United States Securities and Exchange Commission
Washington, D.C. 20549
Form N-CSR
Certified Shareholder Report of Registered Management Investment Companies
Investment Company Act file number 811-01879
Janus Investment Fund
(Exact name of registrant as specified in charter)
151 Detroit Street, Denver, Colorado 80206
(Address of principal executive offices) (Zip code)
Kathryn Santoro, 151 Detroit Street, Denver, Colorado 80206
(Name and address of agent for service)
Registrant's telephone number, including area code: 303-333-3863
Date of fiscal year end: 6/30
Date of reporting period: 6/30/17
Item 1 - Reports to Shareholders
ANNUAL REPORT June 30, 2017 | |||
Janus Henderson Adaptive Global Allocation Fund (formerly named Janus Adaptive Global Allocation Fund) | |||
Janus Investment Fund | |||
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HIGHLIGHTS · Portfolio management perspective · Investment strategy behind your fund · Fund performance, characteristics | |||
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Table of Contents
Janus Henderson Adaptive Global Allocation Fund
Janus Henderson Adaptive Global Allocation Fund (unaudited)
PERFORMANCE OVERVIEW
Janus Henderson Adaptive Global Allocation Fund Class I Shares returned 12.42% for the 12-month period ended June 30, 2017. This compares with a return of 18.78% for its primary benchmark, the MSCI All Country World Index. The Fund’s secondary benchmark, the Adaptive Global Allocation 60-40 Index, an internally calculated index comprised of the MSCI All Country World Index (60%) and the Bloomberg Barclays Global Aggregate Bond Index (40%), returned 10.75%. Its tertiary benchmark, the Bloomberg Barclays Global Aggregate Bond Index, returned -0.41%.
MARKET ENVIRONMENT
Risk assets rallied over the period, driven by improving optimism on the potential for synchronized global growth, a scenario that had proven elusive in the years since the Global Financial Crisis. Most global stock indices traded in a narrow range for the first part of the period. An inflection point was reached after the election of Donald Trump to the U.S. presidency, as investors priced in a pro-growth agenda. The exception was emerging markets, which sold off in the election’s aftermath. Once immediate concerns about rising protectionism subsided, however, shares in those markets experienced their own rally and finished up for the period. European stocks rose as well, although investors exercised caution during France’s election cycle. The ascendency of Emmanuel Macron to the country’s presidency appeared to quell the tide of populism roiling the continent, which, in turn sent regional indices higher. In the aftermath, Germany’s blue chip benchmark hit a record high, as did many U.S. indices in the period’s closing weeks.
Segments of global fixed income markets diverged at first as a pro-growth bias and the expectation of interest rate hikes by the Federal Reserve (Fed) sent yields on safe-haven U.S. Treasurys higher. After cresting above 2.6% in March, the yield on the 10-year note slid over much of the remainder of the period as investors lowered their expectation for regulatory and tax reforms. The yield on the 2-year note rose over the entirety of the period as that segment of the curve tends to be more sensitive to rate hikes, which occurred three times during the period. Investment-grade corporate credits initially generated negative returns but later rallied as spreads on U.S. credits tightened to 109 basis points (bps) by period end. The higher risk high-yield segment of corporates performed well over the whole period, with spreads dipping 230 bps, finishing June at 364 bps. Benchmark crude oil rose to as high as $56 per barrel but fell by roughly 20% over the period’s final months. After rising early on, the value of the U.S. dollar as measured by a widely followed index based on six currencies finished slightly in the red.
PERFORMANCE DISCUSSION
For the period, the Fund underperformed its primary benchmark, the MSCI All Country World Index, due, in part, to its equity underweighting over the full period. However, it outperformed its secondary and tertiary benchmarks: the Adaptive Global Allocation 60-40 Index and the Bloomberg Barclays Global Aggregate Bond Index. During the period, riskier assets, including global equities, generated strong returns as both economic drivers and corporate performance proved favorable.
We believe that compound returns are most affected by tail risks, not average returns. For that key reason, the Fund’s focus is on mitigating drawdowns while capturing upside opportunities. Our proprietary technology garners information constantly from the options markets, and we view their implied estimates of tail risk as robust and reliable indicators of future risk. The strategy sees these indicators as extremely useful in dynamically managing the risk of an investment in order to enhance compound returns. While the Fund dynamically allocates to equities, at any time, equity weightings could vary. The typical average equity weight is less than 100% .Thus, the Fund
Janus Investment Fund | 1 |
Janus Henderson Adaptive Global Allocation Fund (unaudited)
may underperform during a period of consistently strong equity performance.
We view investment risk as having two components: drawdown risk and upside risk. Of course, while compound returns are most affected by drawdowns (left tail risk), we believe that not participating in upside opportunities (right tail risk) is also risky. During the full year, investors wrestled with both types of risks. Globally – although the balance sheets of central banks have exploded from a “mere” $3 trillion in 2000 to $19 trillion currently – global growth remains subdued. In the case of the European Central Bank (ECB), it remains the largest single buyer of debt issued by major eurozone countries (e.g., Germany 17%, France 14% and Italy 12%). The question is: when the ECB slows or – stops – buying, where will the demand for sovereign debt come from?
On the other side of the Atlantic, the Federal Reserve (Fed) increased its benchmark rate three times in the last eight months and announced that it will begin to reduce its $4.0 trillion balance sheet later this year. Whether the unwinding can be accomplished in a smooth way is an open question. As important, against tightening monetary conditions, the potential for sudden, intensifying instability in the fixed income markets (and spillover effect on the equity markets) during the second half of 2017 and beyond can’t be ignored.
With regard to equities, the appetite for this higher-risk asset class remained strong during the full year. Indeed, equities surprised to the upside.
That said, the earlier market confidence in the Trump administration to quickly pass promised reforms seems to be diminishing. In addition, stretched equity valuations, as well as the fact that a small number of stocks explain much of the equity returns year to date, could restrain investors’ appetite in equities in the coming year.
During the period, with the aim of hedging certain exposures, the Fund used a series of derivative instruments including options, futures, swaps and forward exchange contracts. Since many of the derivatives we use, namely futures and certain options, are liquid, the Fund utilizes them as low-cost instruments to dynamically adjust exposures to desired targets. Other derivatives, including swaps and forward contracts, are also used to adjust portfolio exposures as conditions merit in a timely and/or cost-effective manner. This may lead to short positions in futures when exposures need to be adjusted downward. For the period, the Fund’s derivative exposure contributed to performance.
Please see the Derivative Instruments section in the “Notes to Financial Statements” for a discussion of derivatives used by the Fund
OUTLOOK
The Fund is designed to operate at a level of risk consistent with the long-term average downside risk of a 60/40 portfolio. If the risk in markets today is much higher than average, then the Fund allocations will be adjusted away from 60/40 to an allocation that seeks to provide the targeted risk level.
While our signals over the past year consistently pointed to equities as being attractive, in the period’s closing weeks, our proprietary options-based tail risk model signals no compelling opportunities across asset classes with none offering large upside potential. The trade-off between the level of expected upside risk versus the level of expected downside risk is not particularly attractive for equities or any other asset class. However, on the bright side, we also do not see significant downside risk to stocks, suggesting that we aren’t near a left-tail tipping point just yet.
Thank you for investing in Janus Henderson Adaptive Global Allocation Fund.
2 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund (unaudited)
Fund At A Glance
June 30, 2017
5 Largest Equity Holdings - (% of Net Assets) | |
Vanguard FTSE Emerging Markets | |
Exchange-Traded Funds (ETFs) | 7.2% |
Vanguard Small-Cap | |
Exchange-Traded Funds (ETFs) | 4.4% |
iShares Core FTSE 100 UCITS GBP Dist | |
Exchange-Traded Funds (ETFs) | 4.0% |
Vanguard FTSE All World ex-US Small-Cap | |
Exchange-Traded Funds (ETFs) | 3.5% |
Vanguard Value | |
Exchange-Traded Funds (ETFs) | 3.4% |
22.5% | |
Asset Allocation - (% of Net Assets) | |||||
Investment Companies | 69.5% | ||||
Common Stocks | 29.9% | ||||
U.S. Government Agency Notes | 2.3% | ||||
Preferred Stocks | 0.1% | ||||
Other | (1.8)% | ||||
100.0% | |||||
Top Country Allocations - Long Positions - (% of Investment Securities) | |
As of June 30, 2017
| As of June 30, 2016
|
Janus Investment Fund | 3 |
Janus Henderson Adaptive Global Allocation Fund (unaudited)
Performance
See important disclosures on the next page. |
| Expense Ratios - | |||||||
Average Annual Total Return - for the periods ended June 30, 2017 |
|
| per the October 28, 2016 prospectuses | |||||
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| One | Since |
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| Total Annual Fund | Net Annual Fund | |
Class A Shares at NAV |
| 12.17% | 3.26% |
|
| 1.65% | 1.17% | |
Class A Shares at MOP |
| 5.71% | 0.27% |
|
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Class C Shares at NAV | 11.21% | 2.46% |
|
| 2.40% | 1.92% | ||
Class C Shares at CDSC |
| 10.21% | 2.46% |
|
|
|
| |
Class D Shares(1) |
| 12.13% | 3.25% |
|
| 2.70% | 1.19% | |
Class I Shares |
| 12.42% | 3.53% |
|
| 1.39% | 0.92% | |
Class N Shares |
| 12.43% | 3.53% |
|
| 1.38% | 0.92% | |
Class S Shares |
| 11.95% | 3.08% |
|
| 1.89% | 1.42% | |
Class T Shares |
| 12.17% | 3.33% |
|
| 1.64% | 1.17% | |
MSCI All Country World Index(2) |
| 18.78% | 5.19% |
|
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Bloomberg Barclays Global Aggregate Bond Index (Hedged) |
| -0.41% | 3.48% |
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Adaptive Global Allocation 60/40 Index (Hedged) |
| 10.75% | 4.68% |
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Adaptive Global Allocation 70/30 Index (Hedged) |
| 12.71% | 4.83% |
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Adaptive Global Allocation 70/30 Index (Unhedged)(3) |
| 12.13% | 4.77% |
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Bloomberg Barclays Global Aggregate Bond Index (Unhedged)(3) |
| -2.18% | 3.29% |
|
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Morningstar Quartile - Class I Shares |
| 2nd | 2nd |
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Morningstar Ranking - based on total returns for World Allocation Funds |
| 128/493 | 170/473 |
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4 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund (unaudited)
Performance
Returns quoted are past performance and do not guarantee future results; current performance may be lower or higher. Investment returns and principal value will vary; there may be a gain or loss when shares are sold. For the most recent month-end performance call 800.668.0434 (or 800.525.3713 if you hold shares directly with Janus Henderson) or visit janushenderson.com/performance (or janushenderson.com/allfunds if you hold shares directly with Janus Henderson).
Maximum Offering Price (MOP) returns include the maximum sales charge of 5.75%. Net Asset Value (NAV) returns exclude this charge, which would have reduced returns.
CDSC returns include a 1% contingent deferred sales charge (CDSC) on Shares redeemed within 12 months of purchase. Net Asset Value (NAV) returns exclude this charge, which would have reduced returns.
The expense ratios shown are estimated.
Performance may be affected by risks that include those associated with non-diversification, portfolio turnover, short sales, potential conflicts of interest, foreign and emerging markets, initial public offerings (IPOs), high-yield and high-risk securities, undervalued, overlooked and smaller capitalization companies, real estate related securities including Real Estate Investment Trusts (REITs), derivatives, and commodity-linked investments. Each product has different risks. Please see the prospectus for more information about risks, holdings and other details.
Janus Capital Management does not have prior experience managing an adaptive global allocation investment strategy. There is a risk that the Fund’s investments will correlate with stocks and bonds to a greater degree than anticipated, and that the proprietary options implied information model used to implement the Fund's investment strategy may not achieve the desired results. The Fund may underperform during up markets and be negatively affected in down markets. Diversification does not assure a profit or eliminate the risk of loss.
See Financial Highlights for actual expense ratios during the reporting period.
Until the earlier of three years from inception or the Fund’s assets meeting the first fee breakpoint, expenses previously waived or reimbursed may be recovered if the expense ratio falls below certain limits.
Ranking is for the share class shown only; other classes may have different performance characteristics. When an expense waiver is in effect, it may have a material effect on the total return or yield, and therefore the ranking for the period.
© 2017 Morningstar, Inc. All Rights Reserved.
There is no assurance that the investment process will consistently lead to successful investing.
See Notes to Schedule of Investments and Other Information for index definitions.
Index performance does not reflect the expenses of managing a portfolio as an index is unmanaged and not available for direct investment.
See “Useful Information About Your Fund Report.”
*The Fund’s inception date – June 23, 2015
(1) Closed to certain new investors.
(2) Effective on or about January 1, 2017, the Fund’s investment strategies and benchmark indices changed. These changes are intended to provide the Fund with more flexibility to invest across global equity investments and global fixed-income investments and at times, invest in commodity-linked investments, without having to allocate its investments across these asset classes in any fixed proportion. In addition, these changes limit the Fund’s use of derivatives. The changes to the Fund's benchmark indices are summarized below:
· The Fund’s primary benchmark changed from the Adaptive Global Allocation 70/30 Index to the MSCI All Country World Index.
· The Adaptive Global Allocation 60/40 Index was added as a secondary benchmark for the Fund.
· The Fund will continue to retain the Bloomberg Barclays Global Aggregate Bond Index as an additional secondary benchmark.
(3) The Fund’s primary and secondary benchmarks changed to reflect the hedged, rather than unhedged, version of the Bloomberg Barclays Global Aggregate Bond Index. This change was intended to provide a more appropriate comparison for the Fund.
Janus Investment Fund | 5 |
Janus Henderson Adaptive Global Allocation Fund (unaudited)
Expense Examples
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, such as sales charges (loads) on purchase payments (applicable to Class A Shares only); and (2) ongoing costs, including management fees; 12b-1 distribution and shareholder servicing fees; transfer agent fees and expenses payable pursuant to the Transfer Agency Agreement; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The example is based upon an investment of $1,000 invested at the beginning of the period and held for the six-months indicated, unless noted otherwise in the table and footnotes below.
Actual Expenses
The information in the table under the heading “Actual” provides information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the appropriate column for your share class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading “Hypothetical (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based upon the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Additionally, for an analysis of the fees associated with an investment in any share class or other similar funds, please visit www.finra.org/fundanalyzer.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. These fees are fully described in the Fund’s prospectuses. Therefore, the hypothetical examples are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
Actual | Hypothetical | |||||||||
| Beginning | Ending | Expenses |
| Beginning | Ending | Expenses | Net Annualized | ||
Class A Shares | $1,000.00 | $1,082.10 | $5.42 |
| $1,000.00 | $1,019.59 | $5.26 | 1.05% | ||
Class C Shares | $1,000.00 | $1,077.10 | $9.27 |
| $1,000.00 | $1,015.87 | $9.00 | 1.80% | ||
Class D Shares | $1,000.00 | $1,081.00 | $4.75 |
| $1,000.00 | $1,020.23 | $4.61 | 0.92% | ||
Class I Shares | $1,000.00 | $1,083.00 | $4.08 |
| $1,000.00 | $1,020.88 | $3.96 | 0.79% | ||
Class N Shares | $1,000.00 | $1,083.00 | $4.08 |
| $1,000.00 | $1,020.88 | $3.96 | 0.79% | ||
Class S Shares | $1,000.00 | $1,080.00 | $5.98 |
| $1,000.00 | $1,019.04 | $5.81 | 1.16% | ||
Class T Shares | $1,000.00 | $1,082.10 | $4.75 |
| $1,000.00 | $1,020.23 | $4.61 | 0.92% | ||
† | Expenses Paid During Period are equal to the Net Annualized Expense Ratio multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses in the examples include the effect of applicable fee waivers and/or expense reimbursements, if any. Had such waivers and/or reimbursements not been in effect, your expenses would have been higher. Please refer to the Notes to Financial Statements or the Fund’s prospectuses for more information regarding waivers and/or reimbursements. | |||||||||
6 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Schedule of Investments
June 30, 2017
Shares or | Value | ||||||
Common Stocks – 29.9% | |||||||
Aerospace & Defense – 0.3% | |||||||
Arconic Inc | .281 | $6,365 | |||||
Meggitt PLC | 2,631 | 16,339 | |||||
Northrop Grumman Corp | 38 | 9,755 | |||||
Raytheon Co | 247 | 39,886 | |||||
Rockwell Collins Inc | 140 | 14,711 | |||||
Textron Inc | 946 | 44,557 | |||||
Thales SA | 38 | 4,090 | |||||
Zodiac Aerospace | 2,545 | 69,027 | |||||
204,730 | |||||||
Air Freight & Logistics – 0.1% | |||||||
Bollore SA | 492 | 2,237 | |||||
Deutsche Post AG | 237 | 8,883 | |||||
Expeditors International of Washington Inc | 585 | 33,041 | |||||
FedEx Corp | 48 | 10,432 | |||||
Yamato Holdings Co Ltd | 300 | 6,078 | |||||
60,671 | |||||||
Airlines – 0.1% | |||||||
Alaska Air Group Inc | 151 | 13,554 | |||||
American Airlines Group Inc | 191 | 9,611 | |||||
Delta Air Lines Inc | 196 | 10,533 | |||||
Deutsche Lufthansa AG | 272 | 6,189 | |||||
International Consolidated Airlines Group SA | 211 | 1,674 | |||||
Japan Airlines Co Ltd | 300 | 9,267 | |||||
Southwest Airlines Co | 281 | 17,461 | |||||
United Continental Holdings Inc* | 199 | 14,975 | |||||
83,264 | |||||||
Auto Components – 0.2% | |||||||
Aisin Seiki Co Ltd | 200 | 10,226 | |||||
Bridgestone Corp | 100 | 4,304 | |||||
Continental AG | 81 | 17,478 | |||||
Denso Corp | 100 | 4,217 | |||||
GKN PLC | 11,651 | 49,461 | |||||
NGK Spark Plug Co Ltd | 300 | 6,373 | |||||
NOK Corp | 200 | 4,222 | |||||
Sumitomo Electric Industries Ltd | 200 | 3,077 | |||||
Yokohama Rubber Co Ltd | 100 | 2,005 | |||||
101,363 | |||||||
Automobiles – 0.1% | |||||||
Fiat Chrysler Automobiles NV* | 59 | 622 | |||||
General Motors Co | 507 | 17,710 | |||||
Isuzu Motors Ltd | 200 | 2,465 | |||||
Mitsubishi Motors Corp | 700 | 4,606 | |||||
Renault SA | 181 | 16,381 | |||||
Subaru Corp | 100 | 3,367 | |||||
Toyota Motor Corp | 500 | 26,200 | |||||
Yamaha Motor Co Ltd | 200 | 5,154 | |||||
76,505 | |||||||
Banks – 0.6% | |||||||
ABN AMRO Group NV | 26 | 689 | |||||
Aozora Bank Ltd | 1,000 | 3,806 | |||||
Banco de Sabadell SA | 12,887 | 26,181 | |||||
Bank of America Corp | 1,242 | 30,131 | |||||
Bank of East Asia Ltd | 2,000 | 8,595 | |||||
Bankinter SA | 3,860 | 35,551 | |||||
CaixaBank SA | 1,427 | 6,812 | |||||
Comerica Inc | 150 | 10,986 | |||||
Concordia Financial Group Ltd | 100 | 504 | |||||
DBS Group Holdings Ltd | 600 | 9,041 | |||||
Erste Group Bank AG* | 31 | 1,187 | |||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Investment Fund | 7 |
Janus Henderson Adaptive Global Allocation Fund
Schedule of Investments
June 30, 2017
Shares or | Value | ||||||
Common Stocks – (continued) | |||||||
Banks – (continued) | |||||||
Fukuoka Financial Group Inc | .1,000 | $4,748 | |||||
Hachijuni Bank Ltd | 300 | 1,902 | |||||
Hang Seng Bank Ltd | 500 | 10,458 | |||||
Intesa Sanpaolo SpA | 5,001 | 14,826 | |||||
KeyCorp | 1,750 | 32,795 | |||||
Kyushu Financial Group Inc | 200 | 1,261 | |||||
Lloyds Banking Group PLC | 30,828 | 26,555 | |||||
Mebuki Financial Group Inc | 500 | 1,858 | |||||
Mediobanca SpA | 806 | 7,953 | |||||
Mitsubishi UFJ Financial Group Inc | 2,000 | 13,423 | |||||
Mizuho Financial Group Inc | 6,100 | 11,141 | |||||
Nordea Bank AB | 97 | 1,235 | |||||
Oversea-Chinese Banking Corp Ltd | 1,100 | 8,623 | |||||
People's United Financial Inc | 496 | 8,759 | |||||
Raiffeisen Bank International AG* | 700 | 17,667 | |||||
Resona Holdings Inc | 2,200 | 12,099 | |||||
Seven Bank Ltd | 1,100 | 3,932 | |||||
Sumitomo Mitsui Financial Group Inc | 400 | 15,575 | |||||
Sumitomo Mitsui Trust Holdings Inc | 300 | 10,721 | |||||
Wells Fargo & Co | 65 | 3,602 | |||||
Zions Bancorporation | 140 | 6,147 | |||||
348,763 | |||||||
Beverages – 0.7% | |||||||
Anheuser-Busch InBev SA/NV | 94 | 10,382 | |||||
Asahi Group Holdings Ltd | 300 | 11,279 | |||||
Brown-Forman Corp | 1,619 | 78,683 | |||||
Coca-Cola Co | 1,821 | 81,672 | |||||
Dr Pepper Snapple Group Inc | 492 | 44,826 | |||||
Kirin Holdings Co Ltd | 400 | 8,142 | |||||
PepsiCo Inc | 1,469 | 169,655 | |||||
Pernod Ricard SA | 40 | 5,356 | |||||
409,995 | |||||||
Biotechnology – 0.5% | |||||||
AbbVie Inc | 111 | 8,049 | |||||
Alexion Pharmaceuticals Inc* | 88 | 10,707 | |||||
Biogen Inc* | 116 | 31,478 | |||||
Celgene Corp* | 75 | 9,740 | |||||
Gilead Sciences Inc | 1,253 | 88,687 | |||||
Grifols SA | 3,583 | 99,778 | |||||
Incyte Corp* | 66 | 8,310 | |||||
Regeneron Pharmaceuticals Inc* | 8 | 3,929 | |||||
Shire PLC | 776 | 42,825 | |||||
303,503 | |||||||
Building Products – 0.2% | |||||||
Allegion PLC | 201 | 16,305 | |||||
Asahi Glass Co Ltd | 800 | 33,648 | |||||
Daikin Industries Ltd | 300 | 30,598 | |||||
Fortune Brands Home & Security Inc | 213 | 13,896 | |||||
LIXIL Group Corp | 300 | 7,493 | |||||
Masco Corp | 34 | 1,299 | |||||
103,239 | |||||||
Capital Markets – 0.8% | |||||||
3i Group PLC | 3,497 | 41,098 | |||||
Affiliated Managers Group Inc | 112 | 18,576 | |||||
Bank of New York Mellon Corp | 1,831 | 93,418 | |||||
CBOE Holdings Inc | 103 | 9,414 | |||||
Daiwa Securities Group Inc | 1,000 | 5,920 | |||||
Deutsche Boerse AG | 86 | 9,077 | |||||
E*TRADE Financial Corp* | 452 | 17,190 | |||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
8 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Schedule of Investments
June 30, 2017
Shares or | Value | ||||||
Common Stocks – (continued) | |||||||
Capital Markets – (continued) | |||||||
Goldman Sachs Group Inc | .126 | $27,959 | |||||
Hong Kong Exchanges & Clearing Ltd | 1,500 | 38,772 | |||||
Investec PLC | 1,964 | 14,667 | |||||
London Stock Exchange Group PLC | 1,777 | 84,369 | |||||
Nasdaq Inc | 480 | 34,315 | |||||
Nomura Holdings Inc | 600 | 3,593 | |||||
Northern Trust Corp | 48 | 4,666 | |||||
Partners Group Holding AG | 15 | 9,303 | |||||
S&P Global Inc | 109 | 15,913 | |||||
SBI Holdings Inc/Japan | 800 | 10,827 | |||||
Schroders PLC | 356 | 14,390 | |||||
Singapore Exchange Ltd | 3,700 | 19,731 | |||||
Thomson Reuters Corp | 666 | 30,840 | |||||
504,038 | |||||||
Chemicals – 1.1% | |||||||
Air Products & Chemicals Inc | 123 | 17,596 | |||||
Air Water Inc | 100 | 1,835 | |||||
Akzo Nobel NV | 969 | 84,201 | |||||
Albemarle Corp | 145 | 15,303 | |||||
Arkema SA | 99 | 10,563 | |||||
Asahi Kasei Corp | 1,000 | 10,737 | |||||
CF Industries Holdings Inc | 160 | 4,474 | |||||
Covestro AG | 133 | 9,601 | |||||
Eastman Chemical Co | 270 | 22,677 | |||||
Ecolab Inc | 170 | 22,568 | |||||
EMS-Chemie Holding AG | 21 | 15,488 | |||||
Evonik Industries AG | 988 | 31,575 | |||||
FMC Corp | 177 | 12,930 | |||||
Givaudan SA | 7 | 14,006 | |||||
International Flavors & Fragrances Inc | 235 | 31,725 | |||||
Johnson Matthey PLC | 1,381 | 51,630 | |||||
JSR Corp | 100 | 1,722 | |||||
K+S AG | 2,064 | 52,846 | |||||
Kansai Paint Co Ltd | 100 | 2,299 | |||||
Koninklijke DSM NV | 736 | 53,490 | |||||
Kuraray Co Ltd | 400 | 7,249 | |||||
LANXESS AG | 303 | 22,938 | |||||
LyondellBasell Industries NV | 85 | 7,173 | |||||
Mitsubishi Chemical Holdings Corp | 800 | 6,616 | |||||
Mitsubishi Gas Chemical Co Inc | 100 | 2,112 | |||||
Mitsui Chemicals Inc | 2,000 | 10,582 | |||||
Mosaic Co | 324 | 7,397 | |||||
Nissan Chemical Industries Ltd | 100 | 3,299 | |||||
Nitto Denko Corp | 100 | 8,216 | |||||
Potash Corp of Saskatchewan Inc | 1,169 | 19,069 | |||||
Praxair Inc | 290 | 38,440 | |||||
Sherwin-Williams Co | 65 | 22,812 | |||||
Shin-Etsu Chemical Co Ltd | 100 | 9,057 | |||||
Sika AG | 3 | 19,278 | |||||
Sumitomo Chemical Co Ltd | 1,000 | 5,744 | |||||
Symrise AG | 205 | 14,519 | |||||
Toray Industries Inc | 1,700 | 14,214 | |||||
685,981 | |||||||
Commercial Services & Supplies – 0.3% | |||||||
Babcock International Group PLC | 342 | 3,921 | |||||
Cintas Corp | 102 | 12,856 | |||||
Dai Nippon Printing Co Ltd | 1,000 | 11,097 | |||||
Edenred | 200 | 5,214 | |||||
G4S PLC | 1,987 | 8,446 | |||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Investment Fund | 9 |
Janus Henderson Adaptive Global Allocation Fund
Schedule of Investments
June 30, 2017
Shares or | Value | ||||||
Common Stocks – (continued) | |||||||
Commercial Services & Supplies – (continued) | |||||||
Republic Services Inc | .1,305 | $83,168 | |||||
Secom Co Ltd | 200 | 15,161 | |||||
Securitas AB | 368 | 6,205 | |||||
Sohgo Security Services Co Ltd | 100 | 4,499 | |||||
Stericycle Inc* | 265 | 20,225 | |||||
Toppan Printing Co Ltd | 1,000 | 10,955 | |||||
Waste Management Inc | 164 | 12,029 | |||||
193,776 | |||||||
Communications Equipment – 0.2% | |||||||
Harris Corp | 278 | 30,324 | |||||
Juniper Networks Inc | 2,181 | 60,806 | |||||
Motorola Solutions Inc | 16 | 1,388 | |||||
Nokia OYJ | 3,112 | 19,031 | |||||
Telefonaktiebolaget LM Ericsson | 3,995 | 28,582 | |||||
140,131 | |||||||
Construction & Engineering – 0.1% | |||||||
Boskalis Westminster | 322 | 10,456 | |||||
Bouygues SA | 217 | 9,149 | |||||
Ferrovial SA | 390 | 8,656 | |||||
HOCHTIEF AG | 59 | 10,807 | |||||
JGC Corp | 400 | 6,481 | |||||
Obayashi Corp | 1,000 | 11,746 | |||||
Quanta Services Inc* | 213 | 7,012 | |||||
Shimizu Corp | 1,000 | 10,590 | |||||
Taisei Corp | 1,000 | 9,123 | |||||
84,020 | |||||||
Construction Materials – 0% | |||||||
James Hardie Industries PLC (CDI) | 170 | 2,678 | |||||
Martin Marietta Materials Inc | 32 | 7,123 | |||||
Vulcan Materials Co | 79 | 10,008 | |||||
19,809 | |||||||
Consumer Finance – 0.2% | |||||||
AEON Financial Service Co Ltd | 100 | 2,115 | |||||
American Express Co | 842 | 70,930 | |||||
Credit Saison Co Ltd | 600 | 11,706 | |||||
Synchrony Financial | 1,208 | 36,023 | |||||
120,774 | |||||||
Containers & Packaging – 0.3% | |||||||
Avery Dennison Corp | 654 | 57,794 | |||||
Ball Corp | 1,018 | 42,970 | |||||
CCL Industries Inc | 449 | 22,720 | |||||
International Paper Co | 475 | 26,890 | |||||
Sealed Air Corp | 489 | 21,888 | |||||
Toyo Seikan Group Holdings Ltd | 800 | 13,487 | |||||
WestRock Co | 339 | 19,208 | |||||
204,957 | |||||||
Distributors – 0.1% | |||||||
Jardine Cycle & Carriage Ltd | 100 | 3,222 | |||||
LKQ Corp* | 1,033 | 34,037 | |||||
37,259 | |||||||
Diversified Consumer Services – 0% | |||||||
H&R Block Inc | 288 | 8,902 | |||||
Diversified Financial Services – 0.1% | |||||||
Challenger Ltd/Australia | 896 | 9,184 | |||||
First Pacific Co Ltd/Hong Kong | 6,000 | 4,427 | |||||
Mitsubishi UFJ Lease & Finance Co Ltd | 100 | 546 | |||||
Onex Corp | 464 | 37,149 | |||||
ORIX Corp | 700 | 10,831 | |||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
10 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Schedule of Investments
June 30, 2017
Shares or | Value | ||||||
Common Stocks – (continued) | |||||||
Diversified Financial Services – (continued) | |||||||
Wendel SA | .67 | $9,916 | |||||
72,053 | |||||||
Diversified Telecommunication Services – 0.7% | |||||||
AT&T Inc | 938 | 35,391 | |||||
BCE Inc | 65 | 2,928 | |||||
BT Group PLC | 8,422 | 32,326 | |||||
CenturyLink Inc | 1,274 | 30,423 | |||||
Deutsche Telekom AG | 1,581 | 28,382 | |||||
Elisa OYJ | 137 | 5,308 | |||||
HKT Trust & HKT Ltd | 13,000 | 17,051 | |||||
Koninklijke KPN NV | 6,787 | 21,710 | |||||
Nippon Telegraph & Telephone Corp | 900 | 42,495 | |||||
PCCW Ltd | 30,000 | 17,061 | |||||
Singapore Telecommunications Ltd | 14,700 | 41,545 | |||||
Swisscom AG | 45 | 21,721 | |||||
Telefonica Deutschland Holding AG | 2,144 | 10,707 | |||||
Telia Co AB | 7,592 | 34,971 | |||||
TELUS Corp | 347 | 11,981 | |||||
TPG Telecom Ltd | 1,348 | 5,904 | |||||
Verizon Communications Inc | 1,230 | 54,932 | |||||
414,836 | |||||||
Electric Utilities – 0.7% | |||||||
AusNet Services | 3,084 | 4,111 | |||||
Chubu Electric Power Co Inc | 300 | 3,981 | |||||
Chugoku Electric Power Co Inc | 300 | 3,305 | |||||
CLP Holdings Ltd | 3,000 | 31,740 | |||||
Duke Energy Corp | 188 | 15,715 | |||||
Electricite de France SA | 545 | 5,901 | |||||
Emera Inc | 24 | 892 | |||||
Eversource Energy | 253 | 15,360 | |||||
FirstEnergy Corp | 332 | 9,681 | |||||
Fortum OYJ | 302 | 4,735 | |||||
Hydro One Ltd | 6,505 | 116,544 | |||||
Iberdrola SA | 2,464 | 19,509 | |||||
Kansai Electric Power Co Inc | 400 | 5,502 | |||||
Pinnacle West Capital Corp | 59 | 5,024 | |||||
Power Assets Holdings Ltd | 2,000 | 17,663 | |||||
PPL Corp | 1,093 | 42,255 | |||||
Red Electrica Corp SA | 2,089 | 43,645 | |||||
Southern Co | 205 | 9,815 | |||||
SSE PLC | 858 | 16,234 | |||||
Tohoku Electric Power Co Inc | 1,400 | 19,358 | |||||
Tokyo Electric Power Co Holdings Inc* | 300 | 1,235 | |||||
Xcel Energy Inc | 73 | 3,349 | |||||
395,554 | |||||||
Electrical Equipment – 0.1% | |||||||
AMETEK Inc | 364 | 22,047 | |||||
Fuji Electric Co Ltd | 1,000 | 5,264 | |||||
Nidec Corp | 100 | 10,235 | |||||
OSRAM Licht AG | 188 | 14,975 | |||||
Rockwell Automation Inc | 41 | 6,640 | |||||
59,161 | |||||||
Electronic Equipment, Instruments & Components – 0.6% | |||||||
Alps Electric Co Ltd | 100 | 2,881 | |||||
Amphenol Corp | 1,827 | 134,869 | |||||
FLIR Systems Inc | 2,181 | 75,593 | |||||
Hexagon AB | 1,048 | 49,841 | |||||
Hirose Electric Co Ltd | 100 | 14,245 | |||||
Hitachi High-Technologies Corp | 300 | 11,631 | |||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Investment Fund | 11 |
Janus Henderson Adaptive Global Allocation Fund
Schedule of Investments
June 30, 2017
Shares or | Value | ||||||
Common Stocks – (continued) | |||||||
Electronic Equipment, Instruments & Components – (continued) | |||||||
Hitachi Ltd | .1,000 | $6,130 | |||||
Kyocera Corp | 200 | 11,570 | |||||
Omron Corp | 200 | 8,670 | |||||
Shimadzu Corp | 200 | 3,802 | |||||
TDK Corp | 100 | 6,571 | |||||
TE Connectivity Ltd | 413 | 32,495 | |||||
Yaskawa Electric Corp | 200 | 4,234 | |||||
Yokogawa Electric Corp | 400 | 6,406 | |||||
368,938 | |||||||
Energy Equipment & Services – 0.4% | |||||||
Baker Hughes Inc | 977 | 53,256 | |||||
Halliburton Co | 1,465 | 62,570 | |||||
Helmerich & Payne Inc | 211 | 11,466 | |||||
National Oilwell Varco Inc | 876 | 28,855 | |||||
Petrofac Ltd | 1,341 | 7,718 | |||||
Saipem SpA* | 3,231 | 11,933 | |||||
Schlumberger Ltd | 1,335 | 87,896 | |||||
Tenaris SA | 403 | 6,282 | |||||
269,976 | |||||||
Equity Real Estate Investment Trusts (REITs) – 0.5% | |||||||
Alexandria Real Estate Equities Inc | 112 | 13,493 | |||||
Apartment Investment & Management Co | 147 | 6,317 | |||||
Ascendas Real Estate Investment Trust | 600 | 1,138 | |||||
Boston Properties Inc | 9 | 1,107 | |||||
British Land Co PLC | 202 | 1,593 | |||||
CapitaLand Mall Trust | 4,400 | 6,314 | |||||
Crown Castle International Corp | 234 | 23,442 | |||||
Daiwa House REIT Investment Corp | 4 | 9,493 | |||||
Dexus | 1,227 | 8,938 | |||||
Digital Realty Trust Inc | 68 | 7,681 | |||||
Equity Residential | 209 | 13,758 | |||||
Essex Property Trust Inc | 39 | 10,034 | |||||
Federal Realty Investment Trust | 53 | 6,699 | |||||
Fonciere Des Regions | 46 | 4,267 | |||||
H&R Real Estate Investment Trust | 897 | 15,234 | |||||
Hammerson PLC | 224 | 1,676 | |||||
Host Hotels & Resorts Inc | 83 | 1,516 | |||||
Iron Mountain Inc | 425 | 14,603 | |||||
Japan Prime Realty Investment Corp | 4 | 13,854 | |||||
Japan Real Estate Investment Corp | 2 | 9,941 | |||||
Klepierre | 74 | 3,033 | |||||
Land Securities Group PLC | 243 | 3,205 | |||||
Macerich Co | 149 | 8,651 | |||||
Mid-America Apartment Communities Inc | 104 | 10,960 | |||||
Nippon Building Fund Inc | 2 | 10,208 | |||||
Nippon Prologis REIT Inc | 1 | 2,129 | |||||
Prologis Inc | 207 | 12,138 | |||||
Regency Centers Corp | 143 | 8,958 | |||||
Simon Property Group Inc | 19 | 3,073 | |||||
Suntec Real Estate Investment Trust | 2,500 | 3,397 | |||||
UDR Inc | 424 | 16,523 | |||||
Unibail-Rodamco SE | 4 | 1,008 | |||||
Ventas Inc | 20 | 1,390 | |||||
Vicinity Centres | 3,682 | 7,271 | |||||
Welltower Inc | 28 | 2,096 | |||||
Weyerhaeuser Co | 480 | 16,080 | |||||
281,218 | |||||||
Food & Staples Retailing – 0.5% | |||||||
Aeon Co Ltd | 300 | 4,554 | |||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
12 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Schedule of Investments
June 30, 2017
Shares or | Value | ||||||
Common Stocks – (continued) | |||||||
Food & Staples Retailing – (continued) | |||||||
Alimentation Couche-Tard Inc | .140 | $6,712 | |||||
Carrefour SA | 508 | 12,850 | |||||
Colruyt SA | 569 | 29,972 | |||||
Costco Wholesale Corp | 315 | 50,378 | |||||
CVS Health Corp | 155 | 12,471 | |||||
FamilyMart UNY Holdings Co Ltd | 100 | 5,718 | |||||
George Weston Ltd | 201 | 18,198 | |||||
ICA Gruppen AB | 129 | 4,804 | |||||
Kroger Co | 1,264 | 29,476 | |||||
Lawson Inc | 100 | 6,989 | |||||
Loblaw Cos Ltd | 581 | 32,326 | |||||
METRO AG | 184 | 6,210 | |||||
Metro Inc | 1,032 | 33,970 | |||||
Seven & i Holdings Co Ltd | 200 | 8,230 | |||||
Tesco PLC* | 3,085 | 6,781 | |||||
Wal-Mart Stores Inc | 32 | 2,422 | |||||
Wesfarmers Ltd | 36 | 1,110 | |||||
Wm Morrison Supermarkets PLC | 5,259 | 16,518 | |||||
289,689 | |||||||
Food Products – 1.4% | |||||||
Ajinomoto Co Inc | 200 | 4,315 | |||||
Barry Callebaut AG* | 2 | 2,750 | |||||
Campbell Soup Co | 2,783 | 145,133 | |||||
Danone SA | 300 | 22,546 | |||||
General Mills Inc | 2,621 | 145,203 | |||||
Hershey Co | 709 | 76,125 | |||||
Hormel Foods Corp | 2,496 | 85,139 | |||||
JM Smucker Co | 661 | 78,216 | |||||
Kellogg Co | 1,694 | 117,665 | |||||
Kraft Heinz Co | 429 | 36,740 | |||||
McCormick & Co Inc/MD | 733 | 71,475 | |||||
Mondelez International Inc | 265 | 11,445 | |||||
Nisshin Seifun Group Inc | 700 | 11,484 | |||||
Tate & Lyle PLC | 2,241 | 19,319 | |||||
Tyson Foods Inc | 75 | 4,697 | |||||
WH Group Ltd | 6,000 | 6,056 | |||||
Wilmar International Ltd | 1,500 | 3,651 | |||||
841,959 | |||||||
Gas Utilities – 0.1% | |||||||
APA Group | 971 | 6,842 | |||||
Hong Kong & China Gas Co Ltd | 5,000 | 9,402 | |||||
Osaka Gas Co Ltd | 2,000 | 8,172 | |||||
Toho Gas Co Ltd | 1,000 | 7,274 | |||||
Tokyo Gas Co Ltd | 2,000 | 10,391 | |||||
42,081 | |||||||
Health Care Equipment & Supplies – 1.1% | |||||||
Abbott Laboratories | 681 | 33,103 | |||||
Align Technology Inc* | 58 | 8,707 | |||||
Becton Dickinson and Co | 102 | 19,901 | |||||
Boston Scientific Corp* | 768 | 21,289 | |||||
Cochlear Ltd | 37 | 4,420 | |||||
Cooper Cos Inc | 17 | 4,070 | |||||
CYBERDYNE Inc* | 500 | 6,647 | |||||
DENTSPLY SIRONA Inc | 1,237 | 80,207 | |||||
Edwards Lifesciences Corp* | 40 | 4,730 | |||||
Getinge AB | 3,122 | 61,134 | |||||
Hologic Inc* | 136 | 6,172 | |||||
Hoya Corp | 100 | 5,187 | |||||
Intuitive Surgical Inc* | 32 | 29,932 | |||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Investment Fund | 13 |
Janus Henderson Adaptive Global Allocation Fund
Schedule of Investments
June 30, 2017
Shares or | Value | ||||||
Common Stocks – (continued) | |||||||
Health Care Equipment & Supplies – (continued) | |||||||
Smith & Nephew PLC | .14,791 | $255,207 | |||||
Sonova Holding AG | 279 | 45,316 | |||||
Straumann Holding AG | 34 | 19,348 | |||||
Sysmex Corp | 200 | 11,933 | |||||
Terumo Corp | 600 | 23,608 | |||||
Varian Medical Systems Inc* | 134 | 13,827 | |||||
Zimmer Biomet Holdings Inc | 53 | 6,805 | |||||
661,543 | |||||||
Health Care Providers & Services – 0.8% | |||||||
Aetna Inc | 126 | 19,131 | |||||
Alfresa Holdings Corp | 100 | 1,927 | |||||
Cigna Corp | 19 | 3,180 | |||||
Fresenius Medical Care AG & Co KGaA | 1,012 | 97,275 | |||||
Fresenius SE & Co KGaA | 282 | 24,173 | |||||
Healthscope Ltd | 8,371 | 14,215 | |||||
Henry Schein Inc* | 225 | 41,180 | |||||
Humana Inc | 205 | 49,327 | |||||
Laboratory Corp of America Holdings* | 226 | 34,836 | |||||
Medipal Holdings Corp | 200 | 3,696 | |||||
Miraca Holdings Inc | 100 | 4,490 | |||||
| �� | Patterson Cos Inc | 1,316 | 61,786 | ||||
Quest Diagnostics Inc | 851 | 94,597 | |||||
Ramsay Health Care Ltd | 79 | 4,468 | |||||
Suzuken Co Ltd/Aichi Japan | 200 | 6,633 | |||||
Universal Health Services Inc | 81 | 9,888 | |||||
470,802 | |||||||
Health Care Technology – 0% | |||||||
M3 Inc | 300 | 8,256 | |||||
Hotels, Restaurants & Leisure – 0.5% | |||||||
Accor SA | 67 | 3,141 | |||||
Aristocrat Leisure Ltd | 150 | 2,600 | |||||
Carnival PLC | 167 | 11,047 | |||||
Chipotle Mexican Grill Inc* | 191 | 79,475 | |||||
Darden Restaurants Inc | 65 | 5,879 | |||||
Domino's Pizza Enterprises Ltd | 176 | 7,043 | |||||
Genting Singapore PLC | 6,500 | 5,124 | |||||
Hilton Worldwide Holdings Inc | 547 | 33,832 | |||||
InterContinental Hotels Group PLC | 461 | 25,615 | |||||
Marriott International Inc/MD | 63 | 6,320 | |||||
Merlin Entertainments PLC | 3,302 | 20,661 | |||||
MGM China Holdings Ltd | 2,800 | 6,226 | |||||
Oriental Land Co Ltd/Japan | 300 | 20,295 | |||||
Sands China Ltd | 3,600 | 16,485 | |||||
SJM Holdings Ltd | 2,000 | 2,108 | |||||
Wyndham Worldwide Corp | 245 | 24,600 | |||||
Wynn Macau Ltd | 1,600 | 3,738 | |||||
274,189 | |||||||
Household Durables – 0.7% | |||||||
Barratt Developments PLC | 2,202 | 16,158 | |||||
Leggett & Platt Inc | 3,144 | 165,154 | |||||
Mohawk Industries Inc* | 357 | 86,283 | |||||
Nikon Corp | 800 | 12,776 | |||||
Panasonic Corp | 700 | 9,486 | |||||
PulteGroup Inc | 524 | 12,854 | |||||
SEB SA | 47 | 8,440 | |||||
Sekisui House Ltd | 3,700 | 65,127 | |||||
Sony Corp | 300 | 11,433 | |||||
Whirlpool Corp | 117 | 22,420 | |||||
410,131 | |||||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
14 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Schedule of Investments
June 30, 2017
Shares or | Value | ||||||
Common Stocks – (continued) | |||||||
Household Products – 1.0% | |||||||
Church & Dwight Co Inc | .1,469 | $76,212 | |||||
Clorox Co | 603 | 80,344 | |||||
Colgate-Palmolive Co | 3,503 | 259,677 | |||||
Kimberly-Clark Corp | 1,074 | 138,664 | |||||
Procter & Gamble Co | 373 | 32,507 | |||||
Reckitt Benckiser Group PLC | 215 | 21,793 | |||||
Unicharm Corp | 200 | 5,019 | |||||
614,216 | |||||||
Independent Power and Renewable Electricity Producers – 0% | |||||||
AES Corp/VA | 973 | 10,810 | |||||
Electric Power Development Co Ltd | 400 | 9,881 | |||||
20,691 | |||||||
Industrial Conglomerates – 0.2% | |||||||
CK Hutchison Holdings Ltd | 6,000 | 75,315 | |||||
General Electric Co | 254 | 6,861 | |||||
Koninklijke Philips NV | 321 | 11,399 | |||||
93,575 | |||||||
Information Technology Services – 1.1% | |||||||
Accenture PLC | 746 | 92,265 | |||||
Alliance Data Systems Corp | 75 | 19,252 | |||||
Amadeus IT Group SA | 413 | 24,691 | |||||
Atos SE | 110 | 15,439 | |||||
Capgemini SE | 19 | 1,963 | |||||
CGI Group Inc* | 880 | 44,971 | |||||
Cognizant Technology Solutions Corp | 91 | 6,042 | |||||
CSRA Inc | 709 | 22,511 | |||||
Fidelity National Information Services Inc | 320 | 27,328 | |||||
Fujitsu Ltd | 1,000 | 7,361 | |||||
Gartner Inc* | 402 | 49,651 | |||||
Global Payments Inc | 482 | 43,534 | |||||
Nomura Research Institute Ltd | 300 | 11,804 | |||||
NTT Data Corp | 1,500 | 16,673 | |||||
Paychex Inc | 253 | 14,406 | |||||
PayPal Holdings Inc* | 975 | 52,328 | |||||
Total System Services Inc | 1,189 | 69,259 | |||||
Visa Inc | 1,209 | 113,380 | |||||
Xerox Corp | 1,078 | 30,971 | |||||
663,829 | |||||||
Insurance – 1.3% | |||||||
AIA Group Ltd | 1,000 | 7,307 | |||||
Aon PLC | 134 | 17,815 | |||||
Arthur J Gallagher & Co | 1,154 | 66,067 | |||||
Chubb Ltd | 252 | 36,636 | |||||
Cincinnati Financial Corp | 317 | 22,967 | |||||
Dai-ichi Life Holdings Inc | 300 | 5,406 | |||||
Everest Re Group Ltd | 167 | 42,517 | |||||
Gjensidige Forsikring ASA | 568 | 9,698 | |||||
Great-West Lifeco Inc | 137 | 3,714 | |||||
Hartford Financial Services Group Inc | 952 | 50,047 | |||||
Intact Financial Corp | 857 | 64,748 | |||||
Japan Post Holdings Co Ltd | 300 | 3,719 | |||||
Lincoln National Corp | 43 | 2,906 | |||||
Loews Corp | 1,224 | 57,295 | |||||
Mapfre SA | 14,076 | 49,157 | |||||
Medibank Pvt Ltd | 1,975 | 4,249 | |||||
MS&AD Insurance Group Holdings Inc | 100 | 3,356 | |||||
Old Mutual PLC | 3,007 | 7,573 | |||||
Poste Italiane SpA (144A) | 1,108 | 7,586 | |||||
Power Corp of Canada | 637 | 14,532 | |||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Investment Fund | 15 |
Janus Henderson Adaptive Global Allocation Fund
Schedule of Investments
June 30, 2017
Shares or | Value | ||||||
Common Stocks – (continued) | |||||||
Insurance – (continued) | |||||||
Progressive Corp | .478 | $21,075 | |||||
Prudential Financial Inc | 148 | 16,005 | |||||
QBE Insurance Group Ltd | 1,125 | 10,209 | |||||
RSA Insurance Group PLC | 5,126 | 41,085 | |||||
Sampo Oyj | 419 | 21,470 | |||||
Sompo Holdings Inc | 300 | 11,575 | |||||
Standard Life PLC | 6,449 | 33,516 | |||||
Swiss Life Holding AG* | 12 | 4,051 | |||||
T&D Holdings Inc | 400 | 6,080 | |||||
Tokio Marine Holdings Inc | 200 | 8,271 | |||||
Torchmark Corp | 913 | 69,845 | |||||
Travelers Cos Inc | 223 | 28,216 | |||||
UnipolSai Assicurazioni SpA | 10,463 | 22,834 | |||||
Willis Towers Watson PLC | 41 | 5,964 | |||||
777,491 | |||||||
Internet & Direct Marketing Retail – 0.4% | |||||||
Amazon.com Inc* | 104 | 100,672 | |||||
Expedia Inc | 122 | 18,172 | |||||
Netflix Inc* | 168 | 25,101 | |||||
Priceline Group Inc* | 27 | 50,504 | |||||
Rakuten Inc | 300 | 3,527 | |||||
Start Today Co Ltd | 200 | 4,917 | |||||
TripAdvisor Inc* | 330 | 12,606 | |||||
215,499 | |||||||
Internet Software & Services – 0.4% | |||||||
Alphabet Inc - Class A* | 66 | 61,359 | |||||
DeNA Co Ltd | 200 | 4,474 | |||||
eBay Inc* | 1,948 | 68,024 | |||||
Facebook Inc | 468 | 70,659 | |||||
Kakaku.com Inc | 600 | 8,606 | |||||
Mixi Inc | 100 | 5,558 | |||||
Shopify Inc* | 59 | 5,124 | |||||
United Internet AG | 321 | 17,649 | |||||
Yahoo Japan Corp | 2,800 | 12,175 | |||||
253,628 | |||||||
Leisure Products – 0.2% | |||||||
Hasbro Inc | 335 | 37,356 | |||||
Mattel Inc | 2,382 | 51,284 | |||||
Sega Sammy Holdings Inc | 100 | 1,344 | |||||
Yamaha Corp | 100 | 3,450 | |||||
93,434 | |||||||
Life Sciences Tools & Services – 0.3% | |||||||
Agilent Technologies Inc | 220 | 13,048 | |||||
Illumina Inc* | 54 | 9,370 | |||||
Lonza Group AG* | 135 | 29,194 | |||||
Mettler-Toledo International Inc* | 70 | 41,198 | |||||
PerkinElmer Inc | 760 | 51,786 | |||||
Waters Corp* | 134 | 24,635 | |||||
169,231 | |||||||
Machinery – 0.4% | |||||||
Alstom SA | 311 | 10,871 | |||||
ANDRITZ AG | 160 | 9,637 | |||||
Caterpillar Inc | 103 | 11,068 | |||||
Deere & Co | 95 | 11,741 | |||||
FANUC Corp | 100 | 19,256 | |||||
Fortive Corp | 408 | 25,847 | |||||
GEA Group AG | 335 | 13,707 | |||||
Hino Motors Ltd | 200 | 2,218 | |||||
IMI PLC | 287 | 4,466 | |||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
16 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Schedule of Investments
June 30, 2017
Shares or | Value | ||||||
Common Stocks – (continued) | |||||||
Machinery – (continued) | |||||||
JTEKT Corp | .400 | $5,840 | |||||
Komatsu Ltd | 100 | 2,538 | |||||
Kone OYJ | 178 | 9,054 | |||||
MAN SE | 358 | 38,377 | |||||
Metso OYJ | 243 | 8,425 | |||||
Mitsubishi Heavy Industries Ltd | 1,000 | 4,089 | |||||
NGK Insulators Ltd | 200 | 3,982 | |||||
THK Co Ltd | 200 | 5,655 | |||||
Wartsila OYJ Abp | 26 | 1,537 | |||||
Weir Group PLC | 337 | 7,596 | |||||
Xylem Inc/NY | 228 | 12,638 | |||||
Yangzijiang Shipbuilding Holdings Ltd | 6,700 | 5,793 | |||||
214,335 | |||||||
Media – 1.4% | |||||||
Axel Springer SE | 282 | 16,939 | |||||
CBS Corp | 393 | 25,066 | |||||
Charter Communications Inc* | 165 | 55,580 | |||||
Dentsu Inc | 100 | 4,775 | |||||
Discovery Communications Inc* | 3,722 | 96,139 | |||||
DISH Network Corp* | 533 | 33,451 | |||||
Eutelsat Communications SA | 667 | 17,032 | |||||
Hakuhodo DY Holdings Inc | 100 | 1,326 | |||||
Interpublic Group of Cos Inc | 2,995 | 73,677 | |||||
ITV PLC | 10,378 | 24,515 | |||||
News Corp | 4,938 | 67,651 | |||||
REA Group Ltd | 12 | 612 | |||||
Scripps Networks Interactive Inc | 1,320 | 90,169 | |||||
SES SA | 162 | 3,797 | |||||
Shaw Communications Inc | 3,727 | 81,318 | |||||
Telenet Group Holding NV* | 199 | 12,533 | |||||
Twenty-First Century Fox Inc - Class A | 344 | 9,749 | |||||
Vivendi SA | 1,463 | 32,563 | |||||
Walt Disney Co | 1,842 | 195,712 | |||||
WPP PLC | 189 | 3,972 | |||||
846,576 | |||||||
Metals & Mining – 0.6% | |||||||
Agnico Eagle Mines Ltd | 121 | 5,457 | |||||
Alumina Ltd | 1,892 | 2,791 | |||||
Anglo American PLC* | 324 | 4,320 | |||||
ArcelorMittal* | 756 | 17,146 | |||||
Barrick Gold Corp | 59 | 939 | |||||
BHP Billiton Ltd | 149 | 2,665 | |||||
BHP Billiton PLC | 2,069 | 31,684 | |||||
Boliden AB | 642 | 17,527 | |||||
Franco-Nevada Corp | 483 | 34,856 | |||||
Freeport-McMoRan Inc* | 514 | 6,173 | |||||
Glencore PLC* | 6,389 | 23,894 | |||||
Goldcorp Inc | 3,413 | 44,012 | |||||
JFE Holdings Inc | 300 | 5,203 | |||||
Kobe Steel Ltd* | 100 | 1,026 | |||||
Maruichi Steel Tube Ltd | 200 | 5,807 | |||||
Mitsubishi Materials Corp | 200 | 6,047 | |||||
Newmont Mining Corp | 1,638 | 53,055 | |||||
Nippon Steel & Sumitomo Metal Corp | 200 | 4,514 | |||||
Nucor Corp | 154 | 8,912 | |||||
Rio Tinto PLC | 432 | 18,238 | |||||
South32 Ltd | 2,362 | 4,864 | |||||
Sumitomo Metal Mining Co Ltd | 1,000 | 13,343 | |||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Investment Fund | 17 |
Janus Henderson Adaptive Global Allocation Fund
Schedule of Investments
June 30, 2017
Shares or | Value | ||||||
Common Stocks – (continued) | |||||||
Metals & Mining – (continued) | |||||||
thyssenkrupp AG | .1,075 | $30,538 | |||||
343,011 | |||||||
Multiline Retail – 0.4% | |||||||
Dollar General Corp | 307 | 22,132 | |||||
Dollar Tree Inc* | 209 | 14,613 | |||||
Dollarama Inc | 491 | 46,923 | |||||
Isetan Mitsukoshi Holdings Ltd | 300 | 3,004 | |||||
J Front Retailing Co Ltd | 300 | 4,599 | |||||
Kohl's Corp | 80 | 3,094 | |||||
Macy's Inc | 2,703 | 62,818 | |||||
Marks & Spencer Group PLC | 5,232 | 22,708 | |||||
Marui Group Co Ltd | 100 | 1,473 | |||||
Nordstrom Inc | 28 | 1,339 | |||||
Target Corp | 744 | 38,904 | |||||
221,607 | |||||||
Multi-Utilities – 0.3% | |||||||
Ameren Corp | 346 | 18,916 | |||||
Canadian Utilities Ltd | 609 | 19,572 | |||||
CenterPoint Energy Inc | 135 | 3,696 | |||||
Centrica PLC | 11,557 | 30,129 | |||||
CMS Energy Corp | 371 | 17,159 | |||||
Dominion Energy Inc | 232 | 17,778 | |||||
DTE Energy Co | 165 | 17,455 | |||||
E.ON SE | 973 | 9,165 | |||||
Engie SA | 505 | 7,621 | |||||
Innogy SE (144A) | 111 | 4,369 | |||||
RWE AG | 321 | 6,395 | |||||
Suez | 568 | 10,518 | |||||
Veolia Environnement SA | 394 | 8,324 | |||||
171,097 | |||||||
Oil, Gas & Consumable Fuels – 1.9% | |||||||
AltaGas Ltd | 2,797 | 64,025 | |||||
Anadarko Petroleum Corp | 619 | 28,065 | |||||
Apache Corp | 472 | 22,623 | |||||
ARC Resources Ltd | 597 | 7,809 | |||||
BP PLC | 5,869 | 33,842 | |||||
Cabot Oil & Gas Corp | 2,714 | 68,067 | |||||
Caltex Australia Ltd | 115 | 2,793 | |||||
Cameco Corp | 1,478 | 13,462 | |||||
Cenovus Energy Inc | 889 | 6,555 | |||||
Chevron Corp | 77 | 8,033 | |||||
Cimarex Energy Co | 339 | 31,869 | |||||
Concho Resources Inc* | 185 | 22,483 | |||||
ConocoPhillips | 2,175 | 95,613 | |||||
Crescent Point Energy Corp | 196 | 1,500 | |||||
Devon Energy Corp | 743 | 23,754 | |||||
Enagas SA | 37 | 1,037 | |||||
Enbridge Inc | 59 | 2,351 | |||||
Encana Corp | 208 | 1,830 | |||||
EOG Resources Inc | 738 | 66,804 | |||||
EQT Corp | 822 | 48,161 | |||||
Hess Corp | 354 | 15,530 | |||||
Husky Energy Inc* | 158 | 1,794 | |||||
Inpex Corp | 500 | 4,806 | |||||
Inter Pipeline Ltd | 509 | 9,971 | |||||
JXTG Holdings Inc | 1,000 | 4,363 | |||||
Kinder Morgan Inc/DE | 2,478 | 47,478 | |||||
Koninklijke Vopak NV | 38 | 1,762 | |||||
Lundin Petroleum AB* | 747 | 14,379 | |||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
18 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Schedule of Investments
June 30, 2017
Shares or | Value | ||||||
Common Stocks – (continued) | |||||||
Oil, Gas & Consumable Fuels – (continued) | |||||||
Marathon Oil Corp | .1,143 | $13,545 | |||||
Marathon Petroleum Corp | 646 | 33,805 | |||||
Murphy Oil Corp | 299 | 7,663 | |||||
Neste Oyj | 214 | 8,429 | |||||
Noble Energy Inc | 978 | 27,677 | |||||
Occidental Petroleum Corp | 1,617 | 96,810 | |||||
Oil Search Ltd | 282 | 1,478 | |||||
OMV AG | 168 | 8,717 | |||||
ONEOK Inc | 225 | 11,736 | |||||
Origin Energy Ltd* | 197 | 1,038 | |||||
Phillips 66 | 602 | 49,779 | |||||
Pioneer Natural Resources Co | 137 | 21,862 | |||||
PrairieSky Royalty Ltd | 145 | 3,302 | |||||
Range Resources Corp | 2,530 | 58,620 | |||||
Repsol SA | 187 | 2,862 | |||||
Santos Ltd* | 778 | 1,811 | |||||
Snam SpA | 4,749 | 20,695 | |||||
Statoil ASA | 378 | 6,269 | |||||
Tesoro Corp | 714 | 66,830 | |||||
TOTAL SA | 127 | 6,278 | |||||
TransCanada Corp | 145 | 6,913 | |||||
Valero Energy Corp | 749 | 50,528 | |||||
Woodside Petroleum Ltd | 84 | 1,928 | |||||
1,159,334 | |||||||
Paper & Forest Products – 0% | |||||||
Oji Holdings Corp | 1,000 | 5,157 | |||||
Personal Products – 0.1% | |||||||
Estee Lauder Cos Inc | 195 | 18,716 | |||||
Kao Corp | 100 | 5,933 | |||||
Shiseido Co Ltd | 100 | 3,551 | |||||
Unilever PLC | 226 | 12,228 | |||||
40,428 | |||||||
Pharmaceuticals – 1.1% | |||||||
Allergan PLC | 76 | 18,475 | |||||
Astellas Pharma Inc | 2,400 | 29,333 | |||||
AstraZeneca PLC* | 110 | 7,355 | |||||
Bayer AG | 122 | 15,771 | |||||
Bristol-Myers Squibb Co | 902 | 50,259 | |||||
Daiichi Sankyo Co Ltd | 1,000 | 23,537 | |||||
Eisai Co Ltd | 100 | 5,518 | |||||
Hisamitsu Pharmaceutical Co Inc | 200 | 9,568 | |||||
Johnson & Johnson | 287 | 37,967 | |||||
Kyowa Hakko Kirin Co Ltd | 400 | 7,423 | |||||
Merck & Co Inc | 677 | 43,389 | |||||
Merck KGaA | 735 | 88,763 | |||||
Mylan NV* | 180 | 6,988 | |||||
Novartis AG | 1,155 | 96,150 | |||||
Ono Pharmaceutical Co Ltd | 300 | 6,538 | |||||
Roche Holding AG | 60 | 15,285 | |||||
Sanofi | 268 | 25,635 | |||||
Santen Pharmaceutical Co Ltd | 500 | 6,776 | |||||
Sumitomo Dainippon Pharma Co Ltd | 400 | 5,453 | |||||
Takeda Pharmaceutical Co Ltd | 800 | 40,612 | |||||
UCB SA | 1,158 | 79,650 | |||||
Valeant Pharmaceuticals International Inc* | 376 | 6,536 | |||||
Vifor Pharma AG | 305 | 33,631 | |||||
Zoetis Inc | 129 | 8,047 | |||||
668,659 | |||||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Investment Fund | 19 |
Janus Henderson Adaptive Global Allocation Fund
Schedule of Investments
June 30, 2017
Shares or | Value | ||||||
Common Stocks – (continued) | |||||||
Professional Services – 0.3% | |||||||
Bureau Veritas SA | .170 | $3,761 | |||||
Equifax Inc | 169 | 23,224 | |||||
IHS Markit Ltd* | 2,498 | 110,012 | |||||
Robert Half International Inc | 620 | 29,717 | |||||
Verisk Analytics Inc* | 473 | 39,907 | |||||
206,621 | |||||||
Real Estate Management & Development – 0.1% | |||||||
Cheung Kong Property Holdings Ltd | 1,500 | 11,749 | |||||
City Developments Ltd | 200 | 1,559 | |||||
Daiwa House Industry Co Ltd | 300 | 10,238 | |||||
Henderson Land Development Co Ltd | 1,200 | 6,694 | |||||
Mitsubishi Estate Co Ltd | 300 | 5,585 | |||||
Mitsui Fudosan Co Ltd | 200 | 4,767 | |||||
New World Development Co Ltd | 7,000 | 8,885 | |||||
Swire Pacific Ltd | 3,000 | 29,300 | |||||
Swiss Prime Site AG* | 32 | 2,908 | |||||
UOL Group Ltd | 600 | 3,330 | |||||
Vonovia SE | 71 | 2,819 | |||||
87,834 | |||||||
Road & Rail – 0.2% | |||||||
Central Japan Railway Co | 100 | 16,281 | |||||
East Japan Railway Co | 300 | 28,664 | |||||
Kansas City Southern | 179 | 18,732 | |||||
MTR Corp Ltd | 500 | 2,815 | |||||
Norfolk Southern Corp | 119 | 14,482 | |||||
Union Pacific Corp | 179 | 19,495 | |||||
West Japan Railway Co | 300 | 21,170 | |||||
121,639 | |||||||
Semiconductor & Semiconductor Equipment – 0.5% | |||||||
Analog Devices Inc | 550 | 42,790 | |||||
ASM Pacific Technology Ltd | 400 | 5,405 | |||||
ASML Holding NV | 99 | 12,900 | |||||
Broadcom Ltd | 20 | 4,661 | |||||
Infineon Technologies AG | 1,290 | 27,232 | |||||
Lam Research Corp | 53 | 7,496 | |||||
Micron Technology Inc* | 446 | 13,318 | |||||
NVIDIA Corp | 389 | 56,234 | |||||
Qorvo Inc* | 76 | 4,812 | |||||
QUALCOMM Inc | 1,110 | 61,294 | |||||
Rohm Co Ltd | 100 | 7,674 | |||||
Skyworks Solutions Inc | 99 | 9,499 | |||||
STMicroelectronics NV | 298 | 4,278 | |||||
Texas Instruments Inc | 21 | 1,616 | |||||
Xilinx Inc | 498 | 32,031 | |||||
291,240 | |||||||
Software – 0.9% | |||||||
ANSYS Inc* | 1,179 | 143,461 | |||||
Autodesk Inc* | 56 | 5,646 | |||||
Dassault Systemes SE | 160 | 14,342 | |||||
Gemalto NV | 460 | 27,605 | |||||
Intuit Inc | 126 | 16,734 | |||||
Konami Holdings Corp | 100 | 5,549 | |||||
Microsoft Corp | 132 | 9,099 | |||||
Nexon Co Ltd* | 500 | 9,870 | |||||
Open Text Corp | 565 | 17,835 | |||||
Oracle Corp Japan | 300 | 19,447 | |||||
Red Hat Inc* | 984 | 94,218 | |||||
Sage Group PLC | 6,055 | 54,248 | |||||
salesforce.com Inc* | 1,321 | 114,399 | |||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
20 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Schedule of Investments
June 30, 2017
Shares or | Value | ||||||
Common Stocks – (continued) | |||||||
Software – (continued) | |||||||
Synopsys Inc* | .425 | $30,995 | |||||
Trend Micro Inc/Japan | 100 | 5,149 | |||||
568,597 | |||||||
Specialty Retail – 0.8% | |||||||
Advance Auto Parts Inc | 199 | 23,201 | |||||
AutoZone Inc* | 81 | 46,207 | |||||
Bed Bath & Beyond Inc | 2,301 | 69,950 | |||||
CarMax Inc* | 195 | 12,297 | |||||
Dixons Carphone PLC | 5,421 | 20,020 | |||||
Dufry AG* | 285 | 46,707 | |||||
Foot Locker Inc | 309 | 15,228 | |||||
Gap Inc | 165 | 3,628 | |||||
Hennes & Mauritz AB | 338 | 8,425 | |||||
Home Depot Inc | 415 | 63,661 | |||||
Kingfisher PLC | 9,917 | 38,832 | |||||
Lowe's Cos Inc | 305 | 23,647 | |||||
O'Reilly Automotive Inc* | 35 | 7,656 | |||||
Signet Jewelers Ltd | 32 | 2,024 | |||||
Tiffany & Co | 164 | 15,395 | |||||
TJX Cos Inc | 213 | 15,372 | |||||
Tractor Supply Co | 443 | 24,015 | |||||
Yamada Denki Co Ltd | 3,800 | 18,855 | |||||
455,120 | |||||||
Technology Hardware, Storage & Peripherals – 0.5% | |||||||
Apple Inc | 595 | 85,692 | |||||
BlackBerry Ltd* | 1,403 | 14,024 | |||||
Brother Industries Ltd | 500 | 11,529 | |||||
Canon Inc | 2,500 | 84,830 | |||||
FUJIFILM Holdings Corp | 600 | 21,554 | |||||
Hewlett Packard Enterprise Co | 2,223 | 36,880 | |||||
HP Inc | 857 | 14,980 | |||||
Konica Minolta Inc | 100 | 829 | |||||
Ricoh Co Ltd | 100 | 882 | |||||
Seagate Technology PLC | 301 | 11,664 | |||||
Seiko Epson Corp | 300 | 6,666 | |||||
Western Digital Corp | 230 | 20,378 | |||||
309,908 | |||||||
Textiles, Apparel & Luxury Goods – 0.6% | |||||||
adidas AG | 47 | 9,004 | |||||
Asics Corp | 200 | 3,703 | |||||
Burberry Group PLC | 100 | 2,163 | |||||
Hanesbrands Inc | 1,028 | 23,808 | |||||
Hermes International | 30 | 14,823 | |||||
Kering | 23 | 7,832 | |||||
Li & Fung Ltd | 90,000 | 32,739 | |||||
Luxottica Group SpA | 14 | 810 | |||||
Michael Kors Holdings Ltd* | 773 | 28,021 | |||||
NIKE Inc | 2,697 | 159,123 | |||||
PVH Corp | 263 | 30,114 | |||||
Ralph Lauren Corp | 562 | 41,476 | |||||
Under Armour Inc* | 978 | 21,281 | |||||
Yue Yuen Industrial Holdings Ltd | 500 | 2,075 | |||||
376,972 | |||||||
Tobacco – 0.2% | |||||||
Altria Group Inc | 712 | 53,023 | |||||
Imperial Brands PLC* | 1,558 | 69,964 | |||||
Japan Tobacco Inc | 300 | 10,529 | |||||
Philip Morris International Inc | 22 | 2,584 | |||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Investment Fund | 21 |
Janus Henderson Adaptive Global Allocation Fund
Schedule of Investments
June 30, 2017
Shares or | Value | ||||||
Common Stocks – (continued) | |||||||
Tobacco – (continued) | |||||||
Swedish Match AB | .221 | $7,786 | |||||
143,886 | |||||||
Trading Companies & Distributors – 0.2% | |||||||
Bunzl PLC | 780 | 23,240 | |||||
Fastenal Co | 130 | 5,659 | |||||
ITOCHU Corp | 1,000 | 14,841 | |||||
Marubeni Corp | 400 | 2,582 | |||||
MISUMI Group Inc | 100 | 2,282 | |||||
Mitsubishi Corp | 200 | 4,190 | |||||
Mitsui & Co Ltd | 800 | 11,421 | |||||
Rexel SA | 99 | 1,620 | |||||
Sumitomo Corp | 1,300 | 16,900 | |||||
Travis Perkins PLC | 356 | 6,745 | |||||
United Rentals Inc* | 86 | 9,693 | |||||
WW Grainger Inc | 55 | 9,929 | |||||
109,102 | |||||||
Transportation Infrastructure – 0% | |||||||
Aena SA | 12 | 2,341 | |||||
Fraport AG Frankfurt Airport Services Worldwide | 231 | 20,392 | |||||
Japan Airport Terminal Co Ltd | 200 | 7,638 | |||||
30,371 | |||||||
Water Utilities – 0% | |||||||
Severn Trent PLC | 321 | 9,121 | |||||
United Utilities Group PLC | 1,324 | 14,957 | |||||
24,078 | |||||||
Wireless Telecommunication Services – 0.4% | |||||||
KDDI Corp | 700 | 18,518 | |||||
NTT DOCOMO Inc | 2,000 | 47,163 | |||||
Rogers Communications Inc | 914 | 43,176 | |||||
StarHub Ltd | 12,300 | 24,307 | |||||
Tele2 AB | 3,318 | 34,751 | |||||
Vodafone Group PLC | 16,084 | 45,607 | |||||
213,522 | |||||||
Total Common Stocks (cost $17,681,952) | 18,062,754 | ||||||
Preferred Stocks – 0.1% | |||||||
Auto Components – 0% | |||||||
Schaeffler AG | 682 | 9,767 | |||||
Automobiles – 0% | |||||||
Porsche Automobil Holding SE | 180 | 10,111 | |||||
Chemicals – 0.1% | |||||||
FUCHS PETROLUB SE | 556 | 30,271 | |||||
Media – 0% | |||||||
ProSiebenSat.1 Media SE | 225 | 9,415 | |||||
Total Preferred Stocks (cost $54,296) | 59,564 | ||||||
Investment Companies – 69.5% | |||||||
Exchange-Traded Funds (ETFs) – 69.5% | |||||||
Deutsche X-trackers Harvest CSI 300 China A-Shares | 7,574 | 206,467 | |||||
iShares 20+ Year Treasury Bond | 10,270 | 1,284,982 | |||||
iShares 7-10 Year Treasury Bond | 2,129 | 226,973 | |||||
iShares Core FTSE 100 UCITS GBP Dist | 257,222 | 2,421,725 | |||||
iShares Edge MSCI Min Vol Global | 17,044 | 1,348,180 | |||||
iShares iBoxx $ High Yield Corporate Bond | 9,327 | 824,414 | |||||
iShares iBoxx $ Investment Grade Corporate Bond | 3,673 | 442,633 | |||||
iShares International Select Dividend† | 47,091 | 1,540,818 | |||||
iShares MSCI Canada | 61,570 | 1,647,613 | |||||
iShares MSCI EAFE Growth† | 27,176 | 2,009,937 | |||||
iShares MSCI EAFE Value | 35,563 | 1,838,607 | |||||
iShares MSCI Europe Financials | 8,060 | 176,836 | |||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
22 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Schedule of Investments
June 30, 2017
Shares or | Value | ||||||
Investment Companies – (continued) | |||||||
Exchange-Traded Funds (ETFs) – (continued) | |||||||
iShares MSCI Hong Kong | .7,890 | $184,863 | |||||
iShares MSCI South Korea Capped | 17,317 | 1,174,266 | |||||
LYXOR CAC 40 DR UCITS | 13,983 | 823,976 | |||||
LYXOR FTSE MIB UCITS | 61,378 | 1,437,826 | |||||
PowerShares QQQ Trust Series 1 | 12,688 | 1,746,376 | |||||
Vanguard FTSE All World ex-US Small-Cap† | 19,601 | 2,119,260 | |||||
Vanguard FTSE Emerging Markets | 105,744 | 4,317,604 | |||||
Vanguard FTSE Europe | 33,681 | 1,857,170 | |||||
Vanguard FTSE Pacific† | 30,783 | 2,025,521 | |||||
Vanguard Growth | 15,593 | 1,980,935 | |||||
Vanguard High Dividend Yield | 9,777 | 764,170 | |||||
Vanguard International High Dividend Yield | 10,868 | 679,902 | |||||
Vanguard Mid-Cap† | 13,926 | 1,984,734 | |||||
Vanguard S&P 500 | 8,969 | 1,991,656 | |||||
Vanguard Small-Cap | 19,409 | 2,630,696 | |||||
Vanguard Total International Bond | 5,163 | 280,661 | |||||
Vanguard Value† | 21,152 | 2,042,437 | |||||
Total Investment Companies (cost $39,906,881) | 42,011,238 | ||||||
U.S. Government Agency Notes – 2.3% | |||||||
Federal Home Loan Bank Discount Notes: | |||||||
0%, 7/3/17◊ (cost $1,399,924) | $1,400,000 | 1,400,000 | |||||
Total Investments (total cost $59,043,053) – 101.8% | 61,533,556 | ||||||
Liabilities, net of Cash, Receivables and Other Assets – (1.8)% | (1,070,125) | ||||||
Net Assets – 100% | $60,463,431 | ||||||
Summary of Investments by Country - (Long Positions) (unaudited) | |||||
% of | |||||
Investment | |||||
Country | Value | Securities | |||
United States | $46,447,257 | 75.5 | % | ||
United Kingdom | 3,823,295 | 6.2 | |||
Canada | 2,563,425 | 4.2 | |||
Japan | 1,763,576 | 2.9 | |||
Italy | 1,531,367 | 2.5 | |||
France | 1,220,938 | 2.0 | |||
South Korea | 1,174,266 | 1.9 | |||
Germany | 726,319 | 1.2 | |||
Switzerland | 375,136 | 0.6 | |||
Hong Kong | 372,066 | 0.6 | |||
Spain | 321,894 | 0.5 | |||
Sweden | 269,640 | 0.4 | |||
Netherlands | 224,212 | 0.4 | |||
China | 206,467 | 0.3 | |||
Singapore | 136,775 | 0.2 | |||
Belgium | 132,537 | 0.2 | |||
Australia | 113,222 | 0.2 | |||
Finland | 77,989 | 0.1 | |||
Austria | 37,208 | 0.1 | |||
Norway | 15,967 | 0.0 | |||
Total | $61,533,556 | 100.0 | % |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Investment Fund | 23 |
Janus Henderson Adaptive Global Allocation Fund
Schedule of Investments
June 30, 2017
Schedule of Foreign Currency Contracts, Open |
Counterparty/ Currency | Settlement Date | Currency Units Sold | Currency Value | Unrealized Appreciation/ (Depreciation) | ||||
Bank of America: | ||||||||
British Pound | 7/13/17 | 607,000 | $ | 790,687 | $ | (4,726) | ||
Canadian Dollar | 7/13/17 | 945,000 | 728,960 | (28,455) | ||||
Euro | 7/13/17 | 3,177,375 | 3,630,426 | (59,979) | ||||
Japanese Yen | 7/13/17 | 118,305,000 | 1,052,430 | 24,362 | ||||
6,202,503 | (68,798) | |||||||
RBC Capital Markets Corp.: | ||||||||
Japanese Yen | 7/13/17 | 25,495,000 | 226,801 | 5,041 | ||||
Swiss Franc | 7/13/17 | 271,000 | 282,887 | (2,483) | ||||
509,688 | 2,558 | |||||||
Total | $ | 6,712,191 | $ | (66,240) | ||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
24 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Notes to Schedule of Investments and Other Information
Adaptive Global Allocation 60/40 Index | An internally-calculated, hypothetical combination of total returns from the MSCI All Country World IndexSM (60%) and the Bloomberg Barclays Global Aggregate Bond Index (Hedged) (40%). |
Adaptive Global Allocation 70/30 Index (Hedged) | An internally-calculated, hypothetical combination of total returns from the MSCI All Country World IndexSM (70%) and the Bloomberg Barclays Global Aggregate Bond Index (Hedged) (30%). |
Adaptive Global Allocation 70/30 Index (Unhedged) | An internally-calculated, hypothetical combination of total returns from the MSCI All Country World IndexSM (70%) and the Bloomberg Barclays Global Aggregate Bond Index (Unhedged) (30%). |
Bloomberg Barclays Global Aggregate Bond Index | A broad-based measure of the global investment grade fixed-rate debt markets. |
MSCI All Country World IndexSM | An unmanaged, free float-adjusted market capitalization weighted index composed of stocks of companies located in countries throughout the world. It is designed to measure equity market performance in global developed and emerging markets. The index includes reinvestment of dividends, net of foreign withholding taxes. |
CDI | Clearing House Electronic Subregister System Depositary Interest |
LLC | Limited Liability Company |
PLC | Public Limited Company |
144A | Securities sold under Rule 144A of the Securities Act of 1933, as amended, are subject to legal and/or contractual restrictions on resale and may not be publicly sold without registration under the 1933 Act. Unless otherwise noted, these securities have been determined to be liquid under guidelines established by the Board of Trustees. The total value of 144A securities as of the year ended June 30, 2017 is $11,955, which represents 0.0% of net assets. |
* | Non-income producing security. |
† | A portion of this security has been segregated to cover margin or segregation requirements on open futures contracts, forward currency contracts, options contracts, short sales, swap agreements, and/or securities with extended settlement dates, the value of which, as of June 30, 2017, is $9,132,800. |
◊ | Zero coupon bond. |
Share | Share | |||||||||||||
Balance | Balance | Realized | Dividend | Value | ||||||||||
at 6/30/16 | Purchases | Sales | at 6/30/17 | Gain/(Loss) | Income | at 6/30/17 | ||||||||
Janus Cash Liquidity Fund LLC | 1,192,000 | 29,846,203 | (31,038,203) | — | $— | $29,287 | $— |
Janus Investment Fund | 25 |
Janus Henderson Adaptive Global Allocation Fund
Notes to Schedule of Investments and Other Information
The following is a summary of the inputs that were used to value the Fund’s investments in securities and other financial instruments as of June 30, 2017. See Notes to Financial Statements for more information. | |||||||||||||
Valuation Inputs Summary | |||||||||||||
Level 2 - | Level 3 - | ||||||||||||
Level 1 - | Other Significant | Significant | |||||||||||
Quotes Prices | Observable Inputs | Unobservable Inputs | |||||||||||
Assets | |||||||||||||
Investments in Securities: | |||||||||||||
Common Stocks | $ | 18,062,754 | $ | - | $ | - | |||||||
Preferred Stocks | - | 59,564 | - | ||||||||||
Investment Companies | 42,011,238 | - | - | ||||||||||
U.S. Government Agency Notes | - | 1,400,000 | - | ||||||||||
Total Investments in Securities | $ | 60,073,992 | $ | 1,459,564 | $ | - | |||||||
Other Financial Instruments(a): | |||||||||||||
Forward Currency Contracts | - | 29,403 | - | ||||||||||
Total Assets | $ | 60,073,992 | $ | 1,488,967 | $ | - | |||||||
Liabilities | |||||||||||||
Other Financial Instruments(a): | |||||||||||||
Forward Currency Contracts | $ | - | $ | 95,643 | $ | - | |||||||
(a) | Other financial instruments include forward currency, futures, written options, written swaptions, and swap contracts. Forward currency contracts are reported at their unrealized appreciation/(depreciation) at measurement date, which represents the change in the contract's value from trade date. Futures, certain written options on futures, and centrally cleared swap contracts are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. Written options, written swaptions, and other swap contracts are reported at their market value at measurement date. | ||||||||||||
26 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Statement of Assets and Liabilities
June 30, 2017
See footnotes at the end of the Statement. |
|
|
|
|
|
|
|
Assets: | ||||||
Investments, at cost | $ | 59,043,053 | ||||
Investments, at value | 61,533,556 | |||||
Cash | 2,293 | |||||
Forward currency contracts | 29,403 | |||||
Cash denominated in foreign currency(1) | 36,616 | |||||
Non-interested Trustees' deferred compensation | 1,076 | |||||
Receivables: | ||||||
Investments sold | 8,366,170 | |||||
Due from adviser | 49,203 | |||||
Dividends | 37,501 | |||||
Foreign tax reclaims | 5,905 | |||||
Fund shares sold | 941 | |||||
Other assets | 402 | |||||
Total Assets |
|
| 70,063,066 |
| ||
Liabilities: | ||||||
Forward currency contracts | 95,643 | |||||
Payables: | — | |||||
Investments purchased | 9,387,209 | |||||
Advisory fees | 39,426 | |||||
Professional fees | 38,823 | |||||
Fund shares repurchased | 22,674 | |||||
Custodian fees | 2,350 | |||||
Transfer agent fees and expenses | 1,725 | |||||
12b-1 Distribution and shareholder servicing fees | 1,502 | |||||
Non-interested Trustees' deferred compensation fees | 1,076 | |||||
Fund administration fees | 499 | |||||
Non-interested Trustees' fees and expenses | 316 | |||||
Accrued expenses and other payables | 8,392 | |||||
Total Liabilities |
|
| 9,599,635 |
| ||
Net Assets |
| $ | 60,463,431 |
| ||
See Notes to Financial Statements. | |
Janus Investment Fund | 27 |
Janus Henderson Adaptive Global Allocation Fund
Statement of Assets and Liabilities
June 30, 2017
|
|
|
|
|
|
|
Net Assets Consist of: | ||||||
Capital (par value and paid-in surplus) | $ | 56,230,659 | ||||
Undistributed net investment income/(loss) | 220,840 | |||||
Undistributed net realized gain/(loss) from investments and foreign currency transactions | 1,587,372 | |||||
Unrealized net appreciation/(depreciation) of investments, foreign currency translations and non-interested Trustees’ deferred compensation | 2,424,560 | |||||
Total Net Assets |
| $ | 60,463,431 |
| ||
Net Assets - Class A Shares | $ | 743,324 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 70,483 | |||||
Net Asset Value Per Share(2) |
| $ | 10.55 |
| ||
Maximum Offering Price Per Share(3) |
| $ | 11.19 |
| ||
Net Assets - Class C Shares | $ | 1,224,875 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 116,854 | |||||
Net Asset Value Per Share(2) |
| $ | 10.48 |
| ||
Net Assets - Class D Shares | $ | 1,619,085 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 153,565 | |||||
Net Asset Value Per Share |
| $ | 10.54 |
| ||
Net Assets - Class I Shares | $ | 4,595,702 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 434,859 | |||||
Net Asset Value Per Share |
| $ | 10.57 |
| ||
Net Assets - Class N Shares | $ | 48,806,075 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 4,619,718 | |||||
Net Asset Value Per Share |
| $ | 10.56 |
| ||
Net Assets - Class S Shares | $ | 1,183,228 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 112,322 | |||||
Net Asset Value Per Share |
| $ | 10.53 |
| ||
Net Assets - Class T Shares | $ | 2,291,142 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 217,240 | |||||
Net Asset Value Per Share |
| $ | 10.55 |
| ||
(1) Includes cost of $36,616. (2) Redemption price per share may be reduced for any applicable contingent deferred sales charge. (3) Maximum offering price is computed at 100/94.25 of net asset value. |
See Notes to Financial Statements. | |
28 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Statement of Operations
For the year ended June 30, 2017
|
|
|
|
|
|
Investment Income: | |||||
| Dividends | $ | 998,950 | ||
Dividends from affiliates | 29,287 | ||||
Interest | 28,685 | ||||
Other income | 391 | ||||
Foreign tax withheld | (24,733) | ||||
Total Investment Income |
| 1,032,580 |
| ||
Expenses: | |||||
Advisory fees | 418,040 | ||||
12b-1Distribution and shareholder servicing fees: | |||||
Class A Shares | 1,533 | ||||
Class C Shares | 11,189 | ||||
Class S Shares | 2,792 | ||||
Transfer agent administrative fees and expenses: | |||||
Class D Shares | 1,733 | ||||
Class S Shares | 2,792 | ||||
Class T Shares | 3,042 | ||||
Transfer agent networking and omnibus fees: | |||||
Class A Shares | 15 | ||||
Class I Shares | 15 | ||||
Other transfer agent fees and expenses: | |||||
Class A Shares | 80 | ||||
Class C Shares | 153 | ||||
Class D Shares | 448 | ||||
Class I Shares | 93 | ||||
Class N Shares | 1,773 | ||||
Class S Shares | 22 | ||||
Class T Shares | 31 | ||||
Registration fees | 106,608 | ||||
Custodian fees | 63,224 | ||||
Professional fees | 53,603 | ||||
Shareholder reports expense | 19,375 | ||||
Fund administration fees | 5,174 | ||||
Non-interested Trustees’ fees and expenses | 1,436 | ||||
Other expenses | 31,020 | ||||
Total Expenses |
| 724,191 |
| ||
Less: Excess Expense Reimbursement |
| (254,261) |
| ||
Net Expenses |
| 469,930 |
| ||
Net Investment Income/(Loss) |
| 562,650 |
| ||
Net Realized Gain/(Loss) on Investments: | |||||
Investments and foreign currency transactions | 3,607,650 | ||||
Futures contracts | 633,540 | ||||
Swap contracts | 17,703 | ||||
Written options contracts | 44,380 | ||||
Total Net Realized Gain/(Loss) on Investments |
| 4,303,273 |
| ||
Change in Unrealized Net Appreciation/Depreciation: | |||||
Investments, foreign currency translations and non-interested Trustees’ deferred compensation | 1,867,348 | ||||
Futures contracts | (295,880) | ||||
Swap contracts | 18,313 | ||||
Written options contracts | 5,510 | ||||
Total Change in Unrealized Net Appreciation/Depreciation |
| 1,595,291 |
| ||
Net Increase/(Decrease) in Net Assets Resulting from Operations | $ | 6,461,214 |
| ||
See Notes to Financial Statements. | |
Janus Investment Fund | 29 |
Janus Henderson Adaptive Global Allocation Fund
Statements of Changes in Net Assets
|
|
| Year ended |
| Year ended | |||
Operations: | ||||||||
Net investment income/(loss) | $ | 562,650 | $ | 390,114 | ||||
Net realized gain/(loss) on investments | 4,303,273 | (2,596,821) | ||||||
Change in unrealized net appreciation/depreciation | 1,595,291 | 1,415,777 | ||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations |
| 6,461,214 |
|
| (790,930) | |||
Dividends and Distributions to Shareholders: | ||||||||
Dividends from Net Investment Income | ||||||||
Class A Shares | (5,289) | (1,400) | ||||||
Class C Shares | (1,847) | (605) | ||||||
Class D Shares | (13,395) | (2,799) | ||||||
Class I Shares | (12,820) | (3,319) | ||||||
Class N Shares | (544,951) | (154,765) | ||||||
Class S Shares | (8,556) | (1,917) | ||||||
Class T Shares | (11,892) | (2,641) | ||||||
Net Decrease from Dividends and Distributions to Shareholders |
| (598,750) |
|
| (167,446) | |||
Capital Share Transactions: | ||||||||
Class A Shares | 108,044 | 97,999 | ||||||
Class C Shares | 61,795 | 1,001,412 | ||||||
Class D Shares | 179,662 | 1,160,175 | ||||||
Class I Shares | 3,267,488 | 1,014,824 | ||||||
Class N Shares | (4,666,016) | (4,213,215) | ||||||
Class S Shares | 8,507 | 1,007,934 | ||||||
Class T Shares | 1,085,345 | 1,011,209 | ||||||
Net Increase/(Decrease) from Capital Share Transactions |
| 44,825 |
|
| 1,080,338 | |||
Net Increase/(Decrease) in Net Assets |
| 5,907,289 |
|
| 121,962 | |||
Net Assets: | ||||||||
Beginning of period | 54,556,142 | 54,434,180 | ||||||
| End of period | $ | 60,463,431 |
| $ | 54,556,142 | ||
Undistributed Net Investment Income/(Loss) | $ | 220,840 |
| $ | 184,112 | |||
See Notes to Financial Statements. | |
30 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Financial Highlights
Class A Shares | ||||||||||||
For a share outstanding during each year or period ended June 30 |
| 2017 |
|
| 2016 |
|
| 2015(1) |
| |||
Net Asset Value, Beginning of Period |
| $9.49 |
|
| $9.69 |
|
| $10.00 |
| |||
Income/(Loss) from Investment Operations: | ||||||||||||
Net investment income/(loss)(2) | 0.09 | 0.05 | 0.01 | |||||||||
Net realized and unrealized gain/(loss) | 1.06 | (0.23) | (0.32) | |||||||||
Total from Investment Operations |
| 1.15 |
|
| (0.18) |
|
| (0.31) |
| |||
Less Dividends and Distributions: | ||||||||||||
Dividends (from net investment income) | (0.09) | (0.02) | — | |||||||||
Distributions (from capital gains) | — | — | — | |||||||||
Total Dividends and Distributions |
| (0.09) |
|
| (0.02) |
|
| — |
| |||
Net Asset Value, End of Period | $10.55 | $9.49 | $9.69 | |||||||||
Total Return* |
| 12.17% |
|
| (1.85)% |
|
| (3.10)% |
| |||
Net Assets, End of Period (in thousands) | $743 | $571 | $485 | |||||||||
Average Net Assets for the Period (in thousands) | $609 | $530 | $496 | |||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses | 1.52% | 1.54% | 13.45% | |||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets) | 1.07% | 1.09% | 1.07% | |||||||||
Ratio of Net Investment Income/(Loss) | 0.86% | 0.55% | 5.04% | |||||||||
Portfolio Turnover Rate | 302%(3) | 122% | 10% | |||||||||
Class C Shares | ||||||||||||
For a share outstanding during each year or period ended June 30 |
| 2017 |
|
| 2016 |
|
| 2015(1) |
| |||
Net Asset Value, Beginning of Period |
| $9.44 |
|
| $9.69 |
|
| $10.00 |
| |||
Income/(Loss) from Investment Operations: | ||||||||||||
Net investment income/(loss)(2) | 0.01 | (0.01) | 0.01 | |||||||||
Net realized and unrealized gain/(loss) | 1.05 | (0.23) | (0.32) | |||||||||
Total from Investment Operations |
| 1.06 |
|
| (0.24) |
|
| (0.31) |
| |||
Less Dividends and Distributions: | ||||||||||||
Dividends (from net investment income) | (0.02) | (0.01) | — | |||||||||
Distributions (from capital gains) | — | — | — | |||||||||
Total Dividends and Distributions |
| (0.02) |
|
| (0.01) |
|
| — |
| |||
Net Asset Value, End of Period | $10.48 | $9.44 | $9.69 | |||||||||
Total Return* |
| 11.21% |
|
| (2.52)% |
|
| (3.10)% |
| |||
Net Assets, End of Period (in thousands) | $1,225 | $1,046 | $24 | |||||||||
Average Net Assets for the Period (in thousands) | $1,112 | $827 | $25 | |||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses | 2.27% | 2.29% | 14.19% | |||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets) | 1.83% | 1.84% | 1.82% | |||||||||
Ratio of Net Investment Income/(Loss) | 0.05% | (0.06)% | 4.29% | |||||||||
Portfolio Turnover Rate | 302%(3) | 122% | 10% | |||||||||
* Total return not annualized for periods of less than one full year. ** Annualized for periods of less than one full year. (1) Period from June 23, 2015 (inception date) through June 30, 2015. (2) Per share amounts are calculated based on average shares outstanding during the year or period. (3) The increase in the portfolio turnover rate was due to a restructuring of the Fund’s portfolio as a result of a change in its principal investment strategies. |
See Notes to Financial Statements. | |
Janus Investment Fund | 31 |
Janus Henderson Adaptive Global Allocation Fund
Financial Highlights
Class D Shares | ||||||||||||
For a share outstanding during each year or period ended June 30 |
| 2017 |
|
| 2016 |
|
| 2015(1) |
| |||
Net Asset Value, Beginning of Period |
| $9.49 |
|
| $9.70 |
|
| $10.00 |
| |||
Income/(Loss) from Investment Operations: | ||||||||||||
Net investment income/(loss)(2) | 0.09 | 0.06 | 0.01 | |||||||||
Net realized and unrealized gain/(loss) | 1.05 | (0.25) | (0.31) | |||||||||
Total from Investment Operations |
| 1.14 |
|
| (0.19) |
|
| (0.30) |
| |||
Less Dividends and Distributions: | ||||||||||||
Dividends (from net investment income) | (0.09) | (0.02) | — | |||||||||
Distributions (from capital gains) | — | — | — | |||||||||
Total Dividends and Distributions |
| (0.09) |
|
| (0.02) |
|
| — |
| |||
Net Asset Value, End of Period | $10.54 | $9.49 | $9.70 | |||||||||
Total Return* |
| 12.13% |
|
| (1.93)% |
|
| (3.00)% |
| |||
Net Assets, End of Period (in thousands) | $1,619 | $1,285 | $102 | |||||||||
Average Net Assets for the Period (in thousands) | $1,435 | $973 | $64 | |||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses | 2.01% | 2.59% | 20.64% | |||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets) | 0.96% | 1.10% | 0.98% | |||||||||
Ratio of Net Investment Income/(Loss) | 0.94% | 0.69% | 5.03% | |||||||||
Portfolio Turnover Rate | 302%(3) | 122% | 10% | |||||||||
Class I Shares | |||||||||||||
For a share outstanding during each year or period ended June 30 |
|
| 2017 |
|
| 2016 |
|
| 2015(1) |
| |||
Net Asset Value, Beginning of Period |
|
| $9.51 |
|
| $9.69 |
|
| $10.00 |
| |||
Income/(Loss) from Investment Operations: | |||||||||||||
Net investment income/(loss)(2) | 0.17 | 0.09 | 0.01 | ||||||||||
Net realized and unrealized gain/(loss) | 1.00 | (0.24) | (0.32) | ||||||||||
Total from Investment Operations |
|
| 1.17 |
|
| (0.15) |
|
| (0.31) |
| |||
Less Dividends and Distributions: | |||||||||||||
Dividends (from net investment income) | (0.11) | (0.03) | — | ||||||||||
Distributions (from capital gains) | — | — | — | ||||||||||
Total Dividends and Distributions |
|
| (0.11) |
|
| (0.03) |
|
| — |
| |||
Net Asset Value, End of Period | $10.57 | $9.51 | $9.69 | ||||||||||
Total Return* |
|
| 12.42% |
|
| (1.55)% |
|
| (3.10)% |
| |||
Net Assets, End of Period (in thousands) | $4,596 | $1,090 | $48 | ||||||||||
Average Net Assets for the Period (in thousands) | $1,802 | $854 | $50 | ||||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses | 1.40% | 1.28% | 13.19% | ||||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets) | 0.80% | 0.83% | 0.82% | ||||||||||
Ratio of Net Investment Income/(Loss) | 1.69% | 0.94% | 5.29% | ||||||||||
Portfolio Turnover Rate | 302%(3) | 122% | 10% | ||||||||||
* Total return not annualized for periods of less than one full year. ** Annualized for periods of less than one full year. (1) Period from June 23, 2015 (inception date) through June 30, 2015. (2) Per share amounts are calculated based on average shares outstanding during the year or period. (3) The increase in the portfolio turnover rate was due to a restructuring of the Fund’s portfolio as a result of a change in its principal investment strategies. |
See Notes to Financial Statements. | |
32 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Financial Highlights
Class N Shares | ||||||||||||
For a share outstanding during each year or period ended June 30 |
| 2017 |
|
| 2016 |
|
| 2015(1) |
| |||
Net Asset Value, Beginning of Period |
| $9.51 |
|
| $9.70 |
|
| $10.00 |
| |||
Income/(Loss) from Investment Operations: | ||||||||||||
Net investment income/(loss)(2) | 0.10 | 0.07 | 0.01 | |||||||||
Net realized and unrealized gain/(loss) | 1.06 | (0.23) | (0.31) | |||||||||
Total from Investment Operations |
| 1.16 |
|
| (0.16) |
|
| (0.30) |
| |||
Less Dividends and Distributions: | ||||||||||||
Dividends (from net investment income) | (0.11) | (0.03) | — | |||||||||
Distributions (from capital gains) | — | — | — | |||||||||
Total Dividends and Distributions |
| (0.11) |
|
| (0.03) |
|
| — |
| |||
Net Asset Value, End of Period | $10.56 | $9.51 | $9.70 | |||||||||
Total Return* |
| 12.43% |
|
| (1.65)% |
|
| (3.00)% |
| |||
Net Assets, End of Period (in thousands) | $48,806 | $48,423 | $53,702 | |||||||||
Average Net Assets for the Period (in thousands) | $48,134 | $49,786 | $9,234 | |||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses | 1.24% | 1.27% | 67.74% | |||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets) | 0.81% | 0.83% | 0.82% | |||||||||
Ratio of Net Investment Income/(Loss) | 1.03% | 0.73% | 6.84% | |||||||||
Portfolio Turnover Rate | 302%(3) | 122% | 10% | |||||||||
Class S Shares | |||||||||||||
For a share outstanding during each year or period ended June 30 |
|
| 2017 |
|
| 2016 |
|
| 2015(1) |
| |||
Net Asset Value, Beginning of Period |
|
| $9.48 |
|
| $9.69 |
|
| $10.00 |
| |||
Income/(Loss) from Investment Operations: | |||||||||||||
Net investment income/(loss)(2) | 0.07 | 0.05 | 0.01 | ||||||||||
Net realized and unrealized gain/(loss) | 1.06 | (0.24) | (0.32) | ||||||||||
Total from Investment Operations |
|
| 1.13 |
|
| (0.19) |
|
| (0.31) |
| |||
Less Dividends and Distributions: | |||||||||||||
Dividends (from net investment income) | (0.08) | (0.02) | — | ||||||||||
Distributions (from capital gains) | — | — | — | ||||||||||
Total Dividends and Distributions |
|
| (0.08) |
|
| (0.02) |
|
| — |
| |||
Net Asset Value, End of Period | $10.53 | $9.48 | $9.69 | ||||||||||
Total Return* |
|
| 11.95% |
|
| (1.99)% |
|
| (3.10)% |
| |||
Net Assets, End of Period (in thousands) | $1,183 | $1,057 | $24 | ||||||||||
Average Net Assets for the Period (in thousands) | $1,110 | $831 | $25 | ||||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses | 1.75% | 1.78% | 13.69% | ||||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets) | 1.17% | 1.24% | 1.32% | ||||||||||
Ratio of Net Investment Income/(Loss) | 0.70% | 0.53% | 4.79% | ||||||||||
Portfolio Turnover Rate | 302%(3) | 122% | 10% | ||||||||||
* Total return not annualized for periods of less than one full year. ** Annualized for periods of less than one full year. (1) Period from June 23, 2015 (inception date) through June 30, 2015. (2) Per share amounts are calculated based on average shares outstanding during the year or period. (3) The increase in the portfolio turnover rate was due to a restructuring of the Fund’s portfolio as a result of a change in its principal investment strategies. |
See Notes to Financial Statements. | |
Janus Investment Fund | 33 |
Janus Henderson Adaptive Global Allocation Fund
Financial Highlights
Class T Shares | ||||||||||||
For a share outstanding during each year or period ended June 30 |
| 2017 |
|
| 2016 |
|
| 2015(1) |
| |||
Net Asset Value, Beginning of Period |
| $9.50 |
|
| $9.69 |
|
| $10.00 |
| |||
Income/(Loss) from Investment Operations: | ||||||||||||
Net investment income/(loss)(2) | 0.09 | 0.07 | 0.01 | |||||||||
Net realized and unrealized gain/(loss) | 1.06 | (0.24) | (0.32) | |||||||||
Total from Investment Operations |
| 1.15 |
|
| (0.17) |
|
| (0.31) |
| |||
Less Dividends and Distributions: | ||||||||||||
Dividends (from net investment income) | (0.10) | (0.02) | — | |||||||||
Distributions (from capital gains) | — | — | — | |||||||||
Total Dividends and Distributions |
| (0.10) |
|
| (0.02) |
|
| — |
| |||
Net Asset Value, End of Period | $10.55 | $9.50 | $9.69 | |||||||||
Total Return* |
| 12.17% |
|
| (1.72)% |
|
| (3.10)% |
| |||
Net Assets, End of Period (in thousands) | $2,291 | $1,085 | $48 | |||||||||
Average Net Assets for the Period (in thousands) | $1,204 | $856 | $50 | |||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses | 1.51% | 1.53% | 13.44% | |||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets) | 0.94% | 1.00% | 1.07% | |||||||||
Ratio of Net Investment Income/(Loss) | 0.95% | 0.77% | 5.04% | |||||||||
Portfolio Turnover Rate | 302%(3) | 122% | 10% | |||||||||
* Total return not annualized for periods of less than one full year. ** Annualized for periods of less than one full year. (1) Period from June 23, 2015 (inception date) through June 30, 2015. (2) Per share amounts are calculated based on average shares outstanding during the year or period. (3) The increase in the portfolio turnover rate was due to a restructuring of the Fund’s portfolio as a result of a change in its principal investment strategies. |
See Notes to Financial Statements. | |
34 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Notes to Financial Statements
1. Organization and Significant Accounting Policies
Janus Henderson Adaptive Global Allocation Fund (formerly named Janus Adaptive Global Allocation Fund) (the “Fund”) is a series of Janus Investment Fund (the “Trust”), which is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company, and therefore has applied the specialized accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946. The Trust offers 50 funds, each of which offers multiple share classes, with differing investment objectives and policies. The Fund seeks total return through growth of capital and income. The Fund is classified as nondiversified, as defined in the 1940 Act.
The Fund offers multiple classes of shares in order to meet the needs of various types of investors. Each class represents an interest in the same portfolio of investments. Certain financial intermediaries may not offer all classes of shares. Class D Shares are closed to certain new investors.
Class A Shares and Class C Shares are generally offered through financial intermediary platforms including, but not limited to, traditional brokerage platforms, mutual fund wrap fee programs, bank trust platforms, and retirement platforms.
Class D Shares are generally no longer being made available to new investors who do not already have a direct account with the Janus Henderson funds. Class D Shares are available only to investors who hold accounts directly with the Janus Henderson funds, to immediate family members or members of the same household of an eligible individual investor, and to existing beneficial owners of sole proprietorships or partnerships that hold accounts directly with the Janus Henderson funds.
Class I Shares are available through certain financial intermediary platforms including, but not limited to, mutual fund wrap fee programs, managed account programs, asset allocation programs, bank trust platforms, as well as certain retirement platforms. Class I Shares are also available to certain direct institutional investors including, but not limited to, corporations, certain retirement plans, public plans, and foundations/endowments.
Class N Shares are generally available only to financial intermediaries purchasing on behalf of 401(k) plans, 457 plans, 403(b) plans, Taft-Hartley multi-employer plans, profit-sharing and money purchase pension plans, defined benefit plans and certain welfare benefit plans, such as health savings accounts, and nonqualified deferred compensation plans. Class N Shares are also available to Janus proprietary products.
Class S Shares are offered through financial intermediary platforms including, but not limited to, retirement platforms and asset allocation, mutual fund wrap, or other discretionary or nondiscretionary fee-based investment advisory programs. In addition, Class S Shares may be available through certain financial intermediaries who have an agreement with Janus Capital Management LLC (“Janus Capital”) or its affiliates to offer Class S Shares on their supermarket platforms.
Class T Shares are available through certain financial intermediary platforms including, but not limited to, mutual fund wrap fee programs, managed account programs, asset allocation programs, bank trust platforms, as well as certain retirement platforms. In addition, Class T Shares may be available through certain financial intermediaries who have an agreement with Janus Capital or its affiliates to offer Class T Shares on their supermarket platforms.
The following accounting policies have been followed by the Fund and are in conformity with accounting principles generally accepted in the United States of America.
Investment Valuation
Securities held by the Fund are valued in accordance with policies and procedures established by and under the supervision of the Trustees (the “Valuation Procedures”). Equity securities traded on a domestic securities exchange are generally valued at the closing prices on the primary market or exchange on which they trade. If such price is lacking for the trading period immediately preceding the time of determination, such securities are valued at their current bid price. Equity securities that are traded on a foreign exchange are generally valued at the closing prices on such markets. In the event that there is no current trading volume on a particular security in such foreign exchange, the bid price from the primary exchange is generally used to value the security. Securities that are traded on the over-the-counter (“OTC”) markets are generally valued at their closing or latest bid prices as available. Foreign securities and currencies are converted to U.S. dollars using the applicable exchange rate in effect at the close of the New York Stock Exchange (“NYSE”). The Fund will determine the market value of individual securities held by it by using prices provided by one or
Janus Investment Fund | 35 |
Janus Henderson Adaptive Global Allocation Fund
Notes to Financial Statements
more approved professional pricing services or, as needed, by obtaining market quotations from independent broker-dealers. Most debt securities are valued in accordance with the evaluated bid price supplied by the pricing service that is intended to reflect market value. The evaluated bid price supplied by the pricing service is an evaluation that may consider factors such as security prices, yields, maturities and ratings. Certain short-term securities maturing within 60 days or less may be evaluated and valued on an amortized cost basis provided that the amortized cost determined approximates market value. Securities for which market quotations or evaluated prices are not readily available or deemed unreliable are valued at fair value determined in good faith under the Valuation Procedures. Circumstances in which fair value pricing may be utilized include, but are not limited to: (i) a significant event that may affect the securities of a single issuer, such as a merger, bankruptcy, or significant issuer-specific development; (ii) an event that may affect an entire market, such as a natural disaster or significant governmental action; (iii) a nonsignificant event such as a market closing early or not opening, or a security trading halt; and (iv) pricing of a nonvalued security and a restricted or nonpublic security. Special valuation considerations may apply with respect to “odd-lot” fixed-income transactions which, due to their small size, may receive evaluated prices by pricing services which reflect a large block trade and not what actually could be obtained for the odd-lot position. The Fund uses systematic fair valuation models provided by independent third parties to value international equity securities in order to adjust for stale pricing, which may occur between the close of certain foreign exchanges and the close of the NYSE.
Valuation Inputs Summary
FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value, and expands disclosure requirements regarding fair value measurements. This standard emphasizes that fair value is a market-based measurement that should be determined based on the assumptions that market participants would use in pricing an asset or liability and establishes a hierarchy that prioritizes inputs to valuation techniques used to measure fair value. These inputs are summarized into three broad levels:
Level 1 – Unadjusted quoted prices in active markets the Fund has the ability to access for identical assets or liabilities.
Level 2 – Observable inputs other than unadjusted quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
Assets or liabilities categorized as Level 2 in the hierarchy generally include: debt securities fair valued in accordance with the evaluated bid or ask prices supplied by a pricing service; securities traded on OTC markets and listed securities for which no sales are reported that are fair valued at the latest bid price (or yield equivalent thereof) obtained from one or more dealers transacting in a market for such securities or by a pricing service approved by the Fund’s Trustees; certain short-term debt securities with maturities of 60 days or less that are fair valued at amortized cost; and equity securities of foreign issuers whose fair value is determined by using systematic fair valuation models provided by independent third parties in order to adjust for stale pricing which may occur between the close of certain foreign exchanges and the close of the NYSE. Other securities that may be categorized as Level 2 in the hierarchy include, but are not limited to, preferred stocks, bank loans, swaps, investments in unregistered investment companies, options, and forward contracts.
Level 3 – Unobservable inputs for the asset or liability to the extent that relevant observable inputs are not available, representing the Fund’s own assumptions about the assumptions that a market participant would use in valuing the asset or liability, and that would be based on the best information available.
There have been no significant changes in valuation techniques used in valuing any such positions held by the Fund since the beginning of the fiscal year.
The inputs or methodology used for fair valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of inputs used as of June 30, 2017 to fair value the Fund’s investments in securities and other financial instruments is included in the “Valuation Inputs Summary” in the Notes to Schedule of Investments and Other Information.
The Fund recognizes transfers between the levels as of the beginning of the fiscal year. The following describes the amounts of transfers between Level 1, Level 2 and Level 3 of the fair value hierarchy during the year.
36 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Notes to Financial Statements
Financial assets of $4,066,777 were transferred out of Level 2 to Level 1 since certain foreign equity prices were applied a fair valuation adjustment factor at the end of the prior fiscal year and no factor was applied at the end of the current period.
Investment Transactions and Investment Income
Investment transactions are accounted for as of the date purchased or sold (trade date). Dividend income is recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded as soon as the Fund is informed of the dividend, if such information is obtained subsequent to the ex-dividend date. Dividends from foreign securities may be subject to withholding taxes in foreign jurisdictions. Interest income is recorded on the accrual basis and includes amortization of premiums and accretion of discounts. 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, both realized and unrealized, 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
The Fund bears expenses incurred specifically on its behalf. Each class of shares bears a portion of general expenses, which 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.
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.
Indemnifications
In the normal course of business, the Fund may enter into contracts that contain provisions for indemnification of other parties against certain potential liabilities. The Fund’s maximum exposure under these arrangements is unknown, and would involve future claims that may be made against the Fund that have not yet occurred. Currently, the risk of material loss from such claims is considered remote.
Foreign Currency Translations
The Fund does not isolate that portion of the results of operations resulting from the effect of 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 of investments and foreign currency translations arise from changes in the value of assets and liabilities, including investments in securities held at the date of the financial statements, resulting from changes in the exchange rates and changes in market prices of securities held.
Currency gains and losses are also calculated on payables and receivables that are denominated in foreign currencies. The payables and receivables are generally related to foreign security transactions and income translations.
Foreign currency-denominated assets and forward currency contracts may involve more risks than domestic transactions, including currency risk, counterparty risk, political and economic risk, regulatory risk and equity risk. Risks may arise from unanticipated movements in the value of foreign currencies relative to the U.S. dollar.
Dividends and Distributions
The Fund generally declares and distributes dividends of net investment income and realized capital gains (if any) annually. The Fund may treat a portion of the amount paid to redeem shares as a distribution of investment company taxable income and realized capital gains that are reflected in the net asset value. This practice, commonly referred to as “equalization,” has no effect on the redeeming shareholder or the Fund’s total return, but may reduce the amounts that would otherwise be required to be paid as taxable dividends to the remaining shareholders. It is possible that the Internal Revenue Service (IRS) could challenge the Fund's equalization methodology or calculations, and any such challenge could result in additional tax, interest, or penalties to be paid by the Fund.
The Fund may make certain investments in real estate investment trusts (“REITs”) which pay dividends to their shareholders based upon funds available from operations. It is quite common for these dividends to exceed the REITs’ taxable earnings and profits, resulting in the excess portion of such dividends being designated as a return of capital. If
Janus Investment Fund | 37 |
Janus Henderson Adaptive Global Allocation Fund
Notes to Financial Statements
the Fund distributes such amounts, such distributions could constitute a return of capital to shareholders for federal income tax purposes.
Federal Income Taxes
The Fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income in accordance with the requirements of Subchapter M of the Internal Revenue Code. Management has analyzed the Fund’s tax positions taken for all open federal income tax years, generally a three-year period, and has concluded that no provision for federal income tax is required in the Fund’s financial statements. The Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
2. Derivative Instruments
The Fund may invest in various types of derivatives, which may at times result in significant derivative exposure. A derivative is a financial instrument whose performance is derived from the performance of another asset. The Fund may invest in derivative instruments including, but not limited to: futures contracts, put options, call options, options on future contracts, options on foreign currencies, options on recovery locks, options on security and commodity indices, swaps, forward contracts, structured investments, and other equity-linked derivatives. Each derivative instrument that was held by the Fund during the year ended June 30, 2017 is discussed in further detail below. A summary of derivative activity by the Fund is reflected in the tables at the end of this section.
The Fund may use derivative instruments for hedging purposes (to offset risks associated with an investment, currency exposure, or market conditions), to adjust currency exposure relative to a benchmark index, or for speculative purposes (to earn income and seek to enhance returns). When the Fund invests in a derivative for speculative purposes, the Fund will be fully exposed to the risks of loss of that derivative, which may sometimes be greater than the derivative’s cost. The Fund may not use any derivative to gain exposure to an asset or class of assets that it would be prohibited by its investment restrictions from purchasing directly. The Fund’s ability to use derivative instruments may also be limited by tax considerations.
Investments in derivatives in general are subject to market risks that may cause their prices to fluctuate over time. Investments in derivatives may not directly correlate with the price movements of the underlying instrument. As a result, the use of derivatives may expose the Fund to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. The use of derivatives may result in larger losses or smaller gains than otherwise would be the case. Derivatives can be volatile and may involve significant risks.
In pursuit of its investment objective, the Fund may seek to use derivatives to increase or decrease exposure to the following market risk factors:
· Commodity Risk – the risk related to the change in value of commodities or commodity-linked investments due to changes in the overall market movements, volatility of the underlying benchmark, changes in interest rates, or other factors affecting a particular industry of commodity such as drought, floods, weather, livestock disease, embargoes, tariffs, and international economic, political, and regulatory developments.
· Counterparty Risk – the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable to honor its financial obligation to the Fund.
· Credit Risk – the risk an issuer will be unable to make principal and interest payments when due, or will default on its obligations.
· Currency Risk – the risk that changes in the exchange rate between currencies will adversely affect the value (in U.S. dollar terms) of an investment.
· Equity Risk – the risk related to the change in value of equity securities as they relate to increases or decreases in the general market.
· Index Risk – if the derivative is linked to the performance of an index, it will be subject to the risks associated with changes in that index. If the index changes, the Fund could receive lower interest payments or experience a reduction in the value of the derivative to below what the Fund paid. Certain indexed securities, including inverse securities (which move in an opposite direction to the index), may create leverage, to the extent that they increase or decrease in value at a rate that is a multiple of the changes in the applicable index.
38 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Notes to Financial Statements
· Interest Rate Risk – the risk that the value of fixed-income securities will generally decline as prevailing interest rates rise, which may cause the Fund’s NAV to likewise decrease.
· Leverage Risk – the risk associated with certain types of leveraged investments or trading strategies pursuant to which relatively small market movements may result in large changes in the value of an investment. The Fund creates leverage by investing in instruments, including derivatives, where the investment loss can exceed the original amount invested. Certain investments or trading strategies, such as short sales, that involve leverage can result in losses that greatly exceed the amount originally invested.
· Liquidity Risk – the risk that certain securities may be difficult or impossible to sell at the time that the seller would like or at the price that the seller believes the security is currently worth.
Derivatives may generally be traded OTC or on an exchange. Derivatives traded OTC are agreements that are individually negotiated between parties and can be tailored to meet a purchaser’s needs. OTC derivatives are not guaranteed by a clearing agency and may be subject to increased credit risk.
In an effort to mitigate credit risk associated with derivatives traded OTC, the Fund may enter into collateral agreements with certain counterparties whereby, subject to certain minimum exposure requirements, the Fund may require the counterparty to post collateral if the Fund has a net aggregate unrealized gain on all OTC derivative contracts with a particular counterparty. There is no guarantee that counterparty exposure is reduced and these arrangements are dependent on Janus Capital’s ability to establish and maintain appropriate systems and trading.
Forward Foreign Currency Exchange Contracts
A forward foreign currency exchange contract (“forward currency contract”) is an obligation to buy or sell a specified currency at a future date at a negotiated rate (which may be U.S. dollars or a foreign currency). The Fund may enter into forward currency contracts for hedging purposes, including, but not limited to, reducing exposure to changes in foreign currency exchange rates on foreign portfolio holdings and locking in the U.S. dollar cost of firm purchase and sale commitments for securities denominated in or exposed to foreign currencies. The Fund may also invest in forward currency contracts for nonhedging purposes such as seeking to enhance returns. The Fund is subject to currency risk and counterparty risk in the normal course of pursuing its investment objective through its investments in forward currency contracts.
Forward currency contracts are valued by converting the foreign value to U.S. dollars by using the current spot U.S. dollar exchange rate and/or forward rate for that currency. Exchange and forward rates as of the close of the NYSE shall be used to value the forward currency contracts. The unrealized appreciation/(depreciation) for forward currency contracts is reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations for the change in unrealized net appreciation/depreciation (if applicable). 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 a forward currency contract is reported on the Statement of Operations (if applicable).
During the year, the Fund entered into forward currency contracts with the obligation to purchase foreign currencies in the future at an agreed upon rate in order to take a positive outlook on the related currency. These forward contracts seek to increase exposure to currency risk.
During the year, the Fund entered into forward currency contracts with the obligation to purchase foreign currencies in the future at an agreed upon rate in order to decrease exposure to currency risk associated with foreign currency denominated securities held by the Fund.
During the year, the Fund entered into forward currency contracts with the obligation to sell foreign currencies in the future at an agreed upon rate in order to take a negative outlook on the related currency. These forward contracts seek to increase exposure to currency risk.
During the year, the Fund entered into forward currency contracts with the obligation to sell foreign currencies in the future at an agreed upon rate in order to decrease exposure to currency risk associated with foreign currency denominated securities held by the Fund.
During the year ended June 30, 2017, the average ending monthly currency value amounts on purchased and sold forward currency contracts are $613,598 and $7,135,955, respectively.
Janus Investment Fund | 39 |
Janus Henderson Adaptive Global Allocation Fund
Notes to Financial Statements
Futures Contracts
A futures contract is an exchange-traded agreement to take or make delivery of an underlying asset at a specific time in the future for a specific predetermined negotiated price. The Fund may enter into futures contracts to gain exposure to the stock market or other markets pending investment of cash balances or to meet liquidity needs. The Fund is subject to interest rate risk, equity risk, and currency risk in the normal course of pursuing its investment objective through its investments in futures contracts. The Fund may also use such derivative instruments to hedge or protect from adverse movements in securities prices, currency rates or interest rates. The use of futures contracts may involve risks such as the possibility of illiquid markets or imperfect correlation between the values of the contracts and the underlying securities, or that the counterparty will fail to perform its obligations.
Futures contracts on commodities are valued at the settlement price on valuation date on the commodities exchange as reported by an approved vendor. Mini contracts, as defined in the description of the contract, shall be valued using the Actual Settlement Price or “ASET” price type as reported by an approved vendor. In the event that foreign futures trade when the foreign equity markets are closed, the last foreign futures trade price shall be used. Futures contracts are marked-to-market daily, and the daily variation margin is recorded as a receivable or payable on the Statement of Assets and Liabilities (if applicable). The change in unrealized net appreciation/depreciation is reported on the Statement of Operations (if applicable). When a contract is closed, a realized gain or loss is reported on the Statement of Operations (if applicable), equal to the difference between the opening and closing value of the contract. Securities held by the Fund that are designated as collateral for market value on futures contracts are noted on the Schedule of Investments (if applicable). Such collateral is in the possession of the Fund’s futures commission merchant.
With futures, there is minimal counterparty credit risk to the Fund since futures are exchange-traded and the exchange’s clearinghouse, as counterparty to all exchange-traded futures, guarantees the futures against default.
During the year, the Fund purchased commodity futures to increase exposure to commodity risk.
During the year, the Fund purchased futures on equity indices to increase exposure to equity risk.
During the year, the Fund sold futures on equity indices to decrease exposure to equity risk.
During the year, the Fund purchased interest rate futures to increase exposure to interest rate risk.
During the year, the Fund sold interest rate futures to decrease exposure to interest rate risk.
During the year ended June 30, 2017, the average ending monthly market value amounts on purchased and sold futures contracts are $36,962,554 and $26,433,891, respectively. There were no futures held at June 30, 2017.
Options Contracts
An options contract provides the purchaser with the right, but not the obligation, to buy (call option) or sell (put option) a financial instrument at an agreed upon price on or before a specified date. The purchaser pays a premium to the seller for this right. The seller has the corresponding obligation to sell or buy a financial instrument if the purchaser (owner) "exercises" the option. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option, or the cost of the security for a purchased put or call option are adjusted by the amount of premium received or paid. Upon expiration, or closing of the option transaction, a realized gain or loss is reported on the Statement of Operations (if applicable). The difference between the premium paid/received and the market value of the option is recorded as unrealized appreciation or depreciation. The net change in unrealized appreciation or depreciation is reported on the Statement of Operations (if applicable). Option contracts are typically valued using an approved vendor’s option valuation model. To the extent reliable market quotations are available, option contracts are valued using market quotations. In cases when an approved vendor cannot provide coverage for an option and there is no reliable market quotation, a broker quotation or an internal valuation using the Black-Scholes model, the Cox-Rubenstein Binomial Option Pricing Model, or other appropriate option pricing model is used. Certain options contracts are marked-to-market daily, and the daily variation margin is recorded as a receivable or payable on the Statement of Assets and Liabilities as “Variation margin receivable” or “Variation margin payable” (if applicable).
The Fund may use options contracts to hedge against changes in interest rates, the values of equities, or foreign currencies. The Fund generally invests in options to hedge against adverse movements in the value of portfolio holdings. The use of such instruments may involve certain additional risks as a result of unanticipated movements in the market. A lack of correlation between the value of an instrument underlying an option and the asset being hedged, or unexpected adverse price movements, could render the Fund’s hedging strategy unsuccessful. In addition, there can be
40 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Notes to Financial Statements
no assurance that a liquid secondary market will exist for any option purchased or sold. The Fund may be subject to counterparty risk, interest rate risk, liquidity risk, equity risk, commodity risk, and currency risk in the normal course of pursuing its investment objective through its investments in options contracts.
Options traded on an exchange are regulated and the terms of the options are standardized. Options traded OTC expose the Fund to counterparty risk in the event that the counterparty does not perform. This risk is mitigated by having a netting arrangement between the Fund and the counterparty and by having the counterparty post collateral to cover the Fund’s exposure to the counterparty.
The Fund may purchase put options to hedge against a decline in the value of its portfolio. By using put options in this way, the Fund 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. The Fund may purchase 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 the Fund upon exercise of the option, and, unless the price of the underlying security rises sufficiently, the option may expire worthless to the Fund. The risk in buying options is that the Fund pays a premium whether or not the options are exercised. Options purchased are reported in the Schedule of Investments (if applicable).
During the year, the Fund purchased call options on various ETFs for the purpose of increasing exposure to individual equity risk.
During the year, the Fund purchased put options on various ETFs for the purpose of decreasing exposure to individual equity risk.
During the year ended June 30, 2017, the average ending monthly market value amounts on purchased call and put options are $59 and $16,794, respectively.
In writing an option, the Fund bears the risk of an unfavorable change in the price of the security underlying the written option. When an option is written, the Fund receives a premium and becomes obligated to sell or purchase the underlying security at a fixed price, upon exercise of the option. Options written are reported as a liability on the Statement of Assets and Liabilities as “Options written, at value” (if applicable). The risk in writing call options is that the Fund gives up the opportunity for profit if the market price of the security increases and the options are exercised. The risk in writing put options is that the Fund may incur a loss if the market price of the security decreases and the options are exercised. The risk in buying options is that the Fund pays a premium whether or not the options are exercised. Exercise of an option written by the Fund could result in the Fund buying or selling a security at a price different from the current market value.
During the year, the Fund wrote put options on various ETFs for the purpose of increasing exposure to individual equity risk and/or generating income.
During the year ended June 30, 2017, the average ending monthly market value amounts on written put options is $5,752. There were no purchased or written options held at June 30, 2017.
Written option activity for the year ended June 30, 2017 is indicated in the table below: | ||||
Number of | Premiums | |||
|
| Contracts |
| Received |
Options outstanding at June 30, 2016 | 250 | $ 6,750 | ||
Options written | 2,210 | 104,360 | ||
Options closed | (1,105) | (47,920) | ||
Options expired | (1,355) | (63,190) | ||
Options exercised | - | - | ||
Options outstanding at June 30, 2017 |
| - |
| $ - |
Swaps
Swap agreements are two-party contracts entered into primarily by institutional investors for periods ranging from a day to more than one year to exchange one set of cash flows for another. The most significant factor in the performance of swap agreements is the change in value of the specific index, security, or currency, or other factors that determine the amounts of payments due to and from the Fund. The use of swaps is a highly specialized activity which involves
Janus Investment Fund | 41 |
Janus Henderson Adaptive Global Allocation Fund
Notes to Financial Statements
investment techniques and risks different from those associated with ordinary portfolio securities transactions. Swap transactions may in some instances involve the delivery of securities or other underlying assets by the Fund or its counterparty to collateralize obligations under the swap. If the other party to a swap that is not collateralized defaults, the Fund would risk the loss of the net amount of the payments that it contractually is entitled to receive. Swap agreements entail the risk that a party will default on its payment obligations to the Fund. If the other party to a swap defaults, the Fund would risk the loss of the net amount of the payments that it contractually is entitled to receive. If the Fund utilizes a swap at the wrong time or judges market conditions incorrectly, the swap may result in a loss to the Fund and reduce the Fund’s total return.
Swap agreements also bear the risk that the Fund will not be able to meet its obligation to the counterparty. Swap agreements are typically privately negotiated and entered into in the OTC market. However, certain swap agreements are required to be cleared through a clearinghouse and traded on an exchange or swap execution facility. Swaps that are required to be cleared are required to post initial and variation margins in accordance with the exchange requirements. Regulations enacted require the Fund to centrally clear certain interest rate and credit default index swaps through a clearinghouse or central counterparty (“CCP”). To clear a swap with a CCP, the Fund will submit the swap to, and post collateral with, a futures clearing merchant (“FCM”) that is a clearinghouse member. Alternatively, the Fund may enter into a swap with a financial institution other than the FCM (the “Executing Dealer”) and arrange for the swap to be transferred to the FCM for clearing. The Fund may also enter into a swap with the FCM itself. The CCP, the FCM, and the Executing Dealer are all subject to regulatory oversight by the Commodity Futures Trading Commission (“CFTC”). A default or failure by a CCP or an FCM, or the failure of a swap to be transferred from an Executing Dealer to the FCM for clearing, may expose the Fund to losses, increase its costs, or prevent the Fund from entering or exiting swap positions, accessing collateral, or fully implementing its investment strategies. The regulatory requirement to clear certain swaps could, either temporarily or permanently, reduce the liquidity of cleared swaps or increase the costs of entering into those swaps.
Index swaps, interest rate swaps, and credit default swaps are valued using an approved vendor supplied price. Basket swaps are valued using a broker supplied price. Equity swaps that consist of a single underlying equity are valued either at the closing price, the latest bid price, or the last sale price on the primary market or exchange it trades. The market value of swap contracts are aggregated by positive and negative values and are disclosed separately as an asset or liability on the Fund’s Statement of Assets and Liabilities (if applicable). Realized gains and losses are reported on the Fund’s Statement of Operations (if applicable). The change in unrealized net appreciation or depreciation during the year is included in the Statement of Operations (if applicable).
The Fund’s maximum risk of loss from counterparty risk or credit risk is the discounted value of the payments to be received from/paid to the counterparty over the contract’s remaining life, to the extent that the amount is positive. The risk is mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to cover the Fund’s exposure to the counterparty.
The Fund may enter into various types of credit default swap agreements, including OTC credit default swap agreements and index credit default swaps (“CDX”), for investment purposes and to add leverage to its portfolio. Credit default swaps are a specific kind of counterparty agreement that allow the transfer of third party credit risk from one party to the other. One party in the swap is a lender and faces credit risk from a third party, and the counterparty in the credit default swap agrees to insure this risk in exchange for regular periodic payments. Credit default swaps could result in losses if the Fund does not correctly evaluate the creditworthiness of the company or companies on which the credit default swap is based. Credit default swap agreements may involve greater risks than if the Fund had invested in the reference obligation directly since, in addition to risks relating to the reference obligation, credit default swaps are subject to liquidity risk, counterparty risk, and credit risk. The Fund will generally incur a greater degree of risk when it sells a credit default swap than when it purchases a credit default swap. As a buyer of a credit default swap, the Fund may lose its investment and recover nothing should no credit event occur and the swap is held to its termination date. As seller of a credit default swap, if a credit event were to occur, the value of any deliverable obligation received by the Fund, coupled with the upfront or periodic payments previously received, may be less than what it pays to the buyer, resulting in a loss of value to the Fund.
As a buyer of credit protection, the Fund is entitled to receive the par (or other agreed-upon) value of a referenced debt obligation from the counterparty to the contract in the event of a default or other credit event by a third party, such as a U.S. or foreign issuer, on the debt obligation. In return, the Fund as buyer would pay to the counterparty a periodic
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Janus Henderson Adaptive Global Allocation Fund
Notes to Financial Statements
stream of payments over the term of the contract provided that no credit event has occurred. If no credit event occurs, the Fund would have spent the stream of payments and potentially received no benefit from the contract.
If the Fund is the seller of credit protection against a particular security, the Fund would receive an up-front or periodic payment to compensate against potential credit events. As the seller in a credit default swap contract, the Fund would be required to pay the par value (the “notional value”) (or other agreed-upon value) of a referenced debt obligation to the counterparty in the event of a default by a third party, such as a U.S. or foreign corporate issuer, on the debt obligation. In return, the Fund would receive from the counterparty a periodic stream of payments over the term of the contract provided that no event of default has occurred. If no default occurs, the Fund would keep the stream of payments and would have no payment obligations. As the seller, the Fund would effectively add leverage to its portfolio because, in addition to its total net assets, the Fund would be subject to investment exposure on the notional value of the swap. The maximum potential amount of future payments (undiscounted) that the Fund as a seller could be required to make in a credit default transaction would be the notional amount of the agreement.
The Fund may invest in CDXs. A CDX is a swap on an index of credit default swaps. CDXs allow an investor to manage credit risk or take a position on a basket of credit entities (such as credit default swaps or commercial mortgage-backed securities) in a more efficient manner than transacting in a single-name CDS. If a credit event occurs in one of the underlying companies, the protection is paid out via the delivery of the defaulted bond by the buyer of protection in return for a payment of notional value of the defaulted bond by the seller of protection or it may be settled through a cash settlement between the two parties. The underlying company is then removed from the index. If the Fund holds a long position in a CDX, the Fund would indirectly bear its proportionate share of any expenses paid by a CDX. A Fund holding a long position in CDXs typically receives income from principal or interest paid on the underlying securities. By investing in CDXs, the Fund could be exposed to illiquidity risk, counterparty risk, and credit risk of the issuers of the underlying loan obligations and of the CDX markets. If there is a default by the CDX counterparty, the Fund will have contractual remedies pursuant to the agreements related to the transaction. CDXs also bear the risk that the Fund will not be able to meet its obligation to the counterparty.
During the year, the Fund sold protection via the credit default swap market in order to gain credit risk exposure to individual corporates, countries and/or credit indices where gaining this exposure via the cash bond market was less attractive.
During the year ended June 30, 2017, the average ending monthly market value amounts on credit default swaps which are long the reference asset is $27,076. There were no swaps held at June 30, 2017.
The following table, grouped by derivative type, provides information about the fair value and location of derivatives within the Statement of Assets and Liabilities as of June 30, 2017.
Fair Value of Derivative Instruments (not accounted for as hedging instruments) as of June 30, 2017 | |||||
|
|
|
| Currency |
|
Asset Derivatives: | |||||
Forward currency contracts | $ 29,403 | ||||
| |||||
Liability Derivatives: | |||||
Forward currency contracts | $ 95,643 | ||||
(a) | Amounts relate to purchased options. | ||||
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Notes to Financial Statements
The following tables provide information about the effect of derivatives and hedging activities on the Fund’s Statement of Operations for the year ended June 30, 2017.
The effect of Derivative Instruments (not accounted for as hedging instruments) on the Statement of Operations for the year ended June 30, 2017 | |||||||||||||
Amount of Realized Gain/(Loss) Recognized on Derivatives | |||||||||||||
Derivative | Commodity |
| Credit |
| Currency |
| Equity |
| Interest Rate |
| Total | ||
Futures contracts | $ (30,213) | $ - | $ - | $395,646 | $ 268,107 | $ 633,540 | |||||||
Investments and foreign currency transactions | - | - | (156,645) | (a) | (121,305) | (b) | - | (277,950) | |||||
Swap contracts | - | 17,703 | - | - | - | 17,703 | |||||||
Written options contracts | - | - | - | 44,380 | - | 44,380 | |||||||
Total | $ (30,213) |
| $ 17,703 |
| $(156,645) |
| $318,721 |
| $ 268,107 |
| $ 417,673 | ||
Amount of Change in Unrealized Appreciation/Depreciation Recognized on Derivatives | |||||||||||||
Derivative | Commodity |
| Credit |
| Currency |
| Equity |
| Interest Rate |
| Total | ||
Futures contracts | $ 1,800 | $ - | $(114,766) | $ - | $ (182,914) | $(295,880) | |||||||
Investments, foreign currency translations and non-interested Trustees' deferred compensation | - | - | (85,148) | (a) | 10,296 | (b) | - | (74,852) | |||||
Swap contracts | - | 18,313 | - | - | - | 18,313 | |||||||
Written options contracts | - | - | - | 5,510 | - | 5,510 | |||||||
Total | $ 1,800 |
| $ 18,313 |
| $(199,914) |
| $ 15,806 |
| $ (182,914) |
| $(346,909) | ||
(a) | Amounts relate to forward currency contracts. | ||||||||||||
(b) | Amounts relate to purchased options. | ||||||||||||
(c) | Amounts relate to purchased options. | ||||||||||||
Please see the "Net Realized Gain/(Loss) on Investments" and "Change in Unrealized Net Appreciation/Depreciation" sections of the Fund’s Statement of Operations.
3. Other Investments and Strategies
Additional Investment Risk
The financial crisis in both the U.S. and global economies over the past several years has resulted, and may continue to result, in a significant decline in the value and liquidity of many securities of issuers worldwide in the equity and fixed-income/credit markets. In response to the crisis, the United States and certain foreign governments, along with the U.S. Federal Reserve and certain foreign central banks, took steps to support the financial markets. The withdrawal of this support, a failure of measures put in place to respond to the crisis, or investor perception that such efforts were not sufficient could each negatively affect financial markets generally, and the value and liquidity of specific securities. In addition, policy and legislative changes in the United States and in other countries continue to impact many aspects of financial regulation. The effect of these changes on the markets, and the practical implications for market participants, including the Fund, may not be fully known for some time. As a result, it may also be unusually difficult to identify both investment risks and opportunities, which could limit or preclude the Fund’s ability to achieve its investment objective. Therefore, it is important to understand that the value of your investment may fall, sometimes sharply, and you could lose money.
The enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) of 2010 provided for widespread regulation of financial institutions, consumer financial products and services, broker-dealers, OTC derivatives, investment advisers, credit rating agencies, and mortgage lending, which expanded federal oversight in the financial sector, including the investment management industry. Many provisions of the Dodd-Frank Act remain pending and will be implemented through future rulemaking. Therefore, the ultimate impact of the Dodd-Frank Act and the regulations under the Dodd-Frank Act on the Fund and the investment management industry as a whole, is not yet certain.
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Janus Henderson Adaptive Global Allocation Fund
Notes to Financial Statements
A number of countries in the European Union (“EU”) have experienced, and may continue to experience, severe economic and financial difficulties. In particular, many EU nations are susceptible to economic risks associated with high levels of debt, notably due to investments in sovereign debt of countries such as Greece, Italy, Spain, Portugal, and Ireland. Many non-governmental issuers, and even certain governments, have defaulted on, or been forced to restructure, their debts. Many other issuers have faced difficulties obtaining credit or refinancing existing obligations. Financial institutions have in many cases required government or central bank support, have needed to raise capital, and/or have been impaired in their ability to extend credit. As a result, financial markets in the EU experienced extreme volatility and declines in asset values and liquidity. Responses to these financial problems by European governments, central banks, and others, including austerity measures and reforms, may not work, may result in social unrest, and may limit future growth and economic recovery or have other unintended consequences. Further defaults or restructurings by governments and others of their debt could have additional adverse effects on economies, financial markets, and asset valuations around the world. Greece, Ireland, and Portugal have already received one or more "bailouts" from other Eurozone member states, and it is unclear how much additional funding they will require or if additional Eurozone member states will require bailouts in the future. The risk of investing in securities in the European markets may also be heightened due to the referendum in which the United Kingdom voted to exit the EU (known as “Brexit”). There is considerable uncertainty about how Brexit will be conducted, how negotiations of necessary treaties and trade agreements will proceed, or how financial markets will react. In addition, one or more other countries may also abandon the euro and/or withdraw from the EU, placing its currency and banking system in jeopardy.
Certain areas of the world have historically been prone to and economically sensitive to environmental events such as, but not limited to, hurricanes, earthquakes, typhoons, flooding, tidal waves, tsunamis, erupting volcanoes, wildfires or droughts, tornadoes, mudslides, or other weather-related phenomena. Such disasters, and the resulting physical or economic damage, could have a severe and negative impact on the Fund’s investment portfolio and, in the longer term, could impair the ability of issuers in which the Fund invests to conduct their businesses as they would under normal conditions. Adverse weather conditions may also have a particularly significant negative effect on issuers in the agricultural sector and on insurance companies that insure against the impact of natural disasters.
Counterparties
Fund transactions involving a counterparty are subject to the risk that the counterparty or a third party will not fulfill its obligation to the Fund (“counterparty risk”). Counterparty risk may arise because of the counterparty’s financial condition (i.e., financial difficulties, bankruptcy, or insolvency), market activities and developments, or other reasons, whether foreseen or not. A counterparty’s inability to fulfill its obligation may result in significant financial loss to the Fund. The Fund may be unable to recover its investment from the counterparty or may obtain a limited recovery, and/or recovery may be delayed. The extent of the Fund’s exposure to counterparty risk with respect to financial assets and liabilities approximates its carrying value. See the "Offsetting Assets and Liabilities" section of this Note for further details.
The Fund may be exposed to counterparty risk through participation in various programs, including, but not limited to, lending its securities to third parties, cash sweep arrangements whereby the Fund’s cash balance is invested in one or more types of cash management vehicles, as well as investments in, but not limited to, repurchase agreements, debt securities, and derivatives, including various types of swaps, futures and options. The Fund intends to enter into financial transactions with counterparties that Janus Capital believes to be creditworthy at the time of the transaction. There is always the risk that Janus Capital’s analysis of a counterparty’s creditworthiness is incorrect or may change due to market conditions. To the extent that the Fund focuses its transactions with a limited number of counterparties, it will have greater exposure to the risks associated with one or more counterparties.
Exchange-Traded and Mutual Funds
The Fund may invest in exchange-traded funds (“ETFs”) and mutual funds to gain exposure to a particular portion of the market. ETFs are typically open-end investment companies, which may be actively managed or passively managed, that generally seek to track the performance of a specific index. ETFs are traded on a national securities exchange at market prices that may vary from the net asset value of their underlying investments. Accordingly, there may be times when an ETF trades at a premium or discount. When the Fund invests in an ETF or mutual fund, in addition to directly bearing the expenses associated with its own operations, it will bear a pro rata portion of the ETF's or mutual fund’s expenses. As a result, the cost of investing in the Fund may be higher than the cost of investing directly in ETFs or mutual funds and may be higher than other mutual funds that invest directly in stocks and bonds. ETFs also involve the risk that an active trading market for an ETF's shares may not develop or be maintained. Similarly, because the value of ETF shares depends on the demand in the market, the Fund may not be able to purchase or sell an ETF at the most
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Janus Henderson Adaptive Global Allocation Fund
Notes to Financial Statements
optimal time, which could adversely affect the Fund’s performance. In addition, ETFs that track particular indices may be unable to match the performance of such underlying indices due to the temporary unavailability of certain index securities in the secondary market or other factors, such as discrepancies with respect to the weighting of securities. Because the Fund may invest in a broad range of ETFs and mutual funds, such risks may include, but are not limited to, leverage risk, foreign exposure risk, interest rate risk, emerging markets risk, fixed-income risk, and commodity-linked investments risk. The Fund is also subject to substantially the same risks as those associated with direct exposure to the securities held by the ETF or mutual fund.
Offsetting Assets and Liabilities
The Fund presents gross and net information about transactions that are either offset in the financial statements or subject to an enforceable master netting arrangement or similar agreement with a designated counterparty, regardless of whether the transactions are actually offset in the Statement of Assets and Liabilities.
In order to better define its contractual rights and to secure rights that will help the Fund mitigate its counterparty risk, the Fund has entered into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with its derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between the Fund and a counterparty that governs OTC derivatives and forward foreign currency exchange contracts and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, in the event of a default and/or termination event, the Fund may offset with each counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. For financial reporting purposes, the Fund does not offset certain derivative financial instruments’ payables and receivables and related collateral on the Statement of Assets and Liabilities.
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Janus Henderson Adaptive Global Allocation Fund
Notes to Financial Statements
The following tables present gross amounts of recognized assets and/or liabilities and the net amounts after deducting collateral that has been pledged by counterparties or has been pledged to counterparties (if applicable). For corresponding information grouped by type of instrument, see either the “Fair Value of Derivative Instruments as of June 30, 2017” table located in Note 2 of these Notes to Financial Statements and/or the Fund’s Schedule of Investments.
Offsetting of Financial Assets and Derivative Assets | |||||||||
Gross Amounts | |||||||||
of Recognized | Offsetting Asset | Collateral | |||||||
Counterparty | Assets | or Liability(a) | Pledged(b) | Net Amount | |||||
Bank of America | $ | 24,362 | $ | (24,362) | $ | — | $ | — | |
RBC Capital Markets Corp. | 5,041 | (2,483) | — | 2,558 | |||||
Total | $ | 29,403 | $ | (26,845) | $ | — | $ | 2,558 | |
Offsetting of Financial Liabilities and Derivative Liabilities | |||||||||
Gross Amounts | |||||||||
of Recognized | Offsetting Asset | Collateral | |||||||
Counterparty | Liabilities | or Liability(a) | Pledged(b) | Net Amount | |||||
Bank of America | $ | 93,160 | $ | (24,362) | $ | — | $ | 68,798 | |
RBC Capital Markets Corp. | 2,483 | (2,483) | — | — | |||||
Total | $ | 95,643 | $ | (26,845) | $ | — | $ | 68,798 | |
(a) | Represents the amount of assets or liabilities that could be offset with the same counterparty under master netting or similar agreements that management elects not to offset on the Statement of Assets and Liabilities. | ||||||||
(b) | Collateral pledged is limited to the net outstanding amount due to/from an individual counterparty. The actual collateral amounts pledged may exceed these amounts and may fluctuate in value. | ||||||||
The Fund does not exchange collateral on its forward currency contracts with its counterparties; however, the Fund may segregate cash or high-grade securities in an amount at all times equal to or greater than the Fund’s commitment with respect to these contracts. Such segregated assets, if with the Fund’s custodian, are denoted on the accompanying Schedule of Investments and are evaluated daily to ensure their market value equals or exceeds the current market value of the Fund’s corresponding forward currency contracts.
Real Estate Investing
The Fund may invest in equity and debt securities of real estate-related companies. Such companies may include those in the real estate industry or real estate-related industries. These securities may include common stocks, corporate bonds, preferred stocks, and other equity securities, including, but not limited to, mortgage-backed securities, real estate-backed securities, securities of REITs and similar REIT-like entities. A REIT is a trust that invests in real estate-related projects, such as properties, mortgage loans, and construction loans. REITs are generally categorized as equity, mortgage, or hybrid REITs. A REIT may be listed on an exchange or traded OTC.
Sovereign Debt
The Fund may invest in U.S. and foreign government debt securities (“sovereign debt”). Investments in U.S. sovereign debt are considered low risk. However, investments in non-U.S. sovereign debt can involve a high degree of risk, including the risk that the governmental entity that controls the repayment of sovereign debt may not be willing or able to repay the principal and/or to pay the interest on its sovereign debt in a timely manner. A sovereign debtor’s willingness or ability to satisfy its debt obligation may be affected by various factors, including its cash flow situation, the extent of its foreign currency reserves, the availability of foreign exchange when a payment is due, the relative size of its debt position in relation to its economy as a whole, the sovereign debtor’s policy toward international lenders, and local political constraints to which the governmental entity may be subject. Sovereign debtors may also be dependent on expected disbursements from foreign governments, multilateral agencies, and other entities. The failure of a sovereign debtor to implement economic reforms, achieve specified levels of economic performance, or repay principal or interest when due may result in the cancellation of third party commitments to lend funds to the sovereign debtor, which may further impair such debtor’s ability or willingness to timely service its debts. The Fund may be requested to participate in
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Notes to Financial Statements
the rescheduling of such sovereign debt and to extend further loans to governmental entities, which may adversely affect the Fund’s holdings. In the event of default, there may be limited or no legal remedies for collecting sovereign debt and there may be no bankruptcy proceedings through which the Fund may collect all or part of the sovereign debt that a governmental entity has not repaid.
4. Investment Advisory Agreements and Other Transactions with Affiliates
The Fund pays Janus Capital an investment advisory fee which is calculated daily and paid monthly. The following table reflects the Fund’s contractual investment advisory fee rate (expressed as an annual rate).
Average Daily Net Assets of the Fund | Contractual Investment Advisory Fee (%) |
First $2 Billion | 0.75 |
Next $2 Billion | 0.72 |
Over $4 Billion | 0.70 |
Janus Capital has contractually agreed to waive the advisory fee payable by the Fund or reimburse expenses in an amount equal to the amount, if any, that the Fund’s normal operating expenses, including the investment advisory fee, but excluding the 12b-1 distribution and shareholder servicing fees (applicable to Class A Shares, Class C Shares, and Class S Shares), transfer agent fees and expenses payable pursuant to the Transfer Agency Agreement, brokerage commissions, interest, dividends, taxes, acquired fund fees and expenses, and extraordinary expenses, exceed the annual rate of 0.82% of the Fund’s average daily net assets. In addition, Janus Capital shall additionally reimburse or waive acquired fund fees and expenses to the extent they exceed 0.10%. Janus Capital has agreed to continue the waivers until at least November 1, 2017. If applicable, amounts reimbursed to the Fund by Janus Capital are disclosed as “Excess Expense Reimbursement” on the Statement of Operations.
For a period of three years subsequent to the Fund’s commencement of operations, or until the Fund’s assets exceed the first breakpoint in the investment advisory fee schedule, whichever occurs first, Janus Capital may recover from the Fund fees and expenses previously waived or reimbursed, if the Fund’s expense ratio, including recovered expenses, falls below the expense limit. If applicable, this amount is disclosed as “Recoupment expense” on the Statement of Operations. During the year ended June 30, 2017, Janus Capital reimbursed the Fund $254,261 of fees and expenses that are eligible for recoupment. As of June 30, 2017, the aggregate amount of recoupment that may potentially be made to Janus Capital is $644,332. The recoupment of such reimbursements expires June 23, 2018.
Janus Services LLC (“Janus Services”), a wholly-owned subsidiary of Janus Capital, is the Fund’s transfer agent. In addition, Janus Services provides or arranges for the provision of certain other administrative services including, but not limited to, recordkeeping, accounting, order processing, and other shareholder services for the Fund. Janus Services is not compensated for its services related to the shares, except for out-of-pocket costs. These amounts are disclosed as “Other transfer agent fees and expenses” on the Statement of Operations.
Certain, but not all, intermediaries may charge administrative fees (such as networking and omnibus) to investors in Class A Shares, Class C Shares, and Class I Shares for administrative services provided on behalf of such investors. These administrative fees are paid by the Class A Shares, Class C Shares, and Class I Shares of the Fund to Janus Services, which uses such fees to reimburse intermediaries. Consistent with the Transfer Agency Agreement between Janus Services and the Fund, Janus Services may negotiate the level, structure, and/or terms of the administrative fees with intermediaries requiring such fees on behalf of the Fund. Janus Capital and its affiliates benefit from an increase in assets that may result from such relationships. The Funds’ Trustees have set limits on fees that the Funds may incur with respect to administrative fees paid for omnibus or networked accounts. Such limits are subject to change by the Trustees in the future. These amounts are disclosed as “Transfer agent networking and omnibus fees” on the Statement of Operations.
The Fund’s Class D Shares pay an administrative services fee at an annual rate of 0.12% of the average daily net assets of Class D Shares for shareholder services provided by Janus Services. Janus Services provides or arranges for the provision of shareholder services including, but not limited to, recordkeeping, accounting, answering inquiries regarding accounts, transaction processing, transaction confirmations, and the mailing of prospectuses and shareholder reports. These amounts are disclosed as “Transfer agent administrative fees and expenses” on the Statement of Operations.
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Janus Henderson Adaptive Global Allocation Fund
Notes to Financial Statements
Janus Services receives an administrative services fee at an annual rate of up to 0.25% of the average daily net assets of the Fund’s Class S Shares and Class T Shares for providing or procuring administrative services to investors in Class S Shares and Class T Shares of the Fund. Janus Services expects to use all or a significant portion of this fee to compensate retirement plan service providers, broker-dealers, bank trust departments, financial advisors, and other financial intermediaries for providing these services. Janus Services or its affiliates may also pay fees for services provided by intermediaries to the extent the fees charged by intermediaries exceed the 0.25% of net assets charged to Class S Shares and Class T Shares of the Fund. Janus Services may keep certain amounts retained for reimbursement of out-of-pocket costs incurred for servicing clients of Class S Shares and Class T Shares. These amounts are disclosed as “Transfer agent administrative fees and expenses” on the Statement of Operations.
Services provided by these financial intermediaries may include, but are not limited to, recordkeeping, subaccounting, order processing, providing order confirmations, periodic statements, forwarding prospectuses, shareholder reports, and other materials to existing customers, answering inquiries regarding accounts, and other administrative services. Order processing includes the submission of transactions through the National Securities Clearing Corporation (“NSCC”) or similar systems, or those processed on a manual basis with Janus Capital.
Janus Services is compensated for its services related to the Fund’s Class D Shares. In addition to the administrative fees discussed above, Janus Services receives reimbursement for out-of-pocket costs it incurs for serving as transfer agent and providing, or arranging for, servicing to shareholders. These amounts are disclosed as “Other transfer agent fees and expenses” on the Statement of Operations.
Under a distribution and shareholder servicing plan (the “Plan”) adopted in accordance with Rule 12b-1 under the 1940 Act, the Fund pays the Trust’s distributor, Janus Distributors LLC (“Janus Distributors”), a wholly-owned subsidiary of Janus Capital, a fee for the sale and distribution and/or shareholder servicing of the Shares at an annual rate of up to 0.25% of the Class A Shares’ average daily net assets, of up to 1.00% of the Class C Shares’ average daily net assets, and of up to 0.25% of the Class S Shares’ average daily net assets. Under the terms of the Plan, the Trust is authorized to make payments to Janus Distributors for remittance to retirement plan service providers, broker-dealers, bank trust departments, financial advisors, and other financial intermediaries, as compensation for distribution and/or shareholder services performed by such entities for their customers who are investors in the Fund. These amounts are disclosed as “12b-1 Distribution and shareholder servicing fees” on the Statement of Operations. Payments under the Plan are not tied exclusively to actual 12b-1 distribution and shareholder service expenses, and the payments may exceed 12b-1 distribution and shareholder service expenses actually incurred. If any of the Fund’s actual 12b-1 distribution and shareholder service expenses incurred during a calendar year are less than the payments made during a calendar year, the Fund will be refunded the difference. Refunds, if any, are included in “12b-1 Distribution and shareholder servicing fees” in the Statement of Operations.
Janus Capital furnishes certain administration, compliance, and accounting services for the Fund and is reimbursed by the Fund for certain of its costs in providing those services (to the extent Janus Capital seeks reimbursement and such costs are not otherwise waived). In addition, employees of Janus Capital and/or its affiliates may serve as officers of the Trust. The Fund also pays for some or all of salaries, fees, and expenses of certain Janus Capital employees and Fund officers, with respect to certain specified administration functions they perform on behalf of the Fund. The Fund pays these costs based on out-of-pocket expenses incurred by Janus Capital, and these costs are separate and apart from advisory fees and other expenses paid in connection with the investment advisory services Janus Capital provides to the Fund. These amounts are disclosed as “Fund administration fees” on the Statement of Operations. Some expenses related to compensation payable to the Fund's Chief Compliance Officer and compliance staff are shared with the Fund. Total compensation of $263,736 was paid to the Chief Compliance Officer and certain compliance staff by the Trust during the year ended June 30, 2017. The Fund's portion is reported as part of “Other expenses” on the Statement of Operations.
The Board of Trustees has adopted a deferred compensation plan (the “Deferred Plan”) for independent Trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. All deferred fees are credited to an account established in the name of the Trustees. The amounts credited to the account then increase or decrease, as the case may be, in accordance with the performance of one or more of the Janus Henderson funds that are selected by the Trustees. The account balance continues to fluctuate in accordance with the performance of the selected fund or funds until final payment of all amounts are credited to the account. The fluctuation of the account balance is recorded by the Fund as unrealized appreciation/(depreciation) and is included as of June 30, 2017 on the Statement of Assets and Liabilities in the asset, “Non-interested Trustees’ deferred compensation,” and
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Janus Henderson Adaptive Global Allocation Fund
Notes to Financial Statements
liability, “Non-interested Trustees’ deferred compensation fees.” Additionally, the recorded unrealized appreciation/(depreciation) is included in “Unrealized net appreciation/(depreciation) of investments, foreign currency translations and non-interested Trustees’ deferred compensation” on the Statement of Assets and Liabilities. Deferred compensation expenses for the year ended June 30, 2017 are included in “Non-interested Trustees’ fees and expenses” on the Statement of Operations. Trustees are allowed to change their designation of mutual funds from time to time. Amounts will be deferred until distributed in accordance with the Deferred Plan. Deferred fees of $387,825 were paid by the Trust to the Trustees under the Deferred Plan during the year ended June 30, 2017.
Pursuant to the provisions of the 1940 Act and related rules, the Fund may participate in an affiliated or nonaffiliated cash sweep program. In the cash sweep program, uninvested cash balances of the Fund may be used to purchase shares of affiliated or nonaffiliated money market funds or cash management pooled investment vehicles. The Fund is eligible to participate in the cash sweep program (the “Investing Funds”). As adviser, Janus Capital has an inherent conflict of interest because of its fiduciary duties to the affiliated money market funds or cash management pooled investment vehicles and the Investing Funds. Janus Cash Liquidity Fund LLC is an affiliated unregistered cash management pooled investment vehicle that invests primarily in highly-rated short-term fixed-income securities. Janus Cash Liquidity Fund LLC currently maintains a NAV of $1.00 per share and distributes income daily in a manner consistent with a registered product compliant with Rule 2a-7 under the 1940 Act. There are no restrictions on the Fund's ability to withdraw investments from Janus Cash Liquidity Fund LLC at will, and there are no unfunded capital commitments due from the Fund to Janus Cash Liquidity Fund LLC. The units of Janus Cash Liquidity Fund LLC are not charged any management fee, sales charge or service fee.
Any purchases and sales, realized gains/losses and recorded dividends from affiliated investments during the year ended June 30, 2017 can be found in a table located in the Notes to Schedule of Investments and Other Information.
Class A Shares include a 5.75% upfront sales charge of the offering price of the Fund. The sales charge is allocated between Janus Distributors and financial intermediaries. During the year ended June 30, 2017, Janus Distributors retained upfront sales charges of $28.
A contingent deferred sales charge (“CDSC”) of 1.00% will be deducted with respect to Class A Shares purchased without a sales load and redeemed within 12 months of purchase, unless waived. Any applicable CDSC will be 1.00% of the lesser of the original purchase price or the value of the redemption of the Class A Shares redeemed. There were no CDSCs paid by redeeming shareholders of Class A Shares to Janus Distributors during the year ended June 30, 2017.
A CDSC of 1.00% will be deducted with respect to Class C Shares redeemed within 12 months of purchase, unless waived. Any applicable CDSC will be 1.00% of the lesser of the original purchase price or the value of the redemption of the Class C Shares redeemed. During the year ended June 30, 2017, redeeming shareholders of Class C Shares paid CDSCs of $200.
As of June 30, 2017, shares of the Fund were owned by Janus Capital and/or other funds advised by Janus Capital, as indicated in the table below:
Class | % of Class Owned |
| % of Fund Owned |
| |
Class A Shares | 72 | % | 1 | % | |
Class C Shares | 95 | 2 | |||
Class D Shares | 75 | 2 | |||
Class I Shares | 26 | 2 | |||
Class N Shares | 99 | 80 | |||
Class S Shares | 99 | 2 | |||
Class T Shares | 53 | 2 | |||
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Notes to Financial Statements
In addition, other shareholders, including other funds, individuals, accounts, as well as the Fund’s portfolio manager(s) and/or investment personnel, may from time to time own (beneficially or of record) a significant percentage of the Fund’s Shares and can be considered to “control” the Fund when that ownership exceeds 25% of the Fund’s assets (and which may differ from control as determined in accordance with accounting principles generally accepted in the United States of America).
5. Federal Income Tax
The tax components of capital shown in the table below represent: (1) distribution requirements the Fund must satisfy under the income tax regulations; (2) losses or deductions the Fund 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.
Other book to tax differences primarily consist of deferred compensation, derivatives, and foreign currency contract adjustments. The Fund has elected to treat gains and losses on forward foreign currency contracts as capital gains and losses, if applicable. 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.
Loss Deferrals | Other Book | Net Tax | |||||
Undistributed | Undistributed | Accumulated | Late-Year | Post-October | to Tax | Appreciation/ | |
$ 1,883,638 | $ 327,957 | $ - | $ - | $ - | $ (3,122) | $ 2,024,299 | |
During the year ended June 30, 2017, capital loss carryovers of $1,857,018 were utilized by the Fund.
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, 2017 are noted below.
Unrealized appreciation and unrealized depreciation in the table below exclude appreciation/depreciation on foreign currency translations. The primary differences between book and tax appreciation or depreciation of investments are wash sale loss deferrals, investments in partnerships and investments in passive foreign investment companies.
Federal Tax Cost | Unrealized | Unrealized | Net Tax Appreciation/ |
$ 59,509,257 | $ 2,441,245 | $ (416,946) | $ 2,024,299 |
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, passive foreign investment companies, 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 capital.
For the year ended June 30, 2017 | ||||
Distributions | ||||
From Ordinary Income | From Long-Term Capital Gains | Tax Return of Capital | Net Investment Loss | |
$ 598,750 | $ - | $ - | $ - | |
For the year ended June 30, 2016 | ||||
Distributions | ||||
From Ordinary Income | From Long-Term Capital Gains | Tax Return of Capital | Net Investment Loss | |
$ 167,446 | $ - | $ - | $ - | |
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Notes to Financial Statements
Permanent book to tax basis differences may result in reclassifications between the components of net assets. These differences have no impact on the results of operations or net assets. The following reclassifications have been made to the Fund:
Increase/(Decrease) to Capital | Increase/(Decrease) to Undistributed | Increase/(Decrease) to Undistributed | |||
$ 112,832 | $ 72,828 | $ (185,660) | |||
| |||||
Capital has been adjusted by $112,832, including $50,520 of long-term capital gain, for distributions in connection with Fund share redemptions (tax equalization).
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Notes to Financial Statements
6. Capital Share Transactions
Year ended June 30, 2017 | Year ended June 30, 2016 | |||||
Shares | Amount | Shares | Amount | |||
Class A Shares: | ||||||
Shares sold | 10,099 | $ 106,444 | 18,238 | $ 172,540 | ||
Reinvested dividends and distributions | 540 | 5,289 | 151 | 1,400 | ||
Shares repurchased | (350) | (3,689) | (8,195) | (75,941) | ||
Net Increase/(Decrease) | 10,289 | $ 108,044 |
| 10,194 | $ 97,999 | |
Class C Shares: | ||||||
Shares sold | 7,963 | $ 80,428 | 4,711,698 | $45,882,942 | ||
Reinvested dividends and distributions | 189 | 1,847 | 65 | 605 | ||
Shares repurchased | (2,086) | (20,480) | (4,603,475) | (44,882,135) | ||
Net Increase/(Decrease) | 6,066 | $ 61,795 |
| 108,288 | $ 1,001,412 | |
Class D Shares: | ||||||
Shares sold | 38,178 | $ 379,076 | 168,896 | $ 1,561,124 | ||
Reinvested dividends and distributions | 1,369 | 13,386 | 301 | 2,789 | ||
Shares repurchased | (21,398) | (212,800) | (44,318) | (403,738) | ||
Net Increase/(Decrease) | 18,149 | $ 179,662 |
| 124,879 | $ 1,160,175 | |
Class I Shares: | ||||||
Shares sold | 342,781 | $ 3,504,650 | 109,221 | $ 1,011,505 | ||
Reinvested dividends and distributions | 1,308 | 12,820 | 357 | 3,319 | ||
Shares repurchased | (23,808) | (249,982) | - | - | ||
Net Increase/(Decrease) | 320,281 | $ 3,267,488 |
| 109,578 | $ 1,014,824 | |
Class N Shares: | ||||||
Shares sold | 82,790 | $ 825,703 | 133,982 | $ 1,236,460 | ||
Reinvested dividends and distributions | 55,607 | 544,951 | 16,659 | 154,765 | ||
Shares repurchased | (610,500) | (6,036,670) | (597,912) | (5,604,440) | ||
Net Increase/(Decrease) | (472,103) | $(4,666,016) |
| (447,271) | $ (4,213,215) | |
Class S Shares: | ||||||
Shares sold | - | $ - | 108,946 | $ 1,007,904 | ||
Reinvested dividends and distributions | 875 | 8,556 | 205 | 1,906 | ||
Shares repurchased | (6) | (49) | (198) | (1,876) | ||
Net Increase/(Decrease) | 869 | $ 8,507 |
| 108,953 | $ 1,007,934 | |
Class T Shares: | ||||||
Shares sold | 103,305 | $ 1,088,835 | 114,701 | $ 1,062,650 | ||
Reinvested dividends and distributions | 1,215 | 11,892 | 285 | 2,641 | ||
Shares repurchased | (1,559) | (15,382) | (5,707) | (54,082) | ||
Net Increase/(Decrease) | 102,961 | $ 1,085,345 |
| 109,279 | $ 1,011,209 | |
7. Purchases and Sales of Investment Securities
For the year ended June 30, 2017, the aggregate cost of purchases and proceeds from sales of investment securities (excluding any short-term securities, short-term options contracts, and in-kind transactions) was as follows:
Purchases of | Proceeds from Sales | Purchases of Long- | Proceeds from Sales |
$155,945,610 | $ 132,052,634 | $ - | $ - |
8. Recent Accounting Pronouncements
The Securities and Exchange Commission ("SEC") adopted new rules as well as amendments to its rules to modernize the reporting and disclosure of information by registered investment companies. In addition, the SEC adopted amendments to Regulation S-X, which require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The compliance date of the amendments to Regulation S-
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Notes to Financial Statements
X is August 1, 2017. Management believes that many of the Regulation S-X amendments are consistent with the Fund’s current financial statement presentation and will not have a significant impact on the Fund.
The FASB issued Accounting Standards Update No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities ("ASU 2017-08") to amend the amortization period for certain purchased callable debt securities held at a premium. The guidance requires certain premiums on callable debt securities to be amortized to the earliest call date. The amortization period for callable debt securities purchased at a discount will not be impacted. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. Management is currently evaluating the impacts of ASU 2017-08 on the financial statements.
9. Merger Related Matters
On October 3, 2016, Janus Capital Group Inc. (“JCGI”), the direct parent of Janus Capital, and Henderson Group plc (“Henderson”) announced that they had entered into an Agreement and Plan of Merger (the “Merger Agreement”) relating to the strategic combination of Henderson and JCGI (the “Merger”). Pursuant to the Merger Agreement, a newly formed, direct wholly-owned subsidiary of Henderson merged with and into JCGI, with JCGI as the surviving corporation and a direct wholly-owned subsidiary of Henderson.
The consummation of the Merger may have been deemed to cause an “assignment” (as defined in the 1940 Act) of the investment advisory agreement between the Fund and Janus Capital in effect on the date of the Merger. As a result, the consummation of the Merger may have caused the investment advisory agreement to terminate automatically in accordance with its terms.
On December 8, 2016, the Trustees approved, subject to shareholder approval, a new investment advisory agreement between the Fund and Janus Capital in order to permit Janus Capital to continue providing advisory services to the Fund following the closing of the Merger (the “Post-Merger Advisory Agreement”). At the same meeting, the Trustees approved submitting the Post-Merger Advisory Agreement, among other proposals, to Fund shareholders for approval.
Special meeting(s) of shareholders were held on April 6, 2017, and adjourned and reconvened on April 18, 2017, April 25, 2017, April 28, 2017, and May 17, 2017 (together, the “Meeting”).
Approval of Advisory Agreement
At the Meeting, shareholders of the Fund approved the Post-Merger Advisory Agreement which took effect upon consummation of the Merger.
Election of Trustee
At the Meeting, shareholders of each series of the Trust, including the Fund, voting together as a single class, approved the election of Diane L. Wallace to the Trust’s Board of Trustees. Ms. Wallace served as a trustee of certain mutual funds advised by Henderson Global Investors (North America) Inc., a subsidiary of Henderson. Ms. Wallace joined the Trust’s Board of Trustees following consummation of the Merger.
10. Subsequent Event
Management has evaluated whether any events or transactions occurred subsequent to June 30, 2017 and through the date of issuance of the Fund’s financial statements and determined that there were no material events or transactions that would require recognition or disclosure in the Fund’s financial statements.
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Janus Henderson Adaptive Global Allocation Fund
Notes to Financial Statements
To the Board of Trustees of Janus Investment Fund and Shareholders of
Janus Henderson Adaptive Global Allocation Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule 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 Henderson Adaptive Global Allocation Fund (one of the funds constituting Janus Investment Fund, hereafter referred to as the “Fund”) as of June 30, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the two years in the period then ended and the period from June 23, 2015 (inception date) through June 30, 2015, 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 Fund’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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 as of June 30, 2017 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
Denver, Colorado
August 15, 2017
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Report of Independent Registered Public Accounting Firm
Proxy Voting Policies and Voting Record
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to its portfolio securities is available without charge: (i) upon request, by calling 1-877-335-2687 (toll free) (or 1-800-525-3713 if you hold Class D shares); (ii) on the Fund’s website at janushenderson.com/proxyvoting; and (iii) on the SEC’s website at http://www.sec.gov. Additionally, information regarding the Fund’s proxy voting record for the most recent twelve-month period ended June 30 is also available, free of charge, through janushenderson.com/proxyvoting and from the SEC’s website at http://www.sec.gov.
Quarterly Portfolio Holdings
The Fund files its complete portfolio holdings (schedule of investments) with the SEC for the first and third quarters of each fiscal year on Form N-Q within 60 days of the end of such fiscal quarter. The Fund’s Form N-Q: (i) is available on the SEC’s website at http://www.sec.gov; (ii) may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. (information on the Public Reference Room may be obtained by calling 1-800-SEC-0330); and (iii) is available without charge, upon request, by calling Janus Henderson at 1-877-335-2687 (toll free) (or 1-800-525-3713 if you hold Class D shares).
APPROVAL OF ADVISORY AGREEMENTS DURING THE PERIOD
What follows is a discussion of the material factors and conclusions with respect thereto that formed the basis for the Trustees of Janus Investment Fund’s approval of the investment advisory agreements for the Funds and the sub-advisory agreements for the Funds, as applicable, during the period. This discussion references a Transaction (as defined below) to combine the respective businesses of Henderson Group plc and Janus Capital Group, Inc., which resulted in the Trustees’ consideration of new investment advisory agreements for the Funds and sub-advisory agreements for the Funds, as applicable. During the period, the Trustees also approved the renewal of the existing investment advisory agreements for the Funds and the sub-advisory agreements for the Funds, as applicable, which were subsequently replaced by the new investment advisory and sub-advisory agreements at the close of the Transaction on May 30, 2017. In connection with the Transaction and certain Fund mergers, certain Funds were liquidated during the period. Such liquidated Funds do not have annual or semi-annual reporting obligations, and accordingly are not discussed below.
Approval of Advisory and Sub-Advisory Agreements with Janus and Janus Affiliates during the Period
On September 15, 2016, Janus Capital Group Inc. (“Janus”) advised the Trustees of Janus Investment Fund (the “Trust”), each of whom serves as an “independent” Trustee (the “Board” or the “Trustees”), of its intent to seek a strategic combination of its advisory business with Henderson Group plc (“Henderson”). The Board met with the
Chief Executive Officer of Janus, who outlined the proposed combination and the potential benefits to Janus Capital Management LLC (“Janus Capital”) and each Fund of the Trust (each, a “Fund” and collectively, the “Funds”).
Subsequent to the September 15, 2016 meeting, the Trustees identified a list of basic principles, which they believed should serve as the foundation for their review of the organizational, operational and strategic issues involved with any potential change in control of Janus Capital, the investment adviser to the Funds. These basic principles were communicated to Janus Capital on September 27, 2016, and were intended to be shared with Henderson. On October 3, 2016, Janus announced that it had entered into a definitive Agreement and Plan of Merger with Henderson pursuant to which Janus and Henderson agreed to effect an all-stock merger of equals strategic combination of their respective businesses, with Janus Capital surviving the merger as a direct wholly-owned subsidiary of Henderson (the “Transaction”). The Board was advised that, subject to certain conditions, the Transaction is currently expected to close during the second quarter of 2017.
As part of its due diligence, the Board developed an initial list of questions related to the proposed transaction, which was provided to Janus Capital on October 6, 2016. At a special Board meeting held on October 19, 2016, the Board considered Janus Capital’s response to the initial information request and met with the management of Janus to discuss the impact of the Transaction on the nature, extent and quality of services Janus Capital is expected to provide to the Janus Funds following the Transaction, addressing, among other matters, the personnel expected to provide such services, and the resources available to do so. After its October 19, 2016 meeting, the Board developed a supplemental request for additional information, which was provided to Janus Capital on October 26, 2016. At another special Board
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Additional Information (unaudited)
meeting held on November 7-8, 2016, the Board considered Janus Capital’s response to the supplemental information request and again met with the management of Janus and Henderson to discuss the impact of the Transaction on the nature, extent and quality of services Janus Capital is expected to provide to the Janus Funds following the Transaction, and also met with various officers of the Funds and of Janus Capital, including various Fund portfolio managers. After its November 7-8, 2016 meeting, the Board developed a second supplemental request for additional information, which was provided to Janus Capital on November 21, 2016. On December 7-8, 2016, the Board met to consider Janus Capital’s response to the second supplemental information request and to also consider the proposed new investment advisory agreements between the Trust, on behalf of each Fund, and Janus Capital (each, a “New Advisory Agreement” and collectively, the “New Advisory Agreements”) and the new sub-advisory agreements between Janus Capital and each of the Funds that utilize INTECH Investment Management LLC (“INTECH”), Perkins Investment Management LLC (“Perkins”), or Janus Singapore Pte. Limited (“Janus Singapore,” and together with INTECH and Perkins, the “Sub-Advisers” and each, a “Sub-Adviser”) as sub- advisers (each, a “New Sub-Advisory Agreement” and collectively, the “New Sub-Advisory Agreements”) to take effect immediately after the Transaction or shareholder approval, whichever is later. During each of these meetings, the Board sought additional and clarifying information as it deemed necessary or appropriate. In addition, the Board engaged its independent fee consultant to help evaluate certain of the proposals that the Board was being asked to consider. Throughout the process, the Board had the assistance of its independent legal counsel, who advised them on, among other things, its duties and obligations.
In connection with the Board’s review, Janus Capital provided, and the Board obtained, substantial information regarding the following matters: the management, financial position and business of Henderson; the history of Henderson’s business and operations; the investment performance of the investment companies advised by Henderson; the proposed structure, operations and investment processes of the combined investment management organization after the Transaction and the strategy for operating and growing the business following the Transaction; the future plans of Janus and Henderson with respect to the Funds and any proposed changes to the operations or structure of the Funds; and the future plans of Janus and Henderson with respect to the provision of services to the Funds, and the entities providing such services, including those affiliated with Janus. The Board also received information regarding the terms of the Transaction, anticipated management of the combined organization, the resources that each of Janus and Henderson bring to the combined organization and the process being followed by Janus and Henderson to integrate their organizations. The Board also received information regarding the impact of the Transaction on each of INTECH, Perkins and Janus Singapore.
In connection with the Board’s approval of New Advisory Agreements and New Sub-Advisory Agreements at its December 8, 2016 meeting, the Board also continued its on-going annual process to determine whether to continue the existing investment advisory agreements between Janus Capital and the Trust on behalf of each Fund (each, a “Current Advisory Agreement” and collectively, the “Current Advisory Agreements”) and the existing sub-advisory agreements between Janus Capital and each of the Funds that utilize INTECH, Perkins, or Janus Singapore as sub- advisers (each, a “Current Sub-Advisory Agreement” and collectively, the “Current Sub-Advisory Agreements”). In this regard, the Board received and reviewed information provided by Janus and the respective Sub-Advisers in response to requests of the Board and its independent legal counsel. The Board also received and reviewed information and analysis provided by, and in response to requests of, its independent fee consultant. The Board noted that as part of this annual process, the Board had considered and was in the process of considering, numerous factors, including the nature and quality of services provided by Janus Capital and each Sub-Adviser, as applicable; investment performance, on an absolute basis and relative to appropriate peer groups and one or a combination of market indices; investment management fees, expense ratios and asset sizes of the Funds and peer groups; investment management fees charged to comparable investment companies, separate accounts and non-fund clients; Janus Capital’s profitability from managing the Funds; fall-out benefits to Janus Capital from its relationship to the Funds, including revenues derived from services provided to the Funds by affiliates of Janus Capital; and the potential benefits to Janus Capital, the Funds of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms.
In determining whether to approve the New Advisory Agreement for each Fund and the New Sub-Advisory Agreement for Funds managed by INTECH, Perkins or Janus Singapore in connection with the Transaction, and whether to recommend approval to Fund shareholders, the Board received information and made inquiries into all matters as it
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Additional Information (unaudited)
deemed appropriate. The Board reviewed and analyzed various factors it deemed relevant, including the following factors, among others, none of which by itself was considered dispositive:
· The terms of the New Advisory Agreements are substantially similar to the corresponding Current Advisory Agreements, and the contractual fee rate will not change. In this regard, see the discussion of the Board’s considerations with respect to its most recent approval of the Current Advisory Agreements prior to December 8, 2016, as disclosed in each Fund’s most recent prior annual or semi-annual shareholder report, as applicable.
· The terms of the New Sub-Advisory Agreements are substantially similar to the corresponding Current Sub- Advisory Agreements, and the contractual fee rate will not change. In this regard, see the discussion of the Board’s considerations with respect to its most recent approval of the Current Sub-Advisory Agreements prior to December 8, 2016, as disclosed in each Fund’s most recent prior annual or semi-annual shareholder report, as applicable.
· Janus Capital’s plans for the operation of the Funds, including its plans for the continued provision of all services currently provided to the Funds by Janus Capital and its affiliates, including, among others, investment advisory services, portfolio trading services, and Fund administrative and accounting services, and the personnel and resources proposed to support the provision of such services.
· The estimated profitability to Janus Capital from managing the Funds after the Transaction, including potential economies of scale and fall-out benefits to Janus Capital from its relationship to the Funds, including revenues derived from services provided to the Funds by affiliates of Janus Capital, and the potential benefits to Janus Capital, and the Funds of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms.
In connection with its deliberations, the Board received assurances from Janus, on behalf of itself and its affiliates (collectively, “Janus”) including the following:
· Janus has provided to the Board such information as it believes is reasonably necessary to evaluate the New Advisory Agreements and New Sub-Advisory Agreements.
· Janus is committed to the continuance, without interruption, of services to the Funds of at least the type and quality currently provided by Janus Capital and its affiliates, or superior thereto.
· The Transaction is not expected to affect negatively the nature, extent or quality of the investment advisory services provided by Janus Capital to the Funds following the Transaction, and the investment advisory services are expected to be at least comparable to the services being provided under the Current Advisory Agreements and Current Sub-Advisory Agreements. In this regard, the Board noted specific representations that Janus does not intend for the nature, extent or quality of investment advisory and other services to be provided to the Funds following the Transaction to change, and the extent of such services were expected to increase based on the combined resources of the combined investment management organization after the Transaction, and should the nature, extent or quality of such services decline, Janus would commit the resources needed to return such services to pre-Transaction levels.
· The Funds’ current operations were expected to remain largely unchanged, except for certain fund reorganizations which will be separately considered by the Board, and such other changes as were or will be presented to the Board.
· Janus does not intend to make changes to the portfolio managers providing services to the Funds, other than proposed changes in the management of certain Funds as discussed with the Board, including those related to proposals to merge certain Funds with Funds managed by Henderson Global Investors (North America) Inc., an indirect, wholly-owned subsidiary of Henderson, and subject to such changes as may arise at any time as a result of the ongoing process of portfolio manager evaluation.
· After the Transaction, the extent of distribution and marketing services provided to the Janus Funds were expected to increase based on the combined resources of Janus and Henderson. In this regard, Janus Capital advised the Board that after the Transaction, the extent of distribution and marketing services provided to the Janus Funds are expected to increase based on the combined resources of Janus and Henderson. This is due primarily to the anticipated increase of sales related resources and expanded global presence of the combined
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Additional Information (unaudited)
Janus Henderson organization, which is expected to enhance visibility and brand recognition of the Janus Henderson Funds.
· The intent of Janus Capital to take the necessary and appropriate steps to retain and attract its key investment advisory personnel.
· The intent of Janus to take the necessary and appropriate steps to retain and attract its key compliance, financial, fund accounting and administrative personnel supporting the management and oversight of the Funds.
· Janus is not aware of any express or implied term, condition, arrangement or understanding that would impose in its best judgement an “unfair burden” on any Fund as a result of the Transaction, as defined in Section 15(f) of the 1940 Act, and that Janus will take no action that would have the effect of imposing such an “unfair burden” on any Fund in connection with the Transaction.
Janus assured the Board that it intended to comply with Section 15(f) of the Investment Company Act of 1940, as amended (the “1940 Act”). Section 15(f) provides a non-exclusive safe harbor for an investment adviser to an investment company or any of its affiliated persons to receive any amount or benefit in connection with a change in control of the investment adviser so long as two conditions are met. First, for a period of three years after the transaction, at least 75% of the board members of the investment company must not be interested persons of such investment adviser (as defined under the 1940 Act). The composition of the Board is in compliance with this provision of Section 15(f). In addition, after careful review and consideration, the Board determined that it would be in the best interests of the Funds to add to the Board an individual who currently acts as a non-interested board member of the Henderson Trust. The Board believes that this change in the Board composition will provide perspective and insight relating to experience working with the Henderson organization. The Board’s Nominating and Governance Committee considered a number of candidates and recommended that the Board nominate one proposed new trustee from those candidates who currently act as non-interested board members of the Henderson Trust. The Board approved that trustee nominee to serve on the Board, subject to election by the shareholders of the Funds and contingent on the closing of the Transaction. If the new trustee is elected and serves on the Board, the Board composition would continue to satisfy the provisions of Section 15(f).
To meet the second condition of Section 15(f), an “unfair burden” must not be imposed upon the investment company as a result of such transaction or any express or implied terms, conditions or understandings applicable thereto. The term “unfair burden” is defined in Section 15(f) to include any arrangement during the two-year period after the transaction, whereby the investment adviser, or any interested person of such adviser, receives or is entitled to receive any compensation, directly or indirectly, from the investment company or its shareholders (other than fees for bona fide investment advisory or other services) or from any person in connection with the purchase or sale of securities or other property to, from or on behalf of the investment company (other than bona fide ordinary compensation as principal underwriter for such investment company).
Janus represented that it does not believe that an “unfair burden” will be placed on the Funds as a result of the Transaction. In furtherance thereof, Janus has undertaken to pay the costs of preparing and distributing proxy materials to, and of holding the meetings of, the Funds’ shareholders (the “Meetings”), as well as other fees and expenses in connection with the Transaction, including the reasonable fees and expenses of legal counsel and consultants to the Funds and the Trustees. In addition, Janus has agreed, for a period of two years following the closing of the Transaction, (i) not to request any increases to advisory fees for the Funds, other than those proposed to and approved by the Board prior to the close of the Transaction, and (ii) to continue to use the current process by which expense caps are set annually for the Funds.
As a result of its review and consideration of the New Investment Advisory Agreements and New Sub-Advisory Agreements in connection with the Transaction, at a meeting on December 8, 2016, the Board voted unanimously to approve a New Investment Advisory Agreement for each Fund and a New Sub-Advisory Agreement for each Fund managed by INTECH, Perkins or Janus Singapore, and to recommend such agreements to the Funds’ shareholders for their approval.
Approval of Interim Advisory and Sub-Advisory Agreements with Janus and Janus Affiliates during the Period
In the event shareholders of a Fund do not approve such Fund’s New Advisory Agreement and/or New Sub- Advisory Agreement at the Meetings prior to the closing of the Transaction, Janus Capital proposed that an interim investment
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advisory agreement between Janus Capital and such Fund (each, an “Interim Advisory Agreement” and collectively, the “Interim Advisory Agreements”) and an interim sub-advisory agreement between Janus Capital and the applicable Sub-Adviser (each, an “Interim Sub-Advisory Agreement” and collectively, the “Interim Sub- Advisory Agreements”) take effect upon the closing of the Transaction. At the December 8, 2016 meeting, the Board, all of whom are Independent Trustees, unanimously approved an Interim Advisory Agreement for each Fund and an Interim Sub-Advisory Agreement for each applicable Fund in order to assure continuity of investment advisory services to the Funds and sub-advisory services to the sub-advised Funds after the Transaction. The terms of each Interim Advisory Agreement are substantially identical to those of the applicable Current Advisory Agreement and New Advisory Agreement, except for the term and escrow provisions described below. Similarly, the terms of each Interim Sub-Advisory Agreement are substantially identical to those of the Current Sub-Advisory Agreements and New Sub-Advisory Agreements, except for the term and escrow provisions described below. The Interim Advisory Agreement and Interim Sub-Advisory Agreement will continue in effect for a term ending on the earlier of 150 days from the closing of the Transaction (the “150-day period”) or when shareholders of the Fund approve the New Advisory Agreement and/or New Sub-Advisory Agreement. Pursuant to Rule 15a-4 under the 1940 Act, compensation earned by Janus Capital under an Interim Advisory Agreement and compensation earned by a Sub-Adviser under an Interim Sub-Advisory Agreement will be held in an interest- bearing escrow account. If shareholders of a Fund approve the New Advisory Agreement prior to the end of the 150-day period, the amount held in the escrow account under the Interim Advisory Agreement will be paid to Janus Capital. If shareholders of a Fund approve the New Advisory Agreement and New Sub-Advisory Agreement prior to the end of the 150-day period, the amount held in the escrow account under the Interim Sub-Advisory Agreement will be paid to the Sub-Adviser. If shareholders of a Fund do not approve the New Advisory Agreement prior to the end of the 150-day period, the Board will take such action as it deems to be in the best interests of the Fund, and Janus Capital will be paid the lesser of its costs incurred in performing its services under the Interim Advisory Agreement or the total amount in the escrow account, plus interest earned. If shareholders of a Fund do not approve the New Advisory Agreement and/or New Sub-Advisory Agreement prior to the end of the 150-day period, the Board will take such action as it deems to be in the best interests of the Fund, and the Sub-Adviser will be paid the lesser of its costs incurred in performing its services under the Interim Sub-Advisory Agreement or the total amount in the escrow account, plus interest earned.
Approval of Sub-Advisory Agreements with Henderson Investment Management Limited during the Period
Janus Capital met with the Trustees on November 7-8, 2016, and December 7-8, 2016, to discuss the approval of a new sub-advisory agreement between Janus Capital and Henderson Investment Management Limited (“HIML”) (each, a “HIML Sub-Advisory Agreement” and collectively, the “HIML Sub-Advisory Agreements”) on behalf of each of Janus Henderson Asia Equity Fund (formerly, Janus Asia Equity Fund), and Janus Henderson Global Real Estate Fund (formerly, Janus Global Real Estate Fund) (each, an “HIML Fund” and together, the “HIML Funds”) to take effect immediately after the closing of the Transaction or shareholder approval, whichever is later. At the meetings, the Trustees also discussed the HIML Sub-Advisory Agreements with their independent counsel in executive session. During the course of these meetings, the Trustees requested and considered such information as they deemed relevant to their deliberations. In addition, at prior meetings and during the course of these meetings the Board also undertook a comprehensive process to evaluate the impact of the Transaction on the nature, quality and extent of services expected to be provided by Janus Capital and HIML to each HIML Fund, including after the completion of the Transaction. For a fuller discussion of the Board’s consideration of the approval of a new investment advisory agreement for the HIML Funds in connection with the Transaction, see “Approval of Advisory and Sub-Advisory Agreements with Janus and its Affiliates During the Period” above.
At a meeting of the Board of Trustees held on December 8, 2016, the Trustees considered the HIML Sub-Advisory Agreements. In determining whether to approve the HIML Sub-Advisory Agreements, and whether to recommend approval to the shareholders of each HIML Fund, the Board received information and made inquiries into all matters as it deemed appropriate. The Board reviewed and analyzed various factors it deemed relevant, including the following factors, among others, none of which by itself was considered dispositive:
· the terms of each HIML Sub-Advisory Agreement;
· the nature, quality and extent of services expected to be provided under the HIML Sub-Advisory Agreements, including the reputation, qualifications and background of HIML and its operational and compliance infrastructures;
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· the investment approach, the experience and skills of senior management and investment personnel of HIML, including the portfolio managers who would be responsible for managing all or part of the portfolio of each HIML Fund, noting the resources made available to such personnel;
· the ability of HIML to attract and retain high-quality personnel and the organizational depth of HIML;
· the sub-advisory fee rate under each HIML Sub-Advisory Agreement, as well as the overall management fee structure of each HIML Fund, noting that the sub-advisory fee rate is consistent with the approach utilized in the Janus Funds complex for other sub-advisory relationships, taking into account the allocation of managed assets between Janus Capital and HIML for the Global Real Estate Fund;
· under each HIML Sub-Advisory Agreement, Janus Capital would be responsible for paying HIML out of its fees;
· the fall out benefits to HIML and its affiliates from its relationship with each HIML Fund, including the potential benefits to HIML and its affiliates and each HIML Fund of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms;
· the potential for economies of scale with respect to the overall fee structure of each HIML Fund and whether either Fund will benefit from any economies of scale; and
· the costs of seeking approval of the HIML Sub-Advisory Agreements will not be borne by the HIML Funds.
As a result of its review and consideration of each HIML Sub-Advisory Agreement and related matters, on December 8, 2016, the Board voted unanimously to approve each HIML Sub-Advisory Agreement and to recommend such agreement to each HIML Fund’s shareholders for their approval.
Approval of New Shell Advisory Agreements and New Shell Sub-Advisory Agreements
On September 15, 2016, Janus Capital Group, Inc. (“Janus”) advised the Board of its intent to seek a strategic combination of its advisory business with Henderson Group PLC (“Henderson”). The Board met with the Chief Executive Officer of Janus, who outlined the proposed combination and the potential benefits to Janus Capital and the Janus funds overseen by the Board. Subsequent to the September 15, 2016 meeting, the Trustees identified a list of basic principles, which they believed should serve as the foundation for their review of the organizational, operational and strategic issues involved with any potential change in control of Janus Capital, the investment adviser to the funds overseen by the Board. These basic principles were communicated to Janus Capital on September 27, 2016, and were intended to be shared with Henderson. On October 3, 2016, Janus announced that it had entered into a definitive Agreement and Plan of Merger with Henderson pursuant to which Janus and Henderson agreed to effect an all-stock merger of equals strategic combination of their respective businesses, with Janus Capital surviving the merger as a direct wholly-owned subsidiary of Henderson. The Board was advised that, subject to certain conditions, the Transaction is currently expected to close during the second quarter of 2017.
As part of its due diligence, the Board developed an initial list of questions related to the proposed transaction, which was provided to Janus Capital on October 6, 2016. At a special Board meeting held on October 19, 2016, the Board considered Janus Capital’s response to the initial information request and met with the management of Janus to discuss the impact of the Transaction on the nature, extent and quality of services Janus Capital is expected to provide to the Janus Funds following the Transaction, including those created by merger of certain Henderson Global Funds into new “shell” series of JIF (each, a “Henderson Shell Fund” and together, the “Henderson Shell Funds,” and collectively with the Janus funds overseen by the Board, the “Funds”), addressing, among other matters, the personnel expected to provide such services, and the resources available to do so. After its October 19, 2016 meeting, the Board developed a supplemental request for additional information, which was provided to Janus Capital on October 26, 2016. At another special Board meeting held on November 7-8, 2016, the Board considered Janus Capital’s response to the supplemental information request and again met with the management of Janus and Henderson to discuss the impact of the Transaction on the nature, extent and quality of services Janus Capital is expected to provide to the Funds following the Transaction, and also met with various officers of the Funds and of Janus Capital, including various Fund portfolio managers. After its November 7-8, 2016 meeting, the Board developed a second supplemental request for additional information, which was provided to Janus Capital on November 21, 2016. On December 7-8, 2016, the Board met to consider Janus Capital’s response to the second supplemental information request and also to consider the proposed new advisory agreement and sub-advisory agreement for each Henderson Shell Fund (a “New Shell
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Advisory Agreement” and “New Shell Sub-Advisory Agreement.”) In this regard, the Board noted that each Henderson Shell Fund was proposed to be sub-advised and managed by Henderson Investment Management Limited (“HIML”), a wholly-owned subsidiary of Henderson. During each of these meetings, the Board sought additional and clarifying information as it deemed necessary or appropriate. In addition, the Board engaged its independent fee consultant to help evaluate certain of the proposals that the Board was being asked to consider. Throughout the process, the Board had the assistance of its independent legal counsel, who advised them on, among other things, its duties and obligations.
In connection with the Board’s review, Janus Capital provided, and the Board obtained, substantial information regarding the following matters: the management, financial position and business of Henderson; the history of Henderson’s business and operations; the investment performance of the investment companies advised by Henderson; the proposed structure, operations and investment processes of the combined investment management organization after the Transaction and the strategy for operating and growing the business following the Transaction; the future plans of Janus and Henderson with respect to the Funds and any proposed changes to the operations or structure of the Funds; and the future plans of Janus and Henderson with respect to the provision of services to the Funds, and the entities providing such services, including those affiliated with Janus. The Board also received information regarding the terms of the Transaction, anticipated management of the combined organization, the resources that each of Janus and Henderson bring to the combined organization and the process being followed by Janus and Henderson to integrate their organizations. The Board also received information regarding the impact of the Transaction on HIML.
In connection with the Board’s approval of the New Shell Advisory Agreements and New Shell Sub-Advisory Agreements, at its December 8, 2016 meeting, the Board also continued its on-going annual process to determine whether to continue the Current Advisory Agreements and the Current Sub-Advisory Agreements for the Janus Funds. In this regard, the Board received and reviewed information provided by Janus and the respective Sub-Advisers in response to requests of the Board and its independent legal counsel. The Board also received and reviewed information and analysis provided by, and in response to requests of, its independent fee consultant. The Board noted that as part of this annual process, the Board had considered and was in the process of considering, numerous factors, including the nature and quality of services provided by Janus Capital and each Sub-Adviser, as applicable; investment performance, on an absolute basis and relative to appropriate peer groups and one or a combination of market indices; investment management fees, expense ratios and asset sizes of the Funds and peer groups; investment management fees charged to comparable investment companies, separate accounts and non-fund clients; Janus Capital’s profitability from managing the Funds; fall-out benefits to Janus Capital from its relationship to the Funds, including revenues derived from services provided to the Funds by affiliates of Janus Capital; and the potential benefits to Janus Capital, the Funds of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms.
In determining whether to approve the New Shell Advisory Agreement and the New Shell Sub-Advisory Agreement in connection with the Transaction, the Board received information and made inquiries into all matters as it deemed appropriate. The Board reviewed and analyzed various factors it deemed relevant, including the following factors, among others, none of which by itself was considered dispositive:
· The terms of the New Shell Advisory Agreements are substantially similar to the Current Advisory Agreements, other than with respect to the applicable contractual fee rates.
· Information regarding the fees and expenses of each applicable Henderson Global Fund merging into a Henderson Shell Fund in comparison to similar information for other comparable funds as provided by Broadridge, an independent data provider; and analysis of that information provided by their independent fee consultant, who believed such fee and expense levels to be reasonable.
· Information regarding the pro forma fees and expenses of the Henderson Shell Funds provided by Janus Capital, including proposed fee waivers.
· Janus Capital’s plans for the operation of the Funds, including its plans for the continued provision of all services currently provided to the Funds by Janus Capital and its affiliates, including, among others, investment advisory services, portfolio trading services, and Fund administrative and accounting services, and the personnel and resources proposed to support the provision of such services.
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Additional Information (unaudited)
· The estimated profitability to Janus Capital from managing the Funds after the Transaction, including potential economies of scale and fall-out benefits to Janus Capital from its relationship to the Funds, including revenues derived from services provided to the Funds by affiliates of Janus Capital, and the potential benefits to Janus Capital, and the Funds of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms.
· the terms of each New Shell Sub-Advisory Agreement;
· the nature, quality and extent of services expected to be provided under the New Shell Sub-Advisory Agreements, including the reputation, qualifications and background of HIML and its operational and compliance infrastructures;
· the investment approach, the experience and skills of senior management and investment personnel of HIML, including the portfolio managers who would be responsible for managing all or part of the portfolio of each Henderson Shell Fund, noting the resources made available to such personnel;
· the ability of HIML to attract and retain high-quality personnel and the organizational depth of HIML;
· the sub-advisory fee rate under each New Shell Sub-Advisory Agreement, as well as the overall management fee structure of each Henderson Shell Fund, noting that the sub-advisory fee rate is consistent with the approach utilized in the Janus Funds complex for other sub-advisory relationships;
· under each New Shell Sub-Advisory Agreement, Janus Capital would be responsible for paying HIML out of its fees;
· the fall out benefits to HIML and its affiliates from its relationship with each Henderson Shell Fund, including the potential benefits to HIML and its affiliates and each Henderson Shell Fund of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms; and
· the potential for economies of scale with respect to the overall fee structure of each Henderson Shell Fund and whether any Fund will benefit from any economies of scale.
In connection with its deliberations, the Board received assurances from Janus, on behalf of itself and its affiliates (collectively, “Janus”) including the following:
· Janus has provided to the Board such information as it believes is reasonably necessary to evaluate the New Shell Advisory Agreements and New Shell Sub-Advisory Agreements.
· Janus is committed to the continuance, without interruption, of services to the Funds of at least the type and quality currently provided by Janus Capital and its affiliates, or superior thereto.
· The Transaction is not expected to affect negatively the nature, extent or quality of the investment advisory services provided by Janus Capital to the Funds following the Transaction, and the investment advisory services are expected to be at least comparable to the services being provided under the Current Advisory Agreements and Current Sub-Advisory Agreements. In this regard, the Board noted specific representations that Janus does not intend for the nature, extent or quality of investment advisory and other services to be provided to the Funds following the Transaction to change, and the extent of such services were expected to increase based on the combined resources of the combined investment management organization after the Transaction, and should the nature, extent or quality of such services decline, Janus would commit the resources needed to return such services to pre-Transaction levels.
· The Funds’ current operations were expected to remain largely unchanged, except for certain fund reorganizations which will be separately considered by the Board, and such other changes as were or will be presented to the Board.
· Janus does not intend to make changes to the portfolio managers providing services to the Funds, other than proposed changes in the management of certain Funds as discussed with the Board, including those related to proposals to merge certain Funds with Henderson Funds, and subject to such changes as may arise at any time as a result of the ongoing process of portfolio manager evaluation.
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Additional Information (unaudited)
· After the Transaction, the extent of distribution and marketing services provided to the Funds were expected to increase based on the combined resources of Janus and Henderson. In this regard, Janus Capital advised the Board that after the Transaction, the extent of distribution and marketing services provided to the Funds are expected to increase based on the combined resources of Janus and Henderson. This is due primarily to the anticipated increase of sales related resources and expanded global presence of the combined Janus Henderson organization, which is expected to enhance visibility and brand recognition of the Janus Henderson Funds.
· The intent of Janus Capital to take the necessary and appropriate steps to retain and attract its key investment advisory personnel.
· The intent of Janus to take the necessary and appropriate steps to retain and attract its key compliance, financial, fund accounting and administrative personnel supporting the management and oversight of the Funds.
· Janus is not aware of any express or implied term, condition, arrangement or understanding that would impose in its best judgement an “unfair burden” on any Fund as a result of the Transaction, as defined in Section 15(f) of the 1940 Act, and that Janus will take no action that would have the effect of imposing such an “unfair burden” on any Fund in connection with the Transaction.
Janus assured the Board that it intended to comply with Section 15(f) of the 1940 Act. Section 15(f) provides a non-exclusive safe harbor for an investment adviser to an investment company or any of its affiliated persons to receive any amount or benefit in connection with a change in control of the investment adviser so long as two conditions are met. First, for a period of three years after the transaction, at least 75% of the board members of the investment company must not be Interested Persons of such investment adviser. The composition of the Board is in compliance with this provision of Section 15(f). In addition, after careful review and consideration, the Board determined that it would be in the best interests of the Funds to add to the Board an individual who currently acts as a non-interested board member of the Henderson Trust. The Board believes that this change in the Board composition will provide perspective and insight relating to experience working with the Henderson organization. The Board’s Nominating and Governance Committee considered a number of candidates and recommended that the Board nominate one proposed new trustee from those candidates who currently act as non-interested board members of the Henderson Trust. The Board approved that trustee nominee to serve on the Board, subject to election by the shareholders of the Funds and contingent on the closing of the Transaction. If the new trustee is elected and serves on the Board, the Board composition would continue to satisfy the provisions of Section 15(f).
To meet the second condition of Section 15(f), an “unfair burden” must not be imposed upon the investment company as a result of such transaction or any express or implied terms, conditions or understandings applicable thereto. The term “unfair burden” is defined in Section 15(f) to include any arrangement during the two-year period after the transaction, whereby the investment adviser, or any interested person of such adviser, receives or is entitled to receive any compensation, directly or indirectly, from the investment company or its shareholders (other than fees for bona fide investment advisory or other services) or from any person in connection with the purchase or sale of securities or other property to, from or on behalf of the investment company (other than bona fide ordinary compensation as principal underwriter for such investment company).
Janus represented that it does not believe that an “unfair burden” will be placed on the Funds as a result of the Transaction. In furtherance thereof, Janus has undertaken to pay the costs of preparing and distributing proxy materials to, and of holding the Meetings of, the Funds’ shareholders, as well as other fees and expenses in connection with the Transaction, including the reasonable fees and expenses of legal counsel and consultants to the Funds and the Trustees. In addition, Janus has agreed, for a period of two years following the closing of the Transaction, (i) not to request any increases to advisory fees for the Funds, other than those proposed to and approved by the Board prior to the close of the Transaction, and (ii) to continue to use the current process by which expense caps are set annually for the Funds.
As a result of its review and consideration of the New Shell Investment Advisory Agreements and New Shell Sub-Advisory Agreements in connection with the Transaction, at a meeting on December 8, 2016, the Board voted unanimously to approve a New Investment Advisory Agreement and New Sub-Advisory Agreement for each Henderson Shell Fund.
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Additional Information (unaudited)
Approval of New Advisory Agreement and New Sub-Advisory Agreement for Janus Henderson U.S. Growth Opportunities Fund
On September 15, 2016, Janus Capital Group, Inc. (“Janus”) advised the Board of its intent to seek a strategic combination of its advisory business with Henderson Group PLC (“Henderson”). The Board met with the Chief Executive Officer of Janus, who outlined the proposed combination and the potential benefits to Janus Capital and the Janus funds overseen by the Board. Subsequent to the September 15, 2016 meeting, the Trustees identified a list of basic principles, which they believed should serve as the foundation for their review of the organizational, operational and strategic issues involved with any potential change in control of Janus Capital, the investment adviser to the funds overseen by the Board. These basic principles were communicated to Janus Capital on September 27, 2016, and were intended to be shared with Henderson. On October 3, 2016, Janus announced that it had entered into a definitive Agreement and Plan of Merger with Henderson pursuant to which Janus and Henderson agreed to effect an all-stock merger of equals strategic combination of their respective businesses, with Janus Capital surviving the merger as a direct wholly-owned subsidiary of Henderson. The Board was advised that, subject to certain conditions, the Transaction is currently expected to close during the second quarter of 2017.
As part of its due diligence, the Board developed an initial list of questions related to the proposed transaction, which was provided to Janus Capital on October 6, 2016. At a special Board meeting held on October 19, 2016, the Board considered Janus Capital’s response to the initial information request and met with the management of Janus to discuss the impact of the Transaction on the nature, extent and quality of services Janus Capital is expected to provide to the Janus Funds following the Transaction, including those created by merger of certain Henderson Global Funds into new “shell” series of JIF (each, a “Henderson Shell Fund” and together, the “Henderson Shell Funds,” and collectively with the Janus funds overseen by the Board, the “Funds”), addressing, among other matters, the personnel expected to provide such services, and the resources available to do so. After its October 19, 2016 meeting, the Board developed a supplemental request for additional information, which was provided to Janus Capital on October 26, 2016. At another special Board meeting held on November 7-8, 2016, the Board considered Janus Capital’s response to the supplemental information request and again met with the management of Janus and Henderson to discuss the impact of the Transaction on the nature, extent and quality of services Janus Capital is expected to provide to the Funds following the Transaction, and also met with various officers of the Funds and of Janus Capital, including various Fund portfolio managers. After its November 7-8, 2016 meeting, the Board developed a second supplemental request for additional information, which was provided to Janus Capital on November 21, 2016. On December 7-8, 2016, the Board met to consider Janus Capital’s response to the second supplemental information request and also to consider the proposed new advisory agreement and sub-advisory agreement for each Henderson Shell Fund. In this regard, the Board noted that each Henderson Shell Fund was proposed to be sub-advised and managed by Henderson Investment Management Limited, a wholly-owned subsidiary of Henderson. The Board noted that another Henderson Global Fund, U.S. Growth Opportunities Fund, was proposed to be sub-advised and managed by Geneva Capital Management LLC (“Geneva”), an indirect wholly-owned subsidiary of Henderson. On December 19, 2017, the Board issued an additional supplemental information request to Geneva. On January 26, 2017, the Board met to consider Geneva’s response to this additional supplemental information request and also to consider the proposed new advisory agreement and sub-advisory agreement for U.S. Growth Opportunities Fund (the “New Advisory Agreement” and “New Sub-Advisory Agreement,” respectively.) During each of these meetings, the Board sought additional and clarifying information as it deemed necessary or appropriate. In addition, the Board engaged its independent fee consultant to help evaluate certain of the proposals that the Board was being asked to consider. Throughout the process, the Board had the assistance of its independent legal counsel, who advised them on, among other things, its duties and obligations.
In connection with the Board’s review, Janus Capital provided, and the Board obtained, substantial information regarding the following matters: the management, financial position and business of Henderson; the history of Henderson’s business and operations; the investment performance of the investment companies advised by Henderson; the proposed structure, operations and investment processes of the combined investment management organization after the Transaction and the strategy for operating and growing the business following the Transaction; the future plans of Janus and Henderson with respect to the Funds and any proposed changes to the operations or structure of the Funds; and the future plans of Janus and Henderson with respect to the provision of services to the Funds, and the entities providing such services, including those affiliated with Janus. The Board also received information regarding the terms of the Transaction, anticipated management of the combined organization, the resources that each of Janus and Henderson bring to the combined organization and the process being followed by Janus and Henderson to integrate their organizations. The Board also received information regarding the impact of the Transaction on Geneva.
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Additional Information (unaudited)
In connection with the Board approval of the New Advisory Agreement and New Sub-Advisory Agreements, at its December 8, 2016 meeting, the Board also continued its on-going annual process to determine whether to continue the Current Advisory Agreements and the Current Sub-Advisory Agreements for the Janus Funds. In this regard, the Board received and reviewed information provided by Janus and the respective Sub-Advisers in response to requests of the Board and its independent legal counsel. The Board also received and reviewed information and analysis provided by, and in response to requests of, its independent fee consultant. The Board noted that as part of this annual process, the Board had considered and was in the process of considering, numerous factors, including the nature and quality of services provided by Janus Capital and each Sub-Adviser, as applicable; investment performance, on an absolute basis and relative to appropriate peer groups and one or a combination of market indices; investment management fees, expense ratios and asset sizes of the Funds and peer groups; investment management fees charged to comparable investment companies, separate accounts and non-fund clients; Janus Capital’s profitability from managing the Funds; fall-out benefits to Janus Capital from its relationship to the Funds, including revenues derived from services provided to the Funds by affiliates of Janus Capital; and the potential benefits to Janus Capital, the Funds of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms.
In determining whether to approve the New Advisory Agreement and the New Sub-Advisory Agreement in connection with the Transaction, the Board received information and made inquiries into all matters as it deemed appropriate. The Board reviewed and analyzed various factors it deemed relevant, including the following factors, among others, none of which by itself was considered dispositive:
· The terms of the New Advisory Agreement is substantially similar to the Current Advisory Agreement, other than with respect to the applicable contractual fee rates.
· Information regarding the fees and expenses of U.S. Growth Opportunities Fund in comparison to similar information for other comparable funds as provided by Broadridge, an independent data provider; and analysis of that information provided by their independent fee consultant, who believed such fee and expense levels to be reasonable.
· Information regarding the pro forma fees and expenses of U.S. Growth Opportunities Fund provided by Janus Capital, including proposed fee waivers.
· Janus Capital’s plans for the operation of the Funds, including its plans for the continued provision of all services currently provided to the Funds by Janus Capital and its affiliates, including, among others, investment advisory services, portfolio trading services, and Fund administrative and accounting services, and the personnel and resources proposed to support the provision of such services.
· The estimated profitability to Janus Capital from managing the Funds after the Transaction, including potential economies of scale and fall-out benefits to Janus Capital from its relationship to the Funds, including revenues derived from services provided to the Funds by affiliates of Janus Capital, and the potential benefits to Janus Capital, and the Funds of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms.
· the terms of each New Sub-Advisory Agreement;
· the nature, quality and extent of services expected to be provided under the New Shell Sub-Advisory Agreement, including the reputation, qualifications and background of Geneva and its operational and compliance infrastructures;
· the investment approach, the experience and skills of senior management and investment personnel of Geneva, including the portfolio managers who would be responsible for managing all or part of the portfolio of U.S. Growth Opportunities Fund noting the resources made available to such personnel;
· the ability of Geneva to attract and retain high-quality personnel and the organizational depth of Geneva;
· the sub-advisory fee rate under the New Sub-Advisory Agreement, as well as the overall management fee structure of U.S. Growth Opportunities Fund noting that the sub-advisory fee rate is consistent with the approach utilized in the Janus Funds complex for other sub-advisory relationships;
· under the New Sub-Advisory Agreement, Janus Capital would be responsible for paying Geneva out of its fees;
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Additional Information (unaudited)
· the fall out benefits to Geneva and its affiliates from its relationship with U.S. Growth Opportunities Fund, including the potential benefits to Geneva and its affiliates and U.S. Growth Opportunities Fund of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms; and
· the potential for economies of scale with respect to the overall fee structure of U.S. Growth Opportunities Fund and the Fund will benefit from any economies of scale.
In connection with its deliberations, the Board received assurances from Janus, on behalf of itself and its affiliates (collectively, “Janus”) including the following:
· Janus has provided to the Board such information as it believes is reasonably necessary to evaluate the New Advisory Agreement and New Sub-Advisory Agreement.
· Janus is committed to the continuance, without interruption, of services to the Funds of at least the type and quality currently provided by Janus Capital and its affiliates, or superior thereto.
· The Transaction is not expected to affect negatively the nature, extent or quality of the investment advisory services provided by Janus Capital to the Funds following the Transaction, and the investment advisory services are expected to be at least comparable to the services being provided under the Current Advisory Agreements and Current Sub-Advisory Agreements. In this regard, the Board noted specific representations that Janus does not intend for the nature, extent or quality of investment advisory and other services to be provided to the Funds following the Transaction to change, and the extent of such services were expected to increase based on the combined resources of the combined investment management organization after the Transaction, and should the nature, extent or quality of such services decline, Janus would commit the resources needed to return such services to pre-Transaction levels.
· The Funds’ current operations were expected to remain largely unchanged, except for certain fund reorganizations which will be separately considered by the Board, and such other changes as were or will be presented to the Board.
· Janus does not intend to make changes to the portfolio managers providing services to the Funds, other than proposed changes in the management of certain Funds as discussed with the Board, including those related to proposals to merge certain Funds with Henderson Funds, and subject to such changes as may arise at any time as a result of the ongoing process of portfolio manager evaluation.
· After the Transaction, the extent of distribution and marketing services provided to the Funds were expected to increase based on the combined resources of Janus and Henderson. In this regard, Janus Capital advised the Board that after the Transaction, the extent of distribution and marketing services provided to the Funds are expected to increase based on the combined resources of Janus and Henderson. This is due primarily to the anticipated increase of sales related resources and expanded global presence of the combined Janus Henderson organization, which is expected to enhance visibility and brand recognition of the Janus Henderson Funds.
· The intent of Janus Capital to take the necessary and appropriate steps to retain and attract its key investment advisory personnel.
· The intent of Janus to take the necessary and appropriate steps to retain and attract its key compliance, financial, fund accounting and administrative personnel supporting the management and oversight of the Funds.
· Janus is not aware of any express or implied term, condition, arrangement or understanding that would impose in its best judgement an “unfair burden” on any Fund as a result of the Transaction, as defined in Section 15(f) of the 1940 Act, and that Janus will take no action that would have the effect of imposing such an “unfair burden” on any Fund in connection with the Transaction.
Janus assured the Board that it intended to comply with Section 15(f) of the 1940 Act. Section 15(f) provides a non-exclusive safe harbor for an investment adviser to an investment company or any of its affiliated persons to receive any amount or benefit in connection with a change in control of the investment adviser so long as two conditions are met. First, for a period of three years after the transaction, at least 75% of the board members of the investment company
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must not be Interested Persons of such investment adviser. The composition of the Board is in compliance with this provision of Section 15(f). In addition, after careful review and consideration, the Board determined that it would be in the best interests of the Funds to add to the Board an individual who currently acts as a non-interested board member of the Henderson Trust. The Board believes that this change in the Board composition will provide perspective and insight relating to experience working with the Henderson organization. The Board’s Nominating and Governance Committee considered a number of candidates and recommended that the Board nominate one proposed new trustee from those candidates who currently act as non-interested board members of the Henderson Trust. The Board approved that trustee nominee to serve on the Board, subject to election by the shareholders of the Funds and contingent on the closing of the Transaction. If the new trustee is elected and serves on the Board, the Board composition would continue to satisfy the provisions of Section 15(f).
To meet the second condition of Section 15(f), an “unfair burden” must not be imposed upon the investment company as a result of such transaction or any express or implied terms, conditions or understandings applicable thereto. The term “unfair burden” is defined in Section 15(f) to include any arrangement during the two-year period after the transaction, whereby the investment adviser, or any interested person of such adviser, receives or is entitled to receive any compensation, directly or indirectly, from the investment company or its shareholders (other than fees for bona fide investment advisory or other services) or from any person in connection with the purchase or sale of securities or other property to, from or on behalf of the investment company (other than bona fide ordinary compensation as principal underwriter for such investment company).
Janus represented that it does not believe that an “unfair burden” will be placed on the Funds as a result of the Transaction. In furtherance thereof, Janus has undertaken to pay the costs of preparing and distributing proxy materials to, and of holding the Meetings of, the Funds’ shareholders, as well as other fees and expenses in connection with the Transaction, including the reasonable fees and expenses of legal counsel and consultants to the Funds and the Trustees. In addition, Janus has agreed, for a period of two years following the closing of the Transaction, (i) not to request any increases to advisory fees for the Funds, other than those proposed to and approved by the Board prior to the close of the Transaction, and (ii) to continue to use the current process by which expense caps are set annually for the Funds.
As a result of its review and consideration of the New Investment Advisory Agreement and New Sub-Advisory Agreement in connection with the Transaction, at a meeting on January 26, 2017, the Board voted unanimously to approve a New Investment Advisory Agreement and New Sub-Advisory Agreement for the U.S. Growth Opportunities Fund.
Renewal of Advisory and Sub-Advisory Agreements with Janus Capital and Janus Capital Affiliates during the Period
The Trustees of Janus Investment Fund and Janus Aspen Series, each of whom serves as an “independent” Trustee (the “Trustees”), oversee the management of each Fund of Janus Investment Fund and each Portfolio of Janus Aspen Series (each, a “Fund” and collectively, the “Funds”), and as required by law, determine annually whether to continue the investment advisory agreement for each Fund and the subadvisory agreements for the 16 Funds that utilize subadvisers.
In connection with their most recent consideration of those agreements for each Fund, the Trustees received and reviewed information provided by Janus Capital and the respective subadvisers in response to requests of the Trustees and their independent legal counsel. They also received and reviewed information and analysis provided by, and in response to requests of, their independent fee consultant. Throughout their consideration of the agreements, the Trustees were advised by their independent legal counsel. The Trustees met with management to consider the agreements, and also met separately in executive session with their independent legal counsel and their independent fee consultant.
Additionally, in connection with their consideration of whether to continue the investment advisory agreement and subadvisory agreement for each Fund, as applicable, the Trustees also received and reviewed information in connection with the proposed transaction to combine the respective businesses of Henderson Group plc and Janus Capital Group, Inc., the parent company of Janus Capital (the “Transaction”), announced in October 2016, which Janus Capital advised the Trustees was expected to close in the second quarter of 2017. In this regard, the Trustees reviewed information regarding the impact of the Transaction on the services to be provided by Janus Capital and each subadviser, as applicable, to the Funds under such agreements both prior to the close of the Transaction, and afterwards, if the
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Transaction were not to close. If the Transaction closes, all such agreements would be replaced by new investment advisory agreements and subadvisory agreements, as applicable, for each Fund, assuming requisite Fund shareholder approvals have been obtained.
At a meeting held on January 26, 2017, based on the Trustees’ evaluation of the information provided by Janus Capital, the subadvisers, and the independent fee consultant, as well as other information, the Trustees determined that the overall arrangements between each Fund and Janus Capital and each subadviser, as applicable, were fair and reasonable in light of the nature, extent and quality of the services provided by Janus Capital, its affiliates and the subadvisers, the fees charged for those services, and other matters that the Trustees considered relevant in the exercise of their business judgment. At that meeting, the Trustees unanimously approved the continuation of the investment advisory agreement for each Fund, and the subadvisory agreement for each subadvised Fund, for the period from February 1, 2017 through February 1, 2018, subject to earlier termination as provided for in each agreement.
In considering the continuation of those agreements, the Trustees reviewed and analyzed various factors that they determined were relevant, including the factors described below, none of which by itself was considered dispositive. However, the material factors and conclusions that formed the basis for the Trustees’ determination to approve the continuation of the agreements are discussed separately below. Also included is a summary of the independent fee consultant’s conclusions and opinions that arose during, and were included as part of, the Trustees’ consideration of the agreements. “Management fees,” as used herein, reflect actual annual advisory fees and any administration fees (excluding out of pocket costs), net of any waivers.
Nature, Extent and Quality of Services
The Trustees reviewed the nature, extent and quality of the services provided by Janus Capital and the subadvisers to the Funds, taking into account the investment objective, strategies and policies of each Fund, and the knowledge the Trustees gained from their regular meetings with management on at least a quarterly basis and their ongoing review of information related to the Funds. In addition, the Trustees reviewed the resources and key personnel of Janus Capital and each subadviser, particularly noting those employees who provide investment and risk management services to the Funds. The Trustees also considered other services provided to the Funds by Janus Capital or the subadvisers, such as managing the execution of portfolio transactions and the selection of broker-dealers for those transactions. The Trustees considered Janus Capital’s role as administrator to the Funds, noting that Janus Capital does not receive a fee for its services but is reimbursed for its out-of-pocket costs. The Trustees considered the role of Janus Capital in monitoring adherence to the Funds’ investment restrictions, providing support services for the Trustees and Trustee committees, and overseeing communications with shareholders and the activities of other service providers, including monitoring compliance with various policies and procedures of the Funds and with applicable securities laws and regulations.
In this regard, the independent fee consultant noted that Janus Capital provides a number of different services for the Funds and Fund shareholders, ranging from investment management services to various other servicing functions, and that, in its opinion, Janus Capital is a capable provider of those services. The independent fee consultant also provided its belief that Janus Capital has developed a number of institutional competitive advantages that should enable it to provide superior investment and service performance over the long term.
The Trustees concluded that the nature, extent and quality of the services provided by Janus Capital or the subadviser to each Fund were appropriate and consistent with the terms of the respective advisory and subadvisory agreements, and that, taking into account steps taken to address those Funds whose performance lagged that of their peers for certain periods, the Funds were likely to benefit from the continued provision of those services. They also concluded that Janus Capital and each subadviser had sufficient personnel, with the appropriate education and experience, to serve the Funds effectively and had demonstrated its ability to attract well-qualified personnel.
Performance of the Funds
The Trustees considered the performance results of each Fund over various time periods. They noted that they considered Fund performance data throughout the year, including periodic meetings with each Fund’s portfolio manager(s), and also reviewed information comparing each Fund’s performance with the performance of comparable funds and peer groups identified by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent data provider, and with the Fund’s benchmark index. In this regard, the independent fee consultant found that the overall Funds’ performance has been strong: for the 36 months ended September 30, 2016, approximately 76% of the Funds were
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in the top two Broadridge quartiles of performance, and for the 12 months ended September 30, 2016, approximately 47% of the Funds were in the top two Broadridge quartiles of performance.
The Trustees considered the performance of each Fund, noting that performance may vary by share class, and noted the following:
Fixed-Income Funds and Money Market Funds
· For Janus Henderson Flexible Bond Fund (formerly, Janus Flexible Bond Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Bond Fund (formerly, Janus Global Bond Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Unconstrained Bond Fund (formerly, Janus Global Unconstrained Bond Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson High-Yield Fund (formerly, Janus High-Yield Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Multi-Sector Income Fund (formerly, Janus Multi-Sector Income Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Real Return Fund (formerly, Janus Real Return Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Short-Term Bond Fund (formerly, Janus Short-Term Bond Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Government Money Market Fund (formerly, Janus Government Money Market Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance.
· For Janus Henderson Money Market Fund (formerly, Janus Money Market Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance.
Asset Allocation Funds
· For Janus Henderson Global Allocation Fund – Conservative (formerly, Janus Global Allocation Fund – Conservative), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Allocation Fund – Growth (formerly, Janus Global Allocation Fund – Growth), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Allocation Fund – Moderate (formerly, Janus Global Allocation Fund – Moderate), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
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Alternative Fund
· For Janus Henderson Diversified Alternatives Fund (formerly, Janus Diversified Alternatives Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
Value Funds
· For Janus Henderson International Value Fund (formerly, Perkins International Value Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Value Fund (formerly, Perkins Global Value Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Large Cap Value Fund (formerly, Perkins Large Cap Value Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital and Perkins had taken or were taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Mid Cap Value Fund (formerly, Perkins Mid Cap Value Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital and Perkins had taken or were taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Select Value Fund (formerly, Perkins Select Value Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Small Cap Value Fund (formerly, Perkins Small Cap Value Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Value Plus Income Fund (formerly, Perkins Value Plus Income Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
Mathematical Funds
· For Janus Henderson Emerging Markets Managed Volatility Fund (formerly, INTECH Emerging Markets Managed Volatility Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Income Managed Volatility Fund (formerly, INTECH Global Income Managed Volatility Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson International Managed Volatility Fund (formerly, INTECH International Managed Volatility Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson U.S. Managed Volatility Fund (formerly, INTECH U.S. Managed Volatility Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
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Growth and Core Funds
· For Janus Henderson Balanced Fund (formerly, Janus Balanced Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Contrarian Fund (formerly, Janus Contrarian Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Enterprise Fund (formerly, Janus Enterprise Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Forty Fund (formerly, Janus Forty Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Growth and Income Fund (formerly, Janus Growth and Income Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and in the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Research Fund (formerly, Janus Research Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Triton Fund (formerly, Janus Triton Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Venture Fund (formerly, Janus Venture Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
Global and International Funds
· For Janus Henderson Adaptive Global Allocation Fund (formerly, Janus Adaptive Global Allocation Fund), the Trustees noted that, due to limited performance for the Fund, performance history was not a material factor.
· For Janus Henderson Asia Equity Fund (formerly, Janus Asia Equity Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Life Sciences Fund (formerly, Janus Global Life Sciences Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Real Estate Fund (formerly, Janus Global Real Estate Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
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· For Janus Henderson Global Research Fund (formerly, Janus Global Research Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Select Fund (formerly, Janus Global Select Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Technology Fund (formerly, Janus Global Technology Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Overseas Fund (formerly, Janus Overseas Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
Janus Aspen Series
· For Janus Henderson Balanced Portfolio (formerly, Janus Aspen Balanced Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Enterprise Portfolio (formerly, Janus Aspen Enterprise Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Flexible Bond Portfolio (formerly, Janus Aspen Flexible Bond Portfolio), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Forty Portfolio (formerly, Janus Aspen Forty Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Allocation Portfolio – Moderate (formerly, Janus Aspen Global Allocation Portfolio – Moderate), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Research Portfolio (formerly, Janus Aspen Global Research Portfolio), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance
· For Janus Henderson Global Technology Portfolio (formerly, Janus Aspen Global Technology Portfolio), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the
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reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Unconstrained Bond Portfolio (formerly, Janus Aspen Global Unconstrained Bond Portfolio), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson U.S. Low Volatility Portfolio (formerly, Janus Aspen INTECH U.S. Low Volatility Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Research Portfolio (formerly, Janus Aspen Janus Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Overseas Portfolio (formerly, Janus Aspen Overseas Portfolio), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Mid Cap Value Portfolio (formerly, Janus Aspen Perkins Mid Cap Value Portfolio), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital and Perkins had taken or were taking to improve performance, and that the performance trend was improving.
In consideration of each Fund’s performance, the Trustees concluded that, taking into account the factors relevant to performance, as well as other considerations, including steps taken to improve performance, the Fund’s performance warranted continuation of the Fund’s investment advisory and subadvisory agreement(s).
Costs of Services Provided
The Trustees examined information regarding the fees and expenses of each Fund in comparison to similar information for other comparable funds as provided by Broadridge, an independent data provider. They also reviewed an analysis of that information provided by their independent fee consultant and noted that the rate of management (investment advisory and any administration, but excluding out-of-pocket costs) fees for many of the Funds, after applicable waivers, was below the average management fee rate of the respective peer group of funds selected by an independent data provider. The Trustees also examined information regarding the subadvisory fees charged for subadvisory services, as applicable, noting that all such fees were paid by Janus Capital out of its management fees collected from such Fund.
The independent fee consultant provided its belief that the management fees charged by Janus Capital to each of the Funds under the current investment advisory and administration agreements are reasonable in relation to the services provided by Janus Capital. The independent fee consultant found: (1) the total expenses and management fees of the Funds to be reasonable relative to other mutual funds; (2) total expenses, on average, were 12% below the average total expenses of their respective Broadridge Expense Group peers and 20% below the average total expenses for their Broadridge Expense Universes; (3) management fees for the Funds, on average, were 11% below the average management fees for their Expense Groups and 13% below the average for their Expense Universes; and (4) Fund expenses at the functional level for each asset and share class category were reasonable. The Trustees also considered the total expenses for each share class of each Fund compared to the average total expenses for its Broadridge Expense Group peers and to average total expenses for its Broadridge Expense Universe.
The independent fee consultant concluded that, based on its strategic review of expenses at the complex, category and individual fund level, Fund expenses were found to be reasonable relative to both Expense Group and Expense Universe benchmarks. Further, for certain Funds, the independent fee consultant also performed a systematic “focus list” analysis of expenses in the context of the performance or service delivered to each set of investors in each share class in each selected Fund. Based on this analysis, the independent fee consultant found that the combination of
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service quality/performance and expenses on these individual Funds and share classes were reasonable in light of performance trends, performance histories, and existence of performance fees, breakpoints, and expense waivers on such Funds.
The Trustees considered the methodology used by Janus Capital and each subadviser in determining compensation payable to portfolio managers, the competitive environment for investment management talent, and the competitive market for mutual funds in different distribution channels.
The Trustees also reviewed management fees charged by Janus Capital and each subadviser to comparable separate account clients and to comparable non-affiliated funds subadvised by Janus Capital or by a subadviser (for which Janus Capital or the subadviser provides only or primarily portfolio management services). Although in most instances subadvisory and separate account fee rates for various investment strategies were lower than management fee rates for Funds having a similar strategy, the Trustees considered that Janus Capital noted that, under the terms of the management agreements with the Funds, Janus Capital performs significant additional services for the Funds that it does not provide to those other clients, including administration services, oversight of the Funds’ other service providers, trustee support, regulatory compliance and numerous other services, and that, in serving the Funds, Janus Capital assumes many legal risks and other costs that it does not assume in servicing its other clients. Moreover, they noted that the independent fee consultant found that: (1) the management fees Janus Capital charges to the Funds are reasonable in relation to the management fees Janus Capital charges to its institutional and subadvised accounts; (2) these institutional and subadvised accounts have different service and infrastructure needs; (3) Janus mutual fund investors enjoy reasonable fees relative to the fees charged to Janus institutional and subadvised fund investors; and (4) in the majority of cases, the Funds receive proportionally better pricing than the industry in relation to Janus institutional and subadvised accounts.
The Trustees considered the fees for each Fund for its fiscal year ended in 2015, and noted the following with regard to each Fund’s total expenses, net of applicable fee waivers (the Fund’s “total expenses”):
Fixed-Income Funds and Money Market Funds
· For Janus Henderson Flexible Bond Fund (formerly, Janus Flexible Bond Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Bond Fund (formerly, Janus Global Bond Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Unconstrained Bond Fund (formerly, Janus Global Unconstrained Bond Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson High-Yield Fund (formerly, Janus High-Yield Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Multi-Sector Income Fund (formerly, Janus Multi-Sector Income Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Real Return Fund (formerly, Janus Real Return Fund), the Trustees noted that, although the Fund’s total expenses were equal to or exceeded the peer group average for all share classes, overall the
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Additional Information (unaudited)
Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Short-Term Bond Fund (formerly, Janus Short-Term Bond Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Government Money Market Fund (formerly, Janus Government Money Market Fund), the Trustees noted that the Fund’s total expenses exceeded the peer group average for both share classes. The Trustees considered that management fees for this Fund are higher than the peer group average due to the Fund’s management fee including other costs, such as custody and transfer agent services, while many funds in the peer group pay these expenses separately from their management fee. In addition, the Trustees considered that Janus Capital voluntarily waives one-half of its advisory fee and other expenses in order to maintain a positive yield.
· For Janus Henderson Money Market Fund (formerly, Janus Money Market Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes. In addition, the Trustees considered that Janus Capital voluntarily waives one- half of its advisory fee and other expenses in order to maintain a positive yield.
Asset Allocation Funds
· For Janus Henderson Global Allocation Fund – Conservative (formerly, Janus Global Allocation Fund – Conservative), the Trustees noted that, although the Fund’s total expenses exceeded the peer group median for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Allocation Fund – Growth (formerly, Janus Global Allocation Fund – Growth), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Allocation Fund – Moderate (formerly, Janus Global Allocation Fund – Moderate), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
Alternative Fund
· For Janus Henderson Diversified Alternatives Fund (formerly, Janus Diversified Alternatives Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
Value Funds
· For Janus Henderson International Value Fund (formerly, Perkins International Value Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Value Fund (formerly, Perkins Global Value Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Large Cap Value Fund (formerly, Perkins Large Cap Value Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Mid Cap Value Fund (formerly, Perkins Mid Cap Value Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit
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Additional Information (unaudited)
the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Select Value Fund (formerly, Perkins Select Value Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Small Cap Value Fund (formerly, Perkins Small Cap Value Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Value Plus Income Fund (formerly, Perkins Value Plus Income Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
Mathematical Funds
· For Janus Henderson Emerging Markets Managed Volatility Fund (formerly, INTECH Emerging Markets Managed Volatility Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Income Managed Volatility Fund (formerly, INTECH Global Income Managed Volatility Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson International Managed Volatility Fund (formerly, INTECH International Managed Volatility Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson U.S. Managed Volatility Fund (formerly, INTECH U.S. Managed Volatility Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
Growth and Core Funds
· For Janus Henderson Balanced Fund (formerly, Janus Balanced Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Contrarian Fund (formerly, Janus Contrarian Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Enterprise Fund (formerly, Janus Enterprise Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Forty Fund (formerly, Janus Forty Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s
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Additional Information (unaudited)
expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Growth and Income Fund (formerly, Janus Growth and Income Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Research Fund (formerly, Janus Research Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable.
· For Janus Henderson Triton Fund (formerly, Janus Triton Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Venture Fund (formerly, Janus Venture Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
Global and International Funds
· For Janus Henderson Adaptive Global Allocation Fund (formerly, Janus Adaptive Global Allocation Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group median for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Asia Equity Fund (formerly, Janus Asia Equity Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Life Sciences Fund (formerly, Janus Global Life Sciences Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Real Estate Fund (formerly, Janus Global Real Estate Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Research Fund (formerly, Janus Global Research Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Select Fund (formerly, Janus Global Select Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Technology Fund (formerly, Janus Global Technology Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Overseas Fund (formerly, Janus Overseas Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
Janus Aspen Series
· For Janus Henderson Balanced Portfolio (formerly, Janus Aspen Balanced Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
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Additional Information (unaudited)
· For Janus Henderson Enterprise Portfolio (formerly, Janus Aspen Enterprise Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Flexible Bond Portfolio (formerly, Janus Aspen Flexible Bond Portfolio), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for both share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Forty Portfolio (formerly, Janus Aspen Forty Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Allocation Portfolio – Moderate (formerly, Janus Aspen Global Allocation Portfolio – Moderate), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for both share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Research Portfolio (formerly, Janus Aspen Global Research Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Technology Portfolio (formerly, Janus Aspen Global Technology Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Unconstrained Bond Portfolio (formerly, Janus Aspen Global Unconstrained Bond Portfolio), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for both share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson U.S. Low Volatility Portfolio (formerly, Janus Aspen INTECH U.S. Low Volatility Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for its sole share class.
· For Janus Henderson Research Portfolio (formerly, Janus Aspen Janus Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group mean for both share classes.
· For Janus Henderson Overseas Portfolio (formerly, Janus Aspen Overseas Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Mid Cap Value Portfolio (formerly, Janus Aspen Perkins Mid Cap Value Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
The Trustees reviewed information on the profitability to Janus Capital and its affiliates of their relationships with each Fund, as well as an explanation of the methodology utilized by Janus Capital when allocating various expenses of Janus Capital and its affiliates with respect to contractual relationships with the Funds and other clients. The Trustees also reviewed the financial statements and corporate structure of Janus Capital’s parent company. In their review, the Trustees considered whether Janus Capital and each subadviser receive adequate incentives and resources to manage the Funds effectively. The Trustees recognized that profitability comparisons among fund managers are difficult because very little comparative information is publicly available, and the profitability of any fund manager is affected by numerous factors, including the organizational structure of the particular fund manager, the types of funds and other accounts it manages, possible other lines of business, the methodology for allocating expenses, and the fund manager’s capital structure and cost of capital. However, taking into account those factors and the analysis provided by the Trustees’ independent fee consultant, and based on the information available, the Trustees concluded that Janus Capital’s profitability with respect to each Fund in relation to the services rendered was reasonable.
The independent fee consultant found that, while assessing the reasonableness of expenses in light of Janus Capital’s profits is dependent on comparisons with other publicly-traded mutual fund advisers, and that these comparisons are limited in accuracy by differences in complex size, business mix, institutional account orientation, and other factors, after accepting these limitations, the level of profit earned by Janus Capital from managing the Funds is reasonable.
The Trustees concluded that the management fees payable by each Fund to Janus Capital and its affiliates, as well as the fees paid by Janus Capital to the subadvisers of subadvised Funds, were reasonable in relation to the nature, extent, and quality of the services provided, taking into account the fees charged by other advisers for managing comparable
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Additional Information (unaudited)
mutual funds with similar strategies, the fees Janus Capital and the subadvisers charge to other clients, and, as applicable, the impact of fund performance on management fees payable by the Funds. The Trustees also concluded that each Fund’s total expenses were reasonable, taking into account the size of the Fund, the quality of services provided by Janus Capital and any subadviser, the investment performance of the Fund, and any expense limitations agreed to or provided by Janus Capital.
Economies of Scale
The Trustees considered information about the potential for Janus Capital to realize economies of scale as the assets of the Funds increase. They noted their independent fee consultant’s analysis of economies of scale in prior years. They also noted that, although many Funds pay advisory fees at a base fixed rate as a percentage of net assets, without any breakpoints, their independent fee consultant concluded that 91% of these Funds have contractual management fees (gross of waivers) below their Broadridge expense group averages and, overall, 83% of the Funds are below their respective expense group averages for contractual management fees. They also noted that for those Funds whose expenses are being reduced by the contractual expense limitations of Janus Capital, Janus Capital is subsidizing the Funds because they have not reached adequate scale. Moreover, as the assets of some of the Funds have declined in the past few years, certain Funds have benefited from having advisory fee rates that have remained constant rather than increasing as assets declined. In addition, performance fee structures have been implemented for various Funds that have caused the effective rate of advisory fees payable by such a Fund to vary depending on the investment performance of the Fund relative to its benchmark index over the measurement period; and a few Funds have fee schedules with breakpoints and reduced fee rates above certain asset levels. The Trustees also noted that the Funds share directly in economies of scale through the lower charges of third-party service providers that are based in part on the combined scale of all of the Funds. Based on all of the information they reviewed, including past research and analysis conducted by the Trustees’ independent fee consultant, the Trustees concluded that the current fee structure of each Fund was reasonable and that the current rates of fees do reflect a sharing between Janus Capital and the Fund of any economies of scale that may be present at the current asset level of the Fund.
The independent fee consultant concluded that, given the limitations of various analytical approaches to economies of scale considered in prior years, and their conflicting results, its analyses could not confirm or deny the existence of economies of scale in the Janus complex. Further, the independent fee consultant provided its belief that Fund investors are well-served by the fee levels and performance fee structures in place on the Funds in light of any economies of scale that may be present at Janus Capital.
Other Benefits to Janus Capital
The Trustees also considered benefits that accrue to Janus Capital and its affiliates and subadvisers to the Funds from their relationships with the Funds. They recognized that two affiliates of Janus Capital separately serve the Funds as transfer agent and distributor, respectively, and the transfer agent receives compensation directly from the non-money market funds for services provided. The Trustees also considered Janus Capital’s past and proposed use of commissions paid by the Funds on portfolio brokerage transactions to obtain proprietary and third-party research products and services benefiting the Fund and/or other clients of Janus Capital and/or Janus Capital, and/or a subadviser to a Fund. The Trustees concluded that Janus Capital’s and the subadvisers’ use of these types of client commission arrangements to obtain proprietary and third-party research products and services was consistent with regulatory requirements and guidelines and was likely to benefit each Fund. The Trustees also concluded that, other than the services provided by Janus Capital and its affiliates and subadvisers pursuant to the agreements and the fees to be paid by each Fund therefor, the Funds and Janus Capital and the subadvisers may potentially benefit from their relationship with each other in other ways. They concluded that Janus Capital and/or the subadvisers benefits from the receipt of research products and services acquired through commissions paid on portfolio transactions of the Funds and that the Funds benefit from Janus Capital’s and/or the subadvisers’ receipt of those products and services as well as research products and services acquired through commissions paid by other clients of Janus Capital and/or other clients of the subadvisers. They further concluded that the success of any Fund could attract other business to Janus Capital, the subadvisers or other Janus funds, and that the success of Janus Capital and the subadvisers could enhance Janus Capital’s and the subadvisers’ ability to serve the Funds.
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Additional Information (unaudited)
The Management Commentary in this report includes valuable insight as well as statistical information to help you understand how your Fund’s performance and characteristics stack up against those of comparable indices.
If the Fund invests in foreign securities, this report may include information about country exposure. Country exposure is based primarily on the country of risk. A company may be allocated to a country based on other factors such as location of the company’s principal office, the location of the principal trading market for the company’s securities, or the country where a majority of the company’s revenues are derived.
Please keep in mind that the opinions expressed in the Management Commentary are just that: opinions. They are a reflection based on best judgment at the time this report was compiled, which was June 30, 2017. As the investing environment changes, so could opinions. These views are unique and are not necessarily shared by fellow employees or by Janus Henderson in general.
Performance Overviews
Performance overview graphs compare the performance of a hypothetical $10,000 investment in the Fund with one or more widely used market indices. When comparing the performance of the Fund with an index, keep in mind that market indices are not available for investment and do not reflect deduction of expenses.
Average annual total returns are quoted for a Fund with more than one year of performance history. 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. Average annual total return does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemptions of Fund shares.
Cumulative total returns are quoted for a Fund with less than one year of performance history. Cumulative total return is the growth or decline in value of an investment over time, independent of the period of time involved. Cumulative total return does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemptions of Fund shares.
Pursuant to federal securities rules, expense ratios shown in the performance chart reflect subsidized (if applicable) and unsubsidized ratios. The total annual fund operating expenses ratio is gross of any fee waivers, reflecting the Fund’s unsubsidized expense ratio. The net annual fund operating expenses ratio (if applicable) includes contractual waivers of Janus Capital and reflects the Fund’s subsidized expense ratio. Ratios may be higher or lower than those shown in the “Financial Highlights” in this report.
Schedule of Investments
Following the performance overview section is the Fund’s Schedule of Investments. This schedule reports the types of securities held in the Fund 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.). Holdings are subject to change without notice.
The 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.
If the Fund invests in foreign securities, it will also provide a summary of investments by country. This summary reports the Fund exposure to different countries by providing the percentage of securities invested in each country. The country of each security represents the country of risk. The Fund’s Schedule of Investments relies upon the industry group and country classifications published by Barclays and/or MSCI Inc.
Tables listing details of individual forward currency contracts, futures, written options, swaptions, and swaps follow the Fund’s Schedule of Investments (if applicable).
Statement of Assets and Liabilities
This statement is often referred to as the “balance sheet.” It lists the assets and liabilities of the Fund on the last day of the reporting period.
The Fund’s 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 securities owned, and the receivable for Fund
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Useful Information About Your Fund Report (unaudited)
shares sold to investors but not yet settled. The Fund’s liabilities include payables for securities purchased but not yet settled, Fund 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 section entitled “Net Assets Consist of” breaks down the components of the Fund’s net assets. Because the Fund must distribute substantially all earnings, you will notice that a significant portion of net assets is shareholder capital.
The last section of this statement reports the net asset value (“NAV”) per share on the last day of the reporting period. The NAV is calculated by dividing the Fund’s net assets for each share class (assets minus liabilities) by the number of shares outstanding.
Statement of Operations
This statement details the Fund’s income, expenses, realized gains and losses on securities and currency transactions, and changes in unrealized appreciation or depreciation of Fund holdings.
The first section in this statement, entitled “Investment Income,” reports the dividends earned from securities and interest earned from interest-bearing securities in the Fund.
The next section reports the expenses incurred by the Fund, including the advisory fee paid to the investment adviser, transfer agent fees and expenses, and printing and postage for mailing statements, financial reports and prospectuses. Expense offsets and expense reimbursements, if any, are also shown.
The last section lists the amounts of realized gains or losses from investment and foreign currency transactions, and changes in unrealized appreciation or depreciation of investments and foreign currency-denominated assets and liabilities. The Fund will realize a gain (or loss) when it sells its position in a particular security. A change in unrealized gain (or loss) refers to the change in net appreciation or depreciation of the Fund during the reporting period. “Net Realized and Unrealized Gain/(Loss) on Investments” is affected both by changes in the market value of Fund holdings and by gains (or losses) realized during the reporting period.
Statements of Changes in Net Assets
These statements report the increase or decrease in the Fund’s net assets during the reporting period. Changes in the Fund’s net assets are attributable to investment operations, dividends and distributions to investors, and capital share transactions. This is important to investors because it shows exactly what caused the Fund’s 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 Fund’s investment operations. The Fund’s net assets may also change as a result of dividend and capital gains distributions to investors. If investors receive their dividends and/or distributions in cash, money is taken out of the Fund to pay the dividend and/or distribution. If investors reinvest their dividends and/or distributions, the Fund’s net assets will not be affected. If you compare the Fund’s “Net Decrease from Dividends and Distributions” to “Reinvested Dividends and Distributions,” you will notice that dividends and distributions have little effect on the Fund’s net assets. This is because the majority of the Fund’s investors reinvest their dividends and/or distributions.
The reinvestment of dividends and distributions is included under “Capital Share Transactions.” “Capital Shares” refers to the money investors contribute to the Fund through purchases or withdrawals via redemptions. The Fund’s net assets will increase and decrease in value as investors purchase and redeem shares from the Fund.
Financial Highlights
This schedule provides a per-share breakdown of the components that affect the Fund’s NAV for current and past reporting periods as well as total return, asset size, 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/(loss) per share. Following is the per share total of net gains/(losses), realized and unrealized. Per share dividends and distributions to investors are then subtracted to arrive at the NAV per share at the end of the period. The next line reflects the total return for the period. Also included are ratios of expenses and net investment income to average net assets.
The Fund’s expenses may be reduced through expense offsets and expense reimbursements. The ratios shown reflect expenses before and after any such offsets and reimbursements.
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Useful Information About Your Fund Report (unaudited)
The ratio of net investment income/(loss) summarizes the income earned less expenses, divided by the average net assets of the Fund during the reporting period. Do not confuse this ratio with the Fund’s yield. The net investment income ratio is not a true measure of the Fund’s yield because it does not take into account the dividends distributed to the Fund’s investors.
The next figure is the portfolio turnover rate, which measures the buying and selling activity in the Fund. Portfolio turnover is affected by market conditions, changes in the asset size of the Fund, fluctuating volume of shareholder purchase and redemption orders, the nature of the Fund’s investments, and the investment style and/or outlook of the portfolio manager(s) and/or investment personnel. A 100% rate implies that an amount equal to the value of the entire portfolio was replaced once during the fiscal 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 entire portfolio is traded every six months.
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Useful Information About Your Fund Report (unaudited)
Special meetings of shareholders were held on April 6, 2017 and adjourned and reconvened on April 18, 2017, April 25, 2017, April 28, 2017 and May 17, 2017 (together, the "meeting"). At the meeting, the following matters were voted on and approved by shareholders. Each vote reported represents one dollar of net asset value held on the record date for the meeting. The results of the meeting are noted below. | ||||||||||
Proposals | ||||||||||
1. To approve a new investment advisory agreement between the Trust, on behalf of the Fund, and Janus Capital Management LLC. | ||||||||||
| Number of Votes ($) |
| ||||||||
Record Date Votes ($) | Affirmative | Against | Abstain | BVN | Total | |||||
54,045,146.649 | 53,219,915.895 | 55,501.833 | 0.000 | 165,372.630 | 53,440,790.358 | |||||
Percentage of Total Outstanding Votes (%) |
| Percentage Voted (%) | ||||||||
Affirmative | Against | Abstain | BVN | Total | Affirmative | Against | Abstain | BVN | Total | |
98.473 | 0.103 | 0.000 | 0.306 | 98.882 | 99.587 | 0.104 | 0.000 | 0.309 | 100.000 | |
4. To elect an additional Trustee to the Board of Trustees of the Trust - Diane L. Wallace. | ||||||||||
| Number of Votes ($) |
| ||||||||
Record Date Votes ($) | Affirmative | Against | Abstain | BVN | Total | |||||
58,288,530,068.106 | 53,979,078,381.569 | 4,309,451,686.537 | 0.000 | 0.000 | 58,288,530,068.106 | |||||
Percentage of Total Outstanding Votes (%) |
| Percentage Voted (%) | ||||||||
Affirmative | Against | Abstain | BVN | Total | Affirmative | Against | Abstain | BVN | Total | |
54.258 | 4.332 | 0.000 | 0.000 | 58.590 | 92.607 | 7.393 | 0.000 | 0.000 | 100.000 | |
Alan A. Brown, William D. Cvengros, Raudline Etienne, William F. McCalpin, Gary A. Poliner, James T. Rothe, William D. Stewart and Linda S. Wolf continue to serve as Trustees following the meeting. | ||||||||||
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Shareholder Meeting (unaudited)
For federal income tax purposes, the Fund designated the following for the year ended June 30, 2017:
| |
Capital Gain Distributions | $50,520 |
Dividends Received Deduction Percentage | 36% |
Qualified Dividend Income Percentage | 52% |
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Janus Henderson Adaptive Global Allocation Fund
Designation Requirements (unaudited)
The Fund’s Statement of Additional Information includes additional information about the Trustees and officers and is available, without charge, by calling 1-877-335-2687.
The following are the Trustees and officers of the Trust, together with a brief description of their principal occupations during the last five years (principal occupations for certain Trustees may include periods over five years).
Each Trustee has served in that capacity since he or she 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 or her earlier death, resignation, retirement, incapacity, or removal. Under the Fund’s Governance Procedures and Guidelines, the policy is for Trustees to retire no later than the end of the calendar year in which the Trustee turns 75. The Trustees review the Fund’s Governance Procedures and Guidelines from time to time and may make changes they deem appropriate. The Fund’s 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 one other registered investment company advised by Janus Capital: Janus Aspen Series. Collectively, these two registered investment companies consist of 63 series or funds.
The Trust’s officers are elected annually by the Trustees for a one-year term. Certain officers also serve as officers of Janus Aspen Series. Certain officers of the Fund may also be officers and/or directors of Janus Capital. Except as otherwise disclosed, Fund officers receive no compensation from the Fund, except for the Fund’s Chief Compliance Officer, as authorized by the Trustees.
TRUSTEES | |||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years |
Independent Trustees | |||||
86 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Trustees and Officers (unaudited)
TRUSTEES | |||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years |
William F. McCalpin | Chairman Trustee | 1/08-Present 6/02-Present | Managing Partner, Impact Investments, Athena Capital Advisors LLC (independent registered investment advisor) (since 2016) and Managing Director, Holos Consulting LLC (provides consulting services to foundations and other nonprofit organizations). Formerly, Chief Executive Officer, Imprint Capital (impact investment firm) (2013-2015) and Executive Vice President and Chief Operating Officer of The Rockefeller Brothers Fund (a private family foundation) (1998-2006). | 63 | Director of Mutual Fund Directors Forum (a non-profit organization serving independent directors of U.S. mutual funds), Chairman of the Board and Director of The Investment Fund for Foundations Investment Program (TIP) (consisting of 2 funds), and Director of the F.B. Heron Foundation (a private grantmaking foundation). |
Janus Investment Fund | 87 |
Janus Henderson Adaptive Global Allocation Fund
Trustees and Officers (unaudited)
TRUSTEES | |||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years |
Alan A. Brown | Trustee | 1/13-Present | Executive Vice President, Institutional Markets, of Dividend Capital Group (private equity real estate investment management firm) (since 2012). Formerly, Executive Vice President and Co-Head, Global Private Client Group (2007-2010), Executive Vice President, Mutual Funds (2005-2007), and Chief Marketing Officer (2001-2005) of Nuveen Investments, Inc. (asset management). | 63 | Director of WTTW (PBS affiliate) (since 2003). Formerly, Director of MotiveQuest LLC (strategic social market research company) (2003-2016); and Director of Nuveen Global Investors LLC (2007-2011); Director of Communities in Schools (2004-2010); and Director of Mutual Fund Education Alliance (until 2010). |
88 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Trustees and Officers (unaudited)
TRUSTEES | |||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years |
William D. Cvengros | Trustee | 1/11-Present | Managing Member and Chief Executive Officer of SJC Capital, LLC (a personal investment company and consulting firm) (since 2002). Formerly, Venture Partner for The Edgewater Funds (a middle market private equity firm) (2002-2004); Chief Executive Officer and President of PIMCO Advisors Holdings L.P. (a publicly traded investment management firm) (1994-2000); and Chief Investment Officer of Pacific Life Insurance Company (a mutual life insurance and annuity company) (1987-1994). | 63 | Advisory Board Member, Innovate Partners Emerging Growth and Equity Fund I (early stage venture capital fund) (since 2014) and Managing Trustee of National Retirement Partners Liquidating Trust (since 2013). Formerly, Chairman, National Retirement Partners, Inc. (formerly a network of advisors to 401(k) plans) (2005-2013); Director of Prospect Acquisition Corp. (a special purpose acquisition corporation) (2007-2009); Director of RemedyTemp, Inc. (temporary help services company) (1996-2006); and Trustee of PIMCO Funds Multi-Manager Series (1990-2000) and Pacific Life Variable Life & Annuity Trusts (1987-1994). |
Janus Investment Fund | 89 |
Janus Henderson Adaptive Global Allocation Fund
Trustees and Officers (unaudited)
TRUSTEES | |||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years |
Raudline Etienne 151 Detroit Street Denver, CO 80206 DOB: 1965 | Trustee | 6/16-Present | Senior Advisor, Albright Stonebridge Group LLC (global strategy firm) (since 2016). Formerly, Senior Vice President (2011-2015), Albright Stonebridge Group LLC; and Deputy Comptroller and Chief Investment Officer, New York State Common Retirement Fund (public pension fund) (2008-2011). | 63 | Director of Brightwood Capital Advisors, LLC (since 2014). |
Gary A. Poliner 151 Detroit Street Denver, CO 80206 DOB: 1953 | Trustee | 6/16-Present | Retired. Formerly, President (2010-2013) and Executive Vice President and Chief Risk Officer (2009-2012) of Northwestern Mutual Life Insurance Company. | 63 | Director of MGIC Investment Corporation (private mortgage insurance) (since 2013) and West Bend Mutual Insurance Company (property/casualty insurance) (since 2013). Formerly, Trustee of Northwestern Mutual Life Insurance Company (2010-2013); Chairman and Director of Northwestern Mutual Series Fund, Inc. (2010-2012); and Director of Frank Russell Company (global asset management firm) (2008-2013). |
90 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Trustees and Officers (unaudited)
TRUSTEES | |||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years |
James T. Rothe | Trustee | 1/97-Present | Co-founder and Managing Director of Roaring Fork Capital SBIC, L.P. (SBA SBIC fund focusing on private investment in public equity firms), and Professor Emeritus of Business of the University of Colorado, Colorado Springs, CO (since 2004). Formerly, Professor of Business of the University of Colorado (2002-2004), and Distinguished Visiting Professor of Business (2001-2002) of Thunderbird (American Graduate School of International Management), Glendale, AZ. | 63 | Formerly, Director of Red Robin Gourmet Burgers, Inc. (RRGB) (2004- 2014). |
William D. Stewart | Trustee | 6/84-Present | Retired. Formerly, President and founder of HPS Products and Corporate Vice President of MKS Instruments, Boulder, CO (a provider of advanced process control systems for the semiconductor industry) (1976-2012). | 63 | None |
Janus Investment Fund | 91 |
Janus Henderson Adaptive Global Allocation Fund
Trustees and Officers (unaudited)
TRUSTEES | |||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years |
Diane L. Wallace | Trustee | 6/17-Present | Retired | 63 | Independent Trustee, Henderson Global Funds (13 portfolios) (2015 – 2017); Independent Trustee, State Farm Associates’ Funds Trust, State Farm Mutual Fund Trust, and State Farm Variable Product Trust (28 portfolios) (since 2013). |
Linda S. Wolf | Trustee | 11/05-Present | Retired. Formerly, Chairman and Chief Executive Officer of Leo Burnett (Worldwide) (advertising agency) (2001-2005). | 63 | Director of Chicago Community Trust (Regional Community Foundation), Chicago Council on Global Affairs, InnerWorkings (U.S. provider of print procurement solutions to corporate clients), Lurie Children’s Hospital (Chicago, IL), Rehabilitation Institute of Chicago, Walmart, and Wrapports, LLC (digital communications company). Formerly, Director of Chicago Convention & Tourism Bureau (until 2014) and The Field Museum of Natural History (Chicago, IL) (until 2014). |
92 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Trustees and Officers (unaudited)
OFFICERS | |||
Name, Address, and Age | Positions Held with the Trust | Term of Office* and Length of Time Served | Principal Occupations During the Past Five Years |
Ashwin Alankar | Executive Vice President and Co-Portfolio Manager | 6/15-Present | Senior Vice President and Global Head of Asset Allocation and Risk Management of Janus Capital and Portfolio Manager for other Janus Henderson accounts. Formerly, Co-Chief Investment Officer of AllianceBernstein’s Tail Risk Parity (2010-2014). |
Enrique Chang | Executive Vice President and Co-Portfolio Manager | 6/15-Present | Global Chief Investment Officer of Janus Henderson Investors and Portfolio Manager for other Janus Henderson accounts. Formerly, President, Head of Investments of Janus Capital (2016-2017); and Chief Investment Officer Equities and Asset Allocation of Janus Capital (2013-2016). During the five years prior to 2013, Mr. Chang was Chief Investment Officer and Executive Vice President for American Century Investments. |
Bruce L. Koepfgen | President and Chief Executive Officer | 7/14-Present | Head of North America at Janus Henderson Investors and Janus Capital Management LLC (since 2017); Executive Vice President and Director of Janus International Holding LLC (since 2011); Executive Vice President of Janus Distributors LLC (since 2011); Vice President and Director of INTECH Investment Management LLC (since 2011); Executive Vice President and Director of Perkins Investment Management LLC (since 2011); and Executive Vice President and Director of Janus Management Holdings Corporation (since 2011). Formerly, President of Janus Capital Group Inc. and Janus Capital Management LLC (2013-2017); Executive Vice President of Janus Services LLC (2011-2015), Janus Capital Group Inc. and Janus Capital Management LLC (2011-2013); and Chief Financial Officer of Janus Capital Group Inc., Janus Capital |
Janus Investment Fund | 93 |
Janus Henderson Adaptive Global Allocation Fund
Trustees and Officers (unaudited)
Management LLC, Janus Distributors LLC, Janus Management Holdings Corporation, and Janus Services LLC (2011-2013). | |||
David R. Kowalski | Vice President and Chief Compliance Officer | 6/02-Present | Chief Risk Officer of Janus Henderson Investors (since 2017); Senior Vice President (since 2005) and Chief Risk Officer (since 2017) of Janus Capital Management LLC; Senior Vice President of Janus Distributors LLC (since 2005); Senior Vice President (since 2005) and Chief Compliance Officer (since 2004) of Janus Services LLC; Vice President of INTECH Investment Management LLC (since 2005) and Perkins Investment Management LLC (since 2009). Formerly, Chief Compliance Officer of Janus Capital (2000–2017); Chief Compliance Officer of Janus Distributors LLC (2002-2017) and Director of The Janus Foundation (2012-2017). |
Jesper Nergaard | Chief Financial Officer | 3/05-Present | Vice President of Janus Capital and Janus Services LLC. |
Kathryn L. Santoro | Vice President, Chief Legal Counsel, and Secretary | 12/16-Present | Vice President of Janus Capital and Janus Services LLC (since 2016). Formerly, Vice President and Associate Counsel of Curian Capital, LLC and Curian Clearing LLC (2013-2016); and General Counsel and Secretary (2011-2012) and Vice President (2009-2012) of Old Mutual Capital, Inc. |
94 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Trustees and Officers (unaudited)
* Officers are elected at least annually by the Trustees for a one-year term and may also be elected from time to time by the Trustees for an interim period. |
Janus Investment Fund | 95 |
Janus Henderson Adaptive Global Allocation Fund
Trustees and Officers (unaudited)
NotesPage1
96 | JUNE 30, 2017 |
Janus Henderson Adaptive Global Allocation Fund
Notes
NotesPage1
Janus Investment Fund | 97 |
Janus Henderson Adaptive Global Allocation Fund
Notes
Knowledge. Shared
At Janus Henderson, we believe in the sharing of expert insight for better investment and business decisions. We call this ethos Knowledge. Shared.
Learn more by visiting janushenderson.com.
| ||||||||
This report is submitted for the general information of shareholders of the Fund. It is not an offer or solicitation for the Fund and is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. | ||||||||
Janus Henderson, Janus, Henderson, Perkins, INTECH and Henderson Geneva are trademarks or registered trademarks of Janus Henderson Investors. © Janus Henderson Investors. The name Janus Henderson Investors includes HGI Group Limited, Henderson Global Investors (Brand Management) Sarl and Janus International Holding LLC. Funds distributed by Janus Henderson Distributors | ||||||||
125-02-93059 08-17 | ||||||||
98 | JUNE 30, 2017 |
ANNUAL REPORT June 30, 2017 | |||
Janus Henderson All Asset Fund (formerly named Henderson All Asset Fund) | |||
Janus Investment Fund | |||
| |||
HIGHLIGHTS · Portfolio management perspective · Investment strategy behind your fund · Fund performance, characteristics | |||
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Table of Contents
Janus Henderson All Asset Fund
Janus Henderson All Asset Fund (unaudited)
PERFORMANCE
The Janus Henderson All Asset Fund’s Class I Shares generated a positive absolute return of 6.38% over the 11-month period from August 1, 2016, to June 30, 2017. The Fund’s primary benchmark of 3-Month USD LIBOR returned 0.81% and its secondary benchmark, the MSCI World Index, returned 13.40%. Since inception in 2012, the Fund has returned 4.05%.
INVESTMENT ENVIRONMENT
The reporting period saw both the birth and death of the global reflationary environment that swept through markets over the latter half of 2016. Despite this, and a number of monumental geo-political events, the period was characterized by positive performance from most risk assets and an environment of record low cross-asset volatility.
Equity markets surged over the period as renewed optimism about global growth began to feed into company earnings forecasts, which saw their first upwards revisions for a number of years. The growth environment was projected to be both more favorable and more stable than previous years with all 20 of the G20 largest economies predicted to record positive growth for 2017. This would be the first such occurrence since 2010. The result was a slew of positive performance across equity markets with the aggregate MSCI World Index recording strong gains.
Performance was particularly robust in international equity markets, with a falling dollar providing additional foreign currency return and boosting performance for European and Japanese markets to the U.S. investor. Europe was the standout region as positive investor sentiment returned to the region, with political uncertainty abating and macro momentum improving.
Emerging markets (EM) also continued their strong run, concentrated in Asia (particularly China and Korea). EM was both a beneficiary of economic improvement in developed markets as well as an improvement in fundamentals across some of the most economically challenged countries in the region (Brazil being the most notable).
While equity markets continued to climb higher, fixed income markets began to feel the weight of shifting monetary policy expectations and a gradual retreat away from never-ending central bank liquidity. In aggregate, global government bonds lost 5% over the period despite some skepticism over the potential speed of monetary policy tightening across the globe. The U.S. and Japan were the hardest hit given the continued tightening by the Federal Reserve in the U.S. and a series of innovative monetary policy measures from the Bank of Japan. Only EM sovereigns managed to buck the trend and deliver positive absolute returns over the period.
Credit was more constructive, particularly in the high yield space, where a major tightening in spreads helped to offset the negative duration effect. Secured loans and alternative credit also continued to perform well as corporate fundamentals improved against an improving global macro backdrop.
PERFORMANCE DISCUSSION
The Fund outperformed its primary benchmark over the reporting period. Outperformance was largely generated by the Fund’s risk assets with equity and credit positions providing the majority of returns.
In particular, European and international equities were the key regional contributors with positions in Euro Stoxx and TOPIX futures providing an efficient exposure to high-performing regional equity markets. That said, some of the Fund’s more nuanced positions also added value, including certain Exchange-Traded Fund (ETF) strategies within EAFE (Europe, Australasia, Far East) Equities.
We were able to add value through a number of short-term tactical positions in various segments of the U.S. equity market. The Fund’s position in SPDR Regional
Janus Investment Fund | 1 |
Janus Henderson All Asset Fund (unaudited)
Banks ETF contributed to performance as this fund was up 45% over the period.
Fixed income was more challenging, but the Fund still managed to generate positive returns across the majority of positions. Specifically, our preference to favor credit and inflation-linked assets over vanilla duration instruments such as U.S. Treasuries, proved successful, as did our continued allocation to less liquid areas of the market such as senior loans.
The top detractors over the period came from positions within alternatives, AQR Managed Futures Strategy and Sprott Physical Gold Trust being the largest. The AQR strategy struggled from anemic growth in the U.S. and falling oil prices. Lack of demand and a strong dollar were headwinds for Sprott Physical Gold Trust in the second half of 2016. However, near the end of the period, the commodity began to move higher on the back of weakening dollar, therefore we still hold the name. Additionally, our outright positions in U.S. Treasury futures that broadly broke-even, as well as some residual foreign exchange (FX) exposure, which reduced performance over the first half of the period. For example, a small position in sterling in the aftermath of the UK-EU referendum detracted. That said, overall it was a strong period for the Fund.
Please see the Derivative Instruments section in the “Notes to Financial Statements” for a discussion of derivatives used by the Fund.
OUTLOOK
Looking forward, we continue to be more positive than many on the outlook for the U.S. economy, which we believe is experiencing a temporary soft patch. Elsewhere, we maintain our view that the economic cycle is advancing across the developed economies and that we are likely to continue to see a retreat from extraordinary monetary policy as a result. Further, although we anticipate that the equilibrium rate of inflation in developed markets has decreased, we continue to expect a short-term pick up in global prices.
In this environment we continue to prefer risk assets, with equities our ultimate preference. However, we are cautioned by the mid-cycle dampening of volatility, which may begin to prompt complacency in some asset classes. Credit is the area that we feel most concerned about as spreads continue to challenge all-time tights, with the artificial hand of monetary policy holding prices far above fair value, in our view.
Thank you for your investment in Janus Henderson All Asset Fund.
2 | JUNE 30, 2017 |
Janus Henderson All Asset Fund (unaudited)
Fund At A Glance
June 30, 2017
Holdings - (% of Net Assets) | |||
Fidelity Investments Money Market Treasury Portfolio | 33.3 | % | |
Janus Henderson Emerging Markets Fund - Class N Shares | 4.3 | ||
ASG Global Alternatives Fund | 4.1 | ||
PIMCO Enhanced Short Maturity Active | 4.0 | ||
iShares TIPS Bond | 4.0 | ||
T Rowe Price US High Yield Fund | 3.9 | ||
Janus Henderson Global Equity Income Fund - Class N Shares | 3.6 | ||
iShares Edge MSCI Min Vol Emerging Markets | 3.5 | ||
iShares iBoxx $ Investment Grade Corporate Bond | 3.5 | ||
PowerShares International Dividend Achievers Portfolio | 3.3 | ||
AQR Equity Market Neutral Fund | 3.2 | ||
BlackRock Emerging Markets Flexible Dynamic Bond Portfolio | 3.2 | ||
US Cities Fund LP | 3.0 | ||
iShares Edge MSCI Min Vol EAFE | 2.9 | ||
AQR Managed Futures Strategy Fund | 2.9 | ||
Janus Henderson Strategic Income Fund - Class N Shares | 2.8 | ||
SPDR S&P Regional Banking | 2.8 | ||
Sprott Physical Gold Trust | 2.7 | ||
PowerShares Senior Loan Portfolio | 2.5 | ||
VanEck Vectors J.P. Morgan EM Local Currency Bond | 2.0 | ||
iShares JP Morgan USD Emerging Markets Bond | 2.0 | ||
Vanguard Information Technology | 1.5 |
Asset Allocation - (% of Net Assets) | |||
Exchange-Traded Funds (ETFs) | 34.7% | ||
Money Markets | 33.3% | ||
Fixed Income Funds | 13.5% | ||
Alternative Funds | 10.2% | ||
Equity Funds | 7.3% | ||
Other | 1.0% | ||
100.0% | |||
Janus Investment Fund | 3 |
Janus Henderson All Asset Fund (unaudited)
Performance
See important disclosures on the next page. |
| Expense Ratios - | |||||||||
Average Annual Total Return - for the periods ended June 30, 2017 |
|
| per the June 5, 2017 prospectuses | |||||||
|
| One | Five | Since |
|
| Total Annual Fund | Net Annual Fund | ||
Class A Shares at NAV |
| 8.10% | 4.35% | 3.79% |
|
| 1.54% | 1.29% | ||
Class A Shares at MOP |
| 1.85% | 3.12% | 2.63% |
|
|
|
| ||
Class C Shares at NAV | 7.17% | 3.55% | 3.00% |
|
| 2.30% | 2.05% | |||
Class C Shares at CDSC |
| 6.17% | 3.55% | 3.00% |
|
|
|
| ||
Class D Shares(1) |
| 8.00% | 4.27% | 3.72% |
|
| 1.37% | 1.11% | ||
Class I Shares |
| 8.31% | 4.59% | 4.05% |
|
| 1.27% | 1.03% | ||
Class N Shares |
| 8.36% | 4.45% | 3.91% |
|
| 1.23% | 0.97% | ||
Class S Shares |
| 7.68% | 3.93% | 3.39% |
|
| 1.71% | 1.46% | ||
Class T Shares |
| 7.91% | 4.18% | 3.63% |
|
| 1.46% | 1.21% | ||
3-Month USD LIBOR |
|
| 0.85% | 0.43% | 0.43% |
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| |
MSCI World Index (Net) |
|
| 18.20% | 11.38% | 9.72% |
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MSCI World Index (Gross) |
|
| 18.86% | 12.01% | 10.35% |
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Morningstar Quartile - Class I Shares |
| 3rd | 4th | 4th |
|
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Morningstar Ranking - based on total returns for World Allocation Funds |
| 334/493 | 311/393 | 299/389 |
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Returns quoted are past performance and do not guarantee future results; current performance may be lower or higher. Investment returns and principal value will vary; there may be a gain or loss when shares are sold. For the most recent month-end performance call 800.668.0434 (or 800.525.3713 if you hold shares directly with Janus Henderson) or visit janushenderson.com/performance (or janushenderson.com/allfunds if you hold shares directly with Janus Henderson).
Maximum Offering Price (MOP) returns include the maximum sales charge of 5.75%. Net Asset Value (NAV) returns exclude this charge, which would have reduced returns.
CDSC returns include a 1% contingent deferred sales charge (CDSC) on Shares redeemed within 12 months of purchase. Net Asset Value (NAV) returns exclude this charge, which would have reduced returns.
4 | JUNE 30, 2017 |
Janus Henderson All Asset Fund (unaudited)
Performance
The expense ratios shown are estimated.
Performance may be affected by risks that include those associated with non-diversification, portfolio turnover, short sales, potential conflicts of interest, foreign and emerging markets, initial public offerings (IPOs), high-yield and high-risk securities, undervalued, overlooked and smaller capitalization companies, real estate related securities including Real Estate Investment Trusts (REITs), derivatives, and commodity-linked investments. Each product has different risks. Please see the prospectus for more information about risks, holdings and other details.
Returns include reinvestment of all dividends and distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemptions of Fund shares. The returns do not include adjustments in accordance with generally accepted accounting principles required at the period end for financial reporting purposes.
See Financial Highlights for actual expense ratios during the reporting period.
Returns of the Fund shown prior to June 5, 2017 are those for Henderson All Asset Fund (the “Predecessor Fund”), which merged into the Fund after the close of business on June 2, 2017. The Predecessor Fund was advised by Henderson Global Investors (North America) Inc. and subadvised by Henderson Investment Management Limited. Class A Shares, Class C Shares, Class I Shares, and Class R6 Shares of the Predecessor Fund were reorganized into Class A Shares, Class C Shares, Class I Shares, and Class N Shares, respectively, of the Fund. In connection with this reorganization, certain shareholders of the Predecessor Fund who held shares directly with the Predecessor Fund and not through an intermediary had the Class A Shares, Class C Shares, Class I Shares, and Class N Shares of the Fund received in the reorganization automatically exchanged for Class D Shares of the Fund following the reorganization. Class A Shares, Class C Shares, and Class I Shares of the Predecessor Fund commenced operations with the Predecessor Fund’s inception on March 30, 2012. Class R6 Shares of the Predecessor Fund commenced operations on November 30, 2015.
Performance of Class A Shares shown for periods prior to June 5, 2017 reflects the performance of Class A Shares of the Predecessor Fund, calculated using the fees and expenses of Class A Shares of the Predecessor Fund, in effect during the periods shown, net of any fee and expense limitations or waivers.
Performance of Class C Shares shown for periods prior to June 5, 2017 reflects the performance of Class C Shares of the Predecessor Fund, calculated using the fees and expenses of Class C Shares of the Predecessor Fund, in effect during the periods shown, net of any fee and expense limitations or waivers.
Performance of Class I Shares shown for periods prior to June 5, 2017 reflects the performance of Class I Shares of the Predecessor Fund, calculated using the fees and expenses of Class I Shares of the Predecessor Fund, in effect during the periods shown, net of any applicable fee and expense limitations or waivers.
Performance of Class N Shares shown for periods prior to June 5, 2017 reflects the performance of Class R6 Shares of the Predecessor Fund, calculated using the fees and expenses of Class R6 Shares of the Predecessor Fund, in effect during the periods shown, net of any applicable fee and expense limitations or waivers, except that for periods prior to November 30, 2015, performance for Class N Shares reflects the performance of Class I Shares of the Predecessor Fund, calculated using the estimated fees and expenses of Class N Shares, net of any applicable fee and expense limitations or waivers.
Performance of Class S Shares shown for periods prior to June 5, 2017 reflects the performance of Class I Shares of the Predecessor Fund, calculated using the estimated fees and expenses of Class S Shares, net of any applicable fee and expense limitations or waivers.
Performance of Class T Shares shown for periods prior to June 5, 2017 reflects the performance of Class I Shares of the Predecessor Fund, calculated using the estimated fees and expenses of Class T Shares, net of any applicable fee and expense limitations or waivers.
Performance of Class D Shares shown for periods prior to June 5, 2017 reflects the performance of Class I Shares of the Predecessor Fund, calculated using the estimated fees and expenses of Class D Shares, net of any applicable fee and expense limitations or waivers.
Janus Investment Fund | 5 |
Janus Henderson All Asset Fund (unaudited)
Performance
If each share class of the Fund had been available during periods prior to its commencement, the performance shown may have been different. The performance shown for periods following the Fund’s commencement of each share class reflects the fees and expenses of each respective share class, net of any applicable fee and expense limitations or waivers. Please refer to the Fund’s prospectuses for further details concerning historical performance.
Ranking is for the share class shown only; other classes may have different performance characteristics. When an expense waiver is in effect, it may have a material effect on the total return, and therefore the ranking for the period.
© 2017 Morningstar, Inc. All Rights Reserved.
There is no assurance that the investment process will consistently lead to successful investing.
See Notes to Schedule of Investments and Other Information for index definitions.
Index performance does not reflect the expenses of managing a portfolio as an index is unmanaged and not available for direct investment.
See “Useful Information About Your Fund Report.”
Effective June 5, 2017, the Fund’s performance is compared to the MSCI World Index net of foreign withholding taxes. Previously, the Predecessor Fund used the MSCI World Index gross of foreign withholding taxes. The net version of the benchmark is believed to more closely reflect the Fund’s investment universe.
*The Predecessor Fund’s inception date – March 30, 2012
(1) Closed to certain new investors.
6 | JUNE 30, 2017 |
Janus Henderson All Asset Fund (unaudited)
Expense Examples
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, such as sales charges (loads) on purchase payments (applicable to Class A Shares only); and (2) ongoing costs, including management fees; 12b-1 distribution and shareholder servicing fees; transfer agent fees and expenses payable pursuant to the Transfer Agency Agreement; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The example is based upon an investment of $1,000 invested at the beginning of the period and held for the six-months indicated, unless noted otherwise in the table and footnotes below.
Actual Expenses
The information in the table under the heading “Actual” provides information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the appropriate column for your share class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading “Hypothetical (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based upon the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Additionally, for an analysis of the fees associated with an investment in any share class or other similar funds, please visit www.finra.org/fundanalyzer.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. These fees are fully described in the Fund’s prospectuses. Therefore, the hypothetical examples are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
Actual | Hypothetical | |||||||||
| Beginning | Ending | Expenses |
| Beginning | Ending | Expenses | Net Annualized | ||
Class A Shares | $1,000.00 | $1,041.90 | $3.48 |
| $1,000.00 | $1,020.63 | $4.21 | 0.84% | ||
Class C Shares | $1,000.00 | $1,037.70 | $6.66 |
| $1,000.00 | $1,016.86 | $8.00 | 1.60% | ||
Class D Shares | $1,000.00 | $1,040.70 | $0.50 |
| $1,000.00 | $1,021.37 | $3.46 | 0.69% | ||
Class I Shares | $1,000.00 | $1,042.00 | $2.43 |
| $1,000.00 | $1,021.92 | $2.91 | 0.58% | ||
Class N Shares | $1,000.00 | $1,042.10 | $2.48 |
| $1,000.00 | $1,021.87 | $2.96 | 0.59% | ||
Class S Shares | $1,000.00 | $1,039.50 | $0.79 |
| $1,000.00 | $1,019.39 | $5.46 | 1.09% | ||
Class T Shares | $1,000.00 | $1,040.40 | $0.60 |
| $1,000.00 | $1,020.73 | $4.11 | 0.82% | ||
* | Actual Expenses Paid During Period for Class D Shares, Class S Shares and Class T Shares reflect only the inception period for the Fund (June 5, 2017 to June 30, 2017) and are equal to the Net Annualized Expense Ratio multiplied by the average account value over the period, multiplied by 26/365 (to reflect the period). Therefore, actual expenses shown are lower than would be expected for a six-month period. For all other share classes, the Actual Expenses Paid During Period are equal to the Net Annualized Expense Ratio multiplied by the average account value over the period, multiplied by 150/365 (to reflect the one-half year period). | |||||||||
† | Hypothetical Expenses Paid During Period are equal to the Net Annualized Expense Ratio multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses in the examples include the effect of applicable fee waivers and/or expense reimbursements, if any. Had such waivers and/or reimbursements not been in effect, your expenses would have been higher. Please refer to the Notes to Financial Statements or the Fund’s prospectuses for more information regarding waivers and/or reimbursements. | |||||||||
Janus Investment Fund | 7 |
Janus Henderson All Asset Fund
Schedule of Investments
June 30, 2017
| Value | ||||||
Investment Companies – 99.0% | |||||||
Alternative Funds – 10.2% | |||||||
AQR Equity Market Neutral Fund | .129,500 | $1,568,249 | |||||
AQR Managed Futures Strategy Fund | 158,342 | 1,393,410 | |||||
ASG Global Alternatives Fund* | 186,847 | 1,961,889 | |||||
4,923,548 | |||||||
Equity Funds – 7.3% | |||||||
Janus Henderson Emerging Markets Fund - Class N Shares£ | 210,214 | 2,079,013 | |||||
US Cities Fund LP* | 1 | 1,422,306 | |||||
3,501,319 | |||||||
Exchange-Traded Funds (ETFs) – 34.7% | |||||||
iShares Edge MSCI Min Vol EAFE | 20,509 | 1,420,043 | |||||
iShares Edge MSCI Min Vol Emerging Markets | 30,638 | 1,697,345 | |||||
iShares iBoxx $ Investment Grade Corporate Bond | 13,937 | 1,679,548 | |||||
iShares JP Morgan USD Emerging Markets Bond | 8,420 | 962,911 | |||||
iShares TIPS Bond | 16,895 | 1,916,400 | |||||
PIMCO Enhanced Short Maturity Active | 19,098 | 1,942,649 | |||||
PowerShares International Dividend Achievers Portfolio | 103,247 | 1,586,906 | |||||
PowerShares Senior Loan Portfolio | 52,111 | 1,205,849 | |||||
SPDR S&P Regional Banking | 23,902 | 1,313,415 | |||||
Sprott Physical Gold Trust* | 129,644 | 1,313,294 | |||||
VanEck Vectors J.P. Morgan EM Local Currency Bond | 51,596 | 974,648 | |||||
Vanguard Information Technology | 5,023 | 707,439 | |||||
16,720,447 | |||||||
Fixed Income Funds – 13.5% | |||||||
BlackRock Emerging Markets Flexible Dynamic Bond Portfolio | 163,868 | 1,538,719 | |||||
Janus Henderson Global Equity Income Fund - Class N Shares£ | 231,489 | 1,752,372 | |||||
Janus Henderson Strategic Income Fund - Class N Shares£ | 142,014 | 1,340,612 | |||||
T Rowe Price US High Yield Fund | 183,875 | 1,853,463 | |||||
6,485,166 | |||||||
Money Markets – 33.3% | |||||||
Fidelity Investments Money Market Treasury Portfolio, 0.8327%ºº | 16,021,891 | 16,021,891 | |||||
Total Investments (total cost $47,011,535) – 99.0% | 47,652,371 | ||||||
Cash, Receivables and Other Assets, net of Liabilities – 1.0% | 475,152 | ||||||
Net Assets – 100% | $48,127,523 | ||||||
Summary of Investments by Country - (Long Positions) (unaudited) | |||||
% of | |||||
Investment | |||||
Country | Value | Securities | |||
United States | $46,339,077 | 97.2 | % | ||
Canada | 1,313,294 | 2.8 | |||
Total | $47,652,371 | 100.0 | % |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
8 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Schedule of Investments
June 30, 2017
Schedule of Foreign Currency Contracts, Open |
Counterparty/ Currency | Settlement Date | Currency Units Purchased | Currency Value | Unrealized Appreciation/ (Depreciation) | ||||
BNP Paribas: | ||||||||
British Pound | 7/26/17 | (1,968,069) | $ | (2,564,954) | $ | 44,891 | ||
Euro | 7/26/17 | (3,415,640) | (3,905,944) | 75,958 | ||||
Japanese Yen | 7/26/17 | (408,660,405) | (3,637,961) | (45,345) | ||||
Total | $ | (10,108,859) | $ | 75,504 | ||||
Schedule of Futures | ||||||||||||||||||||||
Description | Number of Contracts | Expiration Date | Unrealized Appreciation/ (Depreciation) | Variation Margin | ||||||||||||||||||
Futures Purchased: | ||||||||||||||||||||||
10-Year US Treasury Note | 15 | 9/17 | $ | (4,922) | $ | (11,250) | ||||||||||||||||
EURO STOXX 50 Index | 102 | 9/17 | (133,956) | (115,434) | ||||||||||||||||||
FTSE 100 Index | 27 | 9/17 | (68,913) | (45,052) | ||||||||||||||||||
NIKKEI 225 | 6 | 9/17 | 6,936 | (6,924) | ||||||||||||||||||
S&P 500 E-mini | 6 | 9/17 | (5,070) | 120 | ||||||||||||||||||
TOPIX Index | 15 | 9/17 | 28,010 | (2,626) | ||||||||||||||||||
Total | $ | (177,915) | $ | (181,166) | ||||||||||||||||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Investment Fund | 9 |
Janus Henderson All Asset Fund
Notes to Schedule of Investments and Other Information
LIBOR (London Interbank Offered Rate) | LIBOR (London Interbank Offered Rate) is a short-term interest rate that banks offer one another and generally represents current cash rates. |
MSCI World IndexSM | MSCI World IndexSM reflects the equity market performance of global developed markets. |
LP | Limited Partnership |
SPDR | Standard & Poor's Depositary Receipt |
* | Non-income producing security. |
ºº | Rate shown is the 7-day yield as of June 30, 2017. |
£ | The Fund may invest in certain securities that are considered affiliated companies. As defined by the Investment Company Act of 1940, as amended, an affiliated company is one in which the Fund owns 5% or more of the outstanding voting securities, or a company which is under common ownership or control. The following securities were considered affiliated companies for all or some portion of the period ended June 30, 2017. Unless otherwise indicated, all information in the table is for the period ended June 30, 2017. |
Share | Share | |||||||||||||||||||||||||||||||||
Balance | Balance | Realized | Dividend | Value | ||||||||||||||||||||||||||||||
at 7/31/16 | Purchases | Sales | at 6/30/17 | Gain/(Loss) | Income | at 6/30/17 | ||||||||||||||||||||||||||||
Henderson High Yield Opportunities Fund | ||||||||||||||||||||||||||||||||||
174,852 | 8,946 | (183,798)(1) | — | $— | $88,291 | $— | ||||||||||||||||||||||||||||
Henderson Unconstrained Bond Fund | ||||||||||||||||||||||||||||||||||
258,996 | 1,019 | (260,015) | — | (213,477) | 9,388 | — | ||||||||||||||||||||||||||||
Janus Henderson Emerging Markets Fund(2) - Class N Shares | ||||||||||||||||||||||||||||||||||
— | 210,214 | — | 210,214 | — | 15,925 | 2,079,013 | ||||||||||||||||||||||||||||
Janus Henderson Global Equity Income Fund(3) - Class N Shares | ||||||||||||||||||||||||||||||||||
216,229 | 15,260 | — | 231,489 | — | 112,160 | 1,752,372 | ||||||||||||||||||||||||||||
Janus Henderson Strategic Income Fund(4) - Class N Shares | ||||||||||||||||||||||||||||||||||
137,900 | 4,114 | — | 142,014 | — | 38,392 | 1,340,612 | ||||||||||||||||||||||||||||
Total | $(213,477) | $264,156 | $5,171,997 | |||||||||||||||||||||||||||||||
(1) | All or a portion is the result of a corporate action. | |||||||||||||||||||||||||||||||||
(2) | Formerly named Henderson Emerging Markets Fund. | |||||||||||||||||||||||||||||||||
(3) | Formerly named Henderson Global Equity Income Fund. | |||||||||||||||||||||||||||||||||
(4) | Formerly named Henderson Strategic Income Fund. | |||||||||||||||||||||||||||||||||
10 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Notes to Schedule of Investments and Other Information
The following is a summary of the inputs that were used to value the Fund’s investments in securities and other financial instruments as of June 30, 2017. | |||||||||||||
Valuation Inputs Summary | |||||||||||||
Level 2 - | Level 3 - | ||||||||||||
Level 1 - | Other Significant | Significant | |||||||||||
Quotes Prices | Observable Inputs | Unobservable Inputs | |||||||||||
Assets | |||||||||||||
Investments in Securities: | |||||||||||||
Investment Companies | |||||||||||||
Alternative Funds | $ | 4,923,548 | $ | - | $ | - | |||||||
Equity Funds | 2,079,013 | 1,422,306 | - | ||||||||||
Exchange-Traded Funds (ETFs) | 16,720,447 | - | - | ||||||||||
Fixed Income Funds | 6,485,166 | - | - | ||||||||||
Money Markets | 16,021,891 | - | - | ||||||||||
Total Investments in Securities | $ | 46,230,065 | $ | 1,422,306 | $ | - | |||||||
Other Financial Instruments(a): | |||||||||||||
Forward Currency Contracts | - | 120,849 | - | ||||||||||
Variation Margin Receivable | 120 | - | - | ||||||||||
Total Assets | $ | 46,230,185 | $ | 1,543,155 | $ | - | |||||||
Liabilities | |||||||||||||
Other Financial Instruments(a): | |||||||||||||
Forward Currency Contracts | - | 45,345 | - | ||||||||||
Variation Margin Payable | 181286 | - | - | ||||||||||
Total Liabilities | $ | 181,286 | $ | 45,345 | $ | - | |||||||
(a) | Other financial instruments include forward currency, futures, written options, written swaptions, and swap contracts. Forward currency contracts are reported at their unrealized appreciation/(depreciation) at measurement date, which represents the change in the contract's value from trade date. Futures, certain written options on futures, and centrally cleared swap contracts are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. Written options, written swaptions, and other swap contracts are reported at their market value at measurement date. | ||||||||||||
Janus Investment Fund | 11 |
Janus Henderson All Asset Fund
Statement of Assets and Liabilities
June 30, 2017
See footnotes at the end of the Statement. |
|
|
|
|
|
|
|
Assets: | ||||||
Investments, at cost | $ | 47,011,535 | ||||
Unaffiliated investments, at value | 42,480,374 | |||||
Affiliated investments, at value | 5,171,997 | |||||
Restricted cash (Note 1) | 566,180 | |||||
Forward currency contracts | 120,849 | |||||
Cash denominated in foreign currency(1) | 1,200 | |||||
Variation margin receivable | 120 | |||||
Non-interested Trustees' deferred compensation | 856 | |||||
Receivables: | ||||||
Fund shares sold | 38,650 | |||||
Dividends | 23,673 | |||||
Foreign tax reclaims | 570 | |||||
Other assets | 46,657 | |||||
Total Assets |
|
| 48,451,126 |
| ||
Liabilities: | ||||||
Forward currency contracts | 45,345 | |||||
Variation margin payable | 181,286 | |||||
Payables: | — | |||||
Fund shares repurchased | 40,858 | |||||
Professional fees | 30,539 | |||||
Advisory fees | 10,220 | |||||
12b-1 Distribution and shareholder servicing fees | 7,498 | |||||
Transfer agent fees and expenses | 4,411 | |||||
Non-interested Trustees' deferred compensation fees | 856 | |||||
Fund administration fees | 438 | |||||
Non-interested Trustees' fees and expenses | 421 | |||||
Accrued expenses and other payables | 1,731 | |||||
Total Liabilities |
|
| 323,603 |
| ||
Net Assets |
| $ | 48,127,523 |
| ||
See Notes to Financial Statements. | |
12 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Statement of Assets and Liabilities
June 30, 2017
|
|
|
|
|
|
|
Net Assets Consist of: | ||||||
Capital (par value and paid-in surplus) | $ | 45,257,497 | ||||
Undistributed net investment income/(loss) | 436,631 | |||||
Undistributed net realized gain/(loss) from investments and foreign currency transactions | 1,894,972 | |||||
Unrealized net appreciation/(depreciation) of investments, foreign currency translations and non-interested Trustees’ deferred compensation | 538,423 | |||||
Total Net Assets |
| $ | 48,127,523 |
| ||
Net Assets - Class A Shares | $ | 1,861,609 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 174,002 | |||||
Net Asset Value Per Share(2) |
| $ | 10.70 |
| ||
Maximum Offering Price Per Share(3) |
| $ | 11.35 |
| ||
Net Assets - Class C Shares | $ | 7,979,491 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 762,623 | |||||
Net Asset Value Per Share(2) |
| $ | 10.46 |
| ||
Net Assets - Class D Shares | $ | 79,045 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 7,406 | |||||
Net Asset Value Per Share |
| $ | 10.67 |
| ||
Net Assets - Class I Shares | $ | 7,333,824 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 687,147 | |||||
Net Asset Value Per Share |
| $ | 10.67 |
| ||
Net Assets - Class N Shares | $ | 30,774,462 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 2,890,034 | |||||
Net Asset Value Per Share |
| $ | 10.65 |
| ||
Net Assets - Class S Shares | $ | 49,541 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 4,644 | |||||
Net Asset Value Per Share |
| $ | 10.67 |
| ||
Net Assets - Class T Shares | $ | 49,551 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 4,644 | |||||
Net Asset Value Per Share |
| $ | 10.67 |
| ||
(1) Includes cost of $1,203. (2) Redemption price per share may be reduced for any applicable contingent deferred sales charge. (3) Maximum offering price is computed at 100/94.25 of net asset value. |
See Notes to Financial Statements. | |
Janus Investment Fund | 13 |
Janus Henderson All Asset Fund
Statements of Operations
See footnotes at the end of the Statement |
|
|
| Period ended |
| Year ended |
| ||
Investment Income: | ||||||||
| Dividends | $ | 555,809 | $ | 693,439 | |||
Interest | 542 | — | ||||||
Dividends from affiliates | 264,156 | 213,640 | ||||||
Other income | 16,228 | — | ||||||
Foreign tax withheld | — | (570) | ||||||
Total Investment Income |
| 836,735 |
|
| 906,509 |
| ||
Expenses: | ||||||||
Advisory fees | 184,734 | 220,311 | ||||||
12b-1Distribution and shareholder servicing fees: | ||||||||
Class A Shares | 7,418 | 12,368 | ||||||
Class C Shares | 82,332 | 94,335 | ||||||
Class S Shares | 10 | — | ||||||
Transfer agent administrative fees and expenses: | ||||||||
Class A Shares | — | 1,188 | ||||||
Class C Shares | — | 2,267 | ||||||
Class D Shares | 7 | — | ||||||
Class I Shares | — | 5,303 | ||||||
Class N Shares | — | 4,478 | ||||||
Class S Shares | 10 | — | ||||||
Class T Shares | 10 | — | ||||||
Transfer agent networking and omnibus fees: | ||||||||
Class A Shares | 1,503 | 3,117 | ||||||
Class C Shares | 5,142 | 7,608 | ||||||
Class I Shares | 6,183 | 13,106 | ||||||
Other transfer agent fees and expenses: | ||||||||
Class A Shares | 614 | 814 | ||||||
Class C Shares | 1,279 | 1,320 | ||||||
Class I Shares | 1,150 | 2,980 | ||||||
Class N Shares | 3,627 | 2,470 | ||||||
Registration fees | 48,896 | 47,401 | ||||||
Professional fees | 34,357 | 37,085 | ||||||
Fund administration fees | 10,651 | — | ||||||
Shareholder reports expense | 4,236 | 6,898 | ||||||
Custodian fees | 17,596 | 3,188 | ||||||
Non-interested Trustees’ fees and expenses | 1,802 | 1,865 | ||||||
Other expenses | 18,151 | 12,212 | ||||||
Total Expenses |
| 429,708 |
|
| 480,314 |
| ||
Less: Excess Expense Reimbursement |
| (66,091) |
|
| (41,728) |
| ||
Net Expenses |
| 363,617 |
|
| 438,586 |
| ||
Net Investment Income/(Loss) |
| 473,118 |
|
| 467,923 |
| ||
See Notes to Financial Statements. | |
14 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Statements of Operations
|
|
| Period ended |
| Year ended |
| ||
Net Realized Gain/(Loss) on Investments: | ||||||||
Investments and foreign currency transactions | $ | 1,529,483 | $ | 254,496 | ||||
Investments in affiliates | (213,477) | (26,577) | ||||||
Futures contracts | 2,215,633 | (1,843,431) | ||||||
Capital gain distributions from underlying funds | — | 197,982 | ||||||
Total Net Realized Gain/(Loss) on Investments |
| 3,531,639 |
|
| (1,417,530) |
| ||
Change in Unrealized Net Appreciation/Depreciation: | ||||||||
Investments, foreign currency translations and non-interested Trustees’ deferred compensation | (338,207) | (118,856) | ||||||
Futures contracts | (695,721) | 409,473 | ||||||
Total Change in Unrealized Net Appreciation/Depreciation |
| (1,033,928) |
|
| 290,617 |
| ||
Net Increase/(Decrease) in Net Assets Resulting from Operations | $ | 2,970,829 |
| $ | (658,990) |
| ||
(1) Period from June 5, 2017 (inception date) through June 30, 2017 for Class D Shares, Class S Shares and Class T Shares. (2) Period from November 30, 2015 (inception date) through July 31, 2016 for Class N Shares. (3) Certain prior year amounts have been reclassified to conform to the current period presentation. Presentation of certain financial statement line item descriptions have been changed to conform to the current period presentation. |
See Notes to Financial Statements. | |
Janus Investment Fund | 15 |
Janus Henderson All Asset Fund
Statements of Changes in Net Assets
|
|
| Period ended |
| Year ended |
| Year ended | ||||
Operations: | |||||||||||
Net investment income/(loss) | $ | 473,118 | $ | 467,923 | $ | 613,801 | |||||
Net realized gain/(loss) on investments | 3,531,639 | (1,417,530) | 2,487,539 | ||||||||
Change in unrealized net appreciation/depreciation | (1,033,928) | 290,617 | (1,848,724) | ||||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations |
| 2,970,829 |
|
| (658,990) |
|
| 1,252,616 | |||
Dividends and Distributions to Shareholders: | |||||||||||
Dividends from Net Investment Income | |||||||||||
Class A Shares | (16,309) | (15,397) | (94,558) | ||||||||
Class C Shares | — | — | (98,042) | ||||||||
Class I Shares | (52,539) | (101,094) | (737,517) | ||||||||
Class N Shares | (241,031) | (230,208) | N/A | ||||||||
| Total Dividends from Net Investment Income |
| (309,879) |
|
| (346,699) |
|
| (930,117) | ||
Distributions from Net Realized Gain from Investment Transactions | |||||||||||
Class A Shares | — | (161,332) | (165,496) | ||||||||
Class C Shares | — | (297,759) | (297,564) | ||||||||
Class I Shares | — | (411,454) | (1,153,810) | ||||||||
Class N Shares | — | (860,579) | N/A | ||||||||
| Total Distributions from Net Realized Gain from Investment Transactions | — |
|
| (1,731,124) |
|
| (1,616,870) | |||
Net Decrease from Dividends and Distributions to Shareholders |
| (309,879) |
|
| (2,077,823) |
|
| (2,546,987) | |||
Capital Share Transactions: | |||||||||||
Class A Shares | (2,312,576) | (2,065,085) | (2,406,158) | ||||||||
Class C Shares | (1,732,547) | (1,096,409) | (46,472) | ||||||||
Class D Shares | 79,738 | N/A | N/A | ||||||||
Class I Shares | (3,845,659) | (32,054,787) | (1,589,999) | ||||||||
Class N Shares | 149,275 | 29,428,493 | — | ||||||||
Class S Shares | 50,010 | N/A | N/A | ||||||||
Class T Shares | 50,010 | N/A | N/A | ||||||||
Net Increase/(Decrease) from Capital Share Transactions |
| (7,561,749) |
|
| (5,787,788) |
|
| (4,042,629) | |||
Net Increase/(Decrease) in Net Assets |
| (4,900,799) |
|
| (8,524,601) |
|
| (5,337,000) | |||
Net Assets: | |||||||||||
Beginning of period | 53,028,322 | 61,552,923 | 66,889,923 | ||||||||
| End of period | $ | 48,127,523 |
| $ | 53,028,322 |
| $ | 61,552,923 | ||
Undistributed Net Investment Income/(Loss) | $ | 436,631 |
| $ | 68,893 |
| $ | (96,704) | |||
(1) Period from June 5, 2017 (inception date) through June 30, 2017 for Class D Shares, Class S Shares and Class T Shares. (2) Period from November 30, 2015 (inception date) through July 31, 2016 for Class N Shares. (3) Certain prior year amounts have been reclassified to conform to the current period presentation. Presentation of certain financial statement line item descriptions have been changed to conform to the current period presentation. |
See Notes to Financial Statements. | |
16 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Financial Highlights
Class A Shares | |||||||||||||||||||||
For a share outstanding during the period ended June 30, 2017 and each year or period ended July 31 | 2017(1) |
|
| 2016 |
|
| 2015 |
|
| 2014 |
|
| 2013 |
|
| 2012(2) | |||||
Net Asset Value, Beginning of Period |
| $10.12 |
|
| $10.55 |
|
| $10.76 |
|
| $10.52 |
|
| $9.93 |
|
| $10.00 |
| |||
Income/(Loss) from Investment Operations: | |||||||||||||||||||||
Net investment income/(loss)(3) | 0.09 | 0.08 | 0.09 | 0.10 | 0.09 | 0.01 | |||||||||||||||
Net realized and unrealized gain/(loss) | 0.53 | (0.17) | 0.12 | 0.56 | 0.61 | (0.08) | |||||||||||||||
Total from Investment Operations |
| 0.62 |
|
| (0.09) |
|
| 0.21 |
|
| 0.66 |
|
| 0.70 |
|
| (0.07) |
| |||
Less Dividends and Distributions: | |||||||||||||||||||||
Dividends (from net investment income) | (0.04) | (0.03) | (0.14) | (0.11) | (0.09) | — | |||||||||||||||
Distributions (from capital gains) | — | (0.31) | (0.28) | (0.31) | (0.02) | — | |||||||||||||||
Total Dividends and Distributions |
| (0.04) |
|
| (0.34) |
|
| (0.42) |
|
| (0.42) |
|
| (0.11) |
|
| — |
| |||
Net Asset Value, End of Period | $10.70 | $10.12 | $10.55 | $10.76 | $10.52 | $9.93 | |||||||||||||||
Total Return* |
| 6.18% |
|
| (0.71)% |
|
| 1.94% |
|
| 6.44% |
|
| 7.05% |
|
| (0.70)% |
| |||
Net Assets, End of Period (in thousands) | $1,862 | $4,011 | $6,396 | $8,929 | $12,023 | $5,740 | |||||||||||||||
Average Net Assets for the Period (in thousands) | $3,232 | $4,935 | $7,122 | $10,041 | $10,644 | $1,617 | |||||||||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses(4) | 1.01% | 0.95%(5) | 0.91% | 0.93% | 1.10% | 2.13% | |||||||||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets)(4) | 0.85% | 0.85% | 0.85% | 0.85% | 0.85% | 0.85% | |||||||||||||||
Ratio of Net Investment Income/(Loss)(4) | 0.91% | 0.84% | 0.88% | 0.94% | 0.86% | 0.43% | |||||||||||||||
Portfolio Turnover Rate | 55% | 44% | 19% | 52% | 37% | 7% | |||||||||||||||
1 | |||||||||||||||||||||
Class C Shares | |||||||||||||||||||||
For a share outstanding during the period ended June 30, 2017 and each year or period ended July 31 | 2017(1) |
|
| 2016 |
|
| 2015 |
|
| 2014 |
|
| 2013 |
|
| 2012(2) |
| ||||
Net Asset Value, Beginning of Period |
| $9.93 |
|
| $10.39 |
|
| $10.63 |
|
| $10.43 |
|
| $9.91 |
|
| $10.00 |
| |||
Income/(Loss) from Investment Operations: | |||||||||||||||||||||
Net investment income/(loss)(3) | 0.02 | 0.01 | 0.02 | 0.02 | 0.02 | (0.01) | |||||||||||||||
Net realized and unrealized gain/(loss) | 0.51 | (0.16) | 0.10 | 0.56 | 0.59 | (0.08) | |||||||||||||||
Total from Investment Operations |
| 0.53 |
|
| (0.15) |
|
| 0.12 |
|
| 0.58 |
|
| 0.61 |
|
| (0.09) |
| |||
Less Dividends and Distributions: | |||||||||||||||||||||
Dividends (from net investment income) | — | — | (0.08) | (0.07) | (0.07) | — | |||||||||||||||
Distributions (from capital gains) | — | (0.31) | (0.28) | (0.31) | (0.02) | — | |||||||||||||||
Total Dividends and Distributions |
| — |
|
| (0.31) |
|
| (0.36) |
|
| (0.38) |
|
| (0.09) |
|
| — |
| |||
Net Asset Value, End of Period | $10.46 | $9.93 | $10.39 | $10.63 | $10.43 | $9.91 | |||||||||||||||
Total Return* |
| 5.34% |
|
| (1.37)% |
|
| 1.14% |
|
| 5.61% |
|
| 6.18% |
|
| (0.90)% |
| |||
Net Assets, End of Period (in thousands) | $7,979 | $9,247 | $10,824 | $11,094 | $9,357 | $1,013 | |||||||||||||||
Average Net Assets for the Period (in thousands) | $8,949 | $9,422 | $11,557 | $10,389 | $5,333 | $376 | |||||||||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses(4) | 1.78% | 1.71%(5) | 1.68% | 1.67% | 1.80% | 4.49% | |||||||||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets)(4) | 1.60% | 1.60% | 1.60% | 1.60% | 1.60% | 1.60% | |||||||||||||||
Ratio of Net Investment Income/(Loss)(4) | 0.22% | 0.09% | 0.18% | 0.20% | 0.20% | (0.24)% | |||||||||||||||
Portfolio Turnover Rate | 55% | 44% | 19% | 52% | 37% | 7% | |||||||||||||||
* Total return not annualized for periods of less than one full year. ** Annualized for periods of less than one full year. (1) The Fund changed its fiscal year end from July 31 to June 30 effective June 30, 2017. (2) Period from March 30, 2012 (inception date) through July 31, 2012. (3) Per share amounts are calculated based on average shares outstanding during the year or period. (4) Ratios do not include indirect expenses of the underlying funds and/or investment companies in which the Fund invests. (5) The Ratio of Gross Expenses include a reimbursement of prior period custodian out-of-pocket expenses. The Ratio of Gross Expenses would have been 0.01% higher had the custodian not reimbursed the Fund. |
See Notes to Financial Statements. | |
Janus Investment Fund | 17 |
Janus Henderson All Asset Fund
Financial Highlights
Class D Shares | ||||||
For a share outstanding during the period ended June 30 |
| 2017(1) |
| |||
Net Asset Value, Beginning of Period |
| $10.76 |
| |||
Income/(Loss) from Investment Operations: | ||||||
Net investment income/(loss)(2) | 0.03 | |||||
Net realized and unrealized gain/(loss) | (0.12)(3) | |||||
Total from Investment Operations |
| (0.09) |
| |||
Less Dividends and Distributions: | ||||||
Dividends (from net investment income) | — | |||||
Distributions (from capital gains) | — | |||||
Total Dividends and Distributions |
| — |
| |||
Net Asset Value, End of Period | $10.67 | |||||
Total Return* |
| (0.84)% |
| |||
Net Assets, End of Period (in thousands) | $79 | |||||
Average Net Assets for the Period (in thousands) | $77 | |||||
Ratios to Average Net Assets**: |
|
|
| |||
Ratio of Gross Expenses(4) | 0.86% | |||||
Ratio of Net Expenses (After Waivers and Expense Offsets)(4) | 0.69% | |||||
Ratio of Net Investment Income/(Loss)(4) | 3.79% | |||||
Portfolio Turnover Rate | 55% | |||||
Class I Shares | |||||||||||||||||||||
For a share outstanding during the period ended June 30, 2017 and each year or period ended July 31 | 2017(5) |
|
| 2016 |
|
| 2015 |
|
| 2014 |
|
| 2013 |
|
| 2012(6) |
| ||||
Net Asset Value, Beginning of Period |
| $10.10 |
|
| $10.55 |
|
| $10.77 |
|
| $10.54 |
|
| $9.94 |
|
| $10.00 |
| |||
Income/(Loss) from Investment Operations: | |||||||||||||||||||||
Net investment income/(loss)(2) | 0.11 | 0.07 | 0.13 | 0.13 | 0.11 | 0.02 | |||||||||||||||
Net realized and unrealized gain/(loss) | 0.53 | (0.13) | 0.10 | 0.56 | 0.61 | (0.08) | |||||||||||||||
Total from Investment Operations |
| 0.64 |
|
| (0.06) |
|
| 0.23 |
|
| 0.69 |
|
| 0.72 |
|
| (0.06) |
| |||
Less Dividends and Distributions: | |||||||||||||||||||||
Dividends (from net investment income) | (0.07) | (0.08) | (0.17) | (0.15) | (0.10) | — | |||||||||||||||
Distributions (from capital gains) | — | (0.31) | (0.28) | (0.31) | (0.02) | — | |||||||||||||||
Total Dividends and Distributions |
| (0.07) |
|
| (0.39) |
|
| (0.45) |
|
| (0.46) |
|
| (0.12) |
|
| — |
| |||
Net Asset Value, End of Period | $10.67 | $10.10 | $10.55 | $10.77 | $10.54 | $9.94 | |||||||||||||||
Total Return* |
| 6.38% |
|
| (0.45)% |
|
| 2.20% |
|
| 6.72% |
|
| 7.28% |
|
| (0.60)% |
| |||
Net Assets, End of Period (in thousands) | $7,334 | $10,750 | $44,333 | $46,867 | $43,221 | $28,875 | |||||||||||||||
Average Net Assets for the Period (in thousands) | $8,349 | $22,035 | $45,011 | $52,153 | $35,799 | $27,898 | |||||||||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses(4) | 0.79% | 0.68%(7) | 0.63% | 0.62% | 0.79% | 1.41% | |||||||||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets)(4) | 0.59% | 0.60% | 0.60% | 0.60% | 0.60% | 0.60% | |||||||||||||||
Ratio of Net Investment Income/(Loss)(4) | 1.19% | 0.69% | 1.18% | 1.22% | 1.10% | 0.52% | |||||||||||||||
Portfolio Turnover Rate | 55% | 44% | 19% | 52% | 37% | 7% | |||||||||||||||
* Total return not annualized for periods of less than one full year. ** Annualized for periods of less than one full year. (1) Period from June 5, 2017 (inception date) through June 30, 2017. (2) Per share amounts are calculated based on average shares outstanding during the year or period. (3) This amount does not agree with the change in the aggregate gains and losses in the Fund’s securities for the year or period due to the timing of sales and repurchases of the Fund’s shares in relation to fluctuating market values for the Fund’s securities. (4) Ratios do not include indirect expenses of the underlying funds and/or investment companies in which the Fund invests. (5) The Fund changed its fiscal year end from July 31 to June 30 effective June 30, 2017. (6) Period from March 30, 2012 (inception date) through July 31, 2012. (7) The Ratio of Gross Expenses include a reimbursement of prior period custodian out-of-pocket expenses. The Ratio of Gross Expenses would have been 0.01% higher had the custodian not reimbursed the Fund. |
See Notes to Financial Statements. | |
18 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Financial Highlights
Class N Shares | |||||||||
For a share outstanding during the period ended June 30, 2017 and the period ended July 31, 2016 | 2017(1) |
|
| 2016(2) |
| ||||
Net Asset Value, Beginning of Period |
| $10.09 |
|
| $10.25 |
| |||
Income/(Loss) from Investment Operations: | |||||||||
Net investment income/(loss)(3) | 0.12 | 0.12 | |||||||
Net realized and unrealized gain/(loss) | 0.52 | 0.11(4) | |||||||
Total from Investment Operations |
| 0.64 |
|
| 0.23 |
| |||
Less Dividends and Distributions: | |||||||||
Dividends (from net investment income) | (0.08) | (0.08) | |||||||
Distributions (from capital gains) | — | (0.31) | |||||||
Total Dividends and Distributions |
| (0.08) |
|
| (0.39) |
| |||
Net Asset Value, End of Period | $10.65 | $10.09 | |||||||
Total Return* |
| 6.43% |
|
| 2.37% |
| |||
Net Assets, End of Period (in thousands) | $30,774 | $29,020 | |||||||
Average Net Assets for the Period (in thousands) | $29,638 | $27,943 | |||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
| |||
Ratio of Gross Expenses(5) | 0.71% | 0.64%(6) | |||||||
Ratio of Net Expenses (After Waivers and Expense Offsets)(5) | 0.60% | 0.60% | |||||||
Ratio of Net Investment Income/(Loss)(5) | 1.24% | 1.88% | |||||||
Portfolio Turnover Rate | 55% | 44% | |||||||
Class S Shares | ||||||
For a share outstanding during the period ended June 30 |
| 2017(7) |
| |||
Net Asset Value, Beginning of Period |
| $10.76 |
| |||
Income/(Loss) from Investment Operations: | ||||||
Net investment income/(loss)(3) | 0.03 | |||||
Net realized and unrealized gain/(loss) | (0.12)(4) | |||||
Total from Investment Operations |
| (0.09) |
| |||
Less Dividends and Distributions: | ||||||
Dividends (from net investment income) | — | |||||
Distributions (from capital gains) | — | |||||
Total Dividends and Distributions |
| — |
| |||
Net Asset Value, End of Period | $10.67 | |||||
Total Return* |
| (0.84)% |
| |||
Net Assets, End of Period (in thousands) | $50 | |||||
Average Net Assets for the Period (in thousands) | $50 | |||||
Ratios to Average Net Assets**: |
|
|
| |||
Ratio of Gross Expenses(5) | 1.26% | |||||
Ratio of Net Expenses (After Waivers and Expense Offsets)(5) | 1.09% | |||||
Ratio of Net Investment Income/(Loss)(5) | 3.31% | |||||
Portfolio Turnover Rate | 55% | |||||
* Total return not annualized for periods of less than one full year. ** Annualized for periods of less than one full year. (1) The Fund changed its fiscal year end from July 31 to June 30 effective June 30, 2017. (2) Period from November 30, 2015 (inception date) through July 31, 2016. (3) Per share amounts are calculated based on average shares outstanding during the year or period. (4) This amount does not agree with the change in the aggregate gains and losses in the Fund’s securities for the year or period due to the timing of sales and repurchases of the Fund’s shares in relation to fluctuating market values for the Fund’s securities. (5) Ratios do not include indirect expenses of the underlying funds and/or investment companies in which the Fund invests. (6) The Ratio of Gross Expenses include a reimbursement of prior period custodian out-of-pocket expenses. The Ratio of Gross Expenses would have been 0.01% higher had the custodian not reimbursed the Fund.. (7) Period from June 5, 2017 (inception date) through June 30, 2017. |
See Notes to Financial Statements. | |
Janus Investment Fund | 19 |
Janus Henderson All Asset Fund
Financial Highlights
Class T Shares | ||||||
For a share outstanding during the period ended June 30 |
| 2017(1) |
| |||
Net Asset Value, Beginning of Period |
| $10.76 |
| |||
Income/(Loss) from Investment Operations: | ||||||
Net investment income/(loss)(2) | 0.03 | |||||
Net realized and unrealized gain/(loss) | (0.12)(3) | |||||
Total from Investment Operations |
| (0.09) |
| |||
Less Dividends and Distributions: | ||||||
Dividends (from net investment income) | — | |||||
Distributions (from capital gains) | — | |||||
Total Dividends and Distributions |
| — |
| |||
Net Asset Value, End of Period | $10.67 | |||||
Total Return* |
| (0.84)% |
| |||
Net Assets, End of Period (in thousands) | $50 | |||||
Average Net Assets for the Period (in thousands) | $50 | |||||
Ratios to Average Net Assets**: |
|
|
| |||
Ratio of Gross Expenses(4) | 0.99% | |||||
Ratio of Net Expenses (After Waivers and Expense Offsets)(4) | 0.82% | |||||
Ratio of Net Investment Income/(Loss)(4) | 3.58% | |||||
Portfolio Turnover Rate | 55% | |||||
* Total return not annualized for periods of less than one full year. ** Annualized for periods of less than one full year. (1) Period from June 5, 2017 (inception date) through June 30, 2017. (2) Per share amounts are calculated based on average shares outstanding during the year or period. (3) This amount does not agree with the change in the aggregate gains and losses in the Fund’s securities for the year or period due to the timing of sales and repurchases of the Fund’s shares in relation to fluctuating market values for the Fund’s securities. (4) Ratios do not include indirect expenses of the underlying funds and/or investment companies in which the Fund invests. |
See Notes to Financial Statements. | |
20 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Notes to Financial Statements
1. Organization and Significant Accounting Policies
Janus Henderson All Asset Fund (formerly named Henderson All Asset Fund) (the “Fund”) is a series of Janus Investment Fund (the “Trust”), which is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company, and therefore has applied the specialized accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946. The Fund operates as a “fund of funds,” meaning substantially all of the Fund’s assets will be invested in other underlying funds (the “underlying funds”). The Trust offers 50 funds, each of which offers multiple share classes, with differing investment objectives and policies. The Fund seeks to provide total return by investing in a broad range of asset classes. The Fund is classified as diversified, as defined in the 1940 Act.
Pursuant to the Agreement and Plan of Reorganization, the Fund acquired all the assets and liabilities of the Henderson All Asset Fund (the “Predecessor Fund”), a series of Henderson Global Funds, in exchange for Class A, Class C, Class I and Class N Fund shares having an aggregate net asset value equal to the value of the aggregate net assets of the same share class of the Predecessor Fund (except that Class R6 Predecessor Fund shares were exchanged for Class N Fund shares (the “Reorganization”). The Reorganization occurred at the close of business on June 2, 2017.
The shareholders of the Predecessor Fund received shares of the Fund immediately prior to the Reorganization at the following conversion ratios:
Predecessor Fund Share Class Prior to Reorganization | Predecessor Fund Shares Prior to Reorganization | Conversion Ratio | New Share Class Issued by the Fund | New Shares Issued by the Fund |
Class A | 179,706 | 1.00 | Class A | 179,706 |
Class C | 769,186 | 1.00 | Class C | 769,186 |
Class I | 706,255 | 1.00 | Class I | 706,255 |
Class R6 | 2,890,914 | 1.00 | Class N | 2,890,914 |
The Reorganization was treated as a tax-free exchange for federal income tax purposes, and accordingly, the basis of the assets of the Fund reflected the historical basis of the assets of the Predecessor Fund as of the date of the Reorganization.
The net assets and composition of net assets of the Fund and the Predecessor Fund on June 2, 2017, were as follows:
Fund | Predecessor Fund | Combined Funds | |
Paid-in-Capital | $- | $45,422,256 | $45,422,256 |
Accumulated Net Investment Income | $- | $105,717 | $105,717 |
Accumulated Net Realized Gain | $- | $1,432,359 | $1,432,359 |
Net Unrealized Appreciation | $- | $1,776,130 | $1,776,130 |
Net Assets | $- | $48,736,462 | $48,736,462 |
Cost of Investments | $- | $30,612,601 | $30,612,601 |
The Predecessor Fund and the Fund had identical investment objectives and substantially similar investment policies and principal risks. For financial reporting purposes, the Predecessor Fund’s financial and performance history prior to the Reorganization is carried forward and reflected in the Fund’s financial statements and financial highlights. For the fiscal year ended July 31, 2016, and prior periods, the audit of those financial statements were performed by auditors different from the auditors of this report.
Janus Investment Fund | 21 |
Janus Henderson All Asset Fund
Notes to Financial Statements
The last fiscal year end of the Predecessor Fund was July 31, 2016. Subsequent to July 31, 2016, the Fund changed its fiscal year end to June 30, 2017, to reflect the fiscal year end of certain funds of the Trust. Certain prior year amounts reflected on the Statements of Operations and Statements of Changes in Net Assets have been reclassified to conform to the current period presentation. Presentation of certain financial statement line item descriptions have been changed to conform to the current period presentation.
The Fund offers multiple classes of shares in order to meet the needs of various types of investors. Each class represents an interest in the same portfolio of investments. Certain financial intermediaries may not offer all classes of shares. Class D Shares are closed to certain new investors.
Class A Shares and Class C Shares are generally offered through financial intermediary platforms including, but not limited to, traditional brokerage platforms, mutual fund wrap fee programs, bank trust platforms, and retirement platforms.
Class D Shares are generally no longer being made available to new investors who do not already have a direct account with the Janus Henderson funds. Class D Shares are available only to investors who hold accounts directly with the Janus Henderson funds, to immediate family members or members of the same household of an eligible individual investor, and to existing beneficial owners of sole proprietorships or partnerships that hold accounts directly with the Janus Henderson funds.
Class I Shares are available through certain financial intermediary platforms including, but not limited to, mutual fund wrap fee programs, managed account programs, asset allocation programs, bank trust platforms, as well as certain retirement platforms. Class I Shares are also available to certain direct institutional investors including, but not limited to, corporations, certain retirement plans, public plans, and foundations/endowments.
Class N Shares are generally available only to financial intermediaries purchasing on behalf of 401(k) plans, 457 plans, 403(b) plans, Taft-Hartley multi-employer plans, profit-sharing and money purchase pension plans, defined benefit plans and certain welfare benefit plans, such as health savings accounts, and nonqualified deferred compensation plans. Class N Shares are also available to Janus proprietary products.
Class S Shares are offered through financial intermediary platforms including, but not limited to, retirement platforms and asset allocation, mutual fund wrap, or other discretionary or nondiscretionary fee-based investment advisory programs. In addition, Class S Shares may be available through certain financial intermediaries who have an agreement with Janus Capital Management LLC (“Janus Capital”) or its affiliates to offer Class S Shares on their supermarket platforms.
Class T Shares are available through certain financial intermediary platforms including, but not limited to, mutual fund wrap fee programs, managed account programs, asset allocation programs, bank trust platforms, as well as certain retirement platforms. In addition, Class T Shares may be available through certain financial intermediaries who have an agreement with Janus Capital or its affiliates to offer Class T Shares on their supermarket platforms.
Underlying Funds
The Fund may seek exposure to both traditional asset classes (such as equity and fixed-income investments) and alternative asset classes (such as real estate, commodities, currencies, private equity, and absolute return strategies) by investing in other investment companies or investment pools, by investing directly in securities and other investments or through the use of derivatives. Such investment companies and investment pools might include, for example, other open-end or closed-end investment companies (including investment companies that concentrate their investments in one or more industries or economic or market sectors), exchange-traded funds (“ETFs”, which are open-end investment companies whose shares may be bought or sold by investors in transactions on major stock exchanges), unit investment trusts, and domestic or foreign private investment pools (including investment companies not registered under the 1940 Act, such as “hedge funds”) or indexes of investment pools. Additional details and descriptions of the investment objectives and strategies of each of the underlying funds are available in the underlying funds’ prospectuses. The Trustees of the underlying funds may change the investment objectives or strategies of the underlying funds at any time without prior notice to the Fund’s shareholders.
The following accounting policies have been followed by the Fund and are in conformity with accounting principles generally accepted in the United States of America.
22 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Notes to Financial Statements
Investment Valuation
The Fund’s net asset value (“NAV”) is calculated based upon the NAV of each of the underlying funds in which the Fund invests on the day of valuation. The NAV for each class of the underlying funds is computed by dividing the total value of securities and other assets allocated to the class, less liabilities allocated to that class, by the total number of shares outstanding for the class.
Valuation Inputs Summary
FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value, and expands disclosure requirements regarding fair value measurements. This standard emphasizes that fair value is a market-based measurement that should be determined based on the assumptions that market participants would use in pricing an asset or liability and establishes a hierarchy that prioritizes inputs to valuation techniques used to measure fair value. These inputs are summarized into three broad levels:
Level 1 – Unadjusted quoted prices in active markets the Fund has the ability to access for identical assets or liabilities.
The Fund classifies each of its investments in certain underlying funds as Level 1, without consideration as to the classification level of the specific investments held by the underlying funds.
Level 2 – Observable inputs other than unadjusted quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
Assets or liabilities categorized as Level 2 in the hierarchy generally include: debt securities fair valued in accordance with the evaluated bid or ask prices supplied by a pricing service; securities traded on OTC markets and listed securities for which no sales are reported that are fair valued at the latest bid price (or yield equivalent thereof) obtained from one or more dealers transacting in a market for such securities or by a pricing service approved by the Fund’s Trustees; certain short-term debt securities with maturities of 60 days or less that are fair valued at amortized cost; and equity securities of foreign issuers whose fair value is determined by using systematic fair valuation models provided by independent third parties in order to adjust for stale pricing which may occur between the close of certain foreign exchanges and the close of the NYSE. Other securities that may be categorized as Level 2 in the hierarchy include, but are not limited to, preferred stocks, bank loans, swaps, investments in unregistered investment companies, options, and forward contracts.
Level 3 – Unobservable inputs for the asset or liability to the extent that relevant observable inputs are not available, representing the Fund’s own assumptions about the assumptions that a market participant would use in valuing the asset or liability, and that would be based on the best information available.
There have been no significant changes in valuation techniques used in valuing any such positions held by the Fund since the beginning of the fiscal year.
The inputs or methodology used for fair valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of inputs used as of June 30, 2017 to fair value the Fund’s investments in securities and other financial instruments is included in the “Valuation Inputs Summary” in the Notes to Schedule of Investments and Other Information.
There were no transfers between Level 1, Level 2 and Level 3 of the fair value hierarchy during the period. The Fund recognizes transfers between the levels as of the beginning of the fiscal year.
Investment Transactions and Investment Income
Investment transactions are accounted for as of the date purchased or sold (trade date). Dividend income is recorded on the ex-dividend date. Certain dividends from foreign securities held by the underlying funds will be recorded as soon as the Fund is informed of the dividend, if such information is obtained subsequent to the ex-dividend date. Dividends from foreign securities may be subject to withholding taxes in foreign jurisdictions. Any distributions from the underlying funds are recorded in accordance with the character of the distributions as designated by the underlying funds. 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, both realized and unrealized, 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.
Janus Investment Fund | 23 |
Janus Henderson All Asset Fund
Notes to Financial Statements
Expenses
The Fund bears expenses incurred specifically on its behalf. Additionally, the Fund, as a shareholder in the underlying funds, will also indirectly bear its pro rata share of the expenses incurred by the underlying funds. Each class of shares bears a portion of general expenses, which 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.
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.
Indemnifications
In the normal course of business, the Fund may enter into contracts that contain provisions for indemnification of other parties against certain potential liabilities. The Fund’s maximum exposure under these arrangements is unknown, and would involve future claims that may be made against the Fund that have not yet occurred. Currently, the risk of material loss from such claims is considered remote.
Foreign Currency Translations
The Fund does not isolate that portion of the results of operations resulting from the effect of 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 of investments and foreign currency translations arise from changes in the value of assets and liabilities, including investments in securities held at the date of the financial statements, resulting from changes in the exchange rates and changes in market prices of securities held.
Currency gains and losses are also calculated on payables and receivables that are denominated in foreign currencies. The payables and receivables are generally related to foreign security transactions and income translations.
Foreign currency-denominated assets and forward currency contracts may involve more risks than domestic transactions, including currency risk, counterparty risk, political and economic risk, regulatory risk and equity risk. Risks may arise from unanticipated movements in the value of foreign currencies relative to the U.S. dollar.
Dividends and Distributions
The Fund generally declares and distributes dividends of net investment income and realized capital gains (if any) annually. The Fund may treat a portion of the amount paid to redeem shares as a distribution of investment company taxable income and realized capital gains that are reflected in the net asset value. This practice, commonly referred to as “equalization,” has no effect on the redeeming shareholder or the Fund’s total return, but may reduce the amounts that would otherwise be required to be paid as taxable dividends to the remaining shareholders. It is possible that the Internal Revenue Service (IRS) could challenge the Fund's equalization methodology or calculations, and any such challenge could result in additional tax, interest, or penalties to be paid by the Fund.
The underlying funds may make certain investments in real estate investment trusts (“REITs”) which pay dividends to their shareholders based upon funds available from operations. It is quite common for these dividends to exceed the REITs’ taxable earnings and profits, resulting in the excess portion of such dividends being designated as a return of capital. If the underlying funds distribute such amounts, such distributions could constitute a return of capital to shareholders for federal income tax purposes.
Federal Income Taxes
The Fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income in accordance with the requirements of Subchapter M of the Internal Revenue Code. Management has analyzed the Fund’s tax positions taken for all open federal income tax years, generally a three-year period, and has concluded that no provision for federal income tax is required in the Fund’s financial statements. The Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
24 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Notes to Financial Statements
Restricted Cash
As of June 30, 2017, the Fund has restricted cash in the amount of $566,180. The restricted cash represents collateral pledged in relation to derivatives . The carrying value of the restricted cash approximates fair value.
2. Derivative Instruments
The Fund may invest in various types of derivatives, which may at times result in significant derivative exposure. A derivative is a financial instrument whose performance is derived from the performance of another asset. The Fund may invest in derivative instruments including, but not limited to: futures contracts, put options, call options, options on future contracts, options on foreign currencies, options on recovery locks, options on security and commodity indices, swaps, forward contracts, structured investments, and other equity-linked derivatives. Each derivative instrument that was held by the Fund during the period ended June 30, 2017 is discussed in further detail below. A summary of derivative activity by the Fund is reflected in the tables at the end of this section.
The Fund may use derivative instruments for hedging purposes (to offset risks associated with an investment, currency exposure, or market conditions), to adjust currency exposure relative to a benchmark index, or for speculative purposes (to earn income and seek to enhance returns). When the Fund invests in a derivative for speculative purposes, the Fund will be fully exposed to the risks of loss of that derivative, which may sometimes be greater than the derivative’s cost. The Fund may not use any derivative to gain exposure to an asset or class of assets that it would be prohibited by its investment restrictions from purchasing directly. The Fund’s ability to use derivative instruments may also be limited by tax considerations.
Investments in derivatives in general are subject to market risks that may cause their prices to fluctuate over time. Investments in derivatives may not directly correlate with the price movements of the underlying instrument. As a result, the use of derivatives may expose the Fund to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. The use of derivatives may result in larger losses or smaller gains than otherwise would be the case. Derivatives can be volatile and may involve significant risks.
In pursuit of its investment objective, the Fund may seek to use derivatives to increase or decrease exposure to the following market risk factors:
· Commodity Risk – the risk related to the change in value of commodities or commodity-linked investments due to changes in the overall market movements, volatility of the underlying benchmark, changes in interest rates, or other factors affecting a particular industry of commodity such as drought, floods, weather, livestock disease, embargoes, tariffs, and international economic, political, and regulatory developments.
· Counterparty Risk – the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable to honor its financial obligation to the Fund.
· Credit Risk – the risk an issuer will be unable to make principal and interest payments when due, or will default on its obligations.
· Currency Risk – the risk that changes in the exchange rate between currencies will adversely affect the value (in U.S. dollar terms) of an investment.
· Equity Risk – the risk related to the change in value of equity securities as they relate to increases or decreases in the general market.
· Index Risk – if the derivative is linked to the performance of an index, it will be subject to the risks associated with changes in that index. If the index changes, the Fund could receive lower interest payments or experience a reduction in the value of the derivative to below what the Fund paid. Certain indexed securities, including inverse securities (which move in an opposite direction to the index), may create leverage, to the extent that they increase or decrease in value at a rate that is a multiple of the changes in the applicable index.
· Interest Rate Risk – the risk that the value of fixed-income securities will generally decline as prevailing interest rates rise, which may cause the Fund’s NAV to likewise decrease.
· Leverage Risk – the risk associated with certain types of leveraged investments or trading strategies pursuant to which relatively small market movements may result in large changes in the value of an investment. The Fund creates leverage by investing in instruments, including derivatives, where the investment loss can exceed the
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Notes to Financial Statements
original amount invested. Certain investments or trading strategies, such as short sales, that involve leverage can result in losses that greatly exceed the amount originally invested.
· Liquidity Risk – the risk that certain securities may be difficult or impossible to sell at the time that the seller would like or at the price that the seller believes the security is currently worth.
Derivatives may generally be traded OTC or on an exchange. Derivatives traded OTC are agreements that are individually negotiated between parties and can be tailored to meet a purchaser’s needs. OTC derivatives are not guaranteed by a clearing agency and may be subject to increased credit risk.
In an effort to mitigate credit risk associated with derivatives traded OTC, the Fund may enter into collateral agreements with certain counterparties whereby, subject to certain minimum exposure requirements, the Fund may require the counterparty to post collateral if the Fund has a net aggregate unrealized gain on all OTC derivative contracts with a particular counterparty. There is no guarantee that counterparty exposure is reduced and these arrangements are dependent on Janus Capital’s ability to establish and maintain appropriate systems and trading.
Forward Foreign Currency Exchange Contracts
A forward foreign currency exchange contract (“forward currency contract”) is an obligation to buy or sell a specified currency at a future date at a negotiated rate (which may be U.S. dollars or a foreign currency). The Fund may enter into forward currency contracts for hedging purposes, including, but not limited to, reducing exposure to changes in foreign currency exchange rates on foreign portfolio holdings and locking in the U.S. dollar cost of firm purchase and sale commitments for securities denominated in or exposed to foreign currencies. The Fund may also invest in forward currency contracts for nonhedging purposes such as seeking to enhance returns. The Fund is subject to currency risk and counterparty risk in the normal course of pursuing its investment objective through its investments in forward currency contracts.
Forward currency contracts are valued by converting the foreign value to U.S. dollars by using the current spot U.S. dollar exchange rate and/or forward rate for that currency. Exchange and forward rates as of the close of the NYSE shall be used to value the forward currency contracts. The unrealized appreciation/(depreciation) for forward currency contracts is reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations for the change in unrealized net appreciation/depreciation (if applicable). 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 a forward currency contract is reported on the Statement of Operations (if applicable).
The Fund may enter into forward currency contracts with the obligation to purchase foreign currencies in the future at an agreed upon rate in order to decrease exposure to currency risk associated with foreign currency denominated securities held by the Fund and/or in order to take a positive outlook on the related currency to increase exposure to currency risk. The Fund may enter into forward currency contracts with the obligation to sell foreign currencies in the future at an agreed upon rate in order to decrease exposure to currency risk associated with foreign currency denominated securities held by the Fund and/or in order to take a negative outlook on the related currency to increase exposure to currency risk.
During the period ended June 30, 2017, the average ending monthly currency value amounts on purchased and sold forward currency contracts are $6,809,047 and $260,541, respectively.
Futures Contracts
A futures contract is an exchange-traded agreement to take or make delivery of an underlying asset at a specific time in the future for a specific predetermined negotiated price. The Fund may enter into futures contracts to gain exposure to the stock market or other markets pending investment of cash balances or to meet liquidity needs. The Fund is subject to interest rate risk, equity risk, and currency risk in the normal course of pursuing its investment objective through its investments in futures contracts. The Fund may also use such derivative instruments to hedge or protect from adverse movements in securities prices, currency rates or interest rates. The use of futures contracts may involve risks such as the possibility of illiquid markets or imperfect correlation between the values of the contracts and the underlying securities, or that the counterparty will fail to perform its obligations.
Futures contracts on commodities are valued at the settlement price on valuation date on the commodities exchange as reported by an approved vendor. Mini contracts, as defined in the description of the contract, shall be valued using the Actual Settlement Price or “ASET” price type as reported by an approved vendor. In the event that foreign futures trade when the foreign equity markets are closed, the last foreign futures trade price shall be used. Futures contracts are
26 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Notes to Financial Statements
marked-to-market daily, and the daily variation margin is recorded as a receivable or payable on the Statement of Assets and Liabilities (if applicable). The change in unrealized net appreciation/depreciation is reported on the Statement of Operations (if applicable). When a contract is closed, a realized gain or loss is reported on the Statement of Operations (if applicable), equal to the difference between the opening and closing value of the contract. Securities held by the Fund that are designated as collateral for market value on futures contracts are noted on the Schedule of Investments (if applicable). Such collateral is in the possession of the Fund’s futures commission merchant.
With futures, there is minimal counterparty credit risk to the Fund since futures are exchange-traded and the exchange’s clearinghouse, as counterparty to all exchange-traded futures, guarantees the futures against default.
The Fund may purchase or sell futures on equity indices to increase or decrease exposure to equity risk.
The Fund may purchase or sell futures on interest rate futures to increase or decrease exposure to interest rate risk.
During the period ended June 30, 2017, the average ending monthly market value amounts on purchased and sold futures contracts are $11,705,837 and $(126,213), respectively.
The following table, grouped by derivative type, provides information about the fair value and location of derivatives within the Statement of Assets and Liabilities as of June 30, 2017.
Fair Value of Derivative Instruments (not accounted for as hedging instruments) as of June 30, 2017 | ||||||||||
|
|
|
| Currency |
| Equity |
| Interest Rate |
| Total |
Asset Derivatives: | ||||||||||
Forward currency contracts | $120,849 | $ - | $ - | $120,849 | ||||||
Variation margin receivable | - | 120 | - | 120 | ||||||
Total Asset Derivatives |
| $120,849 |
| $ 120 |
| $ - |
| $120,969 | ||
| ||||||||||
Liability Derivatives: | ||||||||||
Forward currency contracts | $ 45,345 | $ - | $ - | $ 45,345 | ||||||
Variation margin payable | - | 170,036 | 11,250 | 181,286 | ||||||
Total Liability Derivatives |
| $ 45,345 |
| $170,036 |
| $ 11,250 |
| $226,631 | ||
(a) | Amounts relate to purchased options. | |||||||||
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Notes to Financial Statements
The following tables provide information about the effect of derivatives and hedging activities on the Fund’s Statement of Operations for the period ended June 30, 2017.
The effect of Derivative Instruments (not accounted for as hedging instruments) on the Statement of Operations for the period ended June 30, 2017 | |||||||||
Amount of Realized Gain/(Loss) Recognized on Derivatives | |||||||||
Derivative | Currency |
| Equity |
| Interest Rate |
| Total | ||
Futures contracts | $ - | $2,231,476 | $ (15,843) | $2,215,633 | |||||
Investments and foreign currency transactions | 73,604 | (a) | - | - | 73,604 | ||||
Total | $ 73,604 |
| $2,231,476 |
| $ (15,843) |
| $2,289,237 | ||
Amount of Change in Unrealized Appreciation/Depreciation Recognized on Derivatives | |||||||||
Derivative | Currency |
| Equity |
| Interest Rate |
| Total | ||
Futures contracts | $ - | $ (672,315) | $ (23,406) | $ (695,721) | |||||
Investments, foreign currency translations and non-interested Trustees' deferred compensation | 4,224 | (a) | - | - | 4,224 | ||||
Total | $ 4,224 |
| $ (672,315) |
| $ (23,406) |
| $ (691,497) | ||
(a) | Amounts relate to forward currency contracts. | ||||||||
(b) | Amounts relate to purchased options. | ||||||||
The following tables provide information about the effect of derivatives and hedging activities on the Fund’s Statements of Operations for the year ended July 31, 2016.
The effect of Derivative Instruments (not accounted for as hedging instruments) on the Statements of Operations for the year ended July 31, 2016 | |||||||||
Amount of Realized Gain/(Loss) Recognized on Derivatives | |||||||||
Derivative | Currency |
| Equity |
| Interest Rate |
| Total | ||
Futures contracts | $ - | $(1,874,359) | $ 30,928 | $(1,843,431) | |||||
Investments and foreign currency transactions | 267,751 | (a) | - | - | 267,751 | ||||
Total | $267,751 |
| $(1,874,359) |
| $ 30,928 |
| $(1,575,680) | ||
Amount of Change in Unrealized Appreciation/Depreciation Recognized on Derivatives | |||||||||
Derivative | Currency |
| Equity |
| Interest Rate |
| Total | ||
Futures contracts | $ - | $ 398,504 | $ 10,969 | $ 409,473 | |||||
Investments, foreign currency translations and non-interested Trustees' deferred compensation | 271,246 | (a) | - | - | 271,246 | ||||
Total | $271,246 |
| $ 398,504 |
| $ 10,969 |
| $ 680,719 | ||
(a) | Amounts relate to forward currency contracts. | ||||||||
(b) | Amounts relate to purchased options. | ||||||||
Please see the "Net Realized Gain/(Loss) on Investments" and "Change in Unrealized Net Appreciation/Depreciation" sections of the Fund’s Statement of Operations.
3. Other Investments and Strategies
Additional Investment Risk
The financial crisis in both the U.S. and global economies over the past several years has resulted, and may continue to result, in a significant decline in the value and liquidity of many securities of issuers worldwide in the equity and fixed-
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Notes to Financial Statements
income/credit markets. In response to the crisis, the United States and certain foreign governments, along with the U.S. Federal Reserve and certain foreign central banks, took steps to support the financial markets. The withdrawal of this support, a failure of measures put in place to respond to the crisis, or investor perception that such efforts were not sufficient could each negatively affect financial markets generally, and the value and liquidity of specific securities. In addition, policy and legislative changes in the United States and in other countries continue to impact many aspects of financial regulation. The effect of these changes on the markets, and the practical implications for market participants, including the Fund, may not be fully known for some time. As a result, it may also be unusually difficult to identify both investment risks and opportunities, which could limit or preclude the Fund’s ability to achieve its investment objective. Therefore, it is important to understand that the value of your investment may fall, sometimes sharply, and you could lose money.
The enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) of 2010 provided for widespread regulation of financial institutions, consumer financial products and services, broker-dealers, OTC derivatives, investment advisers, credit rating agencies, and mortgage lending, which expanded federal oversight in the financial sector, including the investment management industry. Many provisions of the Dodd-Frank Act remain pending and will be implemented through future rulemaking. Therefore, the ultimate impact of the Dodd-Frank Act and the regulations under the Dodd-Frank Act on the Fund and the investment management industry as a whole, is not yet certain.
A number of countries in the European Union (“EU”) have experienced, and may continue to experience, severe economic and financial difficulties. In particular, many EU nations are susceptible to economic risks associated with high levels of debt, notably due to investments in sovereign debt of countries such as Greece, Italy, Spain, Portugal, and Ireland. Many non-governmental issuers, and even certain governments, have defaulted on, or been forced to restructure, their debts. Many other issuers have faced difficulties obtaining credit or refinancing existing obligations. Financial institutions have in many cases required government or central bank support, have needed to raise capital, and/or have been impaired in their ability to extend credit. As a result, financial markets in the EU experienced extreme volatility and declines in asset values and liquidity. Responses to these financial problems by European governments, central banks, and others, including austerity measures and reforms, may not work, may result in social unrest, and may limit future growth and economic recovery or have other unintended consequences. Further defaults or restructurings by governments and others of their debt could have additional adverse effects on economies, financial markets, and asset valuations around the world. Greece, Ireland, and Portugal have already received one or more "bailouts" from other Eurozone member states, and it is unclear how much additional funding they will require or if additional Eurozone member states will require bailouts in the future. The risk of investing in securities in the European markets may also be heightened due to the referendum in which the United Kingdom voted to exit the EU (known as “Brexit”). There is considerable uncertainty about how Brexit will be conducted, how negotiations of necessary treaties and trade agreements will proceed, or how financial markets will react. In addition, one or more other countries may also abandon the euro and/or withdraw from the EU, placing its currency and banking system in jeopardy.
Certain areas of the world have historically been prone to and economically sensitive to environmental events such as, but not limited to, hurricanes, earthquakes, typhoons, flooding, tidal waves, tsunamis, erupting volcanoes, wildfires or droughts, tornadoes, mudslides, or other weather-related phenomena. Such disasters, and the resulting physical or economic damage, could have a severe and negative impact on the Fund’s investment portfolio and, in the longer term, could impair the ability of issuers in which the Fund invests to conduct their businesses as they would under normal conditions. Adverse weather conditions may also have a particularly significant negative effect on issuers in the agricultural sector and on insurance companies that insure against the impact of natural disasters.
Counterparties
Fund transactions involving a counterparty are subject to the risk that the counterparty or a third party will not fulfill its obligation to the Fund (“counterparty risk”). Counterparty risk may arise because of the counterparty’s financial condition (i.e., financial difficulties, bankruptcy, or insolvency), market activities and developments, or other reasons, whether foreseen or not. A counterparty’s inability to fulfill its obligation may result in significant financial loss to the Fund. The Fund may be unable to recover its investment from the counterparty or may obtain a limited recovery, and/or recovery may be delayed. The extent of the Fund’s exposure to counterparty risk with respect to financial assets and liabilities approximates its carrying value. See the "Offsetting Assets and Liabilities" section of this Note for further details.
The Fund may be exposed to counterparty risk through participation in various programs, including, but not limited to, lending its securities to third parties, cash sweep arrangements whereby the Fund’s cash balance is invested in one or
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Notes to Financial Statements
more types of cash management vehicles, as well as investments in, but not limited to, repurchase agreements, debt securities, and derivatives, including various types of swaps, futures and options. The Fund intends to enter into financial transactions with counterparties that Janus Capital believes to be creditworthy at the time of the transaction. There is always the risk that Janus Capital’s analysis of a counterparty’s creditworthiness is incorrect or may change due to market conditions. To the extent that the Fund focuses its transactions with a limited number of counterparties, it will have greater exposure to the risks associated with one or more counterparties.
Exchange-Traded and Mutual Funds
The Fund may invest in exchange-traded funds (“ETFs”) and mutual funds to gain exposure to a particular portion of the market. ETFs are typically open-end investment companies, which may be actively managed or passively managed, that generally seek to track the performance of a specific index. ETFs are traded on a national securities exchange at market prices that may vary from the net asset value of their underlying investments. Accordingly, there may be times when an ETF trades at a premium or discount. When the Fund invests in an ETF or mutual fund, in addition to directly bearing the expenses associated with its own operations, it will bear a pro rata portion of the ETF's or mutual fund’s expenses. As a result, the cost of investing in the Fund may be higher than the cost of investing directly in ETFs or mutual funds and may be higher than other mutual funds that invest directly in stocks and bonds. ETFs also involve the risk that an active trading market for an ETF's shares may not develop or be maintained. Similarly, because the value of ETF shares depends on the demand in the market, the Fund may not be able to purchase or sell an ETF at the most optimal time, which could adversely affect the Fund’s performance. In addition, ETFs that track particular indices may be unable to match the performance of such underlying indices due to the temporary unavailability of certain index securities in the secondary market or other factors, such as discrepancies with respect to the weighting of securities. Because the Fund may invest in a broad range of ETFs and mutual funds, such risks may include, but are not limited to, leverage risk, foreign exposure risk, interest rate risk, emerging markets risk, fixed-income risk, and commodity-linked investments risk. The Fund is also subject to substantially the same risks as those associated with direct exposure to the securities held by the ETF or mutual fund.
Offsetting Assets and Liabilities
The Fund presents gross and net information about transactions that are either offset in the financial statements or subject to an enforceable master netting arrangement or similar agreement with a designated counterparty, regardless of whether the transactions are actually offset in the Statement of Assets and Liabilities.
In order to better define its contractual rights and to secure rights that will help the Fund mitigate its counterparty risk, the Fund has entered into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with its derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between the Fund and a counterparty that governs OTC derivatives and forward foreign currency exchange contracts and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, in the event of a default and/or termination event, the Fund may offset with each counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. For financial reporting purposes, the Fund does not offset certain derivative financial instruments’ payables and receivables and related collateral on the Statement of Assets and Liabilities.
The following tables present gross amounts of recognized assets and/or liabilities and the net amounts after deducting collateral that has been pledged by counterparties or has been pledged to counterparties (if applicable). For corresponding information grouped by type of instrument, see either the “Fair Value of Derivative Instruments as of June 30, 2017” table located in Note 2 of these Notes to Financial Statements and/or the Fund’s Schedule of Investments.
Offsetting of Financial Assets and Derivative Assets | ||||||||
Gross Amounts | ||||||||
of Recognized | Offsetting Asset | Collateral | ||||||
Counterparty | Assets | or Liability(a) | Pledged(b) | Net Amount | ||||
BNP Paribas | $ | 120,849 | $ | (45,345) | $ | — | $ | 75,504 |
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Janus Henderson All Asset Fund
Notes to Financial Statements
Offsetting of Financial Liabilities and Derivative Liabilities | |||||||||
Gross Amounts | |||||||||
of Recognized | Offsetting Asset | Collateral | |||||||
Counterparty | Liabilities | or Liability(a) | Pledged(b) | Net Amount | |||||
BNP Paribas | $ | 45,345 | $ | (45,345) | $ | — | $ | — | |
(a) | Represents the amount of assets or liabilities that could be offset with the same counterparty under master netting or similar agreements that management elects not to offset on the Statement of Assets and Liabilities. | ||||||||
(b) | Collateral pledged is limited to the net outstanding amount due to/from an individual counterparty. The actual collateral amounts pledged may exceed these amounts and may fluctuate in value. | ||||||||
The Fund does not exchange collateral on its forward currency contracts with its counterparties; however, the Fund may segregate cash or high-grade securities in an amount at all times equal to or greater than the Fund’s commitment with respect to these contracts. Such segregated assets, if with the Fund’s custodian, are denoted on the accompanying Schedule of Investments and are evaluated daily to ensure their market value equals or exceeds the current market value of the Fund’s corresponding forward currency contracts.
4. Investment Advisory Agreements and Other Transactions with Affiliates
The Fund pays Janus Capital an investment advisory fee which is calculated daily and paid monthly. The Fund’s contractual investment advisory fee rate (expressed as an annual rate) is 0.40% of its average daily net assets.
Prior to the Reorganization, the Fund paid Henderson Global Investors (North America) Inc. (“HGINA”), the Predecessor Fund’s investment advisor. The following table reflects the Predecessor Fund’s investment advisory fee rate (expressed as an annual rate).
Average Daily Net Assets of the Fund | Contractual Investment Advisory Fee (%) |
All Asset Levels | 0.40 |
Henderson Investment Management Limited (“HIML”) serves as subadviser to the Fund. As subadviser, HIML provides day-to-day management of the investment operations of the Fund subject to the general oversight of the Board of Trustees and Janus Capital. HIML is an affiliate of Janus Capital through a common parent company.
Janus Capital pays HIML a subadvisory fee rate equal to 50% of the investment advisory fee paid by the Fund to Janus Capital (net of any fee waivers and expense reimbursements).
Prior to the Reorganization, HGINA engaged “HIML” to act as the investment sub-adviser to the Predecessor Fund. The sub-advisers provided research, advice and recommendations with respect to the purchase and sale of securities and made investment decisions regarding assets of the Predecessor Fund subject to the oversight of the Predecessor Fund’s Board of Trustees and the Predecessor Fund’s Adviser. No additional fees were charged to the Predecessor Fund for services of the sub-advisers as these fees were paid from the fees earned by HGINA.
Janus Capital has contractually agreed to waive the investment advisory fee and/or reimburse operating expenses to the extent that the Fund’s total annual fund operating expenses but excluding the 12b-1 distribution and shareholder servicing fees (applicable to Class A Shares, Class C Shares, and Class S Shares), such as transfer agency fees (including out-of-pocket costs), administrative services fees and any networking/omnibus/administrative fees payable by any share class, brokerage commissions, interest, dividends, taxes, acquired fund fees and expenses, and extraordinary expenses) exceed the annual rate of 0.51% of the Fund’s average daily net assets. Janus Capital has agreed to continue the waiver until one year after completion of Reorganization.. If applicable, amounts reimbursed to the Fund by Janus Capital are disclosed as “Excess Expense Reimbursement” on the Statement of Operations.
For the year ended July 31, 2016 and the period prior to the Reorganization, HGINA agreed to waive or limit its management fee and, if necessary, to reimburse expenses of the Predecessor Fund in order to limit total annual ordinary operating expenses, including distribution and service fees, but excluding any acquired fund fees and expenses as a result of investing in other funds, as a percentage of average daily net assets was 0.85%, 1.60%, 0.60%, and 0.60% for Class A, Class C, Class I, and Class R6, respectively. With respect to investments in affiliated underlying
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Notes to Financial Statements
funds, HGINA contractually agreed to reduce or waive the Predecessor Fund’s management fee to limit the combined management fees paid to the Advisor for those assets to the greater of 1.00% or the affiliate underlying fund’s management fee. Any waiver calculated as a result of limiting these combined management fees is in addition to the general expense limitation highlighted in the table. Indirect net expenses associated with the Predecessor Fund’s investments in underlying investment companies are not subject to the contractual expense limitation.
Janus Services LLC (“Janus Services”), a wholly-owned subsidiary of Janus Capital, is the Fund’s and the underlying funds’ transfer agent. In addition, Janus Services provides or arranges for the provision of certain other administrative services including, but not limited to, recordkeeping, accounting, order processing, and other shareholder services for the Fund. Janus Services is not compensated for its services related to the shares, except for out-of-pocket costs. These amounts are disclosed as “Other transfer agent fees and expenses” on the Statement of Operations.
Certain, but not all, intermediaries may charge administrative fees (such as networking and omnibus) to investors in Class A Shares, Class C Shares, and Class I Shares for administrative services provided on behalf of such investors. These administrative fees are paid by the Class A Shares, Class C Shares, and Class I Shares of the Fund to Janus Services, which uses such fees to reimburse intermediaries. Consistent with the Transfer Agency Agreement between Janus Services and the Fund, Janus Services may negotiate the level, structure, and/or terms of the administrative fees with intermediaries requiring such fees on behalf of the Fund. Janus Capital and its affiliates benefit from an increase in assets that may result from such relationships. The Funds’ Trustees have set limits on fees that the Funds may incur with respect to administrative fees paid for omnibus or networked accounts. Such limits are subject to change by the Trustees in the future. These amounts are disclosed as “Transfer agent networking and omnibus fees” on the Statement of Operations.
The Fund’s Class D Shares pay an administrative services fee at an annual rate of 0.12% of the average daily net assets of Class D Shares for shareholder services provided by Janus Services. Janus Services provides or arranges for the provision of shareholder services including, but not limited to, recordkeeping, accounting, answering inquiries regarding accounts, transaction processing, transaction confirmations, and the mailing of prospectuses and shareholder reports. These amounts are disclosed as “Transfer agent administrative fees and expenses” on the Statement of Operations.
Janus Services receives an administrative services fee at an annual rate of up to 0.25% of the average daily net assets of the Fund’s Class S Shares and Class T Shares for providing or procuring administrative services to investors in Class S Shares and Class T Shares of the Fund. Janus Services expects to use all or a significant portion of this fee to compensate retirement plan service providers, broker-dealers, bank trust departments, financial advisors, and other financial intermediaries for providing these services. Janus Services or its affiliates may also pay fees for services provided by intermediaries to the extent the fees charged by intermediaries exceed the 0.25% of net assets charged to Class S Shares and Class T Shares of the Fund. Janus Services may keep certain amounts retained for reimbursement of out-of-pocket costs incurred for servicing clients of Class S Shares and Class T Shares. These amounts are disclosed as “Transfer agent administrative fees and expenses” on the Statement of Operations.
Services provided by these financial intermediaries may include, but are not limited to, recordkeeping, subaccounting, order processing, providing order confirmations, periodic statements, forwarding prospectuses, shareholder reports, and other materials to existing customers, answering inquiries regarding accounts, and other administrative services. Order processing includes the submission of transactions through the National Securities Clearing Corporation (“NSCC”) or similar systems, or those processed on a manual basis with Janus Capital.
Janus Services is compensated for its services related to the Fund’s Class D Shares. In addition to the administrative fees discussed above, Janus Services receives reimbursement for out-of-pocket costs it incurs for serving as transfer agent and providing, or arranging for, servicing to shareholders. These amounts are disclosed as “Other transfer agent fees and expenses” on the Statement of Operations.
Prior to the Reorganization, shares of the Predecessor Fund were often purchased through financial intermediaries who were agents of the Predecessor Fund for the limited purpose of completing purchases and sales. These intermediaries may provide certain networking and sub-transfer agent services with respect to Predecessor Fund shares held by that intermediary for its customers, and the intermediary may charge HGINA for those services. The Predecessor Fund reimbursed HGINA for such fees within limits specified by the Predecessor Fund’s Board of Trustees. The fees were incurred at the class level based on activity, asset levels and/or number of accounts and are included in “Transfer agent networking and omnibus fees” on the Statements of Operations.
32 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Notes to Financial Statements
Under a distribution and shareholder servicing plan (the “Plan”) adopted in accordance with Rule 12b-1 under the 1940 Act, the Fund pays the Trust’s distributor, Janus Henderson Distributors LLC (“Janus Distributors”), a wholly-owned subsidiary of Janus Capital, a fee for the sale and distribution and/or shareholder servicing of the Shares at an annual rate of up to 0.25% of the Class A Shares’ average daily net assets, of up to 1.00% of the Class C Shares’ average daily net assets and of up to 0.25% of the Class S Shares’ average daily net assets. Under the terms of the Plan, the Trust is authorized to make payments to Janus Distributors for remittance to retirement plan service providers, broker-dealers, bank trust departments, financial advisors, and other financial intermediaries, as compensation for distribution and/or shareholder services performed by such entities for their customers who are investors in the Fund. These amounts are disclosed as “12b-1 Distribution and shareholder servicing fees” on the Statement of Operations. Payments under the Plan are not tied exclusively to actual 12b-1 distribution and shareholder service expenses, and the payments may exceed 12b-1 distribution and shareholder service expenses actually incurred. If any of the Fund’s actual 12b-1 distribution and shareholder service expenses incurred during a calendar year are less than the payments made during a calendar year, the Fund will be refunded the difference. Refunds, if any, are included in “12b-1 Distribution fees and shareholder servicing fees” in the Statement of Operations.
Janus Distributors is entitled to retain all fees paid under the Class C Plan for the first 12 months on any investment in Class C Shares to recoup its expenses with respect to the payment of commissions on sales of Class C Shares. Financial intermediaries will become eligible for compensation under the Class C Plan beginning in the 13th month following the purchase of Class C Shares, although Janus Distributors may, pursuant to a written agreement between Janus Distributors and a particular financial intermediary, pay such financial intermediary 12b-1 fees prior to the 13th month following the purchase of Class C Shares.
Prior to the Reorganization, the Predecessor Fund’s Trust adopted a distribution plan for Class A and Class C shares of the Predecessor Fund in accordance with Rule 12b-1 under the 1940 Act (the “12b-1 Plan”). Under the 12b-1 Plan, the Predecessor Fund paid the distributor an annual fee of 0.25% of the average daily net assets attributable to Class A shares, and annual fee of 1.00% of the average daily net assets attributable to Class C shares. The 12b-1 Plan was used to induce or compensate financial intermediaries (including brokerage firms, depository institutions and other firms) to provide distribution services to the Predecessor Fund and their shareholders.
Janus Capital furnishes certain administration, compliance, and accounting services for the Fund and is reimbursed by the Fund for certain of its costs in providing those services (to the extent Janus Capital seeks reimbursement and such costs are not otherwise waived). In addition, employees of Janus Capital and/or its affiliates may serve as officers of the Trust. Janus Capital provides office space for the Fund. Some expenses related to compensation payable to the Janus Henderson funds’ Chief Compliance Officer and compliance staff are shared with the Fund. The Fund also pays for some or all of salaries, fees, and expenses of certain Janus Capital employees and Fund officers, with respect to certain specified administration functions they perform on behalf of the Fund. The Fund pays these costs based on out-of-pocket expenses incurred by Janus Capital, and these costs are separate and apart from advisory fees and other expenses paid in connection with the investment advisory services Janus Capital provides to the Fund. These amounts are disclosed as “Fund administration fees” on the Statement of Operations. Some expenses related to compensation payable to the Fund's Chief Compliance Officer and compliance staff are shared with the Fund. Total compensation of $263,736 was paid to the Chief Compliance Officer and certain compliance staff by the Trust during the period ended June 30, 2017. The Fund's portion is reported as part of “Other expenses” on the Statement of Operations.
The Board of Trustees has adopted a deferred compensation plan (the “Deferred Plan”) for independent Trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. All deferred fees are credited to an account established in the name of the Trustees. The amounts credited to the account then increase or decrease, as the case may be, in accordance with the performance of one or more of the Janus Henderson funds that are selected by the Trustees. The account balance continues to fluctuate in accordance with the performance of the selected fund or funds until final payment of all amounts are credited to the account. The fluctuation of the account balance is recorded by the Fund as unrealized appreciation/(depreciation) and is included as of June 30, 2017 on the Statement of Assets and Liabilities in the asset, “Non-interested Trustees’ deferred compensation,” and liability, “Non-interested Trustees’ deferred compensation fees.” Additionally, the recorded unrealized appreciation/(depreciation) is included in “Unrealized net appreciation/(depreciation) of investments, foreign currency translations and non-interested Trustees’ deferred compensation” on the Statement of Assets and Liabilities. Deferred compensation expenses for the period ended June 30, 2017 are included in “Non-interested Trustees’ fees and expenses” on the Statement of Operations. Trustees are allowed to change their designation of mutual funds from time
Janus Investment Fund | 33 |
Janus Henderson All Asset Fund
Notes to Financial Statements
to time. Amounts will be deferred until distributed in accordance with the Deferred Plan. Deferred fees of $387,825 were paid by the Trust to the Trustees under the Deferred Plan during the period ended June 30, 2017.
Prior to the Reorganization, certain officers and trustees of the Predecessor Fund’s Trust were also officers of HGINA. None of the Predecessor Fund’s Trust’s officers, other than the Chief Compliance Officer, were compensated by the Predecessor Fund’s Trust. The Predecessor Fund’s Trust made no direct payments to the trustees affiliated with HGINA. Fees paid to trustees are reflected as “Non-interested Trustees’ fees and expenses” on the Statements of Operations. The Predecessor Fund paid part of the full compensation paid to the Predecessor Fund’s Chief Compliance Officer. This compensation, together with other compliance-related costs, is reflected as “Other expenses” in the Statements of Operations.
Prior to the Reorganization, State Street served as the administrator for the Predecessor Fund. As compensation for the administrative services provided by State Street, the Predecessor Fund paid State Street an annual administration fee based upon a percentage of the average net assets of the Predecessor Fund.
In December 2015, the Predecessor Fund’s custodian, SSB, announced that it had identified inconsistencies in the way in which clients were invoiced for categories of expenses, particularly those deemed “out-of-pocket” (OOP) costs, during and 18-year period from 1998 until early November 2015. The issue was the result of an inaccurate billing rate that was not subsequently reviewed or adjusted. Over time, as volumes increased or costs decreased, the gap between the amount SSB charged as a pass-through expense to clients and the actual cost grew. As OOP charges are not subject to a clear fee schedule, clients largely had no ability to identify the issue. The amount of the differences in what was and what should have been charged, plus interest, was paid back to clients in July 2016 as a reimbursement. The Predecessor Fund’s Trust commenced operations in 2001 and all currently active funds within the Predecessor Fund’s Trust were impacted by this matter. SSB reimbursed the Predecessor Fund directly, which was recognized as a change in accounting estimate and was reflected as an offset to the July 31, 2016 annual period custody expense and resulted in a decrease in gross expenses incurred. Pursuant to the expense limitations, certain sub-scale funds experienced investment advisor fee waivers during the July 31, 2016 annual period. Accordingly, the reduction in the July 31, 2016 annual period custody expense was offset by a reduction in the July 31, 2016 annual period expense waivers, thereby resulting in no net expense or net asset impact. To the extent there were no July 31, 2016 annual period expense waivers, the reduction in the July 31, 2016 annual period custody expense resulted in lower net expenses and a positive net asset impact. The reduction to the July 31, 2016 custody expense was $6,934. The reduction to the July 31, 2016 waiver/reimbursement was $6,934. The net investment income and net asset impact for July 31, 2016 was $0.
Any purchases and sales, realized gains/losses and recorded dividends from affiliated investments during the period ended June 30, 2017 can be found in a table located in the Notes to Schedule of Investments and Other Information.
Class A Shares include a 5.75% upfront sales charge of the offering price of the Fund. The sales charge is allocated between Janus Distributors and financial intermediaries. During the period ended June 30, 2017, Janus Distributors retained upfront sales charges of $962.
A contingent deferred sales charge (“CDSC”) of 1.00% will be deducted with respect to Class A Shares purchased without a sales load and redeemed within 12 months of purchase, unless waived. Any applicable CDSC will be 1.00% of the lesser of the original purchase price or the value of the redemption of the Class A Shares redeemed. There were no CDSCs paid by redeeming shareholders of Class A Shares to Janus Distributors during the period ended June 30, 2017.
A CDSC of 1.00% will be deducted with respect to Class C Shares redeemed within 12 months of purchase, unless waived. Any applicable CDSC will be 1.00% of the lesser of the original purchase price or the value of the redemption of the Class C Shares redeemed. During the period ended June 30, 2017, redeeming shareholders of Class C Shares paid CDSCs of 1,138.
34 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Notes to Financial Statements
As of June 30, 2017, shares of the Fund were owned by Janus Capital and/or other funds advised by Janus Capital, as indicated in the table below:
Class | % of Class Owned |
| % of Fund Owned |
| ||
Class A Shares | - | %* | - | %* | ||
Class C Shares | -* | -* | ||||
Class D Shares | 63 | -* | ||||
Class I Shares | -* | -* | ||||
Class N Shares | -* | -* | ||||
Class S Shares | 100 | -* | ||||
Class T Shares | 100 | -* | ||||
* | Less than 0.50% | |||||
In addition, other shareholders, including other funds, individuals, accounts, as well as the Fund’s portfolio manager(s) and/or investment personnel, may from time to time own (beneficially or of record) a significant percentage of the Fund’s Shares and can be considered to “control” the Fund when that ownership exceeds 25% of the Fund’s assets (and which may differ from control as determined in accordance with accounting principles generally accepted in the United States of America).
5. Federal Income Tax
The tax components of capital shown in the table below represent: (1) distribution requirements the Fund must satisfy under the income tax regulations; (2) losses or deductions the Fund 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.
Other book to tax differences primarily consist of deferred compensation, derivatives, and foreign currency contract adjustmentsThe Fund has elected to treat gains and losses on forward foreign currency contracts as capital gains and losses, if applicable. 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.
Loss Deferrals | Other Book | Net Tax | |||||
Undistributed | Undistributed | Accumulated | Late-Year | Post-October | to Tax | Appreciation/ | |
$ 1,466,929 | $ 1,018,264 | $ - | $ - | $ - | $ 27,615 | $ 357,218 | |
During the period ended June 30, 2017, capital loss carryovers of $893,462 were utilized by the Fund.
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, 2017 are noted below.
Unrealized appreciation and unrealized depreciation in the table below exclude appreciation/depreciation on foreign currency translations. The primary differences between book and tax appreciation or depreciation of investments are wash sale loss deferrals, investments in partnerships and investments in passive foreign investment companies.
Federal Tax Cost | Unrealized | Unrealized | Net Tax Appreciation/ |
$ 47,295,153 | $ 926,460 | $ (569,242) | $ 357,218 |
Janus Investment Fund | 35 |
Janus Henderson All Asset Fund
Notes to Financial Statements
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, passive foreign investment companies, 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 capital.
For the period ended June 30, 2017 | ||||
Distributions | ||||
From Ordinary Income | From Long-Term Capital Gains | Tax Return of Capital | Net Investment Loss | |
$ 309,879 | $ - | $ - | $ - | |
For the year ended July 31, 2016 | ||||
Distributions | ||||
From Ordinary Income | From Long-Term Capital Gains | Tax Return of Capital | Net Investment Loss | |
$ 1,377,424 | $ 700,399 | $ - | $ - | |
For the year ended July 31, 2015 | ||||
Distributions | ||||
From Ordinary Income | From Long-Term Capital Gains | Tax Return of Capital | Net Investment Loss | |
$ 1,698,896 | $ 848,091 | $ - | $ - | |
Permanent book to tax basis differences may result in reclassifications between the components of net assets. These differences have no impact on the results of operations or net assets. The following reclassifications have been made to the Fund:
Increase/(Decrease) to Capital | Increase/(Decrease) to Undistributed | Increase/(Decrease) to Undistributed | |||
$ - | $ 204,499 | $ (204,499) | |||
| |||||
36 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Notes to Financial Statements
6. Capital Share Transactions
Period ended June 30, 2017(1) | Year ended July 31, 2016(2) | |||||
Shares | Amount | Shares | Amount | |||
Class A Shares: | ||||||
Shares sold | 48,061 | $ 489,973 | 242,349 | $ 2,389,247 | ||
Reinvested dividends and distributions | 926 | 9,384 | 17,076 | 168,932 | ||
Shares repurchased | (271,215) | (2,811,933) | (469,446) | (4,623,264) | ||
Net Increase/(Decrease) | (222,228) | $(2,312,576) |
| (210,021) | $ (2,065,085) | |
Class C Shares: | ||||||
Shares sold | 272,453 | $ 2,717,264 | 328,077 | $ 3,171,463 | ||
Reinvested dividends and distributions | - | - | 26,511 | 257,689 | ||
Shares repurchased | (441,397) | (4,449,811) | (464,349) | (4,525,561) | ||
Net Increase/(Decrease) | (168,944) | $(1,732,547) |
| (109,761) | $ (1,096,409) | |
Class D Shares: | ||||||
Shares sold | 7,406 | $ 79,738 | - | $ - | ||
Reinvested dividends and distributions | - | - | - | - | ||
Shares repurchased | - | - | - | - | ||
Net Increase/(Decrease) | 7,406 | $ 79,738 |
| N/A | N/A | |
Class I Shares: | ||||||
Shares sold | 220,782 | $ 2,264,674 | 270,034 | $ 2,652,602 | ||
Reinvested dividends and distributions | 5,108 | 51,538 | 51,382 | 507,864 | ||
Shares repurchased | (602,702) | (6,161,871) | (3,460,698) | (35,215,253) | ||
Net Increase/(Decrease) | (376,812) | $(3,845,659) |
| (3,139,282) | $(32,054,787) | |
Class N Shares: | ||||||
Shares sold | 4,417 | $ 44,259 | 2,765,534 | $ 28,346,633 | ||
Reinvested dividends and distributions | 23,932 | 240,992 | 110,490 | 1,090,787 | ||
Shares repurchased | (13,373) | (135,976) | (966) | (8,927) | ||
Net Increase/(Decrease) | 14,976 | $ 149,275 |
| 2,875,058 | $ 29,428,493 | |
Class S Shares: | ||||||
Shares sold | 4,644 | $ 50,010 | - | $ - | ||
Reinvested dividends and distributions | - | - | - | - | ||
Shares repurchased | - | - | - | - | ||
Net Increase/(Decrease) | 4,644 | $ 50,010 |
| N/A | N/A | |
Class T Shares: | ||||||
Shares sold | 4,644 | $ 50,010 | - | $ - | ||
Reinvested dividends and distributions | - | - | - | - | ||
Shares repurchased | - | - | - | - | ||
Net Increase/(Decrease) | 4,644 | $ 50,010 |
| N/A | N/A | |
(1) | Period from June 5, 2017 (inception date) through June 30, 2017 for Class D Shares, Class S Shares and Class T Shares. | |||||
(2) | Period from November 30, 2015 (inception date) through July 31, 2015 for Class N Shares. | |||||
Janus Investment Fund | 37 |
Janus Henderson All Asset Fund
Notes to Financial Statements
Year ended July 31, 2015 | Shares | Amount | |
Class A Shares: | |||
Shares sold | 241,338 | $ 2,554,231 | |
Reinvested dividends and distributions | 23,272 | 243,890 | |
Shares repurchased | (487,973) | (5,204,279) | |
Net Increase/(Decrease) | (223,363) | $(2,406,158) | |
Class C Shares: | |||
Shares sold | 470,507 | $ 4,904,804 | |
Reinvested dividends and distributions | 33,502 | 347,023 | |
Shares repurchased | (506,063) | (5,298,299) | |
Net Increase/(Decrease) | (2,054) | $ (46,472) | |
Class I Shares: | |||
Shares sold | 660,704 | $ 7,046,213 | |
Reinvested dividends and distributions | 179,159 | 1,876,370 | |
Shares repurchased | (987,950) | (10,512,582) | |
Net Increase/(Decrease) | (148,087) | $(1,589,999) | |
7. Purchases and Sales of Investment Securities
For the period ended June 30, 2017, the aggregate cost of purchases and proceeds from sales of investment securities (excluding any short-term securities, short-term options contracts, and in-kind transactions) was as follows:
Purchases of | Proceeds from Sales | Purchases of Long- | Proceeds from Sales |
$17,933,841 | $ 20,391,430 | $ - | $ - |
For the year ended July 31, 2016, the aggregate cost of purchases and proceeds from sales of investment securities (excluding any short-term securities, short-term options contracts, and in-kind transactions) was as follows:
Purchases of | Proceeds from Sales | Purchases of Long- | Proceeds from Sales |
$15,514,359 | $ 22,798,774 | $ - | $ - |
8. Recent Accounting Pronouncements
The Securities and Exchange Commission ("SEC") adopted new rules as well as amendments to its rules to modernize the reporting and disclosure of information by registered investment companies. In addition, the SEC adopted amendments to Regulation S-X, which require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The compliance date of the amendments to Regulation S-X is August 1, 2017. Management believes that many of the Regulation S-X amendments are consistent with the Fund’s current financial statement presentation and will not have a significant impact on the Fund.
The FASB issued Accounting Standards Update No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities ("ASU 2017-08") to amend the amortization period for certain purchased callable debt securities held at a premium. The guidance requires certain premiums on callable debt securities to be amortized to the earliest call date. The amortization period for callable debt securities purchased at a discount will not be impacted. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. Management is currently evaluating the impacts of ASU 2017-08 on the financial statements.
38 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Notes to Financial Statements
9. Merger Related Matters
Pursuant to the Agreement and Plan of Reorganization, the Fund acquired all the assets and liabilities of the Henderson All Asset Fund (the “Predecessor Fund”), a series of Henderson Global Funds, in exchange for Class A, Class C, Class I and Class N Fund shares having an aggregate net asset value equal to the value of the aggregate net assets of the same share class of the Predecessor Fund (except that Class R6 Predecessor Fund shares were exchanged for Class N Fund shares) (the “Reorganization”). The Reorganization occurred at the close of business on June 2, 2017.
10. Subsequent Event
Management has evaluated whether any events or transactions occurred subsequent to June 30, 2017 and through the date of issuance of the Fund’s financial statements and determined that there were no material events or transactions that would require recognition or disclosure in the Fund’s financial statements.
Janus Investment Fund | 39 |
Janus Henderson All Asset Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Janus Investment Fund and Shareholders of
Janus Henderson All Asset Fund:
In our opinion, the accompanying statement of assets and liabilities, including the schedule 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 the Janus Henderson All Asset Fund (one of the funds constituting Janus Investment Fund, hereafter referred to as the “Fund”) as of June 30, 2017, and the results of its operations, the changes in its net assets and the financial highlights for the period from August 1, 2016 through June 30, 2017, 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 Fund's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 audit, which included confirmation of securities as of June 30, 2017 by correspondence with the custodian, provides a reasonable basis for our opinion. The financial statements of the Fund as of and for each of the years ended July 31, 2016 and 2015, and the financial highlights for each of the periods ended on or prior to July 31, 2016 (not presented herein, other than the statement of operations, the statements of changes in net assets and the financial highlights) were audited by other auditors whose report dated September 23, 2016 expressed an unqualified opinion on those financial statements and financial highlights.
Denver, Colorado
August 15, 2017
40 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Additional Information (unaudited)
Proxy Voting Policies and Voting Record
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to its portfolio securities is available without charge: (i) upon request, by calling 1-877-335-2687 (toll free) (or 1-800-525-3713 if you hold Class D shares); (ii) on the Fund’s website at janushenderson.com/proxyvoting; and (iii) on the SEC’s website at http://www.sec.gov. Additionally, information regarding the Fund’s proxy voting record for the most recent twelve-month period ended June 30 is also available, free of charge, through janushenderson.com/proxyvoting and from the SEC’s website at http://www.sec.gov.
Quarterly Portfolio Holdings
The Fund files its complete portfolio holdings (schedule of investments) with the SEC for the first and third quarters of each fiscal year on Form N-Q within 60 days of the end of such fiscal quarter. The Fund’s Form N-Q: (i) is available on the SEC’s website at http://www.sec.gov; (ii) may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. (information on the Public Reference Room may be obtained by calling 1-800-SEC-0330); and (iii) is available without charge, upon request, by calling Janus Henderson at 1-877-335-2687 (toll free) (or 1-800-525-3713 if you hold Class D shares).
APPROVAL OF ADVISORY AGREEMENTS DURING THE PERIOD
What follows is a discussion of the material factors and conclusions with respect thereto that formed the basis for the Trustees of Janus Investment Fund’s approval of the investment advisory agreements for the Funds and the sub-advisory agreements for the Funds, as applicable, during the period. This discussion references a Transaction (as defined below) to combine the respective businesses of Henderson Group plc and Janus Capital Group, Inc., which resulted in the Trustees’ consideration of new investment advisory agreements for the Funds and sub-advisory agreements for the Funds, as applicable. During the period, the Trustees also approved the renewal of the existing investment advisory agreements for the Funds and the sub-advisory agreements for the Funds, as applicable, which were subsequently replaced by the new investment advisory and sub-advisory agreements at the close of the Transaction on May 30, 2017. In connection with the Transaction and certain Fund mergers, certain Funds were liquidated during the period. Such liquidated Funds do not have annual or semi-annual reporting obligations, and accordingly are not discussed below.
Approval of Advisory and Sub-Advisory Agreements with Janus and Janus Affiliates during the Period
On September 15, 2016, Janus Capital Group Inc. (“Janus”) advised the Trustees of Janus Investment Fund (the “Trust”), each of whom serves as an “independent” Trustee (the “Board” or the “Trustees”), of its intent to seek a strategic combination of its advisory business with Henderson Group plc (“Henderson”). The Board met with the
Chief Executive Officer of Janus, who outlined the proposed combination and the potential benefits to Janus Capital Management LLC (“Janus Capital”) and each Fund of the Trust (each, a “Fund” and collectively, the “Funds”).
Subsequent to the September 15, 2016 meeting, the Trustees identified a list of basic principles, which they believed should serve as the foundation for their review of the organizational, operational and strategic issues involved with any potential change in control of Janus Capital, the investment adviser to the Funds. These basic principles were communicated to Janus Capital on September 27, 2016, and were intended to be shared with Henderson. On October 3, 2016, Janus announced that it had entered into a definitive Agreement and Plan of Merger with Henderson pursuant to which Janus and Henderson agreed to effect an all-stock merger of equals strategic combination of their respective businesses, with Janus Capital surviving the merger as a direct wholly-owned subsidiary of Henderson (the “Transaction”). The Board was advised that, subject to certain conditions, the Transaction is currently expected to close during the second quarter of 2017.
As part of its due diligence, the Board developed an initial list of questions related to the proposed transaction, which was provided to Janus Capital on October 6, 2016. At a special Board meeting held on October 19, 2016, the Board considered Janus Capital’s response to the initial information request and met with the management of Janus to discuss the impact of the Transaction on the nature, extent and quality of services Janus Capital is expected to provide to the Janus Funds following the Transaction, addressing, among other matters, the personnel expected to provide such services, and the resources available to do so. After its October 19, 2016 meeting, the Board developed a supplemental request for additional information, which was provided to Janus Capital on October 26, 2016. At another special Board
Janus Investment Fund | 41 |
Janus Henderson All Asset Fund
Additional Information (unaudited)
meeting held on November 7-8, 2016, the Board considered Janus Capital’s response to the supplemental information request and again met with the management of Janus and Henderson to discuss the impact of the Transaction on the nature, extent and quality of services Janus Capital is expected to provide to the Janus Funds following the Transaction, and also met with various officers of the Funds and of Janus Capital, including various Fund portfolio managers. After its November 7-8, 2016 meeting, the Board developed a second supplemental request for additional information, which was provided to Janus Capital on November 21, 2016. On December 7-8, 2016, the Board met to consider Janus Capital’s response to the second supplemental information request and to also consider the proposed new investment advisory agreements between the Trust, on behalf of each Fund, and Janus Capital (each, a “New Advisory Agreement” and collectively, the “New Advisory Agreements”) and the new sub-advisory agreements between Janus Capital and each of the Funds that utilize INTECH Investment Management LLC (“INTECH”), Perkins Investment Management LLC (“Perkins”), or Janus Singapore Pte. Limited (“Janus Singapore,” and together with INTECH and Perkins, the “Sub-Advisers” and each, a “Sub-Adviser”) as sub- advisers (each, a “New Sub-Advisory Agreement” and collectively, the “New Sub-Advisory Agreements”) to take effect immediately after the Transaction or shareholder approval, whichever is later. During each of these meetings, the Board sought additional and clarifying information as it deemed necessary or appropriate. In addition, the Board engaged its independent fee consultant to help evaluate certain of the proposals that the Board was being asked to consider. Throughout the process, the Board had the assistance of its independent legal counsel, who advised them on, among other things, its duties and obligations.
In connection with the Board’s review, Janus Capital provided, and the Board obtained, substantial information regarding the following matters: the management, financial position and business of Henderson; the history of Henderson’s business and operations; the investment performance of the investment companies advised by Henderson; the proposed structure, operations and investment processes of the combined investment management organization after the Transaction and the strategy for operating and growing the business following the Transaction; the future plans of Janus and Henderson with respect to the Funds and any proposed changes to the operations or structure of the Funds; and the future plans of Janus and Henderson with respect to the provision of services to the Funds, and the entities providing such services, including those affiliated with Janus. The Board also received information regarding the terms of the Transaction, anticipated management of the combined organization, the resources that each of Janus and Henderson bring to the combined organization and the process being followed by Janus and Henderson to integrate their organizations. The Board also received information regarding the impact of the Transaction on each of INTECH, Perkins and Janus Singapore.
In connection with the Board’s approval of New Advisory Agreements and New Sub-Advisory Agreements at its December 8, 2016 meeting, the Board also continued its on-going annual process to determine whether to continue the existing investment advisory agreements between Janus Capital and the Trust on behalf of each Fund (each, a “Current Advisory Agreement” and collectively, the “Current Advisory Agreements”) and the existing sub-advisory agreements between Janus Capital and each of the Funds that utilize INTECH, Perkins, or Janus Singapore as sub- advisers (each, a “Current Sub-Advisory Agreement” and collectively, the “Current Sub-Advisory Agreements”). In this regard, the Board received and reviewed information provided by Janus and the respective Sub-Advisers in response to requests of the Board and its independent legal counsel. The Board also received and reviewed information and analysis provided by, and in response to requests of, its independent fee consultant. The Board noted that as part of this annual process, the Board had considered and was in the process of considering, numerous factors, including the nature and quality of services provided by Janus Capital and each Sub-Adviser, as applicable; investment performance, on an absolute basis and relative to appropriate peer groups and one or a combination of market indices; investment management fees, expense ratios and asset sizes of the Funds and peer groups; investment management fees charged to comparable investment companies, separate accounts and non-fund clients; Janus Capital’s profitability from managing the Funds; fall-out benefits to Janus Capital from its relationship to the Funds, including revenues derived from services provided to the Funds by affiliates of Janus Capital; and the potential benefits to Janus Capital, the Funds of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms.
In determining whether to approve the New Advisory Agreement for each Fund and the New Sub-Advisory Agreement for Funds managed by INTECH, Perkins or Janus Singapore in connection with the Transaction, and whether to recommend approval to Fund shareholders, the Board received information and made inquiries into all matters as it deemed appropriate. The Board reviewed and analyzed various factors it deemed relevant, including the following factors, among others, none of which by itself was considered dispositive:
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Janus Henderson All Asset Fund
Additional Information (unaudited)
· The terms of the New Advisory Agreements are substantially similar to the corresponding Current Advisory Agreements, and the contractual fee rate will not change. In this regard, see the discussion of the Board’s considerations with respect to its most recent approval of the Current Advisory Agreements prior to December 8, 2016, as disclosed in each Fund’s most recent prior annual or semi-annual shareholder report, as applicable.
· The terms of the New Sub-Advisory Agreements are substantially similar to the corresponding Current Sub- Advisory Agreements, and the contractual fee rate will not change. In this regard, see the discussion of the Board’s considerations with respect to its most recent approval of the Current Sub-Advisory Agreements prior to December 8, 2016, as disclosed in each Fund’s most recent prior annual or semi-annual shareholder report, as applicable.
· Janus Capital’s plans for the operation of the Funds, including its plans for the continued provision of all services currently provided to the Funds by Janus Capital and its affiliates, including, among others, investment advisory services, portfolio trading services, and Fund administrative and accounting services, and the personnel and resources proposed to support the provision of such services.
· The estimated profitability to Janus Capital from managing the Funds after the Transaction, including potential economies of scale and fall-out benefits to Janus Capital from its relationship to the Funds, including revenues derived from services provided to the Funds by affiliates of Janus Capital, and the potential benefits to Janus Capital, and the Funds of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms.
In connection with its deliberations, the Board received assurances from Janus, on behalf of itself and its affiliates (collectively, “Janus”) including the following:
· Janus has provided to the Board such information as it believes is reasonably necessary to evaluate the New Advisory Agreements and New Sub-Advisory Agreements.
· Janus is committed to the continuance, without interruption, of services to the Funds of at least the type and quality currently provided by Janus Capital and its affiliates, or superior thereto.
· The Transaction is not expected to affect negatively the nature, extent or quality of the investment advisory services provided by Janus Capital to the Funds following the Transaction, and the investment advisory services are expected to be at least comparable to the services being provided under the Current Advisory Agreements and Current Sub-Advisory Agreements. In this regard, the Board noted specific representations that Janus does not intend for the nature, extent or quality of investment advisory and other services to be provided to the Funds following the Transaction to change, and the extent of such services were expected to increase based on the combined resources of the combined investment management organization after the Transaction, and should the nature, extent or quality of such services decline, Janus would commit the resources needed to return such services to pre-Transaction levels.
· The Funds’ current operations were expected to remain largely unchanged, except for certain fund reorganizations which will be separately considered by the Board, and such other changes as were or will be presented to the Board.
· Janus does not intend to make changes to the portfolio managers providing services to the Funds, other than proposed changes in the management of certain Funds as discussed with the Board, including those related to proposals to merge certain Funds with Funds managed by Henderson Global Investors (North America) Inc., an indirect, wholly-owned subsidiary of Henderson, and subject to such changes as may arise at any time as a result of the ongoing process of portfolio manager evaluation.
· After the Transaction, the extent of distribution and marketing services provided to the Janus Funds were expected to increase based on the combined resources of Janus and Henderson. In this regard, Janus Capital advised the Board that after the Transaction, the extent of distribution and marketing services provided to the Janus Funds are expected to increase based on the combined resources of Janus and Henderson. This is due primarily to the anticipated increase of sales related resources and expanded global presence of the combined Janus Henderson organization, which is expected to enhance visibility and brand recognition of the Janus Henderson Funds.
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Janus Henderson All Asset Fund
Additional Information (unaudited)
· The intent of Janus Capital to take the necessary and appropriate steps to retain and attract its key investment advisory personnel.
· The intent of Janus to take the necessary and appropriate steps to retain and attract its key compliance, financial, fund accounting and administrative personnel supporting the management and oversight of the Funds.
· Janus is not aware of any express or implied term, condition, arrangement or understanding that would impose in its best judgement an “unfair burden” on any Fund as a result of the Transaction, as defined in Section 15(f) of the 1940 Act, and that Janus will take no action that would have the effect of imposing such an “unfair burden” on any Fund in connection with the Transaction.
Janus assured the Board that it intended to comply with Section 15(f) of the Investment Company Act of 1940, as amended (the “1940 Act”). Section 15(f) provides a non-exclusive safe harbor for an investment adviser to an investment company or any of its affiliated persons to receive any amount or benefit in connection with a change in control of the investment adviser so long as two conditions are met. First, for a period of three years after the transaction, at least 75% of the board members of the investment company must not be interested persons of such investment adviser (as defined under the 1940 Act). The composition of the Board is in compliance with this provision of Section 15(f). In addition, after careful review and consideration, the Board determined that it would be in the best interests of the Funds to add to the Board an individual who currently acts as a non-interested board member of the Henderson Trust. The Board believes that this change in the Board composition will provide perspective and insight relating to experience working with the Henderson organization. The Board’s Nominating and Governance Committee considered a number of candidates and recommended that the Board nominate one proposed new trustee from those candidates who currently act as non-interested board members of the Henderson Trust. The Board approved that trustee nominee to serve on the Board, subject to election by the shareholders of the Funds and contingent on the closing of the Transaction. If the new trustee is elected and serves on the Board, the Board composition would continue to satisfy the provisions of Section 15(f).
To meet the second condition of Section 15(f), an “unfair burden” must not be imposed upon the investment company as a result of such transaction or any express or implied terms, conditions or understandings applicable thereto. The term “unfair burden” is defined in Section 15(f) to include any arrangement during the two-year period after the transaction, whereby the investment adviser, or any interested person of such adviser, receives or is entitled to receive any compensation, directly or indirectly, from the investment company or its shareholders (other than fees for bona fide investment advisory or other services) or from any person in connection with the purchase or sale of securities or other property to, from or on behalf of the investment company (other than bona fide ordinary compensation as principal underwriter for such investment company).
Janus represented that it does not believe that an “unfair burden” will be placed on the Funds as a result of the Transaction. In furtherance thereof, Janus has undertaken to pay the costs of preparing and distributing proxy materials to, and of holding the meetings of, the Funds’ shareholders (the “Meetings”), as well as other fees and expenses in connection with the Transaction, including the reasonable fees and expenses of legal counsel and consultants to the Funds and the Trustees. In addition, Janus has agreed, for a period of two years following the closing of the Transaction, (i) not to request any increases to advisory fees for the Funds, other than those proposed to and approved by the Board prior to the close of the Transaction, and (ii) to continue to use the current process by which expense caps are set annually for the Funds.
As a result of its review and consideration of the New Investment Advisory Agreements and New Sub-Advisory Agreements in connection with the Transaction, at a meeting on December 8, 2016, the Board voted unanimously to approve a New Investment Advisory Agreement for each Fund and a New Sub-Advisory Agreement for each Fund managed by INTECH, Perkins or Janus Singapore, and to recommend such agreements to the Funds’ shareholders for their approval.
Approval of Interim Advisory and Sub-Advisory Agreements with Janus and Janus Affiliates during the Period
In the event shareholders of a Fund do not approve such Fund’s New Advisory Agreement and/or New Sub- Advisory Agreement at the Meetings prior to the closing of the Transaction, Janus Capital proposed that an interim investment advisory agreement between Janus Capital and such Fund (each, an “Interim Advisory Agreement” and collectively, the “Interim Advisory Agreements”) and an interim sub-advisory agreement between Janus Capital and the applicable Sub-
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Janus Henderson All Asset Fund
Additional Information (unaudited)
Adviser (each, an “Interim Sub-Advisory Agreement” and collectively, the “Interim Sub- Advisory Agreements”) take effect upon the closing of the Transaction. At the December 8, 2016 meeting, the Board, all of whom are Independent Trustees, unanimously approved an Interim Advisory Agreement for each Fund and an Interim Sub-Advisory Agreement for each applicable Fund in order to assure continuity of investment advisory services to the Funds and sub-advisory services to the sub-advised Funds after the Transaction. The terms of each Interim Advisory Agreement are substantially identical to those of the applicable Current Advisory Agreement and New Advisory Agreement, except for the term and escrow provisions described below. Similarly, the terms of each Interim Sub-Advisory Agreement are substantially identical to those of the Current Sub-Advisory Agreements and New Sub-Advisory Agreements, except for the term and escrow provisions described below. The Interim Advisory Agreement and Interim Sub-Advisory Agreement will continue in effect for a term ending on the earlier of 150 days from the closing of the Transaction (the “150-day period”) or when shareholders of the Fund approve the New Advisory Agreement and/or New Sub-Advisory Agreement. Pursuant to Rule 15a-4 under the 1940 Act, compensation earned by Janus Capital under an Interim Advisory Agreement and compensation earned by a Sub-Adviser under an Interim Sub-Advisory Agreement will be held in an interest- bearing escrow account. If shareholders of a Fund approve the New Advisory Agreement prior to the end of the 150-day period, the amount held in the escrow account under the Interim Advisory Agreement will be paid to Janus Capital. If shareholders of a Fund approve the New Advisory Agreement and New Sub-Advisory Agreement prior to the end of the 150-day period, the amount held in the escrow account under the Interim Sub-Advisory Agreement will be paid to the Sub-Adviser. If shareholders of a Fund do not approve the New Advisory Agreement prior to the end of the 150-day period, the Board will take such action as it deems to be in the best interests of the Fund, and Janus Capital will be paid the lesser of its costs incurred in performing its services under the Interim Advisory Agreement or the total amount in the escrow account, plus interest earned. If shareholders of a Fund do not approve the New Advisory Agreement and/or New Sub-Advisory Agreement prior to the end of the 150-day period, the Board will take such action as it deems to be in the best interests of the Fund, and the Sub-Adviser will be paid the lesser of its costs incurred in performing its services under the Interim Sub-Advisory Agreement or the total amount in the escrow account, plus interest earned.
Approval of Sub-Advisory Agreements with Henderson Investment Management Limited during the Period
Janus Capital met with the Trustees on November 7-8, 2016, and December 7-8, 2016, to discuss the approval of a new sub-advisory agreement between Janus Capital and Henderson Investment Management Limited (“HIML”) (each, a “HIML Sub-Advisory Agreement” and collectively, the “HIML Sub-Advisory Agreements”) on behalf of each of Janus Henderson Asia Equity Fund (formerly, Janus Asia Equity Fund), and Janus Henderson Global Real Estate Fund (formerly, Janus Global Real Estate Fund) (each, an “HIML Fund” and together, the “HIML Funds”) to take effect immediately after the closing of the Transaction or shareholder approval, whichever is later. At the meetings, the Trustees also discussed the HIML Sub-Advisory Agreements with their independent counsel in executive session. During the course of these meetings, the Trustees requested and considered such information as they deemed relevant to their deliberations. In addition, at prior meetings and during the course of these meetings the Board also undertook a comprehensive process to evaluate the impact of the Transaction on the nature, quality and extent of services expected to be provided by Janus Capital and HIML to each HIML Fund, including after the completion of the Transaction. For a fuller discussion of the Board’s consideration of the approval of a new investment advisory agreement for the HIML Funds in connection with the Transaction, see “Approval of Advisory and Sub-Advisory Agreements with Janus and its Affiliates During the Period” above.
At a meeting of the Board of Trustees held on December 8, 2016, the Trustees considered the HIML Sub-Advisory Agreements. In determining whether to approve the HIML Sub-Advisory Agreements, and whether to recommend approval to the shareholders of each HIML Fund, the Board received information and made inquiries into all matters as it deemed appropriate. The Board reviewed and analyzed various factors it deemed relevant, including the following factors, among others, none of which by itself was considered dispositive:
· the terms of each HIML Sub-Advisory Agreement;
· the nature, quality and extent of services expected to be provided under the HIML Sub-Advisory Agreements, including the reputation, qualifications and background of HIML and its operational and compliance infrastructures;
· the investment approach, the experience and skills of senior management and investment personnel of HIML, including the portfolio managers who would be responsible for managing all or part of the portfolio of each HIML Fund, noting the resources made available to such personnel;
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Janus Henderson All Asset Fund
Additional Information (unaudited)
· the ability of HIML to attract and retain high-quality personnel and the organizational depth of HIML;
· the sub-advisory fee rate under each HIML Sub-Advisory Agreement, as well as the overall management fee structure of each HIML Fund, noting that the sub-advisory fee rate is consistent with the approach utilized in the Janus Funds complex for other sub-advisory relationships, taking into account the allocation of managed assets between Janus Capital and HIML for the Global Real Estate Fund;
· under each HIML Sub-Advisory Agreement, Janus Capital would be responsible for paying HIML out of its fees;
· the fall out benefits to HIML and its affiliates from its relationship with each HIML Fund, including the potential benefits to HIML and its affiliates and each HIML Fund of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms;
· the potential for economies of scale with respect to the overall fee structure of each HIML Fund and whether either Fund will benefit from any economies of scale; and
· the costs of seeking approval of the HIML Sub-Advisory Agreements will not be borne by the HIML Funds.
As a result of its review and consideration of each HIML Sub-Advisory Agreement and related matters, on December 8, 2016, the Board voted unanimously to approve each HIML Sub-Advisory Agreement and to recommend such agreement to each HIML Fund’s shareholders for their approval.
Approval of New Shell Advisory Agreements and New Shell Sub-Advisory Agreements
On September 15, 2016, Janus Capital Group, Inc. (“Janus”) advised the Board of its intent to seek a strategic combination of its advisory business with Henderson Group PLC (“Henderson”). The Board met with the Chief Executive Officer of Janus, who outlined the proposed combination and the potential benefits to Janus Capital and the Janus funds overseen by the Board. Subsequent to the September 15, 2016 meeting, the Trustees identified a list of basic principles, which they believed should serve as the foundation for their review of the organizational, operational and strategic issues involved with any potential change in control of Janus Capital, the investment adviser to the funds overseen by the Board. These basic principles were communicated to Janus Capital on September 27, 2016, and were intended to be shared with Henderson. On October 3, 2016, Janus announced that it had entered into a definitive Agreement and Plan of Merger with Henderson pursuant to which Janus and Henderson agreed to effect an all-stock merger of equals strategic combination of their respective businesses, with Janus Capital surviving the merger as a direct wholly-owned subsidiary of Henderson. The Board was advised that, subject to certain conditions, the Transaction is currently expected to close during the second quarter of 2017.
As part of its due diligence, the Board developed an initial list of questions related to the proposed transaction, which was provided to Janus Capital on October 6, 2016. At a special Board meeting held on October 19, 2016, the Board considered Janus Capital’s response to the initial information request and met with the management of Janus to discuss the impact of the Transaction on the nature, extent and quality of services Janus Capital is expected to provide to the Janus Funds following the Transaction, including those created by merger of certain Henderson Global Funds into new “shell” series of JIF (each, a “Henderson Shell Fund” and together, the “Henderson Shell Funds,” and collectively with the Janus funds overseen by the Board, the “Funds”), addressing, among other matters, the personnel expected to provide such services, and the resources available to do so. After its October 19, 2016 meeting, the Board developed a supplemental request for additional information, which was provided to Janus Capital on October 26, 2016. At another special Board meeting held on November 7-8, 2016, the Board considered Janus Capital’s response to the supplemental information request and again met with the management of Janus and Henderson to discuss the impact of the Transaction on the nature, extent and quality of services Janus Capital is expected to provide to the Funds following the Transaction, and also met with various officers of the Funds and of Janus Capital, including various Fund portfolio managers. After its November 7-8, 2016 meeting, the Board developed a second supplemental request for additional information, which was provided to Janus Capital on November 21, 2016. On December 7-8, 2016, the Board met to consider Janus Capital’s response to the second supplemental information request and also to consider the proposed new advisory agreement and sub-advisory agreement for each Henderson Shell Fund (a “New Shell Advisory Agreement” and “New Shell Sub-Advisory Agreement.”) In this regard, the Board noted that each Henderson Shell Fund was proposed to be sub-advised and managed by Henderson Investment Management Limited (“HIML”), a wholly-owned subsidiary of Henderson. During each of these meetings, the Board sought additional and clarifying information as it deemed necessary or appropriate. In addition, the Board engaged its independent fee consultant to
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Janus Henderson All Asset Fund
Additional Information (unaudited)
help evaluate certain of the proposals that the Board was being asked to consider. Throughout the process, the Board had the assistance of its independent legal counsel, who advised them on, among other things, its duties and obligations.
In connection with the Board’s review, Janus Capital provided, and the Board obtained, substantial information regarding the following matters: the management, financial position and business of Henderson; the history of Henderson’s business and operations; the investment performance of the investment companies advised by Henderson; the proposed structure, operations and investment processes of the combined investment management organization after the Transaction and the strategy for operating and growing the business following the Transaction; the future plans of Janus and Henderson with respect to the Funds and any proposed changes to the operations or structure of the Funds; and the future plans of Janus and Henderson with respect to the provision of services to the Funds, and the entities providing such services, including those affiliated with Janus. The Board also received information regarding the terms of the Transaction, anticipated management of the combined organization, the resources that each of Janus and Henderson bring to the combined organization and the process being followed by Janus and Henderson to integrate their organizations. The Board also received information regarding the impact of the Transaction on HIML.
In connection with the Board’s approval of the New Shell Advisory Agreements and New Shell Sub-Advisory Agreements, at its December 8, 2016 meeting, the Board also continued its on-going annual process to determine whether to continue the Current Advisory Agreements and the Current Sub-Advisory Agreements for the Janus Funds. In this regard, the Board received and reviewed information provided by Janus and the respective Sub-Advisers in response to requests of the Board and its independent legal counsel. The Board also received and reviewed information and analysis provided by, and in response to requests of, its independent fee consultant. The Board noted that as part of this annual process, the Board had considered and was in the process of considering, numerous factors, including the nature and quality of services provided by Janus Capital and each Sub-Adviser, as applicable; investment performance, on an absolute basis and relative to appropriate peer groups and one or a combination of market indices; investment management fees, expense ratios and asset sizes of the Funds and peer groups; investment management fees charged to comparable investment companies, separate accounts and non-fund clients; Janus Capital’s profitability from managing the Funds; fall-out benefits to Janus Capital from its relationship to the Funds, including revenues derived from services provided to the Funds by affiliates of Janus Capital; and the potential benefits to Janus Capital, the Funds of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms.
In determining whether to approve the New Shell Advisory Agreement and the New Shell Sub-Advisory Agreement in connection with the Transaction, the Board received information and made inquiries into all matters as it deemed appropriate. The Board reviewed and analyzed various factors it deemed relevant, including the following factors, among others, none of which by itself was considered dispositive:
· The terms of the New Shell Advisory Agreements are substantially similar to the Current Advisory Agreements, other than with respect to the applicable contractual fee rates.
· Information regarding the fees and expenses of each applicable Henderson Global Fund merging into a Henderson Shell Fund in comparison to similar information for other comparable funds as provided by Broadridge, an independent data provider; and analysis of that information provided by their independent fee consultant, who believed such fee and expense levels to be reasonable.
· Information regarding the pro forma fees and expenses of the Henderson Shell Funds provided by Janus Capital, including proposed fee waivers.
· Janus Capital’s plans for the operation of the Funds, including its plans for the continued provision of all services currently provided to the Funds by Janus Capital and its affiliates, including, among others, investment advisory services, portfolio trading services, and Fund administrative and accounting services, and the personnel and resources proposed to support the provision of such services.
· The estimated profitability to Janus Capital from managing the Funds after the Transaction, including potential economies of scale and fall-out benefits to Janus Capital from its relationship to the Funds, including revenues derived from services provided to the Funds by affiliates of Janus Capital, and the potential benefits to Janus Capital, and the Funds of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms.
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Janus Henderson All Asset Fund
Additional Information (unaudited)
· the terms of each New Shell Sub-Advisory Agreement;
· the nature, quality and extent of services expected to be provided under the New Shell Sub-Advisory Agreements, including the reputation, qualifications and background of HIML and its operational and compliance infrastructures;
· the investment approach, the experience and skills of senior management and investment personnel of HIML, including the portfolio managers who would be responsible for managing all or part of the portfolio of each Henderson Shell Fund, noting the resources made available to such personnel;
· the ability of HIML to attract and retain high-quality personnel and the organizational depth of HIML;
· the sub-advisory fee rate under each New Shell Sub-Advisory Agreement, as well as the overall management fee structure of each Henderson Shell Fund, noting that the sub-advisory fee rate is consistent with the approach utilized in the Janus Funds complex for other sub-advisory relationships;
· under each New Shell Sub-Advisory Agreement, Janus Capital would be responsible for paying HIML out of its fees;
· the fall out benefits to HIML and its affiliates from its relationship with each Henderson Shell Fund, including the potential benefits to HIML and its affiliates and each Henderson Shell Fund of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms; and
· the potential for economies of scale with respect to the overall fee structure of each Henderson Shell Fund and whether any Fund will benefit from any economies of scale.
In connection with its deliberations, the Board received assurances from Janus, on behalf of itself and its affiliates (collectively, “Janus”) including the following:
· Janus has provided to the Board such information as it believes is reasonably necessary to evaluate the New Shell Advisory Agreements and New Shell Sub-Advisory Agreements.
· Janus is committed to the continuance, without interruption, of services to the Funds of at least the type and quality currently provided by Janus Capital and its affiliates, or superior thereto.
· The Transaction is not expected to affect negatively the nature, extent or quality of the investment advisory services provided by Janus Capital to the Funds following the Transaction, and the investment advisory services are expected to be at least comparable to the services being provided under the Current Advisory Agreements and Current Sub-Advisory Agreements. In this regard, the Board noted specific representations that Janus does not intend for the nature, extent or quality of investment advisory and other services to be provided to the Funds following the Transaction to change, and the extent of such services were expected to increase based on the combined resources of the combined investment management organization after the Transaction, and should the nature, extent or quality of such services decline, Janus would commit the resources needed to return such services to pre-Transaction levels.
· The Funds’ current operations were expected to remain largely unchanged, except for certain fund reorganizations which will be separately considered by the Board, and such other changes as were or will be presented to the Board.
· Janus does not intend to make changes to the portfolio managers providing services to the Funds, other than proposed changes in the management of certain Funds as discussed with the Board, including those related to proposals to merge certain Funds with Henderson Funds, and subject to such changes as may arise at any time as a result of the ongoing process of portfolio manager evaluation.
· After the Transaction, the extent of distribution and marketing services provided to the Funds were expected to increase based on the combined resources of Janus and Henderson. In this regard, Janus Capital advised the Board that after the Transaction, the extent of distribution and marketing services provided to the Funds are expected to increase based on the combined resources of Janus and Henderson. This is due primarily to the anticipated increase of sales related resources and expanded global presence of the combined Janus Henderson organization, which is expected to enhance visibility and brand recognition of the Janus Henderson Funds.
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Janus Henderson All Asset Fund
Additional Information (unaudited)
· The intent of Janus Capital to take the necessary and appropriate steps to retain and attract its key investment advisory personnel.
· The intent of Janus to take the necessary and appropriate steps to retain and attract its key compliance, financial, fund accounting and administrative personnel supporting the management and oversight of the Funds.
· Janus is not aware of any express or implied term, condition, arrangement or understanding that would impose in its best judgement an “unfair burden” on any Fund as a result of the Transaction, as defined in Section 15(f) of the 1940 Act, and that Janus will take no action that would have the effect of imposing such an “unfair burden” on any Fund in connection with the Transaction.
Janus assured the Board that it intended to comply with Section 15(f) of the 1940 Act. Section 15(f) provides a non-exclusive safe harbor for an investment adviser to an investment company or any of its affiliated persons to receive any amount or benefit in connection with a change in control of the investment adviser so long as two conditions are met. First, for a period of three years after the transaction, at least 75% of the board members of the investment company must not be Interested Persons of such investment adviser. The composition of the Board is in compliance with this provision of Section 15(f). In addition, after careful review and consideration, the Board determined that it would be in the best interests of the Funds to add to the Board an individual who currently acts as a non-interested board member of the Henderson Trust. The Board believes that this change in the Board composition will provide perspective and insight relating to experience working with the Henderson organization. The Board’s Nominating and Governance Committee considered a number of candidates and recommended that the Board nominate one proposed new trustee from those candidates who currently act as non-interested board members of the Henderson Trust. The Board approved that trustee nominee to serve on the Board, subject to election by the shareholders of the Funds and contingent on the closing of the Transaction. If the new trustee is elected and serves on the Board, the Board composition would continue to satisfy the provisions of Section 15(f).
To meet the second condition of Section 15(f), an “unfair burden” must not be imposed upon the investment company as a result of such transaction or any express or implied terms, conditions or understandings applicable thereto. The term “unfair burden” is defined in Section 15(f) to include any arrangement during the two-year period after the transaction, whereby the investment adviser, or any interested person of such adviser, receives or is entitled to receive any compensation, directly or indirectly, from the investment company or its shareholders (other than fees for bona fide investment advisory or other services) or from any person in connection with the purchase or sale of securities or other property to, from or on behalf of the investment company (other than bona fide ordinary compensation as principal underwriter for such investment company).
Janus represented that it does not believe that an “unfair burden” will be placed on the Funds as a result of the Transaction. In furtherance thereof, Janus has undertaken to pay the costs of preparing and distributing proxy materials to, and of holding the Meetings of, the Funds’ shareholders, as well as other fees and expenses in connection with the Transaction, including the reasonable fees and expenses of legal counsel and consultants to the Funds and the Trustees. In addition, Janus has agreed, for a period of two years following the closing of the Transaction, (i) not to request any increases to advisory fees for the Funds, other than those proposed to and approved by the Board prior to the close of the Transaction, and (ii) to continue to use the current process by which expense caps are set annually for the Funds.
As a result of its review and consideration of the New Shell Investment Advisory Agreements and New Shell Sub-Advisory Agreements in connection with the Transaction, at a meeting on December 8, 2016, the Board voted unanimously to approve a New Investment Advisory Agreement and New Sub-Advisory Agreement for each Henderson Shell Fund.
Approval of New Advisory Agreement and New Sub-Advisory Agreement for Janus Henderson U.S. Growth Opportunities Fund
On September 15, 2016, Janus Capital Group, Inc. (“Janus”) advised the Board of its intent to seek a strategic combination of its advisory business with Henderson Group PLC (“Henderson”). The Board met with the Chief Executive Officer of Janus, who outlined the proposed combination and the potential benefits to Janus Capital and the Janus funds overseen by the Board. Subsequent to the September 15, 2016 meeting, the Trustees identified a list of basic principles, which they believed should serve as the foundation for their review of the organizational, operational
Janus Investment Fund | 49 |
Janus Henderson All Asset Fund
Additional Information (unaudited)
and strategic issues involved with any potential change in control of Janus Capital, the investment adviser to the funds overseen by the Board. These basic principles were communicated to Janus Capital on September 27, 2016, and were intended to be shared with Henderson. On October 3, 2016, Janus announced that it had entered into a definitive Agreement and Plan of Merger with Henderson pursuant to which Janus and Henderson agreed to effect an all-stock merger of equals strategic combination of their respective businesses, with Janus Capital surviving the merger as a direct wholly-owned subsidiary of Henderson. The Board was advised that, subject to certain conditions, the Transaction is currently expected to close during the second quarter of 2017.
As part of its due diligence, the Board developed an initial list of questions related to the proposed transaction, which was provided to Janus Capital on October 6, 2016. At a special Board meeting held on October 19, 2016, the Board considered Janus Capital’s response to the initial information request and met with the management of Janus to discuss the impact of the Transaction on the nature, extent and quality of services Janus Capital is expected to provide to the Janus Funds following the Transaction, including those created by merger of certain Henderson Global Funds into new “shell” series of JIF (each, a “Henderson Shell Fund” and together, the “Henderson Shell Funds,” and collectively with the Janus funds overseen by the Board, the “Funds”), addressing, among other matters, the personnel expected to provide such services, and the resources available to do so. After its October 19, 2016 meeting, the Board developed a supplemental request for additional information, which was provided to Janus Capital on October 26, 2016. At another special Board meeting held on November 7-8, 2016, the Board considered Janus Capital’s response to the supplemental information request and again met with the management of Janus and Henderson to discuss the impact of the Transaction on the nature, extent and quality of services Janus Capital is expected to provide to the Funds following the Transaction, and also met with various officers of the Funds and of Janus Capital, including various Fund portfolio managers. After its November 7-8, 2016 meeting, the Board developed a second supplemental request for additional information, which was provided to Janus Capital on November 21, 2016. On December 7-8, 2016, the Board met to consider Janus Capital’s response to the second supplemental information request and also to consider the proposed new advisory agreement and sub-advisory agreement for each Henderson Shell Fund. In this regard, the Board noted that each Henderson Shell Fund was proposed to be sub-advised and managed by Henderson Investment Management Limited, a wholly-owned subsidiary of Henderson. The Board noted that another Henderson Global Fund, U.S. Growth Opportunities Fund, was proposed to be sub-advised and managed by Geneva Capital Management LLC (“Geneva”), an indirect wholly-owned subsidiary of Henderson. On December 19, 2017, the Board issued an additional supplemental information request to Geneva. On January 26, 2017, the Board met to consider Geneva’s response to this additional supplemental information request and also to consider the proposed new advisory agreement and sub-advisory agreement for U.S. Growth Opportunities Fund (the “New Advisory Agreement” and “New Sub-Advisory Agreement,” respectively.) During each of these meetings, the Board sought additional and clarifying information as it deemed necessary or appropriate. In addition, the Board engaged its independent fee consultant to help evaluate certain of the proposals that the Board was being asked to consider. Throughout the process, the Board had the assistance of its independent legal counsel, who advised them on, among other things, its duties and obligations.
In connection with the Board’s review, Janus Capital provided, and the Board obtained, substantial information regarding the following matters: the management, financial position and business of Henderson; the history of Henderson’s business and operations; the investment performance of the investment companies advised by Henderson; the proposed structure, operations and investment processes of the combined investment management organization after the Transaction and the strategy for operating and growing the business following the Transaction; the future plans of Janus and Henderson with respect to the Funds and any proposed changes to the operations or structure of the Funds; and the future plans of Janus and Henderson with respect to the provision of services to the Funds, and the entities providing such services, including those affiliated with Janus. The Board also received information regarding the terms of the Transaction, anticipated management of the combined organization, the resources that each of Janus and Henderson bring to the combined organization and the process being followed by Janus and Henderson to integrate their organizations. The Board also received information regarding the impact of the Transaction on Geneva.
In connection with the Board approval of the New Advisory Agreement and New Sub-Advisory Agreements, at its December 8, 2016 meeting, the Board also continued its on-going annual process to determine whether to continue the Current Advisory Agreements and the Current Sub-Advisory Agreements for the Janus Funds. In this regard, the Board received and reviewed information provided by Janus and the respective Sub-Advisers in response to requests of the Board and its independent legal counsel. The Board also received and reviewed information and analysis provided by, and in response to requests of, its independent fee consultant. The Board noted that as part of this annual process, the Board had considered and was in the process of considering, numerous factors, including the nature and quality of
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Janus Henderson All Asset Fund
Additional Information (unaudited)
services provided by Janus Capital and each Sub-Adviser, as applicable; investment performance, on an absolute basis and relative to appropriate peer groups and one or a combination of market indices; investment management fees, expense ratios and asset sizes of the Funds and peer groups; investment management fees charged to comparable investment companies, separate accounts and non-fund clients; Janus Capital’s profitability from managing the Funds; fall-out benefits to Janus Capital from its relationship to the Funds, including revenues derived from services provided to the Funds by affiliates of Janus Capital; and the potential benefits to Janus Capital, the Funds of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms.
In determining whether to approve the New Advisory Agreement and the New Sub-Advisory Agreement in connection with the Transaction, the Board received information and made inquiries into all matters as it deemed appropriate. The Board reviewed and analyzed various factors it deemed relevant, including the following factors, among others, none of which by itself was considered dispositive:
· The terms of the New Advisory Agreement is substantially similar to the Current Advisory Agreement, other than with respect to the applicable contractual fee rates.
· Information regarding the fees and expenses of U.S. Growth Opportunities Fund in comparison to similar information for other comparable funds as provided by Broadridge, an independent data provider; and analysis of that information provided by their independent fee consultant, who believed such fee and expense levels to be reasonable.
· Information regarding the pro forma fees and expenses of U.S. Growth Opportunities Fund provided by Janus Capital, including proposed fee waivers.
· Janus Capital’s plans for the operation of the Funds, including its plans for the continued provision of all services currently provided to the Funds by Janus Capital and its affiliates, including, among others, investment advisory services, portfolio trading services, and Fund administrative and accounting services, and the personnel and resources proposed to support the provision of such services.
· The estimated profitability to Janus Capital from managing the Funds after the Transaction, including potential economies of scale and fall-out benefits to Janus Capital from its relationship to the Funds, including revenues derived from services provided to the Funds by affiliates of Janus Capital, and the potential benefits to Janus Capital, and the Funds of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms.
· the terms of each New Sub-Advisory Agreement;
· the nature, quality and extent of services expected to be provided under the New Shell Sub-Advisory Agreement, including the reputation, qualifications and background of Geneva and its operational and compliance infrastructures;
· the investment approach, the experience and skills of senior management and investment personnel of Geneva, including the portfolio managers who would be responsible for managing all or part of the portfolio of U.S. Growth Opportunities Fund noting the resources made available to such personnel;
· the ability of Geneva to attract and retain high-quality personnel and the organizational depth of Geneva;
· the sub-advisory fee rate under the New Sub-Advisory Agreement, as well as the overall management fee structure of U.S. Growth Opportunities Fund noting that the sub-advisory fee rate is consistent with the approach utilized in the Janus Funds complex for other sub-advisory relationships;
· under the New Sub-Advisory Agreement, Janus Capital would be responsible for paying Geneva out of its fees;
· the fall out benefits to Geneva and its affiliates from its relationship with U.S. Growth Opportunities Fund, including the potential benefits to Geneva and its affiliates and U.S. Growth Opportunities Fund of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms; and
· the potential for economies of scale with respect to the overall fee structure of U.S. Growth Opportunities Fund and the Fund will benefit from any economies of scale.
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Janus Henderson All Asset Fund
Additional Information (unaudited)
In connection with its deliberations, the Board received assurances from Janus, on behalf of itself and its affiliates (collectively, “Janus”) including the following:
· Janus has provided to the Board such information as it believes is reasonably necessary to evaluate the New Advisory Agreement and New Sub-Advisory Agreement.
· Janus is committed to the continuance, without interruption, of services to the Funds of at least the type and quality currently provided by Janus Capital and its affiliates, or superior thereto.
· The Transaction is not expected to affect negatively the nature, extent or quality of the investment advisory services provided by Janus Capital to the Funds following the Transaction, and the investment advisory services are expected to be at least comparable to the services being provided under the Current Advisory Agreements and Current Sub-Advisory Agreements. In this regard, the Board noted specific representations that Janus does not intend for the nature, extent or quality of investment advisory and other services to be provided to the Funds following the Transaction to change, and the extent of such services were expected to increase based on the combined resources of the combined investment management organization after the Transaction, and should the nature, extent or quality of such services decline, Janus would commit the resources needed to return such services to pre-Transaction levels.
· The Funds’ current operations were expected to remain largely unchanged, except for certain fund reorganizations which will be separately considered by the Board, and such other changes as were or will be presented to the Board.
· Janus does not intend to make changes to the portfolio managers providing services to the Funds, other than proposed changes in the management of certain Funds as discussed with the Board, including those related to proposals to merge certain Funds with Henderson Funds, and subject to such changes as may arise at any time as a result of the ongoing process of portfolio manager evaluation.
· After the Transaction, the extent of distribution and marketing services provided to the Funds were expected to increase based on the combined resources of Janus and Henderson. In this regard, Janus Capital advised the Board that after the Transaction, the extent of distribution and marketing services provided to the Funds are expected to increase based on the combined resources of Janus and Henderson. This is due primarily to the anticipated increase of sales related resources and expanded global presence of the combined Janus Henderson organization, which is expected to enhance visibility and brand recognition of the Janus Henderson Funds.
· The intent of Janus Capital to take the necessary and appropriate steps to retain and attract its key investment advisory personnel.
· The intent of Janus to take the necessary and appropriate steps to retain and attract its key compliance, financial, fund accounting and administrative personnel supporting the management and oversight of the Funds.
· Janus is not aware of any express or implied term, condition, arrangement or understanding that would impose in its best judgement an “unfair burden” on any Fund as a result of the Transaction, as defined in Section 15(f) of the 1940 Act, and that Janus will take no action that would have the effect of imposing such an “unfair burden” on any Fund in connection with the Transaction.
Janus assured the Board that it intended to comply with Section 15(f) of the 1940 Act. Section 15(f) provides a non-exclusive safe harbor for an investment adviser to an investment company or any of its affiliated persons to receive any amount or benefit in connection with a change in control of the investment adviser so long as two conditions are met. First, for a period of three years after the transaction, at least 75% of the board members of the investment company must not be Interested Persons of such investment adviser. The composition of the Board is in compliance with this provision of Section 15(f). In addition, after careful review and consideration, the Board determined that it would be in the best interests of the Funds to add to the Board an individual who currently acts as a non-interested board member of the Henderson Trust. The Board believes that this change in the Board composition will provide perspective and insight relating to experience working with the Henderson organization. The Board’s Nominating and Governance Committee considered a number of candidates and recommended that the Board nominate one proposed new trustee from those candidates who currently act as non-interested board members of the Henderson Trust. The Board
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Janus Henderson All Asset Fund
Additional Information (unaudited)
approved that trustee nominee to serve on the Board, subject to election by the shareholders of the Funds and contingent on the closing of the Transaction. If the new trustee is elected and serves on the Board, the Board composition would continue to satisfy the provisions of Section 15(f).
To meet the second condition of Section 15(f), an “unfair burden” must not be imposed upon the investment company as a result of such transaction or any express or implied terms, conditions or understandings applicable thereto. The term “unfair burden” is defined in Section 15(f) to include any arrangement during the two-year period after the transaction, whereby the investment adviser, or any interested person of such adviser, receives or is entitled to receive any compensation, directly or indirectly, from the investment company or its shareholders (other than fees for bona fide investment advisory or other services) or from any person in connection with the purchase or sale of securities or other property to, from or on behalf of the investment company (other than bona fide ordinary compensation as principal underwriter for such investment company).
Janus represented that it does not believe that an “unfair burden” will be placed on the Funds as a result of the Transaction. In furtherance thereof, Janus has undertaken to pay the costs of preparing and distributing proxy materials to, and of holding the Meetings of, the Funds’ shareholders, as well as other fees and expenses in connection with the Transaction, including the reasonable fees and expenses of legal counsel and consultants to the Funds and the Trustees. In addition, Janus has agreed, for a period of two years following the closing of the Transaction, (i) not to request any increases to advisory fees for the Funds, other than those proposed to and approved by the Board prior to the close of the Transaction, and (ii) to continue to use the current process by which expense caps are set annually for the Funds.
As a result of its review and consideration of the New Investment Advisory Agreement and New Sub-Advisory Agreement in connection with the Transaction, at a meeting on January 26, 2017, the Board voted unanimously to approve a New Investment Advisory Agreement and New Sub-Advisory Agreement for the U.S. Growth Opportunities Fund.
Renewal of Advisory and Sub-Advisory Agreements with Janus Capital and Janus Capital Affiliates during the Period
The Trustees of Janus Investment Fund and Janus Aspen Series, each of whom serves as an “independent” Trustee (the “Trustees”), oversee the management of each Fund of Janus Investment Fund and each Portfolio of Janus Aspen Series (each, a “Fund” and collectively, the “Funds”), and as required by law, determine annually whether to continue the investment advisory agreement for each Fund and the subadvisory agreements for the 16 Funds that utilize subadvisers.
In connection with their most recent consideration of those agreements for each Fund, the Trustees received and reviewed information provided by Janus Capital and the respective subadvisers in response to requests of the Trustees and their independent legal counsel. They also received and reviewed information and analysis provided by, and in response to requests of, their independent fee consultant. Throughout their consideration of the agreements, the Trustees were advised by their independent legal counsel. The Trustees met with management to consider the agreements, and also met separately in executive session with their independent legal counsel and their independent fee consultant.
Additionally, in connection with their consideration of whether to continue the investment advisory agreement and subadvisory agreement for each Fund, as applicable, the Trustees also received and reviewed information in connection with the proposed transaction to combine the respective businesses of Henderson Group plc and Janus Capital Group, Inc., the parent company of Janus Capital (the “Transaction”), announced in October 2016, which Janus Capital advised the Trustees was expected to close in the second quarter of 2017. In this regard, the Trustees reviewed information regarding the impact of the Transaction on the services to be provided by Janus Capital and each subadviser, as applicable, to the Funds under such agreements both prior to the close of the Transaction, and afterwards, if the Transaction were not to close. If the Transaction closes, all such agreements would be replaced by new investment advisory agreements and subadvisory agreements, as applicable, for each Fund, assuming requisite Fund shareholder approvals have been obtained.
At a meeting held on January 26, 2017, based on the Trustees’ evaluation of the information provided by Janus Capital, the subadvisers, and the independent fee consultant, as well as other information, the Trustees determined that the overall arrangements between each Fund and Janus Capital and each subadviser, as applicable, were fair and
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Janus Henderson All Asset Fund
Additional Information (unaudited)
reasonable in light of the nature, extent and quality of the services provided by Janus Capital, its affiliates and the subadvisers, the fees charged for those services, and other matters that the Trustees considered relevant in the exercise of their business judgment. At that meeting, the Trustees unanimously approved the continuation of the investment advisory agreement for each Fund, and the subadvisory agreement for each subadvised Fund, for the period from February 1, 2017 through February 1, 2018, subject to earlier termination as provided for in each agreement.
In considering the continuation of those agreements, the Trustees reviewed and analyzed various factors that they determined were relevant, including the factors described below, none of which by itself was considered dispositive. However, the material factors and conclusions that formed the basis for the Trustees’ determination to approve the continuation of the agreements are discussed separately below. Also included is a summary of the independent fee consultant’s conclusions and opinions that arose during, and were included as part of, the Trustees’ consideration of the agreements. “Management fees,” as used herein, reflect actual annual advisory fees and any administration fees (excluding out of pocket costs), net of any waivers.
Nature, Extent and Quality of Services
The Trustees reviewed the nature, extent and quality of the services provided by Janus Capital and the subadvisers to the Funds, taking into account the investment objective, strategies and policies of each Fund, and the knowledge the Trustees gained from their regular meetings with management on at least a quarterly basis and their ongoing review of information related to the Funds. In addition, the Trustees reviewed the resources and key personnel of Janus Capital and each subadviser, particularly noting those employees who provide investment and risk management services to the Funds. The Trustees also considered other services provided to the Funds by Janus Capital or the subadvisers, such as managing the execution of portfolio transactions and the selection of broker-dealers for those transactions. The Trustees considered Janus Capital’s role as administrator to the Funds, noting that Janus Capital does not receive a fee for its services but is reimbursed for its out-of-pocket costs. The Trustees considered the role of Janus Capital in monitoring adherence to the Funds’ investment restrictions, providing support services for the Trustees and Trustee committees, and overseeing communications with shareholders and the activities of other service providers, including monitoring compliance with various policies and procedures of the Funds and with applicable securities laws and regulations.
In this regard, the independent fee consultant noted that Janus Capital provides a number of different services for the Funds and Fund shareholders, ranging from investment management services to various other servicing functions, and that, in its opinion, Janus Capital is a capable provider of those services. The independent fee consultant also provided its belief that Janus Capital has developed a number of institutional competitive advantages that should enable it to provide superior investment and service performance over the long term.
The Trustees concluded that the nature, extent and quality of the services provided by Janus Capital or the subadviser to each Fund were appropriate and consistent with the terms of the respective advisory and subadvisory agreements, and that, taking into account steps taken to address those Funds whose performance lagged that of their peers for certain periods, the Funds were likely to benefit from the continued provision of those services. They also concluded that Janus Capital and each subadviser had sufficient personnel, with the appropriate education and experience, to serve the Funds effectively and had demonstrated its ability to attract well-qualified personnel.
Performance of the Funds
The Trustees considered the performance results of each Fund over various time periods. They noted that they considered Fund performance data throughout the year, including periodic meetings with each Fund’s portfolio manager(s), and also reviewed information comparing each Fund’s performance with the performance of comparable funds and peer groups identified by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent data provider, and with the Fund’s benchmark index. In this regard, the independent fee consultant found that the overall Funds’ performance has been strong: for the 36 months ended September 30, 2016, approximately 76% of the Funds were in the top two Broadridge quartiles of performance, and for the 12 months ended September 30, 2016, approximately 47% of the Funds were in the top two Broadridge quartiles of performance.
The Trustees considered the performance of each Fund, noting that performance may vary by share class, and noted the following:
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Janus Henderson All Asset Fund
Additional Information (unaudited)
Fixed-Income Funds and Money Market Funds
· For Janus Henderson Flexible Bond Fund (formerly, Janus Flexible Bond Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Bond Fund (formerly, Janus Global Bond Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Unconstrained Bond Fund (formerly, Janus Global Unconstrained Bond Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson High-Yield Fund (formerly, Janus High-Yield Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Multi-Sector Income Fund (formerly, Janus Multi-Sector Income Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Real Return Fund (formerly, Janus Real Return Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Short-Term Bond Fund (formerly, Janus Short-Term Bond Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Government Money Market Fund (formerly, Janus Government Money Market Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance.
· For Janus Henderson Money Market Fund (formerly, Janus Money Market Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance.
Asset Allocation Funds
· For Janus Henderson Global Allocation Fund – Conservative (formerly, Janus Global Allocation Fund – Conservative), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Allocation Fund – Growth (formerly, Janus Global Allocation Fund – Growth), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Allocation Fund – Moderate (formerly, Janus Global Allocation Fund – Moderate), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
Alternative Fund
· For Janus Henderson Diversified Alternatives Fund (formerly, Janus Diversified Alternatives Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the
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Additional Information (unaudited)
reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
Value Funds
· For Janus Henderson International Value Fund (formerly, Perkins International Value Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Value Fund (formerly, Perkins Global Value Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Large Cap Value Fund (formerly, Perkins Large Cap Value Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital and Perkins had taken or were taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Mid Cap Value Fund (formerly, Perkins Mid Cap Value Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital and Perkins had taken or were taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Select Value Fund (formerly, Perkins Select Value Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Small Cap Value Fund (formerly, Perkins Small Cap Value Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Value Plus Income Fund (formerly, Perkins Value Plus Income Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
Mathematical Funds
· For Janus Henderson Emerging Markets Managed Volatility Fund (formerly, INTECH Emerging Markets Managed Volatility Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Income Managed Volatility Fund (formerly, INTECH Global Income Managed Volatility Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson International Managed Volatility Fund (formerly, INTECH International Managed Volatility Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson U.S. Managed Volatility Fund (formerly, INTECH U.S. Managed Volatility Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
Growth and Core Funds
· For Janus Henderson Balanced Fund (formerly, Janus Balanced Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
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Additional Information (unaudited)
· For Janus Henderson Contrarian Fund (formerly, Janus Contrarian Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Enterprise Fund (formerly, Janus Enterprise Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Forty Fund (formerly, Janus Forty Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Growth and Income Fund (formerly, Janus Growth and Income Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and in the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Research Fund (formerly, Janus Research Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Triton Fund (formerly, Janus Triton Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Venture Fund (formerly, Janus Venture Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
Global and International Funds
· For Janus Henderson Adaptive Global Allocation Fund (formerly, Janus Adaptive Global Allocation Fund), the Trustees noted that, due to limited performance for the Fund, performance history was not a material factor.
· For Janus Henderson Asia Equity Fund (formerly, Janus Asia Equity Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Life Sciences Fund (formerly, Janus Global Life Sciences Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Real Estate Fund (formerly, Janus Global Real Estate Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Research Fund (formerly, Janus Global Research Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
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Additional Information (unaudited)
· For Janus Henderson Global Select Fund (formerly, Janus Global Select Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Technology Fund (formerly, Janus Global Technology Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Overseas Fund (formerly, Janus Overseas Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
Janus Aspen Series
· For Janus Henderson Balanced Portfolio (formerly, Janus Aspen Balanced Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Enterprise Portfolio (formerly, Janus Aspen Enterprise Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Flexible Bond Portfolio (formerly, Janus Aspen Flexible Bond Portfolio), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Forty Portfolio (formerly, Janus Aspen Forty Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Allocation Portfolio – Moderate (formerly, Janus Aspen Global Allocation Portfolio – Moderate), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Research Portfolio (formerly, Janus Aspen Global Research Portfolio), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance
· For Janus Henderson Global Technology Portfolio (formerly, Janus Aspen Global Technology Portfolio), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Unconstrained Bond Portfolio (formerly, Janus Aspen Global Unconstrained Bond Portfolio), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 12 months ended May 31, 2016.
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Janus Henderson All Asset Fund
Additional Information (unaudited)
· For Janus Henderson U.S. Low Volatility Portfolio (formerly, Janus Aspen INTECH U.S. Low Volatility Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Research Portfolio (formerly, Janus Aspen Janus Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Overseas Portfolio (formerly, Janus Aspen Overseas Portfolio), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Mid Cap Value Portfolio (formerly, Janus Aspen Perkins Mid Cap Value Portfolio), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital and Perkins had taken or were taking to improve performance, and that the performance trend was improving.
In consideration of each Fund’s performance, the Trustees concluded that, taking into account the factors relevant to performance, as well as other considerations, including steps taken to improve performance, the Fund’s performance warranted continuation of the Fund’s investment advisory and subadvisory agreement(s).
Costs of Services Provided
The Trustees examined information regarding the fees and expenses of each Fund in comparison to similar information for other comparable funds as provided by Broadridge, an independent data provider. They also reviewed an analysis of that information provided by their independent fee consultant and noted that the rate of management (investment advisory and any administration, but excluding out-of-pocket costs) fees for many of the Funds, after applicable waivers, was below the average management fee rate of the respective peer group of funds selected by an independent data provider. The Trustees also examined information regarding the subadvisory fees charged for subadvisory services, as applicable, noting that all such fees were paid by Janus Capital out of its management fees collected from such Fund.
The independent fee consultant provided its belief that the management fees charged by Janus Capital to each of the Funds under the current investment advisory and administration agreements are reasonable in relation to the services provided by Janus Capital. The independent fee consultant found: (1) the total expenses and management fees of the Funds to be reasonable relative to other mutual funds; (2) total expenses, on average, were 12% below the average total expenses of their respective Broadridge Expense Group peers and 20% below the average total expenses for their Broadridge Expense Universes; (3) management fees for the Funds, on average, were 11% below the average management fees for their Expense Groups and 13% below the average for their Expense Universes; and (4) Fund expenses at the functional level for each asset and share class category were reasonable. The Trustees also considered the total expenses for each share class of each Fund compared to the average total expenses for its Broadridge Expense Group peers and to average total expenses for its Broadridge Expense Universe.
The independent fee consultant concluded that, based on its strategic review of expenses at the complex, category and individual fund level, Fund expenses were found to be reasonable relative to both Expense Group and Expense Universe benchmarks. Further, for certain Funds, the independent fee consultant also performed a systematic “focus list” analysis of expenses in the context of the performance or service delivered to each set of investors in each share class in each selected Fund. Based on this analysis, the independent fee consultant found that the combination of service quality/performance and expenses on these individual Funds and share classes were reasonable in light of performance trends, performance histories, and existence of performance fees, breakpoints, and expense waivers on such Funds.
The Trustees considered the methodology used by Janus Capital and each subadviser in determining compensation payable to portfolio managers, the competitive environment for investment management talent, and the competitive market for mutual funds in different distribution channels.
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Janus Henderson All Asset Fund
Additional Information (unaudited)
The Trustees also reviewed management fees charged by Janus Capital and each subadviser to comparable separate account clients and to comparable non-affiliated funds subadvised by Janus Capital or by a subadviser (for which Janus Capital or the subadviser provides only or primarily portfolio management services). Although in most instances subadvisory and separate account fee rates for various investment strategies were lower than management fee rates for Funds having a similar strategy, the Trustees considered that Janus Capital noted that, under the terms of the management agreements with the Funds, Janus Capital performs significant additional services for the Funds that it does not provide to those other clients, including administration services, oversight of the Funds’ other service providers, trustee support, regulatory compliance and numerous other services, and that, in serving the Funds, Janus Capital assumes many legal risks and other costs that it does not assume in servicing its other clients. Moreover, they noted that the independent fee consultant found that: (1) the management fees Janus Capital charges to the Funds are reasonable in relation to the management fees Janus Capital charges to its institutional and subadvised accounts; (2) these institutional and subadvised accounts have different service and infrastructure needs; (3) Janus mutual fund investors enjoy reasonable fees relative to the fees charged to Janus institutional and subadvised fund investors; and (4) in the majority of cases, the Funds receive proportionally better pricing than the industry in relation to Janus institutional and subadvised accounts.
The Trustees considered the fees for each Fund for its fiscal year ended in 2015, and noted the following with regard to each Fund’s total expenses, net of applicable fee waivers (the Fund’s “total expenses”):
Fixed-Income Funds and Money Market Funds
· For Janus Henderson Flexible Bond Fund (formerly, Janus Flexible Bond Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Bond Fund (formerly, Janus Global Bond Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Unconstrained Bond Fund (formerly, Janus Global Unconstrained Bond Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson High-Yield Fund (formerly, Janus High-Yield Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Multi-Sector Income Fund (formerly, Janus Multi-Sector Income Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Real Return Fund (formerly, Janus Real Return Fund), the Trustees noted that, although the Fund’s total expenses were equal to or exceeded the peer group average for all share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Short-Term Bond Fund (formerly, Janus Short-Term Bond Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
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Janus Henderson All Asset Fund
Additional Information (unaudited)
· For Janus Henderson Government Money Market Fund (formerly, Janus Government Money Market Fund), the Trustees noted that the Fund’s total expenses exceeded the peer group average for both share classes. The Trustees considered that management fees for this Fund are higher than the peer group average due to the Fund’s management fee including other costs, such as custody and transfer agent services, while many funds in the peer group pay these expenses separately from their management fee. In addition, the Trustees considered that Janus Capital voluntarily waives one-half of its advisory fee and other expenses in order to maintain a positive yield.
· For Janus Henderson Money Market Fund (formerly, Janus Money Market Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes. In addition, the Trustees considered that Janus Capital voluntarily waives one- half of its advisory fee and other expenses in order to maintain a positive yield.
Asset Allocation Funds
· For Janus Henderson Global Allocation Fund – Conservative (formerly, Janus Global Allocation Fund – Conservative), the Trustees noted that, although the Fund’s total expenses exceeded the peer group median for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Allocation Fund – Growth (formerly, Janus Global Allocation Fund – Growth), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Allocation Fund – Moderate (formerly, Janus Global Allocation Fund – Moderate), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
Alternative Fund
· For Janus Henderson Diversified Alternatives Fund (formerly, Janus Diversified Alternatives Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
Value Funds
· For Janus Henderson International Value Fund (formerly, Perkins International Value Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Value Fund (formerly, Perkins Global Value Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Large Cap Value Fund (formerly, Perkins Large Cap Value Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Mid Cap Value Fund (formerly, Perkins Mid Cap Value Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Select Value Fund (formerly, Perkins Select Value Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
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Janus Henderson All Asset Fund
Additional Information (unaudited)
· For Janus Henderson Small Cap Value Fund (formerly, Perkins Small Cap Value Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Value Plus Income Fund (formerly, Perkins Value Plus Income Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
Mathematical Funds
· For Janus Henderson Emerging Markets Managed Volatility Fund (formerly, INTECH Emerging Markets Managed Volatility Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Income Managed Volatility Fund (formerly, INTECH Global Income Managed Volatility Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson International Managed Volatility Fund (formerly, INTECH International Managed Volatility Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson U.S. Managed Volatility Fund (formerly, INTECH U.S. Managed Volatility Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
Growth and Core Funds
· For Janus Henderson Balanced Fund (formerly, Janus Balanced Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Contrarian Fund (formerly, Janus Contrarian Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Enterprise Fund (formerly, Janus Enterprise Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Forty Fund (formerly, Janus Forty Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Growth and Income Fund (formerly, Janus Growth and Income Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
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Janus Henderson All Asset Fund
Additional Information (unaudited)
· For Janus Henderson Research Fund (formerly, Janus Research Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable.
· For Janus Henderson Triton Fund (formerly, Janus Triton Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Venture Fund (formerly, Janus Venture Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
Global and International Funds
· For Janus Henderson Adaptive Global Allocation Fund (formerly, Janus Adaptive Global Allocation Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group median for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Asia Equity Fund (formerly, Janus Asia Equity Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Life Sciences Fund (formerly, Janus Global Life Sciences Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Real Estate Fund (formerly, Janus Global Real Estate Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Research Fund (formerly, Janus Global Research Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Select Fund (formerly, Janus Global Select Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Technology Fund (formerly, Janus Global Technology Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Overseas Fund (formerly, Janus Overseas Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
Janus Aspen Series
· For Janus Henderson Balanced Portfolio (formerly, Janus Aspen Balanced Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Enterprise Portfolio (formerly, Janus Aspen Enterprise Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Flexible Bond Portfolio (formerly, Janus Aspen Flexible Bond Portfolio), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for both share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
Janus Investment Fund | 63 |
Janus Henderson All Asset Fund
Additional Information (unaudited)
· For Janus Henderson Forty Portfolio (formerly, Janus Aspen Forty Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Allocation Portfolio – Moderate (formerly, Janus Aspen Global Allocation Portfolio – Moderate), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for both share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Research Portfolio (formerly, Janus Aspen Global Research Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Technology Portfolio (formerly, Janus Aspen Global Technology Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Unconstrained Bond Portfolio (formerly, Janus Aspen Global Unconstrained Bond Portfolio), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for both share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson U.S. Low Volatility Portfolio (formerly, Janus Aspen INTECH U.S. Low Volatility Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for its sole share class.
· For Janus Henderson Research Portfolio (formerly, Janus Aspen Janus Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group mean for both share classes.
· For Janus Henderson Overseas Portfolio (formerly, Janus Aspen Overseas Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Mid Cap Value Portfolio (formerly, Janus Aspen Perkins Mid Cap Value Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
The Trustees reviewed information on the profitability to Janus Capital and its affiliates of their relationships with each Fund, as well as an explanation of the methodology utilized by Janus Capital when allocating various expenses of Janus Capital and its affiliates with respect to contractual relationships with the Funds and other clients. The Trustees also reviewed the financial statements and corporate structure of Janus Capital’s parent company. In their review, the Trustees considered whether Janus Capital and each subadviser receive adequate incentives and resources to manage the Funds effectively. The Trustees recognized that profitability comparisons among fund managers are difficult because very little comparative information is publicly available, and the profitability of any fund manager is affected by numerous factors, including the organizational structure of the particular fund manager, the types of funds and other accounts it manages, possible other lines of business, the methodology for allocating expenses, and the fund manager’s capital structure and cost of capital. However, taking into account those factors and the analysis provided by the Trustees’ independent fee consultant, and based on the information available, the Trustees concluded that Janus Capital’s profitability with respect to each Fund in relation to the services rendered was reasonable.
The independent fee consultant found that, while assessing the reasonableness of expenses in light of Janus Capital’s profits is dependent on comparisons with other publicly-traded mutual fund advisers, and that these comparisons are limited in accuracy by differences in complex size, business mix, institutional account orientation, and other factors, after accepting these limitations, the level of profit earned by Janus Capital from managing the Funds is reasonable.
The Trustees concluded that the management fees payable by each Fund to Janus Capital and its affiliates, as well as the fees paid by Janus Capital to the subadvisers of subadvised Funds, were reasonable in relation to the nature, extent, and quality of the services provided, taking into account the fees charged by other advisers for managing comparable mutual funds with similar strategies, the fees Janus Capital and the subadvisers charge to other clients, and, as applicable, the impact of fund performance on management fees payable by the Funds. The Trustees also concluded that each Fund’s total expenses were reasonable, taking into account the size of the Fund, the quality of services provided by Janus Capital and any subadviser, the investment performance of the Fund, and any expense limitations agreed to or provided by Janus Capital.
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Janus Henderson All Asset Fund
Additional Information (unaudited)
Economies of Scale
The Trustees considered information about the potential for Janus Capital to realize economies of scale as the assets of the Funds increase. They noted their independent fee consultant’s analysis of economies of scale in prior years. They also noted that, although many Funds pay advisory fees at a base fixed rate as a percentage of net assets, without any breakpoints, their independent fee consultant concluded that 91% of these Funds have contractual management fees (gross of waivers) below their Broadridge expense group averages and, overall, 83% of the Funds are below their respective expense group averages for contractual management fees. They also noted that for those Funds whose expenses are being reduced by the contractual expense limitations of Janus Capital, Janus Capital is subsidizing the Funds because they have not reached adequate scale. Moreover, as the assets of some of the Funds have declined in the past few years, certain Funds have benefited from having advisory fee rates that have remained constant rather than increasing as assets declined. In addition, performance fee structures have been implemented for various Funds that have caused the effective rate of advisory fees payable by such a Fund to vary depending on the investment performance of the Fund relative to its benchmark index over the measurement period; and a few Funds have fee schedules with breakpoints and reduced fee rates above certain asset levels. The Trustees also noted that the Funds share directly in economies of scale through the lower charges of third-party service providers that are based in part on the combined scale of all of the Funds. Based on all of the information they reviewed, including past research and analysis conducted by the Trustees’ independent fee consultant, the Trustees concluded that the current fee structure of each Fund was reasonable and that the current rates of fees do reflect a sharing between Janus Capital and the Fund of any economies of scale that may be present at the current asset level of the Fund.
The independent fee consultant concluded that, given the limitations of various analytical approaches to economies of scale considered in prior years, and their conflicting results, its analyses could not confirm or deny the existence of economies of scale in the Janus complex. Further, the independent fee consultant provided its belief that Fund investors are well-served by the fee levels and performance fee structures in place on the Funds in light of any economies of scale that may be present at Janus Capital.
Other Benefits to Janus Capital
The Trustees also considered benefits that accrue to Janus Capital and its affiliates and subadvisers to the Funds from their relationships with the Funds. They recognized that two affiliates of Janus Capital separately serve the Funds as transfer agent and distributor, respectively, and the transfer agent receives compensation directly from the non-money market funds for services provided. The Trustees also considered Janus Capital’s past and proposed use of commissions paid by the Funds on portfolio brokerage transactions to obtain proprietary and third-party research products and services benefiting the Fund and/or other clients of Janus Capital and/or Janus Capital, and/or a subadviser to a Fund. The Trustees concluded that Janus Capital’s and the subadvisers’ use of these types of client commission arrangements to obtain proprietary and third-party research products and services was consistent with regulatory requirements and guidelines and was likely to benefit each Fund. The Trustees also concluded that, other than the services provided by Janus Capital and its affiliates and subadvisers pursuant to the agreements and the fees to be paid by each Fund therefor, the Funds and Janus Capital and the subadvisers may potentially benefit from their relationship with each other in other ways. They concluded that Janus Capital and/or the subadvisers benefits from the receipt of research products and services acquired through commissions paid on portfolio transactions of the Funds and that the Funds benefit from Janus Capital’s and/or the subadvisers’ receipt of those products and services as well as research products and services acquired through commissions paid by other clients of Janus Capital and/or other clients of the subadvisers. They further concluded that the success of any Fund could attract other business to Janus Capital, the subadvisers or other Janus funds, and that the success of Janus Capital and the subadvisers could enhance Janus Capital’s and the subadvisers’ ability to serve the Funds.
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Janus Henderson All Asset Fund
Useful Information About Your Fund Report (unaudited)
The Management Commentary in this report includes valuable insight as well as statistical information to help you understand how your Fund’s performance and characteristics stack up against those of comparable indices.
If the Fund invests in foreign securities, this report may include information about country exposure. Country exposure is based primarily on the country of risk. A company may be allocated to a country based on other factors such as location of the company’s principal office, the location of the principal trading market for the company’s securities, or the country where a majority of the company’s revenues are derived.
Please keep in mind that the opinions expressed in the Management Commentary are just that: opinions. They are a reflection based on best judgment at the time this report was compiled, which was June 30, 2017. As the investing environment changes, so could opinions. These views are unique and are not necessarily shared by fellow employees or by Janus Henderson in general.
Performance Overviews
Performance overview graphs compare the performance of a hypothetical $10,000 investment in the Fund with one or more widely used market indices. When comparing the performance of the Fund with an index, keep in mind that market indices are not available for investment and do not reflect deduction of expenses.
Average annual total returns are quoted for a Fund with more than one year of performance history. 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. Average annual total return does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemptions of Fund shares.
Cumulative total returns are quoted for a Fund with less than one year of performance history. Cumulative total return is the growth or decline in value of an investment over time, independent of the period of time involved. Cumulative total return does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemptions of Fund shares.
Pursuant to federal securities rules, expense ratios shown in the performance chart reflect subsidized (if applicable) and unsubsidized ratios. The total annual fund operating expenses ratio is gross of any fee waivers, reflecting the Fund’s unsubsidized expense ratio. The net annual fund operating expenses ratio (if applicable) includes contractual waivers of Janus Capital and reflects the Fund’s subsidized expense ratio. Ratios may be higher or lower than those shown in the “Financial Highlights” in this report.
Schedule of Investments
Following the performance overview section is the Fund’s Schedule of Investments. This schedule reports the types of securities held in the Fund 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.). Holdings are subject to change without notice.
The 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.
If the Fund invests in foreign securities, it will also provide a summary of investments by country. This summary reports the Fund exposure to different countries by providing the percentage of securities invested in each country. The country of each security represents the country of risk. The Fund’s Schedule of Investments relies upon the industry group and country classifications published by Barclays and/or MSCI Inc.
Tables listing details of individual forward currency contracts, futures, written options, swaptions, and swaps follow the Fund’s Schedule of Investments (if applicable).
Statement of Assets and Liabilities
This statement is often referred to as the “balance sheet.” It lists the assets and liabilities of the Fund on the last day of the reporting period.
The Fund’s 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 securities owned, and the receivable for Fund
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Janus Henderson All Asset Fund
Useful Information About Your Fund Report (unaudited)
shares sold to investors but not yet settled. The Fund’s liabilities include payables for securities purchased but not yet settled, Fund 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 section entitled “Net Assets Consist of” breaks down the components of the Fund’s net assets. Because the Fund must distribute substantially all earnings, you will notice that a significant portion of net assets is shareholder capital.
The last section of this statement reports the net asset value (“NAV”) per share on the last day of the reporting period. The NAV is calculated by dividing the Fund’s net assets for each share class (assets minus liabilities) by the number of shares outstanding.
Statement of Operations
This statement details the Fund’s income, expenses, realized gains and losses on securities and currency transactions, and changes in unrealized appreciation or depreciation of Fund holdings.
The first section in this statement, entitled “Investment Income,” reports the dividends earned from securities and interest earned from interest-bearing securities in the Fund.
The next section reports the expenses incurred by the Fund, including the advisory fee paid to the investment adviser, transfer agent fees and expenses, and printing and postage for mailing statements, financial reports and prospectuses. Expense offsets and expense reimbursements, if any, are also shown.
The last section lists the amounts of realized gains or losses from investment and foreign currency transactions, and changes in unrealized appreciation or depreciation of investments and foreign currency-denominated assets and liabilities. The Fund will realize a gain (or loss) when it sells its position in a particular security. A change in unrealized gain (or loss) refers to the change in net appreciation or depreciation of the Fund during the reporting period. “Net Realized and Unrealized Gain/(Loss) on Investments” is affected both by changes in the market value of Fund holdings and by gains (or losses) realized during the reporting period.
Statements of Changes in Net Assets
These statements report the increase or decrease in the Fund’s net assets during the reporting period. Changes in the Fund’s net assets are attributable to investment operations, dividends and distributions to investors, and capital share transactions. This is important to investors because it shows exactly what caused the Fund’s 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 Fund’s investment operations. The Fund’s net assets may also change as a result of dividend and capital gains distributions to investors. If investors receive their dividends and/or distributions in cash, money is taken out of the Fund to pay the dividend and/or distribution. If investors reinvest their dividends and/or distributions, the Fund’s net assets will not be affected. If you compare the Fund’s “Net Decrease from Dividends and Distributions” to “Reinvested Dividends and Distributions,” you will notice that dividends and distributions have little effect on the Fund’s net assets. This is because the majority of the Fund’s investors reinvest their dividends and/or distributions.
The reinvestment of dividends and distributions is included under “Capital Share Transactions.” “Capital Shares” refers to the money investors contribute to the Fund through purchases or withdrawals via redemptions. The Fund’s net assets will increase and decrease in value as investors purchase and redeem shares from the Fund.
Financial Highlights
This schedule provides a per-share breakdown of the components that affect the Fund’s NAV for current and past reporting periods as well as total return, asset size, 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/(loss) per share. Following is the per share total of net gains/(losses), realized and unrealized. Per share dividends and distributions to investors are then subtracted to arrive at the NAV per share at the end of the period. The next line reflects the total return for the period. Also included are ratios of expenses and net investment income to average net assets.
The Fund’s expenses may be reduced through expense offsets and expense reimbursements. The ratios shown reflect expenses before and after any such offsets and reimbursements.
Janus Investment Fund | 67 |
Janus Henderson All Asset Fund
Useful Information About Your Fund Report (unaudited)
The ratio of net investment income/(loss) summarizes the income earned less expenses, divided by the average net assets of the Fund during the reporting period. Do not confuse this ratio with the Fund’s yield. The net investment income ratio is not a true measure of the Fund’s yield because it does not take into account the dividends distributed to the Fund’s investors.
The next figure is the portfolio turnover rate, which measures the buying and selling activity in the Fund. Portfolio turnover is affected by market conditions, changes in the asset size of the Fund, fluctuating volume of shareholder purchase and redemption orders, the nature of the Fund’s investments, and the investment style and/or outlook of the portfolio manager(s) and/or investment personnel. A 100% rate implies that an amount equal to the value of the entire portfolio was replaced once during the fiscal 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 entire portfolio is traded every six months.
68 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Shareholder Meeting (unaudited)
Special meetings of shareholders1 were held on April 6, 2017, and adjourned and reconvened on May 17, 2017 and May 25, 2017 (together, the "meeting"). At the meeting, the following matter was voted on and approved by shareholders. Each vote and fractional vote reported represents one whole or fractional share, respectively, held on the record date for the meeting. The results of the meeting are noted below. | |||||||||
Proposal | |||||||||
1. To approve an Agreement and Plan of Reorganization, which provides for the transfer of all of the assets and all the liabilities of Henderson All Asset Fund into Janus Henderson All Asset Fund, a corresponding series of Janus Investment Fund, in exchange for shares of beneficial interest of Janus Henderson All Asset Fund. | |||||||||
| Number of Votes ($) |
| |||||||
Record Date Votes ($) | Affirmative | Against | Abstain | BVN | Total | ||||
5,065,900.296 | 3,325,367.251 | 0.000 | 3,984.000 | 0.000 | 3,329,351.251 | ||||
Percentage of Total Outstanding Votes (%) |
| Percentage Voted (%) | |||||||
Affirmative | Against | Abstain | BVN | Total | Affirmative | Against | Abstain | BVN | Total |
65.642 | 0.000 | 0.079 | 0.000 | 65.721 | 99.880 | 0.000 | 0.120 | 0.000 | 100.000 |
1 Shareholders of Henderson Global Funds series portfolios. | |||||||||
Janus Investment Fund | 69 |
Janus Henderson All Asset Fund
Designation Requirements (unaudited)
For federal income tax purposes, the Fund designated the following for the period ended June 30, 2017:
| |
Qualified Dividend Income Percentage | 35% |
|
70 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Trustees and Officers (unaudited)
The Fund’s Statement of Additional Information includes additional information about the Trustees and officers and is available, without charge, by calling 1-877-335-2687.
The following are the Trustees and officers of the Trust, together with a brief description of their principal occupations during the last five years (principal occupations for certain Trustees may include periods over five years).
Each Trustee has served in that capacity since he or she 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 or her earlier death, resignation, retirement, incapacity, or removal. Under the Fund’s Governance Procedures and Guidelines, the policy is for Trustees to retire no later than the end of the calendar year in which the Trustee turns 75. The Trustees review the Fund’s Governance Procedures and Guidelines from time to time and may make changes they deem appropriate. The Fund’s 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 one other registered investment company advised by Janus Capital: Janus Aspen Series. Collectively, these two registered investment companies consist of 63 series or funds.
The Trust’s officers are elected annually by the Trustees for a one-year term. Certain officers also serve as officers of Janus Aspen Series. Certain officers of the Fund may also be officers and/or directors of Janus Capital. Except as otherwise disclosed, Fund officers receive no compensation from the Fund, except for the Fund’s Chief Compliance Officer, as authorized by the Trustees.
TRUSTEES | |||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years |
Independent Trustees | |||||
Janus Investment Fund | 71 |
Janus Henderson All Asset Fund
Trustees and Officers (unaudited)
TRUSTEES | |||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years |
William F. McCalpin | Chairman Trustee | 1/08-Present 6/02-Present | Managing Partner, Impact Investments, Athena Capital Advisors LLC (independent registered investment advisor) (since 2016) and Managing Director, Holos Consulting LLC (provides consulting services to foundations and other nonprofit organizations). Formerly, Chief Executive Officer, Imprint Capital (impact investment firm) (2013-2015) and Executive Vice President and Chief Operating Officer of The Rockefeller Brothers Fund (a private family foundation) (1998-2006). | 63 | Director of Mutual Fund Directors Forum (a non-profit organization serving independent directors of U.S. mutual funds), Chairman of the Board and Director of The Investment Fund for Foundations Investment Program (TIP) (consisting of 2 funds), and Director of the F.B. Heron Foundation (a private grantmaking foundation). |
72 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Trustees and Officers (unaudited)
TRUSTEES | |||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years |
Alan A. Brown | Trustee | 1/13-Present | Executive Vice President, Institutional Markets, of Dividend Capital Group (private equity real estate investment management firm) (since 2012). Formerly, Executive Vice President and Co-Head, Global Private Client Group (2007-2010), Executive Vice President, Mutual Funds (2005-2007), and Chief Marketing Officer (2001-2005) of Nuveen Investments, Inc. (asset management). | 63 | Director of WTTW (PBS affiliate) (since 2003). Formerly, Director of MotiveQuest LLC (strategic social market research company) (2003-2016); and Director of Nuveen Global Investors LLC (2007-2011); Director of Communities in Schools (2004-2010); and Director of Mutual Fund Education Alliance (until 2010). |
Janus Investment Fund | 73 |
Janus Henderson All Asset Fund
Trustees and Officers (unaudited)
TRUSTEES | |||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years |
William D. Cvengros | Trustee | 1/11-Present | Managing Member and Chief Executive Officer of SJC Capital, LLC (a personal investment company and consulting firm) (since 2002). Formerly, Venture Partner for The Edgewater Funds (a middle market private equity firm) (2002-2004); Chief Executive Officer and President of PIMCO Advisors Holdings L.P. (a publicly traded investment management firm) (1994-2000); and Chief Investment Officer of Pacific Life Insurance Company (a mutual life insurance and annuity company) (1987-1994). | 63 | Advisory Board Member, Innovate Partners Emerging Growth and Equity Fund I (early stage venture capital fund) (since 2014) and Managing Trustee of National Retirement Partners Liquidating Trust (since 2013). Formerly, Chairman, National Retirement Partners, Inc. (formerly a network of advisors to 401(k) plans) (2005-2013); Director of Prospect Acquisition Corp. (a special purpose acquisition corporation) (2007-2009); Director of RemedyTemp, Inc. (temporary help services company) (1996-2006); and Trustee of PIMCO Funds Multi-Manager Series (1990-2000) and Pacific Life Variable Life & Annuity Trusts (1987-1994). |
74 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Trustees and Officers (unaudited)
TRUSTEES | |||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years |
Raudline Etienne 151 Detroit Street Denver, CO 80206 DOB: 1965 | Trustee | 6/16-Present | Senior Advisor, Albright Stonebridge Group LLC (global strategy firm) (since 2016). Formerly, Senior Vice President (2011-2015), Albright Stonebridge Group LLC; and Deputy Comptroller and Chief Investment Officer, New York State Common Retirement Fund (public pension fund) (2008-2011). | 63 | Director of Brightwood Capital Advisors, LLC (since 2014). |
Gary A. Poliner 151 Detroit Street Denver, CO 80206 DOB: 1953 | Trustee | 6/16-Present | Retired. Formerly, President (2010-2013) and Executive Vice President and Chief Risk Officer (2009-2012) of Northwestern Mutual Life Insurance Company. | 63 | Director of MGIC Investment Corporation (private mortgage insurance) (since 2013) and West Bend Mutual Insurance Company (property/casualty insurance) (since 2013). Formerly, Trustee of Northwestern Mutual Life Insurance Company (2010-2013); Chairman and Director of Northwestern Mutual Series Fund, Inc. (2010-2012); and Director of Frank Russell Company (global asset management firm) (2008-2013). |
Janus Investment Fund | 75 |
Janus Henderson All Asset Fund
Trustees and Officers (unaudited)
TRUSTEES | |||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years |
James T. Rothe | Trustee | 1/97-Present | Co-founder and Managing Director of Roaring Fork Capital SBIC, L.P. (SBA SBIC fund focusing on private investment in public equity firms), and Professor Emeritus of Business of the University of Colorado, Colorado Springs, CO (since 2004). Formerly, Professor of Business of the University of Colorado (2002-2004), and Distinguished Visiting Professor of Business (2001-2002) of Thunderbird (American Graduate School of International Management), Glendale, AZ. | 63 | Formerly, Director of Red Robin Gourmet Burgers, Inc. (RRGB) (2004- 2014). |
William D. Stewart | Trustee | 6/84-Present | Retired. Formerly, President and founder of HPS Products and Corporate Vice President of MKS Instruments, Boulder, CO (a provider of advanced process control systems for the semiconductor industry) (1976-2012). | 63 | None |
76 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Trustees and Officers (unaudited)
TRUSTEES | |||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years |
Diane L. Wallace | Trustee | 6/17-Present | Retired | 63 | Independent Trustee, Henderson Global Funds (13 portfolios) (2015 – 2017); Independent Trustee, State Farm Associates’ Funds Trust, State Farm Mutual Fund Trust, and State Farm Variable Product Trust (28 portfolios) (since 2013). |
Linda S. Wolf | Trustee | 11/05-Present | Retired. Formerly, Chairman and Chief Executive Officer of Leo Burnett (Worldwide) (advertising agency) (2001-2005). | 63 | Director of Chicago Community Trust (Regional Community Foundation), Chicago Council on Global Affairs, InnerWorkings (U.S. provider of print procurement solutions to corporate clients), Lurie Children’s Hospital (Chicago, IL), Rehabilitation Institute of Chicago, Walmart, and Wrapports, LLC (digital communications company). Formerly, Director of Chicago Convention & Tourism Bureau (until 2014) and The Field Museum of Natural History (Chicago, IL) (until 2014). |
Janus Investment Fund | 77 |
Janus Henderson All Asset Fund
Trustees and Officers (unaudited)
OFFICERS | |||
Name, Address, and Age | Positions Held with the Trust | Term of Office* and Length of Time Served | Principal Occupations During the Past Five Years |
Bruce L. Koepfgen | President and Chief Executive Officer | 7/14-Present | Head of North America at Janus Henderson Investors and Janus Capital Management LLC (since 2017); Executive Vice President and Director of Janus International Holding LLC (since 2011); Executive Vice President of Janus Distributors LLC (since 2011); Vice President and Director of INTECH Investment Management LLC (since 2011); Executive Vice President and Director of Perkins Investment Management LLC (since 2011); and Executive Vice President and Director of Janus Management Holdings Corporation (since 2011). Formerly, President of Janus Capital Group Inc. and Janus Capital Management LLC (2013-2017); Executive Vice President of Janus Services LLC (2011-2015), Janus Capital Group Inc. and Janus Capital Management LLC (2011-2013); and Chief Financial Officer of Janus Capital Group Inc., Janus Capital Management LLC, Janus Distributors LLC, Janus Management Holdings Corporation, and Janus Services LLC (2011-2013). |
David R. Kowalski | Vice President and Chief Compliance Officer | 6/02-Present | Chief Risk Officer of Janus Henderson Investors (since 2017); Senior Vice President (since 2005) and Chief Risk Officer (since 2017) of Janus Capital Management LLC; Senior Vice President of Janus Distributors LLC (since 2005); Senior Vice President (since 2005) and Chief Compliance Officer (since 2004) of Janus Services LLC; Vice President of INTECH Investment Management LLC (since 2005) and Perkins Investment Management LLC (since 2009). Formerly, Chief Compliance Officer of Janus Capital (2000–2017); Chief Compliance Officer of Janus Distributors LLC (2002-2017) and Director of The Janus Foundation (2012-2017). |
78 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Trustees and Officers (unaudited)
Jesper Nergaard | Chief Financial Officer | 3/05-Present | Vice President of Janus Capital and Janus Services LLC. |
Kathryn L. Santoro | Vice President, Chief Legal Counsel, and Secretary | 12/16-Present | Vice President of Janus Capital and Janus Services LLC (since 2016). Formerly, Vice President and Associate Counsel of Curian Capital, LLC and Curian Clearing LLC (2013-2016); and General Counsel and Secretary (2011-2012) and Vice President (2009-2012) of Old Mutual Capital, Inc. |
* Officers are elected at least annually by the Trustees for a one-year term and may also be elected from time to time by the Trustees for an interim period. | |||
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Janus Henderson All Asset Fund
Notes
NotesPage1
80 | JUNE 30, 2017 |
Janus Henderson All Asset Fund
Notes
NotesPage1
Janus Investment Fund | 81 |
Knowledge. Shared
At Janus Henderson, we believe in the sharing of expert insight for better investment and business decisions. We call this ethos Knowledge. Shared.
Learn more by visiting janushenderson.com.
| ||||||||
This report is submitted for the general information of shareholders of the Fund. It is not an offer or solicitation for the Fund and is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. | ||||||||
Janus Henderson, Janus, Henderson, Perkins, INTECH and Henderson Geneva are trademarks or registered trademarks of Janus Henderson Investors. © Janus Henderson Investors. The name Janus Henderson Investors includes HGI Group Limited, Henderson Global Investors (Brand Management) Sarl and Janus International Holding LLC. Funds distributed by Janus Henderson Distributors | ||||||||
125-02-93074 08-17 | ||||||||
ANNUAL REPORT June 30, 2017 | |||
Janus Henderson Diversified Alternatives Fund (formerly named Janus Diversified Alternatives Fund) | |||
Janus Investment Fund | |||
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HIGHLIGHTS · Portfolio management perspective · Investment strategy behind your fund · Fund performance, characteristics | |||
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Table of Contents
Janus Henderson Diversified Alternatives Fund
Investments | |
Information | |
Janus Henderson Diversified Alternatives Fund (unaudited)
PERFORMANCE OVERVIEW
For the 12 months ended June 30, 2017, the Janus Henderson Diversified Alternatives Fund’s Class I Shares returned 5.51%, compared with a return of -0.31% for its primary benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index, and 4.15% for its secondary benchmark, LIBOR + 3%.
MARKET ENVIRONMENT
The UK’s decision to exit the European Union caught investors by surprise at the beginning of the 12-month period. Rates rallied through the first few days of the period as market participants digested the vote. Accommodative monetary policy abroad also drove investors toward the relatively attractive yields on U.S. Treasurys, pushing the yield on the 10-year note to all-time lows. The “risk-off” mindset was, however, short-lived. Stocks quickly rallied, corporate credit spreads resumed tightening and rates generally rose as market concerns ebbed amid improving U.S. economic data and emerging signs of inflation. The election of Donald Trump to the U.S. presidency kept corporate credit in favor and further boosted stocks as investors expressed optimism over the new administration’s pro-growth, business-friendly platform. In December, the Federal Reserve (Fed) announced an increase to the target federal funds rate, its first of three during the period.
In the latter half of the period, Washington’s general lack of progress on reform initiatives caused investors to begin reassessing the prospect of reflation. Downward pressure on the price of crude oil amid a ramp-up in U.S. production created further uncertainty on the inflation front. Economic data also softened, with core inflation, for example, falling below the Fed’s 2% target. Intermediate and longer dated Treasurys rallied as investors expressed renewed concern over the economic outlook. Still, Fed Chairwoman Janet Yellen indicated that the economy was likely healthy enough to withstand additional interest rate increases. These comments, along with a stream of hawkish comments from other developed-world central bank leaders, caused rates to sell off near period end.
Despite these gyrations, several benchmark stock indices achieved record highs by period end, and rates rose across the U.S. Treasury curve over the course of the year. The yield on the 10-year note finished June at 2.30%, up from 1.47% a year prior. The yield on the long bond also climbed, but was held in check by late-period economic concerns. Corporate credit registered strong gains, and both investment-grade and high-yield spreads tightened substantially.
PERFORMANCE DISCUSSION
The Fund outperformed its benchmarks during the 12-month period. Over time, the Fund seeks to provide positive absolute returns and offer true diversification with low correlation to stocks and bonds by investing in a portfolio of risk premia strategies.
The commodity roll yield strategy benefited from the broad-based weakness in the energy complex during the period as inventory reports continued to surprise to the upside. This strategy seeks to generate returns by providing liquidity to the most “crowded” section of the commodity futures curve; it is typically short the most active front-month contract and long farther-dated tenors. Within the energy sector, although natural gas prices were generally up over the course of the year, there was notable pressure on prices during portions of the period as, for the second year in a row, the U.S. experienced a milder-than-expected winter.
The equity emerging strategy also aided returns. This strategy looks to capture the potential return specifically associated with holding equities in companies of less-developed economies. Emerging markets outperformed during the period as concerns such as geopolitical risks in Brazil and fears of an economic hard-landing in China subsided. The majority of the outperformance came within the last six months (12/31/16 to 06/30/17) of the period, as investors turned slightly less risk averse after
Janus Investment Fund | 1 |
Janus Henderson Diversified Alternatives Fund (unaudited)
issues such as Brexit, and the presidential election in the U.S. proved to be much less disruptive than originally expected.
The equity momentum strategy benefited from the relatively persistent rise in the S&P 500 Index after the U.S. election in November. This strategy aims to capture directional momentum in equities through the quantitative analysis of equity index price movement. Fueled by the prospect of tax reform and a fiscal stimulus package, the S&P 500 rallied nearly 18% in a fairly steady fashion. In this environment the strategy remained engaged on the long side during the period.
The commodity momentum strategy, which looks to capture the persistence in the price movement of commodities, suffered as global commodity markets struggled to find a strong direction. Rather than trending in one direction, commodities like oil exhibited mean-reverting behavior, resulting in both long and short positions at inopportune times. Other commodities that acted similarly include gold, silver, corn, and soybeans. The strategy was particularly hurt by its position in oil, as it entered into long positions on several occasions that were later liquidated at lower prices.
The currency momentum strategy, which looks to capture long-term movements in the U.S. dollar versus a basket of foreign currencies, also underperformed. The U.S. dollar ended the period essentially where it began, with volatile but range-bound price action during the period. As mentioned earlier, this presents a challenging environment for time-series momentum based strategies.
The credit strategy was hurt by the rise in interest rates during the period. This strategy seeks to capture the potential systematic return associated with the default and duration risks of investing in bond markets. Global interest rates rose during the final months of 2016 due to the emergence of the “reflation” trade. Though rates stabilized and credit spreads continued to tighten during the second half of the period, it was not enough to make up for earlier losses.
DERIVATIVES
The Fund makes extensive use of derivatives because they are generally the most efficient and liquid way to gain our desired exposures. Swaps are used to take exposures in equity, fixed income and commodity indices. Futures are used to take exposures in commodities, currencies and long-end fixed income markets. Forwards are employed to take exposures in foreign currencies, generally one week in length. In aggregate, these positions contributed to performance during the period. Please see the Derivative Instruments section in the “Notes to Consolidated Financial Statements” for a discussion of derivatives used by the Fund.
OUTLOOK
The Fund’s model has indicated potentially increased correlations between a number of the equity strategies and the absolute direction of financial markets in general. It has, in turn, reduced the allocation to these premia – namely equity value, equity emerging and equity size. The model has increased the allocation to momentum strategies, as these strategies can be more negatively correlated to general market movements than others.
Thank you for investing in Janus Henderson Diversified Alternatives Fund.
2 | JUNE 30, 2017 |
Janus Henderson Diversified Alternatives Fund (unaudited)
Fund At A Glance
June 30, 2017
Asset Allocation |
|
Commodity | 38.0% |
Equity | 23.3% |
Fixed Income | 15.1% |
Currency | 21.2% |
Cash & Cash Equivalents | 2.4% |
100.0% | |
The allocations shown reflect absolute notional exposures to various asset classes. The allocations are calculated net of cash segregated for future obligations. | |
Janus Investment Fund | 3 |
Janus Henderson Diversified Alternatives Fund (unaudited)
Performance
See important disclosures on the next page. |
| Expense Ratios - | |||||||
Average Annual Total Return - for the periods ended June 30, 2017 |
|
| per the October 28, 2016 prospectuses | |||||
|
| One | Since |
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| Total Annual Fund | Net Annual Fund | |
Class A Shares at NAV |
| 5.29% | 1.38% |
|
| 1.66% | 1.52% | |
Class A Shares at MOP |
| -0.81% | 0.05% |
|
|
|
| |
Class C Shares at NAV | 4.48% | 0.75% |
|
| 2.40% | 2.25% | ||
Class C Shares at CDSC |
| 3.48% | 0.75% |
|
|
|
| |
Class D Shares(1) |
| 5.38% | 1.49% |
|
| 1.82% | 1.42% | |
Class I Shares |
| 5.51% | 1.60% |
|
| 1.40% | 1.26% | |
Class N Shares |
| 5.58% | 1.64% |
|
| 1.39% | 1.25% | |
Class S Shares |
| 5.17% | 1.29% |
|
| 1.89% | 1.75% | |
Class T Shares |
| 5.39% | 1.47% |
|
| 1.64% | 1.50% | |
Bloomberg Barclays U.S. Aggregate Bond Index |
| -0.31% | 2.03% |
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| |
London Interbank Offered Rate (LIBOR) + 3% |
| 4.15% | 3.76%** |
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| |
Morningstar Quartile - Class I Shares |
| 2nd | 3rd |
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| |
Morningstar Ranking - based on total returns for Multialternative Funds |
| 110/418 | 140/205 |
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Returns quoted are past performance and do not guarantee future results; current performance may be lower or higher. Investment returns and principal value will vary; there may be a gain or loss when shares are sold. For the most recent month-end performance call 800.668.0434 (or 800.525.3713 if you hold shares directly with Janus Henderson) or visit janushenderson.com/performance (or janushenderson.com/allfunds if you hold shares directly with Janus Henderson).
Maximum Offering Price (MOP) returns include the maximum sales charge of 5.75%. Net Asset Value (NAV) returns exclude this charge, which would have reduced returns.
CDSC returns include a 1% contingent deferred sales charge (CDSC) on Shares redeemed within 12 months of purchase. Net Asset Value (NAV) returns exclude this charge, which would have reduced returns.
4 | JUNE 30, 2017 |
Janus Henderson Diversified Alternatives Fund (unaudited)
Performance
Performance may be affected by risks that include those associated with non-diversification, portfolio turnover, short sales, potential conflicts of interest, foreign and emerging markets, initial public offerings (IPOs), high-yield and high-risk securities, undervalued, overlooked and smaller capitalization companies, real estate related securities including Real Estate Investment Trusts (REITs), derivatives, and commodity-linked investments. Each product has different risks. Please see the prospectus for more information about risks, holdings and other details.
There is a risk that the Fund’s investments will correlate with stocks and bonds to a greater degree than anticipated, and the investment process may not achieve the desired results. The Fund may underperform during up markets and be negatively affected in down markets. Diversification does not assure a profit or eliminate the risk of loss.
Returns include reinvestment of all dividends and distributions and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemptions of Fund shares. The returns do not include adjustments in accordance with generally accepted accounting principles required at the period end for financial reporting purposes.
See Consolidated Financial Highlights for actual expense ratios during the reporting period.
Ranking is for the share class shown only; other classes may have different performance characteristics. When an expense waiver is in effect, it may have a material effect on the total return, and therefore the ranking for the period.
© 2017 Morningstar, Inc. All Rights Reserved.
There is no assurance that the investment process will consistently lead to successful investing.
See Notes to Consolidated Schedule of Investments and Other Information for index definitions.
Index performance does not reflect the expenses of managing a portfolio as an index is unmanaged and not available for direct investment.
See “Useful Information About Your Fund Report.”
* The Fund’s inception date – December 28, 2012
** The London Interbank Offered Rate (LIBOR) + 3% since inception returns are calculated from December 31, 2012.
(1) Closed to certain new investors.
Janus Investment Fund | 5 |
Janus Henderson Diversified Alternatives Fund (unaudited)
Expense Examples
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, such as sales charges (loads) on purchase payments (applicable to Class A Shares only); and (2) ongoing costs, including management fees; 12b-1 distribution and shareholder servicing fees; transfer agent fees and expenses payable pursuant to the Transfer Agency Agreement; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The example is based upon an investment of $1,000 invested at the beginning of the period and held for the six-months indicated, unless noted otherwise in the table and footnotes below.
Actual Expenses
The information in the table under the heading “Actual” provides information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the appropriate column for your share class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading “Hypothetical (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based upon the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Additionally, for an analysis of the fees associated with an investment in any share class or other similar funds, please visit www.finra.org/fundanalyzer.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs. These fees are fully described in the Fund’s prospectuses. Therefore, the hypothetical examples are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
Actual | Hypothetical | |||||||||
| Beginning | Ending | Expenses |
| Beginning | Ending | Expenses | Net Annualized | ||
Class A Shares | $1,000.00 | $1,016.00 | $7.60 |
| $1,000.00 | $1,017.26 | $7.60 | 1.52% | ||
Class C Shares | $1,000.00 | $1,013.30 | $11.43 |
| $1,000.00 | $1,013.44 | $11.43 | 2.29% | ||
Class D Shares | $1,000.00 | $1,016.90 | $7.00 |
| $1,000.00 | $1,017.85 | $7.00 | 1.40% | ||
Class I Shares | $1,000.00 | $1,017.90 | $6.60 |
| $1,000.00 | $1,018.25 | $6.61 | 1.32% | ||
Class N Shares | $1,000.00 | $1,017.90 | $6.30 |
| $1,000.00 | $1,018.55 | $6.31 | 1.26% | ||
Class S Shares | $1,000.00 | $1,017.10 | $8.15 |
| $1,000.00 | $1,016.71 | $8.15 | 1.63% | ||
Class T Shares | $1,000.00 | $1,017.00 | $7.30 |
| $1,000.00 | $1,017.55 | $7.30 | 1.46% | ||
† | Expenses Paid During Period are equal to the Net Annualized Expense Ratio multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses in the examples include the effect of applicable fee waivers and/or expense reimbursements, if any. Had such waivers and/or reimbursements not been in effect, your expenses would have been higher. Please refer to the Notes to Consolidated Financial Statements or the Fund’s prospectuses for more information regarding waivers and/or reimbursements. | |||||||||
6 | JUNE 30, 2017 |
Janus Henderson Diversified Alternatives Fund
Consolidated Schedule of Investments
June 30, 2017
Shares or | Value | ||||||
Investment Companies – 7.8% | |||||||
Money Markets – 7.8% | |||||||
Janus Cash Liquidity Fund LLC, 0.9803%(a),ºº,£ (cost $5,561,820) | .5,561,820 | $5,561,820 | |||||
U.S. Government Agency Notes – 79.5% | |||||||
United States Treasury Bill: | |||||||
0%, 7/13/17◊ | $11,000,000 | 11,002,719 | |||||
0%, 8/10/17◊ | 10,000,000 | 9,990,870 | |||||
0%, 9/14/17†,◊ | 13,000,000 | 12,975,027 | |||||
0%, 10/12/17†,◊ | 13,000,000 | 12,962,885 | |||||
0%, 11/9/17◊ | 10,000,000 | 9,962,690 | |||||
Total U.S. Government Agency Notes (cost $56,894,725) | 56,894,191 | ||||||
Total Investments (total cost $62,456,545) – 87.3% | 62,456,011 | ||||||
Cash, Receivables and Other Assets, net of Liabilities – 12.7% | 9,063,314 | ||||||
Net Assets – 100% | $71,519,325 | ||||||
Schedule of Foreign Currency Contracts, Open |
Counterparty/ Currency | Settlement Date | Currency Units Sold/ (Purchased) | Currency Value | Unrealized Appreciation/ (Depreciation) | ||||
HSBC Securities (USA), Inc.: | ||||||||
Australian Dollar | 7/7/17 | (2,260,000) | $ | (1,736,519) | $ | 10,966 | ||
Canadian Dollar | 7/7/17 | 1,780,000 | 1,372,856 | (8,618) | ||||
Euro | 7/7/17 | 2,798,000 | 3,195,717 | (10,152) | ||||
Japanese Yen | 7/7/17 | 294,900,000 | 2,622,550 | 6,292 | ||||
New Zealand Dollar | 7/7/17 | (3,862,000) | (2,829,173) | 9,006 | ||||
Norwegian Krone | 7/7/17 | (36,860,000) | (4,416,883) | 49,031 | ||||
Swedish Krona | 7/7/17 | 23,600,000 | 2,802,853 | (42,306) | ||||
Swiss Franc | 7/7/17 | 2,280,000 | 2,378,853 | (2,576) | ||||
Total | $ | 3,390,254 | $ | 11,643 | ||||
See Notes to Consolidated Schedule of Investments and Other Information and Notes to Consolidated Financial Statements. | |
Janus Investment Fund | 7 |
Janus Henderson Diversified Alternatives Fund
Consolidated Schedule of Investments
June 30, 2017
Schedule of Futures | ||||||||||||||||||||||
Description | Number of Contracts | Expiration Date | Unrealized Appreciation/ (Depreciation) | Variation Margin | ||||||||||||||||||
Futures Purchased: | ||||||||||||||||||||||
Cattle (a) | 20 | 10/17 | $ | (30,275) | $ | 1,800 | ||||||||||||||||
Copper(a) | 8 | 12/17 | 24,096 | 2,800 | ||||||||||||||||||
Cotton No. 2(a) | 27 | 3/18 | (10,328) | 12,960 | ||||||||||||||||||
Gold(a) | 4 | 10/17 | (2,996) | (1,400) | ||||||||||||||||||
S&P 500 E-mini | 84 | 9/17 | (63,453) | 2,766 | ||||||||||||||||||
Silver (a) | 7 | 12/17 | 1,477 | (945) | ||||||||||||||||||
Soybean (a) | 19 | 5/18 | (205) | (272) | ||||||||||||||||||
(81,684) | 17,709 | |||||||||||||||||||||
Futures Sold: | ||||||||||||||||||||||
Brent Crude (a) | 19 | 10/17 | $ | 13 | $ | (36) | ||||||||||||||||
Cattle (a) | 7 | 12/17 | (8,310) | (1,470) | ||||||||||||||||||
Coffee 'C' (a) | 25 | 12/17 | (3,449) | 6,093 | ||||||||||||||||||
Corn(a) | 65 | 12/17 | (10,527) | (39,000) | ||||||||||||||||||
Euro-Bund | 74 | 9/17 | 17,757 | 17,671 | ||||||||||||||||||
Soybean (a) | 7 | 1/18 | (14,591) | (10,413) | ||||||||||||||||||
Sugar #11 (World) (a) | 77 | 3/18 | (7,619) | (24,147) | ||||||||||||||||||
U.S. Dollar Index | 268 | 9/17 | 277,127 | (13,143) | ||||||||||||||||||
Wheat (a) | 48 | 12/17 | (146,366) | (70,800) | ||||||||||||||||||
WTI Crude (a) | 20 | 11/17 | (49,564) | (21,000) | ||||||||||||||||||
54,471 | (156,245) | |||||||||||||||||||||
Total | $ | (27,213) | $ | (138,536) | ||||||||||||||||||
Schedule of Total Return Swaps | |||||||||||
Unrealized | |||||||||||
Return Paid | Return Received | Termination | Notional | Appreciation/ | |||||||
Counterparty | by the Fund | by the Fund | Date | Amount | (Depreciation) | ||||||
Barclays Capital, Inc. | 3 month USD LIBOR plus 20 basis points | Bloomberg Barclays U.S. Credit RBI Series-1 Index | 8/1/17 | $19,900,000 | $3,356 | ||||||
BNP Paribas(a) | Plus 22 basis points | A long/short basket of commodity indices | 7/31/17 | 72,400,000 | 18 | ||||||
BNP Paribas | Plus 40 basis points | A long/short basket of equity indices | 8/3/17 | 7,800,000 | (471) | ||||||
BNP Paribas | Minus 30 basis points | A long/short basket of equity indices | 8/3/17 | 10,200,000 | 4,481 | ||||||
Goldman Sachs International | 1 month USD LIBOR plus 90 basis points | MSCI Daily Total Return Net Emerging Markets | 7/5/18 | 11,699,777 | 119 | ||||||
Goldman Sachs International | MSCI Daily Total Return Gross World USD | 1 month USD LIBOR Plus 25 basis points | 7/5/18 | (11,699,907) | (45) | ||||||
Total | $7,458 | ||||||||||
See Notes to Consolidated Schedule of Investments and Other Information and Notes to Consolidated Financial Statements. | |
8 | JUNE 30, 2017 |
Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Schedule of Investments and Other Information
Bloomberg Barclays U.S. Aggregate Bond Index | Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based measure of the investment grade, US dollar-denominated, fixed-rate taxable bond market. |
London Interbank Offered Rate (LIBOR) | LIBOR (London Interbank Offered Rate) is a short-term interest rate that banks offer one another and generally represents current cash rates. |
S&P 500® Index | S&P 500® Index reflects U.S. large-cap equity performance and represents broad U.S. equity market performance. |
LLC | Limited Liability Company |
(a) | All or a portion of this security is owned by Janus Diversified Alternatives Subsidiary, Ltd. See Note 1 in Notes to Consolidated Financial Statements. |
† | A portion of this security has been segregated to cover margin or segregation requirements on open futures contracts, forward currency contracts, options contracts, short sales, swap agreements, and/or securities with extended settlement dates, the value of which, as of June 30, 2017, is $24,467,123. |
ºº | Rate shown is the 7-day yield as of June 30, 2017. |
◊ | Zero coupon bond. |
£ | The Fund may invest in certain securities that are considered affiliated companies. As defined by the Investment Company Act of 1940, as amended, an affiliated company is one in which the Fund owns 5% or more of the outstanding voting securities, or a company which is under common ownership or control. The following securities were considered affiliated companies for all or some portion of the year ended June 30, 2017. Unless otherwise indicated, all information in the table is for the year ended June 30, 2017. |
Share | Share | |||||||||||||
Balance | Balance | Realized | Dividend | Value | ||||||||||
at 6/30/16 | Purchases | Sales | at 6/30/17 | Gain/(Loss) | Income | at 6/30/17 | ||||||||
Janus Cash Liquidity Fund LLC | 22,843,654 | 49,721,957 | (67,003,791) | 5,561,820 | $— | $53,276 | $5,561,820 |
Janus Investment Fund | 9 |
Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Schedule of Investments and Other Information
The following is a summary of the inputs that were used to value the Fund’s investments in securities and other financial instruments as of June 30, 2017. See Notes to Consolidated Financial Statements for more information. | |||||||||||||
Valuation Inputs Summary | |||||||||||||
Level 2 - | Level 3 - | ||||||||||||
Level 1 - | Other Significant | Significant | |||||||||||
Quotes Prices | Observable Inputs | Unobservable Inputs | |||||||||||
Assets | |||||||||||||
Investments in Securities: | |||||||||||||
Investment Companies | $ | - | $ | 5,561,820 | $ | - | |||||||
U.S. Government Agency Notes | - | 56,894,191 | - | ||||||||||
Total Investments in Securities | $ | - | $ | 62,456,011 | $ | - | |||||||
Other Financial Instruments(a): | |||||||||||||
Forward Currency Contracts | - | 75,295 | - | ||||||||||
Outstanding Swap Contracts, at Value | - | 7,974 | - | ||||||||||
Variation Margin Receivable | 44,090 | - | - | ||||||||||
Total Assets | $ | 44,090 | $ | 62,539,280 | $ | - | |||||||
Liabilities | |||||||||||||
Other Financial Instruments(a): | |||||||||||||
Forward Currency Contracts | $ | - | $ | 63,652 | $ | - | |||||||
Outstanding Swap Contracts, at Value | - | 516 | - | ||||||||||
Variation Margin Payable | 182,626 | - | - | ||||||||||
Total Liabilities | $ | 182,626 | $ | 64,168 | $ | - | |||||||
(a) | Other financial instruments include forward currency, futures, written options, written swaptions, and swap contracts. Forward currency contracts are reported at their unrealized appreciation/(depreciation) at measurement date, which represents the change in the contract's value from trade date. Futures, certain written options on futures, and centrally cleared swap contracts are reported at their variation margin at measurement date, which represents the amount due to/from the Fund at that date. Written options, written swaptions, and other swap contracts are reported at their market value at measurement date. | ||||||||||||
10 | JUNE 30, 2017 |
Janus Henderson Diversified Alternatives Fund
Consolidated Statement of Assets and Liabilities
June 30, 2017
|
|
|
|
|
|
|
Assets: | ||||||
Investments, at cost | $ | 62,456,545 | ||||
Unaffiliated investments, at value | 56,894,191 | |||||
Affiliated investments, at value | 5,561,820 | |||||
Cash | 9,358 | |||||
Restricted cash (Note 1) | 8,530,000 | |||||
Forward currency contracts | 75,295 | |||||
Outstanding swap contracts, at value | 7,974 | |||||
Variation margin receivable | 44,090 | |||||
Non-interested Trustees' deferred compensation | 1,271 | |||||
Receivables: | ||||||
Investments sold | 814,847 | |||||
Fund shares sold | 127,002 | |||||
Dividends and interest on swap contracts | 13,826 | |||||
Dividends from affiliates | 4,013 | |||||
Foreign tax reclaims | 2,026 | |||||
Other assets | 135 | |||||
Total Assets |
|
| 72,085,848 |
| ||
Liabilities: | ||||||
Forward currency contracts | 63,652 | |||||
Outstanding swap contracts, at value | 516 | |||||
Variation margin payable | 182,626 | |||||
Payables: | — | |||||
Investments purchased | 100,267 | |||||
Advisory fees | 65,474 | |||||
Dividends and interest on swap contracts | 64,238 | |||||
Professional fees | 40,912 | |||||
Fund shares repurchased | 34,069 | |||||
Transfer agent fees and expenses | 2,818 | |||||
12b-1 Distribution and shareholder servicing fees | 2,621 | |||||
Non-interested Trustees' deferred compensation fees | 1,271 | |||||
Custodian fees | 768 | |||||
Fund administration fees | 598 | |||||
Non-interested Trustees' fees and expenses | 391 | |||||
Accrued expenses and other payables | 6,302 | |||||
Total Liabilities |
|
| 566,523 |
| ||
Net Assets |
| $ | 71,519,325 |
| ||
See Notes to Consolidated Financial Statements. | |
Janus Investment Fund | 11 |
Janus Henderson Diversified Alternatives Fund
Consolidated Statement of Assets and Liabilities
June 30, 2017
|
|
|
|
|
|
|
Net Assets Consist of: | ||||||
Capital (par value and paid-in surplus) | $ | 70,069,503 | ||||
Undistributed net investment income/(loss) | 551,752 | |||||
Undistributed net realized gain/(loss) from investments and foreign currency transactions | 906,493 | |||||
Unrealized net appreciation/(depreciation) of investments, foreign currency translations and non-interested Trustees’ deferred compensation | (8,423) | |||||
Total Net Assets |
| $ | 71,519,325 |
| ||
Net Assets - Class A Shares | $ | 2,296,659 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 226,076 | |||||
Net Asset Value Per Share(1) |
| $ | 10.16 |
| ||
Maximum Offering Price Per Share(2) |
| $ | 10.78 |
| ||
Net Assets - Class C Shares | $ | 2,070,793 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 208,329 | |||||
Net Asset Value Per Share(1) |
| $ | 9.94 |
| ||
Net Assets - Class D Shares | $ | 4,856,993 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 476,322 | |||||
Net Asset Value Per Share |
| $ | 10.20 |
| ||
Net Assets - Class I Shares | $ | 6,712,585 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 655,788 | |||||
Net Asset Value Per Share |
| $ | 10.24 |
| ||
Net Assets - Class N Shares | $ | 50,421,442 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 4,915,429 | |||||
Net Asset Value Per Share |
| $ | 10.26 |
| ||
Net Assets - Class S Shares | $ | 1,452,663 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 143,828 | |||||
Net Asset Value Per Share |
| $ | 10.10 |
| ||
Net Assets - Class T Shares | $ | 3,708,190 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 364,738 | |||||
Net Asset Value Per Share |
| $ | 10.17 |
| ||
(1) Redemption price per share may be reduced for any applicable contingent deferred sales charge. (2) Maximum offering price is computed at 100/94.25 of net asset value. |
See Notes to Consolidated Financial Statements. | |
12 | JUNE 30, 2017 |
Janus Henderson Diversified Alternatives Fund
Consolidated Statement of Operations
For the year ended June 30, 2017
|
|
|
|
|
|
Investment Income: | |||||
| Interest | $ | 233,076 | ||
Dividends from affiliates | 53,276 | ||||
Other income | 845 | ||||
Total Investment Income |
| 287,197 |
| ||
Expenses: | |||||
Advisory fees | 784,974 | ||||
12b-1Distribution and shareholder servicing fees: | |||||
Class A Shares | 6,874 | ||||
Class C Shares | 18,965 | ||||
Class S Shares | 3,582 | ||||
Transfer agent administrative fees and expenses: | |||||
Class D Shares | 5,598 | ||||
Class S Shares | 3,582 | ||||
Class T Shares | 6,441 | ||||
Transfer agent networking and omnibus fees: | |||||
Class A Shares | 471 | ||||
Class C Shares | 271 | ||||
Class I Shares | 1,922 | ||||
Other transfer agent fees and expenses: | |||||
Class A Shares | 325 | ||||
Class C Shares | 242 | ||||
Class D Shares | 1,394 | ||||
Class I Shares | 243 | ||||
Class N Shares | 1,716 | ||||
Class S Shares | 25 | ||||
Class T Shares | 59 | ||||
Registration fees | 111,416 | ||||
Professional fees | 53,637 | ||||
Shareholder reports expense | 24,277 | ||||
Custodian fees | 11,887 | ||||
Fund administration fees | 6,086 | ||||
Non-interested Trustees’ fees and expenses | 1,728 | ||||
Other expenses | 10,212 | ||||
Total Expenses |
| 1,055,927 |
| ||
Less: Excess Expense Reimbursement |
| (187,478) |
| ||
Net Expenses |
| 868,449 |
| ||
Net Investment Income/(Loss) |
| (581,252) |
| ||
Net Realized Gain/(Loss) on Investments: | |||||
Investments and foreign currency transactions | 312,833 | ||||
Futures contracts | 1,563,483 | ||||
Swap contracts | 3,560,646 | ||||
Total Net Realized Gain/(Loss) on Investments |
| 5,436,962 |
| ||
Change in Unrealized Net Appreciation/Depreciation: | |||||
Investments, foreign currency translations and non-interested Trustees’ deferred compensation | 2,911 | ||||
Futures contracts | (1,430,297) | ||||
Swap contracts | 34,579 | ||||
Total Change in Unrealized Net Appreciation/Depreciation |
| (1,392,807) |
| ||
Net Increase/(Decrease) in Net Assets Resulting from Operations | $ | 3,462,903 |
| ||
See Notes to Consolidated Financial Statements. | |
Janus Investment Fund | 13 |
Janus Henderson Diversified Alternatives Fund
Consolidated Statements of Changes in Net Assets
|
|
| Year ended |
| Year ended | |||
Operations: | ||||||||
Net investment income/(loss) | $ | (581,252) | $ | (739,199) | ||||
Net realized gain/(loss) on investments | 5,436,962 | (520,479) | ||||||
Change in unrealized net appreciation/depreciation | (1,392,807) | 1,558,179 | ||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations |
| 3,462,903 |
|
| 298,501 | |||
Dividends and Distributions to Shareholders: | ||||||||
Dividends from Net Investment Income | ||||||||
Class A Shares | (84,982) | — | ||||||
Class C Shares | (39,641) | — | ||||||
Class D Shares | (129,036) | — | ||||||
Class I Shares | (105,459) | — | ||||||
Class N Shares | (1,334,148) | — | ||||||
Class S Shares | (41,439) | — | ||||||
Class T Shares | (70,488) | — | ||||||
| Total Dividends from Net Investment Income |
| (1,805,193) |
|
| — | ||
Distributions from Net Realized Gain from Investment Transactions | ||||||||
Class A Shares | — | (27,536) | ||||||
Class C Shares | — | (17,384) | ||||||
Class D Shares | — | (32,440) | ||||||
Class I Shares | — | (20,092) | ||||||
Class N Shares | — | (480,219) | ||||||
Class S Shares | — | (13,463) | ||||||
Class T Shares | — | (15,000) | ||||||
| Total Distributions from Net Realized Gain from Investment Transactions | — |
|
| (606,134) | |||
Net Decrease from Dividends and Distributions to Shareholders |
| (1,805,193) |
|
| (606,134) | |||
Capital Share Transactions: | ||||||||
Class A Shares | (648,350) | 152,790 | ||||||
Class C Shares | 280,356 | 56,519 | ||||||
Class D Shares | (8,871) | 1,681,902 | ||||||
Class I Shares | 4,238,843 | 117,498 | ||||||
Class N Shares | 1,786,193 | (4,853,714) | ||||||
Class S Shares | 41,439 | 13,511 | ||||||
Class T Shares | 2,073,135 | (902,857) | ||||||
Net Increase/(Decrease) from Capital Share Transactions |
| 7,762,745 |
|
| (3,734,351) | |||
Net Increase/(Decrease) in Net Assets |
| 9,420,455 |
|
| (4,041,984) | |||
Net Assets: | ||||||||
Beginning of period | 62,098,870 | 66,140,854 | ||||||
| End of period | $ | 71,519,325 |
| $ | 62,098,870 | ||
Undistributed Net Investment Income/(Loss) | $ | 551,752 |
| $ | 786,597 | |||
See Notes to Consolidated Financial Statements. | |
14 | JUNE 30, 2017 |
Janus Henderson Diversified Alternatives Fund
Consolidated Financial Highlights
Class A Shares | ||||||||||||||||||
For a share outstanding during each year or period ended June 30 |
| 2017 |
|
| 2016 |
|
| 2015 |
|
| 2014 |
|
| 2013(1) |
| |||
Net Asset Value, Beginning of Period |
| $9.92 |
|
| $9.98 |
|
| $9.84 |
|
| $9.82 |
|
| $10.00 |
| |||
Income/(Loss) from Investment Operations: | ||||||||||||||||||
Net investment income/(loss) | (0.11)(2) | (0.14)(2) | (0.15)(2) | (0.13)(2) | (0.10) | |||||||||||||
Net realized and unrealized gain/(loss) | 0.63 | 0.18 | 0.37 | 0.15 | (0.08) | |||||||||||||
Total from Investment Operations |
| 0.52 |
|
| 0.04 |
|
| 0.22 |
|
| 0.02 |
|
| (0.18) |
| |||
Less Dividends and Distributions: | ||||||||||||||||||
Dividends (from net investment income) | (0.28) | — | — | — | — | |||||||||||||
Distributions (from capital gains) | — | (0.10) | (0.08) | — | — | |||||||||||||
Total Dividends and Distributions |
| (0.28) |
|
| (0.10) |
|
| (0.08) |
|
| — |
|
| — |
| |||
Net Asset Value, End of Period | $10.16 | $9.92 | $9.98 | $9.84 | $9.82 | |||||||||||||
Total Return* |
| 5.29% |
|
| 0.42% |
|
| 2.22% |
|
| 0.20% |
|
| (1.80)% |
| |||
Net Assets, End of Period (in thousands) | $2,297 | $2,882 | $2,740 | $4,055 | $3,523 | |||||||||||||
Average Net Assets for the Period (in thousands) | $2,737 | $2,730 | $2,048 | $3,752 | $3,557 | |||||||||||||
Ratios to Average Net Assets**: |
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|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses | 1.83% | 1.89% | 1.84% | 1.70% | 3.05% | |||||||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets) | 1.54% | 1.53% | 1.52% | 1.46% | 1.52% | |||||||||||||
Ratio of Net Investment Income/(Loss) | (1.13)% | (1.42)% | (1.51)% | (1.34)% | (1.36)% | |||||||||||||
Portfolio Turnover Rate | 16% | 0% | 0% | 59% | 38% | |||||||||||||
1 | ||||||||||||||||||
Class C Shares | ||||||||||||||||||
For a share outstanding during each year or period ended June 30 |
| 2017 |
|
| 2016 |
|
| 2015 |
|
| 2014 |
|
| 2013(1) |
| |||
Net Asset Value, Beginning of Period |
| $9.72 |
|
| $9.84 |
|
| $9.79 |
|
| $9.78 |
|
| $10.00 |
| |||
Income/(Loss) from Investment Operations: | ||||||||||||||||||
Net investment income/(loss) | (0.18)(2) | (0.21)(2) | (0.23)(2) | (0.15)(2) | (0.14) | |||||||||||||
Net realized and unrealized gain/(loss) | 0.61 | 0.19 | 0.36 | 0.16 | (0.08) | |||||||||||||
Total from Investment Operations |
| 0.43 |
|
| (0.02) |
|
| 0.13 |
|
| 0.01 |
|
| (0.22) |
| |||
Less Dividends and Distributions: | ||||||||||||||||||
Dividends (from net investment income) | (0.21) | — | — | — | — | |||||||||||||
Distributions (from capital gains) | — | (0.10) | (0.08) | — | — | |||||||||||||
Total Dividends and Distributions |
| (0.21) |
|
| (0.10) |
|
| (0.08) |
|
| — |
|
| — |
| |||
Net Asset Value, End of Period | $9.94 | $9.72 | $9.84 | $9.79 | $9.78 | |||||||||||||
Total Return* |
| 4.48% |
|
| (0.19)% |
|
| 1.31% |
|
| 0.10% |
|
| (2.20)% |
| |||
Net Assets, End of Period (in thousands) | $2,071 | $1,749 | $1,709 | $3,516 | $3,566 | |||||||||||||
Average Net Assets for the Period (in thousands) | $1,885 | $1,685 | $1,752 | $3,551 | $3,578 | |||||||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses | 2.56% | 2.63% | 2.59% | 1.89% | 3.92% | |||||||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets) | 2.29% | 2.27% | 2.26% | 1.64% | 2.27% | |||||||||||||
Ratio of Net Investment Income/(Loss) | (1.85)% | (2.15)% | (2.26)% | (1.52)% | (2.11)% | |||||||||||||
Portfolio Turnover Rate | 16% | 0% | 0% | 59% | 38% | |||||||||||||
* Total return not annualized for periods of less than one full year. ** Annualized for periods of less than one full year. (1) Period from December 28, 2012 (inception date) through June 30, 2013. (2) Per share amounts are calculated based on average shares outstanding during the year or period. |
See Notes to Consolidated Financial Statements. | |
Janus Investment Fund | 15 |
Janus Henderson Diversified Alternatives Fund
Consolidated Financial Highlights
Class D Shares | ||||||||||||||||||
For a share outstanding during each year or period ended June 30 |
| 2017 |
|
| 2016 |
|
| 2015 |
|
| 2014 |
|
| 2013(1) |
| |||
Net Asset Value, Beginning of Period |
| $9.96 |
|
| $10.00 |
|
| $9.85 |
|
| $9.82 |
|
| $10.00 |
| |||
Income/(Loss) from Investment Operations: | ||||||||||||||||||
Net investment income/(loss) | (0.10)(2) | (0.13)(2) | (0.14)(2) | (0.13)(2) | (0.08) | |||||||||||||
Net realized and unrealized gain/(loss) | 0.63 | 0.19 | 0.37 | 0.16 | (0.10) | |||||||||||||
Total from Investment Operations |
| 0.53 |
|
| 0.06 |
|
| 0.23 |
|
| 0.03 |
|
| (0.18) |
| |||
Less Dividends and Distributions: | ||||||||||||||||||
Dividends (from net investment income) | (0.29) | — | — | — | — | |||||||||||||
Distributions (from capital gains) | — | (0.10) | (0.08) | — | — | |||||||||||||
Total Dividends and Distributions |
| (0.29) |
|
| (0.10) |
|
| (0.08) |
|
| — |
|
| — |
| |||
Net Asset Value, End of Period | $10.20 | $9.96 | $10.00 | $9.85 | $9.82 | |||||||||||||
Total Return* |
| 5.38% |
|
| 0.62% |
|
| 2.32% |
|
| 0.31% |
|
| (1.80)% |
| |||
Net Assets, End of Period (in thousands) | $4,857 | $4,758 | $3,060 | $6,170 | $6,008 | |||||||||||||
Average Net Assets for the Period (in thousands) | $4,638 | $3,829 | $3,281 | $5,964 | $4,995 | |||||||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses | 1.87% | 2.05% | 1.96% | 1.66% | 3.20% | |||||||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets) | 1.41% | 1.42% | 1.43% | 1.41% | 1.39% | |||||||||||||
Ratio of Net Investment Income/(Loss) | (0.97)% | (1.30)% | (1.42)% | (1.28)% | (1.23)% | |||||||||||||
Portfolio Turnover Rate | 16% | 0% | 0% | 59% | 38% | |||||||||||||
Class I Shares | ||||||||||||||||||
For a share outstanding during each year or period ended June 30 |
| 2017 |
|
| 2016 |
|
| 2015 |
|
| 2014 |
|
| 2013(1) |
| |||
Net Asset Value, Beginning of Period |
| $10.00 |
|
| $10.02 |
|
| $9.87 |
|
| $9.83 |
|
| $10.00 |
| |||
Income/(Loss) from Investment Operations: | ||||||||||||||||||
Net investment income/(loss) | (0.08)(2) | (0.11)(2) | (0.13)(2) | (0.11)(2) | (0.08) | |||||||||||||
Net realized and unrealized gain/(loss) | 0.63 | 0.19 | 0.36 | 0.15 | (0.09) | |||||||||||||
Total from Investment Operations |
| 0.55 |
|
| 0.08 |
|
| 0.23 |
|
| 0.04 |
|
| (0.17) |
| |||
Less Dividends and Distributions: | ||||||||||||||||||
Dividends (from net investment income) | (0.31) | — | — | — | — | |||||||||||||
Distributions (from capital gains) | — | (0.10) | (0.08) | — | — | |||||||||||||
Total Dividends and Distributions |
| (0.31) |
|
| (0.10) |
|
| (0.08) |
|
| — |
|
| — |
| |||
Net Asset Value, End of Period | $10.24 | $10.00 | $10.02 | $9.87 | $9.83 | |||||||||||||
Total Return* |
| 5.51% |
|
| 0.82% |
|
| 2.32% |
|
| 0.41% |
|
| (1.70)% |
| |||
Net Assets, End of Period (in thousands) | $6,713 | $2,383 | $2,265 | $5,727 | $6,464 | |||||||||||||
Average Net Assets for the Period (in thousands) | $4,396 | $2,318 | $2,586 | $6,201 | $5,751 | |||||||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses | 1.55% | 1.63% | 1.59% | 1.50% | 2.58% | |||||||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets) | 1.31% | 1.27% | 1.26% | 1.25% | 1.27% | |||||||||||||
Ratio of Net Investment Income/(Loss) | (0.81)% | (1.16)% | (1.26)% | (1.13)% | (1.10)% | |||||||||||||
Portfolio Turnover Rate | 16% | 0% | 0% | 59% | 38% | |||||||||||||
* Total return not annualized for periods of less than one full year. ** Annualized for periods of less than one full year. (1) Period from December 28, 2012 (inception date) through June 30, 2013. (2) Per share amounts are calculated based on average shares outstanding during the year or period. |
See Notes to Consolidated Financial Statements. | |
16 | JUNE 30, 2017 |
Janus Henderson Diversified Alternatives Fund
Consolidated Financial Highlights
Class N Shares | ||||||||||||||||||
For a share outstanding during each year or period ended June 30 |
| 2017 |
|
| 2016 |
|
| 2015 |
|
| 2014 |
|
| 2013(1) |
| |||
Net Asset Value, Beginning of Period |
| $10.01 |
|
| $10.04 |
|
| $9.87 |
|
| $9.83 |
|
| $10.00 |
| |||
Income/(Loss) from Investment Operations: | ||||||||||||||||||
Net investment income/(loss) | (0.08)(2) | (0.11)(2) | (0.13)(2) | (0.11)(2) | (0.05) | |||||||||||||
Net realized and unrealized gain/(loss) | 0.63 | 0.18 | 0.38 | 0.15 | (0.12) | |||||||||||||
Total from Investment Operations |
| 0.55 |
|
| 0.07 |
|
| 0.25 |
|
| 0.04 |
|
| (0.17) |
| |||
Less Dividends and Distributions: | ||||||||||||||||||
Dividends (from net investment income) | (0.30) | — | — | — | — | |||||||||||||
Distributions (from capital gains) | — | (0.10) | (0.08) | — | — | |||||||||||||
Total Dividends and Distributions |
| (0.30) |
|
| (0.10) |
|
| (0.08) |
|
| — |
|
| — |
| |||
Net Asset Value, End of Period | $10.26 | $10.01 | $10.04 | $9.87 | $9.83 | |||||||||||||
Total Return* |
| 5.58% |
|
| 0.72% |
|
| 2.52% |
|
| 0.41% |
|
| (1.70)% |
| |||
Net Assets, End of Period (in thousands) | $50,421 | $47,367 | $52,478 | $57,190 | $57,935 | |||||||||||||
Average Net Assets for the Period (in thousands) | $47,482 | $48,364 | $54,416 | $57,130 | $30,839 | |||||||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses | 1.53% | 1.62% | 1.60% | 1.49% | 1.84% | |||||||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets) | 1.26% | 1.25% | 1.25% | 1.25% | 1.25% | |||||||||||||
Ratio of Net Investment Income/(Loss) | (0.83)% | (1.14)% | (1.24)% | (1.13)% | (1.06)% | |||||||||||||
Portfolio Turnover Rate | 16% | 0% | 0% | 59% | 38% | |||||||||||||
Class S Shares | ||||||||||||||||||
For a share outstanding during each year or period ended June 30 |
| 2017 |
|
| 2016 |
|
| 2015 |
|
| 2014 |
|
| 2013(1) |
| |||
Net Asset Value, Beginning of Period |
| $9.89 |
|
| $9.92 |
|
| $9.82 |
|
| $9.81 |
|
| $10.00 |
| |||
Income/(Loss) from Investment Operations: | ||||||||||||||||||
Net investment income/(loss) | (0.12)(2) | (0.12)(2) | (0.18)(2) | (0.14)(2) | (0.11) | |||||||||||||
Net realized and unrealized gain/(loss) | 0.63 | 0.19 | 0.36 | 0.15 | (0.08) | |||||||||||||
Total from Investment Operations |
| 0.51 |
|
| 0.07 |
|
| 0.18 |
|
| 0.01 |
|
| (0.19) |
| |||
Less Dividends and Distributions: | ||||||||||||||||||
Dividends (from net investment income) | (0.30) | — | — | — | — | |||||||||||||
Distributions (from capital gains) | — | (0.10) | (0.08) | — | — | |||||||||||||
Total Dividends and Distributions |
| (0.30) |
|
| (0.10) |
|
| (0.08) |
|
| — |
|
| — |
| |||
Net Asset Value, End of Period | $10.10 | $9.89 | $9.92 | $9.82 | $9.81 | |||||||||||||
Total Return* |
| 5.17% |
|
| 0.72% |
|
| 1.82% |
|
| 0.10% |
|
| (1.90)% |
| |||
Net Assets, End of Period (in thousands) | $1,453 | $1,381 | $1,371 | $3,506 | $3,502 | |||||||||||||
Average Net Assets for the Period (in thousands) | $1,425 | $1,340 | $1,578 | $3,492 | $3,548 | |||||||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses | 2.04% | 2.12% | 2.07% | 1.95% | 3.19% | |||||||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets) | 1.64% | 1.33% | 1.75% | 1.58% | 1.76% | |||||||||||||
Ratio of Net Investment Income/(Loss) | (1.21)% | (1.22)% | (1.74)% | (1.46)% | (1.60)% | |||||||||||||
Portfolio Turnover Rate | 16% | 0% | 0% | 59% | 38% | |||||||||||||
* Total return not annualized for periods of less than one full year. ** Annualized for periods of less than one full year. (1) Period from December 28, 2012 (inception date) through June 30, 2013. (2) Per share amounts are calculated based on average shares outstanding during the year or period. |
See Notes to Consolidated Financial Statements. | |
Janus Investment Fund | 17 |
Janus Henderson Diversified Alternatives Fund
Consolidated Financial Highlights
Class T Shares | ||||||||||||||||||
For a share outstanding during each year or period ended June 30 |
| 2017 |
|
| 2016 |
|
| 2015 |
|
| 2014 |
|
| 2013(1) |
| |||
Net Asset Value, Beginning of Period |
| $9.95 |
|
| $9.98 |
|
| $9.85 |
|
| $9.82 |
|
| $10.00 |
| |||
Income/(Loss) from Investment Operations: | ||||||||||||||||||
Net investment income/(loss) | (0.10)(2) | (0.10)(2) | (0.15)(2) | (0.13)(2) | (0.11) | |||||||||||||
Net realized and unrealized gain/(loss) | 0.63 | 0.17 | 0.36 | 0.16 | (0.07) | |||||||||||||
Total from Investment Operations |
| 0.53 |
|
| 0.07 |
|
| 0.21 |
|
| 0.03 |
|
| (0.18) |
| |||
Less Dividends and Distributions: | ||||||||||||||||||
Dividends (from net investment income) | (0.31) | — | — | — | — | |||||||||||||
Distributions (from capital gains) | — | (0.10) | (0.08) | — | — | |||||||||||||
Total Dividends and Distributions |
| (0.31) |
|
| (0.10) |
|
| (0.08) |
|
| — |
|
| — |
| |||
Net Asset Value, End of Period | $10.17 | $9.95 | $9.98 | $9.85 | $9.82 | |||||||||||||
Total Return* |
| 5.39% |
|
| 0.72% |
|
| 2.12% |
|
| 0.31% |
|
| (1.80)% |
| |||
Net Assets, End of Period (in thousands) | $3,708 | $1,579 | $2,517 | $3,809 | $3,772 | |||||||||||||
Average Net Assets for the Period (in thousands) | $2,556 | $1,689 | $2,162 | $3,773 | $4,004 | |||||||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses | 1.77% | 1.87% | 1.83% | 1.75% | 2.94% | |||||||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets) | 1.45% | 1.18% | 1.51% | 1.40% | 1.51% | |||||||||||||
Ratio of Net Investment Income/(Loss) | (0.97)% | (1.08)% | (1.50)% | (1.28)% | (1.36)% | |||||||||||||
Portfolio Turnover Rate | 16% | 0% | 0% | 59% | 38% | |||||||||||||
* Total return not annualized for periods of less than one full year. ** Annualized for periods of less than one full year. (1) Period from December 28, 2012 (inception date) through June 30, 2013. (2) Per share amounts are calculated based on average shares outstanding during the year or period. |
See Notes to Consolidated Financial Statements. | |
18 | JUNE 30, 2017 |
Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Financial Statements
1. Organization and Significant Accounting Policies
Janus Henderson Diversified Alternatives Fund (formerly named Janus Diversified Alternatives Fund) (the “Fund”) is a series of Janus Investment Fund (the “Trust”), which is organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company, and therefore has applied the specialized accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946. The Trust offers 50 funds which include multiple series of shares, with differing investment objectives and policies. The Fund seeks absolute return with low correlation to stocks and bonds. The Fund is classified as diversified, as defined in the 1940 Act.
The Fund offers multiple classes of shares in order to meet the needs of various types of investors. Each class represents an interest in the same portfolio of investments. Certain financial intermediaries may not offer all classes of shares. Class D Shares are closed to certain new investors.
Class A Shares and Class C Shares are generally offered through financial intermediary platforms including, but not limited to, traditional brokerage platforms, mutual fund wrap fee programs, bank trust platforms, and retirement platforms.
Class D Shares are generally no longer being made available to new investors who do not already have a direct account with the Janus Henderson funds. Class D Shares are available only to investors who hold accounts directly with the Janus Henderson funds, to immediate family members or members of the same household of an eligible individual investor, and to existing beneficial owners of sole proprietorships or partnerships that hold accounts directly with the Janus Henderson funds.
Class I Shares are available through certain financial intermediary platforms including, but not limited to, mutual fund wrap fee programs, managed account programs, asset allocation programs, bank trust platforms, as well as certain retirement platforms. Class I Shares are also available to certain direct institutional investors including, but not limited to, corporations, certain retirement plans, public plans, and foundations/endowments.
Class N Shares are generally available only to financial intermediaries purchasing on behalf of 401(k) plans, 457 plans, 403(b) plans, Taft-Hartley multi-employer plans, profit-sharing and money purchase pension plans, defined benefit plans and certain welfare benefit plans, such as health savings accounts, and nonqualified deferred compensation plans. Class N Shares are also available to Janus proprietary products.
Class S Shares are offered through financial intermediary platforms including, but not limited to, retirement platforms and asset allocation, mutual fund wrap, or other discretionary or nondiscretionary fee-based investment advisory programs. In addition, Class S Shares may be available through certain financial intermediaries who have an agreement with Janus Capital Management LLC (“Janus Capital”) or its affiliates to offer Class S Shares on their supermarket platforms.
Class T Shares are available through certain financial intermediary platforms including, but not limited to, mutual fund wrap fee programs, managed account programs, asset allocation programs, bank trust platforms, as well as certain retirement platforms. In addition, Class T Shares may be available through certain financial intermediaries who have an agreement with Janus Capital or its affiliates to offer Class T Shares on their supermarket platforms.
Investment in Subsidiary
To qualify as a regulated investment company under the Internal Revenue Code of 1986, as amended (the “Code”), 90% of the Fund’s income must be from certain qualified sources. Direct investment in many commodities-related investments generates income that is not from a qualifying source for purposes of meeting this 90% test. The Fund will seek to gain exposure to the commodity markets, in whole or in part, through investments in the Janus Diversified Alternatives Subsidiary, Ltd., a wholly-owned subsidiary of the Fund (”Subsidiary”) organized under the laws of the Cayman Islands, which is generally subject to the same investment policies and restrictions as the Fund. The Subsidiary may invest without limitation in commodity index-linked swaps, commodity futures, commodity swaps, commodity-linked notes, and other commodity-linked derivative instruments. The Subsidiary may also invest in fixed-income securities and other investments which may serve as margin or collateral for the Subsidiary’s derivatives positions. The Fund may invest 25% or less of its total assets in the Subsidiary. Income or net capital gains from the Fund’s investment in the Subsidiary would be treated as ordinary income to the Fund. Janus Capital is the adviser to the Subsidiary. The
Janus Investment Fund | 19 |
Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Financial Statements
Subsidiary will not be subject to U.S. laws (including securities laws) and their protections. The Subsidiary is subject to the laws of a foreign jurisdiction, which can be affected by developments in that jurisdiction.
By investing in the Subsidiary, the Fund will be indirectly exposed to the risks associated with the Subsidiary’s investments, which are generally similar to those that are permitted to be held by the Fund. The Subsidiary is not registered under the 1940 Act, and is not subject to all of the provisions of the 1940 Act. The IRS has previously issued a number of private letter rulings to mutual funds (but not the Fund) in which it ruled that income from a fund’s investment in a wholly-owned foreign subsidiary that invests in commodity-linked derivatives, such as the Subsidiary, constitutes qualifying income. The IRS has suspended issuance of any further private letter rulings pending a review of its position. A change in the IRS’ position or changes in the laws of the United States and/or the Cayman Islands could result in the inability of the Fund and/or the Subsidiary to operate and could adversely affect the Fund. In particular, unfavorable treatment of the income derived from the Fund’s investment in the Subsidiary could jeopardize the Fund’s status as a regulated investment company under the Code, which in turn may subject the Fund to higher tax rates and/or penalties. Additionally, the Commodity Futures Trading Commission (“CFTC”) adopted changes to Rule 4.5 under the Commodity Exchange Act in 2012 that required Janus Capital to register with the CFTC, and operation of the Fund and Subsidiary is subject to certain CFTC rules and regulations. Existing or new CFTC regulation may increase the costs of implementing the Fund’s strategies, which could negatively affect the Fund’s returns.
The Subsidiary was incorporated on December 28, 2012 as a wholly-owned subsidiary of Janus Diversified Alternatives Fund. As of June 30, 2017, the Fund owns 863,169 shares of the Subsidiary, with a market value of $12,407,718. This represents 17% of the Fund’s net assets. The Fund’s Consolidated Schedule of Investments, Consolidated Statement of Assets and Liabilities, Consolidated Statement of Operations, Consolidated Statements of Changes in Net Assets, and Consolidated Financial Highlights include the accounts of both the Fund and the Subsidiary. All inter-company transactions and balances have been eliminated in consolidation.
As of June 30, 2017, Subsidiary information included in the Consolidated Financial Statements is as follows:
Net assets | $ 12,407,718 |
Market value of investments | 3,990,662 |
Net income/(loss) | 26,921 |
Net realized gain/(loss) | 2,160,858 |
Net change in unrealized appreciation/depreciation | (982,929) |
The following accounting policies have been followed by the Fund and are in conformity with accounting principles generally accepted in the United States of America.
Investment Valuation
Securities held by the Fund are valued in accordance with policies and procedures established by and under the supervision of the Trustees (the “Valuation Procedures”). Equity securities traded on a domestic securities exchange are generally valued at the closing prices on the primary market or exchange on which they trade. If such price is lacking for the trading period immediately preceding the time of determination, such securities are valued at their current bid price. Equity securities that are traded on a foreign exchange are generally valued at the closing prices on such markets. In the event that there is no current trading volume on a particular security in such foreign exchange, the bid price from the primary exchange is generally used to value the security. Securities that are traded on the over-the-counter (“OTC”) markets are generally valued at their closing or latest bid prices as available. Foreign securities and currencies are converted to U.S. dollars using the applicable exchange rate in effect at the close of the New York Stock Exchange (“NYSE”). The Fund will determine the market value of individual securities held by it by using prices provided by one or more approved professional pricing services or, as needed, by obtaining market quotations from independent broker-dealers. Most debt securities are valued in accordance with the evaluated bid price supplied by the pricing service that is intended to reflect market value. The evaluated bid price supplied by the pricing service is an evaluation that may consider factors such as security prices, yields, maturities and ratings. Certain short-term securities maturing within 60 days or less may be evaluated and valued on an amortized cost basis provided that the amortized cost determined approximates market value. Securities for which market quotations or evaluated prices are not readily available or deemed unreliable are valued at fair value determined in good faith under the Valuation Procedures. Circumstances in which fair value pricing may be utilized include, but are not limited to: (i) a significant event that may affect the securities of a single issuer, such as a merger, bankruptcy, or significant issuer-specific development; (ii) an event that may affect
20 | JUNE 30, 2017 |
Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Financial Statements
an entire market, such as a natural disaster or significant governmental action; (iii) a nonsignificant event such as a market closing early or not opening, or a security trading halt; and (iv) pricing of a nonvalued security and a restricted or nonpublic security. Special valuation considerations may apply with respect to “odd-lot” fixed-income transactions which, due to their small size, may receive evaluated prices by pricing services which reflect a large block trade and not what actually could be obtained for the odd-lot position. The Fund uses systematic fair valuation models provided by independent third parties to value international equity securities in order to adjust for stale pricing, which may occur between the close of certain foreign exchanges and the close of the NYSE.
Information on the valuation of certain derivatives is contained in Note 2 below.
Valuation Inputs Summary
FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value, and expands disclosure requirements regarding fair value measurements. This standard emphasizes that fair value is a market-based measurement that should be determined based on the assumptions that market participants would use in pricing an asset or liability and establishes a hierarchy that prioritizes inputs to valuation techniques used to measure fair value. These inputs are summarized into three broad levels:
Level 1 – Unadjusted quoted prices in active markets the Fund has the ability to access for identical assets or liabilities.
Level 2 – Observable inputs other than unadjusted quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
Assets or liabilities categorized as Level 2 in the hierarchy generally include: debt securities fair valued in accordance with the evaluated bid or ask prices supplied by a pricing service; securities traded on OTC markets and listed securities for which no sales are reported that are fair valued at the latest bid price (or yield equivalent thereof) obtained from one or more dealers transacting in a market for such securities or by a pricing service approved by the Fund’s Trustees; certain short-term debt securities with maturities of 60 days or less that are fair valued at amortized cost; and equity securities of foreign issuers whose fair value is determined by using systematic fair valuation models provided by independent third parties in order to adjust for stale pricing which may occur between the close of certain foreign exchanges and the close of the NYSE. Other securities that may be categorized as Level 2 in the hierarchy include, but are not limited to, preferred stocks, bank loans, swaps, investments in unregistered investment companies, options, and forward contracts.
Level 3 – Unobservable inputs for the asset or liability to the extent that relevant observable inputs are not available, representing the Fund’s own assumptions about the assumptions that a market participant would use in valuing the asset or liability, and that would be based on the best information available.
There have been no significant changes in valuation techniques used in valuing any such positions held by the Fund since the beginning of the fiscal year.
The inputs or methodology used for fair valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of inputs used as of June 30, 2017 to fair value the Fund’s investments in securities and other financial instruments is included in the “Valuation Inputs Summary” in the Notes to Consolidated Schedule of Investments and Other Information.
There were no transfers between Level 1, Level 2 and Level 3 of the fair value hierarchy during the year. The Fund recognizes transfers between the levels as of the beginning of the fiscal year.
Investment Transactions and Investment Income
Investment transactions are accounted for as of the date purchased or sold (trade date). Dividend income is recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded as soon as the Fund is informed of the dividend, if such information is obtained subsequent to the ex-dividend date. Dividends from foreign securities may be subject to withholding taxes in foreign jurisdictions. Interest income is recorded on the accrual basis and includes amortization of premiums and accretion of discounts. 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, both realized and
Janus Investment Fund | 21 |
Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Financial Statements
unrealized, 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
The Fund bears expenses incurred specifically on its behalf. Each class of shares bears a portion of general expenses, which 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. Additionally, the Fund, as a shareholder in the Subsidiary, will also indirectly bear its pro rata share of the expenses incurred by the Subsidiary.
Estimates
The preparation of consolidated 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 consolidated financial statements, and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
Indemnifications
In the normal course of business, the Fund may enter into contracts that contain provisions for indemnification of other parties against certain potential liabilities. The Fund’s maximum exposure under these arrangements is unknown, and would involve future claims that may be made against the Fund that have not yet occurred. Currently, the risk of material loss from such claims is considered remote.
Foreign Currency Translations
The Fund does not isolate that portion of the results of operations resulting from the effect of changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held at the date of the consolidated financial statements. Net unrealized appreciation or depreciation of investments and foreign currency translations arise from changes in the value of assets and liabilities, including investments in securities held at the date of the consolidated financial statements, resulting from changes in the exchange rates and changes in market prices of securities held.
Currency gains and losses are also calculated on payables and receivables that are denominated in foreign currencies. The payables and receivables are generally related to foreign security transactions and income translations.
Foreign currency-denominated assets and forward currency contracts may involve more risks than domestic transactions, including currency risk, counterparty risk, political and economic risk, regulatory risk and equity risk. Risks may arise from unanticipated movements in the value of foreign currencies relative to the U.S. dollar.
Dividends and Distributions
The Fund generally declares and distributes dividends of net investment income and realized capital gains (if any) annually. The Fund may treat a portion of the amount paid to redeem shares as a distribution of investment company taxable income and realized capital gains that are reflected in the net asset value. This practice, commonly referred to as “equalization,” has no effect on the redeeming shareholder or the Fund’s total return, but may reduce the amounts that would otherwise be required to be paid as taxable dividends to the remaining shareholders. It is possible that the Internal Revenue Service (IRS) could challenge the Fund's equalization methodology or calculations, and any such challenge could result in additional tax, interest, or penalties to be paid by the Fund.
Federal Income Taxes
The Fund intends to continue to qualify as a regulated investment company and distribute all of its taxable income in accordance with the requirements of Subchapter M of the Internal Revenue Code. Management has analyzed the Fund’s tax positions taken for all open federal income tax years, generally a three-year period, and has concluded that no provision for federal income tax is required in the Fund’s consolidated financial statements. The Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Restricted Cash
As of June 30, 2017, the Fund has restricted cash in the amount of $8,530,000. The restricted cash represents collateral pledged in relation to derivatives and/or securities with extended settlement dates. The carrying value of the restricted cash approximates fair value.
22 | JUNE 30, 2017 |
Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Financial Statements
2. Derivative Instruments
The Fund may invest in various types of derivatives, which may at times result in significant derivative exposure. A derivative is a financial instrument whose performance is derived from the performance of another asset. The Fund may invest in derivative instruments including, but not limited to: futures contracts, put options, call options, options on future contracts, options on foreign currencies, options on recovery locks, options on security and commodity indices, swaps, forward contracts, structured investments, and other equity-linked derivatives. Each derivative instrument that was held by the Fund during the year ended June 30, 2017 is discussed in further detail below. A summary of derivative activity by the Fund is reflected in the tables at the end of this section.
The Fund may use derivative instruments for hedging purposes (to offset risks associated with an investment, currency exposure, or market conditions), to adjust currency exposure relative to a benchmark index, or for speculative purposes (to earn income and seek to enhance returns). When the Fund invests in a derivative for speculative purposes, the Fund will be fully exposed to the risks of loss of that derivative, which may sometimes be greater than the derivative’s cost. The Fund may not use any derivative to gain exposure to an asset or class of assets that it would be prohibited by its investment restrictions from purchasing directly. The Fund’s ability to use derivative instruments may also be limited by tax considerations.
Investments in derivatives in general are subject to market risks that may cause their prices to fluctuate over time. Investments in derivatives may not directly correlate with the price movements of the underlying instrument. As a result, the use of derivatives may expose the Fund to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. The use of derivatives may result in larger losses or smaller gains than otherwise would be the case. Derivatives can be volatile and may involve significant risks.
In pursuit of its investment objective, the Fund may seek to use derivatives to increase or decrease exposure to the following market risk factors:
· Commodity Risk – the risk related to the change in value of commodities or commodity-linked investments due to changes in the overall market movements, volatility of the underlying benchmark, changes in interest rates, or other factors affecting a particular industry of commodity such as drought, floods, weather, livestock disease, embargoes, tariffs, and international economic, political, and regulatory developments.
· Counterparty Risk – the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable to honor its financial obligation to the Fund.
· Credit Risk – the risk an issuer will be unable to make principal and interest payments when due, or will default on its obligations.
· Currency Risk – the risk that changes in the exchange rate between currencies will adversely affect the value (in U.S. dollar terms) of an investment.
· Equity Risk – the risk related to the change in value of equity securities as they relate to increases or decreases in the general market.
· Index Risk – if the derivative is linked to the performance of an index, it will be subject to the risks associated with changes in that index. If the index changes, the Fund could receive lower interest payments or experience a reduction in the value of the derivative to below what the Fund paid. Certain indexed securities, including inverse securities (which move in an opposite direction to the index), may create leverage, to the extent that they increase or decrease in value at a rate that is a multiple of the changes in the applicable index.
· Interest Rate Risk – the risk that the value of fixed-income securities will generally decline as prevailing interest rates rise, which may cause the Fund’s NAV to likewise decrease.
· Leverage Risk – the risk associated with certain types of leveraged investments or trading strategies pursuant to which relatively small market movements may result in large changes in the value of an investment. The Fund creates leverage by investing in instruments, including derivatives, where the investment loss can exceed the original amount invested. Certain investments or trading strategies, such as short sales, that involve leverage can result in losses that greatly exceed the amount originally invested.
· Liquidity Risk – the risk that certain securities may be difficult or impossible to sell at the time that the seller would like or at the price that the seller believes the security is currently worth.
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Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Financial Statements
Derivatives may generally be traded OTC or on an exchange. Derivatives traded OTC are agreements that are individually negotiated between parties and can be tailored to meet a purchaser’s needs. OTC derivatives are not guaranteed by a clearing agency and may be subject to increased credit risk.
In an effort to mitigate credit risk associated with derivatives traded OTC, the Fund may enter into collateral agreements with certain counterparties whereby, subject to certain minimum exposure requirements, the Fund may require the counterparty to post collateral if the Fund has a net aggregate unrealized gain on all OTC derivative contracts with a particular counterparty. There is no guarantee that counterparty exposure is reduced and these arrangements are dependent on Janus Capital’s ability to establish and maintain appropriate systems and trading.
Commodity-Linked Investments
The Fund may invest in commodity index-linked swap agreements, commodity options and futures, and options on futures that provide exposure to the investment returns of the commodities markets. The Fund may also invest in other commodity-linked derivative instruments, such as commodity-linked notes (“structured notes”). The Fund will seek to gain exposure to the commodity markets, in whole or in part, through investments in the Subsidiary which is generally subject to the same investment policies and restrictions as the Fund. The Subsidiary invests in commodity-linked investments and other investments which may serve as margin or collateral for the Subsidiary’s derivative positions. Such exposure may subject the Fund to greater volatility than investments in traditional securities. The value of a given commodity-linked derivative investment typically is based upon the price movements of a physical commodity (such as heating oil, livestock, or agricultural products), a commodity futures contract or commodity index, or some other readily measurable economic variable. The value of commodity-linked derivative instruments may therefore be affected by changes in overall market movements, volatility of the underlying benchmark, changes in interest rates, or other factors affecting a particular industry or commodity such as drought, floods, weather, livestock disease, embargoes, tariffs, and international economic, political, and regulatory developments.
Forward Foreign Currency Exchange Contracts
A forward foreign currency exchange contract (“forward currency contract”) is an obligation to buy or sell a specified currency at a future date at a negotiated rate (which may be U.S. dollars or a foreign currency). The Fund may enter into forward currency contracts for hedging purposes, including, but not limited to, reducing exposure to changes in foreign currency exchange rates on foreign portfolio holdings and locking in the U.S. dollar cost of firm purchase and sale commitments for securities denominated in or exposed to foreign currencies. The Fund may also invest in forward currency contracts for nonhedging purposes such as seeking to enhance returns. The Fund is subject to currency risk and counterparty risk in the normal course of pursuing its investment objective through its investments in forward currency contracts.
Forward currency contracts are valued by converting the foreign value to U.S. dollars by using the current spot U.S. dollar exchange rate and/or forward rate for that currency. Exchange and forward rates as of the close of the NYSE shall be used to value the forward currency contracts. The unrealized appreciation/(depreciation) for forward currency contracts is reported in the Consolidated Statement of Assets and Liabilities as a receivable or payable and in the Consolidated Statement of Operations for the change in unrealized net appreciation/depreciation (if applicable). 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 a forward currency contract is reported on the Consolidated Statement of Operations (if applicable).
During the year, the Fund entered into forward currency contracts with the obligation to purchase foreign currencies in the future at an agreed upon rate in order to take a positive outlook on the related currency. These forward contracts seek to increase exposure to currency risk.
During the year, the Fund entered into forward currency contracts with the obligation to sell foreign currencies in the future at an agreed upon rate in order to take a negative outlook on the related currency. These forward contracts seek to increase exposure to currency risk.
During the year ended June 30, 2017, the average ending monthly currency value amounts on purchased and sold forward currency contracts are $5,622,122 and $7,335,846, respectively.
Futures Contracts
A futures contract is an exchange-traded agreement to take or make delivery of an underlying asset at a specific time in the future for a specific predetermined negotiated price. The Fund may enter into futures contracts to gain exposure
24 | JUNE 30, 2017 |
Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Financial Statements
to the stock market or other markets pending investment of cash balances or to meet liquidity needs. The Fund is subject to interest rate risk, equity risk, and currency risk in the normal course of pursuing its investment objective through its investments in futures contracts. The Fund may also use such derivative instruments to hedge or protect from adverse movements in securities prices, currency rates or interest rates. The use of futures contracts may involve risks such as the possibility of illiquid markets or imperfect correlation between the values of the contracts and the underlying securities, or that the counterparty will fail to perform its obligations.
Futures contracts on commodities are valued at the settlement price on valuation date on the commodities exchange as reported by an approved vendor. Mini contracts, as defined in the description of the contract, shall be valued using the Actual Settlement Price or “ASET” price type as reported by an approved vendor. In the event that foreign futures trade when the foreign equity markets are closed, the last foreign futures trade price shall be used. Futures contracts are marked-to-market daily, and the daily variation margin is recorded as a receivable or payable on the Consolidated Statement of Assets and Liabilities (if applicable). The change in unrealized net appreciation/depreciation is reported on the Consolidated Statement of Operations (if applicable). When a contract is closed, a realized gain or loss is reported on the Consolidated Statement of Operations (if applicable), equal to the difference between the opening and closing value of the contract. Securities held by the Fund that are designated as collateral for market value on futures contracts are noted on the Consolidated Schedule of Investments (if applicable). Such collateral is in the possession of the Fund’s futures commission merchant.
With futures, there is minimal counterparty credit risk to the Fund since futures are exchange-traded and the exchange’s clearinghouse, as counterparty to all exchange-traded futures, guarantees the futures against default.
During the year, the Fund purchased interest rate futures to increase exposure to interest rate risk.
During the year, the Fund sold interest rate futures to decrease exposure to interest rate risk.
During the year, the Fund purchased commodity futures to increase exposure to commodity risk.
During the year, the Fund sold commodity futures to decrease exposure to commodity risk.
During the year, the Fund purchased futures on equity indices to increase exposure to equity risk.
During the year, the Fund purchased futures on currency indices to increase exposure to currency risk.
During the year, the Fund sold futures on currency indices to decrease exposure to currency risk.
During the year ended June 30, 2017, the average ending monthly market value amounts on purchased and sold futures contracts are $37,060,519 and $24,053,435, respectively.
Swaps
Swap agreements are two-party contracts entered into primarily by institutional investors for periods ranging from a day to more than one year to exchange one set of cash flows for another. The most significant factor in the performance of swap agreements is the change in value of the specific index, security, or currency, or other factors that determine the amounts of payments due to and from the Fund. The use of swaps is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. Swap transactions may in some instances involve the delivery of securities or other underlying assets by the Fund or its counterparty to collateralize obligations under the swap. If the other party to a swap that is not collateralized defaults, the Fund would risk the loss of the net amount of the payments that it contractually is entitled to receive. Swap agreements entail the risk that a party will default on its payment obligations to the Fund. If the other party to a swap defaults, the Fund would risk the loss of the net amount of the payments that it contractually is entitled to receive. If the Fund utilizes a swap at the wrong time or judges market conditions incorrectly, the swap may result in a loss to the Fund and reduce the Fund’s total return.
Swap agreements also bear the risk that the Fund will not be able to meet its obligation to the counterparty. Swap agreements are typically privately negotiated and entered into in the OTC market. However, certain swap agreements are required to be cleared through a clearinghouse and traded on an exchange or swap execution facility. Swaps that are required to be cleared are required to post initial and variation margins in accordance with the exchange requirements. Regulations enacted require the Fund to centrally clear certain interest rate and credit default index swaps through a clearinghouse or central counterparty (“CCP”). To clear a swap with a CCP, the Fund will submit the swap to, and post collateral with, a futures clearing merchant (“FCM”) that is a clearinghouse member. Alternatively, the
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Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Financial Statements
Fund may enter into a swap with a financial institution other than the FCM (the “Executing Dealer”) and arrange for the swap to be transferred to the FCM for clearing. The Fund may also enter into a swap with the FCM itself. The CCP, the FCM, and the Executing Dealer are all subject to regulatory oversight by the Commodity Futures Trading Commission (“CFTC”). A default or failure by a CCP or an FCM, or the failure of a swap to be transferred from an Executing Dealer to the FCM for clearing, may expose the Fund to losses, increase its costs, or prevent the Fund from entering or exiting swap positions, accessing collateral, or fully implementing its investment strategies. The regulatory requirement to clear certain swaps could, either temporarily or permanently, reduce the liquidity of cleared swaps or increase the costs of entering into those swaps.
Index swaps, interest rate swaps, and credit default swaps are valued using an approved vendor supplied price. Basket swaps are valued using a broker supplied price. Equity swaps that consist of a single underlying equity are valued either at the closing price, the latest bid price, or the last sale price on the primary market or exchange it trades. The market value of swap contracts are aggregated by positive and negative values and are disclosed separately as an asset or liability on the Fund’s Consolidated Statement of Assets and Liabilities (if applicable). Realized gains and losses are reported on the Fund’s Consolidated Statement of Operations (if applicable). The change in unrealized net appreciation or depreciation during the year is included in the Consolidated Statement of Operations (if applicable).
The Fund’s maximum risk of loss from counterparty risk or credit risk is the discounted value of the payments to be received from/paid to the counterparty over the contract’s remaining life, to the extent that the amount is positive. The risk is mitigated by having a netting arrangement between the Fund and the counterparty and by the posting of collateral by the counterparty to cover the Fund’s exposure to the counterparty.
Total return swaps involve an exchange by two parties in which one party makes payments based on a set rate, either fixed or variable, while the other party makes payments based on the return of an underlying asset, which includes both the income it generates and any capital gains over the payment period. A fixed-income total return swap may be written on many different kinds of underlying reference assets, and may include different indices for various kinds of debt securities (e.g., U.S. investment grade bonds, high-yield bonds, or emerging market bonds).
During the year, the Fund entered into total return swaps on equity indices or custom baskets of equity indices to increase exposure to equity risk. These total return swaps require the Fund to pay a floating reference interest rate, and an amount equal to the negative price movement of securities or an index multiplied by the notional amount of the contract. The Fund will receive payments equal to the positive price movement of the same securities or index multiplied by the notional amount of the contract and, in some cases, dividends paid on the securities.
During the year, the Fund entered into total return swaps on equity indices to decrease exposure to equity risk. These total return swaps require the Fund to pay an amount equal to the positive price movement of securities or an index multiplied by the notional amount of the contract and, in some cases, dividends paid on the securities. The Fund will receive payments of a floating reference interest rate and an amount equal to the negative price movement of the same securities or index multiplied by the notional amount of the contract.
During the year, the Fund entered into total return swaps on a custom basket of commodity indices to increase exposure to commodity risk. These total return swaps require the Fund to pay a fixed or a floating reference interest rate, and an amount equal to the negative price movement of an index multiplied by the notional amount of the contract. The Fund will receive payments equal to the positive price movement of the same index multiplied by the notional amount of the contract.
During the year, the Fund entered into total return swaps on credit indices to increase exposure to credit risk. These total return swaps require the Fund to pay a floating reference interest rate, and an amount equal to the negative price movement of an index multiplied by the notional amount of the contract. The Fund will receive payments equal to the positive price movement of the same index multiplied by the notional amount of the contract.
During the year ended June 30, 2017, the average ending monthly market value amounts on total return swaps which are long and short the reference asset are $580,944 and $(239,917), respectively.
26 | JUNE 30, 2017 |
Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Financial Statements
The following table, grouped by derivative type, provides information about the fair value and location of derivatives within the Consolidated Statement of Assets and Liabilities as of June 30, 2017.
Fair Value of Derivative Instruments (not accounted for as hedging instruments) as of June 30, 2017 | ||||||||||||||
|
|
|
| Commodity |
| Credit |
| Currency |
| Equity |
| Interest Rate |
| Total |
Asset Derivatives: | ||||||||||||||
Forward currency contracts | $ - | $ - | $ 75,295 | $ - | $ - | $ 75,295 | ||||||||
Outstanding swap contracts, at value | 18 | 3,356 | - | 4,600 | - | 7,974 | ||||||||
Variation margin receivable | 23,653 | (a) | - | - | 2,766 | (a) | 17,671 | (a) | 44,090 | |||||
Total Asset Derivatives |
| $ 23,671 |
| $ 3,356 |
| $ 75,295 |
| $ 7,366 |
| $ 17,671 |
| $127,359 | ||
| ||||||||||||||
Liability Derivatives: | ||||||||||||||
Forward currency contracts | $ - | $ - | $ 63,652 | $ - | $ - | $ 63,652 | ||||||||
Outstanding swap contracts, at value | - | - | - | 516 | - | 516 | ||||||||
Variation margin payable | 169,483 | (a) | - | 13,143 | (a) | - | - | 182,626 | ||||||
Total Liability Derivatives |
| $ 169,483 |
| $ - |
| $ 76,795 |
| $ 516 |
| $ - |
| $246,794 | ||
(a) | Amounts relate to variation margin for futures. | |||||||||||||
The following tables provide information about the effect of derivatives and hedging activities on the Fund’s Consolidated Statement of Operations for the year ended June 30, 2017.
The effect of Derivative Instruments (not accounted for as hedging instruments) on the Consolidated Statement of Operations for the year ended June 30, 2017 | |||||||||||||
Amount of Realized Gain/(Loss) Recognized on Derivatives | |||||||||||||
Derivative | Commodity |
| Credit |
| Currency |
| Equity |
| Interest Rate |
| Total | ||
Futures contracts | $ 206,897 | $ - | $(580,783) | $1,219,885 | $ 717,484 | $ 1,563,483 | |||||||
Investments and foreign currency transactions | - | - | 316,095 | (a) | - | - | 316,095 | ||||||
Swap contracts | 1,953,961 | (280,618) | - | 1,887,303 | - | 3,560,646 | |||||||
Total | $2,160,858 |
| $(280,618) |
| $(264,688) |
| $3,107,188 |
| $ 717,484 |
| $ 5,440,224 | ||
Amount of Change in Unrealized Appreciation/Depreciation Recognized on Derivatives | |||||||||||||
Derivative | Commodity |
| Credit |
| Currency |
| Equity |
| Interest Rate |
| Total | ||
Futures contracts | $ (982,948) | $ - | $ 298,670 | $ (230,811) | $ (515,208) | $(1,430,297) | |||||||
Investments, foreign currency translations and non-interested Trustees' deferred compensation | - | - | 4,808 | (a) | - | - | 4,808 | ||||||
Swap contracts | 18 | 30,833 | - | 3,728 | - | 34,579 | |||||||
Total | $ (982,930) |
| $ 30,833 |
| $ 303,478 |
| $ (227,083) |
| $ (515,208) |
| $(1,390,910) | ||
(a) | Amounts relate to forward currency contracts. | ||||||||||||
Please see the “Net Realized Gain/(Loss) on Investments” and “Change in Unrealized Net Appreciation/Depreciation” sections of the Fund’s Consolidated Statement of Operations.
3. Other Investments and Strategies
Additional Investment Risk
The financial crisis in both the U.S. and global economies over the past several years has resulted, and may continue to result, in a significant decline in the value and liquidity of many securities of issuers worldwide in the equity and fixed-income/credit markets. In response to the crisis, the United States and certain foreign governments, along with the U.S.
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Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Financial Statements
Federal Reserve and certain foreign central banks, took steps to support the financial markets. The withdrawal of this support, a failure of measures put in place to respond to the crisis, or investor perception that such efforts were not sufficient could each negatively affect financial markets generally, and the value and liquidity of specific securities. In addition, policy and legislative changes in the United States and in other countries continue to impact many aspects of financial regulation. The effect of these changes on the markets, and the practical implications for market participants, including the Fund, may not be fully known for some time. As a result, it may also be unusually difficult to identify both investment risks and opportunities, which could limit or preclude the Fund’s ability to achieve its investment objective. Therefore, it is important to understand that the value of your investment may fall, sometimes sharply, and you could lose money.
The enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) of 2010 provided for widespread regulation of financial institutions, consumer financial products and services, broker-dealers, OTC derivatives, investment advisers, credit rating agencies, and mortgage lending, which expanded federal oversight in the financial sector, including the investment management industry. Many provisions of the Dodd-Frank Act remain pending and will be implemented through future rulemaking. Therefore, the ultimate impact of the Dodd-Frank Act and the regulations under the Dodd-Frank Act on the Fund and the investment management industry as a whole, is not yet certain.
A number of countries in the European Union (“EU”) have experienced, and may continue to experience, severe economic and financial difficulties. In particular, many EU nations are susceptible to economic risks associated with high levels of debt, notably due to investments in sovereign debt of countries such as Greece, Italy, Spain, Portugal, and Ireland. Many non-governmental issuers, and even certain governments, have defaulted on, or been forced to restructure, their debts. Many other issuers have faced difficulties obtaining credit or refinancing existing obligations. Financial institutions have in many cases required government or central bank support, have needed to raise capital, and/or have been impaired in their ability to extend credit. As a result, financial markets in the EU experienced extreme volatility and declines in asset values and liquidity. Responses to these financial problems by European governments, central banks, and others, including austerity measures and reforms, may not work, may result in social unrest, and may limit future growth and economic recovery or have other unintended consequences. Further defaults or restructurings by governments and others of their debt could have additional adverse effects on economies, financial markets, and asset valuations around the world. Greece, Ireland, and Portugal have already received one or more "bailouts" from other Eurozone member states, and it is unclear how much additional funding they will require or if additional Eurozone member states will require bailouts in the future. The risk of investing in securities in the European markets may also be heightened due to the referendum in which the United Kingdom voted to exit the EU (known as “Brexit”). There is considerable uncertainty about how Brexit will be conducted, how negotiations of necessary treaties and trade agreements will proceed, or how financial markets will react. In addition, one or more other countries may also abandon the euro and/or withdraw from the EU, placing its currency and banking system in jeopardy.
Certain areas of the world have historically been prone to and economically sensitive to environmental events such as, but not limited to, hurricanes, earthquakes, typhoons, flooding, tidal waves, tsunamis, erupting volcanoes, wildfires or droughts, tornadoes, mudslides, or other weather-related phenomena. Such disasters, and the resulting physical or economic damage, could have a severe and negative impact on the Fund’s investment portfolio and, in the longer term, could impair the ability of issuers in which the Fund invests to conduct their businesses as they would under normal conditions. Adverse weather conditions may also have a particularly significant negative effect on issuers in the agricultural sector and on insurance companies that insure against the impact of natural disasters.
Counterparties
Fund transactions involving a counterparty are subject to the risk that the counterparty or a third party will not fulfill its obligation to the Fund (“counterparty risk”). Counterparty risk may arise because of the counterparty’s financial condition (i.e., financial difficulties, bankruptcy, or insolvency), market activities and developments, or other reasons, whether foreseen or not. A counterparty’s inability to fulfill its obligation may result in significant financial loss to the Fund. The Fund may be unable to recover its investment from the counterparty or may obtain a limited recovery, and/or recovery may be delayed. The extent of the Fund’s exposure to counterparty risk with respect to financial assets and liabilities approximates its carrying value. See the "Offsetting Assets and Liabilities" section of this Note for further details.
The Fund may be exposed to counterparty risk through participation in various programs, including, but not limited to, lending its securities to third parties, cash sweep arrangements whereby the Fund’s cash balance is invested in one or more types of cash management vehicles, as well as investments in, but not limited to, repurchase agreements, debt
28 | JUNE 30, 2017 |
Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Financial Statements
securities, and derivatives, including various types of swaps, futures and options. The Fund intends to enter into financial transactions with counterparties that Janus Capital believes to be creditworthy at the time of the transaction. There is always the risk that Janus Capital’s analysis of a counterparty’s creditworthiness is incorrect or may change due to market conditions. To the extent that the Fund focuses its transactions with a limited number of counterparties, it will have greater exposure to the risks associated with one or more counterparties.
Offsetting Assets and Liabilities
The Fund presents gross and net information about transactions that are either offset in the consolidated financial statements or subject to an enforceable master netting arrangement or similar agreement with a designated counterparty, regardless of whether the transactions are actually offset in the Consolidated Statement of Assets and Liabilities.
In order to better define its contractual rights and to secure rights that will help the Fund mitigate its counterparty risk, the Fund has entered into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with its derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between the Fund and a counterparty that governs OTC derivatives and forward foreign currency exchange contracts and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, in the event of a default and/or termination event, the Fund may offset with each counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. For financial reporting purposes, the Fund does not offset certain derivative financial instruments’ payables and receivables and related collateral on the Consolidated Statement of Assets and Liabilities.
The following tables present gross amounts of recognized assets and/or liabilities and the net amounts after deducting collateral that has been pledged by counterparties or has been pledged to counterparties (if applicable). For corresponding information grouped by type of instrument, see either the “Fair Value of Derivative Instruments as of June 30, 2017” table located in Note 2 of these Notes to Consolidated Financial Statements and/or the Fund’s Consolidated Schedule of Investments.
Offsetting of Financial Assets and Derivative Assets | ||||||||
Gross Amounts | ||||||||
of Recognized | Offsetting Asset | Collateral | ||||||
Counterparty | Assets | or Liability(a) | Pledged(b) | Net Amount | ||||
Barclays Capital, Inc. | $ | 3,356 | $ | — | $ | — | $ | 3,356 |
BNP Paribas | 4,481 | (471) | (4,010) | — | ||||
BNP Paribas(c) | 18 | — | — | 18 | ||||
Goldman Sachs International | 119 | (45) | — | 74 | ||||
HSBC Securities (USA), Inc. | 75,295 | (63,652) | — | 11,643 | ||||
Total | $ | 83,269 | $ | (64,168) | $ | (4,010) | $ | 15,091 |
Janus Investment Fund | 29 |
Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Financial Statements
Offsetting of Financial Liabilities and Derivative Liabilities | |||||||||
Gross Amounts | |||||||||
of Recognized | Offsetting Asset | Collateral | |||||||
Counterparty | Liabilities | or Liability(a) | Pledged(b) | Net Amount | |||||
BNP Paribas | $ | 471 | $ | (471) | $ | — | $ | — | |
Goldman Sachs International | 45 | (45) | — | — | |||||
HSBC Securities (USA), Inc. | 63,652 | (63,652) | — | — | |||||
Total | $ | 64,168 | $ | (64,168) | $ | — | $ | — | |
(a) | Represents the amount of assets or liabilities that could be offset with the same counterparty under master netting or similar agreements that management elects not to offset on the Consolidated Statement of Assets and Liabilities. | ||||||||
(b) | Collateral pledged is limited to the net outstanding amount due to/from an individual counterparty. The actual collateral amounts pledged may exceed these amounts and may fluctuate in value. | ||||||||
(c) | This counterparty has an ISDA Master Agreement with the Fund and a separate ISDA Master Agreement with the Subsidiary. Exposure from OTC derivatives can only be netted across transactions governed under the same ISDA Master Agreement with the same legal entity. The Fund and Subsidiary are recognized as two separate legal entities. As such, exposure cannot be netted. This line item represents the amount from the Subsidiary. | ||||||||
The Fund does not exchange collateral on its forward currency contracts with its counterparties; however, the Fund may segregate cash or high-grade securities in an amount at all times equal to or greater than the Fund’s commitment with respect to these contracts. Such segregated assets, if with the Fund’s custodian, are denoted on the accompanying Consolidated Schedule of Investments and are evaluated daily to ensure their market value equals or exceeds the current market value of the Fund’s corresponding forward currency contracts.
The Fund may require the counterparty to pledge securities as collateral daily (based on the daily valuation of the financial asset) if the Fund has a net aggregate unrealized gain on OTC derivative contracts with a particular counterparty. The Fund may deposit cash as collateral with the counterparty and/or custodian daily (based on the daily valuation of the financial asset) if the Fund has a net aggregate unrealized loss on OTC derivative contracts with a particular counterparty. The collateral amounts are subject to minimum exposure requirements and initial margin requirements. Collateral amounts are monitored and subsequently adjusted up or down as valuations fluctuate by at least the minimum exposure requirement. Collateral may reduce the risk of loss.
Sovereign Debt
The Fund may invest in U.S. and foreign government debt securities (“sovereign debt”). Investments in U.S. sovereign debt are considered low risk. However, investments in non-U.S. sovereign debt can involve a high degree of risk, including the risk that the governmental entity that controls the repayment of sovereign debt may not be willing or able to repay the principal and/or to pay the interest on its sovereign debt in a timely manner. A sovereign debtor’s willingness or ability to satisfy its debt obligation may be affected by various factors, including its cash flow situation, the extent of its foreign currency reserves, the availability of foreign exchange when a payment is due, the relative size of its debt position in relation to its economy as a whole, the sovereign debtor’s policy toward international lenders, and local political constraints to which the governmental entity may be subject. Sovereign debtors may also be dependent on expected disbursements from foreign governments, multilateral agencies, and other entities. The failure of a sovereign debtor to implement economic reforms, achieve specified levels of economic performance, or repay principal or interest when due may result in the cancellation of third party commitments to lend funds to the sovereign debtor, which may further impair such debtor’s ability or willingness to timely service its debts. The Fund may be requested to participate in the rescheduling of such sovereign debt and to extend further loans to governmental entities, which may adversely affect the Fund’s holdings. In the event of default, there may be limited or no legal remedies for collecting sovereign debt and there may be no bankruptcy proceedings through which the Fund may collect all or part of the sovereign debt that a governmental entity has not repaid.
30 | JUNE 30, 2017 |
Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Financial Statements
4. Investment Advisory Agreements and Other Transactions with Affiliates
The Fund and the Subsidiary each pay Janus Capital an investment advisory fee which is calculated daily and paid monthly. The following table reflects the Fund’s and the Subsidiary's contractual investment advisory fee rate (expressed as an annual rate).
Average Daily Net Assets of the Fund | Contractual Investment Advisory Fee (%) |
First $1 Billion | 1.00 |
Over $1 Billion | 0.95 |
Janus Capital has contractually agreed to waive a portion of the Fund’s management fee in an amount equal to the management fee paid to Janus Capital by the Subsidiary. The management fee waiver arrangement related to the Subsidiary may not be discontinued by Janus Capital as long as its contract with the Subsidiary is in place.
Janus Capital has contractually agreed to waive the advisory fee payable by the Fund or reimburse expenses in an amount equal to the amount, if any, that the Fund’s normal operating expenses, which include the other expenses of the Subsidiary, , including the investment advisory fee, but excluding the 12b-1 distribution and shareholder servicing fees (applicable to Class A Shares, Class C Shares, and Class S Shares), transfer agent fees and expenses payable pursuant to the Transfer Agency Agreement, brokerage commissions, interest, dividends, taxes, acquired fund fees and expenses, and extraordinary expenses, exceed the annual rate of 1.25% of the Fund’s average daily net assets. Janus Capital has agreed to continue the waivers until at least November 1, 2017. If applicable, amounts reimbursed to the Fund by Janus Capital are disclosed as “Excess Expense Reimbursement” on the Consolidated Statement of Operations.
Janus Services LLC (“Janus Services”), a wholly-owned subsidiary of Janus Capital, is the Fund’s and the Subsidiary's transfer agent. In addition, Janus Services provides or arranges for the provision of certain other administrative services including, but not limited to, recordkeeping, accounting, order processing, and other shareholder services for the Fund. Janus Services is not compensated for its services related to the shares, except for out-of-pocket costs. These amounts are disclosed as “Other transfer agent fees and expenses” on the Consolidated Statement of Operations.
Certain, but not all, intermediaries may charge administrative fees (such as networking and omnibus) to investors in Class A Shares, Class C Shares, and Class I Shares for administrative services provided on behalf of such investors. These administrative fees are paid by the Class A Shares, Class C Shares, and Class I Shares of the Fund to Janus Services, which uses such fees to reimburse intermediaries. Consistent with the Transfer Agency Agreement between Janus Services and the Fund, Janus Services may negotiate the level, structure, and/or terms of the administrative fees with intermediaries requiring such fees on behalf of the Fund. Janus Capital and its affiliates benefit from an increase in assets that may result from such relationships. The Funds’ Trustees have set limits on fees that the Funds may incur with respect to administrative fees paid for omnibus or networked accounts. Such limits are subject to change by the Trustees in the future. These amounts are disclosed as “Transfer agent networking and omnibus fees” on the Consolidated Statement of Operations.
The Fund’s Class D Shares pay an administrative services fee at an annual rate of 0.12% of the average daily net assets of Class D Shares for shareholder services provided by Janus Services. Janus Services provides or arranges for the provision of shareholder services including, but not limited to, recordkeeping, accounting, answering inquiries regarding accounts, transaction processing, transaction confirmations, and the mailing of prospectuses and shareholder reports. These amounts are disclosed as “Transfer agent administrative fees and expenses” on the Consolidated Statement of Operations.
Janus Services receives an administrative services fee at an annual rate of up to 0.25% of the average daily net assets of the Fund’s Class S Shares and Class T Shares for providing or procuring administrative services to investors in Class S Shares and Class T Shares of the Fund. Janus Services expects to use all or a significant portion of this fee to compensate retirement plan service providers, broker-dealers, bank trust departments, financial advisors, and other financial intermediaries for providing these services. Janus Services or its affiliates may also pay fees for services provided by intermediaries to the extent the fees charged by intermediaries exceed the 0.25% of net assets charged to Class S Shares and Class T Shares of the Fund. Janus Services may keep certain amounts retained for reimbursement of out-of-pocket costs incurred for servicing clients of Class S Shares and Class T Shares. These amounts are disclosed as “Transfer agent administrative fees and expenses” on the Consolidated Statement of Operations.
Janus Investment Fund | 31 |
Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Financial Statements
Services provided by these financial intermediaries may include, but are not limited to, recordkeeping, subaccounting, order processing, providing order confirmations, periodic statements, forwarding prospectuses, shareholder reports, and other materials to existing customers, answering inquiries regarding accounts, and other administrative services. Order processing includes the submission of transactions through the National Securities Clearing Corporation (“NSCC”) or similar systems, or those processed on a manual basis with Janus Capital.
Janus Services is compensated for its services related to the Fund’s Class D Shares. In addition to the administrative fees discussed above, Janus Services receives reimbursement for out-of-pocket costs it incurs for serving as transfer agent and providing, or arranging for, servicing to shareholders. These amounts are disclosed as “Other transfer agent fees and expenses” on the Consolidated Statement of Operations.
Under a distribution and shareholder servicing plan (the “Plan”) adopted in accordance with Rule 12b-1 under the 1940 Act, the Fund pays the Trust’s distributor, Janus Distributors LLC (“Janus Distributors”), a wholly-owned subsidiary of Janus Capital, a fee for the sale and distribution and/or shareholder servicing of the Shares at an annual rate of up to 0.25% of the Class A Shares’ average daily net assets, of up to 1.00% of the Class C Shares’ average daily net assets, and of up to 0.25% of the Class S Shares’ average daily net assets. Under the terms of the Plan, the Trust is authorized to make payments to Janus Distributors for remittance to retirement plan service providers, broker-dealers, bank trust departments, financial advisors, and other financial intermediaries, as compensation for distribution and/or shareholder services performed by such entities for their customers who are investors in the Fund. These amounts are disclosed as “12b-1 Distribution and shareholder servicing fees” on the Consolidated Statement of Operations. Payments under the Plan are not tied exclusively to actual 12b-1 distribution and shareholder service expenses, and the payments may exceed 12b-1 distribution and shareholder service expenses actually incurred. If any of the Fund’s actual 12b-1 distribution and shareholder service expenses incurred during a calendar year are less than the payments made during a calendar year, the Fund will be refunded the difference. Refunds, if any, are included in “12b-1 Distribution and shareholder servicing fees” in the Consolidated Statement of Operations.
Janus Capital furnishes certain administration, compliance, and accounting services for the Fund and is reimbursed by the Fund for certain of its costs in providing those services (to the extent Janus Capital seeks reimbursement and such costs are not otherwise waived). In addition, employees of Janus Capital and/or its affiliates may serve as officers of the Trust. The Fund also pays for some or all of the salaries, fees, and expenses of certain Janus Capital employees and Fund officers, with respect to certain specified administration functions they perform on behalf of the Fund. The Fund pays these costs based on out-of-pocket expenses incurred by Janus Capital, and these costs are separate and apart from advisory fees and other expenses paid in connection with the investment advisory services Janus Capital provides to the Fund. These amounts are disclosed as “Fund administration fees” on the Consolidated Statement of Operations. Some expenses related to compensation payable to the Fund's Chief Compliance Officer and compliance staff are shared with the Fund. Total compensation of $263,736 was paid to the Chief Compliance Officer and certain compliance staff by the Trust during the year ended June 30, 2017. The Fund's portion is reported as part of “Other expenses” on the Consolidated Statement of Operations.
The Board of Trustees has adopted a deferred compensation plan (the “Deferred Plan”) for independent Trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Fund. All deferred fees are credited to an account established in the name of the Trustees. The amounts credited to the account then increase or decrease, as the case may be, in accordance with the performance of one or more of the Janus Henderson funds that are selected by the Trustees. The account balance continues to fluctuate in accordance with the performance of the selected fund or funds until final payment of all amounts are credited to the account. The fluctuation of the account balance is recorded by the Fund as unrealized appreciation/(depreciation) and is included as of June 30, 2017 on the Consolidated Statement of Assets and Liabilities in the asset, “Non-interested Trustees’ deferred compensation,” and liability, “Non-interested Trustees’ deferred compensation fees.” Additionally, the recorded unrealized appreciation/(depreciation) is included in “Unrealized net appreciation/(depreciation) of investments, foreign currency translations and non-interested Trustees’ deferred compensation” on the Consolidated Statement of Assets and Liabilities. Deferred compensation expenses for the year ended June 30, 2017 are included in “Non-interested Trustees’ fees and expenses” on the Consolidated Statement of Operations. Trustees are allowed to change their designation of mutual funds from time to time. Amounts will be deferred until distributed in accordance with the Deferred Plan. Deferred fees of $387,825 were paid by the Trust to the Trustees under the Deferred Plan during the year ended June 30, 2017.
32 | JUNE 30, 2017 |
Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Financial Statements
Pursuant to the provisions of the 1940 Act and related rules, the Fund may participate in an affiliated or nonaffiliated cash sweep program. In the cash sweep program, uninvested cash balances of the Fund may be used to purchase shares of affiliated or nonaffiliated money market funds or cash management pooled investment vehicles. The Fund is eligible to participate in the cash sweep program (the “Investing Funds”). As adviser, Janus Capital has an inherent conflict of interest because of its fiduciary duties to the affiliated money market funds or cash management pooled investment vehicles and the Investing Funds. Janus Cash Liquidity Fund LLC is an affiliated unregistered cash management pooled investment vehicle that invests primarily in highly-rated short-term fixed-income securities. Janus Cash Liquidity Fund LLC currently maintains a NAV of $1.00 per share and distributes income daily in a manner consistent with a registered product compliant with Rule 2a-7 under the 1940 Act. There are no restrictions on the Fund's ability to withdraw investments from Janus Cash Liquidity Fund LLC at will, and there are no unfunded capital commitments due from the Fund to Janus Cash Liquidity Fund LLC. The units of Janus Cash Liquidity Fund LLC are not charged any management fee, sales charge or service fee.
Any purchases and sales, realized gains/losses and recorded dividends from affiliated investments during the year ended June 30, 2017 can be found in a table located in the Notes to Consolidated Schedule of Investments and Other Information.
Class A Shares include a 5.75% upfront sales charge of the offering price of the Fund. The sales charge is allocated between Janus Distributors and financial intermediaries. There were no upfront sales charges retained by Janus Distributors during the year ended June 30, 2017.
A contingent deferred sales charge (“CDSC”) of 1.00% will be deducted with respect to Class A Shares purchased without a sales load and redeemed within 12 months of purchase, unless waived. Any applicable CDSC will be 1.00% of the lesser of the original purchase price or the value of the redemption of the Class A Shares redeemed. There were no CDSCs paid by redeeming shareholders of Class A Shares to Janus Distributors during the year ended June 30, 2017.
A CDSC of 1.00% will be deducted with respect to Class C Shares redeemed within 12 months of purchase, unless waived. Any applicable CDSC will be 1.00% of the lesser of the original purchase price or the value of the redemption of the Class C Shares redeemed. There were no CDSCs paid by redeeming shareholders of Class C Shares during the year ended June 30, 2017.
As of June 30, 2017, shares of the Fund were owned by Janus Capital and/or other funds advised by Janus Capital, as indicated in the table below:
Class | % of Class Owned |
| % of Fund Owned |
| |
Class A Shares | 49 | % | 2 | % | |
Class C Shares | 68 | 2 | |||
Class D Shares | - | - | |||
Class I Shares | - | - | |||
Class N Shares | 97 | 69 | |||
Class S Shares | 100 | 2 | |||
Class T Shares | 35 | 2 | |||
In addition, other shareholders, including other funds, individuals, accounts, as well as the Fund’s portfolio manager(s) and/or investment personnel, may from time to time own (beneficially or of record) a significant percentage of the Fund’s Shares and can be considered to “control” the Fund when that ownership exceeds 25% of the Fund’s assets (and which may differ from control as determined in accordance with accounting principles generally accepted in the United States of America).
5. Federal Income Tax
The tax components of capital shown in the table below represent: (1) distribution requirements the Fund must satisfy under the income tax regulations; (2) losses or deductions the Fund 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.
Other book to tax differences primarily consist of deferred compensation, derivatives, and foreign currency contract adjustments. The Fund has elected to treat gains and losses on forward foreign currency contracts as capital gains and
Janus Investment Fund | 33 |
Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Financial Statements
losses, if applicable. 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.
Loss Deferrals | Other Book | Net Tax | |||||
Undistributed | Undistributed | Accumulated | Late-Year | Post-October | to Tax | Appreciation/ | |
$ 2,331,687 | $ 113,172 | $ - | $ - | $ - | $ (251,439) | $ (743,598) | |
During the year ended June 30, 2017, capital loss carryovers of $1,533,695 were utilized by the Fund.
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, 2017 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 investments in partnerships.
Federal Tax Cost | Unrealized | Unrealized | Net Tax Appreciation/ |
$ 63,199,609 | $ 16,080 | $ (759,678) | $ (743,598) |
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 capital.
For the year ended June 30, 2017 | ||||
Distributions | ||||
From Ordinary Income | From Long-Term Capital Gains | Tax Return of Capital | Net Investment Loss | |
$ 1,805,193 | $ - | $ - | $ - | |
For the year ended June 30, 2016 | ||||
Distributions | ||||
From Ordinary Income | From Long-Term Capital Gains | Tax Return of Capital | Net Investment Loss | |
$ 37,292 | $ 568,842 | $ - | $ - | |
Permanent book to tax basis differences may result in reclassifications between the components of net assets. These differences have no impact on the results of operations or net assets. The following reclassifications have been made to the Fund:
Increase/(Decrease) to Capital | Increase/(Decrease) to Undistributed | Increase/(Decrease) to Undistributed | |||
$ 187,458 | $ 2,151,600 | $ (2,339,058) |
Capital has been adjusted by $187,458, including $8,677 of long-term capital gain, for distributions in connection with Fund share redemptions (tax equalization).
34 | JUNE 30, 2017 |
Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Financial Statements
6. Capital Share Transactions
Year ended June 30, 2017 | Year ended June 30, 2016 | |||||
Shares | Amount | Shares | Amount | |||
Class A Shares: | ||||||
Shares sold | 68,349 | $ 693,334 | 26,339 | $ 256,424 | ||
Reinvested dividends and distributions | 8,507 | 84,982 | 2,902 | 27,536 | ||
Shares repurchased | (141,210) | (1,426,666) | (13,491) | (131,170) | ||
Net Increase/(Decrease) | (64,354) | $ (648,350) |
| 15,750 | $ 152,790 | |
Class C Shares: | ||||||
Shares sold | 27,955 | $ 276,529 | 19,883 | $ 190,060 | ||
Reinvested dividends and distributions | 4,041 | 39,641 | 1,863 | 17,384 | ||
Shares repurchased | (3,618) | (35,814) | (15,465) | (150,925) | ||
Net Increase/(Decrease) | 28,378 | $ 280,356 |
| 6,281 | $ 56,519 | |
Class D Shares: | ||||||
Shares sold | 275,006 | $2,801,234 | 376,129 | $ 3,665,064 | ||
Reinvested dividends and distributions | 12,801 | 128,390 | 3,381 | 32,185 | ||
Shares repurchased | (289,307) | (2,938,495) | (207,729) | (2,015,347) | ||
Net Increase/(Decrease) | (1,500) | $ (8,871) |
| 171,781 | $ 1,681,902 | |
Class I Shares: | ||||||
Shares sold | 730,298 | $7,421,286 | 106,810 | $ 1,044,128 | ||
Reinvested dividends and distributions | 10,483 | 105,459 | 2,104 | 20,092 | ||
Shares repurchased | (323,385) | (3,287,902) | (96,470) | (946,722) | ||
Net Increase/(Decrease) | 417,396 | $4,238,843 |
| 12,444 | $ 117,498 | |
Class N Shares: | ||||||
Shares sold | 815,553 | $8,243,513 | 164,210 | $ 1,601,677 | ||
Reinvested dividends and distributions | 132,356 | 1,334,148 | 50,232 | 480,219 | ||
Shares repurchased | (763,744) | (7,791,468) | (711,924) | (6,935,610) | ||
Net Increase/(Decrease) | 184,165 | $1,786,193 |
| (497,482) | $(4,853,714) | |
Class S Shares: | ||||||
Shares sold | - | $ - | - | $ 48 | ||
Reinvested dividends and distributions | 4,173 | 41,439 | 1,424 | 13,463 | ||
Shares repurchased | - | - | - | - | ||
Net Increase/(Decrease) | 4,173 | $ 41,439 |
| 1,424 | $ 13,511 | |
Class T Shares: | ||||||
Shares sold | 301,264 | $3,042,024 | 25,467 | $ 245,031 | ||
Reinvested dividends and distributions | 7,049 | 70,488 | 1,570 | 14,927 | ||
Shares repurchased | (102,214) | (1,039,377) | (120,675) | (1,162,815) | ||
Net Increase/(Decrease) | 206,099 | $2,073,135 |
| (93,638) | $ (902,857) | |
Janus Investment Fund | 35 |
Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Financial Statements
7. Purchases and Sales of Investment Securities
For the year ended June 30, 2017, the aggregate cost of purchases and proceeds from sales of investment securities (excluding any short-term securities, short-term options contracts, and in-kind transactions) was as follows:
Purchases of | Proceeds from Sales | Purchases of Long- | Proceeds from Sales |
$ 2,000,000 | $ 4,450,000 | $ - | $ - |
8. Merger Related Matters
On October 3, 2016, Janus Capital Group Inc. (“JCGI”), the direct parent of Janus Capital, and Henderson Group plc (“Henderson”) announced that they had entered into an Agreement and Plan of Merger (the “Merger Agreement”) relating to the strategic combination of Henderson and JCGI (the “Merger”). Pursuant to the Merger Agreement, a newly formed, direct wholly-owned subsidiary of Henderson merged with and into JCGI, with JCGI as the surviving corporation and a direct wholly-owned subsidiary of Henderson.
The consummation of the Merger may have been deemed to cause an “assignment” (as defined in the 1940 Act) of the investment advisory agreement between the Fund and Janus Capital in effect on the date of the Merger. As a result, the consummation of the Merger may have caused the investment advisory agreement to terminate automatically in accordance with its terms.
On December 8, 2016, the Trustees approved, subject to shareholder approval, a new investment advisory agreement between the Fund and Janus Capital in order to permit Janus Capital to continue providing advisory services to the Fund following the closing of the Merger (the “Post-Merger Advisory Agreement”). At the same meeting, the Trustees approved submitting the Post-Merger Advisory Agreement, among other proposals, to Fund shareholders for approval.
Special meeting(s) of shareholders were held on April 6, 2017, and adjourned and reconvened on April 18, 2017, April 25, 2017, April 28, 2017, and May 17, 2017 (together, the “Meeting”).
Approval of Advisory Agreement
At the Meeting, shareholders of the Fund approved the Post-Merger Advisory Agreement which took effect upon consummation of the Merger.
Election of Trustee
At the Meeting, shareholders of each series of the Trust, including the Fund, voting together as a single class, approved the election of Diane L. Wallace to the Trust’s Board of Trustees. Ms. Wallace served as a trustee of certain mutual funds advised by Henderson Global Investors (North America) Inc., a subsidiary of Henderson. Ms. Wallace joined the Trust’s Board of Trustees following consummation of the Merger.
Approval of Manager-of-Managers Structure
At the Meeting, shareholders of the Fund also approved a manager-of-managers structure for the Fund. The Trust and Janus Capital have received an exemptive order from the Securities and Exchange Commission that permits Janus Capital, subject to the approval of the Trustees, to appoint or replace certain subadvisers to manage all or a portion of a Fund’s assets and enter into, amend, or terminate a sub-advisory agreement with certain subadvisers without obtaining shareholder approval (a “manager-of-managers structure”). The manager-of-managers structure applies to subadvisers that are not affiliated with the Trust or Janus Capital (“non-affiliated subadvisers”), as well as any subadviser that is an indirect or direct “wholly-owned subsidiary” (as such term is defined by the 1940 Act) of Janus Capital or of another company that, indirectly or directly, wholly owns Janus Capital (collectively, “wholly-owned subadvisers”). To the extent that the Fund’s assets are allocated to one or more subadvisers, Janus Capital, subject to oversight and supervision by the Trustees, would have the responsibility to oversee such subadviser(s) and to recommend for approval by the Trustees, the hiring, termination, and replacement of a subadviser for the Fund. In the event that Janus Capital hires a subadviser pursuant to the manager-of-managers structure, the Fund would provide shareholders with information about the subadviser and sub-advisory agreement within 90 days.
36 | JUNE 30, 2017 |
Janus Henderson Diversified Alternatives Fund
Notes to Consolidated Financial Statements
9. Recent Accounting Pronouncements
The Securities and Exchange Commission ("SEC") adopted new rules as well as amendments to its rules to modernize the reporting and disclosure of information by registered investment companies. In addition, the SEC adopted amendments to Regulation S-X, which require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The compliance date of the amendments to Regulation S-X is August 1, 2017. Management believes that many of the Regulation S-X amendments are consistent with the Fund’s current financial statement presentation and will not have a significant impact on the Fund.
The FASB issued Accounting Standards Update No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities ("ASU 2017-08") to amend the amortization period for certain purchased callable debt securities held at a premium. The guidance requires certain premiums on callable debt securities to be amortized to the earliest call date. The amortization period for callable debt securities purchased at a discount will not be impacted. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. Management is currently evaluating the impacts of ASU 2017-08 on the financial statements.
10. Subsequent Event
Management has evaluated whether any events or transactions occurred subsequent to June 30, 2017 and through the date of issuance of the Fund’s consolidated financial statements and determined that there were no material events or transactions that would require recognition or disclosure in the Fund’s consolidated financial statements.
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Janus Henderson Diversified Alternatives Fund
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Janus Investment Fund and Shareholders of
Janus Henderson Diversified Alternatives Fund:
In our opinion, the accompanying consolidated statement of assets and liabilities, including the consolidated schedule of investments, and the related consolidated statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Janus Henderson Diversified Alternatives Fund (one of the funds constituting Janus Investment Fund, hereafter referred to as the “Fund”) as of June 30, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the four years in the period then ended and for the period from December 28, 2012 (inception date) through June 30, 2013, 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 Fund’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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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 as of June 30, 2017 by correspondence with the custodian, transfer agent and brokers, provide a reasonable basis for our opinion.
Denver, Colorado
August 15, 2017
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Additional Information (unaudited)
Proxy Voting Policies and Voting Record
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to its portfolio securities is available without charge: (i) upon request, by calling 1-877-335-2687 (toll free) (or 1-800-525-3713 if you hold Class D shares); (ii) on the Fund’s website at janushenderson.com/proxyvoting; and (iii) on the SEC’s website at http://www.sec.gov. Additionally, information regarding the Fund’s proxy voting record for the most recent twelve-month period ended June 30 is also available, free of charge, through janushenderson.com/proxyvoting and from the SEC’s website at http://www.sec.gov.
Quarterly Portfolio Holdings
The Fund files its complete portfolio holdings (schedule of investments) with the SEC for the first and third quarters of each fiscal year on Form N-Q within 60 days of the end of such fiscal quarter. The Fund’s Form N-Q: (i) is available on the SEC’s website at http://www.sec.gov; (ii) may be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. (information on the Public Reference Room may be obtained by calling 1-800-SEC-0330); and (iii) is available without charge, upon request, by calling Janus Henderson at 1-877-335-2687 (toll free) (or 1-800-525-3713 if you hold Class D shares).
APPROVAL OF ADVISORY AGREEMENTS DURING THE PERIOD
What follows is a discussion of the material factors and conclusions with respect thereto that formed the basis for the Trustees of Janus Investment Fund’s approval of the investment advisory agreements for the Funds and the sub-advisory agreements for the Funds, as applicable, during the period. This discussion references a Transaction (as defined below) to combine the respective businesses of Henderson Group plc and Janus Capital Group, Inc., which resulted in the Trustees’ consideration of new investment advisory agreements for the Funds and sub-advisory agreements for the Funds, as applicable. During the period, the Trustees also approved the renewal of the existing investment advisory agreements for the Funds and the sub-advisory agreements for the Funds, as applicable, which were subsequently replaced by the new investment advisory and sub-advisory agreements at the close of the Transaction on May 30, 2017. In connection with the Transaction and certain Fund mergers, certain Funds were liquidated during the period. Such liquidated Funds do not have annual or semi-annual reporting obligations, and accordingly are not discussed below.
Approval of Advisory and Sub-Advisory Agreements with Janus and Janus Affiliates during the Period
On September 15, 2016, Janus Capital Group Inc. (“Janus”) advised the Trustees of Janus Investment Fund (the “Trust”), each of whom serves as an “independent” Trustee (the “Board” or the “Trustees”), of its intent to seek a strategic combination of its advisory business with Henderson Group plc (“Henderson”). The Board met with the
Chief Executive Officer of Janus, who outlined the proposed combination and the potential benefits to Janus Capital Management LLC (“Janus Capital”) and each Fund of the Trust (each, a “Fund” and collectively, the “Funds”).
Subsequent to the September 15, 2016 meeting, the Trustees identified a list of basic principles, which they believed should serve as the foundation for their review of the organizational, operational and strategic issues involved with any potential change in control of Janus Capital, the investment adviser to the Funds. These basic principles were communicated to Janus Capital on September 27, 2016, and were intended to be shared with Henderson. On October 3, 2016, Janus announced that it had entered into a definitive Agreement and Plan of Merger with Henderson pursuant to which Janus and Henderson agreed to effect an all-stock merger of equals strategic combination of their respective businesses, with Janus Capital surviving the merger as a direct wholly-owned subsidiary of Henderson (the “Transaction”). The Board was advised that, subject to certain conditions, the Transaction is currently expected to close during the second quarter of 2017.
As part of its due diligence, the Board developed an initial list of questions related to the proposed transaction, which was provided to Janus Capital on October 6, 2016. At a special Board meeting held on October 19, 2016, the Board considered Janus Capital’s response to the initial information request and met with the management of Janus to discuss the impact of the Transaction on the nature, extent and quality of services Janus Capital is expected to provide to the Janus Funds following the Transaction, addressing, among other matters, the personnel expected to provide such services, and the resources available to do so. After its October 19, 2016 meeting, the Board developed a supplemental request for additional information, which was provided to Janus Capital on October 26, 2016. At another special Board meeting held on November 7-8, 2016, the Board considered Janus Capital’s response to the supplemental information request and again met with the management of Janus and Henderson to discuss the impact of the Transaction on the
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Additional Information (unaudited)
nature, extent and quality of services Janus Capital is expected to provide to the Janus Funds following the Transaction, and also met with various officers of the Funds and of Janus Capital, including various Fund portfolio managers. After its November 7-8, 2016 meeting, the Board developed a second supplemental request for additional information, which was provided to Janus Capital on November 21, 2016. On December 7-8, 2016, the Board met to consider Janus Capital’s response to the second supplemental information request and to also consider the proposed new investment advisory agreements between the Trust, on behalf of each Fund, and Janus Capital (each, a “New Advisory Agreement” and collectively, the “New Advisory Agreements”) and the new sub-advisory agreements between Janus Capital and each of the Funds that utilize INTECH Investment Management LLC (“INTECH”), Perkins Investment Management LLC (“Perkins”), or Janus Singapore Pte. Limited (“Janus Singapore,” and together with INTECH and Perkins, the “Sub-Advisers” and each, a “Sub-Adviser”) as sub- advisers (each, a “New Sub-Advisory Agreement” and collectively, the “New Sub-Advisory Agreements”) to take effect immediately after the Transaction or shareholder approval, whichever is later. During each of these meetings, the Board sought additional and clarifying information as it deemed necessary or appropriate. In addition, the Board engaged its independent fee consultant to help evaluate certain of the proposals that the Board was being asked to consider. Throughout the process, the Board had the assistance of its independent legal counsel, who advised them on, among other things, its duties and obligations.
In connection with the Board’s review, Janus Capital provided, and the Board obtained, substantial information regarding the following matters: the management, financial position and business of Henderson; the history of Henderson’s business and operations; the investment performance of the investment companies advised by Henderson; the proposed structure, operations and investment processes of the combined investment management organization after the Transaction and the strategy for operating and growing the business following the Transaction; the future plans of Janus and Henderson with respect to the Funds and any proposed changes to the operations or structure of the Funds; and the future plans of Janus and Henderson with respect to the provision of services to the Funds, and the entities providing such services, including those affiliated with Janus. The Board also received information regarding the terms of the Transaction, anticipated management of the combined organization, the resources that each of Janus and Henderson bring to the combined organization and the process being followed by Janus and Henderson to integrate their organizations. The Board also received information regarding the impact of the Transaction on each of INTECH, Perkins and Janus Singapore.
In connection with the Board’s approval of New Advisory Agreements and New Sub-Advisory Agreements at its December 8, 2016 meeting, the Board also continued its on-going annual process to determine whether to continue the existing investment advisory agreements between Janus Capital and the Trust on behalf of each Fund (each, a “Current Advisory Agreement” and collectively, the “Current Advisory Agreements”) and the existing sub-advisory agreements between Janus Capital and each of the Funds that utilize INTECH, Perkins, or Janus Singapore as sub- advisers (each, a “Current Sub-Advisory Agreement” and collectively, the “Current Sub-Advisory Agreements”). In this regard, the Board received and reviewed information provided by Janus and the respective Sub-Advisers in response to requests of the Board and its independent legal counsel. The Board also received and reviewed information and analysis provided by, and in response to requests of, its independent fee consultant. The Board noted that as part of this annual process, the Board had considered and was in the process of considering, numerous factors, including the nature and quality of services provided by Janus Capital and each Sub-Adviser, as applicable; investment performance, on an absolute basis and relative to appropriate peer groups and one or a combination of market indices; investment management fees, expense ratios and asset sizes of the Funds and peer groups; investment management fees charged to comparable investment companies, separate accounts and non-fund clients; Janus Capital’s profitability from managing the Funds; fall-out benefits to Janus Capital from its relationship to the Funds, including revenues derived from services provided to the Funds by affiliates of Janus Capital; and the potential benefits to Janus Capital, the Funds of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms.
In determining whether to approve the New Advisory Agreement for each Fund and the New Sub-Advisory Agreement for Funds managed by INTECH, Perkins or Janus Singapore in connection with the Transaction, and whether to recommend approval to Fund shareholders, the Board received information and made inquiries into all matters as it deemed appropriate. The Board reviewed and analyzed various factors it deemed relevant, including the following factors, among others, none of which by itself was considered dispositive:
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Additional Information (unaudited)
· The terms of the New Advisory Agreements are substantially similar to the corresponding Current Advisory Agreements, and the contractual fee rate will not change. In this regard, see the discussion of the Board’s considerations with respect to its most recent approval of the Current Advisory Agreements prior to December 8, 2016, as disclosed in each Fund’s most recent prior annual or semi-annual shareholder report, as applicable.
· The terms of the New Sub-Advisory Agreements are substantially similar to the corresponding Current Sub- Advisory Agreements, and the contractual fee rate will not change. In this regard, see the discussion of the Board’s considerations with respect to its most recent approval of the Current Sub-Advisory Agreements prior to December 8, 2016, as disclosed in each Fund’s most recent prior annual or semi-annual shareholder report, as applicable.
· Janus Capital’s plans for the operation of the Funds, including its plans for the continued provision of all services currently provided to the Funds by Janus Capital and its affiliates, including, among others, investment advisory services, portfolio trading services, and Fund administrative and accounting services, and the personnel and resources proposed to support the provision of such services.
· The estimated profitability to Janus Capital from managing the Funds after the Transaction, including potential economies of scale and fall-out benefits to Janus Capital from its relationship to the Funds, including revenues derived from services provided to the Funds by affiliates of Janus Capital, and the potential benefits to Janus Capital, and the Funds of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms.
In connection with its deliberations, the Board received assurances from Janus, on behalf of itself and its affiliates (collectively, “Janus”) including the following:
· Janus has provided to the Board such information as it believes is reasonably necessary to evaluate the New Advisory Agreements and New Sub-Advisory Agreements.
· Janus is committed to the continuance, without interruption, of services to the Funds of at least the type and quality currently provided by Janus Capital and its affiliates, or superior thereto.
· The Transaction is not expected to affect negatively the nature, extent or quality of the investment advisory services provided by Janus Capital to the Funds following the Transaction, and the investment advisory services are expected to be at least comparable to the services being provided under the Current Advisory Agreements and Current Sub-Advisory Agreements. In this regard, the Board noted specific representations that Janus does not intend for the nature, extent or quality of investment advisory and other services to be provided to the Funds following the Transaction to change, and the extent of such services were expected to increase based on the combined resources of the combined investment management organization after the Transaction, and should the nature, extent or quality of such services decline, Janus would commit the resources needed to return such services to pre-Transaction levels.
· The Funds’ current operations were expected to remain largely unchanged, except for certain fund reorganizations which will be separately considered by the Board, and such other changes as were or will be presented to the Board.
· Janus does not intend to make changes to the portfolio managers providing services to the Funds, other than proposed changes in the management of certain Funds as discussed with the Board, including those related to proposals to merge certain Funds with Funds managed by Henderson Global Investors (North America) Inc., an indirect, wholly-owned subsidiary of Henderson, and subject to such changes as may arise at any time as a result of the ongoing process of portfolio manager evaluation.
· After the Transaction, the extent of distribution and marketing services provided to the Janus Funds were expected to increase based on the combined resources of Janus and Henderson. In this regard, Janus Capital advised the Board that after the Transaction, the extent of distribution and marketing services provided to the Janus Funds are expected to increase based on the combined resources of Janus and Henderson. This is due primarily to the anticipated increase of sales related resources and expanded global presence of the combined Janus Henderson organization, which is expected to enhance visibility and brand recognition of the Janus Henderson Funds.
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Additional Information (unaudited)
· The intent of Janus Capital to take the necessary and appropriate steps to retain and attract its key investment advisory personnel.
· The intent of Janus to take the necessary and appropriate steps to retain and attract its key compliance, financial, fund accounting and administrative personnel supporting the management and oversight of the Funds.
· Janus is not aware of any express or implied term, condition, arrangement or understanding that would impose in its best judgement an “unfair burden” on any Fund as a result of the Transaction, as defined in Section 15(f) of the 1940 Act, and that Janus will take no action that would have the effect of imposing such an “unfair burden” on any Fund in connection with the Transaction.
Janus assured the Board that it intended to comply with Section 15(f) of the Investment Company Act of 1940, as amended (the “1940 Act”). Section 15(f) provides a non-exclusive safe harbor for an investment adviser to an investment company or any of its affiliated persons to receive any amount or benefit in connection with a change in control of the investment adviser so long as two conditions are met. First, for a period of three years after the transaction, at least 75% of the board members of the investment company must not be interested persons of such investment adviser (as defined under the 1940 Act). The composition of the Board is in compliance with this provision of Section 15(f). In addition, after careful review and consideration, the Board determined that it would be in the best interests of the Funds to add to the Board an individual who currently acts as a non-interested board member of the Henderson Trust. The Board believes that this change in the Board composition will provide perspective and insight relating to experience working with the Henderson organization. The Board’s Nominating and Governance Committee considered a number of candidates and recommended that the Board nominate one proposed new trustee from those candidates who currently act as non-interested board members of the Henderson Trust. The Board approved that trustee nominee to serve on the Board, subject to election by the shareholders of the Funds and contingent on the closing of the Transaction. If the new trustee is elected and serves on the Board, the Board composition would continue to satisfy the provisions of Section 15(f).
To meet the second condition of Section 15(f), an “unfair burden” must not be imposed upon the investment company as a result of such transaction or any express or implied terms, conditions or understandings applicable thereto. The term “unfair burden” is defined in Section 15(f) to include any arrangement during the two-year period after the transaction, whereby the investment adviser, or any interested person of such adviser, receives or is entitled to receive any compensation, directly or indirectly, from the investment company or its shareholders (other than fees for bona fide investment advisory or other services) or from any person in connection with the purchase or sale of securities or other property to, from or on behalf of the investment company (other than bona fide ordinary compensation as principal underwriter for such investment company).
Janus represented that it does not believe that an “unfair burden” will be placed on the Funds as a result of the Transaction. In furtherance thereof, Janus has undertaken to pay the costs of preparing and distributing proxy materials to, and of holding the meetings of, the Funds’ shareholders (the “Meetings”), as well as other fees and expenses in connection with the Transaction, including the reasonable fees and expenses of legal counsel and consultants to the Funds and the Trustees. In addition, Janus has agreed, for a period of two years following the closing of the Transaction, (i) not to request any increases to advisory fees for the Funds, other than those proposed to and approved by the Board prior to the close of the Transaction, and (ii) to continue to use the current process by which expense caps are set annually for the Funds.
As a result of its review and consideration of the New Investment Advisory Agreements and New Sub-Advisory Agreements in connection with the Transaction, at a meeting on December 8, 2016, the Board voted unanimously to approve a New Investment Advisory Agreement for each Fund and a New Sub-Advisory Agreement for each Fund managed by INTECH, Perkins or Janus Singapore, and to recommend such agreements to the Funds’ shareholders for their approval.
Approval of Interim Advisory and Sub-Advisory Agreements with Janus and Janus Affiliates during the Period
In the event shareholders of a Fund do not approve such Fund’s New Advisory Agreement and/or New Sub- Advisory Agreement at the Meetings prior to the closing of the Transaction, Janus Capital proposed that an interim investment advisory agreement between Janus Capital and such Fund (each, an “Interim Advisory Agreement” and collectively, the “Interim Advisory Agreements”) and an interim sub-advisory agreement between Janus Capital and the applicable Sub-
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Additional Information (unaudited)
Adviser (each, an “Interim Sub-Advisory Agreement” and collectively, the “Interim Sub- Advisory Agreements”) take effect upon the closing of the Transaction. At the December 8, 2016 meeting, the Board, all of whom are Independent Trustees, unanimously approved an Interim Advisory Agreement for each Fund and an Interim Sub-Advisory Agreement for each applicable Fund in order to assure continuity of investment advisory services to the Funds and sub-advisory services to the sub-advised Funds after the Transaction. The terms of each Interim Advisory Agreement are substantially identical to those of the applicable Current Advisory Agreement and New Advisory Agreement, except for the term and escrow provisions described below. Similarly, the terms of each Interim Sub-Advisory Agreement are substantially identical to those of the Current Sub-Advisory Agreements and New Sub-Advisory Agreements, except for the term and escrow provisions described below. The Interim Advisory Agreement and Interim Sub-Advisory Agreement will continue in effect for a term ending on the earlier of 150 days from the closing of the Transaction (the “150-day period”) or when shareholders of the Fund approve the New Advisory Agreement and/or New Sub-Advisory Agreement. Pursuant to Rule 15a-4 under the 1940 Act, compensation earned by Janus Capital under an Interim Advisory Agreement and compensation earned by a Sub-Adviser under an Interim Sub-Advisory Agreement will be held in an interest- bearing escrow account. If shareholders of a Fund approve the New Advisory Agreement prior to the end of the 150-day period, the amount held in the escrow account under the Interim Advisory Agreement will be paid to Janus Capital. If shareholders of a Fund approve the New Advisory Agreement and New Sub-Advisory Agreement prior to the end of the 150-day period, the amount held in the escrow account under the Interim Sub-Advisory Agreement will be paid to the Sub-Adviser. If shareholders of a Fund do not approve the New Advisory Agreement prior to the end of the 150-day period, the Board will take such action as it deems to be in the best interests of the Fund, and Janus Capital will be paid the lesser of its costs incurred in performing its services under the Interim Advisory Agreement or the total amount in the escrow account, plus interest earned. If shareholders of a Fund do not approve the New Advisory Agreement and/or New Sub-Advisory Agreement prior to the end of the 150-day period, the Board will take such action as it deems to be in the best interests of the Fund, and the Sub-Adviser will be paid the lesser of its costs incurred in performing its services under the Interim Sub-Advisory Agreement or the total amount in the escrow account, plus interest earned.
Approval of Sub-Advisory Agreements with Henderson Investment Management Limited during the Period
Janus Capital met with the Trustees on November 7-8, 2016, and December 7-8, 2016, to discuss the approval of a new sub-advisory agreement between Janus Capital and Henderson Investment Management Limited (“HIML”) (each, a “HIML Sub-Advisory Agreement” and collectively, the “HIML Sub-Advisory Agreements”) on behalf of each of Janus Henderson Asia Equity Fund (formerly, Janus Asia Equity Fund), and Janus Henderson Global Real Estate Fund (formerly, Janus Global Real Estate Fund) (each, an “HIML Fund” and together, the “HIML Funds”) to take effect immediately after the closing of the Transaction or shareholder approval, whichever is later. At the meetings, the Trustees also discussed the HIML Sub-Advisory Agreements with their independent counsel in executive session. During the course of these meetings, the Trustees requested and considered such information as they deemed relevant to their deliberations. In addition, at prior meetings and during the course of these meetings the Board also undertook a comprehensive process to evaluate the impact of the Transaction on the nature, quality and extent of services expected to be provided by Janus Capital and HIML to each HIML Fund, including after the completion of the Transaction. For a fuller discussion of the Board’s consideration of the approval of a new investment advisory agreement for the HIML Funds in connection with the Transaction, see “Approval of Advisory and Sub-Advisory Agreements with Janus and its Affiliates During the Period” above.
At a meeting of the Board of Trustees held on December 8, 2016, the Trustees considered the HIML Sub-Advisory Agreements. In determining whether to approve the HIML Sub-Advisory Agreements, and whether to recommend approval to the shareholders of each HIML Fund, the Board received information and made inquiries into all matters as it deemed appropriate. The Board reviewed and analyzed various factors it deemed relevant, including the following factors, among others, none of which by itself was considered dispositive:
· the terms of each HIML Sub-Advisory Agreement;
· the nature, quality and extent of services expected to be provided under the HIML Sub-Advisory Agreements, including the reputation, qualifications and background of HIML and its operational and compliance infrastructures;
· the investment approach, the experience and skills of senior management and investment personnel of HIML, including the portfolio managers who would be responsible for managing all or part of the portfolio of each HIML Fund, noting the resources made available to such personnel;
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Additional Information (unaudited)
· the ability of HIML to attract and retain high-quality personnel and the organizational depth of HIML;
· the sub-advisory fee rate under each HIML Sub-Advisory Agreement, as well as the overall management fee structure of each HIML Fund, noting that the sub-advisory fee rate is consistent with the approach utilized in the Janus Funds complex for other sub-advisory relationships, taking into account the allocation of managed assets between Janus Capital and HIML for the Global Real Estate Fund;
· under each HIML Sub-Advisory Agreement, Janus Capital would be responsible for paying HIML out of its fees;
· the fall out benefits to HIML and its affiliates from its relationship with each HIML Fund, including the potential benefits to HIML and its affiliates and each HIML Fund of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms;
· the potential for economies of scale with respect to the overall fee structure of each HIML Fund and whether either Fund will benefit from any economies of scale; and
· the costs of seeking approval of the HIML Sub-Advisory Agreements will not be borne by the HIML Funds.
As a result of its review and consideration of each HIML Sub-Advisory Agreement and related matters, on December 8, 2016, the Board voted unanimously to approve each HIML Sub-Advisory Agreement and to recommend such agreement to each HIML Fund’s shareholders for their approval.
Approval of New Shell Advisory Agreements and New Shell Sub-Advisory Agreements
On September 15, 2016, Janus Capital Group, Inc. (“Janus”) advised the Board of its intent to seek a strategic combination of its advisory business with Henderson Group PLC (“Henderson”). The Board met with the Chief Executive Officer of Janus, who outlined the proposed combination and the potential benefits to Janus Capital and the Janus funds overseen by the Board. Subsequent to the September 15, 2016 meeting, the Trustees identified a list of basic principles, which they believed should serve as the foundation for their review of the organizational, operational and strategic issues involved with any potential change in control of Janus Capital, the investment adviser to the funds overseen by the Board. These basic principles were communicated to Janus Capital on September 27, 2016, and were intended to be shared with Henderson. On October 3, 2016, Janus announced that it had entered into a definitive Agreement and Plan of Merger with Henderson pursuant to which Janus and Henderson agreed to effect an all-stock merger of equals strategic combination of their respective businesses, with Janus Capital surviving the merger as a direct wholly-owned subsidiary of Henderson. The Board was advised that, subject to certain conditions, the Transaction is currently expected to close during the second quarter of 2017.
As part of its due diligence, the Board developed an initial list of questions related to the proposed transaction, which was provided to Janus Capital on October 6, 2016. At a special Board meeting held on October 19, 2016, the Board considered Janus Capital’s response to the initial information request and met with the management of Janus to discuss the impact of the Transaction on the nature, extent and quality of services Janus Capital is expected to provide to the Janus Funds following the Transaction, including those created by merger of certain Henderson Global Funds into new “shell” series of JIF (each, a “Henderson Shell Fund” and together, the “Henderson Shell Funds,” and collectively with the Janus funds overseen by the Board, the “Funds”), addressing, among other matters, the personnel expected to provide such services, and the resources available to do so. After its October 19, 2016 meeting, the Board developed a supplemental request for additional information, which was provided to Janus Capital on October 26, 2016. At another special Board meeting held on November 7-8, 2016, the Board considered Janus Capital’s response to the supplemental information request and again met with the management of Janus and Henderson to discuss the impact of the Transaction on the nature, extent and quality of services Janus Capital is expected to provide to the Funds following the Transaction, and also met with various officers of the Funds and of Janus Capital, including various Fund portfolio managers. After its November 7-8, 2016 meeting, the Board developed a second supplemental request for additional information, which was provided to Janus Capital on November 21, 2016. On December 7-8, 2016, the Board met to consider Janus Capital’s response to the second supplemental information request and also to consider the proposed new advisory agreement and sub-advisory agreement for each Henderson Shell Fund (a “New Shell Advisory Agreement” and “New Shell Sub-Advisory Agreement.”) In this regard, the Board noted that each Henderson Shell Fund was proposed to be sub-advised and managed by Henderson Investment Management Limited (“HIML”), a wholly-owned subsidiary of Henderson. During each of these meetings, the Board sought additional and clarifying information as it deemed necessary or appropriate. In addition, the Board engaged its independent fee consultant to
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Additional Information (unaudited)
help evaluate certain of the proposals that the Board was being asked to consider. Throughout the process, the Board had the assistance of its independent legal counsel, who advised them on, among other things, its duties and obligations.
In connection with the Board’s review, Janus Capital provided, and the Board obtained, substantial information regarding the following matters: the management, financial position and business of Henderson; the history of Henderson’s business and operations; the investment performance of the investment companies advised by Henderson; the proposed structure, operations and investment processes of the combined investment management organization after the Transaction and the strategy for operating and growing the business following the Transaction; the future plans of Janus and Henderson with respect to the Funds and any proposed changes to the operations or structure of the Funds; and the future plans of Janus and Henderson with respect to the provision of services to the Funds, and the entities providing such services, including those affiliated with Janus. The Board also received information regarding the terms of the Transaction, anticipated management of the combined organization, the resources that each of Janus and Henderson bring to the combined organization and the process being followed by Janus and Henderson to integrate their organizations. The Board also received information regarding the impact of the Transaction on HIML.
In connection with the Board’s approval of the New Shell Advisory Agreements and New Shell Sub-Advisory Agreements, at its December 8, 2016 meeting, the Board also continued its on-going annual process to determine whether to continue the Current Advisory Agreements and the Current Sub-Advisory Agreements for the Janus Funds. In this regard, the Board received and reviewed information provided by Janus and the respective Sub-Advisers in response to requests of the Board and its independent legal counsel. The Board also received and reviewed information and analysis provided by, and in response to requests of, its independent fee consultant. The Board noted that as part of this annual process, the Board had considered and was in the process of considering, numerous factors, including the nature and quality of services provided by Janus Capital and each Sub-Adviser, as applicable; investment performance, on an absolute basis and relative to appropriate peer groups and one or a combination of market indices; investment management fees, expense ratios and asset sizes of the Funds and peer groups; investment management fees charged to comparable investment companies, separate accounts and non-fund clients; Janus Capital’s profitability from managing the Funds; fall-out benefits to Janus Capital from its relationship to the Funds, including revenues derived from services provided to the Funds by affiliates of Janus Capital; and the potential benefits to Janus Capital, the Funds of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms.
In determining whether to approve the New Shell Advisory Agreement and the New Shell Sub-Advisory Agreement in connection with the Transaction, the Board received information and made inquiries into all matters as it deemed appropriate. The Board reviewed and analyzed various factors it deemed relevant, including the following factors, among others, none of which by itself was considered dispositive:
· The terms of the New Shell Advisory Agreements are substantially similar to the Current Advisory Agreements, other than with respect to the applicable contractual fee rates.
· Information regarding the fees and expenses of each applicable Henderson Global Fund merging into a Henderson Shell Fund in comparison to similar information for other comparable funds as provided by Broadridge, an independent data provider; and analysis of that information provided by their independent fee consultant, who believed such fee and expense levels to be reasonable.
· Information regarding the pro forma fees and expenses of the Henderson Shell Funds provided by Janus Capital, including proposed fee waivers.
· Janus Capital’s plans for the operation of the Funds, including its plans for the continued provision of all services currently provided to the Funds by Janus Capital and its affiliates, including, among others, investment advisory services, portfolio trading services, and Fund administrative and accounting services, and the personnel and resources proposed to support the provision of such services.
· The estimated profitability to Janus Capital from managing the Funds after the Transaction, including potential economies of scale and fall-out benefits to Janus Capital from its relationship to the Funds, including revenues derived from services provided to the Funds by affiliates of Janus Capital, and the potential benefits to Janus Capital, and the Funds of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms.
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Additional Information (unaudited)
· the terms of each New Shell Sub-Advisory Agreement;
· the nature, quality and extent of services expected to be provided under the New Shell Sub-Advisory Agreements, including the reputation, qualifications and background of HIML and its operational and compliance infrastructures;
· the investment approach, the experience and skills of senior management and investment personnel of HIML, including the portfolio managers who would be responsible for managing all or part of the portfolio of each Henderson Shell Fund, noting the resources made available to such personnel;
· the ability of HIML to attract and retain high-quality personnel and the organizational depth of HIML;
· the sub-advisory fee rate under each New Shell Sub-Advisory Agreement, as well as the overall management fee structure of each Henderson Shell Fund, noting that the sub-advisory fee rate is consistent with the approach utilized in the Janus Funds complex for other sub-advisory relationships;
· under each New Shell Sub-Advisory Agreement, Janus Capital would be responsible for paying HIML out of its fees;
· the fall out benefits to HIML and its affiliates from its relationship with each Henderson Shell Fund, including the potential benefits to HIML and its affiliates and each Henderson Shell Fund of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms; and
· the potential for economies of scale with respect to the overall fee structure of each Henderson Shell Fund and whether any Fund will benefit from any economies of scale.
In connection with its deliberations, the Board received assurances from Janus, on behalf of itself and its affiliates (collectively, “Janus”) including the following:
· Janus has provided to the Board such information as it believes is reasonably necessary to evaluate the New Shell Advisory Agreements and New Shell Sub-Advisory Agreements.
· Janus is committed to the continuance, without interruption, of services to the Funds of at least the type and quality currently provided by Janus Capital and its affiliates, or superior thereto.
· The Transaction is not expected to affect negatively the nature, extent or quality of the investment advisory services provided by Janus Capital to the Funds following the Transaction, and the investment advisory services are expected to be at least comparable to the services being provided under the Current Advisory Agreements and Current Sub-Advisory Agreements. In this regard, the Board noted specific representations that Janus does not intend for the nature, extent or quality of investment advisory and other services to be provided to the Funds following the Transaction to change, and the extent of such services were expected to increase based on the combined resources of the combined investment management organization after the Transaction, and should the nature, extent or quality of such services decline, Janus would commit the resources needed to return such services to pre-Transaction levels.
· The Funds’ current operations were expected to remain largely unchanged, except for certain fund reorganizations which will be separately considered by the Board, and such other changes as were or will be presented to the Board.
· Janus does not intend to make changes to the portfolio managers providing services to the Funds, other than proposed changes in the management of certain Funds as discussed with the Board, including those related to proposals to merge certain Funds with Henderson Funds, and subject to such changes as may arise at any time as a result of the ongoing process of portfolio manager evaluation.
· After the Transaction, the extent of distribution and marketing services provided to the Funds were expected to increase based on the combined resources of Janus and Henderson. In this regard, Janus Capital advised the Board that after the Transaction, the extent of distribution and marketing services provided to the Funds are expected to increase based on the combined resources of Janus and Henderson. This is due primarily to the anticipated increase of sales related resources and expanded global presence of the combined Janus Henderson organization, which is expected to enhance visibility and brand recognition of the Janus Henderson Funds.
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· The intent of Janus Capital to take the necessary and appropriate steps to retain and attract its key investment advisory personnel.
· The intent of Janus to take the necessary and appropriate steps to retain and attract its key compliance, financial, fund accounting and administrative personnel supporting the management and oversight of the Funds.
· Janus is not aware of any express or implied term, condition, arrangement or understanding that would impose in its best judgement an “unfair burden” on any Fund as a result of the Transaction, as defined in Section 15(f) of the 1940 Act, and that Janus will take no action that would have the effect of imposing such an “unfair burden” on any Fund in connection with the Transaction.
Janus assured the Board that it intended to comply with Section 15(f) of the 1940 Act. Section 15(f) provides a non-exclusive safe harbor for an investment adviser to an investment company or any of its affiliated persons to receive any amount or benefit in connection with a change in control of the investment adviser so long as two conditions are met. First, for a period of three years after the transaction, at least 75% of the board members of the investment company must not be Interested Persons of such investment adviser. The composition of the Board is in compliance with this provision of Section 15(f). In addition, after careful review and consideration, the Board determined that it would be in the best interests of the Funds to add to the Board an individual who currently acts as a non-interested board member of the Henderson Trust. The Board believes that this change in the Board composition will provide perspective and insight relating to experience working with the Henderson organization. The Board’s Nominating and Governance Committee considered a number of candidates and recommended that the Board nominate one proposed new trustee from those candidates who currently act as non-interested board members of the Henderson Trust. The Board approved that trustee nominee to serve on the Board, subject to election by the shareholders of the Funds and contingent on the closing of the Transaction. If the new trustee is elected and serves on the Board, the Board composition would continue to satisfy the provisions of Section 15(f).
To meet the second condition of Section 15(f), an “unfair burden” must not be imposed upon the investment company as a result of such transaction or any express or implied terms, conditions or understandings applicable thereto. The term “unfair burden” is defined in Section 15(f) to include any arrangement during the two-year period after the transaction, whereby the investment adviser, or any interested person of such adviser, receives or is entitled to receive any compensation, directly or indirectly, from the investment company or its shareholders (other than fees for bona fide investment advisory or other services) or from any person in connection with the purchase or sale of securities or other property to, from or on behalf of the investment company (other than bona fide ordinary compensation as principal underwriter for such investment company).
Janus represented that it does not believe that an “unfair burden” will be placed on the Funds as a result of the Transaction. In furtherance thereof, Janus has undertaken to pay the costs of preparing and distributing proxy materials to, and of holding the Meetings of, the Funds’ shareholders, as well as other fees and expenses in connection with the Transaction, including the reasonable fees and expenses of legal counsel and consultants to the Funds and the Trustees. In addition, Janus has agreed, for a period of two years following the closing of the Transaction, (i) not to request any increases to advisory fees for the Funds, other than those proposed to and approved by the Board prior to the close of the Transaction, and (ii) to continue to use the current process by which expense caps are set annually for the Funds.
As a result of its review and consideration of the New Shell Investment Advisory Agreements and New Shell Sub-Advisory Agreements in connection with the Transaction, at a meeting on December 8, 2016, the Board voted unanimously to approve a New Investment Advisory Agreement and New Sub-Advisory Agreement for each Henderson Shell Fund.
Approval of New Advisory Agreement and New Sub-Advisory Agreement for Janus Henderson U.S. Growth Opportunities Fund
On September 15, 2016, Janus Capital Group, Inc. (“Janus”) advised the Board of its intent to seek a strategic combination of its advisory business with Henderson Group PLC (“Henderson”). The Board met with the Chief Executive Officer of Janus, who outlined the proposed combination and the potential benefits to Janus Capital and the Janus funds overseen by the Board. Subsequent to the September 15, 2016 meeting, the Trustees identified a list of basic principles, which they believed should serve as the foundation for their review of the organizational, operational
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and strategic issues involved with any potential change in control of Janus Capital, the investment adviser to the funds overseen by the Board. These basic principles were communicated to Janus Capital on September 27, 2016, and were intended to be shared with Henderson. On October 3, 2016, Janus announced that it had entered into a definitive Agreement and Plan of Merger with Henderson pursuant to which Janus and Henderson agreed to effect an all-stock merger of equals strategic combination of their respective businesses, with Janus Capital surviving the merger as a direct wholly-owned subsidiary of Henderson. The Board was advised that, subject to certain conditions, the Transaction is currently expected to close during the second quarter of 2017.
As part of its due diligence, the Board developed an initial list of questions related to the proposed transaction, which was provided to Janus Capital on October 6, 2016. At a special Board meeting held on October 19, 2016, the Board considered Janus Capital’s response to the initial information request and met with the management of Janus to discuss the impact of the Transaction on the nature, extent and quality of services Janus Capital is expected to provide to the Janus Funds following the Transaction, including those created by merger of certain Henderson Global Funds into new “shell” series of JIF (each, a “Henderson Shell Fund” and together, the “Henderson Shell Funds,” and collectively with the Janus funds overseen by the Board, the “Funds”), addressing, among other matters, the personnel expected to provide such services, and the resources available to do so. After its October 19, 2016 meeting, the Board developed a supplemental request for additional information, which was provided to Janus Capital on October 26, 2016. At another special Board meeting held on November 7-8, 2016, the Board considered Janus Capital’s response to the supplemental information request and again met with the management of Janus and Henderson to discuss the impact of the Transaction on the nature, extent and quality of services Janus Capital is expected to provide to the Funds following the Transaction, and also met with various officers of the Funds and of Janus Capital, including various Fund portfolio managers. After its November 7-8, 2016 meeting, the Board developed a second supplemental request for additional information, which was provided to Janus Capital on November 21, 2016. On December 7-8, 2016, the Board met to consider Janus Capital’s response to the second supplemental information request and also to consider the proposed new advisory agreement and sub-advisory agreement for each Henderson Shell Fund. In this regard, the Board noted that each Henderson Shell Fund was proposed to be sub-advised and managed by Henderson Investment Management Limited, a wholly-owned subsidiary of Henderson. The Board noted that another Henderson Global Fund, U.S. Growth Opportunities Fund, was proposed to be sub-advised and managed by Geneva Capital Management LLC (“Geneva”), an indirect wholly-owned subsidiary of Henderson. On December 19, 2017, the Board issued an additional supplemental information request to Geneva. On January 26, 2017, the Board met to consider Geneva’s response to this additional supplemental information request and also to consider the proposed new advisory agreement and sub-advisory agreement for U.S. Growth Opportunities Fund (the “New Advisory Agreement” and “New Sub-Advisory Agreement,” respectively.) During each of these meetings, the Board sought additional and clarifying information as it deemed necessary or appropriate. In addition, the Board engaged its independent fee consultant to help evaluate certain of the proposals that the Board was being asked to consider. Throughout the process, the Board had the assistance of its independent legal counsel, who advised them on, among other things, its duties and obligations.
In connection with the Board’s review, Janus Capital provided, and the Board obtained, substantial information regarding the following matters: the management, financial position and business of Henderson; the history of Henderson’s business and operations; the investment performance of the investment companies advised by Henderson; the proposed structure, operations and investment processes of the combined investment management organization after the Transaction and the strategy for operating and growing the business following the Transaction; the future plans of Janus and Henderson with respect to the Funds and any proposed changes to the operations or structure of the Funds; and the future plans of Janus and Henderson with respect to the provision of services to the Funds, and the entities providing such services, including those affiliated with Janus. The Board also received information regarding the terms of the Transaction, anticipated management of the combined organization, the resources that each of Janus and Henderson bring to the combined organization and the process being followed by Janus and Henderson to integrate their organizations. The Board also received information regarding the impact of the Transaction on Geneva.
In connection with the Board approval of the New Advisory Agreement and New Sub-Advisory Agreements, at its December 8, 2016 meeting, the Board also continued its on-going annual process to determine whether to continue the Current Advisory Agreements and the Current Sub-Advisory Agreements for the Janus Funds. In this regard, the Board received and reviewed information provided by Janus and the respective Sub-Advisers in response to requests of the Board and its independent legal counsel. The Board also received and reviewed information and analysis provided by, and in response to requests of, its independent fee consultant. The Board noted that as part of this annual process, the Board had considered and was in the process of considering, numerous factors, including the nature and quality of
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services provided by Janus Capital and each Sub-Adviser, as applicable; investment performance, on an absolute basis and relative to appropriate peer groups and one or a combination of market indices; investment management fees, expense ratios and asset sizes of the Funds and peer groups; investment management fees charged to comparable investment companies, separate accounts and non-fund clients; Janus Capital’s profitability from managing the Funds; fall-out benefits to Janus Capital from its relationship to the Funds, including revenues derived from services provided to the Funds by affiliates of Janus Capital; and the potential benefits to Janus Capital, the Funds of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms.
In determining whether to approve the New Advisory Agreement and the New Sub-Advisory Agreement in connection with the Transaction, the Board received information and made inquiries into all matters as it deemed appropriate. The Board reviewed and analyzed various factors it deemed relevant, including the following factors, among others, none of which by itself was considered dispositive:
· The terms of the New Advisory Agreement is substantially similar to the Current Advisory Agreement, other than with respect to the applicable contractual fee rates.
· Information regarding the fees and expenses of U.S. Growth Opportunities Fund in comparison to similar information for other comparable funds as provided by Broadridge, an independent data provider; and analysis of that information provided by their independent fee consultant, who believed such fee and expense levels to be reasonable.
· Information regarding the pro forma fees and expenses of U.S. Growth Opportunities Fund provided by Janus Capital, including proposed fee waivers.
· Janus Capital’s plans for the operation of the Funds, including its plans for the continued provision of all services currently provided to the Funds by Janus Capital and its affiliates, including, among others, investment advisory services, portfolio trading services, and Fund administrative and accounting services, and the personnel and resources proposed to support the provision of such services.
· The estimated profitability to Janus Capital from managing the Funds after the Transaction, including potential economies of scale and fall-out benefits to Janus Capital from its relationship to the Funds, including revenues derived from services provided to the Funds by affiliates of Janus Capital, and the potential benefits to Janus Capital, and the Funds of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms.
· the terms of each New Sub-Advisory Agreement;
· the nature, quality and extent of services expected to be provided under the New Shell Sub-Advisory Agreement, including the reputation, qualifications and background of Geneva and its operational and compliance infrastructures;
· the investment approach, the experience and skills of senior management and investment personnel of Geneva, including the portfolio managers who would be responsible for managing all or part of the portfolio of U.S. Growth Opportunities Fund noting the resources made available to such personnel;
· the ability of Geneva to attract and retain high-quality personnel and the organizational depth of Geneva;
· the sub-advisory fee rate under the New Sub-Advisory Agreement, as well as the overall management fee structure of U.S. Growth Opportunities Fund noting that the sub-advisory fee rate is consistent with the approach utilized in the Janus Funds complex for other sub-advisory relationships;
· under the New Sub-Advisory Agreement, Janus Capital would be responsible for paying Geneva out of its fees;
· the fall out benefits to Geneva and its affiliates from its relationship with U.S. Growth Opportunities Fund, including the potential benefits to Geneva and its affiliates and U.S. Growth Opportunities Fund of receiving research services from broker/dealer firms in connection with the allocation of portfolio transactions to such firms; and
· the potential for economies of scale with respect to the overall fee structure of U.S. Growth Opportunities Fund and the Fund will benefit from any economies of scale.
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In connection with its deliberations, the Board received assurances from Janus, on behalf of itself and its affiliates (collectively, “Janus”) including the following:
· Janus has provided to the Board such information as it believes is reasonably necessary to evaluate the New Advisory Agreement and New Sub-Advisory Agreement.
· Janus is committed to the continuance, without interruption, of services to the Funds of at least the type and quality currently provided by Janus Capital and its affiliates, or superior thereto.
· The Transaction is not expected to affect negatively the nature, extent or quality of the investment advisory services provided by Janus Capital to the Funds following the Transaction, and the investment advisory services are expected to be at least comparable to the services being provided under the Current Advisory Agreements and Current Sub-Advisory Agreements. In this regard, the Board noted specific representations that Janus does not intend for the nature, extent or quality of investment advisory and other services to be provided to the Funds following the Transaction to change, and the extent of such services were expected to increase based on the combined resources of the combined investment management organization after the Transaction, and should the nature, extent or quality of such services decline, Janus would commit the resources needed to return such services to pre-Transaction levels.
· The Funds’ current operations were expected to remain largely unchanged, except for certain fund reorganizations which will be separately considered by the Board, and such other changes as were or will be presented to the Board.
· Janus does not intend to make changes to the portfolio managers providing services to the Funds, other than proposed changes in the management of certain Funds as discussed with the Board, including those related to proposals to merge certain Funds with Henderson Funds, and subject to such changes as may arise at any time as a result of the ongoing process of portfolio manager evaluation.
· After the Transaction, the extent of distribution and marketing services provided to the Funds were expected to increase based on the combined resources of Janus and Henderson. In this regard, Janus Capital advised the Board that after the Transaction, the extent of distribution and marketing services provided to the Funds are expected to increase based on the combined resources of Janus and Henderson. This is due primarily to the anticipated increase of sales related resources and expanded global presence of the combined Janus Henderson organization, which is expected to enhance visibility and brand recognition of the Janus Henderson Funds.
· The intent of Janus Capital to take the necessary and appropriate steps to retain and attract its key investment advisory personnel.
· The intent of Janus to take the necessary and appropriate steps to retain and attract its key compliance, financial, fund accounting and administrative personnel supporting the management and oversight of the Funds.
· Janus is not aware of any express or implied term, condition, arrangement or understanding that would impose in its best judgement an “unfair burden” on any Fund as a result of the Transaction, as defined in Section 15(f) of the 1940 Act, and that Janus will take no action that would have the effect of imposing such an “unfair burden” on any Fund in connection with the Transaction.
Janus assured the Board that it intended to comply with Section 15(f) of the 1940 Act. Section 15(f) provides a non-exclusive safe harbor for an investment adviser to an investment company or any of its affiliated persons to receive any amount or benefit in connection with a change in control of the investment adviser so long as two conditions are met. First, for a period of three years after the transaction, at least 75% of the board members of the investment company must not be Interested Persons of such investment adviser. The composition of the Board is in compliance with this provision of Section 15(f). In addition, after careful review and consideration, the Board determined that it would be in the best interests of the Funds to add to the Board an individual who currently acts as a non-interested board member of the Henderson Trust. The Board believes that this change in the Board composition will provide perspective and insight relating to experience working with the Henderson organization. The Board’s Nominating and Governance Committee considered a number of candidates and recommended that the Board nominate one proposed new trustee from those candidates who currently act as non-interested board members of the Henderson Trust. The Board
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approved that trustee nominee to serve on the Board, subject to election by the shareholders of the Funds and contingent on the closing of the Transaction. If the new trustee is elected and serves on the Board, the Board composition would continue to satisfy the provisions of Section 15(f).
To meet the second condition of Section 15(f), an “unfair burden” must not be imposed upon the investment company as a result of such transaction or any express or implied terms, conditions or understandings applicable thereto. The term “unfair burden” is defined in Section 15(f) to include any arrangement during the two-year period after the transaction, whereby the investment adviser, or any interested person of such adviser, receives or is entitled to receive any compensation, directly or indirectly, from the investment company or its shareholders (other than fees for bona fide investment advisory or other services) or from any person in connection with the purchase or sale of securities or other property to, from or on behalf of the investment company (other than bona fide ordinary compensation as principal underwriter for such investment company).
Janus represented that it does not believe that an “unfair burden” will be placed on the Funds as a result of the Transaction. In furtherance thereof, Janus has undertaken to pay the costs of preparing and distributing proxy materials to, and of holding the Meetings of, the Funds’ shareholders, as well as other fees and expenses in connection with the Transaction, including the reasonable fees and expenses of legal counsel and consultants to the Funds and the Trustees. In addition, Janus has agreed, for a period of two years following the closing of the Transaction, (i) not to request any increases to advisory fees for the Funds, other than those proposed to and approved by the Board prior to the close of the Transaction, and (ii) to continue to use the current process by which expense caps are set annually for the Funds.
As a result of its review and consideration of the New Investment Advisory Agreement and New Sub-Advisory Agreement in connection with the Transaction, at a meeting on January 26, 2017, the Board voted unanimously to approve a New Investment Advisory Agreement and New Sub-Advisory Agreement for the U.S. Growth Opportunities Fund.
Renewal of Advisory and Sub-Advisory Agreements with Janus Capital and Janus Capital Affiliates during the Period
The Trustees of Janus Investment Fund and Janus Aspen Series, each of whom serves as an “independent” Trustee (the “Trustees”), oversee the management of each Fund of Janus Investment Fund and each Portfolio of Janus Aspen Series (each, a “Fund” and collectively, the “Funds”), and as required by law, determine annually whether to continue the investment advisory agreement for each Fund and the subadvisory agreements for the 16 Funds that utilize subadvisers.
In connection with their most recent consideration of those agreements for each Fund, the Trustees received and reviewed information provided by Janus Capital and the respective subadvisers in response to requests of the Trustees and their independent legal counsel. They also received and reviewed information and analysis provided by, and in response to requests of, their independent fee consultant. Throughout their consideration of the agreements, the Trustees were advised by their independent legal counsel. The Trustees met with management to consider the agreements, and also met separately in executive session with their independent legal counsel and their independent fee consultant.
Additionally, in connection with their consideration of whether to continue the investment advisory agreement and subadvisory agreement for each Fund, as applicable, the Trustees also received and reviewed information in connection with the proposed transaction to combine the respective businesses of Henderson Group plc and Janus Capital Group, Inc., the parent company of Janus Capital (the “Transaction”), announced in October 2016, which Janus Capital advised the Trustees was expected to close in the second quarter of 2017. In this regard, the Trustees reviewed information regarding the impact of the Transaction on the services to be provided by Janus Capital and each subadviser, as applicable, to the Funds under such agreements both prior to the close of the Transaction, and afterwards, if the Transaction were not to close. If the Transaction closes, all such agreements would be replaced by new investment advisory agreements and subadvisory agreements, as applicable, for each Fund, assuming requisite Fund shareholder approvals have been obtained.
At a meeting held on January 26, 2017, based on the Trustees’ evaluation of the information provided by Janus Capital, the subadvisers, and the independent fee consultant, as well as other information, the Trustees determined that the overall arrangements between each Fund and Janus Capital and each subadviser, as applicable, were fair and
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reasonable in light of the nature, extent and quality of the services provided by Janus Capital, its affiliates and the subadvisers, the fees charged for those services, and other matters that the Trustees considered relevant in the exercise of their business judgment. At that meeting, the Trustees unanimously approved the continuation of the investment advisory agreement for each Fund, and the subadvisory agreement for each subadvised Fund, for the period from February 1, 2017 through February 1, 2018, subject to earlier termination as provided for in each agreement.
In considering the continuation of those agreements, the Trustees reviewed and analyzed various factors that they determined were relevant, including the factors described below, none of which by itself was considered dispositive. However, the material factors and conclusions that formed the basis for the Trustees’ determination to approve the continuation of the agreements are discussed separately below. Also included is a summary of the independent fee consultant’s conclusions and opinions that arose during, and were included as part of, the Trustees’ consideration of the agreements. “Management fees,” as used herein, reflect actual annual advisory fees and any administration fees (excluding out of pocket costs), net of any waivers.
Nature, Extent and Quality of Services
The Trustees reviewed the nature, extent and quality of the services provided by Janus Capital and the subadvisers to the Funds, taking into account the investment objective, strategies and policies of each Fund, and the knowledge the Trustees gained from their regular meetings with management on at least a quarterly basis and their ongoing review of information related to the Funds. In addition, the Trustees reviewed the resources and key personnel of Janus Capital and each subadviser, particularly noting those employees who provide investment and risk management services to the Funds. The Trustees also considered other services provided to the Funds by Janus Capital or the subadvisers, such as managing the execution of portfolio transactions and the selection of broker-dealers for those transactions. The Trustees considered Janus Capital’s role as administrator to the Funds, noting that Janus Capital does not receive a fee for its services but is reimbursed for its out-of-pocket costs. The Trustees considered the role of Janus Capital in monitoring adherence to the Funds’ investment restrictions, providing support services for the Trustees and Trustee committees, and overseeing communications with shareholders and the activities of other service providers, including monitoring compliance with various policies and procedures of the Funds and with applicable securities laws and regulations.
In this regard, the independent fee consultant noted that Janus Capital provides a number of different services for the Funds and Fund shareholders, ranging from investment management services to various other servicing functions, and that, in its opinion, Janus Capital is a capable provider of those services. The independent fee consultant also provided its belief that Janus Capital has developed a number of institutional competitive advantages that should enable it to provide superior investment and service performance over the long term.
The Trustees concluded that the nature, extent and quality of the services provided by Janus Capital or the subadviser to each Fund were appropriate and consistent with the terms of the respective advisory and subadvisory agreements, and that, taking into account steps taken to address those Funds whose performance lagged that of their peers for certain periods, the Funds were likely to benefit from the continued provision of those services. They also concluded that Janus Capital and each subadviser had sufficient personnel, with the appropriate education and experience, to serve the Funds effectively and had demonstrated its ability to attract well-qualified personnel.
Performance of the Funds
The Trustees considered the performance results of each Fund over various time periods. They noted that they considered Fund performance data throughout the year, including periodic meetings with each Fund’s portfolio manager(s), and also reviewed information comparing each Fund’s performance with the performance of comparable funds and peer groups identified by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent data provider, and with the Fund’s benchmark index. In this regard, the independent fee consultant found that the overall Funds’ performance has been strong: for the 36 months ended September 30, 2016, approximately 76% of the Funds were in the top two Broadridge quartiles of performance, and for the 12 months ended September 30, 2016, approximately 47% of the Funds were in the top two Broadridge quartiles of performance.
The Trustees considered the performance of each Fund, noting that performance may vary by share class, and noted the following:
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Fixed-Income Funds and Money Market Funds
· For Janus Henderson Flexible Bond Fund (formerly, Janus Flexible Bond Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Bond Fund (formerly, Janus Global Bond Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Unconstrained Bond Fund (formerly, Janus Global Unconstrained Bond Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson High-Yield Fund (formerly, Janus High-Yield Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Multi-Sector Income Fund (formerly, Janus Multi-Sector Income Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Real Return Fund (formerly, Janus Real Return Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Short-Term Bond Fund (formerly, Janus Short-Term Bond Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Government Money Market Fund (formerly, Janus Government Money Market Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance.
· For Janus Henderson Money Market Fund (formerly, Janus Money Market Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance.
Asset Allocation Funds
· For Janus Henderson Global Allocation Fund – Conservative (formerly, Janus Global Allocation Fund – Conservative), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Allocation Fund – Growth (formerly, Janus Global Allocation Fund – Growth), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Allocation Fund – Moderate (formerly, Janus Global Allocation Fund – Moderate), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
Alternative Fund
· For Janus Henderson Diversified Alternatives Fund (formerly, Janus Diversified Alternatives Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the