As Filed with the Securities and Exchange Commission on December 12, 2002
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-14
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. __
[ ] Post-Effective Amendment No. __
JANUS ASPEN SERIES
(Exact Name of Registrant as Specified in Charter)
100 FILLMORE STREET
DENVER, COLORADO 80206-4928
(Address of Principal Executive Offices, Zip Code)
Registrant's Telephone Number, including Area Code: (303) 333-3863
-----------------
THOMAS A. EARLY
JANUS ASPEN SERIES
100 FILLMORE STREET
DENVER, COLORADO 80206-4928
(Name and Address of Agent for Service)
Copy to:
DEBORAH BIELICKE EADES
VEDDER, PRICE, KAUFMAN & KAMMHOLZ
222 NORTH LASALLE STREET
CHICAGO, ILLINOIS 60601
-----------------
Approximate date of proposed public offering: As soon as practicable
after the effective date of this Registration Statement.
No filing fee is required because an indefinite number of shares have
previously been registered pursuant to Rule 24f-2 under the Investment Company
Act of 1940.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
[JANUS LOGO]
FOR SHAREHOLDERS OF ONE OR MORE OF THE FOLLOWING FUNDS:
January XX, 2003 BERGER IPT-GROWTH FUND
BERGER IPT-LARGE CAP GROWTH FUND
BERGER IPT-INTERNATIONAL FUND
Dear Shareholder:
Your fund's Board is requesting your vote on the following proposals regarding
your Berger IPT growth fund(s). These proposals are part of a plan to reorganize
your Berger IPT growth fund into a Janus fund with similar investment
objectives.
While we encourage you to read the Questions and Answers section and the full
text of the enclosed proxy statement/prospectus, the proposals are summarized as
follows:
o Approve the reorganization of your Berger IPT growth fund(s)
into a Janus growth fund with similar investment objectives
(please see page X of the proxy statement/prospectus to see
which Berger fund will reorganize with which Janus fund);
o Ratify an interim advisory agreement with Janus (for Berger
IPT-Growth and Berger IPT-Large Cap Growth Funds only).
Your Fund's Board members unanimously approved the proposals and urge you to
vote "FOR" each proposal.
Please take a few minutes to cast your vote now. If you have any questions about
the proposals, feel free to call a proxy specialist at 1-866-238-7096
(Georgeson's number).
Thank you for your response and we look forward to welcoming you as a Janus
shareholder and serving your future investment needs.
Respectfully,
Mark Whiston
CEO, Janus Capital Group
YOUR VOTE IS IMPORTANT. Voting your shares will only take a few minutes of your
time. To vote, simply fill out the enclosed proxy cards and return them to us in
the enclosed postage-paid envelope (Please complete and return all enclosed
proxy cards). If we do not hear from you by ______, our proxy solicitor,
Georgeson Shareholder Communications Inc., may contact you.
QUESTIONS AND ANSWERS
YOUR VOTE IS VERY IMPORTANT
While we encourage you to read the full text of the enclosed Proxy
Statement/Prospectus, here is a brief overview of some matters affecting your
Fund that will be the subject of shareholder vote.
Q. WHAT ARE SHAREHOLDERS BEING ASKED TO VOTE ON AT THE UPCOMING SPECIAL
MEETINGS ON MARCH 7, 2003?
A. Stilwell Financial Inc. ("Stilwell") is the indirect owner of both
Berger Financial Group LLC ("Berger") and Janus Capital Management LLC
("Janus"). On September 3, 2002, Stilwell announced its intention to
consolidate all of its investment advisory operations under Janus. As a
result of this restructuring, it is anticipated that Berger, the
investment adviser to your Fund, will be consolidated into Janus and
will cease to exist.
In connection with the consolidation, your Board approved the
reorganization of your Fund into a similar Janus Fund. You are being
asked to vote on the reorganization of your Fund (the
"Reorganization").
In connection with the Reorganization, your Board also approved an
interim advisory agreement with Janus for Berger IPT--Growth Fund and
Berger IPT--Large Cap Growth Fund. Pursuant to the interim advisory
agreement, Janus began serving as investment adviser to your Fund on
December 16, 2002. You are being asked to ratify that agreement for
your Fund. Berger and the current subadviser, Bank of Ireland Asset
Management (U.S.) Ltd., will continue to provide advisory services to
Berger IPT--International Fund until the closing of the Reorganization.
Q. HOW DO THE INVESTMENT OBJECTIVES AND POLICIES OF BERGER FUNDS AND THE
JANUS FUNDS COMPARE?
A. Although each of the Berger Funds has similar investment objectives and
compatible investment policies with its corresponding Janus Fund, there
are differences. For Berger IPT--International Fund, your portfolio
manager will change and will be supported by the research and trading
personnel and facilities of Janus rather than Berger and your Fund's
former subadviser.
Q. WHAT ARE THE ADVANTAGES FOR BERGER FUND SHAREHOLDERS?
A. Combining your Fund with a Janus Fund will allow you to continue your
investment in a fund with a similar investment objective and compatible
investment policies. In addition, each Janus Fund is expected to have
lower overall expenses than the corresponding Berger Fund.
Q. WHEN WOULD THE REORGANIZATION TAKE PLACE FOR MY FUND?
A. If approved by shareholders, the Reorganization for each Fund is
expected to occur in the first quarter of 2003.
Q. WILL I RECEIVE NEW SHARES IN EXCHANGE FOR MY CURRENT SHARES?
A. Yes. Upon approval and completion of the Reorganization, your Berger
Fund shares will be exchanged for shares of the applicable Janus Fund.
You will receive shares of the Janus Fund whose
aggregate value at the time of issuance will equal the aggregate value
of your Berger Fund shares on the effective date.
Q. WHO WILL PAY THE COSTS OF THE REORGANIZATION?
A. Janus, the investment adviser of the Janus Funds and the current
adviser of the Berger IPT--Growth Fund and Berger IPT--Large Cap Growth
Fund, has agreed to bear the costs of the Reorganization.
Q. WILL THE REORGANIZATION CREATE A TAXABLE EVENT FOR ME?
A. The Berger Funds are available to investors purchasing certain variable
insurance and annuity contracts offered by participating insurance
companies, and to certain qualified retirement plans. Because your
shares are held in insurance company separate accounts or qualified
plans, making them tax-deferred investments, there will be no
realization of capital gains or losses as a result of the
Reorganizations. As a result, the Reorganization is expected to be
tax-free for federal income tax purposes.
Q. CAN I EXCHANGE OR REDEEM MY BERGER FUND SHARES BEFORE THE
REORGANIZATION TAKES PLACE?
A. Yes. You may exchange your Berger Fund shares for shares of another
Berger Fund open to new investors or redeem your shares, at any time
before the Reorganization takes place. If you choose to do so, your
request will be treated as a normal exchange or redemption of shares
and will be a taxable transaction.
Q. HAS THE BOARD APPROVED THE PROPOSALS?
A. Yes. Your Fund's Board members unanimously approved the proposals and
recommend that you vote in favor of each proposal.
Q. HOW DO I VOTE MY SHARES?
A. You can vote your shares by mail using the enclosed proxy card. You can
also vote by telephone, by the Internet or by attending the shareholder
meeting. If you need more information on how to vote or if you have any
questions, please call Georgeson Shareholder Communications, Inc. at
1-866-238-7096.
Q. WHAT HAPPENS IF A PROPOSAL IS NOT APPROVED?
A. If shareholders do not approve the Reorganization of a Fund, the
Reorganization for that Fund will not take effect and your Fund's Board
members will take such action as they deem to be in the best interests
of the Fund and its shareholders.
If shareholders do not ratify the interim advisory agreement of a Fund,
the interim advisory agreement will terminate in accordance with its
terms upon the earlier of the effective date of the Reorganization or
on May 15, 2003.
BERGER INSTITUTIONAL PRODUCTS TRUST
BERGER IPT-GROWTH FUND
BERGER IPT-LARGE CAP GROWTH FUND
BERGER IPT-INTERNATIONAL FUND
NOTICE OF SPECIAL MEETINGS OF SHAREHOLDERS
TO BE HELD ON MARCH 7, 2003
Notice is hereby given that Special Meetings of Shareholders of the Berger Funds
listed above (each a "Berger Fund" and, collectively, the "Berger Funds"), will
be held at the offices of Janus Capital Management LLC, 3773 Cherry Creek Drive
North, Denver, Colorado 80209, on March 7, 2003 at 10:00 a.m. Mountain time, for
the purposes of considering the proposals set forth below.
Proposal 1: For shareholders of all Berger Funds, to approve an Agreement
and Plan of Reorganization providing for the transfer of all
assets and all liabilities of: (a) Berger IPT-Growth Fund in
exchange for Institutional Shares of Janus Aspen Series
("JAS") Growth Portfolio; (b) Berger IPT-Large Cap Growth Fund
in exchange for Institutional Shares of JAS Growth and Income
Portfolio; and (c) Berger IPT-International Fund in exchange
for Institutional Shares of JAS International Growth
Portfolio. The shares so received will be distributed to
shareholders of the applicable Berger Fund, which will be
terminated or dissolved as soon as practicable thereafter.
Proposal 2: For shareholders of Berger IPT-Growth Fund and Berger
IPT-Large Cap Growth Fund only, to ratify an interim
Investment Advisory Agreement for each Fund with Janus Capital
Management LLC.
Shareholders of record of each Berger Fund set forth above as of the
close of business on January 7, 2003 are entitled to notice of, and to vote at
this meeting, or any adjournment of this meeting. Shareholders of each Berger
Fund will vote separately on each proposal. A proposal will be effected as to a
particular Berger Fund only if that Fund's shareholders approve the proposal.
SHAREHOLDERS ARE REQUESTED TO EXECUTE AND RETURN PROMPTLY THE
ACCOMPANYING PROXY CARD, WHICH IS BEING SOLICITED BY THE BOARD OF THE BERGER
FUNDS. YOU MAY EXECUTE THE PROXY CARD USING THE METHODS DESCRIBED IN THE PROXY
CARD. EXECUTING THE PROXY CARD IS IMPORTANT TO ENSURE A QUORUM AT THE MEETING.
PROXIES MAY BE REVOKED AT ANY TIME BEFORE THEY ARE EXERCISED BY SUBMITTING A
WRITTEN NOTICE OF REVOCATION OR A SUBSEQUENTLY EXECUTED PROXY OR BY ATTENDING
THE MEETING AND VOTING IN PERSON.
By Order of the Board of Trustees
---------------------------------
Sue Vreeland
Secretary
, 2003
- --------------------
PROXY STATEMENT/PROSPECTUS
DATED , 2003
-----------
RELATING TO THE ACQUISITION OF CERTAIN BERGER FUNDS
210 UNIVERSITY BOULEVARD
DENVER, COLORADO 80206
1-800-551-5849
BY AND IN EXCHANGE FOR SHARES OF CERTAIN JANUS FUNDS
100 FILLMORE STREET
DENVER, COLORADO 80206-4928
1-800-525-3713
This Proxy Statement/Prospectus is furnished in connection with the
solicitation of proxies by the Board of Trustees (each trustee a "Board Member")
of Berger Institutional Products Trust (the "Berger Trust") in connection with
the Special Meetings of Shareholders (the "Meetings") of Berger IPT-Growth Fund,
Berger IPT-Large Cap Growth Fund and Berger IPT-International Fund (each a
"Berger Fund" and collectively, the "Berger Funds"), to be held on March 7, 2003
at 10:00 a.m. Mountain time, at the offices of Janus Capital Management LLC
("Janus"), 3773 Cherry Creek Drive North, Denver, Colorado 80209. Shareholders
of each Berger Fund, voting separately, will be asked to consider and approve an
Agreement and Plan of Reorganization (the "Reorganization Plan"), pursuant to
which all of the assets and liabilities of each Berger Fund would be acquired by
a corresponding series of Janus Aspen Series (the "Janus Trust") in return for
Institutional Shares of that series (each a "Janus Fund" and collectively, the
"Janus Funds") (each a "Reorganization" and collectively, the
"Reorganizations"). Each Berger Fund will then be terminated or dissolved as
soon as practicable thereafter.
In connection with the Reorganizations, shareholders of Berger
IPT-Growth Fund and Berger IPT-Large Cap Growth Fund, voting separately, will be
asked to ratify an interim investment advisory agreement with Janus, pursuant to
which Janus currently serves as investment adviser to such Berger Funds (the
"Interim Advisory Agreement").
Shares of the Berger Funds are sold only in connection with investment
in and payments under variable annuity contracts and variable life insurance
contracts (collectively, the "contracts") issued by life insurance companies
("Participating Insurance Companies"), as well as to certain qualified plans
("Qualified Plans"). Individual contract owners are not the "shareholders" of
the Berger Funds. Rather, the Participating Insurance Companies and their
separate accounts or trustees of Qualified Plans are the shareholders. Each
Participating Insurance Company will offer to contract owners the opportunity to
instruct it as to how it should vote shares held by it and the separate accounts
on the items to be considered at the meetings. This Proxy Statement/Prospectus
is therefore furnished to contract owners entitled to give voting instructions
with regard to the Berger Funds.
This Proxy Statement/Prospectus sets forth concisely the information
that a shareholder of each Berger Fund should know before voting on the
proposals and should be retained for future reference. Certain additional
relevant documents listed below, which have been filed with the Securities and
Exchange Commission ("SEC"), are incorporated in whole or in part by reference.
A Statement of Additional Information dated ___________, 2003, relating to this
Proxy Statement/Prospectus and the Reorganizations and including certain
financial information about the participating Berger Funds and Janus Funds, has
been filed with the SEC and is incorporated by reference into this Proxy
Statement/Prospectus. A copy of such Statement of Additional Information is
available upon request and
without charge by writing to the Janus Funds, P.O. Box 173375, Denver, Colorado
80217-3375, by calling toll-free 1-800-525-3713, or contacting your
Participating Insurance Company or Qualified Plan Administrator.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
Each Reorganization Plan provides that each Berger Fund will transfer
all of its assets and all liabilities to the corresponding Janus Fund listed
opposite its name in the following chart:
<Table>
<Caption>
BERGER FUND (SELLING FUND) JANUS FUND (ACQUIRING FUND)
-------------------------- ---------------------------
Berger IPT--Growth Fund JAS Growth Portfolio Institutional Shares
Berger IPT--Large Cap Growth Fund JAS Growth and Income
Portfolio Institutional Shares
Berger IPT--International Fund JAS International Growth
Portfolio Institutional Shares
</Table>
In exchange for the transfer of these assets and liabilities, each Janus Fund
will issue Institutional Shares to the corresponding Berger Fund listed above,
in an amount equal in value to the aggregate net assets of the Berger Fund.
These transfers are expected to occur on or about March 24, 2003 (the "Closing
Date"), based on the value of each Fund's assets as of the close of the regular
trading session on the New York Stock Exchange (normally, 4:00 p.m. Eastern
time) on the business day immediately prior to the Closing Date (the "Effective
Time"). As soon as practicable after the transfer of all of a Berger Fund's
assets and liabilities, that Berger Fund will make a liquidating distribution to
its shareholders of the Janus Fund's shares received, so that a holder of shares
in a Berger Fund at the Effective Time of the Reorganization will receive a
number of shares of the corresponding Janus Fund with the same aggregate value
as the shareholder had in the Berger Fund at the Effective Time. On the Closing
Date, shareholders of each Berger Fund will become shareholders of the
corresponding Janus Fund. Each Berger Fund will then be terminated as soon as
practicable thereafter. The closing of each Reorganization (each a "Closing") is
contingent upon shareholder approval of the Reorganization Plan with respect to
the applicable Berger Fund. Shareholders of each Berger Fund will vote
separately on its Reorganization and approval of a Reorganization is not
contingent upon the approval of any other Reorganization. A copy of the
Reorganization Plan is attached as Exhibit A.
The Berger Trust and the Janus Trust are open-end, management
investment companies registered under the Investment Company Act of 1940 (the
"1940 Act"). Berger Financial Group LLC ("Berger") is the investment adviser and
administrator to Berger IPT--International Fund. Prior to December 16, 2002 (the
effective date of each Interim Advisory Agreement), Berger was the investment
adviser and administrator to the other Berger Funds included in this Proxy
Statement/Prospectus. Berger Distributors LLC, a wholly owned subsidiary of
Berger, is the principal underwriter of the Berger Funds. DST Systems, Inc.,
serves as transfer agent for the Berger Funds.
Janus Capital Management LLC ("Janus") is the investment adviser to the
Janus Funds. On December 16, 2002, Janus began serving as investment adviser to
Berger IPT-Growth Fund and Berger IPT-Large Cap Growth Fund pursuant to an
Interim Advisory Agreement with respect to each Fund. Janus Distributors LLC, a
wholly owned subsidiary of Janus, is the principal underwriter of the Janus
Funds. Janus Services LLC, a wholly owned subsidiary of Janus, serves as
transfer agent for the Janus Funds.
For a more detailed discussion of the investment objectives, policies
and risks of the Berger Funds, see the Berger Funds' Prospectuses and Statement
of Additional Information dated May 1, 2002, as amended and/or supplemented,
which have been filed with the SEC and are incorporated by reference into this
Proxy Statement/Prospectus insofar as they relate to the Berger Funds
participating in the Reorganizations. No other parts of the Statement of
Additional Information are incorporated herein. Copies of the Berger Funds'
prospectuses and statement of additional information are available upon request
and without charge by calling 1-800-551-5849, or by contacting your applicable
Participating Insurance Company or Qualified Plan Administrator.
For a more detailed discussion of the investment objectives, policies
and risks of the Janus Funds, see the Janus Funds' Prospectus and Statement of
Additional Information for Institutional Shares dated May 1, 2002, as amended
and/or supplemented, which have been filed with the SEC and are incorporated by
reference into this Proxy Statement/Prospectus insofar as they relate to the
Janus Funds participating in the Reorganizations. No other part of the Statement
of Additional Information is incorporated herein. A copy of the prospectus for
the Janus Fund(s) into which your Berger Fund(s) is reorganizing accompanies
this Proxy Statement/Prospectus. Copies of the Janus Funds' statement of
additional information are available upon request and without charge by calling
1-800-525-3713, or by contacting your applicable Participating Insurance Company
or Qualified Plan Administrator.
This Proxy Statement/Prospectus, the Notice of Special Meetings and
proxy card(s) or voting instruction card are expected to be sent to shareholders
beginning on or about ___________, 2003.
The following table identifies the Berger Funds entitled to vote on
each proposal:
<Table>
<Caption>
BERGER IPT- BERGER IPT-
BERGER IPT-- LARGE CAP INTERNATIONAL
PROPOSAL GROWTH FUND GROWTH FUND FUND
-------- ------------ ------------- -----------------
To approve an Agreement and Plan of Reorganization ..... X X X
To ratify an Interim Advisory Agreement with Janus ..... X X
</Table>
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
Proposal 1: To Approve an Agreement and Plan of Reorganization ................................ 1
Synopsis 1
Investment Management and Performance .......................................................... 2
JAS Growth Portfolio--Berger IPT-Growth Fund .......................................... 3
JAS Growth and Income Portfolio--Berger IPT-Large Cap Growth Fund ..................... 5
JAS International Growth Portfolio -- Berger IPT-International Fund ................... 7
Shareholder Fees and Fund Expenses ............................................................. 9
Information Relating to the Reorganizations .................................................... 14
Shareholder Rights ............................................................................. 17
Additional Information ......................................................................... 19
Proposal 2: To ratify an Interim Advisory Agreement with Janus (Berger IPT-Growth Fund and
Berger IPT-Large Cap Growth Fund Only) .................................................. 20
Voting Matters ................................................................................. 24
Other Business ................................................................................. 26
Shareholder Inquiries .......................................................................... 26
Exhibit A -- Agreement and Plan of Reorganization
Exhibit B -- Form of Interim Advisory Agreement
Exhibit C -- Management's Discussion of the Janus Funds' Performance
Exhibit D -- Management's Discussion of the Berger Funds' Performance
</Table>
PROPOSAL 1: TO APPROVE AN AGREEMENT AND PLAN OF REORGANIZATION
SYNOPSIS
This portion of the Proxy Statement/Prospectus is designed to allow you
to compare the investment policies, shareholder policies, fees and expenses and
other features of each Berger Fund with those of its corresponding Janus Fund.
Shareholders should read this entire Proxy Statement/Prospectus carefully. For
more complete information, please read the prospectus for each Fund.
INTRODUCTION
On September 3, 2002, Stilwell Financial Inc. ("Stilwell"), which
indirectly owns approximately 86% of Berger, entered into an Agreement and Plan
of Merger with Janus Capital Corporation ("JCC"). JCC is a holding company that
owns approximately 92% of Janus and is the managing member of Janus vested with
all management authority and responsibility, although the officers of Janus have
been delegated most of the management of the day-to-day operations. Stilwell is
a publicly traded holding company with principal operations in the financial
asset management businesses. Stilwell currently owns approximately 98% of JCC,
and through such ownership, approximately 92% of Janus. Pursuant to the
Agreement and Plan of Merger, JCC will merge into Stilwell on or about December
31, 2002, with Stilwell surviving and succeeding to all of the assets and
liabilities of JCC, including Janus. Stilwell will remain a publicly traded
holding company with principal operations in financial asset management
businesses and will operate under the name Janus Capital Group Inc. or a similar
name ("JCGI"). After the merger, Janus will be a direct subsidiary of JCGI and
JCGI will own at least 92% of Janus. In a series of related transactions, Berger
will become a wholly owned subsidiary of Janus, and it is expected that Berger
will be consolidated into Janus in the first quarter of 2003 and cease to exist.
The foregoing series of transactions is referred to as the "Stilwell
Consolidation."
THE REORGANIZATIONS
The Board Members of the Berger Trust (the "Board"), including all of
the Board Members who are not "interested persons" of Berger or Janus or the
Berger Trust within the meaning of the 1940 Act (the "Independent Board
Members"), approved the Reorganization Plan at a meeting held on November 26,
2002. Subject to its approval by shareholders of each Berger Fund with respect
to such Berger Fund, the Reorganization Plan provides for (a) the transfer of
all of the assets and liabilities of each Berger Fund in exchange for
Institutional Shares of a comparable Janus Fund; (b) the distribution of such
shares to shareholders of each Berger Fund in liquidation of that Fund; and (c)
the termination or dissolution of each Berger Fund. As a result of the
Reorganizations, shareholders of a Berger Fund will become shareholders of the
Janus Fund opposite its name in the chart on the cover of this Proxy
Statement/Prospectus. Shareholders of each Berger Fund will vote separately on
the Reorganization of their Fund, with each Reorganization separate and distinct
from the other. The Reorganization of each Berger Fund is not contingent upon
approval by shareholders of any other Berger Fund.
THE BERGER TRUST AND THE JANUS TRUST
The Berger Trust is an open-end management investment company and was
organized as a Delaware statutory trust on October 17, 1995. Berger IPT-Growth
Fund, Berger IPT-Large Cap Growth Fund and Berger IPT-International Fund are
each separate series of the Berger Trust. The Berger Trust does not offer
classes of shares.
The Janus Trust is an open-end management investment company and was
organized as a Delaware statutory trust on May 20, 1993. Each Janus Fund is a
series of Janus Aspen Series. Each Janus Fund offers two or three classes of
shares, one of which is the Institutional share class.
INVESTMENT ADVISER
Janus is the investment adviser to the Janus Funds. As of December 16,
2002, Janus began serving as investment adviser to the Berger IPT-Growth Fund
and Berger IPT-Large Cap Growth Fund. Janus, 100 Fillmore Street, Denver,
Colorado 80206, began serving as investment adviser to Janus Fund in 1970 and
currently serves as adviser to fifty-nine (59) proprietary Janus funds and
subadviser to approximately fifty-two (52) mutual funds. Janus and its
affiliates also serve as adviser to offshore funds, unregistered pooled vehicles
and institutional separate accounts. As of September 30, 2002, the Janus
portfolio management team consisted of twenty-three (23) portfolio managers and
over forty (40) research analysts. Janus offers domestic and international
equity products primarily in the "growth" style, as well as fixed income and
money market products. As a result of the Stilwell Consolidation, Janus also
will offer a range of products in the "value" and mathematical styles through
its subsidiaries and strategic partners. Janus and its affiliates have
approximately [$128.75] billion in assets under management as of December 31,
2002, and constitute one of the nation's largest asset management complexes.
Janus is registered as an investment adviser under the Investment Advisers Act
of 1940 (the "Advisers Act"). Prior to December 31, 2002, Stilwell owned 92% of
the outstanding shares of Janus indirectly.
Prior to December 16, 2002, Berger was investment adviser to all of the
Berger Funds included in this Proxy Statement/Prospectus, and Berger continues
to serve as investment adviser to Berger IPT-International Fund. Berger is
registered as an investment adviser under the Advisers Act. Berger, located at
210 University Boulevard, Denver, Colorado 80206, had approximately $_____
billion in assets under management as of [December 31], 2002. Prior to December
31, 2002, Stilwell owned approximately 86% of Berger indirectly. As of December
31, 2002, Berger is a wholly owned subsidiary of Janus. Berger will serve as
investment adviser to Berger IPT--International Fund until the Closing Date of
the Reorganization through its own personnel and Janus personnel serving as dual
employees.
Bank of Ireland Asset Management (U.S.) Ltd. ("BIAM"), 75 Holly Hill
Lane, Greenwich, Connecticut 06830 (representative office) and 26 Fitzwilliam
Place, Dublin 2, Ireland (main office) serves as subadviser to Berger
IPT-International Fund, and will continue to serve as subadviser until the
Closing Date of the Reorganization. The current subadvisory agreement with BIAM
will terminate as of the consummation of the Reorganization.
Although Stilwell owned both Janus and Berger before the Stilwell
Consolidation, the companies historically operated as independent organizations.
In connection with the Stilwell Consolidation, it is expected that Berger will
be consolidated into Janus and will cease to exist.
INVESTMENT MANAGEMENT
AND PERFORMANCE
COMPARISON OF FUND POLICIES AND RISKS
This section will help you compare, among other things, the investment
objectives, policies and risks of each Janus Fund with its corresponding Berger
Fund, as well as the historical performance of the Funds. The investment
objective of each Janus Fund may be changed by the Funds' Trustees without a
shareholder vote. The investment objective of each Berger Fund is fundamental
and may not be changed without shareholder approval. The discussion below for
each Berger Fund is based on the historical
2
operation of the Fund prior to the effectiveness of the Interim Advisory
Agreements with Janus. To the extent that Janus serves as investment adviser
pursuant to an Interim Advisory Agreement, it is expected that such Fund would
be managed in a manner similar to the Janus Funds, subject to the policies and
restrictions of the applicable Berger Fund. Please be aware that this is only a
brief discussion. More complete information may be found in the Funds'
prospectuses.
JAS GROWTH PORTFOLIO-
BERGER IPT-GROWTH FUND
Investment Objectives, Policies and Restrictions. While the Funds have
similar investment objectives and policies, there are some differences. JAS
Growth Portfolio seeks long-term growth of capital in a manner consistent with
the preservation of capital. Berger IPT-Growth Fund aims for long-term capital
appreciation. Each Fund invests primarily in common stocks of companies with the
potential for growth. JAS Growth Portfolio may invest in growth companies of any
size, though it generally invests in larger, more established companies. While
Berger IPT-Growth Fund also may invest in companies of any size, it focuses on
more established companies and has adopted a fundamental restriction (i.e., one
that cannot be changed without a shareholder vote) limiting its investments in
companies with limited operating histories to no more than 5% of its total
assets. Each Fund is classified as a diversified fund.
In selecting companies for JAS Growth Portfolio, the portfolio manager
takes a "bottom up" approach, which means that the portfolio manager seeks to
identify individual companies with earnings growth potential that may not be
recognized by the market at large. The portfolio manager does not use specific
selection criteria in making this assessment. Berger IPT-Growth Fund focuses on
companies that have demonstrated an ability to generate above-average growth in
revenue and earnings. In selecting companies for Berger IPT-Growth Fund, the
portfolio manager looks for companies with strong revenue and earnings growth,
large market potential for their products and services and proven, capable
management teams with clearly defined strategies for future growth. Berger
IPT-Growth Fund's investments may be focused in a small number of business
sectors. Portfolio turnover rates are not a factor in making buy and sell
decisions for either Fund, and the portfolio manager may actively trade the
Berger IPT-Growth Fund's portfolio in pursuit of its investment objective.
As secondary investment strategies in seeking to achieve their
respective investment objectives, both Funds are permitted to invest in foreign
securities, convertible securities, investment grade bonds, illiquid and
restricted securities (up to 15% of net assets), special situations (companies
about to undergo a structural, financial or management change that may
significantly affect the value of their securities) and initial public
offerings. Each Fund may also use futures, forwards and options for hedging
purposes (and for nonhedging purposes, such as seeking to enhance return, for
JAS Growth Portfolio) and may invest in cash, government securities and other
short-term, interest bearing securities when a Fund's portfolio manager believes
market conditions warrant a temporary defensive position. JAS Growth Portfolio
also may invest up to 35% of its net assets in high-yield/high-risk bonds.
JAS Growth Portfolio has adopted fundamental policies that generally
track the requirements of the 1940 Act; the Berger IPT-Growth Fund has adopted
slightly more restrictive fundamental policies. As a result, the fundamental
policies of the Funds vary somewhat. For example, although each Fund may borrow
money for temporary or emergency purposes, Berger IPT-Growth Fund is limited to
borrowing in an amount up to 5% of its total assets, compared to JAS Growth
Portfolio's 33?% limit. In addition, Berger IPT-Growth Fund's issuer
concentration limitation applies to all of its assets, whereas this limit only
applies to 75% of JAS Growth Portfolio's assets. Berger IPT-Growth Fund has also
adopted fundamental policies that are in addition to those required under the
1940 Act, such as the restriction
3
regarding companies with limited operating histories, as discussed above, and
other restrictions regarding participating on a joint basis in securities
trading accounts and investing in companies for the purpose of exercising
control of management.
Investment Risks. Because JAS Growth Portfolio's investment objective
is similar to that of the Berger IPT-Growth Fund and both Funds invest in the
common stocks of growth companies, an investment in JAS Growth Portfolio is
subject to many of the same risks as an investment in Berger IPT-Growth Fund.
Both Funds are subject to the risks of equity investing. Because the price of
common stock moves up and down in response to corporate earnings and
developments, economic and market conditions and unanticipated events, the price
of the Funds' investments may go down and investors may lose money on their
investment. In addition, to the extent a Fund engages in active trading, the
Fund will have an increased portfolio turnover rate. Higher turnover rates may
result in higher brokerage costs to the Fund and in higher net taxable gains for
investors.
Portfolio Manager. Blaine P. Rollins is Executive Vice President and
Portfolio Manager of JAS Growth Portfolio, which he has managed since January
2000. He is also Portfolio Manager of other Janus accounts. Mr. Rollins joined
Janus in 1990. Mr. Rollins holds a Bachelor of Science degree in Finance from
the University of Colorado. Mr. Rollins has earned the right to use the
Chartered Financial Analyst designation. Mr. Rollins has acted as Portfolio
Manager of Berger IPT-Growth Fund since December 16, 2002.
Performance. The following table shows the Funds' average annual total
returns over different periods and shows how the Funds' performance compares
with relevant broad-based market indices. The performance of the Funds and the
indices varies over time, and past performance is not necessarily indicative of
future results. The Funds' returns assume reinvestment of dividends and
distributions and reflect Fund expenses. They do not, however, reflect charges
and expenses deducted by your particular variable insurance contract or
retirement plan, which would lower performance.
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED JUNE 30, 2002 (UNAUDITED)
[TO BE UPDATED AS OF DECEMBER 31, 2002]
<Table>
<Caption>
LIFE OF
THE
FUND 1 YEAR 5 YEARS FUND(1)
---- ------ ------- -------
Berger IPT-Growth Fund ........................... (35.46%) (5.46%) (2.60%)
JAS Growth Portfolio - Institutional Shares ...... (28.15%) 2.82% 9.00%
Russell 3000 Growth Index(2) (reflects no
deduction for expenses) ....................... (26.39%) (.50%) 4.24%
S&P 500 Index(3) (reflects no deduction for
expenses) ..................................... (17.98%) 3.67% 11.08%
</Table>
- ---------
(1) As of May 1, 1996 for Berger IPT-Growth Fund and as of September 13,
1993 for JAS Growth Portfolio.
(2) The Russell 3000 Growth Index is Berger IPT-Growth Fund's current
benchmark index. Berger IPT-Growth Fund recently changed its benchmark
index to correlate more closely to the investment style of the Fund.
The Russell 3000 Growth Index is an unmanaged index, with dividends
reinvested, which measures the performance of those Russell 3000
companies with higher price-to-book ratios and higher forecasted growth
values. The stocks in this index are also members of either the Russell
1000 Growth Index or the Russell 2000 Growth Index.
(3) The S&P 500 Index is JAS Growth Portfolio's benchmark index and Berger
IPT-Growth Fund's previous benchmark index. The S&P 500 Index is an
unmanaged index, with dividends reinvested, which consists of the
common stocks of 500 publicly traded U.S. companies.
4
JAS GROWTH AND INCOME PORTFOLIO-
BERGER IPT-LARGE CAP GROWTH FUND
Investment Objectives, Policies and Restrictions. While the Funds have
similar investment objectives and policies, there are some differences. JAS
Growth and Income Portfolio seeks long-term capital growth and current income.
Berger IPT-Large Cap Growth Fund aims for capital appreciation. Both Funds
primarily invest in common stocks of companies with the potential for growth.
While JAS Growth and Income Portfolio invests in companies regardless of size or
length of operating history, Berger IPT-Large Cap Growth Fund focuses on large,
well-established companies and invests at least 80% of its total assets in
equity securities of companies whose market capitalization, at the time of
purchase, is $10 billion or more. Although JAS Growth and Income Portfolio
normally invests up to 75% of its assets in equity securities of growth
companies, it also invests at least 25% of its assets in securities with income
potential, including convertible securities and all types of debt securities.
Berger IPT-Large Cap Growth Fund may invest up to 20% of its assets in
convertible securities rated below investment grade.
In selecting growth companies for JAS Growth and Income Portfolio, the
portfolio manager takes a "bottom up" approach, which means that the portfolio
manager seeks to identify individual companies with earnings growth potential
that may not be recognized by the market at large. The portfolio manager does
not use specific criteria in making this assessment. JAS Growth and Income
Portfolio shifts assets between the growth and income components of its
portfolio based on the portfolio manager's analysis of relevant market,
financial and economic conditions. Berger IPT-Large Cap Growth Fund focuses on
companies that have demonstrated a history of growth in revenues and earnings.
In selecting companies for the Berger IPT-Large Cap Growth Fund, the portfolio
manager looks for companies with opportunities for above-average revenue and
earnings growth, strong market positions for their products and services and
strong, seasoned management teams with well-established and clearly defined
strategies. Portfolio turnover rates are not a factor in making buy and sell
decisions for either Fund, and the portfolio manager may actively trade the
Berger IPT-Large Cap Growth Fund's portfolio in pursuit of its investment
objective.
As secondary investment strategies in seeking to achieve their
investment objectives, both Funds are permitted to invest in foreign securities,
illiquid and restricted securities (up to 15% of net assets), special situations
(companies about to undergo a structural, financial or management change that
may significantly affect the value of their securities) and initial public
offerings. Each Fund may also use futures, forwards and options for hedging
purposes (and up to 5% of net assets for nonhedging purposes such as seeking to
enhance returns for JAS Growth and Income Portfolio) and may invest in cash,
government securities and other short-term interest bearing securities, when the
Fund's portfolio manager believes market conditions warrant a temporary
defensive position. Berger IPT-Large Cap Growth Fund may also invest in
investment grade bonds and JAS Growth and Income Portfolio may invest up to 35%
of its net assets in high-yield/high-risk bonds.
JAS Growth and Income Portfolio has adopted fundamental policies that
generally track the requirements of the 1940 Act; Berger IPT-Large Cap Growth
Fund has adopted more restrictive fundamental policies. As a result, the
fundamental policies of the Funds vary somewhat. For example, although each Fund
may borrow money for temporary or emergency purposes, Berger IPT-Large Cap
Growth Fund is limited to borrowing in an amount up to 5% of its total assets.
In addition, Berger IPT-Large Cap Growth Fund's issuer concentration limitation
applies to all of its assets, whereas this limit only applies to 75% of JAS
Growth and Income Portfolio's assets. Berger IPT-Large Cap Growth Fund has also
adopted fundamental policies that are in addition to those required under the
1940 Act, such as the restrictions regarding companies with limited operating
histories, participating on a joint basis in
5
securities trading accounts and investing in companies for the purpose of
exercising control of management.
Investment Risks. Because JAS Growth and Income Portfolio's investment
objective is similar to that of Berger IPT-Large Cap Growth Fund and both Funds
invest in the common stocks of growth companies, an investment in JAS Growth and
Income Portfolio is subject to many of the same risks as an investment in Berger
IPT-Large Cap Growth Fund. Both Funds are subject to the risks of equity
investing. Because the price of common stock moves up and down in response to
corporate earnings and developments, economic and market conditions and
unanticipated events, the price of the Funds' investments may go down and
investors may lose money on their investment. In addition, to the extent a Fund
engages in active trading, the Fund will have an increased portfolio turnover
rate. Higher turnover rates may result in higher brokerage costs to the Fund and
in higher net taxable gains for investors.
The income component of JAS Growth and Income Portfolio includes
fixed-income securities, which are subject to interest rate and credit risks.
Their value generally decreases when interest rates rise, and there is the risk
that an issuer will be unable to make principal and interest payments when due.
Berger IPT-Large Cap Growth Fund's investments in convertible securities are
subject to similar risks. Because Berger IPT-Large Cap Growth Fund tends to
focus on more established companies, unlike JAS Growth and Income Portfolio, it
is not subject to the risks of investing in newer companies. Newer companies may
pose greater market, liquidity and information risks because of narrow product
lines, limited financial resources, less depth in management or a limited
trading market for their stocks.
Portfolio Manager. David J. Corkins is Executive Vice President and
Portfolio Manager of JAS Growth and Income Portfolio, which he has managed since
February 2002. Mr. Corkins is also Portfolio Manager of other Janus accounts. He
joined Janus in 1995 as a research analyst. Mr. Corkins holds a Bachelor of Arts
degree in English and Russian from Dartmouth and he received his Master of
Business Administration degree from Columbia University in 1993. Mr. Corkins has
acted as Portfolio Manager of Berger IPT-Large Cap Growth Fund since December
16, 2002.
Performance. The following table shows the Funds' average annual total
returns over different periods and shows how the Funds' performance compares
with relevant broad-based market indices. The performance of the Funds and the
indices varies over time, and past performance is not necessarily indicative of
future results. The Funds' returns assume reinvestment of dividends and
distributions and reflect Fund expenses. They do not, however, reflect charges
and expenses deducted by your particular variable insurance contract or
retirement plan, which would lower performance.
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED JUNE 30, 2002 (UNAUDITED)
[TO BE UPDATED AS OF DECEMBER 31, 2002]
<Table>
<Caption>
LIFE OF
THE
FUND 1 YEAR 5 YEARS FUND(1)
---- ------ ------- -------
Berger IPT-Large Cap Growth Fund* ................ (32.57%) 2.58% 5.60%
JAS Growth and Income Portfolio-Institutional
Shares ........................................ (16.87%) N/A (8.20%)
Russell 1000 Growth Index(2) (reflects no
deduction for expenses) ....................... (26.49%) (.28%) (4.89%)
S&P 500 Index(3) (reflects no deduction for
expenses) ..................................... (17.98%) N/A (1.46%)
</Table>
- ---------
(1) As of May 1, 1996 for Berger IPT-Large Cap Growth Fund and as of May 1,
1998 for JAS Growth and Income Portfolio.
6
(2) The Russell 1000 Growth Index is Berger IPT-Large Cap Growth Fund's
current benchmark index. Berger IPT-Large Cap Growth Fund recently
changed its benchmark index to correlate more closely to the investment
style of the Fund. The Russell 1000 Growth Index is an unmanaged index,
with dividends reinvested, which measures the performance of those
Russell 1000 companies with higher price-to-book ratios and higher
forecasted growth values.
(3) The S&P 500 Index is JAS Growth and Income Portfolio's benchmark index
and Berger IPT-Large Cap Growth Fund's previous benchmark index. The
S&P 500 Index is an unmanaged index, with dividends reinvested, which
consists of the common stocks of 500 publicly traded U.S. companies.
* Effective May 1, 2001, Berger IPT-Large Cap Growth Fund changed its
name and non-fundamental investment strategies from that of a growth
and income fund to a large cap growth fund.
JAS INTERNATIONAL GROWTH PORTFOLIO --
BERGER IPT-INTERNATIONAL FUND
Investment Objectives, Policies and Restrictions. While the Funds have
similar investment objectives and policies, there are some differences. JAS
International Growth Portfolio seeks long-term growth of capital. Berger
IPT-International Fund aims for long-term capital appreciation. Both Funds
primarily invest in equity securities of foreign companies. JAS International
Growth Portfolio generally invests at least 80% of its net assets in securities
of issuers from at least five different countries, excluding the United States.
Berger IPT-International Fund normally invests at least 65% of its total assets
in securities of companies from at least five countries outside the United
States. Each Fund may at times invest in fewer than five countries or even in a
single country. Berger IPT-International Fund has recently been weighted toward
the United Kingdom, Europe and selectively in Japan and the Far East, but may
also invest in other foreign countries, including developing countries. Berger
IPT-International Fund focuses on well-established, mid-sized to large
capitalization companies.
In selecting companies for JAS International Growth Portfolio, the
portfolio manager takes a "bottom up" approach, which means that the portfolio
manager seeks to identify individual companies with earnings growth potential
that may not be recognized by the market at large. The portfolio manager does
not use specific criteria in making this assessment. Berger IPT-International
Fund focuses on companies best positioned to take advantage of identified
economic or business themes. In selecting companies for the Berger
IPT-International Fund, the portfolio manager generally looks for companies with
securities that are fundamentally undervalued, business operations predominantly
in well-regulated and more stable foreign markets and substantial size and
liquidity, strong balance sheets, proven management and diversified earnings.
Berger IPT-International Fund's investments may be focused in a small number of
business sectors. Portfolio turnover rates are not a factor in making buy and
sell decisions for JAS International Growth Portfolio.
As secondary investment strategies in seeking to achieve their
investment objectives, both Funds are permitted to invest in convertible
securities, investment grade bonds, illiquid and restricted securities (up to
15% of net assets), special situations (companies about to undergo a structural,
financial or management change that may significantly affect the value of their
securities), companies with limited operating histories and initial public
offerings. Each Fund may also use forwards for hedging purposes (and up to 5% of
net assets for nonhedging purposes, such as seeking to enhance return, for JAS
International Growth Portfolio) and may invest in cash, government securities
and other short-term interest bearing securities when the Fund's portfolio
manager believes market conditions warrant a temporary defensive position. JAS
International Growth Portfolio may also invest up to 35% of its net assets in
high-yield/high-risk bonds, and may use futures and options for hedging purposes
(and for nonhedging purposes subject to the 5% limit described above). JAS
International Growth Portfolio is not permitted to invest in futures or options.
7
The Funds have substantially similar fundamental investment policies.
However, although both Funds may borrow money for temporary or emergency
purposes, Berger IPT-International Fund is limited to borrowing in an amount up
to 25% of its total assets, whereas JAS International Growth Portfolio is
limited to borrowing 33?% of its assets. In addition, Berger IPT-International
Fund is not restricted from investing in real estate or purchasing or selling
commodities.
Investment Risks. Because JAS International Growth Portfolio's
investment objective is similar to that of Berger IPT-International Fund and
both Funds invest in equity securities of foreign companies, an investment in
JAS International Growth Portfolio is subject to many of the same risks as an
investment in Berger IPT-International Fund. Both Funds are subject to the risks
of equity investing. Because the price of common stock moves up and down in
response to corporate earnings and developments, economic and market conditions
and unanticipated events, the price of the Fund's investments may go down and
investors may lose money on their investment.
Each Fund is also subject to the risk of foreign investing, which may
involve greater risks than investing in domestic securities because a Fund's
performance may depend on issues other than the performance of a particular
company. For example, the value of foreign securities is affected by the value
of the local currency relative to the U.S. dollar. 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 addition, there
may be less government supervision of foreign markets and foreign securities
markets may be less liquid and more volatile than domestic markets. The costs of
buying, selling and holding foreign securities, including brokerage, tax and
custody costs, may also be higher than those involved in domestic transactions.
In addition, to the extent JAS International Growth Portfolio engages in active
trading, the Fund will have an increased portfolio turnover rate. Higher
turnover rates may result in higher brokerage costs to the Fund and in higher
net taxable gains for investors.
Portfolio Managers. Helen Young Hayes is Executive Vice President and
Co-Manager of JAS International Growth Portfolio. She joined Janus in 1987 and
has served as a Portfolio Manager or a Co-Manager of JAS International Growth
Portfolio since its inception. Ms. Hayes is also Portfolio Manager of other
Janus accounts and is the Managing Director of Investments and a Director of
Janus Capital. Ms. Hayes holds a Bachelor of Arts degree in economics from Yale
University. Ms. Hayes has earned the right to use the Chartered Financial
Analyst designation.
Brent A. Lynn is Executive Vice President and Co-Manager of JAS
International Growth Portfolio, for which he has served as Co-Manager since
January 2001. Mr. Lynn is also Portfolio Manager of other Janus accounts. He
joined Janus as a research analyst in 1991. Mr. Lynn holds a Bachelor of Arts
degree in economics and industrial engineering from Stanford University. Mr.
Lynn has earned the right to use the Chartered Financial Analyst designation.
BIAM, using a team approach, has been the investment manager for the
Berger IPT - International Fund since its inception in 1997. BIAM is the
subadviser to Berger IPT-International Fund and is part of Bank of Ireland's
asset management group, established in 1966. BIAM is also the investment manager
for other Berger funds. Most of the team of investment professionals have been
with the group for at least 10 years.
Performance. The following table shows the Funds' average annual total
returns over different periods and shows how the Funds' performance compares
with relevant broad-based market indices. The performance of the Funds and the
indices varies over time, and past performance is not necessarily indicative of
future results. The Funds' returns assume reinvestment of dividends and
distributions and
8
reflect Fund expenses. They do not, however, reflect charges and expenses
deducted by your particular variable insurance contract or retirement plan,
which would lower performance.
AVERAGE ANNUAL TOTAL RETURNS
FOR THE PERIODS ENDED JUNE 30, 2002 (UNAUDITED)
[TO BE UPDATED AS OF DECEMBER 31, 2002]
<Table>
<Caption>
LIFE OF
THE
FUND 1 YEAR 5 YEARS FUND(1)
---- ------ ------- -------
Berger IPT-International Fund ....................... (10.88%) (.23%) .55%
JAS International Growth Portfolio -
Institutional Shares ............................. (20.15%) 3.97% 10.85%
Morgan Stanley Capital International EAFE
Index(2) (reflects no reduction for expenses) .... (9.49%) (1.55%) .75%/2.38%
</Table>
- ---------
(1) As of May 1, 1997 for Berger IPT-International Fund and as of May 2,
1994 for JAS International Growth Portfolio. As of May 1, 1997 and
May 2, 1994, respectively, for the Index.
(2) The Morgan Stanley Capital International EAFE Index is the benchmark
for Berger IPT - International Fund and for JAS International Growth
Portfolio. The index is an unmanaged market capitalization weighted
index, with dividends reinvested, composed of companies representative
of the market structure of 21 developed market countries in Europe,
Australia and the Far East.
SHAREHOLDER FEES AND FUND EXPENSES
The following comparative fee tables show the fees for each Janus Fund
and its corresponding Berger Fund for the year ended June 30, 2002. The
unaudited pro forma table shows Janus Fund's fees assuming that the
Reorganization is approved.
FUND EXPENSES
JAS GROWTH PORTFOLIO-BERGER IPT-GROWTH FUND
SHAREHOLDER FEES
Shareholders in the Berger Funds and Institutional Class shareholders
of the Janus Funds do not pay any sales loads, redemption fees or exchange fees,
but do indirectly bear Annual Fund Operating Expenses, which vary from year to
year. In addition, variable insurance contracts and retirement plans may involve
other charges and expenses not described below.
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS) (UNAUDITED)
[TO BE UPDATED AS OF DECEMBER 31, 2002]
<Table>
<Caption>
PRO FORMA--
JAS GROWTH BERGER IPT- JAS GROWTH
PORTFOLIO GROWTH FUND PORTFOLIO
---------- ----------- ------------
Management Fees ....................... .65% .75% .65%
Other Expenses ........................ .01% .25% .01%
Total Annual Operating Expenses ....... .66% 1.00% .66%
Less Fee Waivers .................. -- (.01%) --%
---- ---- ----
Net Expenses .......................... .66% .99% .66%
==== ==== ====
</Table>
9
Annual Fund Operating Expenses are paid by each Fund. As a result, they
reduce the Fund's return. Fund expenses include management fees, and
administrative costs such as shareholder recordkeeping and reports, custodian
and pricing services and registration fees.
EXAMPLE
The following example helps you compare the cost of investing in each
Fund with the cost of investing in other mutual funds by showing what your costs
may be over time. It uses the same assumptions that other funds use in their
prospectuses:
o $10,000 initial investment
o 5% return for each year
o each Fund's operating expenses remain the same for each period
o redemption after the end of each period
o reinvestment of all dividends and distributions
Your actual costs may be higher or lower, so this example should be
used for comparison only. Based on these assumptions, your costs at the end of
each time period would be:
<Table>
<Caption>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---- ------ ------- ------- --------
JAS Growth Portfolio-Institutional Shares .................. $ 67 $211 $368 $ 822
Berger IPT-Growth Fund ..................................... $102 $318 $552 $1,225
Pro Forma--JAS Growth Portfolio-Institutional Shares ....... $ 67 $211 $368 $ 822
</Table>
JAS GROWTH AND INCOME PORTFOLIO - BERGER IPT - LARGE CAP GROWTH FUND
SHAREHOLDER FEES
Shareholders in the Berger Funds and Institutional Class shareholders
of the Janus Funds do not pay any sales loads, redemption fees or exchange fees,
but do indirectly bear Annual Fund Operating Expenses, which vary from year to
year. In addition, variable insurance contracts and retirement plans may involve
other charges and expenses not described below.
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS) (UNAUDITED)
[TO BE UPDATED AS OF DECEMBER 31, 2002]
<Table>
<Caption>
PRO FORMA--JAS
BERGER IPT- GROWTH AND
JAS GROWTH AND LARGE CAP INCOME
INCOME PORTFOLIO GROWTH FUND PORTFOLIO
---------------- ----------- -----------
Management Fees ...................... .65% .75% .65%
Other Expenses ....................... .06% .12% .05%
Total Annual Operating Expenses ...... .71% .87% .70%
</Table>
Annual Fund Operating Expenses are paid by each Fund. As a result, they
reduce the Fund's return. Fund expenses include management fees and
administrative costs such as shareholder recordkeeping and reports, custodian
and pricing services and registration fees.
10
EXAMPLE
The following example helps you compare the cost of investing in each
Fund with the cost of investing in other mutual funds by showing what your costs
may be over time. It uses the same assumptions that other funds use in their
prospectuses:
o $10,000 initial investment
o 5% return for each year
o each Fund's operating expenses remain the same for each period
o redemption after the end of each period
o reinvestment of all dividends and distributions
Your actual costs may be higher or lower, so this example should be
used for comparison only. Based on these assumptions, your costs at the end of
each time period would be:
<Table>
<Caption>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---- ------ ------- ------- --------
JAS Growth and Income Portfolio-Institutional Shares....... $73 $227 $395 $ 883
Berger IPT-Large Cap Growth Fund........................... $89 $278 $482 $1,073
Pro Forma--JAS Growth and Income Portfolio-Institutional
Shares.................................................. $72 $224 $390 $ 871
</Table>
JAS INTERNATIONAL GROWTH PORTFOLIO - BERGER IPT - INTERNATIONAL FUND
SHAREHOLDER FEES
Shareholders in the Berger Funds and Institutional class shareholders
of the Janus Funds do not pay any sales loads, redemption fees or exchange fees,
but do indirectly bear Annual Fund Operating Expenses, which vary from year to
year. In addition, variable insurance contracts and retirement plans may involve
other charges and expenses not described below.
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS) (UNAUDITED)
[TO BE UPDATED AS OF DECEMBER 31, 2002]
<Table>
<Caption>
PRO FORMA -JAS
JAS BERGER INTERNATIONAL
INTERNATIONAL IPT-INTERNATIONAL GROWTH
GROWTH PORTFOLIO FUND PORTFOLIO
---------------- ----------------- --------------
Management Fees .............................. .65% .16% .65%
Other Expenses ............................... .04% 1.33% .04%
Total Annual Operating Expenses .............. .69% 2.18% .69%
----- ----- -----
Less Fee Waivers .......................... -- (.98)% --
----- ----- -----
Net Expenses ................................. .69% 1.20% .69%
===== ===== =====
</Table>
Annual Fund Operating Expenses are paid by each Fund. As a result, they
reduce the Fund's return. Fund expenses include management fees, and
administrative costs such as shareholder recordkeeping and reports, custodian
and pricing services and registration fees.
11
EXAMPLE
The following example helps you compare the cost of investing in each
Fund with the cost of investing in other mutual funds by showing what your costs
may be over time. It uses the same assumptions that other funds use in their
prospectuses:
o $10,000 initial investment
o 5% return for each year
o each Fund's operating expenses remain the same for each period
o redemption after the end of each period
o reinvestment of all dividends and distributions
Your actual costs may be higher or lower, so this example should be
used for comparison only. Based on these assumptions, your costs at the end of
each time period would be:
<Table>
<Caption>
FUND 1 YEAR 3 YEARS 5 YEARS 10 YEARS
---- ------ ------- ------- --------
JAS International Growth Portfolio--Institutional Shares ..... $ 70 $221 $ 384 $ 859
Berger IPT-International Fund ................................ $221 $682 $1,169 $2,513
Pro Forma--JAS International Growth
Portfolio--Institutional Shares ........................... $ 70 $221 $ 384 $ 859
</Table>
INVESTMENT ADVISORY FEES
The following table compares annual investment advisory fees as a
percentage of average net assets paid to Janus for each Janus Fund and to Berger
for each Berger Fund. The table shows fees before any waivers or reimbursements
("Total") and fees after any waivers or reimbursements ("Net"). The fees listed
are for the six month period ended June 30, 2002.
<Table>
<Caption>
JANUS FUNDS FEE BERGER FUNDS (UNAUDITED) FEE
----------- --- ------------------------ ---
JAS Growth Portfolio Berger IPT-Growth Fund
Total ................................... .65% Total ................................. .76%
Net ..................................... .65% Net ................................... .75%
JAS Growth and Income Portfolio Berger IPT-Large Cap Growth Fund
Total ................................... .65% Total ................................. .75%
Net ..................................... .65% Net ................................... .75%
JAS International Growth Portfolio Berger IPT-International Fund
Total ................................... .65% Total ................................. 1.83%
Net ..................................... .65% Net ................................... .85%
</Table>
SHAREHOLDER SERVICES
PURCHASE PROCEDURES
Berger Funds. The Berger Funds sell their shares to variable contract
accounts of Participating Insurance Companies or to Qualified Plans. You may
invest in shares of the Berger Funds only through this type of variable
insurance contract or retirement
12
plan. The contract account prospectus or retirement plan documents explain how
to invest in the Funds, including the minimum and maximum purchase amounts. Not
all of the Funds may be available under a particular plan or contract.
Berger Fund shares are purchased at a price per share equal to the NAV
next determined after the purchase request is received in good order and
accepted by the Fund, or by any participating insurance company or retirement
plan administrator who has been authorized by the Fund to accept requests on its
behalf. The NAV of each Fund is calculated once each business day as of the
close of the regular trading session on the New York Stock Exchange (normally
4:00 p.m. Eastern time). The NAV per share is calculated by dividing the total
value of each Fund's investments, cash and other assets, less any liabilities,
by the total outstanding shares of that Fund.
Janus Funds. The Janus Funds sell their shares to variable contract
accounts of Participating Insurance Companies or to Qualified Plans. You may
invest in shares of the Janus Funds only through this type of variable insurance
contract or retirement plan. The contract account prospectus or retirement plan
documents explain how to invest in the Funds, including the minimum and maximum
purchase amounts. Not all of the Funds may be available under a particular plan
or contract.
Janus Fund shares are purchased at a price per share equal to the NAV
next determined after the purchase request is received and accepted. The NAV of
each Fund is calculated once each business day as of the close of the regular
trading session on the New York Stock Exchange (normally 4:00 p.m. Eastern
time). The NAV per share is calculated by dividing the total value of each
Fund's investments, cash and other assets, less any liabilities, by the total
outstanding shares of that Fund.
REDEMPTION PROCEDURES
Berger Funds. Shares of the Berger Funds are sold by the Funds on a
continuous basis to separate accounts of Participating Insurance Companies or to
Qualified Plans. Investors may not redeem shares of the Funds directly, but only
through variable insurance contracts offered through separate accounts of
Participating Insurance Companies or through Qualified Plans. The account
prospectus or plan documents, as applicable, explains how to redeem shares of
the Fund. Fund shares are redeemed at the net asset value per share next
computed after receipt of a redemption order by a Fund, its authorized agent or
its designee.
Janus Funds. Shares of the Janus Funds are sold by the Funds on a
continuous basis to separate accounts of Participating Insurance Companies or to
Qualified Plans. Investors may not redeem shares of the Funds directly, but only
through variable insurance contracts offered through separate accounts of
Participating Insurance Companies or through Qualified Plans. The account
prospectus or plan documents, as applicable, will explain how to redeem shares
of the Fund. Fund shares are redeemed at the net asset value per share next
computed after receipt of a redemption order by a Fund, its authorized agent or
its designee.
REDEMPTIONS IN KIND
Berger Funds. The Berger Funds have elected to pay redemption proceeds
in cash up to $250,000 or 1% of each Fund's total value during any 90-day period
for any one shareholder, whichever is less. Because larger redemptions may be
detrimental to existing shareholders, the Berger Funds reserve the right to make
payments in the form of portfolio securities (a redemption in kind) under
unusual circumstances.
Janus Funds. The Janus Funds also have elected to pay redemption
proceeds in cash up to $250,000 or 1% of each Fund's total value during any
90-day period for any one shareholder, whichever
13
is less. Should redemption by any shareholder exceed such limitation, the Janus
Funds have the option to pay the excess in cash or in kind.
A redemption in kind will consist of securities equal in value to the
shares redeemed. In the event that a redemption in kind was made, shareholders
would probably have to pay brokerage costs to sell the securities distributed to
them, as well as taxes on any gain from the sale. Shareholders may have
difficulty selling the securities and recovering the amount of their redemption
if the securities are illiquid.
DIVIDEND POLICIES
Berger Funds. The Berger Funds declare and pay dividends annually. The
Berger Funds distribute capital gains, if any, at least annually, normally in
December. Shareholders will receive dividends and distributions in the form of
additional shares unless they have elected to receive payment in cash.
Janus Funds. Dividends for the Funds are normally declared and
distributed in June and December. Distributions will automatically be reinvested
in additional shares unless shareholders change their distribution options.
INFORMATION RELATING TO THE REORGANIZATIONS
DESCRIPTION OF THE REORGANIZATIONS
The following summary is qualified in its entirety by reference to the
Reorganization Plan in Exhibit A. The Reorganization Plan provides for the
Reorganizations to occur on or about March 24, 2003.
The Reorganization Plan provides that all of the assets and liabilities
of each Berger Fund will be transferred to the corresponding Janus Fund on the
Closing Date of the Reorganizations. In exchange for the transfer of these
assets and liabilities, the Janus Funds will simultaneously issue on the Closing
Date of the Reorganizations a number of full and fractional shares of each Janus
Fund to the corresponding Berger Fund equal in value to the aggregate net asset
value of the corresponding Berger Fund calculated at the Effective Time.
Following the transfer of assets and liabilities in exchange for Janus
Fund shares, each Berger Fund will distribute, in complete liquidation, pro rata
to its shareholders of record, all of the shares of the corresponding Janus Fund
so received. Shareholders of each Berger Fund owning shares at the Effective
Time will receive a number of shares of the corresponding Janus Fund with the
same aggregate value as such shareholder had in the Berger Fund at the Effective
Time. Such distribution will be accomplished by the establishment of accounts in
the names of the Berger Funds' shareholders on the share records of the Janus
Funds' transfer agent. Each account will receive the respective pro rata number
of full and fractional shares of the applicable Janus Fund due to the
shareholders of the corresponding Berger Fund. Each Berger Fund then will be
terminated or dissolved as soon as practicable thereafter. The Janus Funds will
not issue share certificates to Berger Fund shareholders in connection with the
Reorganizations. Shares of the Janus Funds to be issued will have no preemptive
or conversion rights.
The Reorganization Plan contains customary representations, warranties
and conditions. The Reorganization Plan provides that the consummation of the
Reorganization with respect to a Berger Fund and its corresponding Janus Fund is
conditioned upon, among other things: (1) approval of the Reorganization by the
Berger Fund's shareholders; (2) the receipt by the Funds of a tax opinion to the
14
effect that the Reorganization will be tax-free for federal income tax purposes
to the Berger Funds, their shareholders and the Janus Funds; and (3) the
establishment of an advisory board (the "Advisory Board") comprised of at least
four of the former independent Board Members of the Berger Trust. The Advisory
Board would be authorized to provide advice and make recommendations to the
Board of Trustees of Janus Aspen Series regarding the Janus Funds into which the
Berger Funds are reorganized. Each member of the Advisory Board would be
compensated at the annual rate of $60,000, and the Chairman of the Advisory
Board would receive an additional $5,000 annually, payable by those Janus Funds
and by other funds managed by Janus into which other funds in the Berger family
are reorganized. The Reorganization Plan may be terminated by mutual agreement
of the Janus Trust with respect to a Janus Fund or the Berger Trust with respect
to a Berger Fund, or if, before the Closing Date, any of the required conditions
have not been met or the representations and warranties are not true.
COSTS OF REORGANIZATIONS
Janus will bear the following reasonable costs associated with the
Funds' participation in the Reorganizations: (a) expenses associated with the
preparation and filing of this Proxy Statement/Prospectus; (b) postage; (c)
printing; (d) accounting fees; (e) legal fees incurred by each Fund (including
fees of counsel to, and independent consultants retained by, the Independent
Board Members); (f) solicitation costs; (g) fees payable to the Independent
Board Members for participation in any special meetings relating to the
Reorganizations; and (h) other related administrative or operational costs,
including the cost (if any) of continuation of directors' and officers'/errors
and omissions insurance for the Independent Board Members and obtaining
directors' and officers'/errors and omissions insurance for the Advisory Board
discussed above. The Funds will not pay any of these expenses. The Berger Funds
will pay brokerage costs of any necessary rebalancing of their investment
portfolios prior to the effective date of the Reorganizations.
FEDERAL INCOME TAXES
Each Reorganization is intended to qualify for U.S. federal income tax
purposes as a tax-free reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"). If it so qualifies, neither the
Berger Funds nor their shareholders will recognize taxable gain or loss as a
result of the Reorganizations; the tax basis of the Janus Fund shares received
by shareholders will be the same in the aggregate as the basis of the Berger
Fund shares exchanged; and the holding period of the Janus Fund shares received
will include the holding period of the Berger Fund shares exchanged, provided
that the shares exchanged were held as capital assets at the time of the
Reorganizations. As a condition to the closing of the Reorganizations, the Janus
Trust and the Berger Trust will receive a tax opinion to that effect. No tax
ruling from the Internal Revenue Service regarding the Reorganizations has been
requested. The tax opinion is not binding on the Internal Revenue Service or a
court and does not preclude the Internal Revenue Service from asserting or
adopting a contrary position.
The Berger Funds will continue their investment operations while the
Reorganizations are pending. Accordingly, they may realize taxable income and
gains, which may have to be distributed to shareholders under the tax rules
relating to mutual funds. However, such distributions should not have any tax
consequences to underlying contract owners.
As of December 31, 2001, each Berger Fund had the following unutilized
capital loss carryovers:
<Table>
Berger IPT-Growth Fund ................................. $ 5,106,202
Berger IPT-Large Cap Growth Fund ....................... 10,165,612
Berger IPT-Institutional Fund .......................... 323,870
</Table>
As of December 31, 2001, each Janus Fund had the following unutilized
capital loss carryovers:
<Table>
Janus Aspen Growth Portfolio.......................... $ 825,857,740
Janus Aspen Growth & Income Portfolio................. 24,326,987
Janus Aspen International Portfolio................... 397,772,820
</Table>
The final amount of unutilized capital loss carryovers for each Berger
Fund is subject to change and will not be determined until the time of the
Reorganizations. After and as a result of the Reorganizations, these capital
loss carryovers may be subject to limitations under applicable tax laws on the
rate at which they may be used in the future to offset capital gains of the
Janus Funds. As a result, some or all of the capital loss carryovers may expire
unutilized. The Board took this factor into account
15
in concluding that the proposed Reorganizations would be in the best interests
of the Berger Funds and their shareholders.
THE BERGER FUNDS MAY SELL SECURITIES BEFORE THE REORGANIZATIONS,
WHETHER IN THE ORDINARY COURSE OF BUSINESS OR IN ANTICIPATION OF THE
REORGANIZATIONS. AFTER THE CLOSING, THE JANUS FUNDS MAY DISPOSE OF CERTAIN
SECURITIES RECEIVED FROM THE CORRESPONDING BERGER FUNDS. SUCH SALES MAY RESULT
IN TRANSACTION COSTS AND CAPITAL GAINS (OR LOSSES). ALTHOUGH VARIABLE INSURANCE
AND ANNUITY CONTRACTS OFFERED BY PARTICIPATING INSURANCE COMPANIES AND QUALIFIED
PLANS ARE GENERALLY TAX-DEFERRED INVESTMENTS, CONTRACT OWNERS MAY WANT TO
CONSULT THEIR OWN TAX ADVISERS CONCERNING ANY POTENTIAL TAX CONSEQUENCES OF THE
REORGANIZATIONS.
CAPITALIZATION
The following table sets forth, as of June 30, 2002, the capitalization
of each Janus Fund, the capitalization of each Berger Fund, and the unaudited
pro forma combined capitalization of the Janus Funds assuming the Reorganization
has taken place. The capitalizations are likely to be different on the Closing
Date as a result of daily share purchase and redemption activity.
<Table>
<Caption>
NET ASSET
VALUE PER SHARES
FUND NET ASSETS SHARE OUTSTANDING
---- ---------- --------- -----------
JAS Growth Portfolio--Institutional Shares ................ $1,938,422,215 $16.78 115,505,767
Berger IPT-Growth Fund (Unaudited)......................... $ 5,470,009 $ 7.70 710,112
Pro Forma--JAS Growth Portfolio (Unaudited) ............... $1,943,892,224 $16.78 115,831,751
JAS Growth and Income Portfolio--Institutional Shares ..... $ 72,706,853 $13.26 5,483,228
Berger IPT-Large Cap Growth Fund (Unaudited).............. $ 20,106,334 $12.95 1,552,950
Pro Forma--JAS Growth and Income Portfolio (Unaudited) .... $ 92,813,187 $13.26 6,999,543
JAS International Growth Portfolio--Institutional
Shares ................................................. $ 763,141,562 $20.55 37,140,125
Berger IPT-International Fund (Unaudited).................. $ 8,897,911 $ 9.23 422,520
Pro Forma --JAS International Growth Portfolio
(Unaudited) ............................................ $ 767,039,473 $20.55 37,329,804
</Table>
BOARD CONSIDERATIONS
As discussed above, the Reorganizations are part of an initiative to
restructure and streamline the management and operation of funds advised by
Janus and Berger. Janus first proposed the Reorganizations to the Independent
Board Members of the Berger Trust at a meeting held on [__________]. See
"Synopsis -- Introduction" above. This initiative includes several components:
(1) a change in branding to offer all funds advised by Stilwell affiliates under
the Janus name; (2) the combination of certain Berger Funds with a growth
investment style into similar Janus Funds currently offered to the public; (3)
the combination of certain Berger Funds with a value investment style into
newly-created Janus funds; (4) the liquidation of certain small Berger Funds
that are unlikely to reach an
16
efficient operating size; (5) the elimination of the master-feeder structure for
international products; and (6) the implementation of the fee structure and
services currently in place for the Janus Funds.
The Independent Board Members of the Berger Trust reviewed the
potential implication of these proposals for the Reorganizations discussed in
this Proxy Statement/Prospectus as well as various other Berger Funds for which
they serve as Board Members. They were assisted in this review by their
independent legal counsel and by independent consultants with special expertise
in financial and mutual fund matters.
On November 26, 2002, the Board of the Berger Trust, including the
Independent Board Members, voted unanimously to approve the Reorganizations and
to recommend their approval to shareholders. In reviewing the Reorganizations,
the Board, including the Independent Board Members, was presented with
information to assist it in evaluating the Reorganizations, such as: (1) the
terms and conditions of the Reorganizations; (2) the compatibility of the Funds'
objectives, limitations and policies; (3) performance history for the Funds; (4)
pro forma and/or estimated expense ratios for the Janus Funds and any changes in
fees to be paid or borne by shareholders of the Funds (directly or indirectly)
after the Reorganizations; (5) the potential economies of scale to be gained
from the Reorganizations; (6) the fact that each Reorganization is expected to
be free from federal income taxes; (7) the fact that the Janus Funds will assume
all of the liabilities of the Berger Funds; (8) the fact that the Reorganization
expenses incurred by the Funds will be borne by Janus and not the Funds; and (9)
the fact that services to be provided to shareholders of the Berger Funds after
the Reorganizations would be similar to those currently provided.
At the meeting, the Board Members, including all of the Independent
Board Members, determined that the Reorganizations are in the best interests of
each Berger Fund and their shareholders and that the interests of existing
Berger Fund shareholders will not be diluted as a result of the Reorganizations.
The Board Members, including the Independent Board Members, concluded that the
proposed Reorganizations were the best course available to the Berger Funds from
among the possible alternatives, including liquidation. In reaching that
conclusion, the Board Members noted that each Berger Fund will have
substantially similar investment objectives and compatible policies to those of
the corresponding Janus Fund and that the Berger Funds would not bear any
expenses in connection with the Reorganization. The Boards also noted the lower
expense ratios of the Janus Funds.
BASED ON THIS INFORMATION, THE BOARD MEMBERS OF THE BERGER TRUST
UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS OF EACH BERGER FUND APPROVE THE
REORGANIZATION FOR THEIR FUND.
SHAREHOLDER RIGHTS
JANUS TRUST
General. The Janus Trust is an open-end management investment company
which was established as a Delaware statutory trust pursuant to a Trust
Instrument dated May 19, 1993. The Janus Trust is also governed by its bylaws
and Delaware state law.
Shares. The Janus Trust is authorized to issue an unlimited number of
shares of beneficial interest, with a par value of $.001, from an unlimited
number of series of shares. Currently, Janus Trust consists of fourteen separate
investment series, all of which offer one to three classes of shares. Shares of
each Janus Fund have no preemptive, conversion or subscription rights.
17
Voting Rights. On any matter submitted to a vote of shareholders of the
Janus Funds, all Funds (and classes, as applicable) generally vote together as a
single group, except where a separate vote by Fund (or class) is required by law
or where the interests of the Fund (or class) differ from the other Funds.
Shareholders of each Janus Fund are entitled to one vote for each share owned
and for each fractional share owned, a proportionate fractional vote.
A Participating Insurance Company issuing a variable insurance contract
or a Qualified Plan will vote shares in the separate account as required by law
(i.e., pass-through voting). A Participating Insurance Company or Qualified Plan
is required to request voting instructions from policy owners and must vote
shares in the separate account, including shares for which no instructions have
been received, in proportion to the voting instructions received.
Shareholder Meetings. The Janus Trust is not required to hold annual
meetings of shareholders, but may hold special meetings of shareholders under
certain circumstances. A special meeting of shareholders for the purpose of
considering the removal of a Janus board member (a "Board Member" for the
purposes of referring to board members of the Janus Trust) may be called by the
Board Members or on the request of shareholders owning at least 10% of the
outstanding shares of the Trust. Other Special Shareholder meetings shall be
called by the Board Members and shall be called by the Board Members upon the
written two-thirds of the outstanding shares entitled to vote.
Election and Term of Trustees. The Janus Trust's operations are
overseen by the Board Members under Delaware state law. Subject to 1940 Act
requirements, Board Members may be elected by shareholders or appointed by the
Board. Board Members hold office until the termination of the Trust or their
earlier death, retirement, resignation, incapacity or removal. A Board Member of
the same Trust may be removed at any time by written instrument signed by all of
the remaining trustees or by a vote or written request of shareholders holding
two-thirds of the outstanding shares.
Shareholder Liability. The Janus Trust's Trust Instrument contains an
indemnification provision for any shareholder liability and Delaware law
provides that shareholders are not liable for obligations of the Fund and the
Trust's Trust Instrument disclaims shareholder liability for acts or obligations
of the Funds.
Board Member Liability. The Board Members of the Janus Trust generally
are not liable for any obligation of the Trust. The Janus Trust will indemnify
its Board Members against all liabilities and expenses, except for those arising
from the Board Member's willful misfeasance, bad faith, gross negligence or
reckless disregard of such trustee's duties.
THE BERGER TRUST
General. The Berger Trust is an open-end management investment company
and was established as a Delaware statutory trust pursuant to a Trust Instrument
dated October 17, 1995. The Berger Trust is also governed by its bylaws and
Delaware state law.
Shares. The Berger Trust is authorized to issue an unlimited number of
shares of beneficial interest, with a par value of $.01, from an unlimited
number of series of shares. Currently, the Berger Trust consists of [four]
separate investment series. The Berger Trust does not offer classes of shares.
The shares of the Berger Fund have no preference as to conversion features,
exchange privileges or other attributes and have no preemptive rights.
Voting Rights. On any matter submitted to a vote of shareholders of the
Berger Trust, all shares entitled to vote are voted on by individual series or
class, except that shares are voted in the aggregate and not by individual
series or class in the election of trustees of the Trust and on all matters
relating to the
18
Trust as a whole. Each full share of each Fund has one vote and each fractional
share has a proportionate fractional vote.
Shareholder Meetings. The Berger Trust is not required to hold annual
meetings of shareholders, but may hold special meetings of shareholders under
certain circumstances. A special meeting of shareholders for the purpose of
considering the removal of a Board Member may be called by the Board Members or
on the request of shareholders owning at least 10% of the outstanding shares of
the Trust. Special meetings for other purposes may be called by the Board
Members or at the request of shareholders owning at least 25% of the outstanding
shares of the Trust.
Election and Term of Board Members. The Berger Trust's affairs are
supervised by Board Members under Delaware state law. Subject to 1940 Act
requirements, Board Members may be elected by shareholders or appointed by the
Board. Board Members of the Berger Trust hold office until their successors are
duly elected and qualified, or until their death, resignation, retirement,
removal or mental or physical incapacity. A Board Member may be removed at any
time by unanimous written consent of the remaining Board Members or by a vote of
shareholders holding two-thirds of the outstanding shares.
Shareholder Liability. Pursuant to Delaware law and the Trust
Instrument of the Berger Trust, shareholders of the Trust are not personally
liable for the acts, omissions, liabilities or obligations of any kind of the
Trust or any Fund.
Board Member Liability. The Board Members of the Berger Trust generally
are not personally liable for any obligation of the Trust. The Trust will
indemnify its Board Members against all liabilities and expenses, except for
those arising from a Board Members' willful misfeasance, bad faith, gross
negligence or reckless disregard of his or her duties.
THE FOREGOING IS ONLY A SUMMARY OF CERTAIN RIGHTS OF SHAREHOLDERS OF
THE JANUS TRUST AND THE BERGER TRUST UNDER THEIR GOVERNING CHARTER DOCUMENTS,
BYLAWS AND STATE LAW AND IS NOT A COMPLETE DESCRIPTION OF PROVISIONS CONTAINED
IN THOSE SOURCES. SHAREHOLDERS SHOULD REFER TO THE PROVISIONS OF THOSE DOCUMENTS
AND STATE LAW DIRECTLY FOR A MORE THOROUGH DESCRIPTION.
ADDITIONAL INFORMATION
Information concerning the operation and management of the Janus Funds
is included in the current Prospectus and Statement of Additional Information
relating to those Funds, which are incorporated herein by reference insofar as
they relate to the Janus Funds participating in the Reorganizations. No other
part of the Statement of Additional Information is incorporated herein. A copy
of the prospectus for the Janus Fund(s) into which your Berger Fund(s) is
reorganizing accompanies this Proxy Statement/Prospectus. Additional information
about the Janus Funds is included in the Statement of Additional Information
dated May 1, 2002, as amended and/or supplemented, which is available upon
request and without charge by calling 1-800-525-3713 or by contacting your
Participating Insurance Company or Qualified Plan Administrator.
Information about the Berger Funds is included in the current
prospectuses relating to those Funds dated May 1, 2002, which are incorporated
herein by reference insofar as such prospectuses relate to the Berger Funds
participating in the Reorganizations. Additional information is included in the
Statements of Additional Information of the Berger Funds dated May 1, 2002,
which are available upon request and without charge by calling 1-800-551-5849 or
by contacting your Participating Insurance Company or Qualified Plan
Administrator.
19
The Janus Funds and the Berger Funds are subject to the informational
requirements of the Securities Exchange Act of 1934 and the 1940 Act and in
accordance therewith file reports and other information, including proxy
material and charter documents, with the SEC. These items may be inspected and
copied at the Public Reference Facilities maintained by the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the SEC's regional offices in New
York at 233 Broadway, New York, New York 10279, and in Chicago at 175 West
Jackson Boulevard, Suite 900, Chicago, Illinois 60604. Copies of such items can
be obtained from the Public Reference Branch, Office of Consumer Affairs, SEC,
Washington, D.C. 20549, at prescribed rates.
FISCAL YEAR END AND FINANCIAL STATEMENTS
The fiscal year end of each Fund is December 31.
The financial statements of the Janus Funds contained in the Janus
Aspen Series' annual report to shareholders for the fiscal year ended December
31, 2001 have been audited by PricewaterhouseCoopers LLP, their independent
accountants. These financial statements, together with the unaudited financial
statements of the Janus Aspen Series contained in the semi-annual report for the
six months ended June 30, 2002, are incorporated by reference into this Proxy
Statement/Prospectus insofar as such financial statements relate to the Janus
Funds participating in the Reorganizations.
The financial statements of the Berger Funds are contained in the
Berger IPT Funds' annual report to shareholders for the fiscal year ended
December 31, 2001 and have been audited by PricewaterhouseCoopers LLP, their
independent accountants. These financial statements, together with the unaudited
financial statements of the Berger IPT Funds contained in the semi-annual report
for the six months ended June 30, 2002, are incorporated by reference into this
Proxy Statement/Prospectus insofar as such financial statements relate to the
Berger Funds participating in the Reorganizations.
The Janus Funds and the Berger Funds each will furnish, without charge,
a copy of their most recent semiannual report succeeding such annual report, if
any, on request. Requests should be directed to the Janus Funds at P.O. Box
173375, Denver, Colorado 80217-3375, or by calling 1-800-525-3713, and to the
Berger Funds at P.O. Box 219958, Kansas City, Missouri 64121-9958, by calling
1-800-551-5849 or by contacting your Participating Insurance Company or
Qualified Plan Administrator.
THE BOARD OF THE BERGER TRUST UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR
APPROVAL OF THE REORGANIZATION FOR YOUR FUND.
PROPOSAL 2: TO RATIFY AN INTERIM ADVISORY AGREEMENT WITH JANUS
(BERGER IPT-GROWTH FUND AND
BERGER IPT-LARGE CAP GROWTH FUND ONLY)
Until December 16, 2002, Berger served as investment adviser to the
Berger IPT-Growth Fund and the Berger IPT-Large Cap Growth Fund pursuant to an
investment advisory agreement between Berger and the Berger Trust on behalf of
each such Berger Fund (the "Berger Advisory Agreements"). As a result of the
Stilwell Consolidation, Berger will become a wholly owned subsidiary of Janus on
or before December 31, 2002. It is expected that Berger will be consolidated
into Janus in 2003 and will cease to exist. On November 26, 2002, the Berger
Trust Board voted to terminate the Berger Advisory Agreements with respect to
Berger IPT-Growth Fund and Berger IPT-Large Cap Growth Fund as of December 16,
2002, and Berger waived its rights to notice of termination under the Agreement.
For information about the Stilwell Consolidation, see "Proposal 1: Synopsis --
Introduction."
20
In connection with their approval of the Reorganizations and in
anticipation of the Stilwell Consolidation, the Board Members of the Berger
Trust, including the Independent Board Members, approved an Interim Advisory
Agreement for the Berger IPT-Growth Fund and the Berger IPT-Large Cap Growth
Fund with Janus at a meeting held on November 26, 2002. For more information
about Janus, please see "Proposal 1: Investment Management and Performance --
Investment Adviser." Pursuant to the Interim Advisory Agreements, Janus began
serving as investment adviser and manager to Berger IPT-Growth Fund and Berger
IPT-Large Cap Growth Fund on December 16, 2002. The Interim Advisory Agreements
provide that compensation earned by Janus thereunder between December 16, 2002
and the Closing Date of the Reorganizations will be held in an interest-bearing
account. The Interim Advisory Agreements are being proposed for ratification by
shareholders of the Berger IPT-Growth Fund and the Berger IPT-Large Cap Growth
Fund. A form of Interim Advisory Agreement is attached as Exhibit B. The
differences between the Interim Advisory Agreement and the Berger Advisory
Agreement are described below. If shareholders of a Berger Fund ratify the
Interim Advisory Agreement, the amount held in the escrow account under the
Interim Advisory Agreement with respect to that Fund, plus interest, will be
paid to Janus. If shareholders of a Berger Fund do not ratify the Interim
Advisory Agreement, Janus will be paid the lesser of its costs incurred in
performing its services under the Interim Advisory Agreement with respect to
that Fund or the total amount in the escrow account, plus interest earned.
COMPARISON OF THE BERGER AND INTERIM ADVISORY AGREEMENTS
Investment Advisory Services. Under each Berger Advisory Agreement,
Berger managed the overall investment operations of the Fund. Pursuant to each
Berger Advisory Agreement, Berger was responsible for furnishing continuous
advice and recommendations as to what securities and other assets of the Fund
would be acquired, held, disposed of or loaned, in conformity with the
investment objective, policies and restrictions and the other statements
concerning the Fund in the Berger Trust's charter documents and registration
statements, any order issued to the Berger Trust by the SEC, and the provisions
of the Code, applicable to the Trust as a registered investment company or
required to maintain compliance with any diversification provision applicable to
insurance company separate accounts or qualified plans investing in the Trust.
Each Berger Advisory Agreement provided that Berger would also cause its
officers to attend meetings and furnish certain oral and written reports,
including economic, operational and investment data, and place orders for or
supervise the purchase and sale of securities for investments of each Fund.
Each Berger Advisory Agreement authorized and directed Berger, absent
instructions from the Berger Trust to the contrary, to place Fund portfolio
transactions only with brokers and dealers who render satisfactory service in
the execution of orders at the most favorable prices and at reasonable
commission rates. Each Berger Advisory Agreement also described the
circumstances under which Berger would pay a broker an amount of commission for
effecting a securities transaction in excess of the amount of commission another
broker would have charged, as well as Berger's other brokerage practices with
respect to the Fund.
The Berger Advisory Agreements for Berger IPT-Growth Fund and Berger
IPT- Large Cap Growth Fund provided that Berger's investment advice and
recommendations would be treated as being advisory only and that the Board
Members, or officers to whom the Board Members have so delegated, would have the
power to authorize actions with respect to portfolio transactions.
Each Interim Advisory Agreement contains provisions substantially
similar to the corresponding Berger Advisory Agreement, except that the Interim
Advisory Agreements for Berger IPT-Growth Fund and Berger IPT-Large Cap Growth
Fund do not contain the provisions relating to treating the adviser's advice as
advisory only and to the Board having the power to authorize actions with
respect to portfolio
21
transactions. In addition, each Interim Advisory Agreement allows Janus to
aggregate purchase and sale orders on behalf of the Fund with simultaneous
purchase and sale orders on behalf of other Janus clients.
Expenses. Each Berger Advisory Agreement provided that Berger would pay
all its own costs and expenses incurred in fulfilling its obligations under the
Agreement, as well as rental of offices of the Berger Trust and reasonable
compensation, fees and related expenses of the Berger Trust's officers and Board
Members, except for Board Members who are not interested persons of Berger. Each
Berger Advisory Agreement also provided that the Berger Trust would pay all
expenses incidental to its operations and business not specifically assumed or
agreed to be paid by Berger thereunder, provided, however, that, to the extent
Berger performed certain administrative and clerical functions, the Berger Trust
would compensate or reimburse Berger for its expenses incurred as Berger and the
Berger Trust agreed from time to time. Berger provided administrative services
to each Fund pursuant to a separate agreement for no additional compensation.
The Berger Advisory Agreements for Berger IPT-Growth Fund and Berger
IPT-Large Cap Growth Fund provided that Berger would pay all expenses of
promoting the sales of shares of the Fund other than expenses incurred in
complying with the laws applicable to the offer, issue or sale of Fund shares.
The Interim Advisory Agreements do not contain this provision.
The Interim Advisory Agreements contain substantially similar
provisions, except that the Interim Advisory Agreements do not provide that the
adviser pays expenses of promoting the sale of Fund shares.
[As a result, since December 16, 2002, Janus has been providing the
Berger Funds administrative services pursuant to a separate agreement for no
additional compensation.]
Compensation. In return for the services provided under each Berger
Advisory Agreement, each Fund paid Berger an advisory fee which was accrued
daily and payable monthly. The advisory fee rates under each Interim Advisory
Agreement are the same as the rates under the corresponding Berger Advisory
Agreement. For the Berger IPT-Growth Fund and the Berger IPT-Large Cap Growth
Fund, the annual advisory fee rate is .75% of the first $500 million of average
daily net assets of the Fund, .70% of the next $500 million of average daily net
assets and .65% on any part of the Fund's average daily net assets in excess of
$1 billion. Each Interim Advisory Agreement also contains the escrow provisions
described above. For information on the advisory fees paid to Berger with
respect to each Fund for the six month period ended June 30, 2002, please see
"Proposal 1: Investment Management and Performance -- Investment Advisory Fees."
Liability of Investment Adviser. Each Berger Advisory Agreement
provided that Berger, any affiliate of Berger performing services for the Berger
Trust contemplated thereunder and any managers, members, owners and officers of
Berger and such affiliates would not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission taken with respect to the Fund, except for willful misfeasance, bad
faith or gross negligence in the performance of their respective duties, or by
reason of reckless disregard of their respective obligations and duties under
the Agreement and except to the extent otherwise provided by law. Each Interim
Advisory Agreement contains substantially similar provisions.
Termination of the Agreements. Each Berger Advisory Agreement provided
that it would terminate automatically in the event of its assignment. Each
Berger Advisory Agreement also provided that it could be terminated without
penalty upon sixty (60) days' written notice by either party. Each Fund could
terminate its Berger Advisory Agreement either by the vote of a majority of the
outstanding voting securities of the Fund or by the Board. Each Interim Advisory
Agreement contains substantially similar provisions, except that each Interim
Advisory Agreement may be terminated by the Board without
22
penalty upon ten (10) days' written notice to Janus. In addition, unless
terminated sooner, each Interim Advisory Agreement remains in effect until the
earlier of May 15, 2003 (which is 150 days from the effective date of the
Agreement) or the effective date of the Reorganizations.
Each Berger Advisory Agreement provided that, as soon as reasonably
practicable following termination of the Agreement, the Company will cease to
use "Berger" in the Fund's name if Berger ceases to serve as investment adviser.
The Interim Advisory Agreements do not contain this provision.
If shareholders of a Fund ratify the Interim Advisory Agreement but do
not approve the Reorganization for their Fund, Janus will receive the fees held
in escrow but the Interim Advisory Agreement would terminate by its terms on May
15, 2003.
BOARD CONSIDERATIONS
In connection with their approval of the Reorganizations, the Boards
considered the anticipated consolidation of Berger into Janus and the likely
retention of Berger portfolio management personnel through the Closing of the
Reorganizations. (See Proposal 1 for more information regarding the Board's
evaluation.) As a result, the Board proposed that Janus assume management
responsibility for the Berger Funds in the interim. In determining whether Janus
should assume management responsibility of the Berger Funds on an interim basis,
the Board requested and reviewed various materials including materials provided
by Janus and by independent parties. These materials included information
regarding Janus and its affiliates, and their respective personnel, operations
and financial condition. Janus also provided its Form ADV filed with the SEC,
and information regarding the performance records of mutual funds currently
managed by Janus. The Board Members met with senior officers of Janus and its
affiliates, and such personnel were available to discuss the operations of
Janus.
The Board Members considered a number of factors in reviewing the
Interim Advisory Agreements with Janus, including the similarities between the
Berger Advisory Agreements and the Interim Advisory Agreements, particularly the
fact that the advisory fee rates are the same. [The Board Members also
considered the nature and quality of the services provided by Janus to funds
already managed by Janus. In reviewing the quality of services provided to those
funds, the Board Members considered comparative performance information.] The
Board Members reviewed the financial condition and profitability of Janus and
the quality and depth of Janus's organization in general. The Board Members also
considered the soft-dollar practices of Janus. The Board Members considered the
fees to be paid to Janus for investment advisory services. In connection with
their review of such fees, the Board Members noted that the advisory fee rates
of the Interim Advisory Agreements are identical to the current rates.
Based on their review, the Board Members, including the Independent
Board Members, concluded that the proposed advisory fees under the Interim
Advisory Agreements are fair and that shareholders should receive reasonable
value in return for paying such fees.
BASED ON THIS INFORMATION, THE BOARD OF THE BERGER TRUST RECOMMENDS
THAT THE SHAREHOLDERS OF EACH APPLICABLE BERGER FUND VOTE FOR RATIFYING THE
INTERIM ADVISORY AGREEMENT FOR THEIR FUND.
23
VOTING MATTERS
GENERAL INFORMATION
This solicitation is being made primarily by the mailing of this Proxy
Statement/Prospectus and the accompanying proxy card. Supplementary
solicitations may be made by mail, telephone, telegraph, facsimile, electronic
means or by personal interview by representatives of Janus. In addition,
Georgeson Shareholder Communications, Inc. ("GS"), a professional proxy
solicitation firm, may be paid to solicit shareholders of the Berger Funds. The
total cost of such services is estimated to be $1,000. The cost of preparing,
printing and mailing the Proxy Statement/Prospectus, and all other costs
incurred in connection with the solicitation of proxies, including the fees of
GS, will be paid by Janus. Janus also will reimburse brokerage firms and other
financial intermediaries for their reasonable expenses in forwarding
solicitation materials to the beneficial owners of shares.
The Berger Trust may arrange to have votes recorded by telephone. If
the Trust records votes by telephone, it will use procedures designed to
authenticate shareholders' identities, to allow shareholders to authorize voting
in accordance with their instructions and to confirm that their instructions
have been properly recorded. Proxies voted by telephone may be revoked in the
same manner as proxies voted by mail may be revoked.
The Berger Trust may also arrange to have votes submitted over the
Internet. In order to use this feature, you should go to www.proxyvote.com and
enter the control number set forth on your proxy card(s). You will be prompted
to follow a simple set of instructions. Proxies voted on the Internet may be
revoked in the same manner as proxies voted by mail may be revoked.
VOTING RIGHTS AND REQUIRED VOTE
Shareholders of each Berger Fund are entitled to one vote for each full
share held and are entitled to fractional votes for fractional shares. Any
shareholder giving a proxy may revoke it at any time before it is exercised by
submitting to the Berger Trust a written notice of revocation or a subsequently
executed proxy or by attending the Meeting and voting in person.
Due to the pass-through voting structure of variable insurance and
annuity contracts, the Participating Insurance Companies and Qualified Plans
will vote shares in the separate accounts. However, they are required by law to
request voting instructions from contract owners and must vote shares in the
separate account, including shares for which no instructions have been received,
in proportion to the voting instructions received.
One-third of the outstanding shares of each Fund entitled to vote,
present in person or by proxy, constitutes a quorum.
For the purposes of determining the presence of a quorum for
transacting business at the Meeting, abstentions and broker "nonvotes" (i.e.,
proxies from brokers or nominees indicating that such persons have not received
instructions from the beneficial owners or other persons entitled to vote shares
on a particular matter with respect to which the brokers or nominees do not have
discretionary power) will be treated as shares that are present but which have
not been voted. Accordingly, shareholders are encouraged to forward their voting
instructions promptly. Abstentions and broker nonvotes will have the effect of a
"no" vote for purposes of obtaining the requisite approval of each proposal.
For each Berger Fund, approval of a Reorganization and ratification of
the Interim Advisory Agreement (for Berger IPT-Growth Fund and Berger IPT-Large
Cap Growth Fund only) with Janus requires the affirmative vote with respect to
any Fund of the lesser of (1) 67% of the outstanding shares of
24
the Fund present at the Meetings if more than 50% of the shares of the Fund
outstanding on the Record Date are present in person or by proxy or (2) more
than 50% of the shares of the Fund outstanding on the Record Date.
Shares represented by a properly executed proxy will be voted in
accordance with the instructions thereon, or, if no specification is made, the
shares will be voted "FOR" the approval of each proposal.
If sufficient votes in favor of the proposals set forth in the Notice
of Special Meetings are not received by the time scheduled for a Meeting, the
holders of a majority of shares present in person or by proxy at the Meeting and
entitled to vote at the Meeting, whether or not sufficient to constitute a
quorum, may adjourn the Meeting. The persons named as proxies will vote in favor
of such adjournment if they determine that each adjournment and additional
solicitation are reasonable and in the interests of shareholders. Any business
that might have been transacted at a Meeting originally called may be transacted
at any such adjourned session(s) at which a quorum is present. The costs of any
additional solicitation and of any adjourned session(s) will be borne by Janus.
RECORD DATE AND OUTSTANDING SHARES
Only shareholders of record of the Berger Funds at the close of
business on January 7, 2003 (the "Record Date") are entitled to notice of and to
vote at the Meeting and any postponement or adjournment thereof. In this case,
shareholders consist primarily of Participating Insurance Companies and
Qualified Plans. Therefore, the following figures represent the number of
Participating Insurance Companies and Qualified Plans, and do not reflect the
number of underlying contract owners. However, Participating Insurance Companies
and Qualified Plans are required by law to vote shares on the separate accounts
per the instructions given by the contract owner(s). At the close of business on
the Record Date, the following number of shares were outstanding and entitled to
vote:
<Table>
<Caption>
NAME OF FUND TOTAL NUMBER OF SHARES OUTSTANDING
------------ ----------------------------------
Berger IPT-Growth Fund ..................
Berger IPT-Large Cap Growth Fund ........
Berger IPT-International Fund ...........
</Table>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Janus Funds. The officers and Board Members of the Janus Aspen Series
Portfolios cannot directly own shares of the portfolios without purchasing an
insurance contract through a Participating Insurance Company or through a
Qualified Plan. [As a result, as of the Record Date, the officers and Board
Members of the Janus Trust as a group beneficially owned less than 1% of the
outstanding shares of each Janus Fund.] As of the Record Date, to the best of
the knowledge of the Janus Trust, the following persons owned of record or
beneficially 5% or more of the outstanding shares of the following Janus Funds:
<Table>
<Caption>
NAME AND ADDRESS FUND PERCENTAGE OWNERSHIP TYPE OF OWNERSHIP
---------------- ---- -------------------- -----------------
</Table>
Berger Funds. The officers and Board Members of the Berger Trust cannot
directly own shares of the portfolios without purchasing an insurance contract
through a Participating Insurance Company or through a Qualified Plan. [As a
result, as of the Record Date, the officers and Board Members of the Berger
Trust as a group beneficially owned less than 1% of the outstanding shares of
each Berger Fund.]
25
As of the Record Date, to the best of the knowledge of the Berger Trust, the
following persons owned of record or beneficially 5% or more of the outstanding
shares of the following Berger Funds:
<Table>
<Caption>
NAME AND ADDRESS FUND PERCENTAGE OWNERSHIP TYPE OF OWNERSHIP
---------------- ---- -------------------- -----------------
</Table>
OTHER BUSINESS
The Board of the Berger Trust knows of no other business to be brought
before the Meetings. However, if any other matters come before the Meetings, it
is the intention that proxies that do not contain specific restrictions to the
contrary will be voted on such matters in accordance with the judgment of the
persons named in the enclosed form of proxy.
SHAREHOLDER INQUIRIES
Contract owner inquiries may be addressed to the applicable
Participating Insurance Company or Qualified Plan Administrator.
SHAREHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING ARE
REQUESTED TO VOTE USING THE METHODS DESCRIBED ON THE ENCLOSED PROXY CARD OR IN
PERSON AT THE MEETING.
By Order of the Board of Trustees,
---------------------------------
Sue Vreeland
Secretary
26
EXHIBIT A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of this 10th day of December, 2002, by and among Janus Aspen Series, a Delaware
business trust, with its principal place of business at 100 Fillmore Street,
Denver, Colorado 80206-4923 (the "Acquiring Trust"), with respect to Janus Aspen
Growth Portfolio, Janus Aspen Growth and Income Portfolio and Janus Aspen
International Growth Portfolio, each a separate series of the Acquiring Trust
(each an "Acquiring Fund" and, collectively, the "Acquiring Funds"), and Berger
Institutional Products Trust, a Delaware statutory trust, with its principal
place of business at 210 University Boulevard, Suite 900, Denver, Colorado 80206
(the "Selling Trust"), with respect to Berger IPT - Growth Fund, Berger IPT -
Large Cap Growth Fund and Berger IPT - International Fund, each a separate
series of the Selling Trust (each a "Selling Fund" and, collectively, the
"Selling Funds"), and Janus Capital Management LLC ("Janus"), the investment
adviser to the Acquiring Funds (for purposes of paragraph 9.1 of the Agreement
only).
This Agreement is intended to be, and is adopted as, a plan of
reorganization within the meaning of Section 368(a)(1) of the United States
Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury
Regulations promulgated thereunder. The reorganization will consist of: (i) the
transfer of all of the assets of each Selling Fund in exchange for Institutional
Shares of beneficial interest, $.001 par value per share, of its corresponding
Acquiring Fund ("Acquiring Fund Shares") as set forth on Schedule A attached
hereto; (ii) the assumption by each Acquiring Fund of all of the liabilities of
each Selling Fund; and (iii) the distribution, after the Closing Date(s)
hereinafter referred to, of each Acquiring Fund Shares to the shareholders of
each Selling Fund and the termination, dissolution and complete liquidation of
each Selling Fund as provided herein, all upon the terms and conditions set
forth in this Agreement (each a "Reorganization").
WHEREAS, each Acquiring Fund and each Selling Fund is a separate series
of the Acquiring Trust and Selling Trust, respectively, and the Acquiring Trust
and the Selling Trust are open-end, registered management investment companies
and each Selling Fund owns securities that generally are assets of the character
in which its corresponding Acquiring Fund is permitted to invest;
WHEREAS, each Acquiring Fund is authorized to issue its shares of
beneficial interest;
WHEREAS, the Trustees of the Acquiring Trust have determined that the
Reorganization, with respect to each Acquiring Fund, is in the best interests of
such Acquiring Fund and that the interests of the existing shareholders of such
Acquiring Fund will not be diluted as a result of the Reorganization;
WHEREAS, the Trustees of the Selling Trust have determined that the
Reorganization, with respect to each Selling Fund, is in the best interests of
such Selling Fund and that the interests of the existing shareholders of such
Selling Fund will not be diluted as a result of the Reorganization;
NOW, THEREFORE, in consideration of the premises and of the covenants
and agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
A-1
ARTICLE I
TRANSFER OF ASSETS OF THE SELLING FUNDS IN EXCHANGE FOR ACQUIRING FUND
SHARES AND THE ASSUMPTION OF SELLING FUNDS' LIABILITIES AND LIQUIDATION
OF THE SELLING FUNDS
1.1 THE EXCHANGE. Subject to the terms and conditions contained herein
and on the basis of the representations and warranties contained herein, each
Selling Fund agrees to transfer all of its assets, as set forth in paragraph
1.2, to its corresponding Acquiring Fund as set forth on Schedule A. In
exchange, each Acquiring Fund agrees: (i) to deliver to its corresponding
Selling Fund the number of full and fractional Acquiring Fund Shares, determined
by dividing the value of the Selling Fund's assets net of any liabilities of the
Selling Fund, computed in the manner and as of the time and date set forth in
paragraph 2.1, by the net asset value of one Acquiring Fund Share, computed in
the manner as of the time and date set forth in paragraph 2.2; and (ii) to
assume all of the liabilities of the Selling Fund. Such transactions shall take
place at the closing (the "Closing") provided for in paragraph 3.1.
1.2 ASSETS TO BE ACQUIRED. The assets of each Selling Fund to be
acquired by its corresponding Acquiring Fund shall consist of all property,
including, without limitation, all cash, securities, commodities, interests in
futures and dividends or interest receivables, owned by the Selling Fund and any
deferred or prepaid expenses shown as an asset on the books of such Selling Fund
on its respective Closing Date.
Each Selling Fund has provided its corresponding Acquiring Fund with
its most recent audited financial statements, which contain a list of all of the
Selling Fund's assets as of the date of such statements. Each Selling Fund
hereby represents that, as of the date of the execution of this Agreement, there
have been no changes in its financial position as reflected in such financial
statements other than those occurring in the ordinary course of business in
connection with the purchase and sale of securities, the issuance and redemption
of Selling Fund shares and the payment of normal operating expenses, dividends
and capital gains distributions.
Each Selling Fund will, within a reasonable period of time before its
respective Closing Date, furnish each Acquiring Fund with a list of the Selling
Fund's portfolio securities and other investments. Each Acquiring Fund will,
within a reasonable time before its respective Closing Date, furnish its
corresponding Selling Fund with a list of the securities, if any, on the Selling
Fund's list referred to above that do not conform to the Acquiring Fund's
investment objectives, policies and restrictions. A Selling Fund, if requested
by its corresponding Acquiring Fund, will dispose of securities on the Acquiring
Fund's list before its Closing Date. In addition, if it is determined that the
portfolios of a Selling Fund and its Acquiring Fund, when aggregated, would
contain investments exceeding certain percentage limitations imposed upon the
Acquiring Fund with respect to such investments, the Selling Fund, if requested
by the Acquiring Fund, will dispose of a sufficient amount of such investments
as may be necessary to avoid violating such limitations as of its Closing Date.
Notwithstanding the foregoing, nothing herein will require a Selling Fund to
dispose of any investments or securities if, in the reasonable judgment of the
Selling Fund's Trustees or investment adviser, such disposition would adversely
affect the tax-free nature of the Reorganization for federal income tax purposes
or would otherwise not be in the best interests of the Selling Fund.
1.3 LIABILITIES TO BE ASSUMED. Each Selling Fund will endeavor to
discharge all of its known liabilities and obligations to the extent possible
before its respective Closing Date. Notwithstanding the foregoing, any
liabilities not so discharged shall be assumed by the Acquiring Fund, which
assumed liabilities shall include all of the Selling Fund's liabilities, debts,
obligations and duties of whatever kind or nature, whether absolute, accrued,
contingent or otherwise, whether or not arising in the
A-2
ordinary course of business, whether or not determinable at the Closing Date and
whether or not specifically referred to in this Agreement. Each Selling Fund's
liabilities specifically include obligations to the independent trustees of the
Selling Trust under any deferred compensation plan.
1.4 STATE FILINGS. Prior to each Closing Date, the Selling Trust shall
make any filings with the State of Delaware that may be required under the laws
of the State of Delaware, effective as of each respective Closing Date.
1.5 LIQUIDATION AND DISTRIBUTION. On or as soon after its Closing Date
as is conveniently practicable, but in no event later than 12 months after the
Closing Date (the "Liquidation Date"): (a) each Selling Fund will distribute in
complete liquidation of the Selling Fund, pro rata to its shareholders of
record, determined as of the close of business on the Valuation Date (as defined
in paragraph 2.1) (the "Selling Fund Shareholders"), all of the Acquiring Fund
Shares received by the Selling Fund pursuant to paragraph 1.1; and (b) the
Selling Fund will thereupon proceed to dissolve and terminate as set forth in
paragraph 1.9 below. Such distribution will be accomplished by the transfer of
Acquiring Fund Shares credited to the account of the Selling Fund on the books
of the Acquiring Fund to open accounts on the share records of the Acquiring
Fund in the name of the Selling Fund Shareholders and representing the
respective pro rata number of Acquiring Fund Shares due such shareholders. The
Acquiring Funds shall assume the share records received from the Selling Funds
are valid, current and accurate and that such transfers to shareholders are
valid, proper and correct. All issued and outstanding shares of the Selling Fund
will simultaneously be canceled on the books of the Selling Fund. The Acquiring
Fund shall not issue certificates representing Acquiring Fund Shares in
connection with such transfer.
1.6 OWNERSHIP OF SHARES. Ownership of Acquiring Fund Shares will be
shown on the books of each Acquiring Fund's transfer agent. Shares of each
Acquiring Fund will be issued simultaneously to its corresponding Selling Fund,
in an amount equal in value to the aggregate net asset value of each Selling
Fund's shares, to be distributed to Selling Fund Shareholders.
1.7 TRANSFER TAXES. Any transfer taxes payable upon the issuance of
Acquiring Fund Shares in a name other than the registered holder of the Selling
Fund shares on the books of the Selling Fund as of that time shall, as a
condition of such issuance and transfer, be paid by the person to whom such
Acquiring Fund Shares are to be issued and transferred.
1.8 REPORTING RESPONSIBILITY. Any reporting responsibility of each
Selling Fund, including, without limitation, the responsibility for filing of
regulatory reports, tax returns or other documents with the Securities and
Exchange Commission (the "Commission"), any state securities commission and any
federal, state or local tax authorities or any other relevant regulatory
authority, is and shall remain the responsibility of the Selling Fund.
1.9 TERMINATION AND DISSOLUTION. Each Selling Fund shall be terminated
and dissolved promptly following its respective Closing Date and the making of
all distributions pursuant to paragraph 1.5.
1.10 BOOKS AND RECORDS. All books and records of each Selling Fund,
including all books and records required to be maintained under the Investment
Company Act of 1940 (the "1940 Act") and the rules and regulations thereunder,
shall be available to the corresponding Acquiring Fund from and after its
respective Closing Date and shall be turned over to the Acquiring Fund as soon
as practicable following its respective Closing Date.
A-3
1.11 RELATIONSHIP OF TRANSACTIONS. Subject to the conditions set forth
in this Agreement, the failure of one of the Selling Funds to consummate the
transactions contemplated hereby shall not affect the consummation or validity
of the Reorganization with respect to any other Selling Fund, and the provisions
of this Agreement shall be construed to effect this intent, including, without
limitation, as the context requires, construing the terms "Acquiring Fund" and
"Selling Fund" as meaning only those series of the Acquiring Trust and the
Selling Trust, respectively, which are involved in the Reorganization as of the
Closing Date(s).
ARTICLE II
VALUATION
2.1 VALUATION OF ASSETS. The value of a Selling Fund's assets to be
acquired by its corresponding Acquiring Fund hereunder shall be the value of
such assets as of the close of regular trading on the New York Stock Exchange
("NYSE") on the business day immediately prior to each Closing Date (such time
and date being hereinafter called a "Valuation Date"), after the declaration and
payment of any dividends on that date, using the valuation procedures set forth
in the trust instrument of the Acquiring Trust and the Acquiring Fund's
then-current prospectus and statement of additional information or such other
valuation procedures as shall be mutually agreed upon by the parties.
2.2 VALUATION OF SHARES. The net asset value per share of Acquiring
Fund Shares shall be the net asset value per share computed on the Valuation
Date, using the valuation procedures set forth in the Acquiring Trust's trust
instrument and the Acquiring Fund's then-current prospectus and statement of
additional information or such other valuation procedures as shall be mutually
agreed upon by the parties.
2.3 SHARES TO BE ISSUED. The number of Acquiring Fund Shares to be
issued (including fractional shares, if any) in exchange for the corresponding
Selling Fund's assets shall be determined by dividing the value of the assets
with respect to shares of the Selling Fund determined in accordance with
paragraph 2.1 by the net asset value of an Acquiring Fund Share determined in
accordance with paragraph 2.2.
2.4 DETERMINATION OF VALUE. All computations of value shall be made by
or under the direction of each Fund's respective accounting agent, if
applicable, in accordance with its regular practice and the requirements of the
1940 Act.
ARTICLE III
CLOSINGS AND CLOSING DATES
3.1 CLOSING DATES. The Closing shall occur on [March 24, 2003], or such
other date(s) as the parties may agree to in writing (each a "Closing Date" and
collectively, the "Closing Dates"). Unless otherwise provided, all acts taking
place at the Closing(s) shall be deemed to take place as of immediately after
the close of regular trading on the Valuation Date. The Closing shall be held at
the offices of Vedder, Price, Kaufman & Kammholz, 222 North LaSalle Street,
Chicago, Illinois 60601, or at such other time and/or place as the parties may
agree.
3.2 CUSTODIAN'S CERTIFICATE. Each Selling Fund shall cause its
Custodian, State Street Bank and Trust Company (the "Custodian"), to deliver at
the Closing(s) a certificate of an authorized officer stating that: (a) each
Selling Fund's portfolio securities, cash and any other assets have been
delivered in proper form to its corresponding Acquiring Fund on the Closing
Date; and (b) all
A-4
necessary taxes including all applicable federal and state stock transfer
stamps, if any, have been paid, or provision for payment shall have been made,
in conjunction with the delivery of portfolio securities by the Selling Fund.
The Selling Fund's portfolio securities represented by a certificate or other
written instrument shall be presented by the Custodian for the Selling Fund to
the custodian for the Acquiring Fund for examination no later than five (5)
business days preceding the Closing Date and transferred and delivered by the
Selling Fund as of the Closing Date for the account of the Acquiring Fund, duly
endorsed in proper form for transfer in such condition as to constitute good
delivery thereof.
3.3 EFFECT OF SUSPENSION IN TRADING. In the event that, on the
Valuation Date, either: (a) the NYSE or another primary exchange on which the
portfolio securities of an Acquiring Fund or a Selling Fund are purchased or
sold shall be closed to trading or trading on such exchange shall be restricted;
or (b) trading or the reporting of trading on the NYSE or elsewhere shall be
disrupted so that accurate appraisal of the value of the net assets of an
Acquiring Fund or a Selling Fund is impracticable, the Valuation Date shall be
postponed until the first business day after the day when trading is fully
resumed and reporting is restored.
3.4 TRANSFER AGENT'S CERTIFICATE. Each Selling Fund shall cause its
transfer agent, DST Systems, Inc., to deliver at the Closing a certificate of an
authorized officer stating that its records contain the names and addresses of
Selling Fund Shareholders as of the applicable Closing Date, and the number and
percentage ownership of outstanding shares owned by each such shareholder
immediately prior to the Closing. Each Acquiring Fund shall issue and deliver or
cause Janus Services LLC, its transfer agent, to issue and deliver a
confirmation evidencing Acquiring Fund Shares to be credited on the Closing
Dates to the Secretary of the Selling Trust or provide evidence satisfactory to
the Selling Fund that such Acquiring Fund Shares have been credited to the
Selling Fund's account on the books of the Acquiring Fund. At the Closing(s),
each party shall deliver to the other such bills of sale, checks, assignments,
share certificates, receipts and other documents, if any, as such other party or
its counsel may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS OF THE SELLING FUNDS. The Selling Trust, on behalf
of each Selling Fund, represents and warrants to the Acquiring Trust, on behalf
of each corresponding Acquiring Fund, as follows:
(a) The Selling Fund is a legally designated, separate series
of a statutory trust that is duly organized, validly existing and in good
standing under laws of the State of Delaware.
(b) The Selling Trust is registered as an open-end management
investment company under the 1940 Act, and the Selling Trust's registration with
the Commission as an investment company under the 1940 Act is in full force and
effect.
(c) The current prospectus and statement of additional
information of the Selling Fund conform in all material respects to the
applicable requirements of the Securities Act of 1933 (the "1933 Act") and the
1940 Act and the rules and regulations thereunder and do not include any untrue
statement of a material fact or omit to state any material fact required to be
stated or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(d) The Selling Fund is not in violation of, and the
execution, delivery and performance of this Agreement (subject to shareholder
approval) will not result in the violation of, any
A-5
provision of the Selling Trust's trust instrument or bylaws or of any material
agreement, indenture, instrument, contract, lease or other undertaking to which
the Selling Fund is a party or by which it is bound.
(e) The Selling Fund has no material contracts or other
commitments (other than this Agreement) that will be terminated with liability
to it before its applicable Closing Date, except for liabilities, if any, to be
discharged or reflected in the Statement of Assets and Liabilities as provided
in paragraph 1.2 hereof.
(f) Except as otherwise disclosed in writing to and accepted
by the Acquiring Fund, no litigation, administrative proceeding or investigation
of or before any court or governmental body is presently pending or to its
knowledge threatened against the Selling Fund or any of its properties or assets
that, if adversely determined, would materially and adversely affect its
financial condition, the conduct of its business or the ability of the Selling
Fund to carry out the transactions contemplated by this Agreement. The Selling
Fund knows of no facts that might form the basis for the institution of such
proceedings and is not a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body that materially and
adversely affects its business or its ability to consummate the transactions
contemplated herein.
(g) The financial statements of the Selling Fund as of
December 31, 2001 and for the fiscal year then ended have been prepared in
accordance with generally accepted accounting principles and have been audited
by independent auditors, and such statements (copies of which have been
furnished to the Acquiring Funds) fairly reflect the financial condition of the
Selling Fund as of December 31, 2001, and there are no known contingent
liabilities of the Selling Fund as of such date that are not disclosed in such
statements.
(h) Since the date of the financial statements referred to in
paragraph (g) above, there have been no material adverse changes in the Selling
Fund's financial condition, assets, liabilities or business (other than changes
occurring in the ordinary course of business), or any incurrence by the Selling
Fund of indebtedness maturing more than one year from the date such indebtedness
was incurred, except as otherwise disclosed to and accepted by the Acquiring
Fund. For the purposes of this paragraph (h), a decline in the net asset value
of the Selling Fund shall not constitute a material adverse change.
(i) All federal and other tax returns and reports of the
Selling Fund required by law to be filed have been filed, and all federal and
other taxes shown due on such returns and reports have been paid, or provision
shall have been made for the payment thereof. To the best of the Selling Fund's
knowledge, no such return is currently under audit, and no assessment has been
asserted with respect to such returns.
(j) All issued and outstanding shares of the Selling Fund are
duly and validly issued and outstanding, fully paid and nonassessable by the
Selling Fund. All of the issued and outstanding shares of the Selling Fund will,
at the time of the Closing Date, be held by the persons and in the amounts set
forth in the records of the Selling Fund's transfer agent as provided in
paragraph 3.4. The Selling Fund has no outstanding options, warrants or other
rights to subscribe for or purchase any of the Selling Fund shares and has no
outstanding securities convertible into any of the Selling Fund shares.
(k) At the Closing Date, the Selling Fund will have good and
marketable title to the Selling Fund's assets to be transferred to the Acquiring
Fund pursuant to paragraph 1.2 and full right, power and authority to sell,
assign, transfer and deliver such assets hereunder, free of any lien or other
encumbrance, except those liens or encumbrances to which the Acquiring Fund has
received notice, and,
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upon delivery and payment for such assets and the filing of any documents that
may be required under Delaware law, the Acquiring Fund will acquire good and
marketable title, subject to no restrictions on the full transfer of such
assets, other than such restrictions as might arise under the 1933 Act and other
than as disclosed to and accepted by the Acquiring Fund.
(l) The execution, delivery and performance of this Agreement
have been duly authorized by all necessary action on the part of the Selling
Fund. Subject to approval by the Selling Fund Shareholders, this Agreement
constitutes a valid and binding obligation of the Selling Fund, enforceable in
accordance with its terms, subject as to enforcement to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights and to general equity principles.
(m) The information to be furnished by the Selling Fund for
use in no-action letters, applications for orders, registration statements,
proxy materials and other documents that may be necessary in connection with the
transactions contemplated herein shall be accurate and complete in all material
respects and shall comply in all material respects with federal securities and
other laws and regulations.
(n) From the effective date of the Registration Statement (as
defined in paragraph 5.8) through the time of the meeting of the Selling Fund
Shareholders and on each Closing Date, any written information furnished by the
Selling Trust with respect to the Selling Fund for use in the Proxy Materials
(as defined in paragraph 5.8) or any other materials provided in connection with
the Reorganization does not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated or
necessary to make the statements, in light of the circumstances under which such
statements were made, not misleading.
(o) The Selling Fund has elected to qualify and has qualified
as a "regulated investment company" under the Code (a "RIC") as of and since its
first taxable year; has been a RIC under the Code at all times since the end of
its first taxable year when it so qualified; and qualifies and will continue to
qualify as a RIC under the Code for its taxable year ending upon its
liquidation.
(p) No governmental consents, approvals, authorizations or
filings are required under the 1933 Act, the Securities Exchange Act of 1934
(the "1934 Act"), the 1940 Act or Delaware state law for the execution of this
Agreement by the Selling Trust, for itself and on behalf of each Selling Fund,
except for the effectiveness of the Registration Statement and the filing of any
documents that may be required under Delaware law and except for such other
consents, approvals, authorizations and filings as have been made or received
and such consents, approvals, authorizations and filings as may be required
subsequent to the Closing Date, it being understood, however, that this
Agreement and the transactions contemplated herein must be approved by the
shareholders of the Selling Fund as described in paragraph 5.2.
4.2 REPRESENTATIONS OF THE ACQUIRING FUNDS. The Acquiring Trust, on
behalf of each Acquiring Fund, represents and warrants to the Selling Trust, on
behalf of each Selling Fund, as follows:
(a) The Acquiring Fund is a legally designated, separate
series of a statutory trust that is duly organized, validly existing and in good
standing under the laws of the State of Delaware.
(b) The Acquiring Trust is registered as an open-end
management investment company under the 1940 Act, and the Acquiring Trust's
registration with the Commission as an investment company under the 1940 Act is
in full force and effect.
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(c) The current prospectus and statement of additional
information of the Acquiring Fund conform in all material respects to the
applicable requirements of the 1933 Act and the 1940 Act and the rules and
regulations thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated or necessary to
make such statements therein, in light of the circumstances under which they
were made, not misleading.
(d) The Acquiring Fund is not in violation of, and the
execution, delivery and performance of this Agreement will not result in a
violation of, the Acquiring Trust's trust instrument or bylaws or of any
material agreement, indenture, instrument, contract, lease or other undertaking
to which the Acquiring Fund is a party or by which it is bound.
(e) Except as otherwise disclosed in writing to and accepted
by the Selling Fund, no litigation, administrative proceeding or investigation
of or before any court or governmental body is presently pending or to its
knowledge threatened against the Acquiring Fund or any of its properties or
assets which, if adversely determined, would materially and adversely affect its
financial condition, the conduct of its business or the ability of the Acquiring
Fund to carry out the transactions contemplated by this Agreement. The Acquiring
Fund knows of no facts that might form the basis for the institution of such
proceedings and it is not a party to or subject to the provisions of any order,
decree or judgment of any court or governmental body that materially and
adversely affects its business or its ability to consummate the transaction
contemplated herein.
(f) The financial statements included in the Registration
Statement of the Acquiring Fund as of December 31, 2001 and for the fiscal year
then ended have been prepared in accordance with generally accepted accounting
principles and have been audited by independent auditors, and such statements
(copies of which have been furnished to the Selling Funds) fairly reflect the
financial condition of the Acquiring Fund as of such dates, and there are no
known contingent liabilities of the Acquiring Fund as of such date that are not
disclosed in such statements.
(g) Since the date of the financial statements referred to in
paragraph (f) above, there have been no material adverse changes in the
Acquiring Fund's financial condition, assets, liabilities or business (other
than changes occurring in the ordinary course of business), or any incurrence by
the Acquiring Fund of indebtedness maturing more than one year from the date
such indebtedness was incurred, except as otherwise disclosed to and accepted by
the Selling Fund. For the purposes of this paragraph (g), a decline in the net
asset value of the Acquiring Fund shall not constitute a material adverse
change.
(h) All federal and other tax returns and reports of the
Acquiring Fund required by law to be filed have been filed. All federal and
other taxes shown due on such returns and reports have been paid or provision
shall have been made for their payment. To the best of the Acquiring Fund's
knowledge, no such return is currently under audit, and no assessment has been
asserted with respect to such returns.
(i) All issued and outstanding Acquiring Fund Shares are duly
and validly issued and outstanding, fully paid and nonassessable by the
Acquiring Fund. The Acquiring Fund has no outstanding options, warrants or other
rights to subscribe for or purchase any Acquiring Fund Shares, and there are no
outstanding securities convertible into any Acquiring Fund Shares.
(j) The execution, delivery and performance of this Agreement
have been duly authorized by all necessary action on the part of the Acquiring
Fund, and this Agreement constitutes a valid and binding obligation of the
Acquiring Fund, enforceable in accordance with its terms, subject as to
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enforcement to bankruptcy, insolvency, reorganization, moratorium and other laws
relating to or affecting creditors' rights and to general equity principles.
(k) Acquiring Fund Shares to be issued and delivered to the
Selling Fund for the account of the Selling Fund Shareholders pursuant to the
terms of this Agreement will, at the Closing Date, have been duly authorized.
When so issued and delivered, such shares will be duly and validly issued
Acquiring Fund Shares and will be fully paid and nonassessable.
(l) The information to be furnished by the Acquiring Fund for
use in no-action letters, applications for orders, registration statements,
proxy materials and other documents that may be necessary in connection with the
transactions contemplated herein shall be accurate and complete in all material
respects and shall comply in all material respects with federal securities and
other laws and regulations.
(m) From the effective date of the Registration Statement (as
defined in paragraph 5.8) through the time of the meeting of the Selling Fund
Shareholders and on each Closing Date, any written information furnished by the
Acquiring Trust with respect to the Acquiring Fund for use in the Proxy
Materials (as defined in paragraph 5.8), or any other materials provided in
connection with the Reorganization, does not and will not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated or necessary to make the statements, in light of the circumstances under
which such statements were made, not misleading.
(n) The Acquiring Fund has elected to qualify and has
qualified as a RIC under the Code as of and since its first taxable year, has
been a RIC under the Code at all times since the end of its first taxable year
when it so qualified, and qualifies and shall continue to qualify as a RIC under
the Code.
(o) No governmental consents, approvals, authorizations or
filings are required under the 1933 Act, the 1934 Act, the 1940 Act or Delaware
law for the execution of this Agreement by the Acquiring Trust, for itself and
on behalf of the Acquiring Fund, or the performance of the Agreement by the
Acquiring Trust, for itself and on behalf of the Acquiring Fund, except for the
effectiveness of the Registration Statement and the filing of any documents that
may be required under Delaware law and such other consents, approvals,
authorizations and filings as have been made or received and except for such
consents, approvals, authorizations and filings as may be required subsequent to
the Closing Date.
(p) The Acquiring Fund agrees to use all reasonable efforts to
obtain the approvals and authorizations required by the 1933 Act, the 1940 Act
and any state blue sky or securities laws as it may deem appropriate in order to
continue its operations after the Closing Date.
ARTICLE V
COVENANTS OF THE ACQUIRING FUND AND THE SELLING FUND
5.1 OPERATION IN ORDINARY COURSE. Subject to paragraph 8.5, each
Acquiring Fund and Selling Fund will operate its business in the ordinary course
between the date of this Agreement and the respective Closing Date, it being
understood that such ordinary course of business will include customary
dividends and shareholder purchases and redemptions. No party shall take any
action that would, or reasonably would be expected to, result in any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any material respect.
5.2 APPROVAL OF SHAREHOLDERS. The Selling Trust will call a special
meeting of Selling Fund Shareholders to consider and act upon this Agreement (or
transactions contemplated hereby)
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and to take all other appropriate action necessary to obtain approval of the
transactions contemplated herein.
5.3 INVESTMENT REPRESENTATION. Each Selling Fund covenants that the
Acquiring Fund Shares to be issued pursuant to this Agreement are not being
acquired for the purpose of making any distribution, other than in connection
with the Reorganization and in accordance with the terms of this Agreement.
5.4 ACCESS TO BOOKS AND RECORDS. Upon reasonable notice, the Acquiring
Trust's officers and agents shall have reasonable access to the Selling Fund's
books and records necessary to maintain current knowledge of the Selling Fund
and to ensure that the representations and warranties made by the Selling Fund
are accurate.
5.5 ADDITIONAL INFORMATION. Each Selling Fund will assist its
corresponding Acquiring Fund in obtaining such information as the Acquiring Fund
reasonably requests concerning the beneficial ownership of the Selling Fund's
shares.
5.6 FURTHER ACTION. Subject to the provisions of this Agreement, each
Acquiring Fund and its corresponding Selling Fund will take or cause to be taken
all action and do or cause to be done all things reasonably necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, including any actions required to be taken after the applicable
Closing Date. In particular, each Selling Fund covenants that it will, as and
when reasonably requested by the Acquiring Fund, execute and deliver or cause to
be executed and delivered all such assignments and other instruments and will
take or cause to be taken such further action as the Acquiring Fund may
reasonably deem necessary or desirable in order to vest in and confirm the
Acquiring Fund's title to and possession of all the assets and otherwise to
carry out the intent and purpose of this Agreement.
5.7 STATEMENT OF EARNINGS AND PROFITS. As promptly as practicable, but
in any case within sixty (60) days after the applicable Closing Date, each
Selling Fund shall furnish its corresponding Acquiring Fund, in such form as is
reasonably satisfactory to the Acquiring Fund, a statement of the earnings and
profits of the Selling Fund for federal income tax purposes that will be carried
over by the Acquiring Fund as a result of Section 381 of the Code, and which
will be certified by the Selling Trust's Treasurer.
5.8 PREPARATION OF REGISTRATION STATEMENT AND PROXY STATEMENT. The
Acquiring Trust will prepare and file with the Commission a registration
statement on Form N-14 (the "Registration Statement") relating to the Acquiring
Fund Shares to be issued to shareholders of the Selling Funds. The Registration
Statement shall include a proxy statement of the Selling Funds and a prospectus
of each Acquiring Fund relating to the transactions contemplated by this
Agreement. The Registration Statement shall be in compliance with the 1933 Act,
the 1934 Act and the 1940 Act, as applicable. Each party will provide the other
party with the materials and information necessary to prepare the proxy
statement of the Selling Funds contained in the Registration Statement (the
"Proxy Materials"), for inclusion therein, in connection with the meeting(s) of
the Selling Fund Shareholders to consider the approval of this Agreement and the
transactions contemplated herein.
5.9 LIABILITY INSURANCE. For the period beginning at the Closing Date
and ending not less than five years thereafter, the Acquiring Trust, its
successors or assigns shall provide, or cause to be provided, reasonable
liability insurance covering the actions of the former independent trustees of
the Selling Trust for the period they served as such. The Acquiring Trust shall
ensure that the members of the newly created advisory board are covered persons
under the current liability insurance policies of the
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Acquiring Trust for the duration of the advisory board and shall use
commercially reasonable efforts to maintain such coverage for three years
thereafter.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLING FUND
The obligations of the Selling Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by its
corresponding Acquiring Fund of all the obligations to be performed by the
Acquiring Fund pursuant to this Agreement on or before the applicable Closing
Date and, in addition, subject to the following conditions:
6.1 All representations, covenants and warranties of the Acquiring Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date, with the same force and effect
as if made on and as of the Closing Date. Each Acquiring Fund shall have
delivered to its corresponding Selling Fund a certificate executed in the
Acquiring Fund's name by the Acquiring Trust's President or Vice President and
its Treasurer or Assistant Treasurer, in form and substance satisfactory to the
Selling Fund and dated as of the Closing Date, to such effect and as to such
other matters as the Selling Fund shall reasonably request.
6.2 The Selling Fund shall have received on the Closing Date an opinion
from Vedder, Price, Kaufman & Kammholz, dated as of the Closing Date, in a form
reasonably satisfactory to the Selling Fund, covering the following points:
(a) The Acquiring Trust is a statutory trust validly existing
under the laws of the State of Delaware.
(b) To such counsel's knowledge, and without any independent
investigation, the Acquiring Trust is registered as an open-end management
investment company under the 1940 Act and the Acquiring Trust's registration
with the Commission as an investment company under the 1940 Act is in full force
and effect.
(c) This Agreement has been duly authorized, executed and
delivered by the Acquiring Trust on behalf of each Acquiring Fund and, assuming
due authorization, execution and delivery of this Agreement by the Selling
Trust, is a valid and binding obligation of the Acquiring Trust on behalf of
each Acquiring Fund enforceable against each Acquiring Fund in accordance with
its terms, subject as to enforcement to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws relating to or affecting
creditors' rights generally and to general equity principles.
(d) Assuming that the Acquiring Fund Shares have been issued
in accordance with the terms of this Agreement, Acquiring Fund Shares to be
issued and delivered to each Selling Fund on behalf of the Selling Fund
Shareholders, as provided by this Agreement, are duly authorized and upon such
delivery will be legally issued and outstanding and fully paid and
nonassessable, and no shareholder of an Acquiring Fund has any preemptive rights
with respect to Acquiring Fund Shares.
(e) The Registration Statement has been declared effective by
the Commission, and to such counsel's knowledge no stop order under the 1933 Act
pertaining thereto has been issued, and to the knowledge of such counsel, and
without any independent investigation, all regulatory consents, authorizations,
approvals or filings required to be obtained or made by the Selling Funds under
the federal laws of the United States or the laws of the State of Delaware for
the exchange of the Selling Funds' assets for Acquiring Fund Shares pursuant to
this Agreement have been obtained or made.
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(f) The execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated herein will not, result in a
violation of the Acquiring Trust's trust instrument or bylaws.
(g) To such counsel's knowledge, and without any independent
investigation, the Acquiring Trust is not subject to any litigation or other
proceedings that might have a materially adverse effect on the operations of the
Acquiring Funds.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by
each corresponding Selling Fund of all the obligations to be performed by the
Selling Fund pursuant to this Agreement on or before the applicable Closing Date
and, in addition, shall be subject to the following conditions:
7.1 All representations, covenants and warranties of a Selling Fund
contained in this Agreement shall be true and correct in all material respects
as of the date hereof and as of the Closing Date, with the same force and effect
as if made on and as of such Closing Date. Each Selling Fund shall have
delivered to its corresponding Acquiring Funds on such Closing Date a
certificate executed in the Selling Fund's name by the Selling Trust's President
or Vice President and the Treasurer or Assistant Treasurer, in form and
substance satisfactory to the Acquiring Fund and dated as of such Closing Date,
to such effect and as to such other matters as the Acquiring Fund shall
reasonably request.
7.2 Each Selling Fund shall have delivered to its corresponding
Acquiring Fund a statement of the Selling Fund's assets and liabilities,
together with a list of the Selling Fund's portfolio securities showing the tax
costs of such securities by lot and the holding periods of such securities, as
of the Closing Date, certified by the Treasurer of the Selling Trust.
7.3 The Acquiring Fund shall have received on the applicable Closing
Date an opinion of Vedder, Price, Kaufman & Kammholz, dated as of such Closing
Date, in a form reasonably satisfactory to the Acquiring Fund, covering the
following points:
(a) The Selling Trust is a statutory trust validly existing
under the laws of the State of Delaware.
(b) To such counsel's knowledge, and without any independent
investigation, the Selling Trust is registered as an investment company under
the 1940 Act and such registration with the Commission as an investment company
under the 1940 Act is in full force and effect.
(c) This Agreement has been duly authorized, executed and
delivered by the Selling Trust on behalf of each Selling Fund and, assuming due
authorization, execution and delivery of this Agreement by the Acquiring Trust
on behalf of each Acquiring Fund, is a valid and binding obligation of the
Selling Trust on behalf of each Selling Fund enforceable against the Selling
Fund in accordance with its terms, subject as to enforcement to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other laws
relating to or affecting creditors' rights generally and to general equity
principles.
(d) To the knowledge of such counsel, and without any
independent investigation, all regulatory consents, authorizations, approvals or
filings required to be obtained or made by the Acquiring
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Funds under the federal laws of the United States or the laws of the State of
Delaware for the exchange of the Selling Funds' assets for Acquiring Fund Shares
pursuant to this Agreement have been obtained or made.
(e) The execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated hereby will not, result in a
violation of the Selling Trust's trust instrument (assuming shareholder approval
has been obtained) or bylaws.
(f) To such counsel's knowledge, and without any independent
investigation, the Selling Trust is not subject to any litigation or other
proceedings that might have a materially adverse effect on the operations of the
Selling Funds.
ARTICLE VIII
FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH
ACQUIRING FUND AND SELLING FUND
If any of the conditions set forth below do not exist on or before the
applicable Closing Date with respect to each Selling Fund or its corresponding
Acquiring Fund, the other party to this Agreement shall, at its option, not be
required to consummate the transactions contemplated by this Agreement:
8.1 This Agreement and the transactions contemplated herein, with
respect to each Selling Fund, shall have been approved by the requisite vote of
the holders of the outstanding shares of each Selling Fund in accordance with
the provisions of the Selling Trust's trust instrument and bylaws, applicable
Delaware law and the 1940 Act. Certified copies of the resolutions evidencing
such approval shall have been delivered to the corresponding Acquiring Fund.
Notwithstanding anything herein to the contrary, neither an Acquiring Fund nor a
Selling Fund may waive the conditions set forth in this paragraph 8.1.
8.2 On each Closing Date, the Commission shall not have issued an
unfavorable report under Section 25(b) of the 1940 Act, or instituted any
proceeding seeking to enjoin the consummation of the transactions contemplated
by this Agreement under Section 25(c) of the 1940 Act. Furthermore, no action,
suit or other proceeding shall be threatened or pending before any court or
governmental agency in which it is sought to restrain or prohibit, or obtain
damages or other relief in connection with, this Agreement or the transactions
contemplated herein.
8.3 All required consents of other parties and all other consents,
orders and permits of federal, state and local regulatory authorities (including
those of the Commission and of state securities authorities, including any
necessary "no-action" positions and exemptive orders from such federal
authorities) to permit consummation of the transactions contemplated herein
shall have been obtained, except where failure to obtain any such consent, order
or permit would not involve a risk of a material adverse effect on the assets or
properties of an Acquiring Fund or a Selling Fund, provided that either party
hereto may waive any such conditions for itself.
8.4 The Registration Statement shall have become effective under the
1933 Act, and no stop orders suspending the effectiveness thereof shall have
been issued. To the best knowledge of the parties to this Agreement, no
investigation or proceeding for that purpose shall have been instituted or be
pending, threatened or contemplated under the 1933 Act.
8.5 Each Selling Fund shall have declared and paid a dividend or
dividends that, together with all previous such dividends, shall have the effect
of distributing to its shareholders all of the Selling
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Fund's investment company taxable income for all taxable periods ending on or
before the applicable Closing Date (computed without regard to any deduction for
dividends paid), if any, plus the excess of its interest income, if any,
excludable from gross income under Section 103(a) of the Code over its deduction
disallowed under Sections 265 and 171(a)(2) of the Code for all taxable years
ending on or before such Closing Date and all of its net capital gains realized
in all taxable periods ending on or before such Closing Date (after reduction
for any capital loss carryforward).
8.6 The parties shall have received an opinion of Vedder, Price,
Kaufman & Kammholz addressed to each Acquiring Fund and Selling Fund
substantially to the effect that, based on certain facts, assumptions and
representations of the parties, for federal income tax purposes:
(a) the transfer of all of the Selling Fund's assets in
exchange for Acquiring Fund Shares and the assumption by the Acquiring Fund of
all of the liabilities of the Selling Fund (followed by the distribution of
Acquiring Fund Shares to the Selling Fund Shareholders in dissolution and
liquidation of the Selling Fund) will constitute a "reorganization" within the
meaning of Section 368(a)(1) of the Code and the Acquiring Fund and the Selling
Fund will each be a "party to a reorganization" within the meaning of Section
368(b) of the Code;
(b) no gain or loss will be recognized by the Acquiring Fund
upon the receipt of the assets of the Selling Fund solely in exchange for
Acquiring Fund Shares and the assumption by the Acquiring Fund of all of the
liabilities of the Selling Fund;
(c) no gain or loss will be recognized by the Selling Fund
upon the transfer of the Selling Fund's assets to the Acquiring Fund solely in
exchange for Acquiring Fund Shares and the assumption by the Acquiring Fund of
all of the liabilities of the Selling Fund or upon the distribution (whether
actual or constructive) of Acquiring Fund Shares to Selling Fund Shareholders in
exchange for such shareholders' shares of the Selling Fund;
(d) no gain or loss will be recognized by the Selling Fund
Shareholders upon the exchange of their Selling Fund shares for Acquiring Fund
Shares in the Reorganization;
(e) the aggregate tax basis of Acquiring Fund Shares received
by each Selling Fund Shareholder pursuant to the Reorganization will be the same
as the aggregate tax basis of the Selling Fund shares exchanged therefor by such
shareholder. The holding period of Acquiring Fund Shares to be received by each
Selling Fund Shareholder will include the period during which the Selling Fund
shares exchanged therefor were held by such shareholder, provided the Selling
Fund shares are held as capital assets at the time of the Reorganization; and
(f) the tax basis of the Selling Fund's assets acquired by the
Acquiring Fund will be the same as the tax basis of such assets to the Selling
Fund immediately before the Reorganization. The holding period of the assets of
the Selling Fund in the hands of the Acquiring Fund will include the period
during which those assets were held by the Selling Fund.
Such opinion shall be based on customary assumptions and such
representations as Vedder, Price, Kaufman & Kammholz may reasonably request, and
each Selling Fund and Acquiring Fund will cooperate to make and certify the
accuracy of such representations. Notwithstanding anything herein to the
contrary, neither an Acquiring Fund nor a Selling Fund may waive the condition
set forth in this paragraph 8.6.
8.7 The Acquiring Trust's Trustees shall have approved the
establishment of an advisory board comprised of at least four of the former
independent Trustees of the Selling Trust.
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ARTICLE IX
EXPENSES
9.1 Janus will pay reasonable expenses associated with the Acquiring
Funds' and the Selling Funds' participation in the Reorganization, including but
not limited to: (a) expenses associated with the preparation and filing of the
Proxy Materials; (b) postage; (c) printing; (d) accounting fees; (e) legal fees
incurred by each Fund (including fees of counsel to, and independent consultants
retained by, the independent trustees); (f) solicitation costs of the
transaction; (g) fees payable to the independent Trustees for participation in
any special meetings related to the Reorganizations; and (h) other related
administrative or operational costs, including the cost (if any) of continuation
of directors' and officers'/errors and omissions insurance for the independent
trustees of the Selling Trust and obtaining directors' and officers'/errors and
omissions insurance for the advisory board contemplated by paragraph 8.7 hereof.
Brokerage costs payable by any Selling Fund in connection with the realignment
of its portfolio pursuant to paragraph 1.2 hereof are payable by the applicable
Selling Fund.
9.2 The Acquiring Trust and the Selling Trust, on behalf of the
Acquiring Funds and the Selling Funds, respectively, represent and warrant that
they have no obligations to pay any brokers' or finders' fees in connection with
the transactions provided for herein.
ARTICLE X
ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
10.1 The Acquiring Trust, on behalf of each Acquiring Fund, and the
Selling Trust, on behalf of each Selling Fund, agree that neither party has made
to the other party any representation, warranty and/or covenant not set forth
herein and that this Agreement constitutes the entire agreement between the
parties.
10.2 Except as specified in the next sentence set forth in this
paragraph 10.2, the representations, warranties and covenants contained in this
Agreement or in any document delivered pursuant to or in connection with this
Agreement shall not survive the consummation of the transactions contemplated
hereunder. The covenants to be performed after each Closing Date and the
obligations of each of the Acquiring Funds in paragraph 5.6 shall continue in
effect beyond the consummation of the transactions contemplated hereunder.
ARTICLE XI
TERMINATION
11.1 This Agreement may be terminated by the mutual agreement of the
Acquiring Trust and the Selling Trust. In addition, either Acquiring Trust or
the Selling Trust may at its option terminate this Agreement with respect to a
Reorganization at or before the applicable Closing Date due to:
(a) a breach by the other of any representation, warranty or
agreement contained herein to be performed at or before the Closing Date, if not
cured within 30 days; or
(b) a condition herein expressed to be precedent to the
obligations of the terminating party that has not been met if it reasonably
appears that it will not or cannot be met.
A-15
11.2 In the event of any such termination, in the absence of willful
default, there shall be no liability for damages on the part of either an
Acquiring Fund, a Selling Fund, the Acquiring Trust or the Selling Trust, or
their respective Trustees or officers, to the other party or its Trustees or
officers. In the event of willful default, all remedies at law or in equity of
the party adversely affected shall survive.
ARTICLE XII
AMENDMENTS
12.1 This Agreement may be amended, modified, or supplemented in such
manner as may be mutually agreed upon in writing by the officers of the
Acquiring Trust and the Selling Trust as specifically authorized by their
respective Board of Trustees; provided, however, that, following the meeting of
the Selling Fund Shareholders called by a Selling Fund pursuant to paragraph 5.2
of this Agreement, no such amendment may have the effect of changing the
provisions for determining the number of Acquiring Fund Shares to be issued to
the Selling Fund Shareholders under this Agreement to the detriment of such
Shareholders without their further approval.
ARTICLE XIII
HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT;
LIMITATION OF LIABILITY
13.1 The article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
13.2 This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
13.3 This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware.
13.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but, except as provided in
this paragraph, no assignment or transfer hereof or of any rights or obligations
hereunder shall be made by any party without the written consent of the other
party. Nothing herein expressed or implied is intended or shall be construed to
confer upon or give any person, firm or corporation, other than the parties
hereto and their respective successors and assigns, any rights or remedies under
or by reason of this Agreement.
13.5 It is expressly agreed that the obligations of each Acquiring Fund
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Acquiring Trust personally, but shall bind
only the trust property of the Acquiring Fund, as provided in the trust
instrument of the Acquiring Trust. Moreover, no series of the Acquiring Trust
other than the Acquiring Fund shall be responsible for the obligations of the
Trust hereunder, and all persons shall look only to the assets of the applicable
Acquiring Fund to satisfy the obligations of the Acquiring Fund hereunder. The
execution and delivery of this Agreement have been authorized by the Trustees of
the Acquiring Trust on behalf of each Acquiring Fund and signed by authorized
officers of the Acquiring Trust, acting as such. Neither the authorization by
such Trustees nor the execution and delivery by such officers shall be deemed to
have been made by any of them individually or to impose any liability on any of
them personally, but shall bind only the trust property of each Acquiring Fund
as provided in the trust instrument of the Acquiring Trust.
A-16
13.6 It is expressly agreed that the obligations of each Selling Fund
hereunder shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Selling Trust personally, but shall bind
only the trust property of the Selling Fund, as provided in the trust instrument
of the Selling Trust. Moreover, no series of the Selling Trust other than the
Selling Funds shall be responsible for the obligations of the Selling Trust
hereunder, and all persons shall look only to the assets of the applicable
Selling Fund to satisfy the obligations of the Selling Fund hereunder. The
execution and delivery of this Agreement have been authorized by the Trustees of
the Selling Trust on behalf of each Selling Fund and signed by authorized
officers of the Selling Trust, acting as such. Neither the authorization by such
Trustees nor the execution and delivery by such officers shall be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of each Selling Fund as
provided in the trust instrument of the Selling Trust.
ARTICLE XIV
NOTICES
14.1 Any notice, report, statement or demand required or permitted by
any provisions of this Agreement shall be in writing and shall be deemed duly
given if delivered by hand (including by FedEx or similar express courier) or
transmitted by facsimile or three days after being mailed by prepaid registered
or certified mail, return receipt requested, addressed to the Selling Trust, 210
University Boulevard, Denver, Colorado 80206, Attention: General Counsel, or to
the Acquiring Trust, 100 Fillmore Street, Denver, Colorado 80206, Attention:
General Counsel, or to any other address that the Selling Trust or the Acquiring
Trust shall have last designated by notice to the other party.
A-17
IN WITNESS WHEREOF, the parties have duly executed this Agreement, all
as of the date first written above.
BERGER INSTITUTIONAL PRODUCTS TRUST
By:
--------------------------------
Name:
Title: President
ACKNOWLEDGED:
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
JANUS ASPEN SERIES
By:
--------------------------------
Name:
Title: President
ACKNOWLEDGED:
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
The Undersigned is a party to
this Agreement for the purposes
of paragraph 9.1 only:
JANUS CAPITAL MANAGEMENT LLC
By:
--------------------------------
Name:
Title:
ACKNOWLEDGED:
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
A-18
SCHEDULE A TO THE AGREEMENT AND PLAN OF REORGANIZATION
SUMMARY OF THE REORGANIZATION
(shareholders of each Selling Fund will receive shares
of the Acquiring Fund as designated below)
<Table>
<Caption>
BERGER INSTITUTIONAL PRODUCTS TRUST JANUS ASPEN SERIES
(SELLING FUND) (ACQUIRING FUND)
----------------------------------- ------------------
Berger IPT -- Growth Fund JAS Growth Portfolio
-- Institutional Shares
Berger IPT -- Large Cap Growth Fund JAS Growth and Income Portfolio
-- Institutional Shares
Berger IPT -- International Fund JAS International Growth Portfolio
-- Institutional Shares
</Table>
A-1
EXHIBIT B
FORM OF INTERIM ADVISORY AGREEMENT
INTERIM
INVESTMENT ADVISORY AGREEMENT
BERGER ____________________________ FUND [, INC.]
[(A SERIES OF BERGER ____________________ TRUST)]
This INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this 16th
day of December, 2002, between JANUS CAPITAL MANAGEMENT LLC, a Delaware limited
liability corporation ("Janus Capital"), and BERGER _______________________
TRUST/BERGER ____________________ FUND, INC., a Delaware statutory trust/a
Maryland corporation (the "Trust/Fund") [, with respect to the BERGER
_____________________ FUND, a series of the Trust (the "Fund")].
RECITALS
A. The Trust/Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
and has registered its shares for public offering under the Securities Act of
1933, as amended (the "1933 Act").
[B. The Trust is authorized to create separate series of shares, each
with its own separate investment portfolio, one of such series created by the
Trust being the Fund.]
C. Janus Capital is engaged in the business of rendering investment
advisory services and is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act").
D. The Trust/Fund and Janus Capital deem it mutually advantageous that
Janus Capital should assist the Trustees/Directors and officers of the
Trust/Fund in the management of the securities portfolio of the Fund.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Appointment. The Trust/Fund hereby appoints Janus Capital as
investment adviser and manager with respect to the Fund for the period and on
the terms set forth in this Agreement. Janus Capital hereby accepts such
appointment and agrees to render the services herein set forth, for the
compensation herein provided.
2. Investment Advisory Functions. In its capacity as investment adviser
to the Fund, Janus Capital shall have the following duties and responsibilities:
(a) To manage the investment operations of the Fund and the
composition of its investment portfolio, and to determine without prior
consultation with the Trust/Fund, what securities and other assets of the Fund
will be acquired, held, disposed of or loaned, in conformity with the investment
objective, policies and restrictions and the other statements concerning the
Fund in the [Trust's trust
B-1
instrument, as amended from time to time (the "Trust Instrument")] [Fund's
articles of incorporation, as amended from time to time (the "Charter")], bylaws
and registration statements under the 1940 Act and the 1933 Act, the 1940 Act
and the Advisers Act, the rules and regulations thereunder, and all other
applicable federal and state laws and regulations, and the provisions of the
Internal Revenue Code of 1986, as amended, applicable to the Fund as a regulated
investment company [or required to maintain compliance with any diversification
provisions applicable to insurance company separate accounts or qualified plans
investing in the Trust];
(b) To cause its officers to attend meetings and furnish oral
or written reports, as the Trust/Fund may reasonably require, in order to keep
the Trustees/Directors and appropriate officers of the Trust/Fund fully informed
as to the condition of the investment portfolio of the Fund, the investment
decisions of Janus Capital, and the investment considerations which have given
rise to those decisions;
(c) To [supervise] [place orders for] the purchase and sale of
securities for investments of the Fund and for other related transactions as
directed by the appropriate officers of the Trust/Fund; to give instructions to
the custodian (including any subcustodian) of the Fund as to deliveries of
securities to and from such custodian and receipt and payments of cash for the
account of the Fund, and advise the Trust/Fund on the same day such instructions
are given; and to submit such reports relating to the valuation of the Fund's
assets and to otherwise assist in the calculation of the net asset value of
shares of the Fund as may reasonably be requested;
(d) To maintain all books and records required to be
maintained by Janus Capital pursuant to the 1940 Act and the rules and
regulations promulgated thereunder, as the same may be amended from time to
time, with respect to transactions on behalf of the Fund, and shall furnish the
Trustees/Directors with such periodic and special reports as the
Trustees/Directors reasonably may request. Janus Capital agrees that all records
which it maintains for the Fund or the Trust/Fund are the property of the
Trust/Fund, agrees to permit the reasonable inspection thereof by the Trust/Fund
or its designees and agrees to preserve for the periods prescribed under the
1940 Act any records which it maintains for the Trust/Fund and which are
required to be maintained under the 1940 Act, and further agrees to surrender
promptly to the Trust/Fund or its designees any records which it maintains for
the Trust/Fund upon request by the Trust/Fund; and
(e) At such times as shall be reasonably requested by the
Trustees/Directors, to provide the Trustees/Directors with economic, operational
and investment data and reports, including without limitation all information
and materials reasonably requested by or requested to be delivered to the
Trustees/Directors of the Trust/Fund pursuant to Section 15(c) of the 1940 Act,
and make available to the Trustees/Directors any economic, statistical and
investment services normally available to similar investment company clients of
Janus Capital.
3. Further Obligations. In all matters relating to the performance of
this Agreement, Janus Capital shall act in conformity with the [Trust's Trust
Instrument] [Fund's Charter], bylaws and currently effective registration
statements under the 1940 Act and the 1933 Act and any amendments or supplements
thereto (the "Registration Statements") and with the written policies,
procedures and guidelines of the Fund, and written instructions and directions
of the Trustees/Directors of the Trust/Fund and shall comply with the
requirements of the 1940 Act, the Advisers Act, the rules thereunder, and all
other applicable federal and state laws and regulations. The Trust/Fund agrees
to provide Janus Capital with copies of the [Trust's Trust Instrument] [Fund's
Charter], bylaws, Registration Statements, written policies, procedures and
guidelines, and written instructions and directions of the Trustees/Directors,
and any amendments or supplements to any of them at, or, if practicable, before
the time such materials become effective. Janus Capital shall maintain errors
and omissions insurance in an amount at least equal to that disclosed to the
Trustees/Directors in connection with their approval of this Agreement.
B-2
4. Obligations of Trust/Fund. The Trust/Fund shall have the following
obligations under this Agreement:
(a) To keep Janus Capital continuously and fully informed as
to the composition of the investment portfolio of the Fund and the nature of all
of the Fund's assets and liabilities from time to time;
(b) To furnish Janus Capital with a certified copy of any
financial statement or report prepared for the Fund by certified or independent
public accountants and with copies of any financial statements or reports made
to the Fund's shareholders or to any governmental body or securities exchange;
(c) To furnish Janus Capital with any further materials or
information which Janus Capital may reasonably request to enable it to perform
its function under this Agreement; and
(d) To compensate Janus Capital for its services in accordance
with the provisions of Section 5 hereof.
5. Compensation. (a) The Trust/Fund shall pay to Janus Capital for its
services under this Agreement a fee, payable in United States dollars, at an
annual rate of [insert fee rate from current contract] of the average daily net
asset value of the Fund. This fee shall be computed and accrued daily and
payable monthly as of the last day of each month during which or part of which
this Agreement is in effect. For the month during which this Agreement becomes
effective and the month during which it terminates, however, there shall be an
appropriate proration of the fee payable for such month based on the number of
calendar days of such month during which this Agreement is effective.
(b) The compensation earned by Janus Capital under this
Agreement shall be held in an interest-bearing escrow account with the
Trust's/Fund's custodian or a bank. If a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Fund approve an investment
advisory agreement with Janus Capital within 150 days of the day and year first
written above, the amount in the escrow account (including interest thereon)
shall be paid to Janus Capital. If a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Fund do not approve an investment
advisory agreement with Janus Capital within 150 days of the day and year first
written above, Janus Capital shall be paid, out of the escrow account, the
lesser of (i) any costs incurred by Janus Capital in performing this Agreement
(plus interest earned on that amount while in escrow) or (ii) the total amount
in the escrow account (plus interest earned).
6. Expenses.
(a) Expenses Paid by the Trust/Fund. The Trust/Fund assumes
and shall pay all expenses incidental to its operations and business not
specifically assumed or agreed to be paid by Janus Capital hereunder or
otherwise, including, but not limited to, any compensation, fees or
reimbursements which the Trust/Fund pays to its Trustees/Directors who are not
interested persons of Berger Associates or Janus Capital; compensation of the
Fund's custodian, transfer agent, registrar and dividend disbursing agent and
other service providers; legal, accounting, audit and printing expenses;
administrative, clerical, recordkeeping and bookkeeping expenses; brokerage
commissions and all other expenses in connection with execution of portfolio
transactions (including any appropriate commissions paid to Janus Capital or its
affiliates for effecting exchange listed, over-the-counter or other securities
transactions); interest; all federal, state and local taxes (including stamp,
excise, income and franchise taxes); costs of stock certificates and expenses of
delivering such certificates to the purchasers thereof; [expenses of local
representation in Delaware;] expenses of shareholders' meetings and of
preparing, printing and
B-3
distributing proxy statements, notices, and reports to shareholders; expenses of
preparing and filing reports and tax returns with federal and state regulatory
authorities; all expenses incurred in complying with all federal and state laws
and the laws of any foreign country applicable to the issue, offer or sale of
shares of the Fund, including, but not limited to, all costs involved in
preparing, printing and mailing prospectuses and statements of additional
information to shareholders of the Fund; and all fees, dues and other expenses
incurred by the Trust/Fund in connection with the membership of the Trust/Fund
in any trade association or other investment company organization. To the extent
that Janus Capital shall perform any of the above described administrative and
clerical functions, including transfer agency, registry, dividend disbursing,
recordkeeping, bookkeeping, accounting and blue sky monitoring and registration
functions, and the preparation of reports and returns, the Trust/Fund shall pay
to Janus Capital compensation for, or reimburse Janus Capital for its expenses
incurred in connection with, such services as Janus Capital and the Trust/Fund
shall agree from time to time, any other provision of this Agreement
notwithstanding.
(b) Expenses Paid by Janus Capital. Janus Capital shall pay
all its own costs and expenses incurred in fulfilling its obligations under this
Agreement. In addition to such costs and expenses, Janus Capital shall incur and
pay the following expenses relating to the Fund's operations:
(i) Reasonable compensation, fees and related expenses of the
Trust's/Fund's officers and Trustees/Directors, except for such
Trustees/Directors who are not interested persons of Berger Associates
or Janus Capital; and
(ii) Rental of offices of the Trust/Fund.
7. Brokerage Commissions. For purposes of this Agreement, brokerage
commissions paid by the Fund upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Fund and shall be
paid by the Fund. Absent instructions from the Trust/Fund to the contrary, Janus
Capital is authorized and directed to place Fund portfolio transactions only
with brokers and dealers who render satisfactory service in the execution of
orders at the most favorable prices and at reasonable commission rates,
provided, however, that Janus Capital may pay a broker an amount of commission
for effecting a securities transaction in excess of the amount of commission
another broker would have charged for effecting that transaction if Janus
Capital determines in good faith that such amount of commission was reasonable
in relation to the value of the brokerage and research services provided by such
broker viewed in terms of either that particular transaction or the overall
responsibilities of Janus Capital. Janus Capital is also authorized to consider
sales of Fund shares/variable insurance contracts that permit allocation of
contract values to the Fund as a factor in selecting broker-dealers to execute
Fund portfolio transactions. In placing portfolio business with such
broker-dealers, Janus Capital shall seek the best execution of each transaction.
Subject to the terms of this Agreement and the applicable requirements and
provisions of the law, including the 1940 Act and the Securities Exchange Act of
1934, as amended, and in the event that Janus Capital or an affiliate is
registered as a broker-dealer, Janus Capital may select a broker with which it
or any of its affiliates or the Fund is affiliated. Janus Capital or such
affiliated broker may effect or execute Fund portfolio transactions, whether on
a securities exchange or in the over-the-counter market, and receive separate
compensation from the Fund therefor. Notwithstanding the foregoing, the
Trust/Fund shall retain the right to direct the placement of all portfolio
transactions, and the Trustees/Directors of the Trust/Fund may establish
policies or guidelines to be followed by Janus Capital in placing portfolio
transactions for the Trust/Fund pursuant to the foregoing provisions. Janus
Capital shall report on the placement of portfolio transactions in the prior
fiscal quarter at each quarterly meeting of such Trustees/Directors. To the
extent consistent with applicable law, purchase or sell orders for the Fund may
be aggregated with simultaneous purchase or sell orders for other clients of
Janus Capital. Whenever Janus Capital simultaneously places orders to purchase
or sell the same security on behalf of the Fund and one or more other clients of
Janus Capital, such orders will be
B-4
allocated as to price and amount among all such clients in a manner reasonably
believed by Janus Capital to be fair and equitable to each client. The
Trust/Fund recognizes that in some cases, this procedure may adversely affect
the results obtained for the Fund.
8. Effectiveness, Duration and Termination. This Agreement, unless
sooner terminated as provided herein, shall become effective as of the day and
year first written above, and shall remain in effect until the earlier of: (i)
150 days from the date hereof or (ii) a majority of the outstanding voting
securities (as defined in the 1940 Act) of the Fund approve an investment
advisory agreement with Janus Capital. This Agreement may also be terminated at
any time, without the payment of any penalty, upon ten (10) days' written notice
to Janus Capital, by the affirmative vote of a majority of the
Trustees/Directors of the Trust/Fund or by the affirmative vote of the
outstanding securities (as defined in the 1940 Act) of the Fund. This Agreement
will automatically and immediately terminate in the event of its assignment, as
such term is defined in the 1940 Act.
9. Amendments. This Agreement may be amended by the parties only if
such amendment is specifically approved (i) by a majority of the
Trustees/Directors, including a majority of the Trustees/Directors who are not
interested persons of the Fund or Berger Associates or Janus Capital and, (ii)
if required by applicable law, by the affirmative vote of a majority of the
outstanding voting securities of the Fund.
10. Allocation of Expenses. The Trustees/Directors shall determine the
basis for making an appropriate allocation of the Trust's/Company's expenses
(other than those directly attributable to the Fund) between the Fund [and any
other series of the Trust and between the Fund] and other investment companies
managed by Janus Capital or its affiliates.
11. [Limitation on Personal Liability. NOTICE IS HEREBY GIVEN that the
Trust is a statutory trust organized under the Delaware Statutory Trust Act
pursuant to a Certificate of Trust filed in the office of the Secretary of State
of the State of Delaware. All parties to this Agreement acknowledge and agree
that the Trust is a series trust and all debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to a
particular series shall be enforceable against the assets held with respect to
such series only, and not against the assets of the Trust generally or against
the assets held with respect to any other series and further that no Trustee,
officer or holder of shares of beneficial interest of the Trust shall be
personally liable for any of the foregoing.]
12. Limitation of Liability of Janus Capital. Janus Capital shall not
be liable for any error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission taken with respect to the Fund,
except for willful misfeasance, bad faith or gross negligence in the performance
of its duties, or by reason of reckless disregard of its obligations and duties
hereunder and except to the extent otherwise provided by law. As used in this
Section __, "Janus Capital" shall include any affiliate of Janus Capital
performing services for the Trust/Fund contemplated hereunder and directors,
officers and employees of Janus Capital and such affiliates.
13. Activities of Janus Capital. The services of Janus Capital to the
Trust/Fund hereunder are not to be deemed to be exclusive, and Janus Capital and
its affiliates are free to render services to other parties, so long as its
services under this Agreement are not materially adversely affected or otherwise
impaired thereby. Nothing in this Agreement shall limit or restrict the right of
any director, officer or employee of Janus Capital to engage in any other
business or to devote his or her time and attention in part to the management or
other aspects of any other business, whether of a similar nature or a dissimilar
nature. It is understood that Trustees/Directors, officers and shareholders of
the Trust/Fund are or may become interested in Janus Capital as directors,
officers and shareholders of Janus Capital, that directors, officers, employees
and shareholders of Janus Capital are or may become similarly interested in the
B-5
Trust/Fund, and that Janus Capital may become interested in the Trust/Fund as a
shareholder or otherwise.
14. Certain Definitions. The terms "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons" when used
herein, shall have the respective meanings specified in the 1940 Act, as now in
effect or hereafter amended, and the rules and regulations thereunder, subject
to such orders, exemptions and interpretations as may be issued by the
Securities and Exchange Commission under said Act and as may be then in effect.
Where the effect of a requirement of the federal securities laws reflected in
any provision of this Agreement is made less restrictive by a rule, regulation,
order, interpretation or other authority of the Securities and Exchange
Commission, whether of special or general application, such provision shall be
deemed to incorporate the effect of such rule, regulation, order, interpretation
or other authority.
15. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Colorado (without giving effect to the conflicts of
laws principles thereof) and the 1940 Act. To the extent that the applicable
laws of the State of Colorado conflict with the applicable provisions of the
1940 Act, the latter shall control.
16. Miscellaneous. The headings in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions thereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Investment Advisory Agreement as of the date and year
first above written.
JANUS CAPITAL MANAGEMENT LLC
By:
-------------------------------
BERGER _______________ TRUST, [with
respect to the series known as the
Berger _____________________ Fund]/
BERGER _________________ FUND, INC.
By:
-------------------------------
President
B-6
EXHIBIT C
MANAGEMENT'S DISCUSSION OF THE JANUS FUNDS' PERFORMANCE
JANUS ASPEN GROWTH PORTFOLIO
PORTFOLIO MANAGER BLAINE ROLLINS
For the 12-month period ended December 31, 2001, Janus Aspen Growth
Portfolio lost 24.73% for its Institutional Shares and declined 24.90% for its
Service Shares while its benchmark, the Standard & Poor's 500 Index, dropped
11.88%.(1)
Unquestionably, 2001 was a disappointment, and I'm not happy to report
the Portfolio's failure to meet your expectations and mine. It has been a
challenging 12 months as the economy slowed, came to a near halt following the
terrorist attacks of September 11, and then started to show signs of life in the
fourth quarter. While some of our positions suffered as a result of poor
execution in a difficult economy, others were slow to recover after a wave of
reactionary selling. Nevertheless, our investment strategy remains unchanged,
and we are committed to companies that our research indicates have the best
business models and superior management teams.
In the year's closing months, the stock market rallied in anticipation
of a 2002 recovery, but the economy was still under pressure. Higher
unemployment levels weighed on consumers, and a reluctance to commit to capital
expenditures tempered corporate outlooks. Meanwhile, the ongoing conflict in
Afghanistan cast an air of uncertainty over the nation. With the Federal
Reserve's prime lending rate at a 40-year low of 1.75%, however, we believe
conditions are ideal for the economy to improve at some point.
As for the Portfolio, perhaps the best evidence of our commitment to
our holdings is the Portfolio's low turnover. Many of the companies we own are
dominant players in their respective industries and have not only navigated
through the tough economic times, but also improved their market position at the
expense of weaker competitors. Eventually, these actions will pay dividends as
the economy returns to a robust state. Many of our companies have certainly been
tested, and I am very satisfied with the response of their management teams.
One such example is Bank of New York, a longtime holding that has
struggled in 2001. In addition to its focus on trust management and back-office
services for the securities industry, the company has emerged as the source
foreign firms turn to when seeking to raise dollar-denominated capital. A
worldwide falloff in trading activity hurt its bottom line through the second
half of the year, but its recurring-fee and high-margin businesses continue to
perform well.
Southwest Airlines also posted losses, primarily due to the aftershocks
of the events of September 11. However, in the new, more challenging air travel
market, we believe the operators with the best strategy and lowest cost will
thrive. Not only does Southwest offer low airfares, which have become
increasingly attractive to business travelers, but it is also in a position to
expand into markets where airports are apprehensive about major carriers pulling
out to cut costs. Although volumes may moderate over the next 12 months, I
believe the company is poised for solid growth.
Elsewhere, we were extremely disappointed in energy trader Enron, which
declared bankruptcy in the fourth quarter. It was a great company with a great
franchise that clearly chose the wrong method of financing its growth.
Fortunately, we took significant profits when the stock's price was peaking, so
our exposure was limited as Enron headed toward bankruptcy.
C-1
Meanwhile, as the year came to a close, some of our holdings joined in
the market rally and reversed losses, including electronic circuit manufacturer
Maxim Integrated Products. The chip sector tends to lead the technology industry
out of slumps, but our interest in Maxim extends beyond processors for personal
computers. Maxim produces circuitry for a variety of markets, including
communications, industrial and data processing, each of which requires
specialized functions and therefore is not as susceptible to mass-market price
pressures.
Looking ahead, some signs of optimism have emerged as investors are
considering the next few quarters and have concluded that the worst is most
likely behind us. However, it is impossible to know how a recovery will evolve.
Lacking the ability to predict the market's direction, we will remain focused on
finding leading companies run by top-notch managers who are focused on
allocating capital efficiently and increasing long-term shareholder value. We
strongly believe this strategy will once again deliver the results you expect.
Thank you for your continued investment in Janus Aspen Growth
Portfolio.
<Table>
<Caption>
PORTFOLIO ASSET MIX
(% OF NET ASSETS) DECEMBER 31, 2001 DECEMBER 31, 2000
-------------------- ----------------- -----------------
Equities ..................... 96.6% 93.6%
Foreign ................... 9.7% 8.2%
Europe .................... 2.6% 4.8%
Top 10 Equities .............. 38.8% 37.9%
Number of Stocks ............. 102 88
Cash and Cash Equivalents .... 3.4% 6.4%
</Table>
<Table>
AVERAGE ANNUAL TOTAL RETURN
For the Periods Ended December 31, 2001
- ----------------------------------------------------------
Institutional Shares (Inception Date 9/13/93)
1 Year (24.73)%
5 Year 9.05%
From Inception 11.83%
- ----------------------------------------------------------
S&P 500 Index
1 Year (11.88)%
5 Year 10.70%
From Inception Date of Institutional Shares 13.70%
- ----------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year (24.90)%
5 Year 8.75
From Portfolio Inception 11.49%
- ----------------------------------------------------------
</Table>
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
In recent years, returns have sustained significant gains and losses due to
market volatility in the technology sector.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
Standard & Poor's is a corporation that rates stocks and corporate and municipal
bonds according to risk profiles. The S&P 500 is an index of 500 major,
large-cap US corporations. The Portfolio may differ significantly from the
securities held in the index. The index is not available for direct investment;
therefore its performance does not reflect the expenses associated with the
active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
PERFORMANCE OVERVIEW
Average Annual Total Return
for the periods ended December 31, 2001
One Year (24.73)%
Five Year 9.05%
Since 9/13/93* 11.83
JANUS ASPEN GROWTH PORTFOLIO
- -- INSTITUTIONAL SHARES -- $25,294
S&P 500 Index
- -- $29,032
[GRAPH]
* The Portfolio's inception date.
Source -- Lipper, Inc. 2001
See "Explanations of Charts and Tables."
- ---------
(1) All returns include reinvested dividends and capital gains.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
C-2
JANUS ASPEN GROWTH AND INCOME PORTFOLIO
PORTFOLIO MANAGER DAVID CORKINS
Janus Aspen Growth and Income Portfolio declined 13.37% for its
Institutional Shares and 13.58% for its Service Shares for the fiscal year ended
December 31, 2001, while its benchmark, the S&P 500 Index, fell 11.88%.(1) As of
December 31, 2001, the Portfolio placed in the top quartile of its peer group,
ranking 11 out of 148 large-cap growth funds for the one-year period as tracked
by Lipper, Inc., a leading mutual fund rating company.(2)
The past year has been challenging for investors, as markets were
roiled by an economic downturn in the United States, a rash of corporate
earnings disappointments and the ongoing correction in technology valuations.
Compounding these pressures were the tragic events of September 11, which left
investors in shock and cast a shadow of uncertainty over markets worldwide.
Responding to this environment, the Federal Reserve reduced interest rates 11
times, taking the federal funds rate to its lowest level in more than four
decades. These rate cuts helped rejuvenate consumer confidence and raise hopes
for an improved economic outlook in 2002.
We are disappointed that we must report a loss to our shareholders.
Nonetheless, we believe that our more defensive posture helped shield our
investors from the worst of the volatility. As we look ahead to position the
Portfolio for a potential economic rebound, we have made changes incrementally,
relying on disciplined analysis rather than swift reaction to market swings. For
instance, as interest rates continued to decline in the second half of the year,
we took gains on a number of our longer-term, fixed-income holdings. Given the
prospects for an improved economy, we felt that the bond market offered fewer
marginal opportunities. Consequently, we redeployed assets to take advantage of
reduced valuations in the stock market.
On the equity side, we maintained a diversified portfolio to ensure
that no single position or industry could have a disproportionate effect on
performance. At the same time, we continued to rely on a core of long-time
holdings that have earned our confidence through their execution and
profitability. These are blue-chip companies with proven management teams and
established market positions.
One standout was global financial services powerhouse Citigroup. With
its diverse product base and global reach, Citigroup is positioned for continued
growth as it taps underserved markets for credit cards, insurance and
underwriting. In August, Citigroup completed its purchase of Mexico's Grupo
Financiero Banamex-Accival, or Banacci, one of the leading commercial banks in
Mexico. This acquisition will help it leverage its technology and marketing
prowess to capitalize on Banacci's huge market share.
Another stock that provided us with stability was PepsiCo, parent of
the Pepsi Cola, Frito-Lay and Tropicana brands. The company continues to reap
synergies in the distribution of its many products. Moreover, its recent
acquisition of Quaker Oats, including the powerful Gatorade brand, offers the
opportunity to further boost incremental margins. Meanwhile, Anheuser-Busch, the
world's largest brewer, benefited from its leading brand name and dominant
market share, which helped it sustain price increases and double-digit earnings
growth even in a lackluster economy.
Detracting from our results was disappointing performance by American
International Group, a multi-line insurance company, which sold off sharply in
the third quarter after suffering roughly $800 million in losses stemming from
the terrorist attacks. Despite this setback, the insurance company's solid
capitalization, broad and profitable product lines and high credit rating
continue to win our confidence.
C-3
Additionally, several of our energy positions, including Exxon-Mobil,
declined on concerns that oil prices would continue to sag due to weaker global
demand and the failure by oil-producing nations to coordinate production
cutbacks. Even so, we felt that the drop in Exxon's stock was overstated. With
its strong business platform and ample cash flow, the company has already proven
its ability to weather economic and oil-demand cycles. Furthermore, we believe
that the stock will continue to benefit from the synergies created by Exxon's
acquisition of Mobil, a merger that strengthens Exxon's already-powerful
leverage with suppliers and customers.
Going forward, we remain cautiously optimistic on prospects for a
recovery in 2002, as interest rate cuts, increased government spending and lower
oil prices take hold. At the same time, our concerns over lingering
uncertainties will lead us to maintain a relatively conservative approach that
focuses on a diverse group of companies that have proven their worth time and
again. We believe this is the best way to balance near-term risk with
longer-term opportunity.
Thank you for investing in Janus Aspen Growth and Income Portfolio.
<Table>
<Caption>
PORTFOLIO ASSET MIX
(% OF NET ASSETS) DECEMBER 31, 2001 DECEMBER 31, 2000
-------------------- ----------------- -----------------
Equities ...................... 84.3% 76.2%
Top 10 Equities ............... 27.2% 27.2%
Number of Stocks .............. 74 79
Fixed Income Securities ....... 6.9% 8.8%
Cash and Cash Equivalents ..... 8.8% 15.0%
</Table>
<Table>
AVERAGE ANNUAL TOTAL RETURN
For the Periods Ended December 31, 2001
- ----------------------------------------------------------
Institutional Shares (Inception Date 5/1/98)
1 Year (13.37)%
From Inception 12.72%
- ----------------------------------------------------------
S&P 500 Index
1 Year (11.88)%
From Inception of Institutional Shares 2.20%
- ----------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year (13.58)%
From Portfolio Inception 12.44%
- ----------------------------------------------------------
</Table>
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
Standard & Poor's is a corporation that rates stocks and corporate and municipal
bonds according to risk profiles. The S&P 500 is an index of 500 major,
large-cap US corporations. The Portfolio may differ significantly from the
securities held in the index. The index is not available for direct investment;
therefore its performance does not reflect the expenses associated with the
active management of an actual portfolio.
These returns do not reflect the changes and expenses of any particular
insurance product or qualified plan.
PERFORMANCE OVERVIEW
Average Annual Total Return
for the periods ended December 31, 2001
One Year (13.37)%
Since 5/1/98,* 12.72%
JANUS ASPEN GROWTH AND INCOME PORTFOLIO
- -- INSTITUTIONAL SHARES -- $15,514
S&P 500 Index
- -- $10,832
[GRAPH]
* The Portfolio's inception date.
Source -- Lipper, Inc. 2001.
See "Explanations of Charts and Tables."
- ---------
(1) All returns include reinvested dividends and capital gains.
(2) Lipper, Inc. is a nationally recognized organization that ranks the
performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical and are based on
total return with capital gains and dividends reinvested.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
C-4
JANUS ASPEN INTERNATIONAL GROWTH PORTFOLIO
PORTFOLIO MANAGERS HELEN YOUNG HAYES
BRENT LYNN
Janus Aspen International Growth Portfolio's Institutional Shares fell
23.23% for the 12-month period ended December 31, 2001, while the Portfolio's
Service Shares declined 23.43%. This compares to the 21.44% loss posted by its
benchmark, the Morgan Stanley Capital International EAFE Index.(1)
The Portfolio's weak performance came as a rapid slowdown in economic
growth worldwide set the tone for the year. In November of 2000, political
uncertainty created by the controversy surrounding the U.S. presidential
election catalyzed a sudden and severe drop in capital spending by companies in
the newly deregulated telecom industry. This sharp drop in spending impacted a
wide range of technology companies, and, by the first quarter of 2001, virtually
all of corporate America was slashing spending and growing cautious. Before
long, that weakness had spread overseas, and by the second quarter, virtually
all major economies in Europe showed signs of a significant slowdown in growth.
The story was much the same in Asia, where many of the region's developing
economies suffered from a sharp fall-off in demand from the U.S., and while
Japanese exporters benefited from a decline in the yen, the Japanese domestic
economy remained in a severe slump. Latin American companies, with their export
ties to the U.S., experienced similar retrenchment. Economic uncertainty reached
a climax with the September 11 World Trade Center tragedy, and central banks
moved decisively in the autumn to lower interest rates and provide the markets
with some much needed liquidity.
Stocks reacted by falling nearly across the board. Virtually all major
European markets finished the year with losses, while Japan's Nikkei 225 Index
traded at or near lows not seen in 17 years. Though investors eyed a recovery in
the fourth quarter and bid many stock prices up, especially in the technology
sector, the NASDAQ Composite Index lost roughly 20% of its value during the
period.
Throughout most of the year, we responded to this weakness by taking a
more defensive stance than we have in the past, although in hindsight we would
have liked to respond more rapidly in the first quarter. In addition to
maintaining a substantial cash position, we sold stocks we believed were at risk
for further earnings disappointments while adding companies we believe are
capable of performing well in a slow- or zero-growth environment, including
several healthcare and consumer products businesses. After September 11, we took
advantage of the considerable volatility and deployed some of our cash to invest
in select companies whose stocks we believe overreacted.
Not surprisingly, healthcare and consumer products stocks were our
strong performers, given the uncertain economic environment. Stocks that we
added to the Portfolio included diverse companies like Reckitt Benckiser, Diageo
and Smith & Nephew. A global household products company, Reckitt Benckiser, is
experiencing faster top-line growth than the industry due to its product
innovation pipeline and mix of business. The company still has significant
opportunities to expand its margins, and we believe its high cash-generation is
undervalued by the market. With regard to Diageo, recent acquisitions and
divestments have enabled the company to focus solely on its global leadership
position in spirits. New marketing efforts lead us to believe there is
significant potential for Diageo to restructure its distribution and to use its
strong cash-generation to repurchase shares. Medical device company Smith &
Nephew has also focused its operations. The company specializes in orthopedic
implants, trauma, arthroscopy, wound management, and rehabilitation and
concentrates primarily on fast-growing market segments that cater to an aging
demographic.
Another strong performer, albeit volatile during the period, was
Porsche. For much of the year, the deteriorating global economic environment
seemed to distract the market from numerous positive
C-5
developments taking place at the company, including booming demand for its newly
updated and extremely profitable 911 models and the late-2002 launch of its new
SUV. During the fourth quarter, however, Porsche released extremely impressive
results for its fiscal year, redirecting the market's attention away from the
weak economy to that of the positive company-specific events and causing the
stock to gain significantly.
Meanwhile, our exposure to wireless worked against us. Late this year,
leading Japanese wireless provider NTT DoCoMo scaled back high investor
expectations for the October 1 launch of its "third generation" wireless data
service, the first of its kind in the world. In the same period, global
mobile-phone giant Vodafone consolidated its presence in the Japanese market,
aggressively gaining share from market leader DoCoMo. These two catalysts, along
with Japan's weakened economy, combined to drive DoCoMo's shares to levels not
seen since the company's public offering in October 1998.
In closing, a significant amount of political and economic uncertainty
has kept global markets under pressure. Nonetheless, central bankers around the
world have acted in concert to inject massive amounts of liquidity in an effort
to stave off worldwide recession, and more signs of improvement are being
detected by certain businesses. While the exact timing of a recovery cannot be
predicted, we will continue to maintain a well-diversified portfolio made up of
companies that can weather the market's ongoing choppiness. That, together with
the fact that more than a year of difficult market performance has left many
valuations at compelling levels, allows us to look ahead to the coming year with
a growing sense of optimism.
Thank you for your continued investment in Janus Aspen International
Growth Portfolio.
<Table>
<Caption>
PORTFOLIO ASSET MIX
(% OF NET ASSETS) DECEMBER 31, 2001 DECEMBER 31, 2000
-------------------- ----------------- -----------------
Equities ..................... 92.0% 82.2%
Foreign ................... 90.2% 79.2%
Top 10 Equities .............. 23.2% 27.4%
Number of Stocks ............. 118 101
Cash and Cash Equivalents .... 8.0% 17.8%
</Table>
- ---------
(1) All returns include reinvested net dividends. Net dividends reinvested
are the dividends that remain to be reinvested after foreign tax
obligations have been met. Such obligations vary from country to
country.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
C-6
<Table>
AVERAGE ANNUAL TOTAL RETURN
For the Periods Ended December 31, 2001
- ----------------------------------------------------------
Institutional Shares (Inception Date 5/2/94)
1 Year (23.23)%
5 Year 10.32%
From Inception 13.47%
- ----------------------------------------------------------
Morgan Stanley Capital International EAFE* Index
1 Year (21.44)%
5 Year 0.89%
From Inception Date of Institutional Shares 2.76%
- ----------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year (23.43)%
5 Year 9.78%
From Portfolio Inception 13.47%
- ----------------------------------------------------------
</Table>
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
In recent years, returns have sustained significant gains and losses due to
market volatility in the technology sector.
Foreign investing involves special risks such as currency fluctuations and
political uncertainty.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
The Morgan Stanley Capital International EAFE* Index is defined as an
international index measuring market performance of 21 countries in Europe,
Australasia, and the Far East. It's divided into 8 economic sectors and 38
industry groups; managed by Morgan Stanley Capital International. The NASDAQ
Composite Stock Index (The National Association of Securities Dealers Automated
Quotation System) is defined as a nationwide computerized quotation system for
over 5,500 over-the-counter stocks. The index is compiled of more than 4,800
stocks that are traded via the system. The Nikkei Stock Average is a price
weighted index of the 225 leading stocks traded on the Tokyo Stock Exchange. It
is Japan's equivalent of the Dow Jones Stock Average. The Portfolio may differ
significantly from the securities held in the indices. The indices are not
available for direct investment; therefore their performance does not reflect
the expenses associated with the active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
All returns include reinvested net dividends. Net dividends reinvested are the
dividends that remain to be reinvested after foreign tax obligations have been
met. Such obligations vary from country to country.
PERFORMANCE OVERVIEW
Average Annual Total Return
for the periods ended December 31, 2001
One Year, (23.23)%
Five Year, 10.32%
Since 5/2/94*, 13.47%
JANUS ASPEN INTERNATIONAL GROWTH PORTFOLIO
- -- INSTITUTIONAL SHARES -- $26,349
Morgan Stanley Capital
International EAFE*
Index -- $12,318
[GRAPH]
* The Portfolio's inception date.
Source -- Lipper, Inc. 2001.
See "Explanations of Charts and Tables."
C-7
EXHIBIT D
MANAGEMENT'S DISCUSSION OF THE BERGER FUNDS' PERFORMANCE
BERGER IPT-GROWTH FUND
PORTFOLIO MANAGER COMMENTARY JAY W. TRACEY, CFA
MARKET CONDITIONS
The past year was one of the most difficult investment periods on
record, especially for growth stock investors. Growth stocks underperformed the
market in general and value stocks in particular for two main reasons. First,
the economy slowed suddenly. Although this affected the earnings growth of most
companies, the impact fell harder on companies that had been posting superior
growth. Second, valuations accorded to companies with superior growth had
reached much higher-than-average levels by March of 2000, reflecting their
higher growth rates. Those premiums shrank with the companies' slowing revenue
and earnings growth. In general, the combination of declining growth rates and
lower valuations caused growth stock prices to drop more than the market.
FUND PERFORMANCE
Berger IPT-Growth Fund (the "Fund") declined in value by 32.51% for the
year ended December 31, 2001, compared with a 19.63% decline in the Russell 3000
Growth Index(1) and an 11.88% decline in the S&P 500 Index.(2)
Despite a good fourth-quarter rebound, the technology sector was a
significant source of underperformance in 2001. As a result of relatively high
valuations at the beginning of the year, as well as slowing growth rates over
the course of the year, most technology stocks experienced a very tough year.
Communications technology stocks were among the hardest hit this period as
carriers and corporate customers severely cut capital spending on communications
equipment. The Fund's holdings in such stocks as CIENA Corp., Nortel Networks
Corp., Corning, Inc., JDS Uniphase Corp. and ONI Systems Corp. were sold during
the year, but not before having a negative impact on the Fund's performance.
There were a few bright spots within the technology sector, including
Concurrent Computer Corp., which is benefiting from increasing acceptance of its
video-on-demand systems by cable TV companies. We initiated a new position in
customer relationship management (CRM) software-maker Peoplesoft, Inc. that
positively contributed to the Fund's performance. The Fund's position in Texas
Instruments, Inc. was also a positive contributor as a result of the improved
outlook for the company's wireless communications products in the fourth
quarter.
In general, healthcare companies were positive contributors to the
Fund's performance this period. Health sciences stocks Amgen, Inc., Celgene
Corp. and Sepracor, Inc. were strong enough in the fourth quarter to have a
positive impact for the year. Hospital management company Tenet Healthcare
Corp., which was added in the third quarter, also made positive contributions to
the Fund's performance. Despite above-average relative sales and earnings
growth, pharmaceutical stocks posted mixed results in 2001. American Home
Products Corp. made a positive contribution, while Pfizer, Inc. had a slightly
negative impact on Fund performance.
The consumer sector was also mixed. Restaurant stocks, including
Brinker International, Inc. and P.F. Chang's China Bistro, Inc., added to the
Fund's performance, while broadcast companies such as Clear Channel
Communications, Inc. suffered from a weak advertising environment. Retail stocks
were
D-1
among the stock market's best performers, and the Fund benefited from its
holdings in Best Buy Co., Inc., Bed Bath & Beyond, Inc., and Abercrombie & Fitch
Co.
The Fund's financial holdings posted mixed results as well. Investors
Financial Services Corp., Capital One Financial Corp. and American International
Group, Inc. were modestly positive performers; AmeriCredit Corp. and Washington
Mutual, Inc. were underperformers. Lending institutions have benefited from a
positively sloped yield curve; however, with a slower economy, the
"creditworthiness" of their loan portfolios has deteriorated to some extent.
We began the year overweighted in energy companies, which contributed
positively to the Fund's performance in the first quarter. However, as oil and
gas prices and business fundamentals deteriorated in the second quarter, we
significantly reduced the Fund's energy weighting. In general, the Fund's energy
holdings contributed negatively to performance. Independent power producers
Constellation Energy Group, Inc. and Mirant Corp. also fell victim to the
economic slowdown and were sold.
OUTLOOK
We believe we have addressed the issues that led to the Fund's
underperformance this past year and are looking forward to 2002. In our opinion,
the Fund is better balanced, not only with respect to sector weightings, but
also with regard to economic sensitivity. Technology and energy weightings were
reduced, while less economically sensitive healthcare and consumer sector
weightings were increased. We believe the outlook for the economy has improved
in the last few months as inventories have been worked down and consumer
confidence has improved. Fiscal and monetary policy have also become very
stimulative, in our opinion. The stock market has suffered two down years that
have been particularly hard on growth stocks. We are optimistic that 2002 holds
brighter prospects for the stock market in general and for growth stocks in
particular.
D-2
PERFORMANCE OVERVIEW
================================================================================
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2001
One Year (32.51)%
Five Year 1.89%
Life of Fund (5/1/96) 2.36%
Berger IPT-Growth Fund
Growth of $10,000
[GRAPH]
Berger IPT-Growth Fund $11,412
Russell 3000 Growth Index $16,213
S&P 500 Index $19,103
Past performance is no guarantee of future results. Investment returns and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The Fund's change in value is compared to the
Russell 3000 Growth Index, the Fund's new benchmark index, and the S&P 500
Index, the Fund's previous benchmark. The Fund is changing its benchmark index
so that it correlates more closely to the investment style of the Fund.
================================================================================
- ---------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
1 The Russell 3000 Growth Index, which includes reinvestment of
dividends, measures the performance of those Russell 3000 Index
companies with higher price-to-book ratios and higher forecasted growth
values. The stocks in this index are also members of either the Russell
1000 Growth or the Russell 2000 Growth indexes. The Index is unmanaged,
and investors cannot actually make investments in the Index.
2 The S&P 500 Index is an unmanaged index, with dividends reinvested,
that consists of the common stocks of 500 publicly traded U.S.
companies. It is a generally recognized indicator used to measure
overall performance of the U.S. stock market. One cannot invest
directly in an index.
D-3
BERGER IPT-LARGE CAP GROWTH FUND
PORTFOLIO MANAGER COMMENTARY STEVEN L. FOSSEL, CFA
MARKET CONDITIONS
The past year was one of the most difficult investment periods on
record, especially for growth stock investors. Growth stocks underperformed the
market in general and value stocks in particular for two main reasons. First,
the economy slowed suddenly. Although this affected the earnings growth of most
companies, the impact fell harder on companies that had been posting superior
growth. Second, valuations accorded to companies with superior growth had
reached much higher-than-average levels, reflecting their higher growth rates,
and those premiums shrank with the companies' slowing revenue and earnings
growth. The combination of declining growth rates and lower valuations caused
growth stock prices to drop more than the market in general.
FUND PERFORMANCE
Against this difficult backdrop, the Berger IPT-Large Cap Growth Fund
(the "Fund") was down 25.26% for the year ended December 31, 2001, compared with
a 20.42% decline in the Russell 1000 Growth Index(1) and an 11.88% decline in
the S&P 500 Index.(2) Over the last year, most major industry sectors performed
poorly with technology, communications, utility and energy services being the
hardest hit. The key reason for the Fund's underperformance was that we held
many companies, especially technology companies, whose fast growth rates and
higher valuations suffered sharp declines.
Although we significantly reduced our technology exposure throughout
the year, we did not foresee the magnitude or duration of the decline in this
sector. Many of our technology stocks were down dramatically, and the Fund
particularly suffered from its large holdings of networking, storage and
software stocks. Among networking stocks, JDS Uniphase Corp., Corning, Inc.,
Nortel Networks Corp. and Cisco Systems, Inc. dragged down performance. So did
the Fund's storage holdings, including EMC Corp. and Network Appliance, Inc. In
software, Oracle Corp. and VeriSign, Inc. had a negative impact on Fund
performance.
Believing that many networking stocks will experience a protracted
decline in orders, we sold our positions in Corning, Nortel and JDS Uniphase. We
are more sanguine about the outlook for several software stocks. VeriSign, for
example, has continued to show strong growth throughout this period, so we
increased our position in the stock. The company has a market-share lead, strong
management and high barriers to entry in its business. We also continue to hold
VERITAS Software Corp. because it has improved its competitive position and
should benefit from an economic recovery. On a positive note, technology started
performing better later in the year and International Business Machines Corp.,
Microsoft Corp. and Intel Corp. all contributed positively to the Fund's
performance.
The energy and utility sectors were strong in the beginning of the year
but much weaker the second half. Many of the Fund's energy services holdings
such as Nabors Industries, Inc. were good performers in the first part of the
year as a result of strong commodity prices and high drilling activity. This
trend reversed itself in the second half of the year as slowing economic
activity caused deterioration in the supply/demand balance. We sold several
holdings, including Nabors Industries, Inc., at the beginning of this downward
trend.
In other sectors the news was less bleak with some bright spots. In
communications, the Fund suffered a decline in Qwest Communications
International, Inc. but enjoyed a rise in Sprint Corp. (PCS Group). Retail
holdings Wal-Mart Stores, Inc. and Best Buy Co., Inc. did well while The Kroger
Co. did poorly. Financial stocks showed a similar mixed pattern.
Market-sensitive stocks such as Charles
D-4
Schwab & Co., Inc. and Morgan Stanley Dean Witter & Co. suffered declines, while
consistent growth companies like Freddie Mac and Fifth Third Bancorp. were
positive contributors to performance. Individual company execution and stock
picking were crucial in these sectors.
At the end of the period, healthcare was the Fund's second-largest
sector. We increased our holdings in this sector over the year because many
companies are showing strong growth that is not affected by the current economic
weakness. We purchased several healthcare services companies such as Tenet
Healthcare Corp. and Anthem, Inc. that were positive contributors to
performance. Accelerating sales growth in hospital stocks such as Tenet
Healthcare and HCA, Inc. is resulting in margin expansion and
better-than-expected earnings growth. American Home Products Corp. and
Medtronic, Inc. were also strong performers for the Fund. We continue to own
several biotechnology stocks such as Genentech, Inc. that declined for the year
on the contraction in industry valuations but remain attractive as a result of
strong growth in existing products and an exciting product pipeline.
OUTLOOK
We believe we have addressed the issues that led to the Fund's
underperformance this past year and are looking forward to a fresh start for the
coming year. In our opinion the Fund is better balanced, with decreased exposure
to technology and increased exposure to the more stable healthcare, consumer and
financial sectors. Stimulative economic and fiscal policy should also help the
economy and the stock market in general.
D-5
PERFORMANCE OVERVIEW
================================================================================
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2001
One Year (25.26)%
Five Year 10.64%
Life of Fund (5/1/96) 11.43%
Berger IPT-Large Cap Growth Fund
Growth of $10,000
[GRAPH]
Berger IPT-Large Cap Growth Fund $18,471
Russell 1000 Growth Index $16,893
S&P 500 Index $19,103
Past performance is no guarantee of future results. Investment returns and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The Fund's change in value is compared to the
Russell 1000 Growth Index, the Fund's new benchmark index, and the S&P 500
Index, the Fund's previous benchmark. The Fund is changing its benchmark index
so that it correlates more closely to the investment style of the Fund.
================================================================================
- ---------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
1 The Russell 1000 Growth Index, which includes reinvestment of
dividends, measures the performance of those Russell 1000 companies
with higher price-to-book ratios and higher forecasted growth values.
The Index is unmanaged, and investors cannot actually make investments
in the Index.
2 The S&P 500 Index is an unmanaged index, with dividends reinvested,
that consists of the common stocks of 500 publicly traded U.S.
companies. It is a generally recognized indicator used to measure
overall performance of the U.S. stock market. One cannot invest
directly in an index.
D-6
BERGER IPT-INTERNATIONAL FUND
PORTFOLIO MANAGER COMMENTARY BANK OF IRELAND ASSET
MANAGEMENT (U.S.) LTD.
MARKET CONDITIONS
The year 2001 began with global equity markets struggling in the face
of a rapidly slowing economy, declining corporate earnings and continued
unwinding of the late 1990s technology bubble. Even prior to the horrific events
of September 11, most major equity markets were firmly in bear territory.
Despite a furious fourth quarter rally, fueled primarily by optimism over an
anticipated recovery in 2002, most developed equity markets ended the year with
double-digit negative returns. Only Australia and New Zealand posted modest
gains.
The economic climate at the end of 2001 was gloomy world-wide. The
German economy has been experiencing a painfully slow downturn, and those
economies that had enjoyed strong growth (France, Italy and Spain) began to
slide in the same direction. However, the Euroland economy is likely to record
positive growth for the full year and may avoid the recession that has stalked
much of the global economy. Although not insulated from the global slowdown, the
UK economy has proven to be one of the most robust in the developed world.
Japan's economy showed little sign of recovery during the fourth quarter,
continuing its year-long downward spiral to slip into yet another recession.
FUND PERFORMANCE
Against this difficult backdrop, the Berger IPT -International Fund
(the "Fund") declined 20.27% for the year ended December 31, 2001, compared with
a drop of 21.21% in the MSCI EAFE Index.(1) The Fund managed to slightly
outperform the index as a result of the defensive bias of its holdings.
Defensive sectors such as healthcare, energy and consumer staples outperformed
the TMT (Technology, Media, and Telecommunications) and cyclical sectors in all
but the fourth quarter.
Although the financial sector generally performed inline with the
broader market, two UK financial institutions, Barclays PLC and Lloyds TSB Group
PLC, held up well and had the largest positive impact on the portfolio.
Netherlands-based ING Groep NV and French insurer AXA both had a difficult year.
Both of these financial services companies attributed their poor results to
decreasing demand caused by a slowing global economy, weak equity markets and
claims arising from the September 11 terrorist attacks.
Despite strong gains during the final quarter, the portfolio's
telecommunications holdings fared the worst. French-quoted equipment maker
Alcatel Althsom suffered as demand for its products slowed rapidly. Vodafone
Group PLC, the world's largest mobile operator, was dragged down by negative
sentiment surrounding the sector as well as by announcement of a fiscal
first-half loss of US$9.74 billion as a result of a goodwill writeoff associated
with recent acquisitions. Vodafone's results before the writeoff revealed good
growth and lower-than-expected expenditures.
Nokia Oyj was unique among telecommunications holdings, contributing
strongly to Fund performance after announcing that fourth quarter sales and
earnings might be better than expected.
Beverage company Diageo PLC also posted good results, citing strong
performance from its spirits division.
D-7
OUTLOOK
We believe the global economy will likely spend much of 2002 digging
itself out of recession, with growth possibly set to recover somewhat in the
second half of the year. However, the strength of this recovery may not be as
powerful as capital markets have anticipated. For the first time since the
1960s, the economies of the United States, Japan and Germany all contracted in
the third quarter. This synchronized downturn may make it difficult for a
widespread revival in global consumer demand, particularly as the employment
situation continues to deteriorate in many economies.
Nevertheless, the U.S. benchmark interest rate is at a 40- year low,
Germany's lending rates are at their lowest level in more than a decade and
Japan's central bank continues to pump money into an economy with zero nominal
interest rates. Equity markets have typically benefited from these low-rate
environments--some benefit was reflected in the fourth quarter. Given time,
economies may ultimately gain from cheaper credit conditions.
We believe inflation is likely to remain benign. As economic recovery
takes hold, corporate profits could improve--helping to underpin valuations--and
interest rates may rise. However, we do not believe the recovery will be so
strong as to prompt an aggressive rise in rates.
In our opinion, markets will remain volatile. We believe stocks with
dependable top and bottom-line growth will provide the best returns over the
next few years and that the current valuations ascribed to cyclicals are too
optimistic. Despite uncertainties about the macroeconomic outlook, there are
companies likely to produce good earnings growth and margin expansion
independent of the economic cycle. Taking all of this into account, we believe
there are no obvious sectors or geographic regions that are obvious winners in
the current environment. Consequently, we believe continued focus on judicious
stock selection will drive returns in 2002.
D-8
PERFORMANCE OVERVIEW
================================================================================
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2001
One Year (20.27)%
Life of Fund (5/1/97) 1.43%
Berger IPT-International Fund
Growth of $10,000
[GRAPH]
Berger IPT - International Fund $10,686
MSCI EAFE Index $10,700
Past performance is no guarantee of future results. Investment returns and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Investments in the Fund are not insured by the
Federal Deposit Insurance Corporation, are not deposits and are not obligations
of, or endorsed or guaranteed in any way by, any bank. Foreign investing
involves special risks, such as currency fluctuations and political and economic
uncertainty, which are discussed further in the prospectus.
================================================================================
- ---------
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
1 The Morgan Stanley Capital International EAFE Index represents major
overseas markets. The Index is unmanaged, with dividends reinvested,
and investors cannot actually make investments in the Index.
D-9
May 1, 2002
Growth Portfolio
Growth and Income Portfolio
International Growth Portfolio
JANUS ASPEN SERIES
INSTITUTIONAL SHARES
Prospectus
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.
[JANUS LOGO]
This prospectus describes three series (the "Portfolios") with a
variety of investment objectives. Each Portfolio of Janus Aspen
Series currently offers one or more 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 or commissions. 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.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<Table>
RISK/RETURN SUMMARY
Equity Portfolios........................................ 2
Fees and expenses........................................ 7
INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES AND
RISKS
Equity Portfolios........................................ 8
General portfolio policies............................... 11
Risks.................................................... 13
MANAGEMENT OF THE PORTFOLIOS
Investment adviser....................................... 15
Management expenses...................................... 15
Portfolio managers....................................... 16
OTHER INFORMATION........................................... 17
DISTRIBUTIONS AND TAXES
Distributions............................................ 18
Taxes.................................................... 18
SHAREHOLDER'S GUIDE
Pricing of portfolio shares.............................. 19
Purchases................................................ 19
Redemptions.............................................. 20
Excessive trading........................................ 20
Shareholder communications............................... 20
FINANCIAL HIGHLIGHTS........................................ 21
GLOSSARY OF INVESTMENT TERMS
Equity and debt securities............................... 24
Futures, options and other derivatives................... 26
Other investments, strategies and/or techniques.......... 26
</Table>
Table of contents 1
RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------
EQUITY PORTFOLIOS
The Equity Portfolios are designed for long-term investors who
primarily seek growth of capital and who can tolerate the greater
risks associated with common stock investments. Although Growth and
Income Portfolio may also emphasize some degree of income, it is not
designed for investors who desire a consistent level of income.
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.
- GROWTH AND INCOME PORTFOLIO seeks long-term capital growth and
current income.
GLOBAL/INTERNATIONAL EQUITY PORTFOLIO
- INTERNATIONAL GROWTH PORTFOLIO seeks long-term growth of capital.
The Portfolios' Trustees may change these objectives or the
Portfolios' principal investment policies without a shareholder
vote. The Portfolios will notify you at least 60 days before making
any changes to their objectives or principal investment policies.
If there is a material change to a Portfolio's objective or
principal investment 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 at companies one at a time to
determine if a company is an attractive investment opportunity and is
consistent with a Portfolio's investment policies. 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.
Within the parameters of its specific investment policies discussed
below, each Portfolio may invest without limit in foreign equity and
debt securities.
Within the parameters of its specific investment policies discussed
below, each Portfolio will limit its investment in
high-yield/high-risk bonds to less than 35% of its net assets.
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.
GROWTH AND INCOME PORTFOLIO normally emphasizes investments in common
stocks. It will normally invest up to 75% of its assets in equity
securities selected primarily for their growth potential, and at least
25% of its assets in securities the portfolio manager believes have
income potential.
INTERNATIONAL GROWTH PORTFOLIO invests, under normal circumstances, at
least 80% of its net 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.
2 Janus Aspen Series
For purposes of International Growth Portfolio's 80% policy, net
assets will take into account borrowings for investment purposes.
3. WHAT ARE THE MAIN RISKS OF INVESTING IN THE EQUITY PORTFOLIOS?
The biggest risk is that the Portfolios' returns may vary, and you
could lose money. The Equity Portfolios 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 may get back less money.
The income component of GROWTH AND INCOME PORTFOLIO'S holdings
includes fixed-income securities. A fundamental risk of these
securities is that their value will fall if interest rates rise. Since
the value of a fixed-income portfolio will generally decrease when
interest rates rise, 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 may have significant exposure to
foreign markets. As a result, its 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.
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.
Risk return summary 3
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 periods
indicated. The tables compare the average annual returns for the
Shares of each Portfolio for the periods indicated to a broad-based
securities market index.
GROWTH PORTFOLIO - INSTITUTIONAL SHARES
<Table>
Annual returns for periods ended 12/31
2.76% 30.17% 18.45% 22.75% 35.66% 43.98% (14.55%) (24.73%)
1994 1995 1996 1997 1998 1999 2000 2001
Best Quarter: 4th-1998 27.71% Worst Quarter: 3rd-2001 (24.79%)
</Table>
Average annual total return for periods ended 12/31/01
------------------------------------------------------
<Table>
<Caption>
Since Inception
1 year 5 years (9/13/93)
Growth Portfolio - Institutional Shares (24.73%) 9.05% 11.83%
S&P 500 Index* (11.88%) 10.70% 13.70%
--------------------------------------
</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
GROWTH AND INCOME PORTFOLIO - INSTITUTIONAL SHARES
<Table>
Annual returns for periods ended 12/31
74.04% (14.10%) (13.37%)
1999 2000 2001
Best Quarter: 4th-1999 38.39% Worst Quarter: 3rd-2001 (15.32%)
</Table>
Average annual total return for periods ended 12/31/01
------------------------------------------------------
<Table>
<Caption>
Since Inception
1 year (5/1/98)
Growth and Income Portfolio - Institutional Shares (13.37%) 12.72%
S&P 500 Index* (11.88%) 2.20%
---------------------------
</Table>
* The S&P 500 is the Standard & Poor's Composite Index of 500 Stocks,
a widely recognized, unmanaged index of common stock prices.
Risk return summary 5
INTERNATIONAL GROWTH PORTFOLIO - INSTITUTIONAL SHARES
<Table>
Annual returns for periods ended 12/31
23.15% 34.71% 18.51% 17.23% 82.27% (15.94%) (23.23%)
1995 1996 1997 1998 1999 2000 2001
Best Quarter: 4th-1999 58.48% Worst Quarter: 3rd-2001 (20.38%)
</Table>
Average annual total return for periods ended 12/31/01
------------------------------------------------------
<Table>
<Caption>
Since Inception
1 year 5 years (5/2/94)
International Growth Portfolio - Institutional Shares (23.23%) 10.32% 13.47%
Morgan Stanley Capital International EAFE(R) Index* (21.44%) 0.89% 2.76%
--------------------------------------
</Table>
* The Morgan Stanley Capital International EAFE(R) Index is a market
capitalization weighted index composed of companies representative
of the market structure of 21 Developed Market countries in Europe,
Australasia and the Far East.
The Equity Portfolios' past performance does not necessarily indicate
how they will perform in the future.
6 Janus Aspen Series
FEES AND EXPENSES
SHAREHOLDER FEES, such as sales loads, redemption fees or exchange
fees, are charged directly to an investor's account. The Janus funds
are no-load investments, so you will generally 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*
Growth Portfolio 0.65% 0.01% 0.66%
Growth and Income Portfolio 0.65% 0.05% 0.70%
International Growth Portfolio 0.65% 0.06% 0.71%
</Table>
- --------------------------------------------------------------------------------
* Expenses are based upon expenses for the year ended December 31, 2001.
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 and 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. Since no sales load applies, the results apply whether or not you
redeem your investment at the end of each period. 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
-----------------------------------------
Growth Portfolio $67 $211 $368 $822
Growth and Income Portfolio $72 $224 $390 $871
International Growth Portfolio $73 $227 $395 $883
</Table>
Risk return summary 7
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>
Growth Portfolio Janus Fund
Growth and Income Portfolio Janus Growth and Income Fund
International Growth Portfolio Janus Overseas 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 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.
GROWTH AND INCOME PORTFOLIO
Growth and Income Portfolio seeks long-term capital growth and current
income. It pursues its objective by normally emphasizing investments
in common stocks. It will normally invest up to 75% of its assets in
equity securities selected primarily for their growth potential, and
at least 25% of its assets in securities the portfolio manager
believes have income potential. Equity securities may make up part of
this income component if they currently pay dividends or the portfolio
manager believes they have potential for increasing or commencing
dividend payments. Because of this investment strategy, the Portfolio
is not designed for investors who need consistent income.
GLOBAL/INTERNATIONAL EQUITY PORTFOLIO
INTERNATIONAL GROWTH PORTFOLIO
International Growth Portfolio seeks long-term growth of capital. It
invests, under normal circumstances, at least 80% of its net 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
8 Janus Aspen Series
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.
The following questions and answers are designed to help you better understand
the Equity Portfolios' principal investment strategies.
1. HOW ARE COMMON STOCKS SELECTED?
Consistent with its investment objective and policies, 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. This means that they seek to identify
individual companies with earnings growth potential that may not be
recognized by the market at large. The portfolio managers 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.
Growth and Income Portfolio may emphasize some degree of income.
Realization of income is not a significant consideration when choosing
investments for the other Portfolios. Income realized on the
Portfolios' investments may be incidental to their objectives. In the
case of Growth and Income Portfolio, the portfolio manager may
consider dividend-paying characteristics to a greater degree in
selecting common stock.
2. ARE THE SAME CRITERIA USED TO SELECT FOREIGN SECURITIES?
Generally, yes. The portfolio managers seek companies that meet their
selection criteria, regardless of where a company is located. Foreign
securities are generally selected on a stock-by-stock basis without
regard to any defined allocation among countries or geographic
regions. However, certain factors such as expected levels of
inflation, government policies influencing business conditions, the
outlook for currency relationships, and prospects for economic growth
among countries, regions or geographic areas may warrant greater
consideration in selecting foreign securities. There are no
limitations on the countries in which the Portfolios may invest and
the Portfolios may at times have significant foreign exposure.
3. WHAT DOES "MARKET CAPITALIZATION" MEAN?
Market capitalization is the most commonly used measure of the size
and value of a company. It is computed by multiplying the current
market price of a share of the company's stock by the total number of
its shares outstanding. The Equity Portfolios offered by this
Prospectus do not emphasize companies of any particular size.
4. HOW ARE ASSETS ALLOCATED BETWEEN THE GROWTH AND INCOME COMPONENTS OF GROWTH
AND INCOME PORTFOLIO'S HOLDINGS?
Growth and Income Portfolio shifts assets between the growth and
income components of its holdings based on the portfolio manager's
analysis of relevant market, financial and economic conditions. If the
portfolio manager believes that growth securities will provide better
returns than the yields then available or expected on income-producing
securities, the Portfolio will place a greater emphasis on the growth
component.
5. WHAT TYPES OF SECURITIES MAKE UP THE GROWTH COMPONENT OF GROWTH AND INCOME
PORTFOLIO'S HOLDINGS?
The growth component of the Portfolio is expected to consist primarily
of common stocks, but may also include preferred stocks or convertible
securities selected primarily for their growth potential.
Investment objectives, principal investment strategies and risks 9
6. WHAT TYPES OF SECURITIES MAKE UP THE INCOME COMPONENT OF GROWTH AND INCOME
PORTFOLIO'S HOLDINGS?
The income component of Growth and Income Portfolio's holdings will
consist of securities that the portfolio manager believes have income
potential. Such securities may include equity securities, convertible
securities and all types of debt securities. Equity securities may be
included in the income component of the Portfolio if they currently
pay dividends or the portfolio manager believes they have the
potential for either increasing their dividends or commencing
dividends, if none are currently paid.
7. HOW DO INTEREST RATES AFFECT THE VALUE OF MY GROWTH AND INCOME PORTFOLIO
INVESTMENT?
The income component of Growth and Income Portfolio's holdings
includes fixed-income securities. 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.
10 Janus Aspen Series
GENERAL PORTFOLIO POLICIES
The percentage limitations included in these policies and elsewhere in
this Prospectus apply at the time of purchase of a 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,
for example, protect its assets, maintain liquidity or meet unusually
large redemptions. A Portfolio's cash position may also increase
temporarily due to unusually large cash inflows. 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 and
securities convertible into common or preferred stocks. To a lesser
degree, the Portfolios may invest in other types of domestic and
foreign securities and use other investment strategies, which are
described in the Glossary. These 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
- short sales (no more than 8% of a Portfolio's assets may be invested
in "naked" short sales)
- 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
Within the parameters of its specific investment policies, each
Portfolio may invest without limit in foreign equity and debt
securities. The Portfolios may invest directly in foreign securities
denominated in a foreign
Investment objectives, principal investment strategies and risks 11
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 manager, the securities of
a particular issuer will be recognized and appreciate in value due to
a specific development with respect to that issuer. Special situations
may include significant changes in a company's allocation of its
existing capital, a restructuring of assets, or a redirection of free
cash flow. Developments creating a special situation might include,
among others, a new product or process, a technological breakthrough,
a management change or other extraordinary corporate event, or
differences in market supply of and demand for the security. A
Portfolio's performance could suffer if the anticipated development in
a "special situation" investment does not occur or does not attract
the expected attention.
PORTFOLIO TURNOVER
The Portfolios generally intend to purchase securities for long-term
investment, although, to the extent permitted by its specific
investment policies, each 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. Portfolio turnover
is affected by market conditions, changes in the size of a Portfolio,
the nature of the Portfolio's investments and the investment style of
the portfolio manager. 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. The Financial Highlights section of this Prospectus shows
the Portfolios' historical turnover rates.
12 Janus Aspen Series
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 bonds, 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, or may not be publicly traded at all, and
may be subject to wide price fluctuations. Investments in such
companies tend to be more volatile and somewhat more speculative.
2. HOW COULD THE PORTFOLIOS' INVESTMENTS IN FOREIGN SECURITIES AFFECT THEIR
PERFORMANCE?
Within the parameters of its specific investment policies, each
Portfolio 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 a Portfolio's 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.
Investment objectives, principal investment strategies and risks 13
- 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.
3. 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 and default risk 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. In addition, the junk bond market
can experience sudden and sharp price swings.
4. 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.
5. WHAT IS "INDUSTRY RISK"?
Industry risk is the possibility that a group of related stocks will
decline in price due to industry-specific developments. Companies in
the same or similar industries may share common characteristics and
are more likely to react similarly to industry-specific market or
economic developments. The Equity Portfolios may at times have
significant exposure to industry risk as a result of investing in
multiple companies in a particular industry.
14 Janus Aspen Series
MANAGEMENT OF THE PORTFOLIOS
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Janus Capital Management LLC ("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
Each Portfolio pays Janus Capital a management fee which is calculated
daily and paid monthly. Each Portfolio's advisory agreement spells out
the management fee and other expenses that the Portfolios must pay.
New investment advisory agreements approved at a special meeting of
the shareholders on January 31, 2002, that are the same in all
material respects as the previous advisory agreements, became
effective on April 3, 2002.
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. Each of the Portfolios is subject to the
following management fee schedule (expressed as an annual rate).
<Table>
<Caption>
Average Daily Annual Rate
Net Assets Percentage
Portfolios of Portfolio (%)
- -----------------------------------------------------------------------------------------------------
Growth Portfolio All Asset Levels 0.65
Growth and Income Portfolio
International Growth Portfolio
- -----------------------------------------------------------------------------------------------------
</Table>
For the year ended December 31, 2001, each Portfolio paid Janus
Capital the following management fees based upon each Portfolio's
average net assets: 0.65% for Growth Portfolio, 0.65% for Growth and
Income Portfolio and 0.65% for International Growth Portfolio.
Management of the Portfolios 15
PORTFOLIO MANAGERS
DAVID J. CORKINS
- --------------------------------------------------------------------------------
is Executive Vice President and Portfolio Manager of Growth and
Income Portfolio, which he has managed since its inception. Mr.
Corkins is also Portfolio Manager of other Janus accounts. He
joined Janus Capital in 1995 as a research analyst. Mr. Corkins
holds a Bachelor of Arts degree in English and Russian from
Dartmouth and he received his Master of Business Administration
degree from Columbia University in 1993.
HELEN YOUNG HAYES
- --------------------------------------------------------------------------------
is Executive Vice President and Co-Manager of International
Growth Portfolio which she has managed or co-managed since its
inception. Ms. Hayes is also Portfolio Manager of other Janus
accounts. She joined Janus Capital in 1987. She holds a Bachelor
of Arts degree in Economics from Yale University. Ms. Hayes has
earned the right to use the Chartered Financial Analyst
designation.
BRENT A. LYNN
- --------------------------------------------------------------------------------
is Executive Vice President and Co-Manager of International
Growth Portfolio, which he has co-managed since January 2001. Mr.
Lynn is also Portfolio Manager of other Janus accounts. He joined
Janus Capital in 1991 as a research analyst. He holds a Bachelor
of Arts degree in Economics and a Master's degree in Economics
and Industrial Engineering from Stanford University. Mr. Lynn has
earned the right to use the Chartered Financial Analyst
designation.
BLAINE P. ROLLINS
- --------------------------------------------------------------------------------
is Executive Vice President and Portfolio Manager of Growth
Portfolio, which he has managed since January 2000. He previously
served as Executive Vice President and Portfolio Manager of
Equity Income Portfolio from its inception to December 1999 and
Balanced Portfolio from May 1996 to December 1999. Mr. Rollins is
also Portfolio Manager of other Janus accounts. Mr. Rollins
joined Janus Capital in 1990. He holds a Bachelor of Science
degree in Finance from the University of Colorado. Mr. Rollins
has earned the right to use the Chartered Financial Analyst
designation.
16 Janus Aspen Series
OTHER INFORMATION
- --------------------------------------------------------------------------------
CLASSES OF SHARES
Each Portfolio currently offers two or three classes of shares, one of
which, the Institutional Shares, is offered pursuant to this
prospectus and 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 and Service II
Shares of each Portfolio offering such Shares 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. For Service II
Shares, a redemption fee may be imposed on interests in separate
accounts or plans held 60 days or less. 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
Service II Shares, please call 1-800-525-0020.
CONFLICTS OF INTEREST
The Shares offered by this prospectus are available only to variable
annuity and variable life separate accounts of insurance companies
that are unaffiliated with Janus Capital and to certain qualified
retirement plans. 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
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 Portfolios. 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 Portfolios 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 THE PORTFOLIOS
The Portfolios are distributed by Janus Distributors LLC, which is 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 17
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 at least 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.
DISTRIBUTION SCHEDULE
Dividends for the Portfolios are normally declared and distributed in
June and December. Capital gains are normally declared and distributed
in June for all of the Portfolios.
HOW DISTRIBUTIONS AFFECT A PORTFOLIO'S 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 an
election is not made, any foreign taxes paid or accrued will represent
an expense to the Portfolios.
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.
18 Janus Aspen Series
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 calculated 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. Securities
of the Portfolios are valued at market value or, if a market quotation
is not readily available, at their fair value determined in good faith
under procedures established by and under the supervision of the
Trustees. Short-term instruments maturing within 60 days are valued at
amortized cost, which approximates market value.
Because foreign securities markets may operate on days that are not
business days in the United States, the value of a Portfolio's
holdings may change on days when you 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 are not intended for excessive 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, including
exchange purchases, for any reason. For example, purchase orders may
be refused if a Portfolio would be unable to invest the money
effectively in accordance with its investment policies or would
otherwise be adversely affected due to the size of the transaction,
frequency of trading or other factors. The Portfolios may also suspend
or terminate your exchange privilege if you engage in an excessive
pattern of exchanges. For more information about the Portfolios'
policy on market timing, see "Excessive Trading" on the next page.
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.
The Portfolios may discontinue sales to a qualified plan and require
plan participants with existing investments in the Shares to redeem
those investments if the plan loses (or in the opinion of Janus
Capital, is at risk of losing) its qualified plan status.
Shareholder's guide 19
REDEMPTIONS
Redemptions, like purchases, may be effected only through the separate
accounts of participating insurance companies or through qualified
plans. Please refer to the appropriate separate account prospectus or
plan documents for details.
Shares of any Portfolio may be redeemed on any business day.
Redemptions are processed at the NAV next calculated after receipt and
acceptance of the redemption order by the Portfolio or its agent.
Redemption proceeds will normally be wired to the participating
insurance company the business day following receipt of the redemption
order, but in no event later than seven days after receipt of such
order.
EXCESSIVE TRADING
Frequent trading into and out of a Portfolio can disrupt portfolio
investment strategies and increase portfolio expenses for all
shareholders, including long-term shareholders who do not generate
these costs. The Portfolios are not intended for market timing or
excessive trading. The Portfolios and their agents reserve the right
to reject any purchase request (including exchange purchases if
permitted by your insurance company or plan sponsor) by any investor
or group of investors indefinitely if they believe that any
combination of trading activity in the account(s) is attributable to
market timing or is otherwise excessive or potentially disruptive to
the Portfolio. The Portfolios may refuse purchase orders (including
exchange purchases) for any reason without prior notice, particularly
orders that the Portfolio believes are made on behalf of market
timers.
The trading history of accounts under common ownership or control may
be considered in enforcing these policies. Transactions placed through
the same insurance company or plan sponsor on an omnibus basis may be
deemed part of a group for the purpose of this policy and may be
rejected in whole or in part by a Portfolio. Transactions accepted by
your insurance company or plan sponsor in violation of our excessive
trading policy are not deemed accepted by the Portfolio and may be
cancelled or revoked by the Portfolio on the next business day
following receipt by your intermediary.
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.
20 Janus Aspen Series
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights tables are intended to help you understand
the Institutional Shares' financial performance for each of the five
most recent years or the life of the Portfolio if less than five
years. Items 1 through "Net asset value, end of period" reflect
financial results for a single Share. The total returns in the tables
represent the rate that an investor would have earned (or lost) on an
investment in the Institutional Shares of the Portfolios (assuming
reinvestment of all dividends and distributions) but do 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
- ---------------------------------------------------------------------------------------------------------------------------------
Years ended December 31
2001 2000 1999 1998 1997
1. NET ASSET VALUE, BEGINNING OF PERIOD $26.48 $33.65 $23.54 $18.48 $15.51
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.02 0.05 0.07 0.05 0.15
3. Net gains or losses on securities (both realized and
unrealized) (6.56) (4.59) 10.24 6.36 3.34
4. Total from investment operations (6.54) (4.54) 10.31 6.41 3.49
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.01) (0.06) (0.06) (0.05) (0.15)
6. Distributions (from capital gains) (0.04) (2.57) (0.14) (1.30) (0.37)
7. Total distributions (0.05) (2.63) (0.20) (1.35) (0.52)
8. NET ASSET VALUE, END OF PERIOD $19.89 $26.48 $33.65 $23.54 $18.48
9. Total return (24.73%) (14.55%) 43.98% 35.66% 22.75%
10. Net assets, end of period (in thousands) $2,490,954 $3,529,807 $2,942,649 $1,103,549 $608,281
11. Average net assets for the period (in thousands) $2,911,331 $3,734,449 $1,775,373 $789,454 $477,914
12. Ratio of gross expenses to average net assets(1) 0.66%(2) 0.67%(2) 0.67%(2) 0.68%(2) 0.70%(2)
13. Ratio of net expenses to average net assets(3) 0.66% 0.67% 0.67% 0.68% 0.69%
14. Ratio of net investment income to average net assets 0.07% 0.19% 0.30% 0.26% 0.91%
15. Portfolio turnover rate 48% 47% 53% 73% 122%
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) The expense ratio reflects expenses prior to any expense offset
arrangements.
(2) The ratio was 0.66% in 2001, 0.67% in 2000, 0.69% in 1999, 0.75% in 1998 and
0.78% in 1997 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Fund.
(3) The expense ratio reflects expenses after any expense offset arrangements.
Financial highlights 21
<Table>
<Caption>
GROWTH AND INCOME PORTFOLIO - INSTITUTIONAL SHARES
- ------------------------------------------------------------------------------------------------------------
Years ended December 31
2001 2000 1999 1998(1)
1. NET ASSET VALUE, BEGINNING OF PERIOD $17.41 $20.77 $11.96 $10.00
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.20 0.19 0.04 0.02
3. Net gains or losses on securities (both realized and
unrealized) (2.52) (3.08) 8.81 1.96
4. Total from investment operations (2.32) (2.89) 8.85 1.98
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.22) (0.16) (0.04) (0.02)
6. Distributions (from capital gains) -- (0.31) -- --
7. Total distributions (0.22) (0.47) (0.04) (0.02)
8. NET ASSET VALUE, END OF PERIOD $14.87 $17.41 $20.77 $11.96
9. Total return* (13.37%) (14.10%) 74.04% 19.80%
10. Net assets, end of period (in thousands) $92,659 $123,812 $84,480 $6,413
11. Average net assets for the period (in thousands) $105,243 $124,282 $28,838 $2,883
12. Ratio of gross expenses to average net assets**(2) 0.70%(3) 0.78%(3) 1.06%(3) 1.25%(3)
13. Ratio of net expenses to average net assets**(4) 0.70% 0.78% 1.05% 1.25%
14. Ratio of net investment income to average net assets** 1.19% 1.07% 0.56% 0.66%
15. Portfolio turnover rate** 52% 37% 59% 62%
- ------------------------------------------------------------------------------------------------------------
</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, 1998 (inception) through December 31, 1998.
(2) The expense ratio reflects expenses prior to any expense offset
arrangements.
(3) The ratio was 0.70% in 2001, 0.78% in 2000, 1.15% in 1999 and 3.06% in 1998
before waiver of certain fees and/or reduction of adviser's fees to the
effective rate of Janus Growth and Income Fund.
(4) The expense ratio reflects expenses after any expense offset arrangements.
22 Janus Aspen Series
<Table>
<Caption>
INTERNATIONAL GROWTH PORTFOLIO - INSTITUTIONAL SHARES
- --------------------------------------------------------------------------------------------------------------------------
Years ended December 31
2001 2000 1999 1998 1997
1. NET ASSET VALUE, BEGINNING OF PERIOD $30.90 $38.67 $21.27 $18.48 $15.72
INCOME FROM INVESTMENT OPERATIONS:
2. Net investment income 0.26 0.62 0.06 0.13 0.11
3. Net gains or losses on securities (both realized and
unrealized) (7.43) (6.51) 17.40 3.07 2.80
4. Total from investment operations (7.17) (5.89) 17.46 3.20 2.91
LESS DISTRIBUTIONS:
5. Dividends (from net investment income) (0.26) (0.63) (0.06) (0.14) (0.11)
6. Distributions (from capital gains) -- (0.91) -- (0.27) (0.04)
7. Tax return of capital distributions -- (0.34) -- -- --
8. Total distributions (0.26) (1.88) (0.06) (0.41) (0.15)
9. NET ASSET VALUE, END OF PERIOD $23.47 $30.90 $38.67 $21.27 $18.48
10. Total return (23.23%) (15.94%) 82.27% 17.23% 18.51%
11. Net assets, end of period (in thousands) $869,983 $1,158,666 $810,392 $311,110 $161,091
12. Average net assets for the period (in thousands) $962,343 $1,214,163 $425,876 $234,421 $96,164
13. Ratio of gross expenses to average net assets(1) 0.71%(2) 0.71%(2) 0.77%(2) 0.86%(2) 0.96%(2)
14. Ratio of net expenses to average net assets(3) 0.71% 0.71% 0.76% 0.86% 0.96%
15. Ratio of net investment income to average net assets 0.95% 1.88% 0.26% 0.73% 0.70%
16. Portfolio turnover rate 65% 67% 80% 93% 86%
- --------------------------------------------------------------------------------------------------------------------------
</Table>
(1) The expense ratio reflects expenses prior to any expense offset
arrangements.
(2) The ratio was 0.71% in 2001, 0.71% in 2000, 0.84% in 1999, 0.95% in 1998 and
1.08% in 1997 before waiver of certain fees and/or reduction of adviser's
fees to the effective rate of Janus Overseas Fund.
(3) The expense ratio reflects expenses after any offset arrangements.
Financial highlights 23
GLOSSARY OF INVESTMENT TERMS
- --------------------------------------------------------------------------------
This glossary provides a more detailed description of some of the
types of securities, investment strategies 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.
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 earn 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).
EQUITY SECURITIES generally include domestic and foreign common
stocks; preferred stocks; securities convertible into common stocks or
preferred stocks; warrants to purchase common or preferred stocks; and
other securities with equity characteristics.
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, dividends or coupons for a specified period of time. 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.
24 Janus Aspen Series
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 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.
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.
VARIABLE AND FLOATING RATE SECURITIES have variable or floating rates
of interest and, under certain limited circumstances, may have varying
principal amounts. Variable and floating rate 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 "underlying index"). 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. The specified price is usually
higher
Glossary of investment terms 25
than the market price at the time of issuance of the warrant. The
right may last for a period of years or indefinitely.
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 indices
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 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.
III. OTHER INVESTMENTS, STRATEGIES AND/OR TECHNIQUES
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
26 Janus Aspen Series
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.
SHORT SALES in which a Portfolio may engage may be of two types, short
sales "against the box" or "naked" short sales. Short sales against
the box involve selling either a security that a Portfolio owns, or a
security equivalent in kind or amount to the security sold short that
a Portfolio has the right to obtain, for delivery at a specified date
in the future. Naked short sales involve selling a security that a
Portfolio borrows and does not own. A Portfolio may enter into a short
sale to hedge against anticipated declines in the market price of a
security or to reduce portfolio volatility. If the value of a security
sold short increases prior to the scheduled delivery date, the
Portfolio loses the opportunity to participate in the gain. For
"naked" short sales, a Portfolio will incur a loss if the value of a
security increases during this period because it will be paying more
for the security than it has received from the purchaser in the short
sale and if the price declines during this period, a Portfolio will
realize a short-term capital gain. Although a Portfolio's potential
for gain as a result of a short sale is limited to the price at which
it sold the security short less the cost of borrowing the security,
its potential for loss is theoretically unlimited because there is no
limit to the cost of replacing the borrowed security.
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.
Glossary of investment terms 27
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28
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You can request other information,
including a Statement of Additional
Information, Annual Report or
Semiannual Report, free of charge, by
contacting your insurance company or
plan sponsor or visiting our Web site
at janus.com. In the Portfolios'
Annual and Semiannual Reports, 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 and copy
information about the Portfolios
(including the Portfolios' Statement
of Additional Information) at the
Public Reference Room of the SEC or
get text only copies, after paying a
duplicating fee, by sending an
electronic request by e-mail to
publicinfo@sec.gov or by writing to or
calling the Public Reference Room,
Washington, D.C. 20549-0102
(1-202-942-8090). You may also obtain
reports and other information about
the Portfolios from the Electronic
Data Gathering Analysis and Retrieval
(EDGAR) Database on the SEC's Web site
at http://www.sec.gov.
[JANUS LOGO]
WWW.JANUS.COM
100 Fillmore Street
Denver, CO
80206-4928
1-800-525-0020
Investment Company Act File No. 811-7736
BERGER IPT FUNDS
SUPPLEMENT DATED SEPTEMBER 3, 2002
On September 3, 2002, Stilwell Financial Inc. ("Stilwell"), the parent company
of Berger Financial Group LLC ("Berger"), announced its intention to consolidate
all of its investment advisory operations under Janus Capital Management LLC
("Janus"). As the transaction is presently contemplated, Berger, the investment
adviser to the Berger IPT Funds, will be consolidated into Janus and Berger will
cease to exist.
It is anticipated that portfolio management of the following Berger IPT Funds,
which are advised by subadvisers to Berger, will not be affected:
Berger IPT - Mid Cap Value Fund
Berger IPT - Large Cap Value Fund
It is presently anticipated that a change in portfolio management of the
following Berger IPT Funds will occur:
Berger IPT - Growth Fund
Berger IPT - Large Cap Growth Fund
Berger IPT - Small Company Growth Fund
Berger IPT - International Fund
The Trustees of the Berger IPT Funds, not Janus or Stilwell, will be responsible
for selecting a new adviser for these funds. The Trustees have begun considering
the alternatives. Berger will continue to provide investment advisory and
administrative services to the Berger IPT Funds until the completion of the
transaction. It is anticipated that the consolidation of Stilwell will be
completed in the first quarter of 2003.
BERGER IPT - SMALL COMPANY GROWTH FUND
BERGER IPT - GROWTH FUND
SUPPLEMENT DATED JULY 19, 2002
TO
PROSPECTUS DATED MAY 1, 2002
Effective July 19, 2002, Berger Financial Group LLC Executive Vice
President and Chief Investment Officer Jay W. Tracey III will be appointed
portfolio manager of Berger IPT - Small Company Growth Fund. Also effective July
19, 2002, Berger Financial Group LLC Vice President and Portfolio Manager Steven
L. Fossel will join Mr. Tracey as portfolio manager of Berger IPT - Growth Fund.
Messrs. Tracey and Fossel will manage Berger IPT - Growth Fund as a team.
The section "Organization of the Funds" of the Prospectus is amended
accordingly.
BERGER IPT - SMALL COMPANY GROWTH FUND
SUPPLEMENT DATED JULY 19, 2002
TO
PROSPECTUS DATED MAY 1, 2002
Effective July 19, 2002, Berger Financial Group LLC Executive Vice
President and Chief Investment Officer Jay W. Tracey III will be appointed
portfolio manager of Berger IPT - Small Company Growth Fund. Mr. Tracey joined
Berger Financial Group LLC in June of 2000. From November 1995 to May 2000, he
was Vice President and Portfolio Manager of Oppenheimer Funds where he managed
emerging growth funds. Mr. Tracey has more than 25 years experience in the
securities industry.
The section "Organization of the Fund" of the Prospectus is amended
accordingly.
May 1, 2002
BERGER IPT FUNDS
PROSPECTUS
[BERGER FUNDS LOGO]
BERGER IPT - GROWTH FUND
BERGER IPT - LARGE CAP GROWTH FUND
BERGER IPT - SMALL COMPANY GROWTH FUND
BERGER IPT - INTERNATIONAL FUND
BERGER IPT - LARGE CAP VALUE FUND
BERGER IPT - MID CAP VALUE FUND
The Securities and Exchange Commission has not approved or disapproved any
shares offered in this prospectus or determined whether this prospectus is
accurate or complete. Anyone who tells you otherwise is committing a crime. Like
all mutual funds, an investment in the Berger IPT Funds is not a bank deposit
and is not insured or guaranteed by the FDIC or any other government agency.
There is no guarantee that the Funds will meet their investment goals, and
although you have the potential to make money, you could also lose money in the
Funds.
BERGER IPT - SMALL COMPANY GROWTH FUND is a registered servicemark of Berger
Financial Group LLC; the BERGER MOUNTAIN LOGO is a registered trademark of
Berger Financial Group LLC; BERGER IPT - INTERNATIONAL FUND, BERGER IPT - LARGE
CAP GROWTH FUND, BERGER IPT - GROWTH FUND, BERGER IPT - MID CAP VALUE FUND and
BERGER IPT - LARGE CAP VALUE FUND are servicemarks of Berger Financial Group
LLC; and other marks referred to herein are the servicemarks, trademarks,
registered servicemarks or registered trademarks of the respective owners
thereof.
3
Table of Contents
THE BERGER IPT FUNDS are mutual funds. A mutual fund pools money from
shareholders and invests in a portfolio of securities. You may not invest in
shares of the Funds directly. You may invest in shares of the Funds by
purchasing a variable annuity or variable life insurance contract from a
participating insurance company. A participating insurance company is one that
has arranged to make one or more of the Funds available as an investment option
under their variable insurance contracts. You may also invest in shares of the
Funds if you participate in a qualified retirement plan and your employer has
arranged to make one or more of the Funds available as an investment option
under that plan. Each of the following sections introduces a Fund, its goal,
principal investment strategies and principal risks. They also contain expense
and performance information.
<Table>
Berger IPT - Growth Fund(SM) ...................................................... 4
Berger IPT - Large Cap Growth Fund(SM) ............................................ 6
Berger IPT - Small Company Growth Fund(R) ......................................... 8
Berger IPT - International Fund(SM) ............................................... 10
Berger IPT - Large Cap Value Fund(SM) ............................................. 12
Berger IPT - Mid Cap Value Fund(SM) ............................................... 14
Investment Techniques, Securities and Associated Risks ............................ 16
Risk and Investment Table ......................................................... 17
Risk and Investment Glossary ...................................................... 18
Buying and Selling (Redeeming) Shares ............................................. 20
Fund Share Price .................................................................. 20
Other Information ................................................................. 20
Excessive Trading ................................................................. 20
Privacy Notice .................................................................... 20
Distributions and Taxes ........................................................... 21
Organization of the Funds ......................................................... 22
Investment Managers ............................................................... 22
Past Performance of Similar Funds ................................................. 24
12b-1 Arrangements ................................................................ 25
Financial Highlights .............................................................. 26
Berger IPT - Growth Fund .......................................................... 26
Berger IPT - Large Cap Growth Fund ................................................ 27
Berger IPT - Small Company Growth Fund ............................................ 27
Berger IPT - International Fund ................................................... 28
</Table>
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
4
Berger IPT -
Growth Fund
The Fund's Goal and Principal Investment Strategies
The Fund aims for long-term capital appreciation. In pursuing that goal, the
Fund primarily invests in the common stocks of established companies with the
potential for growth.
The Fund's stock selection by the Fund's investment manager focuses on companies
that have demonstrated an ability to generate above-average growth in revenue
and earnings regardless of the company's size.
The Fund's investment manager generally looks for companies with:
o Strong revenue and earnings growth
o Large market potential for their products and services
o Proven, capable management teams with clearly-defined strategies for future
growth.
The Fund's investment manager will generally sell a security when it no longer
meets the manager's investment criteria or when it has met the manager's
expectations for appreciation. The Fund's investment manager may actively trade
the portfolio in pursuit of the Fund's goal.
Principal Risks
You may be interested in the Fund if you are comfortable with the risks of
equity investing and intend to make a long-term investment commitment. Like all
managed funds, there is a risk that the investment manager's strategy for
managing the Fund may not achieve the desired results. In addition, the price of
common stock moves up and down in response to corporate earnings and
developments, economic and market conditions and unanticipated events. As a
result, the price of the Fund's investments may go down, and you could lose
money on your investment.
Although the Fund is expected to invest in stocks of companies of all sizes,
including large companies, the Fund's share price may fluctuate more than that
of funds primarily invested in stocks of large companies. Small and mid-sized
companies may pose greater market, liquidity and information risks because of
narrow product lines, limited financial resources, less depth in management or a
limited trading market for their stocks. The Fund's investments are often
focused in a small number of business sectors, which may pose greater market and
liquidity risks. In addition, the Fund's active trading will cause the Fund to
have an increased portfolio turnover rate. Higher turnover rates may result in
higher brokerage costs to the Fund and in higher net taxable gains for you as an
investor.
See "Investment Techniques, Securities and Associated Risks" later in this
prospectus for more information on principal risks and other risks.
The Fund's Past Performance
The information below shows the Fund's performance through December 31, 2001.
These returns include reinvestment of all dividends and capital gain
distributions and reflect Fund expenses. They do not, however, reflect charges
and expenses deducted by your particular variable insurance contract or
retirement plan, which would lower performance. Therefore, they should only be
considered along with the total return information provided by your contract or
plan that reflects those charges and expenses. As with all mutual funds, past
performance does not guarantee future results.
Year-by-year returns show you how the Fund's performance has varied by
illustrating the differences for each full calendar year since the Fund began.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
[GRAPH]
<Table>
1997 13.76%
1998 16.29%
1999 49.13%
2000 -17.51%
2001 -32.51%
BEST QUARTER: 12/31/99 42.08%
WORST QUARTER: 3/31/01 -27.81%
</Table>
Average annual total return is a measure of the Fund's performance over time.
The Fund's average annual return is compared to the Russell 3000 Growth Index,
the Fund's new benchmark index, and the Standard & Poor's 500 Index (S&P 500),
the Fund's previous benchmark index. The Fund changed its benchmark index to
correlate more closely to the investment style of the Fund. The Russell 3000
Growth Index is an unmanaged index, with dividends reinvested, which measures
the performance of those Russell 3000 companies with higher price-to-book ratios
and higher forecasted growth values. The stocks in this index are also members
of either the Russell 1000 Growth or the Russell 2000 Growth indexes. The S&P
500 is an unmanaged index, with dividends reinvested, which consists of the
common stocks of 500 publicly
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
5
Berger IPT Funds
traded U.S. companies. While the Fund does not seek to match the returns of
either index, they are good indicators of general stock market performance. You
may not invest in either index, and unlike the Fund, they do not incur fees or
charges.
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2001
<Table>
<Caption>
Life of the Fund
1 Year 5 Years (May 1, 1996)
------- ------- ----------------
The Fund -32.51% 1.89% 2.36%
Russell 3000 Growth -19.63% 7.72% 8.89%
S&P 500 -11.88% 10.70% 12.09%
</Table>
Fund Expenses
As a shareholder in the Fund, you do not pay any sales load, redemption or
exchange fees, but you do indirectly bear Annual Fund Operating Expenses, which
vary from year to year.
<Table>
<Caption>
ANNUAL FUND OPERATING EXPENSES
(deducted directly from the Fund) %
- --------------------------------- ------
Management fee 0.75
Other expenses 0.33
Total Annual Fund Operating Expenses 1.08
Fee Waiver and Reimbursement(1) (0.08)
-----
Net Expenses 1.00
=====
</Table>
(1) Under a written contract, the Fund's investment adviser waives its fee and
reimburses the Fund to the extent that, at any time during the life of the Fund,
the Fund's annual operating expenses exceed 1.00%. The contract may not be
terminated or amended except by a vote of the Fund's Board of Trustees.
Understanding Expenses
Annual Fund Operating Expenses are paid by the Fund. As a result, they reduce
the Fund's return. Fund expenses include management fees and administrative
costs such as shareholder recordkeeping and reports, custodian and pricing
services and registration fees. They do not include any charges or expenses
deducted by your variable insurance contract or retirement plan, which would
increase expenses. Refer to your variable contract prospectus or retirement plan
documents for an explanation of those charges and expenses.
Example Costs
The following example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same for each period
o Redemption after the end of each period
o Reinvestment of all dividends and distributions
Your actual costs may be higher or lower, so this example should be used for
comparison only. Based on these assumptions, your costs at the end of each
period would be:
<Table>
<Caption>
YEARS $
- ----- -----
One 102
Three 318
Five 552
Ten 1,225
</Table>
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
6
Berger IPT - Large Cap
Growth Fund
The Fund's Goal and Principal Investment Strategies
The Fund aims for capital appreciation. In pursuing that goal, the Fund
primarily invests in the securities of large, well-established companies that
have potential for growth.
The Fund's security selection focuses on the common stocks of larger companies
that have demonstrated a history of growth in revenues and earnings.
The Fund's investment manager generally looks for companies with:
o Opportunities for above-average revenue and earnings growth
o Strong market positions for their products and services
o Strong, seasoned management teams with well- established and clearly defined
strategies.
Under normal circumstances, the Fund invests at least 80% of its assets in
equity securities of companies whose market capitalization, at the time of
initial purchase, is $10 billion or more. Shareholders will be provided at least
60 days notice prior to any change to the Fund's 80% investment policy. In
certain unusual circumstances, the Fund may be unable to remain invested at
these levels in securities of companies with the stated market capitalization.
The Fund may invest up to 20% of its assets in convertible securities rated
below investment grade (BB or lower by Standard & Poor's, Ba or lower by
Moody's). The Fund's investment manager will generally sell a security when it
no longer meets the manager's investment criteria or when it has met the
manager's expectations for appreciation. The Fund's investment manager may
actively trade the portfolio in pursuit of the Fund's goal.
Principal Risks
You may be interested in the Fund if you are comfortable with the risks of
equity investing and intend to make a long-term investment commitment. Like all
managed funds, there is a risk that the investment manager's strategy for
managing the Fund may not achieve the desired results. In addition, the price of
common stock moves up and down in response to corporate earnings and
developments, interest rate movements, economic and market conditions and
unanticipated events. As a result, the price of the Fund's investments may go
down, and you could lose money on your investment.
To the extent the Fund invests in fixed-income securities it takes on different
risks, including movements in interest rates and default on payment of principal
or interest. In addition, the Fund may invest in convertible securities rated
below investment grade, which may pose greater market, interest rate, prepayment
and credit risk. These issuers are less financially secure, and are more likely
to be hurt by interest rate movements. In addition, if the Fund does engage in
active trading, this will cause the Fund to have an increased portfolio turnover
rate. Higher turnover rates may result in higher brokerage costs to the Fund and
in higher net taxable gains for you as an investor.
See "Investment Techniques, Securities and Associated Risks" later in this
prospectus for more information on principal risks and other risks.
The Fund's Past Performance
The information below shows the Fund's performance through December 31, 2001.
These returns include reinvestment of all dividends and capital gains
distributions and reflect Fund expenses. They do not, however, reflect charges
and expenses deducted by your particular variable insurance contract or
retirement plan, which would lower performance. Therefore, they should only be
considered along with the total return information provided by your contract or
plan that reflects those charges and expenses. As with all mutual funds, past
performance does not guarantee future results.
Year-by-year returns show you how the Fund's performance has varied by
illustrating the differences for each full calendar year since the Fund began.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31(1)
[GRAPH]
<Table>
1997 24.99%
1998 25.03%
1999 59.05%
2000 -10.75%
2001 -25.26%
BEST QUARTER: 12/31/99 39.65%
WORST QUARTER: 9/30/01 -21.19%
</Table>
(1) Effective May 1, 2001, the Fund changed its name and non-fundamental
investment strategies from that of a growth and income fund to a large cap
growth fund.
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
7
Berger IPT Funds
Average annual total return is a measure of the Fund's performance over time.
The Fund's average annual return is compared to the Russell 1000 Growth Index,
the Fund's new benchmark index, and the Standard & Poor's 500 Index (S&P 500),
the Fund's previous benchmark index. The Fund changed its benchmark index to
correlate more closely to the investment style of the Fund. The Russell 1000
Growth Index is an unmanaged index, with dividends reinvested, which measures
the performance of those Russell 1000 companies with higher price-to-book ratios
and higher forecasted growth values. The S&P 500 is an unmanaged index, with
dividends reinvested, which consists of the common stocks of 500 publicly traded
U.S. companies. While the Fund does not seek to match the returns of either
index, they are good indicators of general stock market performance. You may not
invest in either index, and unlike the Fund, they do not incur fees or charges.
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2001(1)
<Table>
<Caption>
Life of the Fund
1 Year 5 Years (May 1, 1996)
------- ------- ----------------
The Fund -25.26% 10.64% 11.43%
Russell 1000 Growth -20.42% 8.27% 9.69%
S&P 500 -11.88% 10.70% 12.09%
</Table>
(1) Effective May 1, 2001, the Fund changed its name and non-fundamental
investment strategies from that of a growth and income fund to a large cap
growth fund.
Fund Expenses
As a shareholder in the Fund, you do not pay any sales load, redemption or
exchange fees, but you do indirectly bear Annual Fund Operating Expenses, which
vary from year to year.
<Table>
<Caption>
ANNUAL FUND OPERATING EXPENSES
(deducted directly from the Fund) %
- --------------------------------- ----
Management fee 0.75
Other expenses 0.14
----
Total Annual Fund Operating Expenses 0.89
====
</Table>
Understanding Expenses
Annual Fund Operating Expenses are paid by the Fund. As a result, they reduce
the Fund's return. Fund expenses include management fees and administrative
costs such as shareholder recordkeeping and reports, custodian and pricing
services and registration fees. They do not include any charges or expenses
deducted by your variable insurance contract or retirement plan, which would
increase expenses. Refer to your variable contract prospectus or retirement plan
documents for an explanation of those charges and expenses.
Example Costs
The following example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same for each period
o Redemption after the end of each period
o Reinvestment of all dividends and distributions
Your actual costs may be higher or lower, so this example should be used for
comparison only. Based on these assumptions, your costs at the end of each
period would be:
<Table>
<Caption>
YEARS $
- ----- -----
One 91
Three 284
Five 493
Ten 1,096
</Table>
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
8
Berger IPT -
Small Company
Growth Fund
The Fund's Goal and Principal Investment Strategies
The Fund aims for capital appreciation. In pursuing that goal, the Fund
primarily invests in the common stocks of small companies with the potential for
rapid revenue and earnings growth.
The Fund's stock selection focuses on companies that either occupy a dominant
position in an emerging industry or have a growing market share in a larger,
fragmented industry.
The Fund's investment manager generally looks for companies with:
o An innovative technology, product or service that may enable the company to
be a market share leader
o Strong entrepreneurial management with clearly defined strategies for growth
o Relatively strong balance sheets.
Under normal circumstances, the Fund invests at least 80% of its assets in
equity securities of companies whose market capitalization, at the time of
initial purchase, is less than the 12-month average of the maximum market
capitalization for companies included in the Russell 2000 Index. This average is
updated monthly. Shareholders will be provided at least 60 days notice prior to
any change to the Fund's 80% investment policy. In certain unusual
circumstances, the Fund may be unable to remain invested at these levels in
securities of companies with the stated market capitalization. The Fund's
investment manager will generally sell a security when it no longer meets the
manager's investment criteria or when it has met the manager's expectations for
appreciation. The Fund's investment manager may actively trade the portfolio in
pursuit of the Fund's goal.
Principal Risks
You may be interested in the Fund if you are comfortable with above-average risk
and intend to make a long-term investment commitment. Like all managed funds,
there is a risk that the investment manager's strategy for managing the Fund may
not achieve the desired results. In addition, the price of common stock moves up
and down in response to corporate earnings and developments, economic and market
conditions and unanticipated events. As a result, the price of the Fund's
investments may go down, and you could lose money on your investment.
The Fund's share price may fluctuate more than that of funds primarily invested
in stocks of mid-sized and large companies. Small company securities may
underperform as compared to the securities of larger companies. They may also
pose greater market, liquidity and information risks because of narrow product
lines, limited financial resources, less depth in management or a limited
trading market for their stocks. The Fund's investments are often focused in a
small number of business sectors, which may pose greater market and liquidity
risks. In addition, the Fund's active trading will cause the Fund to have an
increased portfolio turnover rate. Higher turnover rates may result in higher
brokerage costs to the Fund and in higher net taxable gains for you as an
investor.
See "Investment Techniques, Securities and Associated Risks" later in this
prospectus for more information on principal risks and other risks.
The Fund's Past Performance
The information below shows the Fund's performance through December 31, 2001.
These returns include reinvestment of all dividends and capital gains
distributions and reflect Fund expenses. They do not, however, reflect charges
and expenses deducted by your particular variable insurance contract or
retirement plan, which would lower performance. Therefore, they should only be
considered along with the total return information provided by your contract or
plan that reflects those charges and expenses. As with all mutual funds, past
performance does not guarantee future results.
Year-by-year returns show you how the Fund's performance has varied by
illustrating the differences for each full calendar year since the Fund began.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
[GRAPH]
<Table>
1997 21.21%
1998 1.87%
1999 91.45%
2000 -6.55%
2001 -33.47%
BEST QUARTER: 12/31/99 55.28%
WORST QUARTER: 9/30/01 -38.28%
</Table>
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
9
Berger IPT Funds
Average annual total return is a measure of the Fund's performance over time.
The Fund's average annual return is compared to the Russell 2000 Growth Index,
the Fund's new benchmark index, and the Russell 2000 Index, the Fund's previous
benchmark index. The Fund changed its benchmark index to correlate more closely
to the investment style of the Fund. The Russell 2000 Growth Index is an
unmanaged index, with dividends reinvested, which measures the performance of
those Russell 2000 companies with higher price-to-book ratios and higher
forecasted growth values. It is a generally recognized indicator used to measure
overall small company growth-stock performance. The Russell 2000 Index is an
unmanaged index, with dividends reinvested, which consists of the common stocks
of 2000 U.S. companies. While the Fund does not seek to match the returns of
either index, they are good indicators of general stock market performance. You
may not invest in either index, and unlike the Fund, they do not incur fees or
charges.
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2001
<Table>
<Caption>
Life of the Fund
1 Year 5 Years (May 1, 1996)
------- ------- ----------------
The Fund -33.47% 8.01% 6.93%
Russell 2000 Growth -9.23% 2.87% 1.42%
Russell 2000 2.49% 7.52% 7.56%
</Table>
Fund Expenses
As a shareholder in the Fund, you do not pay any sales load, redemption or
exchange fees, but you do indirectly bear Annual Fund Operating Expenses, which
vary from year to year.
<Table>
<Caption>
ANNUAL FUND OPERATING EXPENSES
(deducted directly from the Fund) %
- --------------------------------- ----
Management fee 0.85
Other expenses 0.13
----
Total Annual Fund Operating Expenses 0.98
====
</Table>
Understanding Expenses
Annual Fund Operating Expenses are paid by the Fund. As a result, they reduce
the Fund's return. Fund expenses include management fees and administrative
costs such as shareholder recordkeeping and reports, custodian and pricing
services and registration fees. They do not include any charges or expenses
deducted by your variable insurance contract or retirement plan, which would
increase expenses. Refer to your variable contract prospectus or retirement plan
documents for an explanation of those charges and expenses.
Example Costs
The following example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same for each period
o Redemption after the end of each period
o Reinvestment of all dividends and distributions
Your actual costs may be higher or lower, so this example should be used for
comparison only. Based on these assumptions, your costs at the end of each
period would be:
<Table>
<Caption>
YEARS $
- ----- -----
One 100
Three 312
Five 542
Ten 1,201
</Table>
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
10
Berger IPT -
International Fund
The Fund's Goal and Principal Investment Strategies
The Fund aims for long-term capital appreciation. In pursuing that goal, the
Fund primarily invests in common stocks of well-established foreign companies.
The Fund's investment manager first identifies economic and business themes that
it believes provide a favorable framework for selecting stocks. Using
fundamental analysis, the investment manager then selects individual companies
best positioned to take advantage of opportunities presented by these themes.
The Fund's investment manager generally looks for companies with:
o Securities that are fundamentally undervalued relative to their long-term
prospective earnings growth rates, their historic valuation levels and their
competitors
o Business operations predominantly in well-regulated and more stable foreign
markets
o Substantial size and liquidity, strong balance sheets, proven management and
diversified earnings.
The Fund invests primarily in common stocks with 65% of its total assets in
securities of companies located in at least five different countries outside the
United States. In certain unusual circumstances, the Fund may be unable to
remain invested in securities of companies at the stated market level. Recently,
the Fund has been weighted toward the United Kingdom, Europe and selectively in
Japan and the Far East. However, it may also invest in other foreign countries,
including developing countries. A majority of the Fund's assets are invested in
mid-sized to large capitalization companies. The Fund's investment manager will
generally sell a security when it no longer meets the manager's investment
criteria or when it has met the manager's expectations for appreciation.
Principal Risks
You may be interested in the Fund if you are comfortable with the risks of
international investing and intend to make a long-term investment commitment.
Like all managed funds, there is a risk that the investment manager's strategy
for managing the Fund may not achieve the desired results. In addition, the
price of common stock moves up and down in response to corporate earnings and
developments, economic and market conditions and unanticipated events. As a
result, the price of the Fund's investments may go down, and you could lose
money on your investment. There are additional risks with investing in foreign
countries, especially in developing countries--specifically, economic, market,
currency, liquidity, information, political and transaction risks. As a result
of these additional risks, the Fund may be more volatile than a domestic stock
fund. In addition, foreign stocks may not move in concert with the U.S. markets.
The Fund's investments are often focused in a small number of business sectors,
which may pose greater market and liquidity risks. In addition, the Fund may
invest in certain securities with unique risks, such as forward foreign currency
contracts, which may present hedging, credit, correlation, opportunity and
leverage risks.
See "Investment Techniques, Securities and Associated Risks" later in this
prospectus for more information on principal risks and other risks.
The Fund's Past Performance
The information below shows the Fund's performance through December 31, 2001.
These returns include reinvestment of all dividends and capital gains
distributions and reflect Fund expenses. They do not, however, reflect charges
and expenses deducted by your particular variable insurance contract or
retirement plan, which would lower performance. Therefore, they should only be
considered along with the total return information provided by your contract or
plan that reflects those charges and expenses. As with all mutual funds, past
performance does not guarantee future results.
Year-by-year returns show you how the Fund's performance has varied by
illustrating the differences for each full calendar year since the Fund began.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
[GRAPH]
<Table>
1998 16.13%
1999 31.24%
2000 -10.18%
2001 -20.27%
BEST QUARTER: 12/31/99 21.19%
WORST QUARTER: 9/30/98 -16.53%
</Table>
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
11
Berger IPT Funds
Average annual total return is a measure of the Fund's performance over time.
The Fund's average annual return is compared with the Morgan Stanley Capital
International Europe, Australasia and the Far East Index (EAFE Index), an
unmanaged index, with dividends reinvested, which represents major overseas
stock markets. While the Fund does not seek to match the returns of the EAFE
Index, this index is a good indicator of foreign stock markets. You may not
invest in the EAFE Index and, unlike the Fund, it does not incur fees or
charges.
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2001
<Table>
<Caption>
Life of the Fund
1 Year 5 Years (May 1, 1997)
------- ------- ----------------
The Fund -20.27% -2.04% 1.43%
EAFE Index -21.21% -4.79% 1.46%
</Table>
Fund Expenses
As a shareholder in the Fund, you do not pay any sales load, redemption or
exchange fees, but you do indirectly bear Annual Fund Operating Expenses, which
vary from year to year.
<Table>
<Caption>
ANNUAL FUND OPERATING EXPENSES
(deducted directly from the Fund) %
- --------------------------------- -----
Management fee 0.85
Other expenses 0.75
Total Annual Fund Operating Expenses 1.60
Fee Waiver and Reimbursement(1) (0.40)
-----
Net Expenses 1.20
=====
</Table>
(1) Under a written contract, the Fund's investment adviser waives its fee and
reimburses the Fund to the extent that, at any time during the life of the Fund,
the Fund's annual operating expenses exceed 1.20%. The contract may not be
terminated or amended except by a vote of the Fund's Board of Trustees.
Understanding Expenses
Annual Fund Operating Expenses are paid by the Fund. As a result, they reduce
the Fund's return. Fund expenses include management fees and administrative
costs such as shareholder recordkeeping and reports, custodian and pricing
services and registration fees. They do not include any charges or expenses
deducted by your variable insurance contract or retirement plan, which would
increase expenses. Refer to your variable contract prospectus or retirement plan
documents for an explanation of those charges and expenses.
Example Costs
The following example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same for each period
o Redemption after the end of each period
o Reinvestment of all dividends and distributions
Your actual costs may be higher or lower, so this example should be used for
comparison only. Based on these assumptions, your costs at the end of each
period would be:
<Table>
<Caption>
YEARS $
- ----- -----
One 122
Three 381
Five 660
Ten 1,455
</Table>
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
Berger IPT -
Large Cap Value Fund
The Fund's Goal and Principal Investment Strategies
The Fund aims for capital appreciation. In pursuing that goal, the Fund invests
primarily in the common stocks of large companies whose stock prices are
believed to be undervalued.
The Fund's investment manager uses fundamental analysis and proprietary
valuation models to select a core holding of stocks for the Fund. The Fund's
investment manager generally looks for companies:
o That have strong fundamentals and strong management
o Whose stock is trading at a discount relative to their intrinsic investment
value based on their assets, earnings, cash flow or franchise value
o Where there is a specific catalyst or event that has the potential to drive
appreciation of their stock toward intrinsic value.
Under normal circumstances, the Fund invests at least 80% of its assets in
common stocks of companies whose market capitalization, at the time of initial
purchase, is $9 billion or more. Shareholders will be provided at least 60 days
notice prior to any change to the Fund's 80% investment policy. In certain
unusual circumstances, the Fund may be unable to remain invested at these levels
in securities of companies with the stated market capitalization. The Fund's
investment manager will generally sell a security when it no longer meets the
manager's investment criteria or when it has met the manager's expectation for
appreciation.
Principal Risks
You may be interested in the Fund if you are comfortable with the risks of
equity investing and intend to make a long-term investment commitment. Like all
managed funds, there is a risk that the investment manager's strategy for
managing the Fund may not achieve the desired results. In addition, the price of
common stock moves up and down in response to corporate earnings and
developments, economic and market conditions and unanticipated events. As a
result, the price of the Fund's investments may go down, and you could lose
money on your investment.
The Fund's investments may focus in a small number of business sectors, which
may pose greater market and liquidity risks. In addition, the Fund may invest in
certain securities with unique risks, such as special situations, which could
present greater market and information risks.
See "Investment Techniques, Securities and Associated Risks" later in this
prospectus for more information on principal risks and other risks.
The Fund's Past Performance
The Fund has no performance history since it did not commence operations until
December 31, 2001.
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
13
Berger IPT Funds
Fund Expenses
As a shareholder in the Fund, you do not pay any sales loads, redemption or
exchange fees, but you do indirectly bear Annual Fund Operating Expenses, which
vary from year to year.
<Table>
<Caption>
ANNUAL FUND OPERATING EXPENSES(1)
(deducted directly from the Fund) %
- --------------------------------- -----
Management fee 0.75
Distribution (12b-1) fee 0.25
Other expenses 0.31
Total Annual Fund Operating Expenses 1.31
Fee Waiver and Expense Reimbursement(2) (0.36)
-----
Net Expenses 0.95
=====
</Table>
(1) Based on estimates for the Fund's first year of operations.
(2) Pursuant to a written agreement, the Fund's investment adviser waives its
fee and reimburses the Fund to the extent transfer agency, shareholder reporting
and registration expenses exceed 0.95% of the daily net assets during the fiscal
year. The agreement may not be terminated until December 31, 2002.
Understanding Expenses
Annual Fund Operating Expenses are paid by the Fund. As a result, they reduce
the Fund's return. Fund expenses include management fees, 12b-1 fees and
administrative costs such as shareholder recordkeeping and reports, custodian
and pricing services and registration fees. They do not include any charges or
expenses deducted by your variable insurance contract or retirement plan, which
would increase expenses. Refer to your variable contract prospectus or
retirement plan documents for an explanation of those charges and expenses.
Example Costs
The following example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same for each period (except that the
example reflects the expense reimbursement by Berger Financial Group LLC for
the one-year period and the first year of the three-year period)
o Redemption after the end of each period
o Reinvestment of all dividends and distributions
Your actual costs may be higher or lower, so this example should be used for
comparison only. Based on these assumptions, your costs at the end of each
period would be:
<Table>
<Caption>
YEARS $
- ----- ---
One 97
Three 380
</Table>
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
14
Berger IPT -
Mid Cap Value Fund
The Fund's Goal and Principal Investment Strategies
The Fund aims for capital appreciation. In pursuing that goal, the Fund
primarily invests in the common stocks of mid-sized companies whose stock prices
are believed to be undervalued.
The Fund's investment selection focuses on companies that have fallen out of
favor with the market or are temporarily misunderstood by the investment
community. To a lesser degree, the Fund also invests in companies that
demonstrate special situations or turnarounds, meaning companies that have
experienced significant business problems but are believed to have favorable
prospects for recovery.
The Fund's investment manager generally looks for companies with:
o A low price relative to their assets, earnings, cash flow or business
franchise
o Products and services that give them a competitive advantage
o Quality balance sheets and strong management.
The investment manager's philosophy is to weigh a security's downside risk
before considering its upside potential, which may help provide an element of
capital preservation. Under normal circumstances, the Fund invests at least 80%
of its assets in equity securities of mid-sized companies whose market
capitalization falls, at the time of initial purchase, within the 12-month
average of the capitalization range of the Russell Midcap Index. This average is
updated monthly. Shareholders will be provided at least 60 days notice prior to
any change to the Fund's 80% investment policy. In certain unusual
circumstances, the Fund may be unable to remain invested at these levels in
securities of companies with the stated market capitalization. The Fund's
investment manager will generally sell a security when it no longer meets the
manager's investment criteria or when it has met the manager's expectations for
appreciation. The Fund's investment manager may actively trade the portfolio in
pursuit of the Fund's goal.
Principal Risks
You may be interested in the Fund if you are comfortable with above-average risk
and intend to make a long-term investment commitment. Like all managed funds,
there is a risk that the investment manager's strategy for managing the Fund may
not achieve the desired results. In addition, the price of common stock moves up
and down in response to corporate earnings and developments, economic and market
conditions and unanticipated events. As a result, the price of the Fund's
investments may go down and you could lose money on your investment.
The Fund's share price may fluctuate more than that of funds primarily invested
in large companies. Mid-sized companies may pose greater market, liquidity and
information risks because of narrow product lines, limited financial resources,
less depth in management or a limited trading market for their stocks. The
Fund's investments are often focused in a small number of business sectors,
which may pose greater market and liquidity risks. In addition, the Fund may
invest in certain securities with unique risks, such as special situations which
could present increased market and information risks. The Fund's active trading
will cause the Fund to have an increased portfolio turnover rate. Higher
turnover rates may result in higher brokerage costs to the Fund and in higher
net taxable gains for you as an investor.
See "Investment Techniques, Securities and Associated Risks" later in this
prospectus for more information on principal risks and other risks.
The Fund's Past Performance
The Fund has no performance history since it did not commence operations until
December 31, 2001.
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
15
Berger IPT Funds
Fund Expenses
As a shareholder in the Fund, you do not pay any sales loads, redemption or
exchange fees, but you do indirectly bear Annual Fund Operating Expenses, which
vary from year to year.
<Table>
<Caption>
ANNUAL FUND OPERATING EXPENSES(1)
(deducted directly from the Fund) %
- --------------------------------- -----
Management fee 0.75
Distribution (12b-1) fee 0.25
Other expenses 0.33
-----
Total Annual Fund Operating Expenses 1.33
Fee Waiver and Reimbursement(2) (0.13)
-----
Net Expenses 1.20
=====
</Table>
(1) Based on estimates for the Fund's first year of operations.
(2) Pursuant to a written agreement, the Fund's investment adviser waives its
fee and reimburses the Fund to the extent transfer agency, shareholder reporting
and registration expenses exceed 1.20% of the daily net assets during the fiscal
year. The agreement may not be terminated until December 31, 2002.
Understanding Expenses
Annual Fund Operating Expenses are paid by the Fund. As a result, they reduce
the Fund's return. Fund expenses include management fees, 12b-1 fees and
administrative costs such as shareholder recordkeeping and reports, custodian
and pricing services and registration fees. They do not include any charges or
expenses deducted by your variable insurance contract or retirement plan, which
would increase expenses. Refer to your variable contract prospectus or
retirement plan documents for an explanation of those charges and expenses.
Example Costs
The following example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same for each period (except that the
example reflects the expense reimbursement by Berger Financial Group LLC for
the one-year period and the first year of the three-year period)
o Redemption after the end of each period
o Reinvestment of all dividends and distributions
Your actual costs may be higher or lower, so this example should be used for
comparison only. Based on these assumptions, your costs at the end of each
period would be:
<Table>
<Caption>
YEARS $
- ----- ---
One 122
Three 409
</Table>
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
16
Investment Techniques,
Securities and
Associated Risks
BEFORE YOU INVEST. . .
in any of the Funds, make sure you understand the risks involved. All
investments involve risk. Generally, the greater the risk, the greater the
potential for return. The reverse is also generally true--the lower the risk,
the lower the potential for return.
Like all mutual funds, an investment in the Funds is not a bank deposit and is
not insured or guaranteed by the FDIC or any other government agency. The Funds
are not a complete investment program, but may serve to diversify other types of
investments in your portfolio. There is no guarantee that the Funds will meet
their investment goals, and although you have the potential to make money, you
could also lose money by investing in the Funds.
The table on the following page will help you further understand the risks the
Funds take by investing in certain securities and the investment techniques used
by the Funds. A glossary follows the table. You may get more detailed
information about the risks of investing in the Funds in the Statement of
Additional Information (SAI), including a discussion of debt security ratings in
Appendix A to the SAI.
KEY TO TABLE
Follow down the columns under the name of the Fund in which you are interested.
The boxes will tell you:
Y Yes, the security or technique is permitted by a Fund and is
emphasized by a Fund.
----------------------------------------------------------------------
< Yes, the security or technique is permitted by a Fund.
(< denotes a hollow Y)
----------------------------------------------------------------------
N No, the security or technique is not permitted by a Fund.
----------------------------------------------------------------------
F The restriction is fundamental to a Fund. (Fundamental restrictions
cannot be changed without a shareholder vote.)
----------------------------------------------------------------------
5 Use of a security or technique is permitted, but subject to a
restriction of up to 5% of total assets.
----------------------------------------------------------------------
25 Use of a security or technique is permitted, but subject to a
restriction of up to 25% of total assets.
----------------------------------------------------------------------
33.3 Use of a security or technique is permitted, but subject to a
restriction of up to 33 1/3% of total assets.
----------------------------------------------------------------------
[] Use of a security or technique is permitted, but subject to a
restriction of up to 5% of net assets.
([] denotes a hollow 5)
----------------------------------------------------------------------
[][][] Use of a security or technique is permitted, but subject to a
restriction of up to 15% of net assets.
([][][] denotes a hollow 15)
----------------------------------------------------------------------
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
17
Berger IPT Funds
<Table>
<Caption>
RISK AND INVESTMENT TABLE
Berger IPT - Berger IPT - Berger IPT - Berger IPT - Berger IPT -
Berger IPT - Large Cap Small Company International Large Cap Mid Cap
Growth Fund Growth Fund Growth Fund Fund Value Fund Value Fund
------------ ------------ ------------- ------------- ------------ ------------
Diversification F F F F F F
- ------------------------------------------------------------------------------------------------------------------------------------
Small and mid-sized company securities Y < Y < < Y
Market, liquidity and information risk
- ------------------------------------------------------------------------------------------------------------------------------------
Foreign securities < < < Y < <
Market, currency, transaction, liquidity,
information, economic and political risk
- ------------------------------------------------------------------------------------------------------------------------------------
Sector focus Y < Y Y Y Y
Market and liquidity risk
- ------------------------------------------------------------------------------------------------------------------------------------
Convertible securities(1) < < < < < <
Market, interest rate, prepayment and
credit risk
- ------------------------------------------------------------------------------------------------------------------------------------
Investment grade bonds (nonconvertible) < < < < < <
Interest rate, market, call and credit risk
- ------------------------------------------------------------------------------------------------------------------------------------
Companies with limited operating histories 5F 5F < < < <
Market, liquidity and information risk
- ------------------------------------------------------------------------------------------------------------------------------------
Illiquid and restricted securities [][][] [][][] [][][] [][][] [][][] [][][]
Market, liquidity and transaction risk
- ------------------------------------------------------------------------------------------------------------------------------------
Special situations < < < < Y Y
Market and information risk
- ------------------------------------------------------------------------------------------------------------------------------------
Initial Public Offerings (IPOs) < < < < < <
Market, liquidity and information risk
- ------------------------------------------------------------------------------------------------------------------------------------
Temporary defensive measures < < < < < <
Opportunity risk
- ------------------------------------------------------------------------------------------------------------------------------------
Lending portfolio securities 33.3 33.3 33.3 33.3 33.3 33.3
Credit risk
- ------------------------------------------------------------------------------------------------------------------------------------
Borrowing 5F 5F 25F 25F 25F 25F
Leverage risk
- ------------------------------------------------------------------------------------------------------------------------------------
Hedging Strategies
- ------------------
Financial futures(2) [] [] [] N [] []
Hedging, correlation, opportunity and leverage risk
- ------------------------------------------------------------------------------------------------------------------------------------
Forward foreign currency contracts(2) < < < Y < <
Hedging, credit, correlation, opportunity
and leverage risk
- ------------------------------------------------------------------------------------------------------------------------------------
Options(2) (exchange-traded and over-the-counter) [] [] [] N [] []
Hedging, credit, correlation and leverage risk
- ------------------------------------------------------------------------------------------------------------------------------------
Writing (selling) covered call options(2) 25 25 25 N 25 25
(exchange-traded and over-the-counter)
Opportunity, credit and leverage risk
- ------------------------------------------------------------------------------------------------------------------------------------
</Table>
Notes to table:
(1) The Funds have no minimum quality standards for convertible securities,
although they will not invest in defaulted securities. They also will not invest
20% or more of their assets in convertible securities rated below investment
grade or in unrated convertible securities that the adviser or sub-adviser
considers to be below investment grade.
(2) The Funds may use futures, forwards and options only for hedging. Not more
than 5% of a Fund's net assets may be used for initial margins for futures and
premiums for options, although a Fund may have more at risk under these
contracts than the initial margin or premium. However, a Fund's aggregate
obligations under these contracts may not exceed the total market value of the
assets being hedged, such as some or all of the value of the Fund's equity
securities.
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
18
Risk and Investment
Glossary
BORROWING refers to a loan of money from a bank or other financial institution
undertaken by a Fund for temporary or emergency reasons only.
CALL RISK is the possibility that an issuer may redeem or "call" a fixed-income
security before maturity at a price below its current market price. An increased
likelihood of a call may reduce the security's price.
COMMON STOCK is a share of ownership (equity) interest in a company.
COMPANIES WITH LIMITED OPERATING HISTORIES are securities issued by companies
that have been in continuous operation for less than three years. Sometimes
called "unseasoned" issuers.
CONVERTIBLE SECURITIES are debt or equity securities that may be converted on
specified terms into stock of the issuer.
CORRELATION RISK occurs when a Fund "hedges" - uses one investment to offset the
Fund's position in another. If the two investments do not behave in relation to
each other the way the Fund managers expect them to, then unexpected results may
occur.
CREDIT RISK means that the issuer of a security or the counterparty to an
investment contract may default, be downgraded or become unable to pay its
obligations when due.
CURRENCY RISK happens when a Fund buys or sells a security denominated in
foreign currency. Foreign currencies "float" in value against the U.S. dollar.
Adverse changes in foreign currency values can cause investment losses when a
Fund's investments are converted to U.S. dollars.
DIVERSIFICATION means a diversified fund may not, with respect to at least 75%
of its assets, invest more than 5% of its assets in the securities of one
company. A nondiversified fund may be more volatile than a diversified fund
because it invests more of its assets in a smaller number of companies and the
gains or losses on a single stock will therefore have a greater impact on the
Fund's share price. The Berger IPT Funds are diversified funds.
ECONOMIC RISK is the risk associated with the fact that foreign economies are
often less diverse than the U.S. economy. This lack of diversity may lead to
greater volatility and could negatively affect foreign investment values. In
addition, it is often difficult for domestic investors to understand all the
economic factors that influence foreign markets, thus making it harder to
evaluate the Funds' holdings.
FINANCIAL FUTURES are exchange-traded contracts on securities, securities
indexes or foreign currencies that obligate the holder to take or make future
delivery of a specified quantity of those underlying securities or currencies on
a predetermined future date at a predetermined price.
FOREIGN SECURITIES are issued by companies located outside the United States. A
Fund considers a company to be located outside the United States if the
principal securities trading market for its equity securities is located outside
the U.S. or it is organized under the laws of, and has a principal office in, a
country other than the U.S.
FORWARD FOREIGN CURRENCY CONTRACTS are privately negotiated contracts committing
the holder to purchase or sell a specified quantity of a foreign currency on a
predetermined future date at a predetermined price.
HEDGING RISK comes into play when a Fund uses a security whose value is based on
an underlying security or index to "offset" the Fund's position in another
security or currency. The objective of hedging is to offset potential losses in
one security with gains in the hedge. However, a hedge can eliminate or reduce
gains as well as offset losses. (Also see "Correlation risk.")
ILLIQUID AND RESTRICTED SECURITIES are securities that, by rules of their issue
or by their nature, cannot be sold readily. These do not include liquid Rule
144A securities.
INFORMATION RISK means that information about a security or issuer might not be
available, complete, accurate or comparable.
INITIAL PUBLIC OFFERING (IPO) is the sale of a company's securities to the
public for the first time. IPO companies can be small and have limited operating
histories. The price of IPO securities can be highly unstable because of
prevailing market psychology and the small number of shares available. In
addition, the quality and number of IPOs available for purchase may diminish in
the future, and their contribution to Fund performance may be less significant
as a Fund grows in size.
INTEREST RATE RISK is the risk that changes in interest rates will adversely
affect the value of an investor's securities. When interest rates rise, the
value of fixed-income securities will generally fall. Conversely, a drop in
interest rates will generally cause an increase in the value of fixed-income
securities. Longer-term securities are subject to greater interest rate risk.
INVESTMENT-GRADE BONDS are rated BBB (Standard & Poor's) or Baa (Moody's) or
above. Bonds rated below investment grade are subject to greater credit risk
than investment-grade bonds.
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
19
Berger IPT Funds
LENDING PORTFOLIO SECURITIES to qualified financial institutions is undertaken
in order to earn income. The Funds lend securities only on a fully
collateralized basis.
LEVERAGE RISK occurs in some securities or techniques that tend to magnify the
effect of small changes in an index or a market. This magnified change can
result in a loss that exceeds the amount that was invested in the contract or
security.
LIQUIDITY RISK occurs when investments cannot be sold readily. A Fund may have
to accept a less-than-desirable price to complete the sale of an illiquid
security or may not be able to sell it at all.
MARKET CAPITALIZATION is the total current market value of a company's
outstanding common stock.
MARKET RISK exists in all mutual funds and means the risk that the prices of
securities in a market, a sector, or an industry will fluctuate and that such
movements might reduce an investment's value.
OPPORTUNITY RISK means missing out on an investment opportunity because the
assets necessary to take advantage of it are committed to less advantageous
investments or strategies.
OPTIONS are contracts giving the holder the right but not the obligation to
purchase or sell a security on or before a predetermined future date at a fixed
price. Options on securities indexes are similar but settle in cash.
POLITICAL RISK comes into play with investments, particularly foreign
investments, that may be adversely affected by nationalization, taxation, war,
government instability or other economic or political actions or factors.
PREPAYMENT RISK is the risk that, as interest rates fall, borrowers are more
likely to refinance their debts. As a result, the principal on certain
fixed-income securities may be paid earlier than expected, which could cause
investment losses and cause prepaid amounts to have to be reinvested at a
relatively lower interest rate.
SECTOR FOCUS occurs when a significant portion of a Fund's assets are invested
in a relatively small number of related industries. These related industries, or
sectors, are narrowly defined segments of the economy, i.e. utilities,
technology, healthcare services, telecommunications, etc. There may be
additional risks associated with Funds whose investments are focused in a small
number of sectors. For example, competition among technology companies may
result in increasingly aggressive pricing of their products and services, which
may affect the profitability of companies in a Fund's portfolio. In addition,
because of the rapid pace of technological development, products or services
developed by companies in a Fund's portfolio may become rapidly obsolete or have
relatively short product cycles. As a result, the Fund's returns may be
considerably more volatile than the returns of a Fund that does not invest in
similarly related companies. The Funds will not concentrate 25% or more of their
total assets in any one industry. Sector focus may increase both market and
liquidity risk.
SMALL AND MID-SIZED COMPANY SECURITIES are securities issued by small or
mid-sized companies, as measured by their market capitalization. The market
capitalization range targeted by each of the Funds investing primarily in small
or mid-sized companies varies by Fund and appears in the description for those
Funds under the heading "The Fund's Goal and Principal Investment Strategies."
In general, the smaller the company, the greater its risks.
SPECIAL SITUATIONS are companies about to undergo a structural, financial or
management change that may significantly affect the value of their securities.
TEMPORARY DEFENSIVE MEASURES Although the Funds reserve the right to take
temporary defensive measures, it is the intention of the Funds to remain fully
invested at all times. In response to adverse market, economic, political, or
other conditions, a Fund's investment manager may believe taking temporary
defensive measures is warranted. When this happens, the Fund may increase its
investment in government securities and other short-term securities that are
inconsistent with the Fund's principal investment strategies. In addition,
certain unusual circumstances may force a Fund to temporarily depart from the
investment requirement implied by its name.
TRANSACTION RISK means that a Fund may be delayed or unable to settle a
transaction or that commissions and settlement expenses may be higher than
usual. In the case of foreign securities, use of a foreign securities depository
to maintain Fund assets may increase this risk. However, custodial risks of
using the depository may be minimized through analysis and continuous monitoring
by the Funds' primary custodian.
WRITING (SELLING) COVERED CALL OPTIONS is the selling of a contract to another
party that gives them the right but not the obligation to buy a particular
security from you. A Fund will write call options only if it already owns the
security (if it is "covered").
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
20
Buying and Selling
(Redeeming) Shares
The Funds sell their shares to variable contract accounts of participating
insurance companies or to qualified retirement plans. You may invest in shares
of the Funds only through this type of variable insurance contract or retirement
plan. If you invest through a variable insurance contract, your variable
contract account prospectus will explain how you can purchase or surrender a
contract, withdraw a portion of your investment, allocate to one or more of the
Funds or change existing allocations among investment alternatives. If you
invest through a retirement plan, your retirement plan documents will explain
this information. Not all of the Funds may be available under a particular
contract or plan, and certain contracts or plans may limit allocations among the
Funds. Purchases must be made in U.S. dollars drawn on U.S. banks.
The Funds do not impose any sales charges, commissions or redemption fees for
the sale or redemption of Fund shares. However, your participating insurance
company may impose a sales charge or other charge when you purchase a variable
insurance contract. If you invest through a retirement plan, your retirement
plan administrator may impose charges when you participate in the plan. In
addition, variable insurance contracts and retirement plans may involve other
charges and expenses not described in this prospectus. These charges and
expenses are described in your variable contract account prospectus or plan
document.
Fund Share Price
The price at which Fund shares are sold and redeemed is the share price or net
asset value (NAV). The share price for each Fund is determined by adding the
value of that Fund's investments, cash and other assets, deducting liabilities,
and then dividing that value by the total number of that Fund's shares
outstanding.
Each Fund's share price is calculated at the close of the regular trading
session of the New York Stock Exchange (the "Exchange") (normally 4:00 p.m.
Eastern time) each day that the Exchange is open. Share price is not calculated
on the days that the Exchange is closed.
For a purchase or redemption of Fund shares, the share price is the share price
next calculated after a purchase or redemption request is received in good order
and accepted by the Fund, or by any participating insurance company or
retirement plan administrator who has been authorized by the Fund to accept
requests on its behalf. To receive a specific day's share price for your
purchase or redemption request, your request must be received before the close
of the Exchange on that day.
Generally, payment for redeemed shares will be sent within seven days after
receipt of the redemption request in good order. However, payment may be
postponed under unusual circumstances, such as when normal trading is not taking
place on the Exchange, an emergency as defined by the Securities and Exchange
Commission exists, or as permitted by the Securities and Exchange Commission.
When the Funds calculate their share price, they value the securities they hold
at market value. Sometimes market quotes for some securities are not available
or are not representative of market value. Examples would be when events occur
that materially affect the value of a security at a time when the security is
not trading or when the securities are illiquid. In that case, securities may be
valued in good faith at fair value, using consistently applied procedures
decided on by the trustees. Money market instruments maturing within 60 days are
valued at amortized cost, which approximates market value. Assets and
liabilities expressed in foreign currencies are converted into U.S. dollars at
the prevailing market rates quoted by one or more banks or dealers shortly
before the close of the Exchange.
A Fund's foreign securities may trade on days that the Exchange is closed and
the Fund's daily share price is not calculated. As a result, the Fund's daily
share price may be affected and you will not be able to purchase or redeem
shares.
Other Information
Excessive Trading
The Funds do not permit excessive, short-term or other abusive trading practices
due to the potential negative impact upon portfolio management strategies and
overall Fund performance. The Funds reserve the right to reject any purchase or
exchange order and to revoke the exchange privilege from any investor that, in
the Funds' opinion, engages in trading that may be disruptive to the Funds, or
who has a history of excessive trading. Accounts under common ownership or
control may be considered together when evaluating the trading history.
Privacy Notice
To service your account, each Fund may collect personal information from you.
Personal information includes information you provide when opening an account or
when requesting investment literature, such as your name and address. Personal
information also includes your account balance and transaction information.
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
21
Berger IPT Funds
The Funds do not share, distribute or sell this information to any outside
company or individual without permission. Your personal information is used only
to service or maintain your account, including providing you with information on
Berger Funds' products and services. We will not disclose your personal
information to third parties, other than to service your account as permitted by
law, nor sell your personal information to third parties. Nor do we provide your
personal information to third parties for their marketing purposes. We may
disclose information as required by the Securities and Exchange Commission and
other federal and state regulatory agencies.
The Funds recognize the importance of protecting your personal and financial
information entrusted to us. Thus, we restrict access to your personal and
financial data to those authorized to service your account. These personnel,
like all personnel, are subject to a strict employment policy regarding
confidentiality. To further ensure your privacy, our web site uses 128-bit
internet security encryption protocol. As an added measure, we do not include
personal or account information in nonsecure e-mails that we send you via the
internet. Berger Funds' privacy policy may be changed or modified at any time.
RIGHTS RESERVED BY THE FUNDS
Berger Funds and their agents reserve certain rights including the following:
(1) to waive or reduce investment minimums and fees; (2) to increase investment
minimums following notice; (3) to refuse any purchase or exchange order; (4) to
terminate or modify the exchange privilege at any time; (5) to not cancel a
transaction once it has been submitted; (6) to discontinue offering shares of a
Fund; (7) to close any account if it is believed the shareholder is engaging in
activities which may be detrimental to the Funds; (8) to reject any trade not in
good order; (9) to freeze any account and suspend account services when notice
has been received of a dispute between the registered or beneficial account
owners, or there is reason to believe a fraudulent transaction may occur, or if
ordered to do so by a governmental agency; (10) to act on instructions believed
to be genuine; and (11) to suspend temporarily shareholder services and
telephone transactions, in case of an emergency.
REDEMPTIONS IN-KIND
Each Fund intends to redeem its shares only for cash, although in order to
protect the interest of remaining shareholders, it retains the right to redeem
its shares in-kind under unusual circumstances. In-kind payment means payment
will be made in portfolio securities rather than cash. If this occurs, you will
incur transaction costs if the securities are sold for cash. You may have
difficulty selling the securities and recovering the amount of the redemption if
the securities are illiquid.
Distributions and Taxes
Unless an election is made on behalf of a variable contract account or
retirement plan to receive distributions in cash, they will be reinvested
automatically in Fund shares.
The Funds generally make two kinds of distributions:
o Capital gains from the sale of portfolio securities held by a Fund.
o Net investment income from interest or dividends received on securities held
by a Fund.
Distributions made by the Funds will normally be capital gains. The Funds
generally will not distribute net investment income, although any net investment
income that is generated as a by-product of managing their portfolios will be
distributed.
Each of the Funds intends to declare dividends representing the Fund's net
investment income annually, normally in December. It is also the present policy
of each Fund to distribute annually all of its net realized capital gains.
As a variable insurance contract owner or retirement plan participant, you
typically would not owe taxes on any distributions of income or capital gains
made by the Funds that are attributed to your account. You may owe taxes if you
make a withdrawal from your account, however, depending on the applicable tax
laws. You should refer to the appropriate variable contract account prospectus
or plan documents for further information on the Federal income tax treatment of
the owners of variable insurance contracts and qualified plan participants.
Whether participating insurance companies are subject to taxes on the Funds'
distributions depends on their tax status. Participating insurance companies
should consult their own tax advisors concerning whether distributions are
subject to federal income taxes if retained as part of contract reserves.
The Funds reserve the right to reinvest into your account undeliverable or
uncashed distribution checks that remain outstanding for six months, or
dividends or distributions of less than $10. The distribution amount will be
reinvested in shares of the applicable Fund at the share price next computed
after the check is canceled.
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
22
Organization of the
Funds
Investment Managers
The following companies provide investment management and administrative
services to the Funds. The advisory fees paid to them for the most recent fiscal
year are shown in the following table as a percentage of each Fund's average
daily net assets.
BERGER FINANCIAL GROUP LLC (BFG) (FORMERLY BERGER LLC) (210 University Blvd.,
Suite 800, Denver, CO 80206) serves as investment adviser, sub-adviser or
administrator to mutual funds and institutional investors. BFG has been in the
investment advisory business since 1974 managing growth and balanced funds. When
acting as investment adviser, BFG is responsible for managing the investment
operations of the Funds. BFG also provides administrative services to the Funds.
BANK OF IRELAND ASSET MANAGEMENT (U.S.) LIMITED (BIAM) (75 Holly Hill Lane,
Greenwich, CT 06830 [representative office]; 26 Fitzwilliam Place, Dublin 2,
Ireland [main office]) serves as investment adviser or sub-adviser to pension
and profit-sharing plans and other institutional investors and mutual funds.
Bank of Ireland's investment management group was founded in 1966. As
sub-adviser, BIAM provides day-to-day management of the investment operations of
the Berger IPT-International Fund.
BAY ISLE FINANCIAL LLC (BAY ISLE) (475 14th Street, Suite 550, Oakland,
California 94612), has been in the investment advisory business since 1987 and
provides day-to-day management of the investment operations as sub-adviser of
the Berger IPT-Large Cap Value Fund. Bay Isle is a wholly owned subsidiary of
BFG.
PERKINS, WOLF, MCDONNELL & COMPANY (PWM) (310 S. Michigan Avenue, Suite 2600,
Chicago, IL 60604) has been in the investment management business since 1984 and
provides day-to-day management of the investment operations as sub-adviser of
the Berger IPT-Mid Cap Value Fund.
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
23
Berger IPT Funds
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------
Advisory Fee
Fund Paid by the Fund The Fund's Investment Manager
- ---------------------------------------------------------------------------------------------
Berger IPT-Growth 0.75% paid to Jay W. Tracey, CFA, Executive Vice
Fund BFG(1) President and Chief Investment Officer of
BFG, assumed management of the Fund in
August 2000. Mr. Tracey joined BFG in June
2000. From November 1995 to May 2000, he was
Vice President and Portfolio Manager of
Oppenheimer Funds where he managed emerging
growth funds. Mr. Tracey has more than 25
years experience in the investment
management industry.
- ---------------------------------------------------------------------------------------------
Berger IPT-Large 0.75% paid to BFG Steven L. Fossel, CFA, Vice President of
Cap Growth Fund BFG, has been the portfolio manager of the
Berger IPT-Large Cap Growth Fund since August
2000. Mr. Fossel assumed sole portfolio
management of the Fund in December 2001. Mr.
Fossel managed the Fund on an interim basis
from August 2000 to January 2001,and as a
team portfolio manager with Jay W. Tracey from
January to December 2001. Mr. Fossel joined
BFG in March 1998 as a Senior Equity Analyst.
Previously, Mr. Fossel was Vice President
(from January 1996 to February 1998) and an
equity analyst (from August 1992 to January
1996) with Salomon Brothers Asset Management
and assistant portfolio manager of the
Salomon Total Return Fund from January 1997
to February 1998. Mr. Fossel has more than 10
years of experience in the investment
management industry.
- ---------------------------------------------------------------------------------------------
Berger IPT-Small 0.85% paid to BFG Paul A. LaRocco, CFA, Vice President of BFG,
Company Growth assumed management of the Fund in January
Fund 2001 when he joined BFG. Prior to joining
Berger, Mr. LaRocco co-managed small and
mid-cap funds for Montgomery Asset Management
from January 2000 to December 2000. From
March 1998 to December 1999,he was a Senior
Portfolio Manager for small and mid-cap
growth funds at Founders Asset Management
and from 1993 to March 1998, he was a
Portfolio Manager for small and mid-cap
funds with Oppenheimer Funds. Mr. LaRocco has
more than 11 years of experience in the
investment management industry.
- ---------------------------------------------------------------------------------------------
Berger IPT- 0.85% paid to BIAM, using a team approach, has been the
International Fund BFG(1) investment manager for the Fund since its
inception in 1997. BIAM is the sub-adviser to
the Fund and is part of Bank of Ireland's
asset management group, established in 1966.
BIAM is also the investment manager for the
Berger International Portfolio. Most of the
team of investment professionals have been
with the group for at least 10 years.
- ---------------------------------------------------------------------------------------------
Berger IPT-Large 0.75% paid to William F. K. Schaff, CFA, has been an
Cap Value Fund BFG(2) investment manager for the Fund since its
inception in December 2001. Mr. Schaff joined
BFG as Portfolio Manager in September 2001.
Mr. Schaff co-founded and was the Chief
Executive Officer and Chief Investment Officer
of Bay Isle Financial Corporation. Effective
December 2001, BFG acquired all outstanding
shares of Bay Isle Financial Corporation and
Bay Isle Financial Corporation, now Bay Isle
Financial LLC, became a subsidiary of BFG. Mr.
Schaff is President of Bay Isle Financial LLC.
Mr. Schaff has been managing large cap value
accounts of Bay Isle clients since 1987. Steve
Block, CFA, has been an investment manager for
the Fund since its inception in December 2001.
Mr. Block joined BFG as Portfolio Manager in
September 2001. Mr. Block has served as the
senior equity analyst for the large cap value
products of Bay Isle since August 1996.
- ---------------------------------------------------------------------------------------------
Berger IPT-Mid Cap 0.75% paid to Thomas M. Perkins has been the lead
Value Fund BFG(2) investment manager for the Berger IPT-Mid Cap
Value Fund since its inception in December
2001. Thomas Perkins has been an investment
manager since 1974 and joined Perkins, Wolf,
McDonnell & Company as a portfolio manager in
1998.Previously, he was a portfolio manager of
valuation sensitive growth portfolios for
Alliance Capital from 1984 to June 1998. As
lead manager, Tom Perkins is responsible for
the daily decisions of the Fund's security
selection. Robert H. Perkins has served as
investment manager of the Berger IPT-Mid Cap
Value Fund since its inception in December
2001, and as investment manager of the Berger
Small Cap Value Fund since its inception in
1985. Robert Perkins has been an investment
manager since 1970 and serves as President and
a director of PWM. Jeffrey Kautz, CFA, has
been an investment manager for the Berger
IPT-Mid Cap Value Fund since its inception in
December 2001. Jeff Kautz has served as a
research analyst for the value products of PWM
since October 1997. Previously, Jeff worked as
a market maker for the G.V.R. Company from
1995 to October 1997.
- ---------------------------------------------------------------------------------------------
</Table>
(1) After waivers, advisory fees paid were: Berger IPT-Growth Fund 0.67% and
Berger IPT-International Fund 0.45%.
(2) The investment advisory fees charged to the Berger IPT-Mid Cap Value Fund
and Berger IPT-Large Cap Value Fund are:0.75% of the first $500 million of
average daily net assets; 0.70% of the next $500 million and 0.65% in excess of
$1 billion. The Funds commenced operations on December 31, 2001, therefore no
investment advisory fees were paid in 2001.
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
24
Berger IPT Funds
Past Performance of Similar Funds
Each Fund's investment manager also acts as the investment manager for a
corresponding retail Berger Fund, which has the same investment objective and
substantially the same investment strategies and policies as the Fund. Set out
is performance information for each Fund and/or its corresponding retail Berger
Fund. This information is provided so you can consider the performance history
of the Funds' investment managers with funds substantially similar to the Funds.
The Berger IPT-Large Cap Value Fund's corresponding retail fund was added as a
new series in September 2001, therefore there is no corresponding performance
information.
You should not consider the performance information for the corresponding retail
Berger Funds as a substitute for the performance of the Funds, nor as an
indication of the past or future performance of the Funds.
Despite their similarity, there are differences between the Funds and their
corresponding retail Berger Funds, and their performance is expected to differ.
The following should be noted in considering the performance information:
o Each of the Funds is smaller than its corresponding retail Berger Fund and
cash flows vary significantly. Differences in asset size and in cash flow
resulting from purchases and redemption of Fund shares may result in
different security selections, differences in the relative weightings of
securities or differences in the prices paid for particular portfolio
holdings.
o The performance information for the Berger IPT-Growth Fund , Berger IPT-Large
Cap Growth Fund, Berger IPT-Small Company Growth Fund and Berger
IPT-International Fund each reflect fee waivers and expense reimbursements by
the Funds' adviser, without which performance would be lower.
o Each of the Berger retail funds has a 12b-1 fee that will impact the
performance of the respective retail fund.
o The following information does not reflect the deduction of charges or
expenses attributable to the variable insurance contract or retirement plan
through which you would be purchasing your Fund shares, which would lower
your returns.
AVERAGE ANNUAL TOTAL RETURNS OF THE FUNDS AND SIMILAR
FUNDS (AS OF DECEMBER 31, 2001)
<Table>
<Caption>
Berger IPT- Berger
Growth Growth
Fund Fund(1)
----------- -------
1 Year -32.51% -32.47%
Since Inception of the
Berger IPT-Growth Fund (5/1/96) 2.36% 2.20%
5 Year 1.89% 1.94%
10 Year n/a 6.43%
Since Inception of the Berger
Growth Fund (9/30/74) n/a 12.55%
</Table>
(1) As of December 31, 2001, the retail Berger Growth Fund had assets of
approximately $836,482,000.
<Table>
<Caption>
Berger IPT- Berger
Large Cap Large Cap
Growth Fund Growth Fund(1)
----------- --------------
1 Year -25.26% -26.38%
Since Inception of the Berger IPT-
Large Cap Growth Fund (5/1/96) 11.43% 10.15%
5 Year 10.64% 9.64%
10 Year n/a 10.33%
Since Inception of the Berger
Large Cap Growth Fund (9/30/74) n/a 12.95%
</Table>
(1) As of December 31, 2001, the retail Berger Large Cap Growth Fund had assets
of approximately $352,480,000.
<Table>
<Caption>
Berger Small
Berger IPT- Company Growth
Small Company Fund-Investor
Growth Fund Shares(1)
------------- --------------
1 Year -33.47% -33.82%
Since Inception of the Berger IPT-
Small Company Growth Fund (5/1/96) 6.93% 6.98%
5 Year 8.01% 8.26%
Since Inception of the Berger
Small Company Growth Fund (12/30/93) n/a 12.90%
</Table>
(1) As of December 31, 2001, the retail Berger Small Company Growth Fund had
assets of approximately $737,953,000.
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
25
Berger IPT Funds
<Table>
<Caption>
Berger IPT- Berger
International International
Fund Fund(1,2)
------------- -------------
1 Year -20.27% -22.19%
Since Inception of the Berger
IPT-International Fund (5/1/97) 1.43% 1.66%
5 Year n/a 1.54%
10 Year n/a 7.73%
Since Inception of the Berger
International Fund (7/31/89) n/a 8.59%
</Table>
(1) As of December 31, 2001, the retail Berger International Fund had assets of
approximately $21,570,000.
(2) Predecessor Performance: Performance figures for the retail Berger
International Fund covering periods prior to October 11, 1996, include the
performance of a pool of assets advised by that Fund's investment manager for
periods before that Fund began operations. This performance was adjusted to
reflect the increased expenses expected in operating that Fund, net of fee
waivers. The asset pool was not registered with the SEC and was not subject to
the investment restrictions imposed on mutual funds. If the pool had been
registered, its performance might have been adversely affected.
<Table>
<Caption>
Berger IPT- Berger
Mid Cap Mid Cap
Value Fund Value Fund(1)
----------- -------------
1 Year n/a 20.52%
Since Inception of the Berger
Mid Cap Value Fund (8/12/98) n/a 25.06%
</Table>
(1) As of December 31, 2001, the retail Berger Mid Cap Value Fund had assets of
approximately $264,847,000.
Additional Information
PORTFOLIO TURNOVER
Portfolio changes are made whenever a Fund's investment manager believes that
the Fund's goal could be better achieved by investment in another security,
regardless of portfolio turnover. At times, portfolio turnover for a Fund may
exceed 100% per year. A turnover rate of 100% means the securities owned by a
Fund were replaced once during the year. Higher turnover rates may result in
higher brokerage costs to the Fund. Portfolio turnover rates can be found under
the heading "Financial Highlights."
12b-1 Arrangements
You pay no sales charge or commissions when you buy or sell Fund shares.
However, the Berger IPT-Mid Cap Value and Berger IPT-Large Cap Value Fund have
adopted a 12b-1 plan permitting them to pay a fee in connection with
distribution of their shares. Berger Financial Group LLC is entitled to be paid
a fee of 0.25% of these Funds' average daily net assets. Because this fee is
paid on an ongoing basis, this may result in the cost of your investment
increasing and over time may cost you more than other types of sales charges.
The fee may be used for such things as marketing and promotion, compensation to
dealers and others who provide distribution and administrative services, and
shareholder support services (such as routine requests for information).
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
26
Financial Highlights
The financial highlights will help you understand each Fund's financial
performance for the periods indicated. Certain information reflects financial
results for a single Fund share. Total return shows how much your investment in
the Fund increased or decreased during each period, assuming you reinvested all
dividends and distributions, but does not reflect charges and expenses deducted
by your variable insurance contract or retirement plan. PricewaterhouseCoopers
LLP, independent accountants, audited this information. Their report is included
in the Funds' annual report, which is available without charge upon request.
Berger IPT-Growth Fund
For a Share Outstanding Throughout the Period
<Table>
<Caption>
Year Ended December 31,
-------------------------------------------------------------------
2001 2000 1999 1998 1997
---------- ----------- ---------- ---------- ----------
Net asset value, beginning of period $ 15.32 $ 19.22 $ 12.89 $ 11.11 $ 10.39
---------- ----------- ---------- ---------- ----------
From investment operations
Net investment income (loss) -- (0.00)(1) -- 0.02 0.01
Net realized and unrealized gains (losses) from
investments and foreign currency transactions (4.98) (3.37) 6.33 1.79 1.39
---------- ----------- ---------- ---------- ----------
Total from investment operations (4.98) (3.37) 6.33 1.81 1.40
---------- ----------- ---------- ---------- ----------
Less dividends and distributions
Dividends (from net investment income) -- -- (0.00)1 (0.02) (0.04)
Distributions (from net realized gains on investments) -- (0.53) -- (0.01) (0.64)
---------- ----------- ---------- ---------- ----------
Total dividends and distributions -- (0.53) -- (0.03) (0.68)
---------- ----------- ---------- ---------- ----------
Net asset value, end of period $ 10.34 $ 15.32 $ 19.22 $ 12.89 $ 11.11
---------- ----------- ---------- ---------- ----------
Total Return (32.51)% (17.51)% 49.13% 16.29% 13.76%
---------- ----------- ---------- ---------- ----------
Ratios/Supplemental Data:
Net assets, end of period $8,435,777 $11,730,432 $6,665,664 $3,710,109 $1,233,892
Net expense ratio to average net assets(2) 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income (loss)
to average net assets (0.46)% (0.48)% (0.05)% 0.29% 0.51%
Gross expense ratio to average net assets 1.08% 1.30% 2.19% 2.88% 9.18%
Portfolio turnover rate 144% 80% 231% 258% 246%
</Table>
(1) Amount represents less than $0.01 per share.
(2) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Adviser. Gross and net expenses do not include the deduction
of any charges attributable to any particular variable insurance contract.
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
27
Financial Highlights
Berger IPT-Large Cap Growth Fund
For a Share Outstanding Throughout the Period
<Table>
<Caption>
Year Ended December 31,
-------------------------------------------------------------------
2001 2000 1999 1998 1997
----------- ----------- ----------- ---------- ----------
Net asset value, beginning of period $ 22.98 $ 26.45 $ 16.63 $ 13.39 $ 11.14
----------- ----------- ----------- ---------- ----------
From investment operations
Net investment income 0.12 0.05 0.02 0.10 0.01
Net realized and unrealized gains (losses) from
investments and foreign currency transactions (5.92) (2.90) 9.80 3.25 2.75
----------- ----------- ----------- ---------- ----------
Total from investment operations (5.80) (2.85) 9.82 3.35 2.76
----------- ----------- ----------- ---------- ----------
Less dividends and distributions
Dividends (from net investment income) (0.09) -- -- (0.11) (0.10)
Distributions (from net realized gains on investments) -- (0.62) -- -- (0.41)
----------- ----------- ----------- ---------- ----------
Total dividends and distributions (0.09) (0.62) -- (0.11) (0.51)
----------- ----------- ----------- ---------- ----------
Net asset value, end of period $ 17.09 $ 22.98 $ 26.45 $ 16.63 $ 13.39
----------- ----------- ----------- ---------- ----------
Total Return (25.26)% (10.75)% 59.05% 25.03% 24.99%
----------- ----------- ----------- ---------- ----------
Ratios/Supplemental Data:
Net assets, end of period $33,322,878 $56,018,925 $24,871,949 $9,084,022 $1,501,118
Net expense ratio to average net assets(1) 0.89% 0.90% 1.00% 1.00% 1.00%
Ratio of net investment income
to average net assets 0.47% 0.38% 0.10% 1.10% 1.39%
Gross expense ratio to average net assets 0.89% 0.90% 1.19% 1.99% 9.62%
Portfolio turnover rate 102% 64% 149% 426% 215%
</Table>
(1) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Adviser. Gross and net expenses do not include the
deduction of any charges attributable to any particular variable insurance
contract.
Berger IPT-Small Company Growth Fund
For a Share Outstanding Throughout the Period
<Table>
<Caption>
Year Ended December 31,
--------------------------------------------------------------------
2001 2000 1999 1998 1997
----------- ----------- ----------- ---------- ----------
Net asset value, beginning of period $ 21.61 $ 23.51 $ 12.28 $ 12.06 $ 9.95
----------- ----------- ----------- ---------- ----------
From investment operations
Net investment income (loss) -- -- -- -- 0.00(2)
Net realized and unrealized gains (losses) from
investments and foreign currency transactions (7.23) (1.56) 11.23 0.23 2.11
----------- ----------- ----------- ---------- ----------
Total from investment operations (7.23) (1.56) 11.23 0.23 2.11
----------- ----------- ----------- ---------- ----------
Less dividends and distributions
Dividends (in excess of net investment income) -- -- -- (0.01) --
Distributions (from net realized gains on
investments) (0.15) (0.34) -- -- --
----------- ----------- ----------- ---------- ----------
Total dividends and distributions (0.15) (0.34) -- (0.01) --
----------- ----------- ----------- ---------- ----------
Net asset value, end of period $ 14.23 $ 21.61 $ 23.51 $ 12.28 $ 12.06
----------- ----------- ----------- ---------- ----------
Total Return (33.47)% (6.55)% 91.45% 1.87% 21.21%
----------- ----------- ----------- ---------- ----------
Ratios/Supplemental Data:
Net assets, end of period $56,200,619 $83,482,960 $41,334,809 $9,858,303 $2,719,559
Net expense ratio to average net assets(1) 0.98% 0.98% 1.15% 1.15% 1.15%
Ratio of net investment income (loss)
to average net assets (0.66)% (0.16)% (0.56)% (0.11)% 0.05%
Gross expense ratio to average net assets 0.98% 0.98% 1.53% 2.19% 5.81%
Portfolio turnover rate 160% 111% 179% 147% 194%
</Table>
(1) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Adviser. Gross and net expenses do not include the
deduction of any charges attributable to any particular variable insurance
contract.
(2) Amount represents less than $0.01 per share.
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
28
Financial Highlights
Berger IPT-International Fund
For a Share Outstanding Throughout the Period
<Table>
<Caption>
Year Ended December 31,
--------------------------------------------------------------------
2001 2000 1999 1998 1997(1)
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period $ 13.10 $ 14.63 $ 11.21 $ 9.79 $ 10.00
---------- ---------- ---------- ---------- ----------
From investment operations
Net investment income 0.21 0.10 0.03 0.08 0.05
Net realized and unrealized gains (losses) from
investments and foreign currency transactions (2.89) (1.59) 3.47 1.50 (0.26)
---------- ---------- ---------- ---------- ----------
Total from investment operations (2.68) (1.49) 3.50 1.58 (0.21)
---------- ---------- ---------- ---------- ----------
Less dividends and distributions
Dividends (from net investment income) (0.11) (0.04) (0.08) (0.14) --
Distributions (from net realized gains on investments) (0.72) -- -- (0.02) --
---------- ----------- ---------- ---------- ----------
Total dividends and distributions (0.83) (0.04) (0.08) (0.16) --
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 9.59 $ 13.10 $ 14.63 $ 11.21 $ 9.79
---------- ---------- ---------- ---------- ----------
Total Return(2) (20.27)% (10.18)% 31.24% 16.13% (2.10)%
---------- ---------- ---------- ---------- ----------
Ratios/Supplemental Data:
Net assets, end of period $5,510,162 $6,711,147 $6,122,261 $5,430,076 $2,705,831
Net expense ratio to average net assets(3) 1.20% 1.20% 1.20% 1.20% 1.20%(4)
Ratio of net investment income
to average net assets 1.80% 0.55% 0.51% 2.85% 0.86%(4)
Gross expense ratio to average net assets 1.60% 2.14% 2.46% 2.85% 3.83%(4)
Portfolio turnover rate(2) 24% 35% 26% 20% 14%
</Table>
(1) For the period from May 1, 1997 (commencement of investment operations) to
December 31, 1997.
(2) Not annualized.
(3) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Adviser. Gross and net expenses do not include the
deduction of any charges attributable to any particular variable insurance
contract.
(4) Annualized.
Berger IPT Funds - May 1, 2002 IPT Combined Prospectus
This page intentionally left blank
This page intentionally left blank
FOR MORE INFORMATION:
Additional information about the Funds' investments is available in the Funds'
annual and semi-annual reports to shareholders. The Funds' annual report
contains a discussion of the market conditions and investment strategies that
affected the Funds' performance over the past year.
You may wish to read the Statement of Additional Information (SAI) for more
information on the Funds and the securities in which they invest. The SAI is
incorporated into this prospectus by reference, which means that it is
considered to be part of the prospectus.
You can get free copies of the annual and semi-annual reports and the SAI,
request other information or get answers to your questions about the Funds by
calling or writing either a participating insurance company or the Funds at:
Berger Funds
P.O. Box 5005
Denver, CO 80217-5005
(800) 259-2820
bergerfunds.com
A downloadable file of the SAI and annual and semi-annual reports may also be
obtained at bergerfunds.com.
Text-only versions of Fund documents can be viewed online or downloaded from the
EDGAR database on the SEC's web site at http://www.sec.gov.
You can also review and obtain copies of more information about the Funds
(including the SAI) by visiting the SEC's Public Reference Room in Washington
D.C. For information on the operation of the Public Reference Room, call (202)
942-8090. Copies of documents may also be obtained, after paying a duplicating
fee, by sending your request to the following e-mail address:
publicinfo@sec.gov, or by writing to the SEC's Public Reference Room,
Washington, D.C. 20549-0102.
INVESTMENT COMPANY ACT FILE NUMBER:
Berger Institutional Products Trust 811-07367
o Berger IPT - Growth Fund
o Berger IPT - Large Cap Growth Fund
o Berger IPT - Small Company Growth Fund
o Berger IPT - International Fund
o Berger IPT - Large Cap Value Fund
o Berger IPT - Mid Cap Value Fund
5/02 IPT PROS
STATEMENT OF ADDITIONAL INFORMATION
JANUS ASPEN SERIES
100 FILLMORE STREET
DENVER, COLORADO 80206-4928
1-800-525-3713
This Statement of Additional Information is not a prospectus, but
should be read in conjunction with the Proxy Statement/Prospectus dated
___________, 2003 for the Special Meetings of Shareholders of Berger IPT-Growth
Fund, Berger IPT-Large Cap Growth Fund and Berger IPT-International Fund to be
held on March 7, 2003. Copies of the Proxy Statement/Prospectus may be obtained
at no charge by writing to the Janus Funds, P.O. Box 173375, Denver, Colorado
80217-3375, or by calling toll-free 1-800-525-3713. Unless otherwise indicated,
capitalized terms used herein and not otherwise defined have the same meanings
as are given to them in the Proxy Statement/Prospectus.
Further information about the Janus Funds is contained in and
incorporated by reference to the Janus Funds' Statement of Additional
Information ("SAI") dated May 1, 2002, as amended and/or supplemented, insofar
as they relate to the Janus Funds participating in the Reorganizations. No other
parts of the SAIs are incorporated by reference herein. The audited financial
statements and related independent accountant's report for the Janus Funds
contained in the Annual Report for the fiscal years ended December 31, 2001,
together with the unaudited financial statements of the Janus Funds contained in
the semi-annual report for the six months ended June 30, 2002, are hereby
incorporated herein by reference insofar as they relate to the Janus Funds
participating in the Reorganizations. No other parts of the Annual Reports are
incorporated by reference herein.
The unaudited pro forma financial statements, attached hereto, are
intended to present the financial condition and related results of operations of
JAS Growth and Income Portfolio as if Reorganizations had been consummated on
__________, 2002.
Further information about the Berger Funds is contained in and
incorporated by reference to the Berger Funds' Statement of Additional
Information dated May 1, 2002, insofar as they relate to the Berger Funds
participating in the Reorganizations. The audited financial statements and
related independent accountant's report for the Berger Funds contained in the
Annual Report for the fiscal year ended December 31, 2001, together with the
unaudited financial statements of the Berger Funds contained in the semi-annual
report for the six months ended June 30, 2002, are incorporated herein by
reference insofar as they relate to the Berger Funds participating in the
Reorganizations.
The date of this Statement of Additional Information is ________, 2003.
S-1
Schedule of Investments
As of June 30, 2002 (unaudited)
SHARES
<Table>
<Caption>
Janus Aspen Growth
Berger IPT - Large Cap Growth Fund and Income Portfolio Combined
---------------------------------- --------------------- --------
Common Stock 85.5%
Advertising Agencies 0.2%
2,200 - 2,200
Advertising Sales 0.3%
- 9,210 9,210
Aerospace and Defense 0.8%
- 7,980 7,980
4,300 4,300
Applications Software 2.7%
18,880 66,785 85,445
Automotive - Cars and Light Trucks 0.80%
- 33,315 33,315
Automotive - Truck Parts and Equipment 0.9%
- 120,345 120,345
Beverages - Non-Alcoholic 3.1%
- 99,620 99,620
4,400 64,466 68,886
Brewery 1.6%
- 56,328 56,328
Broadcast Services and Programming 3.0%
6,000 40,570 46,570
- 391,378 391,378
Cable Television 3.2%
- 5,380 5,380
11,850 130,638 142,488
- 74,321 74,321
Casino Hotels 0.8%
- 136,380 136,380
Chemicals - Diversified 2.0%
- 78,893 78,893
Commercial Services - Finance 1.0%
-
14,100 - 14,100
44.782 44,782
Computer Services 0.8%
- 72,570 72,570
Computers 0.7%
- 44,105 44,105
11,300 - 11,300
2,090 - 2,090
Computers - Integrated Systems 0.0%
5,000 - 5,000
Consulting Services 0.4%
- 40,350 40,350
Cosmetics and Toiletries 1.7%
- 12,570 12,570
2,200 24,735 28,935
Cruise Lines 0.1%
8,000 - 8,000
<Caption>
MARKET VALUE
Berger IPT - Large Cap Janus Aspen Growth and
Growth Fund Income Portfolio Combined
---------------------- ---------------------- --------------
Omnicom Group, Inc. 100,760 - 100,760
Lamar Advertising Co.* - 342,704 342,704
General Dynamics Corp. - 848,673 848,673
Lockheed Martin Corp. 298,850 - 298,850
Microsoft Corp.* 1,020,702 3,653,139 4,673,841
BMW A.G. - 1,373,689 1,373,689
Delphi Corp. - 1,588,554 1,588,554
Coca-Cola Enterprises, Inc. - 2,199,610 2,199,610
PepsiCo, Inc. 212,080 3,107,261 3,319,341
Anheuser-Busch Companies, Inc. - 2,816,400 2,816,400
Clear Channel Communications, Inc.* 192,120 1,299,051 1,491,171
Liberty Media Corp. - Class A* - 3,718,091 3,718,091
Comcast Corp. - Class A* - 130,196 130,196
Comcast Corp. - Special Class A* 282,504 3,114,410 3,396,914
Cox Communications, Inc. - Class A* - 2,047,544 2,047,544
Park Place Entertainment Corp.* - 1,397,895 1,397,895
E.L. du Pont de Nemours and Co. - 3,502,849 3,502,849
Concord EFS, Inc.* 424,974 - 424,974
Paychex, Inc. - 1,400,603 1,400,603
Ceridian Corp.* - 1,377,379 1,377,379
Apple Computer, Inc.* - 781,541 781,541
Dell Computer Corp.* 285,382 - 295,382
IBM Corp. 150,480 - 150,480
Brocade Communications Systems, Inc.* 87,400 - 87,400
Accenture, Ltd. - Class A* - 766,650 766,650
Colgate-Palmolive Co. - 629,129 629,129
Procter & Gamble Co. 196,460 2,208,835 2,405,295
Carnival Corp. 221,520 - 221,520
</Table>
S-2
<Table>
Data Processing and Management 0.3%
-- 7,015 7,015
5,400 -- 5,400
Diversified Financial Services 3.7%
9,173 159,095 168,268
Diversified Operations 5.7%
-- 14,260 14,260
28,020 130,433 158,453
-- 102,605 102,605
E-Commerce/Services 0.1%
3,100 -- 3,100
Electric - Integrated 0.9%
-- 49,900 49,900
Electronic Components - Miscellaneous 0.1%
9,300 -- 9,300
Electronic Components - Semiconductors 0.5%
17,000 -- 17,000
6,000 -- 6,000
4,400 -- 4,400
15,800 -- 15,800
Electronic Forms 0.1%
8,000 -- 8,000
Engineering - Research and Development 1.2%
-- 53,280 53,280
Enterprise Software/Services 0.1%
12,000 -- 12,000
Entertainment Software 0.6%
-- 15,505 15,505
Finance - Consumer Loans 2.1%
-- 72,495 72,495
Finance - Credit Card 0.2%
4,600 -- 4,600
Finance - Investment Bankers/Brokers 3.2%
2,800 22,845 25,645
-- 105,760 105,760
-- 3,300 3,300
Finance - Mortgage Loan Banker 0.2%
4,400 -- 4,400
2,000 -- 2,000
Financial Guarantee Insurance 0.9%
-- 23,920 23,920
Food - Diversified 0.3%
-- 14,600 14,600
Food - Retail 1.0%
-- 87,645 87,645
Hotels and Motels 0.6%
38,182 38,182
Insurance Brokers 2.2%
-- 40,229 40,229
Internet Brokers 0.4%
-- 65,516 65,516
Investment Management and Advisory Services 0.7%
-- 37,275 37,275
Life and Health Insurance 2.8%
</Table>
<Table>
Automatic Data Processing, Inc. -- 305,503 305,503
First Data Corp. 200,880 -- 200,880
Citigroup, Inc. 355,454 6,164,931 6,520,385
3M Co. -- 1,753,980 1,753,980
General Electric Co. 813,981 3,789,079 4,603,060
Honeywell International, Inc. -- 3,614,774 3,614,774
eBay, Inc.* 191,022 -- 191,022
Duke Energy Corp. -- 1,551,890 1,551,890
Celestica, Inc.- New York Shares* 211,203 -- 211,203
Intel Corp. 310,590 -- 310,590
Intersil Corp. - Class A* 128,280 -- 128,280
Micron Technology, Inc.* 88,968 -- 88,968
Texas Instruments, Inc. 374,460 -- 374,460
Adobe Systems, Inc. 228,000 -- 228,000
Fluor Corp. -- 2,075,256 2,075,256
Oracle Corp.* 113,640 -- 113,640
Electronic Arts, Inc.* -- 1,024,105 1,024,105
Household International, Inc. -- 3,603,002 3,603,002
Capital One Financial Corp. 280,830 -- 280,830
Goldman Sachs Group, Inc. 205,380 1,675,681 1,881,061
J.P. Morgan Chase & Co. -- 3,587,379 3,587,379
Lehman Brothers Holdings, Inc. -- 206,316 206,316
Federal Home Loan Mortgage Corp. 269,280 -- 269,280
Fannie Mae 147,500 -- 147,500
MGIC Investment Corp. -- 1,621,776 1,621,776
H.J. Heinz Co. -- 600,060 600,060
Kroger Co.* -- 1,744,135 1,744,135
Fairmont Hotels & Resorts, Inc. - New York Shares -- 984,332 984,332
Marsh & McLennan Companies, Inc. -- 3,886,121 3,886,121
Charles Schwab Corp. -- 733,779 733,779
T. Rowe Price Group, Inc. -- 1,225,602 1,225,602
</Table>
S-3
<Table>
-- 33,170 33,170
-- 14,310 14,310
-- 39,659 39,659
-- 34,255 34,255
Medical - Biomedical/Gene 0.3%
9,280 -- 9,280
6,330 -- 6,330
Medical - Drugs 5.3%
4,700 -- 4,700
3,000 23,762 26,762
1,800 -- 1,800
26,800 69,045 95,845
14,280 -- 14,280
10,990 55,200 66,190
Medical - HMO 0.1%
2,500 -- 2,500
Medical - Hospitals 0.5%
10,300 -- 10,300
6,250 -- 6,250
Medical - Wholesale Drug Distribution 0.2%
7,000 -- 7,000
Medical Instruments 1.2%
4,650 45,314 49,964
Medical Products 0.5%
9,200 -- 9,200
7,700 -- 7,700
Metal - Aluminum 0.1%
6,900 -- 6,900
Motorcycle and Motor Scooter Manufacturing 0.6%
2,000 18,963 20,963
Multi-Line Insurance 2.1%
4,580 50,565 55,145
Multimedia 3.1%
9,980 -- 9,980
-- 5,370 5,370
8,700 81,954 90,654
-- 49,795 49,795
NETWORKING PRODUCTS 0.2%
28,718 -- 28,718
Oil - Field Services 0.2%
6,900 -- 6,900
Oil Companies - Integrated 5.5%
-- 84,480 84,480
-- 64,024 64,024
-- 123,570 123,570
3,280 -- 3,280
Oil and Gas Drilling 0.1%
6,800 -- 6,800
Pipelines 0.4%
Printing - Commercial -- 20,546 20,546
0.6%
-- 27,036 27,036
Property and Casualty Insurance 0.1%
-- 2,190 2,190
</Table>
<Table>
AFLAC, Inc. -- 1,061,440 1,061,440
CIGNA Corp. -- 1,394,080 1,394,080
John Hancock Financial Services, Inc. -- 1,395,997 1,395,997
Principal Financial Group, Inc.* -- 1,061,905 1,061,905
Amgen, Inc.* 388,646 -- 388,646
Genentech, Inc.* 212,055 -- 212,055
Abbott Labs 176,955 -- 176,955
Allergen, Inc. 200,250 1,586,114 1,786,364
Eli Lilly and Co. 101,520 -- 101,520
Pfizer, Inc. 938,000 2,416,575 3,354,575
Pharmacia Corp. 534,786 -- 534,786
Wyeth 562,688 2,826,240 3,388,928
Well Point Health Networks, Inc. 194,525 -- 194,525
HCA, Inc. 489,250 -- 489,250
Tenet Healthcare Corp.* 447,188 -- 447,188
Cardinal Health, Inc. 429,870 -- 429,870
Medtronic, Inc. 199,253 1,941,705 2,140,958
Baxter International, Inc. 408,940 -- 408,940
Johnson & Johnson 402,402 -- 402,402
Alcoa, Inc. 228,735 -- 228,735
Harley-Davidson, Inc. 102,540 972,233 1,074,733
American International Group, Inc. 312,493 3,450,050 3,762,543
AOL Time Warner, Inc.* 146,806 -- 146,806
Gannett Company, Inc. -- 407,583 407,583
Viacom, Inc. - Class B* 386,019 3,636,299 4,022,318
Walt Disney Co. -- 941,125 941,125
Cisco Systems, Inc.* 400,616 -- 400,616
Weatherford International, Inc. 298,080 -- 298,080
Conoco, Inc. -- 2,348,544 2,348,544
EnCana Corp. - New York Shares -- 1,959,134 1,959,134
Exxon Mobil Corp. -- 5,056,484 5,056,484
Total Fina Elf S.A. 265,352 -- 265,352
Transocean, Inc. 211,820 -- 211,820
Kinder Morgan, Inc. -- 781,159 781,159
Valassis Communications, Inc.* -- 986,814 986,814
Chubb Corp. -- 155,052 155,052
</Table>
S-4
<Table>
Reinsurance 1.3%
985 985
Retail - Building Products 0.4%
11,500 -- 11,500
7,500 -- 7,500
Retail - Consumer Electronics 0.2%
7,350 -- 7,350
Retail - Discount 1.0%
4,500 -- 4,500
-- 25,015 25,015
12,400 -- 12,400
Satellite Telecommunications 0.1%
7,100 -- 7,100
Semiconductor Components/Integrated Circuits 2.0%
12,400 -- 12,400
-- 29,435 29,435
-- 57,829 57,829
Semiconductor Equipment 0.2%
6,600 -- 6,600
4,630 -- 4,630
Super-Regional Banks 3.7%
21,130 21,130
5,125 -- 5,125
196,590 196,590
Telecommunication Equipment 0.4%
8,134 44,145 52,279
Tools -Hand Held 0.7%
-- 29,395 29,395
Toys 1.2%
-- 98,325 98,325
Transportation Services 0.1%
3,900 -- 3,900
Travel Services 1.0%
8,000 65,835 731,835
Wireless Equipment 0.1%
4,040 4,040
Total Common Stocks (cost $21,391,062 $ 142,004,979 $ 163,396,061)
--------------- -------------
Corporate Bonds 2.0%
Advertising Sales 0.2%
-- 115,000 115,000
Cellular Telecommunications 0.0%
-- 58,000 58,000
Finance - Investment Bankers/Brokers 0.3%
-- 200,000 200,000
-- 300,000 300,000
Oil Companies - Exploration and Production 0.1%
-- 363,000 363,000
Retail - Discount 1.0%
-- 1,655,000 1,655,000
Berkshire Hathaway, Inc. - Class B* -- 2,200,490 2,200,490
Home Depot, Inc. 422,395 -- 422,395
Lowes, Inc. 340,500 -- 340,500
Best Buy Company, Inc.* 266,805 -- 266,805
Costco Wholesale Corp.* 173,790 -- 173,790
Target Corp. -- 953,072 953,072
Wal-Mart Stores, Inc. 682,124 -- 682,124
Echostar Communications Corp.* 131,776 -- 131,776
Analog Devices, Inc.* 386,280 -- 368,280
Linear Technology Corp. -- 925,142 925,142
Maxim Integrated Products, Inc.* -- 2,216,586 2,216,586
Applied Materials, Inc.* 125,532 -- 125,532
KLA-Tencor Corp.* 203,674 -- 203,674
Bank of America Corp. -- 1,486,707 1,486,707
Fifth Third Bancorp 341,581 -- 341,581
U.S. Bancorp -- 4,590,376 4,590,376
Nokia Oyj(ADR) 117,780 639,220 757,000
Stanley Works Co. -- 1,205,489 1,205,489
Mattel, Inc. -- 2,072,691 2,072,691
FedEx Corp. 208,260 -- 208,260
USA Interactive* 187,600 1,543,831 1,731,431
QUALCOMM, Inc.* 111,060 -- 111,060
Total Common Stocks 19,122,645 130,644,041 149,786,686
Lamar Advertising Co., 5.25%
Convertible notes, due 9/15/06 -- 116,150 116,150
VoiceStream Wireless Corp., 10.375%
senior notes, due 11/15/09 -- 56,680 55,680
Merrill Lynch & Company, Inc.
6.15%, notes, due 1/26/06 -- 209,500 209,500
5.36%, notes, due 2/1/07 -- 303,375 303,375
Devon Energy Corp., 0%
convertible debentures, due 6/27/20 -- 179,685 179,685
Wal-Mart Stores, Inc., 4.375%
notes, due 8/1/03 -- 1,690,169 1,690,169
</Table>
S-5
<Table>
Telephone- Integrated 0.1%
-- 185,000 185,000
Toys
0.1%
-- 140,000 140,000
250,000 250,000
Transportation - Railroad 0.2%
365,000 365,000
Total Corporate Bonds (cost $3,438,825 3,438,825)
=========== =========== ===========
PREFERRED STOCK 4.3%
Automotive - Cars and Light Trucks 3.8%
-- 40,490 40,490
-- 71,290 71,290
-- 5,445 5,445
Electric - Integrated 0.5%
-- 31,921 31,921
Total Preferred Stock (cost $ 7,744,896 7,744,896)
=========== =========== ===========
U.S. GOVERNMENT OBLIGATIONS 4.5%
3,765,000
3,880,000
Total U.S. Government Obligations (cost $ 7,695,479 7,695,479)
=========== =========== ===========
REPURCHASE AGREEMENTS 4.3%
-- 6,900,000 6,900,000
662,000 -- 662,000
Total Repurchase Agreements (cost $662,000 $ 6,900,000 7,562,000)
=========== =========== ===========
Total Investments (total cost $22,053,083 167,784,179 189,837,261 100.6%
=========== =========== =========== =====
Liabilities, net of Cash, Receivables and
Other Assets -0.6%
=========== =========== =========== =====
Net Assets 100%
=========== =========== =========== =====
CenturyTel, Inc., 8.375%
notes, due 10/15/10 -- 192,631 192,631
Mattel, Inc.:
6.00%, notes, due 7/15/03 -- 141,050 141,050
6.125%, notes, due 7/15/05 -- 249,375 249,375
Wisconsin Central Transportation Corp.
6.625%, notes, due 4/15/08 -- 382,338 382,338
-- $ 3,519,953 $ 3,519,953
=========== ============ ============
Ford Motor Company Capital Trust II
convertible, 6.50% -- 2,277,562 2,277,562
General Motors Corp. - Series B
convertible, 5.25% -- 1,872,788 1,872,788
Porsche A.G. -- 2,581,257 2,581,257
Reliant Energy, Inc. convertible, 2.00%
(AOL Time Warner, Inc.) -- 798,025 798,025
Total Preferred Stock (cost $ 7,529,632 7,529,632
=========== ============ ============
U.S. Treasury Notes:
3.00%, due 1/3/04 -- 3,789,548 3,789,548
5.25%, due 5/15/04 -- 4,055,298 4,055,298
Total U.S. Government Obligations (cost -- $ 7,844,846 $ 7,844,846
=========== ============ ============
ABN AMRO Bank N.V.
1.97%, due 7/1/02 -- 6,900,000 6,900,000
State Street Bank
1.92%, due 7/11/02 662,000 -- 662,000
Total Repurchase Agreements (cost $662,000 $ 662,000 $ 6,900,000 7,562,000
=========== ============ ============
Total Investments (total cost $22,053,082 $19,784,645 156,458,472 $176,243,117
=========== ============ ============
Liabilities, net of Cash, Receivables and
Other Assets $ 321,689 $ (1,291,996) $ (970,307)
=========== ============ ============
Net Assets $20,106,334 $155,166,476 $175,272,810
=========== ============ ============
</Table>
S-6
STATEMENTS OF ASSETS AND LIABILITIES
<Table>
<Caption>
Janus Aspen Berger IPT
Growth and Large Cap
As of June 30, 2002 Income Growth
(all numbers in thousands except net asset value per share) Portfolio Fund Adjustment Pro Forma
- ----------------------------------------------------------- ----------- ---------- ---------- ---------
Assets:
Investments at cost $ 167,784 $ 22,053 $ 189,837
Investments at value: $ 156,458 $ 19,785 $ 176,243
Cash 44 -- 44
Receivables:
Investments sold 682 368 1,050
Portfolio shares sold 1 -- 1
Dividends 157 12 169
Interest 138 -- 138
Other assets 1 -- 1
Total Assets: 157,481 20,165 177,646
Payables:
Investments purchased 1,479 -- 1,479
Portfolio shares repurchased 707 45 752
Advisory fees 86 7 93
Accrued expenses 42 7 49
Total Liabilities 2,314 59 2,373
Net Assets $ 155,167 $ 20,106 $ 175,273
Net Assets Consist of:
Capital (par value and paid-in surplus) $ 209,300 $ 42,589 $ 251,889
Accumulated net investment income/(loss) 141 158 299
Accumulated net realized gain/(loss) from investments (42,950) (20,373) (63,323)
Unrealized appreciation/(deprecation) of investments
and foreign currency translations (11,324) (2,268) (13,592)
155,167 $ 20,106 $ 175,273
Net Assets - Institutional Shares $ 72,707 20,106 92,813
Shares Outstanding, $0.001 Par Value (unlimited shares authorized) 5,483 (37)(A) 6,999
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) 1,553
Net Asset Value Per Share $ 13.26 $ 12.95 $ 13.25
Net Assets - Service Shares $ 82,460 N/A 82,460
Shares Outstanding, $0.001 Par Value (unlimited shares authorized) 6,218 N/A 6,218
Net Asset Value Per Share $ 13.26 N/A $ 13.26
</Table>
(A) Reflects new shares issued. (Calculation: Net Assets / NAV per share)
S-7
STATEMENTS OF OPERATIONS
(Unaudited)
<Table>
<Caption>
Janus Aspen Berger IPT
Growth and Large Cap
For the fiscal year ended June 30, 2002 Income Growth
(all numbers in thousands) Portfolio Fund Adjustment Pro Forma
- --------------------------------------- ----------- ----------- ---------- ------------
Investment Income:
Interest $ 1,060 $ 73 $ 1,133
Dividends 1,730 204 1,938
Foreign tax withheld (9) -- (9)
Total Investment Income 2,781 281 3,062
Expenses: --
Advisory fees 1,128 235 (32) (A) 1,331
Transfer agent expenses 4 1 -- (B) 5
Registration fees 25 (1) 4 (B) 28
System fees 13 -- -- 13
Custodian fees 46 14 (10) (A) 50
Insurance expense -- -- -- --
Audit fees 15 15 (15) (B) 15
Distribution fees - Service Shares 208 N/A N/A 110
Other expenses 11 8 (7) (B) 12
Total Expenses 1,450 272 (60) 1,662
Expense and fee Offsets (2) (1) (3)
Net Expenses 1,448 271 (60) 1,659
Excess Expense Reimbursement -- -- --
Net Expenses After Reimbursement 1,448 271 (60) 1,659
Net investment Income/(Loss) 1,333 10 1,399
Net Realized and Unrealized Gain/(Loss) on Investments: -- --
Net realized gain/(loss) from securities transactions (26,515) (9,105) (35,620)
Net realized gain/(loss) from foreign currency transactions (1) -- (1)
Net realized gain/(loss) from futures contracts -- -- --
Change in net unrealized appreciation or depreciation of Investments -- --
and foreign currency (7,548) (3,187) (10,735)
Net Realized and Unrealized Gain/(Loss) on Investments (34,064) (12,283) (46,357)
Net Increase/Decrease in Net Assets Resulting from Operations $ (32,731) $ (12,287) $ (44,954)
</Table>
(A) Reflects adjustment in expenses due to effect of new contractual rates.
(B) Reflects adjustment in expenses due to elimination of duplicative services.
S-8
SUMMARY OF INVESTMENTS BY COUNTRY, JUNE 30, 2002
<Table>
<Caption>
% OF INVESTMENT
MARKET VALUE SECURITIES
---------------------------------------------- ---------------
BERGER IPT - JANUS ASPEN
LARGE-CAP GROWTH AND
COUNTRY GROWTH FUND INCOME PORTFOLIO COMBINED COMBINED
- ------------- ------------ ---------------- ------------ --------------
Barbados............ $ 298,080 -- $ 298,080 0.2%
Bermuda............. -- $ 766,650 766,650 0.4%
Canada.............. 211,203 2,943,466 3,154,669 1.8%
Finland............. 117,780 639,220 757,000 0.4%
France.............. 265,352 -- 265,352 0.2%
Germany............. -- 3,954,946 3,954,946 2.2%
United States 18,892,230 148,154,190 167,046,420 94.8%
------------ ------------ ----------- -----
$ 19,784,645 $156,458,472 $176,243,117 100.0%
</Table>
- ----------
* Includes Short-Term Securities (95.7% excluding Short-Term Securities)
"INTRODUCTORY NOTE"
The unaudited pro forma combined financial statements are presented for the
information of the reader and may not necessarily be representative of what the
actual combined financial statements would have been had the reorganization
occurred at June 30,2002. The unaudited pro forma schedule of investments, and
statement of assets and liabilities reflect the financial position of the
Acquiring Fund and the Selling Fund, (as defined in Note 2 to Pro Forma
Financial Statements) as well as combined, at June 30, 2002. The unaudited pro
forma statement of operations reflects the results of operations of the
Acquiring Fund and the Selling Fund for the year ended June 30, 2002. These
statements have been derived from the Funds' respective books and records
utilized in calculating daily net asset value at the date indicated above for
both the Acquiring and Selling Fund under accounting principles generally
accepted in the United States of America in the investment company industry. The
historical cost of investment securities will be carried forward to the
surviving entity and the results of operations of the Selling Fund for
pre-combination periods will not be restated.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
NOTE 1 - SCHEDULE OF INVESTMENTS:
ADR American Depository Receipt
New York Shares Securities of foreign companies trading on the New York Stock
Exchange
- ----------
* Non-income producing security
Repurchase Agreements held by a Fund are fully collateralized, and such
collateral is in the possession of the Fund's custodian or subcustodian. The
collateral is evaluated daily to ensure its market value exceeds the current
market value of the repurchase agreements, including accrued interest. In the
event of default on the obligation to repurchase, the Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. In the event of default or bankruptcy by the other party to the
agreement, realization and/or retention of the collateral or proceeds may be
subject to legal proceedings.
NOTE 2 - REORGANIZATION:
On December 10, 2002, the Board of Trustees of the Janus Investment Funds and on
November 26, 2002 the Board of Directors of Berger IPT Trust, approved an
Agreement and Plan of Reorganization.
The reorganization will result in the following funds (Berger IPT Funds) moving
into comparable Janus Aspen Funds as follows, subject to shareholder approval:
S-9
<Table>
<Caption>
Selling Fund Acquiring Fund
- ------------ --------------
Berger IPT-Growth Fund Janus Aspen Growth Portfolio -
Institutional Shares
Berger IPT-Large Cap Growth Fund Janus Aspen Growth and Income Portfolio
- Institutional Shares
Berger IPT-International Fund Janus Aspen International Growth
Portfolio - Institutional Shares
</Table>
Each Acquiring Fund will acquire all of the assets of the each Selling Fund,
subject to the liabilities of such Fund, in exchange for a number of shares of
Acquiring Fund equal in value to the net assets of the Selling Fund. The Merger
will be accounted for as a tax-free merger of investment companies.
The unaudited pro forma portfolio of investments, and unaudited statement of
assets and liabilities and statement of operations should be read in conjunction
with the historical financial statements of each Fund which are incorporated by
reference in the Statements of Additional Information.
NOTE 3 - SECURITY VALUATION:
Securities are valued at the closing price for securities traded on a principal
exchange (U.S. or foreign) and on the NASDAQ National Market. Securities traded
on over-the-counter markets and listed securities for which no sales are
reported are valued at the latest bid price obtained from one or more dealers
making a market for such securities or by a pricing service approved by the
Fund's Trustees. Short-term securities maturing within 60 days are valued at
amortized cost, which approximates market value. Foreign securities are
converted to U.S. dollars using exchange rates at the close of the New York
Stock Exchange. When market quotations are not readily available, or events or
circumstances that may affect the value of portfolio securities are identified
between the closing of their principle markets and the time the net asset value
(NAV) is determined, securities are valued at their fair value as determined in
good faith under procedures adopted by and under the supervision of the Fund's
Trustees. in the possession of the Fund's custodian.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held at the date of the
financial statements. Net unrealized appreciation or depreciation on investments
and foreign currency translation arise from changes in the value of assets and
liabilities, including investments in securities at the date of the financial
statements, resulting from changes in the exchange rates and changes in market
prices of securities held.
NOTE 4 - CAPITAL SHARES:
The unaudited pro forma net asset value per share assumes additional shares of
the Acquiring Fund issued in connection with the proposed acquisition of the
Selling Fund as of June 30, 2002. The number of additional shares issued was
calculated by dividing the value of the assets, net of liabilities, of the
Selling Fund by the net asset value of the Acquiring Fund Share.
NOTE 5 - UNAUDITED PRO FORMA ADJUSTMENTS:
The accompanying unaudited pro forma financial statements reflect changes in
fund shares as if the merger had taken place on June 30, 2002. The Selling
Fund's expenses were adjusted assuming the Acquiring Fund's fee and expense
structure was in effect for the year ended June 30, 2002 and for estimated
reductions due to the elimination of duplicate expenses.
S-10
NOTE 6 - MERGER COSTS:
Janus Capital Management LLC ("Janus Capital), the investment adviser to the
Funds, will bear all costs in connection with the reorganization.
NOTE 7 - FEDERAL INCOME TAXES:
It is the policy of the Funds, to comply with the requirements of Subchapter M
of the Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of their net investment income and any net realized
gains to their shareholders. Therefore, a federal income tax or excise tax
provision is not required. In addition, by distributing during each calendar
year substantially all of its net investment income and net realized capital
gains, each Fund intends not to be subject to any federal excise tax.
The Fund intends to offset any net capital gains with any available capital loss
carryforward until each carryforward has been fully utilized or expires. The
amount of capital loss carryforward, which may offset the Selling Fund's capital
gains in any given year, may be limited as a result of previous reorganizations.
In addition, no capital gain distribution shall be made until the capital loss
carryforward has been fully utilized or expires.
S-11
May 1, 2002
As Supplemented May 13, 2002,
May 31, 2002 and June 19, 2002
Growth Portfolio
Aggressive Growth Portfolio
Capital Appreciation Portfolio
Strategic Value Portfolio
Core Equity Portfolio
(Formerly Equity Income
Portfolio)
Balanced Portfolio
Growth and Income Portfolio
International Growth Portfolio
Worldwide Growth Portfolio
Global Life Sciences Portfolio
Global Technology Portfolio
Flexible Income Portfolio
JANUS ASPEN SERIES
INSTITUTIONAL SHARES
Statement of Additional Information
This Statement of Additional Information ("SAI") expands upon and supplements
the information contained in the current Prospectus for the Institutional Shares
(the "Shares") of the Portfolios listed above, each of which is a separate
series of Janus Aspen Series, a Delaware business trust. The Shares are sold
under the name "Janus Aspen Series." Each of these series of the Trust
represents shares of beneficial interest in a separate portfolio of securities
and other assets with its own objective and policies. Each Portfolio is managed
separately by Janus Capital Management LLC ("Janus Capital"). Core Equity
Portfolio was formerly known as Equity Income Portfolio. The name change was
effective July 31, 2001.
The Shares of the Portfolios may be purchased only by the separate accounts of
insurance companies for the purpose of funding variable life insurance policies
and variable annuity contracts (collectively, "variable insurance contracts")
and by certain qualified retirement plans. Certain Portfolios also offer one or
two additional classes of shares to certain qualified plans or separate accounts
of insurance companies.
This SAI is not a Prospectus and should be read in conjunction with the
Portfolios' Prospectus dated May 1, 2002, which is incorporated by reference
into this SAI and may be obtained from your insurance company. This SAI contains
additional and more detailed information about the Portfolios' operations and
activities than the Prospectus. The Annual and Semiannual Reports, which contain
important financial information about the Portfolios, are incorporated by
reference into this SAI and are also available, without charge, from your
insurance company.
[JANUS LOGO]
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<Table>
Classification, Investment Policies and Restrictions, and
Investment Strategies and Risks............................. 2
Investment Adviser.......................................... 23
Custodian, Transfer Agent and Certain Affiliations.......... 27
Portfolio Transactions and Brokerage........................ 28
Trustees and Officers....................................... 33
Shares of the Trust......................................... 39
Net Asset Value Determination............................ 39
Purchases................................................ 39
Redemptions.............................................. 40
Income Dividends, Capital Gains Distributions and Tax
Status...................................................... 41
Principal Shareholders...................................... 42
Miscellaneous Information................................... 45
Shares of the Trust...................................... 45
Shareholder Meetings..................................... 45
Voting Rights............................................ 45
Independent Accountants.................................. 46
Registration Statement................................... 46
Performance Information..................................... 47
Financial Statements........................................ 49
Appendix A.................................................. 50
Explanation of Rating Categories......................... 50
</Table>
1
CLASSIFICATION, INVESTMENT POLICIES AND RESTRICTIONS, AND INVESTMENT STRATEGIES
AND RISKS
- --------------------------------------------------------------------------------
CLASSIFICATION
Each Portfolio is a series of the Trust, an open-end, management
investment company. The Investment Company Act of 1940 ("1940 Act")
classifies mutual funds as either diversified or nondiversified.
Aggressive Growth Portfolio, Capital Appreciation Portfolio, Strategic
Value Portfolio, Global Life Sciences Portfolio and Global Technology
Portfolio intend to operate in a nondiversified manner. Each of these
Portfolios may at times, however, operate in a diversified manner if
market conditions warrant. The nondiversified Portfolios will be
operated in a manner consistent with the diversification requirements
of Subchapter M of the Internal Revenue Code of 1986, as amended, and
the regulations thereunder (the "Code"). Growth Portfolio, Core Equity
Portfolio, Balanced Portfolio, Growth and Income Portfolio,
International Growth Portfolio, Worldwide Growth Portfolio and
Flexible Income Portfolio are diversified funds.
INVESTMENT POLICIES AND RESTRICTIONS APPLICABLE TO ALL PORTFOLIOS
The Portfolios are subject to certain fundamental policies and
restrictions that may not be changed without shareholder approval.
Shareholder approval means approval by the lesser of (i) more than 50%
of the outstanding voting securities of the Trust (or a particular
Portfolio or particular class of shares if a matter affects just that
Portfolio or that class of shares), or (ii) 67% or more of the voting
securities present at a meeting if the holders of more than 50% of the
outstanding voting securities of the Trust (or a particular Portfolio
or class of shares) are present or represented by proxy. The following
policies are fundamental policies of the Portfolios. Each of these
policies applies to all of the Portfolios, except policy (1), which
applies only to the Portfolios specifically listed in that policy.
(1) With respect to 75% of its total assets, Growth Portfolio, Core
Equity Portfolio, Balanced Portfolio, Growth and Income Portfolio,
International Growth Portfolio, Worldwide Growth Portfolio and
Flexible Income Portfolio may not purchase securities of an issuer
(other than the U.S. Government, its agencies, instrumentalities or
authorities or repurchase agreements collateralized by U.S. Government
securities, and other investment companies) if: (a) such purchase
would, at the time, cause more than 5% of the Portfolio's total assets
taken at market value to be invested in the securities of such issuer;
or (b) such purchase would, at the time, result in more than 10% of
the outstanding voting securities of such issuer being held by the
Portfolio.
Each Portfolio may not:
(2) Invest 25% or more of the value of their respective total assets
in any particular industry (other than U.S. government securities).
This policy does not apply to Global Life Sciences Portfolio.
(3) Invest directly in real estate or interests in real estate;
however, the Portfolios may own debt or equity securities issued by
companies engaged in those businesses.
(4) Purchase or sell physical commodities unless acquired as a result
of ownership of securities or other instruments (but this limitation
shall not prevent the Portfolios from purchasing or selling foreign
currencies, options, futures, swaps, forward contracts or other
derivative instruments or from investing in securities or other
instruments backed by physical commodities).
(5) Lend any security or make any other loan if, as a result, more
than 33 1/3% of a Portfolio's total assets would be lent to other
parties (but this limitation does not apply to investments in
repurchase agreements, commercial paper, debt securities or loans,
including assignments and participation interests).
2
(6) Act as an underwriter of securities issued by others, except to
the extent that a Portfolio may be deemed an underwriter in connection
with the disposition of its portfolio securities.
(7) Borrow money except that the Portfolios may borrow money for
temporary or emergency purposes (not for leveraging or investment).
Borrowings from banks will not, in any event, exceed one-third of the
value of a Portfolio's total assets (including the amount borrowed).
This policy shall not prohibit short sales transactions, or futures,
options, swaps or forward transactions. The Portfolios may not issue
"senior securities" in contravention of the 1940 Act.
As a fundamental policy, each Portfolio may, notwithstanding any other
investment policy or limitation (whether or not fundamental), invest
all of its assets in the securities of a single open-end management
investment company with substantially the same fundamental investment
objective, policies and limitations as such Portfolio.
The Trustees have adopted additional investment restrictions for the
Portfolios. These restrictions are operating policies of the
Portfolios and may be changed by the Trustees without shareholder
approval. The additional investment restrictions adopted by the
Trustees to date include the following:
(a) A Portfolio will not (i) enter into any futures contracts and
related options for purposes other than bona fide hedging transactions
within the meaning of Commodity Futures Trading Commission ("CFTC")
regulations if the aggregate initial margin and premiums required to
establish positions in futures contracts and related options that do
not fall within the definition of bona fide hedging transactions will
exceed 5% of the fair market value of a Portfolio's net assets, after
taking into account unrealized profits and unrealized losses on any
such contracts it has entered into; and (ii) enter into any futures
contracts if the aggregate amount of such Portfolio's commitments
under outstanding futures contracts positions would exceed the market
value of its total assets.
(b) The Portfolios may sell securities short if they own or have the
right to obtain securities equivalent in kind and amount to the
securities sold short without the payment of any additional
consideration therefor ("short sales against the box"). In addition,
the Equity Portfolios may engage in "naked" short sales, which involve
selling a security that a Portfolio borrows and does not own. The
total market value of all of a Portfolio's naked short sale positions
will not exceed 8% of its assets. Transactions in futures, options,
swaps and forward contracts are not deemed to constitute selling
securities short.
(c) The Portfolios do not currently intend to purchase securities on
margin, except that the Portfolios may obtain such short-term credits
as are necessary for the clearance of transactions, and provided that
margin payments and other deposits in connection with transactions in
futures, options, swaps and forward contracts shall not be deemed to
constitute purchasing securities on margin.
(d) A Portfolio may not mortgage or pledge any securities owned or
held by such Portfolio in amounts that exceed, in the aggregate, 15%
of that Portfolio's net asset value, provided that this limitation
does not apply to reverse repurchase agreements, deposits of assets to
margin, guarantee positions in futures, options, swaps or forward
contracts, or the segregation of assets in connection with such
contracts.
(e) The Portfolios do not currently intend to purchase any security or
enter into a repurchase agreement, if as a result, more than 15% of
their respective net assets would be invested in repurchase agreements
not entitling the holder to payment of principal and interest within
seven days and in securities that are illiquid by virtue of legal or
contractual restrictions on resale or the absence of a readily
available market. The Trustees, or the Portfolios' investment adviser
acting pursuant to authority delegated by the Trustees,
3
may determine that a readily available market exists for securities
eligible for resale pursuant to Rule 144A under the Securities Act of
1933 ("Rule 144A Securities"), or any successor to such rule, Section
4(2) commercial paper and municipal lease obligations. Accordingly,
such securities may not be subject to the foregoing limitation.
(f) The Portfolios may not invest in companies for the purpose of
exercising control of management.
Under the terms of an exemptive order received from the Securities and
Exchange Commission ("SEC"), each of the Portfolios may borrow money
from or lend money to other funds that permit such transactions and
for which Janus Capital serves as investment adviser. All such
borrowing and lending will be subject to the above limits. A Portfolio
will borrow money through the program only when the costs are equal to
or lower than the cost of bank loans. Interfund loans and borrowings
normally extend overnight, but can have a maximum duration of seven
days. A Portfolio will lend through the program only when the returns
are higher than those available from other short-term instruments
(such as repurchase agreements). A Portfolio may have to borrow from a
bank at a higher interest rate if an interfund loan is called or not
renewed. Any delay in repayment to a lending Portfolio could result in
a lost investment opportunity or additional borrowing costs.
For the purposes of these investment restrictions, the identification
of the issuer of a municipal obligation depends on the terms and
conditions of the security. When assets and revenues of a political
subdivision are separate from those of the government that created the
subdivision and the security is backed only by the assets and revenues
of the subdivision, the subdivision is deemed to be the sole issuer.
Similarly, in the case of an industrial development bond, if the bond
is backed only by assets and revenues of a nongovernmental user, then
the nongovernmental user would be deemed to be the sole issuer. If,
however, in either case, the creating government or some other entity
guarantees the security, the guarantee would be considered a separate
security that would be treated as an issue of the guaranteeing entity.
For purposes of the Portfolios' restriction on investing in a
particular industry, the Portfolios will rely primarily on industry
classifications as published by Bloomberg L.P. To the extent that
Bloomberg L.P. classifications are so broad that the primary economic
characteristics in a single class are materially different, the
Portfolios may further classify issuers in accordance with industry
classifications as published by the SEC.
INVESTMENT POLICIES APPLICABLE TO CERTAIN PORTFOLIOS
BALANCED PORTFOLIO. As an operational policy, at least 25% of the
assets of Balanced Portfolio normally will be invested in fixed-income
senior securities.
GLOBAL LIFE SCIENCES PORTFOLIO. As a fundamental policy, Global Life
Sciences Portfolio will normally invest at least 25% of its total
assets, in the aggregate, in the following industry groups: health
care; pharmaceuticals; agriculture; cosmetics/personal care; and
biotechnology.
FLEXIBLE INCOME PORTFOLIO. As a fundamental policy, this Portfolio may
not purchase a non-income-producing security if, after such purchase,
less than 80% of the Portfolio's total assets would be invested in
income-producing securities. Income-producing securities include
securities that make periodic interest payments as well as those that
make interest payments on a deferred basis or pay interest only at
maturity (e.g., Treasury bills or zero coupon bonds).
4
INVESTMENT STRATEGIES AND RISKS
Cash Position
As discussed in the Prospectus, a Portfolio's cash position may
temporarily increase under various circumstances. Securities that the
Portfolios may invest in as a means of receiving a return on idle cash
include commercial paper, certificates of deposit, repurchase
agreements or other short-term debt obligations. The Portfolios may
also invest in money market funds, including funds managed by Janus
Capital. (See "Investment Company Securities").
Illiquid Investments
Each Portfolio may invest up to 15% of its net assets in illiquid
investments (i.e., securities that are not readily marketable). The
Trustees have authorized Janus Capital to make liquidity
determinations with respect to certain securities, including Rule 144A
Securities, commercial paper and municipal lease obligations purchased
by the Portfolios. Under the guidelines established by the Trustees,
Janus Capital will consider the following factors: (1) the frequency
of trades and quoted prices for the obligation; (2) the number of
dealers willing to purchase or sell the security and the number of
other potential purchasers; (3) the willingness of dealers to
undertake to make a market in the security; and (4) the nature of the
security and the nature of the marketplace trades, including the time
needed to dispose of the security, the method of soliciting offers and
the mechanics of the transfer. In the case of commercial paper, Janus
Capital will also consider whether the paper is traded flat or in
default as to principal and interest and any ratings of the paper by a
nationally recognized statistical rating organization ("NRSRO"). A
foreign security that may be freely traded on or through the
facilities of an offshore exchange or other established offshore
securities market is not deemed to be a restricted security subject to
these procedures.
If illiquid securities exceed 15% of a Portfolio's net assets after
the time of purchase the Portfolio will take steps to reduce in an
orderly fashion its holdings of illiquid securities. Because illiquid
securities may not be readily marketable, a portfolio manager may not
be able to dispose of them in a timely manner. As a result, a
Portfolio may be forced to hold illiquid securities while their price
depreciates. Depreciation in the price of illiquid securities may
cause the net asset value of a Portfolio to decline.
Each of the Portfolios may invest up to 5% of its total assets in
venture capital investments, although no more than 0.5% of its total
assets will be invested in any one venture capital company. Venture
capital investments are investments in new and early stage companies
whose securities are not publicly traded. These investments may
present significant opportunities for capital appreciation but involve
a high degree of risk that can result in substantial losses. The
Portfolios may not be able to sell such investments when a portfolio
manager deems it appropriate to do so due to restrictions on their
sale. In addition, the Portfolios may be forced to sell their venture
capital investments at less than fair market value. Where venture
capital investments must be registered prior to their sale, the
Portfolios may be obligated to pay all or part of the registration
expenses. Any of these situations may result in a decrease in a
Portfolio's NAV.
Securities Lending
Under procedures adopted by the Trustees, the Portfolios may lend
securities to qualified parties (typically brokers or other financial
institutions) who need to borrow securities in order to complete
certain transactions such as covering short sales, avoiding failures
to deliver securities or completing arbitrage activities. The
Portfolios may seek to earn additional income through securities
lending. Since there is the risk of delay in recovering a loaned
security or the risk of loss in collateral rights if the borrower
fails
5
financially, securities lending will only be made to parties that
Janus Capital deems creditworthy and in good standing. In addition,
such loans will only be made if Janus Capital believes the benefit
from granting such loans justifies the risk. The Portfolios will not
have the right to vote on securities while they are being lent, but it
will generally call a loan in anticipation of any important vote. All
loans will be continuously secured by collateral which consists of
cash, U.S. government securities, letters of credit and such other
collateral permitted by the SEC. Cash collateral may be invested in
money market funds advised by Janus to the extent consistent with
exemptive relief obtained from the SEC.
Foreign Securities
Unless otherwise limited by its specific investment policies, each
Portfolio 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.
Short Sales
Each Portfolio may engage in "short sales against the box." This
technique involves selling either a security that a Portfolio owns, or
a security equivalent in kind and amount to the security sold short
that the Portfolio has the right to obtain, for delivery at a
specified date in the future. A Portfolio may enter into a short sale
against the box to hedge against anticipated declines in the market
price of portfolio securities. If the value of the securities sold
short increases prior to the scheduled delivery date, a Portfolio
loses the opportunity to participate in the gain.
6
The Equity Portfolios may also engage in "naked" short sales. In a
naked short sale transaction, a Portfolio sells a security it does not
own to a purchaser at a specified price. To complete a naked short
sale, a Portfolio must: (1) borrow the security to deliver it to the
purchaser and (2) buy that same security in the market to return it to
the lender. A Portfolio will engage in naked short sales when its
portfolio manager anticipates that the security's market purchase
price will be less than its borrowing price. Naked short sales involve
the same fundamental risk as short sales against the box, as described
in the previous paragraph. In addition, naked short sales carry risks
of loss if the value of a security sold short increases prior to the
scheduled delivery date and a Portfolio must pay more for the security
than it has received from the purchaser in the short sale. The total
market value of all of a Portfolio's naked short sale positions will
not exceed 8% of its assets.
Zero Coupon, Step Coupon and Pay-In-Kind Securities
Each Portfolio may invest up to 10% (without limit for Flexible Income
Portfolio) of its assets in zero coupon, pay-in-kind and step coupon
securities. Zero coupon bonds are issued and traded at a discount from
their face value. They do not entitle the holder to any periodic
payment of interest prior to maturity. Step coupon bonds trade at a
discount from their face value and pay coupon interest. The coupon
rate is low for an initial period and then increases to a higher
coupon rate thereafter. The discount from the face amount or par 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. Pay-in-kind bonds 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.
For the purposes of any Portfolio's restriction on investing in
income-producing securities, income-producing securities include
securities that make periodic interest payments as well as those that
make interest payments on a deferred basis or pay interest only at
maturity (e.g., Treasury bills or zero coupon bonds).
Current federal income tax law requires holders of zero coupon
securities and step coupon securities to report the portion of the
original issue discount on such securities that accrues during a given
year as interest income, even though the holders receive no cash
payments of interest during the year. In order to qualify as a
"regulated investment company" under the Code, a Portfolio must
distribute its investment company taxable income, including the
original issue discount accrued on zero coupon or step coupon bonds.
Because a Portfolio will not receive cash payments on a current basis
in respect of accrued original-issue discount on zero coupon bonds or
step coupon bonds during the period before interest payments begin, in
some years that Portfolio may have to distribute cash obtained from
other sources in order to satisfy the distribution requirements under
the Code. A Portfolio might obtain such cash from selling other
portfolio holdings which might cause that Portfolio to incur capital
gains or losses on the sale. Additionally, these actions are likely to
reduce the assets to which Portfolio expenses could be allocated and
to reduce the rate of return for that Portfolio. In some
circumstances, such sales might be necessary in order to satisfy cash
distribution requirements even though investment considerations might
otherwise make it undesirable for a Portfolio to sell the securities
at the time.
Generally, the market prices of zero coupon, step coupon and
pay-in-kind securities are more volatile than the prices of securities
that pay interest periodically and in cash and are likely to respond
to changes in interest rates to a greater degree than other types of
debt securities having similar maturities and credit quality.
7
Pass-Through Securities
The Portfolios may invest in various types of pass-through securities,
such as mortgage-backed securities, asset-backed securities and
participation interests. A pass-through security is a share or
certificate of interest in a pool of debt obligations that have been
repackaged by an intermediary, such as a bank or broker-dealer. The
purchaser of a pass-through security receives an undivided interest in
the underlying pool of securities. The issuers of the underlying
securities make interest and principal payments to the intermediary
which are passed through to purchasers, such as the Portfolios. The
most common type of pass-through securities are mortgage-backed
securities. Ginnie Mae Certificates are mortgage-backed securities
that evidence an undivided interest in a pool of mortgage loans.
Ginnie Mae Certificates differ from bonds in that principal is paid
back monthly by the borrowers over the term of the loan rather than
returned in a lump sum at maturity. A Portfolio will generally
purchase "modified pass-through" Ginnie Mae Certificates, which
entitle the holder to receive a share of all interest and principal
payments paid and owned on the mortgage pool, net of fees paid to the
"issuer" and Ginnie Mae, regardless of whether or not the mortgagor
actually makes the payment. Ginnie Mae Certificates are backed as to
the timely payment of principal and interest by the full faith and
credit of the U.S. government.
Freddie Mac issues two types of mortgage pass-through securities:
mortgage participation certificates ("PCs") and guaranteed mortgage
certificates ("GMCs"). PCs resemble Ginnie Mae Certificates in that
each PC represents a pro rata share of all interest and principal
payments made and owned on the underlying pool. Freddie Mac guarantees
timely payments of interest on PCs and the full return of principal.
GMCs also represent a pro rata interest in a pool of mortgages.
However, these instruments pay interest semiannually and return
principal once a year in guaranteed minimum payments. This type of
security is guaranteed by Freddie Mac as to timely payment of
principal and interest but it is not guaranteed by the full faith and
credit of the U.S. government.
Fannie Mae issues guaranteed mortgage pass-through certificates
("Fannie Mae Certificates"). Fannie Mae Certificates resemble Ginnie
Mae Certificates in that each Fannie Mae Certificate represents a pro
rata share of all interest and principal payments made and owned on
the underlying pool. This type of security is guaranteed by Fannie Mae
as to timely payment of principal and interest but it is not
guaranteed by the full faith and credit of the U.S. government.
Except for GMCs, each of the mortgage-backed securities described
above is characterized by monthly payments to the holder, reflecting
the monthly payments made by the borrowers who received the underlying
mortgage loans. The payments to the security holders (such as the
Portfolios), like the payments on the underlying loans, represent both
principal and interest. Although the underlying mortgage loans are for
specified periods of time, such as 20 or 30 years, the borrowers can,
and typically do, pay them off sooner. Thus, the security holders
frequently receive prepayments of principal in addition to the
principal that is part of the regular monthly payments. A portfolio
manager will consider estimated prepayment rates in calculating the
average-weighted maturity of a Portfolio. A borrower is more likely to
prepay a mortgage that bears a relatively high rate of interest. This
means that in times of declining interest rates, higher yielding
mortgage-backed securities held by a Portfolio might be converted to
cash and that Portfolio will be forced to accept lower interest rates
when that cash is used to purchase additional securities in the
mortgage-backed securities sector or in other investment sectors.
Additionally, prepayments during such periods will limit a Portfolio's
ability to participate in as large a market gain as may be experienced
with a comparable security not subject to prepayment.
8
Asset-backed securities represent interests in pools of consumer loans
and are backed by paper or accounts receivables originated by banks,
credit card companies or other providers of credit. Generally, the
originating bank or credit provider is neither the obligor nor the
guarantor of the security, and interest and principal payments
ultimately depend upon payment of the underlying loans by individuals.
Tax-exempt asset-backed securities include units of beneficial
interests in pools of purchase contracts, financing leases, and sales
agreements that may be created when a municipality enters into an
installment purchase contract or lease with a vendor. Such securities
may be secured by the assets purchased or leased by the municipality;
however, if the municipality stops making payments, there generally
will be no recourse against the vendor. The market for tax-exempt
asset-backed securities is still relatively new. These obligations are
likely to involve unscheduled prepayments of principal.
Investment Company Securities
From time to time, the Portfolios may invest in securities of other
investment companies, subject to the provisions of Section 12(d)(1) of
the 1940 Act. The Portfolios may invest in securities of money market
funds managed by Janus Capital in excess of the limitations of Section
12(d)(1) under the terms of an SEC exemptive order obtained by Janus
Capital and the Janus funds.
Depositary Receipts
The Portfolios may invest in sponsored and unsponsored American
Depositary Receipts ("ADRs"), which are receipts issued by an American
bank or trust company evidencing ownership of underlying securities
issued by a foreign issuer. ADRs, in registered form, are designed for
use in U.S. securities markets. Unsponsored ADRs may be created
without the participation of the foreign issuer. Holders of these ADRs
generally bear all the costs of the ADR facility, whereas foreign
issuers typically bear certain costs in a sponsored ADR. The bank or
trust company depositary of an unsponsored ADR may be under no
obligation to distribute shareholder communications received from the
foreign issuer or to pass through voting rights. The Portfolios may
also invest in European Depositary Receipts ("EDRs"), Global
Depositary Receipts ("GDRs") and in other similar instruments
representing securities of foreign companies. EDRs and GDRs are
securities that are typically issued by foreign banks or foreign trust
companies, although U.S. banks or U.S. trust companies may issue them.
EDRs and GDRs are structured similarly to the arrangements of ADRs.
EDRs, in bearer form, are designed for use in European securities
markets.
Depositary Receipts are generally subject to the same sort of risks as
direct investments in a foreign country, such as, currency risk,
political and economic risk, and market risk, because their values
depend on the performance of a foreign security denominated in its
home currency. The risks of foreign investing are addressed in some
detail in the Portfolios' prospectus.
Municipal Obligations
The Portfolios may invest in municipal obligations issued by states,
territories and possessions of the United States and the District of
Columbia.
The value of municipal obligations can be affected by changes in their
actual or perceived credit quality. The credit quality of municipal
obligations can be affected by, among other things, the financial
condition of the issuer or guarantor, the issuer's future borrowing
plans and sources of revenue, the economic feasibility of the revenue
bond project or general borrowing purpose, political or economic
developments in the region where the security is issued, and the
liquidity of the security. Because municipal securities are generally
traded over-the-counter, the liquidity of a particular issue often
depends on the willingness of
9
dealers to make a market in the security. The liquidity of some
municipal obligations may be enhanced by demand features, which would
enable a Portfolio to demand payment on short notice from the issuer
or a financial intermediary.
Other Income-Producing Securities
Other types of income producing securities that the Portfolios may
purchase include, but are not limited to, the following types of
securities:
VARIABLE AND FLOATING RATE OBLIGATIONS. These types of securities have
variable or floating rates of interest and, under certain limited
circumstances, may have varying principal amounts. Variable and
floating rate 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 "underlying
index"). The floating rate tends to decrease the security's price
sensitivity to changes in interest rates.
In order to most effectively use these investments, a portfolio
manager must correctly assess probable movements in interest rates.
This involves different skills than those used to select most
portfolio securities. If the portfolio manager incorrectly forecasts
such movements, a Portfolio could be adversely affected by the use of
variable or floating rate obligations.
STANDBY COMMITMENTS. These instruments, which are similar to a put,
give a Portfolio the option to obligate a broker, dealer or bank to
repurchase a security held by that Portfolio at a specified price.
TENDER OPTION BONDS. Tender option bonds are relatively long-term
bonds that are coupled with the 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 investment
structure is commonly used as a means of enhancing a security's
liquidity.
INVERSE FLOATERS. Inverse floaters are debt instruments whose interest
bears an inverse relationship to the interest rate on another
security. No Portfolio will invest more than 5% of its assets in
inverse floaters. Similar to variable and floating rate obligations,
effective use of inverse floaters requires skills different from those
needed to select most portfolio securities. If movements in interest
rates are incorrectly anticipated, a fund could lose money or its NAV
could decline by the use of inverse floaters.
STRIP BONDS. 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.
The Portfolios will purchase standby commitments, tender option bonds
and instruments with demand features primarily for the purpose of
increasing the liquidity of their holdings.
Repurchase and Reverse Repurchase Agreements
In a repurchase agreement, a Portfolio purchases a security and
simultaneously commits to resell that security to the seller at an
agreed upon price on an agreed upon date within a number of days
(usually not more than seven) from the date of purchase. The resale
price consists of the purchase price plus an agreed upon incremental
amount that is unrelated to the coupon rate or maturity of the
purchased security. A repurchase agreement involves the obligation of
the seller to pay the agreed upon price, which obligation is in effect
secured by the value (at least equal to the amount of the agreed upon
resale price and marked-to-market daily) of the underlying security or
"collateral." A risk associated with repurchase agreements is the
failure of the seller to repurchase the securities as agreed, which
may cause a Portfolio to suffer a loss if
10
the market value of such securities declines before they can be
liquidated on the open market. In the event of bankruptcy or
insolvency of the seller, a Portfolio may encounter delays and incur
costs in liquidating the underlying security. Repurchase agreements
that mature in more than seven days are subject to the 15% limit on
illiquid investments. While it is not possible to eliminate all risks
from these transactions, it is the policy of the Portfolios to limit
repurchase agreements to those parties whose creditworthiness has been
reviewed and found satisfactory by Janus Capital.
A Portfolio may use reverse repurchase agreements to obtain cash to
satisfy unusually heavy redemption requests or for other temporary or
emergency purposes without the necessity of selling portfolio
securities, or to earn additional income on portfolio securities, such
as Treasury bills or notes. In a reverse repurchase agreement, a
Portfolio sells a portfolio security to another party, such as a bank
or broker-dealer, in return for cash and agrees to repurchase the
instrument at a particular price and time. While a reverse repurchase
agreement is outstanding, a Portfolio will maintain cash and
appropriate liquid assets in a segregated custodial account to cover
its obligation under the agreement. The Portfolios will enter into
reverse repurchase agreements only with parties that Janus Capital
deems creditworthy. Using reverse repurchase agreements to earn
additional income involves the risk that the interest earned on the
invested proceeds is less than the expense of the reverse repurchase
agreement transaction. This technique may also have a leveraging
effect on the Portfolio, although the Portfolio's intent to segregate
assets in the amount of the reverse repurchase agreement minimizes
this effect.
High-Yield/High-Risk Bonds
Flexible Income Portfolio may invest without limit in bonds that are
rated below investment grade (e.g., bonds rated BB or lower by
Standard & Poor's Ratings Services or Ba or lower by Moody's Investors
Service, Inc.). Within the parameters of its specific investment
policies, no other Portfolio intends to invest 35% or more of its net
assets in such bonds, except Core Equity Portfolio will, under normal
circumstances, limit its investments in such bonds to 20% of its net
assets. Lower rated bonds involve a higher degree of credit risk,
which is the risk that the issuer will not make interest or principal
payments when due. In the event of an unanticipated default, a
Portfolio would experience a reduction in its income, and could expect
a decline in the market value of the bonds so affected.
Any Portfolio may also invest in unrated debt bonds of foreign and
domestic issuers. For the Portfolios subject to such limit, unrated
bands will be included in each Portfolio's limit on investments in
bonds rated below investment grade unless its portfolio manager deems
such securities to be the equivalent of investment grade bonds.
Unrated bonds, while not necessarily of lower quality than rated
bonds, may not have as broad a market. Because of the size and
perceived demand of the issue, among other factors, certain
municipalities may not incur the costs of obtaining a rating. A
Portfolio's manager will analyze the creditworthiness of the issuer,
as well as any financial institution or other party responsible for
payments on the bond, in determining whether to purchase unrated
municipal bonds.
Defaulted Securities
A Portfolio will invest in defaulted securities only when its
portfolio manager believes, based upon his or her analysis of the
financial condition, results of operations and economic outlook of an
issuer, that there is potential for resumption of income payments and
that the securities offer an unusual opportunity for capital
appreciation. For the Portfolios subject to such limit, defaulted
securities will be included in each Portfolio's limit on investments
in bonds rated below investment grade. Notwithstanding the portfolio
manager's belief about the resumption of income, however, the purchase
of any security on which payment
11
of interest or dividends is suspended involves a high degree of risk.
Such risk includes, among other things, the following:
FINANCIAL AND MARKET RISKS. Investments in securities that are in
default involve a high degree of financial and market risks that can
result in substantial or, at times, even total losses. Issuers of
defaulted securities may have substantial capital needs and may become
involved in bankruptcy or reorganization proceedings. Among the
problems involved in investments in such issuers is the fact that it
may be difficult to obtain information about the condition of such
issuers. The market prices of such securities also are subject to
abrupt and erratic movements and above average price volatility, and
the spread between the bid and asked prices of such securities may be
greater than normally expected.
DISPOSITION OF PORTFOLIO SECURITIES. Although these Portfolios
generally will purchase securities for which their portfolio managers
expect an active market to be maintained, defaulted securities may be
less actively traded than other securities and it may be difficult to
dispose of substantial holdings of such securities at prevailing
market prices. The Portfolios will limit holdings of any such
securities to amounts that the portfolio managers believe could be
readily sold, and holdings of such securities would, in any event, be
limited so as not to limit the Portfolios' ability to readily dispose
of securities to meet redemptions.
OTHER. Defaulted securities require active monitoring and may, at
times, require participation in bankruptcy or receivership proceedings
on behalf of the Portfolios.
Futures, Options and Other Derivative Instruments
FUTURES CONTRACTS. The Portfolios may enter into contracts for the
purchase or sale for future delivery of equity securities,
fixed-income securities, foreign currencies or contracts based on
financial indices, including indices of U.S. government securities,
foreign government securities, equity or fixed-income securities. U.S.
futures contracts are traded on exchanges which have been designated
"contract markets" by the CFTC and must be executed through a futures
commission merchant ("FCM"), or brokerage firm, which is a member of
the relevant contract market. Through their clearing corporations, the
exchanges guarantee performance of the contracts as between the
clearing members of the exchange.
The buyer or seller of a futures contract is not required to deliver
or pay for the underlying instrument unless the contract is held until
the delivery date. However, both the buyer and seller are required to
deposit "initial margin" for the benefit of the FCM when the contract
is entered into. Initial margin deposits are equal to a percentage of
the contract's value, as set by the exchange on which the contract is
traded, and may be maintained in cash or certain other liquid assets
by the Portfolios' custodian or subcustodian for the benefit of the
FCM. Initial margin payments are similar to good faith deposits or
performance bonds. Unlike margin extended by a securities broker,
initial margin payments do not constitute purchasing securities on
margin for purposes of the Portfolio's investment limitations. If the
value of either party's position declines, that party will be required
to make additional "variation margin" payments for the benefit of the
FCM to settle the change in value on a daily basis. The party that has
a gain may be entitled to receive all or a portion of this amount. In
the event of the bankruptcy of the FCM that holds margin on behalf of
a Portfolio, that Portfolio may be entitled to return of margin owed
to such Portfolio only in proportion to the amount received by the
FCM's other customers. Janus Capital will attempt to minimize the risk
by careful monitoring of the creditworthiness of the FCMs with which
the Portfolios do business and by depositing margin payments in a
segregated account with the Portfolios' custodian.
12
The Portfolios intend to comply with guidelines of eligibility for
exclusion from the definition of the term "commodity pool operator"
adopted by the CFTC and the National Futures Association, which
regulate trading in the futures markets. The Portfolios will use
futures contracts and related options primarily for bona fide hedging
purposes within the meaning of CFTC regulations. To the extent that
the Portfolios hold positions in futures contracts and related options
that do not fall within the definition of bona fide hedging
transactions, the aggregate initial margin and premiums required to
establish such positions will not exceed 5% of the fair market value
of a Portfolio's net assets, after taking into account unrealized
profits and unrealized losses on any such contracts it has entered
into.
Although a Portfolio will segregate cash and liquid assets in an
amount sufficient to cover its open futures obligations, the
segregated assets would be available to that Portfolio immediately
upon closing out the futures position, while settlement of securities
transactions could take several days. However, because a Portfolio's
cash that may otherwise be invested would be held uninvested or
invested in other liquid assets so long as the futures position
remains open, such Portfolio's return could be diminished due to the
opportunity losses of foregoing other potential investments.
A Portfolio's primary purpose in entering into futures contracts is to
protect that Portfolio from fluctuations in the value of individual
securities or the securities markets generally, or interest rates
without actually buying or selling the underlying debt or equity
security. For example, if the Portfolio anticipates an increase in the
price of stocks, and it intends to purchase stocks at a later time,
that Portfolio could enter into a futures contract to purchase a stock
index as a temporary substitute for stock purchases. If an increase in
the market occurs that influences the stock index as anticipated, the
value of the futures contracts will increase, thereby serving as a
hedge against that Portfolio not participating in a market advance.
This technique is sometimes known as an anticipatory hedge. A
Portfolio may also use this technique with respect to an individual
company's stock. To the extent a Portfolio enters into futures
contracts for this purpose, the segregated assets maintained to cover
such Portfolio's obligations with respect to the futures contracts
will consist of liquid assets from its portfolio in an amount equal to
the difference between the contract price and the aggregate value of
the initial and variation margin payments made by that Portfolio with
respect to the futures contracts. Conversely, if a Portfolio holds
stocks and seeks to protect itself from a decrease in stock prices,
the Portfolio might sell stock index futures contracts, thereby hoping
to offset the potential decline in the value of its portfolio
securities by a corresponding increase in the value of the futures
contract position. Similarly, if a Portfolio holds an individual
company's stock and expects the price of that stock to decline, the
Portfolio may sell a futures contract on that stock in hopes of
offsetting the potential decline in the company's stock price. A
Portfolio could protect against a decline in stock prices by selling
portfolio securities and investing in money market instruments, but
the use of futures contracts enables it to maintain a defensive
position without having to sell portfolio securities.
If a Portfolio owns bonds and the portfolio manager expects interest
rates to increase, that Portfolio may take a short position in
interest rate futures contracts. Taking such a position would have
much the same effect as that Portfolio selling bonds in its portfolio.
If interest rates increase as anticipated, the value of the bonds
would decline, but the value of that Portfolio's interest rate futures
contract will increase, thereby keeping the net asset value of that
Portfolio from declining as much as it may have otherwise. If, on the
other hand, a portfolio manager expects interest rates to decline,
that Portfolio may take a long position in interest rate futures
contracts in anticipation of later closing out the futures position
and purchasing the bonds. Although a Portfolio can accomplish similar
results by buying securities with long maturities and selling
securities with short maturities, given the greater liquidity of the
futures market than the cash
13
market, it may be possible to accomplish the same result more easily
and more quickly by using futures contracts as an investment tool to
reduce risk.
The ordinary spreads between prices in the cash and futures markets,
due to differences in the nature of those markets, are subject to
distortions. First, all participants in the futures market are subject
to initial margin and variation margin requirements. Rather than
meeting additional variation margin requirements, investors may close
out futures contracts through offsetting transactions which could
distort the normal price relationship between the cash and futures
markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making
or taking delivery of the instrument underlying a futures contract. To
the extent participants decide to make or take delivery, liquidity in
the futures market could be reduced and prices in the futures market
distorted. Third, from the point of view of speculators, the margin
deposit requirements in the futures market are less onerous than
margin requirements in the securities market. Therefore, increased
participation by speculators in the futures market may cause temporary
price distortions. Due to the possibility of the foregoing
distortions, a correct forecast of general price trends by a portfolio
manager still may not result in a successful use of futures.
Futures contracts entail risks. Although the Portfolios believe that
use of such contracts will benefit the Portfolios, a Portfolio's
overall performance could be worse than if such Portfolio had not
entered into futures contracts if the portfolio manager's investment
judgement proves incorrect. For example, if a Portfolio has hedged
against the effects of a possible decrease in prices of securities
held in its portfolio and prices increase instead, that Portfolio will
lose part or all of the benefit of the increased value of these
securities because of offsetting losses in its futures positions. This
risk may be magnified for single stock futures transactions, as the
portfolio manager must predict the direction of the price of an
individual stock, as opposed to securities prices generally. In
addition, if a Portfolio has insufficient cash, it may have to sell
securities from its portfolio to meet daily variation margin
requirements. Those sales may be, but will not necessarily be, at
increased prices which reflect the rising market and may occur at a
time when the sales are disadvantageous to such Portfolio.
The prices of futures contracts depend primarily on the value of their
underlying instruments. Because there are a limited number of types of
futures contracts, it is possible that the standardized futures
contracts available to a Portfolio will not match exactly such
Portfolio's current or potential investments. A Portfolio may buy and
sell futures contracts based on underlying instruments with different
characteristics from the securities in which it typically
invests - for example, by hedging investments in portfolio securities
with a futures contract based on a broad index of securities - which
involves a risk that the futures position will not correlate precisely
with the performance of such Portfolio's investments.
Futures prices can also diverge from the prices of their underlying
instruments, even if the underlying instruments closely correlate with
a Portfolio's investments, such as with a single stock futures
contract. Futures prices are affected by factors such as current and
anticipated short-term interest rates, changes in volatility of the
underlying instruments and the time remaining until expiration of the
contract. Those factors may affect securities prices differently from
futures prices. Imperfect correlations between a Portfolio's
investments and its futures positions also may result from differing
levels of demand in the futures markets and the securities markets,
from structural differences in how futures and securities are traded,
and from imposition of daily price fluctuation limits for futures
contracts. A Portfolio may buy or sell futures contracts with a
greater or lesser value than the securities it wishes to hedge or is
considering purchasing in order to attempt to compensate for
differences in historical volatility between the futures
14
contract and the securities, although this may not be successful in
all cases. If price changes in a Portfolio's futures positions are
poorly correlated with its other investments, its futures positions
may fail to produce desired gains or result in losses that are not
offset by the gains in that Portfolio's other investments.
Because futures contracts are generally settled within a day from the
date they are closed out, compared with a settlement period of three
days for some types of securities, the futures markets can provide
superior liquidity to the securities markets. Nevertheless, there is
no assurance that a liquid secondary market will exist for any
particular futures contract at any particular time. In addition,
futures exchanges may establish daily price fluctuation limits for
futures contracts and may halt trading if a contract's price moves
upward or downward more than the limit in a given day. On volatile
trading days when the price fluctuation limit is reached, it may be
impossible for a Portfolio to enter into new positions or close out
existing positions. If the secondary market for a futures contract is
not liquid because of price fluctuation limits or otherwise, a
Portfolio may not be able to promptly liquidate unfavorable futures
positions and potentially could be required to continue to hold a
futures position until the delivery date, regardless of changes in its
value. As a result, such Portfolio's access to other assets held to
cover its futures positions also could be impaired.
OPTIONS ON FUTURES CONTRACTS. The Portfolios may buy and write put and
call options on futures contracts. An option on a future gives a
Portfolio the right (but not the obligation) to buy or sell a futures
contract at a specified price on or before a specified date. The
purchase of a call option on a futures contract is similar in some
respects to the purchase of a call option on an individual security.
Depending on the pricing of the option compared to either the price of
the futures contract upon which it is based or the price of the
underlying instrument, ownership of the option may or may not be less
risky than ownership of the futures contract or the underlying
instrument. As with the purchase of futures contracts, when a
Portfolio is not fully invested it may buy a call option on a futures
contract to hedge against a market advance.
The writing of a call option on a futures contract constitutes a
partial hedge against declining prices of the security or foreign
currency which is deliverable under, or of the index comprising, the
futures contract. If the futures price at the expiration of the option
is below the exercise price, a Portfolio will retain the full amount
of the option premium which provides a partial hedge against any
decline that may have occurred in that Portfolio's holdings. The
writing of a put option on a futures contract constitutes a partial
hedge against increasing prices of the security or foreign currency
which is deliverable under, or of the index comprising, the futures
contract. If the futures price at expiration of the option is higher
than the exercise price, a Portfolio will retain the full amount of
the option premium which provides a partial hedge against any increase
in the price of securities which that Portfolio is considering buying.
If a call or put option a Portfolio has written is exercised, such
Portfolio will incur a loss which will be reduced by the amount of the
premium it received. Depending on the degree of correlation between
the change in the value of its portfolio securities and changes in the
value of the futures positions, a Portfolio's losses from existing
options on futures may to some extent be reduced or increased by
changes in the value of portfolio securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio
securities. For example, a Portfolio may buy a put option on a futures
contract to hedge its portfolio against the risk of falling prices or
rising interest rates.
The amount of risk a Portfolio assumes when it buys an option on a
futures contract is the premium paid for the option plus related
transaction costs. In addition to the correlation risks discussed
above, the
15
purchase of an option also entails the risk that changes in the value
of the underlying futures contract will not be fully reflected in the
value of the options bought.
FORWARD CONTRACTS. A forward contract is an agreement between two
parties in which one party is obligated to deliver a stated amount of
a stated asset at a specified time in the future and the other party
is obligated to pay a specified amount for the assets at the time of
delivery. The Portfolios may enter into forward contracts to purchase
and sell government securities, equity or income securities, foreign
currencies or other financial instruments. Forward contracts generally
are traded in an interbank market conducted directly between traders
(usually large commercial banks) and their customers. Unlike futures
contracts, which are standardized contracts, forward contracts can be
specifically drawn to meet the needs of the parties that enter into
them. The parties to a forward contract may agree to offset or
terminate the contract before its maturity, or may hold the contract
to maturity and complete the contemplated exchange.
The following discussion summarizes the Portfolios' principal uses of
forward foreign currency exchange contracts ("forward currency
contracts"). A Portfolio may enter into forward currency contracts
with stated contract values of up to the value of that Portfolio's
assets. A forward currency contract is an obligation to buy or sell an
amount of a specified currency for an agreed price (which may be in
U.S. dollars or a foreign currency). A Portfolio will exchange foreign
currencies for U.S. dollars and for other foreign currencies in the
normal course of business and may buy and sell currencies through
forward currency contracts in order to fix a price for securities it
has agreed to buy or sell ("transaction hedge"). A Portfolio also may
hedge some or all of its investments denominated in a foreign currency
or exposed to foreign currency fluctuations against a decline in the
value of that currency relative to the U.S. dollar by entering into
forward currency contracts to sell an amount of that currency (or a
proxy currency whose performance is expected to replicate or exceed
the performance of that currency relative to the U.S. dollar)
approximating the value of some or all of its portfolio securities
denominated in that currency ("position hedge") or by participating in
options or futures contracts with respect to the currency. A Portfolio
also may enter into a forward currency contract with respect to a
currency where the Portfolio is considering the purchase or sale of
investments denominated in that currency but has not yet selected the
specific investments ("anticipatory hedge"). In any of these
circumstances a Portfolio may, alternatively, enter into a forward
currency contract to purchase or sell one foreign currency for a
second currency that is expected to perform more favorably relative to
the U.S. dollar if the portfolio manager believes there is a
reasonable degree of correlation between movements in the two
currencies ("cross-hedge").
These types of hedging minimize the effect of currency appreciation as
well as depreciation, but do not eliminate fluctuations in the
underlying U.S. dollar equivalent value of the proceeds of or rates of
return on a Portfolio's foreign currency denominated portfolio
securities. The matching of the increase in value of a forward
contract and the decline in the U.S. dollar equivalent value of the
foreign currency denominated asset that is the subject of the hedge
generally will not be precise. Shifting a Portfolio's currency
exposure from one foreign currency to another removes that Portfolio's
opportunity to profit from increases in the value of the original
currency and involves a risk of increased losses to such Portfolio if
its portfolio manager's projection of future exchange rates is
inaccurate. Proxy hedges and cross-hedges may result in losses if the
currency used to hedge does not perform similarly to the currency in
which hedged securities are denominated. Unforeseen changes in
currency prices may result in poorer overall performance for a
Portfolio than if it had not entered into such contracts.
16
The Portfolios will cover outstanding forward currency contracts by
maintaining liquid portfolio securities denominated in or whose value
is tied to the currency underlying the forward contract or the
currency being hedged. To the extent that a Portfolio is not able to
cover its forward currency positions with underlying portfolio
securities, the Portfolios' custodian will segregate cash or other
liquid assets having a value equal to the aggregate amount of such
Portfolio's commitments under forward contracts entered into with
respect to position hedges, cross-hedges and anticipatory hedges. If
the value of the securities used to cover a position or the value of
segregated assets declines, a Portfolio will find alternative cover or
segregate additional cash or other liquid assets on a daily basis so
that the value of the covered and segregated assets will be equal to
the amount of such Portfolio's commitments with respect to such
contracts. As an alternative to segregating assets, a Portfolio may
buy call options permitting such Portfolio to buy the amount of
foreign currency being hedged by a forward sale contract or a
Portfolio may buy put options permitting it to sell the amount of
foreign currency subject to a forward buy contract.
While forward contracts are not currently regulated by the CFTC, the
CFTC may in the future assert authority to regulate forward contracts.
In such event, the Portfolios' ability to utilize forward contracts
may be restricted. In addition, a Portfolio may not always be able to
enter into forward contracts at attractive prices and may be limited
in its ability to use these contracts to hedge Portfolio assets.
OPTIONS ON FOREIGN CURRENCIES. The Portfolios may buy and write
options on foreign currencies in a manner similar to that in which
futures or forward contracts on foreign currencies will be utilized.
For example, a decline in the U.S. dollar value of a foreign currency
in which portfolio securities are denominated will reduce the U.S.
dollar value of such securities, even if their value in the foreign
currency remains constant. In order to protect against such
diminutions in the value of portfolio securities, a Portfolio may buy
put options on the foreign currency. If the value of the currency
declines, such Portfolio will have the right to sell such currency for
a fixed amount in U.S. dollars, thereby offsetting, in whole or in
part, the adverse effect on its portfolio.
Conversely, when a rise in the U.S. dollar value of a currency in
which securities to be acquired are denominated is projected, thereby
increasing the cost of such securities, a Portfolio may buy call
options on the foreign currency. The purchase of such options could
offset, at least partially, the effects of the adverse movements in
exchange rates. As in the case of other types of options, however, the
benefit to a Portfolio from purchases of foreign currency options will
be reduced by the amount of the premium and related transaction costs.
In addition, if currency exchange rates do not move in the direction
or to the extent projected, a Portfolio could sustain losses on
transactions in foreign currency options that would require such
Portfolio to forego a portion or all of the benefits of advantageous
changes in those rates.
The Portfolios may also write options on foreign currencies. For
example, to hedge against a potential decline in the U.S. dollar value
of foreign currency denominated securities due to adverse fluctuations
in exchange rates, a Portfolio could, instead of purchasing a put
option, write a call option on the relevant currency. If the expected
decline occurs, the option will most likely not be exercised and the
decline in value of portfolio securities will be offset by the amount
of the premium received.
Similarly, instead of purchasing a call option to hedge against a
potential increase in the U.S. dollar cost of securities to be
acquired, a Portfolio could write a put option on the relevant
currency which, if rates move in the manner projected, should expire
unexercised and allow that Portfolio to hedge the increased cost up to
the amount of the premium. As in the case of other types of options,
however, the writing of a foreign currency option will constitute only
a partial hedge up to the amount of the premium. If exchange rates do
not move in the expected direction, the option may be exercised and a
Portfolio would be required to
17
buy or sell the underlying currency at a loss which may not be offset
by the amount of the premium. Through the writing of options on
foreign currencies, a Portfolio also may lose all or a portion of the
benefits which might otherwise have been obtained from favorable
movements in exchange rates.
The Portfolios may write covered call options on foreign currencies. A
call option written on a foreign currency by a Portfolio is "covered"
if that Portfolio owns the foreign currency underlying the call or has
an absolute and immediate right to acquire that foreign currency
without additional cash consideration (or for additional cash
consideration held in a segregated account by its custodian) upon
conversion or exchange of other foreign currencies held in its
portfolio. A call option is also covered if a Portfolio has a call on
the same foreign currency in the same principal amount as the call
written if the exercise price of the call held (i) is equal to or less
than the exercise price of the call written or (ii) is greater than
the exercise price of the call written, if the difference is
maintained by such Portfolio in cash or other liquid assets in a
segregated account with the Portfolios' custodian.
The Portfolios also may write call options on foreign currencies for
cross-hedging purposes. A call option on a foreign currency is for
cross-hedging purposes if it is designed to provide a hedge against a
decline due to an adverse change in the exchange rate in the U.S.
dollar value of a security which a Portfolio owns or has the right to
acquire and which is denominated in the currency underlying the
option. Call options on foreign currencies which are entered into for
cross-hedging purposes are not covered. However, in such
circumstances, a Portfolio will collateralize the option by
segregating cash or other liquid assets in an amount not less than the
value of the underlying foreign currency in U.S. dollars
marked-to-market daily.
OPTIONS ON SECURITIES. In an effort to increase current income and to
reduce fluctuations in net asset value, the Portfolios may write
covered put and call options and buy put and call options on
securities that are traded on United States and foreign securities
exchanges and over-the-counter. The Portfolios may write and buy
options on the same types of securities that the Portfolios may
purchase directly.
A put option written by a Portfolio is "covered" if that Portfolio (i)
segregates cash not available for investment or other liquid assets
with a value equal to the exercise price of the put with the
Portfolios' custodian or (ii) holds a put on the same security and in
the same principal amount as the put written and the exercise price of
the put held is equal to or greater than the exercise price of the put
written. The premium paid by the buyer of an option will reflect,
among other things, the relationship of the exercise price to the
market price and the volatility of the underlying security, the
remaining term of the option, supply and demand and interest rates.
A call option written by a Portfolio is "covered" if that Portfolio
owns the underlying security covered by the call or has an absolute
and immediate right to acquire that security without additional cash
consideration (or for additional cash consideration held in a
segregated account by the Portfolios' custodian) upon conversion or
exchange of other securities held in its portfolio. A call option is
also deemed to be covered if a Portfolio holds a call on the same
security and in the same principal amount as the call written and the
exercise price of the call held (i) is equal to or less than the
exercise price of the call written or (ii) is greater than the
exercise price of the call written if the difference is maintained by
that Portfolio in cash and other liquid assets in a segregated account
with its custodian.
The Portfolios also may write call options that are not covered for
cross-hedging purposes. A Portfolio collateralizes its obligation
under a written call option for cross-hedging purposes by segregating
cash or other liquid assets in an amount not less than the market
value of the underlying security, marked-to-market daily. A Portfolio
would write a call option for cross-hedging purposes, instead of
writing a covered
18
call option, when the premium to be received from the cross-hedge
transaction would exceed that which would be received from writing a
covered call option and its portfolio manager believes that writing
the option would achieve the desired hedge.
The writer of an option may have no control over when the underlying
securities must be sold, in the case of a call option, or bought, in
the case of a put option, since with regard to certain options, the
writer may be assigned an exercise notice at any time prior to the
termination of the obligation. Whether or not an option expires
unexercised, the writer retains the amount of the premium. This
amount, of course, may, in the case of a covered call option, be
offset by a decline in the market value of the underlying security
during the option period. If a call option is exercised, the writer
experiences a profit or loss from the sale of the underlying security.
If a put option is exercised, the writer must fulfill the obligation
to buy the underlying security at the exercise price, which will
usually exceed the then market value of the underlying security.
The writer of an option that wishes to terminate its obligation may
effect a "closing purchase transaction." This is accomplished by
buying an option of the same series as the option previously written.
The effect of the purchase is that the writer's position will be
canceled by the clearing corporation. However, a writer may not effect
a closing purchase transaction after being notified of the exercise of
an option. Likewise, an investor who is the holder of an option may
liquidate its position by effecting a "closing sale transaction." This
is accomplished by selling an option of the same series as the option
previously bought. There is no guarantee that either a closing
purchase or a closing sale transaction can be effected.
In the case of a written call option, effecting a closing transaction
will permit a Portfolio to write another call option on the underlying
security with either a different exercise price or expiration date or
both. In the case of a written put option, such transaction will
permit a Portfolio to write another put option to the extent that the
exercise price is secured by deposited liquid assets. Effecting a
closing transaction also will permit a Portfolio to use the cash or
proceeds from the concurrent sale of any securities subject to the
option for other investments. If a Portfolio desires to sell a
particular security from its portfolio on which it has written a call
option, such Portfolio will effect a closing transaction prior to or
concurrent with the sale of the security.
A Portfolio will realize a profit from a closing transaction if the
price of the purchase transaction is less than the premium received
from writing the option or the price received from a sale transaction
is more than the premium paid to buy the option. A Portfolio will
realize a loss from a closing transaction if the price of the purchase
transaction is more than the premium received from writing the option
or the price received from a sale transaction is less than the premium
paid to buy the option. Because increases in the market of a call
option generally will reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call
option is likely to be offset in whole or in part by appreciation of
the underlying security owned by a Portfolio.
An option position may be closed out only where a secondary market for
an option of the same series exists. If a secondary market does not
exist, the Portfolio may not be able to effect closing transactions in
particular options and the Portfolio would have to exercise the
options in order to realize any profit. If a Portfolio is unable to
effect a closing purchase transaction in a secondary market, it will
not be able to sell the underlying security until the option expires
or it delivers the underlying security upon exercise. The absence of a
liquid secondary market may be due to the following: (i) insufficient
trading interest in certain options, (ii) restrictions imposed by a
national securities exchange ("Exchange") on which the option is
traded on opening or closing transactions or both, (iii) trading
halts, suspensions or other
19
restrictions imposed with respect to particular classes or series of
options or underlying securities, (iv) unusual or unforeseen
circumstances that interrupt normal operations on an Exchange, (v) the
facilities of an Exchange or of the Options Clearing Corporation
("OCC") may not at all times be adequate to handle current trading
volume, or (vi) one or more Exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in
which event the secondary market on that Exchange (or in that class or
series of options) would cease to exist, although outstanding options
on that Exchange that had been issued by the OCC as a result of trades
on that Exchange would continue to be exercisable in accordance with
their terms.
A Portfolio may write options in connection with buy-and-write
transactions. In other words, a Portfolio may buy a security and then
write a call option against that security. The exercise price of such
call will depend upon the expected price movement of the underlying
security. The exercise price of a call option may be below
("in-the-money"), equal to ("at-the-money") or above
("out-of-the-money") the current value of the underlying security at
the time the option is written. Buy-and-write transactions using
in-the-money call options may be used when it is expected that the
price of the underlying security will remain flat or decline
moderately during the option period. Buy-and-write transactions using
at-the-money call options may be used when it is expected that the
price of the underlying security will remain fixed or advance
moderately during the option period. Buy-and-write transactions using
out-of-the-money call options may be used when it is expected that the
premiums received from writing the call option plus the appreciation
in the market price of the underlying security up to the exercise
price will be greater than the appreciation in the price of the
underlying security alone. If the call options are exercised in such
transactions, a Portfolio's maximum gain will be the premium received
by it for writing the option, adjusted upwards or downwards by the
difference between that Portfolio's purchase price of the security and
the exercise price. If the options are not exercised and the price of
the underlying security declines, the amount of such decline will be
offset by the amount of premium received.
The writing of covered put options is similar in terms of risk and
return characteristics to buy-and-write transactions. If the market
price of the underlying security rises or otherwise is above the
exercise price, the put option will expire worthless and a Portfolio's
gain will be limited to the premium received. If the market price of
the underlying security declines or otherwise is below the exercise
price, a Portfolio may elect to close the position or take delivery of
the security at the exercise price and that Portfolio's return will be
the premium received from the put options minus the amount by which
the market price of the security is below the exercise price.
A Portfolio may buy put options to hedge against a decline in the
value of its portfolio. By using put options in this way, a Portfolio
will reduce any profit it might otherwise have realized in the
underlying security by the amount of the premium paid for the put
option and by transaction costs.
A Portfolio may buy call options to hedge against an increase in the
price of securities that it may buy in the future. The premium paid
for the call option plus any transaction costs will reduce the
benefit, if any, realized by such Portfolio upon exercise of the
option, and, unless the price of the underlying security rises
sufficiently, the option may expire worthless to that Portfolio.
EURODOLLAR INSTRUMENTS. A Portfolio may make investments in Eurodollar
instruments. Eurodollar instruments are U.S. dollar-denominated
futures contracts or options thereon which are linked to the London
Interbank Offered Rate ("LIBOR"), although foreign
currency-denominated instruments are available from time to time.
Eurodollar futures contracts enable purchasers to obtain a fixed rate
for the
20
lending of funds and sellers to obtain a fixed rate for borrowings. A
Portfolio might use Eurodollar futures contracts and options thereon
to hedge against changes in LIBOR, to which many interest rate swaps
and fixed-income instruments are linked.
SWAPS AND SWAP-RELATED PRODUCTS. A Portfolio may enter into interest
rate swaps, caps and floors on either an asset-based or
liability-based basis, depending upon whether it is hedging its assets
or its liabilities, and will usually enter into interest rate swaps on
a net basis (i.e., the two payment streams are netted out, with a
Portfolio receiving or paying, as the case may be, only the net amount
of the two payments). The net amount of the excess, if any, of a
Portfolio's obligations over its entitlement with respect to each
interest rate swap will be calculated on a daily basis and an amount
of cash or other liquid assets having an aggregate net asset value at
least equal to the accrued excess will be maintained in a segregated
account by the Portfolios' custodian. If a Portfolio enters into an
interest rate swap on other than a net basis, it would maintain a
segregated account in the full amount accrued on a daily basis of its
obligations with respect to the swap. A Portfolio will not enter into
any interest rate swap, cap or floor transaction unless the unsecured
senior debt or the claims-paying ability of the other party thereto is
rated in one of the three highest rating categories of at least one
NRSRO at the time of entering into such transaction. Janus Capital
will monitor the creditworthiness of all counterparties on an ongoing
basis. If there is a default by the other party to such a transaction,
a Portfolio will have contractual remedies pursuant to the agreements
related to the transaction.
The swap market has grown substantially in recent years with a large
number of banks and investment banking firms acting both as principals
and as agents utilizing standardized swap documentation. Janus Capital
has determined that, as a result, the swap market has become
relatively liquid. Caps and floors are more recent innovations for
which standardized documentation has not yet been developed and,
accordingly, they are less liquid than swaps. To the extent a
Portfolio sells (i.e., writes) caps and floors, it will segregate cash
or other liquid assets having an aggregate net asset value at least
equal to the full amount, accrued on a daily basis, of its obligations
with respect to any caps or floors.
There is no limit on the amount of interest rate swap transactions
that may be entered into by a Portfolio. These transactions may in
some instances involve the delivery of securities or other underlying
assets by a Portfolio or its counterparty to collateralize obligations
under the swap. Under the documentation currently used in those
markets, the risk of loss with respect to interest rate swaps is
limited to the net amount of the payments that a Portfolio is
contractually obligated to make. If the other party to an interest
rate swap that is not collateralized defaults, a Portfolio would risk
the loss of the net amount of the payments that it contractually is
entitled to receive. A Portfolio may buy and sell (i.e., write) caps
and floors without limitation, subject to the segregation requirement
described above.
ADDITIONAL RISKS OF OPTIONS ON FOREIGN CURRENCIES, FORWARD CONTRACTS
AND FOREIGN INSTRUMENTS. Unlike transactions entered into by the
Portfolios in futures contracts, options on foreign currencies and
forward contracts are not traded on contract markets regulated by the
CFTC or (with the exception of certain foreign currency options) by
the SEC. To the contrary, such instruments are traded through
financial institutions acting as market-makers, although foreign
currency options are also traded on certain Exchanges, such as the
Philadelphia Stock Exchange and the Chicago Board Options Exchange,
subject to SEC regulation. Similarly, options on currencies may be
traded over-the-counter. In an over-the-counter trading environment,
many of the protections afforded to Exchange participants will not be
available. For example, there are no daily price fluctuation limits,
and adverse market movements could therefore continue to an unlimited
extent over a period of time. Although the buyer of an option cannot
lose more
21
than the amount of the premium plus related transaction costs, this
entire amount could be lost. Moreover, an option writer and a buyer or
seller of futures or forward contracts could lose amounts
substantially in excess of any premium received or initial margin or
collateral posted due to the potential additional margin and
collateral requirements associated with such positions.
Options on foreign currencies traded on Exchanges are within the
jurisdiction of the SEC, as are other securities traded on Exchanges.
As a result, many of the protections provided to traders on organized
Exchanges will be available with respect to such transactions. In
particular, all foreign currency option positions entered into on an
Exchange are cleared and guaranteed by the OCC, thereby reducing the
risk of counterparty default. Further, a liquid secondary market in
options traded on an Exchange may be more readily available than in
the over-the-counter market, potentially permitting a Portfolio to
liquidate open positions at a profit prior to exercise or expiration,
or to limit losses in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options,
however, is subject to the risks of the availability of a liquid
secondary market described above, as well as the risks regarding
adverse market movements, margining of options written, the nature of
the foreign currency market, possible intervention by governmental
authorities and the effects of other political and economic events. In
addition, exchange-traded options on foreign currencies involve
certain risks not presented by the over-the-counter market. For
example, exercise and settlement of such options must be made
exclusively through the OCC, which has established banking
relationships in applicable foreign countries for this purpose. As a
result, the OCC may, if it determines that foreign governmental
restrictions or taxes would prevent the orderly settlement of foreign
currency option exercises, or would result in undue burdens on the OCC
or its clearing member, impose special procedures on exercise and
settlement, such as technical changes in the mechanics of delivery of
currency, the fixing of dollar settlement prices or prohibitions on
exercise.
In addition, options on U.S. government securities, futures contracts,
options on futures contracts, forward contracts and options on foreign
currencies may be traded on foreign exchanges and over-the-counter in
foreign countries. Such transactions are subject to the risk of
governmental actions affecting trading in or the prices of foreign
currencies or securities. The value of such positions also could be
adversely affected by (i) other complex foreign political and economic
factors, (ii) lesser availability than in the United States of data on
which to make trading decisions, (iii) delays in a Portfolio's ability
to act upon economic events occurring in foreign markets during
non-business hours in the United States, (iv) the imposition of
different exercise and settlement terms and procedures and margin
requirements than in the United States, and (v) low trading volume.
22
INVESTMENT ADVISER
- --------------------------------------------------------------------------------
As stated in the Prospectus, each Portfolio has an Investment Advisory
Agreement with Janus Capital, 100 Fillmore Street, Denver, Colorado
80206-4928. Each Advisory Agreement provides that Janus Capital will
furnish continuous advice and recommendations concerning the
Portfolios' investments, provide office space for the Portfolios, and
pay the salaries, fees and expenses of all Portfolio officers and of
those Trustees who are affiliated with Janus Capital. Janus Capital
also may make payments to selected broker-dealer firms or institutions
which were instrumental in the acquisition of shareholders for the
Portfolios or other Janus Funds or which perform recordkeeping or
other services with respect to shareholder accounts. The minimum
aggregate size required for eligibility for such payments, and the
factors in selecting the broker-dealer firms and institutions to which
they will be made, are determined from time to time by Janus Capital.
Janus Capital is also authorized to perform the management and
administrative services necessary for the operation of the Portfolios.
The Portfolios pay custodian and transfer agent fees and expenses,
brokerage commissions and dealer spreads and other expenses in
connection with the execution of portfolio transactions, legal and
accounting expenses, interest and taxes, trade or other investment
company organization dues and expenses, registration fees, expenses of
shareholders' meetings and reports to shareholders, fees and expenses
of Portfolio Trustees who are not affiliated with Janus Capital and
other costs of complying with applicable laws regulating the sale of
Portfolio shares. Pursuant to the Advisory Agreements, Janus Capital
furnishes certain other services, including net asset value
determination, portfolio accounting and recordkeeping, for which the
Portfolios may reimburse Janus Capital for its costs.
Growth Portfolio, Aggressive Growth Portfolio, Capital Appreciation
Portfolio, Core Equity Portfolio, Balanced Portfolio, Growth and
Income Portfolio, Strategic Value Portfolio, International Growth
Portfolio, Worldwide Growth Portfolio, Global Life Sciences Portfolio
and Global Technology Portfolio have each agreed to compensate Janus
Capital for its services by the monthly payment of a fee at the annual
rate of 0.65% of the average daily net assets of each Portfolio.
Janus Capital has agreed to reimburse Strategic Value Portfolio, Core
Equity Portfolio, Global Life Sciences Portfolio and Global Technology
Portfolio by the amount, if any, that such Portfolio's normal
operating expenses in any fiscal year, including the investment
advisory fee but excluding brokerage commissions, interest, taxes and
extraordinary expenses, exceed an annual rate of 1.25% of the average
daily net assets of the Portfolio until at least the next annual
renewal of the advisory agreements. Mortality risk, expense risk and
other charges imposed by participating insurance companies are
excluded from the above expense limitation.
Flexible Income Portfolio has agreed to compensate Janus Capital for
its services by the monthly payment of a fee at the annual rate of
0.65% of the first $300 million of the average daily net assets of the
Portfolio, plus 0.55% of the average daily net assets of the Portfolio
in excess of $300 million. Janus Capital has agreed by contract to
waive the advisory fee payable by Flexible Income Portfolio in an
amount equal to the amount, if any, that the Portfolio's normal
operating expenses in any fiscal year, including the investment
advisory fee but excluding brokerage commissions, interest, taxes and
extraordinary expenses, exceed 1% of the average daily net assets for
a fiscal year. Mortality risk, expense risk and other charges imposed
by participating insurance companies are excluded from the above
expense limitation. Janus Capital has agreed to continue such waivers
until at least the next annual renewal of the advisory agreements.
23
The following table summarizes the advisory fees paid by the
Portfolios and any advisory fee waivers for the last three fiscal
periods indicated. The information below is for fiscal periods ended
December 31. The information presented in the table below reflects the
management fees in effect during each of the periods shown.
<Table>
<Caption>
2001 2000 1999
----------------------- ------------------------------- -----------------------
Portfolio Name Advisory Fees Waivers Advisory Fees(1) Waivers Advisory Fees Waivers
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio $19,964,950 $ -- $24,948,688 $ -- $11,643,196 $ --
Aggressive Growth Portfolio $17,257,955 $ -- $29,581,977 $ -- $10,080,519 $ --
Capital Appreciation Portfolio $ 8,901,772 $ -- $ 8,477,539 $ -- $ 1,716,060 $ --
Strategic Value Portfolio $ 87,965 $12,203 $ 15,984(2) $15,984(2,3) N/A N/A
Core Equity Portfolio(4) $ 94,870 $ -- $ 118,672 $70,742 $ 106,069 $14,279
Balanced Portfolio $22,559,338 $ -- $20,105,983 $ -- $10,804,814 $ --
Growth and Income Portfolio $ 1,163,163 $ -- $ 935,796 $ -- $ 201,847 $ --
International Growth Portfolio $ 9,648,235 $ -- $ 9,772,975 $ -- $ 2,829,430 $ --
Worldwide Growth Portfolio $42,291,852 $ -- $54,995,300 $ -- $25,509,504 $ --
Global Life Sciences Portfolio $ 290,630 $ -- $ 133,995 (5) $ -- N/A N/A
Global Technology Portfolio $ 2,057,015 $ -- $2,010,693 (5) $ -- N/A N/A
Flexible Income Portfolio $ 2,041,819 $ -- $ 1,344,877 $ -- $ 1,051,109 $ --
</Table>
(1) The management fee paid by Growth, Aggressive Growth, Capital Appreciation,
Core Equity, Balanced, Growth and Income, International Growth and Worldwide
Growth Portfolios was reduced to 0.65% of the average daily net assets of
each Portfolio.
(2) May 1, 2000 (inception) to December 31, 2000.
(3) Fee waiver by Janus Capital exceeded the advisory fee.
(4) Formerly, Equity Income Portfolio.
(5) January 18, 2000 (inception) to December 31, 2000.
Each Portfolio's Advisory Agreement is dated April 3, 2002, and will
continue in effect until July 1, 2002, and thereafter from year to
year so long as such continuance is approved annually by a majority of
the Portfolios' Trustees who are not parties to the Advisory
Agreements or interested persons of any such party, and by either a
majority of the outstanding voting shares of each Portfolio or the
Trustees of the Portfolios. Each Advisory Agreement (i) may be
terminated without the payment of any penalty by any Portfolio or
Janus Capital on 60 days' written notice; (ii) terminates
automatically in the event of its assignment; and (iii) generally, may
not be amended without the approval by vote of a majority of the
Trustees of the affected Portfolio, including the Trustees who are not
interested persons of that Portfolio or Janus Capital and, to the
extent required by the 1940 Act, the vote of a majority of the
outstanding voting securities of that Portfolio.
Janus Capital is an indirect subsidiary of Stilwell Financial Inc.
("Stilwell"), a publicly traded holding company with principal
operations in financial asset management businesses. Stilwell, through
its subsidiaries, indirectly owns approximately 92% of Janus Capital,
and certain Janus Capital employees directly own approximately 8%.
In approving the Portfolios' existing Advisory Agreements, the
Trustees considered various matters relating to the possible effects
on Janus Capital and the Portfolios of the expiration of Mr. Bailey's
contractual management rights with respect to Janus Capital, including
Stilwell's intentions regarding the preservation and strengthening of
Janus Capital's business and existing and proposed incentive
compensation arrangements for key Janus Capital employees.
24
In addition, the Trustees considered a wide range of information of
the type they regularly consider when determining whether to continue
the Portfolios' Advisory Agreements as in effect from year to year.
The Trustees considered information about, among other things:
- Janus Capital and its personnel (including particularly those
personnel with responsibilities for providing services to the
Portfolios), resources and investment process;
- the terms of each Advisory Agreement;
- the scope and quality of the services that Janus Capital has been
providing to the Portfolios;
- the investment performance of each Portfolio and of comparable funds
managed by other advisers over various periods;
- the advisory fee rates payable to Janus Capital by the Portfolios
and by other funds and client accounts managed by Janus Capital, and
payable by comparable funds managed by other advisers;
- the total expense ratio of each Portfolio and of comparable funds
managed by other advisers;
- compensation payable by the Portfolios to affiliates of Janus
Capital for other services;
- the profitability to Janus Capital and its affiliates of their
relationships with the Portfolios; and
- Janus Capital's use of the Portfolios' brokerage transactions to
obtain research benefiting the Portfolios or other Janus Capital
clients at a cost that may be in excess of the amount other brokers
would charge or to reduce certain out-of-pocket expenses otherwise
payable by the Portfolios.
Janus Capital acts as sub-adviser for a number of private-label mutual
funds and provides separate account advisor services for institutional
accounts. Investment decisions for each account managed by Janus
Capital, including the Portfolios, are made independently from those
for any other account that is or may in the future become managed by
Janus Capital or its affiliates. If, however, a number of accounts
managed by Janus Capital are contemporaneously engaged in the purchase
or sale of the same security, the orders may be aggregated and/or the
transactions may be averaged as to price and allocated to each account
in accordance with allocation procedures adopted by Janus Capital.
Partial fills for the accounts of two or more portfolio managers will
be allocated pro rata under procedures adopted by Janus Capital. In
some cases, these allocation procedures may adversely affect the price
paid or received by an account or the size of the position obtained or
liquidated for an account. In others, however, the accounts' ability
to participate in volume transactions may produce better executions
and prices for the accounts.
With respect to allocations of initial public offerings ("IPOs"),
under IPO allocation procedures adopted by Janus Capital, accounts
will participate in an IPO if the portfolio manager believes the IPO
is an appropriate investment based on the account's investment
restrictions, risk profile, asset composition, and/or cash levels.
These IPO allocation procedures require that each account be assigned
to a pre-defined group ("IPO Group"), based on objective criteria set
forth in the procedures. Generally, an account may not participate in
an IPO unless it is assigned to an IPO Group that correlates with the
pre-offering market capitalization ("IPO Classification") of the
company. If, however, the portfolio manager intends to build a
long-term position in the company and purchases securities in both the
initial offering and in the immediate aftermarket, then all
participating portfolio managers' clients will receive the same
proportion of IPO shares to aftermarket shares, resulting in a blended
price equal to the average price paid for all IPO and immediate
aftermarket shares. If there is no immediate aftermarket activity, all
shares purchased will be allocated pro rata to the participating
manager's accounts in the IPO Group corresponding to the IPO
25
Classification, subject to a de minimis standard. In situations where
a portfolio manager wants to take a small position in a security, an
exception to this de minimis standard may be allowed. These IPO
allocation procedures may result in certain accounts, particularly
larger accounts, receiving fewer IPOs than other accounts, which may
impact performance.
Janus Capital is permitted to adjust its allocation procedures to
eliminate fractional shares or odd lots, and has the discretion to
deviate from its allocation procedures in certain circumstances. For
example, additional securities may be allocated to a portfolio manager
who is instrumental in originating or developing an investment
opportunity or to comply with a portfolio manager's request to ensure
that his or her accounts receive sufficient securities to satisfy
specialized investment objectives.
Pursuant to an exemptive order granted by the SEC, the Portfolios and
other portfolios advised by Janus Capital may also transfer daily
uninvested cash balances into one or more joint trading accounts.
Assets in the joint trading accounts are invested in money market
instruments and the proceeds are allocated to the participating
portfolios on a pro rata basis.
Each account managed by Janus Capital has its own investment objective
and policies and is managed accordingly by a particular portfolio
manager or team of portfolio managers. As a result, from time to time
two or more different managed accounts may pursue divergent investment
strategies with respect to investments or categories of investments.
Janus Capital does not permit the Portfolios' portfolio managers to
purchase and sell securities for their own accounts except under the
limited exceptions contained in the Code of Ethics which applies to
Directors/Trustees of Janus Capital and the Portfolios and employees
of, and persons working on a contractual basis for, Janus Capital and
its subsidiaries. The Code of Ethics is on file with and available
through the SEC Web site at www.sec.gov. The Code of Ethics requires
investment personnel, inside Directors/Trustees of Janus Capital and
the Portfolios and certain other designated employees deemed to have
access to current trading information to pre-clear all transactions in
securities not otherwise exempt under the Code of Ethics. Requests for
trading authorization will be denied when, among other reasons, the
proposed personal transaction would be contrary to the provisions of
the Code of Ethics or would be deemed to adversely affect any
transaction then known to be under consideration for or to have been
effected on behalf of any client account, including the Portfolios.
In addition to the pre-clearance requirement described above, the Code
of Ethics subjects such personnel to various trading restrictions and
reporting obligations. All reportable transactions are required to be
reviewed for compliance with the Code of Ethics. Those persons also
may be required under certain circumstances to forfeit their profits
made from personal trading.
The provisions of the Code of Ethics are administered by and subject
to exceptions authorized by Janus Capital.
26
CUSTODIAN, TRANSFER AGENT AND CERTAIN AFFILIATIONS
- --------------------------------------------------------------------------------
State Street Bank and Trust Company, P.O. Box 0351, Boston,
Massachusetts 02117-0351 is the custodian of the domestic securities
and cash of the Portfolios. State Street is the designated Foreign
Custody Manager (as the term is defined in Rule 17f-5 under the 1940
Act) of the Portfolios' securities and cash held outside the United
States. The Portfolios' Trustees have delegated to State Street
certain responsibilities for such assets, as permitted by Rule 17f-5.
State Street and the foreign subcustodians selected by it hold the
Portfolios' assets in safekeeping and collect and remit the income
thereon, subject to the instructions of each Portfolio.
Janus Services LLC ("Janus Services"), P.O. Box 173375, Denver,
Colorado 80217-3375, a wholly-owned subsidiary of Janus Capital, is
the Portfolios' transfer agent. In addition, Janus Services provides
certain other administrative, recordkeeping and shareholder relations
services to the Portfolios. Janus Services is not compensated for its
services related to the Shares, except for out-of-pocket costs.
The Portfolios pay DST Systems, Inc. ("DST"), a subsidiary of
Stilwell, license fees at the annual rate of $3.06 per shareholder
account for the equity portfolios and $3.98 per shareholder account
for Flexible Income Portfolio for the use of DST's shareholder
accounting system.
Prior to June 1, 2001, the Portfolios also paid DST a monthly base fee
for the use of its portfolio and fund accounting system, of $265 to
$1,323 per month based on the number of Janus funds using the system
and an asset charge of $1 per million dollars of net assets (not to
exceed $500 per month). Effective June 1, 2001, State Street Bank and
Trust Company acquired the portfolio and fund accounting system of
DST.
The Trustees have authorized the Portfolios to use an affiliate of DST
as introducing broker for certain Portfolio transactions. Brokerage
commissions paid on such transactions may be used as a means to reduce
Portfolio expenses through credits against the charges of DST and its
affiliates. Such credits will not reduce the fees Janus Capital is
obligated to pay any Portfolio under its waiver agreement, and such
Portfolio receives the benefit of any such credits. See "Portfolio
Transactions and Brokerage."
Janus Distributors LLC ("Janus Distributors"), 100 Fillmore Street,
Denver, Colorado 80206-4928, a wholly-owned subsidiary of Janus
Capital, is a distributor of the Portfolios. Janus Distributors is
registered as a broker-dealer under the Securities Exchange Act of
1934 and is a member of the National Association of Securities
Dealers, Inc.
27
PORTFOLIO TRANSACTIONS AND BROKERAGE
- --------------------------------------------------------------------------------
Decisions as to the assignment of portfolio business for the
Portfolios and negotiation of its commission rates are made by Janus
Capital whose policy is to seek to obtain the "best execution" of all
portfolio transactions (the best net prices under the circumstances
based upon a number of factors including and subject to the factors
discussed below) except to the extent that Janus Capital may be
permitted to pay higher commissions for research services as described
below. The Portfolios may trade foreign securities in foreign
countries because the best available market for these securities is
often on foreign exchanges. In transactions on foreign stock
exchanges, brokers' commissions are frequently fixed and are often
higher than in the United States, where commissions are negotiated.
Janus Capital considers a number of factors in seeking best execution
in selecting brokers and dealers and in negotiating commissions. Those
factors include, but are not limited to: Janus Capital's knowledge of
currently available negotiated commission rates or prices of
securities currently available and other current transaction costs;
the nature of the security being traded; the size and type of the
transaction; the nature and character of the markets for the security
to be purchased or sold; the desired timing of the trade; the activity
existing and expected in the market for the particular security;
confidentiality, including trade anonymity; liquidity; the quality of
the execution, clearance and settlement services; financial stability
of the broker or dealer; and rebates of commissions by a broker to a
Portfolio or to a third party service provider to the Portfolio to pay
Portfolio expenses. In addition, Janus Capital may consider the value
of research products or services provided by broker-dealers as a
factor in selecting brokers and dealers and in negotiating
commissions. In recognition of the value of the foregoing factors,
Janus Capital may place portfolio transactions with a broker or dealer
with whom it has negotiated a commission that is in excess of the
commission another broker or dealer would have charged for effecting
that transaction if Janus Capital determines in good faith that such
amount of commission was reasonable in relation to the value of the
brokerage and research provided by such broker or dealer viewed in
terms of either that particular transaction or of the overall
responsibilities of Janus Capital. Research may include furnishing
advice, either directly or through publications or writings, as to the
value of securities, the advisability of purchasing or selling
specific securities and the availability of securities or purchasers
or sellers of securities; furnishing seminars, information, analyses
and reports concerning issuers, industries, securities, trading
markets and methods, legislative developments, changes in accounting
practices, economic factors and trends and portfolio strategy; access
to research analysts, corporate management personnel, industry
experts, economists and government officials; comparative performance
evaluation and technical measurement services and quotation services,
and products and other services (such as third party publications,
reports and analyses, and computer and electronic access, equipment,
software, information and accessories that deliver, process or
otherwise utilize information, including the research described above)
that assist Janus Capital in carrying out its responsibilities.
Research received from brokers or dealers is supplemental to Janus
Capital's own research efforts. Most brokers and dealers used by Janus
Capital provide research and other services described above. Much of
the research provided to Janus Capital by broker-dealers would
otherwise be available to Janus Capital for a cash payment. In some
cases, research is generated by third parties, but is provided to
Janus Capital through broker-dealers. For example, Janus Capital has
arrangements with broker-dealers to allocate brokerage in exchange
for, among other things, third-party research reports relating to
specific industry fundamentals and trends, third-party research
reports providing analysis of micro and macro economic trends, and
access to databases providing financial, market, economic and
fundamental data. Because Janus Capital receives research from
broker-dealers, Janus Capital may have an incentive to continue to use
those broker-dealers to effect transactions. Janus Capital may also
direct trades to a broker-dealer with the instruction that the
broker-dealer execute the transaction, but direct a portion of the
commission to another broker-dealer that supplies Janus Capital with
research services and/or products.
28
For the year ended December 31, 2001, the total brokerage commissions
paid by the Portfolios to brokers and dealers in transactions
identified for execution primarily on the basis of research and other
services provided to the Portfolios are summarized below:
<Table>
<Caption>
Portfolio Name Commissions Transactions
- ------------------------------------------------------------------------------------------
Growth Portfolio $2,316,685 $1,658,511,653
Aggressive Growth Portfolio $3,033,478 $1,954,351,001
Capital Appreciation Portfolio $1,671,235 $1,393,566,670
Strategic Value Portfolio $ 36,231 $ 21,446,650
Core Equity Portfolio(1) $ 28,128 $ 19,839,485
Balanced Portfolio $3,054,114 $2,364,793,906
Growth and Income Portfolio $ 158,616 $ 112,087,780
International Growth Portfolio $ 283,659 $ 182,788,634
Worldwide Growth Portfolio $2,406,747 $1,639,352,564
Global Life Sciences Portfolio $ 33,330 $ 31,876,085
Global Technology Portfolio $ 178,141 $ 90,753,082
</Table>
(1) Formerly, Equity Income Portfolio.
Note: Portfolios that are not included in the table did not pay any commissions
related to research for the stated period.
Janus Capital may use research products and services in servicing
other accounts in addition to the Portfolios. Fixed-income related
research products and services may be paid for by commissions
generated by equity trades. If Janus Capital determines that any
research product or service has a mixed use, such that it also serves
functions that do not assist in the investment decision-making
process, Janus Capital may allocate the costs of such service or
product accordingly. Only that portion of the product or service that
Janus Capital determines will assist it in the investment
decision-making process may be paid for in brokerage commission
dollars. Such allocation may create a conflict of interest for Janus
Capital.
Janus Capital does not enter into agreements with any brokers
regarding the placement of securities transactions because of the
research services they provide. It does, however, have an internal
procedure for allocating transactions in a manner consistent with its
execution policy to brokers that it has identified as providing
superior executions and research, research-related products or
services which benefit its advisory clients, including the Portfolios.
Research products and services incidental to effecting securities
transactions furnished by brokers or dealers may be used in servicing
any or all of Janus Capital's clients and such research may not
necessarily be used by Janus Capital in connection with the accounts
which paid commissions to the broker-dealer providing such research
products and services.
Janus Capital may consider sales of Portfolio Shares or shares of
other Janus funds by a broker-dealer or the recommendation of a
broker-dealer to its customers that they purchase Portfolio Shares as
a factor in the selection of broker-dealers to execute Portfolio
transactions. Janus Capital may also consider payments made by brokers
effecting transactions for a Portfolio (i) to the Portfolio or (ii) to
other persons on behalf of the Portfolio for services provided to the
Portfolio for which it would be obligated to pay. In placing Portfolio
business with such broker-dealers, Janus Capital will seek the best
execution of each transaction.
When the Portfolios purchase or sell a security in the
over-the-counter market, the transaction takes place directly with a
principal market-maker, without the use of a broker, except in those
circumstances where in the opinion of Janus Capital better prices and
executions will be achieved through the use of a broker.
The Portfolios' Trustees have authorized Janus Capital to place
transactions with DST Securities, Inc. ("DSTS"), a wholly-owned
broker-dealer subsidiary of DST. Janus Capital may do so if it
reasonably
29
believes that the quality of the transaction and the associated
commission are fair and reasonable and if, overall, the associated
transaction costs, net of any credits described above under
"Custodian, Transfer Agent and Certain Affiliations," are lower than
the net costs that would be incurred through other brokerage firms.
The following table lists the total amount of brokerage commissions
paid by each Portfolio for the fiscal periods ending on December 31st
of each year:
<Table>
<Caption>
Portfolio Name 2001 2000 1999
- ------------------------------------------------------------------------------------------------------
Growth Portfolio $ 3,206,915 $ 3,423,084 $1,800,731
Aggressive Growth Portfolio $ 4,314,792 $ 2,582,189 $1,664,794
Capital Appreciation Portfolio $ 1,879,337 $ 730,533 $ 232,858
Strategic Value Portfolio $ 44,753 $ 8,024(1) N/A
Core Equity Portfolio(2) $ 35,898 $ 22,893 $ 15,272
Balanced Portfolio $ 3,841,938 $ 2,213,641 $1,254,757
Growth and Income Portfolio $ 216,649 $ 131,011 $ 39,174
International Growth Portfolio $ 3,133,111 $ 3,344,307 $1,084,559
Worldwide Growth Portfolio $12,988,041 $13,476,203 $7,327,446
Global Life Sciences Portfolio $ 72,825 $ 60,730(3) N/A
Global Technology Portfolio $ 478,746 $ 499,126(3) N/A
Flexible Income Portfolio $ 0 $ 1,311 $ 1,200
</Table>
(1) May 1, 2000 (inception) to December 31, 2000.
(2) Formerly, Equity Income Portfolio.
(3) January 18, 2000 (inception) to December 31, 2000.
Included in such brokerage commissions are the following amounts paid
to DSTS, which served to reduce each Portfolio's out-of-pocket
expenses as follows:
<Table>
<Caption>
Commission Paid
through DSTS for the
Period Ended Reduction of % of Total % of Total
Portfolio Name December 31, 2001* Expenses* Commissions Transactions
- ------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio $25,075 $18,811 0.78% 0.82%
Aggressive Growth Portfolio $26,449 $19,842 0.61% 0.53%
Strategic Value Portfolio $ 260 $ 195 0.58% 0.23%
Core Equity Portfolio** $ 95 $ 71 0.26% 0.30%
Balanced Portfolio $24,610 $18,462 0.64% 0.60%
Growth and Income Portfolio $ 763 $ 572 0.35% 0.25%
Worldwide Growth Portfolio $15,224 $11,421 0.12% 0.14%
Global Life Sciences Portfolio $ 128 $ 96 0.18% 0.06%
</Table>
* The difference between commissions paid through DSTS and expenses reduced
constitute commissions paid to an unaffiliated clearing broker.
** Formerly, Equity Income Portfolio.
Note: Portfolios that did not execute trades with DSTS during the stated periods
are not included in the table.
30
<Table>
<Caption>
Commission Paid Commission Paid
through DSTS for the through DSTS for the
Period Ended Reduction of Period Ended Reduction of
Portfolio Name December 31, 2000* Expenses* December 31, 1999* Expenses*
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio $ -- $ -- $7,244 $5,433
Core Equity Portfolio** $ 37 $ 28 $ -- $ --
Balanced Portfolio $ -- $ -- $2,294 $1,721
Growth and Income Portfolio $ 305 $ 229 $ 55 $ 41
International Growth Portfolio $ 1,241 $ 931 $ -- $ --
Worldwide Growth Portfolio $16,745 $12,559 $ -- $ --
</Table>
* The difference between commissions paid through DSTS and expenses reduced
constitute commissions paid to an unaffiliated clearing broker.
** Formerly, Equity Income Portfolio.
Note: Portfolios that did not execute trades with DSTS during the periods
indicated are not included in the table.
The Portfolios may also place trades with E*Trade Securities
("E*Trade"), a registered broker-dealer and a wholly-owned subsidiary
of E*Trade Group, Inc. As of September 1, 2000, Janus Capital owned,
in the aggregate, more than 5% of the outstanding securities of
E*Trade Group in various accounts, including the Portfolios. By virtue
of such ownership, E*Trade Group is considered an affiliate of Janus
Capital for 1940 Act purposes. Because it is a wholly-owned subsidiary
of E*Trade Group, an affiliate of the Portfolios, E*Trade is
considered an affiliated broker of the Portfolios. The table below
sets forth the aggregate dollar amount of brokerage commissions paid
by each Portfolio to E*Trade for the fiscal year ended December 31,
2001. The Portfolios did not execute any transactions through E*Trade
during their fiscal years ended December 31, 1999 or December 31,
2000. Portfolios not listed below did not pay any commissions to
E*Trade.
<Table>
<Caption>
Aggregate Commissions
Portfolio Name Paid to E*Trade
- -----------------------------------------------------------------------------------
Growth Portfolio $ 618.17
International Growth Portfolio $2,157.40
Worldwide Growth Portfolio $8,813.58
Global Technology Portfolio $ 204.71
</Table>
For the most recent fiscal year ended December 31, 2001, the table
below shows the percentage of each Portfolio's aggregate brokerage
commissions paid to E*Trade and the percentage of each Portfolio's
aggregate dollar amount of transactions involving the payment of
commissions effected through E*Trade. Portfolios not listed below did
not pay any commissions to E*Trade.
<Table>
<Caption>
Percentage of Aggregate
Percentage of Aggregate Transactions Effected
Portfolio Name Commissions Paid to E*Trade Through E*Trade
- -------------------------------------------------------------------------------------------------------------------
Growth Portfolio 0.02% 0.05%
International Growth Portfolio 0.07% 0.24%
Worldwide Growth Portfolio 0.07% 0.19%
Global Technology Portfolio 0.04% 0.12%
</Table>
31
As of December 31, 2001, certain Portfolios owned securities of their
regular broker-dealers (or parents), as shown below:
<Table>
<Caption>
Name of Value of
Portfolio Name Broker-Dealer Securities Owned
- ----------------------------------------------------------------------------------------------------------------------
Growth Portfolio Charles Schwab Corp. $50,788,335
Growth Portfolio Goldman Sachs Group, Inc. $26,823,764
Growth Portfolio Merrill Lynch & Company, Inc. $19,412,302
Aggressive Growth Portfolio Charles Schwab Corp. $14,353,994
Aggressive Growth Portfolio E*TRADE Group, Inc. $17,568,397
Capital Appreciation Portfolio Goldman Sachs Group, Inc. $65,331,245
Capital Appreciation Portfolio J.P. Morgan Chase & Co. $14,083,808
Capital Appreciation Portfolio Merrill Lynch & Company, Inc. $27,326,985
Strategic Value Portfolio Lehman Brothers Holdings, Inc. $ 230,460
Core Equity Portfolio J.P. Morgan Chase & Co. $ 193,745
Balanced Portfolio Charles Schwab Corp. $10,416,193
Balanced Portfolio J.P. Morgan Chase & Co. $42,170,478
Balanced Portfolio Salomon Smith Barney Holdings, Inc. $17,974,688
Growth and Income Portfolio Charles Schwab Corp. $ 1,206,521
Growth and Income Portfolio Goldman Sachs Group, Inc. $ 2,045,601
Growth and Income Portfolio J.P. Morgan Chase & Co. $ 2,629,014
Growth and Income Portfolio Merrill Lynch & Company, Inc. $ 2,026,088
Worldwide Growth Portfolio Goldman Sachs Group, Inc. $42,329,709
</Table>
32
TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------
The following are the Trustees and officers of the Trust, together
with a brief description of their principal occupations during the
last five years.
Each Trustee has served in that capacity since he was originally
elected or appointed. The Trustees do not serve a specified term of
office. Each Trustee will hold office until the termination of the
Trust or his earlier death, resignation, retirement, incapacity, or
removal. The retirement age for Trustees is 72. The Funds' Nominating
and Governance Committee will consider nominees for the position of
Trustee recommended by shareholders. Shareholders may submit the name
of a candidate for consideration by the Committee by submitting their
recommendations to the Trust's Secretary. Each Trustee is currently a
Trustee of two other registered investment companies advised by Janus
Capital: Janus Investment Fund and Janus Adviser Series. Collectively,
these three registered investment companies consist of 52 series or
funds.
The Portfolios' officers are elected annually by the Trustees for a
one-year term. Each portfolio manager also manages other Janus Capital
accounts. Certain officers also serve as officers of Janus Investment
Fund and Janus Adviser Series.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------------
TRUSTEES
- ---------------------------------------------------------------------------------------------------------
NAME, AGE AND POSITIONS HELD WITH PRINCIPAL OCCUPATIONS DURING THE
ADDRESS PORTFOLIOS LENGTH OF TIME SERVED PAST FIVE YEARS
- ---------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
- ---------------------------------------------------------------------------------------------------------
Thomas H. Bailey* President, 5/93-Present Until July 1, 2002, President and
100 Fillmore Street Chairman Chief Executive Officer of Janus
Denver, CO 80206 and Trustee Capital. Formerly, President and
Age 64 Director (1994-2002) of Janus
Foundation; Chairman and Director
(1978-2002) of Janus Capital
Corporation; and Director (1997-
2001) of Janus Distributors, Inc.
- ---------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- ---------------------------------------------------------------------------------------------------------
William F. McCalpin Trustee 6/02-Present Executive Vice President and
100 Fillmore Street Chief Operating Officer of The
Denver, CO 80206 Rockefeller Brothers Fund (a
Age 45 private family foundation).
Formerly, Director of Investments
(1991-1998) of The John D. and
Catherine T. MacArthur Foundation
(a private family foundation).
- ---------------------------------------------------------------------------------------------------------
John W. McCarter, Jr. Trustee 6/02-Present President and Chief Executive
100 Fillmore Street Officer of The Field Museum of
Denver, CO 80206 Natural History. Formerly, Senior
Age 64 Vice President (1987-1997) of
Booz-Allen & Hamilton, Inc. (a
management consulting firm).
- ---------------------------------------------------------------------------------------------------------
Dennis B. Mullen Trustee 9/93-Present Private Investor. Formerly (1997-
100 Fillmore Street 1998) Chief Financial
Denver, CO 80206 Officer - Boston Market Concepts,
Age 58 Boston Chicken, Inc., Golden, CO
(a restaurant chain).
- ---------------------------------------------------------------------------------------------------------
<Caption>
- ------------------------- -----------------------------------------------
TRUSTEES
- ------------------------- -----------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, AGE AND FUND COMPLEX OVERSEEN OTHER DIRECTORSHIPS
ADDRESS BY TRUSTEE HELD BY TRUSTEE
- ------------------------- -----------------------------------------------
INTERESTED TRUSTEE
- -------------------------------------------------------------------------------------------------
Thomas H. Bailey* 52 N/A
100 Fillmore Street
Denver, CO 80206
Age 64
- ---------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- ---------------------------------------------------------------------------------------------------------
William F. McCalpin 52 Founding Director and
100 Fillmore Street Board Chair, Solar
Denver, CO 80206 Development
Age 45 Foundation; Trustee
and Vice President,
Asian Cultural
Council.
- ---------------------------------------------------------------------------------------------------------
John W. McCarter, Jr. 52 Chairman of the Board,
100 Fillmore Street Divergence LLC;
Denver, CO 80206 Director of A.M.
Age 64 Castle & Co., Harris
Insight Funds, W.W.
Grainger, Inc.;
Trustee of WTTW
(Chicago public
television station),
the University of
Chicago and Chicago
Public Education Fund.
- ---------------------------------------------------------------------------------------------------------
Dennis B. Mullen 52 N/A
100 Fillmore Street
Denver, CO 80206
Age 58
- ---------------------------------------------------------------------------------------------------------
</Table>
* Mr. Bailey is an "interested person" of the Trust by virtue of his past
positions and continuing relationship with Janus Capital.
33
<Table>
<Caption>
- ---------------------------------------------------------------------------------------------------------
TRUSTEES
- ---------------------------------------------------------------------------------------------------------
NAME, AGE AND POSITIONS HELD WITH PRINCIPAL OCCUPATIONS DURING THE
ADDRESS PORTFOLIOS LENGTH OF TIME SERVED PAST FIVE YEARS
- ---------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
- ---------------------------------------------------------------------------------------------------------
James T. Rothe Trustee 1/97-Present Professor of Business, University
100 Fillmore Street of Colorado, Colorado Springs,
Denver, CO 80206 CO. Formerly, Distinguished
Age 58 Visiting Professor of Business
(2001-2002), Thunderbird
(American Graduate School of
International Management),
Phoenix, AZ; and Principal (1988-
1999) of Phillips-Smith Retail
Group, Colorado Springs, CO (a
venture capital firm).
- ---------------------------------------------------------------------------------------------------------
William D. Stewart Trustee 9/93-Present Corporate Vice President and
100 Fillmore Street General Manager of MKS
Denver, CO 80206 Instruments - HPS Products,
Age 57 Boulder, CO (a manufacturer of
vacuum fittings and valves).
- ---------------------------------------------------------------------------------------------------------
Martin H. Waldinger Trustee 9/93-Present Consultant
100 Fillmore Street
Denver, CO 80206
Age 63
- ---------------------------------------------------------------------------------------------------------
<Caption>
- ------------------------- -----------------------------------------------
TRUSTEES
- ------------------------- -----------------------------------------------
NUMBER OF PORTFOLIOS IN
NAME, AGE AND FUND COMPLEX OVERSEEN OTHER DIRECTORSHIPS
ADDRESS BY TRUSTEE HELD BY TRUSTEE
- ------------------------- -----------------------------------------------
INTERESTED TRUSTEE
- --------------------------------------------------------------------------
James T. Rothe 52 Director of Optika,
100 Fillmore Street Inc. and NeoCore Corp.
Denver, CO 80206
Age 58
- --------------------------------------------------------------------------
William D. Stewart 52 N/A
100 Fillmore Street
Denver, CO 80206
Age 57
- --------------------------------------------------------------------------
Martin H. Waldinger 52 N/A
100 Fillmore Street
Denver, CO 80206
Age 63
- --------------------------------------------------------------------------
</Table>
34
<Table>
<Caption>
- -----------------------------------------------------------------------------------------------------------------------------
OFFICERS
- -----------------------------------------------------------------------------------------------------------------------------
NAME, AGE AND
ADDRESS POSITIONS HELD WITH PORTFOLIOS LENGTH OF TIME SERVED PRINCIPAL OCCUPATIONS DURING THE PAST FIVE YEARS
- -----------------------------------------------------------------------------------------------------------------------------
Laurence J. Chang* Executive Vice President and 1/00-Present Vice President of Janus Capital. Formerly,
100 Fillmore Street Co- Portfolio Manager Analyst (1993-1998) for Janus Capital
Denver, CO 80206 Worldwide Growth Portfolio Corporation.
Age 36
- -----------------------------------------------------------------------------------------------------------------------------
Jonathan D. Executive Vice President and 2/02-Present Vice President of Janus Capital. Formerly,
Coleman* Portfolio Manager Co-Portfolio Manager (1997-2000) for other Janus
100 Fillmore Street Aggressive Growth Portfolio accounts and Analyst (1994-1997 and 2000-2002)
Denver, CO 80206 for Janus Capital Corporation.
Age 31
- -----------------------------------------------------------------------------------------------------------------------------
David J. Corkins* Executive Vice President and 11/97-Present Vice President of Janus Capital. Formerly,
100 Fillmore Street Portfolio Manager Analyst (1995-1997) for Janus Capital
Denver, CO 80206 Growth and Income Portfolio Corporation.
Age 35
- -----------------------------------------------------------------------------------------------------------------------------
David C. Decker* Executive Vice President and 12/99-Present Vice President of Janus Capital.
100 Fillmore Street Portfolio Manager
Denver, CO 80206 Strategic Value Portfolio
Age 36
- -----------------------------------------------------------------------------------------------------------------------------
Helen Young Hayes* Executive Vice President and 3/94-Present Vice President and Managing Director of
100 Fillmore Street Co-Portfolio Manager Investments of Janus Capital. Formerly, Director
Denver, CO 80206 Worldwide Growth Portfolio and (2000-2002) for Janus Capital Corporation.
Age 39 International Growth Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
C. Mike Lu* Executive Vice President and 12/99-Present Vice President of Janus Capital. Formerly,
100 Fillmore Street Portfolio Manager Analyst (1991-1998) for Janus Capital
Denver, CO 80206 Global Technology Portfolio Corporation.
Age 32
- -----------------------------------------------------------------------------------------------------------------------------
Brent A. Lynn* Executive Vice President and 1/01-Present Vice President of Janus Capital. Formerly,
100 Fillmore Street Co-Portfolio Manager Analyst (1991-2001) for Janus Capital
Denver, CO 80206 International Growth Portfolio Corporation.
Age 38
- -----------------------------------------------------------------------------------------------------------------------------
Thomas R. Malley* Executive Vice President and 12/99-Present Vice President of Janus Capital. Formerly,
100 Fillmore Street Portfolio Manager Analyst (1991-1998) for Janus Capital
Denver, CO 80206 Global Life Sciences Portfolio Corporation.
Age 33
- -----------------------------------------------------------------------------------------------------------------------------
Karen L. Reidy* Executive Vice President and 1/00-Present Vice President of Janus Capital. Formerly,
100 Fillmore Street Portfolio Manager Analyst (1995-1999) for Janus Capital
Denver, CO 80206 Balanced Portfolio and Corporation.
Age 35 Core Equity Portfolio
- -----------------------------------------------------------------------------------------------------------------------------
Blaine P. Rollins* Executive Vice President and 1/00-Present Vice President of Janus Capital.
100 Fillmore Street Portfolio Manager
Denver, CO 80206 Growth Portfolio
Age 35
- -----------------------------------------------------------------------------------------------------------------------------
Scott W. Schoelzel* Executive Vice President and 5/97-Present Vice President of Janus Capital.
100 Fillmore Street Portfolio Manager
Denver, CO 80206 Capital Appreciation Portfolio
Age 43
- -----------------------------------------------------------------------------------------------------------------------------
Ronald V. Speaker* Executive Vice President and 5/93-Present Vice President of Janus Capital.
100 Fillmore Street Portfolio Manager
Denver, CO 80206 Flexible Income Portfolio
Age 37
- -----------------------------------------------------------------------------------------------------------------------------
</Table>
* "Interested person" of the Trust by virtue of positions with Janus Capital.
35
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------------------------------------------
OFFICERS
- ----------------------------------------------------------------------------------------------------------------------------------
NAME, AGE AND
ADDRESS POSITIONS HELD WITH PORTFOLIOS LENGTH OF TIME SERVED PRINCIPAL OCCUPATIONS DURING THE PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------------------
Thomas A. Early* Vice President and General 3/98-Present Vice President, General Counsel, Secretary and
100 Fillmore Street Counsel Interim Director of Janus Capital; Vice
Denver, CO 80206 President, General Counsel and Secretary of
Age 47 Janus Distributors; Vice President, General
Counsel, Secretary and Director of Janus
Services, Janus Capital International LLC and
Janus Institutional Services LLC; Vice
President, General Counsel and Director to Janus
International (Asia) Limited and Janus
International Limited; Vice President, General
Counsel and Secretary to the Janus Foundation;
and Director for Janus Capital Trust Manager
Limited and Janus World Funds. Formerly,
Director (2001) of Janus Distributors, Inc.;
Vice President, General Counsel, Secretary and
Director (2000-2002) of Janus International
Holding, Inc.; and Executive Vice President and
General Counsel/Mutual Funds (1994-1998) of
Prudential Insurance Company.
- ----------------------------------------------------------------------------------------------------------------------------------
Bonnie M. Howe* Vice President 12/99-Present Vice President and Assistant General Counsel to
100 Fillmore Street Janus Capital, Janus Distributors and Janus
Denver, CO 80206 Services. Formerly, Assistant Vice President
Age 36 (1997-1999) and Associate Counsel (1995-1999)
for Janus Capital Corporation and Assistant Vice
President (1998-2000) for Janus Service
Corporation.
- ----------------------------------------------------------------------------------------------------------------------------------
Kelley Abbott Howes* Vice President and Secretary 12/99-Present Vice President and Assistant General Counsel of
100 Fillmore Street Janus Capital, Janus Distributors and Janus
Denver, CO 80206 Services. Formerly, Assistant Vice President
Age 36 (1997-1999) of Janus Capital Corporation; Chief
Compliance Officer, Director and President
(1997-1999) of Janus Distributors, Inc.; and
Assistant Vice President (1998-2000) of Janus
Service Corporation.
- ----------------------------------------------------------------------------------------------------------------------------------
David R. Kowalski* Vice President 6/02-Present Vice President and Chief Compliance Officer of
100 Fillmore Street Janus Capital and Janus Distributors LLC; and
Denver, CO 80206 Assistant Vice President of Janus Services LLC.
Age 45 Formerly, Senior Vice President and Director
(1985-2000) of Mutual Fund Compliance for Van
Kampen Funds.
- ----------------------------------------------------------------------------------------------------------------------------------
Glenn P. O'Flaherty* Treasurer and Chief Accounting 1/96-Present Vice President of Janus Capital. Formerly,
100 Fillmore Street Officer Director of Fund Accounting (1991-1997) of Janus
Denver, CO 80206 Capital Corporation.
Age 43
- ----------------------------------------------------------------------------------------------------------------------------------
Loren M. Starr* Vice President and Chief 9/01-Present Vice President of Finance, Treasurer, Chief
100 Fillmore Street Financial Officer Financial Officer and Interim Director of Janus
Denver, CO 80206 Capital; Vice President of Finance, Treasurer
Age 40 and Chief Financial Officer of Janus Services
and Janus International Limited; Vice President
of Finance, Treasurer, Chief Financial Officer
and Director of Janus Distributors, Janus
Capital International LLC and Janus
Institutional Services LLC; and Director of
Janus Capital Trust Manager Limited and Janus
World Funds. Formerly, Vice President of
Finance, Treasurer, Chief Financial Officer
(2001-2002) and Director (2002) of Janus
International Holding, Inc.; Managing Director,
Treasurer and Head of Corporate Finance and
Reporting (1998-2001) for Putnam Investments;
and Senior Vice President of Financial Planning
and Analysis (1996-1998) for Lehman Brothers,
Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
Heidi J. Walter* Vice President 4/00-Present Vice President and Assistant General Counsel to
100 Fillmore Street Janus Capital and Janus Services. Formerly, Vice
Denver, CO 80206 President and Senior Legal Counsel (1995-1999)
Age 34 for Stein Roe & Farnham, Inc.
- ----------------------------------------------------------------------------------------------------------------------------------
</Table>
* "Interested person" of the Trust by virtue of positions with Janus Capital.
36
The Trustees are responsible for major decisions relating to each
Portfolio's objective, policies and techniques. The Trustees also
supervise the operation of the Portfolios by their officers and review
the investment decisions of the officers although they do not actively
participate on a regular basis in making such decisions. The Board of
Trustees has five standing committees that each perform specialized
functions: an Audit Committee, Brokerage Committee, Money Market
Committee, Nominating and Governance Committee and Pricing Committee.
Information about each of these committees is provided in the
following table:
<Table>
<Caption>
- --------------------------------------------------------------------------------------------------------------
FUNCTIONS MEMBERS
- --------------------------------------------------------------------------------------------------------------
AUDIT COMMITTEE Reviews the financial reporting Martin H. Waldinger (Chairman)
process, the system of internal William D. Stewart
control, the audit process, and the Dennis B. Mullen
Trusts' process for monitoring
compliance with investment
restrictions and applicable laws and
the Trusts' Code of Ethics.
- --------------------------------------------------------------------------------------------------------------
BROKERAGE COMMITTEE Reviews and makes recommendations James T. Rothe (Chairman)
regarding matters related to the William D. Stewart
Trusts' use of brokerage commissions Dennis B. Mullen
and placement of portfolio
transactions.
- --------------------------------------------------------------------------------------------------------------
MONEY MARKET COMMITTEE Reviews various matters related to the William D. Stewart (Chairman)
operations of the Janus Money Market Dennis B. Mullen
Funds, including compliance with each James T. Rothe
Trust's Money Market Fund Procedures.
- --------------------------------------------------------------------------------------------------------------
NOMINATING AND GOVERNANCE Identifies and recommends individuals Dennis B. Mullen (Chairman)
COMMITTEE for Trustee membership, consults with William D. Stewart
Management in planning Trustee Martin H. Waldinger
meetings, and oversees the
administration of, and ensures the
compliance with, the Governance
Procedures and Guidelines adopted by
the Trusts.
- --------------------------------------------------------------------------------------------------------------
PRICING COMMITTEE Determines the fair value of William D. Stewart (Chairman)
restricted securities and other Dennis B. Mullen
securities for which market quotations James T. Rothe
are not readily available, pursuant to
procedures adopted by the Trustees.
- --------------------------------------------------------------------------------------------------------------
<Caption>
- ---------------------------------- -----------------------------------
NUMBER OF MEETINGS HELD DURING LAST
FISCAL YEAR
- ---------------------------------- -----------------------------------
AUDIT COMMITTEE 4
- -----------------------------------------------------------------------
BROKERAGE COMMITTEE 5
- -----------------------------------------------------------------------
MONEY MARKET COMMITTEE 4
- -----------------------------------------------------------------------
NOMINATING AND GOVERNANCE 5
COMMITTEE
- -----------------------------------------------------------------------
PRICING COMMITTEE 15
- -----------------------------------------------------------------------
</Table>
37
The table below gives the dollar range of shares of each Portfolio
described in this SAI, as well as the aggregate dollar range of shares
of all funds advised and sponsored by Janus Capital (collectively, the
"Janus Funds"), owned by each Trustee as of December 31, 2001.
<Table>
<Caption>
- ---------------------------------------------------------------------------------------
DOLLAR RANGE OF EQUITY
NAME OF TRUSTEE SECURITIES IN THE PORTFOLIOS
- ---------------------------------------------------------------------------------------
INTERESTED TRUSTEE
- ---------------------------------------------------------------------------------------
THOMAS H. BAILEY None
- ---------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- ---------------------------------------------------------------------------------------
WILLIAM F. MCCALPIN+ None
- ---------------------------------------------------------------------------------------
JOHN F. MCCARTER, JR.+ None
- ---------------------------------------------------------------------------------------
DENNIS B. MULLEN None
- ---------------------------------------------------------------------------------------
JAMES T. ROTHE None
- ---------------------------------------------------------------------------------------
WILLIAM D. STEWART None
- ---------------------------------------------------------------------------------------
MARTIN H. WALDINGER None
- ---------------------------------------------------------------------------------------
<Caption>
- ------------------------- -------------------------------------------------------------
AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES IN ALL REGISTERED
NAME OF TRUSTEE INVESTMENT COMPANIES OVERSEEN BY TRUSTEE IN JANUS FUNDS
- ------------------------- -------------------------------------------------------------
INTERESTED TRUSTEE
- ---------------------------------------------------------------------------------------
THOMAS H. BAILEY Over $100,000
- ---------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- ---------------------------------------------------------------------------------------
WILLIAM F. MCCALPIN+ Over $100,000
- ---------------------------------------------------------------------------------------
JOHN F. MCCARTER, JR.+ None
- ---------------------------------------------------------------------------------------
DENNIS B. MULLEN Over $100,000
- ---------------------------------------------------------------------------------------
JAMES T. ROTHE Over $100,000
- ---------------------------------------------------------------------------------------
WILLIAM D. STEWART Over $100,000
- ---------------------------------------------------------------------------------------
MARTIN H. WALDINGER Over $100,000
- ---------------------------------------------------------------------------------------
</Table>
+ Trustee since June 2002.
As of December 31, 2001, none of the Trustees or their immediate
family members owned shares of Janus Capital, Janus Distributors or
their control persons.
The following table shows the aggregate compensation earned by and
paid to each Trustee by the Portfolios described in this SAI and all
Janus Funds for the periods indicated. None of the Trustees receives
any pension or retirement benefits from the Portfolios or the Janus
Funds.
<Table>
<Caption>
Aggregate Compensation Total Compensation
from the Portfolios for from the Janus Funds for
fiscal year ended calendar year ended
Name of Person, Position* December 31, 2001 December 31, 2001****
- -----------------------------------------------------------------------------------------------------------------
Thomas H. Bailey, Chairman and Trustee** $ 0 $ 0
William D. Stewart, Trustee*** $21,597 $185,000
Dennis B. Mullen, Trustee*** $20,784 $185,000
Martin H. Waldinger, Trustee*** $21,933 $185,000
James T. Rothe, Trustee*** $20,559 $185,000
</Table>
* Mr. McCalpin and Mr. McCarter were elected as Trustees in June 2002.
Therefore, they did not receive any compensation from the Portfolios
described in this SAI or the Janus Funds during the periods shown in the
table.
** Mr. Bailey is an interested person of the Portfolios and Janus Capital and
is compensated by Janus Capital.
*** Independent Trustee.
**** As of December 31, 2001, Janus Funds consisted of three registered
investment companies comprised of a total of 51 funds.
38
SHARES OF THE TRUST
- --------------------------------------------------------------------------------
NET ASSET VALUE DETERMINATION
As stated in the Portfolios' Prospectus, the net asset value ("NAV")
of the Shares of each Portfolio is determined once each day the NYSE
is open, at the close of its regular trading session (normally 4:00
p.m., New York time, Monday through Friday). The NAV of the Shares of
each Portfolio is not determined on days the NYSE is closed. The per
Share NAV of the Shares of each Portfolio is determined by dividing
the total value of a Portfolio's securities and other assets, less
liabilities, attributable to the Shares of a Portfolio, by the total
number of Shares outstanding. In determining NAV, securities listed on
an Exchange, the Nasdaq National Market and foreign markets are
generally valued at the closing prices on such markets, or if such
price is lacking for the trading period immediately preceding the time
of determination, such securities are valued at their current bid
price. Municipal securities held by the Portfolios are traded
primarily in the over-the-counter market. Valuations of such
securities are furnished by one or more pricing services employed by
the Portfolios and approved by the Trustees and are based upon last
trade or closing sales prices or a computerized matrix system or
appraisals obtained by a pricing service, in each case in reliance
upon information concerning market transactions and quotations from
recognized municipal securities dealers. Other securities that are
traded on the over-the-counter market are generally valued at their
closing bid prices. Foreign securities and currencies are converted to
U.S. dollars using the exchange rate in effect at the close of the
NYSE. Each Portfolio will determine the market value of individual
securities held by it, by using prices provided by one or more
professional pricing services which may provide market prices to other
funds, or, as needed, by obtaining market quotations from independent
broker-dealers. Short-term securities maturing within 60 days are
valued on an amortized cost basis. Securities for which market
quotations are not readily available are valued at fair value
determined in good faith under procedures established by and under the
supervision of the Trustees (the "Valuation Procedures").
Trading in securities on European and Far Eastern securities exchanges
and over-the-counter markets is normally completed well before the
close of business on each business day in New York (i.e., a day on
which the NYSE is open). In addition, European or Far Eastern
securities trading generally or in a particular country or countries
may not take place on all business days in New York. Furthermore,
trading takes place in Japanese markets on certain Saturdays and in
various foreign markets on days which are not business days in New
York and on which a Portfolio's NAV is not calculated. A Portfolio
calculates its NAV per Share, and therefore effects sales, redemptions
and repurchases of its Shares, as of the close of the NYSE once on
each day on which the NYSE is open. Such calculation may not take
place contemporaneously with the determination of the prices of the
foreign portfolio securities used in such calculation. If an event
that is expected to affect the value of a portfolio security occurs
after the close of the exchange or market on which that security is
traded, and before the Portfolio calculates its NAV per Share, then
that security may be valued in good faith under the Valuation
Procedures.
PURCHASES
Shares of the Portfolios can be purchased only by (i) the separate
accounts of participating insurance companies for the purpose of
funding variable insurance contracts and (ii) certain qualified
retirement plans. Participating insurance companies and certain other
designated organizations are authorized to receive purchase orders on
the Portfolios' behalf and those organizations are authorized to
designate their agents and affiliates as intermediaries to receive
purchase orders. Purchase orders are deemed received by a Portfolio
when authorized organizations, their agents or affiliates receive the
order. The Portfolios are not responsible for the failure of any
designated organization or its agents or affiliates to carry out its
obligations to its customers. Shares of the Portfolios are purchased
at the NAV per Share as determined at the close of the regular trading
session of the NYSE next occurring after a purchase order is received
and
39
accepted by a Portfolio or its authorized agent. In order to receive a
day's price, your order must be received by the close of the regular
trading session of the NYSE as described above in "Net Asset Value
Determination." The prospectus for your insurance company's separate
account or your plan documents contain detailed information about
investing in the different Portfolios.
REDEMPTIONS
Redemptions, like purchases, may only be effected through the separate
accounts of participating insurance companies or qualified retirement
plans. Certain designated organizations are authorized to receive
redemption orders on the Portfolios' behalf and those organizations
are authorized to designate their agents and affiliates as
intermediaries to receive redemption orders. Redemption orders are
deemed received by a Portfolio when authorized organizations, their
agents or affiliates receive the order. The Portfolios are not
responsible for the failure of any designated organization or its
agents or affiliates to carry out its obligations to its customers.
Shares normally will be redeemed for cash, although each Portfolio
retains the right to redeem some or all of its Shares in kind under
unusual circumstances, in order to protect the interests of remaining
shareholders, or to accommodate a request by a particular shareholder
that does not adversely affect the interest of the remaining
shareholders, by delivery of securities selected from its assets at
its discretion. However, the Portfolios are governed by Rule 18f-1
under the 1940 Act, which requires each Portfolio to sell shares
solely in cash up to the lesser of $250,000 or 1% of the NAV of that
Portfolio during any 90-day period for any one shareholder. Should
redemptions by any shareholder exceed such limitation, a Portfolio
will have the option of selling the excess in cash or in kind. If
shares are sold in kind, the redeeming shareholder might incur
brokerage costs in converting the assets to cash. The method of
valuing securities used to make redemptions in kind will be the same
as the method of valuing portfolio securities described under "Shares
of the Trust - Net Asset Value Determination" and such valuation will
be made as of the same time the redemption price is determined.
The right to require the Portfolios to sell their Shares may be
suspended, or the date of payment may be postponed, whenever (1)
trading on the NYSE is restricted, as determined by the SEC, or the
NYSE is closed except for holidays and weekends, (2) the SEC permits
such suspension and so orders, or (3) an emergency exists as
determined by the SEC so that disposal of securities or determination
of NAV is not reasonably practicable.
40
INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX STATUS
- --------------------------------------------------------------------------------
It is a policy of the Shares of the Portfolios to make distributions
of substantially all of their respective investment income and any net
realized capital gains. The Portfolios intend to qualify as regulated
investment companies by satisfying certain requirements prescribed by
Subchapter M of the Internal Revenue Code ("Code"). In addition, each
Portfolio intends to comply with the diversification requirements of
Code Section 817(h) related to the tax-deferred status of insurance
company separate accounts.
All income dividends and capital gains distributions, if any, on a
Portfolio's Shares are reinvested automatically in additional Shares
of that Portfolio at the NAV determined on the first business day
following the record date.
The Portfolios may purchase securities of certain foreign corporations
considered to be passive foreign investment companies by the IRS. In
order to avoid taxes and interest that must be paid by the Portfolios,
the Portfolios may make various elections permitted by the tax laws.
However, these elections could require that the Portfolios recognize
taxable income, which in turn must be distributed.
Some foreign securities purchased by the Portfolios may be subject to
foreign taxes which could reduce the yield on such securities. If the
amount of foreign taxes is significant in a particular year, the
Portfolios that qualify under Section 853 of the Code may elect to
pass through such taxes to shareholders. If such election is not made,
any foreign taxes paid or accrued will represent an expense to each
Portfolio which will reduce its investment company taxable income.
Because Shares of the Portfolios can only be purchased through
variable insurance contracts or qualified plans, it is anticipated
that any income dividends or capital gains distributions will be
exempt from current taxation if left to accumulate within such
contracts or plans. See the prospectus for the separate account of the
related insurance company or the plan documents for additional
information.
41
PRINCIPAL SHAREHOLDERS
- --------------------------------------------------------------------------------
The officers and Trustees of the Portfolios cannot directly own Shares
of the Portfolios without purchasing an insurance contract through one
of the participating insurance companies or through a qualified plan.
As a result, such officers and Trustees as a group own less than 1% of
the outstanding Shares of each Portfolio. As of April 2, 2002, all of
the outstanding Shares of the Portfolios were owned by certain
insurance company separate accounts or qualified plans. The percentage
ownership of each separate account or plan owning 5% or more of the
Shares of any Portfolio is as follows:
Aetna Life Insurance and Annuity Company, ACES - Separate Account B,
151 Farmington Avenue, Hartford, CT 06156-0001, owned of record 5% or
more of the outstanding Shares of the Portfolios, as follows:
<Table>
<Caption>
Portfolio Name Percent Held
- --------------------------------------------------------------------------
Growth Portfolio 31.56%
Aggressive Growth Portfolio 58.55%
Balanced Portfolio 32.72%
Worldwide Growth Portfolio 33.15%
Flexible Income Portfolio 35.20%
</Table>
AUL Group Retirement Account II, P.O. Box 1955, Indianapolis, IN
46206-9102, owned of record 5% or more of the outstanding Shares of
the Portfolios, as follows:
<Table>
<Caption>
Portfolio Name Percent Held
- --------------------------------------------------------------------------
Flexible Income Portfolio 12.67%
</Table>
Automatic Data Processing, Inc., 1 ADP Boulevard, Roseland, NJ
07068-1786, owned of record 5% or more of the outstanding Shares of
the Portfolios, as follows:
<Table>
<Caption>
Portfolio Name Percent Held
- --------------------------------------------------------------------------
International Growth Portfolio 7.87%
</Table>
Connecticut Mutual Life Insurance Company, 1295 State Street,
Springfield, MA 01111-0001, owned of record 5% or more of the
outstanding Shares of the Portfolios, as follows:
<Table>
<Caption>
Portfolio Name Percent Held
- --------------------------------------------------------------------------
Capital Appreciation Portfolio 14.08%
</Table>
GE Life and Annuity Assurance Company, 6610 W. Broad Street, Richmond,
VA 23230-1702, owned of record 5% or more of the outstanding Shares of
the Portfolios, as follows:
<Table>
<Caption>
Portfolio Name Percent Held
- --------------------------------------------------------------------------
Growth Portfolio 18.46%
Aggressive Growth Portfolio 11.51%
Capital Appreciation Portfolio 35.92%
Balanced Portfolio 16.09%
International Growth Portfolio 18.33%
Worldwide Growth Portfolio 10.23%
Flexible Income Portfolio 21.38%
</Table>
Great-West Life and Annuity Insurance Company, 8515 E. Orchard Road,
Englewood, CO 80111-5037, owned of record 5% or more of the
outstanding Shares of the Portfolios, as follows:
<Table>
<Caption>
Portfolio Name Percent Held
- --------------------------------------------------------------------------
Flexible Income Portfolio 8.81%
</Table>
42
Kemper Investors Life Insurance Company, Variable Annuity Separate
Account, 1 Kemper Drive, Long Grove, IL 60049-0001, owned of record 5%
or more of the outstanding Shares of the Portfolios, as follows:
<Table>
<Caption>
Portfolio Name Percent Held
- --------------------------------------------------------------------------
Growth and Income Portfolio 79.21%
</Table>
Lincoln Benefit Life, Variable Annuity Account, 2940 S. 83rd Street,
Lincoln, NE 98506, owned of record 5% or more of the outstanding
Shares of the Portfolios, as follows:
<Table>
<Caption>
Portfolio Name Percent Held
- --------------------------------------------------------------------------
Flexible Income Portfolio 5.11%
</Table>
Lincoln National Life, Variable Annuity Account C, 1300 S. Clinton
Street, Fort Wayne, IN 46802-3518, owned of record 5% or more of the
outstanding Shares of the Portfolios, as follows:
<Table>
<Caption>
Portfolio Name Percent Held
- --------------------------------------------------------------------------
Worldwide Growth Portfolio 5.37%
</Table>
MONY Life Insurance Company, MONY America Variable Account A, 1740
Broadway, Suite 635, New York, NY 10019-4315, owned of record 5% or
more of the outstanding Shares of the Portfolios, as follows:
<Table>
<Caption>
Portfolio Name Percent Held
- --------------------------------------------------------------------------
Capital Appreciation Portfolio 7.12%
</Table>
New York Life Insurance and Annuity Company, 300 Interspace Parkway,
Parsippany, NJ 07054-1100, owned of record 5% or more of the
outstanding Shares of the Portfolios, as follows:
<Table>
<Caption>
Portfolio Name Percent Held
- --------------------------------------------------------------------------
Balanced Portfolio 25.37%
Worldwide Growth Portfolio 11.20%
</Table>
Pruco Life Insurance Company, 100 Mulberry Street, Newark, NJ
07102-4056, owned of record 5% or more of the outstanding Shares of
the Portfolios, as follows:
<Table>
<Caption>
Portfolio Name Percent Held
- --------------------------------------------------------------------------
Growth Portfolio 12.84%
International Growth Portfolio 28.50%
</Table>
State Street Bank and Trust Company, FBO Northwest Airlines Retirement
Savings Plan, 105 Rosemont Road, Westwood, MA 02090-2318, owned of
record 5% or more of the outstanding Shares of the Portfolios, as
follows:
<Table>
<Caption>
Portfolio Name Percent Held
- --------------------------------------------------------------------------
International Growth Portfolio 7.84%
</Table>
Western Reserve Life Assurance Company of Ohio, P.O. Box 5068,
Clearwater, FL 33758-5068, owned of record 5% or more of the
outstanding Shares of the Portfolios, as follows:
<Table>
<Caption>
Portfolio Name Percent Held
- --------------------------------------------------------------------------
Strategic Value Portfolio 100.00%
Core Equity Portfolio 99.98%
Growth and Income Portfolio 17.04%
Global Life Sciences Portfolio 100.00%
Global Technology Portfolio 100.00%
</Table>
No qualified plan owned 10% or more of the shares of the Trust as a
whole.
43
The Shares held by the separate accounts of each insurance company,
including Shares for which no voting instructions have been received,
will be voted by each insurance company in proportion to instructions
received from contract owners.
44
MISCELLANEOUS INFORMATION
- --------------------------------------------------------------------------------
Each Portfolio is a series of the Trust, an open-end management
investment company registered under the 1940 Act and organized as a
Delaware business trust on May 20, 1993. As of the date of this SAI,
the Trust consists of fourteen series of shares, known as
"Portfolios," three of which offer three classes of shares, ten of
which offer two classes of shares and one of which offers one class of
shares.
SHARES OF THE TRUST
The Trust is authorized to issue an unlimited number of shares of
beneficial interest with a par value of $0.001 per share for each
series of the Trust. Shares of each Portfolio are fully paid and
nonassessable when issued. Shares of a Portfolio participate equally
in dividends and other distributions by the shares of such Portfolio,
and in residual assets of that Portfolio in the event of liquidation.
Shares of each Portfolio have no preemptive, conversion or
subscription rights.
The Portfolios discussed in this SAI each offer two or three classes
of shares. The Shares discussed in this SAI are offered only in
connection with investment in and payments under variable insurance
contracts and to qualified retirement plans. The other classes of
shares, Service Shares and Service II Shares, are offered only in
connection with investment in and payments under variable insurance
contracts and to qualified retirement plans that require a fee from
Portfolio assets to procure distribution and administrative services
to contract owners and plan participants. For Service II Shares, a
redemption fee may be imposed on interests in separate accounts or
plans held 60 days or less.
SHAREHOLDER MEETINGS
The Trust does not intend to hold annual shareholder meetings.
However, special meetings may be called for a specific Portfolio or
for the Trust as a whole for purposes such as electing or removing
Trustees, terminating or reorganizing the Trust, changing fundamental
policies, or for any other purpose requiring a shareholder vote under
the 1940 Act. Separate votes are taken by each Portfolio or class only
if a matter affects or requires the vote of only that Portfolio or
class or that Portfolio's or class' interest in the matter differs
from the interest of other Portfolios of the Trust. Shareholder is
entitled to one vote for each Share owned.
VOTING RIGHTS
A participating insurance company issuing a variable insurance
contract will vote shares in the separate account as required by law
and interpretations thereof, as may be amended or changed from time to
time. In accordance with current law and interpretations, a
participating insurance company is required to request voting
instructions from policy owners and must vote shares in the separate
account, including shares for which no instructions have been
received, in proportion to the voting instructions received.
Additional information may be found in the participating insurance
company's separate account prospectus.
The Trustees are responsible for major decisions relating to each
Portfolio's policies and objectives; the Trustees oversee the
operation of each Portfolio by its officers and review the investment
decisions of the officers.
The present Trustees were elected at a meeting of shareholders held on
January 31, 2002. Under the Trust Instrument, each Trustee will
continue in office until the termination of the Trust or his earlier
death, retirement, resignation, bankruptcy, incapacity or removal.
Vacancies will be filled by a majority of the remaining Trustees,
subject to the 1940 Act. Therefore, no annual or regular meetings of
shareholders normally will be held, unless otherwise required by the
Trust Instrument or the 1940 Act. Subject to the foregoing,
shareholders have the power to vote to elect or remove Trustees, to
terminate or reorganize their
45
Portfolio, to amend the Trust Instrument, to bring certain derivative
actions and on any other matters on which a shareholder vote is
required by the 1940 Act, the Trust Instrument, the Trust's Bylaws or
the Trustees.
As mentioned above in "Shareholder Meetings," each share of each
portfolio of the Trust has one vote (and fractional votes for
fractional shares). Shares of all portfolios of the Trust have
noncumulative voting rights, which means that the holders of more than
50% of the shares of all series of the Trust voting for the election
of Trustees can elect 100% of the Trustees if they choose to do so
and, in such event, the holders of the remaining shares will not be
able to elect any Trustees.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 1670 Broadway, Suite 1000, Denver,
Colorado 80202, independent accountants for the Portfolios, audit the
Portfolios' annual financial statements and prepare their tax returns.
REGISTRATION STATEMENT
The Trust has filed with the SEC, Washington, D.C., a Registration
Statement under the Securities Act of 1933, as amended, with respect
to the securities to which this SAI relates. If further information is
desired with respect to the Portfolios or such securities, reference
is made to the Registration Statement and the exhibits filed as a part
thereof.
46
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
Quotations of average annual total return for the Shares of a
Portfolio will be expressed in terms of the average annual compounded
rate of return of a hypothetical investment in the Shares of such
Portfolio over periods of 1, 5, and 10 years (up to the life of the
Portfolio). These are the annual total rates of return that would
equate the initial amount invested to the ending redeemable value.
These rates of return are calculated pursuant to the following
formula: P(1 + T)(n) = ERV (where P = a hypothetical initial payment
of $1,000, T = the average annual total return, n = the number of
years and ERV = the ending redeemable value of a hypothetical $1,000
payment made at the beginning of the period). All total return figures
reflect the deduction of a proportional share of expenses of the
Shares of a Portfolio on an annual basis, and assume that all
dividends and distributions are reinvested when paid.
The average annual total return of the Shares of each Portfolio,
computed as of December 31, 2001, is shown in the table below.
<Table>
<Caption>
Average Annual Total Return
Date Number ------------------------------
Available of Months One Five Life of
Portfolio Name for Sale in Lifetime Year Years Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Growth Portfolio - Institutional Shares 9/13/93 99.5 (24.73%) 9.05% 11.83%
Aggressive Growth Portfolio - Institutional Shares 9/13/93 99.5 (39.45%) 7.08% 12.51%
Capital Appreciation Portfolio - Institutional Shares 5/1/97 56 (21.67%) N/A 17.73%
Strategic Value Portfolio - Institutional Shares 5/1/00 20 (8.12%) N/A (4.84%)
Core Equity Portfolio - Institutional Shares(1) 5/1/97 56 (11.75%) N/A 19.12%
Balanced Portfolio - Institutional Shares 9/13/93 99.5 (4.66%) 14.13% 14.31%
Growth and Income Portfolio - Institutional Shares 5/1/98 44 (13.37%) N/A 12.72%
International Growth Portfolio - Institutional Shares 5/2/94 92 (23.23%) 10.32% 13.47%
Worldwide Growth Portfolio - Institutional Shares 9/13/93 99.5 (22.44%) 11.12% 15.75%
Global Life Sciences Portfolio - Institutional Shares 1/18/00 23.5 (16.43%) N/A (11.96%)
Global Technology Portfolio - Institutional Shares 1/18/00 23.5 (37.07%) N/A (36.24%)
Flexible Income Portfolio - Institutional Shares 9/13/93 99.5 7.74% 7.24% 8.14%
</Table>
(1) Formerly, Equity Income Portfolio.
Yield quotations for a Portfolio's Shares are based on the investment
income per Share earned during a particular 30-day period (including
dividends, if any, and interest), less expenses accrued during the
period ("net investment income"), and are computed by dividing net
investment income by the net asset value per share on the last day of
the period, according to the following formula:
6
YIELD = 2[(a - b + 1) - 1]
-----
cd
where a = dividend and interest income
b = expenses accrued for the period (net of reimbursements)
c = average daily number of shares outstanding during the period
that were entitled to receive dividends
d = maximum net asset value per share on the last day of the
period
The yield for the 30-day period ending December 31, 2001, for the
Shares of Flexible Income Portfolio is 5.64%.
47
From time to time in advertisements or sales material, the Portfolios
may discuss their performance ratings or other information as
published by recognized mutual fund statistical rating services,
including, but not limited to, Lipper Analytical Services, Inc.
("Lipper"), Ibbotson Associates, Micropal or Morningstar, Inc.,
("Morningstar") or by publications of general interest such as Forbes,
Money, The Wall Street Journal, Mutual Funds Magazine, Kiplinger's or
Smart Money. The Portfolios may also compare their performance to that
of other selected mutual funds (for example, peer groups created by
Lipper or Morningstar), mutual fund averages or recognized stock
market indicators, including, but not limited to, the Standard &
Poor's 500 Composite Stock Price Index, the Lehman Brothers
Government/Credit Index and the Nasdaq composite. In addition, the
Portfolios may compare their total return or yield to the yield on
U.S. Treasury obligations and to the percentage change in the Consumer
Price Index. Worldwide Growth Portfolio and International Growth
Portfolio may also compare their performance to the record of global
market indicators, such as the Morgan Stanley Capital International
World Index or Morgan Stanley Capital International Europe,
Australasia, Far East Index (EAFE(R) Index). Such performance ratings
or comparisons may be made with funds that may have different
investment restrictions, objectives, policies or techniques than the
Portfolios and such other funds or market indicators may be comprised
of securities that differ significantly from the Portfolios'
investments.
48
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORT
The following audited financial statements for the period ended
December 31, 2001 are hereby incorporated into this SAI by reference
to the Portfolios' Annual Report dated December 31, 2001:
Schedules of Investments as of December 31, 2001
Statements of Assets and Liabilities as of December 31, 2001
Statements of Operations for the period ended December 31, 2001
Statements of Changes in Net Assets for the periods ended December 31,
2001 and 2000
Financial Highlights for each of the periods indicated
Notes to Financial Statements
Report of Independent Accountants
The portions of the Annual Report that are not specifically listed
above are not incorporated by reference into this SAI and are not part
of the Registration Statement.
49
APPENDIX A
- --------------------------------------------------------------------------------
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>
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>
MOODY'S INVESTORS SERVICE, INC.
<Table>
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>
50
Unrated securities will be treated as noninvestment grade securities
unless the 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.
51
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[JANUS LOGO]
www.janus.com
100 Fillmore Street
Denver, CO 80206-4928
1-800-525-0020
BERGER IPT - GROWTH FUND
BERGER IPT - LARGE CAP GROWTH FUND
BERGER IPT - SMALL COMPANY GROWTH FUND
BERGER IPT - INTERNATIONAL FUND
BERGER IPT - LARGE CAP VALUE FUND
BERGER IPT - MID CAP VALUE FUND
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information ("SAI") is not a
prospectus. It relates to the Prospectus for the Funds listed above (the
"Funds"), dated May 1, 2002, as it may be amended or supplemented from time to
time, which may be obtained by writing the Funds at P.O. Box 5005, Denver,
Colorado 80217-5005, or calling 1-800-259-2820. Each of the Funds is a series of
Berger Institutional Products Trust (the "Trust").
Shares of the Funds are not offered directly to the public,
but are sold only in connection with investment in and payments under variable
annuity contracts and variable life insurance contracts (collectively "variable
insurance contracts") issued by life insurance companies ("Participating
Insurance Companies"), as well as to certain qualified retirement plans.
The financial statements of each of the Funds for the fiscal
year ended December 31, 2001, and the related Report of Independent Accountants
on those statements, are incorporated into this SAI by reference from the Funds'
2001 Annual Report to Shareholders dated December 31, 2001. A copy of that
Annual Report is available, without charge, upon request, by calling
1-800-259-2820, or by contacting a Participating Insurance Company.
DATED MAY 1, 2002
TABLE OF CONTENTS
&
CROSS-REFERENCES TO PROSPECTUS
<Table>
<Caption>
CROSS-REFERENCES TO
PAGE RELATED DISCLOSURES
SECTION NO. IN PROSPECTUS
- ------- ---- -------------
Introduction 1 Contents
1. Investment Strategies and Risks of the Funds 1 Berger IPT Funds; Investment Techniques, Securities
and Associated Risks
2. Investment Restrictions 14 Berger IPT Funds; Investment Techniques, Securities
and Associated Risks
3. Management of the Funds 18 Organization of the Funds
4. Investment Adviser and Sub-Adviser 29 Organization of the Funds
5. Expenses of the Funds 33 Berger IPT Funds; Organization of the Funds;
Financial Highlights
6. Brokerage Policy 37 Organization of the Funds
7. Purchasing and Redeeming Shares of the Fund 40 Buying and Selling (Redeeming) Shares
8. Suspension of Redemption Rights 41 Other Information
9. How the Net Asset Value is Determined 41 Fund Share Price
10. Income Dividends, Capital Gains Distributions 42 Distributions and Taxes
and Tax Treatment
11. Performance Information 42 Berger IPT Funds; Past Performance of Similar
Funds; Financial Highlights
12. Additional Information 44 Other Information
Financial Information 48 Financial Highlights
</Table>
INTRODUCTION
The Funds are diversified portfolios or series of the Berger
Institutional Products Trust, an open-end, management investment company.
Although each Fund is offering only its own shares and is not participating in
the sale of the shares of the other Funds, it is possible that a Fund might
become liable for any misstatement, inaccuracy or incomplete disclosure in the
Prospectus or SAI concerning the other Funds.
1. INVESTMENT STRATEGIES AND RISKS OF THE FUNDS
The Prospectus describes the investment objective of the Funds
and the principal investment policies and strategies used to achieve that
objective. It also describes the principal risks of investing in each Fund.
This section contains supplemental information concerning the
types of securities and other instruments in which the Funds may invest, the
investment policies and portfolio strategies that the Funds may utilize and
certain risks attendant to those investments, policies and strategies.
COMMON AND PREFERRED STOCKS. Stocks represent shares of
ownership in a company. Generally, preferred stock has a specified dividend and
ranks after bonds and before common stocks in its claim on income for dividend
payments and on assets should the company be liquidated. After other claims are
satisfied, common stockholders participate in company profits on a pro rata
basis. Profits may be paid out in dividends or reinvested in the company to help
it grow. Increases and decreases in earnings are usually reflected in a
company's stock price, so common stocks generally have the greatest appreciation
and depreciation potential of all corporate securities. While most preferred
stocks pay dividends, any of the Funds may purchase preferred stock where the
issuer has omitted, or is in danger of omitting, payment of its dividends. Such
investments would be made primarily for their capital appreciation potential.
All investments in stocks are subject to market risk, meaning that their prices
may move up and down with the general stock market, and that such movements
might reduce their value.
DEBT SECURITIES. Debt securities (such as bonds or debentures)
are fixed-income securities that bear interest and are issued by corporations or
governments. The issuer has a contractual obligation to pay interest at a stated
rate on specific dates and to repay principal on a specific maturity date. In
addition to market risk, debt securities are generally subject to two other
kinds of risk: credit risk and interest rate risk. Credit risk refers to the
ability of the issuer to meet interest or principal payments as they come due.
The lower the rating given a security by a rating service (such as Moody's
Investor Service ("Moody's") and Standard & Poor's ("S&P")), the greater the
credit risk the rating service perceives with respect to that security. The
Funds will not purchase any nonconvertible securities rated below investment
grade (Ba or lower by Moody's, BB or lower by S&P). In cases where the ratings
assigned by more than one rating agency differ, the Funds will consider the
security as rated in the higher category. If nonconvertible securities purchased
by a Fund are downgraded to below investment grade following purchase, the
trustees of the Fund, in consultation with the Fund's adviser or sub-adviser,
will determine what action, if any, is appropriate in light of all relevant
circumstances. For a further discussion of debt security ratings, see Appendix A
to this Statement of Additional Information.
Interest rate risk refers to the fact that the value of
fixed-income securities (like debt securities) generally fluctuates in response
to changes in interest rates. A decrease in interest rates will generally result
in an increase in the price of fixed-income securities held by a Fund.
Conversely, during periods of rising interest rates, the value of fixed-income
securities held by a Fund will generally decline. Longer-term securities are
generally more sensitive to interest rate changes and are more volatile than
shorter-term securities, but they generally offer higher yields to compensate
investors for the associated risks.
Certain debt securities can also present prepayment risk. For
example, a security may contain redemption and call provisions. If an issuer
exercises these provisions when interest rates are declining, the Fund could
sustain investment losses as well as have to reinvest the proceeds from the
security at lower interest rates, resulting in a decreased return for the Fund.
FOREIGN SECURITIES. Each Fund may invest in foreign
securities, which may be traded in foreign markets and denominated in foreign
currency. The Funds' investments may also include American Depositary
- 1 -
Receipts (ADRs), European Depositary Receipts (EDRs) that are similar to ADRs,
in bearer form, designed for use in the European securities markets, and in
Global Depositary Receipts (GDRs).
Investments in foreign securities involve some risks that are
different from the risks of investing in securities of U.S. issuers, such as the
risk of adverse political, social, diplomatic and economic developments and,
with respect to certain countries, the possibility of expropriation, taxes
imposed by foreign countries or limitations on the removal of monies or other
assets of the Funds. Moreover, the economies of individual foreign countries
will vary in comparison to the U.S. economy in such respects as growth of gross
domestic product, rate of inflation, capital reinvestment, resources,
self-sufficiency and balance of payments position. Securities of some foreign
companies, particularly those in developing countries, are less liquid and more
volatile than securities of comparable domestic companies. A developing country
generally is considered to be in the initial stages of its industrialization
cycle. Investing in the securities of developing countries may involve exposure
to economic structures that are less diverse and mature and to political systems
that can be expected to have less stability than developed countries.
There also may be less publicly available information about
foreign issuers and securities than domestic issuers and securities, and foreign
issuers generally are not subject to accounting, auditing and financial
reporting standards, requirements and practices comparable to those applicable
to domestic issuers. Also, there is generally less government supervision and
regulation of exchanges, brokers, financial institutions and issuers in foreign
countries than there is in the U.S. Foreign financial markets typically have
substantially less volume than U.S. markets. Foreign markets also have different
clearance and settlement procedures and, in certain markets, delays or other
factors could make it difficult to effect transactions, potentially causing a
Fund to experience losses or miss investment opportunities. The use of a foreign
securities depository may increase this risk. The Funds may maintain assets with
a foreign securities depository if certain conditions are met. A foreign
securities depository may maintain assets on behalf of a Fund if the depository:
(a) acts as or operates a system for the central handling of securities that is
regulated by a foreign financial regulatory authority; (b) holds assets on
behalf of the Fund under safekeeping conditions no less favorable than those
that apply to other participants; (c) maintains records that identify the assets
of participants and keeps its own assets separated from the assets of
participants; (d) provides periodic reports to participants; and (e) undergoes
periodic examination by regulatory authorities or independent accountants. In
addition, the Funds' primary custodian provides the Fund with an analysis of the
custodial risks of using a depository, monitors the depository on a continuous
basis and notifies the Funds of any material changes in risks associated with
using the depository. In general, the analysis may include an analysis of a
depository's expertise and market reputation; the quality of its services, its
financial strength, and insurance or indemnification arrangements; the extent
and quality of regulation and independent examination of the depository; its
standing in published ratings; its internal controls and other procedures for
safeguarding investments; and any related legal proceedings.
Costs associated with transactions in foreign securities are
generally higher than with transactions in U.S. securities. A Fund will incur
greater costs in maintaining assets in foreign jurisdictions and in buying and
selling foreign securities generally, resulting in part from converting foreign
currencies into U.S. dollars. In addition, a Fund might have greater difficulty
taking appropriate legal action with respect to foreign investments in non-U.S.
courts than with respect to domestic issuers in U.S. courts, which may heighten
the risk of possible losses through the holding of securities by custodians and
securities depositories in foreign countries.
For any Fund invested in securities denominated or quoted in
currencies other than the U.S. dollar, changes in foreign currency exchange
rates will affect the value of the investments in its portfolio and the
unrealized appreciation or depreciation of investments insofar as U.S. investors
are concerned. If the foreign currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the security will
increase. Conversely, a decline in the exchange rate of the foreign currency
against the U.S. dollar would adversely affect the dollar value of the foreign
securities. Foreign currency exchange rates are determined by forces of supply
and demand on the foreign exchange markets, which are in turn affected by the
international balance of payments and other economic and financial conditions,
government intervention, speculation and other factors.
PASSIVE FOREIGN INVESTMENT COMPANIES (PFICS). Each Fund may
purchase the securities of certain companies considered Passive Foreign
Investment Companies (PFICs) under U.S. tax laws. For certain types of PFICs, in
addition to bearing their proportionate share of a Fund's expenses (management
fees and
- 2 -
operating expenses), investors will also indirectly bear similar expenses of
such PFIC. PFIC investments also may be subject to less favorable U.S. tax
treatment, as discussed in Section 10.
SECURITIES OF SMALLER COMPANIES. Each Fund may invest in, and
the portfolio of the Berger IPT - Small Company Growth Fund will be weighted
toward, securities of companies with small- or mid-sized market capitalizations.
Market capitalization is defined as total current market value of a company's
outstanding common stock. Investments in companies with smaller market
capitalizations may involve greater risks and price volatility (that is, more
abrupt or erratic price movements) than investments in larger, more mature
companies because smaller companies may be at an earlier stage of development
and may have limited product lines, reduced market liquidity for their shares,
limited financial resources or less depth in management than larger or more
established companies. Smaller companies also may be less significant factors
within their industries and may have difficulty withstanding competition from
larger companies. While smaller companies may be subject to these additional
risks, they may also realize more substantial growth than larger or more
established companies.
SPECIAL SITUATIONS. Each Fund may also invest in "special
situations." Special situations are companies that have recently experienced or
are anticipated to experience a significant change in structure, management,
products or services that may significantly affect the value of their
securities. Examples of special situations are companies being reorganized or
merged, companies emerging from bankruptcy, companies introducing unusual new
products or that enjoy particular tax advantages. Other examples are companies
experiencing changes in senior management, extraordinary corporate events,
significant changes in cost or capital structure or that are believed to be
probable takeover candidates. The opportunity to invest in special situations,
however, is limited and depends in part on the market's assessment of these
companies and their circumstances. By its nature, a "special situation" company
involves to some degree a break with the company's past experience. This creates
greater uncertainty and potential risk of loss than if the company were
operating according to long-established patterns. In addition, stocks of
companies in special situations may decline or not appreciate as expected if an
anticipated change or development does not occur or is not assessed by the
market as favorably as expected.
HEDGING TRANSACTIONS. Each Fund, except the Berger IPT -
International Fund, is authorized to make limited use of certain types of
futures, forwards and/or options, but only for the purpose of hedging, that is,
protecting against market risk caused by market movements that may adversely
affect the value of a Fund's securities or the price of securities that a Fund
is considering purchasing. The utilization of futures, forwards and options is
also subject to policies and procedures that may be established by the trustees
from time to time. In addition, the Funds are not required to hedge. Decisions
regarding hedging are subject to the adviser's or sub-adviser's judgment of the
cost of the hedge, its potential effectiveness and other factors the adviser or
sub-adviser considers pertinent.
Currently, the Berger IPT - International Fund is authorized
to invest in forward contracts for hedging purposes and is not permitted to
invest in futures or options. If the trustees ever authorize the Berger IPT -
International Fund to invest in futures or options, such investments would be
permitted solely for hedging purposes, and the Fund would not be permitted to
invest more than 5% of its net assets at the time of purchase in initial margins
for financial futures transactions and premiums for options. In addition, the
adviser or sub-adviser for the Berger IPT - International Fund may be required
to obtain bank regulatory approval before the Fund engages in futures and
options transactions. The following information about the Funds' hedging
transactions using futures, forwards and options should be read to exclude the
Berger IPT - International Fund, except to the extent the information relates to
forward contracts.
A hedging transaction may partially protect a Fund from a
decline in the value of a particular security or its portfolio generally,
although hedging may also limit a Fund's opportunity to profit from favorable
price movements, and the cost of the transaction will reduce the potential
return on the security or the portfolio. Use of these instruments by a Fund
involves the potential for a loss that may exceed the amount of initial margin
the Fund would be permitted to commit to the contracts under its investment
limitation or, in the case of a call option written by the Fund, may exceed the
premium received for the option. However, a Fund is permitted to use such
instruments for hedging purposes only, and only if the aggregate amount of its
obligations under these contracts does not exceed the total market value of the
assets the Fund is attempting to hedge, such as a portion or all of its exposure
to equity securities or its holding in a specific foreign currency. To help
ensure that the Fund will be able
- 3 -
to meet its obligations under its futures and forward contracts and its
obligations under options written by that Fund, the Fund will be required to
maintain liquid assets in a segregated account with its custodian bank or to set
aside portfolio securities to "cover" its position in these contracts.
The principal risks of a Fund utilizing futures transactions,
forward contracts and options are: (a) losses resulting from market movements
not anticipated by the Fund; (b) possible imperfect correlation between
movements in the prices of futures, forwards and options and movements in the
prices of the securities or currencies hedged or used to cover such positions;
(c) lack of assurance that a liquid secondary market will exist for any
particular futures or options at any particular time and possible
exchange-imposed price fluctuation limits, either of which may make it difficult
or impossible to close a position when so desired; (d) lack of assurance that
the counterparty to a forward contract would be willing to negotiate an offset
or termination of the contract when so desired; and (e) the need for additional
information and skills beyond those required for the management of a portfolio
of traditional securities. In addition, when the Fund enters into an
over-the-counter contract with a counterparty, the Fund will assume counterparty
credit risk, that is, the risk that the counterparty will fail to perform its
obligations, in which case the Fund could be worse off than if the contract had
not been entered into.
Following is additional information concerning the futures,
forwards and options that the Funds (except the Berger IPT - International Fund,
which may only use forwards) may utilize, provided that no more than 5% of the
Fund's net assets at the time the contract is entered into may be used for
initial margins for financial futures transactions and premiums paid for the
purchase of options. In addition, a Fund may only write call options that are
covered and only up to 25% of the Fund's total assets.
Futures Contracts. Financial futures contracts are
exchange-traded contracts on financial instruments (such as securities and
foreign currencies) and securities indices that obligate the holder to take or
make delivery of a specified quantity of the underlying financial instrument, or
the cash value of an index, at a future date. Although futures contracts by
their terms call for the delivery or acquisition of the underlying instruments
or a cash payment based on the mark-to-market value of the underlying
instruments, in most cases the contractual obligation will be offset before the
delivery date by buying (in the case of an obligation to sell) or selling (in
the case of an obligation to buy) an identical futures contract. Such a
transaction cancels the original obligation to make or take delivery of the
instruments.
Each Fund may enter into contracts for the purchase or sale
for future delivery of financial instruments, such as securities and foreign
currencies, or contracts based on financial indices including indices of U.S.
Government securities, foreign government securities or equity securities. U.S.
futures contracts are traded on exchanges that have been designated "contract
markets" by the Commodity Futures Trading Commission ("CFTC") and must be
executed through a futures commission merchant (an "FCM"), or brokerage firm,
which is a member of the relevant contract market. Through their clearing
corporations, the exchanges guarantee performance of the contracts as between
the clearing members of the exchange.
Both the buyer and seller are required to deposit "initial
margin" for the benefit of the FCM when a futures contract is entered into.
Initial margin deposits are equal to a percentage of the contract's value, as
set by the exchange on which the contract is traded and may be maintained in
cash or other liquid assets. If the value of either party's position declines,
that party will be required to make additional "variation margin" payments to
the other party to settle the change in value on a daily basis. Initial and
variation margin payments are similar to good faith deposits or performance
bonds or party-to-party payments resulting from daily changes in the value of
the contract, unlike margin extended by a securities broker, and would be
released or credited to the Funds upon termination of the futures contract,
assuming all contractual obligations have been satisfied. Unlike margin extended
by a securities broker, initial and variation margin payments do not constitute
purchasing securities on margin for purposes of a Fund's investment limitations.
A Fund will incur brokerage fees when it buys or sells futures contracts.
In the event of the bankruptcy of the FCM that holds margin on
behalf of a Fund, the Fund may be entitled to return of margin owed to the Fund
only in proportion to the amount received by the FCM's other customers. A Fund
will attempt to minimize this risk by careful monitoring of the creditworthiness
of the FCMs with which the Fund does business and by depositing margin payments
in a segregated account with the Fund's custodian for the benefit of the FCM
when practical or otherwise required by law.
- 4 -
Each Fund intends to comply with guidelines of eligibility for
exclusion from the definition of the term "commodity pool operator" with the
CFTC and the National Futures Association, which regulate trading in the futures
markets. Accordingly, a Fund will not enter into any futures contract or option
on a futures contract if, as a result, the aggregate initial margin and premiums
required to establish such positions would exceed 5% of the Fund's net assets.
Although a Fund will hold cash and liquid assets in a
segregated account with a mark-to-market value sufficient to cover the Fund's
open futures obligations, the segregated assets will be available to the Fund
immediately upon closing out the futures position.
The acquisition or sale of a futures contract may occur, for
example, when a Fund is considering purchasing or holds equity securities and
seeks to protect itself from fluctuations in prices without buying or selling
those securities. For example, if prices were expected to decrease, the Fund
might sell equity index futures contracts, thereby hoping to offset a potential
decline in the value of equity securities in the portfolio by a corresponding
increase in the value of the futures contract position held by the Fund and
thereby prevent the Fund's net asset value from declining as much as it
otherwise would have. A Fund also could protect against potential price declines
by selling portfolio securities and investing in money market instruments.
However, the use of futures contracts as a hedging technique allows a Fund to
maintain a defensive position without having to sell portfolio securities.
Similarly, when prices of equity securities are expected to
increase, futures contracts may be bought to attempt to hedge against the
possibility of having to buy equity securities at higher prices. This technique
is sometimes known as an anticipatory hedge. Since the fluctuations in the value
of futures contracts should be similar to those of equity securities, a Fund
could take advantage of the potential rise in the value of equity securities
without buying them until the market has stabilized. At that time, the futures
contracts could be liquidated, and the Fund could buy equity securities on the
cash market.
The ordinary spreads between prices in the cash and futures
markets, due to differences in the nature of those markets are subject to
distortions. First, all participants in the futures market are subject to
initial margin and variation margin requirements. Rather than meeting additional
variation margin requirements, investors may close out futures contracts through
offsetting transactions that could distort the normal price relationship between
the cash and futures markets. Second, the liquidity of the futures market
depends on participants entering into offsetting transactions rather than making
or taking delivery. To the extent participants decide to make or take delivery,
liquidity in the futures market could be reduced and prices in the futures
market distorted. Third, from the point of view of speculators, the margin
deposit requirements in the futures market are less than margin requirements in
the securities market. Therefore, increased participation by speculators in the
futures market may cause temporary price distortions. Due to the possibility of
the foregoing distortions, a correct forecast of general price trends by a Fund
still may not result in a successful use of futures.
Futures contracts entail additional risks. Although a Fund
will only utilize futures contracts when it believes that use of such contracts
will benefit the Fund, if the Fund's investment judgment is incorrect, the
Fund's overall performance could be worse than if the Fund had not entered into
futures contracts. For example, if the Fund has hedged against the effects of a
possible decrease in prices of securities held in the Fund's portfolio and
prices increase instead, the Fund will lose part or all of the benefit of the
increased value of these securities because of offsetting losses in the Fund's
futures positions. In addition, if the Fund has insufficient cash, it may have
to sell securities from its portfolio to meet daily variation margin
requirements. Those sales may be, but will not necessarily be, at increased
prices that reflect the rising market and may occur at a time when the sales are
disadvantageous to the Fund. Although the buyer of an option cannot lose more
than the amount of the premium plus related transaction costs, a buyer or seller
of futures contracts could lose amounts substantially in excess of any initial
margin deposits made, due to the potential for adverse price movements resulting
in additional variation margin being required by such positions. However, each
Fund intends to monitor its investments closely and will attempt to close its
positions when the risk of loss to the Fund becomes unacceptably high.
The prices of futures contracts depend primarily on the value
of their underlying instruments. Because there are a limited number of types of
futures contracts, it is possible that the standardized futures contracts
available to a Fund will not exactly match the Fund's current or potential
investments. A Fund may buy
- 5 -
and sell futures contracts based on underlying instruments with different
characteristics from the securities in which it typically invests -- for
example, by hedging investments in portfolio securities with a futures contract
based on a broad index of securities -- which involves a risk that the futures
position will not correlate precisely with the performance of the Fund's
investments.
Futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments closely correlate
with a Fund's investments. Futures prices are affected by such factors as
current and anticipated short-term interest rates, changes in volatility of the
underlying instruments and the time remaining until expiration of the contract.
Those factors may affect securities prices differently from futures prices.
Imperfect correlations between a Fund's investments and its futures positions
may also result from differing levels of demand in the futures markets and the
securities markets, from structural differences in how futures and securities
are traded, and from imposition of daily price fluctuation limits for futures
contracts. A Fund may buy or sell futures contracts with a value less than or
equal to the securities it wishes to hedge or is considering purchasing. If
price changes in a Fund's futures positions are poorly correlated with its other
investments, its futures positions may fail to produce desired gains or result
in losses that are not offset by the gains in the Fund's other investments.
Because futures contracts are generally settled within a day
from the date they are closed out, compared with a longer settlement period for
most types of securities, the futures markets can provide superior liquidity to
the securities markets. Nevertheless, there is no assurance a liquid secondary
market will exist for any particular futures contract at any particular time. In
addition, futures exchanges may establish daily price fluctuation limits for
futures contracts and may halt trading if a contract's price moves upward or
downward more than the limit in a given day. On volatile trading days when the
price fluctuation limit is reached, it may be impossible for a Fund to enter
into new positions or close out existing positions. If the secondary market for
a futures contract is not liquid because of price fluctuation limits or
otherwise, a Fund may not be able to promptly liquidate unfavorable futures
positions and potentially could be required to continue to hold a futures
position until the delivery date, regardless of changes in its value. As a
result, a Fund's access to other assets held to cover its futures positions
could also be impaired.
Options on Futures Contracts. Each Fund may buy and write
options on futures contracts for hedging purposes. An option on a futures
contract gives a Fund the right (but not the obligation) to buy or sell a
futures contract at a specified price on or before a specified date. The
purchase of a call option on a futures contract is similar in some respects to
the purchase of a call option on an individual security. Depending on the
pricing of the option compared to either the price of the futures contract upon
which it is based or the price of the underlying instrument, ownership of the
option may or may not be less risky than ownership of the futures contract or
the underlying instrument. As with the purchase of futures contracts, a Fund may
buy a call option on a futures contract to hedge against a market advance, and a
Fund might buy a put option on a futures contract to hedge against a market
decline.
The writing of a call option on a futures contract constitutes
a partial hedge against declining prices of the security or foreign currency
that is deliverable under, or of the index comprising, the futures contract. If
the futures price at the expiration of the call option is below the exercise
price, a Fund will retain the full amount of the option premium that provides a
partial hedge against any decline that may have occurred in the Fund's portfolio
holdings. If a call option a Fund has written is exercised, the Fund will incur
a loss that will be reduced by the amount of the premium it received. Depending
on the degree of correlation between change in the value of its portfolio
securities and changes in the value of the futures positions, a Fund's losses
from existing options on futures may to some extent be reduced or increased by
changes in the value of portfolio securities.
The purchase of a put option on a futures contract is similar
in some respects to the purchase of protective put options on portfolio
securities. For example, a Fund may buy a put option on a futures contract to
hedge the Fund's portfolio against the risk of falling prices.
The amount of risk a Fund assumes when it buys an option on a
futures contract is the premium paid for the option plus related transaction
costs. In addition to the correlation risks discussed above, the purchase of an
option also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the options bought.
- 6 -
Forward Foreign Currency Exchange Contracts. A forward
contract is a privately negotiated agreement between two parties in which one
party is obligated to deliver a stated amount of a stated asset at a specified
time in the future and the other party is obligated to pay a specified invoice
amount for the assets at the time of delivery. The Funds currently intend that
they will only use forward contracts or commitments for hedging purposes and
will only use forward foreign currency exchange contracts, although a Fund may
enter into additional forms of forward contracts or commitments in the future if
they become available and advisable in light of the Fund's objectives and
investment policies. Forward contracts generally are negotiated in an interbank
market conducted directly between traders (usually large commercial banks) and
their customers. Unlike futures contracts, which are standardized
exchange-traded contracts, forward contracts can be specifically drawn to meet
the needs of the parties that enter into them. The parties to a forward contract
may agree to offset or terminate the contract before its maturity or may hold
the contract to maturity and complete the contemplated exchange.
The following discussion summarizes the Funds' principal uses
of forward foreign currency exchange contracts ("forward currency contracts"). A
Fund may enter into forward currency contracts with stated contract values of up
to the value of the Fund's assets. A forward currency contract is an obligation
to buy or sell an amount of a specified currency for an agreed price (which may
be in U.S. dollars or a foreign currency) on a specified date. A Fund will
exchange foreign currencies for U.S. dollars and for other foreign currencies in
the normal course of business and may buy and sell currencies through forward
currency contracts in order to fix a price (in terms of a specified currency)
for securities it has agreed to buy or sell ("transaction hedge"). A Fund also
may hedge some or all of its investments denominated in foreign currency against
a decline in the value of that currency (or a proxy currency whose price
movements are expected to have a high degree of correlation with the currency
being hedged) relative to the U.S. dollar by entering into forward currency
contracts to sell an amount of that currency approximating the value of some or
all of its portfolio securities denominated in that currency ("position hedge")
or by participating in futures contracts (or options on such futures) with
respect to the currency. A Fund may also enter into a forward currency contract
with respect to a currency where the Fund is considering the purchase or sale of
investments denominated in that currency but has not yet selected the specific
investments ("anticipatory hedge").
These types of hedging minimize the effect of currency
appreciation as well as depreciation but do not eliminate fluctuations in the
underlying U.S. dollar equivalent value of the proceeds of or rates of return on
a Fund's foreign currency denominated portfolio securities. The matching of the
increase in value of a forward contract and the decline in the U.S. dollar
equivalent value of the foreign currency denominated asset that is the subject
of the hedge generally will not be precise. Shifting a Fund's currency exposure
from one foreign currency to another limits that Fund's opportunity to profit
from increases in the value of the original currency and involves a risk of
increased losses to such Fund if its investment manager's projection of future
exchange rates is inaccurate. Unforeseen changes in currency prices may result
in poorer overall performance for a Fund than if it had not entered into such
contracts.
A Fund will cover outstanding forward currency contracts by
maintaining liquid portfolio securities denominated in the currency underlying
the forward contract or the currency being hedged. To the extent that a Fund is
not able to cover its forward currency positions with underlying portfolio
securities, the Funds' custodian will segregate cash or liquid assets having a
value equal to the aggregate amount of such Fund's commitments under forward
contracts entered into. If the value of the securities used to cover a position
or the value of segregated assets declines, the Fund must find alternative cover
or segregate additional cash or liquid assets on a daily basis so that the value
of the covered and segregated assets will be equal to the amount of the Fund's
commitments with respect to such contracts.
While forward contracts are not currently regulated by the
CFTC, the CFTC may in the future assert authority to regulate forward contracts.
In such event, the Funds' ability to utilize forward contracts may be
restricted. A Fund may not always be able to enter into forward contracts at
attractive prices and may be limited in its ability to use these contracts to
hedge Fund assets. In addition, when a Fund enters into a privately negotiated
forward contract with a counterparty, the Fund assumes counterparty credit risk,
that is, the risk that the counterparty will fail to perform its obligations, in
which case the Fund could be worse off than if the contract had not been entered
into. Unlike many exchange-traded futures contracts and options on futures,
there are no daily price fluctuation limits with respect to forward contracts
and other negotiated or over-the-counter instruments, and with respect to those
contracts, adverse market movements could therefore continue to an unlimited
extent over a period of time.
- 7 -
However, each Fund intends to monitor its investments closely and will attempt
to renegotiate or close its positions when the risk of loss to the Fund becomes
unacceptably high.
Options on Securities and Securities Indices. A Fund may buy
or sell put or call options and write covered call options on securities that
are traded on United States or foreign securities exchanges or over-the-counter.
Buying an option involves the risk that, during the option period, the price of
the underlying security will not increase (in the case of a call) to above the
exercise price, or will not decrease (in the case of a put) to below the
exercise price in which case the option will expire without being exercised and
the holder would lose the amount of the premium. Writing a call option involves
the risk of an increase in the market value of the underlying security, in which
case the option could be exercised and the underlying security would then be
sold by a Fund to the option holder at a lower price than its current market
value and the Fund's potential for capital appreciation on the security would be
limited to the exercise price. Moreover, when a Fund writes a call option on a
securities index, the Fund bears the risk of loss resulting from imperfect
correlation between movements in the price of the index and the price of the
securities set aside to cover such position. Although they entitle the holder to
buy equity securities, call options to purchase equity securities do not entitle
the holder to dividends or voting rights with respect to the underlying
securities, nor do they represent any rights in the assets of the issuer of
those securities.
A call option written by a Fund is "covered" if the Fund owns
the underlying security covered by the call or has an absolute and immediate
right to acquire that security without additional cash consideration (or for
additional cash consideration held in a segregated account by its custodian)
upon conversion or exchange of other securities held in its portfolio. A call
option is also deemed to be covered if a Fund holds a call on the same security
and in the same principal amount as the call written and the exercise price of
the call held (a) is equal to or less than the exercise price of the call
written or (b) is greater than the exercise price of the call written if the
difference is maintained by the Fund in liquid assets in a segregated account
with its custodian.
The writer of a call option may have no control when the
underlying securities must be sold. Whether or not an option expires
unexercised, the writer retains the amount of the premium. This amount, of
course, may, in the case of a covered call option, be offset by a decline in the
market value of the underlying security during the option period.
The writer of an exchange-traded call option that wishes to
terminate its obligation may effect a "closing purchase transaction." This is
accomplished by buying an option of the same series as the option previously
written. The effect of the purchase is that the writer's position will be
canceled by the clearing corporation. If a Fund desires to sell a particular
security from the Fund's portfolio on which the Fund has written a call option,
the Fund will effect a closing transaction prior to or concurrent with the sale
of the security. However, a writer may not effect a closing purchase transaction
after being notified of the exercise of an option. An investor who is the holder
of an exchange-traded option may liquidate its position by effecting a "closing
sale transaction." This is accomplished by selling an option of the same series
as the option previously bought. There is no guarantee that either a closing
purchase or a closing sale transaction can be effected.
A Fund will realize a profit from a closing transaction if the
price of the purchase transaction is less than the premium received from writing
the option or the price received from a sale transaction is more than the
premium paid to buy the option; the Fund will realize a loss from a closing
transaction if the price of the purchase transaction is more than the premium
received from writing the option or the price received from a sale transaction
is less than the premium paid to buy the option. Because increases in the market
price of a call option will generally reflect increases in the market price of
the underlying security, any loss resulting from the repurchase of a call option
is likely to be offset in whole or in part by appreciation of the underlying
security owned by the Fund.
An option position may be closed out only when a secondary
market exists for an option of the same series. If a secondary market does not
exist, it might not be possible to effect closing transactions in particular
options with the result that a Fund would have to exercise the options in order
to realize any profit. If a Fund is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
security until the option expires or the Fund delivers the underlying security
upon exercise. Reasons for the absence of a liquid secondary market may include
the following: (a) there may be insufficient trading interest in certain
options, (b) restrictions may be imposed by a national securities exchange on
which the option is traded ("Exchange") on opening or closing transactions or
both, (c) trading halts, suspensions or other restrictions may be
- 8 -
imposed with respect to particular classes or series of options or underlying
securities, (d) unusual or unforeseen circumstances may interrupt normal
operations on an Exchange, (e) the facilities of an Exchange or of the Options
Clearing Corporation ("OCC") may not at all times be adequate to handle current
trading volume, or (f) one or more Exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the trading
of options (or a particular class or series of options), in which event the
secondary market on that Exchange (or in that class or series of options) would
cease to exist, although outstanding options on that Exchange that had been
issued by the OCC as a result of trades on that Exchange would continue to be
exercisable in accordance with their terms.
In addition, when a Fund enters into an over-the-counter
option contract with a counterparty, the Fund assumes counterparty credit risk,
that is, the risk that the counterparty will fail to perform its obligations, in
which case the Fund could be worse off than if the contract had not been entered
into.
An option on a securities index is similar to an option on a
security except that rather than the right to take or make delivery of a
security at a specified price, an option on a securities index gives the holder
the right to receive, on exercise of the option, an amount of cash if the
closing level of the securities index on which the option is based is greater
than, in the case of a call, or less than, in the case of a put, the exercise
price of the option.
A Fund may buy call options on securities or securities
indices to hedge against an increase in the price of a security or securities
that the Fund may buy in the future. The premium paid for the call option plus
any transaction costs will reduce the benefit, if any, realized by a Fund upon
exercise of the option, and, unless the price of the underlying security or
index rises sufficiently, the option may expire and become worthless to the
Fund. A Fund may buy put options to hedge against a decline in the value of a
security or its portfolio. The premium paid for the put option plus any
transaction costs will reduce the benefit, if any, realized by a Fund upon
exercise of the option, and, unless the price of the underlying security or
index declines sufficiently, the option may expire and become worthless to the
Fund.
An example of a hedging transaction using an index option
would be if a Fund were to purchase a put on a stock index, in order to protect
the Fund against a decline in the value of all securities held by it to the
extent that the stock index moves in a similar pattern to the prices of the
securities held. While the correlation between stock indices and price movements
of the stocks in which the Funds will generally invest may be imperfect, the
Funds expect, nonetheless, that the use of put options that relate to such
indices will, in certain circumstances, protect against declines in values of
specific portfolio securities or the Funds' portfolio generally. Although the
purchase of a put option may partially protect a Fund from a decline in the
value of a particular security or its portfolio generally, the cost of a put
will reduce the potential return on the security or the portfolio.
CONVERTIBLE SECURITIES. Each Fund may also purchase debt or
equity securities that are convertible into common stock when the Fund's adviser
or sub-adviser believes they offer the potential for a higher total return than
nonconvertible securities. Although fixed-income securities generally have a
priority claim on a corporation's assets over that of common stock, some of the
convertible securities that the Funds may hold are high-yield/high-risk
securities that are subject to special risks, including the risk of default in
interest or principal payments, which could result in a loss of income to the
Funds or a decline in the market value of the securities. Convertible securities
often display a degree of market price volatility that is comparable to common
stocks. The credit risk associated with convertible securities generally is
reflected by their ratings assigned by organizations such as Moody's and S & P
or a similar determination of creditworthiness by the adviser or sub-adviser.
None of the Funds have pre-established minimum quality standards for convertible
securities and may invest in convertible securities of any quality, including
lower rated or unrated securities. However, the Funds will not invest in any
security in default at the time of purchase or in any nonconvertible debt
securities rated below investment grade, and each Fund will invest less than 20%
of the market value of its assets at the time of purchase in convertible
securities rated below investment grade. If convertible securities purchased by
a Fund are downgraded following purchase, or if other circumstances cause 20% or
more of a Fund's assets to be invested in convertible securities rated below
investment grade, the trustees of the Trust, in consultation with the adviser or
sub-adviser will determine what action, if any, is appropriate in light of all
relevant circumstances. For a further discussion of debt security ratings, see
Appendix A to this Statement of Additional Information.
- 9 -
SECURITIES OF COMPANIES WITH LIMITED OPERATING HISTORIES. Each
Fund may invest in securities of companies with limited operating histories.
Each Fund considers these to be securities of companies with a record of less
than three years' continuous operation, even including the operations of any
predecessors and parents. (These are sometimes referred to as "unseasoned
issuers.") These companies by their nature have only a limited operating history
that can be used for evaluating the company's growth prospects. As a result,
investment decisions for these securities may place a greater emphasis on
current or planned product lines and the reputation and experience of the
company's management and less emphasis on fundamental valuation factors than
would be the case for more mature companies. In addition, many of these
companies may also be small companies and involve the risks and price volatility
associated with smaller companies. The Berger IPT - Growth Fund and the Berger
IPT - Large Cap Growth Fund each may invest up to 5% of their total assets in
such securities.
INITIAL PUBLIC OFFERINGS. Each Fund may invest in a company's
securities at the time the company first offers securities to the public, that
is, at the time of the company's initial public offering or IPO. Although
companies can be any age or size at the time of their IPOs, they are often
smaller and have a limited operating history, which involves a greater potential
for the value of their securities to be impaired following the IPO. See
"Securities of Smaller Companies" and "Securities of Companies with Limited
Operating Histories."
Investors in IPOs can be adversely affected by substantial
dilution in the value of their shares, by sales of additional shares and by
concentration of control in existing management and principal investors. In
addition, all of the factors that affect stock market performance may have a
greater impact on the shares of IPO companies.
The price of a company's securities may be highly unstable at
the time of its IPO and for a period thereafter due to market psychology
prevailing at the time of the IPO, the absence of a prior public market, the
small number of shares available and limited availability of investor
information. As a result of this or other factors, a Fund's adviser or
sub-adviser might decide to sell an IPO security more quickly than it would
otherwise, which may result in a significant gain or loss and greater
transaction costs to the Funds. Any gains from shares held for 12 months or less
will be treated as short-term gains, taxable as ordinary income to the Fund's
investors. In addition, IPO securities may be subject to varying patterns of
trading volume and may, at times, be difficult to sell without an unfavorable
impact on prevailing prices.
The effect of an IPO investment can have a magnified impact on
a Fund's performance when the Fund's asset base is small. Consequently, IPOs may
constitute a significant portion of a Fund's returns particularly when the Fund
is small. Since the number of securities issued in an IPO is limited, it is
likely that IPO securities will represent a smaller component of a Fund's assets
as it increases in size and therefore have a more limited effect on the Fund's
performance.
There can be no assurance that IPOs will continue to be
available for the Funds to purchase. The number or quality of IPOs available for
purchase by a Fund may vary, decrease or entirely disappear. In some cases, a
Fund may not be able to purchase IPOs at the offering price, but may have to
purchase the shares in the aftermarket at a price greatly exceeding the offering
price, making it more difficult for the Fund to realize a profit.
The adviser's or sub-adviser's IPO trade allocation procedures
govern which Funds and other advised accounts participate in the allocation of
any IPO. See the heading "Trade Allocations" under Section 4. Under the IPO
allocation procedures of Berger Financial Group LLC, a Fund generally will not
participate in an IPO if the securities available for allocation to the Fund or
its corresponding retail Berger Fund (see under Section 11 Performance
Information) are insignificant relative to that Fund's net assets. As a result,
any Fund or account whose assets, or whose corresponding retail assets, are very
large is not likely to participate in the allocation of many IPOs.
ZEROS/STRIPS. Each Fund may each invest in zero coupon bonds
or in "strips." Zero coupon bonds do not make regular interest payments; rather,
they are sold at a discount from face value. Principal and accreted discount
(representing interest accrued but not paid) are paid at maturity. "Strips" are
debt securities that are stripped of their interest coupon after the securities
are issued, but otherwise are comparable to zero coupon bonds. The market values
of "strips" and zero coupon bonds generally fluctuate in response to changes in
interest rates to a greater degree than do interest-paying securities of
comparable term and quality.
- 10 -
LENDING OF PORTFOLIO SECURITIES. Each Fund may lend its
securities to qualified institutional investors (such as brokers, dealers or
other financial organizations) who need to borrow securities in order to
complete certain transactions, such as covering short sales, avoiding failures
to deliver securities, or completing arbitrage operations. Loans of securities
by a Fund will be collateralized by cash, letters of credit, or securities
issued or guaranteed by the U.S. Government or its agencies. The collateral will
equal at least 100% of the current market value of the loaned securities,
marked-to-market on a daily basis. By lending its securities, a Fund will be
attempting to generate income through the receipt of interest on the loan,
which, in turn, can be invested in additional securities to pursue the Fund's
investment objective. Any gain or loss in the market price of the securities
loaned that might occur during the term of the loan would be for the account of
the Fund.
A Fund may lend its portfolio securities to qualified brokers,
dealers, banks or other financial institutions, so long as the terms, the
structure and the aggregate amount of such loans are not inconsistent with the
Investment Company Act of 1940 or the Rules and Regulations or interpretations
of the Securities and Exchange Commission (the "Commission") thereunder, which
currently require that (a) the borrower pledge and maintain with the Fund
collateral consisting of cash, an irrevocable letter of credit or securities
issued or guaranteed by the United States government having a value at all times
not less than 100% of the value of the securities loaned, (b) the borrower add
to such collateral whenever the price of the securities loaned rises (i.e., the
borrower "marks to the market" on a daily basis), (c) the loan be made subject
to termination by the Fund at any time and (d) the Fund receive reasonable
interest on the loan, which interest may include the Fund's investing cash
collateral in interest bearing short-term investments, and (e) the Fund receive
all dividends and distributions on the loaned securities and any increase in the
market value of the loaned securities.
A Fund bears a risk of loss in the event that the other party
to a securities lending transaction defaults on its obligations and the Fund is
delayed in or prevented from exercising its rights to dispose of the collateral,
including the risk of a possible decline in the value of the collateral
securities during the period in which the Fund seeks to assert these rights, the
risk of incurring expenses associated with asserting these rights and the risk
of losing all or a part of the income from the transaction. The Funds will not
lend its portfolio securities if, as a result, the aggregate value of such loans
would exceed 33-1/3% of the value of the Fund's total assets. Loan arrangements
made by a Fund will comply with all other applicable regulatory requirements,
including the rules of the New York Stock Exchange, which rules presently
require the borrower, after notice, to redeliver the securities within the
normal settlement time of three business days. All relevant facts and
circumstances, including creditworthiness of the broker, dealer or institution,
will be considered in making decisions with respect to the lending of
securities, subject to review by a Fund's trustees.
Although voting rights with respect to loaned securities pass
to the borrower, a lending Fund retains the right to recall a security (or
terminate a loan) for the purpose of exercising the security's voting rights.
Efforts to recall loaned securities in time to exercise voting rights may be
unsuccessful, especially for foreign securities or thinly traded securities. In
addition, it is expected that loaned securities will be recalled for voting only
when the items being voted on are, in the judgment of the lending Fund's
adviser, either material to the economic value of the security or threaten to
materially impact the issuing company's corporate governance policies or
structure.
ILLIQUID AND RESTRICTED SECURITIES. Each Fund is authorized to
invest in securities that are illiquid or not readily marketable because they
are subject to restrictions on their resale ("restricted securities") or
because, based upon their nature or the market for such securities, no ready
market is available. However, the Funds will not purchase any such security, the
purchase of which would cause a Fund to invest more than 15% of its net assets,
measured at the time of purchase, in illiquid securities. Investments in
illiquid securities involve certain risks to the extent that a Fund may be
unable to dispose of such a security at the time desired or at a reasonable
price or, in some cases, may be unable to dispose of it at all. In addition, in
order to resell a restricted security, a Fund might have to incur the
potentially substantial expense and delay associated with effecting
registration. If securities become illiquid following purchase or other
circumstances cause more than 15% of a Fund's net assets to be invested in
illiquid securities, the trustees of that Fund, in consultation with the Fund's
adviser or sub-adviser, will determine what action, if any, is appropriate in
light of all relevant circumstances.
Repurchase agreements maturing in more than seven days will be
considered as illiquid for purposes of this restriction. Pursuant to guidelines
established by the trustees, the Funds' adviser or sub-adviser will determine
whether securities eligible for resale to qualified institutional buyers
pursuant to SEC Rule 144A under
- 11 -
the Securities Act of 1933 should be treated as illiquid investments
considering, among other things, the following factors: (a) the frequency of
trades and quotes for the security; (b) the number of dealers wanting to
purchase or sell the security and the number of other potential purchasers; (c)
dealer undertakings to make a market in the security; and (d) the nature of the
security and the marketplace trades (e.g., the time needed to dispose of the
security, the method of soliciting offers, and the mechanics of the transfer).
The liquidity of a Fund's investments in Rule 144A securities could be impaired
if qualified institutional buyers become uninterested in purchasing these
securities.
REPURCHASE AGREEMENTS. Each Fund may invest in repurchase
agreements with various financial organizations, including commercial banks,
registered broker-dealers and registered government securities dealers. A
repurchase agreement is an agreement under which a Fund acquires a debt security
(generally a debt security issued or guaranteed by the U.S. government or an
agency thereof, a banker's acceptance or a certificate of deposit) from a
commercial bank, broker or dealer, subject to resale to the seller at an agreed
upon price and date (normally, the next business day). A repurchase agreement
may be considered a loan collateralized by securities. The resale price reflects
an agreed upon interest rate effective for the period the instrument is held by
a Fund and is unrelated to the interest rate on the underlying instrument. In
these transactions, the securities acquired by a Fund (including accrued
interest earned thereon) must have a total value equal to or in excess of the
value of the repurchase agreement and are held by the Fund's custodian bank
until repurchased. In addition, the trustees will establish guidelines and
standards for review by the investment adviser or sub-adviser of the
creditworthiness of any bank, broker or dealer party to a repurchase agreement
with a Fund. The Funds will not enter into a repurchase agreement maturing in
more than seven days if as a result more than 15% of a Fund's net assets would
be invested in such repurchase agreements and other illiquid securities.
These transactions must be fully collateralized at all times
by debt securities (generally a security issued or guaranteed by the U.S.
Government or an agency thereof, a banker's acceptance or a certificate of
deposit) but involve certain risks, such as credit risk to a Fund if the other
party defaults on its obligation and the Fund is delayed or prevented from
liquidating the collateral. For example, if the other party to the agreement
defaults on its obligation to repurchase the underlying security at a time when
the value of the security has declined, a Fund may incur a loss upon disposition
of the security. If the other party to the agreement becomes insolvent and
subject to liquidation or reorganization under the Bankruptcy Code or other
laws, a court may determine that the underlying security is collateral for a
loan by a Fund not within the control of the Fund and therefore the realization
by the Fund on such collateral may automatically be stayed and delayed. Further,
it is possible that a Fund may not be able to substantiate its interest in the
underlying security and may be deemed an unsecured creditor of the other party
to the agreement. The Funds expect that these risks can be controlled through
careful monitoring procedures.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. Each Fund may
purchase and sell securities on a when-issued or delayed delivery basis.
However, the Funds do not currently intend to purchase or sell securities on a
when-issued or delayed delivery basis if as a result more than 5% of its total
assets taken at market value at the time of purchase would be invested in such
securities. When-issued or delayed delivery transactions arise when securities
(normally, equity obligations of issuers eligible for investment by a Fund) are
purchased or sold by the Fund with payment and delivery taking place in the
future in order to secure what is considered to be an advantageous price or
yield. However, the yield available on a comparable security when delivery takes
place may vary from the yield on the security at the time that the when-issued
or delayed delivery transaction was entered into. Any failure to consummate a
when-issued or delayed delivery transaction may result in a Fund missing the
opportunity of obtaining a price or yield considered to be advantageous.
When-issued and delayed delivery transactions may generally be expected to
settle within one month from the date the transactions are entered into but in
no event later than 90 days. However, no payment or delivery is made by a Fund
until it receives delivery or payment from the other party to the transaction.
When a Fund purchases securities on a when-issued basis, it
will maintain, in a segregated account with its custodian cash, U.S. government
securities or other liquid assets having an aggregate value equal to the amount
of such purchase commitments, until payment is made. If necessary, additional
assets will be placed in the account daily so that the value of the account will
equal or exceed the amount of the Fund's purchase commitments.
- 12 -
SHORT SALES. Each Fund (other than the Berger IPT -
International Fund) is permitted to engage in short sales if, at the time of the
short sale, the Fund owns or has the right to acquire an equivalent kind and
amount of the security being sold short at no additional cost (i.e., short sales
"against the box").
In a short sale, the seller does not immediately deliver the
securities sold and is said to have a short position in those securities until
delivery occurs. To make delivery to the purchaser, the executing broker borrows
the securities being sold short on behalf of the seller. While the short
position is maintained, the seller collateralizes its obligation to deliver the
securities sold short in an amount equal to the proceeds of the short sale plus
an additional margin amount established by the Board of Governors of the Federal
Reserve. If a Fund engages in a short sale, the collateral account will be
maintained by the Fund's custodian. While the short sale is open, the Fund will
maintain in a segregated custodial account an amount of securities convertible
into or exchangeable for such equivalent securities at no additional cost. These
securities would constitute the Fund's long position.
Under prior law, a Fund could have made a short sale, as
described above, when it wanted to sell a security it owned at a current
attractive price but also wished to defer recognition of gain or loss for
federal income tax purposes and for purposes of satisfying certain tests
applicable to regulated investment companies under the Internal Revenue Code.
However, federal tax legislation has since eliminated the ability to defer
recognition of gain or loss in short sales against the box, and accordingly it
is not anticipated that the Funds will be engaging in these transactions unless
there are further legislative changes.
TEMPORARY DEFENSIVE MEASURES. Although the Funds reserve the
right to take temporary defensive measures, it is the intention of the Funds to
remain fully invested at all times. Each Fund may increase its investment in
government securities, and other short-term, interest-bearing securities without
regard to the Fund's otherwise applicable percentage limits, policies or its
normal investment emphasis, when its adviser or sub-adviser believes market,
economic or political conditions warrant a temporary defensive position. In
addition, certain unusual circumstances may force a Fund to temporarily depart
from the investment requirement implied by its name. Taking larger positions in
such short-term investments may serve as a means of preserving capital in
unfavorable market conditions. When in a defensive position, a Fund could miss
the opportunity to participate in any stock or bond market advances that occur
during those periods, which the Fund might have been able to participate in if
it had remained more fully invested.
PORTFOLIO TURNOVER. The portfolio turnover rates of each of
the Funds are shown in the Financial Highlights tables included in the
Prospectus. The annual portfolio turnover rates of the Funds at times have
exceeded 100%. A 100% annual turnover rate results, for example, if the
equivalent of all of the securities in the Fund's portfolio are replaced in a
period of one year. The Funds anticipate that their portfolio turnover rates in
future years may exceed 100%, and investment changes will be made whenever
management deems them appropriate even if this results in a higher portfolio
turnover rate. In addition, portfolio turnover for the Funds may increase as a
result of large amounts of purchases and redemptions of shares of the Funds due
to economic, market or other factors that are not within the control of
management.
Higher portfolio turnover will necessarily result in
correspondingly higher brokerage costs for the Funds. The existence of a high
portfolio turnover rate has no direct relationship to the tax liability of the
Fund, although sales of certain stocks will lead to realization of gains and,
possibly, increased taxable distributions to investors. The Funds' brokerage
policy is discussed further under Section 6 -- Brokerage Policy, and additional
information concerning income taxes is located under Section 10 -- Income
Dividends, Capital Gains Distributions and Tax Treatment.
- 13 -
2. INVESTMENT RESTRICTIONS
As indicated in the Prospectus, the investment objective of
each of the Funds is as follows:
<Table>
<Caption>
FUND INVESTMENT OBJECTIVE
- ---- --------------------
Berger IPT - Growth Fund Long-term capital appreciation
Berger IPT - Large Cap Growth Fund Capital appreciation
Berger IPT - Small Company Growth Fund Capital appreciation
Berger IPT - International Fund Long-term capital appreciation
Berger IPT - Large Cap Value Fund Capital appreciation
Berger IPT - Mid Cap Value Fund Capital appreciation
</Table>
The investment objectives of each of the Funds are considered
fundamental, meaning that they cannot be changed without an investor vote. There
can be no assurance that any of the Funds' investment objectives will be
realized.
Effective May 2001, the Trustees of the Berger IPT - Growth
and Income Fund approved a change in the name and non-fundamental investment
strategies of the Fund from that of a Growth and Income Fund to a Large Cap
Growth Fund, and in doing so eliminated the Fund's secondary investment
objective.
Each Fund has also adopted certain investment policies,
strategies, guidelines and procedures in pursuing its objective. These may be
changed without an investor vote. The principal policies and strategies used by
the Funds are described in the Prospectus.
In addition, each Fund has adopted certain fundamental and
non-fundamental restrictions on its investments and other activities, which are
listed. Fundamental restrictions may not be changed without the approval of (a)
67% or more of the voting securities of the Fund present at a meeting of
investors thereof if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy or (b) more than 50% of the
outstanding voting securities of the Fund. Non-fundamental restrictions may be
changed in the future by action of the directors or trustees without investor
vote.
BERGER IPT - GROWTH FUND AND BERGER IPT - LARGE CAP GROWTH FUND
The following fundamental restrictions apply to the Berger IPT
- - Growth Fund and the Berger IPT - Large Cap Growth Fund. The Funds may not:
1. Purchase the securities of any one issuer (except U.S.
Government securities) if immediately after and as a result of such purchase (a)
the value of the holdings of the Fund in the securities of such issuer exceeds
5% of the value of the Fund's total assets or (b) the Fund owns more than 10% of
the outstanding voting securities or of any class of securities of such issuer.
2. Purchase securities of any company with a record of less
than three years' continuous operation (including that of predecessors) if such
purchase would cause the Fund's investments in all such companies taken at cost
to exceed 5% of the value of the Fund's total assets.
3. Invest in any one industry more than 25% of the value of
its total assets at the time of such investment.
4. Make loans, except that the Fund may enter into repurchase
agreements and may lend portfolio securities in accordance with the Fund's
investment policies. The Fund does not, for this purpose, consider the purchase
of all or a portion of an issue of publicly distributed bonds, bank loan
participation agreements, bank
- 14 -
certificates of deposit, bankers' acceptances, debentures or other securities,
whether or not the purchase is made upon the original issuance of the
securities, to be the making of a loan.
5. Borrow in excess of 5% of the value of its total assets, or
pledge, mortgage, or hypothecate its assets taken at market value to an extent
greater than 10% of the Fund's total assets taken at cost (and no borrowing may
be undertaken except from banks as a temporary measure for extraordinary or
emergency purposes). This limitation shall not prohibit or restrict short sales
or deposits of assets to margin or guarantee positions in futures, options or
forward contracts, or the segregation of assets in connection with any of such
transactions.
6. Purchase or retain the securities of any issuer if those
officers and trustees of the Fund or its investment adviser owning individually
more than 1/2 of 1% of the securities of such issuer together own more than 5%
of the securities of such issuer.
7. Purchase the securities of any other investment company,
except by purchase in the open market involving no commission or profit to a
sponsor or dealer (other than the customary broker's commission).
8. Act as a securities underwriter (except to the extent the
Fund may be deemed an underwriter under the Securities Act of 1933 in disposing
of a security) or invest in real estate (although it may purchase shares of a
real estate investment trust), or invest in commodities or commodity contracts
except, only for the purpose of hedging, (a) financial futures transactions,
including futures contracts on securities, securities indices and foreign
currencies, and options on any such futures, (b) forward foreign currency
exchange contracts and other forward commitments and (c) securities index put or
call options.
9. Participate on a joint or joint and several basis in any
securities trading account.
10. Invest in companies for the purposes of exercising control
of management.
In applying the industry concentration investment restriction
(no. 3 above), the Funds use the industry groups used in the Data Monitor
Portfolio Monitoring System of William O'Neil & Co. Incorporated. Further, in
implementing that restriction, each Fund intends not to invest in any one
industry 25% or more of the value of its total assets at the time of such
investment.
The trustees have adopted additional non-fundamental
investment restrictions for the Berger IPT - Growth Fund and the Berger IPT -
Large Cap Growth Fund. These limitations may be changed by the trustees without
a shareholder vote. The non-fundamental investment restrictions include the
following:
1. Only for the purpose of hedging, the Fund may purchase and
sell financial futures, forward foreign currency exchange contracts and put and
call options, but no more than 5% of the Fund's net assets at the time of
purchase may be invested in initial margins for financial futures transactions
and premiums for options. The Fund may only write call options that are covered
and only up to 25% of the Fund's total assets.
2. The Fund may not purchase or sell securities on a
when-issued or delayed delivery basis, if as a result more than 5% of its total
assets taken at market value at the time of purchase would be invested in such
securities.
3. The Fund may not purchase any security, including any
repurchase agreement maturing in more than seven days, which is not readily
marketable, if more than 15% of the net assets of the Fund, taken at market
value at the time of purchase would be invested in such securities.
4. The Fund may not purchase securities on margin from a
broker or dealer, except that the Fund may obtain such short-term credits as may
be necessary for the clearance of transactions, and may not make short sales of
securities, except that the Fund may make short sales if, at the time of the
short sale, the Fund owns or has the right to acquire an equivalent kind and
amount of the security being sold short at no additional cost (i.e., short sales
"against the box"). This limitation shall not prohibit or restrict the Fund from
entering into futures, forwards and options contracts or from making margin
payments and other deposits in connection therewith.
- 15 -
5. The Berger IPT - Large Cap Growth Fund has adopted an
investment strategy pursuant to Rule 35d-1 of the 1940 Act, which requires that
at least 80% of the Fund's net assets (plus the amount of any borrowings for
investment purposes) be invested, under normal circumstances, in a strategy
suggested by the Fund's name. Investors will be given at least 60 days notice
prior to any change in the existing investment strategy of the Fund.
BERGER IPT - SMALL COMPANY GROWTH FUND, BERGER IPT - LARGE CAP VALUE FUND AND
BERGER IPT - MID CAP VALUE FUND
The following fundamental restrictions apply to the Berger IPT
- - Small Company Growth Fund, Berger IPT - Large Cap Value Fund and Berger IPT -
Mid Cap Value Fund. The Funds may not:
1. With respect to 75% of the Fund's total assets, purchase
the securities of any one issuer (except U.S. government securities) if
immediately after and as a result of such purchase (a) the value of the holdings
of the Fund in the securities of such issuer exceeds 5% of the value of the
Fund's total assets or (b) the Fund owns more than 10% of the outstanding voting
securities of such issuer.
2. Invest in any one industry (other than U.S. government
securities) 25% or more of the value of its total assets at the time of such
investment.
3. Borrow money, except from banks for temporary or emergency
purposes in amounts not to exceed 25% of the Fund's total assets (including the
amount borrowed) taken at market value, nor pledge, mortgage or hypothecate its
assets, except to secure permitted indebtedness and then only if such pledging,
mortgaging or hypothecating does not exceed 25% of the Fund's total assets taken
at market value. When borrowings exceed 5% of the Fund's total assets, the Fund
will not purchase portfolio securities.
4. Act as a securities underwriter (except to the extent the
Fund may be deemed an underwriter under the Securities Act of 1933 in disposing
of a security), issue senior securities (except to the extent permitted under
the Investment Company Act of 1940), invest in real estate (although it may
purchase shares of a real estate investment trust), or invest in commodities or
commodity contracts except financial futures transactions, futures contracts on
securities and securities indices and options on such futures, forward foreign
currency exchange contracts, forward commitments or securities index put or call
options.
5. Make loans, except that the Fund may enter into repurchase
agreements and may lend portfolio securities in accordance with the Fund's
investment policies. The Fund does not, for this purpose, consider the purchase
of all or a portion of an issue of publicly distributed bonds, bank loan
participation agreements, bank certificates of deposit, bankers' acceptances,
debentures or other securities, whether or not the purchase is made upon the
original issuance of the securities, to be the making of a loan.
In applying the industry concentration investment restriction
(no. 2 above), each Fund uses the industry groups used in the Data Monitor
Portfolio Monitoring System of William O'Neil & Co. Incorporated. Further, in
implementing that restriction, each Fund intends not to invest in any one
industry 25% or more of the value of its total assets at the time of such
investment.
The trustees have adopted additional non-fundamental
investment restrictions for the Berger IPT - Small Company Growth Fund, Berger
IPT - Large Cap Value Fund and Berger IPT - Mid Cap Value Fund. These
limitations may be changed by the trustees without an investor vote. The
non-fundamental investment restrictions include the following:
1. The Fund may not purchase securities on margin from a
broker or dealer, except that the Fund may obtain such short-term credits as may
be necessary for the clearance of transactions, and may not make short sales of
securities, except that the Fund may make short sales if, at the time of the
short sale, the Fund owns or has the right to acquire an equivalent kind and
amount of the security being sold short at no additional cost (i.e., short sales
"against the box"). This limitation shall not prohibit or restrict a Fund from
entering into futures, forwards and options contracts or from making margin
payments and other deposits in connection therewith.
- 16 -
2. The Fund may not purchase the securities of any other
investment company, except by purchase in the open market involving no
commission or profit to a sponsor or dealer (other than the customary broker's
commission).
3. The Fund may not invest in companies for the purposes of
exercising control of management.
4. The Fund may not purchase any security, including any
repurchase agreement maturing in more than seven days, which is not readily
marketable, if more than 15% of the net assets of the Fund, taken at market
value at the time of purchase would be invested in such securities.
5. Only for the purpose of hedging, the Fund may purchase and
sell financial futures, forward foreign currency exchange contracts and put and
call options, but no more than 5% of the Fund's net assets at the time of
purchase may be invested in initial margins for financial futures transactions
and premiums for options. The Fund may only write call options that are covered
and only up to 25% of the Fund's total assets.
6. The Fund may not purchase or sell securities on a
when-issued or delayed delivery basis, if as a result more than 5% of its total
assets taken at market value at the time of purchase would be invested in such
securities.
7. The Fund has adopted an investment strategy pursuant to
Rule 35d-1 of the 1940 Act, which requires that at least 80% of the Fund's net
assets (plus the amount of any borrowings for investment purposes) be invested,
under normal circumstances, in a strategy suggested by the Fund's name.
Investors will be given at least 60 days notice prior to any change in the
existing investment strategy of the Fund.
BERGER IPT - INTERNATIONAL FUND
The following fundamental restrictions apply to the Berger IPT
- - International Fund. The Fund may not:
1. With respect to 75% of the Fund's total assets, purchase
the securities of any one issuer (except U.S. government securities) if
immediately after and as a result of such purchase (a) the value of the holdings
of the Fund in the securities of such issuer exceeds 5% of the value of the
Fund's total assets or (b) the Fund owns more than 10% of the outstanding voting
securities of such issuer.
2. Invest in any one industry (other than U.S. government
securities) 25% or more of the value of its total assets at the time of such
investment.
3. Borrow money, except from banks for temporary or emergency
purposes in amounts not to exceed 25% of the Fund's total assets (including the
amount borrowed) taken at market value, nor pledge, mortgage or hypothecate its
assets, except to secure permitted indebtedness and then only if such pledging,
mortgaging or hypothecating does not exceed 25% of the Fund's total assets taken
at market value. When borrowings exceed 5% of the Fund's total assets, the Fund
will not purchase portfolio securities.
4. Act as a securities underwriter (except to the extent the
Fund may be deemed an underwriter under the Securities Act of 1933 in disposing
of a security), issue senior securities (except to the extent permitted under
the Investment Company Act of 1940), invest in real estate (although it may
purchase shares of a real estate investment trust), or invest in commodities or
commodity contracts except financial futures transactions, futures contracts on
securities and securities indices and options on such futures, forward foreign
currency exchange contracts, forward commitments or securities index put or call
options.
5. Make loans, except that the Fund may enter into repurchase
agreements and may lend portfolio securities in accordance with the Fund's
investment policies. The Fund does not, for this purpose, consider the purchase
of all or a portion of an issue of publicly distributed bonds, bank loan
participation agreements, bank
- 17 -
certificates of deposit, bankers' acceptances, debentures or other securities,
whether or not the purchase is made upon the original issuance of the
securities, to be the making of a loan.
In applying the industry concentration investment restriction
(no. 2 above), the Fund uses the industry groups designated by the Financial
Times World Index Service.
The trustees have adopted additional non-fundamental
investment restrictions for the Berger IPT - International Fund. These
limitations may be changed by the trustees without a shareholder vote. The
non-fundamental investment restrictions include the following:
1. The Fund may not purchase securities on margin from a
broker or dealer, except that the Fund may obtain such short-term credits as may
be necessary for the clearance of transactions, and may not make short sales of
securities. This limitation shall not prohibit or restrict the Fund from
entering into futures, forwards and options contracts or from making margin
payments and other deposits in connection therewith.
2. The Fund may not purchase the securities of any other
investment company, except by purchase in the open market involving no
commission or profit to a sponsor or dealer (other than the customary broker's
commission).
3. The Fund may not invest in companies for the purposes of
exercising control of management.
4. The Fund may not purchase any security, including any
repurchase agreement maturing in more than seven days, which is not readily
marketable, if more than 15% of the net assets of the Fund, taken at market
value at the time of purchase would be invested in such securities.
5. The Fund may not enter into any futures, forwards or
options, except that only for the purpose of hedging, the Fund may enter into
forward foreign currency exchange contracts with stated contract values of up to
the value of the Fund's assets.
6. The Fund may not purchase or sell securities on a
when-issued or delayed delivery basis, if as a result more than 5% of its net
assets taken at market value at the time of purchase would be invested in such
securities.
UNDERTAKINGS
On behalf of the Trust, an undertaking has been given to the
State of California Department of Insurance that limits borrowings of each Fund
(to the extent such borrowings are allowed by the Fund's investment policies) to
10% of the Fund's total assets, except that a Fund may borrow up to 25% of its
total assets when such borrowing is necessary to meet Fund redemptions.
In addition, the undertaking to the State of California
Department of Insurance requires each Fund when investing in foreign securities
(to the extent consistent with the Fund's investment policies) to invest in a
minimum of five different foreign countries, provided that this minimum may be
reduced to four when foreign country investments comprise less than 80% of the
Fund's assets, to three when less than 60% of such assets, to two when less than
40% of such assets, or to one when less than 20% of such assets. Additionally,
no more than 20% of a Fund's assets may be invested in securities of issuers
located in any one foreign country, except that a Fund may have an additional
15% of its assets in securities of issuers located in any one of the following
countries: Australia, Canada, France, Japan, the United Kingdom or Germany.
3. MANAGEMENT OF THE FUNDS
Each Fund is supervised by trustees who are responsible for
major decisions about the Funds' policies and overall Fund oversight. Each
Fund's board hires the companies that run day-to-day Fund operations, such as
the investment adviser, administrator, transfer agent and custodian.
- 18 -
The trustees and executive officers of the Funds are listed
below, together with information that includes their principal occupations
during the past five years and other principal business affiliations. The
directors or trustees of the Funds have adopted a director/trustee retirement
age of 75 years.
- 19 -
<Table>
<Caption>
POSITION(S)
HELD WITH
THE TRUST, NUMBER OF
TERM OF FUNDS IN
OFFICE AND FUND
LENGTH OF PRINCIPAL OCCUPATIONS COMPLEX
NAME, ADDRESS TIME DURING THE PAST OVERSEEN OTHER DIRECTORSHIPS
AND AGE SERVED 5 YEARS BY TRUSTEE HELD BY TRUSTEE
- ------------- ---------- --------------------- ---------- -------------------
INDEPENDENT TRUSTEES
--------------------
Michael Owen Chairman of Dean of Zayed University (since 22 n/a
210 University Blvd. the Board September 2000). Formerly
Suite 800 self-employed as a financial and
Denver, CO 80206 management consultant, and in real
estate development (from June 1999
DOB: 1937 to September 2000). Dean (from 1993
to June 1999), and a member of the
Finance faculty (from 1989 to
1993), of the College of Business,
Montana State University. Formerly,
Chairman and Chief Executive
Officer of Royal Gold, Inc.
(mining) (1976 to 1989).
Dennis E. Baldwin Trustee President, Baldwin Financial 22 n/a
210 University Blvd. Counseling (since July 1991).
Suite 800 Formerly, Vice President and Denver
Denver, CO 80206 Office Manager of Merrill Lynch
Capital Markets (1978 to 1990).
DOB: 1928
Katherine A. Cattanach, CFA Vice Chair of Managing Principal (since September 22 n/a
210 University Blvd. the Board 1987), Sovereign Financial
Suite 800 Services, Inc. (investment
Denver, CO 80206 consulting firm). Executive Vice
President (1981 to 1988), Captiva
DOB: 1945 Corporation, Denver, Colorado
(private investment management
firm). Ph.D. in Finance (Arizona
State University).
Paul R. Knapp Trustee Executive Officer of DST Systems, 22 Director and Vice
210 University Blvd. Inc. ("DST"), a publicly traded President (February
Suite 800 information and transaction 1998 to November 2000)
Denver, CO 80206 processing company, which acts as of West Side
the Funds' transfer agent (since Investments, Inc.
DOB: 1945 October 2000). DST is 33% owned by (investments), a
Stilwell Management Inc., which wholly owned
owns approximately 89.5% of Berger subsidiary of DST
Financial Group LLC. Mr. Knapp owns Systems, Inc.
common shares and options
convertible into common shares of
DST Systems which, in the aggregate
and assuming exercise of the
options, would result in his owning
less than 1/2 of 1% of DST System's
common shares. Mr. Knapp is also
President of Vermont Western
Assurance, Inc., a wholly owned
subsidiary of DST Systems (since
December 2000). President, Chief
Executive Officer and a director
(September 1997 to October 2000) of
DST Catalyst, Inc., an
international financial markets
consulting, software and computer
services company, (now DST
International, a subsidiary of
DST). Previously (1991 to October
2000), Chairman, President, Chief
Executive Officer and a director of
Catalyst Institute (international
public policy research organization
focused primarily on financial
markets and institutions); also
(1991 to September 1997),
</Table>
- 20 -
<Table>
Chairman, President, Chief
Executive Officer and a director of
Catalyst Consulting (international
financial institutions business
consulting firm).
Harry T. Lewis, Jr. Trustee Lewis Investments (since June 1988) 22 Director, J.D.
210 University Blvd. (self-employed private investor). Edwards & Co. (1995
Suite 800 Formerly, Senior Vice President, to March 2002);
Denver, CO 80206 Rocky Mountain Region, of Dain Director, National
Bosworth Incorporated and member of Fuel Corporation
DOB: 1933 that firm's Management Committee (oil & gas
(1981 to 1988). production);
Advisory Director,
Otologics, LLC,
(implantable hearing
aid) (since 1999);
Member of Community
Advisory Board,
Wells Fargo
Bank-Denver
William Sinclaire Trustee President (since January 1998), 22 n/a
210 University Blvd. Santa Clara LLC (privately owned
Suite 800 agricultural company). President
Denver, CO 80206 (January 1963 to January 1998),
Sinclaire Cattle Co. (privately
DOB: 1928 owned agricultural company).
Albert C. Yates Trustee President (since 1990), Chancellor 22 Member, Board of
210 University Blvd. and Professor of Directors, Adolph
Suite 800 Chemistry-Department of Chemistry, Coors Company (brewing
Denver, CO 80206 of Colorado State University. company) (since 1998);
Formerly Executive Vice President Member, Board of
DOB: 1941 and Provost (1983 to 1990), Directors, Dominion
Academic Vice President and Provos Industrial Capital
(1981 to 1983) and Professor of Bank (1999 to 2000);
Chemistry (1981 to 1990) of Member, Board of
Washington State University. Vice Directors, Centennial
President and University Dean for Bank of the West
Graduate Studies and Research and (since 2001)
Professor of Chemistry of the
University of Cincinnati (1977 to
1981).
</Table>
- 21 -
<Table>
<Caption>
POSITION(s) NUMBER OF
HELD WITH THE FUNDS IN
TRUST, TERM OF FUND
OFFICE AND COMPLEX OTHER
NAME, ADDRESS LENGTH OF PRINCIPAL OCCUPATIONS OVERSEEN DIRECTORSHIPS
AND AGE TIME SERVED DURING THE PAST 5 YEARS BY TRUSTEE HELD BY TRUSTEE
- ------------- ------------ ----------------------- ----------- ---------------
INTERESTED TRUSTEES AND OFFICERS OF THE TRUST
- --------------------
Jack R. Thompson* President and President and a director since May 22 Audit Committee Member
210 University Blvd. Trustee of 1999 (Executive Vice President from of the Public
Suite 800 the Trust February 1999 to May 1999) of Employees' Retirement
Denver, CO 80206 (since May Berger Growth Fund and Berger Large Association of
1999) Cap Growth Fund. President and a Colorado (pension plan)
DOB: 1949 trustee since May 1999 (Executive (from November 1997 to
Vice President from February 1999 December 2001).
to May 1999) of Berger Investment
Portfolio Trust, Berger
Institutional Products Trust,
Berger Worldwide Funds Trust,
Berger Worldwide Portfolios Trust
and Berger Omni Investment Trust.
President and Chief Executive
Officer (since June 1999)
(Executive Vice President from
February 1999 to June 1999) of
Berger Financial Group LLC
(formerly Berger LLC). Director,
President and Chief Executive
Office of Stilwell Management, Inc.
(since September 1999). President
and Chief Executive Officer of
Berger/Bay Isle LLC (since May
1999). Self-employed as a
consultant from July 1995 through
February 1999. Director of Wasatch
Advisors (investment management)
from February 1997 to February
1999.
</Table>
* Mr. Thompson is considered an interested person of the Trust due to his
positions held at Berger Financial Group LLC (or its affiliated companies)
<Table>
<Caption>
POSITION(s) HELD WITH THE TRUST,
NAME, ADDRESS TERM OF OFFICE AND LENGTH OF
AND AGE TIME SERVED PRINCIPAL OCCUPATIONS DURING THE PAST 5 YEARS
- ------------- -------------------------------- ---------------------------------------------
OFFICERS OF THE TRUST
- ---------------------
Jay W. Tracey, CFA* Executive Vice President of the Executive Vice President of the Berger Funds (since August
210 University Blvd. Trust (since Aug. 2000) and 2000). Executive Vice President and Chief Investment
Suite 800 Portfolio Manager (since June Officer of Berger Financial Group LLC (since June 2000).
Denver, CO 80206 2000) Portfolio manager of the Berger Growth Fund (since August
2000); team portfolio manager of the Berger Select Fund
DOB: 1954 (since June 2000) and the Berger Large Cap Growth Fund
(from January 2001 through December 2001). Team portfolio
manager (since December 2001) of the Berger Mid Cap Growth
Fund and team interim portfolio manager (since December
2001) of the Berger New Generation Fund. Formerly, Vice
President and portfolio manager at Oppenheimer Funds, Inc.
(September 1994 to May 2000).
Paul A. LaRocco, CFA* Vice President of the Trust Vice President (since February 2001) and portfolio manager
210 University Blvd. (since Feb. 2001) and Portfolio (since January 2001) of the Berger Small Company Growth
Suite 800 Manager (since Jan. 2001) Fund. Vice President (since February 2001) and team
Denver, CO 80206 portfolio manager (since January 2001) of the Berger
Select Fund. Team portfolio manager (since December 2001)
of the Berger Mid Cap Growth Fund and interim team
portfolio manager (since December 2001) of the Berger New
</Table>
- 22 -
<Table>
DOB: 1958 Generation Fund. Vice President of Berger Financial Group
LLC (since December 2000). Formerly, portfolio manager
with Montgomery Asset Management (from January 2000
through December 2000); senior portfolio manager with
Founders Asset Management (from March 1998 through
December 1999); and portfolio manager with
OppenheimerFunds (from January 1993 through March 1998).
Steven L. Fossel, CFA* Vice President of the Trust Vice President (since August 2000) and portfolio manager
210 University Blvd. (since Aug. 2000) and Portfolio (since June 2000) of the Berger Balanced Fund. Vice
Suite 800 Manager (since Jun. 2000) President (since August 2000) and team portfolio manager
Denver, CO 80206 (since June 2000) of the Berger Select Fund. Vice
President (since February 2001) and portfolio manager
DOB: 1968 (since December 2001) of the Berger Large Cap Growth Fund;
and team portfolio manager (from January 2001 through
December 2001) of the Berger Large Cap Growth Fund.
Interim portfolio manager (from June 2000 to January 2001)
of the Berger Large Cap Growth Fund. Vice President and
portfolio manager of Berger Financial Group LLC (since
June 2000); senior equity analyst with Berger Financial
Group LLC (from March 1998 to June 2000). Formerly,
analyst and assistant portfolio manager with Salomon
Brothers Asset Management (from August 1992 to February
1998).
Janice M. Teague* Vice President of the Trust Vice President (since November 1998) and Assistant
210 University Blvd. (since November 1998) and Secretary (since February 2000 and previously from
Suite 800 Assistant Secretary (since September 1996 to November 1998) and Secretary (November
Denver, CO 80206 February 2000) 1998 to February 2000) of the Berger Funds. Vice President
(since October 1997), Secretary (since November 1998) and
DOB: 1954 Assistant Secretary (October 1996 through November 1998)
with Berger Financial Group LLC. Vice President and
Secretary with Berger Distributors LLC (since August
1998). Vice President and Secretary of Bay Isle Financial
LLC (since January 2002). Formerly, self-employed as a
business consultant (from June 1995 through September
1996).
Andrew J. Iseman* Vice President of the Trust Vice President of the Berger Funds (since March 2001).
210 University Blvd. (since Mar. 2001) Vice President (since September 1999) and Chief Operating
Suite 800 Officer (since November 2000) of Berger Financial Group
Denver, CO 80206 LLC. Manager (since September 1999) and Director (June
1999 to September 1999) of Berger Distributors LLC. Vice
DOB: 1964 President-Operations (February 1999 to November 2000) of
Berger Financial Group LLC. Associate (November 1998 to
February 1999) with DeRemer & Associates (a consulting
firm). Vice President-Operations (February 1997 to
November 1998) and Director of Research and Development
(May 1996 to February 1997) of Berger Financial Group LLC.
Anthony R. Bosch* Vice President of the Trust Vice President of the Berger Funds (since February 2000).
210 University Blvd. (since Feb. 2000) Vice President (since June 1999) and Chief Legal Officer
Suite 800 (since August 2000) with Berger Financial Group LLC. Vice
Denver, CO 80206 President and Chief Compliance Officer with Berger
Distributors LLC (since September 2001). Vice President of
DOB: 1965 Bay Isle Financial LLC (since January 2002). Formerly,
Assistant Vice President of Federated Investors, Inc.
(December 1996 through May 1999), and Attorney with the
U.S. Securities and Exchange Commission (June 1990 through
December 1996).
Brian S. Ferrie* Vice President of the Trust Vice President of the Berger Funds (since November 1998).
210 University Blvd. (since Nov. 1998) Vice President (since February 1997), Treasurer and Chief
Suite 800 Financial Officer (since March 2001) and Chief Compliance
Denver, CO 80206 Officer (from August 1994 to March 2001) with Berger
Financial Group LLC. Vice President (since May 1996),
DOB: 1958 Treasurer and Chief Financial Officer (since March 2001)
and Chief Compliance Officer (from May 1996 to September
2001) with Berger Distributors LLC.
</Table>
- 23 -
<Table>
John A. Paganelli* Vice President (since Nov. 1998) Vice President (since November 1998), Treasurer (since
210 University Blvd. and Treasurer (since Mar. 2001) March 2001) and Assistant Treasurer (November 1998 to
Suite 800 of the Trust March 2001) of the Berger Funds. Vice President (since
Denver, CO 80206 November 1998) and Manager of Accounting (January 1997
through November 1998) with Berger Financial Group LLC.
DOB: 1967 Formerly, Manager of Accounting (December 1994 through
October 1996) and Senior Accountant (November 1991 through
December 1994) with Palmeri Fund Administrators, Inc.
Sue Vreeland* Secretary of the Trust (since Secretary of the Berger Funds (since February 2000).
210 University Blvd. Feb. 2000) Assistant Secretary of Berger Financial Group LLC and
Suite 800 Berger Distributors LLC (since June 1999) and Bay Isle
Denver, CO 80206 Financial LLC (since December 2001). Formerly, Assistant
Secretary of the Janus Funds (from March 1994 to May
1999), Assistant Secretary of Janus Distributors, Inc.
(from June 1995 to May 1997) and Manager of Fund
Administration for Janus Capital Corporation (from February
1992 to May 1999).
DOB: 1948
David C. Price, CPA* Assistant Vice President of the Assistant Vice President (since March 2001) of the Berger
210 University Blvd. Trust (since Mar. 2001) Funds. Assistant Vice President-Compliance (since March
Suite 800 2001) with Berger Financial Group LLC. Formerly, Senior
Denver, CO 80206 Auditor (July 1996 through August 1998) and Auditor
(August 1993 through June 1996) with
DOB: 1969 PricewaterhouseCoopers LLP, a public accounting firm.
Lance V. Campbell, CFA, Assistant Treasurer of the Trust Assistant Treasurer (since March 2001) of the Berger
CPA* (since Mar. 2001) Funds. Assistant Vice President (since January 2002) and
210 University Blvd. Manager of Investment Accounting (August 1999 through
Suite 800 January 2002) with Berger Financial Group LLC. Formerly,
Denver, CO 80206 Senior Auditor (December 1998 through August 1999) and
Auditor (August 1997 through December 1998) with
PricewaterhouseCoopers LLP, a public accounting firm, and
Senior Fund Accountant (January 1996 through July 1997)
with INVESCO Funds Group.
DOB: 1972
</Table>
* Interested person (as defined in the Investment Company Act of 1940) of one
or more of the Funds and/or of the Funds' adviser or sub-adviser.
The Board of Trustees has five standing committees that each perform specialized
functions: an Audit Committee, Nominating Committee, Compensation Committee,
Pricing Committee, and Brokerage Committee. Information about each of these
committees is provided in the following table:
<Table>
<Caption>
NUMBER OF MEETINGS
HELD DURING LAST
COMMITTEE FUNCTIONS MEMBERS FISCAL YEAR
- --------- --------- ------- ------------------
Audit Committee Reviews the financial reporting process, Michael Owen (Chair)
the system of internal control, the Katherine A. Cattanach (Vice Chair)
audit process, and the Trust's process Dennis E. Baldwin 4
for monitoring compliance with Paul R. Knapp
investment restrictions and applicable Harry T. Lewis, Jr.
laws as well as the Trust's Code of William Sinclaire
Ethics. Albert C. Yates
</Table>
- 24 -
<Table>
Nominating Committee Identifies and recommends individuals Katherine A. Cattanach (Chair)
for Trustee membership. The committee Michael Owen
does not consider nominees recommended Dennis E. Baldwin 1
by securityholders. Harry T. Lewis, Jr.
William Sinclaire
Albert C. Yates
Compensation Committee Determines and reviews the level of Katherine A. Cattanach (Chair)
compensation for Independent William Sinclaire 1
Trustees/Directors. Albert C. Yates
Pricing Committee Determines the fair value of restricted Harry T. Lewis, Jr. (Chair)
securities and other securities for Dennis E. Baldwin 5
which market quotations are not readily Jack R. Thompson
available pursuant to procedures adopted Albert C. Yates
by the Trustees.
Brokerage Committee Reviews and makes recommendations Dennis E. Baldwin (Chair)
regarding matters related to the Trust's Katherine A. Cattanach 3
use of brokerage commissions and Harry T. Lewis, Jr.
placement of portfolio transactions. Jack R. Thompson
</Table>
The table below gives the dollar range of shares of each Fund, as well as the
aggregate dollar range of shares of all funds advised and sponsored by Berger
Financial Group LLC (the "Berger Funds"), owned by each Trustee as of December
31, 2001.
<Table>
<Caption>
AGGREGATE DOLLAR RANGE OF SECURITIES
IN ALL REGISTERED INVESTMENT
COMPANIES OVERSEEN BY THE TRUSTEE
NAME OF TRUSTEE DOLLAR RANGE OF SECURITIES IN THE FUNDS IN BERGER FUNDS
- --------------- --------------------------------------- ------------------------------------
INDEPENDENT TRUSTEES
- --------------------
Michael Owen Berger Growth Fund $1 - $10,000 Over $100,000
Berger Large Cap Growth Fund $1 - $10,000
Berger Mid Cap Growth Fund $10,001 - $50,000
Berger Mid Cap Value Fund $10,001 - $50,000
Berger Select Fund $10,001 - $50,000
Berger Balanced Fund $10,001 - $50,000
Berger Small Company Growth Fund $10,001 - $50,000
Berger New Generation Fund $10,001 - $50,000
Berger Information Technology Fund $1 - $10,000
Berger International Fund $1 - $10,000
Berger Small Cap Value Fund $50,001 - $100,000
</Table>
- 25 -
<Table>
Dennis E. Baldwin Berger Growth Fund $10,001 - $50,000 Over $100,000
Berger Large Cap Growth Fund $10,001 - $50,000
Berger Mid Cap Growth Fund $10,001 - $50,000
Berger Balanced Fund $10,001 - $50,000
Berger Small Company Growth Fund $10,001 - $50,000
Berger New Generation Fund $1 - $10,000
Berger Information Technology Fund $10,001 - $50,000
Berger International Fund $10,001 - $50,000
Berger Small Cap Value Fund $10,001 - $50,000
Katherine A. Cattanach Berger Growth Fund $10,001 - $50,000 Over $100,000
Berger Mid Cap Growth Fund $10,001 - $50,000
Berger Mid Cap Value Fund $50,001 - $100,000
Berger Select Fund $10,001 - $50,000
Berger New Generation Fund $10,001 - $50,000
Berger Information Technology Fund $10,001 - $50,000
Berger International Fund $10,001 - $50,000
Berger Small Cap Value Fund $50,001 - $100,000
Paul R. Knapp Berger Mid Cap Value Fund $50,001 - $100,000 Over $100,000
Berger Information Technology Fund $10,001 - $50,000
Berger Large Cap Value Fund $10,001 - $50,000
Berger Small Cap Value Fund $50,001 - $100,000
Harry T. Lewis, Jr. Berger Growth Fund $50,001 - $100,000 Over $100,000
Berger Large Cap Growth Fund $10,001 - $50,000
Berger Mid Cap Growth Fund $10,001 - $50,000
Berger Mid Cap Value Fund Over $100,000
Berger Select Fund $10,001 - $50,000
Berger Balanced Fund Over $100,000
Berger Small Company Growth Fund Over $100,000
Berger New Generation Fund $50,001 - $100,000
Berger Information Technology Fund $10,001 - $50,000
Berger Large Cap Value Fund $10,001 - $50,000
Berger International Fund $50,001 - $100,000
Berger Small Cap Value Fund $50,001 - $100,000
William Sinclaire Berger Growth Fund $50,001 - $100,000 Over $100,000
Berger Large Cap Growth Fund $10,001 - $50,000
Berger Mid Cap Value Fund $1 - $10,000
Berger Balanced Fund $1 - $10,000
Berger Small Company Growth Fund $10,001 - $50,000
Berger New Generation Fund $1 - $10,000
Berger Information Technology Fund $1 - $10,000
Berger International Fund $1 - $10,000
Berger Small Cap Value Fund $10,001 - $50,000
</Table>
- 26 -
<Table>
Albert C. Yates Berger Mid Cap Growth Fund $1 - $10,000 $10,001 - $50,000
Berger Mid Cap Value Fund $1 - $10,000
Berger New Generation Fund $1 - $10,000
Berger Information Technology Fund $1 - $10,000
Berger International Fund $1 - $10,000
INTERESTED TRUSTEES AND OFFICERS OF THE TRUST
Jack R. Thompson Berger Growth Fund Over $100,000 Over $100,000
Berger Large Cap Growth Fund $1 - $10,000
Berger Mid Cap Growth Fund $10,001 - $50,000
Berger Select Fund $50,001 - $100,000
Berger Small Company Growth Fund $1 - $10,000
Berger Information Technology Fund $1 - $10,000
Berger Small Cap Value Fund $1 - $10,000
</Table>
APPROVAL OF INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
The Funds' investment advisory and sub-advisory agreements
must be approved by vote of the Funds' trustees, including the vote of the
majority of trustees who are not parties to the agreements or "interested
persons" of any parties (the "Independent Trustees") cast in person at a meeting
called for such purpose. After the initial term of the agreements, the
continuation of each Fund's investment advisory and sub-advisory agreements must
be specifically approved at least annually (1) by the vote of the trustees or by
a vote of the shareholders of the Funds, and (2) by the vote of a majority of
the Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval. Each year, the Board of Trustees calls and holds a
meeting to decide whether to renew the investment advisory and sub-advisory
agreements. In preparation for these meetings, the trustees request and review a
wide variety of materials, including materials provided by the Berger Funds'
investment adviser, and, in the case of continuance of such agreements,
extensive data provided by third parties. In addition, the Independent Trustees
receive advice from counsel to the Independent Trustees.
At the March 2002 meeting, the trustees, including a majority
of Independent Trustees, approved the Funds' investment advisory and
sub-advisory agreements based on its consideration and evaluation of a variety
of specific factors such as: (1) the nature and quality of the investment
advisory and other services to be provided to the Funds under the agreements,
including the adviser's and sub-adviser's personnel, experience and compliance
program and the resources and investment process provided by the advisers, (2)
the Funds' expenses under the agreements and how those expenses compared to
those of other comparable mutual funds; and (3) the profitability of the
adviser.
In its deliberation, the Board did not identify any particular
information that was all-important or controlling. Based on the Board's
deliberation and its evaluation of the information described above, the Board,
including all of the Independent Trustees, unanimously approved the investment
advisory and sub-advisory agreements and concluded that the compensation under
the agreements is fair and reasonable in light of such services and expenses and
such other matters as the trustees have considered to be relevant in the
exercise of their reasonable judgment.
- 27 -
TRUSTEE COMPENSATION
The officers of the Funds received no compensation from the
Funds during the fiscal year ended December 31, 2001. However, trustees of the
Funds who are not "interested persons" of the Funds or its advisers or
sub-advisers are compensated for their services according to a fee schedule,
allocated among the Berger Funds. Neither the officers of the Funds nor the
trustees receive any form of pension or retirement benefit compensation from the
Funds.
The following table sets forth information regarding
compensation paid or accrued for each director or trustee of the Funds and the
other Berger Funds:
<Table>
<Caption>
NAME AND POSITION WITH
BERGER FUNDS AGGREGATE COMPENSATION FROM
==============================================================================================================================
BERGER ALL BERGER
BERGER BERGER IPT FUNDS(2)
BERGER IPT - IPT - SMALL LARGE BERGER IPT FISCAL YEAR
IPT - LARGE CAP COMPANY BERGER IPT - CAP - MID CAP ENDING
GROWTH GROWTH GROWTH INTERNATIONAL VALUE VALUE DECEMBER 31,
FUND FUND FUND FUND FUND(1) FUND(1) 2001
------- --------- ----------- ------------- ------- ----------- ------------
Dennis E. Baldwin(3) $ 98 $ 463 $ 684 $ 63 $ 146 $ 146 $65,000
Louis Bindner(6) $ 18 $ 88 $ 128 $ 10 $ 0 $ 0 $10,000
Katherine A. Cattanach(3) $ 100 $ 472 $ 699 $ 65 $ 146 $ 146 $66,667
Paul R. Knapp(3) $ 91 $ 427 $ 631 $ 58 $ 135 $ 135 $60,000
Harry T. Lewis(3) $ 91 $ 427 $ 631 $ 58 $ 135 $ 135 $60,000
Michael Owen(3) $ 113 $ 534 $ 789 $ 73 $ 169 $ 169 $75,000
William Sinclaire(3) $ 91 $ 427 $ 631 $ 58 $ 135 $ 135 $60,000
Albert C. Yates(3),(7) $ 72 $ 339 $ 504 $ 48 $ 135 $ 135 $50,000
Jack R. Thompson $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
(3),(4),(5)
==============================================================================================================================
</Table>
(1) The Fund was not added as a series of the Trust until December 31, 2001.
Figures are estimates for the first year of operations of the Fund as a
series of the Trust.
(2) For the period covered by this table, the Berger Funds included the Berger
Growth Fund, the Berger Large Cap Growth Fund, the Berger Investment
Portfolio Trust (nine series), the Berger Institutional Products Trust
(seven series), the Berger Worldwide Portfolios Trust (one series), the
Berger Worldwide Funds Trust (three series) and the Berger Omni Investment
Trust (one series). Aggregate compensation figures do not include
first-year estimates for any Fund in existence for less than one year. Of
the aggregate amounts shown for each director/trustee, the following
amounts were deferred under applicable deferred compensation plans: Dennis
E. Baldwin $39,524; Katherine A. Cattanach $66,667; William Sinclaire
$60,000; Albert C. Yates $25,000.
(3) Director of Berger Growth Fund and Berger Large Cap Growth Fund. Trustee of
Berger Investment Portfolio Trust, Berger Institutional Products Trust,
Berger Worldwide Portfolios Trust, Berger Worldwide Funds Trust and Berger
Omni Investment Trust.
(4) Interested person of Berger Financial Group LLC.
(5) President of Berger Growth Fund, Berger Large Cap Growth Fund, Berger
Investment Portfolio Trust, Berger Institutional Products Trust, Berger
Worldwide Portfolios Trust, Berger Worldwide Funds Trust and Berger Omni
Investment Trust.
(6) Resigned effective March 1, 2001.
(7) Appointed Trustee effective March 1, 2001.
Trustees may elect to defer receipt of all or a portion of
their fees pursuant to a fee deferral plan adopted by the Berger Institutional
Products Trust. Under the plan, deferred fees are credited to an account and
- 28 -
adjusted thereafter to reflect the investment experience of whichever of the
Berger Funds (or approved money market funds) is designated by the trustees for
this purpose. Pursuant to an SEC exemptive order, the Trust is permitted to
purchase shares of the designated Fund in order to offset its obligation to the
trustees participating in the plan. Purchases made pursuant to the plan are
excepted from any otherwise applicable investment restriction limiting the
purchase of securities of any other investment company. The Trust's obligation
to make payments of deferred fees under the plan is a general obligation of the
Trust.
As of March 31, 2002, the officers and trustees of the Funds
as a group owned of record or beneficially no shares of the Funds.
The Trust, the Funds' investment adviser and principal
underwriter have adopted Codes of Ethics under Rule 17j-1 of the Investment
Company Act. The Codes of Ethics permit personnel subject to the Codes to invest
in securities, including securities that may be purchased or held by the Funds
in certain circumstances. The Codes of Ethics are described fully under
Restrictions on Personal Trading in Section 4 of this SAI.
4. INVESTMENT ADVISER AND SUB-ADVISER
BERGER FINANCIAL GROUP LLC - INVESTMENT ADVISER
Berger Financial Group LLC ("BFG") (formerly Berger LLC), 210
University Boulevard, Suite 800, Denver, Colorado 80206, is the investment
adviser to the Funds. BFG is responsible for managing the investment operations
of the Funds and the composition of its investment portfolios. BFG also acts as
the Funds' administrator and is responsible for such functions as monitoring
compliance with all applicable federal and state laws.
BFG is a Nevada Limited Liability Company, and has been in the
investment advisory business since 1974. It serves as investment adviser or
sub-adviser to mutual funds and institutional investors and had assets under
management of approximately $8.7 billion as of December 31, 2001. BFG is a
subsidiary of Stilwell Management Inc. ("Stilwell"), which owns approximately
89.5% of BFG, and is an indirect subsidiary of Stilwell Financial Inc.
("Stilwell Financial"). Stilwell also owns approximately 33% of the outstanding
shares of DST Systems, Inc. ("DST"), a publicly traded information and
transaction processing company that acts as the Funds' transfer agent. DST, in
turn, owns 100% of DST Securities, Inc. ("DSTS"), a registered broker-dealer,
which may execute portfolio trades for the Funds.
BANK OF IRELAND ASSET MANAGEMENT (U.S.) LIMITED - SUB-ADVISER
As permitted in its Investment Advisory Agreement with the
Portfolio, the adviser has delegated day-to-day portfolio management
responsibility to Bank of Ireland Asset Management (U.S.) Limited (the
"sub-adviser" or "BIAM"). As sub-adviser for the Berger IPT - International
Fund, BIAM manages the investments in the Portfolio and determines what
securities and other investments will be purchased, retained, sold or loaned,
consistent with the investment objective and policies established by the
trustees of Worldwide Portfolios. BIAM's main offices are at 26 Fitzwilliam
Place, Dublin 2, Ireland. BIAM maintains a representative office at 75 Holly
Hill Lane, Greenwich CT 06830. BIAM is an indirect wholly owned subsidiary of
Bank of Ireland, a publicly traded, diversified financial services group with
business operations worldwide. Bank of Ireland provides investment management
services through a network of related companies, including BIAM, which serves
primarily institutional clients in the United States and Canada. As of December
31, 2001, Bank of Ireland and its affiliates managed $47.7 billion in assets for
clients worldwide.
Bank of Ireland or its affiliates may have deposit, loan or
other commercial or investment banking relationships with the issuers of
securities which may be purchased by the Portfolio, including outstanding loans
to such issuers which could be repaid in whole or in part with the proceeds of
securities purchased by the Portfolio. Federal law prohibits BIAM, in making
investment decisions, from using material non-public information in its
possession or in the possession of any of its affiliates. In addition, in making
investment decisions for the Portfolio, BIAM will not take into consideration
whether an issuer of securities proposed for purchase or sale by the Portfolio
is a customer of Bank of Ireland or its affiliates.
- 29 -
BAY ISLE FINANCIAL LLC - SUB-ADVISER
Bay Isle Financial LLC ("Bay Isle") (formerly Bay Isle
Financial Corporation), 475 14th Street, Suite 550, Oakland, California 94612,
is the investment sub-adviser for the Berger IPT - Large Cap Value Fund. Bay
Isle is also the investment sub-adviser to the Berger Large Cap Value Fund. As
sub-adviser, Bay Isle provides day-to-day management of the Fund's investment
operations. Bay Isle has been in the investment advisory business since 1987.
Bay Isle serves as investment adviser or sub-adviser to mutual funds,
institutional investors and individual separate accounts. As sub-adviser, Bay
Isle provides day-to-day management of the Fund's investment operations.
Effective December 31, 2001, BFG acquired all of the outstanding shares of Bay
Isle. Bay Isle is a wholly owned subsidiary of BFG.
PERKINS, WOLF, MCDONNELL & COMPANY - SUB-ADVISER
Perkins, Wolf, McDonnell & Company ("PWM"), 310 S. Michigan
Avenue, Suite 2600, Chicago, Illinois 60604, has been engaged as the investment
sub-adviser for the Berger IPT - Mid Cap Value Fund. Additionally, PWM has been
the investment sub-adviser to the Berger Mid Cap Value Fund since it commenced
operations in August 1998. PWM was organized in 1980 under the name Mac-Per-Wolf
Co. to operate as a securities broker-dealer. In September 1983, it changed its
name to Perkins, Wolf, McDonnell & Company. PWM is a member of the National
Association of Securities Dealers, Inc. (the "NASD") and, in 1984, became
registered as an investment adviser with the SEC.
Thomas M. Perkins is the lead investment manager for the
Berger IPT - Mid Cap Value Fund. As lead manager, Thomas Perkins is responsible
for the daily decisions on security selection for the Fund's portfolio.
Additionally, Thomas Perkins has been the lead investment manager for the Berger
Mid Cap Value Fund since its inception in August 1998. Robert H. Perkins,
brother of Thomas Perkins, will also serve as investment manager of the Berger
IPT - Mid Cap Value Fund. Robert Perkins has also served as investment manager
of the Berger Mid Cap Value Fund since its inception. Robert Perkins has been an
investment manager since 1970 and serves as President and a director of PWM.
Thomas Perkins has been an investment manager since 1974 and joined PWM as a
portfolio manager in 1998. Robert Perkins owns 46% of PWM. Gregory E. Wolf owns
21% of PWM and serves as its Treasurer and a director. Tom Perkins owns 12% of
PWM.
INVESTMENT ADVISORY AND SUB-ADVISORY AGREEMENTS
Under the Investment Advisory Agreements between each Fund and
its adviser, the adviser is generally responsible for furnishing continuous
advice and making investment decisions as to the acquisition, holding or
disposition of securities or other assets which each Fund may own or contemplate
acquiring from time to time. Each Investment Advisory Agreement provides that
the investment adviser shall not be liable for any error of judgment or mistake
of law or for any loss arising out of any investment or for any act or omission
taken with respect to the Fund, except for willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties thereunder and except to the extent
otherwise provided by law.
Under the Agreements, the adviser is compensated for its
services by the payment of a fee at an annual rate, calculated as a percentage
of the average daily net assets of the Fund. The following schedule reflects the
advisory fees charged to the Funds for the fiscal year ended December 31, 2001:
- 30 -
<Table>
<Caption>
FUND ADVISER INVESTMENT ADVISORY FEE
---- ------- -----------------------
Berger IPT - Growth Fund BFG 0.75%(1)
Berger IPT - Large Cap Growth Fund BFG 0.75%(1)
Berger IPT - Small Company Growth Fund BFG 0.85%(1)
Berger IPT - International Fund BFG 0.85%(1)
Berger IPT - Large Cap Value Fund BFG 0.00%(2)
Berger IPT - Mid Cap Value Fund BFG 0.00%(2)
</Table>
(1) Under a written contract, the Fund's investment adviser waives its fee and
reimburses the Fund to the extent that, at any time during the life of the
Fund, the Fund's annual operating expenses exceed 1.00% in the case of the
Berger IPT - Growth Fund and the Berger IPT - Large Cap Growth Fund, 1.15%
in the case of the Berger IPT - Small Company Growth Fund and 1.20% in the
case of the Berger IPT - International Fund. The contract may not be
terminated or amended except by a vote of the Fund's Board of Trustees.
(2) The Fund paid no investment advisory fee since it was not added as a series
of the Trust until December 31, 2001.
Investment advisory fees are charged according to the following schedule:
<Table>
<Caption>
FUND AVERAGE DAILY NET ASSETS ANNUAL RATE
---- ------------------------ -----------
Berger IPT - Growth Fund First $500 million .75%
Berger IPT - Large Cap Growth Fund Next $500 million .70%
Berger IPT - Large Cap Value Fund Over $1 billion .65%
Berger IPT - Mid Cap Value Fund
Berger IPT - Small Company Growth Fund First $500 million .85%
Berger IPT - International Fund Next $500 million .80%
Over $1 billion .75%
</Table>
Each Fund's current Investment Advisory Agreement will
continue in effect until the last day of April 2003, and thereafter from year to
year if such continuation is specifically approved at least annually by the
trustees or by vote of a majority of the outstanding shares of the Fund and in
either case by vote of a majority of the trustees who are not "interested
persons" (as that term is defined in the 1940 Act) of the Fund or the adviser.
Each Agreement is subject to termination by the Fund or the adviser on 60 days'
written notice, and terminates automatically in the event of its assignment.
Under the Sub-Advisory Agreements between the adviser and the
sub-advisers for the Berger IPT - International Fund, Berger IPT - Large Cap
Value Fund, and Berger IPT - Mid Cap Value Fund, the sub-adviser is responsible
for day-to-day investment management. The sub-adviser manages the investments
and determines what securities and other investments will be acquired, held or
disposed of, consistent with the investment objective and policies established
by the trustees. Each Sub-Advisory Agreement provides that the sub-adviser shall
not be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission taken with respect to
the Fund, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its obligations
and duties thereunder and except to the extent otherwise provided by law.
No fees are paid directly to the sub-advisers by the Funds. As
sub-adviser of the Berger IPT - International Fund, BIAM receives from the
adviser a fee at the annual rate of 0.45% of the first $50 million of the
average daily net assets of the Fund, 0.40% of the next $50 million, and 0.30%
of any amount in excess of $100 million. As sub-adviser of the Berger IPT -
Large Cap Value Fund, Bay Isle receives from the adviser a fee at the annual
rate of 0.375% of the first $500 million of the average daily net assets of the
Fund, 0.35% of the next $500 million, and 0.325% of any amount in excess of $1
billion. As sub-adviser of the Berger IPT - Mid Cap Value Fund, PWM receives
from the adviser a fee at the annual rate of 0.375% of the first $500 million of
the average daily net assets of the Fund, 0.35% of the next $500 million, and
0.325% of any amount in excess of $1 billion.
- 31 -
The Sub-Advisory Agreements will continue in effect until
April 2003, and thereafter from year to year if such continuation is
specifically approved at least annually by the trustees or by vote of a majority
of the outstanding shares of the Fund and in either case by vote of a majority
of the trustees of the Trust who are not "interested persons" (as that term is
defined in the Investment Company Act of 1940) of the Fund or the adviser or the
sub-adviser. The Sub-Advisory Agreements are subject to termination by the Fund
or the sub-adviser on 60 days' written notice, and terminate automatically in
the event of their assignment and in the event of termination of the related
Investment Advisory Agreement.
OTHER ARRANGEMENTS BETWEEN BFG AND PWM
BFG and PWM entered into an Agreement, dated November 18,
1996, as amended January 27, 1997, April 8, 1998 and November 17, 1999, under
which, among other things, PWM agreed that, so long as BFG acts as the adviser
to the Berger Small Cap Value Fund and the Berger Mid Cap Value Fund, and PWM
provides sub-advisory or other services in connection with the Funds, PWM will
not manage or provide advisory services to any registered investment company
that is in direct competition with the Funds.
OTHER ARRANGEMENTS BETWEEN BFG AND BAY ISLE
BFG and Bay Isle have formed a joint venture to provide asset
management services to certain private accounts. Effective December 2001, BFG
acquired all outstanding shares of Bay Isle Financial Corporation and Bay Isle
Financial Corporation, now Bay Isle Financial LLC, became a subsidiary of BFG.
TRADE ALLOCATIONS
While investment decisions for the Funds are made
independently by the adviser or sub-adviser, the same investment decision may be
made for a Fund and one or more accounts advised by the adviser or sub-adviser.
In this circumstance, should purchase and sell orders of the same class of
security be in effect on the same day, the orders for such transactions may be
combined by the adviser or sub-adviser in order to seek the best combination of
net price and execution for each. Client orders partially filled will, as a
general matter, be allocated pro rata in proportion to each client's original
order, although exceptions may be made to avoid, among other things, odd lots
and de minimus allocations. Execution prices for a combined order will be
averaged so that each participating client receives the average price paid or
received. Although in some cases, this policy might adversely affect the price
paid or received by a Fund or other participating accounts, or the size of the
position obtained or liquidated, the adviser or sub-adviser will aggregate
orders if it believes that coordination of orders and the ability to participate
in volume transactions will result in the best overall combination of net price
and execution.
BFG has adopted procedures for allocating to its participating
accounts' securities purchased pursuant to a company's initial public offering
("IPO"). The procedures provide that such allocations must be effected in a
manner that is fair and equitable to all accounts. Generally, securities
received from participating in IPOs will be allocated to participating accounts
pro rata based on account size or total equity assets.
The key criterion for determining eligibility of the account
to participate in an offering is the suitability of the investment for the
account. An account may participate in an IPO allocation if BFG believes that,
based on the account's investment restrictions, risk profile, asset composition
and cash levels, the IPO is an appropriate investment. Accordingly, not every
account will participate in every IPO allocation. In addition, an account
generally will not participate in an IPO if the securities available for
allocation to the account are insignificant relative to the account's net
assets. As a result, any fund or account whose assets are very large is not
likely to participate in the allocation of many IPOs.
RESTRICTIONS ON PERSONAL TRADING
BFG, the Berger Funds and Berger Distributors LLC each permits
its directors, officers and employees to purchase and sell securities for their
own accounts, including securities that may be purchased or held by the Funds,
in accordance with a policy regarding personal investing contained in each of
the Codes of Ethics for BFG, the Berger Funds and Berger Distributors LLC. The
policy requires all covered persons to conduct their personal securities
transactions in a manner that does not operate adversely to the interests of the
Funds or BFG's
- 32 -
other advisory clients. Directors and officers of BFG and Berger Distributors
LLC, investment personnel and other designated persons deemed to have access to
current trading information ("access persons") are required to pre-clear all
transactions in securities not otherwise exempt under the policy. Requests for
authority to trade will be denied pre-clearance when, among other reasons, the
proposed personal transaction would be contrary to the provisions of the policy
or would be deemed to adversely affect any transaction then known to be under
consideration for or currently being effected on behalf of any client account,
including any of the Funds.
In addition to the pre-clearance requirements described here
for BFG and Berger Distributors LLC, the policy subjects directors and officers
of BFG, the Berger Funds and Berger Distributors LLC, investment personnel and
other access persons to various trading restrictions and reporting obligations.
All reportable transactions are reviewed for compliance with the policy. Each
policy is administered by BFG and the provisions of each policy are subject to
interpretation by and exceptions authorized by its management.
BIAM has adopted a Code of Ethics that permits its directors,
officers and employees to purchase and sell securities for their own accounts,
including securities that may be held or acquired by the Berger IPT -
International Fund. BIAM's Code of Ethics restricts its officers, employees and
other staff from personal trading in specified circumstances, including among
others prohibiting participation in initial public offerings, prohibiting
dealing in a security for the seven days before and after any trade in that
security on behalf of clients, prohibiting trading in a security while an order
is pending for any client on that same security, and requiring profits from
short-term trading in securities (purchase and sale within a 60-day period) to
be forfeited. In addition, staff of BIAM must report all of their personal
holdings in securities annually and must disclose their holdings in any private
company if an investment in that same company is being considered for clients.
Staff of BIAM is required to pre-clear all transactions in securities not
otherwise exempt under the Code of Ethics and must instruct their broker to
provide BIAM with duplicate confirmations of all such personal trades.
PWM and Bay Isle have each adopted a Code of Ethics
substantially similar to the Code adopted by BFG.
5. EXPENSES OF THE FUNDS
In addition to paying an investment advisory fee to its
adviser, each Fund pays all of its expenses not assumed by its adviser,
including but not limited to, custodian and transfer agent fees, legal and
accounting expenses, administrative and recordkeeping expenses, interest
charges, federal and state taxes, expenses of investor meetings, compensation of
trustees who are not interested persons of the adviser or sub-adviser, expenses
of printing and distributing reports to investors and federal and state
administrative agencies, and all expenses incurred in connection with the
execution of its portfolio transactions, including brokerage commissions on
purchases and sales of portfolio securities, which are considered a cost of
securities of each Fund. Each Fund also pays all expenses incurred in complying
with all federal and state laws and the laws of any foreign country applicable
to the issue, offer or sale of shares of the Fund, including, but not limited
to, all costs involved in preparing and printing prospectuses for investors of
the Funds.
Under a separate Administrative Services Agreement with
respect to each of such Funds, BFG performs certain administrative and
recordkeeping services not otherwise performed by the Fund's custodian and
recordkeeper, including the preparation of financial statements and reports to
be filed with the Securities and Exchange Commission and state regulatory
authorities. For the fiscal year ended December 31, 2001, BFG did not charge an
administrative fee to the Funds. The administrative services fees may be changed
by the directors or trustees without investor approval.
The following tables show the total dollar amounts of advisory
fees and administrative services fees paid by each of such Funds for the periods
indicated and the amount of such fees waived on account of excess expenses under
applicable expense limitations.
- 33 -
BERGER IPT - GROWTH FUND
<Table>
<Caption>
ADVISORY FEE
WAIVER AND
FISCAL YEAR ENDED INVESTMENT ADMINISTRATIVE EXPENSE
DECEMBER 31 ADVISORY FEE SERVICE FEE REIMBURSEMENTS TOTAL
----------------- ------------ -------------- -------------- --------
2001 $ 67,686 $ 0 $ (7,391) $ 60,295
2000 $ 86,224 $ 0 $(33,956) $ 52,268
1999 $ 35,613 $ 338 $(56,591) $ 0
</Table>
BERGER IPT - LARGE CAP GROWTH FUND
<Table>
<Caption>
ADVISORY FEE
WAIVER AND
FISCAL YEAR ENDED INVESTMENT ADMINISTRATIVE EXPENSE
DECEMBER 31 ADVISORY FEE SERVICE FEE REIMBURSEMENTS TOTAL
----------------- ------------ -------------- -------------- --------
2001 $ 315,910 $ 0 $ 0 $315,910
2000 $ 337,270 $ 0 $ 0 $337,270
1999 $ 109,196 $ 967 $(27,572) $ 82,591
</Table>
BERGER IPT - SMALL COMPANY GROWTH FUND
<Table>
<Caption>
ADVISORY FEE
WAIVER AND
FISCAL YEAR ENDED INVESTMENT ADMINISTRATIVE EXPENSE
DECEMBER 31 ADVISORY FEE SERVICE FEE REIMBURSEMENTS TOTAL
----------------- ------------ -------------- -------------- --------
2001 $ 531,507 $ 0 $ 0 $531,507
2000 $ 651,276 $ 0 $ 0 $651,276
1999 $ 132,056 $ 862 $(57,324) $ 75,594
</Table>
BERGER IPT - INTERNATIONAL FUND
<Table>
<Caption>
ADVISORY FEE
WAIVER AND
FISCAL YEAR ENDED INVESTMENT ADMINISTRATIVE EXPENSE
DECEMBER 31 ADVISORY FEE SERVICE FEE REIMBURSEMENTS TOTAL
----------------- ------------ -------------- -------------- --------
2001 $ 49,514 $ 0 $(23,367) $26,147
2000 $ 58,472(1) $ 0 $(63,557) $ 0
1999 $ 49,260(2) $ 409 $(68,918) $ 0
</Table>
(1) The amount shown includes $21,200 paid to BBOI Worldwide LLC, the Fund's
former adviser, prior to BFG's appointment as investment adviser, at an
annual rate of 0.90% of its average daily net assets under the investment
advisory contract in effect prior to May 12, 2000. After waivers, the
amount paid to BBOI totaled $0.00.
(2) The amount shown was paid to BBOI Worldwide LLC, the Fund's former adviser.
- 34 -
Each Fund has appointed State Street Bank and Trust Company
("State Street"), One Heritage Drive, North Quincy, Massachusetts 02171, as its
recordkeeping and pricing agent. In addition, State Street also serves as the
Funds' custodian. Each Fund has appointed DST Systems, Inc., P.O. Box 219958,
Kansas City, Missouri 64121, as its transfer agent and dividend-disbursing
agent. Stilwell owns approximately 33% of the outstanding shares of DST.
As recordkeeping and pricing agent, State Street calculates
the daily net asset value of each Fund and performs certain accounting and
recordkeeping functions required by the Funds. The Funds pay State Street a
monthly asset-based fee for such services. State Street is also reimbursed for
certain out-of-pocket expenses.
State Street, as custodian, and its subcustodians have custody
and provide for the safekeeping of the Funds' securities and cash, and receive
and remit the income thereon as directed by the management of the Funds. The
custodian and subcustodians do not perform any managerial or policy-making
functions for the Funds. For its services as custodian, State Street receives an
asset-based fee plus certain transaction fees and out-of-pocket expenses.
As transfer agent and dividend disbursing agent, DST maintains
all investor accounts of record; assists in mailing all reports, proxies and
other information to the Funds' investors; calculates the amount of, and
delivers to the Funds' investors, proceeds representing all dividends and
distributions; and performs other related services. For these services, DST
receives a fee from the Funds at an annual rate of $15.47 per open Fund investor
account, subject to preset volume discounts, plus certain transaction fees and
fees for closed accounts, and is reimbursed for out-of-pocket expenses.
All of State Street's fees are subject to reduction pursuant
to an agreed formula for certain earnings credits on the cash balances of the
Funds.
From time to time, BFG may compensate Participating Insurance
Companies or their affiliates whose customers hold shares of the Funds for
providing a variety of administrative services (such as recordkeeping and
accounting) and investor support services (such as responding to inquiries and
preparing mailings to investors). This compensation, which may be paid as a per
account fee or as a percentage of the average daily net assets invested in the
Funds by the compensated Participating Insurance Company, depending on the
nature, extent and quality of the services provided, will be paid from BFG's own
resources and not from the assets of the Funds.
The Funds' adviser may also enter into arrangements with
organizations that solicit clients for the adviser, which may include clients
who purchase shares of the Funds. While the specific terms of each arrangement
may differ, generally, the fee paid by the adviser under such arrangements is
based on the value of the referred client's assets managed by the adviser. None
of the fees paid to such organizations will be borne by the Funds.
The trustees of each of the Funds have authorized portfolio
transactions to be placed on an agency basis through DSTS, a wholly owned
broker-dealer subsidiary of DST. When transactions for a Fund are effected
through DSTS, the commission received by DSTS is credited against, and thereby
reduces, certain operating expenses that the Fund would otherwise be obligated
to pay. No portion of the commission is retained by DSTS. See Section 6
Brokerage Policy for further information concerning the expenses reduced as a
result of these arrangements.
Under a written contract, the Funds' investment adviser waives
its fee and reimburses each Fund to the extent that, at any time during the life
of the Fund, the Fund's annual operating expenses exceed 1.00% in the case of
the Berger IPT - Growth Fund and the Berger IPT - Large Cap Growth Fund, 1.15%
in the case of the Berger IPT - Small Company Growth Fund, and 1.20% in the case
of the Berger IPT - International Fund. The contract may not be terminated or
amended except by a vote of the Funds' Board of Trustees.
Pursuant to written agreements, the Funds' investment adviser
will waive its fee and reimburse the Berger IPT - Mid Cap Value Fund and Berger
IPT - Large Cap Value Fund to the extent the normal transfer agency and
registration expenses exceed 1.20% and 0.95%, respectively, of average daily net
assets during the fiscal year. The agreements shall continue in effect for an
initial term ending December 31, 2002, and shall continue year to
- 35 -
year thereafter unless otherwise terminated. The agreements may be terminated:
(a) by the Fund at any time upon written notice to Berger; or (b) by Berger upon
written notice to the Fund not less than 30 days before the end of any term. In
addition, the agreements shall terminate automatically upon the termination of
the investment advisory agreement between Berger and the Fund.
Prior to May 12, 2000, BBOI Worldwide LLC ("BBOI Worldwide"),
210 University Blvd., Suite 700, Denver, Colorado 80206, a joint venture between
BFG and Bank of Ireland Asset Management (U.S.) Limited (BIAM), served as
adviser and administrator to the Berger IPT-International Fund. Effective May
12, 2000, the Berger IPT-International Fund entered into a new advisory
agreement with BFG replacing BBOI Worldwide LLC as the Fund's investment adviser
and administrator, and BBOI was subsequently dissolved. BFG is responsible for
overseeing, evaluating and monitoring the investment advisory services provided
by BIAM as sub-adviser.
12b-1 PLANS
The Berger IPT - Large Cap Value Fund and Berger IPT - Mid Cap
Value Fund have each adopted a 12b-1 plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940, which provides for the payment to BFG
of a 12b-1 fee of 0.25% per annum of a Fund's average daily net assets to
finance activities primarily intended to result in the sale of Fund shares. The
Plans are intended to benefit the Funds by attracting new assets into the Funds
and thereby affording potential cost reductions due to economies of scale.
The expenses paid by BFG may include, but are not limited to:
-- payments made to, and costs incurred by, a Fund's principal
underwriter in connection with the distribution of Fund
shares, including payments made to and expenses of officers
and registered representatives of the Distributor;
-- payments made to and expenses of other persons (including
employees of BFG) who are engaged in or provide support
services in connection with the distribution of Fund shares,
such as answering routine telephone inquiries and processing
investor requests for information;
-- compensation (including incentive compensation and/or
continuing compensation based on the amount of customer assets
maintained in a Fund) paid to securities dealers, financial
institutions and other organizations that render distribution
and administrative services in connection with the
distribution of Fund shares, including services to holders of
Fund shares and prospective investors;
-- costs related to the formulation and implementation of
marketing and promotional activities, including direct mail
promotions and television, radio, newspaper, magazine and
other mass media advertising;
-- costs of printing and distributing prospectuses and reports to
prospective investors of Fund shares;
-- costs involved in preparing, printing and distributing sales
literature for Fund shares;
-- costs involved in obtaining whatever information, analyses and
reports with respect to marketing and promotional activities
on behalf of a Fund relating to Fund shares that BFG deems
advisable;
-- and such other costs relating to Fund shares as the Fund may
from time to time reasonably deem necessary or appropriate in
order to finance activities primarily intended to result in
the sale of Fund shares.
Such 12b-1 fee payments are to be made by each Fund to BFG
with respect to each fiscal year of the Fund without regard to the actual
distribution expenses incurred by BFG in such year; that is, if the distribution
expenditures incurred by BFG are less than the total of such payments in such
year, the difference is not to be reimbursed to the Fund by BFG, and if the
distribution expenditures incurred by BFG are more than the total of such
payments, the excess is not to be reimbursed to BFG by the Fund.
- 36 -
From time to time a Fund may engage in activities that jointly
promote the sale of Fund shares and other funds that are or may in the future be
advised or administered by BFG, which costs are not readily identifiable as
related to any one fund. In such cases, a Fund's 12b-1 fees may be used to
finance the joint promotion of the shares of that Fund, along with the shares of
the other fund. BFG allocates the cost of such joint promotional activity among
the funds involved on the basis of their respective net assets, unless otherwise
directed by the directors or trustees.
The current 12b-1 Plans will continue in effect until the end
of April 2003 and from year to year thereafter if approved at least annually by
each Fund's directors or trustees and those directors or trustees who are not
interested persons of the Fund and have no direct or indirect financial interest
in the operation of the Plan or any related agreements by votes cast in person
at a meeting called for such purpose. The Plans may not be amended to increase
materially the amount to be spent on distribution of Fund shares without
investor approval.
OTHER EXPENSE INFORMATION
The directors or trustees of each of the Funds have authorized
portfolio transactions to be placed on an agency basis through DST Securities,
Inc. ("DSTS"), a wholly owned broker-dealer subsidiary of DST. When transactions
are effected through DSTS, the commission received by DSTS is credited against,
and thereby reduces, certain operating expenses that a Fund would otherwise be
obligated to pay. No portion of the commission is retained by DSTS. See Section
6--Brokerage Policy for further information concerning the expenses reduced as a
result of these arrangements. DSTS may be considered an affiliate of BFG due to
the ownership interest of Stilwell in both DST and BFG.
The Funds and/or their advisers have entered into arrangements
with certain brokerage firms and other companies (such as recordkeepers and
administrators) to provide administrative services (such as sub-transfer agency,
recordkeeping, investor communications, sub-accounting and/or other services) to
investors purchasing shares of the Funds through those firms or companies. A
Fund's adviser or a Fund (if approved by its directors or trustees) may pay fees
to these companies for their services. These companies may also be appointed as
agents for or authorized by the Funds to accept on their behalf purchase and
redemption requests that are received in good order. Subject to Fund approval,
certain of these companies may be authorized to designate other entities to
accept purchase and redemption orders on behalf of the Funds.
The Fund's adviser may also enter into arrangements with
organizations that solicit clients for the adviser, which may include clients
who purchase shares of the Funds. While the specific terms of each arrangement
may differ, generally the fee paid by the adviser under such arrangements is
based on the value of the referred client's assets managed by the adviser. None
of the fees paid to such organizations will be borne by the Funds.
DISTRIBUTOR
The Distributor (principal underwriter) of each Fund's shares
is Berger Distributors LLC (the "Distributor"), 210 University Boulevard, Suite
800, Denver, Colorado 80206. The Distributor may be reimbursed by BFG for its
costs in distributing the Funds' shares.
6. BROKERAGE POLICY
Although each Fund retains full control over its own
investment policies, under the terms of its Investment Advisory Agreement, the
adviser is directed to place the portfolio transactions of the Fund. Where
applicable, the adviser may delegate placement of brokerage to a Fund's
sub-adviser. A report on the placement of brokerage business is given to the
trustees of the Fund every quarter, indicating the brokers with whom Fund
portfolio business was placed and the basis for such placement. The brokerage
commissions paid by the Funds during the past three fiscal years were as
follows:
Included in the brokerage commissions paid by the Fund during
the last three fiscal years, as stated in the preceding Brokerage Commissions
table, are the following amounts paid to DSTS, which served to reduce the Fund's
out-of-pocket expenses as follows:
- 37 -
BROKERAGE COMMISSIONS
<Table>
<Caption>
FISCAL YEAR ENDED DECEMBER 31,
2001 2000 1999
-------- -------- --------
BERGER IPT - GROWTH FUND $ 23,890 $ 12,790 $ 17,989
BERGER IPT - LARGE CAP GROWTH FUND $ 90,065 $ 64,553 $ 31,609
BERGER IPT - SMALL COMPANY GROWTH FUND $104,527 $ 53,247 $ 23,061
BERGER IPT - INTERNATIONAL FUND $ 4,322 $ 6,664 $ 5,334
BERGER IPT - LARGE CAP VALUE FUND(1) $ 0 $ 0 $ 0
BERGER IPT - MID CAP VALUE FUND(1) $ 0 $ 0 $ 0
</Table>
(1) The Fund was not added as a series of the Trust until December 31, 2001.
The Investment Advisory Agreement that each Fund has with its
adviser and the Sub-Advisory Agreement with the sub-adviser, authorizes and
directs the adviser (or sub-adviser) to place portfolio transactions for the
Fund only with brokers and dealers who render satisfactory service in the
execution of orders at the most favorable prices and at reasonable commission
rates. However, each Agreement specifically authorizes the adviser (or
sub-adviser) to place such transactions with a broker with whom it has
negotiated a commission that is in excess of the commission another broker or
dealer would have charged for effecting that transaction if the adviser (or
sub-adviser) determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker viewed in terms of either that particular transaction or
the overall responsibilities of the adviser (or sub-adviser). Accordingly, the
adviser (or sub-adviser) does not have an obligation to seek the lowest
available commission.
In accordance with this provision of the Agreement, portfolio
brokerage business of each Fund may be placed with brokers who provide useful
brokerage and research services to the adviser or, where applicable, the
sub-adviser. The Fund's adviser or sub-adviser may consider the value of
research provided as a factor in the choice of brokers. "Research" includes
computerized on-line stock quotation systems and related data feeds from stock
exchanges, computerized trade order entry, execution and confirmation systems,
fundamental and technical analysis data and software, computerized stock market
and business news services, economic research, account performance data and
computer hardware used for the receipt of electronic research services and
broker and other third-party equity research, such as publications or writings
that furnish advice as to the value of securities and advisability of investing,
and analyses and reports concerning issuers, industries, securities, market
trends and portfolio strategies. Research may be provided orally, in print or
electronically. These include a service used by the independent directors or
trustees of the Funds in reviewing the Investment Advisory Agreements.
In some cases, a product or services termed "research" may
serve other functions unrelated to the making of investment decisions. When a
product has such a mixed use, the adviser or sub-adviser will make a good faith
allocation of the cost of the product according to the use made of it. The
portion of the product that assists the adviser or sub-adviser in the investment
decision-making process may be paid for with a Fund's commission dollars. The
adviser or sub-adviser pays for the portion of the product that is not
"research" with its own Funds. Accordingly, the decision whether and how to
allocate the costs of such a product presents a conflict of interest for the
adviser or sub-adviser.
The Funds' advisers and sub-advisers do not enter into formal
agreements with any brokers regarding the placement of securities transactions
because of any such brokerage or research services that they provide. An adviser
or sub-adviser may, however, make arrangements with and maintain internal
procedures for allocating transactions to brokers who provide such services to
encourage them to provide services expected to be
- 38 -
useful to the adviser's or sub-adviser's clients, including the Funds. Brokers
may suggest a level of business they would like to receive in return for the
brokerage and research they provide. The adviser or sub-adviser then determines
whether to continue receiving the research and brokerage provided and the
approximate amount of commissions it is willing to pay to continue the brokerage
and research arrangement with each broker. The actual amount of commissions a
broker may receive may be more or less than a broker's suggested allocations,
depending on the adviser's or sub-adviser's level of business, market conditions
and other relevant factors. Even under these arrangements, however, the
placement of all Fund transactions, must be consistent with the Funds' brokerage
placement and execution policies, and must be directed to a broker who renders
satisfactory service in the execution of orders at the most favorable prices and
at reasonable commission rates.
During the fiscal year ended December 31, 2001, of the
brokerage commissions paid by the Funds, the following amounts were paid to
brokers who provided to the Funds selected brokerage or research services
prepared by the broker or subscribed or paid for by the broker on behalf of the
Funds:
<Table>
<Caption>
FUND AMOUNT OF TRANSACTIONS AMOUNT OF COMMISSIONS
---- ---------------------- ---------------------
Berger IPT - Growth Fund $ 4,946,733 $ 8,778
Berger IPT - Large Cap Growth Fund $30,160,585 $ 44,005
Berger IPT - Small Company Growth Fund $ 8,843,192 $ 23,738
Berger IPT - International Fund $ 0 $ 0
Berger IPT - Large Cap Value Fund(1) $ 0 $ 0
Berger IPT - Mid Cap Value Fund(1) $ 0 $ 0
</Table>
(1) The Fund was not added as a series of the Trust until December 31, 2001.
These brokerage and research services received from brokers
are often helpful to the adviser or sub-adviser in performing its investment
advisory responsibilities to the Funds, and the availability of such services
from brokers does not reduce the responsibility of the adviser's or
sub-adviser's advisory personnel to analyze and evaluate the securities in which
the Funds invest. The brokerage and research services obtained as a result of
the Funds' brokerage business also will be useful to the adviser or sub-adviser
in making investment decisions for its other advisory accounts, and, conversely,
information obtained by reason of placement of brokerage business of such other
accounts may be used by the adviser or sub-adviser in rendering investment
advice to the Funds. Although such brokerage and research services may be deemed
to be of value to the adviser or sub-adviser, they are not expected to decrease
the expenses that the adviser or sub-adviser would otherwise incur in performing
its investment advisory services for the Funds nor will the advisory fees that
are received by the adviser or sub-adviser from the Funds be reduced as a result
of the availability of such brokerage and research services from brokers.
The trustees of each of the Funds have authorized portfolio
transactions to be placed on an agency basis through DSTS, a wholly owned
broker-dealer subsidiary of DST. When transactions are effected through DSTS,
the commission received by DSTS is credited against, and thereby reduces,
certain operating expenses that the Fund would otherwise be obligated to pay. No
portion of the commission is retained by DSTS. DSTS may be considered an
affiliate of BFG due to the ownership interest of Stilwell in both DST and BFG.
- 39 -
DSTS COMMISSIONS AND RELATED EXPENSE REDUCTIONS
<Table>
<Caption>
DSTS
COMMISSIONS REDUCTION IN DSTS REDUCTION IN DSTS REDUCTION IN
PAID EXPENSES FYE COMMISSIONS PAID EXPENSES FYE COMMISSIONS PAID EXPENSES FYE
FYE 12/31/01 12/31/01(1) FYE 12/31/00 12/31/00(1) FYE 12/31/99 12/31/99(1)
------------ ------------ ---------------- ------------ ---------------- -----------
Berger IPT - Growth Fund $114 $ 86 $ 0 $ 0 $856 $642
Berger IPT - Large Cap Growth
Fund $534 $401 $ 0 $ 0 $787 $590
Berger IPT - Small Company Growth
Fund $111 $ 83 $ 0 $ 0 $ 0 $ 0
Berger IPT - International
Fund $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Berger IPT - Large Cap Value
Fund(2) $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Berger IPT - Mid Cap Value
Fund(2) $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
==== ==== ==== ==== ==== ====
</Table>
(1) No portion of the commission is retained by DSTS. Difference between
commissions paid through DSTS and reduction in expenses constitute
commissions paid to an unaffiliated clearing broker.
(2) The Fund was not added as a series of the Trust until December 31, 2001.
Each Fund's adviser or sub-adviser places securities orders
with a limited number of major institutional brokerage firms chosen for the
reliability and quality of execution; commission rates; quality of research
coverage of major U.S. companies, the U.S. economy and the securities markets;
promptness; back office capabilities; capital strength and financial stability;
prior performance in serving the adviser and its clients; and knowledge of other
buyers and sellers. The adviser or sub-adviser selects the broker for each order
based on the factors stated, as well as the size, difficulty and other
characteristics of the order. The trustees of each Fund have authorized sales by
a broker-dealer of variable insurance contracts that permit allocation of
contract values to one or more of the Funds to be considered as a factor in the
selection of broker-dealers to execute portfolio transactions for the Funds. In
addition, the adviser or sub-adviser may also consider payments made by brokers
to a Fund or to other persons on behalf of a Fund for services provided to the
Fund for which it would otherwise be obligated to pay, such as transfer agency
fees. In placing portfolio business with any such broker or dealer, the advisers
and sub-adviser of the Funds will seek the best execution of each transaction.
During the fiscal year ended December 31, 2001, Berger IPT -
Large Cap Growth Fund and Berger IPT - International Fund acquired securities of
the Funds' regular broker dealers. As of December 31, 2001, these Funds owned
the following securities of its regular broker-dealers with the following
values:
<Table>
<Caption>
FUND BROKER/DEALER VALUE SECURITY
---- ------------- ----- --------
Berger IPT - Large Cap Growth Fund Morgan Stanley Dean Witter & Co. $ 406,124 Common Stock
Citigroup, Inc. 861,845 Common Stock
Berger IPT - International Fund Prudential Corp. PLC $ 88,586 Common Stock
Reuters Group PLC 40,038 Common Stock
</Table>
7. PURCHASING AND REDEEMING SHARES OF THE FUND
Shares of the Funds are sold by the Funds on a continuous
basis to separate accounts of Participating Insurance Companies or to qualified
plans. Investors may not purchase or redeem shares of the Funds directly, but
only through variable insurance contracts offered through the separate accounts
of Participating Insurance Companies or through qualified retirement plans. You
should refer to the applicable Separate Account Prospectus or your plan
documents for information on how to purchase or surrender a contract, make
partial withdrawals of contract values, allocate contract values to one or more
of the Funds, change existing allocations among investment alternatives,
including the Funds, or select specific Funds as investment options for a
qualified plan. No sales charge is imposed upon the purchase or redemption of
shares of the Funds. Sales charges for the variable insurance contracts or
qualified plans are described in the relevant Separate Account Prospectuses or
plan documents.
Fund shares are purchased or redeemed at the net asset value
per share next computed after receipt of a purchase or redemption order by a
Fund, its authorized agent or its designee.
- 40 -
8. SUSPENSION OF REDEMPTION RIGHTS
The Funds may not suspend the right of redemption, or postpone
the date of payment or satisfaction upon redemption of any redeemable shares for
more than seven days except for any period during which the New York Stock
Exchange (the "Exchange") is closed or the Securities and Exchange Commission
determines that trading on the Exchange is restricted or when there is an
emergency as determined by the Securities and Exchange Commission as a result of
which it is not reasonably practicable for a Fund to dispose of securities owned
by it or to determine the value of its net assets, or for such other period as
the Securities and Exchange Commission may by order permit for the protection of
investors of a Fund.
Each Fund intends to redeem its shares only for cash, although
it retains the right to redeem its shares in-kind under unusual circumstances,
in order to protect the interests of the remaining investors, by the delivery of
securities selected from its assets at its discretion. Each Fund is, however,
governed by Rule 18f-1 under the Investment Company Act of 1940 pursuant to
which the Fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net assets of the Fund during any 90-day period for any
one investor. For purposes of this threshold, each underlying account holder
whose shares are held of record in certain omnibus accounts is treated as one
investor. Should redemptions by any investor during any 90-day period exceed
such limitation, the Fund will have the option of redeeming the excess in cash
or in-kind. If shares are redeemed in-kind, the redeeming investor generally
will incur brokerage costs in converting the assets to cash. The redeeming
investor may have difficulty selling the securities and recovering the amount of
the redemption if the securities are illiquid. The method of valuing securities
used to make redemption in-kind will be the same as the method of valuing
portfolio securities described under Section 9.
9. HOW THE NET ASSET VALUE IS DETERMINED
The net asset value of each Fund is determined once daily, at
the close of the regular trading session of the Exchange (normally 4:00 p.m.,
Eastern time, Monday through Friday) each day that the Exchange is open. The
Exchange is closed and the net asset value of the Funds is not determined on
weekends and on New Year's Day, Martin Luther King, Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day each year. The per share net asset value of each Fund is
determined by dividing the total value of its securities and other assets, less
liabilities, by the total number of shares outstanding.
In determining net asset value, securities listed or traded
primarily on national exchanges, The Nasdaq Stock Market and foreign exchanges
are valued at the last sale price on such markets, or, if such a price is
lacking for the trading period immediately preceding the time of determination,
such securities are valued at the mean of their current bid and asked prices.
Securities that are traded in the over-the-counter market are valued at the mean
between their current bid and asked prices. The market value of individual
securities held by each Fund will be determined by using prices provided by
pricing services that provide market prices to other mutual funds or, as needed,
by obtaining market quotations from independent broker/dealers. Short-term money
market securities maturing within 60 days are valued on the amortized cost
basis, which approximates market value. All assets and liabilities initially
expressed in terms of non-U.S. dollar currencies are translated into U.S.
dollars at the prevailing market rates as quoted by one or more banks or dealers
shortly before the close of the Exchange. Securities and assets for which
quotations are not readily available or are not representative of market value
may be valued at their fair value determined in good faith pursuant to
consistently applied procedures established by the trustees. Examples would be
when events occur that materially affect the value of a security at a time when
the security is not trading or when the securities are illiquid.
Generally, trading in foreign securities markets is
substantially completed each day at various times prior to the close of the
Exchange. The values of foreign securities used in computing the net asset value
of the shares of a Fund are determined as of the earlier of such market close or
the closing time of the Exchange. Occasionally, events affecting the value of
such securities may occur between the times at which they are determined and the
close of the Exchange, or when the foreign market on which such securities trade
is closed but the Exchange is open, which will not be reflected in the
computation of net asset value. If during such periods, events occur which
materially affect the value of such securities, the securities may be valued at
their fair value as determined in good faith pursuant to consistently applied
procedures established by the trustees.
- 41 -
A Fund's securities may be listed primarily on foreign
exchanges or over-the-counter dealer markets which may trade on days when the
Exchange is closed (such as a customary U.S. holiday) and on that the Fund's net
asset value is not calculated. As a result, the net asset value of a Fund may be
significantly affected by such trading on days when investors cannot purchase or
redeem shares of the Fund.
10. INCOME DIVIDENDS, CAPITAL GAINS,
DISTRIBUTIONS AND TAX TREATMENT
Each Fund intends to qualify to be treated as a separate
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code"). If it qualifies and meets certain minimum
distribution requirements, the Funds generally will not be liable for federal
income tax on the amount of their earnings that are timely distributed. If a
Fund distributes annually less than 98% of its income and gain, under certain
circumstances, it may be subject to a nondeductible excise tax equal to 4% of
the shortfall.
Each Fund intends to restrict sales of its shares to
Participating Insurance Companies and qualified plans so as to qualify for
"look-through" treatment under the investment diversification requirements of
Code Section 817(h) that apply to certain insurance company separate accounts.
Each Fund also intends to manage its investments in accordance with the
diversification requirements of Code Section 817(h) so that any separate
account, or segregated asset account thereof, that holds shares in any of the
Funds as its sole asset will comply with those requirements. For further
information concerning federal income tax consequences for the owners of
variable insurance contracts and qualified plan participants, consult the
appropriate Separate Account Prospectus or plan documents.
All dividends or capital gains distributions paid by a Fund
will be automatically reinvested in shares of that Fund at the net asset value
on the ex-dividend date, unless an election is made on behalf of a separate
account or qualified plan to receive distributions in cash. The tax treatment of
distributions made to any investor will depend on the investor's tax status.
The amount, timing and character of a Fund's income may be
affected by certain special U.S. tax rules that may apply to foreign or other
investments of a Fund. Any income received by a Fund from foreign investments
may also be subject to foreign income, withholding or other taxes.
11. PERFORMANCE INFORMATION
From time to time in advertisements, the Fund may discuss its
performance ratings as published by recognized mutual fund statistical services,
such as Lipper Analytical Services, Inc., CDA Investment Technologies, Inc.,
Morningstar, Inc. or Value Line Investment Survey or by publications of general
interest such as The Wall Street Journal, Investor's Business Daily, Money,
Barron's, Financial World or Kiplinger's Personal Finance Magazine. In addition,
the Fund may compare its performance to that of recognized broad-based
securities market indices, including the Standard & Poor's 500 Stock Index, the
Dow Jones Industrial Average, the Wilshire 5000 Index, the Russell 2000 Stock
Index, Russell 1000 Growth Index, Russell Mid Cap Growth, Russell 2000 Growth
Index, Russell 3000 Growth Index, Russell 2000 Value Index, Russell Mid Cap
Value Index, the Standard & Poor's 400 Mid-Cap Index, the Standard & Poor's 600
Small Cap Index, Morgan Stanley Capital International EAFE (Europe, Australasia,
Far East) Index, the Dow Jones World Index, the Standard & Poor's/BARRA Value
Index, the Nasdaq Composite Index, the Nasdaq 100, the Lehman Brothers
Intermediate Term Government/Corporate Bond Index or the InformationWeek 100
Index, or more narrowly based or blended indices that reflect the market sectors
in which that Fund invests.
The total return of each Fund is calculated for any specified
period of time by assuming the purchase of shares of the Fund at the net asset
value at the beginning of the period. Each dividend or other distribution paid
by the Fund is assumed to have been reinvested at the net asset value on the
reinvestment date. The total number of shares then owned as a result of this
process is valued at the net asset value at the end of the period. The
percentage increase is determined by subtracting the initial value of the
investment from the ending value and dividing the remainder by the initial
value.
- 42 -
Each Fund's total return reflects the Fund's performance over
a stated period of time. An average annual total return reflects the
hypothetical annually compounded return that would have produced the same total
return if the Fund's performance had been constant over the entire period. Total
return figures are based on the overall change in value of a hypothetical
investment in each Fund. Because average annual total returns for more than one
year tend to smooth out variations in the Fund's return, investors should
recognize that such figures are not the same as actual year-by-year results.
All performance figures for the Funds are based upon
historical results and do not assure future performance. The investment return
and principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
Quotations of average annual total return for the Funds will
be expressed in terms of the average annual compounded rate of return of a
hypothetical investment in the Fund over periods of 1, 3, 5 and 10 years (or the
life of the Fund, if shorter). These are the rates of return that would equate
the initial amount invested to the ending redeemable value. These rates of
return are calculated pursuant to the following formula:
n
P(1 + T) = ERV
Where P = a hypothetical initial payment of $1,000
T = the average annual total return
n = the number of years
ERV = the ending redeemable value of a hypothetical
$1,000 payment made at the beginning of the
period).
All total return figures reflect the deduction of a
proportional share of Fund expenses on an annual basis, and assume that all
dividends and distributions are reinvested when paid.
A Fund's total return includes the effect of deducting that
Fund's expenses, but does not include any charges and expenses attributable to a
particular variable insurance contract or qualified plan. Because shares of the
Funds can be purchased only through a variable insurance contract or qualified
plan, the Funds' total return data should be reviewed along with the description
of charges and expenses contained in the applicable Separate Account Prospectus
or plan documents. Total return for a Fund must always be accompanied by, and
reviewed with, comparable total return data for an associated separate account,
or data that would permit evaluation of the magnitude of charges and expenses
attributable to the contract or plan that are not reflected in the Fund's total
return.
Each Fund has the same investment objective and follows
similar investment strategies as a Berger retail fund. The Berger retail fund
has the same investment adviser and sub-advisers as the corresponding Funds
offered under this Prospectus. The same persons who serve as portfolio managers
of the Funds also serve as portfolio managers of the corresponding Berger retail
funds.
Set forth in the Prospectus is average annual total return
data for each of the Funds, with the exception of the Berger IPT - Large Cap
Value Fund and Berger IPT - Mid Cap Value Fund, which commenced operations on
December 31, 2001. Also set forth is total return information for each of the
corresponding Berger retail funds (with the exception of the Berger Large Cap
Value Fund, which commenced operations on September 28, 2001 and has no
corresponding performance information available to date), calculated as
described above. Investors should not consider the performance data for the
corresponding Berger retail funds as a substitute for the performance of the
Funds offered under the Prospectus, nor as an indication of the past or future
performance of the Funds. The performance figures in the Prospectus reflect the
deduction of the historical fees and expenses paid by the Berger retail funds,
and not those paid or to be paid by these Funds. Performance data for the Funds
also reflects fee waivers and/or expense reimbursements by the Funds' adviser,
without which performance would be lower. In addition, the figures do not
reflect the deduction of charges or expenses attributable to variable insurance
contracts or qualified plans invested in the Funds. As discussed above,
investors should refer to the applicable Separate Account Prospectus or
qualified plan documents accompanying this Prospectus for information pertaining
to such contract charges and expenses and, in the case of a Separate Account
Prospectus for a variable annuity contract, to the hypothetical performance data
in that prospectus that illustrate the impact of contract charges and
- 43 -
loads on the returns shown below. Each Fund and its corresponding Berger retail
fund will be managed separately and the investments and investment results are
expected to differ. In particular, differences in asset size and in cash flow
resulting from purchases and redemption of Fund shares may result in different
security selections, differences in the relative weightings of securities or
differences in the prices paid for particular portfolio holdings.
In conjunction with performance reports, comparative data
between a Fund's performance for a given period and other types of investment
vehicles may be provided. A Fund's performance is based upon amounts available
for investment under variable insurance contracts of Participating Insurance
Companies or available for allocation to a qualified plan account, rather than
upon premiums paid or contributions by contract owners or plan participants.
Consequently the Fund's total return data does not reflect the impact of sales
loads (whether front-load or deferred) or other contract or plan charges
deducted from premiums or from the assets of the separate accounts or qualified
plans that invest in the Fund. Such sales loads and charges may be substantial
and may vary widely among Participating Insurance Companies and qualified plans.
Accordingly, the total return data for the Funds is most useful for comparison
with comparable data for other investment options under the same variable
insurance contract or qualified plan.
Comparisons of the Funds' total returns to those of other
investment vehicles are useful in evaluating the historical portfolio management
performance of the Funds' investment adviser. However, such comparisons should
not be mistaken for comparisons of the returns from the purchase of a variable
insurance contract of a Participating Insurance Company, or investment in a
qualified plan, to the purchase of another investment vehicle. The Funds' total
return data should be reviewed along with comparable total return data for an
associated separate account or in conjunction with data (such as the data
contained in personalized, hypothetical illustrations of variable life insurance
contracts) that would permit evaluation of the magnitude of charges and expenses
attributable to the contract or plan that are not reflected in the Funds' total
return data.
AVERAGE ANNUAL TOTAL RETURNS
The average annual total return for each of the Funds for
various periods ending December 31, 2001, are shown on the following table:
<Table>
<Caption>
FUND 1-YEAR 3-YEAR 5-YEAR LIFE OF FUND
- ---- ------ ------ ------ ------------
Berger IPT - Growth Fund (32.51)% (6.01)% 1.89% 2.36%
(since 5/1/96)
Berger IPT - Large Cap Growth Fund (25.26)% 1.99% 10.64% 11.43%
(since 5/1/96)
Berger IPT - Small Company Growth Fund (33.47)% 5.98% 8.01% 6.93%
(since 5/1/96)
Berger IPT - International Fund (20.27)% (2.04)% N/A 1.43%
(since 5/1/97)
</Table>
12. ADDITIONAL INFORMATION
FUND ORGANIZATION
The Funds are separate series or portfolios established under
the Berger Institutional Products Trust, a Delaware business trust organized
under the Delaware Business Trust Act on October 17, 1995. The Berger IPT -
Growth Fund, the Berger IPT - Large Cap Growth Fund and the Berger IPT - Small
Company Growth Fund were established under the Trust on October 17, 1995. The
Berger IPT - International Fund was established under the Trust in April 1997.
The Berger IPT - Large Cap Value Fund and the Berger IPT - Mid Cap Value Fund
- 44 -
were established under the Trust in August 2001. The Berger IPT - Growth Fund
was known as the Berger IPT - 100 Fund from its inception to January 31, 2000
when it changed its name. The Berger IPT - Large Cap Growth Fund was known as
the Berger IPT - Growth and Income Fund from its inception until May 1, 2001
when it changed its name. Berger IPT - Small Company Growth Fund(R) was
registered as a trademark in August 1998.
The Trust is authorized to issue an unlimited number of shares
of beneficial interest in series or portfolios. Currently, there are seven
series established under the Trust, some of which are covered in a separate
prospectus and SAI. Others may be added in the future. The Trust is also
authorized to establish multiple classes of shares representing differing
interests in an existing or new series. Shares of the Funds are fully paid and
nonassessable when issued. Each share has a par value of $.01. All shares issued
by each Fund participate equally in dividends and other distributions by the
Fund, and in the residual assets of the Fund in the event of its liquidation.
DELAWARE BUSINESS TRUST INFORMATION. Under Delaware law,
investors of the Funds organized as a series of a Delaware Business Trust will
enjoy the same limitations on personal liability as extended to stockholders of
a Delaware corporation. Further, the Trust Instrument of the Trust provides that
no investor shall be personally liable for the debts, liabilities, obligations
and expenses incurred by, contracted for or otherwise existing with respect to,
the Trust or any particular series (fund) of the Trust. However, the principles
of law governing the limitations of liability of beneficiaries of a business
trust have not been authoritatively established as to business trusts organized
under the laws of one jurisdiction but operating or owning property in other
jurisdictions. In states that have adopted legislation containing provisions
comparable to the Delaware Business Trust Act, it is believed that the
limitation of liability of beneficial owners provided by Delaware law should be
respected. In those jurisdictions that have not adopted similar legislative
provisions, it is possible that a court might hold that the investors of the
Trust are not entitled to the limitations of liability set forth in Delaware law
or the Trust Instrument and, accordingly, that they may be personally liable for
the obligations of the Trust.
In order to protect investors from such potential liability,
the Trust Instrument requires that every written obligation of the Trust or any
series thereof contain a statement to the effect that such obligation may only
be enforced against the assets of the Trust or such series. The Trust Instrument
also provides for indemnification from the assets of the relevant series for all
losses and expenses incurred by any investor by reason of being or having been a
investor, and that the Trust shall, upon request, assume the defense of any such
claim made against such investor for any act or obligation of the relevant
series and satisfy any judgment thereon from the assets of that series.
As a result, the risk of an investor of any Fund incurring
financial loss on account of investor liability is limited to circumstances in
which the Fund itself would be unable to meet its obligations. The Trust
believes that the risk of personal liability to investors of any of the Funds is
remote. The trustees intend to conduct the operations of the Trust and the Funds
so as to avoid, to the extent possible, liability of investors for liabilities
of the Trust or the Funds.
CORPORATE GOVERNANCE AND OTHER INFORMATION PERTAINING TO THE
FUNDS. None of the Funds or the Trust is required to hold annual investor
meetings unless required by the Investment Company Act of 1940 or other
applicable law or unless called by the trustees. If investors owning at least
10% of the outstanding shares of the Trust so request, a special investor
meeting of the Trust will be held for the purpose of considering the removal of
a trustee. Special meetings will be held for other purposes if the holders of at
least 25% of the outstanding shares of the Trust so request. Subject to certain
limitations, the Trust will facilitate appropriate communications by investors
desiring to call a special meeting for the purpose of considering the removal of
a trustee.
Investors of the Funds and, where applicable, the other
series/classes of the Trust, generally vote separately on matters relating to
those respective series/classes, although they vote together and with the
holders of any other series/classes of the Trust in the election of trustees of
the Trust and on all matters relating to the Trust as a whole. Each full share
of each Fund has one vote.
Shares of the Funds have non-cumulative voting rights, which
means that the holders of more than 50% of the shares voting for the election of
trustees can elect 100% of the trustees if they choose to do so and, in
- 45 -
such event, the holders of the remaining less than 50% of the shares voting for
the election of trustees will not be able to elect any person or persons as
trustees.
Shares of the Funds have no preemptive rights. There are no
sinking funds or arrearage provisions, which may affect the rights of the Fund
shares. Fund shares have no subscription rights or conversion rights. Shares of
the Funds may be transferred by endorsement, or other customary methods, but
none of the Funds are bound to recognize any transfer until it is recorded on
its books.
Under governing separate law, each Fund may enter into a
variety of corporate transactions, such as reorganizations, conversions, mergers
and asset transfers, or may be liquidated. Any such transaction would be subject
to a determination of the Trustees that the transaction was in the best
interests of the Fund and its investors, and may require obtaining investor
approval.
The separate accounts of the Participating Insurance Companies
and the trustees of the qualified plans invested in the Funds, rather than
individual contract owners or plan participants, are the investors of the Funds.
However, each Participating Insurance Company or qualified plan will vote such
shares as required by law and interpretations thereof, as amended or changed
from time to time. Under current law, a Participating Insurance Company is
generally required to request voting instructions from its contract owners and
must vote Fund shares held by each of its separate accounts in proportion to the
voting instructions received. Additional information about voting procedures is
contained in the applicable Separate Account Prospectuses.
Each Fund sells its shares only to certain qualified
retirement plans and to variable annuity and variable life insurance separate
accounts of insurance companies that are unaffiliated with BFG and that may be
unaffiliated with one another. The Funds currently do not foresee any
disadvantages to policy owners arising out of the fact that each Fund offers its
shares to such entities. Nevertheless, the trustees intend to monitor events in
order to identify any material irreconcilable conflicts that may arise and to
determine what action, if any, should be taken in response to such conflicts. If
a conflict occurs, the trustees may require one or more insurance company
separate accounts or plans to withdraw its investments in one or more of the
Funds and to substitute shares of another Fund. As a result, a Fund may be
forced to sell securities at disadvantageous prices. In addition, the trustees
may refuse to sell shares of any Fund to any separate account or qualified plan
or may suspend or terminate the offering of shares of any Fund if such action is
required by law or regulatory authority or is deemed by the Fund to be in the
best interests of the investors of the Fund.
Owners of variable insurance contracts and qualified plan
administrators will receive annual and semiannual reports including the
financial statements of the Funds in which contract values or qualified plan
assets are invested. Each report will show the investments owned by each Fund
and the market values thereof, as well as other information about the Funds and
their operations.
- 46 -
PRINCIPAL INVESTORS
Insofar as the management of the Funds is aware, as of March
31, 2001, no person owned, beneficially or of record, more than 5% of the
outstanding shares of any of the Funds, except for the following:
<Table>
<Caption>
OWNER FUND PERCENTAGE
----- ---- ----------
Conseco Variable Insurance Co. Berger IPT - Growth Fund 93.29%
("Conseco")
11825 North Pennsylvania Street Berger IPT - Large Cap Growth Fund 99.51%
Carmel, IN 46032
Berger IPT - Small Company Growth Fund 33.79%
Berger IPT - International Fund(1) 47.13%
Berger Financial Group LLC Berger IPT - Large Cap Value Fund 99.95%
210 University Blvd.
Denver, CO 80206 Berger IPT - Mid Cap Value Fund 99.95%
Ameritas Life Insurance Corp Berger IPT - Growth Fund 5.48%
5900 O Street
Lincoln, NE 68510
BMA Variable Annuity Berger IPT - International Fund 19.65%
BMA Tower
P. O. Box 419458
Kansas City, MO 64141
Great West Life & Annuity Berger IPT - Small Company Growth Fund 46.77%
Insurance Co ("Great West")
8515 E. Orchard Road
Englewood, CO 80111
AIG Life Insurance Company Berger IPT - Small Company Growth Fund 5.98%
1 Alico Plaza
Wilmington, DE 19801
Canada Life Insurance Co. of America Berger IPT - Small Company Growth Fund 5.26%
330 University Ave.
Toronto Ontario Canada M5G1R8 Berger IPT - International Fund 17.25%
Allmerica Financial (TPA) Berger IPT - International Fund 5.50%
Canada Life Insurance Company of
America
440 Lincoln Street
Worcester, MA 01653
Fidelity Security Life Berger IPT - International Fund 9.66%
3130 Broadway Street
Kansas City, MO 64111
</Table>
(1) THE SHARES OWNED OF RECORD BY CONSECO VARIABLE INSURANCE COMPANY INCLUDE
SHARES ATTRIBUTABLE TO A VARIABLE ANNUITY CONTRACT OWNED BY BFG, WHICH
CONSTITUTES 35.06% OF THE OUTSTANDING SHARES OF THE FUND. BFG IS A NEVADA
LIMITED LIABILITY COMPANY THAT PROVIDED INITIAL CAPITAL TO ESTABLISH THE
TRUST. AS A RESULT OF ITS CURRENT SHARE OWNERSHIP, BFG MAY BE DEEMED TO
CONTROL THE BERGER IPT - INTERNATIONAL FUND.
Any person owning more than 25% of the outstanding securities
of a Fund may be deemed to control it. Conseco and Great West are believed to
hold their shares of the Funds as nominees for the benefit of their clients.
In addition, as of March 31, 2002, Conseco owned of record
59.44% of all the outstanding shares of the Berger Institutional Products Trust,
of which the Funds are outstanding series.
DISTRIBUTION
Berger Distributors LLC, as the Funds' Distributor, is the
principal underwriter of the Funds' shares. The Distributor is a wholly owned
subsidiary of BFG. The Distributor is a registered broker-dealer under the
- 47 -
Securities Exchange Act of 1934 and is a member of the National Association of
Securities Dealers, Inc. The Distributor acts as the agent of the Funds in
connection with the sale of the Funds' shares in all states in which the shares
are eligible for sale and in which the Distributor is qualified as a
broker-dealer. Janice M. Teague, Vice President and Secretary of the
Distributor, is also Vice President and Assistant Secretary of the Funds. Brian
Ferrie, Vice President and Chief Financial Officer of the Distributor, is also
Vice President of the Funds. Anthony Bosch, Vice President and Chief Compliance
Officer of the Distributor is also Vice President of the Funds. Sue Vreeland,
Assistant Secretary of the Distributor, is also Secretary of the Funds.
The Trust, on behalf of each Fund, and the Distributor are
parties to a Distribution Agreement that continues through April 2003, and
thereafter from year to year if such continuation is specifically approved at
least annually by the trustees or by vote of a majority of the outstanding
shares of the Fund and in either case by vote of a majority of the trustees of
the Trust who are not "interested persons" (as that term is defined in the
Investment Company Act of 1940) of the Trust or the Distributor. The
Distribution Agreement is subject to termination by a Fund or the Distributor on
60 days' prior written notice, and terminates automatically in the event of its
assignment. The Funds' offerings are continuous, and, under the Distribution
Agreement, the Distributor continuously offers the shares of the Fund and
solicits orders to purchase Fund shares at net asset value. The Distributor is
not compensated for its services under the Distribution Agreement, but may be
reimbursed by BFG for its costs in distributing Fund shares.
OTHER INFORMATION
The Trust has filed with the Securities and Exchange
Commission, Washington, D.C., a Registration Statement under the Securities Act
of 1933, as amended, with respect to the securities of the Funds, of which this
Statement of Additional Information is a part. If further information is desired
with respect to any of the Funds or such securities, reference is made to the
Registration Statement and the exhibits filed as a part thereof.
Davis Graham & Stubbs LLP, 1550 Seventeenth Street, Suite 500,
Denver, Colorado, acts as counsel to the Trust and the Funds.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 1670 Broadway, Suite 1000, Denver,
Colorado, acted as independent accountants to the Funds for the fiscal year
ended December 31, 2001. In that capacity, PricewaterhouseCoopers LLP audited
the financial statements of the Funds referenced below under "Financial
Statements" and assisted the Funds in connection with the preparation of their
2000 income tax returns.
PricewaterhouseCoopers LLP has been appointed to act as
independent accountants for the Funds for the fiscal year ended December 31,
2002. In that capacity, PricewaterhouseCoopers LLP will audit the financial
statements of the Funds and assist the Funds in connection with the preparation
of their 2001 income tax returns.
FINANCIAL STATEMENTS
A copy of the Annual Report referenced below is enclosed with
this SAI. Additional copies of that Annual Report may be obtained upon request
without charge at bergerfunds.com, by calling the Funds at 1-800-259-2820, or by
contacting a Participating Insurance Company.
The following financial statements for each of the Funds are
incorporated herein by reference from the Annual Report to Shareholders of the
Funds dated December 31, 2001, in each case along with the Report of Independent
Accountants thereon dated February 4, 2002.
Schedule of Investments as of December 31, 2001
Statements of Assets and Liabilities as of December 31, 2001
Statements of Operations each of the periods indicated
Statements of Changes in Net Assets for each of the periods
indicated
Notes to Financial Statements, December 31, 2001
Financial Highlights for each of the periods indicated
- 48 -
APPENDIX A
HIGH-YIELD/HIGH RISK SECURITIES
Each of the Funds may invest in convertible securities of any quality,
including unrated securities or securities rated below investment grade (Ba or
lower by Moody's, BB or lower by S&P). However, a Fund will not purchase any
security in default at the time of purchase. None of the Funds will invest more
than 20% of the market value of its assets at the time of purchase in
convertible securities rated below investment grade.
Securities rated below investment grade are subject to greater risk
that adverse changes in the financial condition of their issuers or in general
economic conditions, or an unanticipated rise in interest rates, may impair the
ability of their issuers to make payments of interest and principal or
dividends. The market prices of lower grade securities are generally less
sensitive to interest rate changes than higher-rated investments, but more
sensitive to economic changes or individual corporate developments. Periods of
economic uncertainty and change can be expected to result in volatility of
prices of these securities. Lower rated securities also may have less liquid
markets than higher rated securities, and their liquidity as well as their value
may be adversely affected by poor economic conditions. Adverse publicity and
investor perceptions as well as new or proposed laws may also have a negative
impact on the market for high-yield/high-risk bonds. In the event of an
unanticipated default, a Fund will experience a reduction in its income and
could expect a decline in the market value of the securities affected. The
prices of these securities may be more volatile and the markets for them may be
less liquid than those for higher-rated securities.
Unrated securities, while not necessarily of lower quality than rated
securities, may not have as broad a market. Unrated securities will be included
in a Fund's percentage limits for investments rated below investment grade,
unless the Fund's adviser deems such securities to be the equivalent of
investment grade. If securities purchased by a Fund are downgraded following
purchase, or if other circumstances cause the Fund to exceed its percentage
limits on assets invested in securities rated below investment grade, the
director or trustees of the Fund, in consultation with the Fund's adviser, will
determine what action, if any, is appropriate in light of all relevant
circumstances.
Relying in part on ratings assigned by credit agencies in making
investments will not protect a Fund from the risk that the securities will
decline in value, since credit ratings represent evaluations of the safety of
principal, dividend and/or interest payments, and not the market values of such
securities. Moreover, such ratings may not be changed on a timely basis to
reflect subsequent events.
Although the market for high-yield debt securities has been in
existence for many years and from time to time has experienced economic
downturns, this market has involved a significant increase in the use of
high-yield debt securities to fund highly leveraged corporate acquisitions and
restructurings. Past experience may not, therefore, provide an accurate
indication of future performance of the high-yield debt securities market,
particularly during periods of economic recession.
Expenses incurred in recovering an investment in a defaulted security
may adversely affect a Fund's net asset value. Moreover, the reduced liquidity
of the secondary market for such securities may adversely affect the market
price of, and the ability of a Fund to value, particular securities at certain
times, thereby making it difficult to make specific valuation determinations.
CORPORATE BOND RATINGS
The ratings of fixed-income securities by Moody's and Standard & Poor's
are a generally accepted measurement of credit risk. However, they are subject
to certain limitations. Ratings are generally based upon historical events and
do not necessarily reflect the future. In addition, there is a period of time
between the issuance of a rating and the update of the rating, during which time
a published rating may be inaccurate.
- 49 -
KEY TO MOODY'S CORPORATE RATINGS
Aaa-Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edged." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa-Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A-Bonds that are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa-Bonds that are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba-Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during good and bad times over the future. Uncertainty of position
characterizes bonds of this class.
B-Bonds that are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa-Bonds that are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
Ca-Bonds that are rated Ca represent obligations that are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C-Bonds that are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic
rating classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic category.
KEY TO STANDARD & POOR'S CORPORATE RATINGS
AAA-Debt rated AAA has the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
AA-Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A-Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB-Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions, or changing
- 50 -
circumstances are more likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in higher rated categories.
BB, B, CCC, CC AND C-Debt rated BB, B, CCC, CC and C is regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and C the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are out-weighed by the large uncertainties or major risk exposures to adverse
conditions.
C1-The rating C1 is reserved for income bonds on which no interest is
being paid.
D-Debt rated D is in default, and payment of interest and/or repayment
of principal is in arrears.
PLUS (+) OR MINUS (-)-The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.
- 51 -
JANUS | ASPEN SERIES
2001 ANNUAL REPORT
Janus Aspen Growth Portfolio
Janus Aspen Aggressive Growth Portfolio
Janus Aspen Capital Appreciation Portfolio
Janus Aspen Core Equity Portfolio
Janus Aspen Balanced Portfolio
Janus Aspen Growth and Income Portfolio
Janus Aspen Strategic Value Portfolio
Janus Aspen International Growth Portfolio
Janus Aspen Worldwide Growth Portfolio
Janus Aspen Global Life Sciences Portfolio
Janus Aspen Global Technology Portfolio
Janus Aspen Global Value Portfolio
Janus Aspen Flexible Income Portfolio
Janus Aspen Money Market Portfolio
[LOGO] JANUS
Table of Contents
JANUS ASPEN SERIES
From Tom Bailey ............................................... 1
Portfolio Managers' Commentaries and Schedules of Investments
Growth Portfolio ............................................ 2
Aggressive Growth Portfolio ................................. 6
Capital Appreciation Portfolio .............................. 10
Core Equity Portfolio ....................................... 13
Balanced Portfolio .......................................... 17
Growth and Income Portfolio ................................. 23
Strategic Value Portfolio ................................... 27
International Growth Portfolio .............................. 30
Worldwide Growth Portfolio .................................. 35
Global Life Sciences Portfolio .............................. 40
Global Technology Portfolio ................................. 43
Global Value Portfolio ...................................... 47
Flexible Income Portfolio ................................... 50
Money Market Portfolio ...................................... 54
Statements of Assets and Liabilities .......................... 56
Statements of Operations ...................................... 58
Statements of Changes in Net Assets ........................... 60
Financial Highlights .......................................... 64
Notes to Schedules of Investments ............................. 75
Notes to Financial Statements ................................. 76
Explanations of Charts, Tables
and Financial Statements .................................... 83
Trustees and Officers ......................................... 86
Report of Independent Accountants ............................. 89
[LOGO] JANUS THOMAS H. BAILEY
CHIEF EXECUTIVE OFFICER
While our results reflect a difficult year overall, recently there have been
signs of improvement. Both the market and the economy have shown intermittent
signs of strength in recent months, and we are encouraged that many of our funds
finished the final three months of the year with solid performance.
Only 18 months ago we were still enjoying the longest peacetime expansion in
U.S. history and a phenomenal bull market that didn't seem to have an upper
bound. Today, with the S&P 500 Index still 25% off its March 2000 peak and the
Nasdaq Composite down more than twice that amount, we can only describe what has
been, without question, a downturn of truly immense proportions.
The Federal Reserve recognized the sudden slowdown in economic growth for what
it was - a threat to the U.S. and world economies that was virtually
unprecedented in its scope and speed. For that reason the central bank embarked
on the most aggressive rate cutting campaign in its history, and although the
economy has shown only tentative signs of recovery, we are encouraged by the
notion that the stock market has rarely failed to react - and react strongly -
to the Fed's powerful medicine.
Furthermore, we believe those companies that survive the storm will emerge
stronger for the experience - leaner, hungrier and in a much better competitive
position than before the downturn. Meanwhile, the market's extended decline has
left many outstanding franchises trading at levels that, frankly, haven't been
seen in years.
For our part, we are doing everything we can to ensure that the last 18 months
will remain an anomaly in the greater context of our solid long-term performance
record. Within the portfolios, we're focusing our efforts in areas such as
media, healthcare and financial services, looking for individual companies we
feel are best prepared to endure in the face of continued uncertainty. We've
also looked deeper into areas such as technology, analyzing spending trends to
determine exactly which firms may benefit most from today's economic and
political realities.
Operationally, we've made refinements as well. We continued to increase the
depth of our analytical team in 2001 and have continued recruiting aggressively
even as other firms in the industry have scaled back. Furthermore, in an effort
to push forward the research intensive culture that defines everything we do at
Janus, Jim Goff will be stepping up as Director of Research. As one of Janus'
original analysts, his ability to finely dissect a company's balance sheet,
inquisitive nature and natural mentoring capabilities will help our 43-person
analytical team grow their own capabilities and impact on the portfolios.
At the same time, Helen Young Hayes will assume the role as Managing Director of
Investments. She is a proven leader who has exhibited proven results and a
long-term legacy of success. Helen and Jim will work very closely together to
ensure that Janus' research effort continues to function efficiently and with a
high degree of excellence. We expect that this effort will be at the root of
Janus' continued success over the years.
We made these changes because our continued commitment to the same kind of
fundamental research that has always defined our investment process demands it.
And, as always, the driver for each individual investment continues to be our
rigorous stock selection process - one that has been developed and honed over a
period of more than 30 years.
We're convinced that this unwavering commitment will restore performance to the
levels you expect from Janus.
Thank you for your continued confidence and investment.
/s/ Tom
Tom Bailey
CEO
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
JANUS ASPEN SERIES / DECEMBER 31, 2001 1
JANUS ASPEN GROWTH PORTFOLIO
[PHOTO]
Blaine Rollins
portfolio manager
For the 12-month period ended December 31, 2001, Janus Aspen Growth Portfolio
lost 24.73% for its Institutional Shares and declined 24.90% for its Service
Shares while its benchmark, the Standard & Poor's 500 Index, dropped 11.88%.(1)
Unquestionably, 2001 was a disappointment, and I'm not happy to report the
Portfolio's failure to meet your expectations and mine. It has been a
challenging 12 months as the economy slowed, came to a near halt following the
terrorist attacks of September 11, and then started to show signs of life in the
fourth quarter. While some of our positions suffered as a result of poor
execution in a difficult economy, others were slow to recover after a wave of
reactionary selling. Nevertheless, our investment strategy remains unchanged,
and we are committed to companies that our research indicates have the best
business models and superior management teams.
In the year's closing months, the stock market rallied in anticipation of a 2002
recovery, but the economy was still under pressure. Higher unemployment levels
weighed on consumers, and a reluctance to commit to capital expenditures
tempered corporate outlooks. Meanwhile, the ongoing conflict in Afghanistan cast
an air of uncertainty over the nation. With the Federal Reserve's prime lending
rate at a 40-year low of 1.75%, however, we believe conditions are ideal for the
economy to improve at some point.
As for the Portfolio, perhaps the best evidence of our commitment to our
holdings is the Portfolio's low turnover. Many of the companies we own are
dominant players in their respective industries and have not only navigated
through the tough economic times, but also improved their market position at the
expense of weaker competitors. Eventually, these actions will pay dividends as
the economy returns to a robust state. Many of our companies have certainly been
tested, and I am very satisfied with the response of their management teams.
One such example is Bank of New York, a longtime holding that has struggled in
2001. In addition to its focus on trust management and back-office services for
the securities industry, the company has emerged as the source foreign firms
turn to when seeking to raise dollar-denominated capital. A worldwide falloff in
trading activity hurt its bottom line through the second half of the year, but
its recurring-fee and high-margin businesses continue to perform well.
Southwest Airlines also posted losses, primarily due to the aftershocks of the
events of September 11. However, in the new, more challenging air travel market,
we believe the operators with the best strategy and lowest cost will thrive. Not
only does Southwest offer low airfares, which have become increasingly
attractive to business travelers, but it is also in a position to expand into
markets where airports are apprehensive about major carriers pulling out to cut
costs. Although volumes may moderate over the next 12 months, I believe the
company is poised for solid growth.
Elsewhere, we were extremely disappointed in energy trader Enron, which declared
bankruptcy in the fourth quarter. It was a great company with a great franchise
that clearly chose the wrong method of financing its growth. Fortunately, we
took significant profits when the stock's price was peaking, so our exposure was
limited as Enron headed toward bankruptcy.
Meanwhile, as the year came to a close, some of our holdings joined in the
market rally and reversed losses, including electronic circuit manufacturer
Maxim Integrated Products. The chip sector tends to lead the technology industry
out of slumps, but our interest in Maxim extends beyond processors for personal
computers. Maxim produces circuitry for a variety of markets, including
communications, industrial and data processing, each of which requires
specialized functions and therefore is not as susceptible to mass-market price
pressures.
Looking ahead, some signs of optimism have emerged as investors are considering
the next few quarters and have concluded that the worst is most likely behind
us. However, it is impossible to know how a recovery will evolve. Lacking the
ability to predict the market's direction, we will remain focused on finding
leading companies run by top-notch managers who are focused on allocating
capital efficiently and increasing long-term shareholder value. We strongly
believe this strategy will once again deliver the results you expect.
Thank you for your continued investment in Janus Aspen Growth Portfolio.
Portfolio Asset Mix
(% of Net Assets) December 31, 2001 December 31, 2000
- --------------------------------------------------------------------------------
Equities 96.6% 93.6%
Foreign 9.7% 8.2%
Europe 2.6% 4.8%
Top 10 Equities 38.8% 37.9%
Number of Stocks 102 88
Cash and Cash Equivalents 3.4% 6.4%
- --------------------------------------------------------------------------------
(1) All returns include reinvested dividends and capital gains.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
2 JANUS ASPEN SERIES / DECEMBER 31, 2001
Average Annual Total Return
For the Periods Ended December 31, 2001
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 9/13/93)
1 Year (24.73)%
5 Year 9.05%
From Inception 11.83%
- --------------------------------------------------------------------------------
S&P 500 Index
1 Year (11.88)%
5 Year 10.70%
From Inception Date of Institutional Shares 13.70%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year (24.90)%
5 Year 8.75%
From Portfolio Inception 11.49%
- --------------------------------------------------------------------------------
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
In recent years, returns have sustained significant gains and losses due to
market volatility in the technology sector.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
Standard & Poor's is a corporation that rates stocks and corporate and municipal
bonds according to risk profiles. The S&P 500 is an index of 500 major,
large-cap US corporations. The Portfolio may differ significantly from the
securities held in the index. The index is not available for direct investment;
therefore its performance does not reflect the expenses associated with the
active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
PERFORMANCE OVERVIEW
[GRAPHIC OMITTED]
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen Growth Portfolio - Institutional Shares and the S&P 500 Index.
Janus Aspen Growth Portfolio - Institutional Shares is represented by a shaded
area of green. The S&P 500 Index is represented by a solid black line. The "y"
axis reflects the value of the investment. The "x" axis reflects the computation
periods from inception, September 13, 1993, through December 31, 2001. The lower
right quadrant reflects the ending value of the hypothetical investment in Janus
Aspen Growth Portfolio - Institutional Shares ($25,294) as compared to the S&P
500 Index ($29,032).
Average Annual Total Return
for the periods ended December 31, 2001
One Year, (24.73)%
Five Year, 9.05%
Since 9/13/93,* 11.83%
Janus Aspen Growth Portfolio
- - Institutional Shares - $25,294
S&P 500 INDEX - $29,032
*The Portfolio's inception date.
Source - Lipper, Inc. 2001.
See "Explanations of Charts and Tables."
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Common Stock - 96.6%
Advertising Sales - 0.4%
279,865 Lamar Advertising Co.* ...................... $ 11,849,484
Aerospace and Defense - 4.8%
1,887,575 Boeing Co. .................................. 73,200,158
491,770 General Dynamics Corp. ...................... 39,164,563
383,645 Lockheed Martin Corp. ....................... 17,904,712
130,269,433
Airlines - 1.1%
501,135 Ryanair Holdings PLC (ADR)*,** .............. 16,061,377
676,830 Southwest Airlines Co. ...................... 12,507,818
28,569,195
Applications Software - 0.8%
307,440 Microsoft Corp.* ............................ 20,374,049
Beverages - Non-Alcoholic - 1.4%
791,935 Coca-Cola Co. ............................... 37,339,735
Broadcast Services and Programming - 1.8%
987,963 Clear Channel Communications, Inc.* ......... 50,297,196
Cable Television - 6.8%
580,190 Charter Communications, Inc. - Class A* ..... 9,532,522
4,288,997 Comcast Corp. - Special Class A* ............ 154,403,892
527,995 Cox Communications, Inc. - Class A* ......... 22,128,270
186,064,684
Casino Hotels - 0.5%
1,563,897 Park Place Entertainment Corp.* ............. 14,340,935
Chemicals - Specialty - 0.7%
87,745 Ecolab, Inc. ................................ 3,531,736
357,655 Sigma-Aldrich Corp. ......................... 14,095,184
17,626,920
Commercial Banks - 0.4%
147,820 M&T Bank Corp. .............................. 10,768,687
Commercial Services - 0.1%
87,011 Arbitron, Inc.* ............................. 2,971,426
Commercial Services - Financial - 0.9%
719,342 Paychex, Inc. ............................... 25,069,069
Computer Services - 0.4%
525,755 Ceridian Corp.* ............................. 9,857,906
Computers - Memory Devices - 0.2%
137,805 VERITAS Software Corp.* ..................... 6,176,420
Containers - Paper and Plastic - 0.2%
89,205 Bemis Company, Inc. ......................... 4,387,102
Cosmetics and Toiletries - 4.0%
1,439,228 Colgate-Palmolive Co. ....................... 83,115,417
319,103 Procter & Gamble Co. ........................ 25,250,620
108,366,037
Data Processing and Management - 1.6%
225,370 Automatic Data Processing, Inc. ............. 13,274,293
508,015 Fiserv, Inc.* ............................... 21,499,195
177,195 SEI Investments Co. ......................... 7,993,266
42,766,754
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 3
JANUS ASPEN GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Diversified Operations - 6.9%
224,370 ARAMARK Corp. - Class B* .................... $ 6,035,553
658,256 Bombardier, Inc. - Class B .................. 6,804,170
1,805,720 Cendant Corp.* .............................. 35,410,169
1,003,438 General Electric Co. ........................ 40,217,795
506,335 Honeywell International, Inc. ............... 17,124,250
125,315 Illinois Tool Works, Inc. ................... 8,486,332
162,575 Minnesota Mining and Manufacturing Co. ...... 19,217,991
949,280 Tyco International, Ltd. .................... 55,912,592
189,208,852
E-Commerce/Services - 0.4%
181,597 eBay, Inc.* ................................. 12,148,839
Electronic Components - Semiconductors - 0.7%
224,830 National Semiconductor Corp.* ............... 6,922,516
196,670 NVIDIA Corp.* ............................... 13,157,223
20,079,739
Fiduciary Banks - 3.8%
1,695,996 Bank of New York Company, Inc. .............. 69,196,637
555,277 Northern Trust Corp. ........................ 33,438,781
102,635,418
Finance - Investment Bankers/Brokers - 1.7%
289,205 Goldman Sachs Group, Inc. ................... 26,823,764
372,454 Merrill Lynch & Company, Inc. ............... 19,412,302
46,236,066
Financial Guarantee Insurance - 2.0%
720,185 MGIC Investment Corp. ....................... 44,449,818
156,200 PMI Group, Inc. ............................. 10,466,962
54,916,780
Food - Diversified - 0.3%
178,135 General Mills, Inc. ......................... 9,264,801
Food - Retail - 0.5%
340,955 Safeway, Inc.* .............................. 14,234,871
Food - Wholesale/Distribution - 0.6%
583,610 SYSCO Corp. ................................. 15,302,254
Hospital Beds and Equipment - 0.1%
28,090 Hillenbrand Industries, Inc. ................ 1,552,534
Hotels and Motels - 0.5%
434,640 Starwood Hotels and Resorts
Worldwide, Inc. .......................... 12,974,004
Human Resources - 0.3%
253,675 Robert Half International, Inc.* ............ 6,773,122
Identification Systems and Devices - 0.5%
897,134 Symbol Technologies, Inc. ................... 14,246,488
Instruments - Scientific - 1.9%
1,071,413 Dionex Corp.* ............................... 27,331,746
241,385 Millipore Corp. ............................. 14,652,069
288,605 PerkinElmer, Inc. ........................... 10,106,947
52,090,762
Internet Brokers - 1.9%
3,283,021 Charles Schwab Corp. ........................ 50,788,335
Life and Health Insurance - 2.3%
942,395 AFLAC, Inc. ................................. 23,145,221
175,585 Principal Financial Group, Inc.* ............ 4,214,040
726,380 StanCorp Financial Group, Inc. .............. 34,321,455
61,680,716
Medical - Biomedical and Genetic - 0.6%
287,251 Genentech, Inc.* ............................ $ 15,583,367
Medical - Drugs - 0.9%
204,555 American Home Products Corp. ................ 12,551,495
297,140 Pfizer, Inc. ................................ 11,841,029
24,392,524
Medical - Hospitals - 2.5%
1,179,370 Tenet Healthcare Corp.* ..................... 69,252,606
Medical - Outpatient and Home Medical Care - 0.3%
368,790 Apria Healthcare Group, Inc.* ............... 9,216,062
Medical Instruments - 0.8%
485,290 Apogent Technologies, Inc.* ................. 12,520,482
86,745 Biomet, Inc. ................................ 2,680,421
89,050 St. Jude Medical, Inc.* ..................... 6,914,733
22,115,636
Medical Products - 1.3%
496,610 Becton, Dickinson and Co. ................... 16,462,622
222,295 Stryker Corp. ............................... 12,975,359
9,411 Synthes-Stratec, Inc. ....................... 6,552,540
35,990,521
Metal Processors and Fabricators - 0.2%
179,575 Precision Castparts Corp. ................... 5,072,994
Miscellaneous Distribution and Wholesale - 0.1%
44,675 W.W. Grainger, Inc. ......................... 2,144,400
Multi-Line Insurance - 1.8%
638,605 Allstate Corp. .............................. 21,520,988
151,405 American International Group, Inc. .......... 12,021,557
177,140 HCC Insurance Holdings, Inc. ................ 4,880,207
220,430 PartnerRe, Ltd. ............................. 11,903,220
50,325,972
Multimedia - 12.7%
6,749,958 AOL Time Warner, Inc.* ...................... 216,673,652
2,771,289 Viacom, Inc. - Class B* ..................... 122,352,409
377,220 Walt Disney Co. ............................. 7,815,998
346,842,059
Networking Products - 1.2%
1,849,929 Cisco Systems, Inc.* ........................ 33,502,214
Property and Casualty Insurance - 3.3%
1,026,265 ACE, Ltd. ................................... 41,204,540
133,405 W. R. Berkley Corp. ......................... 7,163,849
455,570 XL Capital, Ltd. - Class A .................. 41,620,875
89,989,264
Radio - 0%
2,160 Hispanic Broadcasting Corp.* ................ 55,080
Reinsurance - 1.5%
7,760 Berkshire Hathaway, Inc. - Class B* ......... 19,594,000
172,865 Everest Re Group, Ltd. ...................... 12,221,556
106,690 RenaissanceRe Holdings, Ltd. ................ 10,178,226
41,993,782
Retail - Discount - 0.5%
287,344 Costco Wholesale Corp.* ..................... 12,752,327
Retail - Drug Store - 1.9%
1,569,820 Walgreen Co. ................................ 52,840,141
SEE NOTES TO SCHEDULES OF INVESTMENTS.
4 JANUS ASPEN SERIES / DECEMBER 31, 2001
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Semiconductor Components/Integrated Circuits - 8.0%
206,867 Integrated Device Technology, Inc.* ......... $ 5,500,594
2,674,080 Linear Technology Corp. ..................... 104,396,083
2,073,601 Maxim Integrated Products, Inc.* ............ 108,884,789
218,781,466
Semiconductor Equipment - 2.2%
868,830 Applied Materials, Inc.* .................... 34,840,083
211,300 KLA-Tencor Corp.* ........................... 10,472,028
281,500 Mykrolis Corp.* ............................. 4,504,000
270,930 Novellus Systems, Inc.* ..................... 10,688,189
60,504,300
Telecommunication Equipment - 1.8%
169,341 Nokia Oyj** ................................. 4,366,507
1,824,135 Nokia Oyj (ADR)** ........................... 44,746,032
49,112,539
Television - 1.8%
1,230,691 Univision Communications, Inc. - Class A* ... 49,793,758
Tools - Hand Held - 0.6%
358,520 Stanley Works Co. ........................... 16,696,276
Transportation - Railroad - 0.5%
106,699 Canadian National Railway Co. ............... 5,126,867
171,550 Canadian National Railway Co.
- New York Shares ........................ 8,282,434
13,409,301
Transportation - Services - 1.6%
170,355 Expeditors International of Washington, Inc.. 9,701,717
627,755 United Parcel Service, Inc. - Class B ....... 34,212,647
43,914,364
Total Common Stock (cost $2,584,055,432) .................... 2,635,509,566
Short-Term Corporate Note - 1.4%
Citicorp
$ 37,000,000 1.70%, 1/2/02
(amortized cost $36,998,253) ............. 36,998,253
Time Deposit - 2.1%
State Street Bank and Trust Co.
57,600,000 1.65%, 1/2/02
(cost $57,600,000) ....................... 57,600,000
Total Investments (total cost $2,678,653,685) - 100.1% ...... 2,730,107,819
Liabilities, net of Cash, Receivables and Other Assets - (0.1%) (2,142,139)
Net Assets - 100% ........................................... $2,727,965,680
SUMMARY OF INVESTMENTS BY COUNTRY, DECEMBER 31, 2001
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Bermuda 6.3% $ 173,041,009
Canada 0.8% 20,213,471
Finland 1.8% 49,112,539
Ireland 0.6% 16,061,377
Switzerland 0.2% 6,552,540
United States++ 90.3% 2,465,126,883
- --------------------------------------------------------------------------------
Total 100.0% $2,730,107,819
++INCLUDES SHORT-TERM SECURITIES (86.8% EXCLUDING SHORT-TERM SECURITIES)
FORWARD CURRENCY CONTRACTS, OPEN AT DECEMBER 31, 2001
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
Euro 4/26/02 12,900,000 $ 11,434,830 $ 13,547
Euro 5/10/02 500,000 443,022 2,303
- --------------------------------------------------------------------------------
Total $ 11,877,852 $ 15,850
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 5
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
[PHOTO]
Jim Goff
portfolio manager
For the year ended December 31, 2001, Janus Aspen Aggressive Growth Portfolio
declined 39.45% for its Institutional Shares and 39.59% for its Service Shares.
This compares with a 0.62% loss in the S&P MidCap 400 Index.(1)
There is no question this year's performance, even within the context of a very
difficult market environment, has been unacceptable to me. Despite the negative
performance, however, we have taken some comfort in the fact that the vast
majority of our companies continued to execute extremely well. In fact, most of
our holdings met or exceeded our original earnings expectations throughout the
latter part of the year in spite of the fundamental changes brought on by an
economic recession and the events of September 11.
The attacks affected us all in a profound way. Their impact on the economy, the
markets and individual companies was equally severe. Although the relentless
profit warnings, rising unemployment and diminished capital spending left little
doubt that the U.S. economy was already weak, the disaster pushed the financial
markets down even further. However, as uncertainty surrounding the U.S. response
faded and the Federal Reserve continued its aggressive easing of short-term
interest rates, major market indices rebounded above pre-attack levels. Although
investors eyed a recovery at year-end and bid stocks upward, news on the
economic front remains mixed at best, and the verdict is still out as to when
we'll see renewed and sustainable growth.
With that said, over the past year we've modified the growth criteria used when
selecting companies for the Portfolio. Previously, a company had to be capable
of 20% annual earnings growth to be considered for inclusion. I have since
lowered that "hurdle rate" down to 15% for two reasons: First, the current
economic environment has made it exceedingly difficult to find individual
mid-cap companies capable of generating that kind of growth. Second, I realized
that the 20% hurdle rate did not allow us to maintain sufficient balance in the
Portfolio, which led to much higher volatility than I would like to see.
I have also cast a much wider valuation net, spending far more time looking at
historical ranges and other analyses, such as price-earnings relative to growth
and discounted cash flow, than I have in the past. As mentioned earlier, this
should also allow us to maintain better balance in the Portfolio, while
providing a cushion during uncertain times.
In another development intended to restore performance, we've renewed our
emphasis on new idea generation. That is, we are directing more of our efforts
to finding new investments across a broad range of industries and themes. Many
of our current holdings are a direct result of this effort, including energy
service provider Kinder Morgan, transaction processing concern Concord EFS and
advanced graphics chip-maker NVIDIA.
However, we still remain committed to some of our longer-term holdings - one
such position being cellular tower operator Crown Castle. Despite current
weakness in the telecommunications sector, Crown has continued to show steady
gains from a revenue standpoint as well as on an operating basis. Beyond that,
the company should benefit from future catalysts we see for the industry as a
whole.
For most of the year, our healthcare positions posted solid returns as investors
placed increasing value on the stability they provide during uncertain times.
Community Health Care, a rural hospital operator, has been capitalizing on a
favorable competitive environment as well as its pricing leverage with managed
care companies. Unfortunately, our gains eroded somewhat in the healthcare area
as investors rotated out of defensive issues into higher-growth technology names
late in the period.
Going forward, the economic uncertainty that has pressured stocks for much of
the last two years will take some time to fully resolve itself. However, given
our transition to steadier, more consistent growth names, we believe the
Portfolio is well-positioned regardless of the economic climate. While periods
such as this are difficult to navigate, we look forward to the coming months
with a growing sense of optimism, believing that today's unsettled markets have
created an enormous number of compelling long-term opportunities.
This is my last letter to you as manager of this Portfolio. As of February 1,
2002, I'll assume the role of Director of Research at Janus. So that I can focus
all my attention on this position, Jonathan Coleman, a long-time member of the
Janus investment team, will assume my portfolio management responsibilities. He
and I will be working closely together, as we have for many years, to assure a
smooth transition.
Thank you for your investment in Janus Aspen Aggressive Growth Portfolio.
Portfolio Asset Mix
(% of Net Assets) December 31, 2001 December 31, 2000
- --------------------------------------------------------------------------------
Equities 90.8% 94.1%
Foreign 2.5% 1.3%
Top 10 Equities 32.5% 43.2%
Number of Stocks 70 59
Cash and Cash Equivalents 9.2% 5.9%
- --------------------------------------------------------------------------------
(1) All returns include reinvested dividends and capital gains.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
6 JANUS ASPEN SERIES / DECEMBER 31, 2001
Average Annual Total Return
For the Periods Ended December 31, 2001
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 9/13/93)
1 Year (39.45)%
5 Year 7.08%
From Inception 12.51%
- --------------------------------------------------------------------------------
S&P MidCap 400 Index
1 Year (0.62)%
5 Year 16.11%
From Inception Date of Institutional Shares 15.59%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year (39.59)%
5 Year 6.79%
From Portfolio Inception 12.22%
- --------------------------------------------------------------------------------
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
In recent years, returns have sustained significant gains and losses due to
market volatility in the technology sector.
Aggressive funds may be subject to greater price volatility.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
Standard & Poor's is a corporation that rates stocks and corporate and municipal
bonds according to risk profiles. The S&P MidCap 400 Index is an index of 400 US
corporations of medium capitalization. The Portfolio may differ significantly
from the securities held in the index. The index is not available for direct
investment; therefore its performance does not reflect the expenses associated
with the active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
PERFORMANCE OVERVIEW
[GRAPHIC OMITTED]
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen Aggressive Growth Portfolio - Institutional Shares and the S&P
MidCap 400 Index. Janus Aspen Aggressive Growth Portfolio - Institutional Shares
is represented by a shaded area of green. The S&P MidCap 400 Index is
represented by a solid black line. The "y" axis reflects the value of the
investment. The "x" axis reflects the computation periods from inception,
September 13, 1993, through December 31, 2001. The lower right quadrant reflects
the ending value of the hypothetical investment in Janus Aspen Aggressive Growth
Portfolio - Institutional Shares ($26,602) as compared to the S&P MidCap 400
Index ($33,274).
Average Annual Total Return
for the periods ended December 31, 2001
One Year, (39.45)%
Five Year, 7.08%
Since 9/13/93,* 12.51%
Janus Aspen Aggressive Growth
Portfolio - Institutional Shares
- - $26,602
S&P MidCap 400 Index
- - $33,274
*The Portfolio's inception date.
Source - Lipper, Inc. 2001.
See "Explanations of Charts and Tables."
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Common Stock - 90.8%
Advertising Sales - 1.9%
1,043,473 Lamar Advertising Co.* ...................... $ 44,180,647
Airlines - 1.2%
1,519,005 Southwest Airlines Co. ...................... 28,071,212
Broadcast Services and Programming - 0.6%
929,080 Liberty Media Corp. - Class A* .............. 13,007,120
Cable Television - 2.1%
2,875,030 Charter Communications, Inc. - Class A* ..... 47,236,743
Cellular Telecommunications - 1.5%
1,187,704 Western Wireless Corp. - Class A* ........... 33,552,638
Commercial Banks - 0.8%
461,710 National Commerce Financial Corp. ........... 11,681,263
182,975 North Fork Bancorporation, Inc. ............. 5,853,370
17,534,633
Commercial Services - 0.3%
294,420 Plexus Corp.* ............................... 7,819,795
Commercial Services - Financial - 7.4%
251,130 Certegy, Inc.* .............................. 8,593,669
2,064,755 Concord EFS, Inc.* .......................... 67,682,669
459,900 Moody's Corp. ............................... 18,331,614
2,080,583 Paychex, Inc. ............................... 72,508,318
167,116,270
Computer Services - 0.6%
133,115 Affiliated Computer Services, Inc.* ......... $ 14,127,495
Computers - Integrated Systems - 0.2%
167,625 Brocade Communications Systems, Inc.* ....... 5,551,740
Diversified Operations - 2.0%
2,352,610 Cendant Corp.* .............................. 46,134,682
Drug Delivery Systems - 2.4%
788,937 Andrx Group, Inc.* .......................... 55,549,054
E-Commerce/Services - 4.7%
1,164,740 eBay, Inc.* ................................. 77,921,106
679,538 TMP Worldwide, Inc.* ........................ 29,152,180
107,073,286
Electronic Components - Semiconductors - 6.5%
2,848,849 Cree, Inc.* ................................. 83,927,091
925,145 NVIDIA Corp.* ............................... 61,892,200
145,819,291
Electronic Design Automation - 0.5%
526,180 Cadence Design Systems, Inc.* ............... 11,533,866
Entertainment Software - 1.9%
709,445 Electronic Arts, Inc.* ...................... 42,531,228
Fiduciary Banks - 1.3%
483,880 Northern Trust Corp. ........................ 29,139,254
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 7
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Financial Guarantee Insurance - 1.0%
370,505 MGIC Investment Corp. ....................... $ 22,867,569
Hotels and Motels - 0.4%
288,425 Starwood Hotels and Resorts
Worldwide, Inc. .......................... 8,609,486
Identification Systems and Devices - 0.4%
580,310 Symbol Technologies, Inc. ................... 9,215,323
Internet Brokers - 1.4%
927,860 Charles Schwab Corp. ........................ 14,353,994
1,713,990 E*TRADE Group, Inc.* ........................ 17,568,397
31,922,391
Life and Health Insurance - 1.1%
1,027,210 AFLAC, Inc. ................................. 25,228,278
Medical - Biomedical and Genetic - 8.7%
567,905 CuraGen Corp.* .............................. 12,704,035
1,055,520 Enzon, Inc.* ................................ 59,404,666
1,738,773 Human Genome Sciences, Inc.* ................ 58,631,426
561,450 Invitrogen Corp.* ........................... 34,770,598
1,329,640 Millennium Pharmaceuticals, Inc.* ........... 32,589,476
198,100,201
Medical - Drugs - 3.7%
294,760 Forest Laboratories, Inc.* .................. 24,155,582
676,107 King Pharmaceuticals, Inc.* ................. 28,484,388
558,747 Sepracor, Inc.* ............................. 31,882,104
84,522,074
Medical - Hospitals - 2.2%
605,870 Community Health Care Corp.* ................ 15,449,685
1,856,265 Health Management Associates, Inc.
- Class A* ............................... 34,155,276
49,604,961
Medical Instruments - 2.9%
729,290 Apogent Technologies, Inc.* ................. 18,815,682
12,325 Biomet, Inc. ................................ 380,842
592,165 St. Jude Medical, Inc.* ..................... 45,981,612
65,178,136
Medical Labs and Testing Services - 3.2%
540,215 Laboratory Corporation of
America Holdings* ........................ 43,676,383
417,130 Quest Diagnostics, Inc.* .................... 29,912,392
73,588,775
Medical Nursing Home - 0.4%
363,615 Manor Care, Inc.* ........................... 8,621,312
Medical Products - 1.4%
548,310 Stryker Corp. ............................... 32,004,855
Miscellaneous Distribution/Wholesale - 0.1%
33,745 Fastenal Co. ................................ 2,241,680
Oil - Field Services - 2.4%
1,281,436 Hanover Compressor Co.* ..................... 32,369,073
896,250 Hanover Compressor Co.*,ss. ................. 22,639,275
55,008,348
Oil Companies - Exploration and Production - 1.0%
583,615 EOG Resources, Inc. ......................... 22,825,183
Oil Field Machinery and Equipment - 0.4%
341,125 Universal Compression Holdings, Inc.* ....... 10,059,776
Pipelines - 4.2%
1,725,940 Kinder Morgan, Inc. ......................... $ 96,117,599
Property and Casualty Insurance - 1.2%
168,445 W. R. Berkley Corp. ......................... 9,045,497
210,895 XL Capital, Ltd. - Class A .................. 19,267,367
28,312,864
Radio - 1.7%
457,666 Cox Radio, Inc. - Class A* .................. 11,661,330
256,046 Entercom Communications Corp.* .............. 12,802,300
538,057 Hispanic Broadcasting Corp.* ................ 13,720,453
38,184,083
Reinsurance - 3.2%
18,465 Berkshire Hathaway, Inc. - Class B* ......... 46,624,125
180,045 Everest Re Group, Ltd. ...................... 12,729,181
133,155 RenaissanceRe Holdings, Ltd. ................ 12,702,987
72,056,293
Satellite Telecommunications - 1.3%
1,079,125 EchoStar Communications Corp.* .............. 29,643,564
Schools - 3.7%
1,868,546 Apollo Group, Inc. - Class A* ............... 84,103,255
Semiconductor Components/Integrated Circuits - 1.9%
1,657,600 Integrated Device Technology, Inc.* ......... 44,075,584
Telecommunication Equipment - Fiber Optics - 0.4%
659,370 CIENA Corp.* ................................ 9,435,585
Telecommunication Services - 0.5%
334,130 Amdocs, Ltd.* ............................... 11,350,396
Therapeutics - 2.0%
700,512 Abgenix, Inc.* .............................. 23,565,224
1,159,008 Medarex, Inc.* .............................. 20,815,784
44,381,008
Transportation - Services - 0.2%
72,405 Expeditors International of Washington, Inc. 4,123,465
Wireless Equipment - 3.9%
7,148,781 Crown Castle International Corp.* ........... 76,348,981
874,365 SBA Communications Corp.* ................... 11,384,232
87,733,213
Total Common Stock (cost $2,142,501,856) .................... 2,065,094,211
Short-Term Corporate Notes - 4.6%
Citicorp
$100,000,000 1.70%, 1/2/02 ............................ 99,995,278
Tyco Capital Corp.
5,700,000 1.78%, 1/2/02 ............................ 5,699,718
Total Short-Term Corporate Notes
(amortized cost $105,694,996) ............................ 105,694,996
Time Deposits - 5.5%
Societe Generale, New York
31,300,000 1.625%, 1/2/02 ........................... 31,300,000
State Street Bank and Trust Co.
94,300,000 1.65%, 1/2/02 ............................ 94,300,000
Total Time Deposits (cost $125,600,000) ..................... 125,600,000
SEE NOTES TO SCHEDULES OF INVESTMENTS.
8 JANUS ASPEN SERIES / DECEMBER 31, 2001
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
U.S. Government Agency - 0.9%
Federal Home Loan Bank System
$ 20,000,000 1.95%, 5/1/02 (cost $19,870,000) ......... $ 19,875,000
Total Investments (total cost $2,393,666,852) - 101.8% ...... 2,316,264,207
Liabilities, net of Cash, Receivables and Other Assets - (1.8%) (41,875,339)
Net Assets - 100% ........................................... $2,274,388,868
SUMMARY OF INVESTMENTS BY COUNTRY, DECEMBER 31, 2001
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Bermuda 1.9% $ 44,699,535
United Kingdom 0.5% 11,350,396
United States++ 97.6% 2,260,214,276
- --------------------------------------------------------------------------------
Total 100.0% $2,316,264,207
++INCLUDES SHORT-TERM SECURITIES (86.7% EXCLUDING SHORT-TERM SECURITIES)
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 9
JANUS ASPEN CAPITAL APPRECIATION PORTFOLIO
[PHOTO]
Scott Schoelzel
portfolio manager
For the 12 months ended December 31, 2001, Janus Aspen Capital Appreciation
Portfolio declined 21.67% for its Institutional Shares and 21.83% for its
Service Shares. This compares with the 11.88% loss posted by its benchmark, the
S&P 500 Index.(1)
Despite some very aggressive actions taken by the Federal Reserve, business
conditions continued to deteriorate virtually across the board during the year.
Testament to this is the fact that nearly every company with whom we have met
these past few months has expressed genuine concern about the short- to
medium-term health of its business.
In response to this fading picture, early in the year we reduced some positions
and sold others entirely - in some cases before they moved significantly lower.
That said, we built a substantial cash position through the summer, which should
be looked upon more as a residual of our investment process rather than some
broad macroeconomic call on the market. We simply couldn't find many companies
with genuinely improving fundamentals at compelling valuations.
The tragic events of September 11 sent the markets reeling. We entered that
first day of trading after the attacks with nearly 24% of the Portfolio in cash.
Although economic conditions were chaotic, we felt that many valuations were,
for the first time in a long while, just too compelling to pass up.
We focused on those companies we believed were the undisputed market leaders in
their respective industries with the balance sheets, financial resources and the
management depth to get them through these unnerving times. We either bought or
added significantly to our positions in Pfizer, Microsoft, Home Depot, Exxon
Mobil and QUALCOMM. We concentrated our investments on companies that have truly
exceptional cash-generating capabilities and that are using that cash to not
only build their businesses but to aggressively buy back their own shares.
In the financial realm, we introduced positions in national powerhouses Bank of
America and J.P. Morgan Chase, which offer stable, high-cash-generative business
models. Bank of America is especially flush in leadership talent, which is
fostering a productive, seamless dovetail with the former Nations Bank
franchise. We added significantly to our holdings in Citigroup, as the stock, in
our view, was trading at some of the best valuations in nearly four years and
demonstrated a solid balance sheet with an aggressive stock repurchase effort.
Our media investments offered mixed results. AOL Time Warner, the Portfolio's
largest stock holding, is a top player in a stubbornly fickle media and
entertainment environment. We trimmed the position to buffer the impact of a
small slide, but remain a big believer in its content and subscription-based
business model.
Although we were disappointed by Exxon Mobil, we added to this undervalued
position on the downturn. We feel the company was merely caught in the near-term
collateral damage from the Enron meltdown and an unusually mild winter's drag on
fuel prices. We also lost ground with General Dynamics, which we slowly acquired
believing that defense spending would be much greater than it has been.
We trimmed a little of our General Electric position, which offered a modest
return. GE remains a top-notch holding with numerous long- and short-term profit
centers and a new president, Jeff Immelt, who is already making a positive
contribution on the heels of the much-revered Jack Welch.
Though we have increased our invested position substantially, we remain
cautious. The economic dislocations in the months ahead may still be swift and
unforgiving. The consumer is highly leveraged, there remains a tremendous amount
of excess capacity and inventory in virtually every industry, and it remains to
be seen whether one of the longest expansions in history can be followed by one
of the shallowest recessions. I am confident that our hard work, patience and
persistence will eventually be rewarded.
Thank you for your continued confidence and investment in Janus Aspen Capital
Appreciation Portfolio.
Portfolio Asset Mix
(% of Net Assets) December 31, 2001 December 31, 2000
- --------------------------------------------------------------------------------
Equities 80.2% 58.2%
Foreign 8.9% 9.5%
Europe 5.6% 2.7%
Top 10 Equities 47.0% 35.6%
Number of Stocks 28 27
Cash and Cash Equivalents 19.8% 41.8%
- --------------------------------------------------------------------------------
(1) All returns include reinvested dividends and capital gains.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
10 JANUS ASPEN SERIES / DECEMBER 31, 2001
Average Annual Total Return For the Periods Ended December 31, 2001
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 5/1/97)
1 Year (21.67)%
From Inception 17.73%
- --------------------------------------------------------------------------------
S&P 500 Index
1 Year (11.88)%
From Inception of Institutional Shares 9.51%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year (21.83)%
From Portfolio Inception 17.28%
- --------------------------------------------------------------------------------
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
In recent years, returns have sustained significant gains and losses due to
market volatility in the technology sector.
Due to recent market volatility, the Portfolio may have an increased position in
cash for temporary defensive purposes.
Concentration may lead to greater price volatility.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
Standard & Poor's is a corporation that rates stocks and corporate and municipal
bonds according to risk profiles. The S&P 500 is an index of 500 major,
large-cap US corporations. The Portfolio may differ significantly from the
securities held in the index. The index is not available for direct investment;
therefore its performance does not reflect the expenses associated with the
active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
PERFORMANCE OVERVIEW
[GRAPHIC OMITTED]
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen Capital Appreciation Portfolio - Institutional Shares and the S&P
500 Index. Janus Aspen Capital Appreciation Portfolio - Institutional Shares is
represented by a shaded area of green. The S&P 500 Index is represented by a
solid black line. The "y" axis reflects the value of the investment. The "x"
axis reflects the computation periods from inception, May 1, 1997, through
December 31, 2001. The lower right quadrant reflects the ending value of the
hypothetical investment in Janus Aspen Capital Appreciation Portfolio -
Institutional Shares ($21,422) as compared to the S&P 500 Index ($15,279).
Average Annual Total Return
for the periods ended December 31, 2001
One Year, (21.67)%
Since 5/1/97,* 17.73%
Janus Aspen Capital Appreciation Portfolio - Institutional Shares
- - $21,422
S&P 500 Index
- - $15,279
*The Portfolio's inception date.
Source - Lipper, Inc. 2001.
See "Explanations of Charts and Tables."
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Common Stock - 80.2%
Aerospace and Defense - 1.7%
269,845 General Dynamics Corp. ...................... $ 21,490,456
Applications Software - 1.8%
218,535 Microsoft Corp.* ............................ 14,482,314
311,490 Siebel Systems, Inc.* ....................... 8,715,490
23,197,804
Diversified Financial Services - 5.9%
1,489,055 Citigroup, Inc. ............................. 75,167,496
Diversified Operations - 9.0%
914,208 General Electric Co. ........................ 36,641,457
655,155 Minnesota Mining and Manufacturing Co. ...... 77,445,873
114,087,330
Electronic Components - 3.3%
1,765,157 Flextronics International, Ltd.* ............ 42,346,116
Entertainment Software - 2.9%
615,300 Electronic Arts, Inc.* ...................... 36,887,235
Finance - Investment Bankers/Brokers - 7.3%
704,380 Goldman Sachs Group, Inc. ................... 65,331,245
524,309 Merrill Lynch & Company, Inc. ............... 27,326,985
92,658,230
Medical - Drugs - 4.5%
833,725 AstraZeneca Group PLC (ADR) ................. 38,851,585
452,547 Pfizer, Inc. ................................ 18,033,998
56,885,583
Medical - HMO - 5.7%
272,495 Oxford Health Plans, Inc.* .................. $ 8,212,999
907,705 UnitedHealth Group, Inc. .................... 64,238,283
72,451,282
Medical Instruments - 4.9%
1,221,405 Medtronic, Inc. ............................. 62,548,150
Money Center Banks - 5.4%
864,335 Bank of America Corp. ....................... 54,409,888
387,450 J.P. Morgan Chase & Co. ..................... 14,083,808
68,493,696
Multimedia - 5.5%
1,973,967 AOL Time Warner, Inc.* ...................... 63,364,341
344,795 Walt Disney Co. ............................. 7,144,152
70,508,493
Oil Companies - Exploration and Production - 2.9%
661,215 Anadarko Petroleum Corp. .................... 37,590,073
Oil Companies - Integrated - 3.1%
1,002,050 Exxon Mobil Corp. ........................... 39,380,565
Retail - Building Products - 2.9%
734,648 Home Depot, Inc. ............................ 37,474,394
Retail - Regional Department Stores - 0.7%
127,930 Kohl's Corp.* ............................... 9,011,389
Satellite Telecommunications - 0.8%
383,398 EchoStar Communications Corp.* .............. 10,531,943
Super-Regional Banks - 4.3%
1,254,890 Wells Fargo & Co. ........................... 54,524,971
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 11
JANUS ASPEN CAPITAL APPRECIATION PORTFOLIO
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Telecommunication Equipment - 4.6%
1,329,562 Nokia Oyj (ADR) ............................. $ 32,614,156
523,570 QUALCOMM, Inc.* ............................. 26,440,285
59,054,441
Transportation - Services - 3.0%
698,315 United Parcel Service, Inc. - Class B ....... 38,058,168
Total Common Stock (cost $1,094,211,443) .................... 1,022,347,815
Repurchase Agreement - 8.5%
$107,900,000 ABN AMRO Bank N.V., 1.80%
dated 12/31/01, maturing 1/2/02 to be
repurchased at $107,910,790
collateralized by $152,761,226 in
Collateralized Mortgage Obligations
2.28%-7.135%, 11/25/20-12/25/40 AAA,
$428,236 in U.S. Treasury Notes/Bonds,
0%, 2/15/18 with respective values of
$109,897,129 and $160,871
(cost $107,900,000) ...................... 107,900,000
U.S. Government Agencies - 10.9%
Fannie Mae:
25,000,000 1.70%, 1/18/02 ........................... 24,979,931
25,000,000 3.27%, 4/17/02 ........................... 24,875,000
Federal Home Loan Bank System:
25,000,000 1.65%, 1/31/02 ........................... 24,965,625
15,000,000 1.75%, 4/15/02 ........................... 14,925,000
20,000,000 1.95%, 5/1/02 ............................ 19,875,000
Freddie Mac
30,000,000 1.82%, 1/29/02 ........................... 29,957,533
Total U.S. Government Agencies (cost $139,456,179) .......... 139,578,089
Total Investments (total cost $1,341,567,622) - 99.6% ....... 1,269,825,904
Cash, Receivables and Other Assets, net of Liabilities - 0.4% 4,821,036
Net Assets - 100% ........................................... $1,274,646,940
SUMMARY OF INVESTMENTS BY COUNTRY, DECEMBER 31, 2001
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Finland 2.6% $ 32,614,156
Singapore 3.3% 42,346,116
United Kingdom 3.1% 38,851,585
United States++ 91.0% 1,156,014,047
- --------------------------------------------------------------------------------
Total 100.0% $1,269,825,904
++INCLUDES SHORT-TERM SECURITIES (71.5% EXCLUDING SHORT-TERM SECURITIES)
SEE NOTES TO SCHEDULES OF INVESTMENTS.
12 JANUS ASPEN SERIES / DECEMBER 31, 2001
JANUS ASPEN CORE EQUITY PORTFOLIO
[PHOTO]
Karen L. Reidy
portfolio manager
Janus Aspen Core Equity Portfolio lost 11.75% for its Institutional Shares and
fell 12.04% for its Service Shares during the 12 months ended December 31, 2001,
while its benchmark, the Standard & Poor's 500 Index, dropped 11.88%.(1)
In what was obviously a difficult year, the U.S. economy slowed substantially.
Although the events of September 11 hastened the slide, it was under way well
ahead of the terrorist attacks, as reflected in the broad-based declines in
corporate profits and a lack of economic growth, which prompted leading
economists to declare that a recession started in March.
After steadily retreating through the first nine months of the year, the major
market indices experienced a freefall immediately following the terrorist
attacks. However, a rebound quickly occurred, and the Federal Reserve's
aggressive rate-cutting campaign, which lowered the overnight borrowing rate to
a 40-year low of 1.75%, helped spark talk of a 2002 recovery. Such sentiment,
along with optimism stemming from historically small inventories and a resilient
housing market, pushed the markets well off their lows through the final months
of the year.
As uncertain economic conditions have affected many companies' ability to
project future earnings growth, market volatility has distorted many stock
prices as well. Within this environment, we remain focused on quality companies
led by management teams with the proven ability to execute on business plans and
deliver returns even in difficult times.
Among the Portfolio's steady performers was longtime holding Anheuser-Busch. The
world's largest brewer consistently met or exceeded expectations during 2001,
even while consumer spending cooled. Supported by exceptional brand management
and an effective long-range growth and acquisition strategy, the company has
built a 48% market share - more than double that of its two largest competitors
combined. Just as important, Anheuser-Busch has gradually boosted prices in a
marketplace in which pricing power has been rare.
We've also been pleased by Minnesota Mining and Manufacturing, the diversified
industrial giant more commonly known as 3M. General Electric veteran Jim
McNerney assumed the CEO position on January 1, 2001, and immediately turned his
attention to improving the working capital structure, shoring up cash flow and
increasing the effectiveness of management. One of his first moves was altering
the research and development fund allocation model to one based on profit
margins instead of revenue generation, which had served as the company standard
for years. By rewarding innovation, lowering costs and redesigning the incentive
plan, we believe 3M stands to benefit in a number of ways when the economy
recovers.
On the downside, AT&T Wireless Services has been a poor performer, despite its
execution on earnings, cost reduction, churn and subscriber growth. The stock
was pressured by the liquidation of a large stake held by former parent AT&T.
Also negatively affecting its performance was the continuing saga surrounding
the rights for a highly desirable slice of the wireless spectrum previously
controlled by now-bankrupt NextWave Telecom. This bandwidth offers the capacity
to roll out new functionality, but its ownership is currently mired in a
controversy involving Congress. The lack of a resolution, meanwhile, has cast a
pall over the sector. Nevertheless, AT&T Wireless's solid fundamentals - not to
mention that our analyses suggest the company will be cash-flow positive in 2003
- - has convinced us to hold on to the stock.
Delphi Automotive Systems also lagged, hit early by cutbacks in 2001 automotive
production plans and later by reduced expectations for 2002. Even so, its
cost-cutting measures appear to be working. Delphi is projecting an increase in
net income for 2002 despite a drop in revenue, and reduced automobile
inventories indicate production levels could rebound soon. Optimistic about
these developments, we see considerable upside potential in the stock, so we
decided to absorb its lackluster returns during the period and maintain our
position.
Elsewhere, the Portfolio remains heavily weighted in the manufacturing and
industrial sectors, where shrinking inventory levels and 15 consecutive months
of contraction point to a recovery in the near term. Conversely, trading levels
in the technology, retail and consumer products areas may have gotten ahead of
themselves with the fourth-quarter rally. As we see it, a company's fundamentals
must support its valuations before we invest. In the end, we would rather miss a
little upside than face a large loss because a company was unable to live up to
unrealistic expectations.
Thank you for investing in Janus Aspen Core Equity Portfolio.
Portfolio Asset Mix
(% of Net Assets) December 31, 2001 December 31, 2000
- --------------------------------------------------------------------------------
Equities 89.2% 80.2%
Foreign 6.3% 3.2%
Top 10 Equities 28.0% 31.3%
Number of Stocks 66 63
Cash, Cash Equivalents
and Fixed Income Securities 10.8% 19.8%
- --------------------------------------------------------------------------------
(1) All returns include reinvested dividends and capital gains.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
Formerly, Janus Aspen Equity Income Portfolio. The Portfolio's name, investment
objective, and certain investment policies changed on 7/31/01.
JANUS ASPEN SERIES / DECEMBER 31, 2001 13
Average Annual Total Return
For the Periods Ended December 31, 2001
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 5/1/97)
1 Year (11.75)%
From Inception 19.12%
- --------------------------------------------------------------------------------
S&P 500 Index
1 Year (11.88)%
From Inception of Institutional Shares 9.51%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year (12.04)%
From Portfolio Inception 18.67%
- --------------------------------------------------------------------------------
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
Standard & Poor's is a corporation that rates stocks and corporate and municipal
bonds according to risk profiles. The S&P 500 is an index of 500 major,
large-cap US corporations. The Portfolio may differ significantly from the
securities held in the index. The index is not available for direct investment;
therefore its performance does not reflect the expenses associated with the
active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
PERFORMANCE OVERVIEW
[GRAPHIC OMITTED]
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen Core Equity Portfolio - Institutional Shares and the S&P 500
Index. Janus Aspen Core Equity Portfolio - Institutional Shares is represented
by a shaded area of green. The S&P 500 Index is represented by a solid black
line. The "y" axis reflects the value of the investment. The "x" axis reflects
the computation periods from inception, May 1, 1997, through December 31, 2001.
The lower right quadrant reflects the ending value of the hypothetical
investment in Janus Aspen Core Equity Portfolio - Institutional Shares ($22,629)
as compared to the S&P 500 Index ($15,280).
Average Annual Total Return
for the periods ended December 31, 2001
One Year, (11.75)%
Since 5/1/97,* 19.12%
Janus Aspen Core Equity Portfolio
- - Institutional Shares
- - $22,629
S&P 500 Index
- - $15,280
*The Portfolio's inception date.
Source - Lipper, Inc. 2001.
See "Explanations of Charts and Tables."
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Common Stock - 86.2%
Advertising Sales - 1.1%
3,535 Lamar Advertising Co.* ....................... $ 149,672
Agricultural Operations - 1.5%
6,215 Monsanto Co. ................................. 210,067
Applications Software - 1.5%
3,140 Microsoft Corp.* ............................. 208,088
Automotive - Cars and Light Trucks - 2.2%
4,930 BMW A.G. ..................................... 173,607
2,705 General Motors Corp. ......................... 131,463
305,070
Automotive - Truck Parts and Equipment - 1.4%
13,950 Delphi Automotive Systems Corp. .............. 190,557
Beverages - Non-Alcoholic - 0.8%
2,145 PepsiCo, Inc. ................................ 104,440
Beverages - Wine and Spirits - 1.0%
11,487 Diageo PLC ................................... 131,289
Brewery - 2.1%
6,299 Anheuser-Busch Companies, Inc. ............... 284,778
Broadcast Services and Programming - 0.9%
2,505 Clear Channel Communications, Inc.* .......... 127,530
Cable Television - 0.7%
2,563 Comcast Corp. - Special Class A* ............. 92,268
Cellular Telecommunications - 2.4%
23,021 AT&T Wireless Services, Inc.* ................ $ 330,812
Chemicals - Diversified - 1.4%
2,710 E.I. du Pont de Nemours and Co. .............. 115,202
5,365 Lyondell Chemical Co. ........................ 76,880
192,082
Computer Services - 2.7%
2,965 Electronic Data Systems Corp. ................ 203,251
7,835 Perot Systems Corp.* ......................... 159,991
363,242
Computers - 2.5%
10,960 Apple Computer, Inc.* ........................ 240,024
805 IBM Corp. .................................... 97,373
337,397
Computers - Peripheral Equipment - 1.2%
2,695 Lexmark International Group, Inc. - Class A*.. 159,005
Cosmetics and Toiletries - 2.7%
2,475 Kimberly-Clark Corp. ......................... 148,005
2,715 Procter & Gamble Co. ......................... 214,838
362,843
Data Processing and Management - 2.6%
6,098 Automatic Data Processing, Inc. .............. 359,172
Diversified Financial Services - 4.7%
12,651 Citigroup, Inc. .............................. 638,622
SEE NOTES TO SCHEDULES OF INVESTMENTS.
14 JANUS ASPEN SERIES / DECEMBER 31, 2001
JANUS ASPEN CORE EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Diversified Operations - 9.3%
9,476 General Electric Co. ................................... $ 379,798
8,860 Honeywell International, Inc. .......................... 299,645
1,905 Illinois Tool Works, Inc. .............................. 129,006
3,850 Minnesota Mining and Manufacturing Co. ................. 455,108
1,263,557
Electronic Design Automation - 1.3%
7,877 Cadence Design Systems, Inc.* .......................... 172,664
Engineering - Research and Development - 1.2%
4,415 Fluor Corp. ............................................ 165,121
Enterprise Software/Services - 0.5%
4,970 Oracle Corp.* .......................................... 68,636
Fiduciary Banks - 0.8%
2,830 Bank of New York Company, Inc. ......................... 115,464
Hotels and Motels - 1.2%
835 Fairmont Hotels and Resorts, Inc.
- New York Shares ................................... 19,957
4,765 Starwood Hotels and Resorts
Worldwide, Inc. ..................................... 142,235
162,192
Insurance Brokers - 3.9%
4,325 Aon Corp. .............................................. 153,624
3,525 Marsh & McLennan Companies, Inc. ....................... 378,761
532,385
Life and Health Insurance - 1.1%
1,595 CIGNA Corp. ............................................ 147,777
Medical - Drugs - 4.8%
5,075 American Home Products Corp. ........................... 311,402
1,580 Eli Lilly and Co. ...................................... 124,093
5,460 Pfizer, Inc. ........................................... 217,581
653,076
Medical - Hospitals - 2.1%
4,805 Tenet Healthcare Corp.* ................................ 282,150
Money Center Banks - 2.3%
2,015 Bank of America Corp. .................................. 126,844
5,330 J.P. Morgan Chase & Co. ................................ 193,745
320,589
Motorcycle and Motor Scooter Manufacturing - 0.6%
1,520 Harley-Davidson, Inc. .................................. 82,551
Multi-Line Insurance - 2.3%
3,923 American International Group, Inc. ..................... 311,486
Multimedia - 5.2%
3,930 Entravision Communications Corp.* ...................... 46,963
1,965 Gannett Company, Inc. .................................. 132,107
7,822 Viacom, Inc. - Class B* ................................ 345,341
8,830 Walt Disney Co. ........................................ 182,957
707,368
Oil Companies - Exploration and Production - 1.3%
4,790 Burlington Resources, Inc. ............................. 179,817
Oil Companies - Integrated - 1.7%
5,770 Exxon Mobil Corp. ...................................... 226,761
Property and Casualty Insurance - 2.6%
3,785 ACE, Ltd. .............................................. 151,968
2,245 XL Capital, Ltd. - Class A ............................. 205,103
357,071
Radio - 0.6%
8,020 Spanish Broadcasting System, Inc. - Class A*............ $ 79,318
Reinsurance - 1.8%
95 Berkshire Hathaway, Inc. - Class B* .................... 239,875
Retail - Discount - 1.8%
2,360 Target Corp. ........................................... 96,878
2,566 Wal-Mart Stores, Inc. .................................. 147,673
244,551
Semiconductor Components/Integrated Circuits - 2.1%
2,903 Linear Technology Corp. ................................ 113,333
3,231 Maxim Integrated Products, Inc.* ....................... 169,660
282,993
Super-Regional Banks - 1.2%
7,733 U.S. Bancorp .............................................. 161,852
Telecommunication Equipment - Fiber Optics - 0.5%
4,970 CIENA Corp.* ........................................... 71,121
Toys - 1.1%
8,910 Mattel, Inc. ........................................... 153,252
Transportation - Services - 1.5%
3,955 FedEx Corp.* ........................................... 205,185
- ------------------------------------------------------------------------------------------
Total Common Stock (cost $11,110,868) .................................. 11,733,746
- ------------------------------------------------------------------------------------------
Corporate Bonds - 1.6%
Brewery - 0.1%
$ 15,000 Anheuser-Busch Companies, Inc., 6.00%
senior notes, due 4/15/11 ........................... 15,169
Broadcast Services and Programming - 0.5%
67,000 Clear Channel Communications, Inc.
2.625%, convertible senior notes
due 4/1/03 .......................................... 68,340
Cellular Telecommunications - 0.4%
46,000 VoiceStream Wireless Corp., 10.375%
senior notes, due 11/15/09 .......................... 52,210
Chemicals - Diversified - 0.6%
78,000 Lyondell Chemical Co., 9.625%
secured notes, due 5/1/07 ........................... 78,780
- ------------------------------------------------------------------------------------------
Total Corporate Bonds (cost $215,461) .................................. 214,499
- ------------------------------------------------------------------------------------------
Preferred Stock - 3.0%
Automotive - Cars and Light Trucks - 1.3%
460 Porsche A.G. ........................................... 175,707
Cable Television - 0.4%
1,110 Cox Communications, Inc.
convertible, 7.00% .................................. 61,239
Electric - Integrated - 0.7%
1,907 Reliant Energy, Inc., convertible, 2.00%
(AOL Time Warner, Inc.) ............................. 97,257
Publishing - Newspapers - 0.6%
896 Tribune Co., convertible, 2.00% ........................ 77,791
- ------------------------------------------------------------------------------------------
Total Preferred Stock (cost $440,871) .................................. 411,994
- ------------------------------------------------------------------------------------------
U.S. Government Obligations - 0.9%
Fannie Mae:
$ 55,000 4.75%, due 11/14/03 ................................. 56,635
65,000 6.625%, due 9/15/09 ................................. 69,469
- ------------------------------------------------------------------------------------------
Total U.S. Government Obligations (cost $122,294) ...................... 126,104
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 15
JANUS ASPEN CORE EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
==========================================================================================
Repurchase Agreement - 7.4%
$ 1,000,000 ABN AMRO Bank N.V., 1.80%
dated 12/31/01, maturing 1/2/02 to be repurchased at
$1,000,100 collateralized by $1,415,767 in Collateralized
Mortgage Obligations 2.28%-7.135%, 11/25/20-12/25/40 AAA,
$3,969 in U.S. Treasury Notes/Bonds, 0%, 2/15/18 with
respective values of $1,018,509 and $1,491
(cost $1,000,000) ................................... $ 1,000,000
- ------------------------------------------------------------------------------------------
Total Investments (total cost $12,889,494) - 99.1% ..................... 13,486,343
- ------------------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 0.9%........... 118,869
- ------------------------------------------------------------------------------------------
Net Assets - 100% ...................................................... $ 13,605,212
- ------------------------------------------------------------------------------------------
SUMMARY OF INVESTMENTS BY COUNTRY, DECEMBER 31, 2001
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Bermuda 2.6% $ 357,071
Canada 0.2% 19,957
Germany 2.6% 349,314
United Kingdom 1.0% 131,289
United States++ 93.6% 12,628,712
- --------------------------------------------------------------------------------
Total 100.0% $ 13,486,343
++INCLUDES SHORT-TERM SECURITIES (86.2% EXCLUDING SHORT-TERM SECURITIES)
SEE NOTES TO SCHEDULES OF INVESTMENTS.
16 JANUS ASPEN SERIES / DECEMBER 31, 2001
JANUS ASPEN BALANCED PORTFOLIO
[PHOTO]
Karen L. Reidy
portfolio manager
For the 12 months ended December 31, 2001, Janus Aspen Balanced Portfolio fell
4.66% for its Institutional Shares and declined 4.90% for its Service Shares. By
comparison, the Standard & Poor's 500 Index, the benchmark for the equity
portion of the Portfolio, lost 11.88% and the Lehman Brothers Government/Credit
Index, the Portfolio's fixed-income benchmark, gained 8.50%.(1)
Amid optimism for an economic recovery in 2002, the major stock indices rallied
through the final months of 2001 and erased the losses posted immediately
following the September 11 terrorist attacks. Helping embolden the markets was
the Federal Reserve, which cut rates 11 times during the year to trim the key
overnight lending rate to 1.75%, a 40-year low.
With the Fed near the end of its aggressive rate-cutting campaign, we moved to
slightly shorten the duration of our bond holdings. By investing in a healthy
balance of investment-grade securities, Treasuries and mortgage-related
government agency debt, we are buffering the Portfolio from significant credit
risk while watching for signals the bond market sends about inflation.
As for our approach to equities, we insist on well-led, quality companies that
generate improving returns even in difficult times. One such holding is
Minnesota Mining and Manufacturing (3M), an industrial conglomerate run by CEO
Jim McNerney, a Jack Welch protege from General Electric. McNerney took the helm
on January 1, 2001, bringing a fresh perspective to an organization historically
known for its entrenched, bureaucratic culture. While effectively implementing
workforce and management changes in a way that has not alienated employees - I
liken it to turning on an iron instead of flipping on a light switch - he has
also streamlined the company's cost structure. When the economy does recover, we
believe 3M will be in an even stronger position and poised to gain.
Another steady performer was the world's largest brewer, Anheuser-Busch. One of
our longtime holdings, the company regularly tops performance expectations while
maintaining a commanding 48% market share. As the economy slowed in 2001 and
pricing power became scarce, Anheuser-Busch was able to gradually introduce
price increases on its leading brands. The move resulted in revenue and profit
growth while continuing to support its effective long-range growth and
acquisition strategy.
Hindering the Portfolio's performance was financial services giant Citigroup.
The recession hurt its corporate finance business, and the World Trade Center
disaster generated a $500 million loss for its insurance unit. Consequently, the
stock experienced some selling pressure. Even so, the company generates more
than $1.5 billion in cash flow on a monthly basis and continues to get stronger
as it diversifies its revenue stream away from volatile investment banking
revenues and into consistent, predictable businesses. Through acquisitions such
as Mexico's Grupo Financiero Banamex-Accival, a purchase completed during the
third quarter, Citigroup is also expanding its global presence and gaining
access to higher-growth markets without risking overexposure to any one country
or region.
Another disappointment is Exxon Mobil as it fell in lockstep with oil prices,
which hovered around $20 a barrel through the fourth quarter after spending most
of the year near $26 a barrel. The company has not missed its earning targets or
guided down revenue expectations, but, the fact is, the stock trades very
closely with the price of oil. Still, given its strong balance sheet, minimal
debt and impressive cash flow, we remain steadfast in our belief in Exxon's
future growth prospects.
Looking ahead, I believe many issues need to be resolved before the economy,
which was showing signs of a slowdown prior to the events of September 11,
regains the solid footing necessary for a recovery. Lethargic demand, soft
earnings and weak earnings outlooks continued to afflict corporate America
through the fourth quarter. Meanwhile, the rising toll of unemployment
endangered resilient consumer confidence levels. Although manufacturing, where
inventories neared historic lows, and housing, where cheap mortgage rates
continued to entice consumers, offered encouraging bright spots, corporate
profits remain a critical factor in any recovery, as they will likely determine
how quickly a bounce in capital spending occurs.
All that said, we will maintain our focus on researching companies from the
bottom up, selecting those whose returns are rising, cash flow is growing and
asset prices - whether stocks or bonds - are attractive.
Thank you for investing in Janus Aspen Balanced Portfolio.
Portfolio Asset Mix
(% of Net Assets) December 31, 2001 December 31, 2000
- --------------------------------------------------------------------------------
Equities 47.5% 42.9%
Top 10 Equities 16.1% 17.3%
Number of Stocks 66 63
Fixed Income Securities
U.S. Government Obligations 21.5% 23.0%
Corporate Bonds/Warrants
Investment Grade 18.1% 15.2%
High-Yield/High-Risk 1.0% 3.0%
Preferred Stock 1.2% 1.7%
Other Securities -- 0.3%
Cash and Cash Equivalents 10.7% 13.9%
- --------------------------------------------------------------------------------
(1) All returns include reinvested dividends and capital gains.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
JANUS ASPEN SERIES / DECEMBER 31, 2001 17
Average Annual Total Return
For the Periods Ended December 31, 2001
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 9/13/93)
1 Year (4.66)%
5 Year 14.13%
From Inception 14.31%
- --------------------------------------------------------------------------------
Lehman Brothers Government/Credit Index
1 Year 8.50%
5 Year 7.37%
From Inception Date of Institutional Shares 6.53%
- --------------------------------------------------------------------------------
S&P 500 Index
1 Year (11.88)%
5 Year 10.70%
From Inception Date of Institutional Shares 13.70%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year (4.90)%
5 Year 14.08%
From Portfolio Inception 14.31%
- --------------------------------------------------------------------------------
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Due to recent market volatility, certain funds may have an increased position in
cash for temporary defensive purposes.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
Standard & Poor's is a corporation that rates stocks and corporate and municipal
bonds according to risk profiles. S&P 500 is an index of 500 major, large-cap US
corporations. Lehman Brothers Government/Credit Index is defined as an index
consisting of more than 4,000 government and corporate bonds; managed by Lehman
Brothers. The Portfolio may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
PERFORMANCE OVERVIEW
[GRAPHIC OMITTED]
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen Balanced Portfolio - Institutional Shares, the S&P 500 Index and
the Lehman Brothers Govt./Credit Index. Janus Aspen Balanced Portfolio -
Institutional Shares is represented by a shaded area of green. The S&P 500 Index
is represented by a solid black line. The Lehman Brothers Govt./Credit Index is
represented by a solid gray line. The "y" axis reflects the value of the
investment. The "x" axis reflects the computation periods from inception,
September 13, 1993, through December 31, 2001. The upper and lower right
quadrant reflects the ending value of the hypothetical investment in Janus Aspen
Balanced Portfolio - Institutional Shares ($30,349) as compared to the S&P 500
Index ($29,032) and the Lehman Brothers Govt./Credit Index ($16,903).
Average Annual Total Return
for the periods ended December 31, 2001
One Year, (4.66)%
Five Year, 14.13%
Since 9/13/93,* 14.31%
Janus Aspen Balanced Portfolio
- - Institutional Shares - $30,349
S&P 500 INDEX - $29,032
Lehman Brothers Govt./
Credit Index
- - $16,903
*The Portfolio's inception date.
Source - Lipper, Inc. 2001.
See "Explanations of Charts and Tables."
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Common Stock - 47.5%
Agricultural Operations - 0.7%
764,960 Monsanto Co. .................................. $ 25,855,648
Applications Software - 0.8%
448,210 Microsoft Corp.* .............................. 29,702,877
Automotive - Cars and Light Trucks - 1.6%
920,609 BMW A.G. ...................................... 32,418,667
549,875 General Motors Corp. .......................... 26,723,925
59,142,592
Automotive - Truck Parts and Equipment - 0.7%
1,957,165 Delphi Automotive Systems Corp. ............... 26,734,874
Beverages - Non-Alcoholic - 0.7%
551,860 PepsiCo, Inc. ................................. 26,870,063
Beverages - Wine And Spirits - 0.4%
1,384,932 Diageo PLC .................................... 15,828,884
Brewery - 1.0%
842,309 Anheuser-Busch Companies, Inc. ................ 38,080,790
Broadcast Services and Programming - 0.8%
300,005 Clear Channel Communications, Inc.* ........... 15,273,255
923,456 Liberty Media Corp. - Class A* ................ 12,928,384
28,201,639
Cable Television - 0.4%
404,919 Comcast Corp. - Special Class A* ............. 14,577,084
Cellular Telecommunications - 1.1%
2,711,008 AT&T Wireless Services, Inc.* ................. $ 38,957,185
Chemicals - Diversified - 1.1%
641,595 E.I. du Pont de Nemours and Co. ............... 27,274,203
831,548 Lyondell Chemical Co. ......................... 11,916,083
39,190,286
Computer Services - 0.8%
433,550 Electronic Data Systems Corp. ................. 29,719,852
Computers - 1.6%
1,228,780 Apple Computer, Inc. * ........................ 26,910,282
252,435 IBM Corp. ..................................... 30,534,538
57,444,820
Computers - Peripheral Equipment - 0.6%
346,245 Lexmark International Group, Inc. - Class A* .. 20,428,455
Cosmetics and Toiletries - 1.4%
328,410 Kimberly-Clark Corp. .......................... 19,638,918
379,220 Procter & Gamble Co. .......................... 30,007,679
49,646,597
Data Processing and Management - 1.4%
865,559 Automatic Data Processing, Inc. ............... 50,981,425
Diversified Financial Services - 2.8%
2,027,071 Citigroup, Inc. ............................... 102,326,544
SEE NOTES TO SCHEDULES OF INVESTMENTS.
18 JANUS ASPEN SERIES / DECEMBER 31, 2001
JANUS ASPEN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Diversified Operations - 5.7%
1,417,664 General Electric Co. ........................ $ 56,819,973
1,626,330 Honeywell International, Inc. ............... 55,002,481
220,445 Illinois Tool Works, Inc. ................... 14,928,535
660,535 Minnesota Mining and Manufacturing Co. ...... 78,081,842
204,832,831
Electronic Components - Semiconductors - 0.2%
273,612 Texas Instruments, Inc. ..................... 7,661,136
Electronic Design Automation - 0.6%
1,046,127 Cadence Design Systems, Inc.* ............... 22,931,104
Engineering - Research and Development - 0.7%
638,655 Fluor Corp. ................................. 23,885,697
Enterprise Software/Services - 0.4%
961,660 Oracle Corp.* ............................... 13,280,525
Fiduciary Banks - 0.5%
408,420 Bank of New York Company, Inc. .............. 16,663,536
Hotels and Motels - 0.1%
120,233 Fairmont Hotels and Resorts, Inc.
- New York Shares ........................ 2,873,569
Insurance Brokers - 2.2%
619,620 Aon Corp. ................................... 22,008,902
521,835 Marsh & McLennan Companies, Inc. ............ 56,071,171
78,080,073
Life and Health Insurance - 0.7%
285,255 CIGNA Corp. ................................. 26,428,876
Medical - Drugs - 2.6%
661,955 American Home Products Corp. ................ 40,617,559
281,415 Eli Lilly and Co. ........................... 22,102,334
371,525 Pfizer, Inc. ................................ 14,805,271
448,130 Schering-Plough Corp. ....................... 16,047,535
93,572,699
Medical - Hospitals - 1.1%
677,310 Tenet Healthcare Corp.* ..................... 39,771,643
Money Center Banks - 1.4%
343,740 Bank of America Corp. ....................... 21,638,433
835,710 J.P. Morgan Chase & Co. ..................... 30,378,059
52,016,492
Motorcycle and Motor Scooter Manufacturing - 0.3%
182,343 Harley-Davidson, Inc. ....................... 9,903,048
Multi-Line Insurance - 1.3%
596,729 American International Group, Inc. .......... 47,380,283
Multimedia - 2.5%
285,745 Gannett Company, Inc. ....................... 19,210,636
1,055,416 Viacom, Inc. - Class B* ..................... 46,596,616
1,125,835 Walt Disney Co. ............................. 23,327,301
89,134,553
Oil Companies - Exploration and Production - 1.4%
367,310 Anadarko Petroleum Corp. .................... 20,881,573
773,917 Burlington Resources, Inc. .................. 29,052,844
49,934,417
Oil Companies - Integrated - 1.5%
1,282,340 Exxon Mobil Corp. ........................... 50,395,962
145,313 PanCanadian Energy Corp. .................... 3,759,680
54,155,642
Property and Casualty Insurance - 1.3%
506,835 ACE, Ltd. ................................... $ 20,349,425
300,885 XL Capital, Ltd. - Class A .................. 27,488,854
47,838,279
Reinsurance - 0.8%
12,285 Berkshire Hathaway, Inc. - Class B* ......... 31,019,625
Retail - Apparel and Shoe - 0.5%
1,208,295 Gap, Inc. ................................... 16,843,632
Retail - Discount - 1.1%
469,770 Target Corp. ................................ 19,284,058
343,625 Wal-Mart Stores, Inc. ....................... 19,775,619
39,059,677
Semiconductor Components/Integrated Circuits - 0.7%
291,847 Linear Technology Corp. ..................... 11,393,707
299,247 Maxim Integrated Products, Inc.* ............ 15,713,460
27,107,167
Super-Regional Banks - 0.7%
1,224,283 U.S. Bancorp ................................ 25,624,243
Telecommunication Equipment - Fiber Optics - 0.4%
908,225 CIENA Corp.* ................................ 12,996,700
Transportation - Services - 0.9%
615,845 FedEx Corp.* ................................ 31,950,039
- --------------------------------------------------------------------------------
Total Common Stock (cost $1,688,092,329) .................... 1,718,635,101
- --------------------------------------------------------------------------------
Corporate Bonds - 19.1%
Aerospace and Defense - 0.7%
Lockheed Martin Corp.:
$ 5,790,000 7.25%, company guaranteed
notes, due 5/15/06 ....................... 6,217,013
6,195,000 8.20%, notes, due 12/1/09 ................ 6,969,375
9,700,000 7.65%, company guaranteed
notes, due 5/1/16 ........................ 10,560,875
23,747,263
Automotive - Truck Parts and Equipment - 0.5%
14,240,000 Delphi Automotive Systems Corp., 6.55%
notes, due 6/15/06 ....................... 14,257,800
5,420,000 Lear Corp., 7.96%
company guaranteed notes, due 5/15/05 .... 5,494,525
19,752,325
Beverages - Non-Alcoholic - 1.2%
Coca-Cola Enterprises, Inc.:
7,675,000 5.375%, notes, due 8/15/06 ............... 7,770,938
17,173,000 7.125%, notes, due 9/30/09 ............... 18,396,576
11,875,000 6.125%, notes, due 8/15/11 ............... 11,949,219
4,455,000 PepsiCo, Inc., 4.50%
notes, due 9/15/04 ....................... 4,510,688
42,627,421
Brewery - 1.3%
Anheuser-Busch Companies, Inc.:
9,995,000 5.65%, notes, due 9/15/08 ................ 10,182,406
9,135,000 5.75%, notes, due 4/1/10 ................. 9,123,581
13,969,000 6.00%, senior notes, due 4/15/11 ......... 14,126,151
3,600,000 7.55%, notes, due 10/1/30 ................ 4,113,000
3,750,000 6.80%, notes, due 1/15/31 ................ 3,914,063
4,925,000 6.80%, notes, due 8/20/32 ................ 5,140,469
46,599,670
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 19
JANUS ASPEN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Broadcast Services and Programming - 0.6%
Clear Channel Communications, Inc.:
$ 13,003,000 2.625%, convertible senior
notes, due 4/1/03 ........................ $ 13,263,060
9,370,000 6.00%, notes, due 11/1/06 ................ 9,217,738
22,480,798
Cable Television - 1.3%
Cox Communications, Inc.:
3,950,000 7.50%, notes, due 8/15/04 ................ 4,216,625
7,672,000 7.75%, notes, due 8/15/06 ................ 8,237,810
CSC Holdings, Inc.:
7,000,000 8.125%, debentures, due 8/15/09 .......... 7,192,500
7,170,000 7.625%, senior notes, due 4/1/11 ......... 7,178,963
18,005,000 TCI Communications, Inc., 6.375%
senior notes, due 5/1/03 ................. 18,500,138
45,326,036
Cellular Telecommunications - 0.6%
8,350,000 AT&T Wireless Services, Inc., 7.35%
senior notes, due 3/1/06 ................. 8,830,125
2,000,000 Cingular Wireless, Inc., 5.625%
notes, due 12/15/06+ ..................... 2,017,500
9,940,000 VoiceStream Wireless Corp., 10.375%
senior notes, due 11/15/09 ............... 11,281,900
22,129,525
Chemicals - Diversified - 0.7%
10,960,000 E.I. du Pont de Nemours and Co., 6.875%
notes, due 10/15/09 ...................... 11,795,700
14,933,000 Lyondell Chemical Co., 9.625%
secured notes, due 5/1/07 ................ 15,082,330
26,878,030
Commercial Banks - 0.1%
5,420,000 US Bank N.A., 5.70%
notes, due 12/15/08 ...................... 5,304,825
Computers - 0.4%
12,723,000 Sun Microsystems, Inc., 7.65%
senior notes, due 8/15/09 ................ 12,913,845
Cosmetics and Toiletries - 0.2%
8,175,000 International Flavors & Fragrances, Inc. 6.45%,
notes, due 5/15/06 ....................... 8,266,969
Diversified Financial Services - 2.6%
11,225,000 Associates Corp. of North America, 5.75%
senior notes, due 11/1/03 ................ 11,702,063
Citigroup, Inc.:
4,590,000 5.50%, notes, due 8/9/06 ................. 4,653,112
11,850,000 7.25%, subordinated notes, due 10/1/10 ... 12,694,312
5,575,000 6.50%, notes, due 1/18/11 ................ 5,735,281
General Electric Capital Corp.:
10,415,000 5.375%, notes, due 1/15/03 ............... 10,688,394
20,100,000 5.375%, notes, due 4/23/04 ............... 20,853,750
10,940,000 7.25%, notes, due 5/3/04 ................. 11,801,525
17,000,000 5.35%, notes, due 3/30/06 ................ 17,297,500
95,425,937
Diversified Operations - 0.4%
Honeywell International, Inc.:
8,950,000 5.125%, notes, due 11/1/06 ............... 8,826,937
7,165,000 6.125%, notes, due 11/1/11 ............... 7,093,350
15,920,287
Finance - Auto Loans - 0.7%
General Motors Acceptance Corp.:
$ 15,850,000 6.75%, notes, due 12/10/02 ............... $ 16,365,125
5,955,000 5.80%, notes, due 3/12/03 ................ 6,074,100
22,439,225
Finance - Consumer Loans - 0.6%
8,830,000 American General Finance Corp., 5.875%
notes, due 7/14/06 ....................... 8,962,450
Household Finance Corp.:
7,180,000 6.50%, notes, due 1/24/06 ................ 7,359,500
4,340,000 6.75%, notes, due 5/15/11 ................ 4,312,875
20,634,825
Finance - Credit Card - 0.4%
12,921,000 American Express Co., 6.75%
senior unsubordinated notes, due 6/23/04 . 13,712,411
Finance - Investment Bankers/Brokers - 0.5%
17,325,000 Salomon Smith Barney Holdings, Inc.
6.50%, notes, due 2/15/08 ................ 17,974,688
Food - Diversified - 0.6%
Kellogg Co.:
18,100,000 5.50%, notes, due 4/1/03 ................. 18,552,500
1,800,000 7.45%, debentures, due 4/1/31 ............ 1,932,750
20,485,250
Food - Retail - 1.2%
4,420,000 Fred Meyer, Inc., 7.45%
company guaranteed notes, due 3/1/08 ..... 4,745,975
Kroger Co.:
3,960,000 7.80%, notes, due 8/15/07 ................ 4,331,250
1,780,000 7.00%, senior notes, due 5/1/18 .......... 1,768,875
4,550,000 6.80%, notes, due 12/15/18 ............... 4,430,562
4,580,000 7.50%, company guaranteed notes
due 4/1/31 ............................... 4,809,000
Safeway, Inc.:
3,050,000 6.85%, senior notes, due 9/15/04 ......... 3,225,375
7,750,000 6.15%, notes, due 3/1/06 ................. 7,953,437
3,350,000 6.50%, notes, due 11/15/08 ............... 3,442,125
9,350,000 6.50%, notes, due 3/1/11 ................. 9,537,000
44,243,599
Internet Brokers - 0.3%
9,667,000 Charles Schwab Corp., 8.05%
notes, due 3/1/10 ........................ 10,416,193
Life and Health Insurance - 0.1%
2,393,000 SunAmerica, Inc., 6.75%
notes, due 10/1/07 ....................... 2,503,676
Medical - Drugs - 0.3%
9,150,000 Pfizer, Inc., 5.625%
notes, due 2/1/06 ........................ 9,413,062
2,871,000 Warner-Lambert Co., 6.00%
notes, due 1/15/08 ....................... 2,910,476
12,323,538
Medical - HMO - 0.1%
4,950,000 UnitedHealth Group, Inc., 7.50%
notes, due 11/15/05 ...................... 5,265,562
Money Center Banks - 0.3%
J.P. Morgan Chase & Co.:
4,935,000 5.625%, notes, due 8/15/06 ............... 5,015,194
6,620,000 6.75%, subordinated notes, due 2/1/11 .... 6,777,225
11,792,419
SEE NOTES TO SCHEDULES OF INVESTMENTS.
20 JANUS ASPEN SERIES / DECEMBER 31, 2001
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Multimedia - 0.3%
Viacom, Inc.:
$ 8,485,000 7.75%, senior notes, due 6/1/05 .......... $ 9,153,194
3,000,000 7.70%, company guaranteed
notes, due 7/30/10 ....................... 3,255,000
12,408,194
Oil Companies - Exploration and Production - 0.2%
7,095,000 Burlington Resources Finance Co., 7.20%
notes, due 8/15/31........................ 6,864,412
Oil Refining and Marketing - 0.2%
5,275,000 Tosco Corp., 8.125%
notes, due 2/15/30 ....................... 6,039,875
Physical Therapy and Rehabilitation Centers - 0%
HEALTHSOUTH Corp.:
1,085,000 7.375%, senior notes, due 10/1/06+ ....... 1,085,000
1,085,000 8.375%, notes, due 10/1/11+ .............. 1,117,550
2,202,550
Pipelines - 0.6%
El Paso Corp.:
8,825,000 7.00%, senior notes, due 5/15/11 ......... 8,736,750
8,825,000 8.05%, notes, due 10/15/30 ............... 9,056,656
3,600,000 Kinder Morgan, Inc., 6.45%
senior notes, due 3/1/03 ................. 3,703,500
21,496,906
Resorts and Theme Parks - 0%
1,065,000 Six Flags, Inc., 9.75%
senior notes, due 6/15/07 ................ 1,080,975
Retail - Apparel and Shoe - 0.4%
Gap, Inc.:
2,800,000 8.15%, notes, due 12/15/05+ .............. 2,415,000
11,715,000 8.80%, notes, due 12/15/08+ .............. 10,250,625
12,665,625
Retail - Building Products - 0.7%
22,425,000 Home Depot, Inc., 6.50%
senior notes, due 9/15/04 ................ 23,742,469
Retail - Discount - 1.0%
Target Corp.:
8,775,000 5.50%, notes, due 4/1/07 ................. 8,862,750
2,855,000 5.40%, notes, due 10/1/08 ................ 2,819,313
Wal-Mart Stores, Inc.:
7,850,000 5.45%, notes, due 8/1/06 ................. 8,036,438
14,340,000 6.875%, senior notes, due 8/10/09 ........ 15,505,125
35,223,626
Super-Regional Banks - 0%
1,693,000 Firstar Bank N.A., 7.125%
subordinated notes, due 12/1/09 .......... 1,779,766
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $674,370,346) ................... 692,668,715
- --------------------------------------------------------------------------------
Preferred Stock - 1.2%
Electric - Integrated - 0.5%
381,152 Reliant Energy, Inc., convertible, 2.00%,
(AOL Time Warner, Inc.) .................. 19,438,752
Oil Companies - Integrated - 0.5%
509,675 El Paso CGP Co., convertible, 6.625% ........ 16,054,762
Publishing - Newspapers - 0.2%
98,448 Tribune Co., convertible, 2.00% ............. 8,547,255
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $64,451,846) .................... 44,040,769
- --------------------------------------------------------------------------------
Warrants - 0%
Finance - Other Services - 0%
4,211 Ono Finance PLC - expires 5/31/09*,+
(cost $0) ................................ $ 37,494
- --------------------------------------------------------------------------------
U.S. Government Obligations - 21.5%
U.S. Government Agencies - 10.8%
Fannie Mae:
$ 63,735,000 4.75%, due 11/14/03 ...................... 65,629,204
90,900,000 3.125%, due 11/15/03 ..................... 90,900,000
23,780,000 5.50%, due 5/2/06 ........................ 24,493,400
14,365,000 4.75%, due 1/2/07 ........................ 14,275,219
43,935,000 6.625%, due 9/15/09 ...................... 46,955,531
13,200,000 6.25%, due 2/1/11 ........................ 13,431,000
34,150,000 5.50%, due 3/15/11 ....................... 33,552,375
Federal Home Loan Bank:
56,325,000 4.875%, due 5/14/04 ...................... 57,944,344
29,175,000 6.50%, due 11/15/05 ...................... 31,180,781
Freddie Mac
12,270,000 5.875%, due 3/21/11 ...................... 12,193,312
390,555,166
U.S. Treasury Notes/Bonds - 10.7%
17,900,000 4.75%, due 1/31/03 ....................... 18,397,083
5,350,000 2.75%, due 9/30/03 ....................... 5,342,457
70,845,000 5.875%, due 11/15/04 ..................... 75,012,103
40,760,000 6.50%, due 10/15/06 ...................... 44,391,716
33,160,000 5.50%, due 2/15/08 ....................... 34,613,071
5,545,000 5.625%, due 5/15/08 ...................... 5,812,269
16,095,000 5.50%, due 5/15/09 ....................... 16,678,927
26,910,000 5.00%, due 2/15/11 ....................... 26,827,924
25,975,000 7.25%, due 5/15/16 ....................... 30,030,477
26,435,000 6.25%, due 8/15/23 ....................... 27,983,827
29,775,000 5.25%, due 2/15/29 ....................... 27,954,556
47,375,000 6.125%, due 8/15/29 ...................... 50,280,035
22,270,000 6.25%, due 5/15/30 ....................... 24,123,755
387,448,200
- --------------------------------------------------------------------------------
Total U.S. Government Obligations (cost $767,421,792) ....... 778,003,366
- --------------------------------------------------------------------------------
Repurchase Agreement - 6.0%
216,900,000 ABN AMRO Bank N.V., 1.80%
dated 12/31/01, maturing 1/2/02 to be
repurchased at $216,921,690
collateralized by $307,079,796 in
Collateralized Mortgage Obligations
2.28%-7.135%, 11/25/20-12/25/40 AAA,
$860,838 in U.S. Treasury Notes/Bonds,
0%, 2/15/18 with respective values of
$220,914,617 and $323,383
(cost $216,900,000) ...................... 216,900,000
- --------------------------------------------------------------------------------
Short-Term Corporate Note - 1.7%
Tyco Capital Corp.
60,000,000 1.78%, 1/2/01
(amortized cost $59,997,033) ............. 59,997,033
- --------------------------------------------------------------------------------
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 21
JANUS ASPEN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
U.S. Government Agencies - 2.9%
Fannie Mae:
$ 25,000,000 3.275%, 4/17/02 .......................... $ 24,875,000
20,000,000 1.92%, 4/18/02 ........................... 19,900,000
Federal Home Loan Bank System:
25,000,000 3.55%, 1/11/02 ........................... 24,987,292
10,000,000 1.95%, 5/1/02 ............................ 9,937,500
25,000,000 1.74%, 5/15/02 ........................... 24,843,750
- --------------------------------------------------------------------------------
Total U.S. Government Agencies (cost $104,405,165) .......... 104,543,542
- --------------------------------------------------------------------------------
Total Investments (total cost $3,575,638,511) - 99.9% ....... 3,614,826,020
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 0.1% 3,175,609
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $3,618,001,629
- --------------------------------------------------------------------------------
SUMMARY OF INVESTMENTS BY COUNTRY, DECEMBER 31, 2001
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Bermuda 1.3% $ 47,838,279
Canada 0.2% 6,633,249
Germany 0.9% 32,418,667
United Kingdom 0.4% 15,866,378
United States++ 97.2% 3,512,069,447
- --------------------------------------------------------------------------------
Total 100.0% $3,614,826,020
++INCLUDES SHORT-TERM SECURITIES (86.6% EXCLUDING SHORT-TERM SECURITIES)
SEE NOTES TO SCHEDULES OF INVESTMENTS.
22 JANUS ASPEN SERIES / DECEMBER 31, 2001
JANUS ASPEN GROWTH AND INCOME PORTFOLIO
[PHOTO]
David Corkins
portfolio manager
Janus Aspen Growth and Income Portfolio declined 13.37% for its Institutional
Shares and 13.58% for its Service Shares for the fiscal year ended December 31,
2001, while its benchmark, the S&P 500 Index, fell 11.88%.(1) As of December 31,
2001, the Portfolio placed in the top quartile of its peer group, ranking 11 out
of 148 large-cap growth funds for the one-year period as tracked by Lipper,
Inc., a leading mutual fund rating company.(2)
The past year has been challenging for investors, as markets were roiled by an
economic downturn in the United States, a rash of corporate earnings
disappointments and the ongoing correction in technology valuations. Compounding
these pressures were the tragic events of September 11, which left investors in
shock and cast a shadow of uncertainty over markets worldwide. Responding to
this environment, the Federal Reserve reduced interest rates 11 times, taking
the federal funds rate to its lowest level in more than four decades. These rate
cuts helped rejuvenate consumer confidence and raise hopes for an improved
economic outlook in 2002.
We are disappointed that we must report a loss to our shareholders. Nonetheless,
we believe that our more defensive posture helped shield our investors from the
worst of the volatility. As we look ahead to position the Portfolio for a
potential economic rebound, we have made changes incrementally, relying on
disciplined analysis rather than swift reaction to market swings. For instance,
as interest rates continued to decline in the second half of the year, we took
gains on a number of our longer-term, fixed-income holdings. Given the prospects
for an improved economy, we felt that the bond market offered fewer marginal
opportunities. Consequently, we redeployed assets to take advantage of reduced
valuations in the stock market.
On the equity side, we maintained a diversified portfolio to ensure that no
single position or industry could have a disproportionate effect on performance.
At the same time, we continued to rely on a core of long-time holdings that have
earned our confidence through their execution and profitability. These are
blue-chip companies with proven management teams and established market
positions.
One standout was global financial services powerhouse Citigroup. With its
diverse product base and global reach, Citigroup is positioned for continued
growth as it taps underserved markets for credit cards, insurance and
underwriting. In August, Citigroup completed its purchase of Mexico's Grupo
Financiero Banamex-Accival, or Banacci, one of the leading commercial banks in
Mexico. This acquisition will help it leverage its technology and marketing
prowess to capitalize on Banacci's huge market share.
Another stock that provided us with stability was PepsiCo, parent of the Pepsi
Cola, Frito-Lay and Tropicana brands. The company continues to reap synergies in
the distribution of its many products. Moreover, its recent acquisition of
Quaker Oats, including the powerful Gatorade brand, offers the opportunity to
further boost incremental margins. Meanwhile, Anheuser-Busch, the world's
largest brewer, benefited from its leading brand name and dominant market share,
which helped it sustain price increases and double-digit earnings growth even in
a lackluster economy.
Detracting from our results was disappointing performance by American
International Group, a multi-line insurance company, which sold off sharply in
the third quarter after suffering roughly $800 million in losses stemming from
the terrorist attacks. Despite this setback, the insurance company's solid
capitalization, broad and profitable product lines and high credit rating
continue to win our confidence.
Additionally, several of our energy positions, including Exxon-Mobil, declined
on concerns that oil prices would continue to sag due to weaker global demand
and the failure by oil-producing nations to coordinate production cutbacks. Even
so, we felt that the drop in Exxon's stock was overstated. With its strong
business platform and ample cash flow, the company has already proven its
ability to weather economic and oil-demand cycles. Furthermore, we believe that
the stock will continue to benefit from the synergies created by Exxon's
acquisition of Mobil, a merger that strengthens Exxon's already-powerful
leverage with suppliers and customers.
Going forward, we remain cautiously optimistic on prospects for a recovery in
2002, as interest rate cuts, increased government spending and lower oil prices
take hold. At the same time, our concerns over lingering uncertainties will lead
us to maintain a relatively conservative approach that focuses on a diverse
group of companies that have proven their worth time and again. We believe this
is the best way to balance near-term risk with longer-term opportunity.
Thank you for investing in Janus Aspen Growth and Income Portfolio.
Portfolio Asset Mix
(% of Net Assets) December 31, 2001 December 31, 2000
- --------------------------------------------------------------------------------
Equities 84.3% 76.2%
Top 10 Equities 27.2% 27.2%
Number of Stocks 74 79
Fixed Income Securities 6.9% 8.8%
Cash and Cash Equivalents 8.8% 15.0%
- --------------------------------------------------------------------------------
(1) All returns include reinvested dividends and capital gains.
(2) Lipper, Inc. is a nationally recognized organization that ranks the
performance of mutual funds within a universe of funds that have similar
investment objectives. Rankings are historical and are based on total return
with capital gains and dividends reinvested.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
JANUS ASPEN SERIES / DECEMBER 31, 2001 23
Average Annual Total Return
For the Periods Ended December 31, 2001
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 5/1/98)
1 Year (13.37)%
From Inception 12.72%
- --------------------------------------------------------------------------------
S&P 500 Index
1 Year (11.88)%
From Inception of Institutional Shares 2.20%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year (13.58)%
From Portfolio Inception 12.44%
- --------------------------------------------------------------------------------
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
Standard & Poor's is a corporation that rates stocks and corporate and municipal
bonds according to risk profiles. The S&P 500 is an index of 500 major,
large-cap US corporations. The Portfolio may differ significantly from the
securities held in the index. The index is not available for direct investment;
therefore its performance does not reflect the expenses associated with the
active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
PERFORMANCE OVERVIEW
[GRAPHIC OMITTED]
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen Growth and Income Portfolio - Institutional Shares and the S&P
500 Index. Janus Aspen Growth and Income Portfolio - Institutional Shares is
represented by a shaded area of green. The S&P 500 Index is represented by a
solid black line. The "y" axis reflects the value of the investment. The "x"
axis reflects the computation periods from inception, May 1, 1998, through
December 31, 2001. The lower right quadrant reflects the ending value of the
hypothetical investment in Janus Aspen Growth and Income Portfolio -
Institutional Shares ($15,514) as compared to the S&P 500 Index ($10,832).
Average Annual Total Return
for the periods ended December 31, 2001
One Year, (13.37)%
Since 5/1/98,* 12.72%
Janus Aspen Growth and Income Portfolio
- - Institutional Shares - $15,514
S&P 500 Index
- - $10,832
*The Portfolio's inception date.
Source - Lipper, Inc. 2001.
See "Explanations of Charts and Tables."
<Table>
<Caption>
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Common Stock - 82.0%
Applications Software - 2.3%
61,845 Microsoft Corp.*............................. $ 4,098,468
Automotive - Cars and Light Trucks - 0.7%
33,315 BMW A.G. .................................... 1,173,167
Automotive - Truck Parts and Equipment - 1.0%
134,590 Delphi Automotive Systems Corp. ............. 1,838,499
Beverages - Non-Alcoholic - 2.9%
102,240 Coca-Cola Enterprises, Inc. ................. 1,936,426
65,111 PepsiCo, Inc. ............................... 3,170,255
5,106,681
Brewery - 1.4%
54,958 Anheuser-Busch Companies, Inc. .............. 2,484,651
Broadcast Services and Programming - 3.3%
18,120 Clear Channel Communications, Inc.* ......... 922,489
349,238 Liberty Media Corp. - Class A* .............. 4,889,332
5,811,821
Cable Television - 4.5%
124,438 Comcast Corp. - Special Class A* ............ 4,479,768
61,456 Cox Communications, Inc. - Class A* ......... 2,575,621
36,830 USA Networks, Inc.* ......................... 1,005,827
8,061,216
Casino Hotels - 0.7%
136,380 Park Place Entertainment Corp.* ............. 1,250,605
Cellular Telecommunications - 1.4%
172,235 AT&T Wireless Services, Inc.* ............... 2,475,017
Chemicals - Diversified - 2.0%
67,013 E.I. du Pont de Nemours and Co. ............. $ 2,848,723
53,140 Solutia, Inc. ............................... 745,023
3,593,746
Commercial Services - 0.2%
9,522 Arbitron, Inc.* ............................. 325,176
Commercial Services - Financial - 0.9%
47,002 Paychex, Inc. ............................... 1,638,020
Computer Services - 0.8%
72,570 Ceridian Corp.* ............................. 1,360,687
Computers - 1.1%
88,730 Apple Computer, Inc.* ....................... 1,943,187
Cosmetics and Toiletries - 1.1%
23,945 Procter & Gamble Co. ........................ 1,894,768
Diversified Financial Services - 4.5%
159,660 Citigroup, Inc. ............................. 8,059,637
Diversified Operations - 6.2%
97,593 General Electric Co. ........................ 3,911,527
89,115 Honeywell International, Inc. ............... 3,013,869
10,185 Minnesota Mining and Manufacturing Co. ...... 1,203,969
49,270 Tyco International, Ltd. .................... 2,902,003
11,031,368
Electric - Integrated - 0.9%
41,450 Duke Energy Corp. ........................... 1,627,327
Electronic Components - Semiconductors - 0.7%
74,330 Advanced Micro Devices, Inc.* ............... 1,178,874
SEE NOTES TO SCHEDULES OF INVESTMENTS.
24 JANUS ASPEN SERIES / DECEMBER 31, 2001
JANUS ASPEN GROWTH AND INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Engineering - Research and Development - 1.1%
50,210 Fluor Corp. ................................. $ 1,877,854
Entertainment Software - 0.5%
15,445 Electronic Arts, Inc.* ...................... 925,928
Finance - Consumer Loans - 1.5%
46,045 Household International, Inc. ............... 2,667,847
Finance - Investment Bankers/Brokers - 1.9%
22,055 Goldman Sachs Group, Inc. ................... 2,045,601
25,905 Merrill Lynch & Company, Inc. ............... 1,350,169
3,395,770
Financial Guarantee Insurance - 0.7%
20,515 MGIC Investment Corp. ....................... 1,266,186
Food - Retail - 0.2%
17,375 Kroger Co.* ................................. 362,616
Hotels and Motels - 0.4%
28,057 Fairmont Hotels and Resorts, Inc.
- New York Shares ........................ 670,562
Insurance Brokers - 3.1%
39,645 Aon Corp. ................................... 1,408,190
34,094 Marsh & McLennan Companies, Inc. ............ 3,663,400
20,200 Willis Group Holdings, Ltd.* ................ 475,710
5,547,300
Internet Brokers - 0.7%
77,991 Charles Schwab Corp. ........................ 1,206,521
Internet Security - 0.4%
19,966 VeriSign, Inc.* ............................. 759,507
Life and Health Insurance - 1.8%
11,960 CIGNA Corp. ................................. 1,108,094
42,329 John Hancock Financial Services, Inc. ....... 1,748,188
16,910 Principal Financial Group, Inc.* ............ 405,840
3,262,122
Medical - Drugs - 5.2%
25,337 Allergan, Inc. .............................. 1,901,542
47,305 American Home Products Corp. ................ 2,902,635
112,535 Pfizer, Inc. ................................ 4,484,520
9,288,697
Medical Instruments - 1.5%
51,664 Medtronic, Inc. ............................. 2,645,713
Money Center Banks - 2.1%
16,440 Bank of America Corp. ....................... 1,034,898
72,325 J.P. Morgan Chase & Co. ..................... 2,629,014
3,663,912
Motorcycle and Motor Scooter Manufacturing - 0.6%
19,568 Harley-Davidson, Inc. ....................... 1,062,738
Multi-Line Insurance - 5.6%
77,855 American International Group, Inc. .......... 6,181,687
45,391 Assicurazioni Generali ...................... 1,260,141
22,625 PartnerRe, Ltd. ............................. 1,221,750
42,410 Prudential Financial, Inc.* ................. 1,407,588
10,071,166
Multimedia - 3.3%
38,860 AOL Time Warner, Inc.* ...................... 1,247,406
84,284 Viacom, Inc. - Class B* ..................... 3,721,139
44,805 Walt Disney Co. ............................. 928,360
5,896,905
Oil Companies - Exploration and Production - 0.8%
36,620 Burlington Resources, Inc. .................. $ 1,374,715
Oil Companies - Integrated - 4.1%
39,220 Conoco, Inc. ................................ 1,109,926
116,580 Exxon Mobil Corp. ........................... 4,581,594
58,704 PanCanadian Energy Corp.
- New York Shares ........................ 1,526,304
7,217,824
Pipelines - 0.8%
10,973 El Paso Corp. ............................... 489,505
17,891 Kinder Morgan, Inc. ......................... 996,350
1,485,855
Printing - Commercial - 0.5%
25,946 Valassis Communications, Inc.* .............. 924,196
Reinsurance - 1.2%
875 Berkshire Hathaway, Inc. - Class B* ......... 2,209,375
Semiconductor Components/Integrated Circuits - 2.6%
35,640 Linear Technology Corp. ..................... 1,391,386
60,119 Maxim Integrated Products, Inc.* ............ 3,156,849
4,548,235
Super-Regional Banks - 2.2%
185,775 U.S. Bancorp ................................ 3,888,271
Telecommunication Equipment - 1.0%
74,615 Nokia Oyj (ADR) ............................. 1,830,306
Telephone - Integrated - 0.7%
93,664 Telefonica S.A.* ............................ 1,253,445
Toys - 0.8%
83,540 Mattel, Inc. ................................ 1,436,888
Transportation - Railroad - 0.1%
7,640 Fording, Inc. - New York Shares ............. 136,527
- --------------------------------------------------------------------------------
Total Common Stock (cost $147,213,267) ...................... 145,829,896
- --------------------------------------------------------------------------------
Corporate Bonds - 2.4%
Cellular Telecommunications - 0%
$ 58,000 VoiceStream Wireless Corp., 10.375%
senior notes, due 11/15/09 ............... 65,830
Finance - Investment Bankers/Brokers - 0.4%
Merrill Lynch & Company, Inc.:
445,000 6.80%, notes, due 11/3/03 ................ 468,919
200,000 6.15%, notes, due 1/26/06 ................ 207,000
675,919
Oil Companies - Exploration and Production - 0.1%
363,000 Devon Energy Corp., 0%
convertible debentures, due 6/27/20 ...... 162,442
Retail - Discount - 1.0%
1,655,000 Wal-Mart Stores, Inc., 4.375%
notes, due 8/1/03 ........................ 1,683,962
Telephone - Integrated - 0.1%
185,000 CenturyTel, Inc., 8.375%
notes, due 10/15/10 ...................... 195,406
111,000 NTL, Inc., 7.00%
convertible subordinated
notes, due 12/15/08 ...................... 10,406
205,812
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 25
JANUS ASPEN GROWTH AND INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Toys - 0.2%
Mattel, Inc.:
$ 140,000 6.00%, notes, due 7/15/03 ................ $ 138,425
250,000 6.125%, notes, due 7/15/05 ............... 242,187
380,612
Transportation - Railroad - 0.2%
365,000 Wisconsin Central Transportation Corp.
6.625%, notes, due 4/15/08 ............... 372,300
Wireless Equipment - 0.4%
1,312,000 American Tower Corp., 5.00%
convertible notes, due 2/15/10+ .......... 782,280
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $4,798,037) ..................... 4,329,157
- --------------------------------------------------------------------------------
Preferred Stock - 2.3%
Automotive - Cars and Light Trucks - 1.3%
5,947 Porsche A.G. ................................ 2,271,583
Electric - Integrated - 1.0%
35,996 Reliant Energy, Inc., convertible, 2.00%
(AOL Time Warner, Inc.) .................. 1,835,796
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $4,383,680) ..................... 4,107,379
- --------------------------------------------------------------------------------
U.S. Government Obligations - 4.5%
U.S. Treasury Notes:
$ 3,765,000 5.25%, due 8/15/03 ....................... 3,915,600
3,880,000 5.25%, due 5/15/04 ....................... 4,045,482
- --------------------------------------------------------------------------------
Total U.S. Government Obligations (cost $7,687,771) ......... 7,961,082
- --------------------------------------------------------------------------------
Repurchase Agreement - 3.8%
6,600,000 ABN AMRO Bank N.V., 1.80%
dated 12/31/01, maturing 1/2/02 to be
repurchased at $6,600,660 collateralized
by $9,344,060 in Collateralized Mortgage
Obligations 2.28%-7.135%,
11/25/20-12/25/40 AAA, $26,194 in U.S.
Treasury Notes/Bonds, 0%, 2/15/18 with
respective values of $6,722,160 and $9,840
(cost $6,600,000) ........................ 6,600,000
- --------------------------------------------------------------------------------
U.S. Government Agencies - 5.6%
Federal Home Loan Bank System:
5,000,000 1.83%, 1/11/02 ........................... 4,997,458
5,000,000 1.65%, 1/31/02 ........................... 4,993,125
- --------------------------------------------------------------------------------
Total U.S. Government Agencies (amortized cost $9,990,583) .. 9,990,583
- --------------------------------------------------------------------------------
Total Investments (total cost $180,673,338) - 100.6% ........ 178,818,097
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets -
(0.6%) .................................................... (1,005,471)
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $ 177,812,626
- --------------------------------------------------------------------------------
SUMMARY OF INVESTMENTS BY COUNTRY, DECEMBER 31, 2001
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Bermuda 2.3% $ 4,123,753
Canada 1.3% 2,333,393
Finland 1.0% 1,830,306
Germany 2.0% 3,444,750
Italy 0.7% 1,260,141
Spain 0.7% 1,253,445
United States++ 92.0% 164,572,309
- --------------------------------------------------------------------------------
Total 100.0% $ 178,818,097
++INCLUDES SHORT-TERM SECURITIES (82.8% EXCLUDING SHORT-TERM SECURITIES)
SEE NOTES TO SCHEDULES OF INVESTMENTS.
26 JANUS ASPEN SERIES / DECEMBER 31, 2001
JANUS ASPEN STRATEGIC VALUE PORTFOLIO
[PHOTO]
David Decker
portfolio manager
For the 12 months ended December 31, 2001, Janus Aspen Strategic Value Portfolio
declined 8.12% for its Institutional Shares and 8.38% for its Service Shares,
outpacing its benchmark, the S&P 500 Index, which saw a loss of 11.88%.(1)
The past year proved to be a very difficult one for investors and businesses
alike as the economy slowed dramatically, falling into recession as early as
spring. While the market spent much of the year searching for signs of an
economic bottom, September 11 threw an already tenuous economy into further
disarray. It is difficult to express my feelings about the events, as I know
that many readers of this letter have suffered great personal and economic
losses. I would, however, like to convey my deepest condolences to those who
suffered personally as a result of the events.
While the Portfolio has rallied back significantly from the severe capital loss
that accompanied the attacks, the damage was, nonetheless, severe. In this
context, market reaction to the events did create unique valuation discrepancies
on which we selectively bought companies at attractive prices.
As you may recall from past letters, we approach valuation as a function of cash
flows. In other words, does the company generate strong free cash flow and does
management reinvest that cash flow at a high rate of return? In some areas like
media, valuation rarely gets to levels that we believe present a compelling
relationship between risk and reward. However, companies such as Viacom and
Clear Channel Communications saw declines in their market values go
substantially below their intrinsic values during the period. These companies
are strong generators of cash with very solid management teams. For us, the
issue has always been valuation. We felt that following September 11, the market
valuation increasingly reflected the short-term outlook and not the intrinsic
value of the cash flows these companies will generate over time. We therefore
built a substantial position in each.
The failed takeover of Honeywell by General Electric provided a unique
opportunity to buy the former company at a discounted price. Honeywell will
certainly suffer along with all companies involved in commercial aerospace.
However, we have tremendous confidence in new CEO Larry Bossidy's ability to
restructure the company and help it generate substantially greater cash flow, at
a higher rate of return, than it has to date. We feel Honeywell's current
valuation does not fully reflect this opportunity.
We also increased our position in Teekay Shipping, a leading transporter of
petroleum and crude energy products. Following a tremendous increase in market
value earlier this year, lower freight rates due to weaker oil demand led to a
substantial decline in the company's market value. While the market continues to
be weak and potential OPEC supply cuts could further damage the environment for
freight rates, we believe the company's market value is below what its ships
alone are worth. Given Teekay's ability to generate substantial free cash flow
in an improved environment, we felt that buying the assets at a steep discount
to their true value will potentially provide excellent return with limited
downside risk.
Following a solid first half of the year, Advanced Micro Devices (AMD) suffered
a severe correction in its market value as a result of a brutal price war for
microprocessors with Intel, its leading competitor. Despite the likely continued
difficult environment, we decided to hold the position due to our belief that
AMD has substantially improved its competitive position in the market, which has
not been fully reflected in its market value. Furthermore, we are particularly
encouraged by AMD's ability to maintain market share despite the price war.
Valuing cash flows is fundamentally a function of the confidence we have in the
consistency of those cash flows. The higher the confidence in those cash flows,
the more we are willing to pay. However, as was the case with Teekay Shipping,
we will invest in companies with volatile cash flows if we can buy them at an
attractive price.
Going forward, although I do not see any clear signs of an economic turnaround,
I am encouraged by periodic anecdotal comments from companies saying things are
not getting worse. Regardless of the macroeconomic environment, we are confident
that the stocks which represent the Portfolio today offer downside support, yet
are positioned to capitalize on the disconnect between intrinsic and market
value.
Thank you for your continued confidence in Janus Aspen Strategic Value
Portfolio.
Portfolio Asset Mix
(% of Net Assets) December 31, 2001 December 31, 2000
- --------------------------------------------------------------------------------
Equities 69.5% 78.4%
Foreign 9.5% 9.2%
Europe 0.1% 0.4%
Top 10 Equities 31.9% 31.1%
Number of Stocks 47 63
Cash, Cash Equivalents
and Fixed Income Securities 30.5% 21.6%
- --------------------------------------------------------------------------------
(1) All returns include reinvested dividends and capital gains.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
JANUS ASPEN SERIES / DECEMBER 31, 2001 27
Average Annual Total Return
For the Periods Ended December 31, 2001
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 5/1/00)
1 Year (8.12)%
From Inception (4.84)%
- --------------------------------------------------------------------------------
S&P 500 Index
1 Year (11.88)%
From Portfolio Inception (12.05)%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 5/1/00)
1 Year (8.38)%
From Inception (4.88)%
- --------------------------------------------------------------------------------
This Portfolio is designed for long-term investors who can accept the special
risks associated with value investing.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Due to recent market volatility, the Portfolio may have an increased position in
cash for temporary defensive purposes.
A "nondiversified" fund has the ability to take larger positions in a smaller
number of issuers than a "diversified" fund. Nondiversified funds may experience
greater price volatility.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
Standard & Poor's is a corporation that rates stocks and corporate and municipal
bonds according to risk profiles. The S&P 500 is an index of 500 major,
large-cap US corporations. The Portfolio may differ significantly from the
securities held in the index. The index is not available for direct investment;
therefore its performance does not reflect the expenses associated with the
active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
The Adviser has contractually agreed to waive a portion of the Portfolio's
expenses. Without such waivers, the Portfolio's total returns for each class
would have been lower.
PERFORMANCE OVERVIEW
[GRAPHIC OMITTED]
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen Strategic Value Portfolio - Institutional Shares and the S&P 500
Index. Janus Aspen Strategic Value Portfolio - Institutional Shares is
represented by a shaded area of green. The S&P 500 Index is represented by a
solid black line. The "y" axis reflects the value of the investment. The "x"
axis reflects the computation periods from inception, May 1, 2000, through
December 31, 2001. The lower right quadrant reflects the ending value of the
hypothetical investment in Janus Aspen Strategic Value Portfolio - Institutional
Shares ($9,206) as compared to the S&P 500 Index ($8,074).
Average Annual Total Return
for the periods ended December 31, 2001
One Year, (8.12)%
Since 5/1/00,* (4.84)%
Janus Aspen Strategic Value Portfolio
- - Institutional Shares - $9,206
S&P 500 INDEX - $8,074
*The Portfolio's inception date.
Source - Lipper, Inc. 2001.
See "Explanations of Charts and Tables."
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Common Stock - 69.5%
Advertising Sales - 0.8%
3,970 Lamar Advertising Co.* ...................... $ 168,090
Aerospace and Defense-Equipment - 1.2%
3,200 Alliant Techsystems, Inc.* .................. 247,040
Apparel Manufacturers - 0.4%
1,680 Liz Claiborne, Inc. ......................... 83,580
Automotive - Cars and Light Trucks - 0.6%
25,000 Nissan Motor Company, Ltd. .................. 132,573
Automotive - Truck Parts and Equipment - 4.7%
10,540 Delphi Automotive Systems Corp. ............. 143,976
12,245 Lear Corp.* ................................. 467,024
10,765 Tower Automotive, Inc.* ..................... 97,208
17,810 Visteon Corp. ............................... 267,862
976,070
Broadcast Services and Programming - 1.9%
1,070 Clear Channel Communications, Inc.* ......... 54,474
24,505 Liberty Media Corp. - Class A* .............. 343,070
397,544
Building Products - Cement and Aggregate - 3.4%
28,580 Cemex S.A. (ADR) ............................ 705,926
Casino Hotels - 0.8%
14,055 Station Casinos, Inc.* ...................... 157,275
Commercial Services - 0.3%
1,741 Arbitron, Inc.* ............................. 59,455
Commercial Services - Financial - 1.0%
4,935 Moody's Corp. ............................... $ 196,709
Computer Services - 2.6%
28,815 Ceridian Corp.* ............................. 540,281
Computers - 3.2%
30,575 Apple Computer, Inc.* ....................... 669,593
Containers - Paper and Plastic - 2.2%
25,605 Packaging Corporation of America* ........... 464,731
Diversified Financial Services - 2.0%
8,051 Citigroup, Inc. ............................. 406,414
Diversified Operations - 1.3%
7,820 Honeywell International, Inc. ............... 264,472
Electronic Components - Semiconductors - 1.6%
20,520 Advanced Micro Devices, Inc.* ............... 325,447
Electronic Design Automation - 3.0%
27,840 Cadence Design Systems, Inc.* ............... 610,253
Fiduciary Banks - 0.3%
1,600 Bank of New York Company, Inc. .............. 65,280
Finance - Credit Card - 0.9%
5,110 American Express Co. ........................ 182,376
Finance - Investment Bankers/Brokers - 1.1%
3,450 Lehman Brothers Holdings, Inc. .............. 230,460
Finance - Mortgage Loan Banker - 3.4%
8,815 Fannie Mae .................................. 700,793
Life and Health Insurance - 0.9%
7,650 Principal Financial Group, Inc.* ............ 183,600
SEE NOTES TO SCHEDULES OF INVESTMENTS.
28 JANUS ASPEN SERIES / DECEMBER 31, 2001
JANUS ASPEN STRATEGIC VALUE PORTFOLIO
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Machinery - Construction and Mining - 0%
240 Terex Corp.* ................................ $ 4,210
Medical Products - 1.9%
11,710 Becton, Dickinson and Co. ................... 388,187
Multimedia - 2.4%
1,390 McGraw-Hill Companies, Inc. ................. 84,762
9,425 Viacom, Inc. - Class B* ..................... 416,114
500,876
Oil Companies - Exploration and Production - 4.3%
7,185 Anadarko Petroleum Corp. .................... 408,467
7,925 Apache Corp. ................................ 395,299
4,015 Ocean Energy, Inc. .......................... 77,088
880,854
Oil Refining and Marketing - 0.7%
12,400 SK Corp. .................................... 141,134
Petrochemicals - 0.2%
6,693 Reliance Industries, Ltd. ................... 42,355
Pipelines - 6.3%
19,122 El Paso Corp. ............................... 853,032
1,730 Kinder Morgan, Inc. ......................... 96,344
9,473 Kinder Morgan Management L.L.C.* ............ 359,027
1,308,403
Printing - Commercial - 1.7%
10,145 Valassis Communications, Inc.* .............. 361,365
Recreational Centers - 0.4%
3,550 Bally Total Fitness Holding Corp.* .......... 76,538
Reinsurance - 3.1%
255 Berkshire Hathaway, Inc. - Class B* ......... 643,875
Retail - Toy Store - 4.1%
40,610 Toys "R" Us, Inc.* .......................... 842,251
Television - 0.1%
950 SBS Broadcasting S.A.* ...................... 17,195
Tobacco - 1.4%
8,903 Vector Group, Ltd. .......................... 292,464
Toys - 0.8%
9,465 Mattel, Inc. ................................ 162,798
Transportation - Marine - 4.5%
15,855 Teekay Shipping Corp. - New York Shares ..... 552,547
38,955 Transportacion Maritima
Mexicana S.A. de C.V.* ................... 373,968
926,515
- --------------------------------------------------------------------------------
Total Common Stock (cost $13,780,866) ....................... 14,356,982
- --------------------------------------------------------------------------------
Corporate Bonds - 1.6%
Tobacco - 1.6%
$ 300,000 Vector Group, Ltd., 6.25%
convertible subordinated notes
due 7/15/08+ (cost $300,000) ............. 336,375
- --------------------------------------------------------------------------------
Repurchase Agreement - 16.0%
$ 3,300,000 ABN AMRO Bank N.V., 1.80%
dated 12/31/01, maturing 1/2/02 to be
repurchased at $3,300,330 collateralized
by $4,672,030 in Collateralized Mortgage
Obligations 2.28%-7.135%,
11/25/20-12/25/40 AAA, $13,097 in U.S.
Treasury Notes/Bonds, 0%, 2/15/18 with
respective values of $3,361,080 and $4,920
(cost $3,300,000) ........................ $ 3,300,000
- --------------------------------------------------------------------------------
U.S Government Agencies - 12.1%
Federal Home Loan Bank System:
1,000,000 1.83%, 1/11/02 ........................... 999,492
1,500,000 1.65%, 1/31/02 ........................... 1,497,937
- --------------------------------------------------------------------------------
Total U.S Government Agencies (amortized cost $2,497,429) ... 2,497,429
- --------------------------------------------------------------------------------
Total Investments (total cost $19,878,295) - 99.2% .......... 20,490,786
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 0.8% 174,241
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $ 20,665,027
- --------------------------------------------------------------------------------
SUMMARY OF INVESTMENTS BY COUNTRY, DECEMBER 31, 2001
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Bahamas 2.7% $ 552,547
India 0.2% 42,355
Japan 0.6% 132,573
Luxembourg 0.1% 17,195
Mexico 5.3% 1,079,894
South Korea 0.7% 141,134
United States++ 90.4% 18,525,088
- --------------------------------------------------------------------------------
Total 100.0% $ 20,490,786
++INCLUDES SHORT-TERM SECURITIES (62.1% EXCLUDING SHORT-TERM SECURITIES)
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 29
JANUS ASPEN INTERNATIONAL GROWTH PORTFOLIO
[PHOTO]
Helen Young Hayes
portfolio manager
[PHOTO]
Brent Lynn
portfolio manager
Janus Aspen International Growth Portfolio's Institutional Shares fell 23.23%
for the 12-month period ended December 31, 2001, while the Portfolio's Service
Shares declined 23.43%. This compares to the 21.44% loss posted by its
benchmark, the Morgan Stanley Capital International EAFE Index.(1)
The Portfolio's weak performance came as a rapid slowdown in economic growth
worldwide set the tone for the year. In November of 2000, political uncertainty
created by the controversy surrounding the U.S. presidential election catalyzed
a sudden and severe drop in capital spending by companies in the newly
deregulated telecom industry. This sharp drop in spending impacted a wide range
of technology companies, and, by the first quarter of 2001, virtually all of
corporate America was slashing spending and growing cautious. Before long, that
weakness had spread overseas, and by the second quarter, virtually all major
economies in Europe showed signs of a significant slowdown in growth. The story
was much the same in Asia, where many of the region's developing economies
suffered from a sharp fall-off in demand from the U.S., and while Japanese
exporters benefited from a decline in the yen, the Japanese domestic economy
remained in a severe slump. Latin American companies, with their export ties to
the U.S., experienced similar retrenchment. Economic uncertainty reached a
climax with the September 11 World Trade Center tragedy, and central banks moved
decisively in the autumn to lower interest rates and provide the markets with
some much needed liquidity.
Stocks reacted by falling nearly across the board. Virtually all major European
markets finished the year with losses, while Japan's Nikkei 225 Index traded at
or near lows not seen in 17 years. Though investors eyed a recovery in the
fourth quarter and bid many stock prices up, especially in the technology
sector, the NASDAQ Composite Index lost roughly 20% of its value during the
period.
Throughout most of the year, we responded to this weakness by taking a more
defensive stance than we have in the past, although in hindsight we would have
liked to respond more rapidly in the first quarter. In addition to maintaining a
substantial cash position, we sold stocks we believed were at risk for further
earnings disappointments while adding companies we believe are capable of
performing well in a slow- or zero-growth environment, including several
healthcare and consumer products businesses. After September 11, we took
advantage of the considerable volatility and deployed some of our cash to invest
in select companies whose stocks we believe overreacted.
Not surprisingly, healthcare and consumer products stocks were our strong
performers, given the uncertain economic environment. Stocks that we added to
the Portfolio included diverse companies like Reckitt Benckiser, Diageo and
Smith & Nephew. A global household products company, Reckitt Benckiser, is
experiencing faster top-line growth than the industry due to its product
innovation pipeline and mix of business. The company still has significant
opportunities to expand its margins, and we believe its high cash-generation is
undervalued by the market. With regard to Diageo, recent acquisitions and
divestments have enabled the company to focus solely on its global leadership
position in spirits. New marketing efforts lead us to believe there is
significant potential for Diageo to restructure its distribution and to use its
strong cash-generation to repurchase shares. Medical device company Smith &
Nephew has also focused its operations. The company specializes in orthopedic
implants, trauma, arthroscopy, wound management, and rehabilitation and
concentrates primarily on fast-growing market segments that cater to an aging
demographic.
Another strong performer, albeit volatile during the period, was Porsche. For
much of the year, the deteriorating global economic environment seemed to
distract the market from numerous positive developments taking place at the
company, including booming demand for its newly updated and extremely profitable
911 models and the late-2002 launch of its new SUV. During the fourth quarter,
however, Porsche released extremely impressive results for its fiscal year,
redirecting the market's attention away from the weak economy to that of the
positive company-specific events and causing the stock to gain significantly.
Meanwhile, our exposure to wireless worked against us. Late this year, leading
Japanese wireless provider NTT DoCoMo scaled back high investor expectations for
the October 1 launch of its "third generation" wireless data service, the first
of its kind in the world. In the same period, global mobile-phone giant Vodafone
consolidated its presence in the Japanese market, aggressively gaining share
from market leader DoCoMo. These two catalysts, along with Japan's weakened
economy, combined to drive DoCoMo's shares to levels not seen since the
company's public offering in October 1998.
In closing, a significant amount of political and economic uncertainty has kept
global markets under pressure. Nonetheless, central bankers around the world
have acted in concert to inject massive amounts of liquidity in an effort to
stave off worldwide recession, and more signs of improvement are being detected
by certain businesses. While the exact timing of a recovery cannot be predicted,
we will continue to maintain a well-diversified portfolio made up of companies
that can weather the market's ongoing choppiness. That, together with the fact
that more than a year of difficult market performance has left many valuations
at compelling levels, allows us to look ahead to the coming year with a growing
sense of optimism.
Thank you for your continued investment in Janus Aspen International Growth
Portfolio.
Portfolio Asset Mix
(% of Net Assets) December 31, 2001 December 31, 2000
- --------------------------------------------------------------------------------
Equities 92.0% 82.2%
Foreign 90.2% 79.2%
Top 10 Equities 23.2% 27.4%
Number of Stocks 118 101
Cash and Cash Equivalents 8.0% 17.8%
- --------------------------------------------------------------------------------
(1) All returns include reinvested net dividends. Net dividends reinvested are
the dividends that remain to be reinvested after foreign tax obligations have
been met. Such obligations vary from country to country.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
30 JANUS ASPEN SERIES / DECEMBER 31, 2001
Average Annual Total Return
For the Periods Ended December 31, 2001
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 5/2/94)
1 Year (23.23)%
5 Year 10.32%
From Inception 13.47%
- --------------------------------------------------------------------------------
Morgan Stanley Capital International EAFE(R)Index
1 Year (21.44)%
5 Year 0.89%
From Inception Date of Institutional Shares 2.76%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year (23.43)%
5 Year 9.78%
From Portfolio Inception 13.47%
- --------------------------------------------------------------------------------
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
In recent years, returns have sustained significant gains and losses due to
market volatility in the technology sector.
Foreign investing involves special risks such as currency fluctuations and
political uncertainty.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
The Morgan Stanely Capital International EAFE(R) Index is defined as an
international index measuring market performance of 21 countries in Europe,
Australasia, and the Far East. It's divided into 8 economic sectors and 38
industry groups; managed by Morgan Stanley Capital International. The NASDAQ
Composite Stock Index (The National Association of Securities Dealers Automated
Quotation System) is defined as a nationwide computerized quotation system for
over 5,500 over-the-counter stocks. The index is compiled of more than 4,800
stocks that are traded via the system. The Nikkei Stock Average is a price
weighted index of the 225 leading stocks traded on the Tokyo Stock Exchange. It
is Japan's equivalent of the Dow Jones Stock Average. The Portfolio may differ
significantly from the securities held in the indices. The indices are not
available for direct investment; therefore their performance does not reflect
the expenses associated with the active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
All returns include reinvested net dividends. Net dividends reinvested are the
dividends that remain to be reinvested after foreign tax obligations have been
met. Such obligations vary from country to country.
PERFORMANCE OVERVIEW
[GRAPHIC OMITTED]
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen International Growth Portfolio - Institutional Shares and the
Morgan Stanley Capital International EAFE Index. Janus Aspen International
Growth Portfolio - Institutional Shares is represented by a shaded area of
green. The Morgan Stanley Capital International EAFE(R) Index is represented by
a solid black line. The "y" axis reflects the value of the investment. The "x"
axis reflects the computation periods from inception, May 2, 1994, through
December 31, 2001. The lower right quadrant reflects the ending value of the
hypothetical investment in Janus Aspen International Growth Portfolio -
Institutional Shares ($26,349) as compared to the Morgan Stanley Capital
International EAFE(R) Index ($12,318).
Average Annual Total Return
for the periods ended December 31, 2001
One Year, (23.23)%
Five Year, 10.32%
Since 5/2/94,* 13.47%
Janus Aspen International Growth Portfolio - Institutional Shares - $26,349
Morgan Stanley Capital
International EAFE(R)
Index - $12,318
*The Portfolio's inception date.
Source - Lipper, Inc. 2001.
See "Explanations of Charts and Tables."
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Common Stock - 88.7%
Advertising Services - 0.3%
437,410 WPP Group PLC** ............................. $ 4,844,938
Aerospace and Defense - 0.7%
426,433 Embraer-Empresa Brasileira de
Aeronautica S.A. (ADR) ................... 9,436,962
Applications Software - 0.8%
43,153 Infosys Technologies, Ltd. .................. 3,645,543
1,530,886 Satyam Computer Services, Ltd. .............. 7,502,040
11,147,583
Audio and Video Products - 0.9%
284,900 Sony Corp.** ................................ 13,021,145
Automotive - Cars and Light Trucks - 2.3%
146,794 BMW A.G.** .................................. 5,169,258
2,632,000 Nissan Motor Company, Ltd.** ................ 13,957,274
501,000 Toyota Motor Corp.** ........................ 12,691,288
31,817,820
Beverages - Wine and Spirits - 1.2%
1,444,867 Diageo PLC** ................................ 16,513,903
Brewery - 3.0%
90,385 Heineken N.V.** ............................. 3,427,500
1,055,365 Interbrew S.A.** ............................ 28,894,904
1,463,000 Kirin Brewery Company, Ltd.** ............... 10,459,570
42,781,974
Broadcast Services and Programming - 2.0%
659,511 Grupo Televisa S.A. (GDR)*,** ............... $ 28,477,685
Building - Heavy Construction - 0.5%
52,156 Technip-Coflexip S.A.** ..................... 6,965,768
Cable Television - 1.3%
868,093 Shaw Communications, Inc. - Class B** ....... 18,370,555
Cellular Telecommunications - 6.9%
700,655 America Movil S.A. de C.V.
- Series L (ADR)** ....................... 13,648,759
7,606,640 China Mobile, Ltd.*,** ...................... 26,776,902
2,782 NTT DoCoMo, Inc.** .......................... 32,689,460
772,235 Rogers Communications, Inc. - Class B*,** ... 13,120,051
4,473,557 Vodafone Group PLC** ........................ 11,703,294
97,938,466
Chemicals - Diversified - 0.5%
163,429 Akzo Nobel N.V.** ........................... 7,297,490
Chemicals - Specialty - 0.6%
174,551 Syngenta A.G.*,** ........................... 9,041,424
Commercial Banks - 0.7%
27,870 Julius Baer Holding, Ltd.** ................. 9,400,285
Computer Services - 1.0%
62,900 Cap Gemini S.A.** ........................... 4,541,977
2,458,957 Computershare, Ltd. ......................... 6,645,992
115,978 Tietoenator Oyj** ........................... 3,025,636
14,213,605
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 31
JANUS ASPEN INTERNATIONAL GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Computers - 1.1%
29,496,000 Legend Holdings, Ltd.** ..................... $ 15,035,760
Decision Support Software - 0.7%
502,447 Thiel Logistik A.G.*,** ..................... 9,797,332
Diversified Financial Services - 1.1%
346,840 Deutsche Boerse A.G.**,+ .................... 13,742,402
116,270 Euronext*,** ................................ 2,199,885
15,942,287
Diversified Operations - 6.8%
1,955,732 BBA Group PLC** ............................. 7,989,876
831,209 Bombardier, Inc. - Class B** ................ 8,591,926
109,640 Siemens A.G.** .............................. 7,258,108
580,842 Smiths Group PLC** .......................... 5,726,922
1,122,060 Tyco International, Ltd. .................... 66,089,334
95,656,166
Electronic Components - 0.9%
234,187 Koninklijke (Royal) Philips
Electronics N.V.** ....................... 6,960,213
23,990 Samsung Electronics** ....................... 5,095,706
12,055,919
Electronic Components - Semiconductors - 2.0%
47,000 Rohm Company, Ltd.** ........................ 6,100,031
652,538 STMicroelectronics N.V.** ................... 20,945,200
52,038 STMicroelectronics N.V.
- New York Shares** ...................... 1,648,043
28,693,274
Electronic Security Devices - 1.4%
7,878,950 Chubb PLC** ................................. 19,693,780
Engineering - Research and Development - 0.4%
140,595 Altran Technologies S.A.** .................. 6,353,007
Finance - Mortgage Loan Banker - 0.2%
219,025 Housing Development Finance
Corporation, Ltd. (HDFC) ................. 3,011,707
Food - Diversified - 2.0%
333,972 Orkla A.S.A. ................................ 5,659,735
381,945 Unilever N.V.** ............................. 22,393,916
28,053,651
Food - Retail - 2.6%
948,446 Koninklijke Ahold N.V.** .................... 27,597,396
1,977,927 Safeway PLC** ............................... 9,211,842
36,809,238
Hotels and Motels - 1.1%
259,298 Accor S.A.** ................................ 9,426,533
256,448 Fairmont Hotels and Resorts, Inc.** ......... 6,093,664
15,520,197
Human Resources - 1.4%
1,640,509 Capita Group PLC** .......................... 11,665,902
643,303 Vedior N.V.** ............................... 7,715,368
19,381,270
Insurance Brokers - 0.3%
187,305 Willis Group Holdings, Ltd.* ................ 4,411,033
Internet Security - 0.7%
255,151 Check Point Software Technologies, Ltd.* .... 10,177,973
Investment Management and Advisory Services - 0.9%
221,989 Amvescap PLC** .............................. $ 3,211,410
129,746 MLP A.G.** .................................. 9,519,073
12,730,483
Machinery - Electrical - 0.5%
137,777 Schneider Electric S.A.** ................... 6,624,360
Medical - Biomedical and Genetic - 0%
18,163 Cambridge Antibody Technology
Group PLC*,** ............................ 516,798
Medical - Drugs - 8.1%
379,299 AstraZeneca Group PLC** ..................... 17,113,690
146,000 Eisai Co., Ltd.** ........................... 3,631,620
381,052 GlaxoSmithKline PLC** ....................... 9,554,937
99,549 Recordati S.p.A.** .......................... 1,983,675
188,368 Roche Holding A.G.** ........................ 13,444,403
103,313 Sanofi-Synthelabo S.A.** .................... 7,708,545
70,705 Schering A.G.** ............................. 3,783,538
16,179 Serono S.A. - Class B** ..................... 14,120,046
471,000 Takeda Chemical Industries, Ltd.** .......... 21,311,082
165,225 Teva Pharmaceutical Industries, Ltd. (ADR) .. 10,182,817
452,000 Yamanouchi Pharmaceutical
Company, Ltd.** .......................... 11,932,857
114,767,210
Medical Products - 1.0%
2,239,368 Smith & Nephew PLC** ........................ 13,518,369
Metal Processors and Fabricators - 0.5%
496,577 Assa Abloy A.B. - Class B ................... 7,148,269
Miscellaneous Distribution/Wholesale - 0.2%
2,268,000 Li & Fung, Ltd.** ........................... 2,544,932
Money Center Banks - 2.7%
2,113,257 Banco Bilbao Vizcaya Argentaria S.A.** ...... 26,154,147
1,029,445 Standard Chartered PLC** .................... 12,310,366
38,464,513
Multi-Line Insurance - 2.5%
677,326 Aegon N.V.** ................................ 18,333,474
321,664 Axa** ....................................... 6,721,853
43,162 Zurich Financial Services A.G.** ............ 10,125,700
35,181,027
Multimedia - 0.5%
243,571 Corus Entertainment, Inc. - Class B*,** ..... 4,837,057
165,001 News Corporation, Ltd. ...................... 1,319,466
8,650 News Corporation, Ltd. (ADR) ................ 275,157
6,431,680
Oil - Field Services - 1.7%
573,611 Saipem S.p.A.*,** ........................... 2,802,373
380,480 Schlumberger, Ltd. .......................... 20,907,376
23,709,749
Oil Companies - Exploration and Production - 0.4%
131,800 Alberta Energy Company, Ltd.** .............. 4,968,117
Oil Companies - Integrated - 5.5%
845,954 Husky Energy, Inc.** ........................ 8,728,442
528,637 PanCanadian Energy Corp.** .................. 13,677,414
36,884 PanCanadian Energy Corp.
- New York Shares** ...................... 958,984
411,060 Petroleo Brasileiro S.A. (ADR) .............. 9,577,698
296,114 Suncor Energy, Inc.** ....................... 9,720,455
247,855 Total Fina Elf** ............................ 35,397,737
78,060,730
SEE NOTES TO SCHEDULES OF INVESTMENTS.
32 JANUS ASPEN SERIES / DECEMBER 31, 2001
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Oil Refining and Marketing - 0.2%
435,000 TonenGeneral Sekiyu K.K.** .................. $ 2,804,632
Optical Supplies - 0.6%
147,000 Hoya Corp.** ................................ 8,782,315
Petrochemicals - 1.5%
3,388,036 Reliance Industries, Ltd. ................... 21,440,464
Property and Casualty Insurance - 0.2%
330,000 Tokio Marine and Fire Insurance
Company, Ltd.** .......................... 2,412,178
Publishing - Books - 0.5%
278,846 Elsevier N.V.** ............................. 3,297,129
386,257 Reed International PLC** .................... 3,209,113
6,506,242
Publishing - Newspapers - 1.1%
1,381,782 Pearson PLC** ............................... 15,935,673
Publishing - Periodicals - 0.6%
397,209 Wolters Kluwer N.V.** ....................... 9,053,833
Reinsurance - 1.3%
16,640 Muenchener Rueckversicherungs
- Gesellschaft A.G.** .................... 4,518,836
135,121 Swiss Re** .................................. 13,591,124
18,109,960
Security Services - 1.0%
733,556 Securitas A.B. - Class B .................... 13,916,297
Semiconductor Components/Integrated Circuits - 0.4%
2,259,000 Taiwan Semiconductor Manufacturing
Company, Ltd.* ........................... 5,649,109
Semiconductor Equipment - 0.9%
167,617 ASM Lithography Holding N.V.*,** ............ 2,913,207
305,286 ASM Lithography Holding N.V.
- New York Shares*,** .................... 5,205,126
88,200 Tokyo Electron, Ltd.** ...................... 4,327,225
12,445,558
Soap and Cleaning Preparations - 1.9%
1,861,099 Reckitt Benckiser PLC** ..................... 27,130,113
Telecommunication Equipment - 1.7%
1,797,756 Datacraft Asia, Ltd. ........................ 3,919,108
395,536 Nokia Oyj** ................................. 10,199,010
384,999 Nokia Oyj (ADR)** ........................... 9,444,025
23,562,143
Telecommunication Services - 1.3%
527,733 Amdocs, Ltd.*,** ............................ 17,927,090
Telephone - Integrated - 2.9%
1,021,507 Telefonica S.A.*,** ......................... 13,670,166
789,395 Telefonos de Mexico S.A. (ADR)** ............ 27,644,613
41,314,779
Television - 1.1%
3,594,000 Television Broadcasts, Ltd.** ............... 15,578,294
Tobacco - 1.1%
2,015 Japan Tobacco, Inc.** ....................... 12,684,078
368,716 Korea Tobacco and Ginseng Corp.**,+ ......... 2,765,370
15,449,448
Transportation - Railroad - 0.5%
58,243 Canadian National Railway Co.** ............. $ 2,798,565
100,600 Canadian National Railway Co.
- New York Shares** ...................... 4,856,968
7,655,533
- --------------------------------------------------------------------------------
Total Common Stock (cost $1,267,359,986) .................... 1,252,202,095
- --------------------------------------------------------------------------------
Preferred Stock - 3.3%
Automotive - Cars and Light Trucks - 1.8%
66,121 Porsche A.G.** .............................. 25,256,325
Multimedia - 0%
130,972 News Corporation, Ltd. ...................... 874,911
Oil Companies - Integrated - 1.5%
939,723 Petroleo Brasileiro S.A. (ADR) .............. 20,890,042
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $44,487,868) .................... 47,021,278
- --------------------------------------------------------------------------------
Repurchase Agreement - 8.0%
$113,400,000 ABN AMRO Bank N.V., 1.80%
dated 12/31/01, maturing 1/2/02 to be
repurchased at $113,411,340
collateralized by $160,547,943 in
Collateralized Mortgage Obligations
2.28%-7.135%, 11/25/20-12/25/40 AAA,
$450,065 in U.S. Treasury Notes/ Bonds,
0%, 2/15/18 with respective values of
$115,498,929 and $169,071
(cost $113,400,000) ...................... 113,400,000
- --------------------------------------------------------------------------------
U.S. Government Agencies - 2.5%
Fannie Mae
25,000,000 1.95%, 4/17/02 ........................... 24,875,000
Federal Home Loan Bank System
10,000,000 1.80%, 2/4/02 ............................ 9,983,189
- --------------------------------------------------------------------------------
Total U.S. Government Agencies (cost $34,742,113) ........... 34,858,189
- --------------------------------------------------------------------------------
Total Investments (total cost $1,459,989,967) - 102.5% ...... 1,447,481,562
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (2.5%) (35,695,820)
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $1,411,785,742
- --------------------------------------------------------------------------------
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 33
JANUS ASPEN INTERNATIONAL GROWTH PORTFOLIO
SUMMARY OF INVESTMENTS BY COUNTRY, DECEMBER 31, 2001
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Australia 0.6% $ 9,115,526
Belgium 2.0% 28,894,904
Bermuda 4.6% 66,089,334
Brazil 2.8% 39,904,702
Canada 6.7% 96,722,198
Finland 1.6% 22,668,671
France 5.8% 83,739,780
Germany 4.8% 69,247,540
Hong Kong 4.1% 59,935,888
India 2.5% 35,599,754
Israel 1.4% 20,360,790
Italy 0.3% 4,786,048
Japan 10.7% 156,804,755
Luxembourg 0.7% 9,797,332
Mexico 4.8% 69,771,057
Netherlands 8.0% 116,394,537
Norway 0.4% 5,659,735
Singapore 0.3% 3,919,108
South Korea 0.5% 7,861,076
Spain 2.8% 39,824,313
Sweden 1.5% 21,064,566
Switzerland 6.4% 92,316,225
Taiwan 0.4% 5,649,109
United Kingdom 14.3% 207,778,016
United States++ 12.0% 173,576,598
- --------------------------------------------------------------------------------
Total 100.0% $1,447,481,562
++INCLUDES SHORT-TERM SECURITIES (1.7% EXCLUDING SHORT-TERM SECURITIES)
FORWARD CURRENCY CONTRACTS, OPEN AT DECEMBER 31, 2001
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 4/26/02 17,200,000 $ 24,862,699 $ (564,723)
British Pound 5/10/02 32,550,000 47,013,788 (456,938)
British Pound 5/24/02 14,400,000 20,782,170 83,430
Canadian Dollar 6/21/02 19,350,000 12,120,786 84,935
Euro 2/7/02 8,900,000 7,910,430 115,368
Euro 4/26/02 50,800,000 45,030,183 210,607
Euro 5/10/02 37,000,000 32,783,643 65,522
Euro 5/24/02 23,800,000 21,078,896 (88,974)
Euro 6/21/02 47,100,000 41,679,491 (438,878)
Hong Kong Dollar 2/7/02 400,399,000 51,341,850 (4,451)
Japanese Yen 1/22/02 30,000,000 229,195 17,313
Japanese Yen 4/26/02 7,590,000,000 58,273,885 4,168,928
Japanese Yen 5/10/02 600,000,000 4,610,309 255,574
Japanese Yen 5/24/02 5,800,000,000 44,601,935 3,460,745
Japanese Yen 6/21/02 180,000,000 1,386,414 27,125
Mexican Peso 4/26/02 110,000,000 11,756,575 (350,637)
South Korean Won
1/28/02 4,600,000,000 3,466,466 61,038
Swiss Franc 4/26/02 25,000,000 15,070,833 25,849
Swiss Franc 5/24/02 15,000,000 9,043,772 149,917
Swiss Franc 6/21/02 15,000,000 9,045,044 (57,628)
- --------------------------------------------------------------------------------
Total $ 462,088,364 $ 6,764,122
SEE NOTES TO SCHEDULES OF INVESTMENTS.
34 JANUS ASPEN SERIES / DECEMBER 31, 2001
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
[PHOTO]
Helen Young Hayes
portfolio manager
[PHOTO]
Laurence Chang
portfolio manager
For the 12-month period ended December 31, 2001, Janus Aspen Worldwide Growth
Portfolio lost 22.44% for its Institutional Shares and 22.62% for its Service
Shares, underperforming the 16.82% loss recorded by its benchmark, the Morgan
Stanley Capital International World Index.(1)
The Portfolio's performance was below the standards we set for ourselves.
Working against us was a very difficult investing environment characterized by
surprisingly rapid declines in economic growth around the world and a collapse
in corporate profitability. Economic weakness first appeared in the U.S. late
last year in the form of a massive drop in capital investment that was virtually
unprecedented in terms of both its speed and severity. This weakness ultimately
forced companies - particularly in high-growth sectors such as technology and
telecommunications - to reduce earnings estimates and lay off large numbers of
workers in an effort to adjust to slackening demand. Despite this, consumer
spending and confidence remained relatively resilient after briefly slipping in
the aftermath of the September terrorist attacks. By year-end, stocks regained
some positive momentum as tentative signs the U.S. economy was bottoming
appeared and investors bid shares higher on optimism for a recovery.
Although the major economies of Europe and, to a lesser extent, Asia, were able
to sidestep much of the U.S.-led weakness during the first few months of the
period, by year-end it was clear that the economic malaise that began with the
U.S. corporate sector had spread overseas. Japan slumped deeper into its
decade-long economic malaise, and saw the yen weaken at year end. There was
little positive news in the emerging markets, with Latin America hurt by the
political and economic turmoil in Argentina, and with many high-tech dependent
Asian economies suffering from a decline in these industries. Most European
economies proved vulnerable to the faltering U.S. economy. Stock prices in
nearly all major global markets declined in response, and virtually all
worldwide indices finished the year in the red.
While the relatively aggressive stance we held at the beginning of the year
clearly inflicted some damage as the sell-off in high-growth areas of the market
continued, as early as the end of last year we began responding to these trends
by taking a more defensive stance within the Portfolio. We sold stocks we
believed to be most at risk from a slowing economy while adding positions that
were better poised to weather the storm. Consequently, we took profits in many
richly valued technology names, such as Internet security firm Checkpoint
Software, and increased the balance of the Portfolio by adding to a number of
more modestly valued stocks in a wide variety of industries including
healthcare, consumer staples, financial services, and energy.
These moves ultimately aided performance. For example, stocks like Diageo, the
U.K.-based spirits company, easily outperformed the broader markets, as
investors sought the relative safety and stability of earnings these types of
companies can provide in times of economic turmoil.
Similar trends worked in favor of U.S.-based healthcare giant Johnson & Johnson.
In addition to the relative insulation from swings in the economic cycle enjoyed
by many of its products, the company has also benefited from its efforts to
market a drug-coated cardiac stent. In clinical tests, Johnson & Johnson's
heparin-coated stent was shown to reduce arterial scarring in heart patients for
periods of up to 200 days, thereby significantly reducing the need for
additional surgery. The new device promises to emerge as a significant and
recurring source of cash beginning in 2002 and 2003.
Unfortunately, these and other successes were unable to fully compensate for
weakness in other areas. Two of our most notable disappointments were wireless
holdings China Mobile and NTT DoCoMo, the Japanese telecom services company.
While lingering concerns related to the roll-out of "third generation" services
joined a noticeable deceleration in growth rates across the industry to create a
difficult environment, company-specific developments such as lackluster interim
results and unexpectedly low usage and revenue performance by prepaid customers
worked against China Mobile. At the same time, NTT DoCoMo fell after reining in
high investor expectations surrounding the early October launch of its
next-generation services. Increased competition from European competitor
Vodafone in DoCoMo's home market of Japan also pressured the stock.
In closing, although the tragic events of September 11 made a difficult
situation worse, markets have recently shown important signs of stability, while
central banks around the world have flooded markets with liquidity in a bid to
shore up the global financial system. While the timing and curve of a global
recovery remain uncertain, we believe that the companies which comprise our
Portfolio are poised to participate in an upturn.
Thank you for your continued investment in Janus Aspen Worldwide Growth
Portfolio.
Portfolio Asset Mix
(% of Net Assets) December 31, 2001 December 31, 2000
- --------------------------------------------------------------------------------
Equities 93.1% 82.1%
Foreign 53.4% 52.5%
Top 10 Equities 22.6% 25.0%
Number of Stocks 142 116
Cash and Cash Equivalents 6.9% 17.9%
- --------------------------------------------------------------------------------
(1) All returns include reinvested net dividends. Net dividends reinvested are
the dividends that remain to be reinvested after foreign tax obligations have
been met. Such obligations vary from country to country.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
JANUS ASPEN SERIES / DECEMBER 31, 2001 35
Average Annual Total Return
For the Periods Ended December 31, 2001
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 9/13/93)
1 Year (22.44)%
5 Year 11.12%
From Inception 15.75%
- --------------------------------------------------------------------------------
Morgan Stanley Capital International World Index
1 Year (16.82)%
5 Year 5.37%
From Inception Date of Institutional Shares 7.91%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year (22.62)%
5 Year 10.77%
From Portfolio Inception 15.43%
- --------------------------------------------------------------------------------
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
In recent years, returns have sustained significant gains and losses due to
market volatility in the technology sector.
Foreign investing involves special risks such as currency fluctuations and
political uncertainty.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
The Morgan Stanley Capital International World Index is defined as a world index
measuring market performance in 23 countries, including the US. It's weighted by
both country and industry and is divided into 8 economic sectors and 38 industry
groups; managed by Morgan Stanley Capital International. The Portfolio may
differ significantly from the securities held in the index. The index is not
available for direct investment; therefore its performance does not reflect the
expenses associated with the active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
All returns include reinvested net dividends. Net dividends reinvested are the
dividends that remain to be reinvested after foreign tax obligations have been
met. Such obligations vary from country to country.
PERFORMANCE OVERVIEW
[GRAPHIC OMITTED]
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen Worldwide Growth Portfolio - Institutional Shares and the Morgan
Stanley Capital International World Index. Janus Aspen Worldwide Growth
Portfolio - Institutional Shares is represented by a shaded area of green. The
Morgan Stanley Capital International World Index is represented by a solid black
line. The "y" axis reflects the value of the investment. The "x" axis reflects
the computation periods from inception, September 13, 1993, through December 31,
2001. The lower right quadrant reflects the ending value of the hypothetical
investment in Janus Aspen Worldwide Growth Portfolio - Institutional Shares
($33,667) as compared to the Morgan Stanley Capital International World Index
($18,805).
Average Annual Total Return
for the periods ended December 31, 2001
One Year, (22.44)%
Five Year, 11.12%
Since 9/13/93,* 15.75%
Janus Aspen Worldwide Growth
Portfolio - Institutional Shares
- - $33,667
Morgan Stanley Capital
International World
Index - $18,805
*The Portfolio's inception date.
Source - Lipper, Inc. 2001.
See "Explanations of Charts and Tables."
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Common Stock - 91.1%
Advertising Services - 0.1%
309,145 WPP Group PLC** ............................. $ 3,424,221
Aerospace and Defense - 1.3%
492,800 Boeing Co. .................................. 19,110,784
366,670 General Dynamics Corp. ...................... 29,201,599
60,485 Northrop Grumman Corp. ...................... 6,097,493
690,385 Raytheon Co. ................................ 22,416,801
76,826,677
Applications Software - 1.2%
1,045,890 Microsoft Corp.* ............................ 69,311,130
Audio and Video Products - 0.9%
1,203,400 Sony Corp.** ................................ 55,000,512
Automotive - Cars and Light Trucks - 2.0%
1,026,714 BMW A.G.** .................................. 36,155,088
5,869,000 Nissan Motor Company, Ltd.** ................ 31,122,811
2,079,000 Toyota Motor Corp.** ........................ 52,665,047
119,942,946
Beverages - Non-Alcoholic - 0.4%
442,850 PepsiCo, Inc. ............................... 21,562,367
Beverages - Wine and Spirits - 1.2%
6,318,084 Diageo PLC** ................................ 72,211,646
Brewery - 0.3%
387,381 Heineken N.V.** ............................. 14,689,919
Broadcast Services and Programming - 3.5%
2,408,486 Clear Channel Communications, Inc.* ......... $ 122,616,022
1,864,150 Grupo Televisa S.A. (GDR)*,** ............... 80,493,997
203,110,019
Cable Television - 1.6%
1,994,902 Comcast Corp. - Special Class A* ............ 71,816,472
724,875 USA Networks, Inc.* ......................... 19,796,336
91,612,808
Cellular Telecommunications - 4.6%
1,408,175 AT&T Wireless Services, Inc.* ............... 20,235,475
21,224,740 China Mobile, Ltd.*,** ...................... 74,715,353
10,202 NTT DoCoMo, Inc.** .......................... 119,877,021
16,107,563 Vodafone Group PLC** ........................ 42,139,074
412,895 Vodafone Group PLC (ADR)** .................. 10,603,144
267,570,067
Chemicals - Diversified - 0.6%
446,857 Akzo Nobel N.V.** ........................... 19,953,218
552,600 Bayer A.G.** ................................ 17,565,177
37,518,395
Commercial Banks - 0.2%
506,817 Fortis** .................................... 13,131,599
Commercial Services - Financial - 0.2%
306,631 Paychex, Inc. ............................... 10,686,090
SEE NOTES TO SCHEDULES OF INVESTMENTS.
36 JANUS ASPEN SERIES / DECEMBER 31, 2001
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Computer Services - 1.2%
106,745 BISYS Group, Inc.* .......................... $ 6,830,613
765,495 Electronic Data Systems Corp. ............... 52,474,682
395,735 SunGard Data Systems, Inc.* ................. 11,448,614
70,753,909
Computers - 0.5%
262,970 IBM Corp. ................................... 31,808,851
Cosmetics and Toiletries - 0.7%
1,213,705 Estee Lauder Companies, Inc. - Class A ...... 38,911,382
Cruise Lines - 0.2%
405,760 Carnival Corp. .............................. 11,393,741
Data Processing and Management - 1.1%
230,470 Automatic Data Processing, Inc. ............. 13,574,683
252,795 First Data Corp. ............................ 19,831,768
686,095 Fiserv, Inc.* ............................... 29,035,540
62,441,991
Diversified Financial Services - 2.9%
3,406,084 Citigroup, Inc. ............................. 171,939,120
Diversified Operations - 7.7%
1,585,550 Cendant Corp.* .............................. 31,092,636
3,015,500 General Electric Co. ........................ 120,861,240
867,480 Honeywell International, Inc. ............... 29,338,174
4,629,930 Tyco International, Ltd. .................... 272,702,877
453,994,927
Electronic Components - 0.6%
144,080 Celestica, Inc. - New York Shares*,** ....... 5,819,391
343,850 Flextronics International, Ltd.* ............ 8,248,962
109,040 Samsung Electronics** ....................... 23,161,141
37,229,494
Electronic Components - Semiconductors - 2.0%
167,000 Rohm Company, Ltd.** ........................ 21,674,580
2,084,916 STMicroelectronics N.V.** ................... 66,921,748
910,654 STMicroelectronics N.V.
- New York Shares** ...................... 28,840,412
117,436,740
Enterprise Software/Services - 0.4%
1,095,320 Oracle Corp.* ............................... 15,126,369
66,464 SAP A.G.** .................................. 8,711,586
23,837,955
Entertainment Software - 0.2%
205,230 Electronic Arts, Inc.* ...................... 12,303,539
Fiduciary Banks - 1.8%
1,360,060 Bank of New York Company, Inc. .............. 55,490,448
481,450 Northern Trust Corp. ........................ 28,992,919
399,490 State Street Corp. .......................... 20,873,353
105,356,720
Finance - Credit Card - 0.6%
1,064,652 American Express Co. ........................ 37,997,430
Finance - Investment Bankers/Brokers - 0.7%
456,385 Goldman Sachs Group, Inc. ................... 42,329,709
Finance - Mortgage Loan Banker - 0.7%
524,905 Fannie Mae .................................. 41,729,948
Food - Diversified - 1.7%
1,732,475 Unilever N.V.** ............................. 101,577,191
Food - Retail - 2.1%
3,545,437 Koninklijke Ahold N.V.** .................... $ 103,163,309
4,655,102 Safeway PLC** ............................... 21,680,307
124,843,616
Food - Wholesale/Distribution - 0.2%
467,170 SYSCO Corp. ................................. 12,249,197
Human Resources - 0.3%
2,210,587 Capita Group PLC** .......................... 15,719,811
Insurance Brokers - 0.5%
277,480 Marsh & McLennan Companies, Inc. ............ 29,815,226
Internet Security - 0.4%
605,965 Check Point Software Technologies, Ltd.* ....... 24,171,944
Life and Health Insurance - 0.9%
597,685 CIGNA Corp. ................................. 55,375,515
Machinery - Electrical - 0.5%
644,880 Schneider Electric S.A.** ................... 31,006,026
Medical - Biomedical and Genetic - 0.6%
262,845 Amgen, Inc.* ................................ 14,834,972
204,935 Genentech, Inc.* ............................ 11,117,724
300,056 Human Genome Sciences, Inc.* ................ 10,117,888
36,070,584
Medical - Drugs - 11.6%
789,965 Abbott Laboratories ......................... 44,040,549
661,675 American Home Products Corp. ................ 40,600,378
1,152,371 AstraZeneca Group PLC** ..................... 51,994,125
2,349,626 GlaxoSmithKline PLC** ....................... 58,917,232
362,228 Novartis A.G.** ............................. 13,090,291
128,285 OSI Pharmaceuticals, Inc.* .................. 5,867,756
3,122,085 Pfizer, Inc. ................................ 124,415,087
674,125 Pharmacia Corp. ............................. 28,751,431
676,281 Roche Holdings A.G.** ....................... 48,268,253
481,469 Sanofi-Synthelabo S.A.** .................... 35,924,091
264,539 Sepracor, Inc.* ............................. 15,094,595
35,276 Serono S.A. - Class B** ..................... 30,786,744
2,008,000 Takeda Chemical Industries, Ltd.** .......... 90,854,889
837,500 Teva Pharmaceutical Industries, Ltd. (ADR) .. 51,615,125
1,641,000 Yamanouchi Pharmaceutical
Company, Ltd.** .......................... 43,322,607
683,543,153
Medical - HMO - 0.3%
208,935 UnitedHealth Group, Inc. .................... 14,786,330
Medical Instruments - 1.2%
1,350,659 Medtronic, Inc. ............................. 69,167,247
Medical Products - 0.9%
193,120 Baxter International, Inc. .................. 10,357,026
718,301 Johnson & Johnson ........................... 42,451,589
52,808,615
Metal Processors and Fabricators - 0.9%
3,572,077 Assa Abloy A.B. - Class B ................... 51,420,359
Money Center Banks - 2.6%
6,405,576 Banco Bilbao Vizcaya Argentaria S.A.** ...... 79,276,859
1,812,229 Lloyds TSB Group PLC** ...................... 19,695,842
3,176,601 Standard Chartered PLC** .................... 37,986,606
349,654 UBS A.G.*,** ................................ 17,648,125
154,607,432
Mortgage Banks - 0.3%
1,050,072 Abbey National PLC** ........................ 15,007,181
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 37
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Multi-Line Insurance - 1.5%
1,533,843 Aegon N.V.** ................................ $ 41,517,189
986,955 Allstate Corp. .............................. 33,260,384
620,297 Axa** ....................................... 12,962,424
87,739,997
Multimedia - 4.5%
1,650,697 AOL Time Warner, Inc.* ...................... 52,987,374
708,135 McGraw-Hill Companies, Inc. ................. 43,182,072
750,939 News Corporation, Ltd. ...................... 6,005,045
36,540 News Corporation, Ltd. (ADR) ................ 1,162,337
734,471 Reuters Group PLC** ......................... 7,292,970
2,112,151 Viacom, Inc. - Class B* ..................... 93,251,467
3,029,665 Walt Disney Co. ............................. 62,774,659
266,655,924
Oil - Field Services - 0.4%
442,150 Schlumberger, Ltd. .......................... 24,296,143
Oil Companies - Exploration and Production - 0.6%
645,785 Anadarko Petroleum Corp. .................... 36,712,877
Oil Companies - Integrated - 5.1%
5,798,008 BP Amoco PLC** .............................. 45,010,939
1,776,062 PanCanadian Energy Corp.** .................. 45,952,013
81,799 PanCanadian Energy Corp.
- New York Shares** ...................... 2,126,774
141,136,000 PetroChina Company, Ltd.** .................. 24,977,100
2,084,920 Petroleo Brasileiro S.A. (ADR) .............. 48,578,636
1,819,153 Repsol - YPF S.A.** ......................... 26,531,180
119,047 Royal Dutch Petroleum Co.** ................. 6,031,206
684,089 Total Fina Elf** ............................ 97,699,067
296,906,915
Optical Supplies - 0.3%
278,700 Hoya Corp.** ................................ 16,650,552
Petrochemicals - 0.6%
5,392,152 Reliance Industries, Ltd. ................... 34,123,086
Property and Casualty Insurance - 0.2%
1,502,000 Tokio Marine and Fire Insurance
Company, Ltd.** .......................... 10,979,065
Publishing - Books - 0.5%
1,197,860 Elsevier N.V.** ............................. 14,163,728
1,671,446 Reed International PLC** .................... 13,886,762
28,050,490
Publishing - Newspapers - 0.5%
2,783,886 Pearson PLC** ............................... 32,105,714
Publishing - Periodicals - 0.7%
1,884,258 Wolters Kluwer N.V.** ....................... 42,949,071
Reinsurance - 1.6%
82,332 Muenchener Rueckversicherungs
- Gesellschaft A.G.** .................... 22,358,463
699,456 Swiss Re** .................................. 70,354,668
92,713,131
Retail - Discount - 1.8%
266,555 Costco Wholesale Corp.* ..................... 11,829,711
595,455 Target Corp. ................................ 24,443,428
1,213,245 Wal-Mart Stores, Inc. ....................... 69,822,250
106,095,389
Retail - Drug Store - 0.6%
1,043,455 Walgreen Co. ................................ 35,122,695
Security Services - 0.9%
2,886,968 Securitas A.B. - Class B .................... $ 54,768,695
Semiconductor Components/Integrated Circuits - 0.7%
15,830,000 Taiwan Semiconductor Manufacturing
Company, Ltd.* ........................... 39,586,276
Semiconductor Equipment - 0.8%
474,775 Applied Materials, Inc. ..................... 19,038,478
606,561 ASM Lithography Holding N.V.*,** ............ 10,542,115
1,079,826 ASM Lithography Holding N.V.
- New York Shares*,** .................... 18,411,033
47,991,626
Soap and Cleaning Preparations - 0.4%
1,715,881 Reckitt Benckiser PLC** ..................... 25,013,202
Super-Regional Banks - 0.4%
1,071,845 U.S. Bancorp ................................ 22,433,716
Telecommunication Equipment - 1.4%
1,337,964 Nokia Oyj** ................................. 34,499,788
1,953,996 Nokia Oyj (ADR)** ........................... 47,931,522
82,431,310
Telecommunication Services - 0.8%
1,334,855 Amdocs, Ltd.*,** ............................ 45,345,024
Telephone - Integrated - 1.6%
1,655,376 Telefonica S.A.*,** ......................... 22,152,823
2,124,220 Telefonos de Mexico S.A. (ADR)** ............ 74,390,184
96,543,007
Tobacco - 0.5%
619,210 Philip Morris Companies, Inc. ............... 28,390,779
Transportation - Services - 0.3%
280,410 United Parcel Service, Inc. - Class B ....... 15,282,345
- --------------------------------------------------------------------------------
Total Common Stock (cost $5,060,589,175) .................... 5,357,120,308
- --------------------------------------------------------------------------------
Preferred Stock - 2.0%
Automotive - Cars and Light Trucks - 0.6%
98,325 Porsche A.G.** .............................. 37,557,328
Multimedia - 0.1%
553,187 News Corporation, Ltd. ...................... 3,695,366
Oil Companies - Integrated - 1.3%
3,562,137 Petroleo Brasileiro S.A. (ADR) .............. 79,186,306
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $119,453,967) ................... 120,439,000
- --------------------------------------------------------------------------------
Repurchase Agreement - 1.4%
$ 80,000,000 ABN AMRO Bank N.V., 1.80%
dated 12/31/01, maturing 1/2/02 to be
repurchased at $80,008,000
collateralized by $113,261,335 in
Collateralized Mortgage Obligations
2.28%-7.135%, 11/25/20-12/25/40
AAA, $317,506 in U.S. Treasury
Notes/Bonds, 0%, 2/15/18
with respective values of
$81,480,726 and $119,274
(cost $80,000,000) ....................... 80,000,000
- --------------------------------------------------------------------------------
Time Deposit - 1.6%
State Street Bank and Trust Co.
95,600,000 1.65%, 1/2/02 (cost $95,600,000) ......... 95,600,000
- --------------------------------------------------------------------------------
SEE NOTES TO SCHEDULES OF INVESTMENTS.
38 JANUS ASPEN SERIES / DECEMBER 31, 2001
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
U.S. Government Agencies - 4.0%
Fannie Mae
$ 50,000,000 2.16%, 4/4/02 ............................ $ 49,750,000
Federal Home Loan Bank System:
50,000,000 2.20%, 1/9/02 ............................ 49,975,556
25,000,000 1.78%, 2/4/02 ............................ 24,957,972
20,000,000 1.75%, 4/15/02 ........................... 19,900,000
30,000,000 1.95%, 5/1/02 ............................ 29,812,500
50,000,000 1.74%, 5/15/02 ........................... 49,687,500
Freddie Mac
10,000,000 1.82%, 1/29/02 ........................... 9,985,844
- --------------------------------------------------------------------------------
Total U.S. Government Agencies (cost $234,023,011) .......... 234,069,372
- --------------------------------------------------------------------------------
Total Investments (total cost $5,589,666,153) - 100.1% ...... 5,887,228,680
- --------------------------------------------------------------------------------
Total Liabilities, Less Cash and Other Assets - (0.1%) ...... (8,108,907)
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $5,879,119,773
- --------------------------------------------------------------------------------
SUMMARY OF INVESTMENTS BY COUNTRY, DECEMBER 31, 2001
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Australia 0.2% $ 10,862,748
Belgium 0.2% 13,131,599
Bermuda 4.6% 272,702,877
Brazil 2.2% 127,764,942
Canada 0.9% 53,898,178
Finland 1.4% 82,431,310
France 3.0% 177,591,608
Germany 2.1% 122,347,642
Hong Kong 1.7% 99,692,453
India 0.6% 34,123,086
Israel 1.3% 75,787,069
Japan 7.5% 442,147,084
Mexico 2.6% 154,884,181
Netherlands 6.3% 372,997,979
Singapore 0.1% 8,248,962
South Korea 0.4% 23,161,141
Spain 2.2% 127,960,862
Sweden 1.8% 106,189,054
Switzerland 4.7% 275,910,241
Taiwan 0.7% 39,586,276
United Kingdom 8.8% 518,033,800
United States++ 46.7% 2,747,775,588
- --------------------------------------------------------------------------------
Total 100.0% $5,887,228,680
++INCLUDES SHORT-TERM SECURITIES (39.7% EXCLUDING SHORT-TERM SECURITIES)
FORWARD CURRENCY CONTRACTS, OPEN AT DECEMBER 31, 2001
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 2/7/02 2,400,000 $ 3,484,370 $ (22,106)
British Pound 4/26/02 18,000,000 26,019,103 (590,990)
British Pound 5/10/02 76,000,000 109,771,057 (1,015,607)
British Pound 5/24/02 61,400,000 88,612,865 355,735
Canadian Dollar 2/7/02 5,500,000 3,445,276 99,680
Canadian Dollar 6/21/02 5,100,000 3,194,626 9,697
Euro 2/7/02 20,900,000 18,576,177 270,921
Euro 4/26/02 129,100,000 114,436,941 466,125
Euro 5/10/02 101,800,000 90,199,321 771,484
Euro 5/24/02 82,600,000 73,156,169 (110,914)
Euro 6/21/02 69,000,000 61,059,127 (582,885)
Hong Kong Dollar 2/7/02 670,200,000 85,937,547 (8,896)
Japanese Yen 1/22/02 2,000,000,000 15,279,667 1,154,187
Japanese Yen 2/7/02 1,400,000,000 10,705,230 1,169,240
Japanese Yen 4/26/02 17,925,000,000 137,623,108 9,352,366
Japanese Yen 5/10/02 11,800,000,000 90,669,417 6,725,714
Japanese Yen 5/24/02 9,300,000,000 71,516,896 5,231,488
Japanese Yen 6/21/02 380,000,000 2,926,873 57,263
Mexican Peso 4/26/02 194,000,000 20,734,323 (618,398)
South Korean Won
1/28/02 12,990,000,000 9,788,998 131,268
Swiss Franc 4/26/02 95,200,000 57,389,732 109,266
Swiss Franc 5/24/02 3,900,000 2,351,381 7,074
Swiss Franc 6/21/02 43,900,000 26,471,829 (168,652)
- --------------------------------------------------------------------------------
Total $1,123,350,033 $ 22,793,060
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 39
JANUS ASPEN GLOBAL LIFE SCIENCES PORTFOLIO
[PHOTO]
Thomas Malley
portfolio manager
For the 12-month period ended December 31, 2001, Janus Aspen Global Life
Sciences Portfolio reported a loss of 16.43% for its Institutional Shares and
16.76% for its Service Shares. This trailed the Portfolio's benchmark, the S&P
500 Index, which was down 11.88%.(1)
Frankly, the overall performance of the Portfolio was not where I wanted it to
be. While we saw rallies in January, April and toward year-end, there was a
negative sentiment overhanging the market for most of the period. With the
seemingly endless parade of corporate earnings shortfalls, a recession and the
tragic events of September 11, the market had its share of volatility to work
through. Fortunately by year's end, the negativity seemed to ease, and relative
stability had taken hold.
Against this tough backdrop, many of our biotech holdings lost some ground. Of
course, stock performance has little or no impact on a company's clinical work,
so as progress continues to be made in areas such as drug treatment and medical
device research, we continue to be encouraged by the prospects of many of our
holdings.
Nonetheless, some of our smaller biotech holdings slumped due to an overall
flight by investors to larger, more liquid names. Among the laggards were NPS
Pharmaceuticals, which has a strong pipeline highlighted by an osteoporosis
treatment in late-phase clinical trials; Neurogen, which hired William Koster, a
longtime Bristol-Myers Squibb executive, as chief executive officer; and
Immunomedics, which reported solid progress in late-phase trials of its
non-Hodgkins lymphoma treatment, LymphoCide. Thus, we viewed price drops in
these stocks as opportunities to add to our positions.
Despite the attention focused on their competitive threat, generic drug stocks
such as Teva Pharmaceuticals and Ivax Corp. posted lackluster results for the
period. Contributing to their underperformance were concerns over pending
lawsuits with incumbent drug companies and a potential slowdown in new product
approvals by the Food and Drug Administration (FDA). With Washington, D.C.,
focused on the war against terrorism, the top seat at the FDA, vacated last
January, has yet to be filled. Even with its lack of leadership, however, the
FDA has gone through with a number of product reviews. Moreover, we believe that
the generic market opportunity will only expand as consumers and healthcare
organizations look to contain drug costs. Consequently, we maintained our
exposure to select generic-drug concerns as a balance to our weighting in more
traditional, branded pharmaceutical companies.
On a more positive note, we saw gains from Baxter International, a
medical-product and device maker whose management team has a penchant for making
strategically opportunistic moves. Not only did Baxter experience solid growth
across all of its business lines, it bolstered its drug-delivery unit with the
acquisition of Cook Pharmaceutical Solutions, enhanced its cancer-treatment arm
with the purchase of the oncology department of Germany's Degussa AG, and
received FDA approval to expand capacity at one of its hemophilia-treatment
production facilities.
Cardiac-device developer, St. Jude Medical, rallied on the strength of its new
implantable cardioverter defibrillator line, which topped sales goals. The
device helps heart-disease patients at risk of sudden cardiac arrest and
enhances an already strong portfolio of pacemakers. The company also developed a
product that attaches blood vessels together during heart surgery, a procedure
that is more efficient than traditional hand-sewing.
As we sought to position the Portfolio for a potential economic rebound, we
capitalized on buying opportunities created by market volatility. For example,
we initiated a position in Eli Lilly and Co. after the stock lost ground on
concerns over an upcoming review of one of its new drugs. Our confidence in the
company and its product paid off when the stock subsequently rebounded on news
that the drug Xigris, a treatment for the potentially-fatal blood condition
sepsis, won final FDA approval.
Looking ahead, we believe U.S. healthcare spending will grow at double-digit
rates over the next five to 10 years, driven by new technology and an aging
population. This steady growth should fuel profits across the healthcare arena
and reinforce our confidence in the Portfolio's positioning for long-term
performance.
Regardless of macroeconomic events, our responsibility is to create the right
balance of long-term opportunity and ongoing performance from the many
investment choices within the life sciences sector. Although market volatility
and extraneous events can heighten this challenge, we're confident our
fundamental analysis will provide us the edge that's necessary to meet this
task.
Thank you for your continued investment in Janus Aspen Global Life Sciences
Portfolio.
Portfolio Asset Mix
(% of Net Assets) December 31, 2001 December 31, 2000
- --------------------------------------------------------------------------------
Equities 95.7% 87.6%
Foreign 22.6% 10.8%
Top 10 Equities 33.4% 28.7%
Number of Stocks 56 60
Cash and Cash Equivalents 4.3% 12.4%
- --------------------------------------------------------------------------------
(1) All returns include reinvested net dividends. Net dividends reinvested are
the dividends that remain to be reinvested after foreign tax obligations have
been met. Such obligations vary from country to country.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
40 JANUS ASPEN SERIES / DECEMBER 31, 2001
Average Annual Total Return
For the Periods Ended December 31, 2001
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 1/18/00)
1 Year (16.43)%
From Inception (11.96)%
- --------------------------------------------------------------------------------
S&P 500 Index
1 Year (11.88)%
From Portfolio Inception (10.34)%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 1/18/00)
1 Year (16.76)%
From Inception (12.23)%
- --------------------------------------------------------------------------------
This Portfolio concentrates in certain industry groups, which may react
similarly to market developments (resulting in greater price volatility), and
may have significant exposure to foreign markets (which include risks such as
currency fluctuation and political uncertainty).
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
Standard & Poor's is a corporation that rates stocks and corporate and municipal
bonds according to risk profiles. The S&P 500 is an index of 500 major,
large-cap US corporations. The Portfolio may differ significantly from the
securities held in the index. The index is not available for direct investment;
therefore its performance does not reflect the expenses associated with the
active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
PERFORMANCE OVERVIEW
[GRAPHIC OMITTED]
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen Global Life Sciences Portfolio - Institutional Shares and the S&P
500 Index. Janus Aspen Global Life Sciences Portfolio - Institutional Shares is
represented by a shaded area of green. The S&P 500 Index is represented by a
solid black line. The "y" axis reflects the value of the investment. The "x"
axis reflects the computation periods from inception, January 18, 2000, through
December 31, 2001. The lower right quadrant reflects the ending value of the
hypothetical investment in Janus Aspen Global Life Sciences Portfolio -
Institutional Shares ($7,797) as compared to the S&P 500 Index ($8,082).
Average Annual Total Return
for the periods ended December 31, 2001
One Year, (16.43)%
Since 1/18/00,* (11.96)%
Janus Aspen Global Life Sciences Portfolio - Institutional Shares - $7,797
S&P 500 INDEX - $8,082
*The Portfolio's inception date.
Source - Lipper, Inc. 2001.
See "Explanations of Charts and Tables."
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Common Stock - 95.7%
Chemicals - Diversified - 1.2%
18,277 Bayer A.G. .................................. $ 580,960
Chemicals - Specialty - 1.2%
29,720 Symyx Technologies, Inc.* ................... 631,253
Diagnostic Equipment - 2.6%
50,075 Cytyc Corp.* ................................ 1,306,957
Drug Delivery Systems - 1.7%
12,065 Andrx Group, Inc.* .......................... 849,497
Health Care Cost Containment - 1.2%
16,825 McKesson Corp. .............................. 629,255
Instruments - Scientific - 0.5%
6,525 Applied Biosystems Group - Applera Corp. .... 256,237
Medical - Biomedical and Genetic - 6.1%
14,655 Cellegy Pharmaceuticals, Inc.* .............. 125,740
13,240 Genentech, Inc.* ............................ 718,270
12,455 Genzyme Corp.* .............................. 745,556
27,130 Immunomedics, Inc.* ......................... 549,654
26,690 Protein Design Labs, Inc.* .................. 878,902
7,660 Third Wave Technologies, Inc.* .............. 56,301
3,074,423
Medical - Drugs - 39.0%
6,590 Altana A.G. ................................. $ 327,998
24,795 American Home Products Corp. ................ 1,521,421
38,050 Biovail Corp. - New York Shares* ............ 2,140,312
13,355 CIMA Labs, Inc.* ............................ 482,783
30,000 Daiichi Pharmaceutical Company, Ltd.** ...... 583,702
10,290 Eli Lilly and Co. ........................... 808,177
25,325 Ivax Corp.* ................................. 510,045
31,810 King Pharmaceuticals, Inc.* ................. 1,340,155
14,833 Novo Nordisk S.A. ........................... 606,613
18,795 OSI Pharmaceuticals, Inc.* .................. 859,683
41,910 Pfizer, Inc. ................................ 1,670,114
30,035 Priority Healthcare Corp. - Class B* ........ 1,056,932
26,723 Sanofi-Synthelabo S.A. ...................... 1,993,897
21,345 Sepracor, Inc.* ............................. 1,217,946
803 Serono S.A. - Class B ....................... 700,810
26,275 Shire Pharmaceuticals Group PLC (ADR)*,** ... 961,665
403,646 SkyePharma PLC*,** .......................... 359,826
29,415 Teva Pharmaceutical Industries, Ltd. (ADR) .. 1,812,846
22,000 Yamanouchi Pharmaceutical Company, Ltd.** ... 580,803
19,535,728
Medical - Generic Drugs - 2.2%
2,330 Pharmaceutical Resources, Inc.* ............. 78,754
29,880 Pharmaceutical Resources, Inc.*,ss. ......... 1,009,944
1,088,698
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 41
JANUS ASPEN GLOBAL LIFE SCIENCES PORTFOLIO
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Medical - HMO - 7.1%
6,365 Anthem, Inc.* ............................... $ 315,067
40,680 Oxford Health Plans, Inc.* .................. 1,226,095
14,140 UnitedHealth Group, Inc. .................... 1,000,688
8,535 Wellpoint Health Networks, Inc.* ............ 997,315
3,539,165
Medical - Hospitals - 6.1%
25,250 HCA, Inc. ................................... 973,135
50,905 Health Management Associates, Inc.
- Class A* ............................... 936,652
19,725 Tenet Healthcare Corp.* ..................... 1,158,252
3,068,039
Medical - Wholesale Drug Distributors - 1.7%
13,660 AmerisourceBergen Corp. ..................... 868,093
Medical Instruments - 6.3%
29,512 Biomet, Inc. ................................ 911,921
14,955 Medtronic, Inc. ............................. 765,846
18,900 St. Jude Medical, Inc.* ..................... 1,467,585
3,145,352
Medical Labs and Testing Services - 3.3%
20,540 Laboratory Corporation of
America Holdings* ........................ 1,660,659
Medical Products - 7.5%
34,070 Baxter International, Inc. .................. 1,827,174
17,210 Becton, Dickinson and Co. ................... 570,511
15,390 Cerus Corp.* ................................ 704,092
110,129 Smith & Nephew PLC** ........................ 664,815
3,766,592
Retail - Drug Store - 1.1%
16,050 Walgreen Co. ................................ 540,243
Therapeutics - 6.9%
140,000 AtheroGenics, Inc.* ......................... 847,000
34,570 Cell Therapeutics, Inc.* .................... 834,520
6,250 Gilead Sciences, Inc.* ...................... 410,750
17,470 ILEX Oncology, Inc.* ........................ 472,389
11,360 Neurogen Corp.* ............................. 198,573
18,205 NPS Pharmaceuticals, Inc.* .................. 697,251
3,460,483
- --------------------------------------------------------------------------------
Total Common Stock (cost $43,961,310) ....................... 48,001,634
- --------------------------------------------------------------------------------
Repurchase Agreement - 4.0%
$ 2,000,000 ABN AMRO Bank N.V., 1.80%
dated 12/31/01, maturing 1/2/02 to be
repurchased at $2,000,200
collateralized by $2,831,533 in
Collateralized Mortgage Obligations
2.28%-7.135%, 11/25/20-12/25/40 AAA,
$7,938 in U.S. Treasury Notes/Bonds,
0%, 2/15/18 with respective values of
$2,037,018 and $2,982
(cost $2,000,000) ........................ 2,000,000
- --------------------------------------------------------------------------------
Total Investments (total cost $45,961,310) - 99.7% .......... 50,001,634
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 0.3% 131,070
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $ 50,132,704
- --------------------------------------------------------------------------------
SUMMARY OF INVESTMENTS BY COUNTRY, DECEMBER 31, 2001
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Canada 4.3% $ 2,140,312
Denmark 1.2% 606,613
France 4.0% 1,993,897
Germany 1.8% 908,958
Israel 3.6% 1,812,846
Japan 2.3% 1,164,505
Switzerland 1.4% 700,810
United Kingdom 4.0% 1,986,306
United States++ 77.4% 38,687,387
- --------------------------------------------------------------------------------
Total 100.0% $ 50,001,634
++INCLUDES SHORT-TERM SECURITIES (73.4% EXCLUDING SHORT-TERM SECURITIES)
FORWARD CURRENCY CONTRACTS, OPEN AT DECEMBER 31, 2001
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 4/26/02 240,000 $ 346,921 $ (7,879)
British Pound 5/24/02 80,000 115,457 274
Japanese Yen 5/24/02 32,000,000 246,080 6,581
- --------------------------------------------------------------------------------
Total $ 708,458 $ (1,024)
SEE NOTES TO SCHEDULES OF INVESTMENTS.
42 JANUS ASPEN SERIES / DECEMBER 31, 2001
JANUS ASPEN GLOBAL TECHNOLOGY PORTFOLIO
[PHOTO]
Mike Lu
portfolio manager
For the 12-month period ended December 31, 2001, Janus Aspen Global Technology
Portfolio declined 37.07% for its Institutional Shares and 37.31% for its
Service Shares. This compares to a loss of 11.88% for the S&P 500 Index, the
Portfolio's benchmark.(1)
Without a doubt, the Portfolio's recent performance has not lived up to my
expectations. The past year was a challenging one for the global economy, and
for technology companies in particular. While the downturn affected only
specific market segments early on, almost every company in the industry felt the
decline eventually. Though tech stocks rallied toward year end, the NASDAQ
Composite Index still recorded a loss of more than 20% for the period. During
this difficult time, we maintained our efforts to understand the end-demand for
each of our companies' products and services. This helped us identify several
potential emerging trends for demand growth early on - particularly in select
software, outsourcing and semiconductor areas.
However, the tragedies of September 11 significantly altered these trends, at
least temporarily, creating an environment of uncertainty across the economy,
which caused a short-term shift in spending priorities.
Part of this reprioritization has led to increased spending on ensuring the
security and robustness of our nation's infrastructure. Most visible is the
beefing up of security at airports, post offices and public gathering places.
However, there is also significant spending being focused on less visible areas
such as network security. Today's economy depends on a broad array of
interconnected networks, and any major disruption in data flow or loss of data
can reverberate throughout the world economy with severe consequences.
That said, many of our long-time holdings provide the necessary components for
enhanced network manageability, security and availability. VERITAS is an
excellent example. As the premier storage management software provider, it
offers data backup, restoration and availability solutions that span nearly all
hardware and networking platforms - from Sun Microsystems to IBM to Microsoft.
VERITAS was put to the ultimate test after the September 11 events, as it helped
over 100 customers affected by the attacks to restore their lost data.
Impressively, they achieved a 100% recovery rate for these customers. While
VERITAS' stock has performed poorly over the past year, due in part to an
anticipated slowdown in growth, we see the company continuing to build upon its
solid franchise. Furthermore, with no letup in research and development, we feel
the company will emerge from the slowdown with stronger product portfolios than
ever. Needless to say, we capitalized on the market's knee-jerk reaction by
picking up some additional shares.
For some time now the Portfolio has had three major investment themes: 1)
companies with subscription-based revenues, thus offering near-term earnings
visibility; 2) companies that are capitalizing on emerging end-demand shifts,
which provide growth potential in the near- to immediate-term; and 3) companies
with strong, long-term franchises driven by innovation.
Keeping this in mind, we remain invested in Microsoft. Despite the spending
slowdown in the tech sector, the software giant continues to generate steady
revenues from its lineup of subscription-license based software and online
services. Fueled by its Windows 2000 Server and SQL Server databases products as
well as the recent launches of Windows XP, Xbox and an upcoming launch of MSN 7,
Microsoft should continue to exhibit solid revenue and earnings growth
visibility. What's more, its antitrust battle seems to be nearing an end.
NVIDIA is another company that fulfills several of our criteria. The maker of
advanced graphics chip technology is supplying the chips for Microsoft's Xbox,
the highly anticipated video-gaming platform that was introduced just in time
for the 2001 holiday season. The company is not dependent on this development
alone. It also maintains its superior graphics accelerator positioning within
the power desktop and notebook PC arena, gaining market share and furthering its
penetration into the product portfolios of such longtime customers as Dell and
Compaq, as well as gaining significant new customers like Toshiba.
Looking ahead, although our recent performance has been disappointing, I am
cautiously optimistic for the future. Let me assure you that while we have made
adjustments to our positions throughout the year, our investment approach hasn't
changed: we continue to emphasize diversification within technology, focusing on
firms developing franchises within their respective spaces. Furthermore, we will
continue to pound the pavement in search of actual end-demand adoption
indicators to form the basis of our fundamentally-driven investment analysis.
Over the medium- and long-term, we remain convinced that technological
innovation will continue to be the engine that drives worldwide economic growth,
and we aim to harness this growth for the benefit of our shareholders.
Thank you for your continued investment in Janus Aspen Global Technology
Portfolio.
Portfolio Asset Mix
(% of Net Assets) December 31, 2001 December 31, 2000
- --------------------------------------------------------------------------------
Equities 80.3% 84.0%
Foreign 24.2% 30.7%
Top 10 Equities 31.2% 31.2%
Number of Stocks 72 110
Cash, Cash Equivalents
and Fixed Income Securities 19.7% 16.0%
- --------------------------------------------------------------------------------
(1) All returns include reinvested net dividends. Net dividends reinvested are
the dividends that remain to be reinvested after foreign tax obligations have
been met. Such obligations vary from country to country.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
JANUS ASPEN SERIES / DECEMBER 31, 2001 43
Average Annual Total Return
For the Periods Ended December 31, 2001
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 1/18/00)
1 Year (37.07)%
From Inception (36.24)%
- --------------------------------------------------------------------------------
S&P 500 Index
1 Year (11.88)%
From Portfolio Inception (10.34)%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 1/18/00)
1 Year (37.31)%
From Inception (36.41)%
- --------------------------------------------------------------------------------
This Portfolio may at times have significant exposure to certain industry
groups, which may react similarly to market developments (resulting in greater
price volatility). The Portfolio also may have significant exposure to foreign
markets (which include risks such as currency fluctuation and political
uncertainty).
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Due to recent market volatility, the Portfolio may have an increased position in
cash for temporary defensive purposes.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
Standard & Poor's is a corporation that rates stocks and corporate and municipal
bonds according to risk profiles. The S&P 500 is an index of 500 major,
large-cap US corporations. The NASDAQ Composite Stock Index (The National
Association of Securities Dealers Automated Quotation System) is defined as a
nationwide computerized quotation system for over 5,500 over-the-counter stocks.
The index is compiled of more than 4,800 stocks that are traded via the system.
The Portfolio may differ significantly from the securities held in the indices.
The indices are not available for direct investment; therefore their performance
does not reflect the expenses associated with the active management of an actual
portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
PERFORMANCE OVERVIEW
[GRAPHIC OMITTED]
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen Global Technology Portfolio - Institutional Shares and the S&P
500 Index. Janus Aspen Global Technology Portfolio - Institutional Shares is
represented by a shaded area of green. The S&P 500 Index is represented by a
solid black line. The "y" axis reflects the value of the investment. The "x"
axis reflects the computation periods from inception, January 18, 2000, through
December 31, 2001. The lower right quadrant reflects the ending value of the
hypothetical investment in Janus Aspen Global Technology Portfolio -
Institutional Shares ($4,151) as compared to the S&P 500 Index ($8,082).
Average Annual Total Return
for the periods ended December 31, 2001
One Year, (37.07)%
Since 1/18/00,* (36.24)%
Janus Aspen Global Technology Portfolio
- - Institutional Shares - $4,151
S&P 500 INDEX - $8,082
*The Portfolio's inception date.
Source - Lipper, Inc. 2001.
See "Explanations of Charts and Tables."
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Common Stock - 78.9%
Aerospace and Defense - 0.8%
113,010 Embraer-Empresa Brasileira de
Aeronautica S.A. (ADR) ................... $ 2,500,911
Applications Software - 8.4%
142,720 Intuit, Inc.* ............................... 6,102,707
18,085 Mercury Interactive Corp.* .................. 614,528
271,475 Microsoft Corp.* ............................ 17,990,648
24,707,883
Automotive - Cars and Light Trucks - 1.0%
552,000 Nissan Motor Company, Ltd.** ................ 2,927,209
Cellular Telecommunications - 3.8%
213,910 China Mobile, Ltd. (ADR)*,** ................ 3,739,147
299 NTT DoCoMo, Inc.** .......................... 3,513,353
479,594 Vodafone Group PLC** ........................ 1,254,668
103,440 Vodafone Group PLC (ADR)** .................. 2,656,339
11,163,507
Computer Aided Design - 1.6%
127,985 Autodesk, Inc. .............................. 4,770,001
Computer Services - 1.7%
31,675 Electronic Data Systems Corp. ............... 2,171,321
292,502 Logica PLC** ................................ 2,719,654
4,890,975
Computers - 1.9%
19,170 IBM Corp. ................................... $ 2,318,803
278,000 Legend Holdings, Ltd.** ..................... 141,712
251,325 Sun Microsystems, Inc.* ..................... 3,101,351
5,561,866
Computers - Integrated Systems - 0.9%
76,095 Brocade Communications Systems, Inc.* ....... 2,520,266
Computers - Memory Devices - 3.7%
241,307 VERITAS Software Corp.* ..................... 10,815,380
Computers - Peripheral Equipment - 0.9%
552,000 Hon Hai Precision Industry Company, Ltd. .... 2,524,148
Consulting Services - 0.6%
102,250 KPMG Consulting, Inc.* ...................... 1,694,282
E-Commerce/Services - 1.1%
49,790 eBay, Inc.* ................................. 3,330,951
Electronic Components - 2.7%
69,225 Celestica, Inc. - New York Shares* .......... 2,795,998
63,705 Flextronics International, Ltd.* ............ 1,528,283
40,000 NEC Corp.** ................................. 408,057
5,600 Samsung Electronics Company, Ltd.** ......... 1,189,494
45,400 Samsung SDI Company, Ltd.** ................. 2,004,720
7,926,552
SEE NOTES TO SCHEDULES OF INVESTMENTS.
44 JANUS ASPEN SERIES / DECEMBER 31, 2001
JANUS ASPEN GLOBAL TECHNOLOGY PORTFOLIO
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Electronic Components - Semiconductors - 13.7%
81,130 Alpha Industries, Inc.* ..................... $ 1,768,634
929,574 ARM Holdings PLC* ........................... 4,858,635
56,010 Intersil Corp. - Class A* ................... 1,806,323
148,110 LSI Logic Corp.* ............................ 2,337,176
97,480 Microsemi Corp.* ............................ 2,895,156
194,835 Microtune, Inc.* ............................ 4,570,829
178,015 NVIDIA Corp.* ............................... 11,909,204
55,571 STMicroelectronics N.V.** ................... 1,783,721
93,533 STMicroelectronics N.V.
- New York Shares** ...................... 2,962,190
68,825 Texas Instruments, Inc. ..................... 1,927,100
85,905 Xilinx, Inc.* ............................... 3,354,590
40,173,558
Electronic Design Automation - 2.3%
304,440 Cadence Design Systems, Inc.* ............... 6,673,325
Enterprise Software/Services - 5.1%
212,560 Micromuse, Inc.* ............................ 3,188,400
114,740 Oracle Corp.* ............................... 1,584,559
174,720 PeopleSoft, Inc.* ........................... 7,023,744
98,180 SAP A.G. (ADR)** ............................ 3,134,887
14,931,590
Entertainment Software - 2.5%
9,690 Activision, Inc.* ........................... 252,037
119,065 Electronic Arts, Inc.* ...................... 7,137,947
7,389,984
Identification Systems and Devices - 0.8%
140,280 Symbol Technologies, Inc. ................... 2,227,646
Internet Applications Software - 0.2%
253,250 Portal Software, Inc.* ...................... 526,760
Internet Security - 2.5%
76,985 Check Point Software Technologies, Ltd.* .... 3,070,932
110,305 VeriSign, Inc.* ............................. 4,196,002
7,266,934
Life and Health Insurance - 0.6%
69,980 AFLAC, Inc. ................................. 1,718,709
Multimedia - 2.8%
56,620 AOL Time Warner, Inc.* ...................... 1,817,502
40,070 Vivendi Universal S.A. (ADR)** .............. 2,155,365
206,535 Walt Disney Co. ............................. 4,279,405
8,252,272
Networking Products - 1.2%
205,145 Cisco Systems, Inc.* ........................ 3,715,176
Optical Supplies - 0.2%
10,000 Hoya Corp.** ................................ 597,436
Retail - Computer Equipment - 0.8%
57,940 Electronics Boutique Holdings Corp.* ........ 2,314,124
Semiconductor Components/Integrated Circuits - 3.2%
125,175 Integrated Device Technology, Inc.* ......... 3,328,403
55,170 Maxim Integrated Products, Inc.* ............ 2,896,977
1,277,000 Taiwan Semiconductor Manufacturing
Company, Ltd.* ........................... 3,193,410
9,418,790
Semiconductor Equipment - 3.8%
100,375 Applied Materials, Inc.* .................... $ 4,025,038
202,535 ASM Lithography Holding N.V.
- New York Shares*,** .................... 3,453,222
117,735 Teradyne, Inc.* ............................. 3,548,533
11,026,793
Telecommunication Equipment - 7.1%
221,701 Nokia Oyj ................................... 5,716,624
343,175 Nokia Oyj (ADR) ............................. 8,418,083
52,365 QUALCOMM, Inc.* ............................. 2,644,432
263,740 Sonus Networks, Inc.* ....................... 1,218,479
98,750 UTStarcom, Inc.* ............................ 2,814,375
20,811,993
Telecommunication Services - 0.6%
50,140 Amdocs, Ltd.*,** ............................ 1,703,256
Telephone - Integrated - 0.7%
55,230 SBC Communications, Inc. .................... 2,163,359
96 Telefonica S.A.*,** ......................... 1,285
2,164,644
Toys - 1.3%
220,680 Mattel, Inc. ................................ 3,795,696
Wireless Equipment - 0.4%
99,407 Crown Castle International Corp.* ........... 1,061,667
- --------------------------------------------------------------------------------
Total Common Stock (cost $288,822,706) ...................... 231,104,284
- --------------------------------------------------------------------------------
Corporate Bonds - 0.7%
Applications Software - 0.2%
$ 900,000 Mercury Interactive Corp., 4.75%
convertible notes, due 7/1/07+ ........... 727,875
Electronic Components - Semiconductors - 0.5%
650,000 International Rectifier Corp., 4.25%
convertible subordinated
notes, due 7/15/07 ....................... 535,438
520,000 NVIDIA Corp., 4.75%
convertible subordinated
notes, due 10/15/07 ...................... 858,975
1,394,413
Networking Products - 0%
1,000,000 Candescent Technologies Corp., 8.00%
convertible senior subordinated
debentures, due 5/1/03+,(OMEGA),(DELTA) .. 85,000
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $2,814,265) ..................... 2,207,288
- --------------------------------------------------------------------------------
Preferred Stock - 1.4%
Computer Services - 1.1%
57,230 Electronic Data Systems Corp.
convertible, 7.625% ...................... 3,219,188
Wireless Equipment - 0.3%
31,515 Crown Castle International Corp.
convertible, 6.25% ....................... 819,390
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $4,437,250) ..................... 4,038,578
- --------------------------------------------------------------------------------
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 45
JANUS ASPEN GLOBAL TECHNOLOGY PORTFOLIO
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Repurchase Agreements - 9.9%
$ 28,900,000 ABN AMRO Bank N.V., 1.80%
dated 12/31/01, maturing 1/2/02 to be
repurchased at $28,902,890
collateralized by $40,915,657 in
Collateralized Mortgage Obligations
2.28%-7.135%, 11/25/20-12/25/40 AAA,
$114,699 in U.S. Treasury Notes/Bonds,
0%, 2/15/18 with respective values of
$29,434,912 and $43,088
(cost $28,900,000) ....................... $ 28,900,000
- --------------------------------------------------------------------------------
U.S. Government Agencies - 8.9%
Federal Home Loan Bank System:
9,000,000 3.55%, 1/11/02 ........................... 8,995,425
12,000,000 1.65%, 1/31/02 ........................... 11,983,500
5,000,000 1.75%, 4/15/02 ........................... 4,975,000
- --------------------------------------------------------------------------------
Total U.S. Government Agencies - (cost $25,953,647) ......... 25,953,925
- --------------------------------------------------------------------------------
Total Investments (cost $350,927,868) - 99.8% ............... 292,204,075
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, Net of
Liabilities - 0.2% ........................................ 541,552
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $ 292,745,627
- --------------------------------------------------------------------------------
SUMMARY OF INVESTMENTS BY COUNTRY, DECEMBER 31, 2001
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Brazil 0.9% $ 2,500,911
Canada 1.0% 2,795,998
Finland 4.8% 14,134,707
France 0.7% 2,155,365
Germany 1.1% 3,134,887
Hong Kong 1.3% 3,880,859
Israel 1.1% 3,070,932
Japan 2.5% 7,446,055
Netherlands 1.2% 3,453,222
Singapore 0.5% 1,528,283
South Korea 1.1% 3,194,214
Spain 0% 1,285
Switzerland 1.6% 4,745,911
Taiwan 2.0% 5,717,558
United Kingdom 4.5% 13,192,552
United States++ 75.7% 221,251,336
- --------------------------------------------------------------------------------
Total 100.0% $ 292,204,075
++INCLUDES SHORT-TERM SECURITIES (56.9% EXCLUDING SHORT-TERM SECURITIES)
FORWARD CURRENCY CONTRACTS, OPEN AT DECEMBER 31, 2001
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 4/26/02 1,200,000 $ 1,734,607 $ (11,978)
British Pound 5/10/02 2,300,000 3,322,019 (8,619)
British Pound 5/24/02 100,000 144,321 579
Euro 4/26/02 3,400,000 3,013,831 1,341
Euro 5/10/02 3,300,000 2,923,947 48,363
Euro 5/24/02 2,600,000 2,302,737 3,443
Hong Kong Dollar 2/7/02 6,000,000 769,360 (55)
Hong Kong Dollar 5/24/02 20,800,000 2,666,045 (233)
Japanese Yen 4/26/02 625,000,000 4,798,574 339,671
South Korean Won
1/28/02 1,150,000,000 866,615 17,317
- --------------------------------------------------------------------------------
Total $ 22,542,056 $ 389,829
SEE NOTES TO SCHEDULES OF INVESTMENTS.
46 JANUS ASPEN SERIES / DECEMBER 31, 2001
JANUS ASPEN GLOBAL VALUE PORTFOLIO
[PHOTO]
Jason Yee
portfolio manager
From May 1, 2001, through December 31, 2001, Janus Aspen Global Value
Portfolio's Service Shares gained 4.97%, outperforming the benchmark MSCI World
Index's loss of 11.12%.(1)
Since the Portfolio's launch, the financial markets have been marked by
extraordinary volatility, largely stemming from uncertain near-term prospects
for global economies. Markets often react negatively to uncertainty, and the
events of September 11 only served to exacerbate an already fragile situation.
In the resulting financial market turmoil, virtually no geographies, industries
or companies were spared.
While many things in this world changed dramatically in recent months, including
stock prices, one that has not changed appreciably is the intrinsic value of the
Portfolio's holdings. Simply put, after careful review of the Portfolio in the
wake of the terrorist attacks, I do not believe any of our holdings suffered a
permanent or irreversible impairment of value. What was a solid, profitable,
well-managed business on September 10 remains so today. As such, I continued to
add to existing positions on an opportunistic basis. The decline in the equity
markets also allowed me to initiate a number of new positions. Exceptional
businesses that I have followed over the years have finally retreated to
attractive valuations, especially in the areas of media, consumer goods,
aerospace and lodging. Worries about a global economic slowdown, coupled with
concerns of the direct financial impact resulting from the attacks, caused many
stock prices to fall much more significantly than their intrinsic values. While
the financial markets rebounded in the fourth quarter as investors anticipated a
recovery, substantial buying opportunities still present themselves to patient
investors.
No one can accurately predict how long the world economies will remain in
recession or when they will start to recover. So you can be sure that my
investment decisions are not based upon any futile prognostications but rather
are guided by a few underlying principles that should help mitigate the risks of
any economic environment. First of all, the Portfolio consistently searches for
companies that can continue to create value in many different economic
environments. Secondly, the Portfolio strives to leave a margin of safety by
making investments at significant discounts to what we believe is the company's
intrinsic value. And finally, the valuation work in determining the intrinsic
value of businesses attempts to capture a wide range of scenarios, encompassing
both optimistic and pessimistic assumptions. These principles will hopefully
allow the Portfolio to minimize some of the downside risk while still preserving
the upside potential. While no investment is completely immune to the whims of
the irrational markets in the short term, the market value of our holdings
should approach their intrinsic value over time. So, no matter what happens on
the macroeconomic front, I believe the Portfolio is well-positioned to weather
the current challenging environment of the global equity markets as well as
benefit from an eventual turnaround.
In summary, it remains very much business as usual: The value of the Portfolio's
investments continues to be driven by their profits and cash flows rather than
the short-term psychology of the equity markets, and my time is spent valuing
these businesses on an individual basis, rather than worrying about or
predicting short-term movements in stock prices. This investment discipline
should help us navigate these decidedly uncertain times.
History teaches us that a time of crisis often presents great opportunity for
investment, and I think that recent events will prove to be no exception. I
remain committed to my value investment strategy, process and philosophy and
will continue to search the globe for great businesses selling at significant
discounts to their intrinsic values. I firmly believe that rigorous fundamental
research coupled with disciplined valuation analysis will serve Janus Aspen
Global Value Portfolio shareholders well over the long term.
Thank you for your continued investment in Janus Aspen Global Value Portfolio.
Portfolio Asset Mix
(% of Net Assets) December 31, 2001
- --------------------------------------------------------------------------------
Equities 95.8%
Foreign 59.5%
Top 10 Equities 39.9%
Number of Stocks 38
Cash and Cash Equivalents 4.2%
- --------------------------------------------------------------------------------
(1) All returns include reinvested net dividends. Net dividends reinvested are
the dividends that remain to be reinvested after foreign tax obligations have
been met. Such obligations vary from country to country.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
JANUS ASPEN SERIES / DECEMBER 31, 2001 47
Cumulative Total Return
For the Period Ended December 31, 2001
- --------------------------------------------------------------------------------
Service Shares (Inception Date 5/1/01)
From Inception 4.97%
- --------------------------------------------------------------------------------
Morgan Stanley Capital International World Index
From Portfolio Inception (11.12)%
- --------------------------------------------------------------------------------
This Portfolio is designed for long-term investors who can accept the special
risks associated with value investing and having significant exposure to foreign
markets (which include risks such as currency fluctuation and political
uncertainty).
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
A portfolio's performance for very short time periods may not be indicative of
future performance.
A "nondiversified" fund has the ability to take larger positions in a smaller
number of issuers than a "diversified" fund. Nondiversified funds may experience
greater price volatility.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
The Morgan Stanley Capital International World Index is defined as a world index
measuring market performance in 23 countries, including the US. It's weighted by
both country and industry and is divided into 8 economic sectors and 38 industry
groups; managed by Morgan Stanley Capital International. The Portfolio may
differ significantly from the securities held in the index. The index is not
available for direct investment; therefore its performance does not reflect the
expenses associated with the active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
The Adviser has contractually agreed to waive a portion of the Portfolio's
expenses. Without such waivers, the Portfolio's total return for each class
would have been lower.
PERFORMANCE OVERVIEW
[GRAPHIC OMITTED]
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen Global Value Portfolio - Service Shares and the Morgan Stanley
Capital International World Index. Janus Aspen Global Value Portfolio - Service
Shares is represented by a shaded area of green. The Morgan Stanley Capital
International World Index is represented by a solid black line. The "y" axis
reflects the value of the investment. The "x" axis reflects the computation
periods from inception, May 1, 2001, through December 31, 2001. The upper and
lower right quadrant reflects the ending value of the hypothetical investment in
Janus Aspen Global Value Portfolio - Service Shares ($10,497) as compared to the
Morgan Stanley Capital International World Index ($8,888).
Cumulative Total Return
for the period ended December 31, 2001
Since 5/1/01,* 4.97%
Janus Aspen Global Value Portfolio
- - Service Shares - $10,497
Morgan Stanley Capital International
World Index - $8,888
*The Portfolio's inception date.
Source - Lipper, Inc. 2001.
See "Explanations of Charts and Tables."
SCHEDULE OF INVESTMENTS
<Caption>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Common Stock - 95.8%
Advertising Services - 3.9%
7,473 WPP Group PLC** ............................................................. $ 82,774
Aerospace and Defense - 2.9%
219 Dassault Aviation S.A.** .................................................... 61,813
Automotive - Cars and Light Trucks - 2.0%
8,000 Nissan Motor Company, Ltd.** ................................................ 42,423
Beverages - Wine and Spirits - 3.1%
5,753 Diageo PLC** ................................................................ 65,753
Brewery - 1.4%
4,000 Kirin Brewery Company, Ltd.** ............................................... 28,598
Building Products - Cement and Aggregate - 1.0%
835 Cemex S.A. (ADR) ............................................................ 20,624
Casino Hotels - 2.5%
5,665 Park Place Entertainment Corp.* ............................................. 51,948
Chemicals - Diversified - 7.0%
1,452 Akzo Nobel N.V.** ........................................................... 64,835
2,604 Bayer A.G.** ................................................................ 82,772
147,607
Chemicals - Specialty - 1.8%
735 Syngenta A.G.* .............................................................. 38,072
Computer Services - 3.0%
3,320 Ceridian Corp.* ............................................................. 62,250
Cosmetics and Toiletries - 1.8%
1,140 Gillette Co. ................................................................ $ 38,076
Diversified Operations - 11.0%
27,425 BBA Group PLC** ............................................................. 112,041
2,040 Cendant Corp.* .............................................................. 40,004
8,031 Smiths Group PLC** .......................................................... 79,183
231,228
Electronic Components - 3.4%
340 Samsung Electronics Company, Ltd. ........................................... 72,219
Electronic Design Automation - 3.0%
2,890 Cadence Design Systems, Inc.* ............................................... 63,349
Electronic Measuring Instruments - 3.9%
2,630 Orbotech, Ltd.* ............................................................. 81,925
Financial Guarantee Insurance - 1.0%
350 MGIC Investment Corp. ....................................................... 21,602
Home Decorating Products - 4.4%
2,319 Hunter Douglas N.V.** ....................................................... 62,212
1,110 Newell Rubbermaid, Inc. ..................................................... 30,603
92,815
Hotels and Motels - 3.6%
3,645 Hilton Hotels Corp. ......................................................... 39,803
870 Marriott International, Inc. - Class A ...................................... 35,366
75,169
SEE NOTES TO SCHEDULES OF INVESTMENTS.
48 JANUS ASPEN SERIES / DECEMBER 31, 2001
JANUS ASPEN GLOBAL VALUE PORTFOLIO
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Machinery - Pumps - 4.0%
2,679 Pfeiffer Vacuum Technology A.G.** ........................................... $ 83,963
Medical - Drugs - 2.0%
980 Pharmacia Corp. ............................................................. 41,797
Medical Products - 2.2%
1,390 Becton, Dickinson and Co. ................................................... 46,079
Property and Casualty Insurance - 2.7%
15,000 NIPPONKOA Insurance Company, Ltd.** ......................................... 56,997
Publishing - Periodicals - 3.1%
2,833 Wolters Kluwer N.V.** ....................................................... 64,574
Radio - 3.8%
3,000 Nippon Broadcasting System, Inc.** .......................................... 80,116
Real Estate Investment Trusts - 2.9%
6,870 Host Marriott Corp. ......................................................... 61,830
Reinsurance - 4.8%
40 Berkshire Hathaway, Inc. - Class B* ......................................... 101,000
Retail - Restaurants - 1.5%
1,210 McDonald's Corp. ............................................................ 32,029
Retail - Toy Store - 1.5%
1,580 Toys "R" Us, Inc.* .......................................................... 32,769
Rubber and Vinyl - 1.8%
4,000 Tenma Corp.** ............................................................... 37,387
Savings/Loan/Thrifts - 0.8%
610 Washington Mutual, Inc. ..................................................... 19,947
Semiconductor Equipment - 1.0%
525 Novellus Systems, Inc.* ..................................................... 20,711
Television - 1.7%
17,190 Granada PLC** ............................................................... 35,877
Toys - 1.3%
1,570 Mattel, Inc. ................................................................ 27,004
- ----------------------------------------------------------------------------------------------------------
Total Common Stock (cost $1,948,264) ........................................................ 2,020,325
- ----------------------------------------------------------------------------------------------------------
Total Investments (total cost $1,948,264) - 95.8% ........................................... 2,020,325
- ----------------------------------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 4.2% ............................... 87,972
- ----------------------------------------------------------------------------------------------------------
Net Assets - 100% ........................................................................... $ 2,108,297
- ----------------------------------------------------------------------------------------------------------
SUMMARY OF INVESTMENTS BY COUNTRY, DECEMBER 31, 2001
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
France 3.1% $ 61,813
Germany 8.2% 166,735
Israel 4.1% 81,925
Japan 12.1% 245,521
Mexico 1.0% 20,624
Netherlands 9.5% 191,621
South Korea 3.6% 72,219
Switzerland 1.9% 38,072
United Kingdom 18.6% 375,628
United States 37.9% 766,167
- --------------------------------------------------------------------------------
Total 100.0% $ 2,020,325
FORWARD CURRENCY CONTRACTS, OPEN AT DECEMBER 31, 2001
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 5/10/02 105,000 $ 151,657 $ (388)
British Pound 5/24/02 20,000 28,864 116
Euro 5/10/02 215,000 190,500 2,899
Euro 5/24/02 35,000 30,998 345
Japanese Yen 4/26/02 5,000,000 38,389 1,685
Japanese Yen 5/10/02 8,000,000 61,471 4,809
Japanese Yen 5/24/02 2,000,000 15,380 350
- --------------------------------------------------------------------------------
Total $ 517,259 $ 9,816
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 49
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
[PHOTO]
Ronald Speaker
portfolio manager
For the 12 months ended December 31, 2001, Janus Aspen Flexible Income
Portfolio's Institutional Shares gained 7.74% and its Service Shares returned
7.49%. By comparison, its benchmark, the Lehman Brothers Government/Credit
Index, returned 8.50%.(1)
After a lackluster first half of the year, the U.S. economy continued stumbling
during the third quarter, tripped up by increasing unemployment figures and
decreasing corporate spending. Experts' debates on whether the nation was
officially entering a recession - generally defined as two consecutive quarters
of economic contraction - ended in November when the National Bureau of Economic
Research announced the U.S. had been in one since March.
The Federal Reserve's immediate response to the terrorist attacks - two
half-point rate cuts within two weeks - cut the prime lending rate to 2.50%. The
moves were intended to boost the economy by making it cheaper to borrow money,
but the immediate impact sparked a rally across the bond markets. This was
especially true in the short-term markets, where rates followed the Fed's lead
lower and prices pushed higher. A volatile stock market also ignited a flight to
lower-risk, higher-quality investments, and the Portfolio profited from its
sizeable positions in Treasuries and government agency debt. After two more rate
cuts and bits of positive economic news at the end of the year, investors eyed a
recovery and bid stock prices up as the Treasury market gave back some of its
prior gains.
Our Treasury exposure, however, remains spread out over the yield curve,
including five-, 10- and 30-year issues. Similarly, we have diversified holdings
in Fannie Mae, the government agency that peddles mortgage-backed bonds. In late
October, the government announced it would stop issuing 30-year bonds, and we
believe the move will ultimately result in increased capital investment by
companies and lower mortgage rates - two factors that should help steady the
economy.
Among our corporate holdings, we've profited from positions in classically
defensive corners of the economy, such as supermarkets, food manufacturers and
healthcare interests. We've focused on high-quality companies with strong lines
of business that endure during transitional and rough times.
We have a long-standing interest in supermarkets, which recently received a
boost from nervous consumers stocking up on basic foodstuffs. During the period,
we enjoyed gains from our holdings in Safeway, one of the largest food
retailers, and Fred Meyer, a division of industry leader Kroger. Our
food-producer holdings include breakfast food-maker Kellogg and meat-processor
Hormel Foods, two consumer staple standbys with upper-tier ratings. Both
companies actively manage their debt loads and take a smart approach to
acquisitions, which increases our confidence in the lower-risk nature of their
bonds.
A constant demand for healthcare services similarly exists through weak and
strong economies, which helped us realize strong gains in outpatient and
rehabilitative care facility operator HEALTHSOUTH. We also took profits on
hospital owner Tenet Healthcare and used the proceeds to initiate a position in
HCA, the former Columbia/HCA Healthcare which owns and operates a variety of
healthcare centers. Another newer investment in the sector, outsourced
laboratory testing services-provider Quest Diagnostics, helped the Portfolio's
performance with a run-up during the period.
Through the course of the year, we scaled back on our exposure to the high-yield
arena as we focused on improving the quality of the Portfolio's holdings. In
fact, our three leading high-yield positions - California-based thrift operator
Golden State Holdings, HCA and waste-services provider Allied Waste - are just a
couple of notches below investment grade, which is granted to blue-chip
corporations.
Two holdings that suffered following the September 11 attacks were United Air
Lines and Cendant, which owns hotels and Avis Car Rentals. Cendant, however,
quickly recovered a portion of its losses thanks in part to its diversified
business lines. What's more, the company's ability to generate a steady stream
of cash soothed concerns over its ability to service the debt. In contrast, we
decided to liquidate our position in United. Though its notes featured
hard-asset stability because the company's planes served as collateral for the
loans, the uncertainty plaguing the airline industry as well as United's
continued labor issues created more risk than we were comfortable with.
As we contemplate the next 12 months, we see a dramatically changed investment
environment with many uncertainties regarding the economic state of the world.
Yet, with hints of good news popping up here and there, conditions could reverse
in the fixed-income market in an instant. By keeping a vigilant eye on the
economic figures and a nimble hand on the Portfolio's holdings, we hope to
extend our gains with the minimal amount of risk to shareholders.
As always, thank you for your investment in Janus Aspen Flexible Income
Portfolio.
Portfolio Asset Mix
(% of Net Assets) December 31, 2001 December 31, 2000
- --------------------------------------------------------------------------------
Corporate Bonds/Warrants
Investment Grade 48.5% 38.5%
High-Yield/High-Risk 11.3% 14.0%
U.S. Government Obligations 32.9% 36.2%
Foreign Dollar/
Non-Dollar Bonds 1.0% 2.1%
Preferred Stock 0.2% 0.6%
Cash and Cash Equivalents 6.1% 8.6%
- --------------------------------------------------------------------------------
Portfolio Profile
- --------------------------------------------------------------------------------
Weighted Average Maturity 8.1 Yrs. 5.8 Yrs.
Average Modified Duration* 5.7 Yrs. 4.4 Yrs.
30-Day Average Yield
Institutional Shares** 5.64% 6.88%
Service Shares** 5.35% 6.59%
Weighted Average Fixed Income
Credit Rating A A+
- --------------------------------------------------------------------------------
*A theoretical measure of price volatility. **Yields will fluctuate.
(1) All returns include reinvested dividends and capital gains.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
50 JANUS ASPEN SERIES / DECEMBER 31, 2001
Average Annual Total Return
For the Periods Ended December 31, 2001
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 9/13/93)
1 Year 7.74%
5 Year 7.24%
From Inception 8.14%
- --------------------------------------------------------------------------------
Lehman Brothers Government/Credit Index
1 Year 8.50%
5 Year 7.37%
From Inception Date of Institutional Shares 6.53%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year 7.49%
5 Year 6.98%
From Portfolio Inception 7.97%
- --------------------------------------------------------------------------------
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
High-yield bonds involve a greater risk of default and price volatility than
U.S. Government and other high quality bonds.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
The Lehman Brothers Government/Credit Index is defined as an index consisting of
more than 4,000 government and corporate bonds; managed by Lehman Brothers. The
Portfolio may differ significantly from the securities held in the index. The
index is not available for direct investment; therefore its performance does not
reflect the expenses associated with the active management of an actual
portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
PERFORMANCE OVERVIEW
[GRAPHIC OMITTED]
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Aspen Flexible Income Portfolio - Institutional Shares and the Lehman
Brothers Govt./Credit Index. Janus Aspen Flexible Income Portfolio -
Institutional Shares is represented by a shaded area of green. The Lehman
Brothers Govt./Credit Index is represented by a solid black line. The "y" axis
reflects the value of the investment. The "x" axis reflects the computation
periods from inception, September 13, 1993, through December 31, 2001. The upper
right quadrant reflects the ending value of the hypothetical investment in Janus
Aspen Flexible Income Portfolio - Institutional Shares ($19,141) as compared to
the Lehman Brothers Govt./Credit Index ($16,903).
Average Annual Total Return
for the periods ended December 31, 2001
One Year, 7.74%
Five Year, 7.24%
Since 9/13/93,* 8.14%
Janus Aspen Flexible Income Portfolio
- - Institutional Shares - $19,141
Lehman Brothers Govt./
Credit Index - $16,903
*The Portfolio's inception date.
Source - Lipper, Inc. 2001.
See "Explanations of Charts and Tables."
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Corporate Bonds - 60.7%
Aerospace and Defense - 1.6%
Raytheon Co.:
$ 3,145,000 6.50%, notes, due 7/15/05 ................... $ 3,247,213
3,000,000 6.15%, notes, due 11/1/08 ................... 2,981,250
6,228,463
Beverages - Non-Alcoholic - 0.7%
2,550,000 Coca-Cola Enterprises, Inc., 6.125%
notes, due 8/15/11 ....................... 2,565,937
Building - Residential and Commercial - 0.3%
1,145,000 KB Home, Inc., 8.625%
senior subordinated notes, due 12/15/08 .. 1,150,725
Cable Television - 1.9%
1,490,000 Adelphia Communications Corp., 8.125%
senior notes, due 7/15/03 ................ 1,478,825
4,000,000 CSC Holdings, Inc., 7.625%
senior notes, due 4/1/11 ................. 4,005,000
996,000 Lenfest Communications, Inc., 7.625%
senior notes, due 2/15/08 ................ 1,052,025
900,000 Mediacom Broadband L.L.C., 11.00%
company guaranteed notes, due 7/15/13 .... 987,750
7,523,600
Cellular Telecommunications - 1.6%
Cingular Wireless, Inc.:
$ 1,350,000 6.50%, notes, due 12/15/11+ .............. $ 1,368,562
950,000 7.125%, notes, due 12/15/31+ ............. 966,625
810,000 Price Communications Wireless, Inc.
11.75%, senior subordinated notes
due 7/15/07 .............................. 882,900
2,950,000 Verizon Wireless, Inc., 5.375%
notes, due 12/15/06+ ..................... 2,935,250
6,153,337
Commercial Banks - 0.4%
698,000 Hudson United Bancorp, Inc., 8.20%
subordinated debentures, due 9/15/06 ..... 693,637
996,000 Provident Trust I Corp., 8.29%
company guaranteed notes, due 4/15/28 .... 877,725
1,571,362
Commercial Services - 1.3%
5,000,000 PHH Corp., 8.125%
notes, due 2/3/03 ........................ 5,000,000
Computers - 0.8%
3,000,000 IBM Corp., 4.875%
notes, due 10/1/06 ....................... 2,977,500
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 51
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Diversified Financial Services - 0.3%
$ 1,000,000 Citigroup, Inc., 7.25%
subordinated notes, due 10/1/10 .......... $ 1,071,250
Diversified Operations - 1.0%
4,000,000 Cendant Corp., 6.875%
notes, due 8/15/06+ ...................... 3,865,000
Electric - Distribution - 1.2%
5,000,000 FirstEnergy Corp., 6.45%
notes, due 11/15/11 ...................... 4,881,250
Electric - Integrated - 3.5%
3,000,000 Carolina Power & Light Co., 6.65%
senior notes, due 4/1/08 ................. 3,078,750
4,250,000 Cinergy Corp., 6.25%
debentures, due 9/1/04 ................... 4,276,562
PSEG Power L.L.C.:
4,000,000 6.875%, company guaranteed
notes, due 4/15/06 ....................... 4,095,000
2,000,000 7.75%, senior notes, due 4/15/11 ......... 2,095,000
13,545,312
Finance - Auto Loans - 1.4%
5,500,000 Ford Motor Credit Co., 5.75%
senior notes, due 2/23/04 ................ 5,589,375
Finance - Other Services - 2.1%
8,200,000 Verizon Global Funding Corp., 5.75%
convertible notes, due 4/1/03 ............ 8,323,000
Food - Diversified - 3.4%
2,500,000 Conagra Foods, Inc., 6.75%
notes, due 9/15/11 ....................... 2,553,125
Kellogg Co.:
6,000,000 5.50%, notes, due 4/1/03 ................. 6,150,000
2,600,000 6.00%, notes, due 4/1/06 ................. 2,661,750
1,750,000 6.60%, notes, due 4/1/11 ................. 1,798,125
13,163,000
Food - Meat Products - 0.8%
3,000,000 Hormel Foods Corp., 6.625%
notes, due 6/1/11+ ....................... 3,018,750
Food - Retail - 7.7%
Delhaize America, Inc.:
3,700,000 7.375%, notes, due 4/15/06+ .............. 3,922,000
1,500,000 8.125%, notes, due 4/15/11+ .............. 1,646,250
Fred Meyer, Inc.:
2,100,000 7.15%, company guaranteed
notes, due 3/1/03 ........................ 2,191,875
2,500,000 7.375%, company guaranteed
notes, due 3/1/05 ........................ 2,640,625
4,250,000 7.45%, company guaranteed
notes, due 3/1/08 ........................ 4,563,437
3,000,000 Kroger Co., 7.50%
company guaranteed notes, due 4/1/31 ..... 3,150,000
1,742,000 Marsh Supermarkets, Inc., 8.875%
company guaranteed notes, due 8/1/07 ..... 1,733,290
Safeway, Inc.:
1,335,000 3.625%, notes, due 11/5/03 ............... 1,328,325
4,450,000 6.15%, notes, due 3/1/06 ................. 4,566,812
4,000,000 6.50%, notes, due 3/1/11 ................. 4,080,000
29,822,614
Foreign Government - 0.3%
1,000,000 United Mexican States, 8.375%
notes, due 1/14/11 ....................... 1,037,500
Independent Power Producer - 0.5%
2,000,000 Calpine Corp., 8.50%
senior notes, due 2/15/11 ................ 1,820,000
Leisure, Recreation and Gaming - 0.4%
1,500,000 Hard Rock Hotel, Inc., 9.25%
senior subordinated notes, due 4/1/05 .... 1,440,000
Life and Health Insurance - 0.2%
$ 813,000 Delphi Financial Group, Inc., 8.00%
senior notes, due 10/1/03 ................ $ 839,422
Medical - HMO - 1.5%
1,000,000 UnitedHealth Group, Inc., 7.50%
notes, due 11/15/05 ...................... 1,063,750
4,825,000 Wellpoint Health Networks, Inc., 6.375%
notes, due 6/15/06 ....................... 4,921,500
5,985,250
Medical - Hospitals - 3.6%
HCA, Inc.:
3,930,000 6.91%, notes, due 6/15/05 ................ 4,042,988
525,000 7.875%, senior notes, due 2/1/11 ......... 535,500
498,000 8.36%, debentures, due 4/15/24 ........... 512,940
Tenet Healthcare Corp.:
5,800,000 5.375%, notes, due 11/15/06+ ............. 5,669,500
3,500,000 6.375%, notes, due 12/1/11+ .............. 3,386,250
14,147,178
Medical Labs and Testing Services - 1.9%
Quest Diagnostics, Inc.:
4,000,000 6.75%, company guaranteed
notes, due 7/12/06 ....................... 4,110,000
3,300,000 7.50%, company guaranteed
notes, due 7/12/11 ....................... 3,403,125
7,513,125
Multimedia - 2.4%
4,100,000 AOL Time Warner, Inc., 6.125%
notes, due 4/15/06 ....................... 4,187,125
5,000,000 Viacom, Inc., 6.40%
company guaranteed notes, due 1/30/06 .... 5,156,250
9,343,375
Networking Products - 0%
996,000 Candescent Technologies Corp., 8.00%
convertible senior subordinated
debentures, due 5/1/03+,(OMEGA),(DELTA) .. 84,660
Non-Hazardous Waste Disposal - 3.5%
3,220,000 Allied Waste North America, Inc., 7.625%
company guaranteed notes, due 1/1/06 ..... 3,179,750
2,750,000 Republic Services, Inc., 6.75%
notes, due 8/15/11 ....................... 2,753,438
Waste Management, Inc.:
3,500,000 7.00%, senior notes, due 10/1/04 ......... 3,631,250
4,000,000 7.375%, notes, due 8/1/10 ................ 4,090,000
13,654,438
Oil Companies - Exploration and Production - 0.3%
1,020,000 Louis Dreyfus Natural Gas Corp., 6.875%
notes, due 12/1/07 ....................... 1,055,700
Oil Companies - Integrated - 2.2%
Conoco Funding Co.:
4,200,000 5.45%, company guaranteed
notes, due 10/15/06 ...................... 4,200,000
2,360,000 6.35%, notes, due 10/15/11 ............... 2,380,650
1,950,000 Occidental Petroleum Corp., 5.875%
notes, due 1/15/07 ....................... 1,942,688
8,523,338
Physical Therapy and Rehabilitation Centers - 1.4%
HEALTHSOUTH Corp.:
2,350,000 7.375%, senior notes, due 10/1/06+ ....... 2,350,000
3,000,000 8.50%, senior notes, due 2/1/08 .......... 3,120,000
5,470,000
Pipelines - 0.6%
Kinder Morgan Energy Partners L.P.:
1,285,000 6.75%, notes, due 3/15/11 ................ 1,285,000
880,000 7.40%, notes, due 3/15/31 ................ 883,300
2,168,300
SEE NOTES TO SCHEDULES OF INVESTMENTS.
52 JANUS ASPEN SERIES / DECEMBER 31, 2001
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Property and Casualty Insurance - 0.1%
$ 498,000 First American Capital Trust, 8.50%
company guaranteed notes, due 4/15/12 .... $ 488,663
Recreational Centers - 0.6%
2,500,000 Bally Total Fitness Holding Corp., 9.875%
senior subordinated notes, due 10/15/07 .. 2,550,000
Real Estate Investment Trusts - 0.3%
1,350,000 Host Marriott Corp., 9.50%
senior notes, due 1/15/07+ ............... 1,351,688
Retail - Discount - 1.1%
4,000,000 Wal-Mart Stores, Inc., 6.875%
senior notes, due 8/10/09 ................ 4,325,000
Satellite Telecommunications - 1.2%
4,850,000 Echostar DBS Corp., 9.125%
senior notes, due 1/15/09 ................ 4,862,125
Savings/Loan/Thrifts - 2.6%
Golden State Holdings, Inc.:
6,248,000 7.00%, senior notes, due 8/1/03 .......... 6,302,670
3,680,000 7.125%, senior notes, due 8/1/05 ......... 3,689,200
9,991,870
Soap and Cleaning Preparations - 1.5%
Dial Corp.:
3,850,000 7.00%, senior notes, due 8/15/06 ......... 3,874,063
2,000,000 6.50%, senior notes, due 9/15/08 ......... 1,917,500
5,791,563
Telecommunication Services - 1.9%
Qwest Capital Funding, Inc.:
4,650,000 5.875%, notes, due 8/3/04+ ............... 4,603,500
3,000,000 6.25%, company guaranteed
notes, due 7/15/05 ....................... 2,973,750
7,577,250
Telephone - Integrated - 1.9%
2,625,000 France Telecom S.A., 7.75%
notes, due 3/1/11+ ....................... 2,812,031
3,000,000 Sprint Capital Corp., 6.00%
notes, due 1/15/07 ....................... 2,977,500
1,600,000 WorldCom, Inc., 6.50%
notes, due 5/15/04 ....................... 1,644,000
7,433,531
Television - 0.4%
1,488,000 Fox/Liberty Networks L.L.C., 8.875%
senior notes, due 8/15/07 ................ 1,540,080
Veterinary Diagnostics - 0.2%
820,000 Vicar Operating, Inc., 9.875%
senior subordinated notes, due 12/1/09+ .. 836,400
Web Hosting/Design - 0.1%
1,245,000 Equinix, Inc., 13.00%
senior notes, due 12/1/07 ................ 417,075
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $235,491,259) ................... 236,698,006
- --------------------------------------------------------------------------------
Preferred Stock - 0.3%
Savings/Loan/Thrifts - 0.3%
35,458 Chevy Chase Savings Bank, 13.00%
(cost $1,055,050) ........................ 975,095
- --------------------------------------------------------------------------------
Warrants - 0%
Finance - Other Services - 0%
996 Ono Finance PLC - expires 5/31/09*,+ ........ 4,980
Telephone - Integrated - 0%
224 Versatel Telecom B.V. - expires 5/15/08* .... 0
Web Hosting/Design - 0%
650 Equinix, Inc. - expires 12/1/07* ............ 13,000
- --------------------------------------------------------------------------------
Total Warrants (cost $0) .................................... 17,980
- --------------------------------------------------------------------------------
U.S. Government Obligations - 32.8%
U.S. Government Agencies - 25.1%
Fannie Mae:
$ 4,565,000 4.75%, due 1/2/07 ........................ $ 4,536,469
20,900,000 5.00%, due 1/15/07 ....................... 20,978,375
16,000,000 6.25%, due 2/1/11 ........................ 16,280,000
39,375,000 6.00%, due 5/15/11 ....................... 40,014,844
15,500,000 6.625%, due 11/15/30 ..................... 16,216,875
98,026,563
U.S. Treasury Notes/Bonds - 7.7%
4,600,000 3.50%, due 11/15/06 ...................... 4,434,308
16,700,000 5.00%, due 8/15/11** ..................... 16,658,250
6,500,000 6.25%, due 5/15/30 ....................... 7,041,060
1,775,000 5.375%, due 2/15/31 ...................... 1,750,026
29,883,644
- --------------------------------------------------------------------------------
Total U.S. Government Obligations (cost $128,614,049) ....... 127,910,207
- --------------------------------------------------------------------------------
Repurchase Agreement - 2.6%
10,300,000 ABN AMRO Bank N.V., 1.80%
dated 12/31/01, maturing 1/2/02 to be repurchased at
$10,301,030 collateralized by $14,582,397 in Collateralized
Mortgage Obligations 2.28%-7.135%, 11/25/20-12/25/40 AAA,
$40,879 in U.S. Treasury Notes/Bonds, 0%, 2/15/18 with
respective values of $10,490,643 and $15,357
(cost $10,300,000) ....................... 10,300,000
- --------------------------------------------------------------------------------
U.S. Government Agencies - 2.1%
Federal Home Loan Bank System
8,000,000 1.65%, 1/31/02
(amortized cost $7,989,000) .............. 7,989,000
- --------------------------------------------------------------------------------
Total Investments (total cost $383,449,358) - 98.5% ......... 383,890,288
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 1.5% 5,754,929
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $ 389,645,217
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Financial Futures - Short
66 Contracts U.S. Treasury - 10-year Note
expires March 2002, principal amount
$6,900,282, value $6,939,281
cumulative depreciation .................. $ (38,999)
- --------------------------------------------------------------------------------
SUMMARY OF INVESTMENTS BY COUNTRY, DECEMBER 31, 2001
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
France 0.7% $ 2,812,031
Mexico 0.3% 1,037,500
United Kingdom 0% 4,980
United States++ 99.0% 380,035,777
- --------------------------------------------------------------------------------
Total 100.0% $ 383,890,288
++INCLUDES SHORT-TERM SECURITIES (94.2% EXCLUDING SHORT-TERM SECURITIES)
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 53
JANUS ASPEN MONEY MARKET PORTFOLIO
[PHOTO]
J. Eric Thorderson
portfolio manager
For the 12 months ended December 31, 2001, Janus Aspen Money Market Portfolio
returned 4.22% for its Institutional Shares and 3.97% for its Service Shares.
The seven-day current yield for the same period was 2.08% and 1.83%,
respectively.(1)
The past year has been challenging for investors. The U.S. economy fell into
recession for the first time in more than a decade, corporate earnings lagged,
and the horrific September terrorist attacks deepened the climate of uncertainty
and cast a shadow over industries from tourism to retailing. The Federal Reserve
responded to these pressures by lowering interest rates eleven times, reducing
the benchmark federal funds rate from 6.50% to 1.75%, its lowest level in more
than forty years.
During this difficult period, money market funds enjoyed strong inflows,
attesting to their appeal as a safe haven for investors worried about stock
market turbulence. Nonetheless, income became a concern in this
falling-interest-rate environment. Consequently, while we maintained careful
attention to liquidity and credit quality, we also looked for opportunities to
bolster the Portfolio's yield. For this reason, we focused our buying on the
longer end of our maturity range for much of the year, locking in higher yields
ahead of Fed easing. These efforts helped the Portfolio's yield compete
favorably with returns on available alternatives.
Our strategy shifted at year-end, however, as a pickup in housing construction,
improved factory orders and better-than-anticipated Christmas retail spending
hinted that the economy might be gearing up for recovery. While the markets
still expect one more Fed rate cut in 2002, the improved economic outlook
suggests that rates could stabilize or even move higher over the coming year.
Given this outlook, we have shortened our focus, targeting securities with four-
to six-month maturities. This positioning gives us the flexibility to capture
higher yields should interest rates begin to rise. At the same time, we have
maintained our diversified investment strategy, holding roughly one-third of our
assets in overnight securities, one-third in instruments maturing in seven days
or less, and a third in certificates of deposit and commercial paper maturing in
less than one year.
We have also remained vigilant to credit quality. While we are confident in our
holdings overall, our concerns over a slowing economy led us to reduce our
exposure to a few issues that we believed could be vulnerable to declining cash
flows, eroding profit margins or potential credit problems. But these actions
have been isolated occurrences, and have not significantly affected the
Portfolio's yield.
Lower interest rates, and the prospect of more government spending, suggest that
the economic climate could improve in 2002. Nonetheless, a higher unemployment
rate, reduced business confidence, and the ongoing terrorist threat raise the
risk that economic growth could remain sluggish. This uncertainty, therefore,
could weigh on financial markets for some time to come. In such a climate, money
markets provide investors with important liquidity and income stability.
Conscious of our role in providing a haven from market volatility, we will
continue to manage the Portfolio with discipline, balancing quality and
flexibility with the potential for competitive yield.
Thank you for your continued investment in Janus Aspen Money Market Portfolio.
Average Annual Total Return
For the Periods Ended December 31, 2001
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 5/1/95)
1 Year 4.22%
5 Year 5.20%
From Inception 5.20%
Seven-Day Current Yield 2.08%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year 3.97%
5 Year 4.96%
From Portfolio Inception 4.98%
Seven-Day Current Yield 1.83%
- --------------------------------------------------------------------------------
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
(1) All returns reflect reinvested dividends.
An investment in the Portfolio is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
Portfolio seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Portfolio.
The yield more closely reflects the current earnings of the money market fund
than the total return.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
54 JANUS ASPEN SERIES / DECEMBER 31, 2001
SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
================================================================================
Certificates of Deposit - 2.0%
$ 2,000,000 Natexis Banque, New York
5.08%, 2/6/02 (cost $2,000,000) .......... $ 2,000,000
- --------------------------------------------------------------------------------
Commercial Paper - 6.0%
2,000,000 Check Point Charlie, Inc.
1.88%, 1/25/02+ .......................... 1,997,493
Victory Receivables Corp.:
1,000,000 2.05%, 1/11/02+ .......................... 999,431
3,000,000 2.16%-2.25%, 1/15/02+ .................... 2,997,445
- --------------------------------------------------------------------------------
Total Commercial Paper (cost $5,994,369) .................... 5,994,369
- --------------------------------------------------------------------------------
Floating Rate Notes - 17.0%
2,000,000 General Motors Acceptance Corp.
2.41%, 1/28/02 ........................... 1,999,948
5,000,000 Idaho Power Corp.
2.4312%, 9/1/02 ss. ...................... 5,004,910
5,000,000 Sigma Finance, Inc.
1.8856%, 10/15/02+ ....................... 4,999,607
Textron Financial Corp.:
1,800,000 2.6612%, 3/18/02 ......................... 1,799,428
3,200,000 2.5056%, 5/28/02 ss. ..................... 3,203,224
- --------------------------------------------------------------------------------
Total Floating Rate Notes (cost $17,007,117) ................ 17,007,117
- --------------------------------------------------------------------------------
Put Bonds - 2.8%
2,805,000 Arapahoe Water and Sanitation District
Arapahoe County, Colorado
2.076%, 12/01/13 (cost $2,805,000) ....... 2,805,000
- --------------------------------------------------------------------------------
Repurchase Agreements - 18.9%
6,000,000 ABN AMRO Bank N.V., 1.83%
dated 12/31/01, maturing 1/2/02
to be repurchased at $6,000,610
collateralized by $7,837,441
in U.S. Government Agencies,
2.88%-7.00%, 5/25/07-10/20/31
with a value of $6,120,005 ............... 6,000,000
13,000,000 Deutsche Banc Alex. Brown, Inc., 1.925%
dated 12/31/01, maturing 1/2/02
to be repurchased at $13,001,390
collateralized by $12,797,116
in U.S. Treasury Notes/Bonds
0%-14.00%, 1/31/02-5/15/30
$5,836,460 in U.S. Government Agencies
0%-7.25%, 11/25/02-2/15/23, with
respective values of $6,932,374
and $6,327,626 ........................... 13,000,000
- --------------------------------------------------------------------------------
Total Repurchase Agreements (cost $19,000,000) .............. 19,000,000
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 10.0%
2,000,000 Bank One Corp.
8.10%, 3/1/02 ............................ 2,010,815
Dorada Finance, Inc.:
2,000,000 2.75%, 10/21/02+ ......................... 2,000,000
3,000,000 2.75%, 10/25/02+ ......................... 3,000,000
3,000,000 Ford Motor Credit Corp.
8.00%, 6/15/02 ........................... 3,053,596
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes (cost $10,064,411) ......... 10,064,411
- --------------------------------------------------------------------------------
Taxable Variable Rate Demand Notes - 39.2%
3,800,000 Advocare of South Carolina, Inc.
2.13%, 6/1/17 ............................ 3,800,000
400,000 Anaheim California Housing Authority
Multifamily Housing Revenue
(Cobblestone), 2.15%, 3/15/33 ............ 400,000
Taxable Variable Rate Demand Notes - (continued)
$ 1,695,000 Arapahoe County, Colorado, Industrial
Development Revenue, (Cottrell)
Series B, 2.16%, 10/1/19 ................. $ 1,695,000
300,000 Asset Partners, Inc.
2.08%, 11/1/27 ........................... 300,000
2,890,000 Breckenridge Terrace L.L.C.
1.9756%, 5/1/39 .......................... 2,890,000
700,000 Bridgeton, Missouri Industrial
Development Authority Industrial
Revenue, (Gold Dust Project), Series B
2.46%, 3/1/21 ............................ 700,000
1,000,000 California Infrastructure and Economic
Development, (International Raisins
Project), Series B, 2.13%, 11/1/20 ....... 1,000,000
Colorado Housing and Finance Authority
Economic Development Revenue:
355,000 (De La Cruz Project), Series B
2.16%, 10/1/05 ........................... 355,000
380,000 (Pemracs, Ltd.), Series B
2.08%, 4/1/21 ............................ 380,000
800,000 (White Wave, Inc. Project), Series B
2.16%, 10/1/18 ........................... 800,000
3,250,000 Colorado Housing Facilities Revenue
(Tenderfoot Seasonal Housing L.L.C.)
Series A, 1.9756%, 7/1/35 ................ 3,250,000
1,000,000 Fox Valley Ice Arena L.L.C.
2.11%, 7/1/27 ............................ 1,000,000
475,000 Kentucky Economic Development
Financing Authority Hospital Facilities
Revenue, (Highlands Regional Project)
Series B, 2.15%, 8/1/03 .................. 475,000
1,810,000 Medical Properties, Inc., North Dakota
(Dakota Clinic Project), 2.39%, 12/22/24 . 1,810,000
3,200,000 Mississippi Business Financial Corp.
Industrial Development Revenue
(Royal Vendors, Inc. Project)
2.13%, 6/1/24 ............................ 3,200,000
5,265,000 Montgomery, Alabama Industrial
Development Board of Revenue
(Jenkins Brick Co.), Series A
2.01%, 9/1/14 ............................ 5,265,000
1,400,000 New York City, New York Industrial
Development Agency, (G.A.F. Seeling, Inc.
Project), 2.02%, 7/1/03 .................. 1,400,000
1,750,000 Post Properties, Ltd., Series 2000
2.03%, 7/01/20 ........................... 1,750,000
6,300,000 Stone-Lee Partners L.L.C.
2.13%, 6/1/21 ............................ 6,300,000
2,500,000 Washington, Missouri Industrial
Development Authority Industrial
Revenue, (Pauwels Project)
2.26%, 12/1/19 ........................... 2,500,000
- --------------------------------------------------------------------------------
Total Taxable Variable Rate Demand Notes (cost $39,270,000) . 39,270,000
- --------------------------------------------------------------------------------
U.S. Government Agencies - 4.0%
Fannie Mae:
2,000,000 2.39%, 1/10/02 ........................... 1,998,805
2,000,000 4.655%, 2/22/02 .......................... 1,986,552
- --------------------------------------------------------------------------------
Total U.S. Government Agencies (cost $3,985,357) ............ 3,985,357
- --------------------------------------------------------------------------------
Total Investments (total cost $100,126,254) - 99.9% ......... 100,126,254
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 0.1% 115,468
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $ 100,241,722
- --------------------------------------------------------------------------------
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 55
STATEMENTS OF ASSETS AND LIABILITIES
Janus Aspen Janus Aspen Janus Aspen
As of December 31, 2001 Janus Aspen Aggressive Capital Core Janus Aspen
(all numbers in thousands except Growth Growth Appreciation Equity Balanced
net asset value per share) Portfolio Portfolio Portfolio Portfolio(1) Portfolio
- -------------------------------------------------------------------------------------------------------------------
Assets:
Investments at cost $ 2,678,654 $ 2,393,667 $1,341,568 $ 12,889 $ 3,575,639
Investments at value: $ 2,730,108 $ 2,316,264 $1,269,826 $ 13,486 $ 3,614,826
Cash 2,034 1,424 6,060 64 3,457
Receivables:
Investments sold 6,542 12,357 -- 21 3,674
Portfolio shares sold 2,644 3,641 5,053 34 3,741
Dividends 1,047 284 297 13 1,590
Interest 3 6 5 4 20,143
Other assets 10 6 2 -- 9
Forward currency contracts 16 -- -- -- --
- -------------------------------------------------------------------------------------------------------------------
Total Assets 2,742,404 2,333,982 1,281,243 13,622 3,647,440
- -------------------------------------------------------------------------------------------------------------------
Liabilities:
Payables:
Due to Advisor -- -- -- -- --
Investments purchased 239 37,531 -- -- 25,376
Portfolio shares repurchased 12,618 20,743 5,778 -- 2,018
Advisory fees 1,487 1,242 694 8 1,976
Variation Margin -- -- -- -- --
Accrued expenses 94 77 124 9 68
Forward currency contracts -- -- -- -- --
- -------------------------------------------------------------------------------------------------------------------
Total Liabilities 14,438 59,593 6,596 17 29,438
- -------------------------------------------------------------------------------------------------------------------
Net Assets $ 2,727,966 $ 2,274,389 $1,274,647 $ 13,605 $ 3,618,002
- -------------------------------------------------------------------------------------------------------------------
Net Assets - Institutional Shares $ 2,490,954 $ 2,104,733 $ 776,553 $ 12,634 $ 3,425,664
Shares Outstanding, $0.001 Par Value
(unlimited shares authorized) 125,267 95,770 37,477 777 151,769
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share $ 19.89 $ 21.98 $ 20.72 $ 16.26 $ 22.57
- -------------------------------------------------------------------------------------------------------------------
Net Assets - Service Shares $ 237,012 $ 169,656 $ 498,094 $ 971 $ 192,338
Shares Outstanding, $0.001 Par Value
(unlimited shares authorized) 11,993 7,809 24,217 60 8,252
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share $ 19.76 $ 21.73 $ 20.57 $ 16.15 $ 22.31
- -------------------------------------------------------------------------------------------------------------------
(1) Formerly, Janus Aspen Equity Income Portfolio.
SEE NOTES TO FINANCIAL STATEMENTS.
56 JANUS ASPEN SERIES / DECEMBER 31, 2001
Janus Aspen Janus Aspen Janus Aspen Janus Aspen Janus Aspen
As of December 31, 2001 Growth and Strategic International Worldwide Global
(all numbers in thousands except Income Value Growth Growth Life Sciences
net asset value per share) Portfolio Portfolio Portfolio Portfolio Portfolio
- -------------------------------------------------------------------------------------------------------------------
Assets:
Investments at cost $ 180,673 $ 19,878 $1,459,990 $ 5,589,666 $ 45,961
Investments at value: $ 178,818 $ 20,491 $1,447,482 $ 5,887,229 $ 50,002
Cash 45 92 6,355 1,420 118
Receivables:
Investments sold 46 -- 1,079 16,032 112
Portfolio shares sold 171 108 1,127 5,494 18
Dividends 119 7 1,327 5,801 31
Interest 188 9 6 8 --
Other assets 1 -- 10 34 --
Forward currency contracts -- -- 6,764 22,793 --
- -------------------------------------------------------------------------------------------------------------------
Total Assets 179,388 20,707 1,464,150 5,938,811 50,281
- -------------------------------------------------------------------------------------------------------------------
Liabilities:
Payables:
Due to Advisor -- -- -- -- --
Investments purchased 1,205 -- 447 18,045 53
Portfolio shares repurchased 234 15 50,977 38,164 46
Advisory fees 97 15 777 3,208 27
Variation Margin -- -- -- -- --
Accrued expenses 39 12 163 274 21
Forward currency contracts -- -- -- -- 1
- -------------------------------------------------------------------------------------------------------------------
Total Liabilities 1,575 42 52,364 59,691 148
- -------------------------------------------------------------------------------------------------------------------
Net Assets $ 177,813 $ 20,665 $1,411,786 $ 5,879,120 $ 50,133
- -------------------------------------------------------------------------------------------------------------------
Net Assets - Institutional Shares $ 92,659 $ 5,060 $ 869,983 $ 5,707,728 $ 5,972
Shares Outstanding, $0.001 Par Value
(unlimited shares authorized) 6,230 554 37,064 199,974 769
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share $ 14.87 $ 9.13 $ 23.47 $ 28.54 $ 7.77
- -------------------------------------------------------------------------------------------------------------------
Net Assets - Service Shares $ 85,154 $ 15,605 $ 541,803 $ 171,392 $ 44,161
Shares Outstanding, $0.001 Par Value
(unlimited shares authorized) 5,726 1,699 23,256 6,040 5,694
- -------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share $ 14.87 $ 9.18 $ 23.30 $ 28.38 $ 7.75
- -------------------------------------------------------------------------------------------------------------------
Janus Aspen Janus Aspen Janus Aspen Janus Aspen
As of December 31, 2001 Global Global Flexible Money
(all numbers in thousands except Technology Value Income Market
net asset value per share) Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------
Assets:
Investments at cost $ 350,928 $ 1,948 $ 383,449 $ 100,126
Investments at value: $ 292,204 $ 2,020 $ 383,890 $ 100,126
Cash 5,065 95 831 23
Receivables:
Investments sold 752 -- -- --
Portfolio shares sold 586 1 1,298 346
Dividends 45 1 -- --
Interest 41 -- 5,845 322
Other assets 1 -- 1 7
Forward currency contracts 390 10 -- --
- ----------------------------------------------------------------------------------------------------
Total Assets 299,084 2,127 391,865 100,824
- ----------------------------------------------------------------------------------------------------
Liabilities:
Payables:
Due to Advisor -- 7 -- --
Investments purchased 25 -- 1,329 --
Portfolio shares repurchased 6,064 -- 623 557
Advisory fees 164 1 206 21
Variation Margin -- -- 40 --
Accrued expenses 85 11 22 4
Forward currency contracts -- -- -- --
- ----------------------------------------------------------------------------------------------------
Total Liabilities 6,338 19 2,220 582
- ----------------------------------------------------------------------------------------------------
Net Assets $ 292,746 $ 2,108 $ 389,645 $ 100,242
- ----------------------------------------------------------------------------------------------------
Net Assets - Institutional Shares $ 5,643 N/A $ 387,509 $ 100,231
Shares Outstanding, $0.001 Par Value
(unlimited shares authorized) 1,447 N/A 33,242 100,231
- ----------------------------------------------------------------------------------------------------
Net Asset Value Per Share $ 3.90 N/A $ 11.66 $ 1.00
- ----------------------------------------------------------------------------------------------------
Net Assets - Service Shares $ 287,103 $ 2,108 $ 2,136 $ 11
Shares Outstanding, $0.001 Par Value
(unlimited shares authorized) 70,434 201 178 11
- ----------------------------------------------------------------------------------------------------
Net Asset Value Per Share $ 4.08 $ 10.49 $ 11.98 $ 1.00
- ----------------------------------------------------------------------------------------------------
JANUS ASPEN SERIES / DECEMBER 31, 2001 57
STATEMENTS OF OPERATIONS
Janus Aspen Janus Aspen Janus Aspen
For the fiscal year or period Janus Aspen Aggressive Capital Core Janus Aspen
ended December 31, 2001 Growth Growth Appreciation Equity Balanced
(all numbers in thousands) Portfolio Portfolio Portfolio Portfolio(1) Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Income:
Interest $ 6,473 $ 8,694 $ 11,540 $ 81 $ 101,183
Dividends 16,327 3,030 10,657 175 21,948
Foreign tax withheld (270) -- (152) (1) (119)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 22,530 11,724 22,045 255 123,012
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Advisory fees 19,965 17,258 8,902 95 22,559
Transfer agent expenses 6 4 5 3 --
Registration fees 90 223 22 4 48
System fees 15 18 17 14 25
Custodian fees 209 146 73 31 204
Insurance expense 7 11 7 -- 42
Audit fees 17 20 6 12 9
Distribution fees - Service Shares 400 367 1,285 2 272
Other expenses 31 24 15 5 22
- ----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 20,740 18,071 10,332 166 23,181
- ----------------------------------------------------------------------------------------------------------------------------------
Expense and Fee Offsets (56) (52) (25) (1) (79)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Expenses 20,684 18,019 10,307 165 23,102
- ----------------------------------------------------------------------------------------------------------------------------------
Excess Expense Reimbursement -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net Expenses After Reimbursement 20,684 18,019 10,307 165 23,102
- ----------------------------------------------------------------------------------------------------------------------------------
Net Investment Income/(Loss) 1,846 (6,295) 11,738 90 99,910
- ----------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain/(Loss)
on Investments:
Net realized gain/(loss) from securities transactions (869,692) (1,447,067) (306,784) (1,602) (171,896)
Net realized gain/(loss)
from foreign currency translations 5,208 -- -- -- (1,472)
Net realized gain/(loss) from futures contracts -- -- -- -- --
Change in net unrealized appreciation/(depreciation)
of investments and foreign currency translations (57,057) (12,668) (68,416) (495) (94,659)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on
Investments and foreign currency translations (921,541) (1,459,735) (375,200) (2,097) (268,027)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations $ (919,695) $(1,466,030) $ (363,462) $ (2,007) $ (168,117)
- ----------------------------------------------------------------------------------------------------------------------------------
(1) Formerly, Janus Aspen Equity Income Portfolio.
SEE NOTES TO FINANCIAL STATEMENTS.
58 JANUS ASPEN SERIES / DECEMBER 31, 2001
Janus Aspen Janus Aspen Janus Aspen Janus Aspen Janus Aspen
For the fiscal year or period Growth and Strategic International Worldwide Global
ended December 31, 2001 Income Value Growth Growth Life Sciences
(all numbers in thousands) Portfolio Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Income:
Interest $ 1,857 $ 123 $ 9,449 $ 32,807 $ 127
Dividends 1,514 106 16,699 68,230 160
Foreign tax withheld (14) (2) (1,554) (5,501) (4)
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 3,357 227 24,594 95,536 283
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses:
Advisory fees 1,163 88 9,648 42,292 291
Transfer agent expenses 3 3 5 -- 3
Registration fees 1 38 66 306 3
System fees 13 12 18 23 13
Custodian fees 47 27 847 2,125 40
Insurance expense 2 -- 3 2 --
Audit fees 15 10 13 24 9
Distribution fees - Service Shares 184 20 1,305 298 95
Other expenses 5 4 10 36 6
- ----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 1,433 202 11,915 45,106 460
- ----------------------------------------------------------------------------------------------------------------------------------
Expense and Fee Offsets (2) (1) (27) (79) (1)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Expenses 1,431 201 11,888 45,027 459
- ----------------------------------------------------------------------------------------------------------------------------------
Excess Expense Reimbursement -- (12) -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net Expenses After Reimbursement 1,431 189 11,888 45,027 459
- ----------------------------------------------------------------------------------------------------------------------------------
Net Investment Income/(Loss) 1,926 38 12,706 50,509 (176)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on Investments:
Net realized gain/(loss) from securities transactions (28,734) (1,887) (393,702) (1,329,490) (9,998)
Net realized gain/(loss) from
foreign currency translations (1) (1) 20,513 78,544 4
Net realized gain/(loss) from futures contracts -- -- -- -- --
Change in net unrealized appreciation/(depreciation)
of investments and foreign currency translations (312) 545 (34,409) (566,073) 379
- ----------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on
Investments and foreign currency translations (29,047) (1,343) (407,598) (1,817,019) (9,615)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations $ (27,121) $ (1,305) $ (394,892) $(1,766,510) $ (9,791)
- ----------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Janus Aspen Janus Aspen Janus Aspen
For the fiscal year or period Global Global Flexible Money
ended December 31, 2001 Technology Value Income Market
(all numbers in thousands) Portfolio Portfolio(2) Portfolio Portfolio
- -------------------------------------------------------------------------------------------------------------------
Investment Income:
Interest $ 3,085 $ 12 $ 20,703 $ 4,249
Dividends 1,299 10 137 --
Foreign tax withheld (89) (1) -- --
- -------------------------------------------------------------------------------------------------------------------
Total Investment Income 4,295 21 20,840 4,249
- -------------------------------------------------------------------------------------------------------------------
Expenses:
Advisory fees 2,057 8 2,042 241
Transfer agent expenses 3 1 3 3
Registration fees 9 2 15 53
System fees 15 8 13 13
Custodian fees 100 12 48 4
Insurance expense 2 -- -- --
Audit fees 14 10 11 11
Distribution fees - Service Shares 768 3 4 --
Other expenses 6 3 8 6
- -------------------------------------------------------------------------------------------------------------------
Total Expenses 2,974 47 2,144 331
- -------------------------------------------------------------------------------------------------------------------
Expense and Fee Offsets (14) -- (10) --
- -------------------------------------------------------------------------------------------------------------------
Net Expenses 2,960 47 2,134 331
- -------------------------------------------------------------------------------------------------------------------
Excess Expense Reimbursement -- (27) -- --
- -------------------------------------------------------------------------------------------------------------------
Net Expenses After Reimbursement 2,960 20 2,134 331
- -------------------------------------------------------------------------------------------------------------------
Net Investment Income/(Loss) 1,335 1 18,706 3,918
- -------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on Investments:
Net realized gain/(loss) from securities transactions (258,136) 17 3,917 3
Net realized gain/(loss) from
foreign currency translations 2,930 -- (33) --
Net realized gain/(loss) from futures contracts -- -- 957 --
Change in net unrealized appreciation/(depreciation)
of investments and foreign currency translations 92,879 82 (1,575) --
- -------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on Investments
and foreign currency translations (162,327) 99 3,266 3
- -------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations $ (160,992) $ 100 $ 21,972 $ 3,921
- -------------------------------------------------------------------------------------------------------------------
(2) Period May 1, 2001 (inception) to December 31, 2001.
SEE NOTES TO FINANCIAL STATEMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 59
STATEMENTS OF CHANGES IN NET ASSETS
Janus Aspen Janus Aspen
Growth Aggressive Growth
For the fiscal year or period ended December 31 Portfolio Portfolio
(all numbers in thousands) 2001 2000 2001 2000
- -------------------------------------------------------------------------------------------------------------------------------
Operations:
Net investment income/(loss) $ 1,846 $ 6,890 $ (6,295) $ (19,861)
Net realized gain/(loss) from investment transactions
and foreign currency translations (864,484) 109,117 (1,447,067) (360,356)
Change in unrealized net appreciation/(depreciation)
of investments and foreign currency translations (57,057) (795,678) (12,668) (1,460,660)
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets Resulting
from Operations (919,695) (679,671) (1,466,030) (1,840,877)
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income* (1,848) (7,413) -- --
Net realized gain from investment transactions* (6,012) (317,739) -- (394,180)
Tax Return of Capital* (80) -- -- (151,092)
- -------------------------------------------------------------------------------------------------------------------------------
Net Decrease from Dividends and Distributions (7,940) (325,152) -- (545,272)
- -------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold
Institutional Shares 477,755 1,526,722 648,763 2,673,828
Retirement Shares -- 153,079 -- 314,482
Service Shares 192,816 125,070 212,264 177,923
Reinvested dividends and distributions
Institutional Shares 7,645 309,764 -- 512,417
Retirement Shares -- 14,214 -- 29,624
Service Shares 295 1,174 -- 3,231
Shares repurchased
Institutional Shares (634,488) (312,403) (634,877) (793,084)
Retirement Shares -- (19,033) -- (38,550)
Service Shares (22,885) (4,460) (97,634) (10,882)
Shares transferred - Retirement Shares(4) N/A (156,824) N/A (238,484)
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) from Capital Share Transactions 21,138 1,637,303 128,516 2,630,505
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets (906,497) 632,480 (1,337,514) 244,356
Net Assets:
Beginning of period 3,634,463 3,001,983 3,611,903 3,367,547
- -------------------------------------------------------------------------------------------------------------------------------
End of period $ 2,727,966 $ 3,634,463 $ 2,274,389 $ 3,611,903
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets Consist of:
Capital (par value and paid-in surplus)* $ 3,599,918 $ 3,578,860 $ 4,169,844 $ 4,047,623
Undistributed net investment income/(loss)* (1) -- -- --
Undistributed net realized gain/(loss) from investments* (923,415) (52,918) (1,818,052) (370,985)
Unrealized appreciation/(depreciation) of investments
and foreign currency translations 51,464 108,521 (77,403) (64,735)
- -------------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 2,727,966 $ 3,634,463 $ 2,274,389 $ 3,611,903
- -------------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Institutional Shares
Shares sold 21,018 45,926 24,285 45,557
Reinvested dividends and distributions 332 9,910 -- 9,599
- -------------------------------------------------------------------------------------------------------------------------------
Total 21,350 55,836 24,285 55,156
- -------------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (29,402) (9,974) (24,548) (14,731)
Net Increase/(Decrease) in Portfolio Shares (8,052) 45,862 (263) 40,425
Shares Outstanding, Beginning of Period 133,319 87,457 96,033 55,608
- -------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 125,267 133,319 95,770 96,033
- -------------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Retirement Shares(3)
Shares sold N/A 4,483,356 N/A 5,216,842
Reinvested dividends and distributions N/A 455,506 N/A 566,408
- -------------------------------------------------------------------------------------------------------------------------------
Total N/A 4,938,862 N/A 5,783,250
- -------------------------------------------------------------------------------------------------------------------------------
Shares Repurchased N/A (560,239) N/A (640,402)
Shares Transferred(4) N/A (6,143,154) N/A (5,956,431)
Net Increase/(Decrease) in Portfolio Shares N/A (1,764,531) N/A (813,583)
Shares Outstanding Beginning of Period N/A 1,764,531 N/A 813,583
- -------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding End of Period N/A -- N/A --
- -------------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service Shares(3)
Shares sold 9,086,376 4,084,302 8,375,264 3,691,277
Reinvested dividends and distributions 12,711 37,963 -- 61,521
- -------------------------------------------------------------------------------------------------------------------------------
Total 9,099,087 4,12 8,375,264 3,752,798
- -------------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (1,076,388) (152,075) (4,072,756) (246,622)
Net Increase/(Decrease) in Portfolio Shares 8,022,699 3,970,190 4,302,508 3,506,176
Shares Outstanding, Beginning of Period 3,970,190 -- 3,506,176 --
- -------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 11,992,889 3,970,190 7,808,684 3,506,176
- -------------------------------------------------------------------------------------------------------------------------------
Purchases and Sales of Investment Securities: (excluding
short-term securities)
Purchases of securities $ 1,557,267 $ 3,172,066 $ 2,579,311 $ 5,700,982
Proceeds from sales of securities 1,395,245 1,649,395 2,453,335 3,542,378
Purchases of long-term U.S. government obligations -- -- -- --
Proceeds from sales of long-term U.S.
government obligations -- -- -- --
*SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS.
(3) Transactions in Portfolio Shares - Retirement and Service Shares numbers are
not in thousands.
(4) A reorganization of the Retirement Shares of the Trust occurred at the close
of business on July 31, 2000. All Capital and Shares were transferred to the
corresponding fund of the newly formed Janus Adviser Series.
See Note 1 in Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS.
60 JANUS ASPEN SERIES / DECEMBER 31, 2001
Janus Aspen Janus Aspen
Capital Appreciation Core Equity
For the fiscal year or period ended December 31 Portfolio Portfolio(1)
(all numbers in thousands) 2001 2000 2001 2000
- -------------------------------------------------------------------------------------------------------------------------------
Operations:
Net investment income/(loss) $ 11,738 $ 20,402 $ 90 $ 60
Net realized gain/(loss) from investment transactions
and foreign currency translations (306,784) (170,331) (1,602) 2,545
Change in unrealized net appreciation/(depreciation)
of investments and foreign currency translations (68,416) (193,493) (495) (4,166)
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets Resulting from Operations (363,462) (343,422) (2,007) (1,561)
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income* (15,054) (16,551) (97) (53)
Net realized gain from investment transactions* -- (586) (504) (4,560)
Tax Return of Capital* -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net Decrease from Dividends and Distributions (15,054) (17,137) (601) (4,613)
- -------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold
Institutional Shares 199,630 704,138 1,725 3,979
Retirement Shares -- 108,656 -- 1,097
Service Shares 335,804 730,222 941 325
Reinvested dividends and distributions
Institutional Shares 10,470 13,032 578 4,254
Retirement Shares -- 427 -- 346
Service Shares 4,529 3,677 23 13
Shares repurchased
Institutional Shares (204,933) (99,620) (2,863) (5,906)
Retirement Shares -- (6,785) -- (169)
Service Shares (230,798) (95,235) (209) (1)
Shares transferred - Retirement Shares(4) N/A (109,632) N/A (1,185)
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) from Capital Share Transactions 114,702 1,248,880 195 2,753
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets (263,814) 888,321 (2,413) (3,421)
Net Assets:
Beginning of period 1,538,461 650,140 16,018 19,439
- -------------------------------------------------------------------------------------------------------------------------------
End of period $ 1,274,647 $ 1,538,461 $ 13,605 $ 16,018
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets Consist of:
Capital (par value and paid-in surplus)* $ 1,823,486 $ 1,708,784 $ 14,840 $ 14,645
Undistributed net investment income/(loss)* 891 4,207 6 12
Undistributed net realized gain/(loss) from investments* (477,989) (171,205) (1,838) 269
Unrealized appreciation/(depreciation) of investments and
foreign currency translations (71,741) (3,325) 597 1,092
- -------------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 1,274,647 $ 1,538,461 $ 13,605 $ 16,018
- -------------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Institutional Shares
Shares sold 8,561 21,576 97 158
Reinvested dividends and distributions 475 444 33 197
- -------------------------------------------------------------------------------------------------------------------------------
Total 9,036 22,020 130 355
- -------------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (9,284) (3,189) (172) (231)
Net Increase/(Decrease) in Portfolio Shares (248) 18,831 (42) 124
Shares Outstanding, Beginning of Period 37,725 18,894 819 695
- -------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 37,477 37,725 777 819
- -------------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Retirement Shares(3)
Shares sold N/A 3,261,564 N/A 41,644
Reinvested dividends and distributions N/A 13,809 N/A 16,227
- -------------------------------------------------------------------------------------------------------------------------------
Total N/A 3,275,373 N/A 57,871
- -------------------------------------------------------------------------------------------------------------------------------
Shares Repurchased N/A (207,295) N/A (6,487)
Shares Transferred(4) N/A (3,781,123) N/A (68,523)
Net Increase/(Decrease) in Portfolio Shares N/A (713,045) N/A (17,139)
Shares Outstanding Beginning of Period N/A 713,045 N/A 17,139
- -------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding End of Period N/A -- N/A --
- -------------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service Shares(3)
Shares sold 14,634,510 22,946,051 55,115 15,491
Reinvested dividends and distributions 204,508 130,292 1,358 638
- -------------------------------------------------------------------------------------------------------------------------------
Total 14,839,018 23,076,343 56,473 16,129
- -------------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (10,512,406) (3,185,919) (12,431) (49)
Net Increase/(Decrease) in Portfolio Shares 4,326,612 19,890,424 44,042 16,080
Shares Outstanding, Beginning of Period 19,890,424 -- 16,080 --
- -------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 24,217,036 19,890,424 60,122 16,080
- -------------------------------------------------------------------------------------------------------------------------------
Purchases and Sales of Investment Securities: (excluding
short-term securities)
Purchases of securities $ 1,239,236 $ 1,168,304 $ 15,571 $ 15,229
Proceeds from sales of securities 737,427 359,775 14,391 17,346
Purchases of long-term U.S. government obligations -- -- 569 --
Proceeds from sales of long-term U.S. government obligations -- -- 455 --
Janus Aspen Janus Aspen
Balanced Growth and Income
For the fiscal year or period ended December 31 Portfolio Portfolio
(all numbers in thousands) 2001 2000 2001 2000
- -------------------------------------------------------------------------------------------------------------------------------
Operations:
Net investment income/(loss) $ 99,910 $ 97,282 $ 1,926 $ 1,504
Net realized gain/(loss) from investment transactions and
foreign currency translations (173,368) 57,873 (28,735) (4,264)
Change in unrealized net appreciation/(depreciation) of
investments and foreign currency translations (94,659) (246,109) (312) (25,126)
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets Resulting from Operations (168,117) (90,954) (27,121) (27,886)
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income* (92,483) (86,344) (2,121) (1,255)
Net realized gain from investment transactions* -- (273,384) -- (2,330)
Tax Return of Capital* -- (2,274) -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net Decrease from Dividends and Distributions (92,483) (362,002) (2,121) (3,585)
- -------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold
Institutional Shares 492,436 1,067,111 6,926 74,754
Retirement Shares -- 110,773 -- 15,655
Service Shares 160,527 49,977 56,233 59,784
Reinvested dividends and distributions
Institutional Shares 89,993 348,553 1,432 3,199
Retirement Shares -- 12,399 -- 237
Service Shares 2,490 1,050 689 148
Shares repurchased
Institutional Shares (253,880) (88,638) (21,655) (14,889)
Retirement Shares -- (22,210) -- (1,929)
Service Shares (13,979) (483) (14,594) (1,032)
Shares transferred - Retirement Shares(4) N/A (131,238) N/A (17,894)
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) from Capital Share Transactions 477,587 1,347,294 29,031 118,033
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets 216,987 894,338 (211) 86,352
Net Assets:
Beginning of period 3,401,015 2,506,677 178,024 91,462
- -------------------------------------------------------------------------------------------------------------------------------
End of period $ 3,618,002 $ 3,401,015 $ 177,813 $ 178,024
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets Consist of:
Capital (par value and paid-in surplus)* $ 3,765,933 $ 3,288,346 $ 212,637 $ 183,607
Undistributed net investment income/(loss)* 5,542 (682) 84 279
Undistributed net realized gain/(loss) from investments* (192,660) (20,495) (33,052) (4,318)
Unrealized appreciation/(depreciation) of investments and
foreign currency translations 39,187 133,846 (1,856) (1,544)
- -------------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 3,618,002 $ 3,401,015 $ 177,813 $ 178,024
- -------------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Institutional Shares
Shares sold 21,063 39,707 438 3,626
Reinvested dividends and distributions 3,937 13,688 92 167
- -------------------------------------------------------------------------------------------------------------------------------
Total 25,000 53,395 530 3,793
- -------------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (11,132) (3,374) (1,411) (749)
Net Increase/(Decrease) in Portfolio Shares 13,868 50,021 (881) 3,044
Shares Outstanding, Beginning of Period 137,901 87,880 7,111 4,067
- -------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 151,769 137,901 6,230 7,111
- -------------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Retirement Shares(3)
Shares sold N/A 3,982,927 N/A 670,648
Reinvested dividends and distributions N/A 482,655 N/A 12,309
- -------------------------------------------------------------------------------------------------------------------------------
Total N/A 4,465,582 N/A 682,957
- -------------------------------------------------------------------------------------------------------------------------------
Shares Repurchased N/A (800,179) N/A (92,538)
Shares Transferred(4) N/A (5,577,102) N/A (928,105)
Net Increase/(Decrease) in Portfolio Shares N/A (1,911,699) N/A (337,686)
Shares Outstanding Beginning of Period N/A 1,911,699 N/A 337,686
- -------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding End of Period N/A -- N/A --
- -------------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service Shares(3)
Shares sold 6,795,702 1,928,848 3,516,345 3,170,558
Reinvested dividends and distributions 106,048 40,850 44,389 8,192
- -------------------------------------------------------------------------------------------------------------------------------
Total 6,901,750 1,969,698 3,560,734 3,178,750
- -------------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (600,570) (18,454) (958,747) (54,597)
Net Increase/(Decrease) in Portfolio Shares 6,301,180 1,951,244 2,601,987 3,124,153
Shares Outstanding, Beginning of Period 1,951,244 -- 3,124,153 --
- -------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 8,252,424 1,951,244 5,726,140 3,124,153
- -------------------------------------------------------------------------------------------------------------------------------
Purchases and Sales of Investment Securities: (excluding
short-term securities)
Purchases of securities $ 2,808,283 $ 2,101,369 $ 115,281 $ 156,034
Proceeds from sales of securities 2,117,439 1,801,062 77,413 43,629
Purchases of long-term U.S. government obligations 1,209,543 553,009 5,900 5,674
Proceeds from sales of long-term U.S. government obligations 1,353,291 188,675 4,006 --
Janus Aspen
Strategic Value
For the fiscal year or period ended December 31 Portfolio
(all numbers in thousands) 2001 2000(2)
- -----------------------------------------------------------------------------------------------
Operations:
Net investment income/(loss) $ 38 $ 23
Net realized gain/(loss) from investment transactions and
foreign currency translations (1,888) (163)
Change in unrealized net appreciation/(depreciation)
of investments and foreign currency translations 545 68
- -----------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets Resulting from Operations (1,305) (72)
- -----------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income* (46) (14)
Net realized gain from investment transactions* -- --
Tax Return of Capital* (3) --
- -----------------------------------------------------------------------------------------------
Net Decrease from Dividends and Distributions (49) (14)
- -----------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold
Institutional Shares 5,015 5,740
Retirement Shares -- --
Service Shares 17,863 1,688
Reinvested dividends and distributions
Institutional Shares 30 14
Retirement Shares -- --
Service Shares 19 --
Shares repurchased
Institutional Shares (3,819) (1,129)
Retirement Shares -- N/A
Service Shares (3,177) (139)
Shares transferred - Retirement Shares(4) N/A N/A
- -----------------------------------------------------------------------------------------------
Net Increase/(Decrease) from Capital Share Transactions 15,931 6,174
- -----------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets 14,577 6,088
Net Assets:
Beginning of period 6,088 --
- -----------------------------------------------------------------------------------------------
End of period $ 20,665 $ 6,088
- -----------------------------------------------------------------------------------------------
Net Assets Consist of:
Capital (par value and paid-in surplus)* $ 22,103 $ 6,174
Undistributed net investment income/(loss)* -- 9
Undistributed net realized gain/(loss) from investments* (2,051) (163)
Unrealized appreciation/(depreciation) of investments and
foreign currency translations 613 68
- -----------------------------------------------------------------------------------------------
Total Net Assets $ 20,665 $ 6,088
- -----------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Institutional Shares
Shares sold 501 566
Reinvested dividends and distributions 3 1
- -----------------------------------------------------------------------------------------------
Total 504 567
- -----------------------------------------------------------------------------------------------
Shares Repurchased (405) (112)
Net Increase/(Decrease) in Portfolio Shares 99 455
Shares Outstanding, Beginning of Period 455 --
- -----------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 554 455
- -----------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Retirement Shares(3)
Shares sold N/A N/A
Reinvested dividends and distributions N/A N/A
- -----------------------------------------------------------------------------------------------
Total N/A N/A
- -----------------------------------------------------------------------------------------------
Shares Repurchased N/A N/A
Shares Transferred(4) N/A N/A
Net Increase/(Decrease) in Portfolio Shares N/A N/A
Shares Outstanding Beginning of Period N/A N/A
- -----------------------------------------------------------------------------------------------
Shares Outstanding End of Period N/A N/A
- -----------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service Shares(3)
Shares sold 1,884,765 167,095
Reinvested dividends and distributions 1,936 --
- -----------------------------------------------------------------------------------------------
Total 1,886,701 167,095
- -----------------------------------------------------------------------------------------------
Shares Repurchased (340,528) (13,867)
Net Increase/(Decrease) in Portfolio Shares 1,546,173 153,228
Shares Outstanding, Beginning of Period 153,228 --
- -----------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 1,699,401 153,228
- -----------------------------------------------------------------------------------------------
Purchases and Sales of Investment Securities:
(excluding short-term securities)
Purchases of securities $ 20,081 $ 5,885
Proceeds from sales of securities 8,816 1,019
Purchases of long-term U.S. government obligations -- --
Proceeds from sales of long-term U.S. government obligations -- --
*SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS.
(1) Formerly, Janus Aspen Equity Income Portfolio.
(2) Period May 1, 2000 (inception) to December 31, 2000.
(3) Transactions in Portfolio Shares - Retirement and Service Shares numbers are
not in thousands.
(4) A reorganization of the Retirement Shares of the Trust occurred at the close
of business on July 31, 2000. All Capital and Shares were transferred to the
corresponding fund of the newly formed Janus Adviser Series. See Note 1 in Notes
to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 61
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
Janus Aspen Janus Aspen
International Growth Worldwide Growth
For the fiscal year or period ended December 31 Portfolio Portfolio
(all numbers in thousands) 2001 2000 2001 2000
- -------------------------------------------------------------------------------------------------------------------------------
Operations:
Net investment income/(loss) $ 12,706 $ 28,280 $ 50,509 $ 43,042
Net realized gain/(loss) from investment transactions and
foreign currency translations (373,189) (37,614) (1,250,946) 397,593
Change in unrealized net appreciation/(depreciation)
of investments and foreign currency translations (34,409) (360,777) (566,073) (2,071,034)
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets Resulting from Operations (394,892) (370,111) (1,766,510) (1,630,399)
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income* (12,432) (26,360) (30,871) (36,497)
Net realized gain from investment transactions* -- (39,214) -- (676,385)
Tax Return of Capital* (1,196) (14,933) -- (26,807)
- -------------------------------------------------------------------------------------------------------------------------------
Net Decrease from Dividends and Distributions (13,628) (80,507) (30,871) (739,689)
- -------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold
Institutional Shares 1,334,758 1,816,630 1,868,238 4,145,802
Retirement Shares -- 41,309 -- 329,517
Service Shares 2,075,701 1,113,808 557,231 112,404
Reinvested dividends and distributions
Institutional Shares 9,883 62,975 30,505 706,606
Retirement Shares -- 2,046 -- 31,514
Service Shares 3,745 15,485 365 1,569
Shares repurchased
Institutional Shares (1,356,535) (1,209,895) (2,122,925) (1,432,236)
Retirement Shares -- (8,874) -- (82,053)
Service Shares (1,903,124) (513,233) (432,833) (31,149)
Shares transferred - Retirement Shares(3) N/A (41,133) N/A (307,138)
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) from Capital Share Transactions 164,428 1,279,118 (99,419) 3,474,836
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets (244,092) 828,500 (1,896,800) 1,104,748
Net Assets:
Beginning of period 1,655,878 827,378 7,775,920 6,671,172
- -------------------------------------------------------------------------------------------------------------------------------
End of period $ 1,411,786 $ 1,655,878 $ 5,879,120 $ 7,775,920
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets Consist of:
Capital (par value and paid-in surplus)* $ 1,873,647 $ 1,710,415 $ 6,956,675 $ 7,056,094
Undistributed net investment income/(loss)* (64) (8) 3,403 (15,370)
Undistributed net realized gain/(loss) from investments* (456,059) (83,200) (1,401,289) (151,208)
Unrealized appreciation/(depreciation) of investments
and foreign currency translations (5,738) 28,671 320,331 886,404
- -------------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 1,411,786 $ 1,655,878 $ 5,879,120 $ 7,775,920
- -------------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Institutional Shares
Shares sold 52,830 47,151 59,161 88,021
Reinvested dividends and distributions 399 1,737 1,020 16,092
- -------------------------------------------------------------------------------------------------------------------------------
Total 53,229 48,888 60,181 104,113
- -------------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (53,661) (32,347) (68,537) (31,832)
Net Increase/(Decrease) in Portfolio Shares (432) 16,541 (8,356) 72,281
Shares Outstanding, Beginning of Period 37,496 20,955 208,330 136,049
- -------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 37,064 37,496 199,974 208,330
- -------------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Retirement Shares(2)
Shares sold N/A 1,025,887 N/A 6,652,190
Reinvested dividends and distributions N/A 56,175 N/A 719,863
- -------------------------------------------------------------------------------------------------------------------------------
Total N/A 1,082,062 N/A 7,372,053
- -------------------------------------------------------------------------------------------------------------------------------
Shares Repurchased N/A (220,009) N/A (1,662,497)
Shares Transferred(3) N/A (1,302,596) N/A (9,376,215)
Net Increase/(Decrease) in Portfolio Shares N/A (440,543) N/A (3,666,659)
Shares Outstanding Beginning of Period N/A 440,543 N/A 3,666,659
- -------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding End of Period N/A -- N/A --
- -------------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service Shares(2)
Shares sold 85,065,105 30,462,735 18,926,181 2,699,741
Reinvested dividends and distributions 150,227 432,775 12,032 36,074
- -------------------------------------------------------------------------------------------------------------------------------
Total 85,215,332 30,895,510 18,938,213 2,735,815
- -------------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (78,187,459) (14,667,488) (14,849,982) (784,128)
Net Increase/(Decrease) in Portfolio Shares 7,027,873 16,228,022 4,088,231 1,951,687
Shares Outstanding, Beginning of Period 16,228,022 -- 1,951,687 --
- -------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 23,255,895 16,228,022 6,039,918 1,951,687
- -------------------------------------------------------------------------------------------------------------------------------
Purchases and Sales of Investment Securities:
(excluding short-term securities)
Purchases of securities $ 1,185,481 $ 1,843,575 $ 5,712,901 $ 7,160,440
Proceeds from sales of securities 808,446 795,283 4,697,653 4,766,416
Purchases of long-term U.S. government obligations -- -- -- --
Proceeds from sales of long-term U.S. government obligations -- -- -- --
*SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS.
(2) Transactions in Portfolio Shares - Retirement and Service Shares numbers are
not in thousands.
(3) A reorganization of the Retirement Shares of the Trust occurred at the close
of business on July 31, 2000. All Capital and Shares were transferred to the
corresponding fund of the newly formed Janus Adviser Series. See Note 1 in Notes
to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS.
62 JANUS ASPEN SERIES / DECEMBER 31, 2001
Janus Aspen Janus Aspen
Global Life Sciences Global Technology
For the fiscal year or period ended December 31 Portfolio Portfolio
(all numbers in thousands) 2001 2000(1) 2001 2000(1)
- -------------------------------------------------------------------------------------------------------------------------------
Operations:
Net investment income/(loss) $ (176) $ 26 $ 1,335 $ 3,787
Net realized gain/(loss) from investment transactions
and foreign currency translations (9,994) (1,278) (255,206) (55,384)
Change in unrealized net appreciation/(depreciation)
of investments and foreign currency translations 379 3,661 92,879 (151,214)
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets Resulting from Operations (9,791) 2,409 (160,992) (202,811)
- -------------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income* (3) (22) (2,265) (2,861)
Net realized gain from investment transactions* -- -- -- --
Tax Return of Capital* (6) -- (23) --
- -------------------------------------------------------------------------------------------------------------------------------
Net Decrease from Dividends and Distributions (9) (22) (2,288) (2,861)
- -------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold
Institutional Shares 3,221 20,738 6,263 84,777
Retirement Shares -- -- -- --
Service Shares 32,095 58,670 339,553 619,734
Reinvested dividends and distributions
Institutional Shares 9 22 295 583
Retirement Shares -- -- -- --
Service Shares -- -- 1,993 2,278
Shares repurchased
Institutional Shares (6,406) (10,083) (34,417) (24,882)
Retirement Shares -- N/A -- N/A
Service Shares (27,975) (12,745) (267,155) (67,324)
Shares transferred - Retirement Shares(3) N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) from Capital Share Transactions 944 56,602 46,532 615,166
- -------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets (8,856) 58,989 (116,748) 409,494
Net Assets:
Beginning of period 58,989 -- 409,494 --
- -------------------------------------------------------------------------------------------------------------------------------
End of period $ 50,133 $ 58,989 $ 292,746 $ 409,494
- -------------------------------------------------------------------------------------------------------------------------------
Net Assets Consist of:
Capital (par value and paid-in surplus)* $ 57,364 $ 56,602 $ 661,675 $ 615,166
Undistributed net investment income/(loss)* -- 3 (45) 901
Undistributed net realized gain/(loss) from investments* (11,271) (1,277) (310,549) (55,359)
Unrealized appreciation/(depreciation) of investments and
foreign currency translations 4,040 3,661 (58,335) (151,214)
- -------------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 50,133 $ 58,989 $ 292,746 $ 409,494
- -------------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Institutional Shares
Shares sold 428 2,379 1,276 8,264
Reinvested dividends and distributions 1 2 66 87
- -------------------------------------------------------------------------------------------------------------------------------
Total 429 2,381 1,342 8,351
- -------------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (840) (1,201) (5,277) (2,969)
Net Increase/(Decrease) in Portfolio Shares (411) 1,180 (3,935) 5,382
Shares Outstanding, Beginning of Period 1,180 -- 5,382 --
- -------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 769 1,180 1,447 5,382
- -------------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Retirement Shares(2)
Shares sold N/A N/A N/A N/A
Reinvested dividends and distributions N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------------------
Total N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------------------
Shares Repurchased N/A N/A N/A N/A
Shares Transferred(3) N/A N/A N/A N/A
Net Increase/(Decrease) in Portfolio Shares N/A N/A N/A N/A
Shares Outstanding Beginning of Period N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding End of Period N/A N/A N/A N/A
- -------------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service Shares(2)
Shares sold 4,176,893 6,575,673 72,489,148 64,808,588
Reinvested dividends and distributions -- -- 421,245 338,970
- -------------------------------------------------------------------------------------------------------------------------------
Total 4,176,893 6,575,673 72,910,393 65,147,558
- -------------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (3,639,459) (1,418,542) (59,678,381) (7,945,780)
Net Increase/(Decrease) in Portfolio Shares 537,434 5,157,131 13,232,012 57,201,778
Shares Outstanding, Beginning of Period 5,157,131 -- 57,201,778 --
- -------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 5,694,565 5,157,131 70,433,790 57,201,778
- -------------------------------------------------------------------------------------------------------------------------------
Purchases and Sales of Investment Securities: (excluding
short-term securities)
Purchases of securities $ 52,563 $ 77,188 $ 273,734 $ 659,258
Proceeds from sales of securities 46,616 27,888 233,432 90,293
Purchases of long-term U.S. government obligations -- -- -- --
Proceeds from sales of long-term U.S. government obligations -- -- -- --
Janus Aspen Janus Aspen
Global Value Flexible Income
For the fiscal year or period ended December 31 Portfolio Portfolio
(all numbers in thousands) 2001(4) 2001 2000
- ---------------------------------------------------------------------------------------------------------------
Operations:
Net investment income/(loss) $ 1 $ 18,706 $ 14,527
Net realized gain/(loss) from investment transactions
and foreign currency translations 17 4,841 (5,880)
Change in unrealized net appreciation/(depreciation)
of investments and foreign currency translations 82 (1,575) 4,718
- ---------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets Resulting
from Operations 100 21,972 13,365
- ---------------------------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income* (1) (19,405) (12,163)
Net realized gain from investment transactions* -- -- --
Tax Return of Capital* -- -- --
- ---------------------------------------------------------------------------------------------------------------
Net Decrease from Dividends and Distributions (1) (19,405) (12,163)
- ---------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold
Institutional Shares -- 188,617(5) 87,737
Retirement Shares -- -- 324
Service Shares 2,008 1,869 585
Reinvested dividends and distributions
Institutional Shares -- 19,327 12,124
Retirement Shares -- -- 32
Service Shares 1 78 7
Shares repurchased
Institutional Shares -- (65,394) (45,339)
Retirement Shares -- -- (368)
Service Shares -- (388) (36)
Shares transferred - Retirement Shares(3) N/A N/A (822)
- ---------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) from Capital Share Transactions 2,009 144,109 54,244
- ---------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets 2,108 146,676 55,446
Net Assets:
Beginning of period -- 242,969 187,523
- ---------------------------------------------------------------------------------------------------------------
End of period $ 2,108 $ 389,645 $ 242,969
- ---------------------------------------------------------------------------------------------------------------
Net Assets Consist of:
Capital (par value and paid-in surplus)* $ 2,009 $ 391,609 $ 247,500
Undistributed net investment income/(loss)* -- 1,306 2,037
Undistributed net realized gain/(loss) from investments* 17 (3,672) (8,545)
Unrealized appreciation/(depreciation) of investments and
foreign currency translations 82 402 1,977
- ---------------------------------------------------------------------------------------------------------------
Total Net Assets $ 2,108 $ 389,645 $ 242,969
- ---------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Institutional Shares
Shares sold -- 15,929(5) 7,707
Reinvested dividends and distributions -- 1,673 1,074
- ---------------------------------------------------------------------------------------------------------------
Total -- 17,602 8,781
- ---------------------------------------------------------------------------------------------------------------
Shares Repurchased -- (5,519) (3,979)
Net Increase/(Decrease) in Portfolio Shares -- 12,083 4,802
Shares Outstanding, Beginning of Period -- 21,159 16,357
- ---------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period -- 33,242 21,159
- ---------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Retirement Shares(2)
Shares sold N/A N/A 27,606
Reinvested dividends and distributions N/A N/A 2,716
- ---------------------------------------------------------------------------------------------------------------
Total N/A N/A 30,322
- ---------------------------------------------------------------------------------------------------------------
Shares Repurchased N/A N/A (31,218)
Shares Transferred(3) N/A N/A (70,947)
Net Increase/(Decrease) in Portfolio Shares N/A N/A (71,843)
Shares Outstanding Beginning of Period N/A N/A 71,843
- ---------------------------------------------------------------------------------------------------------------
Shares Outstanding End of Period N/A N/A --
- ---------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service Shares(2)
Shares sold 200,754 154,988 51,366
Reinvested dividends and distributions 135 6,561 628
- ---------------------------------------------------------------------------------------------------------------
Total 200,889 161,549 51,994
- ---------------------------------------------------------------------------------------------------------------
Shares Repurchased -- (32,039) (3,110)
Net Increase/(Decrease) in Portfolio Shares 200,889 129,510 48,884
Shares Outstanding, Beginning of Period -- 48,884 --
- ---------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 200,889 178,394 48,884
- ---------------------------------------------------------------------------------------------------------------
Purchases and Sales of Investment Securities: (excluding
short-term securities)
Purchases of securities $ 2,148 $ 515,116 $ 244,605
Proceeds from sales of securities 216 421,975 243,465
Purchases of long-term U.S. government obligations -- 541,730 173,377
Proceeds from sales of long-term U.S. government obligations -- 505,846 118,903
Janus Aspen
Money Market
For the fiscal year or period ended December 31 Portfolio
(all numbers in thousands) 2001 2000
- -----------------------------------------------------------------------------------------------
Operations:
Net investment income/(loss) $ 3,918 $ 4,120
Net realized gain/(loss) from investment transactions
and foreign currency translations 3 (4)
Change in unrealized net appreciation/(depreciation)
of investments and foreign currency translations -- --
- -----------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets Resulting
from Operations 3,921 4,116
- -----------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income* (3,918) (4,116)
Net realized gain from investment transactions* (3)
Tax Return of Capital* -- --
- -----------------------------------------------------------------------------------------------
Net Decrease from Dividends and Distributions (3,921) (4,116)
- -----------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold
Institutional Shares 307,440 249,108
Retirement Shares -- 22,027
Service Shares -- 10
Reinvested dividends and distributions
Institutional Shares 3,920 3,962
Retirement Shares -- 119
Service Shares 1 1
Shares repurchased
Institutional Shares (281,937) (251,528)
Retirement Shares -- (16,648)
Service Shares -- --
Shares transferred - Retirement Shares(3) N/A (6,652)
- -----------------------------------------------------------------------------------------------
Net Increase/(Decrease) from Capital Share Transactions 29,424 399
- -----------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets 29,424 399
Net Assets:
Beginning of period 70,818 70,419
- -----------------------------------------------------------------------------------------------
End of period $ 100,242 $ 70,818
- -----------------------------------------------------------------------------------------------
Net Assets Consist of:
Capital (par value and paid-in surplus)* $ 100,242 $ 70,818
Undistributed net investment income/(loss)* -- --
Undistributed net realized gain/(loss) from investments* -- --
Unrealized appreciation/(depreciation) of investments and
foreign currency translations -- --
- -----------------------------------------------------------------------------------------------
Total Net Assets $ 100,242 $ 70,818
- -----------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Institutional Shares
Shares sold 307,440 249,108
Reinvested dividends and distributions 3,920 3,962
- -----------------------------------------------------------------------------------------------
Total 311,360 253,070
- -----------------------------------------------------------------------------------------------
Shares Repurchased (281,937) (251,528)
Net Increase/(Decrease) in Portfolio Shares 29,423 1,542
Shares Outstanding, Beginning of Period 70,808 69,266
- -----------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 100,231 70,808
- -----------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Retirement Shares(2)
Shares sold N/A 22,027,481
Reinvested dividends and distributions N/A 119,031
- -----------------------------------------------------------------------------------------------
Total N/A 22,146,512
- -----------------------------------------------------------------------------------------------
Shares Repurchased N/A (16,647,641)
Shares Transferred(3) N/A (6,651,902)
Net Increase/(Decrease) in Portfolio Shares N/A (1,153,031)
Shares Outstanding Beginning of Period N/A 1,153,031
- -----------------------------------------------------------------------------------------------
Shares Outstanding End of Period N/A --
- -----------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service Shares(2)
Shares sold -- 10,001
Reinvested dividends and distributions 422 600
- -----------------------------------------------------------------------------------------------
Total 422 10,601
- -----------------------------------------------------------------------------------------------
Shares Repurchased -- (1)
Net Increase/(Decrease) in Portfolio Shares 422 10,600
Shares Outstanding, Beginning of Period 10,600 --
- -----------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 11,022 10,600
- -----------------------------------------------------------------------------------------------
Purchases and Sales of Investment Securities: (excluding
short-term securities)
Purchases of securities -- --
Proceeds from sales of securities -- --
Purchases of long-term U.S. government obligations -- --
Proceeds from sales of long-term U.S. government obligations -- --
*SEE NOTE 3 IN NOTES TO FINANCIAL STATEMENTS.
(1) Period January 18, 2000 (inception) to December 31, 2000.
(2) Transactions in Portfolio Shares - Retirement and Service Shares numbers are
not in thousands.
(3) A reorganization of the Retirement Shares of the Trust occurred at the close
of business on July 31, 2000. All Capital and Shares were transferred to the
corresponding fund of the newly formed Janus Adviser Series. See Note 1 in Notes
to Financial Statements.
(4) Period May 1, 2001 (inception) to December 31, 2001.
(5) See Note 1 in Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 63
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES
For a share outstanding during Janus Aspen Growth Portfolio
the fiscal year ended December 31 2001 2000 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 26.48 $ 33.65 $ 23.54 $ 18.48 $ 15.51
- -----------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .02 .05 .07 .05 .15
Net gain/(loss) on securities
(both realized and unrealized) (6.56) (4.59) 10.24 6.36 3.34
- -----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (6.54) (4.54) 10.31 6.41 3.49
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.01) (.06) (.06) (.05) (.15)
Distributions (from capital gains)* (.04) (2.57) (.14) (1.30) (.37)
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions (.05) (2.63) (.20) (1.35) (.52)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 19.89 $ 26.48 $ 33.65 $ 23.54 $ 18.48
- -----------------------------------------------------------------------------------------------------------------------------
Total Return (24.73)% (14.55)% 43.98% 35.66% 22.75%
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $2,490,954 $3,529,807 $2,942,649 $1,103,549 $ 608,281
Average Net Assets for the Period (in thousands) $2,911,331 $3,734,449 $1,775,373 $ 789,454 $ 477,914
Ratio of Gross Expenses to Average Net Assets(1) 0.66% 0.67% 0.67% 0.68% 0.70%
Ratio of Net Expenses to Average Net Assets(1) 0.66% 0.67% 0.67% 0.68% 0.69%
Ratio of Net Investment Income to Average Net Assets 0.07% 0.19% 0.30% 0.26% 0.91%
Portfolio Turnover Rate 48% 47% 53% 73% 122%
For a share outstanding during Janus Aspen Aggressive Growth Portfolio
the fiscal year ended December 31 2001 2000 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 36.30 $ 59.70 $ 27.64 $ 20.55 $ 18.24
- -----------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) -- .01 -- -- --
Net gain/(loss) on securities
(both realized and unrealized) (14.32) (17.08) 33.46 7.09 2.31
- -----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (14.32) (17.07) 33.46 7.09 2.31
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* -- -- -- -- --
Distributions (from capital gains)* -- (4.58) (1.40) -- --
Tax return of capital* -- (1.75) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions -- (6.33) (1.40) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 21.98 $ 36.30 $ 59.70 $ 27.64 $ 20.55
- -----------------------------------------------------------------------------------------------------------------------------
Total Return (39.45)% (31.82)% 125.40% 34.26% 12.66%
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $2,104,733 $3,485,768 $3,319,619 $ 772,943 $ 508,198
Average Net Assets for the Period (in thousands) $2,508,186 $4,409,584 $1,476,445 $ 576,444 $ 418,464
Ratio of Gross Expenses to Average Net Assets(1) 0.67% 0.66% 0.70% 0.75% 0.76%
Ratio of Net Expenses to Average Net Assets(1) 0.66% 0.66% 0.69% 0.75% 0.76%
Ratio of Net Investment Income to Average Net Assets (0.22)% (0.42)% (0.50)% (0.36)% (0.10)%
Portfolio Turnover Rate 99% 82% 105% 132% 130%
*See Note 3 in Notes to Financial Statements.
(1) See Note 5 in Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS.
64 JANUS ASPEN SERIES / DECEMBER 31, 2001
For a share outstanding during Janus Aspen Capital Appreciation Portfolio
the fiscal year or period ended December 31 2001 2000 1999 1998 1997(1)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 26.79 $ 33.17 $ 19.94 $ 12.62 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .22 .43 .12 .01 .05
Net gain/(loss) on securities
(both realized and unrealized) (6.01) (6.43) 13.22 7.32 2.61
- -----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (5.79) (6.00) 13.34 7.33 2.66
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.28) (.37) (.11) (.01) (.04)
Distributions (from capital gains)* -- (.01) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions (.28) (.38) (.11) (.01) (.04)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 20.72 $ 26.79 $ 33.17 $ 19.94 $ 12.62
- -----------------------------------------------------------------------------------------------------------------------------
Total Return** (21.67)% (18.18)% 67.00% 58.11% 26.60%
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 776,553 $1,010,497 $ 626,611 $ 74,187 $ 6,833
Average Net Assets for the Period (in thousands) $ 855,499 $ 954,279 $ 257,422 $ 25,964 $ 2,632
Ratio of Gross Expenses to Average Net Assets***(2) 0.66% 0.67% 0.70% 0.92% 1.26%
Ratio of Net Expenses to Average Net Assets***(2) 0.66% 0.67% 0.70% 0.91% 1.25%
Ratio of Net Investment Income to Average Net Assets*** 0.96% 1.60% 0.76% 0.27% 1.43%
Portfolio Turnover Rate*** 67% 41% 52% 91% 101%
For a share outstanding during Janus Aspen Core Equity Portfolio(3)
each fiscal year ended December 31 2001 2000 1999 1998 1997(1)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 19.20 $ 27.32 $ 19.41 $ 13.46 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .11 .07 .07 .02 .01
Net gain/(loss) on securities
(both realized and unrealized) (2.34) (1.95) 7.99 6.16 3.46
- -----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (2.23) (1.88) 8.06 6.18 3.47
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.12) (.07) (.06) (.02) (.01)
Distributions (from capital gains)* (.59) (6.17) (.09) (.21) --
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions (.71) (6.24) (.15) (.23) (.01)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 16.26 $ 19.20 $ 27.32 $ 19.41 $ 13.46
- -----------------------------------------------------------------------------------------------------------------------------
Total Return** (11.75)% (8.07)% 41.58% 46.24% 34.70%
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 12,634 $ 15,712 $ 18,975 $ 9,017 $ 3,047
Average Net Assets for the Period (in thousands) $ 13,983 $ 17,328 $ 14,663 $ 5,629 $ 1,101
Ratio of Gross Expenses to Average Net Assets***(2) 1.13% 1.25% 1.25% 1.25% 1.25%
Ratio of Net Expenses to Average Net Assets***(2) 1.12% 1.25% 1.25% 1.25% 1.25%
Ratio of Net Investment Income to Average Net Assets*** 0.63% 0.36% 0.31% 0.17% 0.35%
Portfolio Turnover Rate*** 114% 95% 114% 79% 128%
*See Note 3 in Notes to Financial Statements.
**Total return not annualized for periods of less than one full year.
***Annualized for periods of less than one full year.
(1) Period May 1, 1997 (inception) to December 31, 1997.
(2) See Note 5 in Notes to Financial Statements.
(3) Formerly, Janus Aspen Equity Income Portfolio.
SEE NOTES TO FINANCIAL STATEMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 65
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES (CONTINUED)
For a share outstanding during Janus Aspen Balanced Portfolio
the fiscal year ended December 31 2001 2000 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 24.31 $ 27.91 $ 22.50 $ 17.47 $ 14.77
- -----------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .65 .64 .59 .39 .34
Net gain/(loss) on securities
(both realized and unrealized) (1.78) (1.22) 5.38 5.51 2.89
- -----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (1.13) (.58) 5.97 5.90 3.23
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.61) (.69) (.56) (.38) (.35)
Distributions (from capital gains)* -- (2.31) -- (.49) (.18)
Tax return of capital* -- (.02) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions (.61) (3.02) (.56) (.87) (.53)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 22.57 $ 24.31 $ 27.91 $ 22.50 $ 17.47
- -----------------------------------------------------------------------------------------------------------------------------
Total Return (4.66)% (2.27)% 26.76% 34.28% 22.10%
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $3,425,664 $3,352,381 $2,453,079 $ 882,495 $ 362,409
Average Net Assets for the Period (in thousands) $3,361,832 $3,020,072 $1,583,635 $ 555,002 $ 176,432
Ratio of Gross Expenses to Average Net Assets(1) 0.66% 0.66% 0.69% 0.74% 0.83%
Ratio of Net Expenses to Average Net Assets(1) 0.66% 0.66% 0.69% 0.74% 0.82%
Ratio of Net Investment Income to Average Net Assets 2.89% 3.15% 2.86% 2.41% 2.87%
Portfolio Turnover Rate 114% 72% 92% 70% 139%
</Table>
<Table>
For a share outstanding during Janus Aspen Growth and Income Portfolio
the fiscal year or period ended December 31 2001 2000 1999 1998(2)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 17.41 $ 20.77 $ 11.96 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .20 .19 .04 .02
Net gain/(loss) on securities
(both realized and unrealized) (2.52) (3.08) 8.81 1.96
- -----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (2.32) (2.89) 8.85 1.98
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.22) (.16) (.04) (.02)
Distributions (from capital gains)* -- (.31) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions (.22) (.47) (.04) (.02)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 14.87 $ 17.41 $ 20.77 $ 11.96
- -----------------------------------------------------------------------------------------------------------------------------
Total Return** (13.37)% (14.10)% 74.04% 19.80%
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 92,659 $ 123,812 $ 84,480 $ 6,413
Average Net Assets for the Period (in thousands) $ 105,243 $ 124,282 $ 28,838 $ 2,883
Ratio of Gross Expenses to Average Net Assets***(1) 0.70% 0.78% 1.06% 1.25%
Ratio of Net Expenses to Average Net Assets***(1) 0.70% 0.78% 1.05% 1.25%
Ratio of Net Investment Income to Average Net Assets*** 1.19% 1.07% 0.56% 0.66%
Portfolio Turnover Rate*** 52% 37% 59% 62%
*See Note 3 in Notes to Financial Statements.
**Total return not annualized for periods of less than one full year.
***Annualized for periods of less than one full year.
(1) See Note 5 in Notes to Financial Statements.
(2) Period May 1, 1998 (inception) to December 31, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
66 JANUS ASPEN SERIES / DECEMBER 31, 2001
For a share outstanding during Janus Aspen Strategic Value Portfolio
the fiscal year or period ended December 31 2001 2000(1)
- --------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 9.99 $ 10.00
- --------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .05 .05
Net gain/(loss) on securities
(both realized and unrealized) (.86) (.03)
- --------------------------------------------------------------------------------------------------------------
Total from Investment Operations (.81) .02
- --------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.05) (.03)
Distributions (from capital gains)* -- --
- --------------------------------------------------------------------------------------------------------------
Total Distributions (.05) (.03)
- --------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 9.13 $ 9.99
- --------------------------------------------------------------------------------------------------------------
Total Return** (8.12)% 0.20%
- --------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 5,060 $ 4,550
Average Net Assets for the Period (in thousands) $ 5,537 $ 3,243
Ratio of Gross Expenses to Average Net Assets***(2) 1.25% 1.25%
Ratio of Net Expenses to Average Net Assets***(2) 1.25% 1.25%
Ratio of Net Investment Income to Average Net Assets*** 0.55% 0.97%
Portfolio Turnover Rate*** 86% 47%
</Table>
<Table>
For a share outstanding during Janus Aspen International Growth Portfolio
the fiscal year ended December 31 2001 2000 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 30.90 $ 38.67 $ 21.27 $ 18.48 $ 15.72
- -----------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .26 .62 .06 .13 .11
Net gain/(loss) on securities
(both realized and unrealized) (7.43) (6.51) 17.40 3.07 2.80
- -----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (7.17) (5.89) 17.46 3.20 2.91
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.26) (.63) (.06) (.14) (.11)
Distributions (from capital gains)* -- (.91) -- (.27) (.04)
Tax return of capital* -- (.34) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions (.26) (1.88) (.06) (.41) (.15)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 23.47 $ 30.90 $ 38.67 $ 21.27 $ 18.48
- -----------------------------------------------------------------------------------------------------------------------------
Total Return (23.23)% (15.94)% 82.27% 17.23% 18.51%
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 869,983 $1,158,666 $ 810,392 $ 311,110 $ 161,091
Average Net Assets for the Period (in thousands) $ 962,343 $1,214,163 $ 425,876 $ 234,421 $ 96,164
Ratio of Gross Expenses to Average Net Assets(2) 0.71% 0.71% 0.77% 0.86% 0.96%
Ratio of Net Expenses to Average Net Assets(2) 0.71% 0.71% 0.76% 0.86% 0.96%
Ratio of Net Investment Income to Average Net Assets 0.95% 1.88% 0.26% 0.73% 0.70%
Portfolio Turnover Rate 65% 67% 80% 93% 86%
*See Note 3 in Notes to Financial Statements.
**Total return not annualized for periods of less than one full year.
***Annualized for periods of less than one full year.
(1) Period May 1, 2000 (inception) to December 31, 2000.
(2) See Note 5 in Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 67
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES (CONTINUED)
For a share outstanding during Janus Aspen Worldwide Growth Portfolio
the fiscal year ended December 31 2001 2000 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 36.98 $ 47.75 $ 29.09 $ 23.39 $ 19.44
- -----------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .24 .11 .07 .16 .16
Net gain/(loss) on securities
(both realized and unrealized) (8.53) (7.03) 18.65 6.59 4.14
- -----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (8.29) (6.92) 18.72 6.75 4.30
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.15) (.19) (.06) (.18) (.19)
Distributions (from capital gains)* -- (3.52) -- (.87) (.16)
Tax return of capital* -- (.14) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions (.15) (3.85) (.06) (1.05) (.35)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 28.54 $ 36.98 $ 47.75 $ 29.09 $ 23.39
- -----------------------------------------------------------------------------------------------------------------------------
Total Return (22.44)% (15.67)% 64.45% 28.92% 22.15%
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $5,707,728 $7,704,163 $6,496,773 $2,890,375 $1,576,548
Average Net Assets for the Period (in thousands) $6,387,010 $8,255,166 $3,862,773 $2,217,695 $1,148,951
Ratio of Gross Expenses to Average Net Assets(1) 0.69% 0.69% 0.71% 0.72% 0.74%
Ratio of Net Expenses to Average Net Assets(1) 0.69% 0.69% 0.71% 0.72% 0.74%
Ratio of Net Investment Income to Average Net Assets 0.78% 0.52% 0.20% 0.64% 0.67%
Portfolio Turnover Rate 82% 66% 67% 77% 80%
</Table>
<Table>
For a share outstanding during Janus Aspen Global Life Sciences Portfolio
the fiscal year or period ended December 31 2001 2000(2)
- --------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 9.31 $ 10.00
- --------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .02 .05
Net gain/(loss) on securities
(both realized and unrealized) (1.55) (.72)
- --------------------------------------------------------------------------------------------------------------
Total from Investment Operations (1.53) (.67)
- --------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* -- (.02)
Distributions (from capital gains)* -- --
Tax return of capital* (.01) --
- --------------------------------------------------------------------------------------------------------------
Total Distributions (.01) (.02)
- --------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 7.77 $ 9.31
- --------------------------------------------------------------------------------------------------------------
Total Return** (16.43)% (6.70)%
- --------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 5,972 $ 10,984
Average Net Assets for the Period (in thousands) $ 6,482 $ 5,372
Ratio of Gross Expenses to Average Net Assets***(1) 0.81% 1.03%
Ratio of Net Expenses to Average Net Assets***(1) 0.81% 1.02%
Ratio of Net Investment Income to Average Net Assets*** (0.16)% 0.60%
Portfolio Turnover Rate*** 109% 137%
*See Note 3 in Notes to Financial Statements.
**Total return not annualized for periods of less than one full year.
***Annualized for periods of less than one full year.
(1) See Note 5 in Notes to Financial Statements.
(2) Period January 18, 2000 (inception) to December 31, 2000.
SEE NOTES TO FINANCIAL STATEMENTS.
68 JANUS ASPEN SERIES / DECEMBER 31, 2001
For a share outstanding during Janus Aspen Global Technology Portfolio
the fiscal year or period ended December 31 2001 2000(1)
- --------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 6.49 $ 10.00
- --------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .19 .16
Net gain/(loss) on securities
(both realized and unrealized) (2.57) (3.56)
- --------------------------------------------------------------------------------------------------------------
Total from Investment Operations (2.38) (3.40)
- --------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.21) (.11)
Distributions (from capital gains)* -- --
- --------------------------------------------------------------------------------------------------------------
Total Distributions (.21) (.11)
- --------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 3.90 $ 6.49
- --------------------------------------------------------------------------------------------------------------
Total Return** (37.07)% (34.03)%
- --------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 5,643 $ 34,950
Average Net Assets for the Period (in thousands) $ 9,242 $ 55,483
Ratio of Gross Expenses to Average Net Assets***(2) 0.68% 0.69%
Ratio of Net Expenses to Average Net Assets***(2) 0.67% 0.69%
Ratio of Net Investment Income to Average Net Assets*** 0.64% 1.64%
Portfolio Turnover Rate*** 91% 34%
</Table>
<Table>
For a share outstanding during Janus Aspen Flexible Income Portfolio
the fiscal year ended December 31 2001 2000 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 11.46 $ 11.41 $ 12.05 $ 11.78 $ 11.24
- -----------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .61 .72 .76 .64 .67
Net gain/(loss) on securities
(both realized and unrealized) .26 (.02) (.58) .41 .62
- -----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations .87 .70 .18 1.05 1.29
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.67) (.65) (.75) (.67) (.64)
Distributions (from capital gains)* -- -- (.07) (.11) (.11)
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions (.67) (.65) (.82) (.78) (.75)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 11.66 $ 11.46 $ 11.41 $ 12.05 $ 11.78
- -----------------------------------------------------------------------------------------------------------------------------
Total Return 7.74% 6.25% 1.60% 9.11% 11.76%
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 387,509 $ 242,401 $ 186,681 $ 129,582 $ 54,098
Average Net Assets for the Period (in thousands) $ 317,156 $ 206,242 $ 161,459 $ 86,627 $ 36,547
Ratio of Gross Expenses to Average Net Assets(2) 0.67% 0.76% 0.72% 0.73% 0.75%
Ratio of Net Expenses to Average Net Assets(2) 0.67% 0.76% 0.72% 0.73% 0.75%
Ratio of Net Investment Income to Average Net Assets 5.87% 7.02% 6.99% 6.36% 6.90%
Portfolio Turnover Rate 308% 202% 116% 145% 119%
*See Note 3 in Notes to Financial Statements.
**Total return not annualized for periods of less than one full year.
***Annualized for periods of less than one full year.
(1) Period January 18, 2000 (inception) to December 31, 2000.
(2) See Note 5 in Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 69
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES (CONTINUED)
For a share outstanding during Janus Aspen Money Market Portfolio
the fiscal year ended December 31 2001 2000 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .04 .06 .05 .05 .05
Net gain/(loss) on securities
(both realized and unrealized) -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations .04 .06 .05 .05 .05
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.04) (.06) (.05) (.05) (.05)
Distributions (from capital gains)* -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions (.04) (.06) (.05) (.05) (.05)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------------------------------------------------------------------------------------
Total Return 4.22% 6.29% 4.98% 5.36% 5.17%
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 100,231 $ 70,808 $ 69,266 $ 38,690 $ 15,374
Average Net Assets for the Period (in thousands) $ 96,524 $ 64,491 $ 54,888 $ 31,665 $ 8,926
Ratio of Gross Expenses to Average Net Assets(1) 0.34% 0.36% 0.43% 0.34% 0.50%
Ratio of Net Expenses to Average Net Assets(1) 0.34% 0.36% 0.43% 0.34% 0.50%
Ratio of Net Investment Income to Average Net Assets 4.07% 6.13% 4.94% 5.21% 5.17%
*See Note 3 in Notes to Financial Statements.
(1) See Note 5 in Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS.
70 JANUS ASPEN SERIES / DECEMBER 31, 2001
FINANCIAL HIGHLIGHTS - SERVICE SHARES
Janus Aspen Janus Aspen
For a share outstanding during Growth Portfolio Aggressive Growth Portfolio
the fiscal year ended December 31 2001 2000 2001 2000
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 26.36 $ 33.52 $ 35.97 $ 59.16
- -----------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) (.02) (.01) (.09) .12
Net gain/(loss) on securities
(both realized and unrealized) (6.54) (4.58) (14.15) (16.98)
- -----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (6.56) (4.59) (14.24) (16.86)
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* -- -- -- --
Distributions (from capital gains)* (.04) (2.57) -- (4.58)
Tax return of capital* -- -- -- (1.75)
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions (.04) (2.57) -- (6.33)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 19.76 $ 26.36 $ 21.73 $ 35.97
- -----------------------------------------------------------------------------------------------------------------------------
Total Return (24.90)% (14.75)% (39.59)% (31.78)%
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 237,012 $ 104,656 $ 169,656 $ 126,135
Average Net Assets for the Period (in thousands) $ 160,200 $ 29,782 $ 146,884 $ 43,775
Ratio of Gross Expenses to Average Net Assets(1) 0.91% 0.92% 0.92% 0.92%
Ratio of Net Expenses to Average Net Assets(1) 0.91% 0.92% 0.92% 0.92%
Ratio of Net Investment Income/(Loss)
to Average Net Assets (0.20)% (0.07)% (0.48)% (0.65)%
Portfolio Turnover Rate 48% 47% 99% 82%
Janus Aspen Janus Aspen
For a share outstanding during Capital Appreciation Portfolio Core Equity Portfolio(2)
the fiscal year ended December 31 2001 2000 2001 2000
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 26.54 $ 32.77 $ 19.05 $ 27.15
- -----------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .14 .27 .05 .01
Net gain/(loss) on securities
(both realized and unrealized) (5.92) (6.27) (2.31) (1.93)
- -----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (5.78) (6.00) (2.26) (1.92)
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.19) (.22) (.05) (.01)
Distributions (from capital gains)* -- (.01) (.59) (6.17)
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions (.19) (.23) (.64) (6.18)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 20.57 $ 26.54 $ 16.15 $ 19.05
- -----------------------------------------------------------------------------------------------------------------------------
Total Return (21.83)% (18.37)% (12.04)% (8.24)%
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 498,094 $ 527,960 $ 971 $ 306
Average Net Assets for the Period (in thousands) $ 514,004 $ 311,628 $ 612 $ 93
Ratio of Gross Expenses to Average Net Assets(1) 0.91% 0.92% 1.30% 1.52%
Ratio of Net Expenses to Average Net Assets(1) 0.91% 0.92% 1.30% 1.52%
Ratio of Net Investment Income/(Loss) to Average Net Assets 0.69% 1.52% 0.44% 0.38%
Portfolio Turnover Rate 67% 41% 114% 95%
*See Note 3 in Notes to Financial Statements.
(1) See Note 5 in Notes to Financial Statements.
(2) Formerly, Janus Aspen Equity Income Portfolio.
SEE NOTES TO FINANCIAL STATEMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 71
Financial Highlights - Service Shares (continued)
Janus Aspen Janus Aspen
For a share outstanding during Balanced Portfolio Growth and Income Portfolio
the fiscal year ended December 31 2001 2000 2001 2000
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 24.92 $ 27.82 $ 17.35 $ 20.63
- -----------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .47 .17 .12 .07
Net gain/(loss) on securities
(both realized and unrealized) (1.68) (.52) (2.47) (2.99)
- -----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (1.21) (.35) (2.35) (2.92)
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.40) (.22) (.13) (.05)
Distributions (from capital gains)* -- (2.31) -- (.31)
Tax return of capital* -- (.02) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions (.40) (2.55) (.13) (.36)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 23.31 $ 24.92 $ 14.87 $ 17.35
- -----------------------------------------------------------------------------------------------------------------------------
Total Return (4.90)% (1.37)% (13.58)% (14.31)%
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 192,338 $ 48,634 $ 85,154 $ 54,212
Average Net Assets for the Period (in thousands) $ 108,835 $ 13,810 $ 73,705 $ 12,868
Ratio of Gross Expenses to Average Net Assets(1) 0.91% 0.92% 0.95% 1.11%
Ratio of Net Expenses to Average Net Assets(1) 0.91% 0.91% 0.95% 1.10%
Ratio of Net Investment Income/(Loss) to Average Net Assets 2.58% 2.93% 0.91% 1.20%
Portfolio Turnover Rate 114% 72% 52% 37%
Janus Aspen Janus Aspen
For a share outstanding during Strategic Value Portfolio International Growth Portfolio
the fiscal year or period ended December 31 2001 2000(2) 2001 2000
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 10.04 $ 10.00 $ 30.64 $ 38.29
- -----------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) -- .01 .18 .46
Net gain/(loss) on securities
(both realized and unrealized) (.84) .03 (7.35) (6.39)
- -----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (.84) .04 (7.17) (5.93)
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.02) -- (.17) (.47)
Distributions (from capital gains)* -- -- -- (.91)
Tax return of capital* -- -- -- (.34)
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions (.02) -- (.17) (1.72)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 9.18 $ 10.04 $ 23.30 $ 30.64
- -----------------------------------------------------------------------------------------------------------------------------
Total Return** (8.38)% 0.40% (23.43)% (16.14)%
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 15,605 $ 1,538 $ 541,803 $ 497,212
Average Net Assets for the Period (in thousands) $ 7,996 $ 431 $ 522,001 $ 269,680
Ratio of Gross Expenses to Average Net Assets***(1) 1.50% 1.52% 0.96% 0.96%
Ratio of Net Expenses to Average Net Assets***(1) 1.50% 1.52% 0.96% 0.96%
Ratio of Net Investment Income/(Loss) to Average Net Assets*** 0.09% 0.66% 0.68% 1.85%
Portfolio Turnover Rate*** 86% 47% 65% 67%
*See Note 3 in Notes to Financial Statements. **Total return not annualized for
periods of less than one full year. ***Annualized for periods of less than one
full year.
(1) See Note 5 in Notes to Financial Statements.
(2) Period May 1, 2000 (inception) to December 31, 2000.
SEE NOTES TO FINANCIAL STATEMENTS.
72 JANUS ASPEN SERIES / DECEMBER 31, 2001
Janus Aspen Janus Aspen
For a share outstanding during Worldwide Growth Portfolio Global Life Sciences Portfolio
the fiscal year or period ended December 31 2001 2000 2001 2000(2)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 36.77 $ 47.49 $ 9.31 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .17 (.07) -- --
Net gain/(loss) on securities
(both realized and unrealized) (8.48) (6.97) (1.56) (.69)
- -----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (8.31) (7.04) (1.56) (.69)
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.08) (.02) -- --
Distributions (from capital gains)* -- (3.52) -- --
Tax return of capital* -- (.14) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions (.08) (3.68) -- --
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 28.38 $ 36.77 $ 7.75 $ 9.31
- -----------------------------------------------------------------------------------------------------------------------------
Total Return** (22.62)% (15.99)% (16.76)% (6.90)%
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 171,392 $ 71,757 $ 44,161 $ 48,005
Average Net Assets for the Period (in thousands) $ 119,429 $ 22,158 $ 38,230 $ 16,247
Ratio of Gross Expenses to Average Net Assets***(1) 0.94% 0.95% 1.07% 1.20%
Ratio of Net Expenses to Average Net Assets***(1) 0.94% 0.94% 1.06% 1.20%
Ratio of Net Investment Income to Average Net Assets*** 0.47% 0.29% (0.43)% (0.03)%
Portfolio Turnover Rate*** 82% 66% 109% 137%
Janus Aspen Janus Aspen
For a share outstanding during Global Technology Portfolio Global Value Portfolio
the fiscal year or period ended December 31 2001 2000(2) 2001(3)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 6.55 $ 10.00 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .02 .05 .01
Net gain/(loss) on securities
(both realized and unrealized) (2.46) (3.46) .49
- -----------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (2.44) (3.41) .50
- -----------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.03) (.04) (.01)
Distributions (from capital gains)* -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Total Distributions (.03) (.04) (.01)
- -----------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 4.08 $ 6.55 $ 10.49
- -----------------------------------------------------------------------------------------------------------------------------
Total Return** (37.31)% (34.11)% 4.97%
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 287,103 $ 374,544 $ 2,108
Average Net Assets for the Period (in thousands) $ 307,222 $ 268,923 $ 1,947
Ratio of Gross Expenses to Average Net Assets***(1) 0.95% 0.94% 1.50%
Ratio of Net Expenses to Average Net Assets***(1) 0.94% 0.94% 1.50%
Ratio of Net Investment Income to Average Net Assets*** 0.42% 1.14% 0.10%
Portfolio Turnover Rate*** 91% 34% 22%
*See Note 3 in Notes to Financial Statements. **Total return not annualized for
periods of less than one full year. ***Annualized for periods of less than one
full year.
(1) See Note 5 in Notes to Financial Statements.
(2) Period January 18, 2000 (inception) to December 31, 2000.
(3) Period May 1, 2001 (inception) to December 31, 2001.
SEE NOTES TO FINANCIAL STATEMENTS.
JANUS ASPEN SERIES / DECEMBER 31, 2001 73
FINANCIAL HIGHLIGHTS - SERVICE SHARES (CONTINUED)
Janus Aspen
For a share outstanding during Flexible Income Portfolio
the fiscal year ended December 31 2001 2000
- -----------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 11.62 $ 11.41
- -----------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .47 .53
Net gain/(loss) on securities
(both realized and unrealized) .39 .14
- -----------------------------------------------------------------------------------------------
Total from Investment Operations .86 .67
- -----------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.50) (.46)
Distributions (from capital gains)* -- --
- -----------------------------------------------------------------------------------------------
Total Distributions (.50) (.46)
- -----------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 11.98 $ 11.62
- -----------------------------------------------------------------------------------------------
Total Return 7.49% 6.00%
- -----------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 2,136 $ 568
Average Net Assets for the Period (in thousands) $ 1,452 $ 187
Ratio of Gross Expenses to Average Net Assets(1) 0.91% 0.99%
Ratio of Net Expenses to Average Net Assets(1) 0.90% 0.99%
Ratio of Net Investment Income/(Loss) to Average Net Assets 5.56% 6.54%
Portfolio Turnover Rate 308% 202%
Janus Aspen
For a share outstanding during Money Market Portfolio
the fiscal year ended December 31 2001 2000
- -----------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 1.00 $ 1.00
- -----------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .04 .06
Net gain/(loss) on securities
(both realized and unrealized) -- --
- -----------------------------------------------------------------------------------------------
Total from Investment Operations .04 .06
- -----------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.04) (.06)
Distributions (from capital gains)* -- --
- -----------------------------------------------------------------------------------------------
Total Distributions (.04) (.06)
- -----------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00
- -----------------------------------------------------------------------------------------------
Total Return 3.97% 6.03%
- -----------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 11 $ 10
Average Net Assets for the Period (in thousands) $ 11 $ 10
Ratio of Gross Expenses to Average Net Assets(1) 0.59% 0.61%
Ratio of Net Expenses to Average Net Assets(1) 0.59% 0.61%
Ratio of Net Investment Income/(Loss) to Average Net Assets 3.91% 5.84%
*See Note 3 in Notes to Financial Statements.
(1) See Note 5 in Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS.
74 JANUS ASPEN SERIES / DECEMBER 31, 2001
NOTES TO SCHEDULES OF INVESTMENTS
ADR American Depository Receipt
GDR Global Depository Receipt
* Non-income producing security
** A portion of this security has been segregated by the custodian to
cover margin or segregation requirements on open futures contracts,
forward currency contracts and/or swap spread lock agreements.
+ Securities are exempt from the registration requirements of the
Securities Act of 1933 and/or Section 4 (2) of the Securities Act and
may be deemed to be restricted for resale.
(OMEGA) Rate is subject to change. Rate shown reflects current rate.
(DELTA) Security is a defaulted security in Aspen Global Technology Portfolio
and Aspen Flexible Income Portfolio with interest in the amount of
$40,000 and $39,840, respectively, that was written-off December 10,
2001.
ss. Restricted and/or Illiquid Securities are valued at fair value
determined in good faith under procedures established by and under the
supervision of the Trustees.
SCHEDULE OF RESTRICTED AND ILLIQUID SECURITIES
Value as
Acquisition Acquisition Fair % of
Date Cost Value Net Assets
- --------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio
Hanover Compressor Co. 5/19/00 $26,887,500 $22,639,275 1.00%
- --------------------------------------------------------------------------------------------------
Janus Aspen Global Life Sciences Portfolio
Pharmaceutical Resources, Inc. 9/6/01 $ 806,760 $1,009,944 2.01%
- --------------------------------------------------------------------------------------------------
The Portfolio has registration rights for certain restricted securities held at
December 31, 2001. The issuer incurs all registration costs.
Shelf registration has occurred as of December 31, 2001.
Value as
Acquisition Acquisition Amortized % of
Date Cost Cost Net Assets
- --------------------------------------------------------------------------------------------------
Janus Aspen Money Market Portfolio
Idaho Power Corp., 2.4312%, 9/1/02 9/24/01 $5,014,579 $5,004,910 4.99%
Textron Financial Corp., 2.5056%, 5/28/02 7/10/01 3,224,620 3,203,224 3.20%
---------------------------
$8,208,134 8.19%
- --------------------------------------------------------------------------------------------------
Variable Rate Notes. The interest rate, which is based on specific, or an index
of, market interest rates, is subject to change. Rates in the security
description are as of December 31, 2001.
Money market funds may hold securities with stated maturities of greater than
397 days when those securities have features that allow a fund to "put" back the
security to the issuer or to a third party within 397 days of acquisition. The
maturity dates shown in the security descriptions are the stated maturity dates.
Repurchase Agreements held by a Portfolio are fully collateralized, and such
collateral is in the possession of the Portfolio's custodian or subcustodian.
The collateral is evaluated daily to ensure its market value equals or exceeds
the current market value of the repurchase agreements including accrued
interest. In the event of default on the obligation to repurchase, the Portfolio
has the right to liquidate the collateral and apply the proceeds in satisfaction
of the obligation. In the event of default or bankruptcy by the other party to
the agreement, realization and/or retention of the collateral or proceeds may be
subject to legal proceedings.
JANUS ASPEN SERIES / DECEMBER 31, 2001 75
NOTES TO FINANCIAL STATEMENTS
The following section describes the organization and significant accounting
policies of the Portfolios and provides more detailed information about the
schedules and tables that appear throughout this report. In addition, the Notes
explain how the Portfolios operate and the methods used in preparing and
presenting this report.
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Janus Aspen Series (the "Trust") was organized as a Delaware Trust on May 20,
1993, and is registered under the Investment Company Act of 1940 (the "1940
Act") as a no-load, open-end management investment company. The Trust offers
fourteen Portfolios or series of shares with differing investment objectives and
policies. Twelve Portfolios invest primarily in equity securities: Janus Aspen
Growth Portfolio, Janus Aspen Aggressive Growth Portfolio, Janus Aspen Capital
Appreciation Portfolio, Janus Aspen Core Equity Portfolio, Janus Aspen Balanced
Portfolio, Janus Aspen Growth and Income Portfolio, Janus Aspen Strategic Value
Portfolio, Janus Aspen International Growth Portfolio, Janus Aspen Worldwide
Growth Portfolio, Janus Aspen Global Life Sciences Portfolio, Janus Aspen Global
Technology Portfolio and Janus Aspen Global Value Portfolio. One Portfolio
invests primarily in income-producing securities: Janus Aspen Flexible Income
Portfolio. Janus Aspen Money Market Portfolio invests in short-term money market
securities. Each Portfolio is diversified as defined in the 1940 Act, with the
exception of the Janus Aspen Aggressive Growth Portfolio, Janus Aspen Capital
Appreciation Portfolio, Janus Aspen Global Life Sciences Portfolio, Janus Aspen
Global Technology Portfolio, Janus Aspen Strategic Value Portfolio and Janus
Aspen Global Value Portfolio, which are nondiversified.
Institutional Shares of the Trust are issued and redeemed only in connection
with investment in and payments under variable annuity contracts and variable
life insurance contracts (collectively "variable insurance contracts"), as well
as certain qualified retirement plans. Effective May 1, 1997, the Trust issued
the Retirement Shares. Retirement Shares of the Trust were issued and redeemed
only in connection with certain qualified retirement plans.
Effective December 31, 1999, the Trust issued a new class of shares, the Service
Shares. Service Shares of the Trust are issued and redeemed only in connection
with investment in and payments under variable annuity contracts and variable
life insurance contracts (collectively "variable insurance contracts"), as well
as certain qualified retirement plans.
Janus Aspen Global Value Portfolio began operations on May 1, 2001. The
Portfolio offers the Service Shares only and Janus Capital Corporation ("Janus
Capital") invested $2,000,000 of initial seed capital.
Janus Aspen High-Yield Portfolio was liquidated on October 26, 2001. Regulatory
approvals were obtained to substitute shares of the Janus Aspen Flexible Income
Portfolio for shares of the Janus Aspen High-Yield Portfolio. 60,319 shares in
the amount of $731,670 were exchanged into Janus Aspen Flexible Income Portfolio
as a result of the substitution.
Effective December 31, 2001, the Trust issued a new class of shares, the Service
II Shares in the Janus Aspen International Growth, Janus Aspen Worldwide Growth,
and Janus Aspen Global Technology Portfolios. Janus Capital invested $10,000 of
initial seed capital in each Portfolio of the Service II Shares, which is not
reflected in the financial statements.
A reorganization of the Retirement Shares of the Trust occurred at the close of
business on July 31, 2000. Each of the reorganized Portfolios of Janus Aspen
Series allocated a pro rata share (percentage of the Retirement Shares to the
total Portfolio) of each security position to the corresponding Fund of the
newly formed Janus Adviser Series except for securities that were subject to
restrictions on resale or transfer, such as private placement securities. Each
pro rata share was rounded to eliminate fractional shares and odd lots of
securities. Janus Capital, the investment adviser of both Janus Aspen Series and
Janus Adviser Series, has agreed to limit expenses of the Funds formed from this
reorganization so that they will not increase before July 31, 2003.
Specifically, Janus Capital will limit the expenses of each of the new Funds
(excluding brokerage commissions, interest, taxes and extraordinary expenses) to
the expense ratio of the corresponding Janus Aspen Series Portfolio set forth in
the May 1, 2000, Janus Aspen Series Prospectus. These limitations will stay in
place until at least July 31, 2003. In addition, Janus Capital paid all the fees
associated with the reorganization.
The following accounting policies have been consistently followed by the Trust
and are in conformity with accounting principles generally accepted in the
investment company industry in the United States of America.
INVESTMENT VALUATION
Securities are valued at the closing price for securities traded on a principal
securities exchange (U.S. or foreign) and on the NASDAQ National Market.
Securities traded on over-the-counter markets and listed securities for which no
sales are reported are valued at the latest bid price (or
76 JANUS ASPEN SERIES / DECEMBER 31, 2001
yield equivalent thereof) obtained from one or more dealers making a market for
such securities or by a pricing service approved by the Trustees. Short-term
investments maturing within 60 days and all money market securities in the Money
Market Portfolio are valued at amortized cost, which approximates market value.
Foreign securities are converted to U.S. dollars using exchange rates at the
close of the New York Stock Exchange. When market quotations are not readily
available, securities are valued at fair value as determined in good faith under
procedures established by and under the supervision of the Portfolios' Trustees.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for as of the date purchased or sold.
Dividend income is recorded on the ex-dividend date. Certain dividends from
foreign securities will be recorded as soon as the Trust is informed of the
dividend if such information is obtained subsequent to the ex-dividend date.
Interest income is recorded on the accrual basis and includes amortization of
discounts and premiums. Gains and losses are determined on the identified cost
basis, which is the same basis used for federal income tax purposes. Income and
gains and losses are allocated daily to each class of shares based upon the
ratio of net assets represented by each class as a percentage of total net
assets.
FORWARD CURRENCY TRANSACTIONS
AND FUTURES CONTRACTS
The Portfolios enter into forward currency contracts in order to hedge their
exposure to changes in foreign currency exchange rates on their foreign
portfolio holdings and to lock in the U.S. dollar cost of firm purchase and
sales commitments denominated in foreign currencies. A forward currency contract
is a commitment to purchase or sell a foreign currency at a future date at a
negotiated forward rate. The gain or loss arising from the difference between
the U.S. dollar cost of the original contract and the value of the foreign
currency in U.S. dollars upon closing such a contract is included in net
realized gain or loss on foreign currency transactions.
Forward currency contracts held by the Portfolios are fully collateralized by
other securities, in possession at the Portfolio's custodian, which are denoted
in the accompanying Schedule of Investments. The market value of these
securities is evaluated daily to ensure that it is equal to or exceeds the
current market value of the corresponding forward currency contract.
Currency gain and loss are also calculated on payables and receivables that are
denominated in foreign currencies. The payables and receivables are generally
related to security transactions and income.
The Portfolios do not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held at fiscal
year-end. Net unrealized appreciation or depreciation on investments and foreign
currency translation arise from changes in the value of assets and liabilities,
including investments in securities at fiscal year end, resulting from changes
in the exchange rates and changes in market prices of securities held.
The Portfolios may enter into futures contracts and options on securities,
financial indices and foreign currencies, forward contracts and interest-rate
swaps and swap-related products. The Portfolios intend to use such derivative
instruments primarily to hedge or protect from adverse movements in securities
prices, currency rates or interest rates. The use of futures contracts and
options may involve risks such as the possibility of illiquid markets or
imperfect correlation between the value of the contracts and the underlying
securities or that the counterparty will fail to perform its obligations.
Futures contracts are marked to market daily, and the variation margin is
recorded as an unrealized gain or loss. When a contract is closed, a realized
gain or loss is recorded equal to the difference between the opening and closing
value of the contract. Generally, open forward and futures contracts are marked
to market (i.e., treated as realized and subject to distribution) for federal
income tax purposes at fiscal year-end.
Foreign-denominated assets and forward currency contracts may involve more risks
than domestic transactions, including: currency risk, political and economic
risk, regulatory risk and market risk. Risks may arise from the potential
inability of a counterparty to meet the terms of a contract and from
unanticipated movements in the value of foreign currencies relative to the U.S.
dollar.
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Accounting Standards (SFAS) No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which was effective for fiscal years beginning after
June 15, 1999. In June 1999, the FASB issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities-Deferral of Effective Date of FASB
Statement No. 133," delaying by one year the effective date of SFAS No. 133. The
effective date for the Portfolios was January 1, 2001. In June 2000, the FASB
issued No. 138, "Accounting for Certain Derivative Instruments and Certain
Hedging Activities," an amendment of SFAS No. 133. SFAS 133, as amended, may
affect the accounting treatment of the Portfolios' derivative
JANUS ASPEN SERIES / DECEMBER 31, 2001 77
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
instruments and related assets. The Portfolios have adopted this new standard
and have determined that the impact on the Financial Statements is
insignificant.
In November 2000, a revised AICPA Audit and Accounting Guide, Audits of
Investment Companies, was issued, and is effective for fiscal years beginning
after December 15, 2000. The Portfolios have adopted this new Guide and have
determined that the impact on the Financial Statements is insignificant.
INITIAL PUBLIC OFFERINGS
The Portfolios may invest in initial public offerings (IPOs). IPOs and other
investment techniques may have a magnified performance impact on a portfolio
with a small asset base. The Portfolios may not experience similar performance
as their assets grow.
ADDITIONAL INVESTMENT RISK
A portion of the Flexible Income Portfolio may be invested in lower-rated debt
securities that have a higher risk of default or loss of value because of
changes in the economy or in their respective industry.
ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
RESTRICTED SECURITY TRANSACTIONS
Restricted securities held by a Portfolio may not be sold except in exempt
transactions or in a public offering registered under the Securities Act of
1933. The risk of investing in such securities is generally greater than the
risk of investing in the securities of widely held, publicly traded companies.
Lack of a secondary market and resale restrictions may result in the inability
of a Portfolio to sell a security at a fair price and may substantially delay
the sale of the security which each portfolio seeks to sell. In addition, these
securities may exhibit greater price volatility than securities for which
secondary markets exist.
DIVIDEND DISTRIBUTIONS AND EXPENSES
Each Portfolio, except the Money Market Portfolio, makes at least semiannual
distributions of substantially all of its investment income and at least an
annual distribution of its net realized capital gains, if any. Dividends are
declared daily and distributed monthly for the Money Market Portfolio. The
majority of dividends and capital gains distributions from a Portfolio will be
automatically reinvested into additional shares of that Portfolio.
Expenses are allocated daily to each class of shares based upon the ratio of net
assets represented by each class as a percentage of total net assets. Expenses
directly attributable to a specific class of shares are charged against the
operations of such class.
FEDERAL INCOME TAXES
No provision for income taxes is included in the accompanying financial
statements as the Portfolios intend to distribute to shareholders all taxable
investment income and realized gains and otherwise comply with the Internal
Revenue Code applicable to regulated investment companies.
78 JANUS ASPEN SERIES / DECEMBER 31, 2001
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Each equity Portfolio is subject to advisory fees payable to Janus Capital based
upon an annual rate of .65% of average net assets. The Flexible Income Portfolio
is subject to advisory fees payable to Janus Capital based upon annual rates of
..65% of the first $300 million of average net assets plus .55% of average net
assets in excess of $300 million. The Money Market Portfolio's advisory fee rate
is .25% of average net assets. For additional information on the specific fees
for the Service Shares, please refer to Note 4 of the financial statements.
A special meeting of shareholders of Janus Aspen Series will be held on January
31, 2002 to consider and approve new investment advisory agreements for the
Portfolios. The new advisory agreements are the same in all material respects as
the current advisory agreements. Contingent upon receipt of shareholder
approval, the new advisory agreements will be effective upon the termination of
Mr. Bailey's contractual right to select a majority of Janus Capital's board of
directors, currently anticipated to be on or about March 28, 2002, and will
continue in effect until July 1, 2002. Thereafter, each new advisory agreement
will continue in effect from year to year so long as such continuance is
approved at least annually by a majority of the Portfolios' independent
Trustees.
Janus Capital has agreed to reduce its fee to the extent normal operating
expenses exceed 1% of the average net assets of the Flexible Income Portfolio
and .50% of the average net assets of the Money Market Portfolio for a fiscal
year. Janus Capital has also agreed to reduce its fee to the extent that normal
operating expenses exceed 1.25% of the average net assets of the Core Equity,
Strategic Value, Global Life Sciences, Global Technology and Global Value
Portfolios.
Janus Capital has agreed to continue these fee waivers and reductions until at
least the next annual renewal of the advisory contracts. The distribution fee
applicable to the Service Shares is not included in these expense limits.
Officers and certain trustees of the Trust are also officers and/or directors of
Janus Capital; however, they receive no compensation from the Trust.
Janus Service Corporation ("Janus Service"), a wholly owned subsidiary of Janus
Capital, receives certain out-of-pocket expenses for transfer agent services.
Janus Distributors, Inc., a wholly owned subsidiary of Janus Capital, is a
distributor of the Portfolios. The Service Shares have adopted a Distribution
and Shareholder Servicing Plan (The "Plan") pursuant to Rule 12b-1 under The
1940 Act. The Plan authorizes payments by the Portfolios in connection with the
distribution of the Service Shares at an annual rate, as determined from time to
time by the Board of Trustees, of up to .25% of the Service Shares' average
daily net assets.
DST Systems, Inc. (DST), an affiliate of Janus Capital through a degree of
common ownership, provides accounting systems to the Portfolios. DST Securities,
Inc., a wholly owned subsidiary of DST, provides brokerage services on certain
portfolio transactions. Brokerage commissions paid to DST Securities, Inc. serve
to reduce fees and expenses. Brokerage commissions paid, fees reduced and the
net fees paid to DST for the period ended December 31, 2001, are noted below.
Effective June 1, 2001, State Street Bank and Trust Company acquired the fund
accounting system from DST.
DST Securities, Inc. Portfolio Expense DST Systems
Portfolio Commissions Paid* Reduction* Costs
- -----------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio $ 25,075 $ 18,811 $ (4,774)
Janus Aspen Aggressive Growth Portfolio 26,449 19,842 (5,515)
Janus Aspen Capital Appreciation Portfolio -- -- 13,441
Janus Aspen Core Equity Portfolio(1) 95 71 10,140
Janus Aspen Balanced Portfolio 24,610 18,462 (3,218)
Janus Aspen Growth and Income Portfolio 763 572 9,573
Janus Aspen Strategic Value Portfolio 260 195 9,500
Janus Aspen International Growth Portfolio -- -- 14,893
Janus Aspen Worldwide Growth Portfolio 15,224 11,421 5,340
Janus Aspen Global Life Sciences Portfolio 128 96 8,976
Janus Aspen Global Technology Portfolio -- -- 11,219
Janus Aspen Global Value Portfolio -- -- 1,587
Janus Aspen Flexible Income Portfolio -- -- 10,758
Janus Aspen Money Market Portfolio -- -- 9,851
- -----------------------------------------------------------------------------------------------------
* The difference between commissions paid to DST Securities, Inc. and expenses
reduced constitute commissions paid to an unaffiliated clearing broker.
(1) Formerly, Janus Aspen Equity Income Portfolio.
JANUS ASPEN SERIES / DECEMBER 31, 2001 79
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. FEDERAL INCOME TAX
The tax components of capital shown in the table below represent: (1)
distribution requirements the Portfolios must satisfy under the income tax
regulations, (2) losses or deductions the Portfolios may be able to offset
against income and gains realized in future years, and (3) unrealized
appreciation or depreciation of investments for federal income tax purposes.
Accumulated capital losses noted below represent net capital loss carryovers as
of December 31, 2001 that may be available to offset future realized capital
gains and thereby reduce future taxable gain distributions. These carryovers
expire between December 1, 2008 and December 31, 2009.
In 2001, the Portfolios noted below incurred "Post-October" losses during the
period from November 1 through December 31, 2001. These losses will be deferred
for tax purposes and recognized in 2002.
Other book to tax differences in 2001 primarily consist of foreign currency
contract adjustments. The Portfolios have elected to treat gains and losses on
forward foreign currency contracts as capital gains and losses. Other foreign
currency gains and losses on debt instruments are treated as ordinary income for
federal income tax purposes pursuant to Section 988 of the Internal Revenue
Code.
Undistributed Undistributed Post- Other Book Net Tax
Ordinary Long-Term Accumulated October to Tax Appreciation/
Portfolio Income Gains Capital Losses Deferral Differences (Depreciation)
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio -- -- $ (825,859,740) $ (84,289,068) $ (15,850) $ 38,212,656
Janus Aspen Aggressive Growth Portfolio -- -- (1,606,880,761) (185,517,945) -- (103,055,923)
Janus Aspen Capital Appreciation Portfolio $ 891,227 -- (462,062,044) (15,926,810) -- (71,741,718)
Janus Aspen Core Equity Portfolio(1) 6,546 -- (1,735,616) (53,205) -- 547,245
Janus Aspen Balanced Portfolio 5,541,812 -- (124,545,495) (59,873,071) -- 30,945,661
Janus Aspen Growth and Income Portfolio 84,334 -- (24,326,987) (8,211,380) (1,116) (2,369,216)
Janus Aspen Strategic Value Portfolio -- -- (1,881,019) (70,502) -- 513,825
Janus Aspen International Growth Portfolio -- -- (397,772,820) (18,336,589) (6,707,534) (39,044,603)
Janus Aspen Worldwide Growth Portfolio 3,565,326 -- (1,238,904,155) (69,641,742) (22,660,749) 250,113,808
Janus Aspen Global Life Sciences Portfolio -- -- (10,308,367) (11,617) 1,050 3,087,038
Janus Aspen Global Technology Portfolio -- -- (291,551,726) (5,622,725) (412,800) (71,341,410)
Janus Aspen Global Value Portfolio 20,871 $6,472 -- (138) (9,816) 81,854
Janus Aspen Flexible Income Portfolio 1,366,420 -- (2,634,842) (20,708) (841) (673,457)
Janus Aspen Money Market Portfolio 1,078 -- (1,154) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Formerly, Janus Aspen Equity Income Portfolio.
The aggregate cost of investments and the composition of unrealized appreciation
and depreciation of investments for federal income tax purposes as of December
31, 2001 are noted below. Unrealized appreciation and unrealized depreciation in
the table below exclude appreciation/ depreciation on foreign currency
translations. The primary difference between book and tax appreciation or
depreciation of investments is wash sale loss deferrals.
Federal Tax Unrealized Unrealized
Portfolio Cost Appreciation (Depreciation)
- -------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio $2,691,905,337 $ 351,563,712 $ (313,361,230)
Janus Aspen Aggressive Growth Portfolio 2,419,320,130 275,974,236 (379,030,159)
Janus Aspen Capital Appreciation Portfolio 1,341,567,622 64,337,226 (136,078,944)
Janus Aspen Core Equity Portfolio(1) 12,939,043 1,195,062 (647,762)
Janus Aspen Balanced Portfolio 3,583,879,657 165,251,987 (134,305,624)
Janus Aspen Growth and Income Portfolio 181,186,556 13,252,569 (15,621,028)
Janus Aspen Strategic Value Portfolio 19,976,895 1,388,060 (874,169)
Janus Aspen International Growth Portfolio 1,493,296,196 117,040,981 (162,855,615)
Janus Aspen Worldwide Growth Portfolio 5,659,883,189 624,516,495 (397,171,004)
Janus Aspen Global Life Sciences Portfolio 46,913,740 6,353,043 (3,265,149)
Janus Aspen Global Technology Portfolio 363,934,247 17,581,524 (89,311,696)
Janus Aspen Global Value Portfolio 1,948,264 181,942 (109,881)
Janus Aspen Flexible Income Portfolio 384,524,745 4,507,513 (5,141,970)
Janus Aspen Money Market Portfolio 100,126,254 -- --
- -------------------------------------------------------------------------------------------------
(1) Formerly, Janus Aspen Equity Income Portfolio.
80 JANUS ASPEN SERIES / DECEMBER 31, 2001
Income and capital gains distributions are determined in accordance with income
tax regulations that may differ from accounting principles generally accepted in
the United States of America. These differences are due to differing treatments
for items such as net short-term gains, deferral of wash sale losses, foreign
currency transactions, net investment losses and capital loss carryovers.
Certain permanent differences such as tax returns of capital and net investment
losses noted below have been reclassified to paid-in capital.
Distributions
--------------------------------------------
From Ordinary From Long-Term Tax Return of Net Investment
Portfolio Income Capital Gains Capital Loss
- -----------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio $ 1,847,982 $ 6,012,058 $ 80,158 --
Janus Aspen Aggressive Growth Portfolio -- -- -- $ (6,295,306)
Janus Aspen Capital Appreciation Portfolio 15,053,392 -- -- --
Janus Aspen Core Equity Portfolio(1) 115,466 486,175 -- --
Janus Aspen Balanced Portfolio 92,482,786 -- -- --
Janus Aspen Growth and Income Portfolio 2,121,080 -- -- --
Janus Aspen Strategic Value Portfolio 46,525 -- 2,582 --
Janus Aspen International Growth Portfolio 12,432,489 -- 1,195,542 --
Janus Aspen Worldwide Growth Portfolio 30,870,469 -- -- --
Janus Aspen Global Life Sciences Portfolio 3,080 -- 5,771 (176,000)
Janus Aspen Global Technology Portfolio 2,264,658 -- 23,044 --
Janus Aspen Global Value Portfolio 1,404 -- -- --
Janus Aspen Flexible Income Portfolio 19,405,510 -- -- --
Janus Aspen Money Market Portfolio 3,919,449 -- --
- -----------------------------------------------------------------------------------------------------------
(1) Formerly, Janus Aspen Equity Income Portfolio.
Janus Aspen International Growth and Janus Aspen Worldwide Growth Portfolios
have elected to pass through to shareholders foreign taxes under Section 853.
Foreign taxes paid and foreign source income for the Portfolios are as follows:
Portfolio Foreign Taxes Paid Foreign Source Income
- ---------------------------------------------------------------------------------------------
Janus Aspen International Growth Portfolio $1,552,165 $ 8,979,357
Janus Aspen Worldwide Growth Portfolio 5,492,843 27,800,589
- ---------------------------------------------------------------------------------------------
JANUS ASPEN SERIES / DECEMBER 31, 2001 81
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. EXPENSES
The Portfolios' expenses may be reduced through expense-reduction arrangements.
Those arrangements include the use of broker commissions paid to DST Securities,
Inc. and uninvested cash balances earning interest with the Portfolios'
custodian. The Statements of Operations reflect the total expenses before any
offset, the amount of the offset and the net expenses. The expense ratios listed
in the Financial Highlights reflect expenses prior to any expense offset (gross
expense ratio) and after expense offsets (net expense ratio). Both expense
ratios reflect expenses after waivers.
Janus Aspen Series Service Shares incur a pro rata share of operating expenses.
In addition, the Service Shares pay a distribution fee of up to .25% of average
net assets.
5. EXPENSE RATIOS
Listed below are the gross expense ratios for the various Portfolios that would
be in effect, absent the waiver of certain fees, and offsets.
Institutional Shares Service Shares
Portfolio 2001 2000 1999 1998 1997 2001 2000
- -----------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 0.66% 0.67% 0.69% 0.75% 0.78% 0.91% 0.92%
Janus Aspen Aggressive Growth Portfolio 0.67% 0.66% 0.70% 0.75% 0.78% 0.92% 0.92%
Janus Aspen Capital Appreciation Portfolio 0.66% 0.67% 0.79% 0.97% 2.19%(4) 0.91% 0.92%
Janus Aspen Core Equity Portfolio(6) 1.13% 1.65% 1.38% 1.86% 5.75%(4) 1.30% 2.03%
Janus Aspen Balanced Portfolio 0.66% 0.66% 0.69% 0.74% 0.83% 0.91% 0.92%
Janus Aspen Growth and Income Portfolio 0.70% 0.78% 1.15% 3.06%(3) N/A 0.95% 1.11%
Janus Aspen Strategic Value Portfolio 1.34% 3.45%(1) N/A N/A N/A 1.60% 3.72%(1)
Janus Aspen International Growth Portfolio 0.71% 0.71% 0.84% 0.95% 1.08% 0.96% 0.96%
Janus Aspen Worldwide Growth Portfolio 0.69% 0.69% 0.71% 0.74% 0.81% 0.94% 0.95%
Janus Aspen Global Life Sciences Portfolio 0.81% 1.03%(2) N/A N/A N/A 1.07% 1.20%(2)
Janus Aspen Global Technology Portfolio 0.68% 0.69%(2) N/A N/A N/A 0.95% 0.94%(2)
Janus Aspen Global Value Portfolio N/A N/A N/A N/A N/A 3.62%(5) N/A
Janus Aspen Flexible Income Portfolio 0.67% 0.76% 0.72% 0.73% 0.75% 0.91% 0.99%
Janus Aspen Money Market Portfolio 0.34% 0.36% 0.43% 0.34% 0.55% 0.59% 0.61%
- -----------------------------------------------------------------------------------------------------------------
(1) Period May 1, 2000 (inception) to December 31, 2000.
(2) Period January 18, 2000 (inception) to December 31, 2000.
(3) Period May 1, 1998 (inception) to December 31, 1998.
(4) Period May 1, 1997 (inception) to December 31, 1997.
(5) Period May 1, 2001 (inception) to December 31, 2001.
(6) Formerly, Janus Aspen Equity Income Portfolio.
82 JANUS ASPEN SERIES / DECEMBER 31, 2001
EXPLANATIONS OF CHARTS, TABLES AND FINANCIAL STATEMENTS (UNAUDITED)
1. PERFORMANCE OVERVIEWS
Performance overview graphs on the previous pages compare the performance of a
$10,000 investment in each Portfolio (from inception) with one or more widely
used market indices through December 31, 2001.
When comparing the performance of a Portfolio with an index, keep in mind that
market indices do not include brokerage commissions that would be incurred if
you purchased the individual securities in the index. They also do not include
taxes payable on dividends and interest or operating expenses incurred if you
maintained a Portfolio invested in the index.
Average annual total returns are also quoted for each class of the Portfolio.
Average annual total return is calculated by taking the growth or decline in
value of an investment over a period of time, including reinvestment of
dividends and distributions, then calculating the annual compounded percentage
rate that would have produced the same result had the rate of growth been
constant throughout the period.
2. SCHEDULES OF INVESTMENTS
Following the performance overview section is each Portfolio's Schedule of
Investments. This schedule reports the industry concentrations and types of
securities held in each Portfolio on the last day of the reporting period.
Securities are usually listed by type (common stock, corporate bonds, U.S.
government obligations, etc.) and by industry classification (banking,
communications, insurance, etc.).
The market value of each security is quoted as of the last day of the reporting
period. The value of securities denominated in foreign currencies is converted
into U.S. dollars.
Portfolios that invest in foreign securities also provide a summary of
investments by country. This summary reports the Portfolio's exposure to
different countries by providing the percentage of securities invested in each
country.
2A. FORWARD CURRENCY CONTRACTS
A table listing forward currency contracts follows each Portfolio's Schedule of
Investments (if applicable). Forward currency contracts are agreements to
deliver or receive a preset amount of currency at a future date. Forward
currency contracts are used to hedge against foreign currency risk in the
Portfolio's long-term holdings.
The table provides the name of the foreign currency, the settlement date of the
contract, the amount of the contract, the value of the currency in U.S. dollars
and the amount of unrealized gain or loss. The amount of unrealized gain or loss
reflects the change in currency exchange rates from the time the contract was
opened to the last day of the reporting period.
3. STATEMENT OF ASSETS AND LIABILITIES
This statement is often referred to as the "balance sheet." It lists the assets
and liabilities of the Portfolios on the last day of the reporting period.
The Portfolios' assets are calculated by adding the value of the securities
owned, the receivable for securities sold but not yet settled, the receivable
for dividends declared but not yet received on stocks owned and the receivable
for Portfolio shares sold to investors but not yet settled. The Portfolios'
liabilities include payables for securities purchased but not yet settled,
Portfolio shares redeemed but not yet paid and expenses owed but not yet paid.
Additionally, there may be other assets and liabilities such as forward currency
contracts.
The last section of this statement reports the net asset value (NAV) per share
on the last day of the reporting period for each class of the Portfolio. The NAV
is calculated by dividing the Portfolios' net assets (assets minus liabilities)
by the number of shares outstanding.
JANUS ASPEN SERIES / DECEMBER 31, 2001 83
Explanations of Charts, Tables and Financial Statements (continued) (unaudited)
4. STATEMENT OF OPERATIONS
This statement details the Portfolios' income, expenses, gains and losses on
securities and currency transactions, and appreciation or depreciation of
current Portfolio holdings.
The first section in this statement, titled "Investment Income," reports the
dividends earned from stocks and interest earned from interest-bearing
securities in the Portfolio.
The next section reports the expenses and expense offsets incurred by the
Portfolios, including the advisory fee paid to the investment adviser, transfer
agent fees, shareholder servicing expenses, and printing and postage for mailing
statements, financial reports and prospectuses.
The last section lists the increase or decrease in the value of securities held
in the Portfolios. Portfolios realize a gain (or loss) when they sell their
position in a particular security. An unrealized gain (or loss) refers to the
change in net appreciation or depreciation of the Portfolios during the period.
"Net Realized and Unrealized Gain/ (Loss) on Investments" is affected both by
changes in the market value of Portfolio holdings and by gains (or losses)
realized during the reporting period.
5. STATEMENT OF CHANGES IN NET ASSETS
This statement reports the increase or decrease in the Portfolios' net assets
during the reporting period. Changes in the Portfolios' net assets are
attributable to investment operations, dividends, distributions and capital
share transactions. This is important to investors because it shows exactly what
caused the Portfolios' net asset size to change during the period.
The first section summarizes the information from the Statement of Operations
regarding changes in net assets due to the Portfolios' investment performance.
The Portfolios' net assets may also change as a result of dividend and capital
gains distributions to investors. If investors receive their dividends in cash,
money is taken out of the Portfolio to pay the distribution. If investors
reinvest their dividends, the Portfolios' net assets will not be affected. If
you compare each Portfolio's "Net Decrease from Dividends and Distributions" to
the "Reinvested dividends and distributions," you'll notice that dividend
distributions had little effect on each Portfolio's net assets. This is because
the majority of Janus investors reinvest their distributions.
The reinvestment of dividends is included under "Capital Share Transactions."
"Capital Shares" refers to the money investors contribute to the Portfolios
through purchases or withdrawal via redemptions. Each Portfolio's net assets
will increase and decrease in value as investors purchase and redeem shares from
a Portfolio.
The section entitled "Net Assets Consist of" breaks down the components of the
Portfolios' net assets. Because Portfolios must distribute substantially all
earnings, you'll notice that a significant portion of net assets is shareholder
capital.
84 JANUS ASPEN SERIES / DECEMBER 31, 2001
6. FINANCIAL HIGHLIGHTS
This schedule provides a per-share breakdown of the components that affect the
net asset value (NAV) for current and past reporting periods for each class of
the Portfolio. Not only does this table provide you with total return, it also
reports total distributions, asset size, expense ratios and portfolio turnover
rate.
The first line in the table reflects the NAV per share at the beginning of the
reporting period. The next line reports the net investment income per share,
which comprises dividends and interest income earned on securities held by the
Portfolios. Following is the total of gains, realized and unrealized. Dividends
and distributions are then subtracted to arrive at the NAV per share at the end
of the period.
Also included are the expense ratios, or the percentage of net assets that was
used to cover operating expenses during the period. Expense ratios vary across
the Portfolios for a number of reasons, including the differences in management
fees, average shareholder account size, the frequency of dividend payments and
the extent of foreign investments, which entail greater transaction costs.
The Portfolios' expenses may be reduced through expense-reduction arrangements.
These arrangements include the use of brokerage commissions, uninvested cash
balances earning interest or balance credits. The Statement of Operations
reflects total expenses before any such offset, the amount of offset and the net
expenses. The expense ratios listed in the Financial Highlights reflect total
expenses both prior to any expense offset and after the offsets.
The ratio of net investment income summarizes the income earned divided by the
average net assets of a Portfolio during the reporting period. Don't confuse
this ratio with a Portfolio's yield. The net investment income ratio is not a
true measure of a Portfolio's yield because it doesn't take into account the
dividends distributed to the Portfolio's investors.
The next ratio is the portfolio turnover rate, which measures the buying and
selling activity in a Portfolio. Portfolio turnover is affected by market
conditions, changes in the size of a Portfolio, the nature of the Portfolio's
investments and the investment style of the portfolio manager. A 100% rate
implies that an amount equal to the value of the entire Portfolio is turned over
in a year; a 50% rate means that an amount equal to the value of half the
Portfolio is traded in a year; and a 200% rate means that an amount equal to the
value of the Portfolio is sold every six months.
JANUS ASPEN SERIES / DECEMBER 31, 2001 85
TRUSTEES AND OFFICERS (UNAUDITED)
The following are the Trustees and officers of the Trust, together with a brief
description of their principal occupations during the last five years. Each
Trustee has served in that capacity since he was originally elected or
appointed. In addition, each Trustee is currently a Trustee of two other
registered investment companies advised by Janus Capital: Janus Investment Funds
and Janus Adviser Series. Collectively, these three registered investment
companies consist of 51 series or funds.
The Trustees do not serve a specified term of office. Each Trustee will hold
office until the termination of the Trust or his earlier death, resignation,
retirement, incapacity, or removal. The retirement age for Trustees is 72. The
Funds' Nominating and Governance Committee will consider nominees for the
position of Trustee recommended by shareholders.
TRUSTEES
Number of
Portfolios in
Fund Complex
Length of Principal Occupations Overseen Other Directorships
Name, Age and Address Positions Held with Fund Time Served During the Past Five Years by Trustee Held by Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Interested Trustee
Thomas H. Bailey* President, Chairman 5/93-Present President, Chairman, Chief 51 N/A
100 Fillmore Street and Trustee Executive Officer and Director
Denver, CO 80206 of Janus Capital. Formerly,
Age 64 Director (1997-2001) of Janus
Distributors, Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Independent Trustees
Dennis B. Mullen Trustee 9/93-Present Private Investor. Formerly 51 N/A
100 Fillmore Street (1997-1998) Chief Financial
Denver, CO 80206 Officer - Boston Market Concepts,
Age 58 Boston Chicken, Inc., Golden, CO
(a restaurant chain)
James T. Rothe Trustee 1/97-Present Distinguished Visiting Professor 51 Director, Analytical
100 Fillmore Street of Business, Thunderbird Surveys, Inc.;
Denver, CO 80206 (American Graduate School of Director, Optika,
Age 58 International Management), Inc.; Director,
Phoenix, AZ, and Professor of Neocore Corp.
Business, University of Colorado,
Colorado Springs, CO. Formerly
(1988-1999) Principal of Phillips-
Smith Retail Group, Colorado
Springs, CO (a venture capital
firm)
William D. Stewart Trustee 9/93-Present Corporate Vice President and 51 N/A
100 Fillmore Street General Manager of MKS
Denver, CO 80206 Instruments - HPS Products,
Age 57 Boulder, CO (a manufacturer of
vacuum fittings and valves)
Martin H. Waldinger Trustee 9/93-Present Consultant 51 N/A
100 Fillmore Street
Denver, CO 80206
Age 63
- ------------------------------------------------------------------------------------------------------------------------------------
*Mr. Bailey is an "interested person" of the Trust by virtue of his positions
with Janus Capital.
86 JANUS ASPEN SERIES / DECEMBER 31, 2001
OFFICERS
Term of Office* Principal Occupations
Name, Age and Address Positions Held with Fund and Length of Time Served During the Past Five Years
- -----------------------------------------------------------------------------------------------------------------------------------
Laurence J. Chang** Executive Vice President and Co-Portfolio 1/00-Present Vice President of Janus Capital.
100 Fillmore Street Manager Worldwide Growth Portfolio Formerly, Analyst (1993-1998)
Denver, CO 80206 for Janus Capital.
Age 36
David J. Corkins** Executive Vice President and Portfolio 11/97-Present Vice President of Janus Capital.
100 Fillmore Street Manager Growth and Income Portfolio Formerly, Analyst (1995-1997)
Denver, CO 80206 for Janus Capital.
Age 35
David C. Decker** Executive Vice President and Portfolio 12/99-Present Vice President of Janus Capital.
100 Fillmore Street Manager Strategic Value Portfolio
Denver, CO 80206
Age 35
James P. Goff** Executive Vice President and Portfolio 9/93-1/02 Vice President of Janus Capital.
100 Fillmore Street Manager Aggressive Growth Portfolio
Denver, CO 80206
Age 37
Helen Young Hayes** Executive Vice President and Co-Portfolio 3/94-Present Vice President and Director of
100 Fillmore Street Manager International Growth Portfolio Janus Capital.
Denver, CO 80206 and Worldwide Growth Portfolio
Age 39
C. Mike Lu** Executive Vice President and Portfolio 12/99-Present Vice President of Janus Capital.
100 Fillmore Street Manager Global Technology Portfolio Formerly, Analyst (1991-1998) for
Denver, CO 80206 Janus Capital.
Age 32
Brent A. Lynn** Executive Vice President and Co-Portfolio 1/01-Present Vice President of JanusCapital.
100 Fillmore Street Manager International Growth Portfolio Formerly, Analyst (1991-2001) for
Denver, CO 80206 Janus Capital.
Age 37
Thomas R. Malley** Executive Vice President and Portfolio 12/99-Present Vice President of Janus Capital.
100 Fillmore Street Manager Global Life Sciences Portfolio Formerly, Analyst (1991-1998) for
Denver, CO 80206 Janus Capital.
Age 33
Karen L. Reidy** Executive Vice President and Portfolio 1/00-Present Vice President of Janus Capital.
100 Fillmore Street Manager Balanced Portfolio and Formerly, Analyst (1995-1999)
Denver, CO 80206 Core Equity Portfolio of Janus Capital.
Age 34
Blaine P. Rollins** Executive Vice President and Portfolio 1/00-Present Vice President of Janus Capital.
100 Fillmore Street Manager Growth Portfolio
Denver, CO 80206
Age 34
Scott W. Schoelzel** Executive Vice President and Portfolio 5/97-Present Vice President of Janus Capital.
100 Fillmore Street Manager Capital Appreciation Portfolio
Denver, CO 80206
Age 43
Ronald V. Speaker** Executive Vice President and Portfolio 5/93-Present Vice President of Janus Capital.
100 Fillmore Street Manager Flexible Income Portfolio
Denver, CO 80206
Age 37
J. Eric Thorderson** Executive Vice President and Portfolio 1/01-Present Vice President of Janus Capital.
100 Fillmore Street Manager Money Market Portfolio Formerly, Senior Analyst (1996-1999)
Denver, CO 80206 for Janus Capital.
Age 40
- -----------------------------------------------------------------------------------------------------------------------------------
*Officers are elected annually by the Trustees for a one-year term.
**"Interested person" of the Trust by virtue of positions with Janus Capital.
JANUS ASPEN SERIES / DECEMBER 31, 2001 87
Trustees and Officers (continued) (unaudited)
Term of Office* Principal Occupations
Name, Age and Address Positions Held with Fund and Length of Time Served During the Past Five Years
- -----------------------------------------------------------------------------------------------------------------------------------
Jason P. Yee** Executive Vice President and Portfolio 3/01-Present Vice President of Janus Capital.
100 Fillmore Street Manager Global Value Portfolio Formerly, Analyst (1992-1997)
Denver, CO 80206 for Janus Capital.
Age 32
Thomas A. Early** Vice President and General Counsel 3/98-Present Vice President, General Counsel and
100 Fillmore Street Secretary of Janus Capital; Vice
Denver, CO 80206 President, General Counsel, Secretary
Age 47 and Director of Janus Distributors,
Inc., Janus Service Corporation, Janus
Capital International Ltd., Janus
Institutional Services, Inc., and Janus
International Holding Company; Vice
President. General Counsel and Director
to Janus International (Asia) Limited
and Janus International Limited; Vice
President, General Counsel and
Secretary to the Janus Foundation and
Director for Janus Capital Trust
Manager Limited and Janus World Funds.
Formerly, Executive Vice President and
General Counsel/Mutual Funds (1994-
1998) of Prudential Insurance Company.
Bonnie M. Howe** Vice President 12/99-Present Vice President and Assistant General
100 Fillmore Street Counsel to Janus Capital, Janus
Denver, CO 80206 Distributors, Inc. and Janus Service
Age 36 Corporation. Formerly, Assistant Vice
President (1997-1999) and Associate
Counsel (1995-1999) for Janus Capital
and Assistant Vice President (1998-
2000) for Janus Service Corporation.
Kelley Abbott Howes** Vice President and Secretary 12/99-Present Vice President and Assistant General
100 Fillmore Street Counsel to Janus Capital, Janus
Denver, CO 80206 Distributors, Inc. and Janus Service
Age 36 Corporation. Formerly, Assistant Vice
President (1997-1999) of Janus Capital;
Chief Compliance Officer, Director and
President (1997-1999) of Janus
Distributors, Inc.; and Assistant Vice
President (1998-2000) of Janus
Service Corporation.
Glenn P. O'Flaherty** Treasurer and Chief Accounting Officer 1/96-Present Vice President of Janus Capital.
100 Fillmore Street Formerly, Director of Fund Accounting
Denver, CO 80206 (1991-1997) of Janus Capital.
Age 43
Loren M. Starr** Vice President and Chief Financial Officer 9/01-Present Vice President of Finance, Treasurer
100 Fillmore Street and Chief Financial Officer of Janus
Denver, CO 80206 Capital. Formerly, Managing Director,
Age 40 Treasurer and Head of Corporate Finance
and Reporting (1998-2001) for Putnam
Investments; and Senior Vice President
of Financial Planning and Analysis
(1996-1998) for Lehman Brothers, Inc.
Heidi J. Walter** Vice President 4/00-Present Vice President and Assistant General
100 Fillmore Street Counsel to Janus Capital, Janus
Denver, CO 80206 Distributors, Inc. and Janus Service
Age 34 Corporation. Formerly, Vice President
and Senior Legal Counsel (1995-1999)
for Stein Roe & Farnham, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
*Officers are elected annually by the Trustees for a one-year term.
**"Interested person" of the Trust by virtue of positions with Janus Capital.
88 JANUS ASPEN SERIES / DECEMBER 31, 2001
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders
of Janus Aspen Series
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Janus Aspen Growth Portfolio, Janus
Aspen Aggressive Growth Portfolio, Janus Aspen Capital Appreciation Portfolio,
Janus Aspen Core Equity Portfolio, Janus Aspen Balanced Portfolio, Janus Aspen
Growth and Income Portfolio, Janus Aspen Strategic Value Portfolio, Janus Aspen
International Growth Portfolio, Janus Aspen Worldwide Growth Portfolio, Janus
Aspen Global Life Sciences Portfolio, Janus Aspen Global Technology Portfolio,
Janus Aspen Global Value Portfolio, Janus Aspen Flexible Income Portfolio and
Janus Aspen Money Market Portfolio (constituting the Janus Aspen Series,
hereafter referred to as the "Portfolios") at December 31, 2001, the results of
each of their operations, the changes in each of their net assets and the
financial highlights for each of the periods indicated, in conformity with
accounting principles generally accepted in the United States of America. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Portfolios' management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with auditing standards generally accepted in the United States of
America, which require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 2001, by
correspondence with the custodians and brokers, provide a reasonable basis for
the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Denver, Colorado
February 7, 2002
JANUS ASPEN SERIES / DECEMBER 31, 2001 89
[LOGO] JANUS
100 Fillmore Street
Denver, Colorado 80206-4923
1-800-504-4440
Portfolios distributed by Janus Distributors, Inc. (1/02) This material must be
preceded or accompanied by a prospectus.
[LOGO] Recycled Paper
INSJASANNUAL
December 31, 2001
Berger Institutional
Products Trust
Annual Report
[BERGER FUNDS LOGO]
BERGER IPT-GROWTH
BERGER IPT-LARGE CAP GROWTH FUND
BERGER IPT-SMALL COMPANY GROWTH FUND
BERGER IPT-NEW GENERATION FUND
BERGER IPT-INTERNATIONAL FUND
This report reflects the financial position of the Fund at December 31, 2001 and
the results of operations and changes in its net assets for the periods
indicated.
3
Berger IPT Funds
TABLE OF CONTENTS
===============================================================================
<Table>
BERGER IPT FUNDS
Berger IPT-Growth Fund ..................................................... 4
Berger IPT- Large Cap Growth Fund .......................................... 8
Berger IPT-Small Company Growth Fund ....................................... 12
Berger IPT-New Generation Fund ............................................. 16
Berger IPT-International Fund .............................................. 20
FINANCIAL STATEMENTS AND NOTES
Statements of Assets and Liabilities ....................................... 25
Statements of Operations ................................................... 26
Statements of Changes in Net Assets ........................................ 27
Notes to Financial Statements .............................................. 30
FINANCIAL HIGHLIGHTS ....................................................... 35
REPORT OF INDEPENDENT ACCOUNTANTS .......................................... 38
OTHER MATTERS (UNAUDITED) .................................................. 39
FUND TRUSTEES AND OFFICERS (UNAUDITED) ..................................... 40
</Table>
This material must be preceded or accompanied by a prospectus. Berger
Distributors LLC ~ Member NASD (2/02)
Berger IPT Funds o December 31, 2001 Annual Report
4
BERGER IPT- Ticker Symbol BGROX
GROWTH FUND PORTFOLIO MANAGER COMMENTARY JAY W. TRACEY, CFA
================================================================================
Market Conditions
The past year was one of the most difficult investment periods on record,
especially for growth stock investors. Growth stocks underperformed the market
in general and value stocks in particular for two main reasons. First, the
economy slowed suddenly. Although this affected the earnings growth of most
companies, the impact fell harder on companies that had been posting superior
growth. Second, valuations accorded to companies with superior growth had
reached much higher-than-average levels by March of 2000, reflecting their
higher growth rates. Those premiums shrank with the companies' slowing revenue
and earnings growth. In general, the combination of declining growth rates and
lower valuations caused growth stock prices to drop more than the market.
Fund Performance
Berger IPT-Growth Fund (the "Fund") declined in value by 32.51% for
the year ended December 31, 2001, compared with a 19.63% decline in the Russell
3000 Growth Index(1) and an 11.88% decline in the S&P 500 Index.(2)
Despite a good fourth-quarter rebound, the technology sector was a significant
source of underperformance in 2001. As a result of relatively high valuations at
the beginning of the year, as well as slowing growth rates over the course of
the year, most technology stocks experienced a very tough year. Communications
technology stocks were among the hardest hit this period as carriers and
corporate customers severely cut capital spending on communications equipment.
The Fund's holdings in such stocks as CIENA Corp., Nortel Networks Corp.,
Corning, Inc., JDS Uniphase Corp. and ONI Systems Corp. were sold during the
year, but not before having a negative impact on the Fund's performance.
There were a few bright spots within the technology sector, including Concurrent
Computer Corp., which is benefiting from increasing acceptance of its
video-on-demand systems by cable TV companies. We initiated a new position in
customer relationship management (CRM) software-maker Peoplesoft, Inc. that
positively contributed to the Fund's performance. The Fund's position in Texas
Instruments, Inc. was also a positive contributor as a result of the improved
outlook for the company's wireless communications products in the fourth
quarter.
In general, healthcare companies were positive contributors to the Fund's
performance this period. Health sciences stocks Amgen, Inc., Celgene Corp. and
Sepracor, Inc. were strong enough in the fourth quarter to have a positive
impact for the year. Hospital management company Tenet Healthcare Corp., which
was added in the third quarter, also made positive contributions to the Fund's
performance. Despite above-average relative sales and earnings growth,
pharmaceutical stocks posted mixed results in 2001. American Home Products Corp.
made a positive contribution, while Pfizer, Inc. had a slightly negative impact
on Fund performance.
The consumer sector was also mixed. Restaurant stocks, including Brinker
International, Inc. and P.F. Chang's China Bistro, Inc., added to the Fund's
performance, while broadcast companies such as Clear Channel Communications,
Inc. suffered from a weak advertising environment. Retail stocks were among the
stock market's best performers, and the Fund benefited from its holdings in Best
Buy Co., Inc., Bed Bath & Beyond, Inc., and Abercrombie & Fitch Co.
The Fund's financial holdings posted mixed results as well. Investors Financial
Services Corp., Capital One Financial Corp. and American International Group,
Inc. were modestly positive performers; AmeriCredit Corp. and Washington Mutual,
Inc. were underperformers. Lending institutions have benefited from a positively
sloped yield curve; however, with a slower economy, the "creditworthiness" of
their loan portfolios has deteriorated to some extent.
We began the year overweighted in energy companies, which contributed positively
to the Fund's performance in the first quarter. However, as oil and gas prices
and business fundamentals deteriorated in the second quarter, we significantly
reduced the Fund's energy weighting. In general, the Fund's energy holdings
contributed negatively to performance. Independent power producers Constellation
Energy Group, Inc. and Mirant Corp. also fell victim to the economic slowdown
and were sold.
Outlook
We believe we have addressed the issues that led to the Fund's underperformance
this past year and are looking forward to 2002. In our opinion, the Fund is
better balanced, not only with respect to sector weightings, but also with
regard to economic sensitivity. Technology and energy weightings were reduced,
while less economically sensitive healthcare and consumer sector weightings were
increased. We believe the outlook for the economy has improved in the last few
months as inventories have been worked down and consumer confidence has
improved. Fiscal and monetary policy have also become very stimulative, in our
opinion. The stock market has suffered two down years that have been
particularly hard on growth stocks. We are optimistic that 2002 holds brighter
prospects for the stock market in general and for growth stocks in particular.
Past performance is no guarantee of future results.
(1)The Russell 3000 Growth Index, which includes reinvestment of dividends,
measures the performance of those Russell 3000 Index companies with higher
price-to-book ratios and higher forecasted growth values. The stocks in this
index are also members of either the Russell 1000 Growth or the Russell 2000
Growth indexes. The Index is unmanaged, and investors cannot actually make
investments in the Index.
(2)The S&P 500 Index is an unmanaged index, with dividends reinvested, that
consists of the common stocks of 500 publicly traded U.S. companies. It is a
generally recognized indicator used to measure overall performance of the U.S.
stock market. One cannot invest directly in an index.
Berger IPT Funds o December 31, 2001 Annual Report
5
Berger IPT Funds
PERFORMANCE OVERVIEW
================================================================================
Berger IPT-Growth Fund
Growth of $10,000
[GRAPH]
<Table>
<Caption>
12/31/01
Berger IPT-Growth Fund $11,412
Russell 3000 Growth Index $16,213
S&P 500 Index $19,103
</Table>
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2001
<Table>
One Year (32.51)%
Five Year 1.89%
Life of Fund (5/1/96) 2.36%
</Table>
Past performance is no guarantee of future results. Investment returns and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The Fund's change in value is compared to the
Russell 3000 Growth Index, the Fund's new benchmark index, and the S&P 500
Index, the Fund's previous benchmark.The Fund is changing its benchmark index so
that it correlates more closely to the investment style of the Fund.
================================================================================
SCHEDULE OF INVESTMENTS
<Table>
<Caption>
December 31, 2001
- -------------------------------------------------------------------------------
Shares Value
- -------------------------------------------------------------------------------
COMMON STOCK (91.11%)
Aerospace/Defense (0.60%)
500 Northrop Grumman Corp. $ 50,405
- -------------------------------------------------------------------------------
Banks - Super Regional (0.57%)
800 Northern Trust Corp. 48,176
- -------------------------------------------------------------------------------
Beverages - Soft Drinks (1.50%)
2,600 Pepsico, Inc. 126,594
- -------------------------------------------------------------------------------
Commercial Services - Miscellaneous (1.70%)
3,900 The Corporate Executive Board Co.* 143,130
- -------------------------------------------------------------------------------
Commercial Services - Schools (0.82%)
1,900 Education Management Corp.* 68,875
- -------------------------------------------------------------------------------
Commercial Services - Security/Safety (0.92%)
2,200 Macrovision Corp.* 77,484
- -------------------------------------------------------------------------------
Computer - Manufacturers (3.16%)
5,500 Concurrent Computer Corp.* 81,675
1,200 International Business Machines Corp. 145,152
3,200 Sun Microsystems, Inc.* 39,360
- -------------------------------------------------------------------------------
266,187
- -------------------------------------------------------------------------------
Common Stock (91.11%) - continued
Computer - Memory Devices (0.70%)
2,700 Network Appliance, Inc.* $ 59,049
- -------------------------------------------------------------------------------
Computer - Networking (0.87%)
3,000 McDATA Corp. - Class A* 73,500
- -------------------------------------------------------------------------------
Computer Software - Desktop (3.18%)
3,000 Borland Software Corp.* 46,980
3,340 Microsoft Corp.* 221,275
- -------------------------------------------------------------------------------
268,255
- -------------------------------------------------------------------------------
Computer Software - Enterprise (5.21%)
7,400 J.D. Edwards & Co.* 121,730
2,000 Oracle Corp.* 27,620
3,000 Peoplesoft, Inc.* 120,600
5,400 Peregrine Systems, Inc.* 80,082
2,000 VERITAS Software Corp.* 89,660
- -------------------------------------------------------------------------------
439,692
- -------------------------------------------------------------------------------
Computer Software - Security (0.94%)
2,000 Check Point Software Technologies Ltd.* 79,780
- -------------------------------------------------------------------------------
</Table>
Berger IPT Funds o December 31, 2001 Annual Report
6
Berger IPT-
Growth Fund
================================================================================
SCHEDULE OF INVESTMENTS
<Table>
<Caption>
December 31, 2001
- -------------------------------------------------------------------------------
Shares Value
- -------------------------------------------------------------------------------
Common Stock (91.11%) - continued
Diversified Operations (5.59%)
5,700 AOL Time Warner, Inc.* $ 182,970
4,900 Tyco International Ltd. 288,610
- -------------------------------------------------------------------------------
471,580
- -------------------------------------------------------------------------------
Electrical - Equipment (2.13%)
4,490 General Electric Co. 179,959
- -------------------------------------------------------------------------------
Electronics - Measuring Instruments (0.55%)
1,200 Waters Corp.* 46,500
- -------------------------------------------------------------------------------
Electronics - Miscellaneous Components (0.61%)
2,700 RF Micro Devices, Inc.* 51,921
- -------------------------------------------------------------------------------
Electronics - Miscellaneous Products (0.62%)
1,300 Celestica, Inc.* 52,507
- -------------------------------------------------------------------------------
Electronics - Semiconductor Manufacturing (3.28%)
1,500 Analog Devices, Inc.* 66,585
3,400 GlobespanVirata, Inc.* 44,030
1,400 Intersil Corp. - Class A* 45,150
3,900 Sanmina SCI Corp.* 77,610
1,100 Xilinx, Inc.* 42,955
- -------------------------------------------------------------------------------
276,330
- -------------------------------------------------------------------------------
Finance - Mortgage & Related Services (1.01%)
1,300 Freddie Mac 85,020
- -------------------------------------------------------------------------------
Financial Services - Miscellaneous (3.12%)
5,000 Concord EFS, Inc.* 163,900
1,500 Investors Financial Services Corp. 99,315
- -------------------------------------------------------------------------------
263,215
Insurance - Property/Casualty/Title (1.79%)
1,900 American International Group, Inc. 150,860
- -------------------------------------------------------------------------------
Internet - E*Commerce (1.27%)
1,600 eBay, Inc. * 107,040
- -------------------------------------------------------------------------------
Internet - Network Security/Solutions (1.67%)
3,700 VeriSign, Inc. * 140,748
- -------------------------------------------------------------------------------
Internet - Software (0.84%)
3,200 Quest Software, Inc.* 70,752
- -------------------------------------------------------------------------------
Media - Cable TV (6.21%)
5,920 CHARTER COMMUNICATIONS, INC.* 97,265
2,950 Comcast Corp. - Special Class A* 106,200
1,970 Cox Communications, Inc. - Class A* 82,563
3,300 EchoStar Communications Corp. -
Class A* 90,651
10,484 Liberty Media Corp. - Class A* 146,776
- -------------------------------------------------------------------------------
523,455
- -------------------------------------------------------------------------------
Common Stock (91.11%) - continued
Medical - Biomedical/Genetics (7.13%)
1,200 Abgenix, Inc * $ 40,368
1,500 Amgen, Inc.* 84,660
2,700 Celgene Corp.* 86,184
2,300 Genentech, Inc.* 124,775
600 IDEC Pharmaceuticals Corp.* 41,358
4,600 Medarex, Inc.* 82,616
2,000 Medimmune, Inc.* 92,700
2,000 Millenium Pharmaceuticals, Inc.* 49,020
- -------------------------------------------------------------------------------
601,681
- -------------------------------------------------------------------------------
Medical - Drug/Diversified (1.06%)
1,600 Abbott Laboratories 89,200
- -------------------------------------------------------------------------------
Medical - Ethical Drugs (9.48%)
3,700 American Home Products Corp. 227,032
2,000 King Pharmaceuticals, Inc.* 84,260
7,770 Pfizer, Inc. 309,635
4,200 Pharmacia Corp. 179,130
- -------------------------------------------------------------------------------
800,057
- -------------------------------------------------------------------------------
Medical - Hospitals (3.09%)
4,900 Health Management Associates, Inc. -
Class A* 90,160
2,900 Tenet Healthcare Corp.* 170,288
- -------------------------------------------------------------------------------
260,448
Medical - Instruments (1.64%)
2,700 Medtronic, Inc. 138,267
- -------------------------------------------------------------------------------
Medical - Products (2.13%)
2,400 Baxter International, Inc. 128,712
900 Sepracor, Inc.* 51,354
- -------------------------------------------------------------------------------
180,066
- -------------------------------------------------------------------------------
Medical - Wholesale Drugs/Sundries (0.77%)
1,000 Cardinal Health, Inc. 64,660
- -------------------------------------------------------------------------------
Oil & Gas - International Integrated (0.98%)
2,500 Suncor Energy, Inc. 82,350
- -------------------------------------------------------------------------------
Oil & Gas - Machinery & Equipment (1.15%)
2,600 Weatherford International, Inc.* 96,876
- -------------------------------------------------------------------------------
Retail - Apparel/Shoe (0.54%)
1,300 AnnTaylor Stores Corp.* 45,500
- -------------------------------------------------------------------------------
Retail - Consumer Electronics (1.41%)
1,600 Best Buy Co., Inc.* 119,168
- -------------------------------------------------------------------------------
Retail - Major Discount Chains (1.71%)
2,500 Wal-Mart Stores, Inc. 143,875
- -------------------------------------------------------------------------------
</Table>
Berger IPT Funds o December 31, 2001 Annual Report
7
Berger IPT Funds
================================================================================
SCHEDULE OF INVESTMENTS
<Table>
<Caption>
December 31, 2001
- -------------------------------------------------------------------------------
Shares/Par Value Value
- -------------------------------------------------------------------------------
Common Stock (91.11%) - continued
Retail - Miscellaneous/Diversified (0.88%)
2,200 Bed Bath & Beyond, Inc. * $ 74,580
- -------------------------------------------------------------------------------
Retail - Restaurants (4.27%)
5,900 Brinker International, Inc. * 175,584
2,800 P.F. Chang's China Bistro, Inc. * 132,440
1,000 Panera Bread Co. * 52,040
- -------------------------------------------------------------------------------
360,064
- -------------------------------------------------------------------------------
Retail/Wholesale - Building Products (1.81%)
3,000 Home Depot, Inc. 153,030
- -------------------------------------------------------------------------------
Telecommunications - Cellular (1.59%)
5,500 Sprint Corp. (PCS Group) * 134,255
- -------------------------------------------------------------------------------
Telecommunications - Equipment (2.61%)
4,400 Nokia Corp. - Spon. ADR 107,932
1,100 QUALCOMM, Inc. * 55,550
2,000 UTStarcom, Inc. * 57,000
- -------------------------------------------------------------------------------
220,482
- -------------------------------------------------------------------------------
Total Common Stock
(Cost $7,322,913) 7,685,573
- -------------------------------------------------------------------------------
U.S. Government Agency Obligations (4.74%)
$400,000 Fannie Mae Discount Note; 1.45%,
1/2/2002 399,984
- -------------------------------------------------------------------------------
Total U.S. Government Agency Obligations
(Cost $399,984) 399,984
- -------------------------------------------------------------------------------
Repurchase Agreement (3.72%)
$314,000 State Street Repurchase Agreement,
1.40% dated December 31, 2001,
to be repurchased at $314,024 on
January 2, 2002, collateralized by
FHLB Agency Note, 5.00% -
February 14, 2003 with a value of
$324,464 314,000
- -------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $314,000) 314,000
- -------------------------------------------------------------------------------
Total Investments (Cost $8,036,897) (99.57%) 8,399,557
Total Other Assets, Less Liabilities (0.43%) 36,220
- -------------------------------------------------------------------------------
Net Assets (100.00%) $8,435,777
- -------------------------------------------------------------------------------
</Table>
*Non-income producing security.
ADR - American Depositary Receipt.
FHLB - Federal Home Loan Bank.
See notes to financial statements.
Berger IPT Funds o December 31, 2001 Annual Report
8
BERGER IPT-LARGE CAP Ticker Symbol BGINX
GROWTH FUND PORTFOLIO MANAGER COMMENTARY STEVEN L. FOSSEL, CFA
================================================================================
Market Conditions
The past year was one of the most difficult investment periods on record,
especially for growth stock investors. Growth stocks underperformed the market
in general and value stocks in particular for two main reasons. First, the
economy slowed suddenly. Although this affected the earnings growth of most
companies, the impact fell harder on companies that had been posting superior
growth. Second, valuations accorded to companies with superior growth had
reached much higher-than-average levels, reflecting their higher growth rates,
and those premiums shrank with the companies' slowing revenue and earnings
growth. The combination of declining growth rates and lower valuations caused
growth stock prices to drop more than the market in general.
Fund Performance
Against this difficult backdrop, the Berger IPT-Large Cap Growth Fund (the
"Fund") was down 25.26% for the year ended December 31, 2001, compared with a
20.42% decline in the Russell 1000 Growth Index(1) and an 11.88% decline in the
S&P 500 Index(2). Over the last year, most major industry sectors performed
poorly with technology, communications, utility and energy services being the
hardest hit. The key reason for the Fund's underperformance was that we held
many companies, especially technology companies, whose fast growth rates and
higher valuations suffered sharp declines.
Although we significantly reduced our technology exposure throughout the year,
we did not foresee the magnitude or duration of the decline in this sector. Many
of our technology stocks were down dramatically, and the Fund particularly
suffered from its large holdings of networking, storage and software stocks.
Among networking stocks, JDS Uniphase Corp., Corning, Inc., Nortel Networks
Corp. and Cisco Systems, Inc. dragged down performance. So did the Fund's
storage holdings, including EMC Corp. and Network Appliance, Inc. In software,
Oracle Corp. and VeriSign, Inc. had a negative impact on Fund performance.
Believing that many networking stocks will experience a protracted decline in
orders, we sold our positions in Corning, Nortel and JDS Uniphase. We are more
sanguine about the outlook for several software stocks. VeriSign, for example,
has continued to show strong growth throughout this period, so we increased our
position in the stock. The company has a market-share lead, strong management
and high barriers to entry in its business. We also continue to hold Veritas
Software Corp. because it has improved its competitive position and should
benefit from an economic recovery. On a positive note, technology started
performing better later in the year and International Business Machines Corp.,
Microsoft Corp. and Intel Corp. all contributed positively to the Fund's
performance.
The energy and utility sectors were strong in the beginning of the year but much
weaker the second half. Many of the Fund's energy services holdings such as
Nabors Industries, Inc. were good performers in the first part of the year as a
result of strong commodity prices and high drilling activity. This trend
reversed itself in the second half of the year as slowing economic activity
caused deterioration in the supply/demand balance. We sold several holdings,
including Nabors Industries, Inc., at the beginning of this downward trend.
In other sectors the news was less bleak with some bright spots. In
communications, the Fund suffered a decline in Qwest Communications
International, Inc. but enjoyed a rise in Sprint Corp. (PCS Group). Retail
holdings Wal-Mart Stores, Inc. and Best Buy Co., Inc. did well while The Kroger
Co. did poorly. Financial stocks showed a similar mixed pattern.
Market-sensitive stocks such as Charles Schwab & Co., Inc. and Morgan Stanley
Dean Witter & Co. suffered declines, while consistent growth companies like
Freddie Mac and Fifth Third Bancorp. were positive contributors to performance.
Individual company execution and stock picking were crucial in these sectors.
At the end of the period, healthcare was the Fund's second-largest sector. We
increased our holdings in this sector over the year because many companies are
showing strong growth that is not affected by the current economic weakness. We
purchased several healthcare services companies such as Tenet Healthcare Corp.
and Anthem, Inc. that were positive contributors to performance. Accelerating
sales growth in hospital stocks such as Tenet Healthcare and HCA, Inc. is
resulting in margin expansion and better-than-expected earnings growth. American
Home Products Corp. and Medtronic, Inc. were also strong performers for the
Fund. We continue to own several biotechnology stocks such as Genentech, Inc.
that declined for the year on the contraction in industry valuations but remain
attractive as a result of strong growth in existing products and an exciting
product pipeline.
Outlook
We believe we have addressed the issues that led to the Fund's underperformance
this past year and are looking forward to a fresh start for the coming year. In
our opinion the Fund is better balanced, with decreased exposure to technology
and increased exposure to the more stable healthcare, consumer and financial
sectors. Stimulative economic and fiscal policy should also help the economy and
the stock market in general.
Past performance is no guarantee of future results.
(1)The Russell 1000 Growth Index, which includes reinvestment of dividends,
measures the performance of those Russell 1000 companies with higher
price-to-book ratios and higher forecasted growth values. The Index is
unmanaged, and investors cannot actually make investments in the Index.
(2)The S&P 500 Index is an unmanaged index, with dividends reinvested, that
consists of the common stocks of 500 publicly traded U.S. companies. It is a
generally recognized indicator used to measure overall performance of the U.S.
stock market. One cannot invest directly in an index.
Berger IPT Funds o December 31, 2001 Annual Report
9
PERFORMANCE OVERVIEW
Berger IPT Funds
================================================================================
BERGER IPT-LARGE
CAP GROWTH FUND
GROWTH OF $10,000
<Table>
12/31/01
Berger IPT-Large Cap Growth Fund $18,471
Russell 1000 Growth Index $16,893
S&P 500 Index $19,103
</Table>
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2001
<Table>
One Year (25.26)%
Five Year 10.64%
Life of Fund (5/1/96) 11.43%
</Table>
Past performance is no guarantee of future results. Investment returns and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The Fund's change in value is compared to the
Russell 1000 Growth Index, the Fund's new benchmark index, and the S&P 500
Index, the Fund's previous benchmark.The Fund is changing its benchmark index so
that it correlates more closely to the investment style of the Fund.
================================================================================
SCHEDULE OF INVESTMENTS
<Table>
<Caption>
December 31, 2001
- -------------------------------------------------------------------------------
Shares Value
- -------------------------------------------------------------------------------
Common Stock (93.66%)
Aerospace/Defense (1.88%)
3,000 Northrop Grumman Corp. $ 302,430
10,000 Raytheon Co. 324,700
- -------------------------------------------------------------------------------
627,130
- -------------------------------------------------------------------------------
Banks - Money Center (2.59%)
17,073 Citigroup, Inc. 861,845
- -------------------------------------------------------------------------------
Banks - Super Regional (2.73%)
8,825 FIFTH THIRD BANCORP. 541,237
6,110 Northern Trust Corp. 367,944
- -------------------------------------------------------------------------------
909,181
- -------------------------------------------------------------------------------
Beverages - Soft Drinks (1.02%)
7,000 Pepsico, Inc. 340,830
- -------------------------------------------------------------------------------
Commercial Services - Advertising (2.15%)
8,000 Omnicom Group, Inc. 714,800
- -------------------------------------------------------------------------------
Common Stock (93.66%) - continued
Computer - Manufacturers (3.36%)
5,690 International Business
Machines Corp. $ 688,262
35,000 Sun Microsystems, Inc. * 430,500
- -------------------------------------------------------------------------------
1,118,762
- -------------------------------------------------------------------------------
Computer - Networking (1.54%)
28,318 Cisco Systems, Inc. * 512,839
- -------------------------------------------------------------------------------
Computer - Services (2.07%)
10,000 Amdocs Ltd. * 339,700
5,090 Electronic Data Systems Corp. 348,920
- -------------------------------------------------------------------------------
688,620
- -------------------------------------------------------------------------------
Computer Software - Desktop (3.81%)
19,160 Microsoft Corp. * 1,269,350
- -------------------------------------------------------------------------------
Computer Software - Enterprise (1.86%)
28,610 Oracle Corp. * 395,104
5,000 VERITAS Software Corp. * 224,150
- -------------------------------------------------------------------------------
619,254
- -------------------------------------------------------------------------------
</Table>
Berger IPT Funds o December 31, 2001 Annual Report
10
BERGER IPT-LARGE CAP
GROWTH FUND
================================================================================
SCHEDULE OF INVESTMENTS
<Table>
<Caption>
December 31, 2001
- -------------------------------------------------------------------------------
Shares Value
- -------------------------------------------------------------------------------
Common Stock (93.66%) - continued
Computer Software - Security (1.80%)
15,000 Check Point Software
Technologies Ltd.* $ 598,350
- -------------------------------------------------------------------------------
Diversified Operations (6.26%)
20,080 AOL Time Warner, Inc.* 644,568
24,450 Tyco International Ltd. 1,440,105
- -------------------------------------------------------------------------------
2,084,673
- -------------------------------------------------------------------------------
Electrical - Equipment (3.66%)
30,420 General Electric Co. 1,219,234
- -------------------------------------------------------------------------------
Electronics - Miscellaneous Products (1.30%)
10,700 Celestica, Inc.* 432,173
- -------------------------------------------------------------------------------
Electronics - Semiconductor Equipment (1.82%)
12,230 Kla-Tencor Corp.* 606,119
- -------------------------------------------------------------------------------
Electronics - Semiconductor Manufacturing (3.86%)
7,000 Analog Devices, Inc.* 310,730
12,000 Intel Corp. 377,400
15,000 Sanmina SCI Corp.* 298,500
10,700 Texas Instruments, Inc. 299,600
- -------------------------------------------------------------------------------
1,286,230
- -------------------------------------------------------------------------------
Finance - Investment Brokers (1.22%)
7,260 Morgan Stanley Dean Witter & Co. 406,124
- -------------------------------------------------------------------------------
Finance - Mortgage & Related Services (1.43%)
7,300 Freddie Mac 477,420
- -------------------------------------------------------------------------------
Financial Services - Miscellaneous (1.95%)
19,800 Concord EFS, Inc.* 649,044
- -------------------------------------------------------------------------------
Insurance - Property/Casualty/Title (2.09%)
8,780 American International Group, Inc. 697,132
- -------------------------------------------------------------------------------
Internet - Network Security/Solutions (2.52%)
22,100 VeriSign, Inc.* 840,684
- -------------------------------------------------------------------------------
Media - Cable TV (6.27%)
20,293 Charter Communications, Inc.* 333,414
13,350 Comcast Corp. - Special Class A* 480,600
26,500 EchoStar Communications Corp. -
Class A* 727,955
39,170 Liberty Media Corp. - Class A* 548,380
- -------------------------------------------------------------------------------
2,090,349
- -------------------------------------------------------------------------------
Medical - Biomedical/Genetics (4.07%)
10,380 Amgen, Inc.* 585,847
14,230 Genentech, Inc.* 771,978
- -------------------------------------------------------------------------------
1,357,825
- -------------------------------------------------------------------------------
Common Stock (93.66%) - continued
Medical - Drug/Diversified (1.17%)
7,000 Abbott Laboratories $ 390,250
- -------------------------------------------------------------------------------
Medical - Ethical Drugs (8.94%)
17,890 American Home Products Corp. 1,097,730
28,300 Pfizer, Inc. 1,127,755
17,680 Pharmacia Corp. 754,052
- -------------------------------------------------------------------------------
2,979,537
- -------------------------------------------------------------------------------
Medical - Hospitals (3.37%)
11,500 HCA, Inc. 443,210
11,550 Tenet Healthcare Corp.* 678,216
- -------------------------------------------------------------------------------
1,121,426
- -------------------------------------------------------------------------------
Medical - Instruments (1.68%)
10,950 Medtronic, Inc. 560,750
- -------------------------------------------------------------------------------
Medical - Products (1.38%)
8,600 Baxter International, Inc. 461,218
- -------------------------------------------------------------------------------
Medical - Wholesale Drugs/Sundries (1.51%)
7,800 Cardinal Health, Inc. 504,348
- -------------------------------------------------------------------------------
Oil & Gas - International Integrated (2.00%)
10,720 Suncor Energy, Inc. 353,117
4,480 TotalFinaElf SA - Spon. ADR 314,675
- -------------------------------------------------------------------------------
667,792
Oil & Gas - Machinery & Equipment (2.00%)
8,300 Baker Hughes, Inc. 302,701
9,800 Weatherford International, Inc.* 365,148
- -------------------------------------------------------------------------------
667,849
- -------------------------------------------------------------------------------
Oil & Gas - Production/Pipeline (1.10%)
14,300 The Williams Cos., Inc. 364,936
- -------------------------------------------------------------------------------
Retail - Consumer Electronics (1.23%)
5,500 Best Buy Co., Inc.* 409,640
- -------------------------------------------------------------------------------
Retail - Major Discount Chains (2.81%)
4,170 Target Corp. 171,179
13,300 Wal-Mart Stores, Inc. 765,415
- -------------------------------------------------------------------------------
936,594
- -------------------------------------------------------------------------------
Retail/Wholesale - Building Products (1.21%)
7,900 Home Depot, Inc. 402,979
- -------------------------------------------------------------------------------
Telecommunications - Cellular (1.58%)
21,620 Sprint Corp. (PCS Group)* 527,744
- -------------------------------------------------------------------------------
</Table>
Berger IPT Funds o December 31, 2001 Annual Report
11
Berger IPT Funds
================================================================================
SCHEDULE OF INVESTMENTS
<Table>
<Caption>
December 31, 2001
- -------------------------------------------------------------------------------
Shares/Par Value Value
- -------------------------------------------------------------------------------
COMMON STOCK (93.66%) - CONTINUED
Telecommunications - Equipment (2.42%)
18,334 Nokia Corp. - Spon. ADR $ 449,733
7,040 QUALCOMM, Inc.* 355,520
- -------------------------------------------------------------------------------
805,253
- -------------------------------------------------------------------------------
Total Common Stock
(Cost $30,807,421) 31,208,284
- -------------------------------------------------------------------------------
Corporate Debt - Convertible (1.24%)
Computer Software - Enterprise (1.24%)
$314,000 VERITAS Software Corp.;
1.86%, 8/13/2006 414,480
- -------------------------------------------------------------------------------
Total Corporate Debt - Convertible
(Cost $552,478) 414,480
- -------------------------------------------------------------------------------
Repurchase Agreement (4.18%)
$1,393,000 State Street Repurchase Agreement,
1.40% dated December 31, 2001,
to be repurchased at $1,393,108 on
January 2, 2002, collateralized by
FHLB Agency Note, 5.00% -
February 14, 2003 with a value of
$1,423,456 1,393,000
- -------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $1,393,000) 1,393,000
- -------------------------------------------------------------------------------
Total Investments (Cost $32,752,899) (99.08%) 33,015,764
Total Other Assets, Less Liabilities (0.92%) 307,114
- -------------------------------------------------------------------------------
Net Assets (100.00%) $33,322,878
</Table>
*Non-income producing security.
ADR - American Depositary Receipt.
FHLB - Federal Home Loan Bank
See notes to financial statements.
Berger IPT Funds o December 31, 2001 Annual Report
12
BERGER IPT-
SMALL COMPANY Ticker Symbol BSCOX
GROWTH FUND PORTFOLIO MANAGER COMMENTARY PAUL A. LaROCCO, CFA
================================================================================
Market Conditions
The past fiscal year was one of the most difficult periods on record, especially
for growth stock investors. The main reason for this was that valuations
compressed as the market declined. More important in our view, valuations of
stocks with extremely high growth rates shrank more than those with lower growth
rates. Because the Fund focuses on high-growth companies, the effect on its
stocks was quite pronounced. Additionally, the economy slowed dramatically early
in the year, affecting the revenue and earnings growth of many growth-oriented
companies.
Fund Performance
Berger IPT-Small Cap Growth Fund (the "Fund") suffered significantly from this
valuation decrease in nearly every area in which it was invested, declining by
33.47% for the year ended December 31, 2001, compared with a 9.23% decline in
the Russell 2000 Growth Index,1 and a 2.49% decline in the Russell 2000 Index.2
Clearly, these results are immensely disappointing. This has been a painful year
for growth investors and a humbling one for growth portfolio managers. Although
we did make changes to the Fund as a result of the sudden slowdown in growth
rates, we could have responded more quickly to the rapidly deteriorating
fundamentals.
Not surprisingly, technology holdings had the largest negative impact on Fund
performance this period. We reduced some technology holdings early in the year
in response to slowing growth; however, it remains a prominent weighting. Our
conviction in the future of fundamentally sound technology companies remains
strong, and the changes were made to balance near-term fundamentals with
longer-term opportunities. The moves were part of our overall strategy to
position the Fund as well as possible for an eventual economic recovery.
Some of the largest declines in the technology sector were among communications
equipment providers such as Tollgrade Communications, Inc., Lightpath
Technologies, Inc., and Redback Networks, Inc. All of these stocks were sold
during the period based on our analysis that prospects for eventual growth
reacceleration had diminished too much to justify remaining invested in them.
However, the sales were made too late to avoid a significant negative impact on
performance.
Elsewhere in technology, despite stock-price declines, we remain invested in
some companies that continue to gain market share, including Quest Software,
Inc., which provides software to enhance the performance and management of
databases, and Retek, Inc., an enterprise software vendor focused on the retail
industry. Although these companies have seen a slowdown in business and a
contraction in valuation, we believe their prospects for a reacceleration of
growth are good. Also, we believe they are competitively well-positioned for an
eventual recovery in the economy and in business spending.
Within the healthcare sector, stocks of service companies, such as specialty
pharmaceutical distributor Accredo Health, Inc. performed fairly well this
period. Biotechnology companies posted somewhat mixed results, largely a result
of their lack of near-term predictability despite what we believe is their
significant long-term growth potential. A few of the Fund's holdings, such as
IDEC Pharmaceuticals Corp., a company focused on cancer drugs, did relatively
well this period. However, biotechnology equipment provider Invitrogen Corp.
underperformed the Index, despite relatively good fundamental results. The Fund
benefited from companies added during the year, including First Horizon
Pharmaceutical Corp. and Celgene Corp., both of which are profiting from strong
sales.
On the consumer side of the portfolio, the Fund fared better. Whole Foods
Market, Inc., a retailer of organic foods, performed well over the period.
Restaurant operator P.F. Chang's China Bistro, Inc. also contributed modestly to
performance.
Strong commodity prices and high levels of drilling activity drove the positive
performance in the Fund's energy holdings in the first half of the year, but
those trends reversed in the second half as the balance of supply and demand in
the sector succumbed to the economic slowdown. As a result, we significantly
scaled back the Fund's exposure to energy companies as fundamentals began to
erode and ended the period underweighted in energy, as compared with the
indexes.
Outlook
As we have navigated the difficulties and uncertainties of the past fiscal year,
we have focused on companies we believe are best positioned for a possible
recovery in the economy and stock market. We ended 2001 with confidence in the
companies the fund owns. Despite contractions in their valuations and the
near-term impact on their growth rates, we believe they will be able to
successfully navigate the challenges ahead and emerge from this difficult period
poised to resume their growth rates and succeed in the years to come.
Past performance is no guarantee of future results.
(1)The Russell 2000 Growth Index consists of growth common stocks included in
the Russell 2000 Index. Companies in this index tend to exhibit higher
price-to-book and price-earnings ratios. It is a generally recognized indicator
used to measure overall small company growth-stock performance in the U.S. stock
market. The Index is an unmanaged Index, with dividends reinvested, and
investors cannot actually make investments in the Index.
(2)The Russell 2000 Index is an unmanaged index, with dividends reinvested, that
consists of the common stocks of 2000 U.S. companies. It is a generally
recognized indicator used to measure overall performance of small company
stocks. One cannot invest directly in an index.
Berger IPT Funds o December 31, 2001 Annual Report
13
Berger IPT Funds
PERFORMANCE OVERVIEW
================================================================================
Berger Ipt-small Company Growth Fund
Growth of $10,000
<Table>
12/31/01
Berger IPT-Small Company Growth Fund $14,623
Russell 2000 Growth Index $10,831
Russell 2000 Index $15,121
</Table>
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2001
<Table>
One Year (33.47)%
Five Year 8.01%
Life of Fund (5/1/96) 6.93%
</Table>
Past performance is no guarantee of future results. Investment returns and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Investments in small company stocks may
involve greater risks, including price volatility, and rewards than investments
in larger companies. The Fund's change in value is compared to the Russell 2000
Growth Index, the Fund's new benchmark index, and the Russell 2000 Index, the
Fund's previous benchmark.The Fund is changing its benchmark index so that it
correlates more closely to the investment style of the Fund.
================================================================================
SCHEDULE OF INVESTMENTS
<Table>
<Caption>
December 31, 2001
- -------------------------------------------------------------------------------
Shares Value
- -------------------------------------------------------------------------------
Common Stock (94.82%)
Commercial Services - Business Services (0.89%)
14,810 Pediatrix Medical Group, Inc.* $ 502,355
- -------------------------------------------------------------------------------
Commercial Services - Miscellaneous (4.55%)
17,110 FTI Consulting, Inc.* 561,208
54,360 The Corporate Executive Board Co.* 1,995,012
- -------------------------------------------------------------------------------
2,556,220
- -------------------------------------------------------------------------------
Commercial Services - Security/Safety (0.12%)
1,950 Macrovision Corp.* 68,679
- -------------------------------------------------------------------------------
Commercial Services - Staffing (0.75%)
15,460 Administaff, Inc.* 423,759
- -------------------------------------------------------------------------------
Computer - Integrated Systems (1.66%)
18,740 Cerner Corp.* 935,688
- -------------------------------------------------------------------------------
Computer - Manufacturers (1.05%)
39,600 Concurrent Computer Corp.* 588,060
- -------------------------------------------------------------------------------
Common Stock (94.82%) - continued
Computer - Memory Devices (1.16%)
29,880 Network Appliance, Inc.* $ 653,476
- -------------------------------------------------------------------------------
Computer - Networking (2.07%)
47,410 McDATA Corp. - Class A* 1,161,545
- -------------------------------------------------------------------------------
Computer - Optical Recognition (0.86%)
13,680 Optimal Robotics Corp.* 484,956
- -------------------------------------------------------------------------------
Computer - Peripheral Equipment (0.78%)
11,850 Sage, Inc.* 439,280
- -------------------------------------------------------------------------------
Computer - Services (1.90%)
32,300 Ciber, Inc. * 305,235
16,730 Photon Dynamics, Inc.* 763,725
- -------------------------------------------------------------------------------
1,068,960
- -------------------------------------------------------------------------------
Computer Software - Desktop (0.33%)
11,920 Borland Software Corp.* 186,667
- -------------------------------------------------------------------------------
</Table>
Berger IPT Funds o December 31, 2001 Annual Report
14
BERGER IPT-
SMALL COMPANY
GROWTH FUND
================================================================================
SCHEDULE OF INVESTMENTS
<Table>
<Caption>
December 31, 2001
- -------------------------------------------------------------------------------
Shares Value
- -------------------------------------------------------------------------------
Common Stock (94.82%) - continued
Computer Software - Educational/Entertainment (2.04%)
31,920 Midway Games, Inc.* $ 479,119
18,890 SmartForce PLC - Spon. ADR* 467,528
4,090 THQ, Inc.* 198,242
- -------------------------------------------------------------------------------
1,144,889
- -------------------------------------------------------------------------------
Computer Software - Enterprise (4.90%)
6,150 Concord Communications, Inc.* 126,997
47,550 J.D. Edwards & Co.* 782,197
22,590 Keane, Inc.* 407,298
16,080 Legato Systems, Inc.* 208,558
23,160 NetIQ Corp.* 816,622
12,060 SeaChange International, Inc.* 411,487
- -------------------------------------------------------------------------------
2,753,159
- -------------------------------------------------------------------------------
Computer Software - Finance (0.98%)
11,070 Advent Software, Inc.* 552,947
- -------------------------------------------------------------------------------
Computer Software - Medical (0.64%)
21,330 Eclipsys, Corp.* 357,278
- -------------------------------------------------------------------------------
Computer Software - Security (0.81%)
9,750 Internet Security Systems, Inc.* 312,585
6,370 NetScreen Technologies, Inc.* 140,968
- -------------------------------------------------------------------------------
453,553
- -------------------------------------------------------------------------------
Electrical - Equipment (0.91%)
12,610 AstroPower, Inc.* 509,822
- -------------------------------------------------------------------------------
Electronics - Laser Systems/Components (1.08%)
22,810 Cymer, Inc.* 609,711
- -------------------------------------------------------------------------------
Electronics - Military Systems (0.55%)
12,390 The Titan Corp.* 309,131
- -------------------------------------------------------------------------------
Electronics - Miscellaneous Components (1.23%)
35,950 RF Micro Devices, Inc.* 691,319
- -------------------------------------------------------------------------------
Electronics - Semiconductor Equipment (3.67%)
26,930 ADVANCED ENERGY INDUSTRIES, INC.* 717,415
11,300 Brooks Automation, Inc.* 459,571
13,630 FEI Co.* 429,481
15,850 Lattice Semiconductor Corp.* 326,035
6,310 PRI Automation, Inc.* 129,040
- -------------------------------------------------------------------------------
2,061,542
- -------------------------------------------------------------------------------
Electronics - Semiconductor Manufacturing (8.42%)
33,520 Alpha Industries, Inc.* 730,736
32,990 Cree, Inc.* 971,885
1,720 Genesis Microchip, Inc.* 113,726
48,685 GlobespanVirata, Inc.* 630,471
23,320 Intersil Corp. - Class A* 752,070
17,630 O2Micro International Ltd.* 424,001
22,310 Plexus Corp.* 592,554
15,790 Zoran Corp.* 515,386
- -------------------------------------------------------------------------------
4,730,829
- -------------------------------------------------------------------------------
Common Stock (94.82%) - continued
Finance - Consumer/Commercial Loans (1.16%)
20,750 Americredit Corp.* $ 654,663
- -------------------------------------------------------------------------------
Finance - Investment Management (1.61%)
12,840 Affiliated Managers Group, Inc.* 904,963
- -------------------------------------------------------------------------------
Financial Services - Miscellaneous (2.26%)
19,140 Investors Financial Services Corp. 1,267,259
- -------------------------------------------------------------------------------
Internet - ISP/Content (1.12%)
39,340 Exult, Inc.* 631,407
- -------------------------------------------------------------------------------
Internet - Network Security/Solutions (0.68%)
19,660 SonicWall, Inc.* 382,190
- -------------------------------------------------------------------------------
Internet - Software (2.86%)
34,240 Quest Software, Inc.* 757,047
22,690 Retek, Inc.* 677,750
27,760 Support.com, Inc.* 174,055
- -------------------------------------------------------------------------------
1,608,852
- -------------------------------------------------------------------------------
Leisure - Products (1.05%)
18,910 Direct Focus, Inc.* 589,990
- -------------------------------------------------------------------------------
Medical - Biomedical/Genetics (12.58%)
60,760 Arena Pharmaceuticals, Inc.* 730,943
38,420 Celgene Corp.* 1,226,366
6,640 Cephalon, Inc.* 501,884
21,180 Diversa Corp.* 299,697
13,770 ICOS Corp.* 790,949
5,440 IDEC Pharmaceuticals Corp.* 374,979
10,150 InterMune, Inc.* 499,989
11,520 Invitrogen Corp.* 713,434
32,320 Medarex, Inc.* 580,467
32,320 Paradigm Genetics, Inc.* 184,224
11,220 Pharmaceutical Product
Development, Inc.* 362,518
14,070 Regeneron Pharmaceuticals, Inc.* 396,211
16,980 Tularik, Inc.* 407,860
7,069,521
- -------------------------------------------------------------------------------
Medical - Ethical Drugs (3.38%)
17,710 Cell Therapeutics, Inc.* 427,519
5,260 CIMA Labs, Inc.* 190,149
30,240 First Horizon Pharmaceutical Corp.* 888,754
25,150 SICOR, Inc.* 394,352
- -------------------------------------------------------------------------------
1,900,774
- -------------------------------------------------------------------------------
Medical - Hospitals (0.60%)
10,990 Province Healthcare Co.* 339,151
- -------------------------------------------------------------------------------
Medical - Instruments (1.49%)
18,490 Thoratec Corp.* 314,330
23,230 Ventana Medical Systems, Inc.* 525,463
- -------------------------------------------------------------------------------
839,793
- -------------------------------------------------------------------------------
</Table>
Berger IPT Funds o December 31, 2001 Annual Report
15
Berger IPT Funds
================================================================================
SCHEDULE OF INVESTMENTS
<Table>
<Caption>
December 31, 2001
- -------------------------------------------------------------------------------
Shares Value
- -------------------------------------------------------------------------------
Common Stock (94.82%) - continued
Medical/Dental - Supplies (0.27%)
33,440 Align Technology, Inc.* $ 150,480
- -------------------------------------------------------------------------------
Medical/Dental/Services (1.33%)
18,787 Accredo Health, Inc.* 745,844
- -------------------------------------------------------------------------------
Oil & Gas - Drilling (1.91%)
10,210 Helmerich & Payne, Inc. 340,810
37,720 Rowan Companies, Inc.* 730,636
- -------------------------------------------------------------------------------
1,071,446
Oil & Gas - Machinery & Equipment (1.04%)
50,640 Grant Prideco, Inc. * 582,360
- -------------------------------------------------------------------------------
Oil & Gas - U.S. Exploration & Production (1.26%)
10,920 Evergreen Resources, Inc.* 421,621
6,920 Spinnaker Exploration Co.* 284,827
- -------------------------------------------------------------------------------
706,448
- -------------------------------------------------------------------------------
Retail - Apparel/Shoe (2.36%)
11,660 AnnTaylor Stores Corp.* 408,100
9,580 Coach, Inc.* 373,429
17,290 HOT Topic, Inc.* 542,733
- -------------------------------------------------------------------------------
1,324,262
- -------------------------------------------------------------------------------
Retail - Mail Order & Direct (1.04%)
13,560 Williams-Sonoma, Inc.* 581,724
- -------------------------------------------------------------------------------
Retail - Restaurants (1.70%)
16,330 P.F. Chang's China Bistro, Inc.* 772,409
3,530 Panera Bread Co.* 183,701
- -------------------------------------------------------------------------------
956,110
- -------------------------------------------------------------------------------
Retail - Super/Mini Markets (1.22%)
15,740 Whole Foods Market, Inc.* 685,634
- -------------------------------------------------------------------------------
Retail/Wholesale - Food (1.43%)
32,150 United Natural Foods, Inc.* 803,750
- -------------------------------------------------------------------------------
Telecommunications - Cellular (2.76%)
18,120 AirGate PCS, Inc.* 825,366
34,210 Alamosa Holdings, Inc.* 408,125
42,830 UbiquiTel, Inc.* 319,084
- -------------------------------------------------------------------------------
1,552,575
- -------------------------------------------------------------------------------
Telecommunications - Equipment (6.57%)
58,710 Harmonic, Inc.* 705,694
34,830 InterVoice-Brite, Inc.* 445,824
11,350 Microtune, Inc.* 266,271
14,508 Polycom, Inc.* 499,075
44,870 SBA Communications Corp.* 584,208
41,830 UTStarcom, Inc.* 1,192,155
- -------------------------------------------------------------------------------
3,693,227
Common Stock (94.82%) - continued
Telecommunications - Services (1.79%)
28,830 Allegiance Telecom, Inc. * $ 239,001
28,540 Intrado, Inc. * 764,872
- -------------------------------------------------------------------------------
1,003,873
Total Common Stock
(Cost $44,378,606) 53,290,121
- -------------------------------------------------------------------------------
Preferred Stock - Convertible (0.01%)
Telecommunications - Equipment (0.01%)
39,167 Cidera, Inc. - Series D *@[x] 5,092
- -------------------------------------------------------------------------------
Total Preferred Stock - Convertible
(Cost $342,691) 5,092
- -------------------------------------------------------------------------------
U.S. Government Agency Obligations (3.56%)
$2,000,000 Fannie Mae Discount Note;
1.45%, 1/2/2002 1,999,919
- -------------------------------------------------------------------------------
Total U.S. Government Agency Obligations
(Cost $1,999,919) 1,999,919
- -------------------------------------------------------------------------------
Repurchase Agreement (1.79%)
$1,006,000 State Street Repurchase Agreement,
1.40% dated December 31, 2001,
to be repurchased at $1,006,078 on
January 2, 2002, collateralized by
FHLB Agency Note, 2.16% -
November 29, 2002 with a value of
$1,031,054 1,006,000
- -------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $1,006,000) 1,006,000
- -------------------------------------------------------------------------------
Total Investments (Cost $47,727,216) (100.18%) 56,301,132
Total Other Assets, Less Liabilities (-0.18%) (100,513)
- -------------------------------------------------------------------------------
Net Assets (100.00%) $56,200,619
- -------------------------------------------------------------------------------
</Table>
*Non-income producing security.
ADR - American Depositary Receipt.
FHLB - Federal Home Loan Bank.
PLC - Public Limited Company.
++ - Security valued at fair value determined in good faith pursuant to
procedures established by and under the supervision of the Fund's
trustees.
[x] Schedule of Restricted Securities and/or Illiquid Securities
Fair Value
Date Fair as a %
Acquired Cost Value of Net Assets
- -------------------------------------------------------------------------------
Cidera, Inc. -
Series D -
Preferred Stock 9/1/2000 $342,691 $5,092 0.01%
See notes to financial statements.
Berger IPT Funds o December 31, 2001 Annual Report
16
BERGER IPT-NEW Ticker Symbol BINGX
GENERATION FUND PORTFOLIO MANAGER COMMENTARY JAY W. TRACEY, CFA
PAUL A. LaROCCO, CFA
================================================================================
Market Conditions
The past year was one of the most difficult investment periods on record,
especially for growth stock investors. Growth stocks underperformed the market
in general and value stocks in particular for two main reasons. First, the
economy slowed suddenly. Although this affected the earnings growth of most
companies, the impact fell harder on companies that had been posting superior
growth. Second, valuations accorded to companies with superior growth had
reached much higher-than-average levels, reflecting their higher growth rates.
Those premiums shrank with the companies' slowing revenue and earnings growth.
The combination of declining growth rates and lower valuations caused growth
stock prices to drop more than the market in general.
Fund Performance
Berger IPT-New Generation Fund ("the Fund") declined in value by 48.99% for the
year ended December 31, 2001, compared with an 11.88% decline in the Standard &
Poor's (S&P) 500 Index(1) and a 20.82% decline in the Nasdaq Composite Index(2)
and The key reason for this underperformance was that the Fund held many
companies, especially technology companies, whose fast growth rates and higher
valuations suffered sharp declines. This effect was even more pronounced among
smaller, emerging growth stocks that have been the Fund's strategy.
The Fund was substantially overweighted in technology companies--by far the
market's weakest sector in 2001. Despite a good fourth-quarter rebound, the
technology sector was still the primary source of the Fund's relative
underperformance this period. As a result of relatively high valuations at the
beginning of the year, as well as slowing growth rates over the course of the
year, most technology stocks experienced a very difficult year. Communications
technology stocks were among the hardest hit, as carriers and corporate
customers severely cut capital spending on communications equipment. CIENA
Corp., ONI Systems Corp., and Sonus Networks, Inc. were among the Fund's worst
performers this period. Computer software and services stocks such as Internet
Security Systems, Inc., Manugistics Group, Inc., Micromuse, Inc., Openwave
Systems, Inc. and StorageNetworks, Inc. also had a large negative impact on
performance.
There were some individual bright spots within the fund's technology holdings,
including retek, inc., Mcdata corp., And concurrent computer corp., But they
were too few to offset the negatives. Near the end of the year, the fund's
technology weighting was significantly reduced. As a result, going forward the
fund's performance should be less sensitive to the performance of that one
sector.
In terms of their impact on relative performance, the Fund's financial holdings
were a distant second place to its technology holdings, but important
nonetheless. The principal cause of trouble in this sector was NextCard, Inc.,
which experienced significant loan losses because of fraud that were not
disclosed until late in the year. The company's third-quarter report, which
included substantial charges, revealed the surprising magnitude of the losses,
and the stock declined precipitously. We saw little opportunity for recovery,
and the stock was subsequently sold.
In general, the Fund's consumer discretionary holdings had a modestly negative
impact on performance this period. Contributions from the Fund's holdings in
other sectors -- including healthcare, the Fund's second-largest sector -- were
positive. However, these positive performers were not enough to offset the
tremendous negative impact of the Fund's technology holdings.
Outlook
We believe the outlook for the economy has improved in the last few months as
inventories have been worked down and consumer confidence has improved. Fiscal
and monetary policy have also become very stimulative, in our opinion. The stock
market has suffered two down years that have been particularly hard on growth
stocks. We are optimistic that 2002 holds brighter prospects for the stock
market in general and for growth stocks in particular.
Berger Financial Group LLC, investment manager for Berger Funds, has announced
plans for a realignment of the firm's growth funds. Plans call for the
termination of Berger IPT-New Generation Fund. Jay Tracey and Paul LaRocco
became team portfolio managers of the IPT-New Generation Fund effective December
28, 2001.
Past performance is no guarantee of future results.
(1)The S&P 500 Index is an unmanaged index, with dividends reinvested, that
consists of the common stocks of 500 publicly traded U.S. companies. It is a
generally recognized indicator used to measure overall performance of the U.S.
stock market. One cannot invest directly in an index.
(2)The Nasdaq Composite Index measures all Nasdaq domestic and non-U.S. based
common stocks listed on The Nasdaq Stock Market. The Index is market-value
weighted, includes reinvestment of dividends, and is unmanaged. One cannot
invest directly in an index.
Berger IPT Funds o December 31, 2001 Annual Report
17
Berger IPT Funds
PERFORMANCE OVERVIEW
================================================================================
Berger IPT-New Generation Fund
Growth of $10,000
[GRAPH]
<Table>
<Caption>
12/31/01
Berger IPT-New Generation Fund $3,020
S&P 500 Index $7,987
Nasdaq Composite Index $4,928
</Table>
<Table>
AVERAGE ANNUAL TOTAL RETURN AS OF DECEMBER 31, 2001
One Year (48.99)%
Life of Fund (5/1/00) (51.18)%
</Table>
Past performance is no guarantee of future results. Investment returns and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Given the Fund's focus on leading-edge
companies and those in rapidly changing industries, its investments may involve
greater risks and price volatility than those in more stable industries.
================================================================================
SCHEDULE OF INVESTMENTS
<Table>
<Caption>
December 31, 2001
- -------------------------------------------------------------------------------
Shares Value
- -------------------------------------------------------------------------------
COMMON STOCK (80.82%)
Building - Construction Products/Miscellaneous (0.98%)
440 The Stanley Works $ 20,491
- -------------------------------------------------------------------------------
Commercial Services - Security/Safety (1.74%)
1,040 Macrovision Corp.* 36,629
- -------------------------------------------------------------------------------
Computer - Graphics (0.71%)
490 Magma Design Automation, Inc.* 14,837
- -------------------------------------------------------------------------------
Computer - Manufacturers (1.89%)
2,680 Concurrent Computer Corp.* 39,798
- -------------------------------------------------------------------------------
Computer - Memory Devices (0.79%)
760 Network Appliance, Inc.* 16,621
- -------------------------------------------------------------------------------
Computer - Networking (2.69%)
2,305 McDATA Corp. - Class A* 56,473
- -------------------------------------------------------------------------------
Computer - Optical Recognition (1.03%)
610 Optimal Robotics Corp.* 21,625
- -------------------------------------------------------------------------------
COMMON STOCK (80.82%) - CONTINUED
Computer - Services (0.99%)
460 SEI Investments Co. $ 20,751
- -------------------------------------------------------------------------------
Computer Software - Desktop (1.18%)
1,580 Borland Software Corp.* 24,743
- -------------------------------------------------------------------------------
Computer Software - Educational/Entertainment (3.14%)
570 Activision, Inc.* 14,826
1,970 Midway Games, Inc.* 29,570
870 SmartForce PLC - Spon. ADR* 21,532
- -------------------------------------------------------------------------------
65,928
- -------------------------------------------------------------------------------
Computer Software - Enterprise (7.96%)
2,730 J.D. Edwards & Co.* 44,908
810 Keane, Inc.* 14,604
2,160 Peregrine Systems, Inc.* 32,033
360 SeaChange International, Inc.* 12,283
750 Stellent, Inc.* 22,170
920 VERITAS Software Corp.* 41,244
- -------------------------------------------------------------------------------
167,242
- -------------------------------------------------------------------------------
</Table>
Berger IPT Funds o December 31, 2001 Annual Report
18
BERGER IPT-NEW
GENERATION FUND
================================================================================
SCHEDULE OF INVESTMENTS
<Table>
<Caption>
December 31, 2001
- -------------------------------------------------------------------------------
Shares Value
- -------------------------------------------------------------------------------
COMMON STOCK (80.82%) - CONTINUED
Computer Software - Security (2.06%)
830 Check Point Software
Technologies Ltd.* $ 33,109
460 NetScreen Technologies, Inc.* 10,180
- -------------------------------------------------------------------------------
43,289
- -------------------------------------------------------------------------------
Electronics - Miscellaneous Components (1.41%)
1,540 RF Micro Devices, Inc.* 29,614
- -------------------------------------------------------------------------------
Electronics - Semiconductor Equipment (3.29%)
800 Advanced Energy Industries, Inc.* 21,312
890 FEI Co.* 28,044
400 Kla-Tencor Corp.* 19,824
- -------------------------------------------------------------------------------
69,180
- -------------------------------------------------------------------------------
Electronics - Semiconductor Manufacturing (6.78%)
900 Alpha Industries, Inc.* 19,620
500 Analog Devices, Inc.* 22,195
1,850 GlobespanVirata, Inc.* 23,958
590 Intersil Corp. - Class A* 19,028
2,390 Multilink Technology Corp.* 15,487
940 O2Micro International Ltd.* 22,607
440 QLogic Corp.* 19,584
- -------------------------------------------------------------------------------
142,479
- -------------------------------------------------------------------------------
Fiber Optic Components (0.22%)
534 JDS Uniphase Corp.* 4,635
- -------------------------------------------------------------------------------
Finance - Consumer/Commercial Loans (0.86%)
570 Americredit Corp.* 17,984
- -------------------------------------------------------------------------------
Finance - Investment Brokers (0.69%)
290 Legg Mason, Inc. 14,494
- -------------------------------------------------------------------------------
Financial Services - Miscellaneous (0.95%)
300 Investors Financial Services Corp. 19,863
- -------------------------------------------------------------------------------
Internet - E*Commerce (1.37%)
430 eBay, Inc.* 28,767
- -------------------------------------------------------------------------------
Internet - ISP/Content (2.56%)
1,470 Earthlink, Inc.* 17,890
1,170 Exult, Inc.* 18,778
3,000 Raindance Communications, Inc.* 17,130
- -------------------------------------------------------------------------------
53,798
- -------------------------------------------------------------------------------
Internet - Network Security/Solutions (1.85%)
1,020 VeriSign, Inc.* 38,801
- -------------------------------------------------------------------------------
Internet - Software (2.35%)
980 Quest Software, Inc.* 21,668
930 Retek, Inc.* 27,779
- -------------------------------------------------------------------------------
49,447
- -------------------------------------------------------------------------------
COMMON STOCK (80.82%) - CONTINUED
Medical - Biomedical/Genetics (10.69%)
480 Abgenix, Inc.* $ 16,147
380 Amgen, Inc.* 21,447
870 Celgene Corp.* 27,770
530 COR Therapeutics, Inc.* 12,683
730 Diversa Corp.* 10,330
310 Enzon, Inc.* 17,447
320 Genentech, Inc.* 17,360
210 ICOS Corp.* 12,062
140 IDEC Pharmaceuticals Corp.* 9,650
560 Invitrogen Corp.* 34,681
1,210 Medarex, Inc.* 21,732
220 Medimmune, Inc.* 10,197
110 Millenium Pharmaceuticals, Inc.* 2,696
370 Regeneron Pharmaceuticals, Inc.* 10,419
- -------------------------------------------------------------------------------
224,621
- -------------------------------------------------------------------------------
Medical - Ethical Drugs (1.00%)
500 King Pharmaceuticals, Inc.* 21,065
- -------------------------------------------------------------------------------
Medical - Instruments (3.95%)
360 Medtronic, Inc. 18,436
600 SurModics, Inc.* 21,876
900 Therasense, Inc.* 22,320
1,200 Thoratec Corp.* 20,400
- -------------------------------------------------------------------------------
83,032
- -------------------------------------------------------------------------------
Medical - Products (1.01%)
630 Regeneration Technologies, Inc.* 6,420
260 Sepracor, Inc.* 14,835
- -------------------------------------------------------------------------------
21,255
- -------------------------------------------------------------------------------
Retail - Consumer Electronics (0.99%)
280 Best Buy Co., Inc.* 20,854
- -------------------------------------------------------------------------------
Retail - Miscellaneous/Diversified (0.77%)
480 Bed Bath & Beyond, Inc.* 16,272
- -------------------------------------------------------------------------------
Retail - Restaurants (2.02%)
600 AFC Enterprises, Inc.* 17,034
850 Brinker International, Inc.* 25,296
- -------------------------------------------------------------------------------
42,330
- -------------------------------------------------------------------------------
Telecommunications - Cellular (2.74%)
3,880 Nextel Communications, Inc. - Class A* 42,525
2,020 UbiquiTel, Inc. * 15,049
- -------------------------------------------------------------------------------
57,574
- -------------------------------------------------------------------------------
</Table>
Berger IPT Funds o December 31, 2001 Annual Report
19
Berger IPT Funds
================================================================================
SCHEDULE OF INVESTMENTS
<Table>
<Caption>
December 31, 2001
- -------------------------------------------------------------------------------
Shares/Par Value Value
- -------------------------------------------------------------------------------
COMMON STOCK (80.82%) - CONTINUED
Telecommunications - Equipment (8.83%)
2,400 Harmonic, Inc.* $ 28,848
1,230 Microtune, Inc.* 28,856
940 Nokia Corp. - Spon. ADR 23,058
980 Powerwave Technologies, Inc.* 16,934
460 QUALCOMM, Inc.* 23,230
1,670 SBA Communications Corp.* 21,744
1,500 UTStarcom, Inc.* 42,750
- -------------------------------------------------------------------------------
185,420
- -------------------------------------------------------------------------------
Telecommunications - Services (1.33%)
1,040 Intrado, Inc.* 27,870
- -------------------------------------------------------------------------------
Total Common Stock
(Cost $1,523,918) 1,697,782
- -------------------------------------------------------------------------------
PREFERRED STOCK - CONVERTIBLE (0.12%)
Telecommunications - Equipment (0.12%)
1,235 Cidera, Inc. - Series D*@X 160
875 LuxN, Inc. - Series E*@X 2,389
- -------------------------------------------------------------------------------
2,549
- -------------------------------------------------------------------------------
Total Preferred Stock - Convertible
(Cost $23,317) 2,549
- -------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY OBLIGATIONS (11.90%)
$250,000 Fannie Mae Discount Note;
1.45%, 1/2/2002 249,990
- -------------------------------------------------------------------------------
Total U.S. Government Agency Obligations
(Cost $249,990) 249,990
- -------------------------------------------------------------------------------
Repurchase Agreement (5.57%)
$117,000 State Street Repurchase Agreement,
1.40% dated December 31, 2001,
to be repurchased at $117,009 on
January 2, 2002, collateralized by
FHLB Agency Note, 2.10% -
December 5, 2002 with a value of
$119,980 117,000
- -------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $117,000) 117,000
- -------------------------------------------------------------------------------
Total Investments (Cost $1,914,225) (98.41%) 2,067,321
Total Other Assets, Less Liabilities (1.59%) 33,383
- -------------------------------------------------------------------------------
Net Assets (100.00%) $2,100,704
- -------------------------------------------------------------------------------
</Table>
*Non-income producing security.
ADR - American Depositary Receipt.
FHLB - Federal Home Loan Bank.
PLC - Public Limited Company.
@ - Security valued at fair value determined in good faith pursuant to
procedures established by and under the supervision of the Fund's trustees.
X Schedule of Restricted Securities and/or Illiquid Securities
<Table>
<Caption>
Fair Value
Date Fair as a %
Acquired Cost Value of Net Assets
- -------------------------------------------------------------------------------
Cidera, Inc.-
Series D-
Preferred Stock 9/1/2000 $10,805 $ 160 0.01%
LuxN, Inc.-
Series E-
Preferred Stock 12/20/2000 $12,512 $2,389 0.11%
- -------------------------------------------------------------------------------
$2,549 0.12%
- -------------------------------------------------------------------------------
</Table>
See notes to financial statements.
Berger IPT Funds o December 31, 2001 Annual Report
20
Ticker Symbol BINLX
BERGER IPT- BANK OF IRELAND ASSET
INTERNATIONAL FUND PORTFOLIO MANAGER COMMENTARY MANAGEMENT (US.) LTD.
================================================================================
Market Conditions
The year 2001 began with global equity markets struggling in the face of a
rapidly slowing economy, declining corporate earnings and continued unwinding of
the late 1990s technology bubble. Even prior to the horrific events of September
11, most major equity markets were firmly in bear territory. Despite a furious
fourth quarter rally, fueled primarily by optimism over an anticipated recovery
in 2002, most developed equity markets ended the year with double-digit negative
returns. Only Australia and New Zealand posted modest gains.
The economic climate at the end of 2001 was gloomy worldwide. The German economy
has been experiencing a painfully slow downturn, and those economies that had
enjoyed strong growth (France, Italy and Spain) began to slide in the same
direction. However, the Euroland economy is likely to record positive growth for
the full year and may avoid the recession that has stalked much of the global
economy. Although not insulated from the global slowdown, the UK economy has
proven to be one of the most robust in the developed world. Japan's economy
showed little sign of recovery during the fourth quarter, continuing its
year-long downward spiral to slip into yet another recession.
Fund Performance
Against this difficult backdrop, the Berger IPT - International Fund (the
"Fund") declined 20.27% for the year ended December 31, 2001, compared with a
drop of 21.21% in the MSCI EAFE Index.(1) The Fund managed to slightly
outperform the index as a result of the defensive bias of its holdings.
Defensive sectors such as healthcare, energy and consumer staples outperformed
the TMT (Technology, Media, and Telecommunications) and cyclical sectors in all
but the fourth quarter.
Although the financial sector generally performed inline with the broader
market, two UK financial institutions, Barclays PLC and Lloyds TSB Group PLC,
held up well and had the largest positive impact on the portfolio.
Netherlands-based ING Groep NV and French insurer AXA both had a difficult year.
Both of these financial services companies attributed their poor results to
decreasing demand caused by a slowing global economy, weak equity markets and
claims arising from the September 11 terrorist attacks.
Despite strong gains during the final quarter, the portfolio's
telecommunications holdings fared the worst. French-quoted equipment maker
Alcatel Althsom suffered as demand for its products slowed rapidly. Vodafone
Group PLC, the world's largest mobile operator, was dragged down by negative
sentiment surrounding the sector as well as by announcement of a fiscal
first-half loss of US$9.74 billion as a result of a goodwill write-off
associated with recent acquisitions. Vodafone's results before the write-off
revealed good growth and lower-than-expected expenditures.
Nokia Oyj was unique among telecommunications holdings, contributing strongly to
Fund performance after announcing that fourth quarter sales and earnings might
be better than expected.
Beverage company Diageo PLC also posted good results, citing strong performance
from its spirits division.
Outlook
We believe the global economy will likely spend much of 2002 digging itself out
of recession, with growth possibly set to recover somewhat in the second half of
the year. However, the strength of this recovery may not be as powerful as
capital markets have anticipated. For the first time since the 1960s, the
economies of the United States, Japan and Germany all contracted in the third
quarter. This synchronized downturn may make it difficult for a widespread
revival in global consumer demand, particularly as the employment situation
continues to deteriorate in many economies.
Nevertheless, the U.S. benchmark interest rate is at a 40-year low, Germany's
lending rates are at their lowest level in more than a decade and Japan's
central bank continues to pump money into an economy with zero nominal interest
rates. Equity markets have typically benefited from these low-rate
environments--some benefit was reflected in the fourth quarter. Given time,
economies may ultimately gain from cheaper credit conditions.
We believe inflation is likely to remain benign. As economic recovery takes
hold, corporate profits could improve--helping to underpin valuations--and
interest rates may rise. However, we do not believe the recovery will be so
strong as to prompt an aggressive rise in rates.
In our opinion, markets will remain volatile. We believe stocks with dependable
top- and bottom-line growth will provide the best returns over the next few
years and that the current valuations ascribed to cyclicals are too optimistic.
Despite uncertainties about the macroeconomic outlook, there are companies
likely to produce good earnings growth and margin expansion independent of the
economic cycle. Taking all of this into account, we believe there are no obvious
sectors or geographic regions that are obvious winners in the current
environment. Consequently, we believe continued focus on judicious stock
selection will drive returns in 2002.
Past performance is no guarantee of future results.
(1) The Morgan Stanley Capital International EAFE Index represents major
overseas markets. The Index is unmanaged, with dividends reinvested, and
investors cannot actually make investments in the Index.
Berger IPT Funds o December 31, 2001 Annual Report
21
Berger IPT Funds
PERFORMANCE OVERVIEW
================================================================================
Berger IPT-New International Fund
Growth of $10,000
[GRAPH]
<Table>
<Caption>
12/31/01
Berger IPT-International Fund $10,686
MSCI EAFE Index $10,700
</Table>
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 2001
<Table>
One Year (20.27)%
Life of Fund (5/1/97) 1.43%
</Table>
Past performance is no guarantee of future results. Investment returns and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Investments in the Fund are not insured by the
Federal Deposit Insurance Corporation, are not deposits and are not obligations
of, or endorsed or guaranteed in any way by, any bank. Foreign investing
involves special risks, such as currency fluctuations and political and economic
uncertainty, which are discussed further in the prospectus.
================================================================================
SCHEDULE OF INVESTMENTS
<Table>
<Caption>
December 31, 2001
- --------------------------------------------------------------------------------------------------------------
Country/Shares Company Industry Value
- --------------------------------------------------------------------------------------------------------------
Common Stock (94.42%)
Australia (2.63%)
5,883 Brambles Industries Ltd. Transport $ 31,317
2,290 National Australia Bank Ltd. Banks 37,344
4,327 News Corp. Ltd. Media & Photography 34,599
5,187 Westpac Banking Corp. Ltd. Banks 41,829
- --------------------------------------------------------------------------------------------------------------
145,089
- --------------------------------------------------------------------------------------------------------------
Denmark (0.42%)
660 TDC A/S Telecommunications Services 23,510
- --------------------------------------------------------------------------------------------------------------
Finland (0.66%)
1,420 Nokia Oyj Information Technology Hardware 36,606
- --------------------------------------------------------------------------------------------------------------
France (10.10%)
2,500 Alcatel Alsthom Information Technology Hardware 42,727
1,972 Aventis SA Pharmaceuticals 139,991
3,835 AXA Insurance 80,120
510 Lafarge SA Construction & Building Materials 47,622
1,105 TotalFinaElf SA - Class B Oil & Gas 157,772
1,608 Vivendi Universal SA Diversified Industrials 88,029
- --------------------------------------------------------------------------------------------------------------
556,261
- --------------------------------------------------------------------------------------------------------------
</Table>
Berger IPT Funds o December 31, 2001 Annual Report
22
BERGER IPT-
INTERNATIONAL FUND
================================================================================
SCHEDULE OF INVESTMENTS
<Table>
<Caption>
December 31, 2001
- -------------------------------------------------------------------------------------------------------------
Country/Shares Company Industry Value
- -------------------------------------------------------------------------------------------------------------
Common Stock (94.42%) - continued
Germany (5.15%)
2,224 Bayer AG Chemicals - Commodity $ 70,873
900 Bayerische Hypo-Und Vereinsbank
AG Banks 27,495
2,078 Bayerische Motoren Werke AG Automobiles 72,417
2,179 E.On AG Diversified Industrials 112,848
- -------------------------------------------------------------------------------------------------------------
283,633
- -------------------------------------------------------------------------------------------------------------
Hong Kong (2.73%)
6,000 Cheung Kong (Holdings) Ltd. Real Estate 62,326
6,000 China Mobile Ltd.* Telecommunications Services 21,121
196,000 Petrochina Co. Ltd. Oil & Gas 34,687
4,000 Sun Hung Kai Properties Ltd. Real Estate 32,317
- -------------------------------------------------------------------------------------------------------------
150,451
- -------------------------------------------------------------------------------------------------------------
Italy (3.38%)
6,769 ENI S.p.A. Oil & Gas 84,838
11,855 Telecom Italia S.p.A. Telecommunications Services 101,306
- -------------------------------------------------------------------------------------------------------------
186,144
- -------------------------------------------------------------------------------------------------------------
Japan (14.31%)
500 ACOM Co. Ltd. Specialty & Other Finance 36,448
4,000 Canon, Inc. Electronic & Electrical Equipment 137,699
2,000 Fuji Photo Film Co. Ltd. Media & Photography 71,445
10,000 Hitachi Ltd. + Information Technology Hardware 73,277
1,300 Honda Motor Co. Ltd. + Automobiles 51,897
600 Hoya Corp. Electronic & Electrical Equipment 35,860
500 Murata Manufacturing Co. Ltd. Information Technology Hardware 29,998
5,000 NEC Corp. + Information Technology Hardware 51,027
400 Nintendo Co. Ltd. Entertainment/Leisure/Toys 70,071
4 NTT DoCoMo, Inc. Telecommunications Services 47,019
200 Rohm Co. Ltd. Information Technology Hardware 25,968
300 SMC Corp. Engineering & Machinery 30,547
800 Sony Corp. Household Goods & Textiles 36,577
2,000 Takeda Chemical Industries Ltd. Pharmaceuticals 90,527
- -------------------------------------------------------------------------------------------------------------
788,360
- -------------------------------------------------------------------------------------------------------------
Netherlands (12.89%)
4,935 ABN Amro Holdings NV Banks 79,467
3,304 Elsevier NV Media & Photography 39,057
1,167 Fortis Group NV Banks 30,281
850 Heineken NV Beverages 32,225
7,050 ING Groep NV Banks 179,732
4,330 Koninklijke Ahold NV Food & Drug Retailers 125,960
3,966 Koninklijke Philips Electronics
NV Household Goods & Textiles 117,843
945 Royal Dutch Petroleum Oil & Gas 47,864
1,565 TPG NV Support Services 33,852
785 VNU NV Media & Photography 24,115
- -------------------------------------------------------------------------------------------------------------
710,396
- -------------------------------------------------------------------------------------------------------------
Portugal (0.30%)
7,537 Electricidade de Portugal SA Electricity 16,370
- -------------------------------------------------------------------------------------------------------------
Singapore (0.32%)
1,500 Singapore Press Holdings Ltd. Media & Photography 17,709
- -------------------------------------------------------------------------------------------------------------
South Korea (0.34%)
825 Pohang Iron & Steel Co. - Spon.
ADR Steel & Other Materials 18,975
- -------------------------------------------------------------------------------------------------------------
</Table>
Berger IPT Funds o December 31, 2001 Annual Report
23
Berger IPT Funds
================================================================================
SCHEDULE OF INVESTMENTS
<Table>
<Caption>
December 31, 2001
- -------------------------------------------------------------------------------------------------------------
Country/Shares/Par Value Company Industry Value
- -------------------------------------------------------------------------------------------------------------
COMMON STOCK (94.42%) - CONTINUED
Spain (2.83%)
10,454 Banco Santander Central
Hispano SA Banks $ 87,566
5,116 Telefonica SA* Telecommunications Services 68,447
- -------------------------------------------------------------------------------------------------------------
156,013
- -------------------------------------------------------------------------------------------------------------
Sweden (0.58%)
5,860 Telefonaktiebolaget LM
Ericsson - Class B Information Technology Hardware 31,954
- -------------------------------------------------------------------------------------------------------------
Switzerland (10.85%)
770 Nestle SA Reg. Food Producers & Processors 164,244
2,360 Novartis AG Reg. Pharmaceuticals 85,322
1,130 Roche Holding Pharmaceuticals 80,685
1,447 Swiss Re Reg. Insurance 145,607
2,415 UBS AG Reg. Banks 121,943
- -------------------------------------------------------------------------------------------------------------
597,801
- -------------------------------------------------------------------------------------------------------------
United Kingdom (26.93%)
2,200 3i Group PLC Investment Co. 27,490
1,125 Astrazeneca PLC Pharmaceuticals 50,668
5,230 Barclays PLC Banks 172,977
6,710 Cable & Wireless PLC Telecommunications Services 32,240
7,229 Cadbury Schweppes PLC Food Producers & Processors 46,032
7,753 Compass Group PLC Restaurants/Pubs/Breweries 58,047
9,673 Diageo PLC Beverages 110,391
4,481 EMI Group PLC - Class B Media & Photography 23,257
6,735 GlaxoSmithKline PLC Pharmaceuticals 168,705
8,320 Hilton Group PLC Leisure, Entertainment, & Hotels 25,522
4,800 HSBC Holdings PLC Commercial Banks & Other Banks 56,245
14,209 Lloyds TSB Group PLC Banks 154,101
7,655 Prudential Corp. PLC Life Assurance 88,586
4,050 Reuters Group PLC Media & Photography 40,038
1,450 RMC Group PLC Construction & Building Materials 13,049
17,833 Shell Transport And Trading
Co. PLC Oil & Gas 122,369
1,614 Smiths Group PLC Aerospace & Defense 15,885
3,510 TI Automotive Ltd. -
Ordinary A Shares*@ ++ Automobile Components --
8,733 Unilever PLC Food Producers & Processors 71,606
63,852 Vodafone Group PLC Telecommunications Services 166,858
3,590 WPP Group PLC Media & Photography 39,665
- -------------------------------------------------------------------------------------------------------------
1,483,731
- -------------------------------------------------------------------------------------------------------------
Total Common Stock
(Cost $5,355,246) 5,203,003
- -------------------------------------------------------------------------------------------------------------
Repurchase Agreement (0.89%)
$49,000 State Street Repurchase Agreement,
1.40% dated December 31, 2001, to be
repurchased at $49,004 on January 2, 2002,
collateralized by FFCB Agency Note, 2.95% -
June 27, 2003 with a value of $50,063 49,000
- -------------------------------------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $49,000) 49,000
- -------------------------------------------------------------------------------------------------------------
Total Investments (Cost $5,404,246) (95.31%) 5,252,003
Total Other Assets, Less Liabilities (4.69%) 258,159
- -------------------------------------------------------------------------------------------------------------
Net Assets (100.00%) $5,510,162
- -------------------------------------------------------------------------------------------------------------
</Table>
Berger IPT Funds o December 31, 2001 Annual Report
24
BERGER IPT-
INTERNATIONAL FUND
================================================================================
SCHEDULE OF INVESTMENTS
Outstanding Forward Foreign Currency Contracts
<Table>
<Caption>
Contract Maturity Value on Unrealized
Currency Amount Date December 31, 2001 Appreciation
- --------------------------------------------------------------------------------------------------------
Sell Japanese Yen 5,631,000 1/10/2002 $ 43,003 $3,121
Sell Japanese Yen 6,977,000 1/28/2002 53,330 3,118
Sell Japanese Yen 3,609,000 2/13/2002 27,609 1,159
Sell Japanese Yen 5,409,000 2/19/2002 41,391 1,099
- --------------------------------------------------------------------------------------------------------
$165,333 $8,497
- --------------------------------------------------------------------------------------------------------
</Table>
* Non-income producing security.
+ Security is designated as collateral for forward foreign currency contracts.
ADR - American Depositary Receipt.
FFCB - Federal Farm Credit Bank.
PLC - Public Limited Company.
@ - Security valued at fair value determined in good faith pursuant to
procedures established by and under the supervision of the Fund's trustees.
++ Schedule of Restricted Securities and/or Illiquid Securities
<Table>
<Caption>
Fair Value
Date Fair as a %
Acquired Cost Value of Net Assets
- -------------------------------------------------------------------------------
TI Automotive Ltd. -
Ordinary A Shares 6/30/2001 $0 $0 0.00%
</Table>
See notes to financial statements.
Berger IPT Funds o December 31, 2001 Annual Report
25
Financial Statements and Notes
FINANCIAL
STATEMENTS
================================================================================
STATEMENTS OF ASSETS AND LIABILITIES
<Table>
<Caption>
Berger IPT- Berger IPT- Berger IPT- Berger IPT-
Berger IPT- Large Cap Small Company New Generation International
December 31, 2001 Growth Fund Growth Fund Growth Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Assets
Investments, at cost $ 8,036,897 $ 32,752,899 $ 47,727,216 $ 1,914,225 $ 5,404,246
- -----------------------------------------------------------------------------------------------------------------------------------
Investments, at value $ 8,399,557 $ 33,015,764 $ 56,301,132(1) $ 2,067,321 $ 5,252,003
Cash 5,316 48,444 6,148 194 140
Foreign cash (cost $19,570) -- -- -- -- 19,331
Receivables
Investment securities sold 22,169 356,210 258,250 37,429 --
Fund shares sold 26,475 -- 211,293 16,036 247,107
Dividends 2,917 21,426 -- -- 13,185
Interest 12 2,259 40 5 --
Due from Advisor 1,991 -- -- -- 1,700
Other investments (Note 3) -- -- 11,997,265 -- --
Net unrealized appreciation on forward
currency contracts -- -- -- -- 8,497
- -----------------------------------------------------------------------------------------------------------------------------------
Total Assets 8,458,437 33,444,103 68,774,128 2,120,985 5,541,963
- -----------------------------------------------------------------------------------------------------------------------------------
Liabilities
Payables
Investment securities purchased -- -- 268,990 5,793 14,072
Fund shares redeemed 8,365 89,723 255,994 -- 4,560
Securities loaned -- -- 11,997,265 -- --
Accrued investment advisory fees 5,247 21,348 40,635 2,459 3,724
Accrued custodian and accounting fees 2,503 3,912 5,656 3,680 3,621
Accrued transfer agent fees 373 282 1,042 -- 425
Accrued audit fees 5,941 5,940 3,903 8,349 5,335
Accrued shareholder reporting fees 231 20 24 -- --
Other accrued expenses -- -- -- -- 64
- -----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 22,660 121,225 12,573,509 20,281 31,801
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets Applicable to Shares Outstanding $ 8,435,777 $ 33,322,878 $ 56,200,619 $ 2,100,704 $ 5,510,162
- -----------------------------------------------------------------------------------------------------------------------------------
Components of Net Assets
Capital (par value and paid in surplus) $ 13,542,348 $ 48,421,999 $ 86,662,598 $ 5,040,454 $ 6,113,584
Undistributed net investment income -- 195,952 -- -- 112,851
Undistributed net realized loss on securities
and foreign currency transactions (5,469,231) (15,557,938) (39,035,895) (3,092,846) (572,070)
Net unrealized appreciation (depreciation) on
securities and foreign currency transactions 362,660 262,865 8,573,916 153,096 (144,203)
- -----------------------------------------------------------------------------------------------------------------------------------
$ 8,435,777 $ 33,322,878 $ 56,200,619 $ 2,100,704 $ 5,510,162
- -----------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding (par value $0.01,
unlimited shares authorized) 815,841 1,949,294 3,950,022 695,725 574,813
- -----------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Offering and Redemption Price
Per Share $ 10.34 $ 17.09 $ 14.23 $ 3.02 $ 9.59
- -----------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Includes securities on loan with value totaling $11,517,923.
See notes to financial statements.
Berger IPT Funds o December 31, 2001 Annual Report
26
FINANCIAL
STATEMENTS
================================================================================
STATEMENTS OF OPERATIONS
<Table>
<Caption>
Berger IPT- Berger IPT- Berger IPT- Berger IPT-
Berger IPT- Large Cap Small Company New Generation International
For the Year Ended December 31, 2001 Growth Fund Growth Fund Growth Fund Fund Fund
- --------------------------------------------------------------------------------------------------------------------------------
Investment Income
Dividends (net of foreign taxes) $ 26,448 $ 269,962 $ 11,583 $ 183 $ 169,969
Interest 16,867 286,306 84,840 4,559 4,286
Securities lending income -- -- 98,382 -- --
- --------------------------------------------------------------------------------------------------------------------------------
Total Income 43,315 556,268 194,805 4,742 174,255
- --------------------------------------------------------------------------------------------------------------------------------
Expenses
Investment advisory fees 67,686 315,910 531,507 17,318 49,514
Accounting fees 6,168 6,949 10,301 3,426 6,027
Custodian fees 6,125 21,572 20,533 13,120 11,846
Transfer agent fees 3,967 4,008 10,016 1,420 6,641
Registration fees 313 555 619 312 305
Audit fees 10,903 10,917 13,644 10,899 16,301
Legal fees 278 1,260 1,921 52 176
Trustees' fees and expenses 733 3,455 5,120 155 472
Shareholder reporting fees 1,135 7,603 17,255 255 1,445
Other expenses 121 897 1,666 79 432
- --------------------------------------------------------------------------------------------------------------------------------
Gross Expenses 97,429 373,126 612,582 47,036 93,159
Less fees waived and/or reimbursed
by Advisor (7,391) -- -- (23,671) (23,367)
Less earnings credits (5,042) (14,151) (3,675) (1,952) (112)
- --------------------------------------------------------------------------------------------------------------------------------
Net Expenses 84,996 358,975 608,907 21,413 69,680
- --------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) (41,681) 197,293 (414,102) (16,671) 104,575
- --------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Loss on Securities
and Foreign Currency Transactions
NET REALIZED LOSS ON SECURITIES AND FOREIGN CURRENCY
transactions (5,089,117) (13,189,923) (33,727,344) (2,690,389) (508,677)
Net change in unrealized appreciation
(depreciation) on securities and foreign
currency transactions 1,249,953 (1,832,185) 5,896,989 1,240,427 (982,032)
- --------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Loss on
Securities and Foreign Currency
Transactions (3,839,164) (15,022,108) (27,830,355) (1,449,962) (1,490,709)
- --------------------------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(3,880,845) $(14,824,815) $(28,244,457) $ (1,466,633) $ (1,386,134)
- --------------------------------------------------------------------------------------------------------------------------------
Foreign taxes withheld $ 176 $ 4,160 -- -- $ 12,277
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements.
Berger IPT Funds o December 31, 2001 Annual Report
27
Berger IPT Funds
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
Berger IPT-
Berger IPT- Large Cap
Growth Fund Growth Fund
- -----------------------------------------------------------------------------------------------------------------------------
Year Ended December 31 Year Ended December 31,
2001 2000 2001 2000
- -----------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income (loss) $ (41,681) $ (55,295) $ 197,293 $ 170,361
Net realized loss on securities and foreign
currency transactions (5,089,117) (352,254) (13,189,923) (2,083,279)
Net change in unrealized appreciation (depreciation) on
securities and foreign currency transactions 1,249,953 (3,012,134) (1,832,185) (6,140,656)
- -----------------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting
from Operations (3,880,845) (3,419,683) (14,824,815) (8,053,574)
- -----------------------------------------------------------------------------------------------------------------------------
From Dividends and Distributions to Shareholders
Dividends (from net investment income) -- -- (165,689) --
Distributions (from net realized gains on investments) -- (392,252) -- (1,466,713)
- -----------------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets from Dividends and
Distributions to Shareholders -- (392,252) (165,689) (1,466,713)
- -----------------------------------------------------------------------------------------------------------------------------
From Fund Share Transactions
Proceeds from shares sold 3,247,765 13,202,287 10,013,728 42,968,012
Net asset value of shares issued in reinvestment of dividends
and distributions -- 392,252 165,689 1,466,713
Payments for shares redeemed (2,661,575) (4,717,836) (17,884,960) (3,767,462)
- -----------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Derived from
Fund Share Transactions 586,190 8,876,703 (7,705,543) 40,667,263
- -----------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets (3,294,655) 5,064,768 (22,696,047) 31,146,976
Net Assets
Beginning of period 11,730,432 6,665,664 56,018,925 24,871,949
- -----------------------------------------------------------------------------------------------------------------------------
End of period $ 8,435,777 $ 11,730,432 $ 33,322,878 $ 56,018,925
- -----------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income/(Accumulated
net investment loss) -- $ (124) $ 195,952 $ 164,348
- -----------------------------------------------------------------------------------------------------------------------------
Transactions in Fund Shares
Shares sold 275,126 646,700 479,614 1,574,865
Shares issued to shareholders in reinvestment of
dividends and distributions -- 25,688 9,746 64,670
Shares redeemed (225,174) (253,389) (977,726) (142,230)
- -----------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Shares 49,952 418,999 (488,366) 1,497,305
Shares outstanding, beginning of period 765,889 346,890 2,437,660 940,355
- -----------------------------------------------------------------------------------------------------------------------------
Shares outstanding, end of period 815,841 765,889 1,949,294 2,437,660
- -----------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements.
Berger IPT Funds o December 31, 2001 Annual Report
28
FINANCIAL
STATEMENTS
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
Berger IPT- Berger IPT-
Small Company New Generation
Growth Fund Fund
- ----------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, Year Ended December 31,
2001 2000 2001 2000(1)
- ----------------------------------------------------------------------------------------------------------------------------
From Operations
Net investment loss $ (414,102) $ (119,014) $ (16,671) $ (11,632)
Net realized loss on securities and foreign
currency transactions (33,727,344) (4,257,018) (2,690,389) (402,457)
Net change in unrealized appreciation (depreciation) on
securities and foreign currency transactions 5,896,989 (11,179,370) 1,240,427 (1,087,331)
- ----------------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting
from Operations (28,244,457) (15,555,402) (1,466,633) (1,501,420)
- ----------------------------------------------------------------------------------------------------------------------------
From Dividends and Distributions to Shareholders
Distributions (from net realized gains on investments) (590,352) (1,290,949) -- --
- ----------------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets from Dividends and
Distributions to Shareholders (590,352) (1,290,949) -- --
- ----------------------------------------------------------------------------------------------------------------------------
From Fund Share Transactions
Proceeds from shares sold 35,219,713 108,366,775 2,589,104 4,505,462
Net asset value of shares issued in reinvestment of
dividends and distributions 590,352 1,284,440 -- --
Payments for shares redeemed (34,257,597) (50,656,713) (1,483,528) (542,281)
- ----------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Derived from
Fund Share Transactions 1,552,468 58,994,502 1,105,576 3,963,181
- ----------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets (27,282,341) 42,148,151 (361,057) 2,461,761
Net Assets
Beginning of period 83,482,960 41,334,809 2,461,761 --
- ----------------------------------------------------------------------------------------------------------------------------
End of period $ 56,200,619 $ 83,482,960 $ 2,100,704 $ 2,461,761
- ----------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Transactions in Fund Shares
Shares sold 2,181,046 4,082,734 682,453 475,308
Shares issued to shareholders in reinvestment of
dividends and distributions 41,869 62,321 -- --
Shares redeemed (2,135,475) (2,040,396) (402,586) (59,450)
- ----------------------------------------------------------------------------------------------------------------------------
Net Increase in Shares 87,440 2,104,659 279,867 415,858
Shares outstanding, beginning of period 3,862,582 1,757,923 415,858 --
- ----------------------------------------------------------------------------------------------------------------------------
Shares outstanding, end of period 3,950,022 3,862,582 695,725 415,858
- ----------------------------------------------------------------------------------------------------------------------------
</Table>
(1) For the period from May 1, 2000 (commencement of investment operations) to
December 31, 2000.
See notes to financial statements.
Berger IPT Funds o December 31, 2001 Annual Report
29
Financial Statements and Notes
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
Berger IPT-
International
Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
From Operations
Net investment income $ 104,575 $ 36,654
Net realized gain (loss) on securities and foreign currency transactions (508,677) 408,483
Net change in unrealized appreciation (depreciation) on securities and foreign currency transactions (982,032) (1,129,884)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting from Operations (1,386,134) (684,747)
- ---------------------------------------------------------------------------------------------------------------------------------
From Dividends and Distributions to Shareholders
Dividends (from net investment income) (55,471) (20,406)
Distributions (from net realized gains on investments) (363,084) --
- ---------------------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets from Dividends and Distributions to Shareholders (418,555) (20,406)
- ---------------------------------------------------------------------------------------------------------------------------------
From Fund Share Transactions
Proceeds from shares sold 3,475,569 5,688,143
Net asset value of shares issued in reinvestment of dividends and distributions 418,555 20,406
Payments for shares redeemed (3,290,420) (4,414,510)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Derived from Fund Share Transactions 603,704 1,294,039
- ---------------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets (1,200,985) 588,886
Net Assets
Beginning of period 6,711,147 6,122,261
- ---------------------------------------------------------------------------------------------------------------------------------
End of period $ 5,510,162 $ 6,711,147
- ---------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income $ 112,851 $ 49,304
- ---------------------------------------------------------------------------------------------------------------------------------
Transactions in Fund Shares
Shares sold 315,384 410,228
Shares issued to shareholders in reinvestment of dividends and distributions 44,958 1,609
Shares redeemed (297,791) (317,947)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Increase in Shares 62,551 93,890
Shares outstanding, beginning of period 512,262 418,372
- ---------------------------------------------------------------------------------------------------------------------------------
Shares outstanding, end of period 574,813 512,262
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements.
Berger IPT Funds o December 31, 2001 Annual Report
30
NOTES TO FINANCIAL
STATEMENTS
December 31, 2001
================================================================================
1. Organization and Significant Accounting Policies
Organization
Berger Institutional Products Trust (the "Trust"), a Delaware business trust,
was established on October 17, 1995 as a diversified open-end management
investment company. The Trust is authorized to issue an unlimited number of
shares of beneficial interest in series or portfolios. Currently, Berger
IPT-Growth Fund ("IPT-Growth"), Berger IPT-Large Cap Growth Fund ("IPT-LCG")
(formerly Berger IPT-Growth and Income Fund), Berger IPT-Small Company Growth
Fund ("IPT-SCG"), Berger IPT-New Generation Fund ("IPT-NGF") and Berger
IPT-International Fund ("IPT-INTL"), (individually the "Fund" and collectively
the "Funds") are the only portfolios established under the Trust, although
others may be added in the future (Note 6 - Other Matters).
The Trust is registered under the Investment Company Act of 1940 (the "1940
Act") and its shares are registered under the Securities Act of 1933. Shares of
each Fund are fully paid and non-assessable when issued. All shares issued by a
particular Fund participate equally in dividends and other distributions by that
Fund. The Trust's shares are not offered directly to the public, but are sold
exclusively to insurance companies ("Participating Insurance Companies") as a
pooled funding vehicle for variable annuity and variable life insurance
contracts issued by separate accounts of Participating Insurance Companies and
to qualified plans.
Effective May 1, 2001, the trustees of the Berger IPT-Growth and Income Fund
approved a change in the name and non-fundamental investment strategies of the
Fund from that of a Growth and Income Fund to a Large Cap Growth Fund, and in
doing so eliminated the Fund's secondary investment objective. As a result,
IPT-LCG will, under normal circumstances, invest at least 65% of its total
assets in equity securities of companies whose market capitalization, at the
time of initial purchase, is $10 billion or more.
At December 31, 2001, Berger LLC ("Berger") directly or indirectly owned 14% and
32% of the outstanding shares of IPT-NGF and IPT-INTL, respectively. Berger did
not own, directly or indirectly, any of the outstanding shares of IPT-Growth,
IPT-LCG or IPT-SCG at December 31, 2001.
Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with accounting principles generally accepted in the
United States of America.
Investment Valuation
Securities are valued at the close of the regular trading session of the New
York Stock Exchange (the "Exchange") on each day that the Exchange is open.
Securities listed on national exchanges, the Nasdaq Stock Market and foreign
exchanges are valued at the last sale price on such markets, or, if no last sale
price is available, they are valued using the mean between their current bid and
ask prices. Prices of foreign securities are converted to U.S. dollars using
exchange rates determined prior to the close of the Exchange. Securities traded
in the over-the-counter market are valued at the mean between their current bid
and ask prices. Short-term obligations maturing within sixty days are valued at
amortized cost, which approximates market value. Securities for which quotations
are not readily available are valued at fair values as determined in good faith
pursuant to consistently applied procedures established by the trustees of the
Funds. Certain Funds may have registration rights for specific restricted
securities, which may require that registration cost be borne by that Fund.
Generally, trading in foreign securities markets is substantially completed each
day at various times prior to the close of the Exchange. The values of foreign
securities used in computing the Funds' net asset values are determined as of
the earlier of such market close or the closing time of the Exchange.
Occasionally, events affecting the value of such securities may occur between
the times at which they are determined and the close of the Exchange, or when
the foreign market on which such securities trade is closed but the Exchange is
open, which will not be reflected in the computation of net asset value. If
during such periods, events occur that materially affect the value of such
securities, the securities will be valued at their fair market value as
determined in good faith pursuant to consistently applied procedures established
by the trustees of the Funds.
Calculation of Net Asset Value
Each Fund's per share calculation of net asset value is determined by dividing
the total value of it assets, less liabilities, by the total number of shares
outstanding.
Federal Income Tax Status
It is the Funds' intention to comply with the provisions of subchapter M of the
Internal Revenue Code ("Code") applicable to regulated investment companies and
to distribute all of their taxable income, if any, to shareholders. Therefore,
no income tax provision is required.
Berger IPT Funds o December 31, 2001 Annual Report
31
Financial Statements and Notes
================================================================================
Foreign Currency Translation
Assets and liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the prevailing market rates as quoted by one or
more banks or dealers on the date of valuation. The cost of securities is
translated into U.S. dollars at the rates of exchange prevailing when such
securities were acquired. Income and expenses are translated into U.S. dollars
at rates of exchange prevailing when accrued.
Investment Transactions and Investment Income
Investment transactions are accounted for on the date investments are purchased
or sold. Dividend income is recorded on the ex-dividend date except that certain
dividends from foreign securities are recorded as soon as a Fund is informed of
the ex-dividend date if such information is obtained subsequent to the
ex-dividend date. Dividend income is recorded net of foreign taxes withheld.
Interest income is recorded on the accrual basis and includes accretion of
discount and amortization of premium (see "Change in Accounting Principle"
note). Gains and losses are computed on the identified cost basis for both
financial statement and federal income tax purposes for all securities.
Change in Accounting Principle
In November 2000, a revised AICPA Audit and Accounting Guide, Audits of
Investment Companies (the "Guide"), was issued, and is effective for fiscal
years beginning after December 15, 2000. Effective January 1, 2001, the Funds
adopted the provisions of the Guide and, as a result, amortize discount and
premium on debt securities. Prior to January 1, 2001, the Funds did not amortize
premiums on debt securities. The cumulative effect of this accounting change had
no impact on the total net assets of the Funds. Additionally, the effect of this
change had no material impact on the Funds' respective components of net assets
or on their changes in net assets from operations for the year ended December
31, 2001.
Common Expenses
Certain expenses, which are not directly allocable to a specific Fund of the
Trust, are allocated pro rata to each of the Funds.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increases and decreases in net assets from operations
during the reporting period. Actual results may differ from those estimates.
2. Agreements
Berger serves as the investment advisor to the Funds. As compensation for its
services to the Funds, Berger receives an investment advisory fee, which is
accrued daily at the applicable rate and paid monthly according to the following
schedule:
<Table>
<Caption>
Average Daily
Fund Net Assets Annual Rate
- -------------------------------------------------------------------------------
IPT-SCG, IPT-NGF, IPT-INTL First $500 million .85%
Next $500 million .80%
Over $1 billion .75%
- -------------------------------------------------------------------------------
IPT-Growth, IPT-LCG First $500 million .75%
Next $500 million .70%
Over $1 billion .65%
</Table>
Berger has delegated the day-to-day portfolio management of IPT-Intl to Bank of
Ireland Asset Management (U.S.) Limited ("BIAM"), which serves as the investment
sub-advisor. As sub-advisor to IPT-Intl, BIAM receives a sub-advisory fee from
Berger based on the average daily net assets of the Fund.
Berger has agreed to waive its advisory fees and reimburse expenses to the Funds
to the extent that normal operating expenses in any fiscal year (including the
advisory fee but excluding brokerage commissions, interest, taxes and
extraordinary expenses) exceed 1.00% of the average daily net assets of both
IPT-Growth and IPT-LCG, 1.15% of the average daily net assets of IPT-SCG and
IPT-NGF, and 1.20% of the average daily net assets of IPT-Intl.
The Funds have entered into administrative services agreements with Berger.
Berger currently provides these administrative services to the Funds at no cost.
The Trust, on behalf of the Funds, has entered into a custody, recordkeeping and
pricing agreement with State Street Bank and Trust Company ("State Street"). The
custody, recordkeeping and pricing agreement provides for the monthly payment of
a fee computed as a percentage of average daily net assets on a total
relationship basis with other Berger Funds. State Street's fees for custody,
recordkeeping and pricing are subject to reduction by credits earned by each
Fund, based on the cash balances of each Fund held by State Street as custodian.
Such reductions are included in Earnings Credits in the Statement of Operations.
Certain officers and/or directors of Berger are also officers and/or trustees of
the Trust. Trustees who are not affiliated with Berger are compensated for their
services. Such fees are allocated among the entire Berger Funds complex. For the
year ended December 31, 2001, such trustees' fees and expenses totaled $9,935
for the Funds.
Berger IPT Funds o December 31, 2001 Annual Report
32
NOTES TO FINANCIAL
STATEMENTS
December 31, 2001
================================================================================
The Trust adopted a trustee fee deferral plan (the "Plan") which allows the
non-affiliated trustees to defer the receipt of all or a portion of the trustee
fees payable. The deferred fees are invested in various funds advised by Berger
until distribution in accordance with the Plan.
3. Investment Transactions
Purchases and Sales
Purchases and sales proceeds of investment securities (excluding short-term
securities) for the year ended December 31, 2001, were as follows:
<Table>
<Caption>
Fund Purchases Sales
- -------------------------------------------------------------------------------
IPT-Growth $ 12,993,108 $ 12,516,271
IPT-LCG 41,007,081 48,268,203
IPT-SCG 100,602,289 98,133,141
IPT-NGF 5,632,765 4,859,752
IPT-INTL 1,454,990 1,396,033
- -------------------------------------------------------------------------------
</Table>
There were no purchases or sales of long-term U.S. government securities during
the year.
Futures and Forward Contracts
Each Fund may hold certain types of forward foreign currency exchange contracts
and/or futures contracts (except for IPT-INTL, which may only hold forward
foreign currency exchange contracts) for the purpose of hedging each portfolio
against exposure to market value fluctuations. The use of such instruments may
involve certain risks as a result of unanticipated movements in the market, a
lack of correlation between the value of such instruments and the assets being
hedged, or unexpected adverse price movements. In addition, there can be no
assurance that a liquid secondary market will exist for the instrument. Upon
entering a futures contract, a Fund deposits and maintains as collateral such
initial margin as may be required by the exchanges on which the transaction is
effected. Pursuant to the contracts, a Fund agrees to receive from or pay to the
broker an amount of cash equal to the daily fluctuation in the value of the
contract. Realized gains or losses on futures contracts are presented as a
separate component in the Statement of Operations, if applicable. At December
31, 2001, the Funds held no outstanding futures contracts. Realized and
unrealized gains or losses on forward foreign currency contracts are included in
Net Realized and Unrealized Gain (Loss) on Securities and Foreign Currency
Transactions in the Statement of Operations.
Securities Lending
Under an agreement with State Street, IPT-SCG has the ability to lend securities
to brokers, dealers and other authorized financial institutions. Loans of
portfolio securities are collateralized by cash remitted from the borrower of
such securities in an amount greater than the market value of the loaned
securities at the time the loan is made. The cash collateral received is
invested in an unaffiliated money market fund and is evaluated daily to ensure
that its market value exceeds the current market value of the loaned securities.
Income generated by such investment, net of any rebates paid to the borrower, is
split between the Fund and State Street, as lending agent.
Repurchase Agreements
Repurchase agreements held by a Fund are fully collateralized by U.S. government
or government agency securities and such collateral is in the possession of the
Fund's custodian. The collateral is evaluated daily to ensure its market value
exceeds the current market value of the repurchase agreements including accrued
interest. In the event of default on the obligation to repurchase, a Fund has
the right to liquidate the collateral and apply the proceeds in satisfaction of
the obligation. In the event of default or bankruptcy by the other party to the
agreement, realization and/or retention of the collateral or proceeds may be
subject to legal proceedings.
Concentration of Risk
The Funds may have elements of risk due to concentrated investments in specific
industries or foreign issuers located in a specific country. Such concentrations
may subject the Funds to additional risk resulting from future political or
economic conditions and/or possible impositions of adverse foreign governmental
laws or currency exchange restrictions. Net Realized and Unrealized Gain (Loss)
on Securities and Foreign Currency Transactions in the Statements of Operations
includes fluctuations from currency exchange rates and fluctuations in market
value.
Berger IPT Funds o December 31, 2001 Annual Report
33
Financial Statements and Notes
================================================================================
4. Federal Income Taxes
Dividends paid by the Funds from net investment income and distributions of net
realized short-term capital gains are, for federal income tax purposes, taxable
as ordinary income to shareholders. The tax composition of dividends and
distributions to shareholders was as follows:
<Table>
<Caption>
IPT-Growth IPT-LCG IPT-SCG IPT-NGF IPT-INTL
- ----------------------------------------------------------------------------------------------------------
Ordinary income -- $165,689 -- -- $ 55,471
Long-term capital gains -- -- $590,352 -- $363,084
- ---------------------------------------------------------------------------------------------------------
</Table>
Dividends received by shareholders of the Funds, which are derived from foreign
source income, and foreign taxes paid by the Funds are to be treated, to the
extent allowable under the Code, as if received and paid by the shareholders of
the Funds. During the year ended December 31, 2001, IPT-INTL paid $12,277 of
foreign taxes on $182,247 of foreign source income.
The Funds distribute net realized capital gains, if any, to their shareholders
at least annually, if not offset by capital loss carryovers. Income
distributions and capital gain distributions are determined in accordance with
federal income tax regulations, which may differ from generally accepted
accounting principles. These differences are primarily due to the differing
treatment of net operating losses and foreign currency transactions.
Accordingly, these permanent differences have been reclassified to
paid-in-capital.
The tax components of capital represent distribution requirements the Funds must
satisfy and losses or tax deductions the Funds may be able to offset against
income and capital gains realized in future years.
<Table>
<Caption>
Tax Components of Capital
-------------------------
IPT-Growth IPT-LCG IPT-SCG IPT-NGF IPT-INTL
- ------------------------------------------------------------------------------------------------------------------
Federal Tax Cost of Securities $8,291,123 $34,768,795 $48,414,654 $1,982,700 $5,492,130
Tax appreciation $ 845,315 $ 2,903,018 $11,434,174 $249,078 $546,525
Tax depreciation (736,881) (4,656,049) (3,547,696) (164,457) (786,652)
Net tax appr./(depr.) 108,434 (1,753,031) 7,886,478 84,621 (240,127)
Undist. ordinary income -- 195,952 -- -- 121,336
Accumulated capital losses (5,106,202) (10,165,612) (36,962,402) (2,956,142) (323,870)
Post-October loss deferral (108,803) (3,376,430) (1,386,055) (68,229) (160,317)
Cumulative effect of other
timing differences -- -- -- -- (8,485)
- ------------------------------------------------------------------------------------------------------------------
</Table>
The primary difference between book and tax appreciation/depreciation is due to
wash sale loss deferrals. Accumulated capital losses represent net capital loss
carryovers, which may be used to offset future realized capital gains for
federal income tax purposes, and expire in 2008 and 2009. During the year ended
December 31, 2001, the Funds elected to defer the post-October 31 net capital
and/or currency losses, above, to the year ended December 31, 2002. The
cumulative effect of other timing differences is primarily composed of foreign
currency contracts.
5. Line of Credit
The Funds are party to an ongoing agreement with State Street that allows the
funds managed by Berger, collectively, to borrow up to $100 million, subject to
certain conditions, for temporary or emergency purposes. Interest, based on the
Federal Funds Rate plus a spread, is charged to the specific party that executes
the borrowing. In addition, the unsecured line of credit requires a quarterly
payment of a commitment fee based on the average daily unused portion of the
line of credit. No Fund had line of credit borrowings outstanding at December
31, 2001.
6. Other Matters
Berger IPT-Large Cap Value Fund ("IPT-LCV") and Berger IPT-Mid Cap Value Fund
("IPT-MCV"), each a diversified, open-end management investment company
registered under the 1940 Act, commenced operations on December 31, 2001, as
separate series established under the Trust. Each Fund was initially funded by
Berger with $250,000 in capital on December 31, 2001 and each Fund consisted of
25,000 shares outstanding (with a par value of $0.01 per share and unlimited
shares authorized) with net asset values per share of $10.00. Neither Fund had
financial highlights for the one day of operations during the period ended
December 31, 2001. The significant accounting policies consistently followed by
the Funds in the preparation of their financial statements also apply to IPT-LCV
and IPT-MCV.
Berger IPT Funds o December 31, 2001 Annual Report
34
NOTES TO FINANCIAL
STATEMENTS
DECEMBER 31, 2001
================================================================================
7. Subsequent Events
In January 2002, the trustees of the Trust approved the liquidation of IPT-NGF,
subject to shareholder approval. The liquidation of the Fund is expected to be
completed by the second quarter of 2002.
In January 2002, Berger changed its name to Berger Financial Group LLC. This
name change will not impact the investment advisory services provided to or on
the fees borne by the Funds for advisory services.
Berger IPT Funds o December 31, 2001 Annual Report
35
FINANCIAL
HIGHLIGHTS
Financial Highlights
================================================================================
BERGER IPT-GROWTH FUND
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<Table>
<Caption>
Year Ended December 31,
- ------------------------------------------------------------------------------------------------------------------------------------
2001 2000 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 15.32 $ 19.22 $ 12.89 $ 11.11 $ 10.39
- ------------------------------------------------------------------------------------------------------------------------------------
From investment operations
Net investment income (loss) -- (0.00)(1) -- 0.02 0.01
Net realized and unrealized gains (losses) from
investments and foreign currency transactions (4.98) (3.37) 6.33 1.79 1.39
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (4.98) (3.37) 6.33 1.81 1.40
- ------------------------------------------------------------------------------------------------------------------------------------
Less dividends and distributions
Dividends (from net investment income) -- -- (0.00)(1) (0.02) (0.04)
Distributions (from net realized gains on investments) -- (0.53) -- (0.01) (0.64)
- ------------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- (0.53) -- (0.03) (0.68)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.34 $ 15.32 $ 19.22 $ 12.89 $ 11.11
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return (32.51)% (17.51)% 49.13% 16.29% 13.76%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period $8,435,777 $11,730,432 $6,665,664 $3,710,109 $1,233,892
Net expense ratio to average net assets(2) 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income (loss)
to average net assets (0.46)% (0.48)% (0.05)% 0.29% 0.51%
Gross expense ratio to average net assets 1.08% 1.30% 2.19% 2.88% 9.18%
Portfolio turnover rate 144% 80% 231% 258% 246%
</Table>
(1) Amount represents less than $0.01 per share.
(2) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Advisor. Gross and net expenses do not include the
deduction of any charges attributable to any particular variable insurance
contract.
BERGER IPT-LARGE CAP GROWTH FUND
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD
<Table>
<Caption>
Year Ended December 31,
--------------------------------------------------------------------
2001 2000 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 22.98 $ 26.45 $ 16.63 $ 13.39 $ 11.14
- -----------------------------------------------------------------------------------------------------------------------------------
From investment operations
Net investment income 0.12 0.05 0.02 0.10 0.01
Net realized and unrealized gains (losses) from
investments and foreign currency transactions (5.92) (2.90) 9.80 3.25 2.75
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (5.80) (2.85) 9.82 3.35 2.76
- -----------------------------------------------------------------------------------------------------------------------------------
Less dividends and distributions
Dividends (from net investment income) (0.09) -- -- (0.11) (0.10)
Distributions (from net realized gains on investments) -- (0.62) -- -- (0.41)
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (0.09) (0.62) -- (0.11) (0.51)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 17.09 $ 22.98 $ 26.45 $ 16.63 $ 13.39
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return (25.26)% (10.75)% 59.05% 25.03% 24.99%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period $33,322,878 $56,018,925 $24,871,949 $9,084,022 $1,501,118
Net expense ratio to average net assets(1) 0.89% 0.90% 1.00% 1.00% 1.00%
Ratio of net investment income
to average net assets 0.47% 0.38% 0.10% 1.10% 1.39%
Gross expense ratio to average net assets 0.89% 0.90% 1.19% 1.99% 9.62%
Portfolio turnover rate 102% 64% 149% 426% 215%
</Table>
(1) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Advisor. Gross and net expenses do not include the
deduction of any charges attributable to any particular variable insurance
contract.
See notes to financial statements.
Berger IPT Funds o December 31, 2001 Annual Report
36
FINANCIAL
HIGHLIGHTS
================================================================================
BERGER IPT-SMALL COMPANY GROWTH FUND
For a Share Outstanding Throughout the Period
<Table>
<Caption>
Year Ended December 31,
---------------------------------------------------------------------
2001 2000 1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 21.61 $ 23.51 $ 12.28 $ 12.06 $ 9.95
- -----------------------------------------------------------------------------------------------------------------------------------
From investment operations
Net investment income (loss) -- -- -- -- 0.00(2)
Net realized and unrealized gains (losses) from
investments and foreign currency transactions (7.23) (1.56) 11.23 0.23 2.11
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (7.23) (1.56) 11.23 0.23 2.11
- -----------------------------------------------------------------------------------------------------------------------------------
Less dividends and distributions
Dividends (in excess of net investment income) -- -- -- (0.01) --
Distributions (from net realized gains on investments) (0.15) (0.34) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (0.15) (0.34) -- (0.01) --
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 14.23 $ 21.61 $ 23.51 $ 12.28 $ 12.06
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return (33.47)% (6.55)% 91.45% 1.87% 21.21%
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $56,200,619 $83,482,960 $41,334,809 $9,858,303 $2,719,559
Net expense ratio to average net assets(1) 0.98% 0.98% 1.15% 1.15% 1.15%
Ratio of net investment income (loss)
to average net assets (0.66)% (0.16)% (0.56)% (0.11)% 0.05%
Gross expense ratio to average net assets 0.98% 0.98% 1.53% 2.19% 5.81%
Portfolio turnover rate 160% 111% 179% 147% 194%
</Table>
(1) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Advisor. Gross and net expenses do not include the
deduction of any charges attributable to any particular variable insurance
contract.
(2) Amount represents less than $0.01 per share.
BERGER IPT-NEW GENERATION FUND
For a Share Outstanding Throughout the Period
<Table>
<Caption>
Year Ended December 31,
- -------------------------------------------------------------------------------------------
2001 2000(1)
- -------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 5.92 $ 10.00
- --------------------------------------------------------------------------------------------
From investment operations
Net realized and unrealized losses from
investments and foreign currency transactions (2.90) (4.08)
- --------------------------------------------------------------------------------------------
Total from investment operations (2.90) (4.08)
- --------------------------------------------------------------------------------------------
Net asset value, end of period $ 3.02 $ 5.92
- --------------------------------------------------------------------------------------------
Total Return(2) (48.99)% (40.80)%
- --------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $2,100,704 $2,461,761
Net expense ratio to average net assets(3) 1.15% 1.15%(4)
Ratio of net investment loss to average net assets (0.82)% (0.69)%(4)
Gross expense ratio to average net assets 2.31% 3.52%(4)
Portfolio turnover rate(2) 256% 123%
</Table>
(1) For the period from May 1, 2000 (commencement of investment operations) to
December 31, 2000.
(2) Not annualized.
(3) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Advisor. Gross and net expenses do not include the
deduction of any charges attributable to any particular variable insurance
contract.
(4) Annualized.
See notes to financial statements.
Berger IPT Funds o December 31, 2001 Annual Report
37
Financial Highlights
================================================================================
BERGER IPT-INTERNATIONAL FUND
For a Share Outstanding Throughout the Period
<Table>
<Caption>
Year Ended December 31,
- ---------------------------------------------------------------------------------------------------------------------------------
2001 2000 1999 1998 1997(1)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 13.10 $ 14.63 $ 11.21 $ 9.79 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
From investment operations
Net investment income 0.21 0.10 0.03 0.08 0.05
Net realized and unrealized gains (losses) from
investments and foreign currency transactions (2.89) (1.59) 3.47 1.50 (0.26)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (2.68) (1.49) 3.50 1.58 (0.21)
- ---------------------------------------------------------------------------------------------------------------------------------
Less dividends and distributions
Dividends (from net investment income) (0.11) (0.04) (0.08) (0.14) --
Distributions (from net realized gains on investments) (0.72) -- -- (0.02) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions (0.83) (0.04) (0.08) (0.16) --
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.59 $ 13.10 $ 14.63 $ 11.21 $ 9.79
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return(2) (20.27)% (10.18)% 31.24% 16.13% (2.10)%
- ---------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $5,510,162 $6,711,147 $6,122,261 $5,430,076 $2,705,831
Net expense ratio to average net assets(3) 1.20% 1.20% 1.20% 1.20% 1.20%(4)
Ratio of net investment income
to average net assets 1.80% 0.55% 0.51% 2.85% 0.86%(4)
Gross expense ratio to average net assets 1.60% 2.14% 2.46% 2.85% 3.83%(4)
Portfolio turnover rate(2) 24% 35% 26% 20% 14%
</Table>
(1) For the period from May 1, 1997 (commencement of investment operations) to
December 31, 1997.
(2) Not annualized.
(3) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Advisor. Gross and net expenses do not include the
deduction of any charges attributable to any particular variable insurance
contract.
(4) Annualized.
See notes to financial statements.
Berger IPT Funds o December 31, 2001 Annual Report
38
REPORT OF INDEPENDENT
ACCOUNTANTS
================================================================================
To the Board of Trustees and Shareholders of Berger Institutional Products Trust
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Berger IPT-Growth Fund, Berger
IPT-Large Cap Growth Fund, formerly Berger IPT-Growth and Income Fund, Berger
IPT-Small Company Growth Fund, Berger IPT-New Generation Fund, Berger
IPT-International Fund, Berger IPT-Large Cap Value Fund and Berger IPT-Mid Cap
Value Fund (constituting Berger Institutional Products Trust, hereafter referred
to as the "Trust") at December 31, 2001, the results of each of their operations
for the periods indicated, the changes in each of their net assets for each of
the periods indicated and the financial highlights for each of the periods
indicated, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Trust's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 2001 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Denver, Colorado
February 4, 2002
Berger IPT Funds o December 31, 2001 Annual Report
39
OTHER MATTERS
(UNAUDITED)
================================================================================
Dividends Received Deduction Information
For the fiscal year ended December 31, 2001, 99.79% and 0% of the ordinary
income distributions declared by IPT-LCG and IPT-INTL, respectively, qualified
for the dividends received deduction available to corporate shareholders.
Berger IPT Funds o December 31, 2001 Annual Report
40
FUND TRUSTEES AND
OFFICERS (UNAUDITED)
================================================================================
Each Fund is supervised by a board of trustees who are responsible for major
decisions about the Funds' policies and overall Fund oversight. Each Fund's
board hires the companies that run day-to-day Fund operations, such as the
investment adviser, administrator, transfer agent and custodian. The following
table provides information about each of the trustees and officers of the Trust.
<Table>
<Caption>
POSITION(S)
HELD WITH THE NUMBER OF
TRUST, TERM OF FUNDS IN
OFFICE AND FUND COMPLEX OTHER
NAME, ADDRESS LENGTH OF OVERSEEN BY DIRECTORSHIPS
AND AGE TIME SERVED PRINCIPAL OCCUPATIONS DURING THE PAST 5 YEARS TRUSTEE HELD BY TRUSTEE
- -----------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT
TRUSTEES
- -----------------------------------------------------------------------------------------------------------------------------------
Michael Owen Chairman of Dean of Zayed University (since September 2000). Formerly self- 22 N/A
210 University the Board employed as a financial and management consultant, and in real
Blvd. estate development (from June 1999 to September 2000). Dean
Suite 800 (from 1993 to June 1999), and a member of the Finance faculty
Denver,CO 80206 (from 1989 to 1993), of the College of Business, Montana State
University. Formerly, Chairman and Chief Executive Officer of
DOB: 1937 Royal Gold, Inc. (mining) (1976 to 1989).
- ------------------------------------------------------------------------------------------------------------------------------------
Dennis E. Baldwin Trustee President, Baldwin Financial Counseling (since July 1991). 22 N/A
210 University Formerly, Vice President and Denver Office Manager of Merrill
Blvd. Lynch Capital Markets (1978 to 1990).
Suite 800
Denver,CO 80206
DOB: 1928
- ------------------------------------------------------------------------------------------------------------------------------------
Katherine A. Vice Chair of Managing Principal (since September 1987), Sovereign Financial 22 N/A
Cattanach the Board Services, Inc. (investment consulting firm). Executive Vice
210 University President (1981 to 1988), Captiva Corporation, Denver, Colorado
Blvd. (private investment management firm). Ph.D. in Finance (Arizona
Suite 800 State University); Chartered Financial Analyst (CFA).
Denver,CO 80206
DOB: 1945
- ------------------------------------------------------------------------------------------------------------------------------------
Paul R. Knapp Trustee Executive Officer of DST Systems, Inc. ("DST"), a publicly traded 22 Director and Vice
210 University information and transaction processing company, which acts as the President (February
Blvd. Funds' transfer agent (since October 2000). President of Vermont 1998 to November of
Suite 800 Western Assurance, Inc., a wholly owned subsidiary of DST 2000) West Side
Denver,CO 80206 Systems (since December 2000). President, Chief Executive Investments, Inc.
Officer and a director (September 1997 to October 2000) of DST (investments), a
DOB: 1945 Catalyst, Inc., an international financial markets consulting, wholly owned
software and computer services company, (now DST International), subsidiary of DST
a subsidiary of DST). Previously (1991 to October 2000), Chairman, Systems,Inc.
President, Chief Executive Officer and a director of Catalyst
Institute (international public policy research organization
focused primarily on financial markets and institutions); also
(1991 to September 1997), Chairman, President, Chief Executive
Officer Annual Report and a director of Catalyst Consulting
(international financial institutions business consulting firm).
- ------------------------------------------------------------------------------------------------------------------------------------
Harry T. Lewis, Jr. Trustee Lewis Investments (since June 1988) (self-employed private 22 Director, J.D.
210 University investor). Formerly, Senior Vice President, Rocky Mountain Edwards & Co.(1995
Blvd. Region, of Dain Bosworth Incorporated and member of that firm's to March 2002);
Suite 800 Management Committee (1981 to 1988). Director, National
Denver,CO 80206 Fuel Corporation
(oil & gas
DOB: 1933 production);
Advisory Director,
Otologics, LLC,
(implantable
hearing aid) (since
1999); Member of
Community Advisory
Board, Wells Fargo
Berger IPT Funds
Bank-Denver
</Table>
Berger IPT Funds o December 31, 2001 Annual Report
41
<Table>
<Caption>
==================================================================================================================================
POSITION(S)
HELD WITH NUMBER OF
THE TRUST, FUNDS IN
TERM OF FUND
OFFICE AND COMPLEX OTHER
NAME, ADDRESS LENGTH OF OVERSEEN BY DIRECTORSHIPS
AND AGE TIME SERVED PRINCIPAL OCCUPATIONS DURING THE PAST 5 YEARS TRUSTEE HELD BY TRUSTEE
- ----------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT
TRUSTEES
- ----------------------------------------------------------------------------------------------------------------------------------
William Sinclaire Trustee President (since January 1998), Santa Clara LLC 22 N/A
210 University (privately owned agriculture company). President
Blvd. (January 1963 to January 1998), Sinclaire Cattle
Suite 800 Co. (privately owned agriculture company).
Denver, CO 80206
DOB: 1928
- ----------------------------------------------------------------------------------------------------------------------------------
Albert C. Yates Trustee President (since 1990), Chancellor and Professor of 22 Member, Board of
210 University Chemistry - Department of Chemistry, of Colorado State Directors, Adolph
Blvd. University. Formerly Executive Vice President and Provost Coors Company
Suite 800 (1983 to 1990), Academic Vice President and Provost (brewing company)
Denver, CO (1981 to 1983) and Professor of Chemistry (1981 to 1990) (since 1998);
80206 of Washington State University. Vice President and Member Board of
University Dean for Graduate Studies and Research and Directors, Dominion
DOB: 1941 Professor of Chemistry of the University of Cincinnati Industrial Capital
(1977 to 1981). Bank (1999 to
2000); Member,
Board of Directors,
Centennial Bank of
the West (since
2001)
- ----------------------------------------------------------------------------------------------------------------------------------
INTERESTED Messr. Thompson is considered an interested person of the Funds due to his positions held at Berger Financial
TRUSTEES AND Group LLC (or its affiliated companies).
OFFICERS OF
THE TRUST
- ----------------------------------------------------------------------------------------------------------------------------------
Jack R. Thompson President and President and a director since May 1999 (Executive Vice 22 Audit Committee
210 University Trustee of the President from February 1999 to May 1999) of Berger Growth Member of the
Blvd. Trust (since Fund and Berger Large Cap Growth Fund. President and a Public Employees'
Suite 800 May 1999) trustee since May 1999 (Executive Vice President from Retirement
Denver, CO 80206 February 1999 to May 1999) of Berger Investment Portfolio Association of
Trust, Berger Institutional Products Trust, Berger Worldwide Colorado (pension
DOB: 1949 Funds Trust, Berger Worldwide Portfolios Trust and Berger plan) from November
Omni Investment Trust. President and Chief Executive Officer 1997 to December
since June 1999 (Executive Vice President from February 1999 2001.
to June 1999) of Berger Financial Group LLC (formerly Berger
LLC). Director, President and Chief Executive Officer of
Stilwell Management, Inc. (since September 1999). President
and Chief Executive Officer of Berger/Bay Isle LLC (since
May 1999). Self-employed as a consultant from July 1995
through February 1999. Director of Wasatch Advisors
(investment management) from February 1997 to February
1999.
- ----------------------------------------------------------------------------------------------------------------------------------
OFFICERS OF THE
TRUST
- ----------------------------------------------------------------------------------------------------------------------------------
Jay W. Tracey, Executive Vice Executive Vice President of the Berger Funds (since August
CFA President of 2000). Executive Vice President and Chief Investment Officer
210 University the Trust of Berger Financial Group LLC (since June 2000). Portfolio
Blvd. (since August manager of the Berger Growth Fund (since August 2000); team
Suite 800 2000) and portfolio manager of the Berger Select Fund (since June 2000)
Denver,CO 80206 Portfolio and the Berger Large Cap Growth Fund (from January 2001
Manager through December 2001). Team portfolio manager (since
DOB: 1954 (since June December 2001) of the Berger Mid Cap Growth Fund and team
2000) interim portfolio manager (since December 2001) of the Berger
New Generation Fund. Formerly, Vice President and portfolio
manager at Oppenheimer Funds, Inc. (September 1994 to May
2000).
</Table>
Berger IPT Funds o December 31, 2001 Annual Report
42
FUND TRUSTEES AND
OFFICERS (UNAUDITED)
================================================================================
<Table>
<Caption>
POSITION(S)
HELD WITH THE
TRUST, TERM OF
OFFICE AND
NAME, ADDRESS LENGTH OF
AND AGE TIME SERVED PRINCIPAL OCCUPATIONS DURING THE PAST 5 YEARS
- -------------------------------------------------------------------------------------------------------------
OFFICERS OF THE
TRUST
- -------------------------------------------------------------------------------------------------------------
Paul A. LaRocco, Vice President Vice President (since February 2001) and portfolio manager
CFA of the Trust (since January 2001) of the Berger Small Company Growth Fund.
210 University (since August Vice President (since February 2001) and team portfolio manager
Blvd. 2000) and (since January 2001) of the Berger Select Fund. Team portfolio
Suite 800 Portfolio manager (since December 2001) of the Berger Mid Cap Growth
Denver, CO 80206 Manager (since Fund and interim team portfolio manager (since December 2001)
June 2000) of the Berger New Generation Fund. Vice President of Berger
DOB: 1958 Financial Group LLC (since December 2000). Formerly, portfolio
manager with Montgomery Asset Management (from January
2000 through December 2000); senior portfolio manager with
Founders Asset Management (from March 1998 through
December 1999); and portfolio manager with OppenheimerFunds
(from January 1993 through March 1998).
- -------------------------------------------------------------------------------------------------------------
Steven L. Fossel, Vice President Vice President (since August 2000) and portfolio manager (since
CFA of the Trust June 2000) of the Berger Balanced Fund. Vice President (since
210 University (since August August 2000) and team portfolio manager (since June 2000) of
Blvd. 2000) and the Berger Select Fund. Vice President (since February 2001) and
Suite 800 Portfolio portfolio manager (since December 2001) of the Berger Large
Denver, CO 80206 Manager (since Cap Growth Fund; and team portfolio manager (from January
June 2000) 2001 through December 2001) of the Berger Large Cap Growth
DOB: 1968 Fund. Interim portfolio manager (from June 2000 to January
2001) of the Berger Large Cap Growth Fund. Vice President and
portfolio manager of Berger Financial Group LLC (since June
2000); senior equity analyst with Berger Financial Group LLC
(from March 1998 to June 2000). Formerly, analyst and assistant
portfolio manager with Salomon Brothers Asset Management
(from August 1992 to February 1998).
- -------------------------------------------------------------------------------------------------------------
Janice M. Teague Vice President Vice President (since November 1998) and Assistant Secretary
210 University of the Trust (since February 2000 and previously from September 1996 to
Blvd. (since November November 1998) and Secretary (November 1998 to February
Suite 800 1998) and 2000) of the Berger Funds. Vice President (since October 1997),
Denver, CO 80206 Assistant Secretary (since November 1998) and Assistant Secretary
Secretary (since (October 1996 through November 1998) with Berger Financial
DOB: 1954 February 2000) Group LLC. Vice President and Secretary with Berger Distributors
LLC (since August 1998). Vice President and Secretary of Bay
Isle Financial LLC (since January 2002). Formerly, self-employed
as a business consultant (from June 1995 through September 1996).
- -------------------------------------------------------------------------------------------------------------
Andrew J. Iseman Vice President Vice President of the Berger Funds (since March 2001). Vice
210 University of the Trust President (since September 1999) and Chief Operating Officer
Blvd. (since March (since November 2000) of Berger Financial Group LLC. Manager
Suite 800 2001) (since September 1999) and Director (June 1999 to September
Denver, CO 80206 1999) of Berger Distributors LLC. Vice President-Operations
(February 1999 to November 2000) of Berger Financial Group
DOB: 1964 LLC. Associate (November 1998 to February 1999) with
DeRemer & Associates (a consulting firm). Vice President-
Operations (February 1997 to November 1998) and Director of
Research and Development (May 1996 to February 1997) of
Berger Financial Group LLC.
- -------------------------------------------------------------------------------------------------------------
Anthony R. Bosch Vice President Vice President of the Berger Funds (since February 2000). Vice
210 University of the Trust President (since June 1999) and Chief Legal Officer (since August
Blvd. (since February 2000) with Berger Financial Group LLC. Vice President and Chief
Suite 800 2000) Compliance Officer with Berger Distributors LLC (since
Denver, CO 80206 September 2001). Vice President of Bay Isle Financial LLC (since
January 2002). Formerly, Assistant Vice President of Federated
DOB: 1966 Investors, Inc. (December 1996 through May 1999), and Attorney
with the U.S. Securities and Exchange Commission (June 1990
through December 1996).
</Table>
Berger IPT Funds o December 31, 2001 Annual Report
43
================================================================================
<Table>
<Caption>
POSITION(S)
HELD WITH THE
TRUST, TERM OF
OFFICE AND
NAME, ADDRESS LENGTH OF
AND AGE TIME SERVED PRINCIPAL OCCUPATIONS DURING THE PAST 5 YEARS
- --------------------------------------------------------------------------------------------------------
OFFICERS OF THE
TRUST
- --------------------------------------------------------------------------------------------------------
Brian S. Ferrie Vice President Vice President of the Berger Funds (since November 1998). Vice
210 University of the Trust President (since February 1997), Treasurer and Chief Financial
Blvd. (since November Officer (since March 2001) and Chief Compliance Officer (from
Suite 800 1998) August 1994 to March 2001) with Berger Financial Group LLC.
Denver, CO 80206 Vice President (since May 1996), Treasurer and Chief Financial
Officer (since March 2001) and Chief Compliance Officer (from
DOB:1958 May 1996 to September 2001) with Berger Distributors LLC.
- --------------------------------------------------------------------------------------------------------
John A. Paganelli Vice President Vice President (since November 1998), Treasurer (since March
210 University (since November 2001) and Assistant Treasurer (November 1998 to March 2001)
Blvd. 1998) and of the Berger Funds. Vice President (since November 1998) and
Suite 800 Treasurer (since Manager of Accounting (January 1997 through November 1998)
Denver, CO 80206 March 2001) with Berger Financial Group LLC. Formerly, Manager of
of the Trust Accounting (December 1994 through October 1996) and Senior
DOB: 1967 Accountant (November 1991 through December 1994) with
Palmeri Fund Administrators, Inc.
- --------------------------------------------------------------------------------------------------------
Sue Vreeland Secretary of the Secretary of the Berger Funds (since February 2000). Assistant
210 University Trust (since Secretary of Berger Financial Group LLC and Berger Distributors
Blvd. February 2000) LLC (since June 1999) and Bay Isle Financial LLC (since
Suite 800 December 2001). Formerly, Assistant Secretary of the Janus
Denver, CO 80206 Funds (from March 1994 to May 1999), Assistant Secretary of
Janus Distributors, Inc. (from June 1995 to May 1997) and
DOB: 1948 Manager of Fund Administration for Janus Capital Corporation
(from February 1992 to May 1999).
- --------------------------------------------------------------------------------------------------------
David C. Price Assistant Vice Assistant Vice President (since March 2001) of the Berger Funds.
210 University President of the Assistant Vice President-Compliance (since March 2001) and
Blvd. Trust (since Manager-Compliance (October 1998 through March 2001) with
Suite 800 March 2001) Berger Financial Group LLC. Formerly, Senior Auditor (August
Denver, CO 80206 1993 through August 1998) with PricewaterhouseCoopers LLP, a
public accounting firm. Licensed as a Certified Public Accountant.
DOB: 1969
- --------------------------------------------------------------------------------------------------------
Lance V. Campbell Assistant Assistant Treasurer (since March 2001) of the Berger Funds.
210 University Treasurer of the Assistance Vice President (since January 2002) and Manager of
Blvd. Trust (since Investment Accounting (August 1999 through January 2002)
Suite 800 March 2001) with Berger Financial Group LLC. Formerly, Senior Associate
Denver, CO 80206 (December 1998 through August 1999) and Associate (August
1997 through December 1998) with PricewaterhouseCoopers
DOB: 1972 LLP, and Senior Fund Accountant (January 1996 through July
1997) with INVESCO Funds Group.
- --------------------------------------------------------------------------------------------------------
</Table>
Additional information about the Funds and their trustees is available in the
Funds' Statement of Additional Information, which can be obtained free of charge
by writing or calling the Funds at:
Berger Funds
P.O. Box 219958
Kansas City, MO 64121-9958
(800) 333-1001
bergerfunds.com
Berger IPT Funds o December 31, 2001 Annual Report
[BERGER FUNDS LOGO] IPTANN
2002 Semiannual Report
- --------------------------------------------------------------------------------
Janus Aspen Growth Portfolio
Janus Aspen Aggressive Growth Portfolio
Janus Aspen Capital Appreciation Portfolio
Janus Aspen Core Equity Portfolio
Janus Aspen Balanced Portfolio
Janus Aspen Growth and Income Portfolio
JANUS ASPEN SERIES Janus Aspen Strategic Value Portfolio
Janus Aspen International Growth Portfolio
Janus Aspen Worldwide Growth Portfolio
Janus Aspen Global Life Sciences Portfolio
Janus Aspen Global Technology Portfolio
JANUS ASPEN GLOBAL VALUE PORTFOLIO
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
JANUS ASPEN MONEY MARKET PORTFOLIO
[LOGO] JANUS
TABLE OF CONTENTS
<Table>
JANUS ASPEN SERIES
Market Overview ............................................. 1
Portfolio Managers' Commentaries and Schedules of Investments
Growth Portfolio ............................................ 2
Aggressive Growth Portfolio ................................. 6
Capital Appreciation Portfolio .............................. 10
Core Equity Portfolio ....................................... 13
Balanced Portfolio .......................................... 17
Growth and Income Portfolio ................................. 23
Strategic Value Portfolio ................................... 27
International Growth Portfolio .............................. 30
Worldwide Growth Portfolio .................................. 35
Global Life Sciences Portfolio .............................. 40
Global Technology Portfolio ................................. 43
Global Value Portfolio ...................................... 47
Flexible Income Portfolio ................................... 50
Money Market Portfolio ...................................... 55
Statements of Assets and Liabilities ........................ 58
Statements of Operations .................................... 60
Statements of Changes in Net Assets ......................... 62
Financial Highlights ........................................ 66
Notes to Schedules of Investments ........................... 78
Notes to Financial Statements ............................... 79
Explanations of Charts, Tables
and Financial Statements .................................... 84
Shareholder Meeting ......................................... 86
</Table>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MARKET OVERVIEW
Equity markets were volatile throughout the first half of the year, as
mixed economic data kept investors guessing about when a recovery in
corporate earnings would finally materialize. In the U.S., continued
strength in consumer spending kept the economy from slipping into a deeper
recession for most of the period, but eventually ebbed by early summer.
This, combined with the persistent weakness in corporate capital
expenditures, kept prospects for a robust economic recovery in the near
term somewhat remote.
Looking back, the optimism that drove the fleeting rallies in the early
spring ultimately proved premature. While industrial stocks continued to
fare relatively well, the broader market retraced much of its gains as
investors returned to the sidelines, disheartened by the inability of
companies to live up to their more bullish expectations and increasingly
wary of the long and painful earnings recession that has characterized the
market for more than a year.
The market also continued to be shaken by a crisis of confidence related to
the still-developing Enron scandal and other high-profile missteps among
major U.S. corporations. The sheer scope of these scandals gave rise to a
deep mistrust of companies with even a hint of complexity in their balance
sheets. The ongoing threat of terrorism also remains a factor and continues
to further cloud what was already an unusually opaque market.
Meanwhile, overseas markets generally took their cues from the U.S., which
has maintained its status as the single most important engine of global
economic growth despite the current downturn. There were, however, clear
pockets of strength in the world - most notably in Asia. For example, the
struggling Japanese economy - typically the Asian growth barometer -
offered recent glimmers of hope in the wake of a decade-long downturn. In
particular, a weakening U.S. dollar against the yen has helped that
country's export-dependent industries in recent months. Korea was also a
bright spot in the international spectrum, fueled by steady growth in that
country's automobile and consumer electronics exports.
In the fixed-income arena, corporate scandals impacted the bond markets
just as hard, if not swifter and broader in scope, than equities. For
example, major credit-rating agencies such as Standard & Poor's and Moody's
suddenly raised the bar for corporate borrowers. While this should improve
transparency of the market and reduce the number of drastic surprises in
the long term, it also had the unfortunate effect of dramatically
increasing the volatility of credit spreads in the short term.
In the pages that follow, your portfolio manager discusses what he or she
has done to position your portfolio for success in the face of an extremely
difficult market. We ask that you read these perspectives carefully, and we
are hopeful that within them you will find, as we have, reasons to be
optimistic. Foremost among these reasons are the intense emotional drivers
that have driven stock prices downward and, as a result, forced areas of
mispricing to emerge. Because the Janus investment process is - and always
has been - based on identifying and capitalizing on the mispricing of
individual securities, we believe many opportunities are being created for
our shareholders in this challenging market.
With this in mind, we are working harder than ever to ensure that we
deliver long-term performance and remain worthy of your confidence.
Thank you for your continued investment with Janus.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
JANUS ASPEN SERIES JUNE 30, 2002 1
JANUS ASPEN GROWTH PORTFOLIO Blaine Rollins, portfolio manager
For the six-month period ended June 30, 2002, Janus Aspen Growth Portfolio lost
15.59% for its Institutional Shares and declined 15.69% for its Service Shares
while its benchmark, the S&P 500 Index, dropped 13.15%.(1)
Stocks struggled early in the year as record-low interest rates, improving
economic fundamentals and a robust housing market were eclipsed by growing
accounting concerns. Although equity markets were able to recoup some losses by
March, all that changed as the investing community became frustrated with
corporate America's apparent lack of integrity and bid shares sharply lower. In
the period's closing days, WorldCom Communications' acknowledgement of
accounting fraud appeared to be the final straw for many investors. Broad
sell-offs compounded the negative developments, dragging the S&P 500 to its
worst quarterly performance since the early 1970s.
[PHOTO]
This pessimistic sentiment also tainted many of our stocks. Following the
bankruptcy of cable television operator Adelphia Communications and the WorldCom
debacle, the market punished nearly every holding that uses cash flow as its key
measure. For us, that translated into large losses in cable operator Comcast and
AOL Time Warner, which owns the second-largest cable franchise in the U.S.
Ironically, the fundamentals in both companies are improving immensely as the
capital expense-per-subscriber ratio is falling, but few investors want to
acknowledge the progress, instead choosing to assign guilt by association.
AOL Time Warner was also pressured by its exposure to the advertising industry
and issues within its America Online unit. Nevertheless, ad sales are starting
to show signs of a recovery while America Online remains a high
recurring-revenue division. From a valuation standpoint, its share price reached
a level at which we were buying its cable business and some publishing assets -
and, in my opinion, all of AOL's other businesses were essentially free. While
there's definitely still room for improvement, and a few lingering questions in
some of their units, AOL boasts a great mix of businesses that I want to
continue to own.
Of course, even with all of our legwork, there's still a slight risk that a
troublesome issue may surface. For us, that situation materialized at
conglomerate Tyco International, where the former chief executive officer,
Dennis Kozlowski, resigned amid tax evasion charges. Unfortunately, the matter
added scrutiny to a company that didn't need it: Tyco is already dealing with
significant debt issues, and its stock is down considerably. Frankly, I'm still
comfortable with our position. The company controls some extremely strong
franchises, and it spun off its CIT Group financial arm to help address
short-term credit questions. From a valuation standpoint, Tyco is extremely
attractive, although I now view it as a turnaround story, not a rising growth
star.
Meanwhile, we were pleased with the performance of Tenet Healthcare, a hospital
chain that is realizing the benefits of scale. Through the second half of the
1990s, Tenet built up its portfolio by purchasing hospitals all over the
country. Over the past couple of years, however, it has adopted a regional
cluster strategy. This geographic focus gives the corporation increased leverage
in pricing negotiations in addition to lower operating costs. Plus, Tenet is
emphasizing collecting receivables more effectively, which has dramatically
accelerated free cash flow.
MGIC Investment, the largest provider of private mortgage insurance, contributed
to our results as well. The company benefited as historically low interest rates
and rising home ownership bolstered the mortgage market. Although proposed
regulations calling for higher capital reserves could impact profitability, we
believe the tremendous growth in low-down-payment mortgages more than offsets
the risk for MGIC, a well-managed, highly profitable and attractively valued
company.
Over the last 18 months, we've made a concerted effort to find business models
outside of our previous areas of focus and to increase the number of companies
in the Portfolio. As a result, we've diversified into different industries and
end markets and invested in what we believe are good companies that we want to
own for the long haul. More and more, our conviction may set us apart from much
of the investing community in that the market has become so focused on the short
term that few long-term shareholders exist. Yet my goal remains to build a
portfolio of the best businesses and best management teams, because those are
the companies that we believe will thrive in the long run.
Thank you for your continued investment in Janus Aspen Growth Portfolio.
PORTFOLIO ASSET MIX
<Table>
<Caption>
(% of Net Assets) June 30, 2002 December 31, 2001
- --------------------------------------------------------------------------------
Equities 100.0% 96.6%
Foreign 6.8% 9.7%
Europe 1.7% 2.6%
Top 10 Equities 37.4% 38.8%
Number of Stocks 106 102
Cash and Cash Equivalents 0% 3.4%
</Table>
(1) All returns include reinvested dividends and capital gains.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
2 Janus Aspen Series June 30, 2002
AVERAGE ANNUAL TOTAL RETURN
<Table>
<Caption>
For the Periods Ended June 30, 2002
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 9/13/93)
1 Year (28.15)%
5 Year 2.82%
From Inception 9.00%
- --------------------------------------------------------------------------------
S&P 500 Index
1 Year (17.98)%
5 Year 3.67%
From Inception Date of Institutional Shares 11.08%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year (28.31)%
5 Year 2.53%
From Portfolio Inception 8.68%
- --------------------------------------------------------------------------------
</Table>
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
Returns have sustained significant gains and losses due to market volatility in
the consumer discretionary sector.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
The S&P 500 is the Standard & Poor's Composite Index of 500 stocks, a widely
recognized, unmanaged index of common stock prices. The Portfolio may differ
significantly from the securities held in the index. The index is not available
for direct investment; therefore its performance does not reflect the expenses
associated with the active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Common Stock - 100.0%
Advertising Sales - 0.6%
374,285 Lamar Advertising Co.* ..................... $ 13,927,145
Aerospace and Defense - 3.2%
412,735 General Dynamics Corp. ..................... 43,894,367
373,820 Lockheed Martin Corp. ...................... 25,980,490
69,874,857
Airlines - 1.3%
473,960 Ryanair Holdings PLC (ADR)* ................ 16,527,459
676,830 Southwest Airlines Co. ..................... 10,937,573
27,465,032
Applications Software - 0.4%
241,985 BARRA, Inc.* ............................... 8,997,002
Beverages - Non-Alcoholic - 1.8%
709,690 Coca-Cola Co. .............................. 39,742,640
Broadcast Services and Programming - 1.1%
732,653 Clear Channel Communications, Inc.* ........ 23,459,549
Building - Mobile Home and Manufactured Housing - 0.6%
714,260 Clayton Homes, Inc. ........................ 11,285,308
33,840 Winnebago Industries, Inc. ................. 1,488,960
12,774,268
Building - Residential and Commercial - 0.3%
17,300 NVR, Inc.* ................................. 5,587,900
Cable Television - 5.1%
4,622,582 Comcast Corp. - Special Class A* ........... $ 110,202,355
Casino Hotels - 0.3%
708,747 Park Place Entertainment Corp.* ............ 7,264,657
Casino Services - 0.3%
93,585 International Game Technology* ............. 5,306,269
Chemicals - Specialty - 1.3%
144,225 Ecolab, Inc. ............................... 6,667,522
409,850 Sigma-Aldrich Corp. ........................ 20,553,977
27,221,499
Commercial Banks - 0.5%
117,735 M&T Bank Corp. ............................. 10,096,954
Commercial Services - Finance - 1.3%
278,160 Concord EFS, Inc.* ......................... 8,383,742
610,392 Paychex, Inc. .............................. 19,099,166
27,482,908
Computer Services - 0.5%
525,755 Ceridian Corp.* ............................ 9,978,830
Containers - Metal and Glass - 0.3%
153,155 Ball Corp. ................................. 6,352,869
Containers - Paper and Plastic - 0.6%
192,880 Bemis Company, Inc. ........................ 9,161,800
92,365 Sealed Air Corp.* .......................... 3,719,539
12,881,339
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 3
- --------------------------------------------------------------------------------
JANUS ASPEN GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (unaudited)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Cosmetics and Toiletries - 4.8%
1,459,483 Colgate-Palmolive Co. ...................... $ 73,047,124
348,383 Procter & Gamble Co. ....................... 31,110,602
104,157,726
Data Processing and Management - 1.4%
166,545 Automatic Data Processing, Inc. ............ 7,253,035
473,545 Fiserv, Inc.* .............................. 17,383,837
159,610 SEI Investments Co. ........................ 4,496,214
29,133,086
Distribution and Wholesale - 0.3%
138,545 W.W. Grainger, Inc. ........................ 6,941,104
Diversified Operations - 4.8%
190,350 3M Co. ..................................... 23,413,050
329,350 ARAMARK Corp. - Class B* ................... 8,233,750
22,992 Bombardier, Inc. - Class B ................. 190,480
1,805,720 Cendant Corp.* ............................. 28,674,834
79,575 Honeywell International, Inc. .............. 2,803,427
158,870 Illinois Tool Works, Inc. .................. 10,850,821
103,100 ITT Industries, Inc. ....................... 7,278,860
1,668,125 Tyco International, Ltd. ................... 22,536,369
103,981,591
E-Commerce/Products - 0.7%
895,005 Amazon.com, Inc.* .......................... 14,543,831
E-Commerce/Services - 0.7%
247,402 eBay, Inc.* ................................ 15,244,911
Electronic Components - Semiconductors - 0.6%
270,625 National Semiconductor Corp.* .............. 7,894,131
313,535 NVIDIA Corp.* .............................. 5,386,531
13,280,662
Fiduciary Banks - 3.9%
1,695,996 Bank of New York Company, Inc. ............. 57,239,865
594,537 Northern Trust Corp. ....................... 26,195,300
83,435,165
Finance - Investment Bankers/Brokers - 0.9%
252,540 Goldman Sachs Group, Inc. .................. 18,523,809
Financial Guarantee Insurance - 2.8%
720,185 MGIC Investment Corp. ...................... 48,828,543
312,290 PMI Group, Inc. ............................ 11,929,478
60,758,021
Food - Confectionary - 0%
7,061 J.M. Smucker Co.* .......................... 240,992
Food - Retail - 0.8%
416,035 Safeway, Inc.* ............................. 12,144,062
93,630 Whole Foods Market, Inc.* .................. 4,514,839
16,658,901
Food - Wholesale/Distribution - 0.8%
635,070 Sysco Corp. ................................ 17,286,605
Health Care Cost Containment - 0.3%
234,720 First Health Group Corp.* .................. 6,581,549
Hospital Beds and Equipment - 0.5%
193,140 Hillenbrand Industries, Inc. ............... 10,844,811
Hotels and Motels - 0.3%
186,395 Starwood Hotels & Resorts Worldwide, Inc. .. 6,130,532
Human Resources - 0.3%
303,350 Robert Half International, Inc.* ........... 7,068,055
Industrial Gases - 0.2%
92,265 Praxair, Inc. .............................. $ 5,256,337
Instruments - Scientific - 1.7%
1,071,413 Dionex Corp.*,# ............................ 28,703,154
255,030 Millipore Corp. ............................ 8,155,859
36,859,013
Insurance Brokers - 0.3%
210,340 Arthur J. Gallagher & Co. .................. 7,288,281
Internet Brokers - 1.7%
3,348,006 Charles Schwab Corp. ....................... 37,497,667
Life and Health Insurance - 3.4%
1,053,985 AFLAC, Inc. ................................ 33,727,520
726,380 StanCorp Financial Group, Inc. ............. 40,314,090
74,041,610
Machine Tools and Related Products - 0.6%
323,915 Kennametal, Inc. ........................... 11,855,289
Medical - Biomedical and Genetic - 0.4%
281,806 Genentech, Inc.* ........................... 9,440,501
Medical - Drugs - 0.4%
124,625 Forest Laboratories, Inc.* ................. 8,823,450
Medical - HMO - 0.7%
157,725 UnitedHealth Group, Inc. ................... 14,439,724
Medical - Hospitals - 4.0%
1,215,710 Tenet Healthcare Corp.* .................... 86,984,051
Medical - Outpatient and Home Medical Care - 0.4%
416,280 Apria Healthcare Group, Inc.* .............. 9,324,672
Medical - Wholesale Drug Distributors - 0.5%
187,870 Cardinal Health, Inc. ...................... 11,537,097
Medical Instruments - 1.0%
676,110 Apogent Technologies, Inc.* ................ 13,907,583
112,685 St. Jude Medical, Inc.* .................... 8,321,787
22,229,370
Medical Labs and Testing Services - 0.5%
239,820 Laboratory Corporation of
America Holdings* ........................ 10,947,783
Medical Products - 0.8%
222,295 Stryker Corp. .............................. 11,895,005
9,411 Synthes-Stratec, Inc. ...................... 5,754,803
17,649,808
Metal Processors and Fabricators - 0.3%
206,160 Precision Castparts Corp. .................. 6,803,280
Motorcycle and Motor Scooter Manufacturing - 0.6%
258,320 Harley-Davidson, Inc. ...................... 13,244,066
Multi-Line Insurance - 0.5%
220,430 PartnerRe, Ltd. ............................ 10,790,048
Multimedia - 9.0%
6,364,898 AOL Time Warner, Inc.* ..................... 93,627,650
2,295,869 Viacom, Inc. - Class B* .................... 101,867,708
195,495,358
Networking Products - 1.3%
2,018,199 Cisco Systems, Inc.* ....................... 28,153,876
Optical Supplies - 0.7%
411,820 Alcon, Inc.* ............................... 14,104,835
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
4 Janus Aspen Series June 30, 2002
SCHEDULE OF INVESTMENTS (UNAUDITED)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Property and Casualty Insurance - 2.2%
<Table>
<Caption>
162,095 W. R. Berkley Corp. ........................ $ 8,915,225
455,570 XL Capital, Ltd. - Class A ................. 38,586,779
47,502,004
Radio - 0.3%
286,250 Hispanic Broadcasting Corp.* ............... 7,471,125
Reinsurance - 2.1%
34 Berkshire Hathaway, Inc. - Class A* ........ 2,271,200
9,765 Berkshire Hathaway, Inc. - Class B* ........ 21,815,010
172,865 Everest Re Group, Ltd. ..................... 9,671,797
345,720 RenaissanceRe Holdings, Ltd. ............... 12,653,352
46,411,359
Retail - Bookstore - 0.2%
187,425 Barnes & Noble, Inc.* ...................... 4,953,643
Retail - Building Products - 1.9%
1,116,535 Home Depot, Inc. ........................... 41,010,331
Retail - Consumer Electronics - 0.4%
231,467 Best Buy Company, Inc.* .................... 8,402,252
Retail - Discount - 0.6%
326,259 Costco Wholesale Corp.* .................... 12,600,123
Retail - Drug Store - 2.8%
1,569,820 Walgreen Co. ............................... 60,642,147
Schools - 0.6%
313,702 Apollo Group, Inc. - Class A* .............. 12,362,996
Semiconductor Components/Integrated Circuits - 8.1%
2,674,080 Linear Technology Corp. .................... 84,046,334
2,401,086 Maxim Integrated Products, Inc.* ........... 92,033,626
176,079,960
Semiconductor Equipment - 2.6%
1,737,660 Applied Materials, Inc.* ................... 33,050,293
255,440 KLA-Tencor Corp.* .......................... 11,236,806
169,117 Mykrolis Corp.* ............................ 1,997,272
270,930 Novellus Systems, Inc.* .................... 9,211,620
55,495,991
Television - 1.8%
1,230,691 Univision Communications, Inc. - Class A* .. 38,643,697
Textile - Home Furnishings - 0.1%
32,210 Mohawk Industries, Inc.* ................... 1,981,881
Tools - Hand Held - 0.8%
424,270 Stanley Works Co. .......................... 17,399,313
Transportation - Railroad - 0.8%
106,699 Canadian National Railway Co. .............. 5,615,257
211,295 Canadian National Railway Co.
- New York Shares ........................ 10,945,081
16,560,338
Transportation - Services - 2.3%
320,190 Expeditors International of Washington,
Inc. ...................................... 10,617,500
627,755 United Parcel Service, Inc. - Class B ...... 38,763,871
49,381,371
- --------------------------------------------------------------------------------
Total Common Stock (cost $2,364,391,870) .................... 2,163,092,071
- --------------------------------------------------------------------------------
Repurchase Agreement - 0.5%
$ 11,800,000 Deutsche Banc Alex. Brown, Inc., 1.96%
dated 6/28/02, maturing 7/1/02 to be
repurchased at $11,801,927 collateralized
by $6,306,378 in Asset Backed Securities
0%-8.29%, 4/15/03-4/25/32 Aaa; $1,646,614
in Certificates of Deposit, 1.89%,
12/27/02, P-1 $82,731,934 in
Collateralized Mortgage Obligations,
0.427%-7.6752% 6/7/09-9/15/41, Aaa;
$1,607,818 in Commercial Paper,
1.77%-5.00% 7/8/02-3/1/07, P-1; $937,134
in Corporate Bonds, 1.965%-8.875%
8/23/02-3/15/32, Aaa; $210,951 in U.S.
Government Obligations 5.75%-6.25%,
1/15/12-3/5/12 Aaa-Aa2; with respective
values of $4,374,679, $1,646,614,
$3,185,801 $1,605,947, $1,002,098 and
$220,861 (cost $11,800,000) .............. $ 11,800,000
- --------------------------------------------------------------------------------
Total Investments (total cost $2,376,191,870) - 100.5% ...... 2,174,892,071
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (0.5%) (11,127,172)
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $ 2,163,764,899
- --------------------------------------------------------------------------------
</Table>
SUMMARY OF INVESTMENTS BY COUNTRY, JUNE 30, 2002
<Table>
<Caption>
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Bermuda 4.3% $ 94,238,345
Canada 0.8% 16,750,818
Ireland 0.8% 16,527,459
Switzerland 0.9% 19,859,638
United States++ 93.2% 2,027,515,811
- --------------------------------------------------------------------------------
Total 100.0% $ 2,174,892,071
</Table>
++ Includes Short-Term Securities (92.7% excluding Short-Term Securities)
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 5
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO JONATHAN COLEMAN,
portfolio manager
For the six months ended June 30, 2002, Janus Aspen Aggressive Growth Portfolio
declined 19.24%, for its Institutional Shares, and 19.33% for its Service
Shares. This compares with a 3.21% loss in the S&P Mid-Cap 400 Index.(1)
It has been an extraordinary and frustrating time for investors, as the markets
were whipsawed more by rumor and innuendo than by facts. Intense, negative
scrutiny has hurt whole sectors with dramatic intraday price swings following
the wrongdoings of relatively few companies. While the Portfolio is flatter and
more balanced than in the past, many holdings were negatively affected by this
unusually challenging market.
[PHOTO]
As of February 1, 2002, I assumed management of the Aspen Aggressive Growth
Portfolio from Jim Goff, coincident with Jim's assumption of the new full-time
role of Director of Research. Almost immediately, I began to further diversify
the Portfolio, which now includes about 80 holdings comprising broader industry
and sector exposure.
We lost ground in Paychex, a national payroll and benefit processing firm.
Although challenged recently by the low interest rate environment's impact on
the float portfolio it holds for its small business customers, the firm's
fundamental business model remains attractive. However, we significantly reduced
our position in this holding over concerns about its high valuation.
Crown Castle, which leases the infrastructure that supports the wireless
networks of telecom service providers, also retreated. The stock has been
punished by concerns over the health of its struggling customer base, and while
we believe this condition to be temporary, I felt it was prudent to reduce our
exposure until Crown Castle's customers achieve better financial footing.
Meanwhile, eBay, whose growth in core auction listings remains strong, was a
relative outperformer, finishing about flat for the period. The company is also
pushing to create new online markets to expand its reach and future growth
potential. So far, it has excelled in innovative approaches to home sales, auto
sales and a fixed-price auction concept.
Helping to soften our losses with some gains was Apollo Group, which operates
the University of Phoenix. This education bellwether continues to gain market
share in the face of a soft economy, as more adults look to upgrade their skill
sets. Exploding margins at its growing number of campuses are supplemented by
its even more profitable online study programs. Double-digit state college
tuition hikes have created a nice pricing umbrella for Apollo, while its
exposure to tuition payment default is much lower than most higher education
institutions. Indeed, tuition for nearly two-thirds of its student base is
subsidized through corporate reimbursement programs.
Moody's Corp., the global credit rating agency, was also a winner. In an
environment riddled with investor concern about corporate governance and the
integrity of financial reporting, Moody's clearly benefits. In fact, against a
backdrop of accounting scandals, its service has become more valuable and it has
only one substantive competitor, Standard & Poors. I've kept the weighting above
my usual ceiling, because I believe Moody's fundamentals are very strong in
these otherwise challenging times.
Elsewhere, Laboratory Corporation of America, which also gained, is a leader in
esoteric diagnostic tests for diseases such as HIV and Hepatitis C, and stands
to benefit as new genomic tests are being developed to assess the likelihood of
certain inherited illnesses. We especially like Lab Corp.'s economic
insensitivity, as these blood tests are in demand regardless of the state of the
economy.
Another positive contributor was Lamar Advertising, one of the world's largest
billboard providers. With very little capital expenditure requirements, Lamar
has managed to lower its operating costs and execute efficiently during the
advertising downturn while still generating free cash flow. Near the period end,
however, Lamar suffered a sudden drop along with the entire media sector from
the collateral damage of the WorldCom fiasco.
Overall, we are observing an amazing time in the market's history. The general
distrust for corporate governance has created an environment in which
fundamentally sound companies are being attacked and many stocks are extremely
volatile as a result. Going forward, I will continue to look for diversity,
which I believe is the best way to shield the Portfolio and limit our exposure
from the painful rotation that the market is enduring. Thanks to the efforts of
the entire Janus research team, I am finding those opportunities every day in a
broad array of mid-cap stocks.
Thank you for your investment in Janus Aspen Aggressive Growth Portfolio.
PORTFOLIO ASSET MIX
<Table>
<Caption>
(% of Net Assets) June 30, 2002 December 31, 2001
- --------------------------------------------------------------------------------
Equities 87.1% 90.8%
Foreign 3.6% 2.5%
Top 10 Equities 26.1% 32.5%
Number of Stocks 88 70
Cash and Cash Equivalents 12.9% 9.2%
</Table>
(1) All returns include reinvested dividends and capital gains.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
6 Janus Aspen Series June 30, 2002
AVERAGE ANNUAL TOTAL RETURN
<Table>
<Caption>
For the Periods Ended June 30, 2002
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 9/13/93)
1 Year (33.47)%
5 Year 2.06%
From Inception 9.08%
- --------------------------------------------------------------------------------
S&P MidCap 400 Index
1 Year (4.72)%
5 Year 12.58%
From Inception Date of Institutional Shares 14.22%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year (33.62)%
5 Year 1.78%
From Portfolio Inception 8.80%
- --------------------------------------------------------------------------------
</Table>
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
Returns have sustained significant gains and losses due to market volatility in
the technology sector.
Aggressive funds may be subject to greater price volatility.
Due to recent market volatility, the Portfolio may have an increased position in
cash for temporary defensive purposes.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
The S&P MidCap Index is an unmanaged group of 400 domestic stocks chosen for
their market size, liquidity and industry group representation. The Portfolio
may differ significantly from the securities held in the index. The index is not
available for direct investment; therefore its performance does not reflect the
expenses associated with the active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
A "nondiversified" fund has the ability to take larger positions in a smaller
number of issuers than a "diversified" fund. Nondiversified funds may experience
greater price volatility.
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Common Stock - 87.1%
Advertising Agencies - 0.9%
619,605 Interpublic Group of Companies, Inc. ....... $ 15,341,420
Advertising Sales - 2.2%
1,043,473 Lamar Advertising Co.* ..................... 38,827,630
Airlines - 1.5%
1,648,975 Southwest Airlines Co. ..................... 26,647,436
Applications Software - 0.2%
300,300 Keane, Inc.* ............................... 3,828,825
Building - Mobile Home and Manufactured Housing - 0.5%
535,115 Clayton Homes, Inc.* ....................... 8,454,817
Building - Residential and Commercial - 0.9%
51,535 NVR, Inc.* ................................. 16,645,805
Casino Services - 1.2%
363,995 International Game Technology* ............. 20,638,517
Commercial Banks - 2.3%
154,210 Commerce Bancorp, Inc. ..................... 6,816,082
114,465 M&T Bank Corp. ............................. 9,816,518
518,905 National Commerce Financial Corp. .......... 13,647,202
247,505 North Fork Bancorporation, Inc. ............ 9,853,174
40,132,976
Commercial Services - Finance - 5.8%
1,436,580 Concord EFS, Inc.* ......................... 43,298,521
507,200 Moody's Corp. .............................. 25,233,200
1,047,543 Paychex, Inc. .............................. 32,777,620
101,309,341
Computers - 0.7%
697,940 Apple Computer, Inc.* ...................... $ 12,367,497
Containers - Metal and Glass - 0.7%
303,435 Ball Corp. ................................. 12,586,484
Data Processing and Management - 0.6%
284,410 Certegy, Inc.* ............................. 10,554,455
Disposable Medical Products - 0.2%
72,825 C.R. Bard, Inc. ............................ 4,120,438
Distribution and Wholesale - 0.7%
82,300 Fastenal Co. ............................... 3,169,373
179,915 W.W. Grainger, Inc. ........................ 9,013,742
12,183,115
Diversified Operations - 1.8%
1,766,900 Cendant Corp.* ............................. 28,058,372
29,785 SPX Corp.* ................................. 3,499,738
31,558,110
E-Commerce/Services - 4.1%
982,910 eBay, Inc.* ................................ 60,566,914
516,943 TMP Worldwide, Inc.* ....................... 11,114,274
71,681,188
Electric Products - Miscellaneous - 0.6%
270,755 AMETEK, Inc. ............................... 10,085,624
Electronic Components - Miscellaneous - 0.3%
211,545 Celestica, Inc. - New York Shares* ......... 4,804,187
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 7
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Electronic Components - Semiconductors - 2.0%
<Table>
<Caption>
645,824 Cree, Inc.* ................................ $ 8,544,252
452,385 National Semiconductor Corp.* .............. 13,196,070
754,035 NVIDIA Corp.* .............................. 12,954,321
34,694,643
Electronic Design Automation - 0.9%
950,295 Cadence Design Systems, Inc.* .............. 15,318,755
Entertainment Software - 3.0%
805,130 Electronic Arts, Inc.* ..................... 53,178,836
Fiduciary Banks - 1.3%
520,985 Northern Trust Corp. ....................... 22,954,599
Finance - Credit Card - 0.7%
202,125 Capital One Financial Corp. ................ 12,339,731
Finance - Investment Bankers/Brokers - 1.2%
339,375 Lehman Brothers Holdings, Inc. ............. 21,217,725
Financial Guarantee Insurance - 1.6%
425,025 MGIC Investment Corp. ...................... 28,816,695
Food - Dairy Products - 0.6%
301,990 Dean Foods Co.* ............................ 11,264,227
Health Care Cost Containment - 1.2%
771,715 First Health Group Corp.* .................. 21,638,889
Hotels and Motels - 1.0%
528,275 Starwood Hotels & Resorts Worldwide, Inc. .. 17,374,965
Human Resources - 1.0%
756,680 Robert Half International, Inc.* ........... 17,630,644
Industrial Gases - 0.2%
74,580 Praxair, Inc. .............................. 4,248,823
Instruments - Scientific - 0.2%
116,520 Millipore Corp. ............................ 3,726,310
Internet Brokers - 0.8%
1,059,915 Charles Schwab Corp. ....................... 11,871,048
251,220 E*TRADE Group, Inc.* ....................... 1,371,661
13,242,709
Investment Management and Advisory Services - 0.9%
477,730 T. Rowe Price Group, Inc. .................. 15,707,762
Life and Health Insurance - 2.0%
1,091,655 AFLAC, Inc. ................................ 34,932,960
Medical - Biomedical and Genetic - 1.5%
1,108,895 Enzon, Inc.* ............................... 27,289,906
Medical - Drugs - 2.1%
317,455 Forest Laboratories, Inc.* ................. 22,475,814
686,262 King Pharmaceuticals, Inc.* ................ 15,269,330
37,745,144
Medical - HMO - 0.8%
207,990 Anthem, Inc.* .............................. 14,035,165
Medical - Hospitals - 2.0%
435,635 Community Health Care Corp.* ............... 11,675,018
1,173,320 Health Management Associates, Inc.
- Class A* ............................... 23,642,398
35,317,416
Medical Instruments - 3.7%
814,560 Apogent Technologies, Inc.* ................ 16,755,499
646,720 St. Jude Medical, Inc.* .................... 47,760,272
64,515,771
Medical Labs and Testing Services - 4.5%
1,185,170 Laboratory Corporation of
America Holdings* ........................ $ 54,103,010
287,600 Quest Diagnostics, Inc.* ................... 24,747,980
78,850,990
Medical Products - 1.9%
12,325 Biomet, Inc. ............................... 334,254
634,055 Stryker Corp. .............................. 33,928,283
34,262,537
Non-Hazardous Waste Disposal - 0.1%
128,325 Allied Waste Industries, Inc.* ............. 1,231,920
Oil Companies - Exploration and Production - 3.4%
601,980 EOG Resources, Inc. ........................ 23,898,606
152,425 Murphy Oil Corp. ........................... 12,575,063
361,905 Ocean Energy, Inc. ......................... 7,842,481
591,585 Pioneer Natural Resources Co.* ............. 15,410,789
59,726,939
Oil Field Machinery and Equipment - 0.6%
155,650 Smith International, Inc.* ................. 10,613,774
Optical Supplies - 0.3%
146,740 Alcon, Inc.* ............................... 5,025,845
Pipelines - 1.7%
793,800 Kinder Morgan, Inc. ........................ 30,180,276
Printing - Commercial - 0.5%
239,355 Valassis Communications, Inc.* ............. 8,736,457
Property and Casualty Insurance - 1.7%
183,970 W. R. Berkley Corp. ........................ 10,118,350
244,320 XL Capital, Ltd. - Class A ................. 20,693,904
30,812,254
Radio - 3.1%
501,226 Cox Radio, Inc. - Class A* ................. 12,079,547
279,596 Entercom Communications Corp.* ............. 12,833,456
631,557 Hispanic Broadcasting Corp.* ............... 16,483,638
411,575 Westwood One, Inc.* ........................ 13,754,837
55,151,478
Reinsurance - 4.4%
19,955 Berkshire Hathaway, Inc. - Class B* ........ 44,579,470
293,645 Everest Re Group, Ltd. ..................... 16,429,438
435,915 RenaissanceRe Holdings, Ltd. ............... 15,954,489
76,963,397
Retail - Discount - 0.2%
112,055 Fred's, Inc. ............................... 4,121,383
Retail - Restaurants - 0.9%
544,420 Yum! Brands, Inc.* ......................... 15,924,285
Satellite Telecommunications - 1.0%
929,395 EchoStar Communications Corp.* ............. 17,249,571
Schools - 2.7%
1,214,674 Apollo Group, Inc. - Class A* .............. 47,870,302
Semiconductor Components/Integrated Circuits - 1.6%
1,517,355 Integrated Device Technology, Inc.* ........ 27,524,820
Semiconductor Equipment - 1.5%
275,575 KLA-Tencor Corp.* .......................... 12,122,544
105,982 Mykrolis Corp.* ............................ 1,251,647
368,780 Novellus Systems, Inc.* .................... 12,538,520
25,912,711
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
8 Janus Aspen Series June 30, 2002
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Textile-Home Furnishings - 0.8%
224,310 Mohawk Industries, Inc.* ................... $ 13,801,794
Transportation - Railroad - 0.2%
77,680 CSX Corp. .................................. 2,722,684
Transportation - Services - 0.3%
174,160 Expeditors International of Washington,
Inc. ...................................... 5,775,146
Travel Services - 1.1%
832,510 USA Interactive* ........................... 19,522,359
Wireless Equipment - 0.7%
3,325,696 Crown Castle International Corp.* .......... 13,069,985
- --------------------------------------------------------------------------------
Total Common Stock (cost $1,642,230,977) .................... 1,534,010,447
- --------------------------------------------------------------------------------
Repurchase Agreements - 4.7%
$ 23,100,000 ABN AMRO Bank N.V., 1.97%
dated 6/28/02, maturing 7/1/02 to be
repurchased at $23,103,792 collateralized
by $4,760,392 in Collateralized Mortgage
Obligations 2.29%-6.50847%,
6/10/13-12/25/40 Aaa, $21,813,887 in U.S.
Government Obligations, 2.64%-7.30%
6/15/09-5/1/37; with respective values of
$2,128,420 and $21,433,593 23,100,000
60,000,000 Deutsche Banc Alex. Brown, Inc., 1.96%
dated 6/28/02, maturing 7/1/02 to be
repurchased at $60,009,800 collateralized
by $32,066,329 in Asset Backed Securities
0%-8.29%, 4/15/03-4/25/32 Aaa; $8,372,611
in Certificates of Deposit, 1.89%,
12/27/02, P-1 $420,670,851 in
Collateralized Mortgage Obligations,
0.427%-7.6752% 6/7/09-9/15/41, Aaa;
$8,175,345 in Commercial Paper,
1.77%-5.00% 7/8/02-3/1/07, P-1; $4,765,087
in Corporate Bonds, 1.965%-8.875%
8/23/02-3/15/32, Aaa; $1,072,631 in U.S.
Government Obligations 5.75%-6.25%,
1/15/12-3/5/12 Aaa-Aa2; with respective
values of $22,244,129, $8,372,611,
$16,198,990 $8,165,834, $5,095,415 and
$1,123,021 ............................... 60,000,000
- --------------------------------------------------------------------------------
Total Repurchase Agreements (cost $83,100,000) .............. 83,100,000
- --------------------------------------------------------------------------------
Short-Term Corporate Note - 1.4%
Citigroup, Inc.
25,000,000 1.85%, 7/1/02
(amortized cost $25,000,000) ............. 25,000,000
- --------------------------------------------------------------------------------
U.S. Government Agencies - 6.8%
Fannie Mae
$ 20,000,000 1.84%, 8/7/02 ............................ $ 19,962,178
Federal Farm Credit Bank
50,000,000 2.13%, 4/14/03 ........................... 49,312,500
Federal Home Loan Bank System:
25,000,000 1.75%, 7/8/02 ............................ 24,991,688
25,000,000 1.63%, 7/11/02 ........................... 24,988,681
- --------------------------------------------------------------------------------
Total U.S. Government Agencies (cost $119,093,504) .......... 119,255,047
- --------------------------------------------------------------------------------
Total Investments (total cost $1,869,424,481) - 100% ........ 1,761,365,494
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities -
0% ........................................................ 280,429
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $ 1,761,645,923
- --------------------------------------------------------------------------------
</Table>
SUMMARY OF INVESTMENTS BY COUNTRY, JUNE 30, 2002
<Table>
<Caption>
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Bermuda 3.0% $ 53,077,831
Canada 0.3% 4,804,187
Switzerland 0.3% 5,025,845
United States++ 96.4% 1,698,457,631
- --------------------------------------------------------------------------------
Total 100.0% $ 1,761,365,494
</Table>
++ Includes Short-Term Securities (83.5% excluding Short-Term Securities)
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 9
JANUS ASPEN CAPITAL APPRECIATION PORTFOLIO SCOTT SCHOELZEL,
portfolio manager
For the six-month period ended June 30, 2002, the S&P 500 Index was down 13.15%.
By comparison, your Janus Aspen Capital Appreciation Portfolio was down 6.90%
for its Institutional Shares and 7.05% for its Service Shares.(1) This
performance earned the Portfolio's Institutional Shares a top-decile ranking for
the one-year period ended June 30, 2002 , placing it 5th out of 142 variable
annuity large-cap growth funds tracked by Lipper, a Reuters company and leading
mutual fund rating company.(2)
[PHOTO]
As you can see from the Portfolio's returns, we continued to be justifiably
defensive in our stock picking. Although we did manage to meaningfully
outperform the popular averages in the first half of the year, I am just as
disappointed, as I expect you are, with our absolute returns. The investment
climate remains one of the most challenging in the past 60 years, and not since
1939, 1940 and 1941 have the popular averages performed this poorly on a rolling
three-year basis. Nevertheless, we are determined to do better.
Dominating the investment landscape were the ever-widening accounting and
integrity scandals. The daily barrage of scandalous news has been relentless. As
these and other adjacent issues escalated during the period, the public's
confidence continued to erode and the markets trended lower. It's quite clear
that we will need to see some strong actions from both the government as well as
the private sector on this issue before the markets begin to stabilize.
Compelling stock valuations alone will not do it.
During the period, we continued to diversify your Portfolio by adding
investments in the healthcare, insurance and consumer-branded products sectors
while reducing our already downsized positions in technology. Some of the
period's better-performing stocks included UnitedHealth Group and Oxford Health,
both leaders in the managed care industry, Bank of America and Wells Fargo, two
strong bank franchises, and Electronic Arts, the leading gaming software
company.
Some of our poorer-performing stocks included our remaining investment in AOL
Time Warner as well as our investments in the brokerage industry, including
Goldman Sachs, Merrill Lynch and, to some extent, Citigroup and JP Morgan.
During the period, we sold our entire positions in both Merrill Lynch and JP
Morgan. Both companies have been ensnared in many of today's headline-grabbing
scandals and their immediate futures remain too unpredictable.
One of our biggest disappointments during the period was our investment in AOL
Time Warner. Although the position size was drastically reduced long ago, we
have maintained a residual position. The easy and somewhat emotional thing to do
would be to simply throw in the towel, sell it and move on - something I have
been close to doing. Looking at things objectively, however, and having the
benefit of some excellent research from our analysts, I believe the assets are
too good. The "scandals" lack true merit and, at today's valuation, I cannot
believe, if we take a long-term view from here, we won't make quite a bit of
money on this position. Despite the stock's current unpopularity, I am willing
to endure a while longer based on what I know now.
Finally, over the past six months we have sold more stock than we have bought
and, as a result, the cash position in your Portfolio was still high at the end
of the reporting period. I want to emphasize that this is simply a residual of
our investment process and not in any way a macro call on "the market" as some
have speculated. Simply put, when we can find companies we believe have an
improving business and financial model, unquestioned managerial integrity and
which are trading at a compelling valuation, we will invest your assets. When we
are not convinced that all of those characteristics exist, we are content to
wait patiently and continue our search.
I know the last three years have been disappointing, yet the Portfolio still
ranks in the top 5% of all Lipper-ranked growth funds for the one-year period.
Nonetheless, the Portfolio's returns have been disappointing and I offer no
excuses. However, we continue to do the focused research that we genuinely
believe will pay off in the long run.
Thank you for your continued investment in the Janus Aspen Capital Appreciation
Portfolio.
PORTFOLIO ASSET MIX
<Table>
<Caption>
(% of Net Assets) June 30, 2002 December 31, 2001
- --------------------------------------------------------------------------------
Equities 83.7% 80.2%
Foreign 0.4% 8.9%
Europe 0.4% 5.6%
Top 10 Equities 51.1% 47.0%
Number of Stocks 30 28
Cash and Cash Equivalents 16.3% 19.8%
</Table>
(1) All returns include reinvested dividends and capital gains.
(2) Lipper, a Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical and are based on total
return with capital gains and dividends reinvested. As of June 30, 2002, Lipper
ranked Janus Aspen Capital Appreciation Portfolio - Institutional Shares 1 out
of 67 variable annuity large-cap growth funds for the 5-year period.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
10 Janus Aspen Series June 30, 2002
AVERAGE ANNUAL TOTAL RETURN
<Table>
<Caption>
For the Periods Ended June 30, 2002
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 5/1/97)
1 Year (15.69)%
5 Year 11.16%
From Inception 14.30%
- --------------------------------------------------------------------------------
S&P 500 Index
1 Year (17.98)%
5 Year 3.67%
From Inception of Institutional Shares 5.63%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year (15.90)%
5 Year 10.72%
From Portfolio Inception 13.88%
- --------------------------------------------------------------------------------
</Table>
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
Due to recent market volatility, the Portfolio may have an increased position in
cash for temporary defensive purposes.
A "nondiversified" fund has the ability to take larger positions in a smaller
number of issuers than a "diversified" fund. Nondiversified funds may experience
greater price volatility.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
The S&P 500 is the Standard & Poor's Composite Index of 500 stocks, a widely
recognized, unmanaged index of common stock prices. The Portfolio may differ
significantly from the securities held in the index. The index is not available
for direct investment; therefore its performance does not reflect the expenses
associated with the active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Common Stock - 83.7%
Aerospace and Defense - 5.0%
510,085 General Dynamics Corp. ..................... $ 54,247,540
Applications Software - 3.9%
776,655 Microsoft Corp.* ........................... 42,483,028
Athletic Footwear - 0.4%
89,885 Nike, Inc. - Class B ....................... 4,822,330
Diversified Financial Services - 3.9%
1,105,540 Citigroup, Inc. ............................ 42,839,675
Diversified Operations - 2.3%
201,800 3M Co. ..................................... 24,821,400
Entertainment Software - 4.9%
813,180 Electronic Arts, Inc.* ..................... 53,710,539
Finance - Consumer Loans - 2.4%
272,100 SLM Corp. .................................. 26,366,490
Finance - Investment Bankers/Brokers - 4.2%
626,920 Goldman Sachs Group, Inc. .................. 45,984,582
Finance - Mortgage Loan Banker - 0.6%
83,985 Fannie Mae ................................. 6,193,894
Food - Diversified - 0.4%
64,265 Unilever N.V. - New York Shares ............ 4,164,372
Health Care Cost Containment - 0.5%
183,490 McKesson Corp. ............................. 6,000,123
Insurance Brokers - 0.6%
64,760 Marsh & McLennan Companies, Inc. ........... $ 6,255,816
Medical - Biomedical and Genetic - 0.5%
169,370 Genentech, Inc.* ........................... 5,673,895
Medical - Drugs - 0.7%
217,297 Pfizer, Inc. ............................... 7,605,395
Medical - HMO - 10.1%
585,810 Oxford Health Plans, Inc.* ................. 27,216,733
907,705 UnitedHealth Group, Inc. ................... 83,100,393
110,317,126
Medical Instruments - 4.8%
1,221,405 Medtronic, Inc. ............................ 52,337,204
Multi-Line Insurance - 5.2%
837,240 American International Group, Inc. ......... 57,124,885
Multimedia - 4.4%
1,774,577 AOL Time Warner, Inc.* ..................... 26,104,028
506,450 Viacom, Inc. - Class B* .................... 22,471,186
48,575,214
Oil - Field Services - 0.8%
247,260 BJ Services Co.* ........................... 8,377,169
Oil Companies - Exploration and Production - 3.0%
661,215 Anadarko Petroleum Corp. ................... 32,597,899
Oil Companies - Integrated - 3.8%
1,002,050 Exxon Mobil Corp. .......................... 41,003,886
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 11
- --------------------------------------------------------------------------------
JANUS ASPEN CAPITAL APPRECIATION PORTFOLIO
SCHEDULE OF INVESTMENTS (unaudited)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Retail - Building Products - 2.5%
734,648 Home Depot, Inc. ........................... $ 26,983,621
Retail - Regional Department Stores - 2.0%
304,785 Kohl's Corp.* .............................. 21,359,333
Satellite Telecommunications - 1.1%
628,253 EchoStar Communications Corp.* ............. 11,660,376
Super-Regional Banks - 11.4%
864,335 Bank of America Corp. ...................... 60,814,611
1,254,890 Wells Fargo & Co. .......................... 62,819,793
123,634,404
Transportation - Services - 4.0%
698,315 United Parcel Service, Inc. - Class B ...... 43,120,951
Wireless Equipment - 0.3%
106,040 QUALCOMM, Inc.* ............................ 2,915,040
- --------------------------------------------------------------------------------
Total Common Stock (cost $966,339,757) ...................... 911,176,187
- --------------------------------------------------------------------------------
Repurchase Agreement - 10.4%
$ 113,100,000 ABN AMRO Bank N.V., 1.97%
dated 6/28/02, maturing 7/1/02 to be
repurchased at $113,118,567
collateralized by $23,307,374 in
Collateralized Mortgage Obligations
2.29%-6.50847%, 6/10/13-12/25/40 Aaa,
$106,803,055 in U.S. Government
Obligations, 2.64%-7.30%
6/15/09-5/1/37; with respective values
of $10,420,966 and $104,941,096 (cost
$113,100,000) .......................... 113,100,000
- --------------------------------------------------------------------------------
Time Deposit - 4.6%
State Street Bank and Trust Co.
50,000,000 1.9375%, 7/1/02 (cost $50,000,000) ....... 50,000,000
- --------------------------------------------------------------------------------
U.S. Government Agency - 1.4%
Federal Home Loan Bank System
15,000,000 1.63%, 7/11/02
(amortized cost $14,993,208) ............. 14,993,208
- --------------------------------------------------------------------------------
Total Investments (total cost $1,144,432,965) - 100.1% ...... 1,089,269,395
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (0.1%) (1,434,491)
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $ 1,087,834,904
- --------------------------------------------------------------------------------
</Table>
SUMMARY OF INVESTMENTS BY COUNTRY, JUNE 30, 2002
<Table>
<Caption>
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Netherlands 0.4% $ 4,164,372
United States++ 99.6% 1,085,105,023
- --------------------------------------------------------------------------------
Total 100.0% $ 1,089,269,395
</Table>
++ Includes Short-Term Securities (83.3% excluding Short-Term Securities)
SEE NOTES TO SCHEDULES OF INVESTMENTS.
12 Janus Aspen Series June 30, 2002
JANUS ASPEN CORE EQUITY PORTFOLIO Karen L. Reidy, portfolio manager
Janus Aspen Core Equity Portfolio lost 7.01% for its Institutional Shares and
fell 7.12% for its Service Shares during the six months ended June 30, 2002,
while its benchmark, the S&P 500 Index, dropped 13.15%.(1) This performance
earned the Portfolio's Institutional Shares a top-decile ranking for the
one-year period ended June 30, 2002, placing it 12th out of 155 variable annuity
large-cap core funds tracked by Lipper, a Reuters Company and leading mutual
fund rating company.(2)
[PHOTO]
After making a sizzling comeback at year-end, stocks turned lukewarm in 2002.
Shares were pressured as fears over the accounting scandal that brought down
energy trader Enron tainted the broader market. Still, interest rates at
historic lows, rising industrial production and near-record home sales provided
reasons for optimism. But that optimism quickly faded as investors lost faith in
corporate America following news of accounting fraud at WorldCom Communications,
and, as a result, they bid shares sharply lower at the end of the period.
Despite this negative environment, many of our holdings fared well. Minnesota
Mining & Manufacturing, the 100-year-old industrial giant that officially
changed its name to 3M in April, is one such example. Amid slowing domestic
growth as the U.S. economy stalled and cooling demand overseas, the company has
benefited from the leadership of new CEO Jim McNerny, who has implemented
several aggressive cost-cutting and efficiency programs he learned during his
tenure at General Electric. Among his most important initiatives is a new focus
on pay for performance to motivate top executives. After only a year on the job,
McNerny's strategic restructuring has already produced rising profits in the
face of weaker sales. What's more, improvements in working capital and free cash
flow should provide a steady tailwind for the stock going forward.
Another standout was Honeywell International. Our interest in the diversified
manufacturer was piqued when its merger with GE fell through last year over
anti-competitive objections of European Union regulators. At the time, we viewed
Honeywell as a "special situation" - in other words, a company with some very
high-return businesses that had become undervalued due to a downturn in
commercial air travel and the failed merger transaction. We were encouraged that
business could improve when former Honeywell CEO Larry Bossidy temporarily
reassumed the top spot. Bossidy, in turn, has named his former GE colleague
David Cote, most recently CEO of TRW (aerospace and defense contractor), to
continue the work of transforming the company. Business at the manufacturer's
aerospace unit, meanwhile, has soared as defense spending has jumped.
Additionally, we see an eventual recovery in the commercial airline industry
driving future revenue growth.
Anheuser-Busch was a winner as well. The brewer, a company I've owned since I
became manager of the Portfolio, typifies the kind of businesses I want to own.
Over the years, the maker of Budweiser, Bud Light, Busch, Michelob and other
specialty brands has impressed me with its rising free cash flow, declining
capital intensity and dominant and growing market share. All in all, the
company's consistent performance and top-notch management team continue to win
my confidence.
On the downside, IBM hindered our results. Like many of its blue-chip brethren,
the computer and technology behemoth slipped lower on investor misperceptions
about its financial reporting practices. But while the company's accounting was
given a clean bill of health, its fundamental revenue growth weakened as
investment in technology products and services continued to slow despite signs
of improvement elsewhere in the economy. This reinforced my belief that a
recovery in capital spending on technology would lag other business investment,
prompting me to reassess my original thesis for IBM and sell the stock.
Citigroup was another disappointment. With investors focused on confidence
issues and questions about the unknown, the financial services powerhouse
suffered from its loan exposure to long-distance phone company WorldCom and
struggling Latin American economies. Compounding this negative sentiment were
allegations that Wall Street research departments deceived investors with
misleading stock recommendations. Still, we're impressed with Citigroup's strong
fundamentals and attractive valuation and believe the franchise will reward us
over the long run.
Looking ahead, despite the most attractive equity market valuations in years,
emotions - more than fundamental weakness - may continue to drive the market.
While I am confident that the weighty issues conspiring against stocks will
eventually be resolved, the question yet to be answered is whether it will take
a few months or much longer. I am keenly focused on finding attractively valued
companies with rising returns on capital, accelerating free cash flow growth and
managements with a history of executing - regardless of the environment.
Thank you for investing in Janus Aspen Core Equity Portfolio.
PORTFOLIO ASSET MIX
<Table>
<Caption>
(% of Net Assets) June 30, 2002 December 31, 2001
- --------------------------------------------------------------------------------
Equities 90.1% 89.2%
Foreign 8.7% 6.3%
Top 10 Equities 25.4% 28.0%
Number of Stocks 80 66
Cash, Cash Equivalents
and Fixed Income Securities 9.9% 10.8%
</Table>
(1) All returns include reinvested dividends and capital gains.
(2) Lipper, a Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical and are based on total
return with capital gains and dividends reinvested. As of June 30, 2002, Lipper
ranked Janus Aspen Core Equity Portfolio - Institutional Shares 1 out of 83
variable annuity large-cap core funds for the 5-year period.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
JANUS ASPEN SERIES JUNE 30, 2002 13
AVERAGE ANNUAL TOTAL RETURN
<Table>
<Caption>
For the Periods Ended June 30, 2002
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 5/1/97)
1 Year (12.38)%
5 Year 12.57%
From Inception 15.49%
- --------------------------------------------------------------------------------
S&P 500 Index
1 Year (17.98)%
5 Year 3.67%
From Inception of Institutional Shares 5.63%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year (12.63)%
5 Year 12.16%
From Portfolio Inception 15.07%
- --------------------------------------------------------------------------------
</Table>
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
The S&P 500 is the Standard & Poor's Composite Index of 500 stocks, a widely
recognized, unmanaged index of common stock prices. The Portfolio may differ
significantly from the securities held in the index. The index is not available
for direct investment; therefore its performance does not reflect the expenses
associated with the active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
The Adviser has contractually agreed to waive a portion of the Portfolio's
expenses. Without such waivers, the Portfolio's total returns for each class
would have been lower.
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Common Stock - 86.0%
Advertising Sales - 1.0%
3,535 Lamar Advertising Co.* ..................... $ 131,537
Agricultural Operations - 0.7%
5,000 Monsanto Co. ............................... 89,000
Appliances - 0.5%
970 Whirlpool Corp. ............................ 63,399
Applications Software - 0.7%
1,620 Microsoft Corp.* ........................... 88,614
Automotive - Cars and Light Trucks - 3.5%
3,647 BMW A.G. ................................... 150,378
10,335 Ford Motor Co. ............................. 165,360
2,410 General Motors Corp. ....................... 128,815
444,553
Automotive - Truck Parts and Equipment - 2.0%
2,507 Autoliv A.B ................................ 61,105
9,760 Delphi Corp. ............................... 128,832
1,550 Lear Corp.* ................................ 71,687
261,624
Beverages - Non-Alcoholic - 2.0%
1,865 Coca-Cola Co. .............................. 104,440
3,065 PepsiCo, Inc. .............................. 147,733
252,173
Beverages - Wine and Spirits - 1.5%
15,229 Diageo PLC ................................. 196,458
Brewery - 2.1%
5,349 Anheuser-Busch Companies, Inc. ............. $ 267,450
Broadcast Services and Programming - 1.3%
1,265 Clear Channel Communications, Inc.* ........ 40,505
13,825 Liberty Media Corp. - Class A* ............. 131,337
171,842
Cable Television - 0.4%
2,333 Comcast Corp.-Special Class A* ............. 55,619
Chemicals - Diversified - 1.2%
3,520 E.I. du Pont de Nemours and Co. ............ 156,288
Computer Services - 0.4%
1,455 Electronic Data Systems Corp. .............. 54,053
Computers - 0.4%
3,000 Apple Computer, Inc.* ...................... 53,160
Computers - Peripheral Equipment - 1.0%
2,250 Lexmark International Group, Inc. -
Class A* .................................. 122,400
Consulting Services - 0.5%
3,270 Accenture, Ltd. - Class A - New York
Shares* ................................... 62,130
Cosmetics and Toiletries - 1.7%
2,395 Procter & Gamble Co. ....................... 213,874
Data Processing and Management - 3.0%
6,098 Automatic Data Processing, Inc. ............ 265,568
3,355 First Data Corp. ........................... 124,806
390,374
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENT.
14 Janus Aspen Series June 30, 2002
JANUS ASPEN CORE EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Diversified Financial Services - 3.0%
10,061 Citigroup, Inc. ............................ $ 389,864
Diversified Operations - 8.8%
2,865 3M Co. ..................................... 352,395
16,204 Bombardier, Inc. - Class B ................. 134,244
5,476 General Electric Co. ....................... 159,078
11,415 Honeywell International, Inc. .............. 402,150
1,165 Illinois Tool Works, Inc. .................. 79,570
1,127,437
Electronic Design Automation - 1.1%
8,942 Cadence Design Systems, Inc.* .............. 144,145
Engineering - Research and Development - 1.2%
3,855 Fluor Corp. ................................ 150,152
Finance - Consumer Loans - 1.1%
2,735 Household International, Inc. .............. 135,929
Finance - Investment Bankers/Brokers - 2.7%
10,130 J.P. Morgan Chase & Co. .................... 343,610
Food - Diversified - 1.4%
4,505 H.J. Heinz Co. ............................. 185,156
Food - Meat Products - 0.6%
4,600 Tyson Foods, Inc. - Class A ................ 71,346
Food - Retail - 1.1%
6,925 Kroger Co.* ................................ 137,808
Home Furnishings - 0.8%
2,820 Ethan Allen Interiors, Inc. ................ 98,277
Hotels and Motels - 1.4%
4,090 Fairmont Hotels and Resorts, Inc.
- New York Shares ........................ 105,440
2,320 Starwood Hotels & Resorts Worldwide, Inc. .. 76,305
181,745
Instruments - Controls - 0.6%
1,955 Mettler-Toledo International, Inc.* ........ 72,081
Insurance Brokers - 2.9%
3,890 Marsh & McLennan Companies, Inc. ........... 375,774
Life and Health Insurance - 3.2%
9,200 AFLAC, Inc. ................................ 294,400
1,220 CIGNA Corp. ................................ 118,852
413,252
Medical - Drugs - 3.3%
7,230 Schering-Plough Corp. ...................... 177,858
4,740 Wyeth ...................................... 242,688
420,546
Medical - Hospitals - 1.9%
3,395 Tenet Healthcare Corp.* .................... 242,912
Multi-Line Insurance - 1.5%
2,893 American International Group, Inc. ......... 197,389
Multimedia - 4.2%
5,430 Entravision Communications Corp.* .......... 66,518
2,755 Gannett Company, Inc. ...................... 209,104
5,882 Viacom, Inc. - Class B* .................... 260,984
536,606
Oil Companies - Exploration and Production - 1.8%
760 Apache Corp. ............................... $ 43,685
4,790 Burlington Resources, Inc. ................. 182,020
225,705
Oil Companies - Integrated - 3.5%
2,138 EnCana Corp. ............................... 65,649
2,400 EnCana Corp. - New York Shares ............. 73,440
7,480 Exxon Mobil Corp. .......................... 306,082
445,171
Property and Casualty Insurance - 2.0%
1,470 Chubb Corp. ................................ 104,076
1,725 XL Capital, Ltd. - Class A ................. 146,108
250,184
Radio - 0.6%
8,305 Spanish Broadcasting System, Inc. -
Class A* ................................. 83,050
Reinsurance - 1.8%
103 Berkshire Hathaway, Inc. - Class B* ........ 230,102
Retail - Apparel and Shoe - 0.4%
3,265 Gap, Inc. .................................. 46,363
Retail - Discount - 1.9%
3,345 Target Corp. ............................... 127,445
2,066 Wal-Mart Stores, Inc. ...................... 113,651
241,096
Retail - Jewelry - 0.3%
1,065 Tiffany & Co. .............................. 37,488
Rubber - Tires - 0.5%
3,260 Goodyear Tire & Rubber Co. ................. 60,995
Semiconductor Components/Integrated Circuits - 1.2%
2,273 Linear Technology Corp. .................... 71,440
2,266 Maxim Integrated Products, Inc.* ........... 86,856
158,296
Super-Regional Banks - 3.0%
2,015 Bank of America Corp. ...................... 141,775
10,603 U.S. Bancorp ............................... 247,580
389,355
Tobacco - 0.5%
1,345 Philip Morris Companies, Inc. .............. 58,750
Toys - 1.0%
5,890 Mattel, Inc. ............................... 124,161
Transportation - Air Freight - 1.9%
6,455 CNF, Inc. .................................. 245,161
Transportation - Services - 0.9%
2,115 FedEx Corp. ................................ 112,941
- --------------------------------------------------------------------------------
Total Common Stock (cost $11,231,770) ....................... 11,007,395
- --------------------------------------------------------------------------------
Corporate Bonds - 0.5%
Brewery - 0.1%
$ 15,000 Anheuser-Busch Companies, Inc., 6.00%
senior notes, due 4/15/11 ................ 15,562
Cellular Telecommunications - 0.4%
46,000 VoiceStream Wireless Corp., 10.375%
senior notes, due 11/15/09 ............... 44,160
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $60,915) ........................ 59,722
- --------------------------------------------------------------------------------
</Table>
See Notes to Schedules of Investment.
Janus Aspen Series June 30, 2002 15
JANUS ASPEN CORE EQUITY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Preferred Stock - 4.1%
Automotive - Cars and Light Trucks - 3.1%
3,250 Ford Motor Company Capital Trust II
convertible, 6.50% ....................... $ 182,812
3,625 General Motors Corp. - Series A
convertible, 4.50% ....................... 93,670
244 Porsche A.G. ............................... 115,671
392,153
Cable Television - 0.3%
1,110 Cox Communications, Inc.
convertible, 7.00% ....................... 45,244
Electric - Integrated - 0.2%
1,257 Reliant Energy, Inc., convertible, 2.00%
(AOL Time Warner, Inc.)(omega) ........... 31,425
Publishing - Newspapers - 0.5%
896 Tribune Co., convertible, 2.00% ............ 58,464
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $579,922) ....................... 527,286
- --------------------------------------------------------------------------------
U.S. Government Obligations - 0.3%
Fannie Mae:
$ 15,000 4.75%, due 11/14/03 ...................... 15,463
20,000 5.625%, due 5/14/04 ...................... 20,950
- --------------------------------------------------------------------------------
Total U.S. Government Obligations (cost $35,841) ............ 36,413
- --------------------------------------------------------------------------------
Repurchase Agreement - 6.2%
800,000 ABN AMRO Bank N.V., 1.97%
dated 6/28/02, maturing 7/1/02 to be
repurchased at $800,131 collateralized
by $164,862 in Collateralized Mortgage
Obligations 2.29%-6.50847%,
6/10/13-12/25/40 Aaa, $755,459 in U.S.
Government Obligations, 2.64%-7.30%
6/15/09-5/1/37; with respective values
of $73,712 and $742,289 (cost
$800,000) ................................ 800,000
- --------------------------------------------------------------------------------
Total Investments (total cost $12,708,448) - 97.1% .......... 12,430,816
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities -
2.9% ....................................................... 373,731
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $ 12,804,547
- --------------------------------------------------------------------------------
</Table>
SUMMARY OF INVESTMENTS BY COUNTRY, JUNE 30, 2002
<Table>
<Caption>
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Bermuda 1.7% $ 208,238
Canada 3.0% 378,773
Germany 2.1% 266,049
Sweden 0.5% 61,105
United Kingdom 1.6% 196,458
United States++ 91.1% 11,320,193
- --------------------------------------------------------------------------------
Total 100.0% $ 12,430,816
</Table>
++ Includes Short-Term Securities (84.6% excluding Short-Term Securities)
SEE NOTES TO SCHEDULES OF INVESTMENTS.
16 Janus Aspen Series June 30, 2002
JANUS ASPEN BALANCED PORTFOLIO Karen L. Reidy, portfolio manager
For the six months ended June 30, 2002, Janus Aspen Balanced Portfolio fell
3.19% for its Institutional Shares and declined 3.34% for its Service Shares. By
comparison, the S&P 500 Index, the benchmark for the equity portion of the
Portfolio, lost 13.15%, and the Lehman Brothers Government/Credit Index, the
Portfolio's fixed-income benchmark, gained 3.26%.(1) This performance earned the
Portfolio's Institutional Shares a top-quartile ranking for the one-year period
ended June 30, 2002, placing it 15th out of 65 variable annuity balanced funds
tracked by Lipper, a Reuters Company and leading mutual fund rating company.(2)
[PHOTO]
The positive market momentum that had started to build at the end of 2001 lost
steam in the new year. Equity markets were volatile as a crisis of confidence,
triggered by the collapse of energy trader Enron, weighed on share prices across
the board. Although interest rates hovered at 40-year lows and there were
indications that the economy was slowly climbing out of recession, these
encouraging signs were eclipsed by seemingly endless disclosures of corporate
deception, undermining the confidence of investors and consumers alike. Threats
of terrorist attacks in the U.S. and escalating violence in the Middle East also
took a toll.
Bonds benefited in this unfavorable equity environment as investors turned to
debt securities for their relative stability and safety. By the end of June,
U.S. Treasuries were on track to beat stock returns for the third year in a row.
Gross domestic product grew at a surprising 5.6% annual rate in the first
quarter, however, our company research indicated the economy was still weak.
Consequently, we maintained our fixed-income weighting north of 45% during the
period.
On the equity side, Honeywell International proved a winner. When the proposed
merger between the diversified manufacturer and General Electric was rejected by
European Union regulators last year, Honeywell's stock price tumbled, which we
viewed as an attractive buying opportunity. Since then, well-regarded former CEO
Larry Bossidy has temporarily come out of retirement to help put the company
back on track. We are equally pleased that Bossidy has named his old GE
colleague and previous TRW (aerospace and defense contractor) CEO David Cote to
continue the recovery. Amid these changes, Honeywell has profited from increased
military spending as the top provider of cockpit systems and electronics.
Furthermore, an eventual rebound in the commercial airline business bodes well
for the manufacturer going forward.
3M also supported our results. The maker of products ranging from Post-It Notes
to medical software has benefited from a strategic restructuring plan
implemented by new Chairman and CEO Jim McNerny, another former GE executive.
With a fresh perspective on the 100-year-old company, McNerny saw 3M's
antiquated management processes as a roadblock to growth. As such, he has put in
place several initiatives designed to improve working capital and free cash flow
and has established a pay-for-performance compensation system as an incentive
for top employees. Additionally, McNerny is aiming to use 3M's extensive
international distribution channels to drive revenues higher.
Another standout was Anheuser-Busch. The brewer epitomizes everything we look
for in an investment as it enjoys improving free cash flow, declining capital
intensity and dominant market share. No question, Anheuser-Busch's management
team not only has executed well on its business plan by delivering consistent,
predictable earnings, but it also has continued to gain our respect.
On the downside, Citigroup hindered our results. Pressuring shares of the
financial services powerhouse were concerns over its loan exposure to
long-distance phone company WorldCom as well as burgeoning financial crises in
Latin America. Meanwhile, allegations that Wall Street research departments
deceived investors with misleading stock recommendations also worked against the
stock. Nevertheless, given Citigroup's strong fundamentals and attractive
valuation, we remain firm believers in the franchise.
Payroll and tax filing processor Automatic Data Processing also disappointed. As
the economy slipped into recession and companies laid off employees to cut costs
and shore up their balance sheets, ADP struggled as its pays per control, or the
number of employees on payroll, declined. Although the days of double-digit
revenue growth may not return any time soon, as the economy continues to show
welcome signs of a turnaround and unemployment starts to level off, we expect
ADP to benefit as companies gradually begin to add workers.
Looking ahead, despite an improving economic picture, emotions may continue to
drive the market. However, I am confident that if we roll up our sleeves and
make our best efforts to understand the business prospects, balance sheets and
cash flow statements of potential investments, we will find solid opportunities
that will reward us over the long term.
Thank you for investing in Janus Aspen Balanced Portfolio.
PORTFOLIO ASSET MIX
<Table>
<Caption>
(% of Net Assets) June 30, 2002 December 31, 2001
- --------------------------------------------------------------------------------
Equities 43.5% 47.5%
Top 10 Equities 14.9% 16.1%
Number of Stocks 70 66
Fixed Income Securities
U.S. Government Obligations 23.4% 21.5%
Corporate Bonds/Warrants
Investment Grade 19.5% 18.1%
High-Yield/High-Risk 0.5% 1.0%
Preferred Stock 1.7% 1.2%
Cash and Cash Equivalents 11.4% 10.7%
</Table>
(1) All returns include reinvested dividends and capital gains.
(2) Lipper, a Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical and are based on total
return with capital gains and dividends reinvested. As of June 30, 2002, Lipper
ranked Janus Aspen Balanced Portfolio - Institutional Shares 1 out of 42
variable annuity balanced funds for the 5-year period.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
JANUS ASPEN SERIES JUNE 30, 2002 17
AVERAGE ANNUAL TOTAL RETURN
<Table>
<Caption>
For the Periods Ended June 30, 2002
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 9/13/93)
1 Year (4.44)%
5 Year 10.79%
From Inception 13.04%
- --------------------------------------------------------------------------------
Lehman Brothers Government/Credit Index
1 Year 8.25%
5 Year 7.48%
From Inception Date of Institutional Shares 6.53%
- --------------------------------------------------------------------------------
S&P 500 Index
1 Year (17.98)%
5 Year 3.67%
From Inception Date of Institutional Shares 11.08%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year (4.68)%
5 Year 10.72%
From Portfolio Inception 13.03%
- --------------------------------------------------------------------------------
</Table>
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Due to recent market volatility, the Portfolio may have an increased position in
cash for temporary defensive purposes.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
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 Government/
Credit Index is composed of all bonds that are of investment grade with at least
one year until maturity. The Portfolio may differ significantly from the
securities held in the indices. The indices are not available for direct
investment; therefore their performance does not reflect the expenses associated
with the active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Common Stock - 43.5%
Agricultural Operations - 0.4%
736,800 Monsanto Co. ............................... $ 13,115,040
Applications Software - 0.4%
272,610 Microsoft Corp.* ........................... 14,911,767
Automotive - Cars and Light Trucks - 2.2%
859,912 BMW A.G. ................................... 35,457,047
1,742,380 Ford Motor Co. ............................. 27,878,080
342,690 General Motors Corp. ....................... 18,316,780
81,651,907
Automotive - Truck Parts and Equipment - 0.5%
1,381,900 Delphi Corp. ............................... 18,241,080
Beverages - Non-Alcoholic - 0.9%
148,145 Coca-Cola Co. .............................. 8,296,120
479,355 PepsiCo, Inc. .............................. 23,104,911
31,401,031
Beverages - Wine and Spirits - 1.0%
2,702,986 Diageo PLC ................................. 34,869,191
Brewery - 1.3%
954,429 Anheuser-Busch Companies, Inc. ............. 47,721,450
Broadcast Services and Programming - 0.6%
2,379,215 Liberty Media Corp. - Class A* ............. 22,602,542
Cable Television - 0.3%
435,899 Comcast Corp. - Special Class A* ........... $ 10,391,832
Chemicals - Diversified - 0.6%
515,700 E.I. du Pont de Nemours and Co. ............ 22,897,080
Computer Services - 0.4%
439,530 Electronic Data Systems Corp. .............. 16,328,539
Computers - 0.2%
510,800 Apple Computer, Inc.* ...................... 9,051,376
Computers - Peripheral Equipment - 0.5%
330,220 Lexmark International Group, Inc. -
Class A* .................................. 17,963,968
Consulting Services - 0.2%
456,265 Accenture, Ltd. - Class A - New York
Shares* ................................... 8,669,035
Cosmetics and Toiletries - 0.7%
284,320 Procter & Gamble Co. ....................... 25,389,776
Data Processing and Management - 1.5%
914,509 Automatic Data Processing, Inc. ............ 39,826,867
396,520 First Data Corp. ........................... 14,750,544
54,577,411
Diversified Financial Services - 1.7%
1,588,236 Citigroup, Inc. ............................ 61,544,145
Diversified Minerals - 0%
3,430 Companhia Vale do Rio Doce (ADR)* .......... 94,908
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
18 Janus Aspen Series June 30, 2002
JANUS ASPEN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Diversified Operations - 4.7%
457,615 3M Co. ..................................... $ 56,286,645
2,080,541 Bombardier, Inc. - Class B ................. 17,236,497
909,664 General Electric Co. ....................... 26,425,739
2,076,160 Honeywell International, Inc. .............. 73,143,117
173,091,998
Electronic Components - Semiconductors - 0.3%
425,287 Texas Instruments, Inc. .................... 10,079,302
Electronic Design Automation - 0.6%
1,321,092 Cadence Design Systems, Inc.* .............. 21,296,003
Engineering - Research and Development - 0.7%
626,610 Fluor Corp. ................................ 24,406,460
Finance - Consumer Loans - 0.6%
421,425 Household International, Inc. .............. 20,944,822
Finance - Credit Card - 0.4%
450,000 American Express Co. ....................... 16,344,000
Finance - Investment Bankers/Brokers - 1.3%
1,394,045 J.P. Morgan Chase & Co. .................... 47,286,006
Food - Diversified - 0.9%
765,150 H.J. Heinz Co. ............................. 31,447,665
Food - Retail - 0.5%
838,140 Kroger Co.* ................................ 16,678,986
Hotels and Motels - 0.2%
240,233 Fairmont Hotels and Resorts, Inc.
- New York Shares ........................ 6,193,207
Insurance Brokers - 1.9%
708,345 Marsh & McLennan Companies, Inc. ........... 68,426,127
Life and Health Insurance - 1.6%
1,139,060 AFLAC, Inc. ................................ 36,449,920
231,795 CIGNA Corp. ................................ 22,581,469
59,031,389
Medical - Biomedical and Genetic - 0.1%
118,525 Immunex Corp.* ............................. 2,647,849
Medical - Drugs - 1.9%
1,205,000 Schering-Plough Corp. ...................... 29,643,000
791,000 Wyeth ...................................... 40,499,200
70,142,200
Medical - Hospitals - 1.1%
536,320 Tenet Healthcare Corp.* .................... 38,373,696
Motorcycle and Motor Scooter Manufacturing - 0.4%
272,343 Harley-Davidson, Inc. ...................... 13,963,026
Multi-Line Insurance - 0.8%
435,309 American International Group, Inc. ......... 29,701,133
Multimedia - 2.3%
363,705 Gannett Company, Inc. ...................... 27,605,209
973,156 Viacom, Inc. - Class B* .................... 43,178,932
648,245 Walt Disney Co. ............................ 12,251,830
83,035,971
Oil Companies - Exploration and Production - 1.0%
108,415 Apache Corp. ............................... 6,231,694
803,027 Burlington Resources, Inc. ................. 30,515,026
36,746,720
Oil Companies - Integrated - 2.3%
145,313 EnCana Corp. ............................... $ 4,461,938
405,940 EnCana Corp. - New York Shares ............. 12,421,764
1,617,265 Exxon Mobil Corp. .......................... 66,178,484
83,062,186
Property and Casualty Insurance - 1.1%
305,235 Chubb Corp. ................................ 21,610,638
233,865 XL Capital, Ltd. - Class A ................. 19,808,366
41,419,004
Reinsurance - 0.9%
15,495 Berkshire Hathaway, Inc. - Class B* ........ 34,615,830
Retail - Apparel and Shoe - 0.2%
443,620 Gap, Inc. .................................. 6,299,404
Retail - Discount - 1.0%
502,370 Target Corp. ............................... 19,140,297
343,625 Wal-Mart Stores, Inc. ...................... 18,902,811
38,043,108
Rubber - Tires - 0.4%
818,270 Goodyear Tire & Rubber Co. ................. 15,309,832
Semiconductor Components/Integrated Circuits - 0.5%
270,127 Linear Technology Corp. .................... 8,490,092
269,672 Maxim Integrated Products, Inc.* ........... 10,336,528
18,826,620
Super-Regional Banks - 1.7%
343,740 Bank of America Corp. ...................... 24,185,546
1,555,873 U.S. Bancorp ............................... 36,329,635
60,515,181
Toys - 0.3%
552,750 Mattel, Inc. ............................... 11,651,970
Transportation - Services - 0.4%
292,640 FedEx Corp. ................................ 15,626,976
- --------------------------------------------------------------------------------
Total Common Stock (cost $1,667,839,975) .................... 1,586,628,749
- --------------------------------------------------------------------------------
Corporate Bonds - 20.0%
Aerospace and Defense - 0.7%
Lockheed Martin Corp.:
$ 5,790,000 7.25%, company guaranteed notes
due 5/15/06 .............................. 6,289,387
6,195,000 8.20%, notes, due 12/1/09 ................ 7,170,712
9,700,000 7.65%, company guaranteed notes
due 5/1/16 ............................... 11,033,750
24,493,849
Automotive - Truck Parts and Equipment - 0.6%
14,240,000 Delphi Corp., 6.55%
notes, due 6/15/06 ....................... 14,845,200
5,420,000 Lear Corp., 7.96%
company guaranteed notes, due 5/15/05 .... 5,589,375
20,434,575
Beverages - Non-Alcoholic - 1.2% Coca-Cola Enterprises, Inc.:
7,675,000 5.375%, notes, due 8/15/06 ............... 7,895,656
20,173,000 7.125%, notes, due 9/30/09 ............... 22,190,300
11,875,000 6.125%, notes, due 8/15/11 ............... 12,231,250
42,317,206
</Table>
See Notes to Schedules of Investments.
Janus Aspen Series June 30, 2002 19
JANUS ASPEN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Brewery - 1.3%
Anheuser-Busch Companies, Inc.:
$ 9,995,000 5.65%, notes, due 9/15/08 ................ $ 10,369,812
9,135,000 5.75%, notes, due 4/1/10 ................. 9,329,119
14,969,000 6.00%, senior notes, due 4/15/11 ......... 15,530,337
3,600,000 7.55%, notes, due 10/1/30 ................ 4,135,500
3,750,000 6.80%, notes, due 1/15/31 ................ 3,965,625
4,925,000 6.80%, notes, due 8/20/32 ................ 5,208,187
48,538,580
Broadcast Services and Programming - 0.3%
9,370,000 Clear Channel Communications, Inc., 6.00%
notes, due 11/1/06 ....................... 9,206,025
Cable Television - 0.7%
Cox Communications, Inc.:
3,950,000 7.50%, notes, due 8/15/04 ................ 4,014,188
2,512,000 7.75%, notes, due 8/15/06 ................ 2,502,580
18,005,000 TCI Communications, Inc., 6.375%
senior notes, due 5/1/03 ................. 18,387,606
24,904,374
Cellular Telecommunications - 0.3%
9,940,000 VoiceStream Wireless Corp., 10.375%
senior notes, due 11/15/09 ............... 9,542,400
Chemicals - Diversified - 0.3%
11,610,000 Dow Chemical Co., 6.125%
notes, due 2/1/11 ........................ 11,697,075
Commercial Banks - 0.2%
7,115,000 US Bank N.A., 5.70%
notes, due 12/15/08 ...................... 7,292,875
Computers - 0.4%
7,230,000 Apple Computer, Inc., 6.50%
notes, due 2/15/04 ....................... 7,230,000
Sun Microsystems, Inc.:
1,420,000 7.35%, senior notes, due 8/15/04 ......... 1,491,000
7,263,000 7.65%, senior notes, due 8/15/09 ......... 7,671,544
16,392,544
Cosmetics and Toiletries - 0.2%
8,175,000 International Flavors & Fragrances, Inc.
6.45%, notes, due 5/15/06 ................ 8,502,000
Diversified Financial Services - 2.4%
11,225,000 Associates Corporation of North America
5.75%, senior notes, due 11/1/03 ......... 11,659,969
Citigroup, Inc.:
10,070,000 7.25%, subordinated notes, due 10/1/10 ... 10,963,713
3,365,000 6.625%, notes, due 6/15/32 ............... 3,251,431
General Electric Capital Corp.:
10,415,000 5.375%, notes, due 1/15/03 ............... 10,597,262
18,355,000 5.375%, notes, due 4/23/04 ............... 19,066,256
5,340,000 7.25%, notes, due 5/3/04 ................. 5,727,150
15,175,000 5.35%, notes, due 3/30/06 ................ 15,573,344
10,785,000 6.75%, notes, due 3/15/32 ................ 10,596,262
87,435,387
Diversified Operations - 0.5%
Honeywell International, Inc.:
9,950,000 5.125%, notes, due 11/1/06 ............... 10,037,062
7,165,000 6.125%, notes, due 11/1/11 ............... 7,326,212
17,363,274
Finance - Auto Loans - 1.1%
General Motors Acceptance Corp.:
$ 15,850,000 6.75%, notes, due 12/10/02 ............... $ 16,167,000
5,955,000 5.80%, notes, due 3/12/03 ................ 6,081,544
9,043,000 5.36%, notes, due 7/27/04 ................ 9,212,556
7,160,000 5.25%, notes, due 5/16/05 ................ 7,204,750
38,665,850
Finance - Consumer Loans - 0.7%
8,830,000 American General Finance Corp., 5.875%
notes, due 7/14/06 ....................... 9,116,975
Household Finance Corp.:
5,415,000 6.00%, notes, due 5/1/04 ................. 5,597,756
7,180,000 6.50%, notes, due 1/24/06 ................ 7,341,550
4,340,000 6.75%, notes, due 5/15/11 ................ 4,269,475
26,325,756
Finance - Credit Card - 0.5%
American Express Co.:
12,921,000 6.75%, senior unsubordinated notes
due 6/23/04 .............................. 13,777,016
5,380,000 4.25%, notes, due 2/7/05 ................. 5,447,250
19,224,266
Finance - Investment Bankers/Brokers - 0.8%
J.P. Morgan Chase & Co.:
7,175,000 5.25%, notes, due 5/30/07 ................ 7,219,844
5,625,000 6.625%, subordinated notes, due 3/15/12 .. 5,786,719
14,535,000 Salomon Smith Barney Holdings, Inc., 6.50%
notes, due 2/15/08 ....................... 15,534,281
28,540,844
Food - Diversified - 0.9%
General Mills, Inc.:
8,195,000 5.125%, notes, due 2/15/07 ............... 8,184,756
4,745,000 6.00%, notes, due 2/15/12 ................ 4,697,550
Kellogg Co.:
18,100,000 5.50%, notes, due 4/1/03 ................. 18,439,375
1,800,000 7.45%, debentures, due 4/1/31 ............ 1,977,750
33,299,431
Food - Retail - 1.4%
10,465,000 Fred Meyer, Inc., 7.45%
company guaranteed notes, due 3/1/08 ..... 11,511,500
Kroger Co.:
3,960,000 7.80%, notes, due 8/15/07 ................ 4,370,850
3,090,000 7.00%, senior notes, due 5/1/18 .......... 3,101,587
4,950,000 6.80%, notes, due 12/15/18 ............... 4,863,375
4,580,000 7.50%, company guaranteed notes
due 4/1/31 ............................... 4,768,925
Safeway, Inc.:
3,050,000 6.85%, senior notes, due 9/15/04 ......... 3,244,437
7,140,000 6.15%, notes, due 3/1/06 ................. 7,505,925
5,642,000 6.50%, notes, due 11/15/08 ............... 5,959,362
6,690,000 6.50%, notes, due 3/1/11 ................. 6,890,700
52,216,661
Food - Wholesale/Distribution - 0.1%
3,635,000 Pepsi Bottling Holdings, Inc., 5.625%
company guaranteed notes, due 2/17/09+ ... 3,694,069
</Table>
See Notes to Schedules of Investments.
20 Janus Aspen Series June 30, 2002
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Hotels and Motels - 0.2%
Starwood Hotels & Resorts Worldwide, Inc.:
$ 3,605,000 7.375%, notes, due 5/1/07 ................ $ 3,546,419
2,705,000 7.875%, notes, due 5/1/12 ................ 2,650,900
6,197,319
Insurance Brokers - 0.2%
7,275,000 Marsh & McLennan Companies, Inc.
5.375%, notes, due 3/15/07+ .............. 7,465,969
Internet Brokers - 0.3%
9,667,000 Charles Schwab Corp., 8.05%
notes, due 3/1/10 ........................ 10,645,784
Life and Health Insurance - 0.1%
2,393,000 SunAmerica, Inc., 6.75%
notes, due 10/1/07 ....................... 2,587,431
Medical - Drugs - 0.3%
9,150,000 Pfizer, Inc., 5.625%
notes, due 2/1/06 ........................ 9,653,250
2,871,000 Warner-Lambert Co., 6.00%
notes, due 1/15/08 ....................... 2,989,429
12,642,679
Medical - HMO - 0.3%
UnitedHealth Group, Inc.:
4,950,000 7.50%, notes, due 11/15/05 ............... 5,445,000
5,375,000 5.20%, notes, due 1/17/07 ................ 5,462,344
10,907,344
Multi-Line Insurance - 0.4%
14,550,000 AIG SunAmerica Global Financial IX, Inc.
5.10%, notes, due 1/17/07+ ............... 14,841,000
Multimedia - 0.3%
Viacom, Inc.:
8,485,000 7.75%, senior notes, due 6/1/05 .......... 9,301,681
3,000,000 7.70%, company guaranteed notes
due 7/30/10 .............................. 3,281,250
12,582,931
Oil Companies - Exploration and Production - 0.2%
7,095,000 Burlington Resources Finance Co., 7.20%
notes, due 8/15/31 ....................... 7,245,769
Oil Companies - Integrated - 0.3%
10,585,000 Conoco, Inc., 6.95%
senior notes, due 4/15/29 ................ 10,823,163
Oil Refining and Marketing - 0.2%
Valero Energy Corp.:
3,245,000 6.125%, notes, due 4/15/07 ............... 3,350,463
2,504,000 6.875%, notes, due 4/15/12 ............... 2,572,860
1,789,000 7.50%, notes, due 4/15/32 ................ 1,795,709
7,719,032
Resorts and Theme Parks - 0.1%
2,065,000 Six Flags, Inc., 9.75%
senior notes, due 6/15/07 ................ 2,116,625
Retail - Building Products - 0.7%
24,175,000 Home Depot, Inc., 6.50%
senior notes, due 9/15/04 ................ 25,806,813
Retail - Discount - 1.3%
Target Corp.:
$ 12,215,000 5.50%, notes, due 4/1/07 ................. $ 12,611,988
2,855,000 5.40%, notes, due 10/1/08 ................ 2,897,825
7,250,000 5.375%, notes, due 6/15/09 ............... 7,250,000
Wal-Mart Stores, Inc.:
7,850,000 5.45%, notes, due 8/1/06 ................. 8,183,625
14,340,000 6.875%, senior notes, due 8/10/09 ........ 15,756,075
46,699,513
Retail - Restaurants - 0.1%
3,695,000 Yum! Brands, Inc., 7.70%
notes, due 7/1/12 ........................ 3,695,000
Super-Regional Banks - 0%
1,693,000 Firstar Bank N.A., 7.125%
subordinated notes, due 12/1/09 .......... 1,849,603
Tools - Hand Held - 0.4%
12,610,000 Black & Decker Corp., 7.125%
senior notes, due 6/1/11 ................. 13,476,938
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $703,063,691) ................... 727,389,954
- --------------------------------------------------------------------------------
Preferred Stock - 1.7%
Automotive - Cars and Light Trucks - 1.4%
582,090 Ford Motor Company Capital Trust II
convertible, 6.50% ....................... 32,742,563
688,630 General Motors Corp. - Series B
convertible, 5.25% ....................... 18,090,310
50,832,873
Electric - Integrated - 0.1%
243,417 Reliant Energy, Inc., convertible, 2.00%
(AOL Time Warner, Inc.)(omega) ........... 6,085,425
Publishing - Newspapers - 0.2%
98,448 Tribune Co., convertible, 2.00% .......... 6,423,732
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $79,085,606) .................... 63,342,030
- --------------------------------------------------------------------------------
Warrants - 0%
Finance - Other Services - 0%
4,211 Ono Finance PLC, expires 5/31/09*,+
(cost $0) ................................ 42
- --------------------------------------------------------------------------------
U.S. Government Obligations - 23.4%
U.S. Government Agencies - 9.6%
Fannie Mae:
$ 8,200,000 4.75%, due 11/14/03 ...................... 8,453,298
99,260,000 5.625%, due 5/14/04 ...................... 103,976,835
23,780,000 5.50%, due 5/2/06 ........................ 24,969,000
14,365,000 4.75%, due 1/2/07 ........................ 14,544,563
20,070,000 5.00%, due 1/15/07 ....................... 20,621,925
13,200,000 6.25%, due 2/1/11 ........................ 13,876,500
43,935,000 5.375%, due 11/15/11 ..................... 43,989,919
16,195,000 6.625%, due 11/15/30 ..................... 17,105,969
Federal Home Loan Bank System:
27,430,000 4.875%, due 5/14/04 ...................... 28,390,050
28,895,000 3.375%, due 6/15/04 ...................... 29,039,475
29,175,000 6.50%, due 11/15/05 ...................... 31,654,875
12,270,000 Freddie Mac
5.875%, due 3/21/11 ...................... 12,576,750
349,199,159
</Table>
See Notes to Schedules of Investments.
Janus Aspen Series June 30, 2002 21
JANUS ASPEN BALANCED PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
U.S. Treasury Notes/Bonds - 13.8%
$ 17,370,000 3.375%, due 4/30/04 ...................... $ 17,553,254
10,910,000 3.25%, due 5/31/04 ....................... 10,993,462
15,875,000 6.00%, due 8/15/04 ....................... 16,864,965
43,890,000 5.875%, due 11/15/04 ..................... 46,646,731
26,955,000 5.75%, due 11/15/05 ...................... 28,774,463
38,070,000 6.50%, due 10/15/06 ...................... 41,909,740
24,166,000 5.625%, due 5/15/08 ...................... 25,793,338
29,765,000 6.00%, due 8/15/09 ....................... 32,333,124
24,233,000 5.75%, due 8/15/10 ....................... 25,921,555
25,550,000 5.00%, due 8/15/11 ....................... 25,904,634
50,060,000 7.25%, due 5/15/16 ....................... 58,998,213
22,941,000 6.25%, due 8/15/23 ....................... 24,579,446
34,930,000 6.00%, due 2/15/26 ....................... 36,332,440
29,775,000 5.25%, due 2/15/29 ....................... 28,009,640
75,025,000 6.25%, due 5/15/30 ....................... 81,270,081
501,885,086
- --------------------------------------------------------------------------------
Total U.S. Government Obligations (cost $839,018,136) ....... 851,084,245
- --------------------------------------------------------------------------------
Repurchase Agreement - 0.7%
24,500,000 ABN AMRO Bank N.V., 1.97%
dated 6/28/02, maturing 7/1/02 to be
repurchased at $24,504,022 collateralized
by $5,048,901 in Collateralized Mortgage
Obligations 2.29%-6.50847%,
6/10/13-12/25/40 Aaa, $23,135,940 in U.S.
Government Obligations, 2.64%-7.30%
6/15/09-5/1/37; with respective values
f $2,257,415 and $22,732,598 (cost
$24,500,000) ............................. 24,500,000
- --------------------------------------------------------------------------------
Short-Term Corporate Note - 2.7%
Citigroup, Inc.
100,000,000 1.85%, 7/1/02
(amortized cost $100,000,000) ............ 100,000,000
- --------------------------------------------------------------------------------
Time Deposit - 4.7%
State Street Bank and Trust Co.
170,000,000 1.9375%, 7/1/02 (cost $170,000,000) ...... 170,000,000
- --------------------------------------------------------------------------------
U.S. Government Agencies - 2.0%
Federal Farm Credit Bank
50,000,000 1.76%, 11/20/02 .......................... 49,687,500
Federal Home Loan Bank System
25,000,000 1.63%, 7/11/02 ........................... 24,988,681
- --------------------------------------------------------------------------------
Total U.S. Government Agencies (cost $74,641,569) ........... 74,676,181
- --------------------------------------------------------------------------------
Total Investments (total cost $3,658,148,977) - 98.7% ....... 3,597,621,201
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities -
1.3% ...................................................... 46,800,202
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $ 3,644,421,403
- --------------------------------------------------------------------------------
</Table>
SUMMARY OF INVESTMENTS BY COUNTRY, JUNE 30, 2002
<Table>
<Caption>
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Bermuda 0.8% $ 28,477,401
Brazil 0% 94,908
Canada 1.1% 40,313,406
Germany 1.0% 35,457,047
United Kingdom 1.0% 34,869,233
United States++ 96.1% 3,458,409,206
- --------------------------------------------------------------------------------
Total 100.0% $ 3,597,621,201
</Table>
++ Includes Short-Term Securities (85.9% excluding Short-Term Securities)
SEE NOTES TO SCHEDULES OF INVESTMENTS.
22 Janus Aspen Series June 30, 2002
JANUS ASPEN GROWTH AND INCOME PORTFOLIO DAVID CORKINS,
portfolio manager
Janus Aspen Growth and Income Portfolio declined 10.49% for its Institutional
Shares and 10.62% for its Service Shares for the six months ended June 30, 2002,
outpacing its benchmark, the S&P 500 Index, which fell 13.15%.(1) This
performance earned the Portfolio's Institutional Shares a top-decile ranking for
the one-year period ended June 30, 2002, placing it 10th out of 142 variable
annuity large-cap growth funds tracked by Lipper, a Reuters Company and leading
mutual fund rating company.(2)
[PHOTO]
At the start of 2002, mixed messages and a stabilizing economy produced a
sideways market, but investor confidence took a turn for the worse later in the
period, as accounting irregularities, corporate scandals, international unrest
and terrorist threats sent stocks sharply lower. Given the extreme negativity
surrounding the market, I maintained a flat and highly diversified portfolio,
investing across a wide range of industries and holdings. Furthermore, I
continued to use the ongoing rally in bonds to trim our fixed-income exposure
and shift assets back into equities, which appeared to offer a more attractive
risk/reward trade-off for the patient investor.
Contributing to our performance was U.S. Bancorp. Its stock slid late last year
after the company boosted its loan loss reserves in anticipation of rising
credit defaults after September 11th. I bought on the dip, taking the
opportunity to add to our position at an attractive price. Since then, shares
have bounced back nicely on the news that losses were less severe than initially
expected. I am also pleased to see cost-cutting and other benefits of U.S.
Bancorp's merger with Firstar begin to materialize and retail sales at the
bank's newly acquired branches start to improve.
Meanwhile, Anheuser-Busch moved along with nearly 50% of the U.S. market. The
world's largest brewer has maintained pricing power amid a sluggish economy,
giving it substantial leverage in its marketing and distribution spending. This
almost insurmountable competitive advantage translates into earnings power as
the company announced in May that it was raising its 2002 growth target to 13%
following 14 straight quarters of revenue growth as well as record beer sales. A
move toward exclusive distributorships should also work to the company's
benefit, ensuring prime product placement that could result in further share
gains.
Elsewhere, Coca-Cola Enterprises, the largest bottler of Coca-Cola soft drink
products, posted an impressive gain for the period. After several years of
revenue and earnings disappointments, the company bounced back in 2002 with
solid volume growth helped by the launch of Vanilla Coke. Late last year,
Coca-Cola Enterprises also reached an agreement with onetime parent Coca-Cola
Company to share jointly in improving marketing, pricing and cost-cutting
efficiencies while instituting performance-based funding initiatives. The
agreement appears to have gone a long way toward shoring up a previously
strained relationship and should continue to prove beneficial for both
companies.
As I contemplated companies whose performance fell short of our expectations, I
was reminded of an old adage: "The road to success is always under
construction." Such is the case with Citigroup. The leading global services
franchise and top holding suffered on concerns over its exposure to struggling
Latin American economies, as well as scandal-ridden companies Enron and
WorldCom. However, I believe the fears may have been overblown and the selling
indiscriminate. The company's diverse business mix continues to fire on all
cylinders and insulates it against weakness in any one area. We therefore expect
Citigroup to reward our conviction over the longer term.
General Electric also gave ground as the weakening economy hampered sales at its
short-cycle businesses including GE Plastics, Lighting, Appliances and NBC.
Investors also took the industrial conglomerate to task for relying on
short-term debt and acquisitions to drive its growth. Still, I continue to be
impressed by GE's management and its diversified and well-balanced business mix
- - plus, the company generates substantial internal capital. For these reasons,
GE remains among our top holdings.
In conclusion, we are neither optimistic nor pessimistic regarding the market,
only realistic. To that end, we will continue to focus on companies that stick
with basic blocking and tackling and can perform regardless of where the coming
months lead us. While low rates and productivity gains could eventually get the
economy moving again, there's a good chance it could come in fits and starts. As
a result, we'll take it one day at a time, one company at a time.
Thank you for investing in Janus Aspen Growth and Income Portfolio.
PORTFOLIO ASSET MIX
<Table>
<Caption>
(% of Net Assets) June 30, 2002 December 31, 2001
- --------------------------------------------------------------------------------
Equities 89.0% 84.3%
Top 10 Equities 26.9% 27.2%
Number of Stocks 73 74
Fixed Income Securities 7.4% 6.9%
Cash and Cash Equivalents 3.6% 8.8%
</Table>
(1) All returns include reinvested dividends and capital gains.
(2) Lipper, a Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical and are based on total
return with capital gains and dividends reinvested.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
JANUS ASPEN SERIES JUNE 30, 2002 23
AVERAGE ANNUAL TOTAL RETURN
<Table>
For the Periods Ended June 30, 2002
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 5/1/98)
1 Year (16.87)%
From Inception 8.20%
- --------------------------------------------------------------------------------
S&P 500 Index
1 Year (17.98)%
From Inception of Institutional Shares (1.46)%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year (17.07)%
From Portfolio Inception 7.93%
- --------------------------------------------------------------------------------
</Table>
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
The S&P 500 is the Standard & Poor's Composite Index of 500 stocks, a widely
recognized, unmanaged index of common stock prices. The Portfolio may differ
significantly from the securities held in the index. The index is not available
for direct investment; therefore its performance does not reflect the expenses
associated with the active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Common Stock - 84.2%
Advertising Sales - 0.2%
9,210 Lamar Advertising Co.* ..................... $ 342,704
Aerospace and Defense - 0.6%
7,980 General Dynamics Corp. ..................... 848,673
Applications Software - 2.4%
66,785 Microsoft Corp.* ........................... 3,653,139
Automotive - Cars and Light Trucks - 0.9%
33,315 BMW A.G. ................................... 1,373,689
Automotive - Truck Parts and Equipment - 1.0%
120,345 Delphi Corp. ............................... 1,588,554
Beverages - Non-Alcoholic - 3.4%
99,620 Coca-Cola Enterprises, Inc. ................ 2,199,610
64,466 PepsiCo, Inc. .............................. 3,107,261
5,306,871
Brewery - 1.8%
56,328 Anheuser-Busch Companies, Inc. ............. 2,816,400
Broadcast Services and Programming - 3.2%
40,570 Clear Channel Communications, Inc.* ........ 1,299,051
391,378 Liberty Media Corp. - Class A* ............. 3,718,091
5,017,142
Cable Television - 3.4%
5,380 Comcast Corp. - Class A* ................... $ 130,196
130,638 Comcast Corp. - Special Class A* ........... 3,114,410
74,321 Cox Communications, Inc. - Class A* ........ 2,047,544
5,292,150
Casino Hotels - 0.9%
136,380 Park Place Entertainment Corp.* ............ 1,397,895
Chemicals - Diversified - 2.3%
78,893 E.I. du Pont de Nemours and Co. ............ 3,502,849
Commercial Services - Finance - 0.9%
44,762 Paychex, Inc. .............................. 1,400,603
Computer Services - 0.9%
72,570 Ceridian Corp.* ............................ 1,377,379
Computers - 0.5%
44,105 Apple Computer, Inc.* ...................... 781,541
Consulting Services - 0.5%
40,350 Accenture, Ltd. - Class A
- New York Shares* ....................... 766,650
Cosmetics and Toiletries - 1.8%
12,570 Colgate-Palmolive Co. ...................... 629,129
24,735 Procter & Gamble Co. ....................... 2,208,835
2,837,964
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
24 Janus Aspen Series June 30, 2002
JANUS ASPEN GROWTH AND INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Data Processing and Management - 0.2%
7,015 Automatic Data Processing, Inc. ............ $ 305,503
Diversified Financial Services - 4.0%
159,095 Citigroup, Inc. ............................ 6,164,931
Diversified Operations - 5.9%
14,260 3M Co. ..................................... 1,753,980
130,433 General Electric Co. ....................... 3,789,079
102,605 Honeywell International, Inc. .............. 3,614,774
9,157,833
Electric - Integrated - 1.0%
49,900 Duke Energy Corp. .......................... 1,551,890
Engineering - Research and Development - 1.4%
53,280 Fluor Corp. ................................ 2,075,256
Entertainment Software - 0.7%
15,505 Electronic Arts, Inc.* ..................... 1,024,105
Finance - Consumer Loans - 2.3%
72,495 Household International, Inc. .............. 3,603,002
Finance - Investment Bankers/Brokers - 3.5%
22,845 Goldman Sachs Group, Inc. .................. 1,675,681
105,760 J.P. Morgan Chase & Co. .................... 3,587,379
3,300 Lehman Brothers Holdings, Inc. ............. 206,316
5,469,376
Financial Guarantee Insurance - 1.1%
23,920 MGIC Investment Corp. ...................... 1,621,776
Food - Diversified - 0.4%
14,600 H.J. Heinz Co. ............................. 600,060
Food - Retail - 1.1%
87,645 Kroger Co.* ................................ 1,744,135
Hotels and Motels - 0.6%
38,182 Fairmont Hotels & Resorts, Inc.
- New York Shares ........................ 984,332
Insurance Brokers - 2.5%
40,229 Marsh & McLennan Companies, Inc. ........... 3,886,121
Internet Brokers - 0.5%
65,516 Charles Schwab Corp. ....................... 733,779
Investment Management and Advisory Services - 0.8%
37,275 T. Rowe Price Group, Inc. .................. 1,225,602
Life and Health Insurance - 3.2%
33,170 AFLAC, Inc. ................................ 1,061,440
14,310 CIGNA Corp. ................................ 1,394,080
39,659 John Hancock Financial Services, Inc. ...... 1,395,997
34,255 Principal Financial Group, Inc.* ........... 1,061,905
4,913,422
Medical - Drugs - 4.4%
23,762 Allergan, Inc. ............................. 1,586,114
69,045 Pfizer, Inc. ............................... 2,416,575
55,200 Wyeth ...................................... 2,826,240
6,828,929
Medical Instruments - 1.3%
45,314 Medtronic, Inc. ............................ 1,941,705
Motorcycle and Motor Scooter Manufacturing - 0.6%
18,963 Harley-Davidson, Inc. ...................... 972,233
Multi-Line Insurance - 2.2%
50,565 American International Group, Inc. ......... 3,450,050
Multimedia - 3.2%
5,370 Gannett Company, Inc. ...................... $ 407,583
81,954 Viacom, Inc. - Class B* .................... 3,636,299
49,795 Walt Disney Co. ............................ 941,125
4,985,007
Oil Companies - Integrated - 6.0%
84,480 Conoco, Inc. ............................... 2,348,544
64,024 EnCana Corp. - New York Shares ............. 1,959,134
123,570 Exxon Mobil Corp. .......................... 5,056,484
9,364,162
Pipelines - 0.5%
20,546 Kinder Morgan, Inc. ........................ 781,159
Printing - Commercial - 0.6%
27,036 Valassis Communications, Inc.* ............. 986,814
Property and Casualty Insurance - 0.1%
2,190 Chubb Corp. ................................ 155,052
Reinsurance - 1.4%
985 Berkshire Hathaway, Inc. - Class B* ........ 2,200,490
Retail - Discount - 0.6%
25,015 Target Corp. ............................... 953,072
Semiconductor Components/Integrated Circuits - 2.0%
29,435 Linear Technology Corp. .................... 925,142
57,829 Maxim Integrated Products, Inc.* ........... 2,216,586
3,141,728
Super-Regional Banks - 3.9%
21,130 Bank of America Corp. ...................... 1,486,707
196,590 U.S. Bancorp ............................... 4,590,376
6,077,083
Telecommunication Equipment - 0.4%
44,145 Nokia Oyj (ADR) ............................ 639,220
Tools - Hand Held - 0.8%
29,395 Stanley Works Co. .......................... 1,205,489
Toys - 1.3%
98,325 Mattel, Inc. ............................... 2,072,691
Travel Services - 1.0%
65,835 USA Interactive* ........................... 1,543,831
- --------------------------------------------------------------------------------
Total Common Stock (cost $142,004,979) ...................... 130,664,041
- --------------------------------------------------------------------------------
Corporate Bonds - 2.3%
Advertising Sales - 0.1%
$ 115,000 Lamar Advertising Co., 5.25%
convertible notes, due 9/15/06 ........... 116,150
Cellular Telecommunications - 0%
58,000 VoiceStream Wireless Corp., 10.375%
senior notes, due 11/15/09 ............... 55,680
Finance - Investment Bankers/Brokers - 0.3% Merrill Lynch
& Company, Inc.:
200,000 6.15%, notes, due 1/26/06 ................ 209,500
300,000 5.36%, notes, due 2/1/07 ................. 303,375
512,875
Oil Companies - Exploration and Production - 0.1%
363,000 Devon Energy Corp., 0%
convertible debentures, due 6/27/20 ...... 179,685
Retail - Discount - 1.1%
1,655,000 Wal-Mart Stores, Inc., 4.375%
notes, due 8/1/03 ........................ 1,690,169
</Table>
See Notes to Schedules of Investments.
Janus Aspen Series June 30, 2002 25
JANUS ASPEN GROWTH AND INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Telephone - Integrated - 0.1%
$ 185,000 CenturyTel, Inc., 8.375%
notes, due 10/15/10 ...................... $ 192,631
Toys - 0.3%
Mattel, Inc.:
140,000 6.00%, notes, due 7/15/03 ................ 141,050
250,000 6.125%, notes, due 7/15/05 ............... 249,375
390,425
Transportation - Railroad - 0.3%
365,000 Wisconsin Central Transportation Corp.
6.625%, notes, due 4/15/08 ............... 382,338
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $3,438,825) ..................... 3,519,953
- --------------------------------------------------------------------------------
Preferred Stock - 4.8%
Automotive - Cars and Light Trucks - 4.3%
40,490 Ford Motor Company Capital Trust II
convertible, 6.50% ....................... 2,277,562
71,290 General Motors Corp. - Series B
convertible, 5.25% ....................... 1,872,788
5,445 Porsche A.G. ............................... 2,581,257
6,731,607
Electric - Integrated - 0.5%
31,921 Reliant Energy, Inc., convertible, 2.00%
(AOL Time Warner, Inc.)(omega) ........... 798,025
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $7,744,896) ..................... 7,529,632
- --------------------------------------------------------------------------------
U.S. Government Obligations - 5.1%
U.S. Treasury Notes:
$ 3,765,000 3.00%, due 1/31/04 ....................... 3,789,548
3,880,000 5.25%, due 5/15/04 ....................... 4,055,298
- --------------------------------------------------------------------------------
Total U.S. Government Obligations (cost $7,695,479) ......... 7,844,846
- --------------------------------------------------------------------------------
Repurchase Agreement - 4.4%
6,900,000 ABN AMRO Bank N.V., 1.97%
dated 6/28/02, maturing 7/1/02 to be
repurchased at $6,901,133 collateralized
by $1,421,935 in Collateralized Mortgage
Obligations 2.29%-6.50847%,
6/10/13-12/25/40 Aaa, $6,515,836 in U.S.
Government Obligations, 2.64%-7.30%
6/15/09-5/1/37; with respective values
of $635,762 and $6,402,242 (cost
$6,900,000) .............................. 6,900,000
- --------------------------------------------------------------------------------
Total Investments (total cost $167,784,179) - 100.8% ........ 156,458,472
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets -
(0.8)% ..................................................... (1,291,996)
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $ 155,166,476
- --------------------------------------------------------------------------------
</Table>
SUMMARY OF INVESTMENTS BY COUNTRY, JUNE 30, 2002
<Table>
<Caption>
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Bermuda 0.5% $ 766,650
Canada 1.9% 2,943,466
Finland 0.4% 639,220
Germany 2.5% 3,954,946
United States++ 94.7% 148,154,190
- --------------------------------------------------------------------------------
Total 100.0% $ 156,458,472
</Table>
++ Includes Short-Term Securities (90.3% excluding Short-Term Securities)
SEE NOTES TO SCHEDULES OF INVESTMENTS.
26 Janus Aspen Series June 30, 2002
JANUS ASPEN STRATEGIC VALUE PORTFOLIO David Decker, portfolio manager
For the six months ended June 30, 2002, Janus Aspen Strategic Value Portfolio
lost 9.53% for its Institutional Shares, and 9.59% for its Service Shares. This
compares with a 13.15% loss for its benchmark, the S&P 500 Index.(1)
I have often said that successful value investing requires an ability to embrace
controversy. Throughout the first half of 2002, that controversy came in the
form of accounting and disclosure concerns stemming from the collapse of Enron,
ImClone and WorldCom. While these events pointed to the power of negative news,
the violation of trust brought on by the scandals proved especially damaging.
Needless to say, the reaction may have been overblown relative to the scope of
the reported improprieties. However, its impact was widespread.
[PHOTO]
While many waited for the next shoe to drop, it became increasingly apparent
that the economy, which had demonstrated steady yet mixed signs of recovery, may
have moved ahead of the market. This was unclear given the unusually high level
of extraneous events, not the least of which was the ever-present threat of
terrorist attacks.
Among the stocks that played to our strengths was Moody's Corp., a superior
franchise that held up well at a time when other superior franchises did not. As
one of the leading fixed-income rating agencies, the company boasts a solid
business model that generates both strong and stable cash flow. Although we no
longer consider it dramatically undervalued, its prospects remain sustainable in
light of concerns about questionable corporate disclosure and the increasing
complexity of many financial instruments.
Meanwhile, Las Vegas-based Station Casinos moved higher as fears surrounding
debt levels and reduced foot traffic proved unfounded. Unlike many of the more
well-known Strip destinations, Station caters to the local Las Vegas market,
where business has rebounded strongly. Furthermore, concerns that the company's
new property, Sunset Station, would siphon business from its core locations also
appeared premature. In fact, anecdotal evidence suggested that it may actually
be expanding the market.
Specialty retailer Blockbuster, Inc. also fared well for us, having rebounded
nicely from overselling earlier in the year. The company came under pressure due
to expected weakness in its core rental business during the Olympic broadcasts.
In our view, Blockbuster's robust cash flow dynamics did not support its
significantly reduced valuation and we became aggressive purchasers of the
stock. We have since trimmed the position substantially, taking profits as the
share price more fully reflected our fair value estimates.
Regrettably, our detractors took back a disproportionate percentage of the
Portfolio's gains. Perhaps the most notable of these was Tyco International,
which made headlines when its former chief executive was indicted on charges of
tax evasion and evidence tampering. This unforeseen development severely
punished an already-beaten-down stock, yet we continue to believe the company
retains substantial intrinsic value relative to its free cash flow. Although the
recent initial offering of its CIT Group finance unit fell short of
expectations, the remaining mix of businesses remains sound.
Elsewhere, energy company El Paso Corporation suffered a series of setbacks,
ranging from a ratings downgrade and a shift in corporate strategy to the
suicide of its treasurer. With its accounting practices facing intense scrutiny
in the wake of the Enron scandal, the company announced massive cutbacks in its
energy trading operations as well as a refocusing on its core natural gas
business. While we trimmed the position on this announcement, we have maintained
the better part of our holdings given that its depressed valuation more than
discounts the change in strategy.
Finally, longtime holding Cadence Design Systems, a leading provider of
automated design software, has been plagued by severe weakness in capital
spending. Although the company continues to hold its own during an extremely
difficult period, investor sentiment toward the stock has turned increasingly
negative. Moreover, a merger between its two primary competitors has led some
investors to speculate that the combined company could overtake Cadence, but we
fundamentally disagree.
Going forward, I am mindful that external circumstances may have a
greater-than-usual effect on the valuation process. However, since our intent is
to capitalize on disparity and misperception, that's a chance I'll have to take
within certain limits. In the meantime, I'll be actively looking for openings to
put our residual cash to work, knowing full well that volatile markets could
result in short-term underperformance, but also create compelling long-term
opportunities.
Thank you for your investment in Janus Aspen Strategic Value Portfolio.
PORTFOLIO ASSET MIX
<Table>
<Caption>
(% of Net Assets) June 30, 2002 December 31, 2001
- --------------------------------------------------------------------------------
Equities 92.3% 69.5%
Foreign 10.4% 9.5%
Europe 0.1% 0.1%
Top 10 Equities 39.2% 31.9%
Number of Stocks 53 47
Cash, Cash Equivalents
and Fixed Income Securities 7.7% 30.5%
</Table>
(1) All returns include reinvested dividends and capital gains.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
JANUS ASPEN SERIES JUNE 30, 2002 27
AVERAGE ANNUAL TOTAL RETURN
<Table>
<Caption>
For the Periods Ended June 30, 2002
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 5/1/00)
1 Year (15.10)%
From Inception (8.10)%
- --------------------------------------------------------------------------------
S&P 500 Index
1 Year (17.98)%
From Portfolio Inception (15.12)%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 5/1/00)
1 Year (15.22)%
From Inception (8.16)%
- --------------------------------------------------------------------------------
</Table>
This Portfolio is designed for long-term investors who can accept the special
risks associated with value investing.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
A "nondiversified" fund has the ability to take larger positions in a smaller
number of issuers than a "diversified" fund. Nondiversified funds may experience
greater price volatility.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
The S&P 500 is the Standard & Poor's Composite Index of 500 stocks, a widely
recognized, unmanaged index of common stock prices. The Portfolio may differ
significantly from the securities held in the index. The index is not available
for direct investment; therefore its performance does not reflect the expenses
associated with the active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Common Stock - 91.0%
Advertising Agencies - 2.7%
28,565 Interpublic Group of Companies, Inc. ....... $ 707,269
Aerospace and Defense - Equipment - 1.7%
6,880 Alliant Techsystems, Inc.* ................. 438,944
Agricultural Operations - 0.4%
5,810 Monsanto Co. ............................... 103,418
Apparel Manufacturers - 0.7%
5,360 Liz Claiborne, Inc. ........................ 170,448
Automotive - Cars and Light Trucks - 2.8%
10,000 General Motors Corp. ....................... 534,500
25,000 Nissan Motor Company, Ltd.** ............... 173,124
707,624
Automotive - Truck Parts and Equipment - 4.2%
26,025 Delphi Corp. ............................... 343,530
12,715 Lear Corp.* ................................ 588,069
10,765 Tower Automotive, Inc.* .................... 150,172
1,081,771
Broadcast Services and Programming - 7.4%
201,080 Liberty Media Corp. - Class A* ............. 1,910,260
Building Products - Cement and Aggregate - 2.9%
28,580 Cemex S.A. de C.V. (ADR) ................... 753,369
Casino Hotels - 0.8%
11,070 Station Casinos, Inc.* ..................... 197,599
Chemicals - Specialty - 1.2%
10,000 Cytec Industries, Inc.* .................... 314,400
Commercial Services - 0.2%
1,391 Arbitron, Inc.* ............................ $ 43,399
Commercial Services - Finance - 3.4%
17,740 Moody's Corp. .............................. 882,565
Computer Services - 3.3%
44,595 Ceridian Corp.* ............................ 846,413
Computers - 1.9%
27,515 Apple Computer, Inc.* ...................... 487,566
Containers - Paper and Plastic - 2.5%
31,935 Packaging Corporation of America* .......... 635,187
Diversified Financial Services - 0.5%
3,221 Citigroup, Inc. ............................ 124,814
Diversified Operations - 5.6%
19,290 Honeywell International, Inc. .............. 679,587
2,000 SPX Corp.* ................................. 235,000
38,150 Tyco International, Ltd. ................... 515,406
1,429,993
Electronic Components - Semiconductors - 0.4%
10,765 Advanced Micro Devices, Inc.* .............. 104,636
Electronic Design Automation - 3.7%
58,455 Cadence Design Systems, Inc.* .............. 942,295
Enterprise Software and Services - 2.1%
33,675 Computer Associates International, Inc. .... 535,096
Finance - Consumer Loans - 1.1%
3,030 SLM Corp. .................................. 293,607
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
28 Janus Aspen Series June 30, 2002
JANUS ASPEN STRATEGIC VALUE PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Finance - Credit Card - 0.7%
5,110 American Express Co. ....................... $ 185,595
Finance - Mortgage Loan Banker - 5.0%
17,285 Fannie Mae ................................. 1,274,769
Food - Dairy Products - 1.1%
7,770 Dean Foods Co.* ............................ 289,821
Hotels and Motels - 0.5%
9,100 Hilton Hotels Corp. ........................ 126,490
Multimedia - 2.2%
3,875 McGraw-Hill Companies, Inc. ................ 231,338
7,395 Viacom, Inc. - Class B* .................... 328,116
559,454
Non-Hazardous Waste Disposal - 1.5%
40,805 Allied Waste Industries, Inc.* ............. 391,728
Oil Companies - Exploration and Production - 2.7%
7,130 Apache Corp. ............................... 409,832
13,475 Ocean Energy, Inc. ......................... 292,003
701,835
Oil Refining and Marketing - 1.8%
26,300 SK Corp.** ................................. 452,558
Paper and Related Products - 2.3%
12,260 Rayonier, Inc. ............................. 602,334
Petrochemicals - 0.1%
6,693 Reliance Industries, Ltd.* ................. 36,918
Pipelines - 4.5%
24,582 El Paso Corp. .............................. 506,635
1,555 Kinder Morgan, Inc. ........................ 59,121
19,167 Kinder Morgan Management LLC* .............. 584,593
1,150,349
Printing - Commercial - 3.9%
27,590 Valassis Communications, Inc.* ............. 1,007,035
Publishing - Newspapers - 1.8%
8,835 New York Times Co. - Class A ............... 455,002
Recreational Centers - 0.3%
3,550 Bally Total Fitness Holding Corp.* ......... 66,421
Reinsurance - 4.0%
460 Berkshire Hathaway, Inc. - Class B* ........ 1,027,640
Retail - Toy Store - 2.3%
33,570 Toys "R" Us, Inc.* ......................... 586,468
Retail - Video Rental - 1.2%
11,065 Blockbuster, Inc. - Class A ................ 297,649
Telephone - Integrated - 1.1%
26,000 AT&T Corp. ................................. 278,200
Television - 0.1%
950 SBS Broadcasting S.A.* ..................... 17,680
Tobacco - 0.8%
11,228 Vector Group, Ltd. ......................... 197,613
Toys - 0.8%
9,465 Mattel, Inc. ............................... 199,522
Transportation - Marine - 2.8%
102,165 Transportacion Maritima Mexicana
S.A. de C.V.* ............................ 705,960
- --------------------------------------------------------------------------------
Total Common Stock (cost $24,538,820) ....................... 23,321,714
- --------------------------------------------------------------------------------
Corporate Bonds - 0.9%
Tobacco - 0.9%
$ 300,000 Vector Group, Ltd., 6.25%
convertible subordinated notes
due 7/15/08+ (cost $300,000) ............. $ 218,625
- --------------------------------------------------------------------------------
Preferred Stock - 1.3%
Automotive - Cars and Light Trucks - 1.3%
13,100 General Motors Corp. - Series B
convertible, 5.25% (cost $356,464) ....... 344,137
- --------------------------------------------------------------------------------
Repurchase Agreement - 9.4%
$ 2,400,000 ABN AMRO Bank N.V., 1.97%
dated 6/28/02, maturing 7/1/02 to be
repurchased at $2,400,394 collateralized
by $494,586 in Collateralized Mortgage
Obligations 2.29%-6.50847%,
6/10/13-12/25/40 Aaa, $2,266,378 in U.S.
Government Obligations, 2.64%-7.30%
6/15/09-5/1/37; with respective values of
$221,135 and $2,226,867 (cost
$2,400,000) .............................. 2,400,000
- --------------------------------------------------------------------------------
Total Investments (total cost $27,595,284) - 102.6% ......... 26,284,476
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets -
(2.6%) ..................................................... (656,461)
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $ 25,628,015
- --------------------------------------------------------------------------------
</Table>
SUMMARY OF INVESTMENTS BY COUNTRY, JUNE 30, 2002
<Table>
<Caption>
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Bermuda 2.0% $ 515,406
India 0.1% 36,918
Japan 0.6% 173,124
Luxembourg 0.1% 17,680
Mexico 5.6% 1,459,329
South Korea 1.7% 452,558
United States++ 89.9% 23,629,461
- --------------------------------------------------------------------------------
Total 100.0% $ 26,284,476
</Table>
++ Includes Short-Term Securities (80.8% excluding Short-Term Securities)
FORWARD CURRENCY CONTRACTS, OPEN AT JUNE 30, 2002
<Table>
<Caption>
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
Japanese Yen 10/10/02 19,000,000 $ 159,403 $ (10,664)
South Korean Won
7/16/02 225,000,000 186,941 (17,931)
- --------------------------------------------------------------------------------
Total $ 346,344 $ (28,595)
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 29
- --------------------------------------------------------------------------------
JANUS ASPEN INTERNATIONAL GROWTH PORTFOLIO Helen Young Hayes,
portfolio manager
Brent Lynn,
portfolio manager
We are disappointed with our performance during the first half of 2002, a period
that saw the Portfolio's Institutional Shares fall 12.03%, Service Shares
declined 12.16% and Service II Shares declined 11.94%. These results are
significantly worse than the 1.62% loss of its benchmark, the Morgan Stanley
Capital International Europe, Asia and Far East (EAFE(R)) Index.(1)
[PHOTO]
[PHOTO]
Nonetheless, we had a few winners during the period. Willis Group, a U.K.-based
insurance broker, has shown better-than-expected earnings growth as a result of
market share gains and a favorable pricing environment in the property and
casualty business. Meanwhile Encana Corp., a Canadian oil and gas company, has
continued its record of high production growth rates and cost cutting, allowing
the shares to stand out as one of the portfolio's top performers during the
period.
Elsewhere, Teva Pharmaceutical - an Israeli-based drug company - is a leader in
the U.S. market for generic drugs and gained from generics market growth and new
product introductions. Rounding out our list of top performers was Smiths Group,
a British industrial conglomerate that has been helped by portfolio
restructuring, cost cutting and continued strength in its defense and medical
device businesses.
Unfortunately, there were a number of negative performers, including Tyco
International. Despite its low valuation, Tyco fell sharply as psychology began
to drive the stock lower due to concerns about its accounting and the
credibility of management. We began selling our Tyco position in late April
after management abruptly reversed course on its plan to reorganize into four
separate business units and were out of the stock before the end of the period.
Nonetheless, our exposure to Tyco hurt our results during the period.
Other disappointments included Petroleo Brasileiro (Petrobras), a Brazilian oil
company that has generated high rates of production growth and reasonable cash
flows but was hurt by fears that a left-wing candidate would win the country's
presidential election this fall. Petrobras had been a strong performer through
the first quarter, and we took some profits before the stock fell in the second
quarter. Israeli telecom software firm Amdocs also declined after reporting an
earnings shortfall as telecom customers cut back on project spending. We had cut
the position earlier due to concerns about its customer base, and we sold the
rest of the position after the earnings shortfall.
Even some of our more defensive stocks gave ground. Examples include Koninklijke
Ahold N.V., a Netherlands-based supermarket retailer and wholesale food
distributor. The company has shown reasonable earnings and revenue growth but
was pressured by its acquisition history and relatively complex accounting in a
market that has shown little patience for either. In addition, a dramatic
weakening of the U.S. dollar worked against Ahold as the company saw the value
of profits repatriated from the U.S. - Ahold's single largest market - fall in
tandem with the currency.
The relative performance of the portfolio was hurt by macroeconomic factors as
well. The Japanese market outpaced its large-market peers and finished the
period as one of the best-performing markets in the developed world. Because the
portfolio had a much lower weighting in Japanese stocks than the MSCI EAFE(R)
Index, our relative performance suffered. Furthermore, we entered the period
with significant overweight positions in Mexico and Canada, two markets that
performed poorly.
We further reduced our exposure to technology, media and telecom companies
during the period and have taken advantage of the difficult market environment
to purchase several strong franchises at what we believe to be reasonable
valuations. Examples include Kao Corporation, a Japanese household products
company that we added to the portfolio after significant share price volatility
provided a compelling entry point. Despite ongoing deflation and a still-weak
economy in Japan, Kao has managed to maintain a strong cash flow profile. We
also started a position in ASF (Autoroutes du Sud de la France), a French toll
road operator. ASF benefits from a high level of cash flow generation, high
returns on new road investments, and potential cost cutting.
In closing, we appreciate your patience and continued support throughout this
difficult period. Most global markets continued to fall in the first half of
2002 - a fact made even more painful when you consider that it follows on the
heels of nearly two years of steep stock market losses.
In light of falling stock markets and continued weakness in the global economy,
we have positioned the portfolio defensively, while selectively adding to
positions we believe will benefit most when the upturn finally arrives.
Thank you for your continued investment.
PORTFOLIO ASSET MIX
<Table>
<Caption>
(% of Net Assets) June 30, 2002 December 31, 2001
- --------------------------------------------------------------------------------
Equities 92.3% 92.0%
Foreign 90.2% 90.2%
Top 10 Equities 18.8% 23.2%
Number of Stocks 137 118
Cash and Cash Equivalents 7.7% 8.0%
</Table>
(1) All returns include reinvested net dividends. Net dividends reinvested are
the dividends that remain to be reinvested after foreign tax obligations have
been met. Such obligations vary from country to country.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
30 Janus Aspen Series June 30, 2002
AVERAGE ANNUAL TOTAL RETURN
<Table>
<Caption>
For the Periods Ended June 30, 2002
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 5/2/94)
1 Year (20.15)%
5 Year 3.97%
From Inception 10.85%
- --------------------------------------------------------------------------------
Morgan Stanley Capital International EAFE(R)Index
1 Year (9.49)%
5 Year (1.55)%
From Inception Date of Institutional Shares 2.38%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year (20.37)%
5 Year 3.47%
From Portfolio Inception 10.85%
- --------------------------------------------------------------------------------
Service II Shares (Inception Date 12/31/01)
1 Year (20.17)%
5 Year 3.53%
From Portfolio Inception 10.85%
- --------------------------------------------------------------------------------
</Table>
Returns shown for Service and Service II Shares for periods prior to their
inception are derived from the historical performance of Institutional Shares,
adjusted to reflect the higher operating expenses of Service and Service II
Shares.
Foreign investing involves special risks such as currency fluctuations and
political uncertainty.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
The Morgan Stanley Capital International EAFE(R) Index is a market
capitalization weighted index composed of companies representative of the market
structure of 21 Developed Market countries in Europe, Australasia and the Far
East. The Portfolio may differ significantly from the securities held in the
index. The index is not available for direct investment; therefore its
performance does not reflect the expenses associated with the active management
of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
All returns include reinvested net dividends. Net dividends reinvested are the
dividends that remain to be reinvested after foreign tax obligations have been
met. Such obligations vary from country to country.
Due to recent market volatility, the Portfolio may have an increased position in
cash for temporary defensive purposes.
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Common Stock - 89.2%
Advertising Services - 0.8%
1,175,904 WPP Group PLC** ............................ $ 9,836,616
Aerospace and Defense - 0.5%
291,485 Embraer-Empresa Brasileira de
Aeronautica S.A. (ADR) ................... 6,237,779
Applications Software - 1.3%
68,437 Infosys Technologies, Ltd. ................. 4,601,227
2,568,420 Satyam Computer Services, Ltd. ............. 12,103,926
16,705,153
Audio and Video Products - 1.5%
365,300 Sony Corp.** ............................... 19,292,717
Automotive - Cars and Light Trucks - 1.7%
64,895 BMW A.G. ................................... 2,675,838
97,150 Hyundai Motor Company, Ltd. ................ 2,919,440
2,356,000 Nissan Motor Company, Ltd.** ............... 16,315,237
21,910,515
Beverages - Wine and Spirits - 1.6%
1,588,239 Diageo PLC** ............................... 20,488,678
Brewery - 2.9%
414,000 Asahi Breweries, Ltd.** .................... 3,464,506
767,904 Interbrew S.A. ............................. 22,046,722
1,771,000 Kirin Brewery Company, Ltd.** .............. 12,411,888
37,923,116
Broadcast Services and Programming - 2.2%
760,281 Grupo Televisa S.A. (ADR)*,** .............. $ 28,419,304
Building - Heavy Construction - 0.7%
81,823 Technip-Coflexip S.A. ...................... 8,614,393
Cable Television - 0.6%
737,447 Shaw Communications, Inc. - Class B ........ 8,121,716
Cellular Telecommunications - 3.5%
7,586,640 China Mobile, Ltd.*,** ..................... 22,468,962
7,684 NTT DoCoMo, Inc.** ......................... 18,912,519
3,190,043 Vodafone Group PLC** ....................... 4,334,062
45,715,543
Chemicals - Diversified - 0.9%
758,399 BOC Group PLC** ............................ 11,734,462
Chemicals - Specialty - 1.4%
11,310 Givaudan S.A. .............................. 4,560,024
216,979 Syngenta A.G. .............................. 13,042,215
17,602,239
Commercial Banks - 2.3%
549,213 Anglo Irish Bank Corporation PLC ........... 3,541,980
293,360 Danske Bank A/S ............................ 5,401,767
51,187 Julius Baer Holding, Ltd. .................. 14,704,460
101,170 Kookmin Bank ............................... 4,911,488
27,535 Kookmin Bank (ADR) ......................... 1,353,345
29,913,040
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 31
- --------------------------------------------------------------------------------
JANUS ASPEN INTERNATIONAL GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (unaudited)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Computer Services - 1.2%
3,949,829 Computershare, Ltd. ........................ $ 4,878,138
403,637 Tietoenator Oyj ............................ 9,966,050
14,844,188
Computers - 0.7%
26,428,000 Legend Group, Ltd.** ....................... 9,656,744
Consulting Services - 1.4%
830,725 Accenture, Ltd. - Class A
- New York Shares* ....................... 15,783,775
798,734 Serco Group PLC** .......................... 2,422,877
18,206,652
Cooperative Banks - 0.6%
554,574 Banco Popolare di Verona e Novara Scrl ..... 7,273,604
Cosmetics and Toiletries - 1.0%
568,000 Kao Corp.** ................................ 13,079,689
Diversified Financial Services - 2.0%
346,840 Deutsche Boerse A.G.+ ...................... 14,643,921
569,029 Euronext N.V. .............................. 10,677,758
25,321,679
Diversified Minerals - 1.0%
383,438 Anglo American PLC** ....................... 6,333,204
256,880 Companhia Vale do Rio Doce (ADR)* .......... 7,107,870
13,441,074
Diversified Operations - 2.2%
2,430,215 BBA Group PLC** ............................ 10,205,692
983,289 Bombardier, Inc. - Class B ................. 8,146,178
812,151 Smiths Group PLC** ......................... 10,622,420
28,974,290
Electronic Components - Miscellaneous - 0.3%
100,065 Koninklijke (Royal) Philips Electronics
N.V. ...................................... 2,793,831
34,060 Koninklijke (Royal) Philips Electronics N.V.
- New York Shares ........................ 940,056
3,733,887
Electronic Components - Semiconductors - 2.5%
921,740 ARM Holdings PLC*,** ....................... 2,051,339
35,200 Rohm Company, Ltd.** ....................... 5,254,036
29,930 Samsung Electronics Company, Ltd. .......... 8,185,611
659,189 STMicroelectronics N.V. .................... 16,438,546
32,168 STMicroelectronics N.V. - New York Shares .. 782,647
32,712,179
Electronic Security Devices - 1.3%
7,131,911 Chubb PLC** ................................ 17,122,320
Engineering - Research and Development - 0.2%
76,832 Altran Technologies S.A. ................... 2,238,495
Finance - Mortgage Loan Banker - 0.6%
537,338 Housing Development Finance
Corporation, Ltd. ........................ 7,162,905
Food - Catering - 0.3%
540,409 Compass Group PLC** ........................ 3,247,833
Food - Diversified - 2.8%
84,861 Groupe Danone .............................. 11,666,470
292,000 Kikkoman Corp.** ........................... 1,839,373
29,360 Nestle S.A. ................................ 6,846,030
461,220 Orkla A.S.A. ............................... 8,912,131
113,094 Unilever N.V. .............................. 7,405,343
36,669,347
Food - Retail - 2.3%
104,293 Carrefour S.A. ............................. $ 5,644,530
656,610 Koninklijke Ahold N.V. ..................... 13,812,719
2,396,789 Safeway PLC** .............................. 10,189,168
29,646,417
Hotels and Motels - 2.0%
431,655 Accor S.A. ................................. 17,508,686
302,423 Fairmont Hotels and Resorts, Inc. .......... 7,754,997
25,263,683
Human Resources - 1.2%
1,961,945 Capita Group PLC** ......................... 9,361,178
428,929 Vedior N.V. ................................ 5,930,694
15,291,872
Instruments - Controls - 0.3%
97,055 Mettler-Toledo International, Inc.* ........ 3,578,418
Insurance Brokers - 1.2%
664,878 Jardine Lloyd Thompson Group** ............. 6,364,697
257,245 Willis Group Holdings, Ltd.* ............... 8,465,933
14,830,630
Investment Management and Advisory Services - 0.8%
221,989 Amvescap PLC** ............................. 1,784,216
170,900 MLP A.G. ................................... 5,308,292
408,051 Schroders PLC** ............................ 3,652,892
10,745,400
Machinery - Electrical - 0.4%
95,858 Schneider Electric S.A. .................... 5,154,877
Medical - Drugs - 5.0%
286,058 GlaxoSmithKline PLC** ...................... 6,183,103
128,919 Sanofi-Synthelabo S.A. ..................... 7,843,135
120,033 Schering A.G. .............................. 7,509,990
3,592 Serono S.A. - Class B ...................... 2,367,874
214,000 Takeda Chemical Industries, Ltd.** ......... 9,391,599
251,400 Teva Pharmaceutical Industries, Ltd.
(ADR) ..................................... 16,788,492
556,000 Yamanouchi Pharmaceutical
Company, Ltd.** .......................... 14,426,972
64,511,165
Medical Products - 1.1%
2,008,346 Smith & Nephew PLC** ....................... 11,125,292
5,457 Synthes-Stratec, Inc. ...................... 3,336,942
14,462,234
Metal - Aluminum - 0.4%
122,342 Pechiney S.A. .............................. 5,588,296
Metal Processors and Fabricators - 1.8%
1,165,652 Assa Abloy A.B. - Class B .................. 16,425,351
265,200 SKF A.B. - Class B ......................... 6,867,939
23,293,290
Money Center Banks - 3.2%
1,102,810 Banco Bilbao Vizcaya Argentaria S.A. ....... 12,470,913
58,060 Deutsche Bank A.G. ......................... 4,032,828
355,198 HBOS PLC** ................................. 3,815,970
1,029,445 Standard Chartered PLC** ................... 10,981,089
188,343 UBS A.G. ................................... 9,473,154
40,773,954
Multi-Line Insurance - 0.5%
286,587 Aegon N.V. ................................. 5,974,985
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
32 Janus Aspen Series June 30, 2002
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Multimedia - 0.5%
243,437 Corus Entertainment, Inc. - Class B* ....... $ 4,305,673
439,821 Reuters Group PLC** ........................ 2,320,643
6,626,316
Oil - Field Services - 2.1%
675,885 John Wood Group PLC*,** .................... 2,165,720
1,395,580 Saipem S.p.A ............................... 9,978,962
333,470 Schlumberger, Ltd. ......................... 15,506,355
27,651,037
Oil Companies - Exploration and Production - 0%
100,000 CNOOC, Ltd.** .............................. 133,979
Oil Companies - Integrated - 8.0%
810,588 BP PLC** ................................... 6,774,514
812,522 EnCana Corp. ............................... 24,949,061
36,884 EnCana Corp. - New York Shares ............. 1,128,650
445,671 Eni S.p.A .................................. 7,104,115
964,588 Husky Energy, Inc. ......................... 10,566,205
48,975 Petroleo Brasileiro S.A. (ADR) ............. 923,668
756,172 Suncor Energy, Inc. ........................ 13,225,266
223,592 Total Fina Elf S.A. ........................ 36,303,638
19,060 Yukos (ADR) ................................ 2,649,340
103,624,457
Optical Supplies - 0.5%
91,000 Hoya Corp.** ............................... 6,620,608
Paper and Related Products - 0.3%
138,027 Stora Enso Oyj ............................. 1,934,365
49,283 UPM - Kymmene Oyj .......................... 1,940,111
3,874,476
Petrochemicals - 1.7%
4,019,578 Reliance Industries, Ltd.* ................. 22,171,742
Printing - Commercial - 0.6%
350,000 Dai Nippon Printing Company, Ltd.** ........ 4,645,990
270,000 Toppan Printing Company, Ltd.** ............ 2,806,867
7,452,857
Public Thoroughfares - 0.6%
306,274 Autoroutes du Sud de la France S.A.*,+ ..... 8,318,306
Publishing - Books - 1.3%
990,759 Reed Elsevier N.V. ......................... 13,503,277
386,257 Reed Elsevier PLC** ........................ 3,604,994
17,108,271
Publishing - Newspapers - 1.0%
1,314,506 Pearson PLC** .............................. 13,290,436
Publishing - Periodicals - 0.8%
547,055 Wolters Kluwer N.V. ........................ 10,384,281
Reinsurance - 1.9%
51,875 Muenchener Rueckversicherungs
- Gesellschaft A.G. ...................... 12,270,315
131,532 Swiss Re ................................... 12,860,200
25,130,515
Retail - Building Products - 0.2%
524,865 Kingfisher PLC** ........................... 2,485,326
Retail - Consumer Electronics - 0.4%
1,695,733 Dixons Group PLC** ......................... 4,953,463
Retail - Jewelry - 0.3%
662,100 Bulgari S.p.A .............................. $ 4,158,845
Rubber - Tires - 0.6%
107,815 Compagnie Generale des Etablissements
Michelin - Class B ....................... 4,368,907
169,329 Continental A.G. ........................... 3,010,204
7,379,111
Security Services - 1.4%
889,669 Securitas A.B. - Class B ................... 18,296,425
Soap and Cleaning Preparations - 1.8%
1,279,107 Reckitt Benckiser PLC** .................... 22,969,500
Telecommunication Equipment - 0.4%
398,427 Datacraft Asia, Ltd. ....................... 478,112
293,867 Nokia Oyj .................................. 4,301,214
9,293 Nokia Oyj (ADR) ............................ 134,563
4,913,889
Telephone - Integrated - 1.1%
166,624 Telecom Italia S.p.A ....................... 1,314,851
368,065 Telecom Italia S.p.A. - RNC ................ 1,952,050
163,217 Telefonica S.A.* ........................... 1,370,176
290,000 Telefonos de Mexico S.A. (ADR)** ........... 9,303,200
13,940,277
Television - 1.4%
4,316,000 Television Broadcasts, Ltd.** .............. 18,371,350
Tobacco - 1.5%
2,427 Japan Tobacco, Inc.** ...................... 16,280,428
560,625 Korea Tobacco & Ginseng Corp.+ ............. 3,646,025
19,926,453
Transportation - Railroad - 0.6%
58,243 Canadian National Railway Co. .............. 3,065,159
100,600 Canadian National Railway Co.
- New York Shares ........................ 5,211,080
8,276,239
- --------------------------------------------------------------------------------
Total Common Stock (cost $1,184,097,466) .................... 1,153,373,537
- --------------------------------------------------------------------------------
Preferred Stock - 3.1%
Automotive - Cars and Light Trucks - 1.8%
48,813 Porsche A.G. ............................... 23,140,291
Oil Companies - Integrated - 1.3%
1,012,828 Petroleo Brasileiro S.A. (ADR) ............. 17,623,207
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $38,950,126) .................... 40,763,498
- --------------------------------------------------------------------------------
Repurchase Agreement - 3.0%
$ 39,300,000 ABN AMRO Bank N.V., 1.97%
dated 6/28/02, maturing 7/1/02 to be
repurchased at $39,306,452 collateralized
by $8,098,849 in Collateralized Mortgage
Obligations 2.29%-6.50847%,
6/10/13-12/25/40 Aaa, $37,111,937 in U.S.
Government Obligations, 2.64%-7.30%
6/15/09-5/1/37; with respective values of
$3,621,078 and $36,464,943 (cost
$39,300,000) ............................. 39,300,000
- --------------------------------------------------------------------------------
</Table>
See Notes to Schedules of Investments.
Janus Aspen Series June 30, 2002 33
JANUS ASPEN INTERNATIONAL GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Short-Term Corporate Note - 4.6%
Citigroup, Inc.
$ 60,000,000 1.85%, 7/1/02
(amortized cost $60,000,000) ............. $ 60,000,000
- --------------------------------------------------------------------------------
Time Deposit - 4.9%
State Street Bank and Trust Co.
62,500,000 1.9375%, 7/1/02 (cost $62,500,000) ....... 62,500,000
- --------------------------------------------------------------------------------
Total Investments (total cost $1,384,847,592) - 104.8% ...... 1,355,937,035
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets -
(4.8%)...................................................... (62,680,200)
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $ 1,293,256,835
- --------------------------------------------------------------------------------
</Table>
SUMMARY OF INVESTMENTS BY COUNTRY, JUNE 30, 2002
<Table>
<Caption>
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Australia 0.4% $ 4,878,138
Belgium 1.6% 22,046,722
Bermuda 1.2% 15,783,775
Brazil 2.3% 31,892,524
Canada 6.4% 86,473,985
Denmark 0.4% 5,401,767
Finland 1.3% 18,276,303
France 8.3% 113,249,733
Germany 5.4% 72,591,679
Hong Kong 3.7% 50,631,035
India 3.4% 46,039,800
Ireland 0.3% 3,541,980
Israel 1.2% 16,788,492
Italy 2.3% 31,782,427
Japan 10.7% 144,742,429
Mexico 2.8% 37,722,504
Netherlands 5.3% 71,422,944
Norway 0.7% 8,912,131
Russia 0.2% 2,649,340
Singapore 0% 478,112
South Korea 1.5% 21,015,909
Spain 1.0% 13,841,089
Sweden 3.1% 41,589,715
Switzerland 6.2% 84,412,092
United Kingdom 16.3% 220,421,704
United States++ 14.0% 189,350,706
- --------------------------------------------------------------------------------
Total 100.0% $ 1,355,937,035
</Table>
++ Includes Short-Term Securities (2.0% excluding Short-Term Securities)
FORWARD CURRENCY CONTRACTS, OPEN AT JUNE 30, 2002
<Table>
<Caption>
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 10/10/02 7,500,000 $ 11,355,564 $ (338,526)
Hong Kong Dollar
2/21/03 347,200,000 44,509,714 (7,965)
Japanese Yen 10/25/02 1,050,000,000 8,816,839 (599,296)
Japanese Yen 1/31/03 2,210,000,000 18,673,185 (606,304)
Mexican Peso 7/16/02 38,000,000 3,806,137 225,954
- --------------------------------------------------------------------------------
Total $ 87,161,439 $ (1,326,137)
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
34 Janus Aspen Series June 30, 2002
- --------------------------------------------------------------------------------
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO Helen Young Hayes,
portfolio manager
Laurence Chang,
portfolio manager
Janus Aspen Worldwide Growth Portfolio Institutional Shares lost 13.03%, 13.17%
for its Service Shares and 13.16% for its Service II Shares during the six-month
period ended June 30, 2002. This compares to a 8.82% decline to its benchmark,
the Morgan Stanley Capital International World Index.(1)
Investor concerns over the uncertain global economic environment were
overshadowed by the growing crisis in confidence over corporate behavior. While
the focus has clearly been on U.S. firms, many of the same issues have resonated
in markets outside of the U.S., and the forced departure of several high profile
executives, including CEO's at France's Vivendi and at Deutsche Telekom,
indicated that many of the concerns over corporate governance are not confined
to the U.S. exclusively. As a result, most major equity markets worldwide
declined significantly during the period.
[PHOTO]
[PHOTO]
One notable exception to the general decline in worldwide stock prices was
Japan, where the broader market held its ground. That, together with a dramatic
strengthening of the yen, caused U.S. dollar-based returns on the Nikkei 225 to
exceed 7% during the period. Therefore, while we participated in the Japanese
market's strength through a select group of holdings, our relative
underweighting in Japan and overweighting of the weaker North American and
European markets was a source of relative underperformance.
Currency movements had an impact on the Portfolio, as the dollar fell sharply in
the second half of the period. This decline had a positive impact on the value
of our foreign holdings. However, to protect the value of our foreign
investments in the strong dollar environment of the last few years, we have
traditionally hedged a portion of our exposure to the Euro and Yen. Although we
significantly reduced or eliminated these hedges during the year, the small
residual hedges muted some of these gains. In addition, because our benchmark's
performance is measured in dollars rather than local currency, these hedges also
hurt our relative performance.
In addition to these macroeconomic factors, several individual stock picks
worked against us. Disappointments included Tyco International. Despite its low
valuation, Tyco fell sharply as psychology began to drive the stock due to
concerns about its accounting and the credibility of management. We began
selling our Tyco position in late April after management abruptly reversed
course on its plan to reorganize into four separate business units and were
largely out of the stock before the end of the period. Nonetheless, our exposure
to Tyco hurt our results during the period.
Also working against us were declines in a number of our pharmaceutical
holdings, including Pfizer in the U.S. and Takeda Chemical in Japan. Although
looming patent expirations and regulatory foot-dragging pressured virtually the
entire pharmaceutical sector during the period, we remain upbeat on the
long-term potential of the drug companies we own. These are powerful franchises
with established research and marketing platforms that will help them capitalize
on growing demand as the global population ages and new markets are accessed. In
many cases, valuations are more attractive today than they have been in several
years.
On a positive note, several of our consumer staples stocks supported the
Portfolio's performance. One standout was U.K.-based Diageo PLC, the world's
leading distiller and distributor of premium beverages. Diageo boasts a stable
of powerhouse brands that include Smirnoff vodka, Tanqueray gin and Guinness
beer. Its management continues to spin off underperforming businesses such as
its Burger King franchises while intensifying its focus on its core spirits
business. Other strong performers were consumer products companies Reckitt
Benckiser and Unilever, both of which posted solid revenue gains as well as very
strong margin improvement.
We took advantage of recent market volatility to add exposure to other promising
franchises with cyclical upside. These included U.S.-based Interpublic Group of
Companies, Inc., one of the world's leading advertising agency groups. The
company's new management has worked diligently to lower costs, improve
efficiency and attract new clients. These efforts helped the company weather the
recent advertising slump and position it for strong bottom-line profitability
once the ad market rebounds.
To fund these and other additions, we significantly reduced or eliminated our
exposure to several telecommunications holdings, including U.K.-based Vodafone
PLC. This decision reflects our view that the growth opportunities in wireless
communications will plateau as the market matures and competition intensifies.
Although valuations in most markets appear increasingly attractive, particularly
given the low interest rate environment globally, investor concerns over the
extent of an earnings rebound and the quality of these earnings continue to
persist and even intensify. For that reason, we have positioned the Portfolio as
defensively as possible while continuing to hold positions in some companies we
believe will benefit disproportionately when the inevitable upturn finally
arrives.
Thank you for your continued investment.
PORTFOLIO ASSET MIX
<Table>
<Caption>
(% of Net Assets) June 30, 2002 December 31, 2001
- --------------------------------------------------------------------------------
Equities 90.0% 93.1%
Foreign 53.6% 53.4%
Top 10 Equities 16.3% 22.6%
Number of Stocks 156 142
Cash and Cash Equivalents 10.0% 6.9%
</Table>
(1) All returns include reinvested net dividends. Net dividends reinvested are
the dividends that remain to be reinvested after foreign tax obligations have
been met. Such obligations vary from country to country.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
JANUS ASPEN SERIES JUNE 30, 2002 35
AVERAGE ANNUAL TOTAL RETURN
<Table>
<Caption>
For the Periods Ended June 30, 2002
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 9/13/93)
1 Year (22.02)%
5 Year 4.38%
From Inception 12.99%
- --------------------------------------------------------------------------------
Morgan Stanley Capital International World Index
1 Year (15.22)%
5 Year 0.52%
From Inception Date of Institutional Shares 6.32%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year (22.21)%
5 Year 4.03%
From Portfolio Inception 12.68%
- --------------------------------------------------------------------------------
Service II Shares (Inception Date 12/31/01)
1 Year (22.20)%
5 Year 4.03%
From Portfolio Inception 12.68%
- --------------------------------------------------------------------------------
</Table>
Returns shown for Service and Service II Shares for periods prior to their
inception are derived from the historical performance of Institutional Shares,
adjusted to reflect the higher operating expenses of Service and Service II
Shares.
Foreign investing involves special risks such as currency fluctuations and
political uncertainty.
Due to recent market volatility, the Portfolio may have an increased position in
cash for temporary defensive purposes.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
The Morgan Stanley Capital International World Index is a market capitalization
weighted index composed of companies representative of the market structure of
23 Developed Market countries in North America, Europe, and the Asia/Pacific
Region. The Portfolio may differ significantly from the securities held in the
index. The index is not available for direct investment; therefore its
performance does not reflect the expenses associated with the active management
of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
All returns include reinvested net dividends. Net dividends reinvested are the
dividends that remain to be reinvested after foreign tax obligations have been
met. Such obligations vary from country to country.
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Common Stock - 88.1%
Advertising Agencies - 0.5%
1,075,760 Interpublic Group of Companies, Inc. ....... $ 26,635,818
Advertising Services - 0.8%
4,749,149 WPP Group PLC** ............................ 39,727,356
Aerospace and Defense - 1.9%
405,055 General Dynamics Corp. ..................... 43,077,599
157,840 Lockheed Martin Corp. ...................... 10,969,880
85,480 Northrop Grumman Corp. ..................... 10,685,000
690,385 Raytheon Co. ............................... 28,133,189
92,865,668
Applications Software - 1.4%
1,299,860 Microsoft Corp.* ........................... 71,102,342
Athletic Footwear - 0.3%
251,770 Nike, Inc. - Class B ....................... 13,507,461
Audio and Video Products - 1.5%
1,381,700 Sony Corp.** ............................... 72,972,205
Automotive - Cars and Light Trucks - 1.7%
456,450 BMW A.G. ................................... 18,820,960
676,560 Hyundai Motor Company, Ltd. ................ 20,331,204
5,282,000 Nissan Motor Company, Ltd.** ............... 36,577,708
263,400 Toyota Motor Corp.** ....................... 6,988,483
82,718,355
BEVERAGES - NON-ALCOHOLIC - 0.4%
373,955 Coca-Cola Co. .............................. $ 20,941,480
Beverages - Wine and Spirits - 1.4%
5,388,725 Diageo PLC** ............................... 69,515,892
Brewery - 0.3%
1,604,000 Asahi Breweries, Ltd.** .................... 13,422,867
Broadcast Services and Programming - 2.5%
1,585,771 Clear Channel Communications, Inc.* ........ 50,776,387
1,769,245 Grupo Televisa S.A. (ADR)*,** .............. 66,134,378
1,122,440 Liberty Media Corp. - Class A* ............. 10,663,180
127,573,945
Cellular Telecommunications - 2.1%
22,144,740 China Mobile, Ltd.*,** ..................... 65,584,938
16,284 NTT DoCoMo, Inc.** ......................... 40,079,575
105,664,513
Chemicals - Diversified - 2.3%
435,801 Akzo Nobel N.V. ............................ 18,976,687
603,867 BASF A.G. .................................. 28,078,236
623,331 Bayer A.G. ................................. 19,761,315
3,147,096 BOC Group PLC** ............................ 48,693,996
115,510,234
Chemicals - Specialty - 0.3%
32,039 Givaudan S.A. .............................. 12,917,649
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
36 Janus Aspen Series June 30, 2002
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Commercial Banks - 1.4%
372,455 Banco Popular Espanol S.A. ................. $ 16,468,460
1,180,029 Danske Bank A/S ............................ 21,728,393
395,330 Kookmin Bank ............................... 19,192,039
102,875 Kookmin Bank (ADR) ......................... 5,056,306
1,092,725 Westpac Banking Corporation, Ltd. .......... 9,962,079
72,407,277
Computer Services - 1.0%
373,480 BISYS Group, Inc.* ......................... 12,436,884
959,180 Electronic Data Systems Corp. .............. 35,633,537
48,070,421
Consulting Services - 0.5%
1,232,625 Accenture, Ltd. - Class A
- New York Shares* ....................... 23,419,875
Cosmetics and Toiletries - 1.9%
312,090 Colgate-Palmolive Co. ...................... 15,620,105
1,213,705 Estee Lauder Companies, Inc. - Class A ..... 42,722,416
1,532,000 Kao Corp.** ................................ 35,278,316
93,620,837
Data Processing and Management - 2.1%
461,410 Automatic Data Processing, Inc. ............ 20,094,405
1,495,285 First Data Corp. ........................... 55,624,602
767,885 Fiserv, Inc.* .............................. 28,189,058
103,908,065
Diversified Financial Services - 2.7%
3,505,139 Citigroup, Inc. ............................ 135,824,136
Diversified Minerals - 0.5%
820,494 Anglo American PLC** ....................... 13,552,010
466,330 Companhia Vale do Rio Doce (ADR)* .......... 12,903,351
26,455,361
Diversified Operations - 1.6%
405,980 ARAMARK Corp. - Class B* ................... 10,149,500
1,549,495 Cendant Corp.* ............................. 24,605,981
1,126,325 Honeywell International, Inc. .............. 39,680,430
522,545 Tyco International, Ltd. ................... 7,059,583
81,495,494
Electronic Components - Miscellaneous - 0.2%
328,021 Koninklijke (Royal) Philips Electronics
N.V. ...................................... 9,158,398
111,645 Koninklijke (Royal) Philips Electronics N.V.
- New York Shares ........................ 3,081,402
12,239,800
Electronic Components - Semiconductors - 2.6%
69,700 Rohm Company, Ltd.** ....................... 10,403,587
172,620 Samsung Electronics Company, Ltd. .......... 47,210,163
2,160,055 STMicroelectronics N.V. .................... 53,866,439
766,310 STMicroelectronics N.V. - New York Shares .. 18,644,322
130,124,511
Entertainment Software - 0.3%
248,065 Electronic Arts, Inc.* ..................... 16,384,693
Fiduciary Banks - 2.2%
1,588,580 Bank of New York Company, Inc. ............. 53,614,575
519,595 Mellon Financial Corp. ..................... 16,330,871
482,255 Northern Trust Corp. ....................... 21,248,155
435,655 State Street Corp. ......................... 19,473,779
110,667,380
Finance - Consumer Loans - 0.7%
214,380 Household International, Inc. .............. $ 10,654,686
226,070 SLM Corp. .................................. 21,906,183
32,560,869
Finance - Investment Bankers/Brokers - 0.5%
361,080 Goldman Sachs Group, Inc. .................. 26,485,218
Finance - Mortgage Loan Banker - 1.1%
775,515 Fannie Mae ................................. 57,194,231
Food - Catering - 0.5%
3,815,916 Compass Group PLC** ........................ 22,933,477
Food - Diversified - 2.1%
223,390 Groupe Danone .............................. 30,711,076
142,463 Nestle S.A. ................................ 33,218,870
610,573 Unilever N.V. .............................. 39,980,038
103,909,984
Food - Retail - 1.9%
415,238 Carrefour S.A. ............................. 22,473,449
2,519,564 Koninklijke Ahold N.V. ..................... 53,002,588
4,655,102 Safeway PLC** .............................. 19,789,651
95,265,688
Food - Wholesale/Distribution - 0.3%
494,110 Sysco Corp. ................................ 13,449,674
Health Care Cost Containment - 0.7%
1,112,260 McKesson Corp. ............................. 36,370,902
Human Resources - 0.2%
2,030,760 Capita Group PLC** ......................... 9,689,520
Industrial Gases - 0.1%
106,595 Praxair, Inc. .............................. 6,072,717
Insurance Brokers - 1.3%
587,090 Marsh & McLennan Companies, Inc. ........... 56,712,894
326,610 Willis Group Holdings, Ltd.*,** ............ 10,748,735
67,461,629
Internet Content - Information/News - 0.2%
269,813 Thomson Corp. .............................. 8,508,328
Life and Health Insurance - 0.9%
449,675 CIGNA Corp. ................................ 43,807,339
Machinery - Electrical - 0.6%
580,392 Schneider Electric S.A. .................... 31,211,265
Medical - Biomedical and Genetic - 0.2%
356,780 Genentech, Inc.* ........................... 11,952,130
Medical - Drugs - 7.7%
996,525 Abbott Laboratories ........................ 37,519,166
2,159,913 GlaxoSmithKline PLC** ...................... 46,686,212
2,474,120 Pfizer, Inc. ............................... 86,594,200
432,587 Sanofi-Synthelabo S.A. ..................... 26,317,598
15,510 Serono S.A. - Class B ...................... 10,224,312
1,578,000 Takeda Chemical Industries, Ltd.** ......... 69,252,068
868,275 Teva Pharmaceutical Industries, Ltd.
(ADR) ..................................... 57,983,404
203,390 Wyeth ...................................... 10,413,568
1,641,000 Yamanouchi Pharmaceutical
Company, Ltd.** .......................... 42,580,325
387,570,853
Medical - HMO - 0.6%
316,280 UnitedHealth Group, Inc. ................... 28,955,434
Medical - Wholesale Drug Distributors - 0.4%
354,000 Cardinal Health, Inc. ...................... 21,739,140
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 37
- --------------------------------------------------------------------------------
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS (unaudited)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Medical Instruments - 1.0%
1,183,634 Medtronic, Inc. ............................ $ 50,718,717
Medical Products - 0.5%
243,580 Baxter International, Inc. ................. 10,827,131
280,756 Johnson & Johnson .......................... 14,672,309
25,499,440
Metal Processors and Fabricators - 1.1%
3,816,358 Assa Abloy A.B. - Class B .................. 53,776,788
Money Center Banks - 5.1%
4,148,821 Banco Bilbao Vizcaya Argentaria S.A. ....... 46,916,138
1,157,581 Barclays PLC** ............................. 9,742,466
1,006,950 Credit Suisse Group ........................ 31,971,500
232,503 Deutsche Bank A.G. ......................... 16,149,581
1,823,045 HBOS PLC** ................................. 19,585,373
771,530 Royal Bank of Scotland Group PLC** ......... 21,874,690
501,483 Societe Generale ........................... 33,034,986
2,724,015 Standard Chartered PLC** ................... 29,057,066
935,396 UBS A.G. ................................... 47,047,939
255,379,739
Mortgage Banks - 0.3%
1,118,551 Abbey National PLC** ....................... 13,155,008
Multi-Line Insurance - 0.6%
882,190 Allstate Corp. ............................. 32,623,386
Multimedia - 2.7%
1,534,442 AOL Time Warner, Inc.* ..................... 22,571,642
737,935 McGraw-Hill Companies, Inc. ................ 44,054,719
1,760,738 Reuters Group PLC** ........................ 9,290,243
911,161 Viacom, Inc. - Class B* .................... 40,428,214
1,052,875 Walt Disney Co. ............................ 19,899,337
136,244,155
Non-Hazardous Waste Disposal - 0.3%
643,510 Waste Management, Inc. ..................... 16,763,435
Oil - Field Services - 0.4%
392,805 Schlumberger, Ltd. ......................... 18,265,432
Oil Companies - Exploration and Production - 0.8%
645,785 Anadarko Petroleum Corp. ................... 31,837,200
5,014,000 CNOOC, Ltd.** .............................. 6,717,724
38,554,924
Oil Companies - Integrated - 6.5%
7,471,392 BP PLC** ................................... 62,442,391
1,776,062 EnCana Corp. ............................... 54,535,236
81,799 EnCana Corp. - New York Shares ............. 2,503,049
2,707,575 Eni S.p.A .................................. 43,159,470
151,332,000 PetroChina Company, Ltd.** ................. 32,207,751
896,433 Petroleo Brasileiro S.A. (ADR) ............. 16,906,726
644,336 Total Fina Elf S.A. ........................ 104,617,969
57,775 Yukos (ADR) ................................ 8,030,725
324,403,317
Optical Supplies - 0.4%
278,700 Hoya Corp.** ............................... 20,276,522
Paper and Related Products - 0.7%
1,452,415 Stora Enso Oyj ............................. 20,354,723
435,606 UPM - Kymmene Oyj .......................... 17,148,385
37,503,108
Petrochemicals - 0.5%
4,210,211 Reliance Industries, Ltd.* ................. $ 23,223,262
Printing - Commercial - 0.3%
1,242,000 Dai Nippon Printing Company, Ltd.** ........ 16,486,626
Publishing - Books - 0.6%
1,197,860 Reed Elsevier N.V. ......................... 16,325,903
1,671,446 Reed Elsevier PLC** ........................ 15,599,852
31,925,755
Publishing - Newspapers - 0.7%
180,155 New York Times Co. - Class A ............... 9,277,983
2,783,886 Pearson PLC** .............................. 28,146,740
37,424,723
Publishing - Periodicals - 0.7%
1,884,258 Wolters Kluwer N.V. ........................ 35,767,273
Reinsurance - 2.1%
159,433 Muenchener Rueckversicherungs
- Gesellschaft A.G. ...................... 37,711,674
686,090 Swiss Re ................................... 67,080,667
104,792,341
Retail - Building Products - 0.9%
1,066,160 Home Depot, Inc. ........................... 39,160,057
1,364,972 Kingfisher PLC** ........................... 6,463,377
45,623,434
Retail - Consumer Electronics - 0.3%
5,092,938 Dixons Group PLC** ......................... 14,877,153
Retail - Discount - 0.4%
484,080 Costco Wholesale Corp.* .................... 18,695,170
Retail - Diversified - 0.2%
226,000 Ito-Yokado Company, Ltd.** ................. 11,313,571
Retail - Drug Store - 0.2%
317,030 Walgreen Co. ............................... 12,246,869
Retail - Major Department Stores - 0.2%
77,963 Pinault-Printemps-Redoute S.A. ............. 9,247,485
Retail - Restaurants - 0.2%
364,430 McDonald's Corp. ........................... 10,368,034
Savings/Loan/Thrifts - 0.2%
272,385 Washington Mutual, Inc. .................... 10,108,207
Security Services - 1.2%
2,886,968 Securitas A.B. - Class B ................... 59,371,737
Soap and Cleaning Preparations - 0.4%
1,107,350 Reckitt Benckiser PLC** .................... 19,885,182
Telecommunication Equipment - 0.2%
739,091 Nokia Oyj .................................. 10,817,781
Telephone - Integrated - 1.7%
5,047,427 BT Group PLC** ............................. 19,322,322
1,891,547 Telecom Italia S.p.A ....................... 14,926,431
3,383,549 Telecom Italia S.p.A. - RNC ................ 17,944,809
1,050,075 Telefonos de Mexico S.A. (ADR)** ........... 33,686,406
85,879,968
Tobacco - 1.5%
1,146 Japan Tobacco, Inc.** ...................... 7,687,421
1,558,145 Philip Morris Companies, Inc. .............. 68,059,774
75,747,195
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
38 Janus Aspen Series June 30, 2002
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Transportation - Services - 0.3%
280,410 United Parcel Service, Inc. - Class B ...... $ 17,315,318
Travel Services - 0.5%
1,123,045 USA Interactive* ........................... 26,335,405
- --------------------------------------------------------------------------------
Total Common Stock (cost $4,430,165,970) .................... 4,425,448,493
- --------------------------------------------------------------------------------
Preferred Stock - 1.9%
Automotive - Cars and Light Trucks - 0.8%
81,662 Porsche A.G. ............................... 38,712,688
Oil Companies - Integrated - 1.1%
3,248,602 Petroleo Brasileiro S.A. (ADR) ............. 56,525,675
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $101,685,554) ................... 95,238,363
- --------------------------------------------------------------------------------
Repurchase Agreements - 3.4%
$ 71,200,000 ABN AMRO Bank N.V., 1.97%
dated 6/28/02, maturing 7/1/02 to be
repurchased at $71,211,689 collateralized
by $14,672,724 in Collateralized Mortgage
Obligations 2.29%-6.50847%,
6/10/13-12/25/40 Aaa, $67,235,875 in U.S.
Government Obligations, 2.64%-7.30%
6/15/09-5/1/37; with respective values of
$6,560,325 and $66,063,714 ............... 71,200,000
100,000,000 Deutsche Banc Alex. Brown, Inc., 1.96%
dated 6/28/02, maturing 7/1/02 to be
repurchased at $100,016,333 collateralized
by $53,443,882 in Asset Backed Securities
0%-8.29%, 4/15/03-4/25/32 Aaa; $13,954,352
in Certificates of Deposit, 1.89%,
12/27/02, P-1 $701,118,084 in
Collateralized Mortgage Obligations,
0.427%-7.6752% 6/7/09-9/15/41, Aaa;
$13,625,575 in Commercial Paper,
1.77%-5.00% 7/8/02-3/1/07, P-1;
$7,941,812 in Corporate Bonds,
1.965%-8.875% 8/23/02-3/15/32, Aaa;
$1,787,718 in U.S. Government
Obligations 5.75%-6.25%, 1/15/12-3/5/12
Aaa-Aa2; with respective values of
$37,073,549, $13,954,352, $26,998,316
$13,609,723, $8,492,358 and $1,871,702.... 100,000,000
- --------------------------------------------------------------------------------
Total Repurchase Agreements (cost $171,200,000) ............. 171,200,000
- --------------------------------------------------------------------------------
Time Deposit - 2.3%
State Street Bank and Trust Co.
117,500,000 1.9375%, 7/1/02 (cost $117,500,000) ...... 117,500,000
- --------------------------------------------------------------------------------
U.S. Government Agencies - 5.5%
Federal Farm Credit Bank
$ 50,000,000 1.76%, 11/20/02 .......................... $ 49,687,500
Federal Home Loan Bank System:
25,000,000 1.71%, 7/8/02 ............................ 24,991,688
25,000,000 1.63%, 7/11/02 ........................... 24,988,681
25,000,000 1.70%, 8/2/02 ............................ 24,962,222
50,000,000 1.71%, 9/3/02 ............................ 49,875,000
30,000,000 1.80%, 10/15/02 .......................... 29,850,000
45,000,000 1.77%, 10/30/02 .......................... 44,718,750
Freddie Mac
25,000,000 1.75%, 7/18/02 ........................... 24,979,340
- --------------------------------------------------------------------------------
Total U.S. Government Agencies (cost $273,996,107) .......... 274,053,181
- --------------------------------------------------------------------------------
Total Investments (total cost $5,094,547,631) - 101.2% ...... 5,083,440,037
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (1.2%) (62,553,061)
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $ 5,020,886,976
- --------------------------------------------------------------------------------
</Table>
SUMMARY OF INVESTMENTS BY COUNTRY, JUNE 30, 2002
<Table>
<Caption>
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Australia 0.2% $ 9,962,079
Bermuda 0.6% 30,479,458
Brazil 1.7% 86,335,752
Canada 1.3% 65,546,613
Denmark 0.4% 21,728,393
Finland 1.0% 48,320,889
France 5.1% 257,613,828
Germany 3.1% 159,234,454
Hong Kong 2.1% 104,510,413
India 0.5% 23,223,262
Israel 1.1% 57,983,404
Italy 1.5% 76,030,710
Japan 7.5% 383,319,274
Mexico 2.0% 99,820,784
Netherlands 3.5% 176,292,289
Russia 0.2% 8,030,725
South Korea 1.8% 91,789,712
Spain 1.2% 63,384,598
Sweden 2.2% 113,148,525
Switzerland 5.4% 274,971,698
United Kingdom 10.6% 540,029,977
United States++ 47.0% 2,391,683,200
- --------------------------------------------------------------------------------
Total 100.0% $ 5,083,440,037
</Table>
++ Includes Short-Term Securities (36.0% excluding Short-Term Securities)
FORWARD CURRENCY CONTRACTS, OPEN AT JUNE 30, 2002
<Table>
<Caption>
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 10/10/02 18,500,000 $ 28,010,393 $ (871,751)
Hong Kong Dollar
2/21/03 694,300,000 89,006,608 (21,270)
Japanese Yen 10/10/02 525,000,000 4,404,551 (294,641)
Japanese Yen 10/25/02 5,640,000,000 47,359,019 (3,187,957)
Japanese Yen 1/31/03 2,700,000,000 22,813,394 (740,299)
Mexican Peso 7/16/02 137,600,000 13,782,222 727,256
- --------------------------------------------------------------------------------
Total $ 205,376,187 $ (4,388,662)
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 39
JANUS ASPEN GLOBAL LIFE SCIENCES PORTFOLIO THOMAS MALLEY,
portfolio manager
For the six-month period ended June 30, 2002, Janus Aspen Global Life Sciences
Portfolio declined 18.92% for its Institutional Shares and 18.97% for its
Service Shares. This compares to a loss of 13.15% for the S&P 500 Index, the
Portfolio's benchmark.(1)
Equity markets struggled during the period despite positive news on the economy.
While consumer spending showed resilience and production continued to rebound,
profits remained under pressure and a number of companies missed their earnings
targets. Concerns over corporate performance were aggravated by the widening
accounting scandal, with telecommunications giant WorldCom revealing that it
misstated revenues by nearly $4 billion. Adding to the climate of uncertainty
were warnings of potential terrorist attacks, ongoing unrest in the Middle East
and heightened tensions between India and Pakistan.
[PHOTO]
Against this backdrop, investors shunned growth-oriented shares as they sought
stability in Treasury bonds and more defensive areas of the stock market. Within
the healthcare industry, this rotation favored health services providers
recognized for their earnings stability. Biotechnology and pharmaceutical shares
did not fair as well, however. Drug makers, in particular, were hindered by
worries that increased competition and a slowdown in product development might
curtail long-term earnings potential. Concerns over generic competition have
heated up recently as patents on some blockbuster drugs near expiration. In
fact, U.S. courts are overturning some patents ahead of schedule. This has
opened the door even wider for lower-cost generic producers.
The loss of patent protection is especially worrisome because companies are
finding it more difficult to launch new products. With its top post vacant for
more than a year, the U.S. Food and Drug Administration has adopted a more
risk-averse approach - withholding approval of a number of highly anticipated
treatments and tightening scrutiny of drug manufacturing, which has caused
production delays and hurt some companies' near-term profitability. While we
avoided the period's high-profile earnings disappointments, industry woes cast a
shadow over a number of our holdings, hindering the Portfolio's performance.
Detracting from our results were declines in a number of our pharmaceutical
positions, notably Sanofi-Synthelabo, King Pharmaceuticals and Wyeth. Sanofi
lost ground on concerns that its drug Plavix, used to prevent blood clots, will
face a generic threat sooner than expected. Fast-growing King Pharmaceuticals
was hurt by a prospective generic threat to two of its products, hypertension
treatment Altace and thyroid medication Levoxyl. Nonetheless, sales of Altace
and Levoxyl remain strong, and have yet to face any specific generic challenge.
Meanwhile, Wyeth, formerly known as American Home Products, announced that
manufacturing delays might dampen its near-term earnings outlook. While we
remain positive on the firm's growth prospects, we will continue to monitor its
progress in this challenging environment.
Another disappointment during the period was CYTYC Corp., a leading manufacturer
of Pap smear tests for cervical cancer. CYTYC's shares plunged after management
reduced profit estimates to reflect an inventory overhang. Additionally, U.S.
regulators blocked the company's planned merger with Digene Corp., a partnership
CYTYC needed to hold its position against generic challengers. Given these
developments, we liquidated our position in the stock.
Offsetting these declines was strong performance by a number of our other
holdings, including generic drug makers benefiting from an improved market
outlook. Teva Pharmaceutical received a boost when a U.S. court overthrew the
patents protecting GlaxoSmithKline's antibiotic Augmentin from generic
competition. Teva's rival formulation awaits FDA approval.
Our results also benefited from our sizable weighting in healthcare services
stocks. Hospital management companies such as Tenet Healthcare and HCA, Inc.
continue to grow their revenues as they capitalize on increased demand for
higher margin orthopedic and cardiac procedures by aging baby boomers.
As we look ahead to the second half of the year, we will redouble our focus on
leading healthcare services companies and the more promising manufacturers of
pharmaceuticals and medical devices. At the same time, we will maintain
conservative exposure to the more volatile areas of the market, including
biotechnology. This strategy reflects our concerns over near-term economic and
earnings uncertainty.
Nonetheless, our view on the long-term opportunities in the life sciences arena
has not changed. As an aging population demands more treatments, and science
provides more breakthroughs to meet this need, we believe the healthcare market
will offer expanding growth opportunities. Consequently, once we see signs that
investors are again taking the long view, we will look for opportunities to
rebuild our biotechnology and pharmaceutical positions, taking advantage of
market volatility. Our focus will remain on well-managed, financially sound
companies that have proven their ability to successfully develop and market
products, grow their cash flow and create value for shareholders.
Thank you for your continued investment in Janus Aspen Global Life Sciences
Portfolio.
PORTFOLIO ASSET MIX
<Table>
<Caption>
(% of Net Assets) June 30, 2002 December 31, 2001
- --------------------------------------------------------------------------------
Equities 97.3% 95.7%
Foreign 20.8% 22.6%
Top 10 Equities 41.9% 33.4%
Number of Stocks 44 56
Cash and Cash Equivalents 2.7% 4.3%
</Table>
(1) All returns include reinvested net dividends. Net dividends reinvested are
the dividends that remain to be reinvested after foreign tax obligations have
been met. Such obligations vary from country to country.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
40 Janus Aspen Series June 30, 2002
AVERAGE ANNUAL TOTAL RETURN
<Table>
<Caption>
For the Periods Ended June 30, 2002
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 1/18/00)
1 Year (19.54)%
From Inception (17.08)%
- --------------------------------------------------------------------------------
S&P 500 Index
1 Year (17.98)%
From Portfolio Inception (13.44)%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 1/18/00)
1 Year (19.80)%
From Inception (17.30)%
- --------------------------------------------------------------------------------
</Table>
This Portfolio concentrates in certain industry groups, which may react
similarly to market developments (resulting in greater price volatility), and
may have significant exposure to foreign markets (which include risks such as
currency fluctuation and political uncertainty).
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
A "nondiversified" fund has the ability to take larger positions in a smaller
number of issuers than a "diversified" fund. Nondiversified funds may experience
greater price volatility.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
The S&P 500 is the Standard & Poor's Composite Index of 500 stocks, a widely
recognized, unmanaged index of common stock prices. The Portfolio may differ
significantly from the securities held in the index. The index is not available
for direct investment; therefore its performance does not reflect the expenses
associated with the active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Common Stock - 97.3%
Chemicals - Specialty - 1.0%
26,970 Symyx Technologies, Inc.* .................. $ 375,422
Health Care Cost Containment - 2.1%
23,620 McKesson Corp. ............................. 772,374
Medical - Biomedical and Genetic - 1.2%
12,980 IDEC Pharmaceuticals Corp.* ................ 460,141
Medical - Drugs - 36.6%
11,155 Abbott Laboratories ........................ 419,986
10,674 Altana A.G.** .............................. 537,637
5,115 Cephalon, Inc.* ............................ 231,198
35,000 Daiichi Pharmaceutical Company, Ltd.** ..... 639,517
17,845 Forest Laboratories, Inc.* ................. 1,263,426
41,655 King Pharmaceuticals, Inc.* ................ 926,824
19,285 OSI Pharmaceuticals, Inc.* ................. 463,226
13,395 Pfizer, Inc. ............................... 468,825
20,230 Pharmacia Corp. ............................ 757,613
33,955 Priority Healthcare Corp. - Class B* ....... 797,942
10,089 Sanofi-Synthelabo S.A.** ................... 613,792
24,665 Schering-Plough Corp. ...................... 606,759
36,370 Sepracor, Inc.* ............................ 347,333
624 Serono S.A. - Class B** .................... 411,346
23,885 Shire Pharmaceuticals Group PLC (ADR)*,** .. 616,472
493,663 SkyePharma PLC*,** ......................... 487,244
30,435 Teva Pharmaceutical Industries, Ltd.
(ADR) ..................................... 2,032,449
25,120 Wyeth ...................................... 1,286,144
34,200 Yamanouchi Pharmaceutical Company, Ltd.** .. 887,414
13,795,147
Medical - Generic Drugs - 2.7%
37,225 Pharmaceutical Resources, Inc.* ............ $ 1,034,111
Medical - HMO - 15.1%
12,660 Anthem, Inc.* .............................. 854,297
41,390 Oxford Health Plans, Inc.* ................. 1,922,979
15,730 UnitedHealth Group, Inc. ................... 1,440,082
18,700 Wellpoint Health Networks, Inc.* ........... 1,455,047
5,672,405
Medical - Hospitals - 11.7%
29,135 HCA, Inc. .................................. 1,383,912
57,410 Health Management Associates, Inc.
- Class A* ............................... 1,156,811
26,045 Tenet Healthcare Corp.* .................... 1,863,520
4,404,243
Medical - Wholesale Drug Distributors - 1.8%
9,055 AmerisourceBergen Corp. .................... 688,180
Medical Instruments - 5.5%
21,505 Guidant Corp.* ............................. 650,096
19,615 Medtronic, Inc. ............................ 840,503
7,705 St. Jude Medical, Inc.* .................... 569,014
2,059,613
Medical Labs and Testing Services - 6.6%
42,830 Laboratory Corporation of
America Holdings* ........................ 1,955,189
6,235 Quest Diagnostics, Inc.* ................... 536,522
2,491,711
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 41
- --------------------------------------------------------------------------------
JANUS ASPEN GLOBAL LIFE SCIENCES PORTFOLIO
SCHEDULE OF INVESTMENTS (unaudited)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Medical Products - 8.1%
12,575 Baxter International, Inc. ................. $ 558,959
13,845 Becton, Dickinson and Co. .................. 476,960
30,867 Biomet, Inc. ............................... 837,113
10,970 Cerus Corp.* ............................... 371,664
145,600 Smith & Nephew PLC** ....................... 806,556
3,051,252
Optical Supplies - 2.1%
22,850 Alcon, Inc.*,** ............................ 782,613
Physical Therapy and Rehabilitation Centers - 1.2%
34,020 HEALTHSOUTH Corp.* ......................... 435,116
Retail - Drug Store - 1.6%
16,050 Walgreen Co. ............................... 620,012
- --------------------------------------------------------------------------------
Total Common Stock (cost $36,687,734) ....................... 36,642,340
- --------------------------------------------------------------------------------
Repurchase Agreement - 3.2%
$ 1,200,000 ABN AMRO Bank N.V., 1.97%
dated 6/28/02, maturing 7/1/02 to be
repurchased at $1,200,197 collateralized
by $247,293 in Collateralized Mortgage
Obligations 2.29%-6.50847%,
6/10/13-12/25/40 Aaa, $1,133,189 in U.S.
Government Obligations, 2.64%-7.30%
6/15/09-5/1/37; with respective values
of $110,567 and $1,113,433 (cost
$1,200,000) .............................. 1,200,000
- --------------------------------------------------------------------------------
Total Investments (total cost $37,887,734) - 100.5% ......... 37,842,340
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets -
(0.5%) ..................................................... (190,350)
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $ 37,651,990
- --------------------------------------------------------------------------------
</Table>
SUMMARY OF INVESTMENTS BY COUNTRY, JUNE 30, 2002
<Table>
<Caption>
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
France 1.6% $ 613,792
Germany 1.4% 537,637
Israel 5.4% 2,032,449
Japan 4.0% 1,526,931
Switzerland 3.2% 1,193,959
United Kingdom 5.1% 1,910,272
United States++ 79.3% 30,027,300
- --------------------------------------------------------------------------------
Total 100.0% $ 37,842,340
</Table>
++ Includes Short-Term Securities (76.2% excluding Short-Term Securities)
FORWARD CURRENCY CONTRACTS, OPEN AT JUNE 30, 2002
<Table>
<Caption>
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 10/25/02 280,000 $ 423,519 $ (22,532)
British Pound 11/7/02 70,000 105,789 (5,297)
Euro 11/7/02 370,000 363,188 (31,483)
Euro 1/31/03 80,000 78,261 (2,437)
Japanese Yen 11/7/02 46,000,000 386,556 (24,778)
Japanese Yen 1/31/03 35,000,000 295,729 (9,571)
Swiss Franc 10/25/02 215,000 144,814 (14,059)
- --------------------------------------------------------------------------------
Total $ 1,797,856 $ (110,157)
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
42 Janus Aspen Series June 30, 2002
JANUS ASPEN GLOBAL TECHNOLOGY PORTFOLIO Mike Lu, portfolio manager
For the six-month period ended June 30, 2002, Janus Aspen Global Technology
Portfolio declined 29.49% for its Institutional Shares, 29.66% for its Services
Shares and 29.54% for its Service II Shares. This compares to a loss of 13.15%
for the S&P 500 Index, the Portfolio's benchmark.(1)
Economic news in the U.S. and abroad was mixed during the period. Predominantly
dismal corporate earnings reports contrasted with a surprise 5.6% jump in
first-quarter GDP and renewed activity in manufacturing and industrial segments.
Though federal funds rates are still at a 40-year low of 1.75%, business
managements have not gained enough confidence to ease out of their current cost
containment modes and resume corporate investment.
[PHOTO]
Market volatility also increased dramatically, particularly in the United States
as investors grew increasingly wary of corporate governance and accounting
practices. While this affected nearly every segment of the marketplace, the
technology sector suffered a sizeable loss.
Among our detractors was NVIDIA. The graphics chip maker's stock suffered along
with the rest of the semiconductor industry and on news that the SEC was
investigating some of its accounting practices. As a result of the inquiry,
NVIDIA said it would restate its results for the past three years and in fact
noted that net income for that period should increase by more than $1 million.
Also troubling investors was the firm's perceived dependence on its partnership
with Microsoft's Xbox. While the Xbox contract is certainly a testament of
NVIDIA's technical prowess, what's more important is its continued ability to
gain share in its core PC market segments. To that end, it has won some highly
sought after contracts, including those with Hewlett-Packard, and Toshiba.
Additionally, through our checks with various parts of NVIDIA's supply chain,
we've learned that fundamental demand levels remained strong for the company's
chipsets in spite of a weak near-term outlook in the overall PC market. Thus, we
continue to be optimistic about the company's growth prospects in the years
ahead.
Microsoft also had some strong headwinds working against it, including
softer-than-expected sales of its gaming console Xbox and lowered expectations
for the PC market. To help boost sales and remain competitive in the roughly $30
billion global game market, Microsoft cut prices of its gaming console Xbox.
Since then, sales have picked up, some by as much as 40% in parts of Europe.
Meanwhile, Microsoft's subscription-based revenue stream continues to benefit
from improving mix shifts as higher-priced Windows XP Professional becomes a
more significant portion of the overall sales. The increasingly
subscription-based revenue stream is one reason why Microsoft's financial
performance is becoming more de-coupled with overall PC market growth. While our
numerous demand-driven checks into the enterprise IT space indicated an overall
lackluster spending pattern for 2002, the portion dedicated to Microsoft appears
to be stable.
On the positive side, Samsung SDI, the screen display division of Samsung,
gained substantial ground during the period. The Korean-based manufacturer of
display screens - both large cathode ray tubes and super-twist LCD screens -
have benefited from global demand growth in TVs, PC monitors and mobile devices.
Samsung SDI is leading the innovation curve in low-cost, low-power, high-density
color LCD screens for data-centric mobile phones and PDAs. We remain impressed
with the company's focus, its ability to execute and its continued innovation.
Our decision-making process continues to be underpinned by the demand-driven
research that we conduct with the ultimate end users of technology products and
services - the IT decision makers in a variety of enterprises and service
providers. Based on such feedback, our outlook remains one of cautious optimism.
The overall corporate IT spending intentions remain relatively flat in 2002 as
corporations from all segments of the economy continue their focus on cost
rationalization and containment. Thus, we maintain our emphasis on companies
with stable revenue streams as well as those with secular drivers of demand that
enable near- to medium-term earnings visibility.
The technology sector continues to face a difficult demand environment in the
short term. However, technological innovations remain the engine that we believe
will drive worldwide economic growth in the long term. We will intensify our
search for the best-positioned, most innovative companies providing products and
services that will best address existing and emerging demands.
Thank you for your continued investment in Janus Aspen Global Technology
Portfolio.
PORTFOLIO ASSET MIX
<Table>
<Caption>
(% of Net Assets) June 30, 2002 December 31, 2001
- --------------------------------------------------------------------------------
Equities 88.9% 80.3%
Foreign 28.2% 24.2%
Top 10 Equities 32.9% 31.2%
Number of Stocks 78 72
Cash, Cash Equivalents
and Fixed Income Securities 11.1% 19.7%
</Table>
(1) All returns include reinvested net dividends. Net dividends reinvested are
the dividends that remain to be reinvested after foreign tax obligations have
been met. Such obligations vary from country to country.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
JANUS ASPEN SERIES JUNE 30, 2002 43
AVERAGE ANNUAL TOTAL RETURN
<Table>
<Caption>
For the Periods Ended June 30, 2002
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 1/18/00)
1 Year (40.30)%
From Inception (39.44)%
- --------------------------------------------------------------------------------
S&P 500 Index
1 Year (17.98)%
From Portfolio Inception (13.44)%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 1/18/00)
1 Year (40.46)%
From Inception (39.63)%
- --------------------------------------------------------------------------------
Service II Shares (Inception Date 12/31/01)
1 Year (40.36)%
From Inception (39.63)%
- --------------------------------------------------------------------------------
</Table>
Returns shown for Service II Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service II Shares.
This Portfolio may at times have significant exposure to certain industry
groups, which may react similarly to market developments (resulting in greater
price volatility). The Portfolio also may have significant exposure to foreign
markets (which include risks such as currency fluctuation and political
uncertainty).
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
The S&P 500 is the Standard & Poor's Composite Index of 500 stocks, a widely
recognized, unmanaged index of common stock prices. The Portfolio may differ
significantly from the securities held in the indices. The indices are not
available for direct investment; therefore their performance does not reflect
the expenses associated with the active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
A "nondiversified" fund has the ability to take larger positions in a smaller
number of issuers than a "diversified" fund. Nondiversified funds may experience
greater price volatility.
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Common Stock - 87.5%
Aerospace and Defense - 1.3%
115,455 Embraer-Empresa Brasileira de
Aeronautica S.A. (ADR) ................... $ 2,470,737
Applications Software - 10.9%
15,211 Infosys Technologies, Ltd.* ................ 1,022,682
172,350 Intuit, Inc.* .............................. 8,569,242
18,085 Mercury Interactive Corp.* ................. 415,232
193,285 Microsoft Corp.* ........................... 10,572,689
8,780 Red Hat, Inc.* ............................. 51,539
20,631,384
Automotive - Cars and Light Trucks - 2.5%
31,900 Hyundai Motor Company, Ltd.** .............. 958,622
548,000 Nissan Motor Company, Ltd.** ............... 3,794,885
4,753,507
Cellular Telecommunications - 1.7%
155,340 China Mobile, Ltd. (ADR)*,** ............... 2,271,071
362 NTT DoCoMo, Inc.** ......................... 890,985
3,162,056
Computer Aided Design - 0.8%
120,310 Autodesk, Inc. ............................. 1,594,108
Computer Services - 1.9%
44,025 Electronic Data Systems Corp. .............. 1,635,529
111,514 Logica PLC** ............................... 344,525
458,294 Misys PLC** ................................ 1,690,580
3,670,634
Computers - 4.0%
503,000 Compal Electronics, Inc. ................... $ 483,293
158,550 Dell Computer Corp.* ....................... 4,144,497
24,100 IBM Corp. .................................. 1,735,200
278,000 Legend Group, Ltd.** ....................... 101,581
174,000 Quanta Computer, Inc. ...................... 489,570
126,310 Sun Microsystems, Inc.* .................... 632,813
7,586,954
Computers - Integrated Systems - 0.7%
79,325 Brocade Communications Systems, Inc.* ...... 1,386,601
Computers - Memory Devices - 1.8%
168,222 VERITAS Software Corp.* .................... 3,329,113
Computers - Peripheral Equipment - 1.7%
762,000 Hon Hai Precision Industry Company, Ltd. ... 3,113,332
Consulting Services - 1.5%
150,580 Accenture, Ltd. - Class A
- New York Shares* ....................... 2,861,020
Data Processing and Management - 0.7%
8,800 Automatic Data Processing, Inc. ............ 383,240
23,275 First Data Corp. ........................... 865,830
1,249,070
Distribution and Wholesale - 2.6%
149,570 Ingram Micro, Inc. - Class A* .............. 2,056,588
75,055 Tech Data Corp.* ........................... 2,840,832
4,897,420
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
44 Janus Aspen Series June 30, 2002
JANUS ASPEN GLOBAL TECHNOLOGY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
E-Commerce/Products - 1.9%
218,820 Amazon.com, Inc.* .......................... $ 3,555,825
E-Commerce/Services - 1.8%
54,040 eBay, Inc.* ................................ 3,329,945
Electronic Components - Miscellaneous - 2.3%
69,225 Celestica, Inc. - New York Shares* ......... 1,572,100
35,260 Samsung SDI Company, Ltd.** ................ 2,731,786
4,303,886
Electronic Components - Semiconductors - 11.9%
1,483,004 ARM Holdings PLC*,** ....................... 3,300,436
66,540 Broadcom Corp. - Class A* .................. 1,167,112
43,410 Intel Corp. ................................ 793,101
141,870 LSI Logic Corp.* ........................... 1,241,363
280,130 Microtune, Inc.* ........................... 2,495,958
140,190 NVIDIA Corp.* .............................. 2,408,464
10,250 Samsung Electronics Company, Ltd.** ........ 2,803,291
55,571 STMicroelectronics N.V. .................... 1,385,804
93,533 STMicroelectronics N.V. - New York Shares .. 2,275,658
109,030 Texas Instruments, Inc. .................... 2,584,011
85,905 Xilinx, Inc.* .............................. 1,926,849
22,382,047
Electronic Design Automation - 4.9%
304,440 Cadence Design Systems, Inc.* .............. 4,907,573
79,580 Synopsys, Inc.* ............................ 4,361,780
9,269,353
Enterprise Software and Services - 1.9%
99,030 Micromuse, Inc.* ........................... 440,683
102,905 PeopleSoft, Inc.* .......................... 1,531,226
66,945 SAP A.G. (ADR)* ............................ 1,626,094
3,598,003
Entertainment Software - 4.7%
134,070 Electronic Arts, Inc.* ..................... 8,855,324
Human Resources - 0.3%
26,375 Hewitt Associates, Inc. - Class A* ......... 614,538
Internet Brokers - 0.4%
146,500 E*TRADE Group, Inc.* ....................... 799,890
Investment Companies - 1.2%
85,500 Nasdaq-100 Index Tracking Stock* ........... 2,230,695
Life and Health Insurance - 0.9%
54,720 AFLAC, Inc. ................................ 1,751,040
Medical Information Systems - 0.1%
18,975 Eclipsys Corp.* ............................ 124,457
Miscellaneous Manufacturing - 0.3%
55,115 Applied Films Corp.* ....................... 615,083
Multimedia - 0.9%
39,910 AOL Time Warner, Inc.* ..................... 587,076
59,170 Walt Disney Co. ............................ 1,118,313
1,705,389
Networking Products - 0.6%
81,960 Cisco Systems, Inc.* ....................... 1,143,342
Retail - Computer Equipment - 0.9%
57,940 Electronics Boutique Holdings Corp.* ....... 1,697,642
Retail - Consumer Electronics - 0.7%
35,960 Best Buy Company, Inc.* .................... 1,305,348
Satellite Telecommunications - 0.3%
32,485 EchoStar Communications Corp.* ............. $ 602,922
Semiconductor Components/Integrated Circuits - 6.5%
42,580 Emulex Corp.* .............................. 958,476
125,175 Integrated Device Technology, Inc.* ........ 2,270,674
78,225 Marvell Technology Group, Ltd.* ............ 1,555,895
55,170 Maxim Integrated Products, Inc.* ........... 2,114,666
2,136,200 Taiwan Semiconductor Manufacturing
Company, Ltd.* ........................... 4,347,991
794,000 United Microelectronics Corp.* ............. 953,021
12,200,723
Semiconductor Equipment - 3.6%
126,300 Applied Materials, Inc.* ................... 2,402,226
146,370 ASM Lithography Holding N.V.
- New York Shares* ....................... 2,213,114
90,785 Teradyne, Inc.* ............................ 2,133,447
6,748,787
Telecommunication Equipment - 5.8%
221,701 Nokia Oyj .................................. 3,244,949
317,845 Nokia Oyj (ADR) ............................ 4,602,396
150,145 UTStarcom, Inc.* ........................... 3,028,425
10,875,770
Telephone - Integrated - 0%
97 Telefonica S.A.* ........................... 814
Toys - 2.5%
220,680 Mattel, Inc. ............................... 4,651,934
Wireless Equipment - 1.0%
67,925 QUALCOMM, Inc.* ............................ 1,867,258
- --------------------------------------------------------------------------------
Total Common Stock (cost $234,670,682) ...................... 164,935,951
- --------------------------------------------------------------------------------
Corporate Bonds - 1.6%
Applications Software - 0.4%
$ 900,000 Mercury Interactive Corp., 4.75%
convertible notes, due 7/1/07+ ........... 720,000
Electronic Components - Semiconductors - 1.1%
650,000 International Rectifier Corp., 4.25%
convertible subordinated notes
due 7/15/07 .............................. 540,313
1,955,000 NVIDIA Corp., 4.75%
convertible subordinated notes
due 10/15/07 ............................. 1,603,100
2,143,413
Networking Products - 0.1%
1,000,000 Candescent Technologies Corp., 8.00%
convertible senior subordinated debentures
due 5/1/03+,(omega),(delta) .............. 85,000
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $4,807,418) ..................... 2,948,413
- --------------------------------------------------------------------------------
Preferred Stock - 1.4%
Computer Services - 1.1%
57,230 Electronic Data Systems Corp.
convertible, 7.625% ...................... 2,128,956
Wireless Equipment - 0.3%
31,515 Crown Castle International Corp.
convertible, 6.25% ....................... 563,331
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $4,437,250) ..................... 2,692,287
- --------------------------------------------------------------------------------
</Table>
See Notes to Schedules of Investments.
Janus Aspen Series June 30, 2002 45
JANUS ASPEN GLOBAL TECHNOLOGY PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Repurchase Agreement - 9.7%
$ 18,300,000 ABN AMRO Bank N.V., 1.97%
dated 6/28/02, maturing 7/1/02 to be
repurchased at $18,303,004 collateralized
by $3,771,220 in Collateralized Mortgage
Obligations 2.29%-6.50847%,
6/10/13-12/25/40 Aaa, $17,281,131 in U.S.
Government Obligations, 2.64%-7.30%
6/15/09-5/1/37; with respective values of
$1,686,151 and $16,979,859 (cost
$18,300,000) ............................. $ 18,300,000
- --------------------------------------------------------------------------------
Total Investments (total cost $262,215,350) - 100.2% ........ 188,876,651
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets -
(0.2%) ..................................................... (346,618)
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $ 188,530,033
- --------------------------------------------------------------------------------
</Table>
SUMMARY OF INVESTMENTS BY COUNTRY, JUNE 30, 2002
<Table>
<Caption>
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Bermuda 2.3% $ 4,416,915
Brazil 1.3% 2,470,737
Canada 0.8% 1,572,100
Finland 4.2% 7,847,345
Germany 0.9% 1,626,094
Hong Kong 1.3% 2,372,652
India 0.5% 1,022,682
Japan 2.5% 4,685,870
Netherlands 1.2% 2,213,114
South Korea 3.4% 6,493,699
Spain 0% 814
Switzerland 1.9% 3,661,462
Taiwan 5.0% 9,387,207
United Kingdom 2.8% 5,335,541
United States++ 71.9% 135,770,419
- --------------------------------------------------------------------------------
Total 100.0% $ 188,876,651
</Table>
++ Includes Short-Term Securities (62.2% excluding Short-Term Securities)
FORWARD CURRENCY CONTRACTS, OPEN AT JUNE 30, 2002
<Table>
<Caption>
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 10/10/02 600,000 $ 908,445 $ (39,465)
British Pound 10/25/02 200,000 302,514 (16,094)
Hong Kong Dollar 11/7/02 13,800,000 1,769,266 (466)
Hong Kong Dollar 2/21/03 2,000,000 256,392 (137)
Japanese Yen 10/25/02 40,000,000 335,880 (24,717)
Japanese Yen 11/7/02 20,000,000 168,068 (10,773)
South Korean Won
7/16/02 400,000,000 332,341 (34,507)
- --------------------------------------------------------------------------------
Total $ 4,072,906 $ (126,159)
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
46 Janus Aspen Series June 30, 2002
JANUS ASPEN GLOBAL VALUE PORTFOLIO Jason Yee, portfolio manager
Janus Aspen Global Value Portfolio - Service Shares returned 3.35% for the
six-month period ended June 30, 2002, outperforming the 8.82% decline of its
benchmark, the Morgan Stanley Capital International World Index.(1) This
performance earned the Portfolio a top-decile ranking for the one-year period
ended June 30, 2002, placing it 1st out of 65 variable annuity global funds
tracked by Lipper, a Reuters Company and leading mutual fund rating company.(2)
[PHOTO]
While early 2002 saw the markets eagerly anticipating and discounting a future
economic upturn, these hopes were quickly dashed by a growing crisis of
confidence in corporate governance and management credibility. What may have
been initially dismissed as an isolated incident instead turned out to be an
epidemic of egregious corporate misconduct. And one can only suspect that there
is more to come. What is already apparent, however, is the resulting damage to
the fragile financial markets, as evidenced by significant declines in equity
prices and a plummeting U.S. dollar. Equities around the world have continued to
decline in sympathy with the scandal-ridden U.S. markets. Japan surrendered most
of its first-quarter gains, major European indices had dismal performances
across the board, and many emerging markets retreated after a good start to the
year. All of this understatedly proclaims the obvious fact that we are currently
in a less-than-ebullient environment for global equity markets.
While the prognosis for the broader market indices may be somewhat troublesome,
the sharp volatility in today's financial markets does create some good
opportunities on a stock-by-stock basis. And because the Portfolio is comprised
of 40 to 50 holdings and has relatively low turnover, the consequent advantage
is that it really requires only a few of these investment opportunities per year
for the Portfolio to benefit. For example, our investment in Smiths Group PLC,
the U.K. industrial conglomerate, has since gained from a reversal of undue
concern over its cyclical nature and questions over its acquisition discipline.
Meanwhile, our position in Pioneer Natural Resources, the U.S. independent oil
and gas producer, was purchased when natural gas prices were near their recent
lows. In both of these cases, particular market, industry, or company-specific
issues caused these businesses to trade significantly below our appraisal of
their intrinsic value.
But certainly not all of our investments move so quickly toward intrinsic value,
including Allied Waste. The U.S. solid waste management company is a recent
addition to the Portfolio and has been punished severely for its high levels of
debt, despite a greater than 10% free cash flow yield and more than adequate
interest coverage. Meanwhile, Orbotech, the global leader in automated
inspection equipment for printed circuit boards, has suffered from the overall
weak capital spending trends and overcapacity in its customers' production
facilities. Over the longer term, we continue to believe that these businesses
are substantially undervalued and have consequently added to the positions.
Despite the challenging valuations of the market as a whole, we believe that
individual investments can perform well as this gap between stock price and
intrinsic value closes over time. These are exactly the types of special
situations we look for, and we are finding plenty of them around the world. At
the present time, we are closely considering potential opportunities in the
media and pharmaceutical industries. Both of these sectors are characterized by
high returns and free cash flow, and are in areas in which stock prices have
been under significant pressure.
Finding these new investment opportunities is certainly an important aspect to
managing the Portfolio. But I would like to stress that contrary to popular
belief, it is rarely the lack of new ideas or the missed opportunities that
cause underperformance in a portfolio. I often somewhat facetiously claim that
every night while I am asleep, somewhere in the world I am missing hundreds of
stocks that are going up. This is simply a fact of life in today's global
marketplace. But the Portfolio's performance is never penalized for the
investments we do NOT make. Rather, we are only penalized for the investment
mistakes that result in permanent capital loss. These mistakes are the real
enemy of satisfactory returns. Put another way, the most important factor in
driving returns over the long term is properly assessing the value of the
holdings in the Portfolio and understanding the consequent risk/reward
characteristics. This is why we are so selective in our investments and try to
leave an adequate margin of safety to protect from the unpredictable events that
invariably arise in the future. We firmly believe that purchasing businesses at
significant discounts to their intrinsic value is the best way to mitigate
downside risk and maximize upside potential.
Thank you for your continued support of Janus Aspen Global Value Portfolio.
PORTFOLIO ASSET MIX
<Table>
<Caption>
(% of Net Assets) June 30, 2002 December 31, 2001
- --------------------------------------------------------------------------------
Equities 76.4% 95.8%
Foreign 50.4% 59.5%
Top 10 Equities 32.1% 39.9%
Number of Stocks 37 38
Cash and Cash Equivalents 23.6% 4.2%
</Table>
(1) All returns include reinvested net dividends. Net dividends reinvested are
the dividends that remain to be reinvested after foreign tax obligations have
been met. Such obligations vary from country to country.
(2) Lipper, a Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical and are based on total
return with capital gains and dividends reinvested.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
JANUS ASPEN SERIES JUNE 30, 2002 47
<Table>
<Caption>
AVERAGE ANNUAL TOTAL RETURN
For the Period Ended June 30, 2002
- --------------------------------------------------------------------------------
Service Shares (Inception Date 5/1/01)
1 Year 9.47%
From Inception 7.24%
- --------------------------------------------------------------------------------
Morgan Stanley Capital International World Index
1 Year (15.22)%
From Portfolio Inception (16.48)%
- --------------------------------------------------------------------------------
</Table>
This Portfolio is designed for long-term investors who can accept the special
risks associated with value investing and having significant exposure to foreign
markets (which include risks such as currency fluctuation and political
uncertainty).
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
A "nondiversified" fund has the ability to take larger positions in a smaller
number of issuers than a "diversified" fund. Nondiversified funds may experience
greater price volatility.
Due to recent market volatility, the Portfolio may have an increased position in
cash for temporary defensive purposes.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
The Morgan Stanley Capital International World Index is a market capitalization
weighted index composed of companies representative of the market structure of
23 Developed Market countries in North America, Europe, and the Asia/Pacific
Region. The Portfolio may differ significantly from the securities held in the
index. The index is not available for direct investment; therefore its
performance does not reflect the expenses associated with the active management
of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
The Adviser has contractually agreed to waive a portion of the Portfolio's
expenses. Without such waivers, the Portfolio's total return for each class
would have been lower.
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Common Stock - 76.4%
Advertising Agencies - 4.3%
2,600 Asatsu-Dk, Inc.** .......................... $ 56,618
4,245 Interpublic Group of Companies, Inc. ....... 105,106
161,724
Advertising Services - 1.6%
7,473 WPP Group PLC** ............................ 62,513
Aerospace and Defense - 2.0%
219 Dassault Aviation S.A.** ................... 75,701
Automotive - Cars and Light Trucks - 1.5%
8,000 Nissan Motor Company, Ltd.** ............... 55,400
Casino Hotels - 1.5%
5,665 Park Place Entertainment Corp.* ............ 58,066
Chemicals - Diversified - 4.7%
1,870 Akzo Nobel N.V.** .......................... 81,428
3,122 Bayer A.G.** ............................... 98,976
180,404
Chemicals - Specialty - 2.5%
1,607 Syngenta A.G. .............................. 96,594
Diversified Operations - 5.8%
27,425 BBA Group PLC** ............................ 115,171
8,031 Smiths Group PLC** ......................... 105,040
220,211
Electronic Components - 3.8%
3,372 Koninklijke (Royal) Philips Electronics
N.V.** .................................... $ 94,147
180 Samsung Electronics Company, Ltd. .......... 49,229
143,376
Electronic Design Automation - 2.4%
5,615 Cadence Design Systems, Inc.* .............. 90,514
Electronic Measuring Instruments - 2.7%
4,525 Orbotech, Ltd.* ............................ 102,717
Financial Guarantee Insurance - 1.2%
650 MGIC Investment Corp. ...................... 44,070
Home Decoration Products - 2.2%
2,752 Hunter Douglas N.V.** ...................... 84,800
Hotels and Motels - 1.3%
3,645 Hilton Hotels Corp. ........................ 50,665
Machinery - Pumps - 4.7%
4,697 Pfeiffer Vacuum Technology A.G.** .......... 177,205
Medical - Drugs - 3.0%
980 Pharmacia Corp. ............................ 36,701
3,210 Schering-Plough Corp. ...................... 78,966
115,667
Medical Information Systems - 1.2%
2,465 IMS Health, Inc. ........................... 44,247
Medical Products - 0.4%
465 Becton, Dickinson and Co. .................. 16,019
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
48 Janus Aspen Series June 30, 2002
JANUS ASPEN GLOBAL VALUE PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
SHARES OR PRINCIPAL AMOUNT MARKET VALUE
Multimedia - 4.0%
29,011 Reuters Group PLC** ........................ $ 153,072
Non-Hazardous Waste Disposal - 1.8%
7,135 Allied Waste Industries, Inc.* ............. 68,496
Oil Companies - Exploration and Production - 2.2%
3,275 Pioneer Natural Resources Co.* ............. 85,314
Oil Companies - Integrated - 2.7%
3,407 EnCana Corp. ............................... 104,614
Property and Casualty Insurance - 1.6%
15,000 Nipponkoa Insurance Company, Ltd.** ........ 59,446
Publishing - Newspapers - 1.7%
33,595 Independent News & Media PLC** ............. 66,359
Publishing - Periodicals - 2.5%
4,977 Wolters Kluwer N.V.** ...................... 94,474
Radio - 2.9%
3,000 Nippon Broadcasting System, Inc.** ......... 110,132
Real Estate Investment Trusts - Hotels - 1.3%
4,340 Host Marriott Corp. ........................ 49,042
Reinsurance - 3.9%
67 Berkshire Hathaway, Inc. - Class B* ........ 149,678
Retail - Restaurants - 1.5%
2,070 McDonald's Corp. ........................... 58,892
Rubber/Plastic Products - 1.2%
4,000 Tenma Corp.** .............................. 45,321
Savings/Loan/Thrifts - 1.5%
1,515 Washington Mutual, Inc. .................... 56,222
Television - 0.8%
17,190 Granada PLC** .............................. 28,858
- --------------------------------------------------------------------------------
Total Common Stock (cost $2,834,083) ........................ 2,909,813
- --------------------------------------------------------------------------------
Repurchase Agreement - 18.4%
$ 700,000 ABN AMRO Bank N.V., 1.97%
dated 6/28/02, maturing 7/1/02 to be
repurchased at $700,115 collateralized by
$144,254 in Collateralized Mortgage
Obligations 2.29%-6.50847%,
6/10/13-12/25/40 Aaa, $661,027 in U.S.
Government Obligations, 2.64%-7.30%
6/15/09-5/1/37; with respective values
of $64,498 and $649,503 (cost $700,000) .. 700,000
- --------------------------------------------------------------------------------
Total Investments (total cost $3,534,083) - 94.8% ........... 3,609,813
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities -
5.2% ....................................................... 196,064
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $ 3,805,877
- --------------------------------------------------------------------------------
</Table>
SUMMARY OF INVESTMENTS BY COUNTRY, JUNE 30, 2002
<Table>
<Caption>
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Canada 2.9% $ 104,614
France 2.1% 75,701
Germany 7.7% 276,181
Ireland 1.8% 66,359
Israel 2.8% 102,717
Japan 9.0% 326,917
Netherlands 9.8% 354,849
South Korea 1.4% 49,229
Switzerland 2.7% 96,594
United Kingdom 12.9% 464,654
United States++ 46.9% 1,691,998
- --------------------------------------------------------------------------------
Total 100.0% $ 3,609,813
</Table>
++ Includes Short-Term Securities (27.5% excluding Short-Term Securities)
FORWARD CURRENCY CONTRACTS, OPEN AT JUNE 30, 2002
<Table>
<Caption>
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 10/10/02 90,000 $ 136,267 $ (5,920)
British Pound 10/25/02 30,000 45,377 (2,414)
British Pound 11/7/02 25,000 37,782 (1,891)
Euro 10/10/02 190,000 186,733 (14,954)
Euro 11/7/02 165,000 161,962 (9,988)
Japanese Yen 10/10/02 8,000,000 67,117 (4,490)
Japanese Yen 10/25/02 5,000,000 41,985 (3,089)
Japanese Yen 11/7/02 6,000,000 50,420 (3,232)
- --------------------------------------------------------------------------------
Total $ 727,643 $ (45,978)
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 49
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO RONALD SPEAKER,
portfolio manager
For the six months ended June 30, 2002, Janus Aspen Flexible Income Portfolio
returned 3.17% for its Institutional Shares and 3.00% for its Service Shares.
This compares with a 3.26% gain for its benchmark, the Lehman Brothers
Government/Credit Index.(1) This performance earned the Portfolio's
Institutional Shares a top-quartile ranking for the one-year period ended June
30, 2002, placing it 7th out of 34 variable annuity general bond funds tracked
by Lipper, a Reuters Company and leading mutual fund rating company.(2)
[PHOTO]
During the early months of 2002, the U.S. economy exhibited a significant
turnaround from the dramatic weakness it experienced over the final four months
of 2001. As consumer enthusiasm waned and corporate spending plans stalled,
however, expectations for an aggressive economic rebound tapered off come
springtime. All the while suffering from shaken confidence in corporate
accounting and finding little inspiration in corporate profit outlooks, stock
investors endured a volatile market, characterized by a steady stream of losses
and occasional price spikes.
Conversely, the bond market behaved in a classic fashion - providing pockets of
safety and stability, relatively speaking, while offering the diversification of
the broader market. Pacing the fixed-income gainers were investment-grade
issues, which ended the period among the best-performing asset classes for the
year to date.
Bolstering the investment-grade portion of the Portfolio was Quest Diagnostics,
a medical diagnostic testing and services company that was upgraded from the
high-yield ranks by Moody's. Its recent acquisitions of American Medical
Laboratories, which processes esoteric tests such as gene-based assessments
nationwide, and Unilab, the largest independent clinical lab operator in
California, have complemented Quest's portfolio and strengthened its future
profit outlook. Plus, the company's well-respected management team has
demonstrated a commitment to handling debt in a conservative fashion.
Also rallying was Golden State Holdings, the corporate parent of California
Federal Bank. The California thrift, a long-time holding, was recently purchased
by Citigroup in a deal that complements Citigroup's domestic business. In turn,
Golden State's notes, rated "BB," benefited from association with Citigroup's
"AA" status.
Within this environment of improving outlooks and rising rates we adopted a
defensive stance by maintaining an overweight position in investment grade
corporate bonds, accounting for 47.8% of the Portfolio, and a modest weighting
in high-yield issues at 7.6%. We also skewed the Portfolio toward the shorter
side of the duration spectrum.
Government-related issues represented 39.8% of the Portfolio and included a
blend of mid- and long-term Treasury notes and select debt from Fannie Mae, the
government-backed mortgage dealer. These interest-rate sensitive issues inched
upward as the Federal Reserve kept short-term lending rates at a 40-year low and
expectations for a late-summer rate hike all but disappeared. Slowly, the
realization that rates will be lower for some time permeated the long end of the
yield curve, although the abundance of stimuli lingering in the system and
simmering inflation fears supported a relatively steep slope.
As a whole, the spread between investment grade corporate notes and the
government issues tightened, and we were rewarded for our corporate-heavy
strategy. Indicative of our short-term mindset was a Verizon Communications note
due in April 2003, which traded only at a slight loss - a plus during a period
of rising rates and falling prices in the Treasury markets. In an effort to
solidify its investment-grade ratings, the one-time Baby Bell has undertaken an
aggressive debt-reduction campaign, including buying back short-term debt.
Another disappointment was Equinix, a small Internet data-center operator.
Having developed six large facilities across the U.S., Equinix attracted
big-name clients such as IBM, Charles Schwab and AT&T. However, the market
started to soften as it was building its seventh center, and the company fell
into a liquidity squeeze. In addition, the company's liquidity narrowed, so we
sold the position.
We also lost ground in AOL Time Warner, which underperformed Treasury bonds as
spreads widened in connection with an overall decline in the company's shares
resulting from concerns of some its partnerships. Despite this, however, we
believe AOL Time Warner will manage its debt appropriately and maintain its
investment grade status.
Throughout the bond market, responsible borrowing gained popularity as a painful
but important theme emerged, one that corporate America cannot ignore. As the
ratings of some of the largest issuers of investment-grade bonds - companies
such as WorldCom, Qwest Communications and Tyco International - were slashed to
high-yield status, creditors declared that tight accounting is a requirement,
exaggerations of financial conditions will not be tolerated and debt levels need
to be reduced. If a company fails to meet these guidelines, it will suffer.
Looking ahead, we will continue to utilize our latitude in flexibility within
the fixed-income arena. By identifying investment-grade issues that benefit from
an improving economy, high-yield credits with the potential to benefit even more
and short-term bonds that aren't as sensitive to potential rate increases, we
believe we're positioned well to absorb the market's moves in the coming
quarters.
Thank you for your investment in Janus Aspen Flexible Income Portfolio.
PORTFOLIO ASSET MIX
<Table>
<Caption>
(% of Net Assets) June 30, 2002 December 31, 2001
- --------------------------------------------------------------------------------
Corporate Bonds/Warrants
Investment Grade 47.8% 48.5%
High-Yield/High-Risk 7.6% 11.3%
U.S. Government Obligations 39.8% 32.9%
Foreign Dollar/
Non-Dollar Bonds 0.6% 1.0%
Preferred Stock 0.2% 0.2%
Cash and Cash Equivalents 4.0% 6.1%
PORTFOLIO PROFILE
- --------------------------------------------------------------------------------
Weighted Average Maturity 8.6 Yrs. 8.1 Yrs.
Average Modified Duration* 5.8 Yrs. 5.7 Yrs.
30-Day Average Yield**
Institutional Shares 5.07% 5.64%
Service Shares 4.76% 5.35%
Weighted Average Fixed Income
Credit Rating A A
</Table>
* A theoretical measure of price volatility. ** Yields will fluctuate.
(1) All returns include reinvested dividends and capital gains.
(2) Lipper, a Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical and are based on total
return with capital gains and dividends reinvested. As of June 30, 2002, Lipper
ranked Janus Aspen Flexible Income Portfolio - Institutional Shares 3 out of 19
variable annuity general bond funds for the 5-year period.
Past performance does not guarantee future results.
There is no assurance that the investment process will consistently lead to
successful investing.
50 Janus Aspen Series June 30, 2002
AVERAGE ANNUAL TOTAL RETURN
<Table>
<Caption>
For the Periods Ended June 30, 2002
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 9/13/93)
1 Year 8.14%
5 Year 7.00%
From Inception 8.04%
- --------------------------------------------------------------------------------
Lehman Brothers Government/Credit Index
1 Year 8.25%
5 Year 7.48%
From Inception Date of Institutional Shares 6.53%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year 7.85%
5 Year 6.72%
From Portfolio Inception 7.87%
- --------------------------------------------------------------------------------
</Table>
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
High-yield bonds involve a greater risk of default and price volatility than
U.S. Government and other high quality bonds. High-yield/high-risk bonds can
experience sudden and sharp price swings which will affect net asset value.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends and capital gains.
Lehman Brothers Government/Credit Index is composed of all bonds that are of
investment grade with at least one year until maturity. The Portfolio may differ
significantly from the securities held in the index. The index is not available
for direct investment; therefore its performance does not reflect the expenses
associated with the active management of an actual portfolio.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Corporate Bonds - 56.0%
Aerospace and Defense - 1.6%
Raytheon Co.:
$ 4,000,000 6.50%, notes, due 7/15/05 ................ $ 4,195,000
3,000,000 6.15%, notes, due 11/1/08 ................ 3,078,750
7,273,750
Automotive - Cars and Light Trucks - 0.4%
1,810,000 General Motors Corp., 7.20%
company guaranteed notes, due 1/15/11 .... 1,843,938
Beverages - Non-Alcoholic - 0.7% Coca-Cola Enterprises, Inc.:
1,215,000 6.125%, notes, due 8/15/11 ............... 1,251,450
1,850,000 7.125%, debentures, due 8/1/17 ........... 2,090,500
3,341,950
Brewery - 1.2%
5,295,000 Coors Brewing Co., 6.375%
notes, due 5/15/12+ ...................... 5,447,231
Broadcast Services and Programming - 0.1%
425,000 Clear Channel Communications, Inc., 6.00%
notes, due 11/1/06 ....................... 417,563
Building - Residential and Commercial - 0.4%
910,000 K. Hovnanian Enterprises, Inc., 8.875%
senior subordinated notes, due 4/1/12+ ... 895,213
740,000 KB Home, Inc., 8.625%
senior subordinated notes, due 12/15/08 .. 747,400
1,642,613
Cable Television - 0.3%
$ 500,000 Charter Communications Holdings LLC
10.25%, senior notes, due 1/15/10 ........ $ 340,000
900,000 Mediacom Broadband LLC, 11.00%
company guaranteed notes, due 7/15/13 .... 841,500
1,181,500
Cellular Telecommunications - 0.8%
2,820,000 AT&T Wireless Services, Inc., 6.875%
notes, due 4/18/05 ....................... 2,509,800
810,000 Price Communications Wireless, Inc.
11.75%, senior subordinated notes
due 7/15/07 .............................. 853,537
3,363,337
Commercial Banks - 0.4%
698,000 Hudson United Bancorp, Inc., 8.20%
subordinated debentures, due 9/15/06 ..... 733,772
996,000 Provident Trust I Corp., 8.29%
company guaranteed notes, due 4/15/28 .... 873,990
1,607,762
Commercial Services - 1.1%
5,000,000 PHH Corp., 8.125%
notes, due 2/3/03 ........................ 5,068,750
Computers - 0.6%
2,740,000 Apple Computer, Inc., 6.50%
notes, due 2/15/04 ....................... 2,740,000
</Table>
See Notes to Schedules of Investments.
Janus Aspen Series June 30, 2002 51
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Containers - Metal and Glass - 0.4%
$ 1,790,000 Owens-Brockway Glass Container, Inc.
8.875%, secured notes, due 2/15/09+ ...... $ 1,790,000
Cosmetics and Toiletries - 0.7%
2,875,000 Proctor & Gamble Co., 4.75%
notes, due 6/15/07 ....................... 2,900,156
Diversified Financial Services - 1.6%
General Electric Capital Corp.:
4,300,000 4.25%, notes, due 1/28/05 ................ 4,348,375
2,875,000 6.00%, notes, due 6/15/12 ................ 2,860,625
7,209,000
Diversified Operations - 1.5%
2,770,000 ARAMARK Services, Inc., 7.00%
company guaranteed notes, due 5/1/07 ..... 2,828,862
4,000,000 Cendant Corp., 6.875%
notes, due 8/15/06 ....................... 4,025,000
6,853,862
Electric - Integrated - 2.5%
1,335,000 Amerenenergy Generating Co., 7.95%
notes, due 6/1/32 ........................ 1,393,406
1,050,000 Appalachian Power Co., 4.80%
notes, due 6/15/05 ....................... 1,044,750
4,750,000 Cinergy Corp., 6.25%
debentures, due 9/1/04 ................... 4,827,187
PSE&G Power LLC:
3,010,000 6.875%, company guaranteed notes
due 4/15/06 .............................. 3,115,350
750,000 6.95%, notes, due 6/1/12+ ................ 753,750
11,134,443
Finance - Auto Loans - 1.9%
5,500,000 Ford Motor Credit Co., 5.75%
senior notes, due 2/23/04 ................ 5,575,625
3,000,000 General Motors Acceptance Corp., 5.36%
notes, due 7/27/04 ....................... 3,056,250
8,631,875
Finance - Other Services - 0.2%
1,000,000 Pemex Master Trust, 8.625%
notes, due 2/1/22+ ....................... 977,500
Food - Diversified - 1.7%
2,500,000 ConAgra Foods, Inc., 6.75%
notes, due 9/15/11 ....................... 2,637,500
1,200,000 General Mills, Inc., 6.00%
notes, due 2/15/12 ....................... 1,188,000
Kellogg Co.:
1,725,000 6.00%, notes, due 4/1/06 ................. 1,802,625
1,750,000 6.60%, notes, due 4/1/11 ................. 1,835,312
7,463,437
Food - Meat Products - 0.7%
3,000,000 Hormel Foods Corp., 6.625%
notes, due 6/1/11 ........................ 3,123,750
Food - Retail - 4.6%
$ 1,480,000 Delhaize America, Inc., 7.375%
notes, due 4/15/06 ....................... $ 1,539,200
Fred Meyer, Inc.:
2,500,000 7.375%, company guaranteed notes
due 3/1/05 ............................... 2,681,250
4,250,000 7.45%, company guaranteed notes
due 3/1/08 ............................... 4,675,000
165,000 Kroger Co., 7.50%
company guaranteed notes, due 4/1/31 ..... 171,806
1,742,000 Marsh Supermarkets, Inc., 8.875%
company guaranteed notes, due 8/1/07 ..... 1,715,870
Safeway, Inc.:
4,450,000 6.15%, notes, due 3/1/06 ................. 4,678,063
4,000,000 6.50%, notes, due 3/1/11 ................. 4,120,000
1,035,000 Winn-Dixie Stores, Inc., 8.875%
senior notes, due 4/1/08 ................. 1,035,000
20,616,189
Food - Wholesale/Distribution - 0.1%
550,000 Sysco International Co., 6.10%
notes, due 6/1/12+ ....................... 567,875
Foreign Government - 0.2%
1,060,000 United Mexican States, 7.50%
notes, due 1/14/12 ....................... 1,048,075
Forestry - 0.6%
2,770,000 Weyerhaeuser Co., 5.50%
notes, due 3/15/05+ ...................... 2,846,175
Gas - Distribution - 0.3%
1,105,000 Southwest Gas Corp., 7.625%
notes, due 5/15/12 ....................... 1,124,338
Hotels and Motels - 0.3%
1,500,000 Starwood Hotels & Resorts Worldwide, Inc.
7.375%, notes, due 5/1/07 ................ 1,475,625
Insurance Brokers - 0.2%
910,000 Marsh & McLennan Companies, Inc., 6.25%
notes, due 3/15/12+ ...................... 944,125
Leisure, Recreation and Gaming - 0.3%
1,500,000 Hard Rock Hotel, Inc., 9.25%
senior subordinated notes, due 4/1/05 .... 1,470,000
Life and Health Insurance - 0.2%
813,000 Delphi Financial Group, Inc., 8.00%
senior notes, due 10/1/03 ................ 834,341
Linen Supply and Related Items - 0.2%
985,000 Cintas Corp., 6.00%
notes, due 6/1/12+ ....................... 998,544
Machine Tools and Related Products - 0.3%
1,185,000 Kennametal, Inc., 7.20%
senior notes, due 6/15/12 ................ 1,183,519
Medical - HMO - 1.6%
2,000,000 UnitedHealth Group, Inc., 5.20%
notes, due 1/17/07 ....................... 2,032,500
4,825,000 Wellpoint Health Networks, Inc., 6.375%
notes, due 6/15/06 ....................... 5,078,313
7,110,813
</Table>
See Notes to Schedules of Investments.
52 Janus Aspen Series June 30, 2002
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Medical - Hospitals - 4.4%
$ 1,505,000 Clarent Hospital Corp., 11.50%
senior notes, due 8/15/05 ................ $ 1,595,300
HCA, Inc.:
5,000,000 6.91%, notes, due 6/15/05 ................ 5,218,750
2,200,000 6.95%, notes, due 5/1/12 ................. 2,241,250
498,000 8.36%, debentures, due 4/15/24 ........... 530,992
Tenet Healthcare Corp.:
5,800,000 5.375%, notes, due 11/15/06 .............. 5,858,000
4,000,000 6.375%, notes, due 12/1/11 ............... 4,050,000
19,494,292
Medical Labs and Testing Services - 1.7%
Quest Diagnostics, Inc.:
4,000,000 6.75%, company guaranteed notes
due 7/12/06 .............................. 4,190,000
3,095,000 7.50%, company guaranteed notes
due 7/12/11 .............................. 3,361,944
7,551,944
Multimedia - 3.5%
AOL Time Warner, Inc.:
3,655,000 5.625%, notes, due 5/1/05 ................ 3,586,469
1,935,000 7.25%, debentures, due 10/15/17 .......... 1,746,338
1,265,000 Corus Entertainment, Inc., 8.75%
senior subordinated notes, due 3/1/12+ ... 1,265,000
3,620,000 Gannett Company, Inc., 4.95%
notes, due 4/1/05 ........................ 3,692,400
5,000,000 Viacom, Inc., 6.40%
company guaranteed notes, due 1/30/06 .... 5,275,000
15,565,207
Networking Products - 0%
996,000 Candescent Technologies Corp., 8.00%
convertible senior subordinated
debentures, due 5/1/03+,(omega),(delta) .. 84,660
Non-Hazardous Waste Disposal - 2.2%
2,750,000 Republic Services, Inc., 6.75%
notes, due 8/15/11 ....................... 2,832,500
Waste Management, Inc.:
3,500,000 7.00%, senior notes, due 10/1/04 ......... 3,631,250
3,065,000 7.375%, notes, due 8/1/10 ................ 3,183,769
9,647,519
Oil Companies - Exploration and Production - 0.7%
2,020,000 Louis Dreyfus Natural Gas Corp., 6.875%
notes, due 12/1/07 ....................... 2,133,625
795,000 Magnum Hunter Resources, Inc., 9.60%
senior notes, due 3/15/12+ ............... 818,850
2,952,475
Oil Companies - Integrated - 1.9%
Conoco Funding Co.:
4,080,000 5.45%, company guaranteed notes
due 10/15/06 ............................. 4,182,000
2,360,000 6.35%, notes, due 10/15/11 ............... 2,445,550
1,950,000 Occidental Petroleum Corp., 5.875%
notes, due 1/15/07 ....................... 2,020,688
8,648,238
Physical Therapy and Rehabilitation Centers - 1.5%
HEALTHSOUTH Corp.:
3,500,000 7.375%, senior notes, due 10/1/06 ........ 3,500,000
3,000,000 8.50%, senior notes, due 2/1/08 .......... 3,150,000
6,650,000
Pipelines - 0.3%
$ 1,090,000 TEPPCO Partners, L.P., 7.625%
company guaranteed notes, due 2/15/12 .... $ 1,119,975
Property and Casualty Insurance - 0.1%
498,000 First American Capital Trust, 8.50%
company guaranteed notes, due 4/15/12 .... 498,623
Recreational Centers - 0.7%
3,000,000 Bally Total Fitness Holding Corp., 9.875%
senior subordinated notes, due 10/15/07 .. 2,977,500
Real Estate Investment Trusts - Health Care - 0.4%
1,580,000 Health Care Property Investors, Inc., 6.45%
notes, due 6/25/12 ....................... 1,574,075
Rental Auto/Equipment - 0.4%
1,860,000 Hertz Corp., 7.625%
notes, due 6/1/12 ........................ 1,834,425
Research and Development - 0.4%
Science Applications International Corp.:
745,000 6.25%, notes, due 7/1/12 ................. 732,894
960,000 7.125%, notes, due 7/1/32+ ............... 931,200
1,664,094
Retail - Discount - 1.0%
4,000,000 Wal-Mart Stores, Inc., 6.875%
senior notes, due 8/10/09 ................ 4,395,000
Retail - Restaurants - 0.7%
1,980,000 McDonald's Corp., 5.375%
notes, due 4/30/07 ....................... 2,049,300
585,000 Wendy's International, Inc., 6.20%
senior notes, due 6/15/14 ................ 594,506
335,000 Yum! Brands, Inc., 7.70%
notes, due 7/1/12 ........................ 335,000
2,978,806
Satellite Telecommunications - 0.3%
1,610,000 EchoStar DBS Corp., 9.125%
senior notes, due 1/15/09 ................ 1,473,150
Savings/Loan/Thrifts - 2.3%
Golden State Holdings, Inc.:
6,248,000 7.00%, senior notes, due 8/1/03 .......... 6,482,300
3,680,000 7.125%, senior notes, due 8/1/05 ......... 3,928,400
10,410,700
Soap and Cleaning Preparations - 1.4%
Dial Corp.:
3,850,000 7.00%, senior notes, due 8/15/06 ......... 4,028,063
2,000,000 6.50%, senior notes, due 9/15/08 ......... 2,035,000
6,063,063
Telecommunication Services - 3.2%
Verizon Global Funding Corp.:
6,200,000 5.75%, convertible notes, due 4/1/03 ..... 6,262,000
8,000,000 4.25%, convertible senior notes
due 9/15/05+ ............................. 8,040,000
14,302,000
Television - 0.9%
3,988,000 Fox/Liberty Networks LLC, 8.875%
senior notes, due 8/15/07 ................ 4,107,640
Theaters - 0.1%
535,000 AMC Entertainment, Inc., 9.875%
senior subordinated notes, due 2/1/12 .... 535,669
</Table>
See Notes to Schedules of Investments.
Janus Aspen Series June 30, 2002 53
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Veterinary Diagnostics - 0.2%
$ 820,000 Vicar Operating, Inc., 9.875%
senior subordinated notes, due 12/1/09 ... $ 861,000
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $245,702,500) ................... 249,622,091
- --------------------------------------------------------------------------------
Preferred Stock - 0.2%
Savings/Loan/Thrifts - 0.2%
35,458 Chevy Chase Savings Bank, 13.00%
(cost $1,055,050) ........................ 975,095
- --------------------------------------------------------------------------------
Warrants - 0%
Finance - Other Services - 0%
996 Ono Finance PLC - expires 5/31/09*,+ ..... 10
Telephone - Integrated - 0%
224 Versatel Telecom B.V. - expires
5/15/08* ................................ 0
Web Hosting/Design - 0%
650 Equinix, Inc. - expires 12/1/07* ......... 7
- --------------------------------------------------------------------------------
Total Warrants (cost $0) .................................... 17
- --------------------------------------------------------------------------------
U.S. Government Obligations - 39.8%
U.S. Government Agencies - 15.4%
Fannie Mae:
$ 27,460,000 3.875%, due 3/15/05 ...................... 27,700,275
4,255,000 6.00%, due 12/15/05 ...................... 4,542,212
16,025,000 6.25%, due 2/1/11 ........................ 16,846,281
5,130,000 6.00%, due 5/15/11 ....................... 5,373,675
13,450,000 6.625%, due 11/15/30 ..................... 14,206,562
68,669,005
U.S. Treasury Notes/Bonds - 24.4%
1,800,000 3.00%, due 2/29/04 ....................... 1,810,476
2,000,000 3.625%, due 3/31/04 ...................... 2,030,920
490,000 7.50%, due 2/15/05 ....................... 542,445
1,355,000 6.75%, due 5/15/05 ....................... 1,478,847
4,056,000 3.50%, due 11/15/06 ...................... 3,983,722
12,915,000 4.375%, due 5/15/07 ...................... 13,092,581
2,766,000 6.00%, due 8/15/09 ....................... 3,004,650
1,513,538 3.375%, due 1/15/12(pi)................... 1,551,134
17,855,000 4.875%, due 2/15/12 ...................... 17,921,956
10,740,000 7.25%, due 5/15/16 ....................... 12,657,627
7,925,000 7.25%, due 8/15/22 ....................... 9,439,943
25,000,000 6.25%, due 8/15/23 ....................... 26,785,500
2,500,000 6.25%, due 5/15/30 ....................... 2,708,100
11,838,000 5.375%, due 2/15/31** .................... 11,591,888
108,599,789
- --------------------------------------------------------------------------------
Total U.S. Government Obligations (cost $174,509,117) ....... 177,268,794
- --------------------------------------------------------------------------------
Short-Term Corporate Note - 1.1%
Citigroup, Inc.
4,900,000 1.85%, 7/1/02
(amortized cost $4,900,000) .............. 4,900,000
- --------------------------------------------------------------------------------
Total Investments (total cost $426,166,667) - 97.1% ......... 432,765,997
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities -
2.9% ....................................................... 12,849,949
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $ 445,615,946
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Financial Futures - Short
30 Contracts U.S. Treasury - 10-year Note
expires September 2002, principal amount
$3,152,422, value $3,217,031
cumulative depreciation .................. $ (64,609)
- --------------------------------------------------------------------------------
</Table>
SUMMARY OF INVESTMENTS BY COUNTRY, JUNE 30, 2002
<Table>
<Caption>
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Canada 0.4% $ 1,832,875
Mexico 0.2% 1,048,075
United Kingdom 0% 10
United States++ 99.4% 429,885,037
- --------------------------------------------------------------------------------
Total 100.0% $ 432,765,997
</Table>
++ Includes Short-Term Securities (98.2% excluding Short-Term Securities)
SEE NOTES TO SCHEDULES OF INVESTMENTS.
54 Janus Aspen Series June 30, 2002
JANUS ASPEN MONEY MARKET PORTFOLIO J. ERIC THORDERSON,
portfolio manager
For the six months ended June 30, 2002, Janus Aspen Money Market Portfolio
returned 0.89% for its Institutional Shares and 0.76% for its Service Shares.(1)
The seven-day current yield for the same period was 1.62% and 1.36%,
respectively. This performance earned the Portfolio's Institutional Shares a
top-decile ranking for the one-year period ended June 30, 2002, placing it 2nd
out of 111 variable annuity money market funds tracked by Lipper, a Reuters
Company and leading mutual fund rating company.(2)
[PHOTO]
Although the Federal Reserve cut interest rates 11 times in 2001 in an effort to
strengthen the economy, by early 2002 the market was convinced that the Fed had
finished lowering rates. Therefore, in the market's view, the Fed's next move
would be to raise them. One-year rates promptly became higher than overnight
rates, and have remained in that so-called "normal" relationship. It is not at
all clear when the Fed might start to raise rates, and indeed, Chairman
Greenspan has made it clear that his concerns are focused on risks of further
economic weakness.
The market's anticipation of future rate increases has given us an opportunity
to increase the yield on the Portfolio by buying longer-term securities. If we
felt that interest rates might start to rise quickly, we would hesitate to buy
one-year securities, because they would soon be worth less than what we paid for
them. But since the Fed has declared its intention to keep interest rates low,
we believe there is little risk to a strategy of lengthening the weighted
average maturity of the Portfolio.
Although interest rates have been quite steady, the credit arena has been
volatile. The notorious demise of Enron, and subsequent revelations of
accounting irregularities in WorldCom and numerous other large corporations, has
made all market participants edgy. Heightened investor anxiety may be justified
in some cases, but it has sometimes been the cause, rather than the result, of a
credit event. Ratings agencies, historically conservative in their reactions to
economic cycles, have been increasingly hyper-reactive, which has created a
feedback loop that reinforces investor dread and makes it difficult for even
honest, well-managed companies to gain the market's confidence.
One good thing that's coming from all this turmoil is that there will be more
transparency in corporate accounting. Executives are aware that, these days,
they will be considered guilty unless they can prove themselves innocent. And
the proof of innocence is in transparent financial reporting. Although we have
always insisted on receiving extensive disclosure, management's more forthcoming
attitude is a welcome change from previous periods.
This is a fascinating time in investment history. Few of us have experienced
overnight interest rates this low in our professional lives, and the tendency is
to expect them to revert to normal quickly. However, like most concepts in
economics, "normal" is a term that depends on its context. What is normal nine
months after the world changed forever? We think that, for interest rates and
economic activity, normal is now a lot lower than it used to be.
Regardless of economic direction, however, our goal remains the same: vigilant
preservation of principal and assurance of liquidity through the careful and
flexible selection of lower-risk investments.
Thank you for your investment in Janus Aspen Money Market Portfolio.
AVERAGE ANNUAL TOTAL RETURN
<Table>
<Caption>
For the Periods Ended June 30, 2002
- --------------------------------------------------------------------------------
Institutional Shares (Inception Date 5/1/95)
1 Year 2.55%
5 Year 4.87%
From Inception 4.96%
Seven-Day Current Yield 1.62%
- --------------------------------------------------------------------------------
Service Shares (Inception Date 12/31/99)
1 Year 2.28%
5 Year 4.62%
From Portfolio Inception 4.73%
Seven-Day Current Yield 1.36%
- --------------------------------------------------------------------------------
</Table>
Returns shown for Service Shares for periods prior to their inception are
derived from the historical performance of Institutional Shares, adjusted to
reflect the higher operating expenses of Service Shares.
Due to market volatility, current performance may be higher or lower than the
figures shown. Call 1-800-504-4440 or visit janus.com for more current
performance information.
(1) All returns reflect reinvested dividends.
(2) Lipper, a Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical and are based on total
return with capital gains and dividends reinvested. As of June 30, 2002, Lipper
ranked Janus Aspen Money Market Portfolio - Institutional Shares 8 out of 86
variable annuity money market funds for the 5-year period.
An investment in the Portfolio is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
Portfolio seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Portfolio.
The yield more closely reflects the current earnings of the money market fund
than the total return.
Past performance is no guarantee of future results and investment results and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. Total return includes reinvestment of
dividends.
These returns do not reflect the charges and expenses of any particular
insurance product or qualified plan.
JANUS ASPEN SERIES JUNE 30, 2002 55
- --------------------------------------------------------------------------------
JANUS ASPEN MONEY MARKET PORTFOLIO
SCHEDULE OF INVESTMENTS (unaudited)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Certificates of Deposit - 2.0%
$ 2,000,000 Westdeutsche Landesbank Girozentrale
New York, 2.27%, 1/27/03
(cost $2,000,000) ........................ $ 2,000,000
- --------------------------------------------------------------------------------
Commercial Paper - 8.2%
Banque National de Paris Canada:
1,200,000 1.95%, 9/30/02 ........................... 1,194,085
1,700,000 1.98%, 10/9/02 ........................... 1,690,650
4,000,000 Check Point Charlie, Inc.
1.86%, 9/4/02+ ........................... 3,986,567
1,276,000 Victory Receivables Corp.
1.86%, 8/19/02+ .......................... 1,272,769
- --------------------------------------------------------------------------------
Total Commercial Paper (cost $8,144,071) .................... 8,144,071
- --------------------------------------------------------------------------------
Floating Rate Notes - 10.1%
5,000,000 Idaho Power Corp.
2.2475%, 9/1/02+,ss ...................... 5,001,253
5,000,000 Sigma Finance, Inc.
1.83%, 10/15/02+ ......................... 4,999,855
- --------------------------------------------------------------------------------
Total Floating Rate Notes (cost $10,001,108) ................ 10,001,108
- --------------------------------------------------------------------------------
Repurchase Agreements - 23.0%
14,840,000 ABN AMRO Bank N.V., 1.99%
dated 6/28/02, maturing 7/1/02 to be
repurchased at $14,842,461 collateralized
by $18,867,862 in Collateralized Mortgage
Obligations 4.4119%-6.41%,
6/26/29-12/25/40 Aaa; $28,252,347 in U.S.
Government Obligations, 5.125%-8.058%
3/15/11-1/1/36; with respective values of
$7,193,805 and $7,942,995 ................ 14,840,000
8,000,000 Deutsche Banc Alex. Brown, Inc., 1.96%
dated 6/28/02, maturing 7/1/02 to be
repurchased at $8,001,307 collateralized
by $4,275,511 in Asset Backed Securities
0%-8.29%, 4/15/03-4/25/32 Aaa; $1,116,348
in Certificates of Deposit, 1.89%,
12/27/02, P-1 $56,089,447 in Collateralized
Mortgage Obligations, 0.427%-7.6752%
6/7/09-9/15/41, Aaa; $1,090,046 in
Commercial Paper, 1.77%-5.00%
7/8/02-3/1/07, P-1; $635,345 in Corporate
Bonds, 1.965%-8.875% 8/23/02-3/15/32,
Aaa; $143,017 in U.S. Government
Obligations 5.75%-6.25%, 1/15/12-3/5/12
Aaa-Aa2; with respective values of
$2,965,884, $1,116,348, $2,159,865
$1,088,778, $679,389, and $149,736 ....... 8,000,000
- --------------------------------------------------------------------------------
Total Repurchase Agreements (cost $22,840,000) .............. 22,840,000
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 5.0%
Dorada Finance, Inc.:
$ 2,000,000 2.75%, 10/21/02+ ......................... $ 2,000,000
3,000,000 2.75%, 10/25/02+ ......................... 3,000,000
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes (cost $5,000,000) .......... 5,000,000
- --------------------------------------------------------------------------------
Taxable Variable Rate Demand Notes - 50.6%
3,800,000 Advocare of South Carolina, Inc.
1.84%, 6/1/17 ............................ 3,800,000
400,000 Anaheim California Housing Authority
Multifamily Housing Revenue
(Cobblestone), 2.00%, 3/15/33 ............ 400,000
1,695,000 Arapahoe County, Colorado, Industrial
Development Revenue, (Cottrell)
Series B, 2.07%, 10/1/19 ................. 1,695,000
300,000 Asset Partners, Inc.
2.02%, 11/1/27 ........................... 300,000
3,690,000 Breckenridge Terrace LLC
1.888%, 5/1/39 ........................... 3,690,000
500,000 Bridgeton, Missouri Industrial
Development Authority Industrial
Revenue, (Gold Dust Project), Series B
2.46%, 3/1/21 ............................ 500,000
1,000,000 California Infrastructure and Economic
Development, (International Raisins
Project), Series B, 2.09%, 11/1/20 ....... 1,000,000
4,350,000 Colorado Housing Facilities Revenue
(Tenderfoot Seasonal Housing LLC)
Series A, 1.888%, 7/1/35 ................. 4,350,000
Colorado Housing and Finance Authority
Economic Development Revenue:
355,000 (De La Cruz Project), Series B
2.07%, 10/1/05 ........................... 355,000
190,000 (Pemracs, Ltd.), Series B
1.99%, 4/1/21 ............................ 190,000
Cunat Capital Corp.:
1,280,000 Series 1997-C, 2.09%, 12/1/17 ............ 1,280,000
1,305,000 Series 1998-A, 2.05%, 12/1/28 ............ 1,305,000
3,000,000 Fox Valley Ice Arena LLC
2.02%, 7/1/27 ............................ 3,000,000
475,000 Kentucky Economic Development
Financing Authority Hospital Facilities
Revenue, (Highlands Regional Project)
Series B, 2.00%, 8/1/03 .................. 475,000
1,810,000 Medical Properties, Inc., North Dakota
(Dakota Clinic Project), 2.05%,
12/22/24 ................................. 1,810,000
3,200,000 Mississippi Business Financial Corp.
Industrial Development Revenue
(Royal Vendors, Inc. Project)
2.04%, 6/1/24 ............................ 3,200,000
5,265,000 Montgomery, Alabama Industrial
Development Board of Revenue
(Jenkins Brick Co.), Series A
1.94%, 9/1/14 ............................ 5,265,000
</Table>
SEE NOTES TO SCHEDULES OF INVESTMENTS.
56 Janus Aspen Series June 30, 2002
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
Shares or Principal Amount Market Value
================================================================================
Taxable Variable Rate Demand Notes - (continued)
$ 1,400,000 New York City, New York Industrial
Development Agency, (G.A.F. Seelig, Inc.
Project), 1.99%, 7/1/03 .................. $ 1,400,000
1,700,000 Pasadena California COPS, (Los Robles
Avenue Parking Facility Project)
2.20%, 11/1/12 ........................... 1,700,000
1,685,000 Post Properties, Ltd., Series 2000
1.96%, 7/1/20 ............................ 1,685,000
6,300,000 Stone-Lee Partners LLC
1.89%, 6/1/21 ............................ 6,300,000
2,440,000 Washington, Missouri Industrial
Development Authority Industrial
Revenue, (Pauwels Project)
2.21%, 12/1/19 ........................... 2,440,000
4,095,000 Watertown Crossing LLC
1.99%, 5/1/27 ............................ 4,095,000
- --------------------------------------------------------------------------------
Total Taxable Variable Rate Demand Notes (cost
$50,235,000) ............................................... 50,235,000
- --------------------------------------------------------------------------------
Total Investments (total cost $98,220,179) - 98.9% .......... 98,220,179
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities -
1.1% ....................................................... 1,056,341
- --------------------------------------------------------------------------------
Net Assets - 100% ........................................... $ 99,276,520
- --------------------------------------------------------------------------------
</Table>
See Notes to Schedules of Investments.
Janus Aspen Series June 30, 2002 57
STATEMENTS OF ASSETS AND LIABILITIES
<Table>
<Caption>
Janus Aspen Janus Aspen Janus Aspen
As of June 30, 2002 (unaudited) Janus Aspen Aggressive Capital Core Janus Aspen
(all numbers in thousands except Growth Growth Appreciation Equity Balanced
net asset value per share) Portfolio Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Assets:
Investments at cost $ 2,376,192 $ 1,869,424 $ 1,144,433 $ 12,708 $ 3,658,149
Investments at value: $ 2,174,892 $ 1,761,365 $ 1,089,269 $ 12,431 $ 3,597,621
Cash 4,481 1,431 729 15 1,014
Receivables:
Investments sold 16,902 3,718 7,994 641 62,845
Portfolio shares sold 1,607 1,750 982 -- 6,052
Dividends 581 267 -- 14 1,846
Interest 2 13 27 1 20,738
Due from Advisor -- -- -- -- --
Other assets 3 -- -- -- --
Variation Margin -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Total Assets 2,198,468 1,768,544 1,099,001 13,102 3,690,116
- ----------------------------------------------------------------------------------------------------------------------
Liabilities:
Payables:
Investments purchased 29,600 2,301 3,899 288 41,714
Portfolio shares repurchased 3,733 3,507 6,521 1 1,941
Advisory fees 1,221 979 598 -- 1,978
Accrued expenses 149 111 148 8 62
Forward currency contracts -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Total Liabilities 34,703 6,898 11,166 297 45,695
- ----------------------------------------------------------------------------------------------------------------------
Net Assets $ 2,163,765 $ 1,761,646 $ 1,087,835 $ 12,805 $ 3,644,421
- ----------------------------------------------------------------------------------------------------------------------
Net Assets - Institutional Shares $ 1,938,422 $ 1,610,901 $ 643,097 $ 11,900 $ 3,404,690
Shares Outstanding, $0.001 Par Value
(unlimited shares authorized) 115,506 90,734 33,463 788 157,651
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share $ 16.78 $ 17.75 $ 19.22 $ 15.10 $ 21.58
- ----------------------------------------------------------------------------------------------------------------------
Net Assets - Service Shares $ 225,343 $ 150,745 $ 444,738 $ 905 $ 239,731
Shares Outstanding, $0.001 Par Value
(unlimited shares authorized) 13,527 8,599 23,307 60 10,741
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share $ 16.66 $ 17.53 $ 19.08 $ 14.99 $ 22.32
- ----------------------------------------------------------------------------------------------------------------------
Net Assets - Service II Shares* N/A N/A N/A N/A N/A
Shares Outstanding, $0.001 Par Value
(unlimited shares authorized)* N/A N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share N/A N/A N/A N/A N/A
- ----------------------------------------------------------------------------------------------------------------------
</Table>
*Net Assets - Service II Shares and Shares Outstanding are not in thousands.
SEE NOTES TO FINANCIAL STATEMENTS.
58 Janus Aspen Series June 30, 2002
<Table>
<Caption>
Janus Aspen Janus Aspen Janus Aspen Janus Aspen Janus Aspen
As of June 30, 2002 (unaudited) Growth and Strategic International Worldwide Global
(all numbers in thousands except Income Value Growth Growth Life Sciences
net asset value per share) Portfolio Portfolio Portfolio Portfolio Portfolio
- ----------------------------------------------------------------------------------------------------------------------
Assets:
Investments at cost $ 167,784 $ 27,595 $ 1,384,848 $ 5,094,548 $ 37,888
Investments at value: $ 156,458 $ 26,284 $ 1,355,937 $ 5,083,440 $ 37,842
Cash 44 150 8,741 5,476 75
Receivables:
Investments sold 682 -- 6,041 24,122 330
Portfolio shares sold 1 43 7,054 10,998 --
Dividends 157 8 2,687 8,633 44
Interest 138 9 16 47 --
Due from Advisor -- -- -- -- --
Other assets 1 -- 3 11 --
Variation Margin -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Total Assets 157,481 26,494 1,380,479 5,132,727 38,291
- ----------------------------------------------------------------------------------------------------------------------
Liabilities:
Payables:
Investments purchased 1,479 776 13,074 76,126 208
Portfolio shares repurchased 707 43 71,918 28,203 282
Advisory fees 86 14 688 2,739 21
Accrued expenses 42 5 216 383 18
Forward currency contracts -- 28 1,326 4,389 110
- ----------------------------------------------------------------------------------------------------------------------
Total Liabilities 2,314 866 87,222 111,840 639
- ----------------------------------------------------------------------------------------------------------------------
Net Assets $ 155,167 $ 25,628 $ 1,293,257 $ 5,020,887 $ 37,652
- ----------------------------------------------------------------------------------------------------------------------
Net Assets - Institutional Shares $ 72,707 $ 5,186 $ 763,142 $ 4,816,315 $ 4,321
Shares Outstanding, $0.001 Par Value
(unlimited shares authorized) 5,483 628 37,140 194,875 686
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share $ 13.26 $ 8.25 $ 20.55 $ 24.71 $ 6.30
- ----------------------------------------------------------------------------------------------------------------------
Net Assets - Service Shares $ 82,460 $ 20,442 $ 512,508 $ 204,563 $ 33,331
Shares Outstanding, $0.001 Par Value
(unlimited shares authorized) 6,218 2,466 25,137 8,325 5,308
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share $ 13.26 $ 8.29 $ 20.39 $ 24.57 $ 6.28
- ----------------------------------------------------------------------------------------------------------------------
Net Assets - Service II Shares* N/A N/A $ 17,607,236 $ 8,684 N/A
Shares Outstanding, $0.001 Par Value
(unlimited shares authorized)* N/A N/A 861,051 352 N/A
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share N/A N/A $ 20.45 $ 24.67 N/A
- ----------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
Janus Aspen Janus Aspen Janus Aspen
As of June 30, 2002 (unaudited) Global Global Flexible Janus Aspen
(all numbers in thousands except Technology Value Income Money Market
net asset value per share) Portfolio Portfolio Portfolio Portfolio
- ------------------------------------------------------------------------------------------------------
Assets:
Investments at cost $ 262,215 $ 3,534 $ 426,167 $ 98,220
Investments at value: $ 188,877 $ 3,610 $ 432,766 $ 98,220
Cash 75 56 3,149 5
Receivables:
Investments sold 2,481 186 6,388 --
Portfolio shares sold 650 38 3,079 834
Dividends 45 5 -- --
Interest 57 -- 7,398 227
Due from Advisor -- 3 -- --
Other assets -- -- -- 15
Variation Margin -- -- 3 --
- ------------------------------------------------------------------------------------------------------
Total Assets 192,185 3,898 452,783 99,301
- ------------------------------------------------------------------------------------------------------
Liabilities:
Payables:
Investments purchased 1,857 37 6,070 --
Portfolio shares repurchased 1,510 -- 843 3
Advisory fees 106 2 222 20
Accrued expenses 56 7 32 1
Forward currency contracts 126 46 -- --
- ------------------------------------------------------------------------------------------------------
Total Liabilities 3,655 92 7,167 24
- ------------------------------------------------------------------------------------------------------
Net Assets $ 188,530 $ 3,806 $ 445,616 $ 99,277
- ------------------------------------------------------------------------------------------------------
Net Assets - Institutional Shares $ 3,988 N/A $ 437,685 $ 99,266
Shares Outstanding, $0.001 Par Value
(unlimited shares authorized) 1,449 N/A 37,315 99,265
- ------------------------------------------------------------------------------------------------------
Net Asset Value Per Share $ 2.75 N/A $ 11.73 $ 1.00
- ------------------------------------------------------------------------------------------------------
Net Assets - Service Shares $ 178,015 $ 3,806 $ 7,931 $ 11
Shares Outstanding, $0.001 Par Value
(unlimited shares authorized) 61,993 354 650 11
- ------------------------------------------------------------------------------------------------------
Net Asset Value Per Share $ 2.87 $ 10.76 $ 12.19 $ 1.00
- ------------------------------------------------------------------------------------------------------
Net Assets - Service II Shares* $ 6,527,451 N/A N/A N/A
Shares Outstanding, $0.001 Par Value
(unlimited shares authorized)* 2,242,432 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------
Net Asset Value Per Share $ 2.91 N/A N/A N/A
- ------------------------------------------------------------------------------------------------------
</Table>
*Net Assets - Service II Shares and Shares Outstanding are not in thousands.
SEE NOTES TO FINANCIAL STATEMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 59
STATEMENTS OF OPERATIONS
<Table>
<Caption>
Janus Aspen Janus Aspen Janus Aspen
Janus Aspen Aggressive Capital Core Janus Aspen
For the six months ended June 30, 2002 Growth Growth Appreciation Equity Balanced
(unaudited) (all numbers in thousands) Portfolio Portfolio Portfolio Portfolio Portfolio
- --------------------------------------------------------------------------------------------------------------------------------
Investment Income:
Interest $ 191 $ 3,251 $ 2,406 $ 16 $ 45,555
Dividends 6,886 2,020 5,476 87 13,056
Foreign tax withheld (66) -- (100) (1) (120)
- --------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 7,011 5,271 7,782 102 58,491
- --------------------------------------------------------------------------------------------------------------------------------
Expenses:
Advisory fees 8,263 6,474 3,865 45 11,915
Transfer agent expenses -- 11 1 1 6
Registration fees 62 46 43 35 49
System fees 8 7 9 8 11
Custodian fees 78 59 33 14 116
Insurance expense 4 4 2 -- 5
Audit fees 10 8 6 7 7
Distribution fees - Service Shares 304 203 595 1 271
Distribution fees - Service II Shares N/A N/A N/A N/A N/A
Other expenses 81 67 41 3 17
- --------------------------------------------------------------------------------------------------------------------------------
Total Expenses 8,810 6,879 4,595 114 12,397
- --------------------------------------------------------------------------------------------------------------------------------
Expense and Fee Offsets (13) (87) (13) -- (31)
- --------------------------------------------------------------------------------------------------------------------------------
Net Expenses 8,797 6,792 4,582 114 12,366
- --------------------------------------------------------------------------------------------------------------------------------
Excess Expense Reimbursement -- -- -- (26) --
- --------------------------------------------------------------------------------------------------------------------------------
Net Expenses After Reimbursement 8,797 6,792 4,582 88 12,366
- --------------------------------------------------------------------------------------------------------------------------------
Net Investment Income/(Loss) (1,786) (1,521) 3,200 14 46,125
- --------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain/
(Loss) on Investments:
Net realized gain/(loss)
from securities transactions (159,063) (400,389) (106,368) (175) (68,279)
Net realized gain/(loss) from
foreign currency translations 29 -- -- -- 10
Net realized gain/(loss) from futures contracts -- -- -- -- --
Change in net unrealized appreciation/(depreciation)
of investments and foreign currency translations (252,764) (30,656) 16,578 (874) (99,715)
- --------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on
Investments and foreign currency translations (411,798) (431,045) (89,790) (1,049) (167,984)
- --------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations $(413,584) $(432,566) $ (86,590) $ (1,035) $(121,859)
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
60 Janus Aspen Series June 30, 2002
<Table>
<Caption>
Janus Aspen Janus Aspen Janus Aspen Janus Aspen Janus Aspen
Growth and Strategic International Worldwide Global
For the six months ended June 30, 2002 Income Value Growth Growth Life Sciences
(unaudited) (all numbers in thousands) Portfolio Portfolio Portfolio Portfolio Portfolio
- --------------------------------------------------------------------------------------------------------------------------------
Investment Income:
Interest $ 367 $ 44 $ 760 $ 4,795 $ 12
Dividends 912 106 13,234 42,361 85
Foreign tax withheld (7) (1) (1,381) (3,487) (4)
- --------------------------------------------------------------------------------------------------------------------------------
Total Investment Income 1,272 149 12,613 43,669 93
- --------------------------------------------------------------------------------------------------------------------------------
Expenses:
Advisory fees 561 81 4,476 17,990 146
Transfer agent expenses 2 2 -- 5 1
Registration fees 33 28 40 138 1
System fees 7 7 7 10 7
Custodian fees 25 11 489 934 16
Insurance expense -- -- 6 15 --
Audit fees 6 4 5 8 5
Distribution fees - Service Shares 110 24 683 237 50
Distribution fees - Service II Shares N/A N/A 4 -- N/A
Other expenses 9 6 44 174 4
- --------------------------------------------------------------------------------------------------------------------------------
Total Expenses 753 163 5,754 19,511 230
- --------------------------------------------------------------------------------------------------------------------------------
Expense and Fee Offsets (1) -- (24) (21) --
- --------------------------------------------------------------------------------------------------------------------------------
Net Expenses 752 163 5,730 19,490 230
- --------------------------------------------------------------------------------------------------------------------------------
Excess Expense Reimbursement -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
Net Expenses After Reimbursement 752 163 5,730 19,490 230
- --------------------------------------------------------------------------------------------------------------------------------
Net Investment Income/(Loss) 520 (14) 6,883 24,179 (137)
- --------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain/
(Loss) on Investments:
Net realized gain/(loss)
from securities transactions (9,898) (1,035) (131,558) (439,434) (4,758)
Net realized gain/(loss) from
foreign currency translations -- (8) (7,676) (7,560) (242)
Net realized gain/(loss) from futures contracts -- -- -- -- --
Change in net unrealized appreciation/(depreciation)
of investments and foreign currency translations (9,468) (1,952) (24,327) (335,441) (4,192)
- --------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on
Investments and foreign currency translations (19,366) (2,995) (163,561) (782,435) (9,192)
- --------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations $ (18,846) $ (3,009) $(156,678) $(758,256) $ (9,329)
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
Janus Aspen Janus Aspen Janus Aspen
Global Global Flexible Janus Aspen
For the six months ended June 30, 2002 Technology Value Income Money Market
(unaudited) (all numbers in thousands) Portfolio Portfolio Portfolio Portfolio
- -----------------------------------------------------------------------------------------------------------------
Investment Income:
Interest $ 347 $ 2 $ 12,597 $ 1,023
Dividends 531 22 57 --
Foreign tax withheld (54) (2) -- --
- -----------------------------------------------------------------------------------------------------------------
Total Investment Income 824 22 12,654 1,023
- -----------------------------------------------------------------------------------------------------------------
Expenses:
Advisory fees 800 8 1,265 118
Transfer agent expenses 2 1 2 2
Registration fees -- -- 53 29
System fees 7 7 8 7
Custodian fees 28 8 28 3
Insurance expense -- -- -- --
Audit fees 4 5 6 3
Distribution fees - Service Shares 300 3 5 --
Distribution fees - Service II Shares 2 N/A N/A N/A
Other expenses 9 3 17 6
- -----------------------------------------------------------------------------------------------------------------
Total Expenses 1,152 35 1,384 168
- -----------------------------------------------------------------------------------------------------------------
Expense and Fee Offsets (5) -- (4) --
- -----------------------------------------------------------------------------------------------------------------
Net Expenses 1,147 35 1,380 168
- -----------------------------------------------------------------------------------------------------------------
Excess Expense Reimbursement -- (16) -- --
- -----------------------------------------------------------------------------------------------------------------
Net Expenses After Reimbursement 1,147 19 1,380 168
- -----------------------------------------------------------------------------------------------------------------
Net Investment Income/(Loss) (323) 3 11,274 855
- -----------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain/
(Loss) on Investments:
Net realized gain/(loss)
from securities transactions (67,504) 40 (3,522) 1
Net realized gain/(loss) from
foreign currency translations (375) (3) -- --
Net realized gain/(loss) from futures contracts -- -- (951) --
Change in net unrealized appreciation/(depreciation)
of investments and foreign currency translations (15,127) (52) 6,133 --
- -----------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on
Investments and foreign currency translations (83,006) (15) 1,660 1
- -----------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations $ (83,329) $ (12) $ 12,934 $ 856
- -----------------------------------------------------------------------------------------------------------------
</Table>
SEE NOTES TO FINANCIAL STATEMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 61
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
Janus Aspen Janus Aspen
For the six months ended June 30 Growth Aggressive Growth
(unaudited) and for the fiscal year ended Portfolio Portfolio
December 31, 2001 (all numbers in thousands) 2002 2001 2002 2001
- --------------------------------------------------------------------------------------------------------------------------
Operations:
Net investment income/(loss) $ (1,786) $ 1,846 $ (1,521) $ (6,295)
Net realized gain/(loss) from investment transactions
and foreign currency translations (159,034) (864,484) (400,389) (1,447,067)
Change in unrealized net appreciation/(depreciation)
of investments and foreign currency translations (252,764) (57,057) (30,656) (12,668)
- --------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations (413,584) (919,695) (432,566) (1,466,030)
- --------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income* -- (1,848) -- --
Net realized gain from investment transactions* -- (6,012) -- --
Tax Return of Capital* -- (80) -- --
- --------------------------------------------------------------------------------------------------------------------------
Net Decrease from Dividends and Distributions -- (7,940) -- --
- --------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold
Institutional Shares 234,691 477,755 205,326 648,763
Service Shares 52,669 192,816 148,579 212,264
Service II Shares N/A N/A N/A N/A
Reinvested dividends and distributions
Institutional Shares -- 7,645 -- --
Service Shares -- 295 -- --
Service II Shares N/A N/A N/A N/A
Shares repurchased
Institutional Shares (415,052) (634,488) (301,759) (634,877)
Service Shares (22,925) (22,885) (132,323) (97,634)
Service II Shares N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) from Capital Share Transactions (150,617) 21,138 (80,177) 128,516
- --------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets (564,201) (906,497) (512,743) (1,337,514)
Net Assets:
Beginning of period 2,727,966 3,634,463 2,274,389 3,611,903
- --------------------------------------------------------------------------------------------------------------------------
End of period $ 2,163,765 $ 2,727,966 $ 1,761,646 $ 2,274,389
- --------------------------------------------------------------------------------------------------------------------------
Net Assets Consist of:
Capital (par value and paid-in surplus)* $ 3,449,301 $ 3,599,918 $ 4,089,667 $ 4,169,844
Undistributed net investment income/(loss)* (1,787) (1) (1,521) --
Undistributed net realized gain/(loss)
from investments* (1,082,449) (923,415) (2,218,441) (1,818,052)
Unrealized appreciation/(depreciation) of investments
and foreign currency translations (201,300) 51,464 (108,059) (77,403)
- --------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 2,163,765 $ 2,727,966 $ 1,761,646 $ 2,274,389
- --------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Institutional Shares
Shares sold 12,193 21,018 10,398 24,285
Reinvested dividends and distributions -- 332 -- --
- --------------------------------------------------------------------------------------------------------------------------
Total 12,193 21,350 10,398 24,285
- --------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (21,954) (29,402) (15,434) (24,548)
Net Increase/(Decrease) in Portfolio Shares (9,761) (8,052) (5,036) (263)
Shares Outstanding, Beginning of Period 125,267 133,319 95,770 96,033
- --------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 115,506 125,267 90,734 95,770
- --------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service Shares(1)
Shares sold 2,769,274 9,086,376 7,625,621 8,375,264
Reinvested dividends and distributions -- 12,711 -- --
- --------------------------------------------------------------------------------------------------------------------------
Total 2,769,274 9,099,087 7,625,621 8,375,264
- --------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (1,234,801) (1,076,388) (6,835,287) (4,072,756)
Net Increase/(Decrease) in Portfolio Shares 1,534,473 8,022,699 790,334 4,302,508
Shares Outstanding, Beginning of Period 11,992,889 3,970,190 7,808,684 3,506,176
- --------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 13,527,362 11,992,889 8,599,018 7,808,684
- --------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service II Shares(1)
Shares sold N/A N/A N/A N/A
Reinvested dividends and distributions N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Total N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Shares Repurchased N/A N/A N/A N/A
Net Increase/(Decrease) in Portfolio Shares N/A N/A N/A N/A
Shares Outstanding, Beginning of Period N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Purchases and Sales of Investment Securities:
(excluding short-term securities)
Purchases of securities $ 523,859 $ 1,557,267 $ 596,502 $ 2,579,311
Proceeds from sales of securities 584,456 1,395,245 696,297 2,453,335
Purchases of long-term U.S. government obligations -- -- -- --
Proceeds from sales of long-term
U.S. government obligations -- -- -- --
</Table>
* See Note 3 in Notes to Financial Statements.
(1) Transactions in Portfolio Shares - Service and Service II Shares numbers are
not in thousands.
SEE NOTES TO FINANCIAL STATEMENTS.
62 Janus Aspen Series June 30, 2002
<Table>
<Caption>
Janus Aspen Janus Aspen
For the six months ended June 30 Capital Appreciation Core Equity
(unaudited) and for the fiscal year ended Portfolio Portfolio
December 31, 2001 (all numbers in thousands) 2002 2001 2002 2001
- --------------------------------------------------------------------------------------------------------------------------
Operations:
Net investment income/(loss) $ 3,200 $ 11,738 $ 14 $ 90
Net realized gain/(loss) from investment transactions
and foreign currency translations (106,368) (306,784) (175) (1,602)
Change in unrealized net appreciation/(depreciation)
of investments and foreign currency translations 16,578 (68,416) (874) (495)
- --------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations (86,590) (363,462) (1,035) (2,007)
- --------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income* (3,290) (15,054) (8) (97)
Net realized gain from investment transactions* -- -- -- (504)
Tax Return of Capital* -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Net Decrease from Dividends and Distributions (3,290) (15,054) (8) (601)
- --------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold
Institutional Shares 62,409 199,630 1,628 1,725
Service Shares 72,135 335,804 345 941
Service II Shares N/A N/A N/A N/A
Reinvested dividends and distributions
Institutional Shares 2,358 10,470 8 578
Service Shares 932 4,529 -- 23
Service II Shares N/A N/A N/A N/A
Shares repurchased
Institutional Shares (144,270) (204,933) (1,401) (2,863)
Service Shares (90,496) (230,798) (337) (209)
Service II Shares N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) from Capital Share Transactions (96,932) 114,702 243 195
- --------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets (186,812) (263,814) (800) (2,413)
Net Assets:
Beginning of period 1,274,647 1,538,461 13,605 16,018
- --------------------------------------------------------------------------------------------------------------------------
End of period $ 1,087,835 $ 1,274,647 $ 12,805 $ 13,605
- --------------------------------------------------------------------------------------------------------------------------
Net Assets Consist of:
Capital (par value and paid-in surplus)* $ 1,726,554 $ 1,823,486 $ 15,083 $ 14,840
Undistributed net investment income/(loss)* 801 891 12 6
Undistributed net realized gain/(loss)
from investments* (584,357) (477,989) (2,013) (1,838)
Unrealized appreciation/(depreciation) of investments
and foreign currency translations (55,163) (71,741) (277) 597
- --------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 1,087,835 $ 1,274,647 $ 12,805 $ 13,605
- --------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Institutional Shares
Shares sold 3,129 8,561 98 97
Reinvested dividends and distributions 123 475 1 33
- --------------------------------------------------------------------------------------------------------------------------
Total 3,252 9,036 99 130
- --------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (7,266) (9,284) (88) (172)
Net Increase/(Decrease) in Portfolio Shares (4,014) (248) 11 (42)
Shares Outstanding, Beginning of Period 37,477 37,725 777 819
- --------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 33,463 37,477 788 777
- --------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service Shares(1)
Shares sold 3,614,040 14,634,510 21,519 55,115
Reinvested dividends and distributions 49,092 204,508 -- 1,358
- --------------------------------------------------------------------------------------------------------------------------
Total 3,663,132 14,839,018 21,519 56,473
- --------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (4,573,017) (10,512,406) (21,283) (12,431)
Net Increase/(Decrease) in Portfolio Shares (909,885) 4,326,612 236 44,042
Shares Outstanding, Beginning of Period 24,217,036 19,890,424 60,122 16,080
- --------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 23,307,151 24,217,036 60,358 60,122
- --------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service II Shares(1)
Shares sold N/A N/A N/A N/A
Reinvested dividends and distributions N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Total N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Shares Repurchased N/A N/A N/A N/A
Net Increase/(Decrease) in Portfolio Shares N/A N/A N/A N/A
Shares Outstanding, Beginning of Period N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Purchases and Sales of Investment Securities:
(excluding short-term securities)
Purchases of securities $ 260,350 $ 1,239,236 $ 5,695 $ 15,571
Proceeds from sales of securities 281,853 737,427 5,410 14,391
Purchases of long-term U.S. government obligations -- -- 105 569
Proceeds from sales of long-term
U.S. government obligations -- -- 198 455
</Table>
<Table>
<Caption>
Janus Aspen Janus Aspen
For the six months ended June 30 Balanced Growth and Income
(unaudited) and for the fiscal year ended Portfolio Portfolio
December 31, 2001 (all numbers in thousands) 2002 2001 2002 2001
- --------------------------------------------------------------------------------------------------------------------------
Operations:
Net investment income/(loss) $ 46,125 $ 99,910 $ 520 $ 1,926
Net realized gain/(loss) from investment transactions
and foreign currency translations (68,269) (173,368) (9,898) (28,735)
Change in unrealized net appreciation/(depreciation)
of investments and foreign currency translations (99,715) (94,659) (9,468) (312)
- --------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations (121,859) (168,117) (18,846) (27,121)
- --------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income* (41,178) (92,483) (463) (2,121)
Net realized gain from investment transactions* -- -- -- --
Tax Return of Capital* -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Net Decrease from Dividends and Distributions (41,178) (92,483) (463) (2,121)
- --------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold
Institutional Shares 221,992 492,436 2,254 6,926
Service Shares 67,558 160,527 16,251 56,233
Service II Shares N/A N/A N/A N/A
Reinvested dividends and distributions
Institutional Shares 38,949 89,993 276 1,432
Service Shares 2,229 2,490 187 689
Service II Shares N/A N/A N/A N/A
Shares repurchased
Institutional Shares (129,384) (253,880) (13,146) (21,655)
Service Shares (11,888) (13,979) (9,159) (14,594)
Service II Shares N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) from Capital Share Transactions 189,456 477,587 (3,337) 29,031
- --------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets 26,419 216,987 (22,646) (211)
Net Assets:
Beginning of period 3,618,002 3,401,015 177,813 178,024
- --------------------------------------------------------------------------------------------------------------------------
End of period $ 3,644,421 $ 3,618,002 $ 155,167 $ 177,813
- --------------------------------------------------------------------------------------------------------------------------
Net Assets Consist of:
Capital (par value and paid-in surplus)* $ 3,955,389 $ 3,765,933 $ 209,300 $ 212,637
Undistributed net investment income/(loss)* 10,489 5,542 141 84
Undistributed net realized gain/(loss)
from investments* (260,929) (192,660) (42,950) (33,052)
Unrealized appreciation/(depreciation) of investments
and foreign currency translations (60,528) 39,187 (11,324) (1,856)
- --------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 3,644,421 $ 3,618,002 $ 155,167 $ 177,813
- --------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Institutional Shares
Shares sold 9,855 21,063 155 438
Reinvested dividends and distributions 1,808 3,937 21 92
- --------------------------------------------------------------------------------------------------------------------------
Total 11,663 25,000 176 530
- --------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (5,781) (11,132) (923) (1,411)
Net Increase/(Decrease) in Portfolio Shares 5,882 13,868 (747) (881)
Shares Outstanding, Beginning of Period 151,769 137,901 6,230 7,111
- --------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 157,651 151,769 5,483 6,230
- --------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service Shares(1)
Shares sold 2,903,671 6,795,702 1,129,127 3,516,345
Reinvested dividends and distributions 100,148 106,048 14,220 44,389
- --------------------------------------------------------------------------------------------------------------------------
Total 3,003,819 6,901,750 1,143,347 3,560,734
- --------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (515,611) (600,570) (651,459) (958,747)
Net Increase/(Decrease) in Portfolio Shares 2,488,208 6,301,180 491,888 2,601,987
Shares Outstanding, Beginning of Period 8,252,424 1,951,244 5,726,140 3,124,153
- --------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 10,740,632 8,252,424 6,218,028 5,726,140
- --------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service II Shares(1)
Shares sold N/A N/A N/A N/A
Reinvested dividends and distributions N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Total N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Shares Repurchased N/A N/A N/A N/A
Net Increase/(Decrease) in Portfolio Shares N/A N/A N/A N/A
Shares Outstanding, Beginning of Period N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Purchases and Sales of Investment Securities:
(excluding short-term securities)
Purchases of securities $ 1,008,706 $ 2,808,283 $ 37,634 $ 115,281
Proceeds from sales of securities 881,703 2,117,439 30,798 77,413
Purchases of long-term U.S. government obligations 694,542 1,209,543 3,772 5,900
Proceeds from sales of long-term
U.S. government obligations 667,755 1,353,291 4,012 4,006
</Table>
<Table>
<Caption>
Janus Aspen
For the six months ended June 30 Strategic Value
(unaudited) and for the fiscal year ended Portfolio
December 31, 2001 (all numbers in thousands) 2002 2001
- ----------------------------------------------------------------------------------------
Operations:
Net investment income/(loss) $ (14) $ 38
Net realized gain/(loss) from investment transactions
and foreign currency translations (1,043) (1,888)
Change in unrealized net appreciation/(depreciation)
of investments and foreign currency translations (1,952) 545
- ----------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations (3,009) (1,305)
- ----------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income* -- (46)
Net realized gain from investment transactions* -- --
Tax Return of Capital* -- (3)
- ----------------------------------------------------------------------------------------
Net Decrease from Dividends and Distributions -- (49)
- ----------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold
Institutional Shares 2,415 5,015
Service Shares 10,894 17,863
Service II Shares N/A N/A
Reinvested dividends and distributions
Institutional Shares -- 30
Service Shares -- 19
Service II Shares N/A N/A
Shares repurchased
Institutional Shares (1,684) (3,819)
Service Shares (3,653) (3,177)
Service II Shares N/A N/A
- ----------------------------------------------------------------------------------------
Net Increase/(Decrease) from Capital Share Transactions 7,972 15,931
- ----------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets 4,963 14,577
Net Assets:
Beginning of period 20,665 6,088
- ----------------------------------------------------------------------------------------
End of period $ 25,628 $ 20,665
- ----------------------------------------------------------------------------------------
Net Assets Consist of:
Capital (par value and paid-in surplus)* $ 30,075 $ 22,103
Undistributed net investment income/(loss)* (14) --
Undistributed net realized gain/(loss)
from investments* (3,094) (2,051)
Unrealized appreciation/(depreciation) of investments
and foreign currency translations (1,339) 613
- ----------------------------------------------------------------------------------------
Total Net Assets $ 25,628 $ 20,665
- ----------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Institutional Shares
Shares sold 262 501
Reinvested dividends and distributions -- 3
- ----------------------------------------------------------------------------------------
Total 262 504
- ----------------------------------------------------------------------------------------
Shares Repurchased (188) (405)
Net Increase/(Decrease) in Portfolio Shares 74 99
Shares Outstanding, Beginning of Period 554 455
- ----------------------------------------------------------------------------------------
Shares Outstanding, End of Period 628 554
- ----------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service Shares(1)
Shares sold 1,169,147 1,884,765
Reinvested dividends and distributions -- 1,936
- ----------------------------------------------------------------------------------------
Total 1,169,147 1,886,701
- ----------------------------------------------------------------------------------------
Shares Repurchased (402,951) (340,528)
Net Increase/(Decrease) in Portfolio Shares 766,196 1,546,173
Shares Outstanding, Beginning of Period 1,699,401 153,228
- ----------------------------------------------------------------------------------------
Shares Outstanding, End of Period 2,465,597 1,699,401
- ----------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service II Shares(1)
Shares sold N/A N/A
Reinvested dividends and distributions N/A N/A
- ----------------------------------------------------------------------------------------
Total N/A N/A
- ----------------------------------------------------------------------------------------
Shares Repurchased N/A N/A
Net Increase/(Decrease) in Portfolio Shares N/A N/A
Shares Outstanding, Beginning of Period N/A N/A
- ----------------------------------------------------------------------------------------
Shares Outstanding, End of Period N/A N/A
- ----------------------------------------------------------------------------------------
Purchases and Sales of Investment Securities:
(excluding short-term securities)
Purchases of securities $ 18,096 $ 20,081
Proceeds from sales of securities 5,947 8,816
Purchases of long-term U.S. government obligations -- --
Proceeds from sales of long-term
U.S. government obligations -- --
</Table>
* See Note 3 in Notes to Financial Statements.
(1) Transactions in Portfolio Shares - Service and Service II Shares numbers are
not in thousands.
SEE NOTES TO FINANCIAL STATEMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 63
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<Table>
<Caption>
Janus Aspen Janus Aspen
For the six months ended June 30 International Growth Worldwide Growth
(unaudited) and for the fiscal year or period ended Portfolio Portfolio
December 31, 2001 (all numbers in thousands) 2002 2001 2002 2001
- --------------------------------------------------------------------------------------------------------------------------
Operations:
Net investment income/(loss) $ 6,883 $ 12,706 $ 24,179 $ 50,509
Net realized gain/(loss) from investment transactions
and foreign currency translations (139,234) (373,189) (446,994) (1,250,946)
Change in unrealized net appreciation/(depreciation)
of investments and foreign currency translations (24,327) (34,409) (335,441) (566,073)
- --------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations (156,678) (394,892) (758,256) (1,766,510)
- --------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income* (5,395) (12,432) (19,883) (30,871)
Net realized gain from investment transactions* -- -- -- --
Tax Return of Capital* -- (1,196) -- --
- --------------------------------------------------------------------------------------------------------------------------
Net Decrease from Dividends and Distributions (5,395) (13,628) (19,883) (30,871)
- --------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold
Institutional Shares 1,143,622 1,334,758 1,178,790 1,868,238
Service Shares 1,744,133 2,075,701 611,508 557,231
Service II Shares 19,533 N/A 10 N/A
Reinvested dividends and distributions
Institutional Shares 3,496 9,883 19,347 30,505
Service Shares 1,887 3,745 536 365
Service II Shares 12 N/A -- N/A
Shares repurchased
Institutional Shares (1,151,929) (1,356,535) (1,337,179) (2,122,925)
Service Shares (1,716,173) (1,903,124) (553,106) (432,833)
Service II Shares (1,037) N/A -- N/A
- --------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) from Capital Share Transactions 43,544 164,428 (80,094) (99,419)
- --------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets (118,529) (244,092) (858,233) (1,896,800)
Net Assets:
Beginning of period 1,411,786 1,655,878 5,879,120 7,775,920
- --------------------------------------------------------------------------------------------------------------------------
End of period $ 1,293,257 $ 1,411,786 $ 5,020,887 $ 5,879,120
- --------------------------------------------------------------------------------------------------------------------------
Net Assets Consist of:
Capital (par value and paid-in surplus)* $ 1,917,191 $ 1,873,647 $ 6,876,581 $ 6,956,675
Undistributed net investment income/(loss)* 1,424 (64) 7,699 3,403
Undistributed net realized gain/(loss)
from investments* (595,293) (456,059) (1,848,283) (1,401,289)
Unrealized appreciation/(depreciation) of investments
and foreign currency translations (30,065) (5,738) (15,110) 320,331
- --------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 1,293,257 $ 1,411,786 $ 5,020,887 $ 5,879,120
- --------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Institutional Shares
Shares sold 51,681 52,830 43,492 59,161
Reinvested dividends and distributions 173 399 794 1,020
- --------------------------------------------------------------------------------------------------------------------------
Total 51,854 53,229 44,286 60,181
- --------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (51,778) (53,661) (49,385) (68,537)
Net Increase/(Decrease) in Portfolio Shares 76 (432) (5,099) (8,356)
Shares Outstanding, Beginning of Period 37,064 37,496 199,974 208,330
- --------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 37,140 37,064 194,875 199,974
- --------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service Shares(1)
Shares sold 79,398,364 85,065,105 22,867,306 18,926,181
Reinvested dividends and distributions 94,248 150,227 22,104 12,032
- --------------------------------------------------------------------------------------------------------------------------
Total 79,492,612 85,215,332 22,889,410 18,938,213
- --------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (77,611,488) (78,187,459) (20,604,590) (14,849,982)
Net Increase/(Decrease) in Portfolio Shares 1,881,124 7,027,873 2,284,820 4,088,231
Shares Outstanding, Beginning of Period 23,255,895 16,228,022 6,039,918 1,951,687
- --------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 25,137,019 23,255,895 8,324,738 6,039,918
- --------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service II Shares(1)
Shares sold 907,778 N/A 351 N/A
Reinvested dividends and distributions 613 N/A 1 N/A
- --------------------------------------------------------------------------------------------------------------------------
Total 908,391 N/A 352 N/A
- --------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (47,340) N/A -- N/A
Net Increase/(Decrease) in Portfolio Shares 861,051 N/A 352 N/A
Shares Outstanding, Beginning of Period -- N/A -- N/A
- --------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 861,051 N/A 352 N/A
- --------------------------------------------------------------------------------------------------------------------------
Purchases and Sales of Investment Securities:
(excluding short-term securities)
Purchases of securities $ 522,270 $ 1,185,481 $ 2,082,340 $ 5,712,901
Proceeds from sales of securities 479,406 808,446 2,291,099 4,697,653
Purchases of long-term U.S. government obligations -- -- -- --
Proceeds from sales of long-term
U.S. government obligations -- -- -- --
</Table>
*See Note 3 in Notes to Financial Statements.
(1) Transactions in Portfolio Shares - Service and Service II Shares numbers are
not in thousands.
SEE NOTES TO FINANCIAL STATEMENTS.
64 Janus Aspen Series June 30, 2002
<Table>
<Caption>
Janus Aspen Janus Aspen
For the six months ended June 30 Global Life Sciences Global Technology
(unaudited) and for the fiscal year or period ended Portfolio Portfolio
December 31, 2001 (all numbers in thousands) 2002 2001 2002 2001
- --------------------------------------------------------------------------------------------------------------------------
Operations:
Net investment income/(loss) $ (137) $ (176) $ (323) $ 1,335
Net realized gain/(loss) from investment transactions
and foreign currency translations (5,000) (9,994) (67,879) (255,206)
Change in unrealized net appreciation/(depreciation)
of investments and foreign currency translations (4,192) 379 (15,127) 92,879
- --------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations (9,329) (9,791) (83,329) (160,992)
- --------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income* -- (3) -- (2,265)
Net realized gain from investment transactions* -- -- -- --
Tax Return of Capital* -- (6) -- (23)
- --------------------------------------------------------------------------------------------------------------------------
Net Decrease from Dividends and Distributions -- (9) -- (2,288)
- --------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold
Institutional Shares 312 3,221 2,471 6,263
Service Shares 7,837 32,095 76,011 339,553
Service II Shares N/A N/A 7,805 N/A
Reinvested dividends and distributions
Institutional Shares -- 9 -- 295
Service Shares -- -- -- 1,993
Service II Shares N/A N/A -- N/A
Shares repurchased
Institutional Shares (911) (6,406) (2,471) (34,417)
Service Shares (10,390) (27,975) (104,120) (267,155)
Service II Shares N/A N/A (583) N/A
- --------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) from Capital Share Transactions (3,152) 944 (20,887) 46,532
- --------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets (12,481) (8,856) (104,216) (116,748)
Net Assets:
Beginning of period 50,133 58,989 292,746 409,494
- --------------------------------------------------------------------------------------------------------------------------
End of period $ 37,652 $ 50,133 $ 188,530 $ 292,746
- --------------------------------------------------------------------------------------------------------------------------
Net Assets Consist of:
Capital (par value and paid-in surplus)* $ 54,213 $ 57,364 $ 640,788 $ 661,675
Undistributed net investment income/(loss)* (138) -- (368) (45)
Undistributed net realized gain/(loss)
from investments* (16,271) (11,271) (378,428) (310,549)
Unrealized appreciation/(depreciation) of investments
and foreign currency translations (152) 4,040 (73,462) (58,335)
- --------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 37,652 $ 50,133 $ 188,530 $ 292,746
- --------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Institutional Shares
Shares sold 44 428 704 1,276
Reinvested dividends and distributions -- 1 -- 66
- --------------------------------------------------------------------------------------------------------------------------
Total 44 429 704 1,342
- --------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (127) (840) (702) (5,277)
Net Increase/(Decrease) in Portfolio Shares (83) (411) 2 (3,935)
Shares Outstanding, Beginning of Period 769 1,180 1,447 5,382
- --------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 686 769 1,449 1,447
- --------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service Shares(1)
Shares sold 1,105,845 4,176,893 20,516,872 72,489,148
Reinvested dividends and distributions -- -- -- 421,245
- --------------------------------------------------------------------------------------------------------------------------
Total 1,105,845 4,176,893 20,516,872 72,910,393
- --------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (1,492,750) (3,639,459) (28,957,554) (59,678,381)
Net Increase/(Decrease) in Portfolio Shares (386,905) 537,434 (8,440,682) 13,232,012
Shares Outstanding, Beginning of Period 5,694,565 5,157,131 70,433,790 57,201,778
- --------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 5,307,660 5,694,565 61,993,108 70,433,790
- --------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service II Shares(1)
Shares sold N/A N/A 2,424,557 N/A
Reinvested dividends and distributions N/A N/A -- N/A
- --------------------------------------------------------------------------------------------------------------------------
Total N/A N/A 2,424,557 N/A
- --------------------------------------------------------------------------------------------------------------------------
Shares Repurchased N/A N/A (182,125) N/A
Net Increase/(Decrease) in Portfolio Shares N/A N/A 2,242,432 N/A
Shares Outstanding, Beginning of Period N/A N/A -- N/A
- --------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period N/A N/A 2,242,432 N/A
- --------------------------------------------------------------------------------------------------------------------------
Purchases and Sales of Investment Securities:
(excluding short-term securities)
Purchases of securities $ 17,759 $ 52,563 $ 92,097 $ 273,734
Proceeds from sales of securities 20,233 46,616 76,759 233,432
Purchases of long-term U.S. government obligations -- -- -- --
Proceeds from sales of long-term
U.S. government obligations -- -- -- --
</Table>
<Table>
<Caption>
Janus Aspen Janus Aspen
For the six months ended June 30 Global Value Flexible Income
(unaudited) and for the fiscal year or period ended Portfolio Portfolio
December 31, 2001 (all numbers in thousands) 2002 2001(2) 2002 2001
- --------------------------------------------------------------------------------------------------------------------------
Operations:
Net investment income/(loss) $ 3 $ 1 $ 11,274 $ 18,706
Net realized gain/(loss) from investment transactions
and foreign currency translations 37 17 (4,473) 4,841
Change in unrealized net appreciation/(depreciation)
of investments and foreign currency translations (52) 82 6,133 (1,575)
- --------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations (12) 100 12,934 21,972
- --------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income* (21) (1) (11,019) (19,405)
Net realized gain from investment transactions* (6) -- -- --
Tax Return of Capital* -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------
Net Decrease from Dividends and Distributions (27) (1) (11,019) (19,405)
- --------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold
Institutional Shares N/A N/A 97,979 188,617(3)
Service Shares 1,807 2,008 6,198 1,869
Service II Shares N/A N/A N/A N/A
Reinvested dividends and distributions
Institutional Shares N/A N/A 10,923 19,327
Service Shares 27 1 96 78
Service II Shares N/A N/A N/A N/A
Shares repurchased
Institutional Shares N/A N/A (60,577) (65,394)
Service Shares (97) -- (563) (388)
Service II Shares N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) from Capital Share Transactions 1,737 2,009 54,056 144,109
- --------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets 1,698 2,108 55,971 146,676
Net Assets:
Beginning of period 2,108 -- 389,645 242,969
- --------------------------------------------------------------------------------------------------------------------------
End of period $ 3,806 $ 2,108 $ 445,616 $ 389,645
- --------------------------------------------------------------------------------------------------------------------------
Net Assets Consist of:
Capital (par value and paid-in surplus)* $ 3,746 $ 2,009 $ 445,665 $ 391,609
Undistributed net investment income/(loss)* (18) -- 1,561 1,306
Undistributed net realized gain/(loss)
from investments* 48 17 (8,145) (3,672)
Unrealized appreciation/(depreciation) of investments
and foreign currency translations 30 82 6,535 402
- --------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 3,806 $ 2,108 $ 445,616 $ 389,645
- --------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Institutional Shares
Shares sold N/A N/A 8,277 15,929(3)
Reinvested dividends and distributions N/A N/A 931 1,673
- --------------------------------------------------------------------------------------------------------------------------
Total N/A N/A 9,208 17,602
- --------------------------------------------------------------------------------------------------------------------------
Shares Repurchased N/A N/A (5,135) (5,519)
Net Increase/(Decrease) in Portfolio Shares N/A N/A 4,073 12,083
Shares Outstanding, Beginning of Period N/A N/A 33,242 21,159
- --------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period N/A N/A 37,315 33,242
- --------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service Shares(1)
Shares sold 158,888 200,754 510,366 154,988
Reinvested dividends and distributions 2,568 135 7,891 6,561
- --------------------------------------------------------------------------------------------------------------------------
Total 161,456 200,889 518,257 161,549
- --------------------------------------------------------------------------------------------------------------------------
Shares Repurchased (8,631) -- (46,271) (32,039)
Net Increase/(Decrease) in Portfolio Shares 152,825 200,889 471,986 129,510
Shares Outstanding, Beginning of Period 200,889 -- 178,394 48,884
- --------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 353,714 200,889 650,380 178,394
- --------------------------------------------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service II Shares(1)
Shares sold N/A N/A N/A N/A
Reinvested dividends and distributions N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Total N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Shares Repurchased N/A N/A N/A N/A
Net Increase/(Decrease) in Portfolio Shares N/A N/A N/A N/A
Shares Outstanding, Beginning of Period N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period N/A N/A N/A N/A
- --------------------------------------------------------------------------------------------------------------------------
Purchases and Sales of Investment Securities:
(excluding short-term securities)
Purchases of securities $ 1,371 $ 2,148 $ 302,493 $ 515,116
Proceeds from sales of securities 526 216 293,144 421,975
Purchases of long-term U.S. government obligations -- -- 357,921 541,730
Proceeds from sales of long-term
U.S. government obligations -- -- 314,226 505,846
</Table>
<Table>
<Caption>
Janus Aspen
For the six months ended June 30 Money Market
(unaudited) and for the fiscal year or period ended Portfolio
December 31, 2001 (all numbers in thousands) 2002 2001
- ----------------------------------------------------------------------------------------
Operations:
Net investment income/(loss) $ 855 $ 3,918
Net realized gain/(loss) from investment transactions
and foreign currency translations 1 3
Change in unrealized net appreciation/(depreciation)
of investments and foreign currency translations -- --
- ----------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations 856 3,921
- ----------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income* (855) (3,918)
Net realized gain from investment transactions* -- (3)
Tax Return of Capital* -- --
- ----------------------------------------------------------------------------------------
Net Decrease from Dividends and Distributions (855) (3,921)
- ----------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold
Institutional Shares 138,594 307,440
Service Shares -- --
Service II Shares N/A N/A
Reinvested dividends and distributions
Institutional Shares 855 3,920
Service Shares -- 1
Service II Shares N/A N/A
Shares repurchased
Institutional Shares (140,415) (281,937)
Service Shares -- --
Service II Shares N/A N/A
- ----------------------------------------------------------------------------------------
Net Increase/(Decrease) from Capital Share Transactions (966) 29,424
- ----------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets (965) 29,424
Net Assets:
Beginning of period 100,242 70,818
- ----------------------------------------------------------------------------------------
End of period $ 99,277 $ 100,242
- ----------------------------------------------------------------------------------------
Net Assets Consist of:
Capital (par value and paid-in surplus)* $ 99,276 $ 100,242
Undistributed net investment income/(loss)* -- --
Undistributed net realized gain/(loss)
from investments* 1 --
Unrealized appreciation/(depreciation) of investments
and foreign currency translations -- --
- ----------------------------------------------------------------------------------------
Total Net Assets $ 99,277 $ 100,242
- ----------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Institutional Shares
Shares sold 138,594 307,440
Reinvested dividends and distributions 855 3,920
- ----------------------------------------------------------------------------------------
Total 139,449 311,360
- ----------------------------------------------------------------------------------------
Shares Repurchased (140,415) (281,937)
Net Increase/(Decrease) in Portfolio Shares (966) 29,423
Shares Outstanding, Beginning of Period 100,231 70,808
- ----------------------------------------------------------------------------------------
Shares Outstanding, End of Period 99,265 100,231
- ----------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service Shares(1)
Shares sold -- --
Reinvested dividends and distributions 84 422
- ----------------------------------------------------------------------------------------
Total 84 422
- ----------------------------------------------------------------------------------------
Shares Repurchased -- --
Net Increase/(Decrease) in Portfolio Shares 84 422
Shares Outstanding, Beginning of Period 11,022 10,600
- ----------------------------------------------------------------------------------------
Shares Outstanding, End of Period 11,106 11,022
- ----------------------------------------------------------------------------------------
Transactions in Portfolio Shares - Service II Shares(1)
Shares sold N/A N/A
Reinvested dividends and distributions N/A N/A
- ----------------------------------------------------------------------------------------
Total N/A N/A
- ----------------------------------------------------------------------------------------
Shares Repurchased N/A N/A
Net Increase/(Decrease) in Portfolio Shares N/A N/A
Shares Outstanding, Beginning of Period N/A N/A
- ----------------------------------------------------------------------------------------
Shares Outstanding, End of Period N/A N/A
- ----------------------------------------------------------------------------------------
Purchases and Sales of Investment Securities:
(excluding short-term securities)
Purchases of securities -- --
Proceeds from sales of securities -- --
Purchases of long-term U.S. government obligations -- --
Proceeds from sales of long-term
U.S. government obligations -- --
</Table>
* See Note 3 in Notes to Financial Statements.
(1) Transactions in Portfolio Shares - Service and Service II Shares numbers
are not in thousands.
(2) Period May 1, 2001 (inception) to December 31, 2001.
(3) See Note 1 in Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 65
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES
<Table>
<Caption>
For a share outstanding during the
six months ended June 30 (unaudited)
and through each fiscal year Janus Aspen Growth Portfolio
ended December 31 2002 2001 2000 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 19.89 $ 26.48 $ 33.65 $ 23.54 $ 18.48 $ 15.51
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) (.01) .02 .05 .07 .05 .15
Net gain/(loss) on securities
(both realized and unrealized) (3.10) (6.56) (4.59) 10.24 6.36 3.34
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (3.11) (6.54) (4.54) 10.31 6.41 3.49
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* -- (.01) (.06) (.06) (.05) (.15)
Distributions (from capital gains)* -- (.04) (2.57) (.14) (1.30) (.37)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions -- (.05) (2.63) (.20) (1.35) (.52)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 16.78 $ 19.89 $ 26.48 $ 33.65 $ 23.54 $ 18.48
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return** (15.59)% (24.73)% (14.55)% 43.98% 35.66% 22.75%
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $1,938,422 $2,490,954 $3,529,807 $2,942,649 $1,103,549 $ 608,281
Average Net Assets for the Period
(in thousands) $2,318,146 $2,911,331 $3,734,449 $1,775,373 $ 789,454 $ 477,914
Ratio of Gross Expenses to
Average Net Assets***(1) 0.67% 0.66% 0.67% 0.67% 0.68% 0.70%
Ratio of Net Expenses to
Average Net Assets***(1) 0.67% 0.66% 0.67% 0.67% 0.68% 0.69%
Ratio of Net Investment Income to
Average Net Assets*** (0.12)% 0.07% 0.19% 0.30% 0.26% 0.91%
Portfolio Turnover Rate*** 42% 48% 47% 53% 73% 122%
</Table>
<Table>
<Caption>
For a share outstanding during the
six months ended June 30 (unaudited)
and through each fiscal year Janus Aspen Aggressive Growth Portfolio
ended December 31 2002 2001 2000 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 21.98 $ 36.30 $ 59.70 $ 27.64 $ 20.55 $ 18.24
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) (.01) -- .01 -- -- --
Net gain/(loss) on securities
(both realized and unrealized) (4.22) (14.32) (17.08) 33.46 7.09 2.31
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (4.23) (14.32) (17.07) 33.46 7.09 2.31
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* -- -- -- -- -- --
Distributions (from capital gains)* -- -- (4.58) (1.40) -- --
Tax return of capital* -- -- (1.75) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions -- -- (6.33) (1.40) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 17.75 $ 21.98 $ 36.30 $ 59.70 $ 27.64 $ 20.55
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return** (19.24)% (39.45)% (31.82)% 125.40% 34.26% 12.66%
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $1,610,901 $2,104,733 $3,485,768 $3,319,619 $ 772,943 $ 508,198
Average Net Assets for the Period
(in thousands) $1,844,457 $2,508,186 $4,409,584 $1,476,445 $ 576,444 $ 418,464
Ratio of Gross Expenses to
Average Net Assets***(1) 0.67% 0.67% 0.66% 0.70% 0.75% 0.76%
Ratio of Net Expenses to
Average Net Assets***(1) 0.66% 0.66% 0.66% 0.69% 0.75% 0.76%
Ratio of Net Investment Income to
Average Net Assets*** (0.13)% (0.22)% (0.42)% (0.50)% (0.36)% (0.10)%
Portfolio Turnover Rate*** 73% 99% 82% 105% 132% 130%
</Table>
* See Note 3 in Notes to Financial Statements.
** Total Return not annualized for periods of less than one full year.
*** Annualized for periods of less than one full year.
(1) See Note 5 in Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS.
66 Janus Aspen Series June 30, 2002
<Table>
<Caption>
For a share outstanding during the
six months ended June 30 (unaudited)
and through each fiscal year or period Janus Aspen Capital Appreciation Portfolio
ended December 31 2002 2001 2000 1999 1998 1997(1)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 20.72 $ 26.79 $ 33.17 $ 19.94 $ 12.62 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .07 .22 .43 .12 .01 .05
Net gain/(loss) on securities
(both realized and unrealized) (1.50) (6.01) (6.43) 13.22 7.32 2.61
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (1.43) (5.79) (6.00) 13.34 7.33 2.66
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.07) (.28) (.37) (.11) (.01) (.04)
Distributions (from capital gains)* -- -- (.01) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (.07) (.28) (.38) (.11) (.01) (.04)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 19.22 $ 20.72 $ 26.79 $ 33.17 $ 19.94 $ 12.62
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return** (6.90)% (21.67)% (18.18)% 67.00% 58.11% 26.60%
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 643,097 $ 776,553 $1,010,497 $ 626,611 $ 74,187 $ 6,833
Average Net Assets for the Period
(in thousands) $ 719,615 $ 855,499 $ 954,279 $ 257,422 $ 25,964 $ 2,632
Ratio of Gross Expenses to
Average Net Assets***(2) 0.67% 0.66% 0.67% 0.70% 0.92% 1.26%
Ratio of Net Expenses to
Average Net Assets***(2) 0.67% 0.66% 0.67% 0.70% 0.91% 1.25%
Ratio of Net Investment Income to
Average Net Assets*** 0.64% 0.96% 1.60% 0.76% 0.27% 1.43%
Portfolio Turnover Rate*** 56% 67% 41% 52% 91% 101%
</Table>
<Table>
<Caption>
For a share outstanding during the
six months ended June 30 (unaudited)
and through each fiscal year or period Janus Aspen Core Equity Portfolio
ended December 31 2002 2001 2000 1999 1998 1997(1)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 16.26 $ 19.20 $ 27.32 $ 19.41 $ 13.46 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .02 .11 .07 .07 .02 .01
Net gain/(loss) on securities
(both realized and unrealized) (1.17) (2.34) (1.95) 7.99 6.16 3.46
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (1.15) (2.23) (1.88) 8.06 6.18 3.47
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.01) (.12) (.07) (.06) (.02) (.01)
Distributions (from capital gains)* -- (.59) (6.17) (.09) (.21) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (.01) (.71) (6.24) (.15) (.23) (.01)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 15.10 $ 16.26 $ 19.20 $ 27.32 $ 19.41 $ 13.46
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return** (7.01)% (11.75)% (8.07)% 41.58% 46.24% 34.70%
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 11,900 $ 12,634 $ 15,712 $ 18,975 $ 9,017 $ 3,047
Average Net Assets for the Period
(in thousands) $ 12,978 $ 13,983 $ 17,328 $ 14,663 $ 5,629 $ 1,101
Ratio of Gross Expenses to
Average Net Assets***(2) 1.25% 1.13% 1.25% 1.25% 1.25% 1.25%
Ratio of Net Expenses to
Average Net Assets***(2) 1.25% 1.12% 1.25% 1.25% 1.25% 1.25%
Ratio of Net Investment Income to
Average Net Assets*** 0.21% 0.63% 0.36% 0.31% 0.17% 0.35%
Portfolio Turnover Rate*** 89% 114% 95% 114% 79% 128%
</Table>
* See Note 3 in Notes to Financial Statements.
** Total return not annualized for periods of less than one full year.
*** Annualized for periods of less than one full year.
(1) Period May 1, 1997 (inception) to December 31, 1997.
(2) See Note 5 in Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 67
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES (CONTINUED)
<Table>
<Caption>
For a share outstanding during the
six months ended June 30 (unaudited)
and through each fiscal year Janus Aspen Balanced Portfolio
ended December 31 2002 2001 2000 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 22.57 $ 24.31 $ 27.91 $ 22.50 $ 17.47 $ 14.77
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .28 .65 .64 .59 .39 .34
Net gain/(loss) on securities
(both realized and unrealized) (1.02) (1.78) (1.22) 5.38 5.51 2.89
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (.74) (1.13) (.58) 5.97 5.90 3.23
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.25) (.61) (.69) (.56) (.38) (.35)
Distributions (from capital gains)* -- -- (2.31) -- (.49) (.18)
Tax return of capital* -- -- (.02) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (.25) (.61) (3.02) (.56) (.87) (.53)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 21.58 $ 22.57 $ 24.31 $ 27.91 $ 22.50 $ 17.47
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return** (3.19)% (4.66)% (2.27)% 26.76% 34.28% 22.10%
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $3,404,690 $3,425,664 $3,352,381 $2,453,079 $ 882,495 $ 362,409
Average Net Assets for the Period
(in thousands) $3,477,574 $3,361,832 $3,020,072 $1,583,635 $ 555,002 $ 176,432
Ratio of Gross Expenses to
Average Net Assets***(1) 0.66% 0.66% 0.66% 0.69% 0.74% 0.83%
Ratio of Net Expenses to
Average Net Assets***(1) 0.66% 0.66% 0.66% 0.69% 0.74% 0.82%
Ratio of Net Investment Income to
Average Net Assets*** 2.53% 2.89% 3.15% 2.86% 2.41% 2.87%
Portfolio Turnover Rate*** 95% 114% 72% 92% 70% 139%
</Table>
<Table>
<Caption>
For a share outstanding during the
six months ended June 30 (unaudited)
and through each fiscal year or period Janus Aspen Growth and Income Portfolio
ended December 31 2002 2001 2000 1999 1998(2)
- ------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 14.87 $ 17.41 $ 20.77 $ 11.96 $ 10.00
- ------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .06 .20 .19 .04 .02
Net gain/(loss) on securities
(both realized and unrealized) (1.62) (2.52) (3.08) 8.81 1.96
- ------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (1.56) (2.32) (2.89) 8.85 1.98
- ------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.05) (.22) (.16) (.04) (.02)
Distributions (from capital gains)* -- -- (.31) -- --
- ------------------------------------------------------------------------------------------------------------------
Total Distributions (.05) (.22) (.47) (.04) (.02)
- ------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 13.26 $ 14.87 $ 17.41 $ 20.77 $ 11.96
- ------------------------------------------------------------------------------------------------------------------
Total Return** (10.49)% (13.37)% (14.10)% 74.04% 19.80%
- ------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 72,707 $ 92,659 $ 123,812 $ 84,480 $ 6,413
Average Net Assets for the Period
(in thousands) $ 85,408 $ 105,243 $ 124,282 $ 28,838 $ 2,883
Ratio of Gross Expenses to
Average Net Assets***(1) 0.74% 0.70% 0.78% 1.06% 1.25%
Ratio of Net Expenses to
Average Net Assets***(1) 0.74% 0.70% 0.78% 1.05% 1.25%
Ratio of Net Investment Income to
Average Net Assets*** 0.73% 1.19% 1.07% 0.56% 0.66%
Portfolio Turnover Rate*** 44% 52% 37% 59% 62%
</Table>
* See Note 3 in Notes to Financial Statements.
** Total return not annualized for periods of less than one full year.
*** Annualized for periods of less than one full year.
(1) See Note 5 in Notes to Financial Statements.
(2) Period May 1, 1998 (inception) to December 31, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
68 Janus Aspen Series June 30, 2002
<Table>
<Caption>
For a share outstanding during the
six months ended June 30 (unaudited)
and through each fiscal year or period Janus Aspen Strategic Value Portfolio
ended December 31 2002 2001 2000(1)
- ------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 9.13 $ 9.99 $ 10.00
- ------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) -- .05 .05
Net gain/(loss) on securities
(both realized and unrealized) (.88) (.86) (.03)
- ------------------------------------------------------------------------------------
Total from Investment Operations (.88) (.81) .02
- ------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* -- (.05) (.03)
Distributions (from capital gains)* -- -- --
- ------------------------------------------------------------------------------------
Total Distributions -- (.05) (.03)
- ------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 8.25 $ 9.13 $ 9.99
- ------------------------------------------------------------------------------------
Total Return** (9.53)% (8.12)% 0.20%
- ------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 5,186 $ 5,060 $ 4,550
Average Net Assets for the Period
(in thousands) $ 5,470 $ 5,537 $ 3,243
Ratio of Gross Expenses to
Average Net Assets***(2) 1.11% 1.25% 1.25%
Ratio of Net Expenses to
Average Net Assets***(2) 1.11% 1.25% 1.25%
Ratio of Net Investment Income to
Average Net Assets*** 0.08% 0.55% 0.97%
Portfolio Turnover Rate*** 57% 86% 47%
</Table>
<Table>
<Caption>
For a share outstanding during the
six months ended June 30 (unaudited)
and through each fiscal year Janus Aspen International Growth Portfolio
ended December 31 2002 2001 2000 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 23.47 $ 30.90 $ 38.67 $ 21.27 $ 18.48 $ 15.72
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .12 .26 .62 .06 .13 .11
Net gain/(loss) on securities
(both realized and unrealized) (2.94) (7.43) (6.51) 17.40 3.07 2.80
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (2.82) (7.17) (5.89) 17.46 3.20 2.91
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.10) (.26) (.63) (.06) (.14) (.11)
Distributions (from capital gains)* -- -- (.91) -- (.27) (.04)
Tax return of capital* -- -- (.34) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (.10) (.26) (1.88) (.06) (.41) (.15)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 20.55 $ 23.47 $ 30.90 $ 38.67 $ 21.27 $ 18.48
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return** (12.03)% (23.23)% (15.94)% 82.27% 17.23% 18.51%
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 763,142 $ 869,983 $1,158,666 $ 810,392 $ 311,110 $ 161,091
Average Net Assets for the Period
(in thousands) $ 834,229 $ 962,343 $1,214,163 $ 425,876 $ 234,421 $ 96,164
Ratio of Gross Expenses to
Average Net Assets***(2) 0.74% 0.71% 0.71% 0.77% 0.86% 0.96%
Ratio of Net Expenses to
Average Net Assets***(2) 0.73% 0.71% 0.71% 0.76% 0.86% 0.96%
Ratio of Net Investment Income to
Average Net Assets*** 1.09% 0.95% 1.88% 0.26% 0.73% 0.70%
Portfolio Turnover Rate*** 76% 65% 67% 80% 93% 86%
</Table>
* See Note 3 in Notes to Financial Statements.
** Total return not annualized for periods of less than one full year.
*** Annualized for periods of less than one full year.
(1) Period May 1, 2000 (inception) to December 31, 2000.
(2) See Note 5 in Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 69
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES (CONTINUED)
<Table>
<Caption>
For a share outstanding during the
six months ended June 30 (unaudited)
and through each fiscal year Janus Aspen Worldwide Growth Portfolio
ended December 31 2002 2001 2000 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 28.54 $ 36.98 $ 47.75 $ 29.09 $ 23.39 $ 19.44
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .12 .24 .11 .07 .16 .16
Net gain/(loss) on securities
(both realized and unrealized) (3.85) (8.53) (7.03) 18.65 6.59 4.14
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (3.73) (8.29) (6.92) 18.72 6.75 4.30
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.10) (.15) (.19) (.06) (.18) (.19)
Distributions (from capital gains)* -- -- (3.52) -- (.87) (.16)
Tax return of capital* -- -- (.14) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (.10) (.15) (3.85) (.06) (1.05) (.35)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 24.71 $ 28.54 $ 36.98 $ 47.75 $ 29.09 $ 23.39
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return** (13.03)% (22.44)% (15.67)% 64.45% 28.92% 22.15%
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $4,816,315 $5,707,728 $7,704,163 $6,496,773 $2,890,375 $1,576,548
Average Net Assets for the Period
(in thousands) $5,389,958 $6,387,010 $8,255,166 $3,862,773 $2,217,695 $1,148,951
Ratio of Gross Expenses to
Average Net Assets***(1) 0.70% 0.69% 0.69% 0.71% 0.72% 0.74%
Ratio of Net Expenses to
Average Net Assets***(1) 0.70% 0.69% 0.69% 0.71% 0.72% 0.74%
Ratio of Net Investment Income to
Average Net Assets*** 0.88% 0.78% 0.52% 0.20% 0.64% 0.67%
Portfolio Turnover Rate*** 84% 82% 66% 67% 77% 80%
</Table>
<Table>
<Caption>
For a share outstanding during the
six months ended June 30 (unaudited)
and through each fiscal year or period Janus Aspen Global Life Sciences Portfolio
ended December 31 2002 2001 2000(2)
- ------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 7.77 $ 9.31 $ 10.00
- ------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) (.01) .02 .05
Net gain/(loss) on securities
(both realized and unrealized) (1.46) (1.55) (.72)
- ------------------------------------------------------------------------------------
Total from Investment Operations (1.47) (1.53) (.67)
- ------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* -- -- (.02)
Distributions (from capital gains)* -- -- --
Tax return of capital* -- (.01) --
- ------------------------------------------------------------------------------------
Total Distributions -- (.01) (.02)
- ------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 6.30 $ 7.77 $ 9.31
- ------------------------------------------------------------------------------------
Total Return** (18.92)% (16.43)% (6.70)%
- ------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 4,321 $ 5,972 $ 10,984
Average Net Assets for the Period
(in thousands) $ 5,131 $ 6,482 $ 5,372
Ratio of Gross Expenses to
Average Net Assets***(1) 0.81% 0.81% 1.03%
Ratio of Net Expenses to
Average Net Assets***(1) 0.80% 0.81% 1.02%
Ratio of Net Investment Income to
Average Net Assets*** (0.39)% (0.16)% 0.60%
Portfolio Turnover Rate*** 82% 109% 137%
</Table>
* See Note 3 in Notes to Financial Statements.
** Total return not annualized for periods of less than one full year.
*** Annualized for periods of less than one full year.
(1) See Note 5 in Notes to Financial Statements.
(2) Period January 18, 2000 (inception) to December 31, 2000.
SEE NOTES TO FINANCIAL STATEMENTS.
70 Janus Aspen Series June 30, 2002
<Table>
<Caption>
For a share outstanding during the
six months ended June 30 (unaudited)
and through each fiscal year or period Janus Aspen Global Technology Portfolio
ended December 31 2002 2001 2000(1)
- ------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 3.90 $ 6.49 $ 10.00
- ------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) -- .19 .16
Net gain/(loss) on securities
(both realized and unrealized) (1.15) (2.57) (3.56)
- ------------------------------------------------------------------------------------
Total from Investment Operations (1.15) (2.38) (3.40)
- ------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* -- (.21) (.11)
Distributions (from capital gains)* -- -- --
- ------------------------------------------------------------------------------------
Total Distributions -- (.21) (.11)
- ------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 2.75 $ 3.90 $ 6.49
- ------------------------------------------------------------------------------------
Total Return** (29.49)% (37.07)% (34.03)%
- ------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 3,988 $ 5,643 $ 34,950
Average Net Assets for the Period
(in thousands) $ 4,809 $ 9,242 $ 55,483
Ratio of Gross Expenses to
Average Net Assets***(2) 0.69% 0.68% 0.69%
Ratio of Net Expenses to
Average Net Assets***(2) 0.69% 0.67% 0.69%
Ratio of Net Investment Income to
Average Net Assets*** (0.02)% 0.64% 1.64%
Portfolio Turnover Rate*** 72% 91% 34%
</Table>
<Table>
<Caption>
For a share outstanding during the
six months ended June 30 (unaudited)
and through each fiscal year Janus Aspen Flexible Income Portfolio
ended December 31 2002 2001 2000 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 11.66 $ 11.46 $ 11.41 $ 12.05 $ 11.78 $ 11.24
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .30 .61 .72 .76 .64 .67
Net gain/(loss) on securities
(both realized and unrealized) .07 .26 (.02) (.58) .41 .62
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations .37 .87 .70 .18 1.05 1.29
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.30) (.67) (.65) (.75) (.67) (.64)
Distributions (from capital gains)* -- -- -- (.07) (.11) (.11)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (.30) (.67) (.65) (.82) (.78) (.75)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 11.73 $ 11.66 $ 11.46 $ 11.41 $ 12.05 $ 11.78
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return** 3.17% 7.74% 6.25% 1.60% 9.11% 11.76%
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 437,685 $ 387,509 $ 242,401 $ 186,681 $ 129,582 $ 54,098
Average Net Assets for the Period
(in thousands) $ 405,284 $ 317,156 $ 206,242 $ 161,459 $ 86,627 $ 36,547
Ratio of Gross Expenses to
Average Net Assets***(2) 0.68% 0.67% 0.76% 0.72% 0.73% 0.75%
Ratio of Net Expenses to
Average Net Assets***(2) 0.68% 0.67% 0.76% 0.72% 0.73% 0.75%
Ratio of Net Investment Income to
Average Net Assets*** 5.56% 5.87% 7.02% 6.99% 6.36% 6.90%
Portfolio Turnover Rate*** 310% 308% 202% 116% 145% 119%
</Table>
* See Note 3 in Notes to Financial Statements.
** Total return not annualized for periods of less than one full year.
*** Annualized for periods of less than one full year.
(1) Period January 18, 2000 (inception) to December 31, 2000.
(2) See Note 5 in Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 71
FINANCIAL HIGHLIGHTS - INSTITUTIONAL SHARES (CONTINUED)
<Table>
<Caption>
For a share outstanding during the
six months ended June 30 (unaudited)
and through each fiscal year Janus Aspen Money Market Portfolio
ended December 31 2002 2001 2000 1999 1998 1997
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .01 .04 .06 .05 .05 .05
Net gain/(loss) on securities
(both realized and unrealized) -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations .01 .04 .06 .05 .05 .05
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.01) (.04) (.06) (.05) (.05) (.05)
Distributions (from capital gains)* -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (.01) (.04) (.06) (.05) (.05) (.05)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return** 0.89% 4.22% 6.29% 4.98% 5.36% 5.17%
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 99,266 $ 100,231 $ 70,808 $ 69,266 $ 38,690 $ 15,374
Average Net Assets for the Period
(in thousands) $ 95,572 $ 96,524 $ 64,491 $ 54,888 $ 31,665 $ 8,926
Ratio of Gross Expenses to
Average Net Assets***(1) 0.35% 0.34% 0.36% 0.43% 0.34% 0.50%
Ratio of Net Expenses to
Average Net Assets***(1) 0.35% 0.34% 0.36% 0.43% 0.34% 0.50%
Ratio of Net Investment Income to
Average Net Assets*** 1.80% 4.07% 6.13% 4.94% 5.21% 5.17%
</Table>
* See Note 3 in Notes to Financial Statements.
** Total return not annualized for periods of less than one full year.
*** Annualized for periods of less than one full year.
(1) See Note 5 in Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS.
72 Janus Aspen Series June 30, 2002
FINANCIAL HIGHLIGHTS - SERVICE SHARES
<Table>
<Caption>
For a share outstanding during the Janus Aspen Janus Aspen
six months ended June 30 (unaudited) and Growth Portfolio Aggressive Growth Portfolio
through each fiscal year ended December 31 2002 2001 2000 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 19.76 $ 26.36 $ 33.52 $ 21.73 $ 35.97 $ 59.16
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) (.03) (.02) (.01) (.04) (.09) .12
Net gain/(loss) on securities
(both realized and unrealized) (3.07) (6.54) (4.58) (4.16) (14.15) (16.98)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (3.10) (6.56) (4.59) (4.20) (14.24) (16.86)
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* -- -- -- -- -- --
Distributions (from capital gains)* -- (.04) (2.57) -- -- (4.58)
Tax return of capital* -- -- -- -- -- (1.75)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions -- (.04) (2.57) -- -- (6.33)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 16.66 $ 19.76 $ 26.36 $ 17.53 $ 21.73 $ 35.97
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return** (15.69)% (24.90)% (14.75)% (19.33)% (39.59)% (31.78)%
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 225,343 $ 237,012 $ 104,656 $ 150,745 $ 169,656 $ 126,135
Average Net Assets for the Period
(in thousands) $ 245,437 $ 160,200 $ 29,782 $ 164,018 $ 146,884 $ 43,775
Ratio of Gross Expenses to
Average Net Assets***(1) 0.92% 0.91% 0.92% 0.92% 0.92% 0.92%
Ratio of Net Expenses to
Average Net Assets***(1) 0.92% 0.91% 0.92% 0.91% 0.92% 0.92%
Ratio of Net Investment Income/(Loss) to
Average Net Assets*** (0.37)% (0.20)% (0.07)% (0.38)% (0.48)% (0.65)%
Portfolio Turnover Rate*** 42% 48% 47% 73% 99% 82%
</Table>
<Table>
<Caption>
For a share outstanding during the Janus Aspen Janus Aspen
six months ended June 30 (unaudited) and Capital Appreciation Portfolio Core Equity Portfolio
through each fiscal year ended December 31 2002 2001 2000 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 20.57 $ 26.54 $ 32.77 $ 16.15 $ 19.05 $ 27.15
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .04 .14 .27 -- .05 .01
Net gain/(loss) on securities
(both realized and unrealized) (1.49) (5.92) (6.27) (1.16) (2.31) (1.93)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (1.45) (5.78) (6.00) (1.16) (2.26) (1.92)
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.04) (.19) (.22) -- (.05) (.01)
Distributions (from capital gains)* -- -- (.01) -- (.59) (6.17)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (.04) (.19) (.23) -- (.64) (6.18)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 19.08 $ 20.57 $ 26.54 $ 14.99 $ 16.15 $ 19.05
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return** (7.05)% (21.83)% (18.37)% (7.12)% (12.04)% (8.24)%
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 444,738 $ 498,094 $ 527,960 $ 905 $ 971 $ 306
Average Net Assets for the Period
(in thousands) $ 479,624 $ 514,004 $ 311,628 $ 1,055 $ 612 $ 93
Ratio of Gross Expenses to
Average Net Assets***(1) 0.92% 0.91% 0.92% 1.50% 1.30% 1.52%
Ratio of Net Expenses to
Average Net Assets***(1) 0.92% 0.91% 0.92% 1.50% 1.30% 1.52%
Ratio of Net Investment Income/(Loss) to
Average Net Assets*** 0.38% 0.69% 1.52% (0.03)% 0.44% 0.38%
Portfolio Turnover Rate*** 56% 67% 41% 89% 114% 95%
</Table>
* See Note 3 in Notes to Financial Statements.
** Total return not annualized for periods of less than one full year.
*** Annualized for periods of less than one full year.
(1) See Note 5 in Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 73
FINANCIAL HIGHLIGHTS - SERVICE SHARES (CONTINUED)
<Table>
<Caption>
For a share outstanding during the Janus Aspen Janus Aspen
six months ended June 30 (unaudited) and Balanced Portfolio Growth and Income Portfolio
through each fiscal year ended December 31 2002 2001 2000 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 23.31 $ 24.92 $ 27.82 $ 14.87 $ 17.35 $ 20.63
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .23 .47 .17 .03 .12 .07
Net gain/(loss) on securities
(both realized and unrealized) (1.01) (1.68) (.52) (1.61) (2.47) (2.99)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (.78) (1.21) (.35) (1.58) (2.35) (2.92)
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.21) (.40) (.22) (.03) (.13) (.05)
Distributions (from capital gains)* -- -- (2.31) -- -- (.31)
Tax return of capital* -- -- (.02) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (.21) (.40) (2.55) (.03) (.13) (.36)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 22.32 $ 23.31 $ 24.92 $ 13.26 $ 14.87 $ 17.35
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return** (3.34)% (4.90)% (1.37)% (10.62)% (13.58)% (14.31)%
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 239,731 $ 192,338 $ 48,634 $ 82,460 $ 85,154 $ 54,212
Average Net Assets for the Period
(in thousands) $ 219,057 $ 108,835 $ 13,810 $ 88,571 $ 73,705 $ 12,868
Ratio of Gross Expenses to
Average Net Assets***(1) 0.91% 0.91% 0.92% 1.00% 0.95% 1.11%
Ratio of Net Expenses to
Average Net Assets***(1) 0.91% 0.91% 0.91% 1.00% 0.95% 1.10%
Ratio of Net Investment Income/(Loss) to
Average Net Assets*** 2.29% 2.58% 2.93% 0.48% 0.91% 1.20%
Portfolio Turnover Rate*** 95% 114% 72% 44% 52% 37%
</Table>
<Table>
<Caption>
For a share outstanding during the
six months ended June 30 (unaudited) Janus Aspen Janus Aspen
and through each fiscal year or period Strategic Value Portfolio International Growth Portfolio
ended December 31 2002 2001 2000(2) 2002 2001 2000
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 9.18 $ 10.04 $ 10.00 $ 23.30 $ 30.64 $ 38.29
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) -- -- .01 .09 .18 .46
Net gain/(loss) on securities
(both realized and unrealized) (.89) (.84) .03 (2.92) (7.35) (6.39)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (.89) (.84) .04 (2.83) (7.17) (5.93)
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* -- (.02) -- (.08) (.17) (.47)
Distributions (from capital gains)* -- -- -- -- -- (.91)
Tax return of capital* -- -- -- -- -- (.34)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions -- (.02) -- (.08) (.17) (1.72)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 8.29 $ 9.18 $ 10.04 $ 20.39 $ 23.30 $ 30.64
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return** (9.59)% (8.38)% 0.40% (12.16)% (23.43)% (16.14)%
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 20,442 $ 15,605 $ 1,538 $ 512,508 $ 541,803 $ 497,212
Average Net Assets for the Period
(in thousands) $ 19,678 $ 7,996 $ 431 $ 551,100 $ 522,001 $ 269,680
Ratio of Gross Expenses to
Average Net Assets***(1) 1.36% 1.50% 1.52% 0.99% 0.96% 0.96%
Ratio of Net Expenses to
Average Net Assets***(1) 1.36% 1.50% 1.52% 0.98% 0.96% 0.96%
Ratio of Net Investment Income/(Loss) to
Average Net Assets*** (0.16)% 0.09% 0.66% 0.86% 0.68% 1.85%
Portfolio Turnover Rate*** 57% 86% 47% 76% 65% 67%
</Table>
* See Note 3 in Notes to Financial Statements.
** Total return not annualized for periods of less than one full year.
*** Annualized for periods of less than one full year.
(1) See Note 5 in Notes to Financial Statements.
(2) Period May 1, 2000 (inception) to December 31, 2000.
SEE NOTES TO FINANCIAL STATEMENTS.
74 Janus Aspen Series June 30, 2002
<Table>
<Caption>
For a share outstanding during the
six months ended June 30 (unaudited) Janus Aspen Janus Aspen
and through each fiscal year or period Worldwide Growth Portfolio Global Life Sciences Portfolio
ended December 31 2002 2001 2000 2002 2001 2000(2)
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 28.38 $ 36.77 $ 47.49 $ 7.75 $ 9.31 $ 10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .08 .17 (.07) (.02) -- --
Net gain/(loss) on securities
(both realized and unrealized) (3.82) (8.48) (6.97) (1.45) (1.56) (.69)
- ---------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (3.74) (8.31) (7.04) (1.47) (1.56) (.69)
- ---------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.07) (.08) (.02) -- -- --
Distributions (from capital gains)* -- -- (3.52) -- -- --
Tax return of capital* -- -- (.14) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (.07) (.08) (3.68) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 24.57 $ 28.38 $ 36.77 $ 6.28 $ 7.75 $ 9.31
- ---------------------------------------------------------------------------------------------------------------------------------
Total Return** (13.17)% (22.62)% (15.99)% (18.97)% (16.76)% (6.90)%
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 204,563 $ 171,392 $ 71,757 $ 33,331 $ 44,161 $ 48,005
Average Net Assets for the Period
(in thousands) $ 191,186 $ 119,429 $ 22,158 $ 40,019 $ 38,230 $ 16,247
Ratio of Gross Expenses to
Average Net Assets***(1) 0.95% 0.94% 0.95% 1.06% 1.07% 1.20%
Ratio of Net Expenses to
Average Net Assets***(1) 0.95% 0.94% 0.94% 1.05% 1.06% 1.20%
Ratio of Net Investment Income to
Average Net Assets*** 0.67% 0.47% 0.29% (0.64)% (0.43)% (0.03)%
Portfolio Turnover Rate*** 84% 82% 66% 82% 109% 137%
</Table>
<Table>
<Caption>
For a share outstanding during the
six months ended June 30 (unaudited) Janus Aspen Janus Aspen
and through each fiscal year or period Global Technology Portfolio Global Value Portfolio
ended December 31 2002 2001 2000(2) 2002 2001(3)
- ------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 4.08 $ 6.55 $ 10.00 $ 10.49 $ 10.00
- ------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) (.01) .02 .05 .01 .01
Net gain/(loss) on securities
(both realized and unrealized) (1.20) (2.46) (3.46) .34 .49
- ------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (1.21) (2.44) (3.41) .35 .50
- ------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* -- (.03) (.04) (.06) (.01)
Distributions (from capital gains)* -- -- -- (.02) --
- ------------------------------------------------------------------------------------------------------------------
Total Distributions -- (.03) (.04) (.08) (.01)
- ------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 2.87 $ 4.08 $ 6.55 $ 10.76 $ 10.49
- ------------------------------------------------------------------------------------------------------------------
Total Return** (29.66)% (37.31)% (34.11)% 3.35% 4.97%
- ------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 178,015 $ 287,103 $ 374,544 $ 3,806 $ 2,108
Average Net Assets for the Period
(in thousands) $ 241,993 $ 307,222 $ 268,923 $ 2,516 $ 1,947
Ratio of Gross Expenses to
Average Net Assets***(1) 0.94% 0.95% 0.94% 1.50% 1.50%
Ratio of Net Expenses to
Average Net Assets***(1) 0.94% 0.94% 0.94% 1.50% 1.50%
Ratio of Net Investment Income to
Average Net Assets*** (0.27)% 0.42% 1.14% 0.24% 0.10%
Portfolio Turnover Rate*** 72% 91% 34% 46% 22%
</Table>
* See Note 3 in Notes to Financial Statements.
** Total return not annualized for periods of less than one full year.
*** Annualized for periods of less than one full year.
(1) See Note 5 in Notes to Financial Statements.
(2) Period January 18, 2000 (inception) to December 31, 2000.
(3) Period May 1, 2001 (inception) to December 31, 2001.
SEE NOTES TO FINANCIAL STATEMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 75
FINANCIAL HIGHLIGHTS - SERVICE SHARES (CONTINUED)
<Table>
<Caption>
For a share outstanding during the Janus Aspen
six months ended June 30 (unaudited) and Flexible Income Portfolio
through each fiscal year ended December 31 2002 2001 2000
- ------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 11.98 $ 11.62 $ 11.41
- ------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .13 .47 .53
Net gain/(loss) on securities
(both realized and unrealized) .23 .39 .14
- ------------------------------------------------------------------------------------
Total from Investment Operations .36 .86 .67
- ------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.15) (.50) (.46)
Distributions (from capital gains)* -- -- --
- ------------------------------------------------------------------------------------
Total Distributions (.15) (.50) (.46)
- ------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 12.19 $ 11.98 $ 11.62
- ------------------------------------------------------------------------------------
Total Return** 3.00% 7.49% 6.00%
- ------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 7,931 $ 2,136 $ 568
Average Net Assets for the Period
(in thousands) $ 3,842 $ 1,452 $ 187
Ratio of Gross Expenses to
Average Net Assets***(1) 0.95% 0.91% 0.99%
Ratio of Net Expenses to
Average Net Assets***(1) 0.95% 0.90% 0.99%
Ratio of Net Investment Income/(Loss) to
Average Net Assets*** 5.31% 5.56% 6.54%
Portfolio Turnover Rate*** 310% 308% 202%
</Table>
<Table>
<Caption>
For a share outstanding during the Janus Aspen
six months ended June 30 (unaudited) and Money Market Portfolio
through each fiscal year ended December 31 2002 2001 2000
- ------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .01 .04 .06
Net gain/(loss) on securities
(both realized and unrealized) -- -- --
- ------------------------------------------------------------------------------------
Total from Investment Operations .01 .04 .06
- ------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.01) (.04) (.06)
Distributions (from capital gains)* -- -- --
- ------------------------------------------------------------------------------------
Total Distributions (.01) (.04) (.06)
- ------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------
Total Return** 0.76% 3.97% 6.03%
- ------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 11 $ 11 $ 10
Average Net Assets for the Period
(in thousands) $ 11 $ 11 $ 10
Ratio of Gross Expenses to
Average Net Assets***(1) 0.62% 0.59% 0.61%
Ratio of Net Expenses to
Average Net Assets***(1) 0.62% 0.59% 0.61%
Ratio of Net Investment Income/(Loss) to
Average Net Assets*** 1.53% 3.91% 5.84%
</Table>
* See Note 3 in Notes to Financial Statements.
** Total return not annualized for periods of less than one full year.
*** Annualized for periods of less than one full year.
(1) See Note 5 in Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS.
76 Janus Aspen Series June 30, 2002
FINANCIAL HIGHLIGHTS - SERVICE II SHARES
<Table>
<Caption>
Janus Aspen Janus Aspen
International Worldwide
For a share outstanding during the Growth Portfolio Growth Portfolio
six months ended June 30 (unaudited) 2002 2002
- ---------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 23.24 $ 28.49
- ---------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .02 .08
Net gain/(loss) on securities
(both realized and unrealized) (2.79) (3.83)
- ---------------------------------------------------------------------------------------
Total from Investment Operations (2.77) (3.75)
- ---------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* (.02) (.07)
Distributions (from capital gains)* -- --
- ---------------------------------------------------------------------------------------
Total Distributions (.02) (.07)
- ---------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 20.45 $ 24.67
- ---------------------------------------------------------------------------------------
Total Return** (11.94)% (13.16)%
- ---------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 17,607 $ 9
Average Net Assets for the Period
(in thousands) $ 3,196 $ 9
Ratio of Gross Expenses to
Average Net Assets***(1) 1.07% 0.95%
Ratio of Net Expenses to
Average Net Assets***(1) 1.06% 0.95%
Ratio of Net Investment Income/(Loss) to
Average Net Assets*** 1.17% 0.64%
Portfolio Turnover Rate*** 76% 84%
</Table>
<Table>
<Caption>
Janus Aspen
Global Technology
For a share outstanding during the Portfolio
six months ended June 30 (unaudited) 2002
- ---------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 4.13
- ---------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) --
Net gain/(loss) on securities
(both realized and unrealized) (1.22)
- ---------------------------------------------------------------------------------------
Total from Investment Operations (1.22)
- ---------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* --
Distributions (from capital gains)* --
- ---------------------------------------------------------------------------------------
Total Distributions --
- ---------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 2.91
- ---------------------------------------------------------------------------------------
Total Return** (29.54)%
- ---------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 6,527
Average Net Assets for the Period
(in thousands) $1,265
Ratio of Gross Expenses to
Average Net Assets***(1) 1.01%
Ratio of Net Expenses to
Average Net Assets***(1) 0.98%
Ratio of Net Investment Income/(Loss) to
Average Net Assets*** (0.66)%
72%
</Table>
* See Note 3 in Notes to Financial Statements.
** Total return not annualized for periods of less than one full year.
*** Annualized for periods of less than one full year.
(1) See Note 5 in Notes to Financial Statements.
SEE NOTES TO FINANCIAL STATEMENTS.
JANUS ASPEN SERIES JUNE 30, 2002 77
NOTES TO SCHEDULES OF INVESTMENTS
ADR AMERICAN DEPOSITORY RECEIPT
* Non-income-producing security
** A portion of this security has been segregated by the custodian to cover
margin or segregation requirements on open futures contracts, forward currency
contracts and/or swap spread lock agreements.
+ Securities are exempt from the registration requirements of the Securities Act
of 1933 and/or Section 4(2) of the Securities Act and may be deemed to be
restricted for resale.
(omega) Rate is subject to change. Rate shown reflects current rate.
(delta) Security is a defaulted security in Janus Aspen Global Technology
Portfolio and Janus Aspen Flexible Income Portfolio with accrued interest in the
amount of $40,000 and $39,840, respectively, that was written-off December 10,
2001.
(pi) Security is a U.S. Treasury Inflation-Protected Security (TIPS).
SS. SCHEDULE OF ILLIQUID SECURITIES
<Table>
<Caption>
Value as
Acquisition Acquisition Amortized % of
Date Cost Cost Net Assets
======================================================================================
Janus Aspen Money Market Portfolio
Idaho Power Corp., 2.2475%, 9/1/02 9/24/01 $5,014,579 $5,001,253 5.04%
- --------------------------------------------------------------------------------------
</Table>
Illiquid securities are valued at amortized cost.
# The Investment Company Act of 1940 defines affiliates as those companies in
which a Portfolio holds 5% or more of the outstanding voting securities.
Following is a summary of the transactions with each such affiliate for the
period ended June 30, 2002:
<Table>
<Caption>
Purchases Sales Realized Dividend Market Value
Shares Cost Shares Cost Gain/(Loss) Income at 6/30/02
====================================================================================================
Janus Aspen Growth Portfolio
Dionex Corp. -- -- -- -- -- -- $28,703,154
- ----------------------------------------------------------------------------------------------------
</Table>
Variable Rate Notes. The interest rate, which is based on specific, or an index
of, market interest rates, is
subject to change. Rates in the security description are as of June 30, 2002.
Money market funds may hold securities with stated maturities of greater than
397 days when those securities have features that allow a fund to "put" back the
security to the issuer or to a third party within 397 days of acquisition. The
maturity dates shown in the security descriptions are the stated maturity dates.
Repurchase Agreements held by a Portfolio are fully collateralized, and such
collateral is in the possession of the Portfolio's custodian or subcustodian.
The collateral is evaluated daily to ensure its market value equals or exceeds
the current market value of the repurchase agreements including accrued
interest. In the event of default on the obligation to repurchase, the Portfolio
has the right to liquidate the collateral and apply the proceeds in satisfaction
of the obligation. In the event of default or bankruptcy by the other party to
the agreement, realization and/or retention of the collateral or proceeds may be
subject to legal proceedings.
78 Janus Aspen Series June 30, 2002
NOTES TO FINANCIAL STATEMENTS
The following section describes the organization and significant accounting
policies of the Portfolios and provides more detailed information about the
schedules and tables that appear throughout this report. In addition, the Notes
explain how the Portfolios operate and the methods used in preparing and
presenting this report.
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Janus Aspen Series (the "Trust") was organized as a Delaware Trust on May 20,
1993, and is registered under the Investment Company Act of 1940 (the "1940
Act") as a no-load, open-end management investment company. The Trust offers
fourteen Portfolios or series of shares with differing investment objectives and
policies. Twelve Portfolios invest primarily in equity securities: Janus Aspen
Growth Portfolio, Janus Aspen Aggressive Growth Portfolio, Janus Aspen Capital
Appreciation Portfolio, Janus Aspen Core Equity Portfolio, Janus Aspen Balanced
Portfolio, Janus Aspen Growth and Income Portfolio, Janus Aspen Strategic Value
Portfolio, Janus Aspen International Growth Portfolio, Janus Aspen Worldwide
Growth Portfolio, Janus Aspen Global Life Sciences Portfolio, Janus Aspen Global
Technology Portfolio and Janus Aspen Global Value Portfolio. One Portfolio
invests primarily in income-producing securities: Janus Aspen Flexible Income
Portfolio. Janus Aspen Money Market Portfolio invests in short-term money market
securities. Each Portfolio is diversified as defined in the 1940 Act, with the
exception of the Janus Aspen Aggressive Growth Portfolio, Janus Aspen Capital
Appreciation Portfolio, Janus Aspen Strategic Value Portfolio, Janus Aspen
Global Life Sciences Portfolio, Janus Aspen Global Technology Portfolio and
Janus Aspen Global Value Portfolio, which are nondiversified.
Institutional Shares of the Trust are issued and redeemed only in connection
with investment in and payments under variable annuity contracts and variable
life insurance contracts (collectively "variable insurance contracts"), as well
as certain qualified retirement plans.
Effective December 31, 1999, the Trust issued a new class of shares, the Service
Shares. Service Shares of the Trust are also issued and redeemed only in
connection with investment in and payments under variable insurance contracts,
as well as certain qualified retirement plans.
Effective December 31, 2001, the Trust issued a new class of shares, the Service
II Shares in the Janus Aspen International Growth, Janus Aspen Worldwide Growth,
and Janus Aspen Global Technology Portfolios. Janus Capital Management LLC
("Janus Capital") invested $10,000 of initial seed capital in each Portfolio of
the Service II Shares.
Janus Aspen High-Yield Portfolio was liquidated on October 26, 2001. Regulatory
approvals were obtained to substitute shares of the Janus Aspen Flexible Income
Portfolio for shares of the Janus Aspen High-Yield Portfolio. 60,319 shares in
the amount of $731,670 were exchanged into Janus Aspen Flexible Income Portfolio
as a result of the substitution.
The following accounting policies have been consistently followed by the Trust
and are in conformity with accounting principles generally accepted in the
United States of America in the investment company industry.
INVESTMENT VALUATION
Securities are valued at the closing price for securities traded on a principal
securities exchange (U.S. or foreign) and on the NASDAQ National Market.
Securities traded on over-the-counter markets and listed securities for which no
sales are reported are valued at the latest bid price (or yield equivalent
thereof) obtained from one or more dealers making a market for such securities
or by a pricing service approved by the Trustees. Short-term investments
maturing within 60 days and all money market securities in the Money Market
Portfolio are valued at amortized cost, which approximates market value. Foreign
securities are converted to U.S. dollars using exchange rates at the close of
the New York Stock Exchange. When market quotations are not readily available,
securities are valued at fair value as determined in good faith under procedures
established by and under the supervision of the Portfolios' Trustees.
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME
Investment transactions are accounted for as of the date purchased or sold.
Dividend income is recorded on the ex-dividend date. Certain dividends from
foreign securities will be recorded as soon as the Trust is informed of the
dividend if such information is obtained subsequent to the ex-dividend date.
Interest income is recorded on the accrual basis and includes amortization of
discounts and premiums. Gains and losses are determined on the identified cost
basis, which is the same basis used for federal income tax purposes. Income, as
well as, gains and losses are allocated daily to each class of shares based upon
the ratio of net assets represented by each class as a percentage of total net
assets.
FORWARD CURRENCY TRANSACTIONS AND FUTURES CONTRACTS
The Portfolios enter into forward currency contracts in order to reduce their
exposure to changes in foreign currency exchange rates on their foreign
portfolio holdings and to lock in the U.S. dollar cost of firm purchase and
sales commitments for securities denominated in or exposed to foreign
currencies. A forward currency exchange contract is a commitment to purchase or
sell a foreign currency at a future date at a negotiated rate. The gain or loss
arising from the difference between the U.S. dollar cost of the original
contract and the value of the foreign currency in U.S. dollars upon closing of
such contract is included in net realized gain or loss from foreign currency
transactions.
JANUS ASPEN SERIES JUNE 30, 2002 79
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Forward currency contracts held by the Portfolios are fully collateralized by
other securities, which are denoted in the accompanying Schedule of Investments.
Such collateral is in the possession of the Portfolio's custodian. The
collateral is evaluated daily to ensure its market value equals or exceeds the
current market value of the corresponding forward currency contracts.
The Portfolios do not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held at the
date of the financial statements. Net unrealized appreciation or depreciation on
investments and foreign currency translation arise from changes in the value of
assets and liabilities, including investments in securities at the date of the
financial statements, resulting from changes in the exchange rates and changes
in market prices of securities held.
Currency gain and loss are also calculated on payables and receivables that are
denominated in foreign currencies. The payables and receivables are generally
related to security transactions and income.
The Portfolios may enter into futures contracts and options on securities,
financial indices and foreign currencies, forward contracts and interest-rate
swaps and swap-related products. The Portfolios intend to use such derivative
instruments primarily to hedge or protect from adverse movements in securities
prices, currency rates or interest rates. The use of futures contracts and
options may involve risks such as the possibility of illiquid markets or
imperfect correlation between the value of the contracts and the underlying
securities, or that the counterparty will fail to perform its obligations.
Futures contracts are marked to market daily, and the resultant variation margin
is recorded as an unrealized gain or loss. When a contract is closed, a realized
gain or loss is recorded equal to the difference between the opening and closing
value of the contract. Generally, open forward and futures contracts are marked
to market (i.e., treated as realized and subject to distribution) for federal
income tax purposes at fiscal year-end.
Foreign-denominated assets and forward currency contracts may involve more risks
than domestic transactions, including currency risk, political and economic
risk, regulatory risk and market risk. Risks may arise from the potential
inability of a counterparty to meet the terms of a contract and from
unanticipated movements in the value of foreign currencies relative to the U.S.
dollar.
INITIAL PUBLIC OFFERINGS
The Portfolios may invest in initial public offerings (IPOs). IPOs and other
investment techniques may have a magnified performance impact on a portfolio
with a small asset base. The Portfolios may not experience similar performance
as their assets grow.
ADDITIONAL INVESTMENT RISK
A portion of the Janus Aspen Flexible Income Portfolio may be invested in
lower-rated debt securities that have a higher risk of default or loss of value
because of changes in the economy, or political environment, or adverse
developments specific to the issuer.
RESTRICTED SECURITY TRANSACTIONS
Restricted securities held by a Portfolio may not be sold except in exempt
transactions or in a public offering registered under the Securities Act of
1933. The risk of investing in such securities is generally greater than the
risk of investing in the securities of widely held, publicly traded companies.
Lack of a secondary market and resale restrictions may result in the inability
of a Portfolio to sell a security at a fair price and may substantially delay
the sale of the security which each portfolio seeks to sell. In addition, these
securities may exhibit greater price volatility than securities for which
secondary markets exist.
DIVIDEND DISTRIBUTIONS
Each Portfolio, except the Money Market Portfolio, makes at least semiannual
distributions of substantially all of its investment income and at least an
annual distribution of its net realized capital gains, if any. Dividends are
declared daily and distributed monthly for the Janus Aspen Money Market
Portfolio. The majority of dividends and capital gains distributions from a
Portfolio will be automatically reinvested into additional shares of that
Portfolio.
ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of income and expenses during
the reporting period. Actual results could differ from those estimates.
FEDERAL INCOME TAXES
No provision for income taxes is included in the accompanying financial
statements as the Portfolios intend to distribute to shareholders all taxable
investment income and realized gains and otherwise comply with the Internal
Revenue Code applicable to regulated investment companies.
80 Janus Aspen Series June 30, 2002
2. INVESTMENT ADVISORY AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
Each equity Portfolio is subject to advisory fees payable to Janus Capital based
upon an annual rate of .65% of average net assets. The Janus Aspen Flexible
Income Portfolio is subject to advisory fees payable to Janus Capital based upon
annual rates of .65% of the first $300 million of average net assets plus .55%
of average net assets in excess of $300 million. The Janus Aspen Money Market
Portfolio's advisory fee rate is .25% of average net assets.
Janus Capital has agreed to reduce its fee to the extent normal operating
expenses exceed 1% of the average net assets of the Janus Aspen Flexible Income
Portfolio and .50% of the average net assets of the Janus Aspen Money Market
Portfolio for a fiscal year. Janus Capital has also agreed to reduce its fee to
the extent that normal operating expenses exceed 1.25% of the average net assets
of the Janus Aspen Core Equity, Janus Aspen Strategic Value, Janus Aspen Global
Life Sciences, Janus Aspen Global Technology and Janus Aspen Global Value
Portfolios.
Janus Capital has agreed to continue these fee waivers and reductions until at
least the next annual renewal of the advisory contracts. The distribution fee
applicable to the Service and Service II Shares is not included in these expense
limits.
Janus Services LLC ("Janus Services"), a wholly owned subsidiary of Janus
Capital, receives certain out-of-pocket expenses for transfer agent services.
Officers and trustees of the Portfolios may also be officers and/or directors of
Janus Capital; however, such officers and trustees receive no compensation from
the Portfolios.
Janus Distributors LLC, a wholly owned subsidiary of Janus Capital, is a
distributor of the Portfolios. The Service and Service II Shares have each
adopted a Distribution and Shareholder Servicing Plan (The "Plans") pursuant to
Rule 12b-1 under The 1940 Act. The Plans authorize payments by the Portfolios in
connection with the distribution of the Service and Service II Shares at an
annual rate, as determined from time to time by the Board of Trustees, of up to
..25% of the Service and Service II Shares' average daily net assets.
DST Systems, Inc. (DST), an affiliate of Janus Capital through a degree of
common ownership, provides a shareholder accounting system to the Portfolios.
DST Securities, Inc., a wholly owned subsidiary of DST, is designated as an
introductory broker on certain portfolio transactions. Brokerage commissions
paid to DST Securities, Inc. serve to reduce transfer agent fees and expenses.
Brokerage commissions paid, fees reduced and the net fees paid to DST for the
period ended June 30, 2002, are noted below.
<Table>
<Caption>
DST Securities, Inc. Portfolio Expense DST Systems
Portfolio Commissions Paid* Reduction* Costs
========================================================================================================
Janus Aspen Growth Portfolio $ 4,608 $ 3,457 $(1,322)
Janus Aspen Aggressive Growth Portfolio 94,859 71,162 (68,891)
Janus Aspen Capital Appreciation Portfolio -- -- 2,043
Janus Aspen Core Equity Portfolio -- -- 1,890
Janus Aspen Balanced Portfolio 20,157 15,121 (13,308)
Janus Aspen Growth and Income Portfolio -- -- 1,912
Janus Aspen Strategic Value Portfolio -- -- 1,896
Janus Aspen International Growth Portfolio -- -- 2,759
Janus Aspen Worldwide Growth Portfolio -- -- 2,907
Janus Aspen Global Life Sciences Portfolio -- -- 1,883
Janus Aspen Global Technology Portfolio 359 269 1,668
Janus Aspen Global Value Portfolio -- -- 1,206
Janus Aspen Flexible Income Portfolio -- -- 1,963
Janus Aspen Money Market Portfolio -- -- 1,687
- --------------------------------------------------------------------------------------------------------
</Table>
* The difference between commissions paid to DST Securities, Inc. and expenses
reduced constitute commissions paid to an unaffiliated clearing broker.
JANUS ASPEN SERIES JUNE 30, 2002 81
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. FEDERAL INCOME TAX
Net investment income distributions and capital gains distributions are
determined in accordance with income tax regulations that may differ from
accounting principles generally accepted in the United States of America. These
differences are due to differing treatments for items such as deferral of wash
sales, foreign currency transactions, net operating losses and capital loss
carryovers.
The Portfolios have elected to treat gains and losses on forward foreign
currency contracts as capital gains and losses. Other foreign currency gains and
losses on debt instruments are treated as ordinary income for federal income tax
purposes pursuant to Section 988 of the Internal Revenue Code.
Accumulated capital losses noted below represent net capital loss carryovers, as
of December 31, 2001, that may be available to offset future realized capital
gains and thereby reduce future taxable gains distributions. These carryovers
expire between December 1, 2008 and December 31, 2009.
The aggregate cost of investments and the composition of unrealized appreciation
and depreciation of investment securities for federal income tax purposes as of
June 30, 2002 are also noted below.
<Table>
<Caption>
Accumulated Federal Tax Unrealized Unrealized Net Appreciation/
Portfolio Capital Losses Cost Appreciation (Depreciation) (Depreciation)
===================================================================================================================================
Janus Aspen Growth Portfolio $ (825,859,740) $ 2,384,111,867 $ 246,035,371 $ (455,255,167) $ (209,219,796)
Janus Aspen Aggressive Growth Portfolio (1,606,880,761) 1,885,190,868 173,440,529 (297,265,903) (123,825,374)
Janus Aspen Capital Appreciation Portfolio (462,062,044) 1,144,432,965 83,411,158 (138,574,728) (55,163,570)
Janus Aspen Core Equity Portfolio (1,735,616) 12,767,909 786,617 (1,123,710) (337,093)
Janus Aspen Balanced Portfolio (124,545,495) 3,672,383,170 129,179,529 (203,941,498) (74,761,969)
Janus Aspen Growth and Income Portfolio (24,326,987) 168,396,677 9,664,250 (21,602,455) (11,938,205)
Janus Aspen Strategic Value Portfolio (1,881,019) 28,247,550 1,638,685 (3,601,759) (1,963,074)
Janus Aspen International Growth Portfolio (397,772,820) 1,410,927,276 112,008,038 (166,998,279) (54,990,241)
Janus Aspen Worldwide Growth Portfolio (1,238,904,155) 5,148,179,937 386,640,535 (451,380,435) (64,739,900)
Janus Aspen Global Life Sciences Portfolio (10,308,367) 38,795,471 4,347,801 (5,300,932) (953,131)
Janus Aspen Global Technology Portfolio (291,551,726) 271,328,354 9,444,857 (91,896,560) (82,451,703)
Janus Aspen Global Value Portfolio -- 3,534,083 241,945 (166,215) 75,730
Janus Aspen Flexible Income Portfolio (2,634,842) 426,966,895 9,097,019 (3,297,917) 5,799,102
Janus Aspen Money Market Portfolio (1,154) 98,220,179 -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
</Table>
82 Janus Aspen Series June 30, 2002
4. EXPENSES
The Portfolios' expenses may be reduced through expense-reduction arrangements.
Those arrangements include the use of broker commissions paid to DST Securities,
Inc. and uninvested cash balances earning interest with the Portfolios'
custodian. The Statements of Operations reflect the total expenses before any
offset, the amount of the offset and the net expenses. The expense ratios listed
in the Financial Highlights reflect expenses prior to any expense offset (gross
expense ratio) and after expense offsets (net expense ratio). Both expense
ratios reflect expenses after waivers.
Expenses are allocated daily to each class of shares based upon the ratio of net
assets represented by each class as a percentage of total net assets. Expenses
directly attributable to a specific class of shares are charged against the
operations of such class.
Janus Aspen Service and Service II Shares each pay a distribution fee of up to
..25% of average net assets.
5. EXPENSE RATIOS
Listed below are the gross expense ratios for the various Portfolios that would
be in effect, absent the waiver of certain fees, and offsets.
<Table>
<Caption>
Service II
Institutional Shares Service Shares Shares
Portfolio 2002 2001 2000 1999 1998 1997 2002 2001 2000 2002
====================================================================================================================================
Janus Aspen Growth Portfolio 0.67% 0.66% 0.67% 0.69% 0.75% 0.78% 0.92% 0.91% 0.92% N/A
Janus Aspen Aggressive Growth Portfolio 0.67% 0.67% 0.66% 0.70% 0.75% 0.78% 0.92% 0.92% 0.92% N/A
Janus Aspen Capital Appreciation Portfolio 0.67% 0.66% 0.67% 0.79% 0.97% 2.19%(4) 0.92% 0.91% 0.92% N/A
Janus Aspen Core Equity Portfolio 1.62% 1.13% 1.65% 1.38% 1.86% 5.75%(4) 1.87% 1.30% 2.03% N/A
Janus Aspen Balanced Portfolio 0.66% 0.66% 0.66% 0.69% 0.74% 0.83% 0.91% 0.91% 0.92% N/A
Janus Aspen Growth and Income Portfolio 0.74% 0.70% 0.78% 1.15% 3.06%(3) N/A 1.00% 0.95% 1.11% N/A
Janus Aspen Strategic Value Portfolio 1.11% 1.34% 3.45%(1) N/A N/A N/A 1.36% 1.60% 3.72%(1) N/A
Janus Aspen International Growth Portfolio 0.74% 0.71% 0.71% 0.84% 0.95% 1.08% 0.99% 0.96% 0.96% 1.07%
Janus Aspen Worldwide Growth Portfolio 0.70% 0.69% 0.69% 0.71% 0.74% 0.81% 0.95% 0.94% 0.95% 0.95%
Janus Aspen Global Life Sciences Portfolio 0.81% 0.81% 1.03%(2) N/A N/A N/A 1.06% 1.07% 1.20%(2) N/A
Janus Aspen Global Technology Portfolio 0.69% 0.68% 0.69%(2) N/A N/A N/A 0.94% 0.95% 0.94%(2) 1.01%
Janus Aspen Global Value Portfolio N/A N/A N/A N/A N/A N/A 2.77% 3.62%(5) N/A N/A
Janus Aspen Flexible Income Portfolio 0.68% 0.67% 0.76% 0.72% 0.73% 0.75% 0.95% 0.91% 0.99% N/A
Janus Aspen Money Market Portfolio 0.35% 0.34% 0.36% 0.43% 0.34% 0.55% 0.62% 0.59% 0.61% N/A
- ------------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Period May 1, 2000 (inception) to December 31, 2000.
(2) Period January 18, 2000 (inception) to December 31, 2000.
(3) Period May 1, 1998 (inception) to December 31, 1998.
(4) Period May 1, 1997 (inception) to December 31, 1997.
(5) Period May 1, 2001 (inception) to December 31, 2001.
JANUS ASPEN SERIES JUNE 30, 2002 83
EXPLANATIONS OF CHARTS, TABLES AND FINANCIAL STATEMENTS
(unaudited)
1. PERFORMANCE OVERVIEWS
When comparing the performance of a Portfolio with an index, keep in mind that
market indices do not include brokerage commissions that would be incurred if
you purchased the individual securities in the index. They also do not include
taxes payable on dividends and interest or operating expenses incurred if you
maintained a Portfolio invested in the index.
Average annual total returns are quoted for each class of the Portfolio. Average
annual total return is calculated by taking the growth or decline in value of an
investment over a period of time, including reinvestment of dividends and
distributions, then calculating the annual compounded percentage rate that would
have produced the same result had the rate of growth been constant throughout
the period.
2. SCHEDULES OF INVESTMENTS
Following the performance overview section is each Portfolio's Schedule of
Investments. This schedule reports the industry concentrations and types of
securities held in each Portfolio on the last day of the reporting period.
Securities are usually listed by type (common stock, corporate bonds, U.S.
government obligations, etc.) and by industry classification (banking,
communications, insurance, etc.).
The market value of each security is quoted as of the last day of the reporting
period. The values of securities denominated in foreign currencies are converted
into U.S. dollars.
Portfolios that invest in foreign securities also provide a summary of
investments by country. This summary reports the Portfolio's exposure to
different countries by providing the percentage of securities invested in each
country.
2A. FORWARD CURRENCY CONTRACTS
A table listing forward currency contracts follows each Portfolio's Schedule of
Investments (if applicable). Forward currency contracts are agreements to
deliver or receive a preset amount of currency at a future date. Forward
currency contracts are used to hedge against foreign currency risk in the
Portfolio's long-term holdings.
The table provides the name of the foreign currency, the settlement date of the
contract, the amount of the contract, the value of the currency in U.S. dollars
and the amount of unrealized gain or loss. The amount of unrealized gain or loss
reflects the change in currency exchange rates from the time the contract was
opened to the last day of the reporting period.
3. STATEMENT OF ASSETS AND LIABILITIES
This statement is often referred to as the "balance sheet." It lists the assets
and liabilities of the Portfolios on the last day of the reporting period.
The Portfolios' assets are calculated by adding the value of the securities
owned, the receivable for securities sold but not yet settled, the receivable
for dividends declared but not yet received on stocks owned and the receivable
for Portfolio shares sold to investors but not yet settled. The Portfolios'
liabilities include payables for securities purchased but not yet settled,
Portfolio shares redeemed but not yet paid and expenses owed but not yet paid.
Additionally, there may be other assets and liabilities such as unrealized gain
or loss on forward currency contracts.
The last section of this statement reports the net asset value (NAV) per share
on the last day of the reporting period for each class of the Portfolio. The NAV
is calculated by dividing the Portfolios' net assets (assets minus liabilities)
by the number of shares outstanding.
4. STATEMENT OF OPERATIONS
This statement details the Portfolios' income, expenses, gains and losses on
securities and currency transactions, and appreciation or depreciation of
current Portfolio holdings.
The first section in this statement, entitled "Investment Income," reports the
dividends earned from stocks and interest earned from interest-bearing
securities in the Portfolio.
The next section reports the expenses and expense offsets incurred by the
Portfolios, including the advisory fee paid to the investment adviser.
The last section lists the increase or decrease in the value of securities held
in the Portfolios. Portfolios realize a gain (or loss) when they sell their
position in a particular security. An unrealized gain (or loss) refers to the
change in net appreciation or depreciation of the Portfolios during the period.
"Net Realized and Unrealized Gain/ (Loss) on Investments" is affected both by
changes in the market value of Portfolio holdings and by gains (or losses)
realized during the reporting period.
84 Janus Aspen Series June 30, 2002
5. STATEMENT OF CHANGES IN NET ASSETS
This statement reports the increase or decrease in the Portfolios' net assets
during the reporting period. Changes in the Portfolios' net assets are
attributable to investment operations, dividends, distributions and capital
share transactions. This is important to investors because it shows exactly what
caused the Portfolios' net asset size to change during the period.
The first section summarizes the information from the Statement of Operations
regarding changes in net assets due to the Portfolios' investment performance.
The Portfolios' net assets may also change as a result of dividend and capital
gains distributions to investors. If investors receive their dividends in cash,
money is taken out of the Portfolio to pay the distribution. If investors
reinvest their dividends, the Portfolios' net assets will not be affected. If
you compare each Portfolio's "Net Decrease from Dividends and Distributions" to
the "Reinvested dividends and distributions," you'll notice that dividend
distributions had little effect on each Portfolio's net assets. This is because
the majority of Janus investors reinvest their distributions.
The reinvestment of dividends is included under "Capital Share Transactions."
"Capital Shares" refers to the money investors contribute to the Portfolios
through purchases or withdrawal via redemptions. Each Portfolio's net assets
will increase and decrease in value as investors purchase and redeem shares from
a Portfolio.
The section entitled "Net Assets Consist of" breaks down the components of the
Portfolios' net assets. Because Portfolios must distribute substantially all
earnings, you'll notice that a significant portion of net assets is shareholder
capital.
6. FINANCIAL HIGHLIGHTS
This schedule provides a per-share breakdown of the components that affect the
net asset value (NAV) for current and past reporting periods for each class of
the Portfolio. Not only does this table provide you with total return, it also
reports total distributions, asset size, expense ratios and portfolio turnover
rate.
The first line in the table reflects the NAV per share at the beginning of the
reporting period. The next line reports the net investment income per share,
which comprises dividends and interest income earned on securities held by the
Portfolios. Following is the total of gains, realized and unrealized. Dividends
and distributions are then subtracted to arrive at the NAV per share at the end
of the period.
Also included are the expense ratios, or the percentage of net assets that was
used to cover operating expenses during the period. Expense ratios vary across
the Portfolios for a number of reasons, including the differences in management
fees, the frequency of dividend payments and the extent of foreign investments,
which entail greater transaction costs.
The Portfolios' expenses may be reduced through expense-reduction arrangements.
These arrangements include the use of brokerage commissions, uninvested cash
balances earning interest or balance credits. The Statement of Operations
reflects total expenses before any such offset, the amount of offset and the net
expenses. The expense ratios listed in the Financial Highlights reflect total
expenses both prior to any expense offset and after the offsets.
The ratio of net investment income/(loss) summarizes the income earned less
expenses divided by the average net assets of a Portfolio during the reporting
period. Don't confuse this ratio with a Portfolio's yield. The net investment
income ratio is not a true measure of a Portfolio's yield because it doesn't
take into account the dividends distributed to the Portfolio's investors.
The next ratio is the portfolio turnover rate, which measures the buying and
selling activity in a Portfolio. Portfolio turnover is affected by market
conditions, changes in the size of a Portfolio, the nature of the Portfolio's
investments and the investment style of the portfolio manager. A 100% rate
implies that an amount equal to the value of the entire Portfolio is turned over
in a year; a 50% rate means that an amount equal to the value of half the
Portfolio is traded in a year; and a 200% rate means that an amount equal to the
value of the Portfolio is sold every six months.
JANUS ASPEN SERIES JUNE 30, 2002 85
SHAREHOLDER MEETING
Each of the proposals described below were considered at a special meeting of
the Portfolios' Shareholders. The meeting was held on January 31, 2002.
Tabulations of the votes received on each of the proposals presented at the
meetings appear below. Each vote represents a value held on the record date for
each meeting.
PROPOSAL 1
To elect a board of Trustees of the Trust.
<Table>
<Caption>
Number of Shares Percentage of Outstanding Shares Percentage of Shares Voted
Trustees Affirmative Withheld Total Affirmative Withheld Total Affirmative Withheld Total
====================================================================================================================================
Thomas H. Bailey 758,551,719 26,519,589 785,071,308 80.51% 2.81% 83.32% 96.62% 3.38% 100.00%
Dennis B. Mullen 759,975,400 25,095,908 785,071,308 80.66% 2.66% 83.32% 96.80% 3.20% 100.00%
James T. Rothe 760,225,395 24,845,913 785,071,308 80.68% 2.64% 83.32% 96.84% 3.16% 100.00%
William D. Stewart 760,355,853 24,715,455 785,071,308 80.70% 2.62% 83.32% 96.85% 3.15% 100.00%
Martin H. Waldinger 759,412,179 25,659,129 785,071,308 80.60% 2.72% 83.32% 96.73% 3.27% 100.00%
- ------------------------------------------------------------------------------------------------------------------------------------
</Table>
PROPOSAL 2
To consider and approve new investment advisory agreements between Janus Aspen
Series, on behalf of each Portfolio, and Janus Capital Corporation.
<Table>
<Caption>
Number of Shares
Record
Portfolio Total Shares Affirmative Against Abstain
==============================================================================================================
Janus Aspen Growth Portfolio 135,882,166 92,726,202 2,578,879 5,594,573
Janus Aspen Aggressive Growth Portfolio 102,551,284 73,363,018 1,945,345 4,256,802
Janus Aspen Capital Appreciation Portfolio 60,121,904 54,071,377 1,252,455 2,439,747
Janus Aspen Core Equity Portfolio 841,530 839,458 -- 2,072
Janus Aspen Balanced Portfolio 153,576,571 122,947,097 2,353,462 5,790,434
Janus Aspen Growth and Income Portfolio 11,507,874 10,662,289 250,579 460,101
Janus Aspen Strategic Value Portfolio 1,748,189 1,530,181 14,593 47,731
Janus Aspen International Growth Portfolio 60,514,415 37,249,881 1,093,734 1,864,580
Janus Aspen Worldwide Growth Portfolio 206,838,647 146,642,525 3,801,789 6,904,917
Janus Aspen Global Life Sciences Portfolio 6,092,672 5,741,174 137,577 213,910
Janus Aspen Global Technology Portfolio 67,489,850 62,362,279 1,918,742 2,978,860
Janus Aspen Global Value Portfolio 200,005 200,000 -- --
Janus Aspen Flexible Income Portfolio 31,470,614 25,561,929 459,086 1,457,543
Janus Aspen Money Market Portfolio 103,356,389 95,570,778 5,923,910 1,861,701
- --------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
Percentage of Outstanding Shares Percentage of Shares Voted
Portfolio Affirmative Against Abstain Affirmative Against Abstain
==================================================================================================================
Janus Aspen Growth Portfolio 68.24% 1.90% 4.12% 91.90% 2.56% 5.54%
Janus Aspen Aggressive Growth Portfolio 71.54% 1.90% 4.15% 92.20% 2.45% 5.35%
Janus Aspen Capital Appreciation Portfolio 89.94% 2.08% 4.06% 93.61% 2.17% 4.22%
Janus Aspen Core Equity Portfolio 99.75% 0.00% 0.25% 99.75% 0.00% 0.25%
Janus Aspen Balanced Portfolio 80.06% 1.53% 3.77% 93.79% 1.79% 4.42%
Janus Aspen Growth and Income Portfolio 92.65% 2.18% 4.00% 93.75% 2.20% 4.05%
Janus Aspen Strategic Value Portfolio 87.53% 0.83% 2.73% 96.09% 0.91% 3.00%
Janus Aspen International Growth Portfolio 61.55% 1.81% 3.08% 92.64% 2.72% 4.64%
Janus Aspen Worldwide Growth Portfolio 70.89% 1.84% 3.34% 93.19% 2.42% 4.39%
Janus Aspen Global Life Sciences Portfolio 94.23% 2.26% 3.51% 94.23% 2.26% 3.51%
Janus Aspen Global Technology Portfolio 92.40% 2.84% 4.42% 92.72% 2.85% 4.43%
Janus Aspen Global Value Portfolio 100.00% 0.00% 0.00% 100.00% 0.00% 0.00%
Janus Aspen Flexible Income Portfolio 81.23% 1.46% 4.63% 93.03% 1.67% 5.30%
Janus Aspen Money Market Portfolio 92.47% 5.73% 1.80% 92.47% 5.73% 1.80%
- ------------------------------------------------------------------------------------------------------------------
</Table>
86 and 87 Janus Aspen Series June 30, 2002
SHAREHOLDER MEETING (CONTINUED)
Proposal 3a
To approve revisions to or rescission of the fundamental restriction concerning
the diversification of a Portfolio's investments.
<Table>
<Caption>
Number of Shares
Record
Portfolio Total Shares Affirmative Against Abstain
==============================================================================================================
Janus Aspen Growth Portfolio 135,882,166 91,603,148 3,424,671 5,871,835
Janus Aspen Aggressive Growth Portfolio 102,551,284 71,600,277 3,409,854 4,555,034
Janus Aspen Capital Appreciation Portfolio 60,121,904 53,363,683 1,695,938 2,703,942
Janus Aspen Core Equity Portfolio 841,530 796,871 1,874 42,785
Janus Aspen Balanced Portfolio 153,576,571 121,595,397 3,244,477 6,251,119
Janus Aspen Growth and Income Portfolio 11,507,874 10,571,599 325,890 475,480
Janus Aspen Strategic Value Portfolio 1,748,189 1,523,684 23,148 45,673
Janus Aspen International Growth Portfolio 60,514,415 36,880,535 1,328,147 1,999,513
Janus Aspen Worldwide Growth Portfolio 206,838,647 145,165,111 4,889,222 7,294,898
Janus Aspen Global Life Sciences Portfolio 6,092,672 5,646,579 226,014 220,068
Janus Aspen Global Technology Portfolio 67,489,850 61,675,869 2,315,378 3,268,634
Janus Aspen Global Value Portfolio 200,005 200,000 -- --
Janus Aspen Flexible Income Portfolio 31,470,614 25,526,387 650,583 1,301,588
Janus Aspen Money Market Portfolio 103,356,389 94,559,154 6,356,469 2,440,766
- --------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
Percentage of Outstanding Shares Percentage of Shares Voted
Portfolio Affirmative Against Abstain Affirmative Against Abstain
==================================================================================================================
Janus Aspen Growth Portfolio 67.42% 2.52% 4.32% 90.79% 3.39% 5.82%
Janus Aspen Aggressive Growth Portfolio 69.82% 3.33% 4.44% 89.99% 4.29% 5.72%
Janus Aspen Capital Appreciation Portfolio 88.76% 2.82% 4.50% 92.38% 2.94% 4.68%
Janus Aspen Core Equity Portfolio 94.69% 0.22% 5.09% 94.69% 0.22% 5.09%
Janus Aspen Balanced Portfolio 79.18% 2.11% 4.07% 92.76% 2.47% 4.77%
Janus Aspen Growth and Income Portfolio 91.87% 2.83% 4.13% 92.95% 2.87% 4.18%
Janus Aspen Strategic Value Portfolio 87.16% 1.32% 2.61% 95.68% 1.45% 2.87%
Janus Aspen International Growth Portfolio 60.95% 2.19% 3.30% 91.73% 3.30% 4.97%
Janus Aspen Worldwide Growth Portfolio 70.18% 2.36% 3.53% 92.26% 3.11% 4.63%
Janus Aspen Global Life Sciences Portfolio 92.68% 3.71% 3.61% 92.68% 3.71% 3.61%
Janus Aspen Global Technology Portfolio 91.39% 3.43% 4.84% 91.70% 3.44% 4.86%
Janus Aspen Global Value Portfolio 100.00% 0.00% 0.00% 100.00% 0.00% 0.00%
Janus Aspen Flexible Income Portfolio 81.11% 2.07% 4.14% 92.90% 2.37% 4.73%
Janus Aspen Money Market Portfolio 91.49% 6.15% 2.36% 91.49% 6.15% 2.36%
- ------------------------------------------------------------------------------------------------------------------
</Table>
Proposal 3b
To approve revisions to the fundamental restriction concerning a Portfolio's
investments in commodities.
<Table>
<Caption>
Number of Shares
Record
Portfolio Total Shares Affirmative Against Abstain
==============================================================================================================
Janus Aspen Growth Portfolio 135,882,166 89,992,567 4,799,552 6,107,535
Janus Aspen Aggressive Growth Portfolio 102,551,284 70,815,049 4,064,153 4,685,963
Janus Aspen Capital Appreciation Portfolio 60,121,904 52,678,397 2,272,110 2,813,056
Janus Aspen Core Equity Portfolio 841,530 763,104 35,642 42,784
Janus Aspen Balanced Portfolio 153,576,571 120,186,786 4,501,895 6,402,312
Janus Aspen Growth and Income Portfolio 11,507,874 10,433,810 439,716 499,443
Janus Aspen Strategic Value Portfolio 1,748,189 1,511,518 45,244 35,743
Janus Aspen International Growth Portfolio 60,514,415 36,406,445 1,739,496 2,062,254
Janus Aspen Worldwide Growth Portfolio 206,838,647 142,810,426 6,896,545 7,642,260
Janus Aspen Global Life Sciences Portfolio 6,092,672 5,579,515 320,318 192,828
Janus Aspen Global Technology Portfolio 67,489,850 60,924,251 2,921,527 3,414,103
Janus Aspen Global Value Portfolio 200,005 200,000 -- --
Janus Aspen Flexible Income Portfolio 31,470,614 25,057,645 1,117,026 1,303,887
Janus Aspen Money Market Portfolio 103,356,389 91,539,149 9,153,303 2,663,937
- --------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
Percentage of Outstanding Shares Percentage of Shares Voted
Portfolio Affirmative Against Abstain Affirmative Against Abstain
==================================================================================================================
Janus Aspen Growth Portfolio 66.23% 3.53% 4.50% 89.19% 4.76% 6.05%
Janus Aspen Aggressive Growth Portfolio 69.05% 3.97% 4.57% 89.00% 5.11% 5.89%
Janus Aspen Capital Appreciation Portfolio 87.62% 3.78% 4.68% 91.20% 3.93% 4.87%
Janus Aspen Core Equity Portfolio 90.68% 4.24% 5.08% 90.68% 4.24% 5.08%
Janus Aspen Balanced Portfolio 78.26% 2.93% 4.17% 91.68% 3.44% 4.88%
Janus Aspen Growth and Income Portfolio 90.67% 3.82% 4.34% 91.74% 3.87% 4.39%
Janus Aspen Strategic Value Portfolio 86.46% 2.59% 2.04% 94.92% 2.84% 2.24%
Janus Aspen International Growth Portfolio 60.16% 2.87% 3.41% 90.54% 4.33% 5.13%
Janus Aspen Worldwide Growth Portfolio 69.04% 3.34% 3.69% 90.76% 4.38% 4.86%
Janus Aspen Global Life Sciences Portfolio 91.58% 5.26% 3.16% 91.58% 5.26% 3.16%
Janus Aspen Global Technology Portfolio 90.27% 4.33% 5.06% 90.58% 4.34% 5.08%
Janus Aspen Global Value Portfolio 100.00% 0.00% 0.00% 100.00% 0.00% 0.00%
Janus Aspen Flexible Income Portfolio 79.62% 3.55% 4.15% 91.19% 4.07% 4.74%
Janus Aspen Money Market Portfolio 88.57% 8.85% 2.58% 88.57% 8.85% 2.58%
- ------------------------------------------------------------------------------------------------------------------
</Table>
88 and 89 Janus Aspen Series June 30, 2002
SHAREHOLDER MEETING (CONTINUED)
PROPOSAL 3c
To approve revisions to the fundamental restriction concerning the lending of a
Portfolio's portfolio securities.
<Table>
<Caption>
Number of Shares
Record
Portfolio Total Shares Affirmative Against Abstain
==============================================================================================================
Janus Aspen Growth Portfolio 135,882,166 89,492,745 5,269,411 6,137,498
Janus Aspen Aggressive Growth Portfolio 102,551,284 69,836,538 5,079,723 4,648,904
Janus Aspen Capital Appreciation Portfolio 60,121,904 52,481,215 2,466,205 2,816,143
Janus Aspen Core Equity Portfolio 841,530 762,702 35,483 43,345
Janus Aspen Balanced Portfolio 153,576,571 119,053,861 5,336,486 6,700,646
Janus Aspen Growth and Income Portfolio 11,507,874 10,225,584 525,142 622,243
Janus Aspen Strategic Value Portfolio 1,748,189 1,521,950 31,382 39,173
Janus Aspen International Growth Portfolio 60,514,415 36,261,129 1,809,003 2,138,063
Janus Aspen Worldwide Growth Portfolio 206,838,647 141,625,535 7,788,878 7,934,818
Janus Aspen Global Life Sciences Portfolio 6,092,672 5,579,728 273,262 239,671
Janus Aspen Global Technology Portfolio 67,489,850 60,623,637 3,183,792 3,452,452
Janus Aspen Global Value Portfolio 200,005 200,000 -- --
Janus Aspen Flexible Income Portfolio 31,470,614 24,759,216 1,306,389 1,412,953
Janus Aspen Money Market Portfolio 103,356,389 93,632,295 7,626,816 2,097,278
- --------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
Percentage of Outstanding Shares Percentage of Shares Voted
Portfolio Affirmative Against Abstain Affirmative Against Abstain
==================================================================================================================
Janus Aspen Growth Portfolio 65.86% 3.88% 4.52% 88.70% 5.22% 6.08%
Janus Aspen Aggressive Growth Portfolio 68.10% 4.95% 4.54% 87.77% 6.39% 5.84%
Janus Aspen Capital Appreciation Portfolio 87.29% 4.10% 4.69% 90.85% 4.27% 4.88%
Janus Aspen Core Equity Portfolio 90.63% 4.22% 5.15% 90.63% 4.22% 5.15%
Janus Aspen Balanced Portfolio 77.52% 3.48% 4.36% 90.82% 4.07% 5.11%
Janus Aspen Growth and Income Portfolio 88.86% 4.56% 5.41% 89.91% 4.62% 5.47%
Janus Aspen Strategic Value Portfolio 87.06% 1.79% 2.24% 95.57% 1.97% 2.46%
Janus Aspen International Growth Portfolio 59.92% 2.99% 3.53% 90.18% 4.50% 5.32%
Janus Aspen Worldwide Growth Portfolio 68.47% 3.76% 3.84% 90.01% 4.95% 5.04%
Janus Aspen Global Life Sciences Portfolio 91.58% 4.49% 3.93% 91.58% 4.49% 3.93%
Janus Aspen Global Technology Portfolio 89.83% 4.72% 5.11% 90.13% 4.74% 5.13%
Janus Aspen Global Value Portfolio 100.00% 0.00% 0.00% 100.00% 0.00% 0.00%
Janus Aspen Flexible Income Portfolio 78.68% 4.15% 4.49% 90.11% 4.75% 5.14%
Janus Aspen Money Market Portfolio 90.59% 7.38% 2.03% 90.59% 7.38% 2.03%
- ------------------------------------------------------------------------------------------------------------------
</Table>
PROPOSAL 3d
To approve revisions to the fundamental restriction concerning borrowing money
and issuing senior securities.
<Table>
<Caption>
Number of Shares
Record
Portfolio Total Shares Affirmative Against Abstain
==============================================================================================================
Janus Aspen Growth Portfolio 135,882,166 91,837,123 3,445,586 5,616,945
Janus Aspen Aggressive Growth Portfolio 102,551,284 71,448,685 3,473,469 4,643,011
Janus Aspen Capital Appreciation Portfolio 60,121,904 53,456,159 1,695,372 2,612,032
Janus Aspen Core Equity Portfolio 841,530 761,341 36,923 43,266
Janus Aspen Balanced Portfolio 153,576,571 121,254,695 3,617,446 6,218,852
Janus Aspen Growth and Income Portfolio 11,507,874 10,454,188 363,423 555,358
Janus Aspen Strategic Value Portfolio 1,748,189 1,523,946 32,879 35,680
Janus Aspen International Growth Portfolio 60,514,415 36,925,253 1,345,785 1,937,157
Janus Aspen Worldwide Growth Portfolio 206,838,647 144,453,503 5,382,243 7,513,485
Janus Aspen Global Life Sciences Portfolio 6,092,672 5,756,267 79,519 256,875
Janus Aspen Global Technology Portfolio 67,489,850 61,709,091 2,251,298 3,299,492
Janus Aspen Global Value Portfolio 200,005 200,000 -- --
Janus Aspen Flexible Income Portfolio 31,470,614 25,148,676 1,013,310 1,316,572
Janus Aspen Money Market Portfolio 103,356,389 94,822,838 6,384,710 2,148,841
- --------------------------------------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
Percentage of Outstanding Shares Percentage of Shares Voted
Portfolio Affirmative Against Abstain Affirmative Against Abstain
==================================================================================================================
Janus Aspen Growth Portfolio 67.59% 2.54% 4.13% 91.02% 3.41% 5.57%
Janus Aspen Aggressive Growth Portfolio 69.67% 3.39% 4.53% 89.80% 4.37% 5.83%
Janus Aspen Capital Appreciation Portfolio 88.91% 2.82% 4.35% 92.54% 2.94% 4.52%
Janus Aspen Core Equity Portfolio 90.47% 4.39% 5.14% 90.47% 4.39% 5.14%
Janus Aspen Balanced Portfolio 78.95% 2.36% 4.05% 92.50% 2.76% 4.74%
Janus Aspen Growth and Income Portfolio 90.84% 3.16% 4.83% 91.92% 3.20% 4.88%
Janus Aspen Strategic Value Portfolio 87.17% 1.88% 2.04% 95.70% 2.06% 2.24%
Janus Aspen International Growth Portfolio 61.02% 2.22% 3.20% 91.83% 3.35% 4.82%
Janus Aspen Worldwide Growth Portfolio 69.84% 2.60% 3.63% 91.80% 3.42% 4.78%
Janus Aspen Global Life Sciences Portfolio 94.48% 1.31% 4.21% 94.48% 1.31% 4.21%
Janus Aspen Global Technology Portfolio 91.43% 3.34% 4.89% 91.75% 3.35% 4.90%
Janus Aspen Global Value Portfolio 100.00% 0.00% 0.00% 100.00% 0.00% 0.00%
Janus Aspen Flexible Income Portfolio 79.91% 3.22% 4.19% 91.52% 3.69% 4.79%
Janus Aspen Money Market Portfolio 91.74% 6.18% 2.08% 91.74% 6.18% 2.08%
- ------------------------------------------------------------------------------------------------------------------
</Table>
90 and 91 Janus Aspen Series June 30, 2002
NOTES
92 Janus Aspen Series June 30, 2002
NOTES
JANUS ASPEN SERIES JUNE 30, 2002 93
[LOGO] JANUS
www.janus.com
100 Fillmore Street
Denver, CO 80206
1-800-504-4440
Portfolios distributed by Janus Distributors LLC. This material must be preceded
or accompanied by a prospectus. (8/02) 109-24-000 8/02
June 30, 2002
Berger Institutional
Products Trust
Semi-Annual Report
[BERGER FUNDS LOGO]
BERGER IPT-GROWTH FUND
BERGER IPT-LARGE CAP GROWTH FUND
BERGER IPT-SMALL COMPANY GROWTH FUND
BERGER IPT-INTERNATIONAL FUND
BERGER IPT-MID CAP VALUE FUND
BERGER IPT-LARGE CAP VALUE FUND
This report reflects the financial position of each Fund at June 30, 2002 and
the results of operations and changes in their net assets for the periods
indicated.
3
Berger IPT Funds
TABLE OF CONTENTS
================================================================================
<Table>
BERGER IPT FUNDS
Berger IPT-Growth Fund .................................................... 4
Berger IPT-Large Cap Growth Fund .......................................... 8
Berger IPT-Small Company Growth Fund ...................................... 12
Berger IPT-International Fund ............................................. 16
Berger IPT-Mid Cap Value Fund ............................................. 20
Berger IPT-Large Cap Value Fund ........................................... 24
FINANCIAL STATEMENTS AND NOTES
Statements of Assets and Liabilities ...................................... 27
Statements of Operations .................................................. 28
Statements of Changes in Net Assets ....................................... 29
Notes to Financial Statements ............................................. 32
FINANCIAL HIGHLIGHTS ...................................................... 36
FUND TRUSTEES AND OFFICERS (UNAUDITED) .................................... 39
</Table>
Shares of the Funds are not offered directly to the public but are sold only in
connection with investments in variable annuity and variable life insurance
contracts issued by life insurance companies, as well as to certain qualified
retirement plans.
This material must be preceded or accompanied by a prospectus for Berger Funds
that contains more complete information including risks, fees and expenses.
Please read it carefully before you invest. Berger Distributors LLC (8/02)
Berger IPT Funds o June 30, 2002 Semi-Annual Report
4
BERGER IPT- Ticker Symbol BGROX
GROWTH FUND PORTFOLIO MANAGER COMMENTARY JAY W. TRACEY, CFA
================================================================================
Market Conditions
During the first half of 2002, the major stock-market averages gave up
essentially all of their gains from the fourth quarter of 2001 and closed near
their post-9/11 recession lows, despite renewed growth in the economy. In the
first quarter, continued positive economic news was overshadowed by a new crisis
of confidence brought about by the Enron bankruptcy and concerns related to the
escalating conflict in the Middle East. In the second quarter, additional
reports of accounting improprieties, bankruptcies and near- bankruptcies, as
well as other corporate management and governance issues, produced a more
serious loss of confidence, and the stock market sold off sharply. Economic
growth continued in the second quarter, although at a slower pace than in the
first quarter. But the primary issue for the market, in our opinion, was - and
is - a crisis of confidence.
Fund Performance
During the six-month period ended June 30, 2002, the Berger IPT-Growth Fund (the
"Fund") was down 25.53%, underperforming its benchmark, the Russell 3000 Growth
Index,(1) which posted a 20.54% decline, and a 13.16% decline in the Standard &
Poor's (S&P) 500 Index.(2) The Fund's underperformance was primarily a result of
its enterprise software holdings and its position in Tyco International Ltd.
Corporate information technology (IT) spending was weaker than expected, which
particularly hurt enterprise software stocks. Based on deteriorating
fundamentals, most of the Fund's software holdings were reduced or sold. Tyco
was held through most of the period, regrettably, based on our belief in the
viability and attractiveness of its businesses. However, once former CEO Dennis
Koslowski was indicted for tax evasion, the company no longer met our management
credibility requirements and was sold.
The Fund's consumer holdings performed relatively well this period. Casual
dining restaurant chains in particular were strong performers. Holdings in
Brinker International, Inc. and P.F. Chang's China Bistro, Inc., for example,
traded up in response to continued strong sales and earnings performance. Other
consumer areas were mixed. We reduced the Fund's exposure to cable television
stocks as they fell victim to the crisis of confidence, we believe, as a result
of their balance sheet debt and lack of free cash flow. On the other hand,
certain advertising-driven stocks such as Viacom, Inc., a new holding for the
Fund, performed better in response to increased corporate advertising spending
and good earnings reports.
The Fund's results in the healthcare sector were mixed. Biotechnology stocks
were weak, we believe, in part because of concerns about their ability to get
new products approved by a seemingly tougher U.S. Food and Drug Administration,
and because they generally tend to be sensitive to the general direction of the
stock market. We substantially reduced the Fund's biotechnology exposure. The
Fund's newer holdings in healthcare services performed relatively well. Hospital
providers such as Tenet Healthcare Corp., which was added last year, and HMOs
such as Wellpoint Health Networks, Inc. which was added during the period,
responded well to improving fundamentals and accelerating growth.
We reduced the Fund's overall exposure to technology stocks as the
much-anticipated recovery in corporate IT spending appears to have been delayed.
Weightings of various segments were also changed. On the basis of their better
fundamentals, we added semiconductor and semiconductor capital equipment
holdings in place of software holdings that were sold.
The Fund continues to be underweighted in technology as we wait for more
evidence of a broad cyclical improvement in the sector.
In other areas, we moderately increased the Fund's energy exposure, primarily in
services companies, which we believe are poised for an upturn. The Fund's
exposure to financials was also increased from an underweight to an equally
weighted position relative to its benchmark. We believe that economic conditions
and a steep yield curve will continue to favor selected financials enough to
justify being market weighted for at least the intermediate term.
Outlook
Our fundamental growth team believes the economy is on a path of sustained,
moderate growth. Further, and perhaps more important, we believe that low
inflation, moderate unit labor costs and strong productivity gains should result
in a rebound in corporate profit growth in the quarters ahead. Historically, a
corporate profit rebound would be good news for stocks. However, until the
crisis of confidence passes, we believe stocks may not respond to improving
fundamentals. Nevertheless, we are optimistic that, in time, companies with good
fundamentals should win out and the bear market will come to an end.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
5
Berger IPT Funds
PERFORMANCE OVERVIEW
================================================================================
BERGER IPT-GROWTH FUND --
GROWTH OF $10,000
[GRAPH]
<Table>
Berger IPT-Growth Fund $ 8,499
Russell 3000 Growth Index $12,883
S&P 500 Index $16,583
</Table>
AVERAGE ANNUAL TOTAL RETURNS AS OF JUNE 30, 2002
<Table>
One Year (35.46)%
Five Year (5.46)%
Life of Fund (5/1/96) (2.60)%
</Table>
(1) The Russell 3000(R) Growth Index measures the performance of those Russell
3000(R) Index companies with higher price-to-book ratios and higher forecasted
growth values. The stocks in this index are also members of either the Russell
1000(R) Growth or the Russell 2000(R) Growth indexes. The Index is unmanaged,
and investors cannot actually make investments in the Index. Dividends are
reinvested.
(2) The Standard and Poor's 500 Index is a market capitalization weighted index
composed of 500 widely held common stocks listed on the New York Stock Exchange,
American Stock Exchange and Over-the-Counter market. The Index is unmanaged, and
investors cannot actually make investments in the Index. Dividends are
reinvested.
Opinions and forecasts regarding sectors, industries, companies and/or themes
are subject to change at any time based on market conditions and should not be
construed as a recommendation of any specific security. Portfolio holdings and
composition are subject to change.
Past performance is no guarantee of future results. Investment returns and
principal value will fluctuate, and you may have a gain or loss when you sell
shares. Returns for periods of less than one year are not annualized. Due to
market volatility, the Fund's current performance may be lower than the figures
shown. Please visit our web site at berger.com for more current performance
information.
================================================================================
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK (92.93%)
Aerospace/Defense (1.52%)
1,200 Lockheed Martin Corp. $ 83,400
- --------------------------------------------------------------------------------
Aerospace/Defense Equipment (1.05%)
900 Alliant Techsystems, Inc.* 57,420
- --------------------------------------------------------------------------------
Banks - Super Regional (1.10%)
900 Fifth Third Bancorp 59,985
- --------------------------------------------------------------------------------
Commercial Services - Miscellaneous (2.88%)
4,600 The Corporate Executive Board Co.* 157,550
- --------------------------------------------------------------------------------
Commercial Services - Schools (1.41%)
1,900 Education Management Corp.* 77,387
- --------------------------------------------------------------------------------
Computer - Networking (1.16%)
2,100 Brocade Communications Systems, Inc.* 36,708
1,900 Cisco Systems, Inc.* 26,505
- --------------------------------------------------------------------------------
63,213
- --------------------------------------------------------------------------------
Computer - Services (0.74%)
1,600 Anteon International Corp.* 40,448
- --------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK (92.93%) - CONTINUED
Computer Software - Desktop (4.07%)
1,400 Adobe Systems, Inc. $ 39,900
3,340 Microsoft Corp.* 182,698
- --------------------------------------------------------------------------------
222,598
- --------------------------------------------------------------------------------
Computer Software - Enterprise (1.46%)
2,800 J.D. Edwards & Co.* 34,020
3,700 Oracle Corp.* 35,039
3,400 SeeBeyond Technology Corp.* 10,540
- --------------------------------------------------------------------------------
79,599
- --------------------------------------------------------------------------------
Cosmetics/Personal Care (1.07%)
770 Alberto-Culver Co. - Class B 36,806
500 Weight Watchers International, Inc.* 21,720
- --------------------------------------------------------------------------------
58,526
- --------------------------------------------------------------------------------
Electrical - Equipment (2.38%)
4,490 General Electric Co. 130,435
- --------------------------------------------------------------------------------
Electronics - Military Systems (0.49%)
500 L-3 Communications Holdings, Inc.* 27,000
- --------------------------------------------------------------------------------
</Table>
Berger IPT Funds o June 30, 2002 Semi-Annual Report
6
Berger IPT Funds
BERGER IPT-
GROWTH FUND
================================================================================
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
June 30, 2002
- ---------------------------------------------------------------------------------
Shares Value
- ---------------------------------------------------------------------------------
COMMON STOCK (92.93%) - CONTINUED
Electronics - Scientific Instruments (0.55%)
1,000 Photon Dynamics, Inc.* $ 30,000
- ---------------------------------------------------------------------------------
Electronics - Semiconductor Equipment (1.12%)
1,600 Applied Materials, Inc.* 30,432
700 KLA-Tencor Corp.* 30,793
- ---------------------------------------------------------------------------------
61,225
- ---------------------------------------------------------------------------------
Electronics - Semiconductor Manufacturing (3.63%)
3,600 Intel Corp. 65,772
1,900 Intersil Corp. - Class A* 40,622
2,800 Microchip Technology, Inc.* 76,804
2,000 RF Micro Devices, Inc.* 15,240
- ---------------------------------------------------------------------------------
198,438
- ---------------------------------------------------------------------------------
Finance - Consumer/Commercial Loans (3.11%)
1,600 Americredit Corp.* 44,880
1,100 Capital One Financial Corp. 67,155
600 SLM Corp. 58,140
- ---------------------------------------------------------------------------------
170,175
- ---------------------------------------------------------------------------------
Finance - Mortgage & Related Services (1.01%)
900 Freddie Mac 55,080
- ---------------------------------------------------------------------------------
Financial Services - Miscellaneous (6.44%)
5,000 Concord EFS, Inc.* 150,700
1,600 First Data Corp. 59,520
1,400 Fiserv, Inc.* 51,394
2,700 Investors Financial Services Corp. 90,558
- ---------------------------------------------------------------------------------
352,172
- ---------------------------------------------------------------------------------
Food - Miscellaneous Preparation (2.29%)
2,600 Pepsico, Inc. 125,320
- ---------------------------------------------------------------------------------
Insurance - Diversified (1.00%)
800 American International Group, Inc. 54,584
- ---------------------------------------------------------------------------------
Internet - E*Commerce (0.56%)
500 eBay, Inc.* 30,810
- ---------------------------------------------------------------------------------
Leisure Services (1.31%)
2,000 Sabre Holdings Corp.* 71,600
- ---------------------------------------------------------------------------------
Machinery - General Industrial (0.82%)
1,500 Flowserve Corp.* 44,700
- ---------------------------------------------------------------------------------
Media - Cable/Satellite TV (0.68%)
2,000 EchoStar Communications
Corp. - Class A* 37,120
- ---------------------------------------------------------------------------------
Media - Radio/TV (5.44%)
3,400 Clear Channel Communications, Inc.* 108,868
2,200 Univision Communications,
Inc. - Class A* 69,080
2,700 Viacom, Inc. - Class B 119,799
- ---------------------------------------------------------------------------------
297,747
- ---------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK (92.93%) - CONTINUED
Medical - Biomedical/Biotechnology (2.34%)
900 Amgen, Inc.* $ 37,692
1,000 Gilead Sciences, Inc.* 32,880
350 IDEC Pharmaceuticals Corp.* 12,408
1,400 Invitrogen Corp.* 44,814
- --------------------------------------------------------------------------------
127,794
- --------------------------------------------------------------------------------
Medical - Drug/Diversified (2.11%)
1,400 Abbott Laboratories 52,710
1,200 Johnson & Johnson 62,712
- --------------------------------------------------------------------------------
115,422
- --------------------------------------------------------------------------------
Medical - Ethical Drugs (9.47%)
500 Allergan, Inc. 33,375
2,700 King Pharmaceuticals, Inc.* 60,075
6,200 Pfizer, Inc. 217,000
2,400 Pharmacia Corp. 89,880
2,300 Wyeth 117,760
- --------------------------------------------------------------------------------
518,090
- --------------------------------------------------------------------------------
Medical - Genetics (0.55%)
900 Genentech, Inc.* 30,150
- --------------------------------------------------------------------------------
Medical - Health Maintenance Organizations (2.18%)
500 Anthem, Inc.* 33,740
1,100 Wellpoint Health Networks, Inc.* 85,591
- --------------------------------------------------------------------------------
119,331
- --------------------------------------------------------------------------------
Medical - Hospitals (4.09%)
4,700 Health Management Associates,
Inc.- Class A* 94,705
1,800 Tenet Healthcare Corp.* 128,790
- --------------------------------------------------------------------------------
223,495
- --------------------------------------------------------------------------------
Medical - Products (3.20%)
2,400 Baxter International, Inc. 106,680
900 Medtronic, Inc. 38,565
400 St. Jude Medical, Inc.* 29,540
- --------------------------------------------------------------------------------
174,785
- --------------------------------------------------------------------------------
Medical - Wholesale Drugs/Supplies (2.93%)
1,300 AmerisourceBergen Corp. 98,800
1,000 Cardinal Health, Inc. 61,410
- --------------------------------------------------------------------------------
160,210
- --------------------------------------------------------------------------------
Medical/Dental - Services (1.13%)
600 Laboratory Corp. of America Holdings* 27,390
400 Quest Diagnostics, Inc.* 34,420
- --------------------------------------------------------------------------------
61,810
- --------------------------------------------------------------------------------
Oil & Gas - Canadian Integrated (0.59%)
1,800 Suncor Energy, Inc. 32,148
- --------------------------------------------------------------------------------
</Table>
Berger IPT Funds o June 30, 2002 Semi-Annual Report
7
Berger IPT Funds
================================================================================
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares/Par Value Value
- --------------------------------------------------------------------------------
COMMON STOCK (92.93%) - CONTINUED
Oil & Gas - Drilling (2.09%)
1,500 ENSCO International, Inc. $ 40,890
700 Noble Corp.* 27,020
1,500 Transocean, Inc. 46,725
- --------------------------------------------------------------------------------
114,635
- --------------------------------------------------------------------------------
Oil & Gas - Field Services (0.43%)
700 BJ Services Co.* 23,715
- --------------------------------------------------------------------------------
Oil & Gas - Machinery & Equipment (1.50%)
1,900 Weatherford International Ltd.* 82,080
- --------------------------------------------------------------------------------
Retail - Consumer Electronics (1.26%)
1,900 Best Buy Co., Inc.* 68,970
- --------------------------------------------------------------------------------
Retail - Home Furnishings (1.52%)
2,200 Bed Bath & Beyond, Inc.* 83,028
- --------------------------------------------------------------------------------
Retail - Mail Order & Direct (0.99%)
2,300 USA Interactive* 53,935
- --------------------------------------------------------------------------------
Retail - Major Discount Chains (1.71%)
1,700 Wal-Mart Stores, Inc. 93,517
- --------------------------------------------------------------------------------
Retail - Miscellaneous/Diversified (0.56%)
1,500 Hollywood Entertainment Corp.* 31,020
- --------------------------------------------------------------------------------
Retail - Restaurants (5.03%)
5,900 Brinker International, Inc.* 187,325
2,800 P.F. Chang's China Bistro, Inc.* 87,976
- --------------------------------------------------------------------------------
275,301
- --------------------------------------------------------------------------------
Retail/Wholesale - Building Products (1.00%)
1,500 Home Depot, Inc. 55,095
- --------------------------------------------------------------------------------
Telecommunications - Equipment (0.96%)
2,600 UTStarcom, Inc.* 52,442
- --------------------------------------------------------------------------------
Total Common Stock
(Cost $5,465,258) 5,083,505
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT (7.06%)
$386,000 State Street Repurchase Agreement,
1.92%, dated 6/28/02, due 7/1/02,
to be repurchased at $386,062# 386,000
- --------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $386,000) 386,000
- --------------------------------------------------------------------------------
Total Investments (Cost $5,851,258) (99.99%) 5,469,505
Total Other Assets, Less Liabilities (0.01%) 504
- --------------------------------------------------------------------------------
Net Assets (100.00%) $5,470,009
- --------------------------------------------------------------------------------
</Table>
* Non-income producing security.
# - The repurchase agreement is fully collateralized by U.S. government and/or
government agency obligations based on market prices at the date of this
schedule of investments.
See notes to financial statements.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
8
BERGER IPT-LARGE CAP Ticker Symbol BGINX
GROWTH FUND PORTFOLIO MANAGER COMMENTARY STEVEN L. FOSSEL, CFA
================================================================================
Market Conditions
During the first half of 2002, the major stock-market averages gave up
essentially all of their gains from the fourth quarter of 2001 and closed near
their post-9/11 recession lows, despite renewed growth in the economy. In the
first quarter, continued positive economic news was overshadowed by a new crisis
of confidence brought about by the Enron bankruptcy and concerns related to the
escalating conflict in the Middle East. In the second quarter, additional
reports of accounting improprieties, bankruptcies and near- bankruptcies, as
well as other corporate management and governance issues, produced a more
serious loss of confidence, and the stock market sold off sharply. Economic
growth continued in the second quarter, although at a slower pace than in the
first quarter. But the primary issue for the market, in our opinion, was -and
is- a crisis of confidence.
Fund Performance
Against this backdrop, the Berger IPT-Large Cap Growth Fund (the "Fund") posted
a 24.22% loss for the six-month period ended June 30, 2002, underperforming its
benchmark, the Russell 1000 Growth Index,1 which posted a 20.78% decline, and a
13.16% decline in the Standard & Poor's (S&P) 500 Index.2 We attribute much of
the Fund's underperformance to one holding: Tyco International Ltd. Throughout
the period, we slowly reduced the Fund's position in the stock in an attempt to
manage risk and sold out completely following former CEO Dennis Koslowski's
indictment for tax evasion. While we believed Tyco had attractive business
prospects and was inexpensive, we could not overlook management's lack of
credibility.
Throughout the first six months of 2002, we strove to position the Fund to
benefit from an improving economy by adding more cyclical stocks to the
portfolio. We established small positions in the previously unrepresented areas
of basic materials and transportation. We also reduced the Fund's weighting in
the technology and capital goods sectors and increased its weighting in
healthcare and consumer cyclical stocks.
After rallying at the end of the fourth quarter 2001, technology stocks in
general declined sharply in the first part of 2002. Software stocks VeriSign,
Inc. and Check Point Software Technologies Ltd. in particular both hurt the
Fund's performance this period. Corporate spending in these areas was weaker
than expected, and earnings expectations for the remainder of the year are
dismal. As a result, the stocks were sold.
The Fund's healthcare holdings performed well this period. Healthcare services
stocks such as Tenet Healthcare Corp., HCA, Inc. and Wellpoint Health Networks,
Inc. were strong performers. We believe the continuation of strong pricing and
volume trends has led to faster-than-expected earnings growth for these
companies. Allergan, Inc., a new holding, also performed well.
Results in the consumer area were mixed. Cable stocks including Charter
Communications, Inc. and Comcast Corp. performed poorly. Both companies have
rolled out new services that we believe will contribute to growth longer term.
Near term, however, they are being punished for their lack of positive free cash
flow. We sold Charter, but maintained the Fund's position in Comcast because we
believe the company should see substantial savings and improved growth from its
pending acquisition of AT&T Broadband.
In other areas, Sprint Corp. (PCS Group), a wireless services provider, suffered
a large decline for reasons similar to the cable stocks; they are highly
leveraged and are cash-flow-negative. The stock was sold. In financials, Fifth
Third Bancorp., a regional bank, continues to execute well and was a positive
contributor to Fund performance this period. Energy stocks such as Weatherford
International Ltd. were positive contributors to the Fund's performance as
higher commodity prices led to increased drilling activity. Defense stocks also
performed well. The Fund realized gains in Northrop Grumman Corp. and Raytheon
Co.; the proceeds from the sale of these two holdings were used to establish a
new position in Lockheed Martin Corp.
Outlook
Our fundamental growth team believes the economy is on a path of sustained,
moderate growth. Further, and perhaps more important, we believe that low
inflation, moderate unit labor costs and strong productivity gains should result
in a rebound in corporate profits growth in the quarters ahead. Historically, a
corporate profit rebound would be good news for stocks. However, until the
crisis of confidence passes, we believe stocks may not respond to improving
fundamentals. Nevertheless, we are optimistic that, in time, companies with good
fundamentals should win out and the bear market will come to an end.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
9
Berger IPT Funds
PERFORMANCE OVERVIEW
================================================================================
BERGER IPT-LARGE CAP GROWTH FUND-GROWTH OF $10,000
[GRAPH]
<Table>
Berger IPT-Large Cap
Growth Fund $13,997
Russell 1000 Growth Index $13,383
S&P 500 Index $16,583
</Table>
AVERAGE ANNUAL TOTAL RETURNS AS OF JUNE 30, 2002
<Table>
One Year (32.57)%
Five Year 2.58%
Life of Fund (5/1/96) 5.60%
</Table>
(1) The Russell 1000(R) Growth Index measures the performance of those Russell
1000(R) Index companies with higher price-to-book ratios and higher forecasted
growth values. The Index is unmanaged, and investors cannot actually make
investments in the Index. Dividends are reinvested.
(2) The Standard and Poor's 500 Index is a market capitalization weighted index
composed of 500 widely held common stocks listed on the New York Stock Exchange,
American Stock Exchange and Over-the-Counter market. The Index is unmanaged, and
investors cannot actually make investments in the Index. Dividends are
reinvested.
OPINIONS AND FORECASTS REGARDING SECTORS, INDUSTRIES, COMPANIES AND/OR THEMES
ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET CONDITIONS AND SHOULD NOT BE
CONSTRUED AS A RECOMMENDATION OF ANY SPECIFIC SECURITY. PORTFOLIO HOLDINGS AND
COMPOSITION ARE SUBJECT TO CHANGE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Investment returns and
principal value will fluctuate, and you may have a gain or loss when you sell
shares. Returns for periods of less than one year are not annualized. Due to
market volatility, the Fund's current performance may be lower than the figures
shown. Please visit our web site at berger.com for more current performance
information.
================================================================================
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK (95.11%)
Aerospace/Defense (1.49%)
4,300 Lockheed Martin Corp. $298,850
- --------------------------------------------------------------------------------
Banks - Money Center (1.77%)
9,173 Citigroup, Inc. 355,454
- --------------------------------------------------------------------------------
Banks - Super Regional (1.70%)
5,125 Fifth Third Bancorp 341,580
- --------------------------------------------------------------------------------
Commercial Services - Advertising (0.50%)
2,200 Omnicom Group, Inc. 100,760
- --------------------------------------------------------------------------------
Computer - Manufacturers (2.22%)
11,300 Dell Computer Corp.* 295,382
2,090 International Business Machines Corp. 150,480
- --------------------------------------------------------------------------------
445,862
- --------------------------------------------------------------------------------
Computer - Networking (2.43%)
5,000 Brocade Communications Systems, Inc.* 87,400
28,718 Cisco Systems, Inc.* 400,616
- --------------------------------------------------------------------------------
488,016
- --------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK (95.11%) - CONTINUED
Computer Software - Desktop (6.21%)
8,000 Adobe Systems, Inc. $ 228,000
18,660 Microsoft Corp.* 1,020,702
- --------------------------------------------------------------------------------
1,248,702
- --------------------------------------------------------------------------------
Computer Software - Enterprise (0.57%)
12,000 Oracle Corp.* 113,640
- --------------------------------------------------------------------------------
Diversified Operations (0.73%)
9,980 AOL Time Warner, Inc.* 146,806
- --------------------------------------------------------------------------------
Electrical - Equipment (4.05%)
28,020 General Electric Co. 813,981
- --------------------------------------------------------------------------------
Electronics - Miscellaneous Products (1.05%)
9,300 Celestica, Inc.* 211,203
- --------------------------------------------------------------------------------
Electronics - Semiconductor Equipment (1.64%)
6,600 Applied Materials, Inc.* 125,532
4,630 KLA-Tencor Corp.* 203,674
- --------------------------------------------------------------------------------
329,206
- --------------------------------------------------------------------------------
</Table>
Berger IPT Funds o June 30, 2002 Semi-Annual Report
10
BERGER IPT-LARGE CAP
GROWTH FUND
================================================================================
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK (95.11%) - CONTINUED
Electronics - Semiconductor Manufacturing (6.32%)
12,400 Analog Devices, Inc.* $ 368,280
17,000 Intel Corp. 310,590
6,000 Intersil Corp. - Class A* 128,280
4,400 Micron Technology, Inc.* 88,968
15,800 Texas Instruments, Inc. 374,460
- --------------------------------------------------------------------------------
1,270,578
- --------------------------------------------------------------------------------
Finance - Consumer/Commercial Loans (1.40%)
4,600 Capital One Financial Corp. 280,830
- --------------------------------------------------------------------------------
Finance - Investment Brokers (1.02%)
2,800 Goldman Sachs Group, Inc. 205,380
- --------------------------------------------------------------------------------
Finance - Mortgage & Related Services (2.07%)
2,000 Fannie Mae 147,500
4,400 Freddie Mac 269,280
- --------------------------------------------------------------------------------
416,780
- --------------------------------------------------------------------------------
Financial Services - Miscellaneous (3.11%)
14,100 Concord EFS, Inc.* 424,974
5,400 First Data Corp. 200,880
- --------------------------------------------------------------------------------
625,854
- --------------------------------------------------------------------------------
Food - Miscellaneous Preparation (1.05%)
4,400 Pepsico, Inc. 212,080
- --------------------------------------------------------------------------------
Insurance - Diversified (1.55%)
4,580 American International Group, Inc. 312,493
- --------------------------------------------------------------------------------
Internet - E*Commerce (0.95%)
3,100 eBay, Inc.* 191,022
- --------------------------------------------------------------------------------
Leisure - Products (0.51%)
2,000 Harley-Davidson, Inc. 102,540
- --------------------------------------------------------------------------------
Leisure Services (1.10%)
8,000 Carnival Corp. 221,520
- --------------------------------------------------------------------------------
Media - Cable/Satellite TV (2.06%)
11,850 Comcast Corp. - Special Class A* 282,504
7,100 EchoStar Communications
Corp. - Class A* 131,776
- --------------------------------------------------------------------------------
414,280
- --------------------------------------------------------------------------------
Media - Radio/TV (2.88%)
6,000 Clear Channel Communications, Inc.* 192,120
8,700 Viacom, Inc. - Class B 386,019
- --------------------------------------------------------------------------------
578,139
- --------------------------------------------------------------------------------
Medical - Biomedical/Biotechnology (1.93%)
9,280 Amgen, Inc.* 388,646
- --------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK (95.11%) - CONTINUED
Medical - Drug/Diversified (2.88%)
4,700 Abbott Laboratories $ 176,955
7,700 Johnson & Johnson 402,402
- --------------------------------------------------------------------------------
579,357
- --------------------------------------------------------------------------------
Medical - Ethical Drugs (11.62%)
3,000 Allergan, Inc. 200,250
1,800 Eli Lilly & Co. 101,520
26,800 Pfizer, Inc. 938,000
14,280 Pharmacia Corp. 534,786
10,990 Wyeth 562,688
- --------------------------------------------------------------------------------
2,337,244
- --------------------------------------------------------------------------------
Medical - Genetics (1.05%)
6,330 Genentech, Inc.* 212,055
- --------------------------------------------------------------------------------
Medical - Health Maintenance Organizations (0.97%)
2,500 Wellpoint Health Networks* 194,525
- --------------------------------------------------------------------------------
Medical - Hospitals (4.66%)
10,300 HCA, Inc. 489,250
6,250 Tenet Healthcare Corp.* 447,188
- --------------------------------------------------------------------------------
936,438
- --------------------------------------------------------------------------------
Medical - Products (3.02%)
9,200 Baxter International, Inc. 408,940
4,650 Medtronic, Inc. 199,253
- --------------------------------------------------------------------------------
608,193
- --------------------------------------------------------------------------------
Medical - Wholesale Drugs/Supplies (2.14%)
7,000 Cardinal Health, Inc. 429,870
- --------------------------------------------------------------------------------
Metal Ores - Miscellaneous (1.14%)
6,900 Alcoa, Inc. 228,735
- --------------------------------------------------------------------------------
Oil & Gas - Drilling (1.05%)
6,800 Transocean, Inc. 211,820
- --------------------------------------------------------------------------------
Oil & Gas - International Integrated (1.32%)
3,280 TotalFinaElf SA - Spon. ADR 265,352
- --------------------------------------------------------------------------------
Oil & Gas - Machinery & Equipment (1.48%)
6,900 Weatherford International Ltd.* 298,080
- --------------------------------------------------------------------------------
Retail - Consumer Electronics (1.33%)
7,350 Best Buy Co., Inc.* 266,805
- --------------------------------------------------------------------------------
Retail - Mail Order & Direct (0.93%)
8,000 USA Interactive* 187,600
- --------------------------------------------------------------------------------
</Table>
Berger IPT Funds o June 30, 2002 Semi-Annual Report
11
Berger IPT Funds
================================================================================
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares/Par Value Value
- --------------------------------------------------------------------------------
COMMON STOCK (95.11%) - CONTINUED
Retail - Major Discount Chains (4.26%)
4,500 Costco Wholesale Corp.* $ 173,790
12,400 Wal-Mart Stores, Inc. 682,124
- --------------------------------------------------------------------------------
855,914
- --------------------------------------------------------------------------------
Retail/Wholesale - Building Products (3.79%)
11,500 Home Depot, Inc. 422,395
7,500 Lowe's Companies, Inc. 340,500
- --------------------------------------------------------------------------------
762,895
- --------------------------------------------------------------------------------
Soap & Cleaning Preparations (0.98%)
2,200 Procter & Gamble Co. 196,460
- --------------------------------------------------------------------------------
Telecommunications - Equipment (1.14%)
8,134 Nokia Corp. - Spon. ADR 117,780
4,040 QUALCOMM, Inc.* 111,060
- --------------------------------------------------------------------------------
228,840
- --------------------------------------------------------------------------------
Transportation - Air Freight (1.04%)
3,900 FedEx Corp. 208,260
- --------------------------------------------------------------------------------
Total Common Stock
(Cost $21,391,082) 19,122,645
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT (3.29%)
$662,000 State Street Repurchase Agreement,
1.92%, dated 6/28/02, due 7/1/02,
to be repurchased at $662,106# 662,000
- --------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $662,000) 662,000
- --------------------------------------------------------------------------------
Total Investments (Cost $22,053,082) (98.40%) 19,784,645
Total Other Assets, Less Liabilities (1.60%) 321,689
- --------------------------------------------------------------------------------
Net Assets (100.00%) $20,106,334
- --------------------------------------------------------------------------------
</Table>
*Non-income producing security.
ADR - American Depositary Receipt.
# - The repurchase agreement is fully collateralized by U.S. government and/or
government agency obligations based on market prices at the date of this
schedule of investments.
See notes to financial statements.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
12
BERGER IPT-
SMALL COMPANY Ticker Symbol BSCOX
GROWTH FUND PORTFOLIO MANAGER COMMENTARY JAY W. TRACEY, CFA
================================================================================
Effective July 19, 2002, Jay Tracey assumed management of the Berger IPT-Small
Company Growth Fund.
Market Conditions
During the first half of 2002, the major stock-market averages gave up
essentially all of their gains from the fourth quarter of 2001 and closed near
their post-9/11 recession lows, despite renewed growth in the economy. In the
first quarter, continued positive economic news was overshadowed by a new crisis
of confidence brought about by the Enron bankruptcy and concerns related to the
escalating conflict in the Middle East. In the second quarter, additional
reports of accounting improprieties, bankruptcies and near- bankruptcies, as
well as other corporate management and governance issues, produced a more
serious loss of confidence, and the stock market sold off sharply. Economic
growth continued in the second quarter, although at a slower pace than in the
first quarter. But the primary issue for the market, in our opinion, was -and
is- a crisis of confidence.
Fund Performance
The Berger IPT-Small Company Growth Fund (the "Fund") posted a 29.16% loss for
the six-month period ended June 30, 2002, underperforming its benchmark, the
Russell 2000 Growth Index,1 which posted a 17.35% loss, and a 4.70% loss in the
Russell 2000 Index.2 We attribute this underperformance to the Fund's aggressive
stance and some company-specific disappointments.
In general, the Fund's technology holdings disappointed this period,
particularly companies in the software industry. SeeBeyond Technology Corp., an
application integration software vendor, reported disappointing earnings as a
result of a difficult technology spending environment. Genesis Microchip, Inc.,
a manufacturer of semiconductors for flat panel displays, saw its stock decline
after announcing that an acquisition would not be accretive to earnings
immediately. We sold the position late in the first quarter. We continue to hold
technology stocks we believe are fundamentally well-positioned to benefit from
an upturn in the economy despite their short-term issues.
The Fund's relative underweight in financial services companies hurt performance
this period. In general, most banks do not meet our growth-rate criteria, and as
a result we were underweighted in financial companies relative to the benchmark.
Banks in particular posted strong results this period.
Results in the consumer discretionary sector were mixed this period. Restaurants
continued to post strong earnings and their stock prices reflected that
strength. P.F. Chang's China Bistro, Inc. in particular was a strong performer
this period. Other areas, such as radio broadcasters, were negative contributors
to the Fund's performance. In addition to a weak advertising environment, many
of these companies are carrying debt on their balance sheets from past
acquisitions. We anticipate that the Fund's holdings, including Cumulus Media,
Inc., should post stronger results when accounting concerns dissipate, and we
have been adding to positions on this weakness.
Telecommunications stocks had a negative effect on Fund performance this period.
Stock prices of companies such as Sprint affiliate Airgate PCS, Inc. suffered as
subscriber growth among wireless service providers slowed tremendously
throughout the first half of 2002. Because growth prospects in this sector no
longer appear attractive to us, we sold many of the Fund's telecommunications
holdings this period.
The Fund's biotechnology holdings performed poorly this period. ICOS Corp.'s new
product launch was delayed by the FDA, and anti-cancer product developer Cell
Therapeutics, Inc. saw its stock price decline despite showing strong clinical
data. Although investor sentiment on the biotechnology group is quite negative
presently, many of these companies continue to meet expectations for product
sales and milestones for new drug development, and we expect these stocks to
perform better going forward. There were a few bright spots in healthcare,
including Accredo Health, Inc., a distributor of specialty pharmaceutical
products.
Energy services and producer holdings performed relatively well this period.
These include drilling stocks such as Rowan Companies, Inc., which is benefiting
from increased drilling activity in the Gulf of Mexico.
Outlook
Our fundamental growth team believes the economy is on a path of sustained,
moderate growth. Further, and perhaps more important, we believe that low
inflation, moderate unit labor costs and strong productivity gains should result
in a rebound in corporate profits growth in the quarters ahead. Historically, a
corporate profit rebound would be good news for stocks. However, until the
crisis of confidence passes, we believe stocks may not respond to improving
fundamentals. Nevertheless, we are optimistic that, in time, companies with good
fundamentals should win out and the bear market will come to an end.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
13
Berger IPT Funds
PERFORMANCE OVERVIEW
================================================================================
BERGER IPT-SMALL COMPANY GROWTH FUND-GROWTH OF $10,000
[GRAPH]
<Table>
Berger IPT-Small Company Growth Fund $10,359
Russell 2000 Growth Index $ 8,952
Russell 2000 Index $14,410
</Table>
AVERAGE ANNUAL TOTAL RETURNS AS OF JUNE 30,2002
<Table>
One Year (43.98)%
Five Year (0.04)%
Life of Fund (5/1/96) 0.57%
</Table>
(1) Russell 2000(R) Growth Index measures the performance of those Russell
2000(R) Index companies with higher price-to-book ratios and higher forecasted
growth values. The Index is unmanaged, and investors cannot actually make
investments in the Index. Dividends are reinvested.
(2) Russell 2000(R) Index measures the performance of the 2,000 smallest
companies in the Russell 3000(R) Index, and represents approximately 8% of the
total market capitalization of the Russell 3000(R) Index. As of the latest
reconstitution, the average market capitalization was approximately $490
million; the median market capitalization was approximately $395 million. The
index had a total market capitalization range of approximately $1.3 billion to
$128 million. The Index is unmanaged, and investors cannot actually make
investments in the Index. Dividends are reinvested.
OPINIONS AND FORECASTS REGARDING SECTORS,INDUSTRIES,COMPANIES AND/OR THEMES ARE
SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET CONDITIONS AND SHOULD NOT BE
CONSTRUED AS A RECOMMENDATION OF ANY SPECIFIC SECURITY. PORTFOLIO HOLDINGS AND
COMPOSITION ARE SUBJECT TO CHANGE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Investment returns and
principal value will fluctuate, and you may have a gain or loss when you sell
shares. Returns for periods of less than one year are not annualized. The Fund's
performance has sustained significant gains and losses due to market volatility
in the technology sector, and current performance may be lower than the figures
shown. Investments in small company stocks may involve greater risks, including
price volatility, and rewards than investments in larger companies. Please visit
our web site at berger.com for more current performance information.
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK (99.72%)
Auto/Truck - Original Equipment (0.56%)
4,330 Superior Industries
International, Inc. $ 200,263
- --------------------------------------------------------------------------------
Banks - West/Southwest (2.42%)
9,360 Cullen/Frost Bankers, Inc. 336,492
5,680 East West Bancorp., Inc. 196,074
5,740 Southwest Bancorp. of Texas, Inc.* 207,903
8,830 Sterling Bancshares, Inc. 130,419
- --------------------------------------------------------------------------------
870,888
- --------------------------------------------------------------------------------
Commercial Services - Miscellaneous (6.84%)
16,605 FTI Consulting, Inc.* 581,341
32,090 PRG-Schultz International, Inc.* 395,028
43,260 The Corporate Executive Board Co.* 1,481,655
- --------------------------------------------------------------------------------
2,458,024
- --------------------------------------------------------------------------------
Commercial Services - Staffing (2.53%)
14,690 AMN Healthcare Services, Inc.* 514,297
46,460 MPS Group, Inc.* 394,910
- --------------------------------------------------------------------------------
909,207
- --------------------------------------------------------------------------------
Computer - Integrated Systems (1.69%)
18,910 Manhattan Associates, Inc.* 608,145
- --------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK (99.72%) - CONTINUED
Computer - Services (2.49%)
16,240 Anteon International Corp.* $ 410,547
6,190 CACI International, Inc.* 236,396
10,860 Veridian Corp.* 246,522
- --------------------------------------------------------------------------------
893,465
- --------------------------------------------------------------------------------
Computer Software - Desktop (0.35%)
17,340 Roxio, Inc.* 124,847
- --------------------------------------------------------------------------------
Computer Software - Enterprise (3.43%)
9,570 HPL Technologies, Inc.* 144,124
32,250 J.D. Edwards & Co.* 391,838
18,630 JDA Software Group, Inc.* 526,484
54,390 SeeBeyond Technology Corp.* 168,609
- --------------------------------------------------------------------------------
1,231,055
- --------------------------------------------------------------------------------
Computer Software - Medical (1.90%)
10,870 Cerner Corp.* 519,912
12,500 IDX Systems Corp.* 162,750
- --------------------------------------------------------------------------------
682,662
- --------------------------------------------------------------------------------
Cosmetics/Personal Care (0.58%)
13,560 NBTY, Inc.* 209,909
- --------------------------------------------------------------------------------
</Table>
Berger IPT Funds o June 30, 2002 Semi-Annual Report
14
BERGER IPT-
SMALL COMPANY
GROWTH FUND
================================================================================
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK (99.72%) - CONTINUED
Diversified Operations (1.47%)
12,960 Tredegar Corp. $ 312,984
16,210 Walter Industries, Inc. 216,404
- --------------------------------------------------------------------------------
529,388
- --------------------------------------------------------------------------------
Electrical - Control Instruments (0.78%)
13,690 Helix Technology Corp. 282,014
- --------------------------------------------------------------------------------
Electrical - Equipment (1.28%)
20,660 Advanced Energy Industries, Inc.* 458,239
- --------------------------------------------------------------------------------
Electronics - Laser Systems/Components (0.52%)
5,290 Cymer, Inc.* 185,362
- --------------------------------------------------------------------------------
Electronics - Military Systems (0.68%)
13,340 The Titan Corp.* 243,989
- --------------------------------------------------------------------------------
Electronics - Scientific Instruments (0.94%)
11,260 Photon Dynamics, Inc.* 337,800
- --------------------------------------------------------------------------------
Electronics - Semiconductor Equipment (4.55%)
37,630 Axcelis Technologies, Inc. * 425,219
56,690 ChipPAC, Inc. - Class A* 350,344
18,160 Kulicke and Soffa Industries, Inc.* 225,002
12,320 MKS Instruments, Inc.* 247,262
15,780 Mykrolis Corp.* 186,362
5,890 Varian Semiconductor Equipment
Associates, Inc.* 199,848
- --------------------------------------------------------------------------------
1,634,037
- --------------------------------------------------------------------------------
Electronics - Semiconductor Manufacturing (4.10%)
17,290 Amkor Technology, Inc.* 107,544
67,500 Atmel Corp.* 422,550
19,430 Lattice Semiconductor Corp.* 169,818
13,600 Sandisk Corp.* 168,640
9,740 Semtech Corp.* 260,058
12,680 Silicon Laboratories, Inc.* 343,121
- --------------------------------------------------------------------------------
1,471,731
- --------------------------------------------------------------------------------
Finance - Consumer/Commercial Loans (1.91%)
24,520 Americredit Corp.* 687,785
- --------------------------------------------------------------------------------
Finance - Investment Management (2.11%)
12,300 Affiliated Managers Group, Inc.* 756,450
- --------------------------------------------------------------------------------
Financial Services - Miscellaneous (3.37%)
36,130 Investors Financial Services Corp. 1,211,800
- --------------------------------------------------------------------------------
Household - Audio/Video (0.89%)
6,480 Harman International Industries, Inc. 319,140
- --------------------------------------------------------------------------------
Household/Office Furniture (0.46%)
5,510 Furniture Brands International, Inc.* 166,678
- --------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK (99.72%) - CONTINUED
Insurance - Accident & Health (0.69%)
10,410 American Medical Security
Group, Inc.* $ 249,320
- --------------------------------------------------------------------------------
Internet - E*Commerce (0.66%)
7,620 Overstock.com, Inc.* 107,061
6,390 Paypal, Inc.* 129,084
- --------------------------------------------------------------------------------
236,145
- --------------------------------------------------------------------------------
Internet - Security/Solutions (1.22%)
47,830 Digital River, Inc.* 439,558
- --------------------------------------------------------------------------------
Internet - Software (1.12%)
24,410 Concord Communications, Inc.* 402,277
- --------------------------------------------------------------------------------
Leisure - Gaming/Equipment (0.21%)
9,420 Scientific Games Corp. - Class A* 74,795
- --------------------------------------------------------------------------------
Machinery - General Industrial (1.06%)
12,810 Flowserve Corp.* 381,738
- --------------------------------------------------------------------------------
Media - Radio/TV (2.04%)
21,400 Cumulus Media, Inc. - Class A* 294,892
11,190 Radio One, Inc. - Class D* 166,395
27,130 Spanish Broadcasting
System, Inc.- Class A* 271,300
- --------------------------------------------------------------------------------
732,587
- --------------------------------------------------------------------------------
Medical - Biomedical/Biotechnology (4.60%)
22,680 Celgene Corp.* 347,003
50,200 Cell Therapeutics, Inc.* 274,042
8,770 Enzon, Inc.* 215,830
12,820 InterMune, Inc.* 270,502
11,520 Invitrogen Corp.* 368,755
23,880 Medarex, Inc.* 177,190
- --------------------------------------------------------------------------------
1,653,322
- --------------------------------------------------------------------------------
Medical - Ethical Drugs (0.75%)
13,110 First Horizon Pharmaceutical Corp.* 271,246
- --------------------------------------------------------------------------------
Medical - Generic Drugs (3.85%)
17,710 Eon Labs, Inc.* 315,061
31,130 SICOR, Inc.* 577,150
20,050 Taro Pharmaceutical Industries Ltd.* 491,626
- --------------------------------------------------------------------------------
1,383,837
- --------------------------------------------------------------------------------
Medical - Health Maintenance Organizations (2.28%)
16,130 Centene Corp.* 499,707
10,170 MID Atlantic Medical Services* 318,830
- --------------------------------------------------------------------------------
818,537
- --------------------------------------------------------------------------------
Medical - Products (3.55%)
7,530 Bio-Rad Laboratories, Inc.* 342,690
8,550 INAMED Corp.* 228,456
12,910 Therasense, Inc.* 238,448
51,740 Thoratec Corp.* 465,143
- --------------------------------------------------------------------------------
1,274,737
- --------------------------------------------------------------------------------
</Table>
Berger IPT Funds o June 30, 2002 Semi-Annual Report
15
Berger IPT Funds
================================================================================
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK (99.72%) - CONTINUED
Medical - Systems/Equipment (0.36%)
5,560 CTI Molecular Imaging, Inc.* $ 127,546
- --------------------------------------------------------------------------------
Medical/Dental - Services (1.91%)
9,407 Accredo Health, Inc.* 434,039
4,730 DIANON Systems, Inc.* 252,677
- --------------------------------------------------------------------------------
686,716
- --------------------------------------------------------------------------------
Medical/Dental - Supplies (0.60%)
4,540 The Cooper Companies, Inc. 213,834
- --------------------------------------------------------------------------------
Oil & Gas - Drilling (6.08%)
9,510 Helmerich & Payne, Inc. 339,697
11,490 Patterson-UTI Energy, Inc.* 324,363
7,910 Precision Drilling Corp.* 274,793
17,930 Pride International, Inc.* 280,784
45,020 Rowan Companies, Inc. 965,679
- --------------------------------------------------------------------------------
2,185,316
- --------------------------------------------------------------------------------
Oil & Gas - Machinery & Equipment (1.74%)
45,830 Grant Prideco, Inc.* 623,288
- --------------------------------------------------------------------------------
Oil & Gas - U.S. Exploration & Production (1.29%)
10,920 Evergreen Resources, Inc.* 464,100
- --------------------------------------------------------------------------------
Retail - Apparel/Shoe (4.27%)
2,290 Aeropostale, Inc.* 62,677
10,595 AnnTaylor Stores Corp.* 269,007
15,960 Charlotte Russe Holding, Inc.* 356,387
18,380 Hot Topic, Inc.* 490,930
16,060 Pacific Sunwear of California, Inc.* 356,050
- --------------------------------------------------------------------------------
1,535,051
- --------------------------------------------------------------------------------
Retail - Home Furnishings (1.98%)
11,540 Linens 'n Things, Inc.* 378,627
10,850 Williams-Sonoma, Inc.* 332,661
- --------------------------------------------------------------------------------
711,288
- --------------------------------------------------------------------------------
Retail - Miscellaneous/Diversified (1.10%)
11,670 Guitar Center, Inc.* 216,479
13,870 West Marine, Inc.* 176,981
- --------------------------------------------------------------------------------
393,460
- --------------------------------------------------------------------------------
Retail - Restaurants (1.70%)
3,870 AFC Enterprises, Inc.* 120,937
15,640 P.F. Chang's China Bistro, Inc.* 491,409
- --------------------------------------------------------------------------------
612,346
- --------------------------------------------------------------------------------
Retail - Super/Mini Markets (0.94%)
7,020 Whole Foods Market, Inc.* 338,504
- --------------------------------------------------------------------------------
Retail/Wholesale - Auto Parts (0.37%)
9,420 CSK Auto Corp.* 131,315
- --------------------------------------------------------------------------------
Retail/Wholesale - Food (1.02%)
20,190 Fleming Companies, Inc. 366,449
- --------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK (99.72%) - CONTINUED
Steel - Specialty Alloys (0.16%)
4,840 Liquidmetal Technologies* $ 56,144
- --------------------------------------------------------------------------------
Telecommunications - Equipment (2.56%)
70,530 Arris Group, Inc.* 315,974
28,180 Harmonic, Inc.* 103,111
24,900 UTStarcom, Inc.* 502,233
- --------------------------------------------------------------------------------
921,318
- --------------------------------------------------------------------------------
Textile - Apparel Manufacturing (0.41%)
5,990 Quicksilver, Inc.* 148,551
- --------------------------------------------------------------------------------
Transportation - Services (1.85%)
26,100 EGL, Inc.* 442,656
12,840 Pacer International, Inc.* 221,362
- --------------------------------------------------------------------------------
664,018
- --------------------------------------------------------------------------------
Transportation - Truck (3.50%)
7,100 CNF Transportation, Inc. 269,658
8,280 J.B. Hunt Transport Services, Inc.* 244,425
5,760 Swift Transportation Co., Inc.* 134,208
4,750 USFreightways Corp. 179,883
13,210 Yellow Corp.* 428,004
- --------------------------------------------------------------------------------
1,256,178
- --------------------------------------------------------------------------------
Total Common Stock
(Cost $36,915,186) 35,826,399
- --------------------------------------------------------------------------------
PREFERRED STOCK - CONVERTIBLE (0.01%)
Telecommunications - Equipment (0.00%)
39,167 Cidera, Inc. - Series D*@/ --
- --------------------------------------------------------------------------------
Telecommunications - Wireless Services (0.01%)
3,916 Mainstream Data, Inc.*@/ 4,699
- --------------------------------------------------------------------------------
Total Preferred Stock - Convertible
(Cost $342,691) 4,699
- --------------------------------------------------------------------------------
Total Investments (Cost $37,257,877) (99.73%) 35,831,098
Total Other Assets, Less Liabilities (0.27%) 96,746
- --------------------------------------------------------------------------------
Net Assets (100.00%) $35,927,844
- --------------------------------------------------------------------------------
</Table>
*Non-income producing security.
@ - Security valued at fair value determined in good faith pursuant to
procedures established by and under the supervision of the Fund's trustees.
/ Schedule of Restricted Securities and/or Illiquid Securities
<Table>
<Caption>
Fair Value
Date Fair as a %
Acquired Cost Value of Net Assets
---------- ---------- ---------- -------------
Cidera, Inc. -
Series D -
Preferred Stock 9/1/2000 -- -- 0.00%
Mainstream Data, Inc. -
Preferred Stock 2/21/2002 $ 342,691 $ 4,699 0.01%
</Table>
See notes to financial statements.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
16
Ticker Symbol BINLX
BERGER IPT- PORTFOLIO MANAGER COMMENTARY BANK OF IRELAND ASSET
INTERNATIONAL FUND MANAGEMENT (U.S.) LTD.
================================================================================
Market Conditions
In the first quarter, the appearance of a possible economic recovery in the
United States boosted prospects for other economies. Equity markets drifted
lower early in the year before moving forward to finish the quarter in positive
territory. However, fragile investor confidence prompted a slump in almost all
developed equity markets in the second quarter. Business confidence levels rose
in the first half of the period only to sink again following a series of
announcements about manipulated financial statements and bankruptcies. Although
most of the incidents occurred in the United States, debt loads, accounting
inconsistencies and corporate governance around the globe came under renewed
scrutiny as a result.
Fund Performance
The Berger IPT-International Fund (the "Fund") posted a 3.75% loss for the
six-month period ended June 30, 2002, underperforming its benchmark, the MSCI
EAFE Index, 1 which posted a 1.38% loss. The Fund's telecommunications and media
holdings continue to be the main drivers of the negative performance, offset
somewhat by gains in the consumer and oil sectors. The Fund's exposure to more
economically sensitive stocks had a negative impact on performance this period.
By positioning the Fund for a muted global economic recovery, we have tended to
avoid cyclical stocks, which performed well during the first quarter as
investors anticipated a sharp upturn in growth (which has yet to be realized).
As mentioned, Fund performance was hurt most by its telecommunications holdings.
Alcatel SA and Nokia Oyj in particular were disappointments. French-quoted
Alcatel's stock dropped with shrinking demand. Alcatel's management is
responding by aggressively reducing costs with the hope of weathering the
current slump. Shares in Finland's Nokia dropped as the company lowered its
estimate for growth in the mobile-phone handset market. Within this sector, we
were pleased with the performance of Canon, Inc. Canon's shares were boosted by
results released in April that exceed the company's own projections. Aided by
the fall in the yen during the early part of 2002, sales growth was strong in
both digital copiers and cameras.
The Fund's healthcare holdings were some of its best performers this period. In
particular, Novartis AG stood out as a positive contributor. The Swiss
pharmaceutical company's stock rose after releasing positive earnings results
and reiterating its earnings growth targets for 2002-D2005. GlaxoSmithKline PLC
suffered alongside many of its American counterparts in that it suffered from
patent issues. The company lost a court case validating the patent expiry of one
of its key drugs, the antibiotic Augmentin, clearing the way for generic
competition.
Results in the consumer sector were mixed. We were disappointed with the
performance of Vivendi Universal SA. Vivendi, the French-quoted multimedia
company, saw its stock slump amid concerns about the level of debt that it has
amassed during its three-year acquisition spree. Koninklijke Ahold NV also
disappointed us this period. Netherlands-based Ahold is an international food
provider with leading supermarket companies in the United States, Europe, Latin
America and Asia. The company's shares fell when the company restated financial
statements to comply with U.S. accounting rules. On the positive side, Diageo
PLC performed well this period. The U.K.-based beverage company's recent results
were in line with expectations. Diageo continues to focus on its drinks business
by aggressively pursuing the disposal of its Burger King franchise.
The Fund's energy holdings performed well this period. TotalFinaElf SA, the
world's fifth-largest integrated oil company, benefited from the rise of crude
oil prices and continued cost savings from the acquisitions of Petrofina and Elf
Aquitane. Shares in ENI S.p.A., an Italian oil company, also increased this
period after the company reported a rise in second-quarter oil and gas output.
In other areas, we were disappointed with the performance of Telefonica SA and
Vodafone Group PLC. Telefonica is Spain's leading mobile and fixed-line
telecommunications operator, and the largest fixed-line operator in Latin
America. The company's tough domestic markets have been exacerbated by
difficulties in South America, with the economic crisis in Argentina and the
potential escalation of the Brazilian economy's woes. U.K.-quoted Vodafone has
been hurt by worries about the ability of mobile phone companies to generate
sufficient revenue from next-generation services, such as 3G, to justify the
investments of the last few years.
Outlook
We believe current investor sentiment is at a level that does not bode well for
equity markets in the near term. Until the issue of accounting credibility is
resolved, markets may struggle to make sustainable gains. Going forward, we
believe it is likely that equity returns will be lower than in recent periods of
growth. The financial scandals of the last nine months are likely to keep
investor enthusiasm muted in the short term, until it can be shown that these
problems are being addressed. The investigations taking place should provide
some solace in this regard.
As markets shake off the valuation excesses that were built up during the latter
part of the 1990s, we believe attractive opportunities will emerge as the
benefits of anticipated improved economic conditions feed through to corporate
earnings. We continue to look for quality companies with strong balance sheets
where we can identify value investment opportunities.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
17
Berger IPT Funds
PERFORMANCE OVERVIEW
================================================================================
BERGER IPT-INTERNATIONAL FUND -- GROWTH OF $10,000
[GRAPH]
<Table>
Berger IPT-International Fund $10,285
MSCI EAFE Index $10,553
</Table>
AVERAGE ANNUAL TOTAL RETURNS AS OF JUNE 30,2002
<Table>
One Year (10.88)%
Five Year 0.23%
Life of Fund (5/1/97) 0.55%
</Table>
(1) The Morgan Stanley Capital International EAFE Index represents developed
overseas markets. The figures are shown gross of capital gains and dividends.
One cannot invest directly in an index.
OPINIONS AND FORECASTS REGARDING SECTORS, INDUSTRIES, COMPANIES AND/OR THEMES
ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET CONDITIONS AND SHOULD NOT BE
CONSTRUED AS A RECOMMENDATION OF ANY SPECIFIC SECURITY. PORTFOLIO HOLDINGS AND
COMPOSITION ARE SUBJECT TO CHANGE.
Foreign investing involves special risks, such as currency fluctuations and
political and economic uncertainty, which are discussed further in the
prospectus. Investments in the Fund are not insured by the Federal Deposit
Insurance Corporation, are not deposits and are not obligations of,or endorsed
or guaranteed in any way by, any bank.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Investment returns and
principal value will fluctuate, and you may have a gain or loss when you sell
shares. Please visit our web site at berger.com for more current performance
information.
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
June 30, 2002
- ------------------------------------------------------------------------------------------
Country/Shares Company Industry Value
- ------------------------------------------------------------------------------------------
COMMON STOCK (99.92%)
Australia (3.52%)
4,383 Brambles Industries Ltd. Transport $ 23,296
7,520 Foster's Group Ltd. Restaurants/Pubs/Breweries 19,985
1,840 National Australia Bank Ltd. Banks 36,675
3,727 News Corp. Ltd. Media & Photography 20,313
4,052 Westpac Banking Corp. Ltd. Banks 37,052
- ------------------------------------------------------------------------------------------
137,321
- ------------------------------------------------------------------------------------------
Belgium (0.47%)
867 Fortis Banks 18,443
- ------------------------------------------------------------------------------------------
China (0.75%)
138,000 PetroChina Co. Ltd. Oil & Gas 29,370
- ------------------------------------------------------------------------------------------
Finland (0.69%)
1,848 Nokia Oyj Information Technology Hardware 26,997
- ------------------------------------------------------------------------------------------
France (9.60%)
1,800 Alcatel SA Information Technology Hardware 12,491
1,623 Aventis SA Pharmaceuticals 114,791
2,985 AXA Insurance 54,495
380 Lafarge SA Construction & Building Materials 37,833
850 TotalFinaElf SA - Class B Oil & Gas 137,749
778 Vivendi Universal SA Diversified Industrials 16,780
- ------------------------------------------------------------------------------------------
374,139
- ------------------------------------------------------------------------------------------
</Table>
Berger IPT Funds o June 30, 2002 Semi-Annual Report
18
BERGER IPT-
INTERNATIONAL FUND
================================================================================
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
June 30, 2002
- ------------------------------------------------------------------------------------------------------
Country/Shares Company Industry Value
- ------------------------------------------------------------------------------------------------------
COMMON STOCK (99.92%) - CONTINUED
Germany (6.44%)
186 Allianz AG Insurance $ 37,486
1,624 Bayer AG Chemicals - Commodity 51,948
1,603 Bayerische Motoren Werke AG Automobiles 64,960
1,669 E.ON AG Diversified Industrials 96,656
- ------------------------------------------------------------------------------------------------------
251,050
- ------------------------------------------------------------------------------------------------------
Hong Kong (1.85%)
5,000 Cheung Kong (Holdings) Ltd. Real Estate 41,668
4,000 Sun Hung Kai Properties Ltd. Real Estate 30,386
- ------------------------------------------------------------------------------------------------------
72,054
- ------------------------------------------------------------------------------------------------------
Italy (3.52%)
5,169 ENI S.p.A. Oil & Gas 82,035
7,064 Telecom Italia S.p.A. Telecommunications Services 55,219
- ------------------------------------------------------------------------------------------------------
137,254
- ------------------------------------------------------------------------------------------------------
Japan (13.99%)
340 Acom Co. Ltd. Specialty & Other Finance 23,231
3,000 Canon, Inc. + Electronic & Electrical Equipment 113,378
1,000 Fuji Photo Film Co. Ltd. Media & Photography 32,286
7,000 Hitachi Ltd. Information Technology Hardware 45,259
1,200 Honda Motor Co. Ltd. Automobiles 48,655
500 Hoya Corp. Electronic & Electrical Equipment 36,375
300 Nintendo Co. Ltd. Entertainment/Leisure/Toys 44,175
14 NTT DoCoMo, Inc. + Telecommunications Services 34,455
200 Rohm Co. Ltd. Information Technology Hardware 29,850
200 SMC Corp. Engineering & Machinery 23,643
500 Sony Corp. Household Goods & Textiles 26,405
2,000 Takeda Chemical Industries Ltd. + Pharmaceuticals 87,765
- ------------------------------------------------------------------------------------------------------
545,477
- ------------------------------------------------------------------------------------------------------
Netherlands (12.22%)
3,935 ABN Amro Holding NV Banks 71,333
650 Heineken NV Beverages 28,474
5,475 ING Groep NV Banks 140,322
3,230 Koninklijke Ahold NV Food & Drug Retailers 67,819
3,041 Koninklijke Philips Electronics NV Household Goods & Textiles 84,744
3,014 Reed Elsevier NV Media & Photography 41,000
1,115 TPG NV Support Services 25,137
624 VNU NV Media & Photography 17,309
- ------------------------------------------------------------------------------------------------------
476,138
- ------------------------------------------------------------------------------------------------------
Portugal (0.27%)
5,437 Electricidade de Portugal SA Electricity 10,505
- ------------------------------------------------------------------------------------------------------
Singapore (0.15%)
500 Singapore Press Holdings Ltd. Media & Photography 5,633
- ------------------------------------------------------------------------------------------------------
South Korea (1.90%)
600 Kookmin Bank - Spon. ADR * Banks 29,490
625 POSCO - ADR Steel & Other Materials 17,044
200 Samsung Electronics Co. Ltd. * Electronic & Electrical Equipment 27,460
- ------------------------------------------------------------------------------------------------------
73,994
- ------------------------------------------------------------------------------------------------------
Spain (3.04%)
8,354 Banco Santander Central Hispano SA Banks 66,209
6,213 Telefonica SA * Telecommunications Services 52,058
- ------------------------------------------------------------------------------------------------------
118,267
- ------------------------------------------------------------------------------------------------------
Switzerland (12.46%)
595 Nestle SA Food Producers & Processors 138,428
1,835 Novartis AG Pharmaceuticals 80,523
830 Roche Holding Pharmaceuticals 62,605
1,143 Swiss Reinsurance Insurance 111,503
1,845 UBS AG * Banks 92,590
- ------------------------------------------------------------------------------------------------------
485,649
- ------------------------------------------------------------------------------------------------------
</Table>
Berger IPT Funds o June 30, 2002 Semi-Annual Report
19
Berger IPT Funds
================================================================================
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
June 30, 2002
- ------------------------------------------------------------------------------------------------------
Country/Shares Company Industry Value
- ------------------------------------------------------------------------------------------------------
COMMON STOCK (99.92%) - CONTINUED
United Kingdom (29.05%)
1,650 3i Group PLC Investment Co. $ 17,220
825 AstraZeneca PLC Pharmaceuticals 34,163
14,014 Barclays PLC Banks 117,943
1,719 Boots Co. PLC Retail Trade 17,049
6,934 BP PLC Oil & Gas 58,251
3,084 British American Tobacco PLC Tobacco 33,149
5,279 Cadbury Schweppes PLC Food Producers & Processors 39,559
6,053 Compass Group PLC Restaurants/Pubs/Breweries 36,730
7,423 Diageo PLC Beverages 96,425
5,335 GlaxoSmithKline PLC Pharmaceuticals 115,340
6,220 Hilton Group PLC Leisure, Entertainment, & Hotels 21,646
4,560 HSBC Holdings PLC Commercial Banks & Other Banks 52,456
10,288 Lloyds TSB Group PLC Banks 102,427
5,625 Prudential PLC Life Assurance 51,457
1,990 Railtrack Group PLC Transport 6,736
1,606 Reuters Group PLC Media & Photography 8,521
1,050 RMC Group PLC Construction & Building Materials 10,510
13,333 Shell Transport & Trading Co. PLC Oil & Gas 100,624
1,114 Smiths Group PLC Aerospace & Defense 14,470
8,564 Tesco PLC Food & Drug Retailers 31,141
3,510 TI Automotive Ltd. -
Ordinary A Shares *@A Automobile Components --
8,011 Unilever PLC Food Producers & Processors 73,040
43,174 Vodafone Group PLC Telecommunications Services 59,243
1,180 Wolseley PLC Construction & Building Materials 11,964
2,640 WPP Group PLC Media & Photography 22,299
- ------------------------------------------------------------------------------------------------------
1,132,363
- ------------------------------------------------------------------------------------------------------
Total Common Stock
(Cost $3,511,664) 3,894,654
- ------------------------------------------------------------------------------------------------------
RIGHTS (0.00%)
Hong Kong (0.00%)
200 Cheung Kong (Holdings) Ltd. Rights Real Estate --
- ------------------------------------------------------------------------------------------------------
Total Rights
(Cost $0) --
- ------------------------------------------------------------------------------------------------------
Total Investments (Cost $3,511,664) (99.92%) 3,894,654
Total Other Assets, Less (0.08%) 3,257
- ------------------------------------------------------------------------------------------------------
Net Assets (100.00%) $3,897,911
- ------------------------------------------------------------------------------------------------------
</Table>
Outstanding Forward Foreign Currency Contracts
<Table>
<Caption>
Unrealized
Contract Maturity Value on Appreciation/
Currency Amount Date June 30, 2002 (Depreciation)
- ---------------------------------------------------------------------------------------
Sell Japanese Yen 8,544,000 7/15/2002 $71,344 $ (6,187)
Sell Japanese Yen 3,200,000 7/15/2002 26,720 995
Sell Japanese Yen 2,520,000 7/22/2002 21,050 (1,664)
Sell Japanese Yen 2,264,000 7/22/2002 18,912 (1,048)
Sell Japanese Yen 6,595,000 8/13/2002 55,153 (3,588)
Sell Japanese Yen 1,900,000 8/13/2002 15,889 592
Sell Japanese Yen 1,357,000 8/28/2002 11,357 21
- ---------------------------------------------------------------------------------------
$220,425 $(10,879)
- ---------------------------------------------------------------------------------------
</Table>
* Non-income producing security.
ADR - American Depositary Receipt.
PLC - Public Limited Company.
+ - Security is designated as collateral for forward foreign currency contracts.
@ - Security valued at fair value determined in good faith pursuant to
procedures established by and under the supervision of the Fund's trustees.
/ Schedule of Restricted Securities and/or Illiquid Securities
<Table>
<Caption>
Fair Value
Date Fair as a %
Acquired Cost Value of Net Assets
- ----------------------------------------------------------------------
TI Automotive Ltd. -
Ordinary A Shares 6/30/2001 $0 $0 0.00%
</Table>
See notes to financial statements.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
20
Ticker Symbol BIMVX
PORTFOLIO MANAGER COMMENTARY THOMAS M. PERKINS
BERGER IPT-MIDCAP ROBERT H. PERKINS
VALUE FUND JEFFREY KAUTZ, CFA
================================================================================
Market Conditions
Unlike the fourth quarter 2001, in which almost all economic sectors were up,
there were mixed pockets of sector strength and weakness in the first quarter
2002. Our belief in March was that the strength could mark a return to more
normal market conditions after the unusually strong fourth-quarter rally.
However, weak capital spending, sluggish corporate profits, unethical accounting
practices and geopolitical events had a dramatic impact on the markets in the
second quarter. The situation was exacerbated in the last few weeks of the
quarter. In our opinion, most of these negative influences may have run their
full course and should ultimately become more positive. Unfortunately, the
threat of terrorism and political unrest will likely be with us for the long
term. And it is difficult to know if investors, who have generally bought stocks
over the past decade, will decide to lower their high exposure to equities. Thus
the market could enjoy sharp rallies but may remain in an intermediate-term
downtrend. In this difficult market environment, we will keep our focus on
seeking long-term value as it surfaces.
Fund Performance
The Berger IPT-Mid Cap Value Fund (the "Fund") posted a loss of 1.90% for the
six months ended June 30, 2002, underperforming its benchmark, the Russell
Midcap Value Index,1 which posted a 2.86% gain this period. We attribute this
underperformance to the Fund's overweighted position in technology stocks.
Technology was the Fund's weakest performing sector this period. Throughout both
quarters, we increased our exposure to this sector. Our somewhat aggressive
overweight position in technology is hurting near-term performance. However, we
continue to believe that this weakness presents long-term opportunity. We
started new positions in IONA Technologies PLC, Micromuse, Inc., Openwave
Systems, Inc., Comverse Technology, Inc., Autodesk, Inc. and SonicWall, Inc.
Continued weakness in the telecommunications arena had a negative impact on the
Fund's holdings both quarters. One exception was Asyst Technologies, Inc., which
we sold on strength in the first quarter to reinvest in more attractively valued
issues. Before the sharp quarter-end declines, we realized short-term losses and
eliminated Tellabs, Inc., ADC Telecommunications, Inc. and Amdocs Ltd. These
stocks were all directly affected by the unusually difficult telecommunications
market.
After a strong first quarter, the Fund's healthcare holdings were down modestly
in the second quarter. During the second quarter, we took profits in Health
Management Associates, Inc. and purchased other rural hospital management
companies in which we believe valuations appear more attractive, e.g., Province
Healthcare Co. and LifePoint Hospitals, Inc.
In the consumer area, performance was mixed. We ended the first quarter
underweighted in the consumer sector because we considered consumer-spending
levels to be uncertain and felt there was less risk in other areas. We are now
beginning to see some value opportunities materialize at the individual stock
level. We initiated positions in three new consumer companies in the second
quarter after they suffered sharp stock price declines: American Eagle
Outfitters, Inc., Foot Locker, Inc. and O'Reilly Automotive, Inc.
In general, the Fund's energy holdings outperformed in the second quarter but
gave back some of the gains they achieved in the first quarter. Commodity prices
continued to rebound in the first quarter, and investors seemed to grow more
optimistic about a cyclical upturn. Sentiment turned in the second quarter,
though, and commodity prices experienced near-term weakness. We continue to like
the long-term fundamentals for the sector and look to increase the Fund's
exposure on weakness.
This period, financials were the Fund's largest sector weighting, and stocks in
this sector were the Fund's largest positive contributors. In the first quarter,
only one holding, Waddell & Reed Financial, Inc., declined in price and we took
the opportunity to increase the Fund's position in the company. However, given
current valuations and the potential for a Federal Reserve tightening cycle, we
remain underweighted relative to the benchmark. We took profits in property and
casualty insurers The St. Paul Companies, Inc. and Mercury General Corp., which
had reached our sell-price targets.
Outlook
We are maintaining a somewhat cautious stance in terms of the Fund's
positioning. While the economy appears to be recovering, albeit at a slower pace
than many investors had hoped for, the near-term "headline risk" continues to
run high. With terrorism warnings, accounting scandals and high-profile
corporate misconduct dominating the news headlines, we believe the current high
market P/E ratio is at risk. In our opinion, earnings growth will most likely
not be strong enough to generate a sustainable market rally. Further, although
we were net buyers as stocks declined, we are continuing to maintain
above-normal cash levels. We still believe the most attractive long-term segment
of the market is in small- and mid-cap stocks that are selling at below-average
valuations of normalized earnings. While our overweighting of the technology
sector was clearly premature, we see the most compelling opportunities stemming
from this group and believe our patience will be rewarded over time. It is
interesting to note that in recent index rebalancing, technology weightings in
the value component increased. Just as irrational exuberance appears to have led
to excessive valuations, current market pessimism seems to have created some
unusual bargains.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
21
Berger IPT Funds
PERFORMANCE OVERVIEW
================================================================================
BERGER IPT-MID CAP VALUE FUND -- GROWTH OF $10,000
[GRAPH]
<Table>
Berger IPT-Mid Cap Value Fund $ 9,810
Russell Midcap Value Index $10,286
</Table>
TOTAL RETURN AS OF JUNE 30,2002
<Table>
Life of Fund (12/31/01) (1.90)%
</Table>
(1) Russell Midcap(R) Value Index measures the performance of those Russell
Midcap(R) Index companies with lower price-to-book ratios and lower forecasted
growth values. The stocks are also members of the Russell 1000(R) Value
index. The Index is unmanaged, and investors cannot actually make investments in
the Index. Dividends are reinvested.
OPINIONS AND FORECASTS REGARDING SECTORS, INDUSTRIES, COMPANIES AND/OR THEMES
ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET CONDITIONS AND SHOULD NOT BE
CONSTRUED AS A RECOMMENDATION OF ANY SPECIFIC SECURITY. PORTFOLIO HOLDINGS AND
COMPOSITION ARE SUBJECT TO CHANGE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Investment returns and
principal value will fluctuate, and you may have a gain or loss when you sell
shares. Returns for periods of less than one year are not annualized. Due to
market volatility, the Fund's current performance may be lower than the figures
shown. Due to recent market volatility,the Fund may have an increased position
in cash for temporary defensive purposes. Please visit our web site at
berger.com for more current performance information.
================================================================================
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
June 30, 2002
- ------------------------------------------------------------------------
Shares Value
- ------------------------------------------------------------------------
COMMON STOCK (91.44%)
Auto/Truck - Original Equipment (2.66%)
150 Autoliv, Inc. $ 3,780
40 Magna International, Inc. - Class A 2,754
- ------------------------------------------------------------------------
6,534
- ------------------------------------------------------------------------
Banks - Northeast (1.24%)
100 Wilmington Trust Corp. 3,050
- ------------------------------------------------------------------------
Banks - Southeast (0.68%)
50 Compass Bancshares, Inc. 1,680
- ------------------------------------------------------------------------
Banks - Super Regional (1.33%)
125 SouthTrust Corp. 3,265
- ------------------------------------------------------------------------
Building - Air Conditioning & Heating Products (1.08%)
50 Tecumseh Products Co. - Class A 2,654
- ------------------------------------------------------------------------
Building - Hand Tools (0.61%)
50 Snap-On, Inc. 1,485
- ------------------------------------------------------------------------
Building - Heavy Construction (0.95%)
60 Fluor Corp. 2,337
- ------------------------------------------------------------------------
</Table>
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK (91.44%) - CONTINUED
Building - Residential/Commercial (2.48%)
45 Pulte Homes, Inc. $ 2,587
100 Standard Pacific Corp. 3,508
- --------------------------------------------------------------------------------
6,095
- --------------------------------------------------------------------------------
Building Products - Wood (1.00%)
50 Rayonier, Inc. 2,457
- --------------------------------------------------------------------------------
Chemicals - Specialty (0.95%)
200 Hercules, Inc.* 2,320
- --------------------------------------------------------------------------------
Commercial Services - Miscellaneous (0.60%)
75 Convergys Corp.* 1,461
- --------------------------------------------------------------------------------
Commercial Services - Staffing (0.68%)
140 Spherion Corp.* 1,666
- --------------------------------------------------------------------------------
Computer - Graphics (0.54%)
100 Autodesk, Inc. 1,325
- --------------------------------------------------------------------------------
Computer - Integrated Systems (0.76%)
50 Diebold, Inc. 1,862
- --------------------------------------------------------------------------------
</Table>
Berger IPT Funds o June 30, 2002 Semi-Annual Report
22
BERGER IPT-MID CAP
VALUE FUND
================================================================================
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
June 30, 2002
- -------------------------------------------------------------------------------
Shares Value
- -------------------------------------------------------------------------------
COMMON STOCK (91.44%) - CONTINUED
Computer - Memory Devices (1.70%)
100 Adaptec, Inc.* $ 789
400 Advanced Digital Information Corp.* 3,372
- -------------------------------------------------------------------------------
4,161
- -------------------------------------------------------------------------------
Computer Software - Desktop (0.29%)
80 Macromedia, Inc.* 710
- -------------------------------------------------------------------------------
Computer Software - Enterprise (1.15%)
200 IONA Technologies PLC - ADR* 1,060
380 Micromuse, Inc.* 1,763
- -------------------------------------------------------------------------------
2,823
- -------------------------------------------------------------------------------
Electronics - Measuring Instruments (0.53%)
35 Mettler Toledo International, Inc.* 1,290
- -------------------------------------------------------------------------------
Electronics - Miscellaneous Components (0.90%)
100 Vishay Intertechnology, Inc.* 2,200
- -------------------------------------------------------------------------------
Electronics - Scientific Instruments (1.40%)
100 Newport Corp.* 1,566
70 Waters Corp.* 1,869
- -------------------------------------------------------------------------------
3,435
- -------------------------------------------------------------------------------
Electronics - Semiconductor Equipment (0.41%)
50 Asyst Technologies, Inc.* 1,018
- -------------------------------------------------------------------------------
Electronics - Semiconductor Manufacturing (0.81%)
50 Fairchild Semiconductor Corp. - Class A* 1,215
100 Silicon Storage Technology, Inc.* 780
- -------------------------------------------------------------------------------
1,995
- -------------------------------------------------------------------------------
Finance - Investment Brokers (1.01%)
50 Legg Mason, Inc. 2,467
- -------------------------------------------------------------------------------
Finance - Investment Management (2.90%)
100 Franklin Resources, Inc. 4,264
125 Waddell & Reed Financial, Inc. -
Class A 2,865
- -------------------------------------------------------------------------------
7,129
- -------------------------------------------------------------------------------
Finance - Mortgage & Related Services (1.47%)
75 Countrywide Credit Industries, Inc. 3,619
- -------------------------------------------------------------------------------
Finance - REIT (7.41%)
100 Archstone-Smith Trust 2,670
75 Avalonbay Communities, Inc. 3,502
125 Equity Residential 3,594
100 Home Properties Of New York, Inc. 3,794
100 Vornado Realty Trust 4,620
- -------------------------------------------------------------------------------
18,180
- -------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
June 30, 2002
- -------------------------------------------------------------------------------
Shares Value
- -------------------------------------------------------------------------------
COMMON STOCK (91.44%) - CONTINUED
Finance - Savings & Loan (2.60%)
50 Astoria Financial Corp. $ 1,603
125 Webster Financial Corp. 4,780
- -------------------------------------------------------------------------------
6,383
- -------------------------------------------------------------------------------
Household/Office Furniture (0.51%)
50 La-Z-Boy, Inc. 1,261
- -------------------------------------------------------------------------------
Insurance - Property/Casualty/Title (4.59%)
75 Cincinnati Financial Corp. 3,490
100 IPC Holdings Ltd. 3,054
150 Old Republic International Corp. 4,725
- -------------------------------------------------------------------------------
11,269
- -------------------------------------------------------------------------------
Internet - Security/Solutions (0.35%)
170 SonicWall, Inc.* 853
- -------------------------------------------------------------------------------
Internet - Software (1.65%)
100 Filenet Corp.* 1,450
200 Openwave Systems, Inc.* 1,122
150 Webmethods, Inc.* 1,485
- -------------------------------------------------------------------------------
4,057
- -------------------------------------------------------------------------------
Leisure - Hotels & Motels (1.05%)
100 Fairmont Hotels & Resorts, Inc. 2,578
- -------------------------------------------------------------------------------
Leisure - Products (0.57%)
50 Brunswick Corp. 1,400
- -------------------------------------------------------------------------------
Leisure Services (2.53%)
50 Carnival Corp. 1,385
100 Cendant Corp.* 1,588
125 Dollar Thrifty Automotive Group, Inc.* 3,237
- -------------------------------------------------------------------------------
6,210
- -------------------------------------------------------------------------------
Machinery - Construction/Mining (1.41%)
200 Joy Global, Inc.* 3,468
- -------------------------------------------------------------------------------
Machinery - General Industrial (1.33%)
85 Briggs & Stratton Corp. 3,259
- -------------------------------------------------------------------------------
Media - Periodicals (0.69%)
90 The Reader's Digest Association, Inc. -
Class A 1,686
- -------------------------------------------------------------------------------
Medical - Hospitals (1.34%)
60 LifePoint Hospitals, Inc.* 2,179
50 Province Healthcare Co.* 1,118
- -------------------------------------------------------------------------------
3,297
- -------------------------------------------------------------------------------
Medical - Nursing Homes (1.64%)
175 Manor Care, Inc.* 4,025
- -------------------------------------------------------------------------------
</Table>
Berger IPT Funds o June 30, 2002 Semi-Annual Report
23
Berger IPT Funds
================================================================================
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK (91.44%) - CONTINUED
Medical/Dental - Services (2.11%)
150 Omnicare, Inc. $ 3,939
100 Quintiles Transnational Corp.* 1,249
- --------------------------------------------------------------------------------
5,188
- --------------------------------------------------------------------------------
Medical/Dental - Supplies (1.83%)
50 Becton Dickinson & Co. 1,723
75 Invacare Corp. 2,775
- --------------------------------------------------------------------------------
4,498
- --------------------------------------------------------------------------------
Metal - Processing & Fabrication (1.07%)
175 Maverick Tube Corp.* 2,625
- --------------------------------------------------------------------------------
Office - Equipment & Automation (0.60%)
125 InFocus Corp.* 1,473
- --------------------------------------------------------------------------------
Oil & Gas - Drilling (2.15%)
75 Helmerich & Payne, Inc. 2,679
75 Precision Drilling Corp.* 2,606
- --------------------------------------------------------------------------------
5,285
- --------------------------------------------------------------------------------
Oil & Gas - Field Services (1.07%)
250 Key Energy Services, Inc.* 2,625
- --------------------------------------------------------------------------------
Oil & Gas - International Exploration & Production (1.53%)
70 Kerr-McGee Corp. 3,748
- --------------------------------------------------------------------------------
Oil & Gas - U.S. Exploration & Production (7.74%)
50 Burlington Resources, Inc. 1,900
30 EOG Resources, Inc. 1,191
100 Newfield Exploration Co.* 3,717
120 Noble Energy, Inc. 4,326
175 Ocean Energy, Inc. 3,792
125 Pogo Producing Co. 4,078
- --------------------------------------------------------------------------------
19,004
- --------------------------------------------------------------------------------
Paper & Paper Products (1.05%)
75 Boise Cascade Corp. 2,590
- --------------------------------------------------------------------------------
Pollution Control - Services (1.75%)
225 Republic Services, Inc.* 4,290
- --------------------------------------------------------------------------------
Retail - Apparel/Shoe (3.32%)
125 American Eagle Outfitters, Inc.* 2,643
200 Foot Locker, Inc.* 2,890
75 Talbots, Inc. 2,625
- --------------------------------------------------------------------------------
8,158
- --------------------------------------------------------------------------------
Retail - Department Stores (1.21%)
75 Federated Department Stores, Inc.* 2,977
- --------------------------------------------------------------------------------
Retail - Miscellaneous/Diversified (1.25%)
175 Toys R US, Inc.* 3,056
- --------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares/Par Value Value
- --------------------------------------------------------------------------------
COMMON STOCK (91.44%) - CONTINUED
Retail/Wholesale - Auto Parts (0.84%)
75 O'Reilly Automotive, Inc.* $ 2,066
- --------------------------------------------------------------------------------
Shoes & Related Apparel (1.07%)
150 Wolverine World Wide, Inc. 2,617
- --------------------------------------------------------------------------------
Telecommunications - Equipment (2.85%)
200 C-COR.net Corp.* 1,400
150 Comverse Technology, Inc.* 1,389
250 DMC Stratex Networks, Inc.* 503
150 Dycom Industries, Inc.* 1,753
200 Remec, Inc.* 1,122
50 Scientific-Atlanta, Inc. 823
- --------------------------------------------------------------------------------
6,990
- --------------------------------------------------------------------------------
Telecommunications - Wireless Services (1.23%)
50 Telephone & Data Systems, Inc. 3,027
- --------------------------------------------------------------------------------
Transportation - Equipment Manufacturing (1.06%)
125 Trinity Industries, Inc. 2,590
- --------------------------------------------------------------------------------
Transportation - Shipping (0.75%)
50 Teekay Shipping Corp. 1,845
- --------------------------------------------------------------------------------
Transportation - Truck (1.16%)
75 CNF Transportation, Inc. 2,848
- --------------------------------------------------------------------------------
Total Common Stock
(Cost $230,443) 224,464
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENT (9.37%)
$23,000 State Street Repurchase Agreement,
1.92%, dated 6/28/02, due 7/1/02,
to be repurchased at $23,004# 23,000
- --------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $23,000) 23,000
- --------------------------------------------------------------------------------
Total Investments (Cost $253,443) (100.81%) 247,464
Total Other Assets, Less Liabilities (-0.81%) (1,974)
- --------------------------------------------------------------------------------
Net Assets (100.00%) $ 245,490
- --------------------------------------------------------------------------------
</Table>
*Non-income producing security.
ADR - American Depositary Receipt.
PLC - Public Limited Company.
# - The repurchase agreement is fully collateralized by U.S. government and/or
government agency obligations based on market prices at the date of this
schedule of investments.
See notes to financial statements.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
24
Ticker Symbol BILVX
BERGER IPT-LARGE CAP PORTFOLIO MANAGER COMMENTARY WILLIAM F.K. SCHAFF, CFA
VALUE FUND STEVE BLOCK, CFA
================================================================================
Market Conditions
The first quarter of 2002 appeared to demonstrate the resilience of the U.S.
economy. Inventories had been worked down, manufacturing was stronger,
unemployment was still relatively low, consumer sentiment had risen, inflation
and interest rates were at 40-year lows, and new home sales and housing starts
remained particularly robust. However, weak capital spending, sluggish corporate
profits, unethical accounting practices and geopolitical events had a dramatic
impact on the markets in the second quarter. Despite these overwhelming
negatives, as companies reported their first-quarter earnings, in many cases the
news was not quite as bad as many feared; signs of improvement were detailed in
many conference calls to investors. In a new trend, more information was
divulged to analysts as more companies attempted to make their financials as
transparent as possible. We believe this move should also help alleviate
investors' concerns -we expect bargain hunters to support the equity markets in
the coming weeks.
Fund Performance
For the six months ended June 30, 2002, the Berger IPT-Large Cap Value Fund (the
"Fund") posted a 10.20% loss, underperforming its benchmark, the Russell 1000
Value Index,1 which posted a 4.78% loss. We attribute this underperformance to
the Fund's underweighting in cyclical industries and its lack of consumer
staples stocks -areas that performed well in both quarters. Additionally, in the
first quarter the Fund suffered from steep declines in WorldCom, Inc. (sold
during the first quarter) and Convergys Corp., two holdings in or exposed to the
strongly out-of-favor telecommunications area.
Technology was one of the weakest sectors this period and continued to suffer
from an anemic corporate-spending environment. The prices of many of the Fund's
technology holdings bounced between good and bad during the period. For example,
NCR Corp., an information management company was able to post a strong gain in
the first quarter but saw its stock price driven down in the second quarter
after reporting a slowdown in its Teradata business. Motorola, Inc.'s stock
performed poorly in the first quarter as investors shied away from most
telecommunications-related issues, but performed well in the second quarter
after returning to profitability as a result of turnarounds in their handset
division.
Among consumer stocks, Black & Decker Corp. was a positive contributor to Fund
performance for both quarters. We sold the Fund's position in the second quarter
to take gains. AOL Time Warner, Inc. was a disappointment throughout the period.
AOL continues to struggle with a weak advertising environment, high levels of
debt and a slowdown in their dial-up internet subscriber division.
Healthcare hits and misses were relatively balanced this period. Aetna, Inc.
contributed positively to the Fund's performance. Its stock benefited from a
broad upswing experienced by many managed healthcare providers this quarter. We
were disappointed by the performance of Merck & Co., Inc. Its stock sank
alongside many other pharmaceutical drug makers. We believe the sizable number
of new drugs in Merck's pipeline should fuel its growth into the future and
therefore continue to hold the stock.
The Fund's largest sector weighting continues to be financials. In the first
quarter, we sold the Fund's position in J.P. Morgan Chase & Co. on the belief
that its exposure to declines in investment banking, trading, consumer credit,
Argentina and other areas will threaten profitability for some time to come. We
replaced this stock with Wells Fargo & Co. because we believed the price of
Wells Fargo stock had fallen too far. We were disappointed with the performance
of State Street Corp. Although the company is diversified with custody and trust
services, State Street's growth has diminished with the decline in the financial
markets. We believe that as the economy recovers, its business prospects will
improve.
As the market decayed throughout the second quarter, a number of opportunities
arose to buy companies at what we believe are discounts to their fair value. We
established a position in Duke Energy Corp., a major diversified utility. We
also took the opportunity to add Fleet Boston Financial Corp. to the portfolio.
Penney (J.C.) Co. was also added during the period. Penney's has a new, highly
respected management team that is quickly repositioning the company; we expect
them to improve profitability and reinvigorate growth.
We eliminated positions in billing software providers Amdocs Ltd. and Convergys
Corp. It appears to us the telecommunications sector decline has not yet reached
its trough, and the decline is now having an impact on many companies' critical
services spending. We also sold the Fund's positions in ITT Industries, Inc. and
Boston Properties, Inc. for gains, as we believe the stocks have become slightly
overpriced.
Outlook
Generally, the companies that have outperformed the market to date have been
those with large exposure to macroeconomic trends. We do not believe current
valuations in these cyclical businesses will remain at lofty levels. We believe
valuations have been driven to peak levels as investors looked for tangible
assets and that when the economy improves, cyclical companies will tend to
underperform as their stock prices have already anticipated the recovery. The
Fund is usually underweighted in these cyclical industries because we believe
more consistent, better-performing companies can be owned at attractive
valuations, thus providing more upside opportunities over the longer term.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
25
Berger IPT Funds
PERFORMANCE OVERVIEW
================================================================================
BERGER IPT-LARGE CAP VALUE FUND -- GROWTH OF $10,000
<Table>
Berger IPT-Large Cap Value Fund $8,980
Russell 1000 Value Index $9,522
</Table>
TOTAL RETURN AS OF JUNE 30,2002
<Table>
Life of Fund (12/31/01) (10.20)%
</Table>
(1) The Russell 1000(R) Value Index represents large capitalization U.S. stocks
with less-than-average growth orientation. The Index is unmanaged, and investors
cannot actually make investments in the Index. Dividends are reinvested.
OPINIONS AND FORECASTS REGARDING SECTORS, INDUSTRIES, COMPANIES AND/OR THEMES
ARE SUBJECT TO CHANGE AT ANY TIME BASED ON MARKET CONDITIONS AND SHOULD NOT BE
CONSTRUED AS A RECOMMENDATION OF ANY SPECIFIC SECURITY. PORTFOLIO HOLDINGS AND
COMPOSITION ARE SUBJECT TO CHANGE.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. Investment returns and
principal value will fluctuate,and you may have a gain or loss when you sell
shares. Returns for periods of less than one year are not annualized. Due to
market volatility,the Fund's current performance may be lower than the figures
shown. Please visit our web site at berger.com for more current performance
information.
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK (96.03%)
Banks - Money Center (2.86%)
190 Bank of New York Co., Inc. $ 6,413
- --------------------------------------------------------------------------------
Banks - Super Regional (13.97%)
120 BB&T Corp. 4,632
170 Fleet Boston Financial Corp. 5,500
270 Mellon Financial Corp. 8,486
110 PNC Financial Services Group 5,751
140 Wells Fargo & Co. 7,008
- --------------------------------------------------------------------------------
31,377
- --------------------------------------------------------------------------------
Building - Construction Products/Miscellaneous (3.34%)
277 Masco Corp. 7,508
- --------------------------------------------------------------------------------
Commercial Services - Advertising (1.76%)
160 Interpublic Group Cos., Inc. 3,962
- --------------------------------------------------------------------------------
Computer - Integrated Systems (3.08%)
200 NCR Corp.* 6,920
- --------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK (96.03%) - CONTINUED
Computer - Manufacturers (2.23%)
328 Hewlett-Packard Co. $ 5,012
- --------------------------------------------------------------------------------
Computer - Services (1.82%)
110 Electronic Data Systems Corp. 4,087
- --------------------------------------------------------------------------------
Diversified Operations (11.29%)
330 AOL Time Warner, Inc.* 4,854
180 Emerson Electric Co. 9,632
160 United Technologies Corp. 10,864
- --------------------------------------------------------------------------------
25,350
- --------------------------------------------------------------------------------
Electronics - Semiconductor Manufacturing (1.71%)
210 Intel Corp. 3,837
- --------------------------------------------------------------------------------
Finance - Investment Management (2.59%)
130 State Street Corp. 5,811
- --------------------------------------------------------------------------------
Finance - REIT (7.46%)
280 Equity Office Properties Trust 8,428
320 Prologis Trust 8,320
- --------------------------------------------------------------------------------
16,748
- --------------------------------------------------------------------------------
</Table>
Berger IPT Funds o June 30, 2002 Semi-Annual Report
26
BERGER IPT-LARGE CAP
VALUE FUND
================================================================================
SCHEDULE OF INVESTMENTS (UNAUDITED)
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK (96.03%) - CONTINUED
Household - Housewares (4.22%)
270 Newell Rubbermaid, Inc. $ 9,466
- --------------------------------------------------------------------------------
Insurance - Property/Casualty/Title (2.77%)
160 The St. Paul Companies, Inc. 6,227
- --------------------------------------------------------------------------------
Media - Books (3.99%)
150 McGraw-Hill Companies, Inc. 8,955
- --------------------------------------------------------------------------------
Medical - Ethical Drugs (2.03%)
90 Merck & Co., Inc. 4,557
- --------------------------------------------------------------------------------
Medical - Health Maintenance Organizations (4.70%)
220 Aetna, Inc. 10,553
- --------------------------------------------------------------------------------
Medical/Dental - Supplies (2.45%)
160 Becton Dickinson & Co. 5,512
- --------------------------------------------------------------------------------
Oil & Gas - International Integrated (9.68%)
130 ChevronTexaco Corp. 11,505
250 Exxon Mobil Corp. 10,230
- --------------------------------------------------------------------------------
21,735
- --------------------------------------------------------------------------------
Oil & Gas - Refining/Marketing (3.60%)
260 Duke Energy Corp. 8,086
- --------------------------------------------------------------------------------
</Table>
<Table>
<Caption>
June 30, 2002
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCK (96.03%) - CONTINUED
Retail - Department Stores (3.82%)
390 Penney (J.C.) Co. $ 8,588
- --------------------------------------------------------------------------------
Retail - Drug Stores (2.59%)
190 CVS Corp. 5,814
- --------------------------------------------------------------------------------
Retail - Super/Mini Markets (1.95%)
150 Safeway, Inc. * 4,379
- --------------------------------------------------------------------------------
Telecommunications - Equipment (2.12%)
330 Motorola, Inc. 4,759
- --------------------------------------------------------------------------------
Total Common Stock
(Cost $227,313) 215,656
- --------------------------------------------------------------------------------
Repurchase Agreement (8.02%)
$18,000 State Street Repurchase Agreement,
1.92%, dated 6/28/02, due 7/1/02,
to be repurchased at $18,003# 18,000
- --------------------------------------------------------------------------------
Total Repurchase Agreement
(Cost $18,000) 18,000
- --------------------------------------------------------------------------------
Total Investments (Cost $245,313) (104.05%) 233,656
Total Other Assets, Less Liabilities (-4.05%) (9,087)
- --------------------------------------------------------------------------------
Net Assets (100.00%) $ 224,569
- --------------------------------------------------------------------------------
</Table>
* Non-income producing security.
# - The repurchase agreement is fully collateralized by U.S. government and/or
government agency obligations based on market prices at the date of this
schedule of investments.
See notes to financial statements.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
27
Berger IPT Funds
FINANCIAL STATEMENTS
================================================================================
STATEMENTS OF ASSETS AND LIABILITIES
<Table>
<Caption>
Berger IPT- Berger IPT- Berger IPT- Berger IPT- Berger IPT-
Berger IPT- Large Cap Small Company International Mid Cap Large Cap
June 30, 2002 (Unaudited) Growth Fund Growth Fund Growth Fund Fund Value Fund Value Fund
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments, at cost $ 5,851,258 $ 22,053,082 $ 37,257,877 $ 3,511,664 $ 253,443 $ 245,313
- ----------------------------------------------------------------------------------------------------------------------------------
Investments, at value $ 5,469,505 $ 19,784,645 $ 35,831,098(1) $ 3,894,654 $ 247,464 $ 233,656
Cash 887 538 -- 3,385 750 384
Foreign cash (cost $51,445) -- -- -- 51,457 -- --
Receivables
Investment securities sold 253,731 367,694 851,942 2,588 9,482 --
Fund shares sold 18 -- 101,531 739 -- --
Dividends 1,429 12,095 1,189 20,224 225 332
Interest 62 106 -- -- 4 3
Due from Adviser 1,197 -- -- 6,378 549 1,003
Other investments (Note 3) -- -- 7,174,156 -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Assets 5,726,829 20,165,078 43,959,916 3,979,425 258,474 235,378
- ----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payables
Investment securities purchased 238,466 -- 452,205 2,448 6,918 4,607
Fund shares redeemed 9,822 45,164 11,560 3,180 -- --
Loan payable to bank -- -- 358,013 40,000 -- --
Securities loaned -- -- 7,174,156 -- -- --
Accrued investment advisory fees 3,540 7,052 25,154 2,708 152 143
Accrued custodian and accounting fees 1,519 3,210 5,269 6,565 214 351
Accrued 12b-1 distribution fees -- -- -- -- 51 47
Accrued transfer agent fees 21 15 22 66 40 52
Accrued audit fees 3,347 3,303 5,693 15,514 5,609 5,609
Other accrued expenses 105 -- -- 154 -- --
Net unrealized depreciation in
forward currency contracts -- -- -- 10,879 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 256,820 58,744 8,032,072 81,514 12,984 10,809
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO
SHARES OUTSTANDING $ 5,470,009 $ 20,106,334 $ 35,927,844 $ 3,897,911 $ 245,490 $ 224,569
- ----------------------------------------------------------------------------------------------------------------------------------
COMPONENTS OF NET ASSETS
Capital (par value and paid in surplus) $ 12,548,473 $ 42,589,234 $ 82,185,414 $ 4,632,388 $ 250,125 $ 250,125
Undistributed net investment income/
(Accumulated net investment loss) (18,639) 158,877 (172,586) 158,106 209 987
Undistributed net realized gain/
(Accumulated net realized loss)
on securities and foreign
currency transactions (6,678,072) (20,373,340) (44,658,205) (1,266,146) 1,135 (14,886)
Net unrealized appreciation
(depreciation) on securities and
foreign currency transactions (381,753) (2,268,437) (1,426,779) 373,563 (5,979) (11,657)
- ----------------------------------------------------------------------------------------------------------------------------------
$ 5,470,009 $ 20,106,334 $ 35,927,844 $ 3,897,911 $ 245,490 $ 224,569
- ----------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding (par value $0.01,
unlimited shares authorized) 710,112 1,552,950 3,563,067 422,520 25,013 25,013
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $ 7.70 $ 12.95 $ 10.08 $ 9.23 $ 9.81 $ 8.98
- ----------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) Includes securities on loan with value totaling $6,847,966.
See notes to financial statements.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
28
FINANCIAL STATEMENTS
================================================================================
STATEMENTS OF OPERATIONS
<Table>
<Caption>
Berger IPT- Berger IPT- Berger IPT- Berger IPT- Berger IPT-
Six Months Ended Berger IPT- Large Cap Small Company International Mid Cap Large Cap
June 30, 2002 (Unaudited) Growth Fund Growth Fund Growth Fund Fund Value Fund Value Fund
- -------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends (net of foreign taxes) $ 11,577 $ 78,812 $ 24,750 $ 74,455 $ 1,505 $ 2,057
Interest 3,685 7,801 17,350 887 214 93
Securities lending income -- -- 26,055 -- -- --
- -------------------------------------------------------------------------------------------------------------------------------
Total Income 15,262 86,613 68,155 75,342 1,719 2,150
- -------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Investment advisory fees 25,869 104,756 201,411 22,289 953 926
Accounting fees 652 1,354 3,127 4,775 6 6
Custodian fees 4,560 4,707 16,478 28,648 2,391 881
Transfer agent fees 126 92 130 397 118 127
Registration fees 285 414 414 285 285 285
Audit fees 5,668 8,847 11,074 22,935 5,609 5,609
Legal fees 71 299 438 52 55 4
Trustees' fees and expenses 276 1,124 1,884 206 8 8
Shareholder reporting fees 831 1,125 4,895 1,436 607 578
12b-1 distribution fees -- -- -- -- 318 308
Interest expense -- 744 505 1,084 -- --
Other expenses -- 363 528 64 -- --
- -------------------------------------------------------------------------------------------------------------------------------
Gross Expenses 38,338 123,825 240,884 82,171 10,350 8,732
Less fees waived and/or expenses
reimbursed by Adviser (4,415) -- -- (49,882) (8,840) (7,569)
Less earnings credits (22) (137) (143) (30) -- --
Less brokerage credits -- -- -- (2,172) -- --
- -------------------------------------------------------------------------------------------------------------------------------
Net Expenses 33,901 123,688 240,741 30,087 1,510 1,163
- -------------------------------------------------------------------------------------------------------------------------------
Net Investment Income (Loss) (18,639) (37,075) (172,586) 45,255 209 987
- -------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
LOSS ON SECURITIES AND
FOREIGN CURRENCY TRANSACTIONS
Net realized gain (loss) on securities
and foreign currency transactions (1,208,841) (4,815,402) (5,622,310) (694,076) 1,135 (14,886)
Net change in unrealized appreciation
(depreciation) on securities and
foreign currency transactions (744,413) (2,531,302) (10,000,695) 517,766 (5,979) (11,657)
- -------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized
Loss on Securities and
Foreign Currency Transactions (1,953,254) (7,346,704) (15,623,005) (176,310) (4,844) (26,543)
- -------------------------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS
RESULTING FROM OPERATIONS $ (1,971,893) $ (7,383,779) $(15,795,591) $ (131,055) $ (4,635) $ (25,556)
- -------------------------------------------------------------------------------------------------------------------------------
Foreign taxes withheld $ 155 $ 985 -- $ 9,382 -- --
- -------------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
29
Financial Statements and Notes
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
Berger IPT-
Berger IPT- Large Cap
Growth Fund Growth Fund
- -----------------------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
June 30, 2002 December 31, June 30, 2002 December 31,
(Unaudited) 2001 (Unaudited) 2001
- -----------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income (loss) $ (18,639) $ (41,681) $ (37,075) $ 197,293
Net realized loss on securities and foreign
currency transactions (1,208,841) (5,089,117) (4,815,402) (13,189,923)
Net change in unrealized appreciation (depreciation) on
securities and foreign currency transactions (744,413) 1,249,953 (2,531,302) (1,832,185)
- -----------------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting
from Operations (1,971,893) (3,880,845) (7,383,779) (14,824,815)
- -----------------------------------------------------------------------------------------------------------------------------
From Dividends and Distributions to Shareholders
Dividends (from Net investment income) -- -- -- (165,689)
Distributions (from Net realized gains on investments) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets from Dividends and
Distributions to Shareholders -- -- -- (165,689)
- -----------------------------------------------------------------------------------------------------------------------------
FROM FUND SHARE TRANSACTIONS
Proceeds from shares sold 592,888 3,247,765 1,696,347 10,013,728
Net asset value of shares issued in reinvestment of dividends
and distributions -- -- -- 165,689
Payments for shares redeemed (1,586,763) (2,661,575) (7,529,112) (17,884,960)
- -----------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets Derived from
Fund Share Transactions (993,875) 586,190 (5,832,765) (7,705,543)
- -----------------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets (2,965,768) (3,294,655) (13,216,544) (22,696,047)
NET ASSETS
Beginning of period 8,435,777 11,730,432 33,322,878 56,018,925
- -----------------------------------------------------------------------------------------------------------------------------
End of period $ 5,470,009 $ 8,435,777 $ 20,106,334 $ 33,322,878
- -----------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income/(Accumulated
net investment loss) $ (18,639) -- $ 158,877 $ 195,952
- -----------------------------------------------------------------------------------------------------------------------------
TRANSACTIONS IN FUND SHARES
Shares sold 63,488 275,126 111,978 479,614
Shares issued to shareholders in reinvestment of
dividends and distributions -- -- -- 9,746
Shares redeemed (169,217) (225,174) (508,322) (977,726)
- -----------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Shares (105,729) 49,952 (396,344) (488,366)
Shares outstanding, beginning of period 815,841 765,889 1,949,294 2,437,660
- -----------------------------------------------------------------------------------------------------------------------------
Shares outstanding, end of period 710,112 815,841 1,552,950 1,949,294
- -----------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
30
FINANCIAL STATEMENTS
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
Berger IPT- Berger IPT-
Small Company International
Growth Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------
Six Months Ended Year Ended Six Months Ended Year Ended
June 30, 2002 December 31, June 30, 2002 December 31,
(Unaudited) 2001 (Unaudited) 2001
- -----------------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income (loss) $ (172,586) $ (414,102) $ 45,255 $ 104,575
Net realized loss on securities and foreign
currency transactions (5,622,310) (33,727,344) (694,076) (508,677)
Net change in unrealized appreciation (depreciation) on
securities and foreign currency transactions (10,000,695) 5,896,989 517,766 (982,032)
- -----------------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting
from Operations (15,795,591) (28,244,457) (131,055) (1,386,134)
- -----------------------------------------------------------------------------------------------------------------------------
FROM DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income -- -- -- (55,471)
Distributions (from net realized gains on investments) -- (590,352) -- (363,084)
- -----------------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets from Dividends and
Distributions to Shareholders -- (590,352) -- (418,555)
- -----------------------------------------------------------------------------------------------------------------------------
From Fund Share Transactions
Proceeds from shares sold 11,543,498 35,219,713 7,000,670 3,475,569
Net asset value of shares issued in reinvestment of
dividends and distributions -- 590,352 -- 418,555
Payments for shares redeemed (16,020,682) (34,257,597) (8,481,866) (3,290,420)
- -----------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
Derived from Fund Share Transactions (4,477,184) 1,552,468 (1,481,196) 603,704
- -----------------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets (20,272,775) (27,282,341) (1,612,251) (1,200,985)
NET ASSETS
Beginning of period 56,200,619 83,482,960 5,510,162 6,711,147
- -----------------------------------------------------------------------------------------------------------------------------
End of period $ 35,927,844 $ 56,200,619 $ 3,897,911 $ 5,510,162
- -----------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income/
(Accumulated net investment loss) $ (172,586) -- $ 158,106 $ 112,851
- -----------------------------------------------------------------------------------------------------------------------------
TRANSACTIONS IN FUND SHARES
Shares sold 887,300 2,181,046 754,340 315,384
Shares issued to shareholders in reinvestment
of dividends and distributions -- 41,869 -- 44,958
Shares redeemed (1,274,255) (2,135,475) (906,633) (297,791)
- -----------------------------------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Shares (386,955) 87,440 (152,293) 62,551
Shares outstanding, beginning of period 3,950,022 3,862,582 574,813 512,262
- -----------------------------------------------------------------------------------------------------------------------------
Shares outstanding, end of period 3,563,067 3,950,022 422,520 574,813
- -----------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
31
Financial Statements and Notes
================================================================================
STATEMENTS OF CHANGES IN NET ASSETS
<Table>
<Caption>
Berger IPT- Berger IPT-
Mid Cap Large Cap
Value Fund Value Fund
- --------------------------------------------------------------------------------------------------------------------
Six Months Ended Six Months Ended
June 30, 2002(1) June 30, 2002(1)
(Unaudited) (Unaudited)
- --------------------------------------------------------------------------------------------------------------------
FROM OPERATIONS
Net investment income $ 209 $ 987
Net realized gain (loss) on securities and foreign currency transactions 1,135 (14,886)
Net change in unrealized appreciation (depreciation) on securities
and foreign currency transactions (5,979) (11,657)
- --------------------------------------------------------------------------------------------------------------------
Net Decrease in Net Assets Resulting from Operations (4,635) (25,556)
- --------------------------------------------------------------------------------------------------------------------
FROM FUND SHARE TRANSACTIONS
Proceeds from shares sold 250,125 250,125
Net asset value of shares issued in reinvestment of dividends and distributions -- --
Payments for shares redeemed -- --
- --------------------------------------------------------------------------------------------------------------------
Net Increase in Net Assets Derived from Fund Share Transactions 250,125 250,125
- --------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 245,490 224,569
Net Assets
Beginning of period -- --
- --------------------------------------------------------------------------------------------------------------------
End of period $ 245,490 $ 224,569
- --------------------------------------------------------------------------------------------------------------------
Undistributed net investment income $ 209 $ 987
- --------------------------------------------------------------------------------------------------------------------
TRANSACTIONS IN FUND SHARES
Shares sold 25,013 25,013
Shares issued to shareholders in reinvestment of dividends and distributions -- --
Shares redeemed -- --
- --------------------------------------------------------------------------------------------------------------------
Net Increase in Shares 25,013 25,013
Shares outstanding, beginning of period -- --
- --------------------------------------------------------------------------------------------------------------------
Shares outstanding, end of period 25,013 25,013
- --------------------------------------------------------------------------------------------------------------------
</Table>
(1) Includes information for the one day of operations on December 31, 2001.
See notes to financial statements.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
32
NOTES TO FINANCIAL STATEMENTS
June 30, 2002 (Unaudited)
================================================================================
1. Organization and Significant Accounting Policies
Organization
Berger Institutional Products Trust (the "Trust"), a Delaware business trust,
was established on October 17, 1995 as a diversified open-end management
investment company. The Trust is authorized to issue an unlimited number of
shares of beneficial interest in series or portfolios. Currently, Berger
IPT-Growth Fund ("IPT-Growth"), Berger IPT-Large Cap Growth Fund ("IPT-LCG")
(formerly Berger IPT-Growth and Income Fund), Berger IPT-Small Company Growth
Fund ("IPT-SCG"), Berger IPT-International Fund ("IPT-Intl"), Berger IPT-Mid Cap
Value Fund ("IPT-MCV") and Berger IPT-Large Cap Value Fund ("IPT-LCV")
(individually the "Fund" and collectively the "Funds") are the only portfolios
established under the Trust, although others may be added in the future.
The Trust is registered under the Investment Company Act of 1940 (the "1940
Act") and its shares are registered under the Securities Act of 1933. Shares of
each Fund are fully paid and non-assessable when issued. All shares issued by a
particular Fund participate equally in dividends and other distributions by that
Fund. The Trust's shares are not offered directly to the public, but are sold
exclusively to insurance companies ("Participating Insurance Companies") as a
pooled funding vehicle for variable annuity and variable life insurance
contracts issued by separate accounts of Participating Insurance Companies and
to qualified plans.
Effective May 1, 2001, the trustees of the Berger IPT-Growth and Income Fund
approved a change in the name and non-fundamental investment strategies of the
Fund from that of a Growth and Income Fund to a Large Cap Growth Fund, and in
doing so eliminated the Fund's secondary investment objective. As a result,
IPT-LCG will, under normal circumstances, invest at least 80% of its total
assets in equity securities of companies whose market capitalization, at the
time of initial purchase, is $10 billion or more.
Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with accounting principles generally accepted in the
United States of America.
Investment Valuation
Securities are valued at the close of the regular trading session of the New
York Stock Exchange (the "Exchange") on each day that the Exchange is open.
Securities listed on national exchanges, the Nasdaq Stock Market and foreign
exchanges are valued at the last sale price on such markets, or, if no last sale
price is available, they are valued using the mean between their current bid and
ask prices. Prices of foreign securities are converted into U.S. dollars using
exchange rates determined prior to the close of the Exchange. Securities traded
in the over-the-counter market are valued at the mean between their current bid
and ask prices. Short-term obligations maturing within sixty days are valued at
amortized cost, which approximates market value. Securities for which quotations
are not readily available are valued at fair values as determined in good faith
pursuant to consistently applied procedures established by the trustees of the
Funds. Certain Funds may have registration rights for specific restricted
securities, which may require that registration cost be borne by that Fund.
Generally, trading in foreign securities markets is substantially completed each
day at various times prior to the close of the Exchange. The values of foreign
securities used in computing the Funds' net asset values are determined as of
the earlier of such market close or the closing time of the Exchange.
Occasionally, events affecting the value of such securities may occur between
the times at which they are determined and the close of the Exchange, or when
the foreign market on which such securities trade is closed but the Exchange is
open, which will not be reflected in the computation of net asset value. If
during such periods, events occur that materially affect the value of such
securities, the securities will be valued at their fair market value as
determined in good faith pursuant to consistently applied procedures established
by the trustees of the Funds. Calculation of Net Asset Value Each Fund's per
share calculation of net asset value is determined by dividing the total value
of it assets, less liabilities, by the total number of shares outstanding.
Federal Income Tax Status
It is the Funds' intention to comply with the provisions of subchapter M of the
Internal Revenue Code (the "Code") applicable to regulated investment companies
and to distribute all of their taxable income, if any, to shareholders.
Therefore, no income tax provision is required.
Foreign Currency Translation
Assets and liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the prevailing
Berger IPT Funds o June 30, 2002 Semi-Annual Report
33
Financial Statements and Notes
================================================================================
market rates as quoted by one or more banks or dealers on the date of valuation.
The cost of securities is translated into U.S. dollars at the rates of exchange
prevailing when such securities were acquired. Income and expenses are
translated into U.S. dollars at rates of exchange prevailing when accrued.
Investment Transactions and Investment Income
Investment transactions are accounted for on the date investments are purchased
or sold. Dividend income is recorded on the ex-dividend date except that certain
dividends from foreign securities are recorded as soon as a Fund is informed of
the ex-dividend date if such information is obtained subsequent to the
ex-dividend date. Dividend income is recorded net of foreign taxes withheld.
Interest income is recorded on the accrual basis and includes accretion of
discount and amortization of premium. Gains and losses are computed on the
identified cost basis for both financial statement and federal income tax
purposes for all securities.
Common Expenses
Certain expenses, which are not directly allocable to a specific Fund, are
allocated pro rata to each of the Funds.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increases and decreases in net assets from operations
during the reporting period. Actual results may differ from those estimates.
2. Agreements
Berger serves as the investment adviser to the Funds. As compensation for its
services to the Funds, Berger receives an investment advisory fee, which is
accrued daily at the applicable rate and paid monthly according to the following
schedule:
<Table>
<Caption>
Average Daily
Fund Net Assets Annual Rate
- --------------------------------------------------------------------------------
IPT-SCG, IPT-INTL First $500 million .85%
Next $500 million .80%
Over $1 billion .75%
- --------------------------------------------------------------------------------
IPT-Growth, IPT-LCG, First $500 million .75%
IPT-MCV, IPT-LCV Next $500 million .70%
Over $1 billion .65%
- --------------------------------------------------------------------------------
</Table>
Berger has delegated the day-to-day portfolio management of IPT-Intl to Bank of
Ireland Asset Management (U.S.) Limited ("BIAM"), which serves as the investment
sub-adviser. Berger has delegated the day-to-day investment management of
IPT-MCV to Perkins, Wolf, McDonnell & Company ("PWM"). Additionally, Berger has
delegated the day-to-day investment management of IPT-LCV to Bay Isle Financial
LLC ("Bay Isle"), a wholly-owned subsidiary of Berger. As sub-advisers to the
Funds, BIAM, PWM and Bay Isle each receives a sub-advisory fee from Berger based
on the average daily net assets of each of the Funds.
Berger has agreed to waive its advisory fees and reimburse expenses to the Funds
to the extent that normal operating expenses in any fiscal year (including the
advisory fee but excluding brokerage commissions, interest, taxes and
extraordinary expenses) exceed 1.00% of the average daily net assets of both
IPT-Growth and IPT-LCG, 1.15% of the average daily net assets of IPT-SCG, 1.20%
of the average daily net assets of both IPT-Intl and IPT-MCV, and 0.95% of the
average daily net assets of IPT-LCV.
The Funds have entered into administrative services agreements with Berger.
Berger currently provides these administrative services to the Funds at no cost.
IPT-MCV and IPT-LCV have adopted plans pursuant to Rule 12b-1 under the 1940 Act
(the "Plans"). The Plans provide for the payment to Berger of a 12b-1 fee of
..25% per annum of each Fund's average daily net assets to finance activities
primarily intended to result in the sale of Fund shares. The Plans provide that
such payments will be made to Berger as compensation rather than as
reimbursements for actual expenses incurred to promote the sale of shares of the
Funds.
The Trust, on behalf of the Funds, has entered into a custody, recordkeeping and
pricing agreement with State Street Bank and Trust Company ("State Street"). The
custody, recordkeeping and pricing agreement provides for the monthly payment of
a fee computed as a percentage of average daily net assets on a total
relationship basis with other Berger Funds. State Street's fees for custody,
recordkeeping and pricing are subject to reduction by credits earned by each
Fund, based on the cash balances of each Fund held by State Street as custodian.
Such reductions are included in earnings credits in the Statement of Operations.
The Funds have entered into rebate arrangements with certain brokers whereby the
Funds earn commission credits on portfolio transactions effected with such
brokers. DST
Berger IPT Funds o June 30, 2002 Semi-Annual Report
34
NOTES TO FINANCIAL STATEMENTS
June 30, 2002 (Unaudited)
================================================================================
Systems, Inc. ("DST"), an affiliate of Berger through a degree of common
ownership, provides shareholder accounting services to the Funds. DST
Securities, Inc. ("DSTS"), a wholly-owned subsidiary of DST, is designated as an
introductory broker on certain portfolio transactions. The Funds receive a
portion of the brokerage commissions paid to DSTS as credits against fund fees
and expenses. Such credits, if any, are included as brokerage credits on the
Statement of Operations. For the period ended June 30, 2002, none of the Funds
earned such credits from DSTS.
Certain officers and/or directors of Berger are also officers and/or trustees of
the Trust. Trustees who are not affiliated with Berger are compensated for their
services. Such fees are allocated among the entire Berger Funds complex. For the
period ended June 30, 2002, such trustees' fees and expenses totaled $3,506 for
the Funds. The Trust adopted a trustee fee deferral plan (the "Plan") which
allows the non-affiliated trustees to defer the receipt of all or a portion of
the trustee fees payable. The deferred fees are invested in various funds
advised by Berger until distribution in accordance with the Plan.
3. Investment Transactions
Purchases and Sales
Purchases and sales proceeds of investment securities (excluding short-term
securities) for the period ended June 30, 2002, were as follows:
<Table>
<Caption>
Fund Purchases Sales
- --------------------------------------------------------------------------------
IPT-Growth $ 3,473,242 $ 4,121,813
IPT-LCG 11,468,547 16,619,487
IPT-SCG 42,275,853 44,116,922
IPT-Intl 3,639,186 4,729,010
IPT-MCV 314,806 85,498
IPT-LCV 335,271 93,072
- --------------------------------------------------------------------------------
</Table>
There were no purchases or sales of long-term U.S. government securities during
the period.
Futures and Forward Contracts
Each Fund may hold certain types of forward foreign currency exchange contracts
and/or futures contracts (except for IPT-intl, which may only hold forward
foreign currency exchange contracts) for the purpose of hedging each portfolio
against exposure to market value fluctuations. The use of such instruments may
involve certain risks as a result of unanticipated movements in the market, a
lack of correlation between the value of such instruments and the assets being
hedged, or unexpected adverse price movements. In addition, there can be no
assurance that a liquid secondary market will exist for the instrument. Upon
entering a futures contract, a Fund deposits and maintains as collateral such
initial margin as may be required by the exchanges on which the transaction is
effected. Pursuant to the contracts, a Fund agrees to receive from or pay to the
broker an amount of cash equal to the daily fluctuation in the value of the
contract. Realized gains or losses on futures contracts are presented as a
separate component in the Statement of Operations, if applicable. At June 30,
2002, the Funds held no outstanding futures contracts. Realized and unrealized
gains or losses on forward foreign currency contracts are included in Net
Realized and Unrealized Gain (Loss) on Securities and Foreign Currency
Transactions in the Statement of Operations.
Securities Lending
Under an agreement with State Street, IPT-SCG has the ability to lend securities
to brokers, dealers and other authorized financial institutions. Loans of
portfolio securities are collateralized by cash remitted from the borrower of
such securities in an amount greater than the market value of the loaned
securities at the time the loan is made. The cash collateral received is
invested in an unaffiliated money market fund and is evaluated daily to ensure
that its market value exceeds the current market value of the loaned securities.
Income generated by such investment, net of any rebates paid to the borrower, is
split between the Fund and State Street, as lending agent.
Repurchase Agreements
Repurchase agreements held by a Fund are fully collateralized by U.S. government
or government agency securities and such collateral is in the possession of the
Fund's custodian. The collateral is evaluated daily to ensure its market value
exceeds the current market value of the repurchase agreements including accrued
interest. In the event of default on the obligation to repurchase, a Fund has
the right to liquidate the collateral and apply the proceeds in satisfaction of
the obligation. In the event of default or bankruptcy by the other party to the
agreement, realization and/or retention of the collateral or proceeds may be
subject to legal proceedings.
Concentration of Risk
The Funds may have elements of risk due to concentrated investments in specific
industries or foreign issuers located in a specific country. Such concentrations
may subject the Funds to additional risk resulting from future political or
Berger IPT Funds o June 30, 2002 Semi-Annual Report
35
Financial Statements and Notes
================================================================================
economic conditions and/or possible impositions of adverse foreign governmental
laws or currency exchange restrictions. Net Realized and Unrealized Gain (Loss)
on Securities and Foreign Currency Transactions in the Statements of Operations
includes fluctuations from currency exchange rates and fluctuations in market
value.
4. Federal Income Taxes
Dividends paid by the Funds from net investment income and distributions of net
realized short-term capital gains are, for federal income tax purposes, taxable
as ordinary income to shareholders.
Dividends received by shareholders of the Funds, which are derived from foreign
source income, and foreign taxes paid by the Funds are to be treated, to the
extent allowable under the Code, as if received and paid by the shareholders of
the Funds. The Funds distribute net realized capital gains, if any, to their
shareholders at least annually, if not offset by capital loss carryovers. Income
distributions and capital gain distributions are determined in accordance with
federal income tax regulations, which may differ from generally accepted
accounting principles. These differences are primarily due to the differing
treatment of net operating losses and foreign currency transactions.
Accordingly, these permanent differences have been reclassified to
paid-in-capital.
At June 30, 2002, the federal tax cost of securities and the composition of net
unrealized appreciation (depreciation) of investment securities were as follows:
<Table>
<Caption>
Gross Gross Net
Federal Unrealized Unrealized Appreciation/
Fund Tax Cost Appreciation Depreciation (Depreciation)
- --------------------------------------------------------------------------------
IPT- Growth $ 6,130,834 $ 173,339 $ (834,668) $ (661,329)
IPT-LCG 24,280,385 427,858 (4,923,598) (4,495,740)
IPT-SCG 38,171,076 3,874,734 (6,214,712) (2,339,978)
IPT-INTL 3,926,638 291,398 (323,382) (31,984)
IPT-MCV 253,888 15,539 (21,963) (6,424)
IPT-LCV 245,313 8,149 (19,806) (11,657)
- --------------------------------------------------------------------------------
</Table>
The primary difference between book and tax appreciation/depreciation is due to
wash sale loss deferrals.
<Table>
<Caption>
Accumulated Post-October
Fund Capital Losses Loss Deferral
- --------------------------------------------------------------------------------
IPT- Growth $ 5,106,202 $ 108,803
IPT-LCG 10,165,612 3,376,430
IPT-SCG 36,962,402 1,386,055
IPT-INTL 323,870 160,317
IPT-MCV -- --
IPT-LCV -- --
- --------------------------------------------------------------------------------
</Table>
Accumulated capital losses represent net capital loss carryovers as of December
31, 2001, which may be used to offset future realized capital gains for federal
income tax purposes, and expire in 2008 and 2009. During the year ended December
31, 2001, the Funds elected to defer the post-October 31 net capital and/or
currency losses, above, to the year ended December 31, 2002.
5. Line of Credit
The Funds are party to an ongoing agreement with State Street that allows the
funds managed by Berger, collectively, to borrow up to $100 million, subject to
certain conditions, for temporary or emergency purposes. Interest, based on the
Federal Funds Rate plus a spread, is charged to the specific party that executes
the borrowing. In addition, the unsecured line of credit requires a quarterly
payment of a commitment fee based on the average daily unused portion of the
line of credit. At June 30, 2002, IPT-SCG and IPT-INTL had line of credit
borrowings outstanding of $250,000 and $40,000, respectively. No other Fund had
line of credit borrowings outstanding at June 30, 2002.
6. Other Matters
In January 2002, the trustees of the Trust approved the liquidation of Berger
IPT-New Generation Fund. The liquidation of this fund was completed on May 31,
2002.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
36
FINANCIAL HIGHLIGHTS
================================================================================
BERGER IPT-GROWTH FUND
For a Share Outstanding Throughout the Period
<Table>
<Caption>
Six Months Ended Years Ended December 31,
June 30, 2002 -------------------------------------------------------------------------
(Unaudited) 2001 2000 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.34 $ 15.32 $ 19.22 $ 12.89 $ 11.11 $ 10.39
- ------------------------------------------------------------------------------------------------------------------------------------
From investment operations
Net investment income (loss) (0.03) -- (0.00)(1) -- 0.02 0.01
Net realized and unrealized
gains (losses) from
investments and foreign
currency transactions (2.61) (4.98) (3.37) 6.33 1.79 1.39
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (2.64) (4.98) (3.37) 6.33 1.81 1.40
- ------------------------------------------------------------------------------------------------------------------------------------
Less dividends and distributions
Dividends (from net
investment income) -- -- -- (0.00)(1) (0.02) (0.04)
Distributions (from net
realized gains on
investments) -- -- (0.53) -- (0.01) (0.64)
- ------------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- -- (0.53) -- (0.03) (0.68)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 7.70 $ 10.34 $ 15.32 $ 19.22 $ 12.89 $ 11.11
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(4) (25.53)% (32.51)% (17.51)% 49.13% 16.29% 13.76%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period $5,470,009 $8,435,777 $11,730,432 $6,665,664 $3,710,109 $1,233,892
Net expense ratio to average
net assets(2) 0.99%(3) 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income
(loss) to average net assets (0.54)%(3) (0.46)% (0.48)% (0.05)% 0.29% 0.51%
Gross expense ratio to average
net assets 1.12%(3) 1.08% 1.30% 2.19% 2.88% 9.18%
Portfolio turnover
rate(4) 54% 144% 80% 231% 258% 246%
</Table>
(1) Amount represents less than $0.01 per share.
(2) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Adviser. Gross and net expenses do not include the deduction
of any charges attributable to any particular variable insurance contract.
(3) Annualized.
(4) Not Annualized.
BERGER IPT-LARGE CAP GROWTH FUND
For a Share Outstanding Throughout the Period
<Table>
<Caption>
Six Months Ended Years Ended December 31,
June 30, 2002 --------------------------------------------------------------------------
(Unaudited) 2001 2000 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 17.09 $ 22.98 $ 26.45 $ 16.63 $ 13.39 $ 11.14
- ------------------------------------------------------------------------------------------------------------------------------------
From investment operations
Net investment income -- 0.12 0.05 0.02 0.10 0.01
Net realized and unrealized
gains (losses) from
investments and foreign
currency transactions (4.14) (5.92) (2.90) 9.80 3.25 2.75
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (4.14) (5.80) (2.85) 9.82 3.35 2.76
- ------------------------------------------------------------------------------------------------------------------------------------
Less dividends and distributions
Dividends (from net
investment income) -- (0.09) -- -- (0.11) (0.10)
Distributions (from net
realized gains on
investments) -- -- (0.62) -- -- (0.41)
- ------------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- (0.09) (0.62) -- (0.11) (0.51)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 12.95 $ 17.09 $ 22.98 $ 26.45 $ 16.63 $ 13.39
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(3) (24.22)% (25.26)% (10.75)% 59.05% 25.03% 24.99%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period $20,106,334 $33,322,878 $56,018,925 $24,871,949 $9,084,022 $1,501,118
Net expense ratio to average
net assets(1) 0.89%(2) 0.89% 0.90% 1.00% 1.00% 1.00%
Ratio of net investment income
to average net assets (0.27)%(2) 20.47% 0.38% 0.10% 1.10% 1.39%
Gross expense ratio to average
net assets 0.89%(2) 0.89% 0.90% 1.19% 1.99% 9.62%
Portfolio turnover rate(3) 43% 102% 64% 149% 426% 215%
</Table>
(1) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Adviser. Gross and net expenses do not include the deduction
of any charges attributable to any particular variable insurance contract.
(2) Annualized.
(3) Not Annualized.
See notes to financial statements.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
37
Financial Highlights
================================================================================
BERGER IPT-SMALL COMPANY GROWTH FUND
For a Share Outstanding Throughout the Period
<Table>
<Caption>
Six Months Ended Years Ended December 31,
June 30, 2002 -------------------------------------------------------------------------
(Unaudited) 2001 2000 1999 1998 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 14.23 $ 21.61 $ 23.51 $ 12.28 $ 12.06 $ 9.95
- ------------------------------------------------------------------------------------------------------------------------------------
From investment operations
Net investment income (loss) (0.05) -- -- -- -- 0.00(4)
Net realized and unrealized
gains (losses) from
investments and foreign
currency transactions (4.10) (7.23) (1.56) 11.23 0.23 2.11
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (4.15) (7.23) (1.56) 11.23 0.23 2.11
- ------------------------------------------------------------------------------------------------------------------------------------
Less dividends and distributions
Dividends (in excess of
net investment income) -- -- -- -- (0.01) --
Distributions (from net
realized gains on
investments) -- (0.15) (0.34) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- (0.15) (0.34) -- (0.01) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.08 $ 14.23 $ 21.61 $ 23.51 $ 12.28 $ 12.06
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(3) (29.16)% (33.47)% (6.55)% 91.45% 1.87% 21.21%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $35,927,844 $56,200,619 $83,482,960 $41,334,809 $9,858,303 $2,719,559
Net expense ratio to average
net assets(1) 1.02%(2) 0.98% 0.98% 1.15% 1.15% 1.15%
Ratio of net investment income
(loss) to average net assets (0.73)%(2) (0.66)% (0.16)% (0.56)% (0.11)% 0.05%
Gross expense ratio to average
net assets 1.02%(2) 0.98% 0.98% 1.53% 2.19% 5.81%
Portfolio turnover rate(3) 95% 160% 111% 179% 147% 194%
</Table>
(1) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Adviser. Gross and net expenses do not include the deduction
of any charges attributable to any particular variable insurance contract.
(2) Annualized.
(3) Not Annualized.
(4) Amount represents less than $0.01 per share.
BERGER IPT-INTERNATIONAL FUND
For a Share Outstanding Throughout the Period
<Table>
<Caption>
Six Months Ended Years Ended December 31,
June 30, 2002 -------------------------------------------------------------------------
(Unaudited) 2001 2000 1999 1998 1997(1)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 9.59 $ 13.10 $ 14.63 $ 11.21 $ 9.79 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------------------
From investment operations
Net investment income 0.17 0.21 0.10 0.03 0.08 0.05
Net realized and unrealized
gains (losses) from
investments and foreign
currency transactions (0.53) (2.89) (1.59) 3.47 1.50 (0.26)
- ------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.36) (2.68) (1.49) 3.50 1.58 (0.21)
- ------------------------------------------------------------------------------------------------------------------------------------
Less dividends and distributions
Dividends (from net
investment income) -- (0.11) (0.04) (0.08) (0.14) --
Distributions (from net
realized gains on
investments) -- (0.72) -- -- (0.02) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions -- (0.83) (0.04) (0.08) (0.16) --
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 9.23 $ 9.59 $ 13.10 $ 14.63 $ 11.21 $ 9.79
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(2) (3.75)% (20.27)% (10.18)% 31.24% 16.13% (2.10)%
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $3,897,911 $5,510,162 $6,711,147 $6,122,261 $5,430,076 $2,705,831
Net expense ratio to
average net assets(3) 1.20%(4) 1.20% 1.20% 1.20% 1.20% 1.20%(4)
Ratio of net investment
income to average net
assets 1.74%(4) 1.80% 0.55% 0.51% 2.85% 0.86%(4)
Gross expense ratio to
average net assets 3.16%(4) 1.60% 2.14% 2.46% 2.85% 3.83%(4)
Portfolio turnover rate(2) 72% 24% 35% 26% 20% 14%
</Table>
(1) For the period from May 1, 1997 (commencement of investment operations) to
December 31, 1997.
(2) Not annualized.
(3) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Adviser. Gross and net expenses do not include the deduction
of any charges attributable to any particular variable insurance contract.
(4) Annualized.
See notes to financial statements.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
38
FINANCIAL HIGHLIGHTS
================================================================================
BERGER IPT-MID CAP VALUE FUND
For a Share Outstanding Throughout the Period
<Table>
<Caption>
Six Months Ended
June 30, 2002(1)
(Unaudited)
- --------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00
- --------------------------------------------------------------------------------
From investment operations
Net realized and unrealized losses from
investments and foreign currency transactions (0.19)
- --------------------------------------------------------------------------------
Total from investment operations (0.19)
- --------------------------------------------------------------------------------
Net asset value, end of period $ 9.81
- --------------------------------------------------------------------------------
Total Return(4) (1.90)%
- --------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period $ 245,490
Net expense ratio to average net assets(2) 1.20%(3)
Ratio of net investment loss to average net assets 0.17%(3)
Gross expense ratio to average net assets 8.19%(3)
Portfolio turnover rate(4) 36%
</Table>
(1) The Fund had no financial highlights for the one day of operations during
the period ended December 31, 2001.
(2) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Adviser. Gross and net expenses do not include the deduction
of any charges attributable to any particular variable insurance contract.
(3) Annualized
(4) Not Annualized.
See notes to financial statements.
BERGER IPT-LARGE CAP VALUE FUND
For a Share Outstanding Throughout the Period
<Table>
<Caption>
Six Months Ended
June 30, 2002(1)
(Unaudited)
- --------------------------------------------------------------------------------
Net asset value, beginning of period $ 10.00
- --------------------------------------------------------------------------------
From investment operations
Net investment income 0.04
Net realized and unrealized losses from
investments and foreign currency transactions (1.06)
- --------------------------------------------------------------------------------
Total from investment operations (1.02)
- --------------------------------------------------------------------------------
Net asset value, end of period $ 8.98
- --------------------------------------------------------------------------------
Total Return(4) (10.20)%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period $ 224,569
Net expense ratio to average net assets(2) 0.95%(3)
Ratio of net investment loss to average net assets 0.80%(3)
Gross expense ratio to average net assets 7.12%(3)
Portfolio turnover rate(4) 39%
</Table>
(1) The Fund had no financial highlights for the one day of operations during
the period ended December 31, 2001.
(2) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Adviser. Gross and net expenses do not include the deduction
of any charges attributable to any particular variable insurance contract.
(3) Annualized
(4) Not Annualized.
See notes to financial statements.
Berger IPT Funds o June 30, 2002 Semi-Annual Report
39
Financial Highlights
FUND TRUSTEES AND
OFFICERS (UNAUDITED)
================================================================================
<Table>
<Caption>
POSITION(S)
HELD WITH THE NUMBER OF
TRUST,TERM OF FUNDS IN FUND
OFFICE AND COMPLEX OTHER
NAME,ADDRESS LENGTH OF OVERSEEN BY DIRECTORSHIPS
AND AGE TIME SERVED PRINCIPAL OCCUPATIONS DURING THE PAST 5 YEARS TRUSTEE HELD BY TRUSTEE
- ----------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT
TRUSTEES
Michael Owen Chairman of the Dean of Zayed University (since September 20 N/A
210 University Board 2000). Formerly self-employed as a financial
Blvd. and management consultant, and in real estate
Suite 800 development (from June 1999 to September 2000).
Denver, CO 80206 Dean (from 1993 to June 1999), and a member of
the Finance faculty (from 1989 to 1993), of the
DOB: 1937 College of Business, Montana State University.
Formerly, Chairman and Chief Executive Officer
of Royal Gold, Inc. (mining) (1976 to 1989).
- ----------------------------------------------------------------------------------------------------------------------------------
Dennis E. Baldwin Trustee President, Baldwin Financial Counseling (since 20 N/A
210 University July 1991). Formerly, Vice President and Denver
Blvd. Office Manager of Merrill Lynch Capital Markets
Suite 800 (1978 to 1990).
Denver, CO 80206
DOB: 1928
- ----------------------------------------------------------------------------------------------------------------------------------
Katherine A. Vice Chair of Managing Principal (since September 20 N/A
Cattanach the Board 1987), Sovereign Financial Services, Inc.
210 University (investment consulting firm). Executive Vice
Blvd. President (1981 to 1988), Captiva
Suite 800 Corporation, Denver, Colorado (private investment
Denver, CO 80206 management firm). Ph.D. in Finance (Arizona State
University); Chartered Financial Analyst (CFA).
DOB: 1945
- ----------------------------------------------------------------------------------------------------------------------------------
Paul R. Knapp Trustee Executive Officer of DST Systems, Inc.("DST"), a 20 Director and Vice
210 University publicly traded information and transaction President (February
Blvd. processing company, which acts as the Funds' 1998 to November
Suite 800 transfer agent (since October 2000). DST is 33% 2000) of West Side
Denver, CO 80206 owned by Stilwell Management, Inc., which owns Investments, Inc.
approximately 89.5% of Berger Financial Group (investments), a
DOB: 1945 LLC. Mr. Knapp owns common shares and options wholly owned
convertible into common shares of DST which, in subsidiary of DST
the aggregate and assuming exercise of the Systems, Inc.
options, would result in his owning less than
1/2 of 1% of DST's common shares. Mr. Knapp is
also President of Vermont Western
Assurance, Inc., a wholly owned subsidiary of
DSTS (since December 2000). President, Chief
Executive Officer and a director (September
1997 to October 2000) of DST Catalyst, Inc., an
international financial markets consulting,
software and computer services company, (now DST
International, a subsidiary of DST). Previously
(1991 to October 2000), Chairman, President,
Chief Executive Officer and a director of
Catalyst Institute (international public policy
research organization focused primarily on
financial markets and institutions); also (1991
to September 1997), Chairman, President, Chief
Executive Officer and a director of Catalyst
Consulting (international financial
institutions business consulting firm).
- ----------------------------------------------------------------------------------------------------------------------------------
</Table>
Berger IPT Funds o June 30, 2002 Semi-Annual Report
40
FUND TRUSTEES AND
OFFICERS (UNAUDITED)
================================================================================
<Table>
<Caption>
POSITION(S)
HELD WITH THE NUMBER OF
TRUST,TERM OF FUNDS IN FUND
OFFICE AND COMPLEX OTHER
NAME,ADDRESS LENGTH OF OVERSEEN BY DIRECTORSHIPS
AND AGE TIME SERVED PRINCIPAL OCCUPATIONS DURING THE PAST 5 YEARS TRUSTEE HELD BY TRUSTEE
- ----------------------------------------------------------------------------------------------------------------------------------
Harry T. Lewis, Jr. Trustee Lewis Investments (since June 1988) 20 Director, J.D. Edwards
210 University (self-employed private investor). Formerly, & Co. (1995 to March
Blvd. Senior Vice President, Rocky Mountain Region, of 2002); Director,
Suite 800 Dain Bosworth Incorporated and member of that National Fuel
Denver, CO 80206 firm's Management Committee (1981 to 1988). Corporation (oil & gas
production); Advisory
DOB: 1933 Director, Otologics,
LLC, (implantable
hearing aid) (since
1999); Member of
Community Advisory
Board, Wells Fargo
Bank-Denver
- ----------------------------------------------------------------------------------------------------------------------------------
William Sinclaire Trustee President (since January 1998), Santa Clara LLC 20 N/A
210 University (privately owned agriculture company). President
Blvd. (January 1963 to January 1998), Sinclaire
Suite 800 Cattle Co. (privately owned agricultural
Denver, CO 80206 company).
DOB: 1928
- ----------------------------------------------------------------------------------------------------------------------------------
Albert C. Yates Trustee President (since 1990),Chancellor and Professor 20 Member, Board of
210 University of Chemistry-Department of Chemistry, of Directors, Adolph
Blvd. Colorado State University. Formerly Executive Coors Company
Suite 800 Vice President and Provost (1983 to (brewing company)
Denver, CO 80206 1990), Academic Vice President and Provost (1981 (since 1998);
to 1983) and Professor of Chemistry (1981 to Member Board of
DOB: 1941 1990) of Washington State University. Vice Directors, Dominion
President and University Dean for Graduate Industrial Capital
Studies and Research and Professor of Chemistry Bank (1999 to
of the University of Cincinnati (1977 to 1981). 2000); Member,
Board of Directors,
Centennial Bank of
the West (since
2001)
<Caption>
- ----------------------------------------------------------------------------------------------------------------------------------
INTERESTED
TRUSTEES AND
OFFICERS OF THE
TRUST
Jack R. Thompson* President and President and a director since May 1999 20 Audit Committee
210 University Trustee of the (Executive Vice President from February 1999 to Member of the
Blvd. Trust (since May 1999) of Berger Growth Fund and Berger Public Employees'
Suite 800 May 1999) Large Cap Growth Fund. President and a trustee Retirement
Denver, CO 80206 since May 1999 (Executive Vice President from Association of
February 1999 to May 1999) of Berger Investment Colorado (pension
DOB: 1949 Portfolio Trust, Berger Institutional Products plan) from November
Trust, Berger Worldwide Funds Trust, Berger 1997 to December
Worldwide Portfolios Trust and Berger Omni 2001.
Investment Trust. President and Chief Executive
Officer since June 1999 (Executive Vice
President from February 1999 to June 1999) of
Berger Financial Group LLC (formerly Berger
LLC). Director, President and Chief Executive
Officer of Stilwell Management, Inc. (since
September 1999). President and Chief Executive
Officer of Berger/Bay Isle LLC (since May
1999).Self-employed as a consultant from July
1995 through February 1999. Director of Wasatch
Advisors (investment management) from February
1997 to February 1999.
- ----------------------------------------------------------------------------------------------------------------------------------
</Table>
*Messr. Thompson is considered an interested person of the Funds due to his
positions held at Berger Financial Group LLC (or its affiliated companies).
Berger IPT Funds o June 30, 2002 Semi-Annual Report
41
================================================================================
<Table>
<Caption>
POSITION(S)
HELD WITH THE
TRUST, TERM OF
OFFICE AND
NAME,ADDRESS LENGTH OF
AND AGE TIME SERVED PRINCIPAL OCCUPATIONS DURING THE PAST 5 YEARS
- -------------------------------------------------------------------------------------------
OFFICERS OF THE
TRUST
Jay W. Tracey, Executive Vice Executive Vice President of the Berger Funds
CFA* President of the (since August 2000). Executive Vice President
210 University Trust (since and Chief Investment Officer of Berger
Blvd. August 2000) Financial Group LLC (since June 2000).
Suite 800 and Portfolio Portfolio manager of the Berger Growth Fund
Denver, CO 80206 Manager (since (since August 2000); team portfolio manager of
June 2000) the Berger Select Fund (since June 2000) and
DOB: 1954 the Berger Large Cap Growth Fund (from January
2001 through December 2001). Team portfolio
manager (since December 2001) of the Berger Mid
Cap Growth Fund. Formerly, Vice President and
portfolio manager at OppenheimerFunds, Inc.
(September 1994 to May 2000).
- -------------------------------------------------------------------------------------------
Steven L. Fossel, Vice President Vice President (since February 2001) and
CFA* of the Trust portfolio manager (since December 2001) of the
210 University (since August Berger Large Cap Growth Fund; and team
Blvd. 2000) and portfolio manager (from January 2001 through
Suite 800 Portfolio December 2001) of the Berger Large Cap Growth
Denver, CO 80206 Manager (since Fund. Interim portfolio manager (from June 2000
June 2000) to January 2001) of the Berger Large Cap Growth
DOB: 1968 Fund. Vice President (from August 2000 to June
2002) and portfolio manager (from June 2000 to
June 2002) of the Berger Balanced Fund. Vice
President and portfolio manager of Berger
Financial Group LLC (since June 2000); senior
equity analyst with Berger Financial Group LLC
(from March 1998 to June 2000).
Formerly, analyst and assistant portfolio
manager with Salomon Brothers Asset Management
(from August 1992 to February 1998).
- -------------------------------------------------------------------------------------------
Janice M. Teague* Vice President Vice President (since November 1998) and
210 University of the Trust Assistant Secretary (since February 2000 and
Blvd. (since November previously from September 1996 to November
Suite 800 1998) and 1998) and Secretary (November 1998 to February
Denver, CO 80206 Assistant 2000) of the Berger Funds. Vice President
Secretary (since (since October 1997), Secretary (since November
DOB: 1954 February 2000) 1998) and Assistant Secretary (October 1996
through November 1998) with Berger Financial
Group LLC. Vice President and Secretary with
Berger Distributors LLC (since August 1998).
Vice President and Secretary of Bay Isle
Financial LLC (since January 2002).
Formerly, self-employed as a business consultant
(from June 1995 through September 1996).
- -------------------------------------------------------------------------------------------
Andrew J. Iseman* Vice President Vice President of the Berger Funds (since March
210 University of the Trust 2001). Vice President (since September 1999)
Blvd. (since March and Chief Operating Officer (since November
Suite 800 2001) 2000) of Berger Financial Group LLC. Manager
Denver, CO 80206 (since September 1999) and Director (June 1999
to September 1999) of Berger Distributors LLC.
DOB: 1964 Vice President-Operations (February 1999 to
November 2000) of Berger Financial Group LLC.
Associate (November 1998 to February 1999) with
DeRemer & Associates (a consulting firm). Vice
President-Operations (February 1997 to November
1998) and Director of Research and Development
(May 1996 to February 1997) of Berger Financial
Group LLC.
- -------------------------------------------------------------------------------------------
Anthony R. Bosch* Vice President Vice President of the Berger Funds (since
210 University of the Trust February 2000). Vice President (since June
Blvd. (since February 1999) and Chief Legal Officer (since August
Suite 800 2000) 2000) with Berger Financial Group LLC. Vice
Denver, CO 80206 President and Chief Compliance Officer with
Berger Distributors LLC (since September 2001).
DOB: 1966 Vice President of Bay Isle Financial LLC (since
January 2002). Formerly, Assistant Vice
President of Federated Investors, Inc. (December
1996 through May 1999), and Attorney with the
U.S. Securities and Exchange Commission (June
1990 through December 1996).
- -------------------------------------------------------------------------------------------
</Table>
Berger IPT Funds o June 30, 2002 Semi-Annual Report
42
FUND TRUSTEES AND
OFFICERS (UNAUDITED)
================================================================================
<Table>
<Caption>
POSITION(S)
HELD WITH THE
TRUST,TERM OF
OFFICE AND
NAME, ADDRESS LENGTH OF
AND AGE TIME SERVED PRINCIPAL OCCUPATIONS DURING THE PAST 5 YEARS
- -----------------------------------------------------------------------------------------------
OFFICERS OF THE
TRUST
- -----------------------------------------------------------------------------------------------
Brian S. Ferrie* Vice President Vice President of the Berger Funds (since
210 University of the Trust November 1998). Vice President (since February
Blvd. (since November 1997), Treasurer and Chief Financial Officer
Suite 800 1998) (since March 2001) and Chief Compliance
Denver, CO 80206 Officer (from August 1994 to March 2001) with
Berger Financial Group LLC. Vice President
DOB: 1958 (since May 1996), Treasurer and Chief
Financial Officer (since March 2001) and Chief
Compliance Officer (from May 1996 to September
2001) with Berger Distributors LLC.
- -----------------------------------------------------------------------------------------------
John A. Paganelli* Vice President Vice President (since November 1998),
210 University (since November Treasurer (since March 2001) and Assistant
Blvd. 1998) and Treasurer (November 1998 to March 2001) of the
Suite 800 Treasurer (since Berger Funds. Vice President (since November
Denver, CO 80206 March 2001) 1998) and Manager of Accounting (January 1997
of the Trust through November 1998) with Berger Financial
DOB: 1967 Group LLC. Formerly, Manager of Accounting
(December 1994 through October 1996) and
Senior Accountant (November 1991 through
December 1994) with Palmeri Fund
Administrators, Inc.
- -----------------------------------------------------------------------------------------------
Sue Vreeland* Secretary of the Secretary of the Berger Funds (since February
210 University Trust (since 2000). Assistant Secretary of Berger Financial
Blvd. February 2000) Group LLC and Berger Distributors LLC (since
Suite 800 June 1999) and Bay Isle Financial LLC (since
Denver, CO 80206 December 2001). Formerly, Assistant Secretary
DOB: 1948 of the Janus Funds (from March 1994 to May
1999), Assistant Secretary of Janus
Distributors, Inc. (from June 1995 to May
1997) and Manager of Fund Administration for
Janus Capital Corporation (from February 1992
to May 1999).
- -----------------------------------------------------------------------------------------------
David C. Price, Assistant Vice Assistant Vice President (since March 2001) of
CPA* President of the the Berger Funds. Assistant Vice
210 University Trust (since President-Compliance (since March 2001) and
Blvd. March 2001) Manager-Compliance (October 1998 through March
Suite 800 2001) with Berger Financial Group LLC.
Denver, CO 80206 Formerly, Senior Auditor (August 1993 through
August 1998) with PricewaterhouseCoopers LLP,
DOB: 1969 a public accounting firm.
- -----------------------------------------------------------------------------------------------
Lance V. Campbell, Assistant Assistant Treasurer (since March 2001) of the
CFA, CPA* Treasurer of the Berger Funds. Assistance Vice President (since
210 University Trust (since January 2002) and Manager of Investment
Blvd. March 2001) Accounting (August 1999 through January 2002)
Suite 800 with Berger Financial Group LLC. Formerly,
Denver, CO 80206 Senior Auditor (December 1998 through August
1999) and Auditor (August 1997 through
DOB: 1972 December 1998) with PricewaterhouseCoopers
LLP, a public accounting firm, and Senior Fund
Accountant (January 1996 through July 1997)
with INVESCO Funds Group.
- -----------------------------------------------------------------------------------------------
</Table>
*Interested person (as defined in the Investment Company Act of 1940) of one or
more of the Funds and/or of the Fund's adviser or sub-adviser.
Additional information about the Funds and their trustees is available in the
Funds' Statement of Additional Information,which can be obtained free of charge
by writing or calling the Funds at:
Berger Funds
P.O.Box 219958
Kansas City,MO 64121-9958
(800) 333-1001
bergerfunds.com
Berger IPT Funds o June 30, 2002 Semi-Annual Report
IPTSA
[BERGER FUNDS LOGO]
JANUS ASPEN SERIES
PART C -- OTHER INFORMATION
ITEM 15. INDEMNIFICATION
Article IX of Janus Aspen Series' Trust Instrument provides for
indemnification of certain persons acting on behalf of the Portfolios. In
general, Trustees and officers will be indemnified against liability and against
all expenses of litigation incurred by them in connection with any claim,
action, suit or proceeding (or settlement of the same) in which they become
involved by virtue of their office in connection with the Portfolios, unless
their conduct is determined to constitute willful misfeasance, bad faith, gross
negligence or reckless disregard of their duties, or unless it has been
determined that they have not acted in good faith in the reasonable belief that
their actions were in the best interests of the Portfolios. A determination that
a person covered by the indemnification provisions is entitled to
indemnification may be made by the court or other body before which the
proceeding is brought, or by either a vote of a majority of a quorum of Trustees
who are neither "interested persons" of the Trust nor parties to the proceeding
or by an independent legal counsel in a written opinion. The Portfolios also may
advance money for these expenses, provided that the Trustee or officer
undertakes to repay the Portfolios if his conduct is later determined to
preclude indemnification, and that either he provide security for the
undertaking, the Trust be insured against losses resulting from lawful advances
or a majority of a quorum of disinterested Trustees, or independent counsel in a
written opinion, determines that he ultimately will be found to be entitled to
indemnification. The Trust also maintains a liability insurance policy covering
its Trustees and officers.
ITEM 16. EXHIBITS
Exhibit 1 (a) Trust Instrument dated May 19, 1993, is
incorporated herein by reference to Registrant's
Registration Statement on Form N-1A filed with the
Securities and Exchange Commission on May 20, 1993
(File No. 33-63212).
(b) Amendments to Trust Instrument are incorporated
herein by reference to Exhibit 1(b) to
Post-Effective Amendment No. 7, filed on February
14, 1996 (File No. 33-63212).
(c) Amendment to Trust Instrument dated December 10,
1996 is incorporated herein by reference to Exhibit
1(c) to Post-Effective Amendment No. 10, filed on
February 13, 1997 (File No. 33-63212).
(d) Amendment to Trust Instrument dated September 14,
1999 is incorporated herein by reference to Exhibit
1(d) to Post-Effective Amendment No. 20, filed on
October 26, 1999 (File No. 33-63212).
(e) Amendment to Trust Instrument dated December 14,
1999 is incorporated herein by reference to Exhibit
1(e) to Post-Effective Amendment No. 23, filed on
February 16, 2000 (File No. 33-63212).
(f) Form of Amendment to Trust Instrument dated July
28, 2000, is incorporated by reference to Exhibit
1(f) to Post-Effective Amendment No. 25, filed on
February 14, 2001 (File No. 33-63212).
(g) Form of Amendment to Trust Instrument dated August
1, 2000, is incorporated herein by reference to
Exhibit 1(g) to Post-Effective Amendment No. 25,
filed on February 14, 2001 (File No. 33-63212).
(h) Form of Amendment to Trust Instrument dated
February 12, 2001, is incorporated herein by
reference to Exhibit 1(h) to Post-Effective
Amendment No. 25, filed on February 14, 2001 (File
No. 33-63212).
(i) Form of Amendment to Trust Instrument dated July
31, 2001, is incorporated herein by reference to
Exhibit 1(i) to Post-Effective Amendment No. 26,
filed on June 1, 2001 (File No. 33-63212).
(j) Amendment to Trust Instrument dated September 13,
2001, is incorporated herein by reference to
Exhibit 1(j) to Post-Effective Amendment No. 27,
filed on October 18, 2001 (File No. 33-63212).
(k) Fourteenth Amendment to Trust Instrument dated
September 18, 2002, is incorporated herein by
reference to Exhibit 1(k) to Post-Effective
Amendment No. 30, filed on October 17, 2002 (File
No. 33-63212).
(l) Fifteenth Amendment to Trust Instrument dated
October 14, 2002, is incorporated herein by
reference to Exhibit 1(l) to Post-Effective
Amendment No. 30, filed on October 17, 2002 (File
No. 33-63212).
Exhibit 2 (a) Restated Bylaws are incorporated herein by
reference to Exhibit 2(a) to Post-Effective
Amendment No. 7, filed on February 14, 1996 (File
No. 33-63212).
(b) First Amendment to the Bylaws is incorporated
herein by reference to Exhibit 2(b) to
Post-Effective Amendment No. 7, filed on February
14, 1996 (File No. 33-63212).
(c) Second Amendment to Bylaws dated September 18,
2002, is incorporated herein by reference to
Exhibit 2(c) to Post-Effective Amendment No. 30,
filed on October 17, 2002 (File No. 33-63212).
Exhibit 3 Not Applicable
Exhibit 4 Form of Agreement and Plan of Reorganization is
filed herein as Exhibit A to Part A of this
Registration Statement.
Exhibit 5 Not Applicable
Exhibit 6 (a) Investment Advisory Agreement for Growth Portfolio
is incorporated herein by reference to Exhibit 5(a)
to Post-Effective Amendment No. 15, filed on
February 27, 1998 (File No. 33-63212).
(b) Investment Advisory Agreement for International
Growth Portfolio is incorporated herein by
reference to Exhibit 5(b) to Post-Effective
Amendment No. 15, filed on February 27, 1998 (File
No. 33-63212).
2
(c) Form of Investment Advisory Agreement for Growth
and Income Portfolio is incorporated herein by
reference to Exhibit 5(g) to Post-Effective
Amendment No. 12, filed on August 11, 1997 (File
No. 33-63212).
(d) Amendment to Investment Advisory Agreement for
Growth Portfolio is incorporated herein by
reference to Exhibit 4(k) to Post-Effective
Amendment No. 24, filed on April 14, 2000 (File No.
33-63212).
(e) Amendment to Investment Advisory Agreement for
Growth and Income Portfolio is incorporated herein
by reference to Exhibit 4(p) to Post-Effective
Amendment No. 24, filed on April 14, 2000 (File No.
33-63212).
(f) Amendment to Investment Advisory Agreement for
International Growth Portfolio is incorporated
herein by reference to Exhibit 4(q) to
Post-Effective Amendment No. 24, filed on April 14,
2000 (File No. 33-63212).
(g) Form of Investment Advisory Agreement for Growth
and Income Portfolio, Growth Portfolio and
International Growth Portfolio is incorporated
herein by reference to Exhibit 4(u) to
Post-Effective Amendment No. 28, filed on February
21, 2002 (File No. 33-63212).
(h) Form of Transfer and Assumption Agreement between
Janus Capital Corporation and Janus Capital
Management LLC, dated April 1, 2002, is
incorporated herein by reference to Exhibit 4(v) to
Post-Effective Amendment No. 29, filed on April 29,
2002 (File No. 33-63212).
Exhibit 7 (a) Form of Amended and Restated Distribution
Agreement, dated September 13, 2001, is
incorporated herein by reference to Exhibit 5(e) to
Post-Effective Amendment No. 27, filed on October
18, 2001 (File No. 33-63212).
(b) Form of Transfer and Assumption Agreement between
Janus Distributors, Inc. and Janus Distributors
LLC, dated April 1, 2002, is incorporated herein by
reference to Exhibit 5(h) to Post-Effective
Amendment No. 29, filed on April 29, 2002 (File No.
33-63212).
(c) Amended and Restated Distribution Agreement between
Janus Aspen Series and Janus Distributors LLC,
dated June 18, 2002, is incorporated herein by
reference to Exhibit 5(i) to Post-Effective
Amendment No. 30, filed on October 17, 2002 (File
No. 33-63212).
Exhibit 8 Not Applicable
Exhibit 9 (a) Form of Custody Agreement between Janus Aspen
Series and Investors Fiduciary Trust Company is
incorporated herein by reference to Exhibit 8(a) to
Post-Effective Amendment No. 11, filed on April 30,
1997 (File No. 33-63212).
(b) Form of Custodian Contract between Janus Aspen
Series and State Street Bank and Trust Company is
incorporated herein by reference to Exhibit 8(b) to
Post-Effective Amendment No. 11, filed on April 30,
1997 (File No. 33-63212).
3
(c) Letter Agreement dated April 4, 1994 regarding
State Street Custodian Agreement is incorporated
herein by reference to Exhibit 8(c) to
Post-Effective Amendment No. 11, filed on April 30,
1997 (File No. 33-63212).
(d) Amendment dated October 11, 1995 of State Street
Custodian Contract is incorporated herein by
reference to Exhibit 8(e) to Post-Effective
Amendment No. 7, filed on February 14, 1996 (File
No. 33-63212).
(e) Letter Agreement dated September 10, 1996 regarding
State Street Custodian is incorporated herein by
reference to Exhibit 8(f) to Post-Effective
Amendment No. 9, filed on October 24, 1996 (File
No. 33-63212).
(f) Form of Letter Agreement dated September 9, 1997,
regarding State Street Custodian Contract is
incorporated herein by reference to Exhibit 8(h) to
Post-Effective Amendment No. 14, filed on October
24, 1997 (File No. 33-63212).
(g) Amendment to Custodian Contract is incorporated
herein by reference to Exhibit 7(k) to
Post-Effective Amendment No. 24, filed on April 14,
2000 (File No. 33-63212).
(h) Foreign Custody Agreement to State Street Bank and
Trust Company Contract, dated December 5, 2000, is
incorporated herein by reference to Exhibit 7(l) to
Post-Effective Amendment No. 25, filed on February
14, 2001 (File No. 33-63212).
(i) Foreign Custody Manager Addendum to Global
Custodial Services Agreement with Citibank, N.A.,
dated December 5, 2000, is incorporated herein by
reference to Exhibit 7(m) to Post-Effective
Amendment No. 25, filed on February 14, 2001 (File
No. 33-63212).
(j) Amendment to State Street Bank and Trust Company
Custodian Contract, dated December 5, 2000, is
incorporated herein by reference to Exhibit 7(n) to
Post-Effective Amendment No. 25, filed on February
14, 2001 (File No. 33-63212).
(k) Form of Amendment to State Street Bank and Trust
Company Custodian Contract, dated December 5, 2000,
is incorporated herein by reference to Exhibit 7(o)
to Post-Effective Amendment No. 25, filed on
February 14, 2001 (File No. 33-63212).
Exhibit 10 Amended and Restated Rule 18f-3 Plan, dated
September 13, 2001, is incorporated herein by
reference to Exhibit 15(e) to Post-Effective
Amendment No. 27, filed on October 18, 2001 (File
No. 33-63212).
Exhibit 11 Opinion and Consent of Vedder, Price, Kaufman &
Kammholz is filed herein.
Exhibit 12 Form of Tax Opinion of Vedder, Price, Kaufman &
Kammholz is filed herein.
Exhibit 13 (a) Form of Model Participation Agreement is
incorporated herein by reference to Exhibit 9(c) to
Post-Effective Amendment No. 11, filed on April 30,
1997 (File No. 33-63212).
4
(b) Form of Amended and Restated Transfer Agency
Agreement, dated September 13, 2001, is
incorporated herein by reference to Exhibit 8(d) to
Post-Effective Amendment No. 27, filed on October
18, 2001 (File No. 33-63212).
(c) Form of Transfer and Assumption Agreement between
Janus Service Corporation and Janus Services LLC,
dated April 1, 2002, is incorporated herein by
reference to Exhibit 8(e) to Post-Effective
Amendment No. 29, filed on April 29, 2002 (File No.
33-63212).
(d) Amended and Restated Transfer Agency Agreement
between Janus Aspen Series and Janus Services LLC,
dated June 18, 2002, is incorporated herein by
reference to Exhibit 8(f) to Post-Effective
Amendment No. 30, filed on October 17, 2002 (File
No. 33-63212).
Exhibit 14 Consent of PricewaterhouseCoopers LLP is filed
herein.
Exhibit 15 Not Applicable
Exhibit 16 Powers of Attorney are filed herein.
Exhibit 17 Forms of Voting Instructions are filed herein.
ITEM 17. UNDERTAKINGS
(1) The undersigned registrant agrees that prior to any public
reoffering of the securities registered through the use of a prospectus which is
a part of this registration statement by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c) of the Securities Act, the
reoffering prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(2) The undersigned registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
5
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement
has been signed on behalf of the registrant, in the City of Denver, and State of
Colorado, on the 12th day of December, 2002.
JANUS ASPEN SERIES
By: /s/ Loren M. Starr
-----------------------------------
Loren M. Starr, President and Chief
Executive Officer
As required by the Securities Act of 1933, this Registration Statement
has been signed below by the following persons in the capacities and on the
dates indicated.
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Loren M. Starr President and Chief Executive Officer December 12, 2002
- ---------------------------- (Principal Executive Officer)
Loren M. Starr
/s/ Anita E. Falicia Vice President, Chief Financial December 12, 2002
- ---------------------------- Officer and Treasurer (Principal
Anita E. Falicia Financial Officer and Principal
Accounting Officer)
Thomas H. Bailey* Trustee December 12, 2002
- ----------------------------
Thomas H. Bailey
William F. McCalpin* Trustee December 12, 2002
- ----------------------------
William F. McCalpin
John W. McCarter, Jr.* Trustee December 12, 2002
- ----------------------------
John W. McCarter, Jr.
Dennis B. Mullen* Trustee December 12, 2002
- ----------------------------
Dennis B. Mullen
James T. Rothe* Trustee December 12, 2002
- ----------------------------
James T. Rothe
William D. Stewart* Trustee December 12, 2002
- ----------------------------
William D. Stewart
Martin H. Waldinger* Trustee December 12, 2002
- ----------------------------
Martin H. Waldinger
/s/ Thomas A. Early
- ----------------------------
*By Thomas A. Early
Attorney-in-Fact
</Table>
6
INDEX OF EXHIBITS
<Table>
<Caption>
EXHIBIT NUMBER EXHIBIT TITLE
- -------------- -------------
11 Opinion and Consent of Vedder, Price, Kaufman & Kammholz
12 Form of Tax Opinion of Vedder, Price, Kaufman & Kammholz
14 Consent of PricewaterhouseCoopers LLP
16 Powers of Attorney
17 Forms of Voting Instructions
</Table>
7