AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 8, 2006
REGISTRATION NO. 333-135710
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
[X] PRE-EFFECTIVE AMENDMENT NO. 1 [ ] POST-EFFECTIVE AMENDMENT NO.
(Check appropriate Box or Boxes)
JANUS INVESTMENT FUND
(Exact Name of Registrant as Specified in Charter)
151 DETROIT STREET, DENVER, COLORADO 80206-4805
(Address of Principal Executive Offices)
303-333-3863
(Registrant's Telephone No., including Area Code)
STEPHANIE GRAUERHOLZ-LOFTON -- 151 DETROIT STREET, DENVER, COLORADO 80206-4805
(Name and Address of Agent for Service)
WITH COPIES TO:
<Table>
CAMERON S. AVERY, ESQ. GEOFFREY R. T. KENYON, ESQ. LESTER R. WOODWARD, ESQ.
BELL, BOYD & LLOYD LLC GOODWIN PROCTOR LLP DAVIS, GRAHAM & STUBBS
70 WEST MADISON STREET, SUITE 3300 EXCHANGE PLACE 1550 17TH STREET, SUITE 500
CHICAGO, IL 60602-4207 BOSTON, MA 02109 DENVER, CO 80202
</Table>
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
this Registration Statement becomes effective under the Securities Act of 1933.
No filing fee is required because an indefinite number of shares of
beneficial interest $.01 par value, of the Registrant have previously been
registered pursuant to Section 24(f) of the Investment Company Act of 1940, as
amended.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
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FOR SHAREHOLDERS OF
JANUS OLYMPUS FUND
(JANUS LOGO)
[August , 2006]
Dear Shareholder:
The Board of Trustees for Janus Olympus Fund recently approved a proposal
to merge the Fund into Janus Orion Fund. If the merger is approved by a
shareholder vote, you will receive shares of Janus Orion Fund equivalent in
dollar value to your shares in Janus Olympus Fund at the time of the merger.
Janus Capital Management LLC's recommendation to merge these funds is based
primarily on the funds' similarities. Both pursue companies demonstrating
aggressive growth traits and rely on a go-anywhere approach to find them. We
believe that merging them will allow you to maintain your exposure to
high-growth areas of the market while also enabling you to potentially benefit
from Janus Orion Fund's nondiversified investment strategy. Specifically,
Portfolio Manager Ron Sachs believes this strategy is an enhanced approach to
fundamental research and information analysis with regard to a particular
company, which can be an important factor in balancing the risk and reward
potential of each investment.
The proposed merger also offers a number of other benefits to shareholders,
including an equal or potentially lower expense ratio than the current expense
ratio of the Fund, greater efficiency in terms of portfolio management and
operations, and an impressive track record of performance. It's also noteworthy
that the merger is designed to be a tax-free reorganization, so you should not
realize a tax gain or loss as a direct result of the merger. Additional details
about the proposed merger are described in the enclosed Q&A and Proxy
Statement/Prospectus.
YOUR FUND'S BOARD OF TRUSTEES BELIEVES THE PROPOSED MERGER IS IN THE BEST
INTEREST OF SHAREHOLDERS AND HAS RECOMMENDED THAT SHAREHOLDERS VOTE "FOR" THE
MERGER.
You can vote in one of four ways:
- BY MAIL with the enclosed proxy card;
- BY INTERNET through the website listed in the proxy voting instructions;
- BY TELEPHONE using the toll-free number listed in the proxy voting
instructions; or
- IN PERSON at the special shareholder meeting on October 2, 2006.
Your vote is extremely important, so please read the enclosed Proxy
Statement/ Prospectus carefully and submit your vote. If you have any questions
about the proposal, please call our proxy solicitor, D.F. King & Co., Inc., at
1-800-628-8528.
Thank you for your consideration of this important proposal. We value you
as a shareholder and look forward to continuing our relationship with you.
Sincerely,
/s/ Gary D. black
Gary D. Black
Chief Executive Officer and
Chief Investment Officer of
Janus Capital Management LLC
JANUS OLYMPUS FUND
151 DETROIT STREET
DENVER, COLORADO 80206
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Notice is hereby given that the Board of Trustees of Janus Investment Fund
(the "Trust"), has called a Special Meeting of Shareholders of Janus Olympus
Fund ("Olympus Fund"), a series of the Trust, to be held at the JW Marriott
Hotel, 150 Clayton Lane, Denver, Colorado 80206, on October 2, 2006, at 10:00
a.m. Mountain Time (together with any adjournments or postponements thereof, the
"Meeting"). At the Meeting, shareholders will be asked to vote to approve an
Agreement and Plan of Reorganization (the "Plan"), which provides for the merger
of Olympus Fund into Janus Orion Fund ("Orion Fund") (the "Merger") and to
transact such other business, if any, as may properly come before the Meeting.
Any shareholder who owned shares of Olympus Fund as of the close of
business on July 14, 2006 (the "Record Date") will receive notice of the Meeting
and will be entitled to vote at the Meeting and at any adjournments or
postponements thereof.
The persons named as proxies will vote in their discretion on any other
business that may properly come before the Meeting or any adjournments or
postponements thereof.
In the event that the necessary quorum to transact business or the vote
required to approve the Plan is not obtained at the Meeting, the persons named
as proxies may propose one or more adjournments to permit further solicitation
of proxies. Any such adjournment will require the affirmative vote of the
holders of a majority of shares of Olympus Fund entitled to vote that are
present in person or by proxy at the Meeting. If a quorum is not present, the
persons named as proxies will vote the proxies (including broker non-votes and
abstentions), in accordance with applicable law, in favor of adjournment if they
determine additional solicitation is warranted and in the interests of Olympus
Fund's shareholders.
SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE URGED TO COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY CARD(S) AND RETURN IT IN THE ENCLOSED ADDRESSED
ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES, OR TO TAKE
ADVANTAGE OF THE INTERNET OR TELEPHONIC VOTING PROCEDURES DESCRIBED ON THE
ENCLOSED PROXY CARD(S). IF YOU WISH TO ATTEND THE MEETING AND VOTE YOUR SHARES
IN PERSON AT THAT TIME, YOU WILL STILL BE ABLE TO DO SO.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PLAN.
By Order of the Board of Trustees,
/s/ Kelley Abbott Howes
Kelley Abbott Howes
President and Chief Executive Officer,
of
Janus Investment Fund
[August xx, 2006]
INSTRUCTIONS FOR SIGNING PROXY CARDS
The following general rules for signing proxy cards may be of assistance to
you and may avoid the time and expense involved in validating your vote if you
fail to sign your proxy card properly.
1. INDIVIDUAL ACCOUNT: Sign your name exactly as it appears in the
registration on the proxy card.
2. JOINT ACCOUNT: Either party may sign, but the name of the party
signing should conform exactly to the name shown in the registration on the
proxy card.
3. ALL OTHER ACCOUNTS: The capacity of the individual signing the
proxy card should be indicated unless it is reflected in the form of
registration. For example:
<Table>
<Caption>
REGISTRATION VALID SIGNATURE
- ------------ ---------------
Corporate Account
(1) ABC Corp. ABC Corp.
(2) ABC Corp. John Doe, Treasurer
(3) ABC Corp. c/o John Doe, Treasurer John Doe
(4) ABC Corp. Profit Sharing Plan John Doe, Trustee
Trust Account
(1) ABC Trust Jane B. Doe, Trustee
(2) Jane B. Doe, Trustee u/t/d 12/28/78 Jane B. Doe
Custodial or Estate Account
(1) John B. Smith, Cust. f/b/o John B. Smith
John B. Smith, Jr. UGMA
(2) Estate of John B. Smith John B. Smith, Jr., Executor
</Table>
PROXY STATEMENT/PROSPECTUS
[ , 2006]
RELATING TO THE ACQUISITION OF THE ASSETS OF
JANUS OLYMPUS FUND,
A SERIES OF JANUS INVESTMENT FUND
151 DETROIT STREET
DENVER, COLORADO 80206
1-800-525-3713
BY AND IN EXCHANGE FOR SHARES OF BENEFICIAL INTEREST OF
JANUS ORION FUND,
A SERIES OF JANUS INVESTMENT FUND
151 DETROIT STREET
DENVER, COLORADO 80206
1-800-525-3713
INTRODUCTION
This Proxy Statement/Prospectus is being furnished to shareholders of Janus
Olympus Fund in connection with a special meeting of shareholders to be held at
the JW Marriott Hotel, 150 Clayton Lane, Denver, Colorado 80206, on October 2,
2006, at 10:00 a.m. Mountain Time (together with any adjournments or
postponements thereof, the "Meeting") to consider a proposal to approve an
Agreement and Plan of Reorganization with respect to Janus Olympus Fund (the
"Plan"). Pursuant to the Plan, all or substantially all of the assets of Janus
Olympus Fund ("Olympus Fund") would be transferred to Janus Orion Fund ("Orion
Fund," and collectively, the "Funds"), a Fund also managed by Janus Capital
Management LLC ("Janus"), in exchange for shares of beneficial interest of Orion
Fund and the assumption by Orion Fund of all of the liabilities of Olympus Fund,
as described more fully below (the "Merger"). As a result of the proposed
Merger, each shareholder of Olympus Fund will receive a number of full and
fractional shares of Orion Fund equal in value to their holdings in Olympus Fund
as of the closing date of the Merger. After the Merger is completed, Olympus
Fund will be liquidated. The closing of the Merger (the "Closing") is contingent
upon shareholder approval of the Plan. A copy of the Plan is attached as
Appendix A. The Merger is expected to occur on or about October 31, 2006 (the
"Closing Date").
Janus will remain the investment adviser of Orion Fund. Janus is
responsible for the day-to-day management of Olympus Fund's and Orion Fund's
investment portfolios and furnishes continuous advice and recommendations
concerning each Fund's investments. Janus, which as of June 30, 2006, sponsored
69 mutual funds with approximately $85.4 billion in mutual fund assets under
management, is one of the larger mutual fund sponsors in the United States. The
proposed Merger will offer shareholders continuity in portfolio management while
giving them continued access to Janus' experience and resources in managing
mutual funds.
The Board of Trustees that oversees the Funds is soliciting proxies from
shareholders of Olympus Fund for the Meeting. This Proxy Statement/Prospectus,
Notice of Special Meeting, and the proxy card(s) are first being mailed to
shareholders on or about August , 2006.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PLAN.
This Proxy Statement/Prospectus, which you should read carefully and retain
for future reference, sets forth concisely the information that you should know
before voting on the Plan and thereby investing in Orion Fund as of the Closing.
Orion Fund and Olympus Fund are each a series of Janus Investment Fund (the
"Trust"), an open-end, registered management investment company organized as a
Massachusetts business trust. Olympus Fund is a diversified series of the Trust
and Orion Fund is a nondiversified series, within the meaning of the Investment
Company Act of 1940, as amended (the "1940 Act"). Both Funds have the same
investment objective: to seek long-term growth of capital. The Prospectus of
Orion Fund dated February 28, 2006, as supplemented, is enclosed and is
considered part of this Proxy Statement/Prospectus. For more information about
the investment objective, strategies, restrictions and risks of Orion Fund and
Olympus Fund, see:
(i) the Prospectus of Olympus Fund dated February 28, 2006, as
supplemented;
(ii) the Statement of Additional Information of Olympus Fund and Orion
Fund dated February 28, 2006, as supplemented;
(iii) the Annual Report of Olympus Fund and Orion Fund for the fiscal
year ended October 31, 2005; and
(iv) the unaudited Semiannual Report for Olympus Fund and Orion Fund
for the fiscal period ended April 30, 2006.
These documents have been filed with the Securities and Exchange Commission
("SEC") and are incorporated by reference. Olympus Fund's Prospectus, Annual
Report, and Semiannual Report have previously been delivered to Olympus Fund
shareholders. You can obtain free copies of any of the documents by calling
Janus at 1-800-525-3713 or by contacting your financial intermediary.
No other parts of the Prospectus, Statement of Additional Information,
Annual Report, or Semiannual Report are incorporated by reference.
A Statement of Additional Information dated [August xx, 2006] relating to
the Merger has been filed with the SEC and is incorporated by reference in this
Proxy Statement/Prospectus. You can obtain a free copy of that document by
calling Janus at 1-800-525-3713 or by contacting your financial intermediary.
LIKE SHARES OF OLYMPUS FUND, SHARES OF ORION FUND ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
2
OR ANY OTHER AGENCY, AND INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF THE
PRINCIPAL AMOUNT INVESTED.
Each Fund is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and the 1940 Act, and files reports, proxy
materials, and other information with the SEC. You may review and copy
information about the Funds at the Public Reference Room of the SEC or get text
only copies, after paying a duplicating fee, by sending an electronic request by
e-mail to publicinfo@sec.gov or by writing to or calling the Public Reference
Room, Washington, D.C. 20549-0102 (1-202-942-8090). Information on the operation
of the Public Reference Room may also be obtained by calling this number. You
may also obtain reports and other information about the Funds from the
Electronic Data Gathering Analysis and Retrieval (EDGAR) Database on the SEC's
website at http://www.sec.gov.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
3
I. SYNOPSIS
This Proxy Statement/Prospectus provides a brief overview of the key
features and other matters typically of concern to shareholders considering a
proposed merger between mutual funds. These responses are qualified in their
entirety by the remainder of this Proxy Statement/Prospectus, which you should
read carefully because it contains additional information and further details
regarding the proposed Merger. The description of the Merger is qualified by
reference to the full text of the Plan, which is attached as Appendix A.
Q. WHAT IS BEING PROPOSED?
A. The Board of Trustees of the Trust recommends that shareholders of Olympus
Fund approve a Plan that authorizes the merger of Olympus Fund into Orion
Fund. Each Fund is a series of the Trust and is managed by Janus. You are
receiving this Proxy Statement/Prospectus because you have a right to vote
on the Merger.
If approved by shareholders, as of the Closing, Olympus Fund investors will
receive shares of Orion Fund equivalent in dollar value to their shares in
Olympus Fund at the time of the Merger. Specifically, all of the assets of
Olympus Fund will be transferred to Orion Fund solely in exchange for
shares of Orion Fund with a value equal to the value of Olympus Fund's
assets net of liabilities, and for the assumption by Orion Fund of all
liabilities of Olympus Fund. Immediately following the transfer, the shares
of Orion Fund received by Olympus Fund will be distributed pro-rata to each
Olympus Fund shareholder of record as of the Closing Date (on or about
October 31, 2006). Olympus Fund would then be liquidated. The Merger is
conditional upon receipt of an opinion of counsel that the Merger qualifies
as a tax-free reorganization.
Q. WHY IS THE MERGER IN THE BEST INTEREST OF FUND SHAREHOLDERS?
A. The Board of Trustees concluded that the Merger is in the best interest of
Olympus Fund shareholders based on the following factors, among others:
- The Funds have the same investment objectives as well as strategies and
risks that are comparable in many respects, and some overlap in portfolio
holdings. Both pursue companies demonstrating aggressive growth traits
and rely on a go-anywhere approach to find them. Merging the two Funds
should therefore allow you to maintain your exposure to high-growth areas
of the market while also enabling you to potentially benefit from Orion
Fund's nondiversified investment strategy. Specifically, Portfolio
Manager Ron Sachs believes this strategy is an enhanced approach to
fundamental research and information analysis with regard to a particular
company, which can be an important factor in balancing the risk and
reward potential of each investment.
4
- It is anticipated that the elimination of some duplicative expenses may
result in an expense ratio that is equal to or lower than the current
expense ratio of either Fund.
- There should be greater efficiency, in terms of portfolio management and
operations, of managing a single Fund rather than two separate Funds.
- The proposed Merger is designed to be a tax-free reorganization, so you
should not realize a tax gain or loss as a result.
Q. WHAT IS THE RECOMMENDATION OF THE BOARD OF TRUSTEES?
A. At a meeting held on July 5, 2006, the Board of Trustees determined that
the Merger is in the best interests of Olympus Fund and its shareholders.
See "Reasons for the Merger" below for further information on the
considerations taken by the Board of Trustees regarding the Merger.
THE BOARD OF TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE FOR THE PLAN.
Q. DO THE FUNDS HAVE THE SAME INVESTMENT OBJECTIVE?
A. Yes. Both Funds have the same investment objective of seeking long-term
growth of capital and each may invest in companies of any size, from
larger, well-established companies to smaller, emerging growth companies.
Q. WHAT ARE THE PRIMARY DIFFERENCES IN INVESTMENT STRATEGIES AND RISKS OF THE
FUNDS?
A. The primary differences relate to the number of holdings, exposure to small
and mid-sized companies versus large capitalization companies,
diversification, and foreign exposure. Orion Fund invests in a smaller
number of companies than Olympus Fund, and has historically had more
exposure to small to mid-sized companies and foreign markets (including
emerging markets) than Olympus Fund.
- Number of Holdings. Although the Funds have the same investment
objective, Orion Fund pursues its objective by normally investing
primarily in a core group of 20-30 stocks while Olympus Fund has
historically invested in a broader range of stocks.
- Capitalization. As of June 30, 2006, Olympus Fund had 44.9% of its net
assets invested in large companies (companies with capitalization of over
$10 billion), and 19.2% of its net assets invested in small to mid-sized
companies (companies with capitalization of $1 to $5 billion); Orion Fund
had 26.3% of its net assets invested in large companies and 53.7% of its
net assets invested in small to mid-sized companies. Orion Fund's
investments in small to mid-sized companies may be more volatile and
somewhat more speculative than Olympus Fund's investments in larger or
more established companies.
5
- Diversification. Olympus Fund is classified as "diversified" while Orion
Fund is classified as "nondiversified." This means that Orion Fund has
the ability to take larger positions in a smaller number of issuers than
Olympus Fund. This gives Orion Fund more flexibility to focus its
investments in the most attractive companies identified by the portfolio
manager, but it may add more risk because the price movement of a single
stock may have a greater impact on a Fund's net asset value.
- Foreign Exposure. As of June 30, 2006, Olympus Fund had 23.7% of its
assets invested in foreign stocks, of which 3.0% were in emerging
markets, while Orion Fund had 37.1% of its assets invested in foreign
stocks, of which 20.6% were in emerging markets. Due to its potential
higher exposure to foreign markets, Orion Fund's returns and net asset
value may be affected to a greater extent than Olympus Fund's economic or
political events in a given country or countries.
- Benchmarks. Olympus Fund benchmarks its performance against the Russell
1000(R) Growth Index, while Orion Fund benchmarks against the Russell
3000(R) Growth Index, as this index reflects greater exposure to a
broader universe of companies.
Further information comparing the investment objectives, strategies and
restrictions is included below under "Investment Objectives, Strategies and
Restrictions."
Q. HOW DO THE FUNDS COMPARE IN SIZE?
A. As of June 30, 2006, Orion Fund's net assets were $1.0 billion and Olympus
Fund's net assets were $2.2 billion. The asset size of each Fund fluctuates
on a daily basis and the asset size of Orion Fund after the Merger may be
larger or smaller than the combined assets of the Funds as of June 30.
Q. WILL THE PROPOSED MERGER RESULT IN HIGHER INVESTMENT ADVISORY FEES OR OTHER
FUND EXPENSES?
A. No. The investment advisory fee for Olympus Fund and Orion Fund are the
same, 0.64% per annum of average net assets. The projected total expense
ratio of Orion Fund (following completion of the Merger) is expected to be
equal to or lower than the current expense ratio of Olympus Fund. Pro forma
fee, expense, and financial information is included in the Proxy Statement/
Prospectus.
Q. WHAT ARE THE TAX CONSEQUENCES OF THE PROPOSED MERGER?
A. The Merger is expected to be a tax-free transaction for federal income tax
purposes and will not take place unless counsel provides an opinion to that
effect. Shareholders should not recognize any capital gain or loss as a
direct result of the Merger. As a result of the Merger, however, Olympus
Fund and/or Orion Fund may lose the benefit of a portion of realized
capital losses
6
that might have been used to offset or defer gains on sales of portfolio
securities under some circumstances. If you choose to redeem or exchange
your shares before or after the Merger, you may realize a taxable gain or
loss; therefore, consider consulting a tax adviser before doing so. In
addition, you may receive a distribution of ordinary income or capital
gains as a result of the normal operations of Olympus Fund.
Q. WILL THE SHAREHOLDER SERVICES PROVIDED BY JANUS CHANGE?
A. No. Janus manages Olympus Fund and Orion Fund. The custodian, transfer
agent, and distributor are the same for both Funds. Purchase, exchange, and
redemption privileges are the same for both Funds. Please consult your
financial intermediary for information on any services provided by them to
the Funds.
Q. CAN I STILL ADD TO MY EXISTING OLYMPUS FUND ACCOUNT WHEN IT CLOSES TO NEW
INVESTORS ON JULY 14TH?
A. Yes. Olympus Fund shareholders as of July 14, 2006 may continue to make
subsequent investments until at least the date of shareholder approval
(anticipated on October 2, 2006). However, the Fund has been closed to new
investors as of July 14, 2006.
Q. WHAT HAPPENS IF THE MERGER IS NOT APPROVED?
A. Any shares you held in Olympus Fund would remain Olympus Fund shares.
Olympus Fund and Orion Fund would each continue to operate separately and
the Board of Trustees would determine what further action, if any, to take.
Q. WILL EITHER FUND PAY FOR THE PROXY SOLICITATION AND LEGAL COSTS ASSOCIATED
WITH THE PROPOSED MERGER?
A. No. Janus will bear those costs.
Q. WHEN WILL THE MERGER TAKE PLACE?
A. If approved, the Merger will occur on or about October 31, 2006, or as soon
as reasonably practicable after shareholder approval is obtained. Shortly
after completion of the Merger, affected shareholders will receive a
confirmation statement reflecting their new Fund account number and number
of shares owned.
Q. WHAT IF I WANT TO EXCHANGE MY SHARES INTO ANOTHER JANUS FUND PRIOR TO THE
MERGER?
A. You may exchange your shares into other Janus funds before the Closing Date
(on or about October 31, 2006) by calling 1-800-525-3713, visiting
www.janus.com, or contacting your financial intermediary. If you choose to
exchange your Olympus Fund shares for another Janus fund, your request will
be treated as a normal exchange of shares and will be a taxable transaction
unless your shares are held in a tax-deferred account, such as an IRA.
7
Q. HOW MANY VOTES AM I ENTITLED TO CAST?
A. You are entitled to one vote for each whole or fractional dollar value of
the net asset value of Olympus Fund shares held in your name on July 14,
2006 (the "Record Date"). Shareholders of record of Olympus Fund at the
close of business on the Record Date will receive notice of and be asked to
vote on the Merger.
Q. HOW CAN I VOTE MY SHARES?
A. You can vote in any one of four ways:
- By mail, by sending the enclosed proxy card (signed and dated) in the
enclosed envelope;
- Through the Internet by going to the website listed on your proxy card;
- By telephone using the toll-free number listed on your proxy card; or
- In person, by attending the Special Meeting of Shareholders on October 2,
2006 (or any adjournment or postponement thereof).
Whichever method you choose, please take the time to read the full text of
the Proxy Statement/Prospectus before you vote.
Q. IF I VOTE MY PROXY NOW AS REQUESTED, CAN I CHANGE MY VOTE LATER?
A. Yes. You may revoke your proxy vote at any time before it is voted at the
Meeting by (1) delivering a written revocation to the Secretary of Olympus
Fund at 151 Detroit Street, Denver, Colorado 80206; (2) submitting a
subsequently executed proxy vote; or (3) attending the Meeting and voting
in person. Even if you plan to attend the Meeting, we ask that you return
the enclosed proxy card. This will help us ensure that an adequate number
of shares are present at the Meeting for consideration of the Merger.
Q. WHAT IS THE REQUIRED VOTE TO APPROVE THE MERGER?
A. Approval of the Merger will require the affirmative vote of a "majority of
the outstanding voting securities" of Olympus Fund within the meaning of
the 1940 Act. This means the lesser of (1) 67% or more of the shares
present at the Meeting if the holders of more than 50% of the outstanding
shares are present or represented by proxy, or (2) more than 50% of the
outstanding shares.
Q. WHOM SHOULD I CALL FOR ADDITIONAL INFORMATION ABOUT THIS PROXY STATEMENT/
PROSPECTUS?
A. Please call D.F. King & Co., Inc., your Fund's information agent (proxy
solicitor), at 1-800-628-8528.
8
INVESTMENT OBJECTIVES, STRATEGIES AND RESTRICTIONS
This section will help you compare the investment objectives, main
investment strategies and restrictions of Olympus Fund and Orion Fund. Please
note that this is only a brief discussion. Information contained in the Proxy
Statement/Prospectus is qualified by the more complete information contained in
the Funds' Prospectuses, which are incorporated by reference.
The Funds are each managed by Janus. The Funds have the same investment
objective of long-term growth of capital. The Funds have substantially similar
principal investment strategies. The primary differences in the investment
strategies relate to the number of holdings, exposure to small and mid-sized
companies versus large capitalization companies, foreign exposure, and
diversification. There is no assurance that a Fund will achieve its stated
objective.
Number of Holdings. Each Fund pursues its investment objective by normally
investing primarily in common stocks selected for their growth potential and
each may invest in companies of any size, from larger, well-established
companies to smaller, emerging growth companies. Each Fund is categorized by
Lipper Inc. ("Lipper") in Lipper's Multi-Cap Growth Fund category. Each Fund
limits its high-yield/high-risk bonds to 35% or less of its net assets. Orion
Fund, however, normally invests primarily in a group of 20 to 30 domestic and
foreign common stocks whereas Olympus Fund's strategy does not normally
concentrate its number of holdings. As of June 30, 2006, Olympus Fund held
stocks of 69 companies, while Orion Fund held stocks of 47 companies. Of these
holdings, 16 securities were held by both Funds, comprising approximately 27.8%
and 40.2% of Olympus Fund's and Orion Fund's total market value, respectively.
Capitalization Exposure. As of June 30, 2006, 44.9% and 26.3% of Olympus
Fund's and Orion Fund's net assets, respectively, were invested in large
companies with capitalizations of greater than $10 billion. Also as of June 30,
2006, 19.2% and 53.7% of Olympus Fund's and Orion Fund's net assets,
respectively, were invested in small to mid-sized companies with capitalizations
between $1 to $5 billion.
Foreign Exposure. Although each Fund may invest in companies anywhere in
the world, including companies in emerging markets, Orion Fund has historically
invested a higher percentage of its assets in foreign companies than Olympus
Fund, including companies in emerging markets. As of June 30, 2006, Olympus Fund
had 23.7% of its assets invested in foreign stocks, of which 3.0% were in
emerging markets, while Orion Fund had 37.1% of its assets invested in foreign
stocks, of which 20.6% were in emerging markets.
Diversification. Olympus Fund is classified as "diversified," while Orion
Fund is classified as "nondiversified." As a nondiversified fund, Orion Fund may
hold larger positions in a smaller number of securities than a fund that is
classified as "diversified," such as Olympus Fund. With respect to 75% of its
total assets, Olympus Fund may not purchase securities of an issuer (other than
the U.S. Government, its agencies, instrumentalities or authorities, or
repurchase
9
agreements collateralized by U.S. Government securities, and other investment
companies) if: (a) such purchase would, at the time, cause more than 5% of
Olympus Fund's total assets taken at market value to be invested in the
securities of such issuer or (b) such purchase would, at the time, result in
more than 10% of the outstanding voting securities of such issuer being held by
Olympus Fund. Orion Fund is not subject to that restriction. As of June 30,
2006, 5.15% of the net assets of Olympus Fund were invested in a single company,
while 7.55% of the net assets of Orion Fund were invested in a single company.
Each Fund's portfolio holdings are available on Janus' website (www.janus.com)
monthly with a 30-day lag.
Portfolio Turnover. During the fiscal year ended October 31, 2005 and the
six-month period ended April 30, 2006, Olympus Fund had a portfolio turnover
rate of 119% and 98%, respectively, while Orion Fund had a portfolio turnover
rate of 68% and 54%, respectively. As a reference point, a portfolio turnover
rate of 100% would mean that a portfolio had sold and purchased securities
valued at 100% of its net assets within a one-year period. Variations in
portfolio turnover rates may occur due to market conditions, changes in the size
of a portfolio, the nature of a portfolio's investments, and the investment
style and/or outlook of the investment personnel. Portfolio turnover in Orion
Fund may increase for a period of time following completion of the proposed
Merger as a result of any portfolio rebalancing by the portfolio manager.
Fundamental and non-fundamental investment restrictions of the Funds are
substantially similar. A description of each of these investment restrictions is
included as Appendix B.
COMPARISON OF FEES AND EXPENSES
The following tables compare the fees and expenses you may bear directly or
indirectly as an investor in Olympus Fund and Orion Fund, and show the projected
("pro forma") estimated fees and expenses of Orion Fund, assuming consummation
of the Merger as of October 31, 2005. Fees and expenses shown for Olympus Fund
and Orion Fund were determined based on each Fund's net assets as of the fiscal
year ended October 31, 2005. THE FUNDS WILL NOT PAY ANY FEES IN CONNECTION WITH
THE PROPOSED MERGER.
Shareholder fees are those paid directly from your investment, such as
sales loads and redemption fees. The Funds are no-load investments, so you will
generally not pay any shareholder fees when you buy or sell shares of the Funds.
Annual fund operating expenses are paid out of a Fund's assets and include
fees for portfolio management, maintenance of shareholder accounts, shareholder
servic-
10
ing, accounting, and other services. You do not pay these fees directly but, as
the examples below show, these costs are borne indirectly by all shareholders.
<Table>
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)
Sales charges........................................ None
Redemption fee (as a % of amount redeemed)........... None(1)
</Table>
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
<Table>
<Caption>
TOTAL ANNUAL
FUND
MANAGEMENT OTHER OPERATING
FEE EXPENSES EXPENSES
---------- -------- ------------
Janus Olympus Fund............... 0.64% 0.33% 0.97%
Janus Orion Fund................. 0.64% 0.38% 1.02%
Janus Orion Fund (Pro forma
combined, assuming consummation
of the Merger)................. 0.64% 0.33%(2) 0.97%
</Table>
EXAMPLES:
These examples are intended to help you compare the cost of investing in the
Funds and in the combined Fund (assuming consummation of the Merger) on a pro
forma basis. The examples assume that you invest $10,000 in each Fund and in
Orion Fund after the Merger for the time periods indicated, you reinvest all
dividends and distributions, and then redeem all of your shares at the end of
those periods. The examples also assume that your investment has a 5% return
each year and that each Fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based upon these assumptions your costs
would be as follows:
<Table>
<Caption>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
Janus Olympus Fund............ $ 99 $309 $536 $1,190
Janus Orion Fund.............. $104 $325 $563 $1,248
Janus Orion Fund (Pro forma
combined, assuming
consummation of the
Merger)..................... $ 99 $309 $536 $1,190
</Table>
- ---------------
(1) Each Fund may charge a fee to cover the cost of sending a wire transfer for
redemptions, and your bank may charge an additional fee to receive the wire.
(2) Other expenses are estimated, accounting for the effect of the proposed
Merger.
COMPARISON OF PERFORMANCE OF OLYMPUS FUND AND ORION FUND
The following information provides some indication of the risks of
investing in the Funds by showing how each Fund's performance has varied over
time. The bar charts depict the change in performance from year to year during
the periods indicated. The tables following the charts show how the performance
of each Fund compares to broad-based market indices (which, unlike the Funds, do
not have any
11
fees or expenses). Olympus Fund's performance is compared to the Russell 1000(R)
Growth Index. Orion Fund's performance is compared to the Russell 3000(R) Growth
Index. It is expected that Orion Fund will continue to compare its performance
to the Russell 3000(R) Growth Index after the proposed Merger. The S&P 500(R)
Index is a secondary benchmark index for both Funds. The indices are not
available for direct investment. The performance of the Funds and the indices
varies over time. Of course, a Fund's past performance (before and after taxes)
is not necessarily an indication of future performance.
OLYMPUS FUND
<Table>
Annual returns for periods ended 12/31
21.73% 26.73% 56.97% 100.12% (21.63)% (32.05)% (28.19)% 31.65% 8.74% 14.21%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Best Quarter: 4th-1999 51.67% Worst Quarter: 1st-2001 (26.29)%
</Table>
2006 Total Return through June 30: (2.54)%
ORION FUND
<Table>
Annual returns for periods ended 12/31
(14.69)% (29.77)% 43.81% 14.90% 20.93%
2001 2002 2003 2004 2005
Best Quarter: 2nd-2003 23.59% Worst Quarter: 1st-2001 (22.54)%
</Table>
2006 Total Return through June 30: 7.68%
12
AVERAGE ANNUAL TOTAL RETURNS (%) AS OF 12/31/05
<Table>
<Caption>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION(1)
------ ------- -------- ------------
OLYMPUS FUND
Return Before Taxes.............. 14.21% (4.42)% 11.72% 11.72%
Return After Taxes on
Distributions................. 14.21% (4.45)% 11.36% 11.35%
Return After Taxes on
Distributions and Sale of Fund
Shares(2)..................... 9.24% (3.72)% 10.33% 10.33%
Russell 1000(R) Growth Index(3).... 5.26% (3.58)% 6.73% 6.73%
(reflects no deduction for
expenses, fees, or taxes)
S&P 500(R) Index(4)................ 4.91% 0.54% 9.07% 9.07%
(reflects no deduction for
expenses, fees, or taxes)
ORION FUND
Return Before Taxes.............. 20.93% 3.67% N/A (3.08)%
Return After Taxes on
Distributions................. 20.71% 3.63% N/A (3.13)%
Return After Taxes on
Distributions and Sale of Fund
Shares(2)..................... 13.70% 3.13% N/A (2.62)%
Russell 3000(R) Growth Index(5).... 5.17% (3.15)% N/A (7.91)%
(reflects no deduction for
expenses, fees, or taxes)
S&P 500(R) Index(4)................ 4.91% 0.54% N/A (1.16)%
(reflects no deduction for
expenses, fees, or taxes)
</Table>
- ---------------
(1) The inception date for Olympus Fund is 12/29/95 and for Orion Fund is
6/30/00. Index comparisons begin 12/29/95 for Olympus Fund and 6/30/00 for
Orion Fund.
(2) If the Fund incurs a loss, which generates a tax benefit, the Return After
Taxes on Distributions and Sale of Fund Shares may exceed the Fund's other
return figures.
(3) The Russell 1000(R) Growth Index measures the performance of those Russell
1000 companies with higher price-to-book ratios and higher forecasted growth
values.
(4) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500 stocks,
a widely recognized, unmanaged index of common stock prices.
(5) The Russell 3000(R) Growth Index measures the performance of those Russell
3000(R) Index companies with higher price-to-book ratios and higher
forecasted growth values. The stocks in this index are also members of
either the Russell 1000(R) Growth Index or the Russell 2000(R) Growth Index.
After-tax returns are calculated using the historically highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your individual tax situation
and may differ from those shown in the preceding table. The after-tax return
information shown above does not apply to Fund shares held through a
tax-deferred account, such as a 401(k) plan or IRA.
13
Current performance may be higher or lower than the performance data shown
above. For more recent performance information, visit Janus' website at
www.janus.com.
DISTRIBUTION AND PURCHASE PROCEDURES, EXCHANGE RIGHTS, AND REDEMPTION PROCEDURES
Janus manages both Olympus Fund and Orion Fund, and Janus Distributors LLC
is the distributor of each Fund. In addition, the custodian, State Street Bank
and Trust Company, and transfer agent, Janus Services LLC, are the same for both
Olympus Fund and Orion Fund. Olympus Fund and Orion Fund have identical
purchase, exchange, and redemption procedures. These common procedures, as well
as other features related to investing in the Funds, are summarized below. A
more complete description can be found in the Funds' Prospectuses. It is
expected that shareholders will continue to receive the same services as
shareholders of Orion Fund as they currently do as shareholders of Olympus Fund.
PURCHASES OF FUND SHARES
Investors can purchase Fund shares directly through Janus by the following
methods:
- By calling Janus XpressLine at 1-888-979-7737, a 24-hour automated phone
system;
- By contacting a Janus representative at 1-800-525-3713 (TDD For the
speech and hearing impaired, 1-800-525-0056);
- By regular mail, Janus, P.O. Box 173375, Denver, Colorado 80217-3375;
- By overnight mail, Janus, 720 S. Colorado Blvd., Suite 290A Denver,
Colorado 80246-1929; or
- Through www.janus.com.
For investors who invest in the Funds through a financial intermediary or
plan sponsor, contact your financial intermediary or plan sponsor, or refer to
your plan documents for information on how to invest in each Fund, including
additional information on minimum initial or subsequent investment requirements.
MINIMUM INVESTMENT REQUIREMENTS
The minimum investment is $2,500 per Fund account for non-retirement
accounts. For certain tax-deferred accounts or UGMA/UTMA accounts, the minimum
investment is $1,000 without an automatic investment program, or $500 with an
automatic investment program of $100 per month. Investors in a defined
contribution plan through a third party administrator should refer to their plan
document or contact their plan administrator for additional information. In
addition, accounts held through certain wrap programs may not be subject to
these mini-
14
mums. Investors should refer to their intermediary for additional information.
The Funds reserve the right to annually request that intermediaries close Fund
accounts that are valued at less than $100.
EXCHANGE RIGHTS
An exchange represents the sale of shares from one fund and the purchase of
shares of another fund, which may produce a taxable gain or loss in a
nonretirement account.
- You may generally exchange shares of a fund for shares of any fund in the
Trust.
- New Janus fund accounts established by exchange must be opened with
$2,500 or the total account value if the value of the Janus fund account
you are exchanging from is less than $2,500.
- UGMA/UTMA accounts, Traditional or Roth IRAs, Simplified Employee Pension
IRAs, and Coverdell Education Savings Accounts established by exchange
must meet the minimum investment requirements previously described. If
the value of the Janus fund account you are exchanging from is less than
the stated minimum, you must exchange the entire balance.
- Exchanges between existing Janus fund accounts must meet the $100
subsequent investment requirement.
- For Systematic Exchanges, if no date is specified on your request,
systematic exchanges will be made on the 20th of each month. You may
establish this option for as little as $100 per exchange. If the balance
in the Janus fund account you are exchanging from falls below the
Systematic Exchange amount, all remaining shares will be exchanged and
your Systematic Exchange Program will be discontinued.
- The exchange privilege is not intended as a vehicle for short-term or
excessive trading. You may make up to four round trips in a Fund in a
12-month period, although the Funds at all times reserve the right to
reject any exchange purchase for any reason without prior notice.
Generally, a "round trip" is a redemption out of a Fund (by any means)
followed by a purchase back into the same Fund (by any means). Different
restrictions may apply if you invest through an intermediary. The Funds
will work with financial intermediaries to apply the Funds' exchange
limit. However, the Funds may not always have the ability to monitor or
enforce the trading activity in such accounts. For more information about
the Funds' policies on excessive trading, see "Excessive Trading" in each
Fund's Prospectus.
- The Funds reserve the right to reject any exchange request and to modify
or terminate the exchange privilege at any time.
15
- With certain limited exceptions, exchanges between Janus fund accounts
will be accepted only if the registrations are identical. If you are
exchanging into a closed Janus fund, you will need to meet criteria for
investing in the closed fund. For more information, see "Closed Fund
Policies" in each Fund's Prospectus.
- If the shares you are exchanging are held in certificate form, you must
return the certificate to Janus prior to making any exchanges. Shares are
no longer available in certificate form.
For investors who invest in the Funds through financial intermediaries or
plan sponsors, contact your financial intermediary or plan sponsor, or consult
your plan documents to exchange into other funds in the Trust. Be sure to read
the prospectus of the fund into which you are exchanging. An exchange is
generally a taxable transaction (except for certain tax-deferred accounts).
REDEMPTION PROCEDURES
Generally all accounts are automatically eligible for the electronic
redemption option if bank information is provided. Redemption proceeds can be
electronically transferred to your predesignated bank account on the next bank
business day after receipt of your redemption request (wire transfer). Wire
transfers will be charged a fee for each wire and your bank may charge an
additional fee to receive the wire. Redemption proceeds can be electronically
transferred to your predesignated bank account on or about the second bank
business day after receipt of your redemption request. There is no fee
associated with this type of electronic transfer. Redemption proceeds will be
sent to the shareholder(s) of record at the address of record within seven days
after receipt of a valid redemption request. During the 10 days following an
address change, requests for redemption checks to be sent to a new address
require a signature guarantee. If no date is specified on your request,
systematic redemptions will be made on or about the 24th of each month. If the
balance in the Fund you are selling from falls to zero, your Systematic
Redemption Program will be discontinued.
Please contact your financial intermediary or plan sponsor, or refer to the
appropriate plan documents for details including any restrictions on
redemptions, redemption charges, redemption in-kind, automatic redemption, and
delays in honoring redemption requests.
CALCULATION OF NET ASSET VALUE
Olympus Fund and Orion Fund each calculate their respective net asset value
per share (NAV) once each business day at the close of the regular trading
session of the New York Stock Exchange (normally, 4:00 p.m. Eastern time).
16
PRINCIPAL RISK FACTORS OF INVESTING IN THE FUNDS
Each Fund may invest in various types of securities or use certain
investment techniques to achieve its investment objective of long-term growth of
capital. The following is a summary of the principal risks associated with such
securities and investment techniques. Additional information about these risks
is included in Orion Fund's Prospectus. As with any security, an investment in
either Fund involves certain risks, including loss of principal. An investment
in the Funds is not a deposit of a bank and is not insured by the Federal
Deposit Insurance Corporation or any other government agency. The fact that a
particular risk is not identified does not indicate that a Fund does not invest
its assets in, or is precluded from investing its assets in, securities that
give rise to that risk. Information about additional investment techniques that
the Funds may utilize and related risks are included in Appendix C.
SIMILAR RISK FACTORS OF THE FUNDS
Common Stock and Market Risk. Because each Fund may invest substantially
all of its assets in common stocks, the main risk is that the value of the
stocks they hold might decrease in response to the activities of an individual
company or in response to general market and/or economic conditions. If this
occurs, a Fund's share price may also decrease. The value of a Fund's portfolio
may decrease if the value of an individual company or multiple companies in the
portfolio decreases. The value of a Fund's portfolio could also decrease if the
stock market goes down regardless of how well the individual companies perform.
The market as a whole may not favor the types of investments a Fund makes and a
Fund may not be able to get an attractive price for them. If the value of a
Fund's portfolio decreases, a Fund's NAV will also decrease, which means if you
sell your shares in a Fund you may lose money.
Growth Investing Risk. Since growth stocks usually reinvest a large
portion of earnings in their own businesses, they may lack the dividends
associated with value stocks that might otherwise cushion their decline in a
falling market. Growth companies may be expected to increase their earnings at a
certain rate. Earnings disappointments in growth stocks often result in sharp
price declines. Growth stocks may also be out of favor for certain periods in
relation to value stocks.
Foreign Investment Risk. Each Fund may invest without limit in foreign
securities either indirectly (e.g., Depositary Receipts, which may be sponsored
or unsponsored) or directly in foreign markets, including emerging markets.
Investments in foreign securities, including those of foreign governments, may
involve greater risks than investing in domestic securities because a Fund's
performance may depend on factors other than the performance of a particular
company. These risks include currency risk, political and economic risk,
regulatory risk, foreign markets risk, transaction costs and geographic risk.
Investments in unsponsored depositary receipts may include those created without
the participation of the foreign issuer. Holders of these depositary receipts
generally bear all the costs of the
17
depositary receipt facility, whereas foreign issuers typically bear certain
costs in a sponsored depositary receipt. The bank or trust company depositary of
an unsponsored depositary receipt may be under no obligation to distribute
shareholder communications received from the foreign issuer or to pass through
voting rights. Foreign investment risk is greater for Orion Fund given its more
significant exposure to foreign markets, including emerging markets.
High-Yield Investment Risk. To the extent each Fund invests in high-
yield/high-risk bonds, returns and NAV may be affected by factors such as
economic changes, political changes, or developments specific to the company
that issued the bond. In addition, some bonds may experience sudden and sharp
price swings.
PRIMARY DIFFERENCES IN RISK FACTORS OF THE FUNDS
Nondiversification Risk. Diversification is a way to reduce risk by
investing in a broad range of stocks or other securities. Olympus Fund is
classified as "diversified." Orion Fund is classified as "nondiversified." A
fund classified as "nondiversified" has the ability to take larger positions in
a smaller number of issuers than a fund classified as "diversified." This gives
Orion Fund more flexibility to focus its investments in companies identified by
the portfolio manager. Because the appreciation or depreciation of a single
stock may have a greater impact on the NAV of a nondiversified fund, Orion
Fund's share price can be expected to fluctuate more than Olympus Fund. Such
fluctuation, if significant, may affect the performance of Orion Fund and
subject Orion Fund to greater risk than Olympus Fund.
Foreign and Emerging Market Risk. Orion Fund has historically invested a
greater portion of its assets in foreign markets, including emerging markets,
than Olympus Fund. Such countries include, but are not limited to countries
included in the Morgan Stanley Capital International Emerging Markets Index(SM).
As a result, its returns and NAV may be affected to a larger degree by
fluctuations in currency exchange rates or political or economic conditions in a
particular country. A market swing in one or more countries or regions where the
Fund has invested a significant amount of its assets may have a greater effect
on Orion Fund's performance than it would on a more geographically diversified
portfolio. The Fund's investments in emerging market countries may involve risks
greater than, or in addition to, the risks of investing in more developed
countries. The securities markets of emerging market countries may be smaller,
less liquid, and subject to greater price volatility than those in the United
States. As of June 30, 2006, Olympus Fund had 23.7% of its net assets invested
in foreign stocks, of which 3.0% were in emerging markets, while Orion Fund had
37.1% of its net assets invested in foreign stocks, of which 20.6% were in
emerging markets.
Small and Mid Cap Investment Risk. Many attractive investment
opportunities pursued by Orion Fund have historically been in smaller and
mid-sized companies. Smaller and mid-sized companies may suffer more significant
losses than larger or more established issuers because they may lack depth of
manage-
18
ment, be unable to generate funds necessary for growth or potential development,
or be developing or marketing new products or services for which markets are not
yet established and may never become established. In addition, such companies
may be insignificant factors in their industries and may become subject to
intense competition from larger or more established companies. Securities of
smaller and mid-sized companies may have more limited trading markets than the
markets for securities of larger or more established issuers, or may not be
publicly traded at all, and may be subject to wide price fluctuations.
Investments in such companies tend to be more volatile and somewhat more
speculative.
THE MERGER
THE PLAN
Shareholders of Olympus Fund are being asked to approve the Plan, which
sets forth the terms and conditions under which the Merger will be implemented.
Significant provisions of the Plan are summarized below; however, this summary
is qualified in its entirety by reference to the Plan, which is attached as
Appendix A to this Proxy Statement/Prospectus.
The Plan contemplates: (i) Orion Fund's acquisition of all of the assets of
Olympus Fund in exchange solely for shares of Orion Fund and the assumption by
Orion Fund of all of Olympus Fund's liabilities, if any, as of the Closing Date;
(ii) the distribution on the Closing Date of those shares to the shareholders of
Olympus Fund; and (iii) the liquidation of Olympus Fund.
The value of Olympus Fund's assets to be acquired and the amount of its
liabilities to be assumed by Orion Fund and the NAV of a share of Olympus Fund
will be determined as of the close of regular trading on the New York Stock
Exchange ("NYSE") on the Closing Date, after the declaration of any dividends on
the Closing Date, and will be determined in accordance with the valuation
procedures described in the Trust's Amended and Restated Agreement and
Declaration of Trust and the Funds' currently effective Prospectus and Statement
of Additional Information. The Plan provides that Janus will bear all costs and
expenses of the Merger, including the costs and expenses incurred in the
preparation and mailing of this Proxy Statement/Prospectus. The Closing Date is
expected to be on or about October 31, 2006.
As soon as practicable after the Closing Date, Olympus Fund will distribute
pro rata to its shareholders of record the shares of Orion Fund it receives in
the Merger, so that each shareholder of Olympus Fund will receive a number of
full and fractional shares of Orion Fund equal in value to his or her holdings
in Olympus Fund, and Olympus Fund will be liquidated.
Such distribution will be accomplished by opening accounts on the books of
Orion Fund in the names of the corresponding Olympus Fund shareholders and by
transferring thereto the shares of Orion Fund previously credited to the account
of
19
Olympus Fund on those books. Each shareholder account shall be credited with the
pro rata number of Orion Fund's shares due to that shareholder. Accordingly,
immediately after the Merger, each former shareholder of Olympus Fund will own
shares of Orion Fund that will be equal to the value of that shareholder's
shares of Olympus Fund as of the Closing Date. Any special options (for example,
automatic investment plans on current Olympus Fund shareholder accounts) will
automatically transfer to the new Fund accounts.
The implementation of the Merger is subject to a number of conditions set
forth in the Plan, including approval of the shareholders of Olympus Fund. The
Plan also requires receipt of a tax opinion indicating that, for federal income
tax purposes, the Merger qualifies as a tax-free reorganization. The Plan may be
terminated and the Merger abandoned at any time prior to the Closing Date by the
Board of Trustees (the "Trustees") if they determine that the Merger would
disadvantage the Funds. Please review the Plan carefully.
REASONS FOR THE MERGER
The Funds have the same investment objective and some overlap in portfolio
holdings, as well as strategies and risks that are comparable in many respects,
even considering the difference in classification of Orion Fund as a
"nondiversified" fund and Olympus Fund as a "diversified" fund. Both pursue
companies demonstrating aggressive growth traits and rely on a go-anywhere
approach to find them. Merging the two Funds should therefore allow an Olympus
Fund shareholder to maintain exposure to high-growth areas of the market while
also potentially benefiting from Orion Fund's nondiversified investment
strategy. Merging the Funds would also provide a larger asset base for Orion
Fund that should result in an expense ratio that is equal to or lower than the
current expense ratio of either Fund.
Janus met with the Trustees and counsel to the Funds and independent
counsel to the independent Trustees on June 14, 2006 and July 5, 2006 to discuss
Janus' proposal to merge the Funds. At each meeting, the independent Trustees
also discussed this proposal and the Plan 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.
At the meeting of the Trustees held on July 5, 2006, the Trustees determined
that (1) the Merger is in the best interests of the shareholders of Olympus Fund
and Orion Fund; and (2) the Plan should be approved by the Trustees and
submitted to shareholders of Olympus Fund for approval. In making these
determinations, the Trustees considered the following factors, among others:
(1) the potential benefits of the Merger to shareholders of each Fund;
(2) the compatibility of the Funds' investment objectives, strategies
and risks; the extent of the overlap of portfolio holdings between the
Funds; and the effect of the Merger on Olympus Fund shareholders who now
are invested in a
20
diversified fund, but after the Merger would be invested in a
nondiversified fund;
(3) the relative size and investment performance of the Funds;
(4) the historic and pro forma combined expense ratios and other
information regarding the fees and expenses of the Funds, including the
expected elimination of some expenses and a resulting expense ratio that is
equal to or lower than the current expense ratio of either Fund;
(5) the greater efficiency, in terms of portfolio management and
operations, of managing a single Fund rather than two separate Funds;
(6) whether the Merger would dilute the interests of either Fund's
current shareholders;
(7) the tax consequences of the Merger to the respective Funds and
their shareholders, including the expected tax-free nature of the Merger;
(8) the fact that, since July 1, 2006, the Funds have had the same
portfolio manager;
(9) the potential benefits of the Merger to Janus and its affiliates;
and
(10) the fact that Janus agreed to pay all costs associated with the
Merger.
Based on these considerations, among others, the Trustees concluded that:
(1) the Merger is in the best interests of Olympus Fund and Orion Fund and their
respective shareholders and (2) the interests of the existing shareholders of
each Fund will not be diluted as a result of the Merger. Accordingly, the
Trustees approved the Plan.
THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE PLAN
TO AUTHORIZE THE MERGER.
FEDERAL INCOME TAX CONSEQUENCES
As a condition to the Merger, the Trust will receive a legal opinion from
Goodwin Procter LLP to the effect that, subject to customary assumptions and
representations, on the basis of the existing provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), the Treasury Regulations promulgated
thereunder and current administrative and judicial interpretations thereof, for
federal income tax purposes:
- the transfer of all or substantially all of the assets of Olympus Fund
solely in exchange for shares of Orion Fund and the assumption by Orion
Fund of all liabilities of Olympus Fund, and the distribution of such
shares to the shareholders of Olympus Fund, will constitute a
"reorganization" within the meaning of Section 368(a) of the Code; Orion
Fund and Olympus Fund will
21
each be a "party to a reorganization" within the meaning of Section
368(b) of the Code;
- no gain or loss will be recognized by Olympus Fund on the transfer of the
assets of Olympus Fund to Orion Fund in exchange for Orion Fund shares or
the assumption by Orion Fund of all liabilities of Olympus Fund or upon
the distribution of Orion Fund shares to Olympus Fund shareholders in
exchange for their shares of Olympus Fund;
- the tax basis of Olympus Fund's assets acquired by Orion Fund will be the
same to Orion Fund as the tax basis of such assets to Olympus Fund
immediately prior to the Merger, and the holding period of the assets of
Olympus Fund in the hands of Orion Fund will include the period during
which those assets were held by Olympus Fund;
- no gain or loss will be recognized by Orion Fund upon the receipt of the
assets of Olympus Fund solely in exchange for Orion Fund shares and the
assumption by Orion Fund of all liabilities of Olympus Fund;
- no gain or loss will be recognized by shareholders of Olympus Fund upon
the receipt of Orion Fund shares by such shareholders, provided such
shareholders receive solely Orion Fund shares (including fractional
shares) in exchange for their Olympus Fund shares; and
- the aggregate tax basis of Orion Fund shares, including any fractional
shares, received by each shareholder of Olympus Fund pursuant to the
Merger will be the same as the aggregate tax basis of Olympus Fund shares
held by such shareholder immediately prior to the Merger, and the holding
period of Orion Fund shares, including fractional shares, to be received
by each shareholder of Olympus Fund will include the period during which
Olympus Fund shares exchanged therefor were held by such shareholder
(provided that Olympus Fund shares were held as a capital asset on the
date of the Merger).
The receipt of such an opinion is a condition to the consummation of the
Merger. The Trust has not obtained an Internal Revenue Service ("IRS") private
letter ruling regarding the federal income tax consequences of the Merger, and
the IRS is not bound by advice of counsel. If the transfer of the assets of
Olympus Fund in exchange for Orion Fund shares and the assumption by Orion Fund
of all liabilities of Olympus Fund do not constitute a tax-free reorganization,
each Olympus Fund shareholder generally will recognize a gain or loss equal to
the difference between the value of Orion Fund shares such shareholder acquires
and the tax basis of such shareholder's Olympus Fund shares.
Shareholders of Olympus Fund should consult their tax advisers regarding
the effect, if any, of the proposed Merger in light of their individual
circumstances. Since the foregoing discussion relates only to the federal income
tax consequences
22
of the Merger, shareholders of Olympus Fund should also consult tax advisers as
to state and local tax consequences, if any, of the Merger.
As of October 31, 2005, Olympus Fund had accumulated capital loss
carryforwards of $1,684,106,645. After the Merger, these losses may be available
to Orion Fund, which had accumulated capital loss carryforwards of $548,470,090,
to offset its capital gains. The final amount of the accumulated capital loss
carryforwards for Olympus Fund and Orion Fund is subject to change and will not
be determined until the time of the Merger. After and as a result of the Merger,
these accumulated capital loss carryforwards may in part be subject to
limitations under applicable tax laws. As a result, Orion Fund may not be able
to use some or all of these losses as quickly as each Fund may have used these
losses in the absence of the Merger, and part of these losses may not be useable
at all. The Board of Trustees of the Trust took this factor into account in
concluding that the proposed Merger would be in the best interests of the Funds
and their shareholders.
CAPITALIZATION
The following table shows, on an unaudited basis, the capitalization as of
June 30, 2006 for Olympus Fund and Orion Fund, as well as pro forma
capitalization giving effect to the proposed Merger:
<Table>
<Caption>
NET
ASSET VALUE SHARES
FUND NET ASSETS PER SHARE OUTSTANDING
- ---- -------------- ----------- -----------
Janus Olympus Fund........ $2,217,780,821 31.86 69,603,089
Janus Orion Fund.......... 1,024,410,720 8.97 114,147,203
PRO FORMA AFTER MERGER
Janus Orion Fund.......... 3,242,191,541 8.97 361,448,332
</Table>
OTHER COMPARATIVE INFORMATION ABOUT THE FUNDS
INVESTMENT ADVISER
Janus, 151 Detroit Street, Denver, Colorado 80206-4805, is the investment
adviser to both of the Funds. Janus is responsible for the day-to-day management
of the Funds' investment portfolios and furnishes continuous advice and
recommendations concerning the Funds' investments. Janus provides certain
administrative and other services, and is responsible for the other business
affairs of the Funds. Janus (together with its predecessors) has served as
investment adviser to mutual funds since 1970 and currently serves as investment
adviser to all of the Janus funds, acts as subadviser for a number of
private-label mutual funds, and provides separate account advisory services for
institutional accounts.
Janus furnishes certain administrative, compliance, and accounting services
for the Funds, and may be reimbursed by the Funds for its costs in providing
those services. In addition, employees of Janus and/or its affiliates serve as
officers of the Trust and Janus provides office space for the Funds and pays all
or a portion of the
23
salaries, fees, and expenses of all Fund officers and those Trustees who are
considered interested persons of Janus.
From its own assets, Janus or its affiliates may make payments based on
gross sales, current assets, or other measures to selected brokerage firms or
other financial intermediaries that were instrumental in the acquisition or
retention of shareholders for the Janus funds. The amount of these payments is
determined from time to time by Janus, may be substantial, and may differ for
different financial intermediaries. Eligibility requirements for such payments
to institutional intermediaries are determined by Janus and/or its affiliates.
Janus or its affiliates may pay fees, from their own assets, to brokerage
firms, banks, financial advisers, retirement plan service providers, and other
financial intermediaries for providing recordkeeping, subaccounting, transaction
processing, and other shareholder or administrative services (including payments
for processing transactions via National Securities Clearing Corporation
("NSCC") or other means) in connection with investments in the Janus funds.
These fees are in addition to any fees that may be paid by the Janus funds for
these types of or other services. In addition, Janus or its affiliates may also
share certain marketing expenses with, or pay for or sponsor informational
meetings, seminars, client awareness events, support for marketing materials, or
business building programs for such intermediaries to raise awareness of the
Funds.
The receipt of (or prospect of receiving) payments described above are not
intended to, but may provide a financial intermediary and its salespersons with
an incentive to favor sales of Janus funds' shares over sales of other mutual
funds (or non-mutual fund investments) with respect to which the financial
intermediary does not receive such payments or receives them in a lower amount.
These payment arrangements will not, however, change the price an investor pays
for shares or the amount that a Janus fund receives to invest on behalf of the
investor. You may wish to consider whether such arrangements exist when
evaluating any recommendations to purchase or sell shares of the Funds.
MANAGEMENT FEES
Each Fund pays Janus an investment advisory fee which is calculated daily
and paid monthly at the annual rate of 0.64% of average daily net assets. Each
Fund's advisory agreement details the investment advisory fee and other expenses
that the Funds pay. Each Fund incurs expenses not assumed by Janus, including
any transfer agent and custodian fees and expenses, legal and auditing fees,
printing and mailing costs of sending reports and other information to existing
shareholders, and Independent Trustees' fees and expenses.
The basis for the Trustees' approval of the investment advisory agreement
for Orion Fund is contained in Orion Fund's unaudited Semiannual Report to
shareholders dated April 30, 2006.
24
PORTFOLIO MANAGER
The portfolio manager for each Fund is Ron Sachs. Mr. Sachs is Executive
Vice President and Portfolio Manager of Orion Fund, which he has managed since
its inception, and Executive Vice President and Portfolio Manager of Olympus
Fund, which he has managed since July 1, 2006. Mr. Sachs was Portfolio Manager
of Janus Triton Fund from February 2005 to January 2006. He is also Portfolio
Manager of other Janus accounts. Mr. Sachs joined Janus in 1996 as a research
analyst. Mr. Sachs holds a Bachelor's degree (cum laude) in Economics from
Princeton and a law degree from the University of Michigan. Mr. Sachs has earned
the right to use the Chartered Financial Analyst designation.
Orion Fund's Statement of Additional Information dated February 28, 2006,
which is incorporated by reference herein, provides information about the
structure and method of Mr. Sach's compensation.
TRUSTEES AND OFFICERS
The following individuals comprise the Board of Trustees of the Trust of
which each Fund is a series: Thomas H. Bailey, Jerome S. Contro, William F.
McCalpin, John W. McCarter, Jr., Dennis B. Mullen, James T. Rothe, William D.
Stewart, Martin H. Waldinger, and Linda S. Wolf. Eight of the Trustees are not
"interested" persons of Janus or the Trust, as that term is defined under the
1940 Act. The officers of the Trust are disclosed in each Fund's Statement of
Additional Information.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP, 1670 Broadway, Suite 1000, Denver, Colorado
80202, Independent Registered Public Accounting Firm for the Funds, audits the
Funds' annual financial statements and reviews their tax returns.
CHARTER DOCUMENTS
Each Fund is a series of the Trust, a Massachusetts business trust governed
by Massachusetts law. The Funds are governed by an Amended and Restated
Agreement and Declaration of Trust dated March 18, 2003, as amended from time to
time ("Trust Instrument"). The following is a summary of certain provisions of
the Trust Instrument and is qualified in its entirety by reference to the Trust
Instrument.
Shares. As a shareholder, you are entitled to one vote for each whole
dollar and a proportionate fractional vote for each fractional dollar of NAV of
the Fund that you own. Generally, all funds and classes vote together as a
single group, except where a separate vote of one or more funds or classes is
required by law or where the interests of one or more funds or classes are
affected differently from other funds or classes. Shares of all series of the
Trust have noncumulative voting rights, which means that the holders of more
than 50% of the value of shares of all series of the Trust voting for the
election of Trustees can elect 100% of the Trustees if they
25
choose to do so. In such event, the holders of the remaining value of shares
will not be able to elect any Trustees.
All shares of a Fund participate equally in dividends and other
distributions by the shares of the same class of that Fund, and in residual
assets of that class of that Fund in the event of liquidation. Shares of each
Fund have no preemptive, conversion, or appraisal rights. Shares of each Fund
may be transferred by endorsement or stock power as is customary, but a Fund is
not bound to recognize any transfer until it is recorded on its books. The Funds
have the right to redeem, at the then current NAV, the shares of any shareholder
whose account does not meet certain minimum requirements as described in the
Fund's Prospectus.
Shareholder Meetings. The Trust is not required, and does not intend, to
hold annual shareholder meetings unless otherwise required by the Trust
Instrument, the 1940 Act or in compliance with any regulatory order. Under the
terms of a settlement reached between Janus and the SEC in August 2004,
commencing in 2005 and not less than every fifth calendar year thereafter, the
Trust will hold a meeting of shareholders to elect Trustees. Special meetings
may be called for a specific fund or for the Trust for purposes such as election
of Trustees, when required by the Trust Instrument or to comply with the 1940
Act or a regulatory order. Under the Trust Instrument, special meetings of
shareholders of the Trust or of any fund shall be called upon written request of
shareholders holding not less than 10% of the shares then outstanding.
Shareholder Liability. Under Massachusetts law, shareholders of a
Massachusetts business trust could, under certain circumstances, be held liable
for the obligations of their Fund. However, the Trust Instrument disclaims
shareholder liability for acts or obligations of the Funds and requires that
notice of this disclaimer be given in each agreement, obligation, or instrument
entered into or executed by the Funds or the Trustees. The Trust Instrument also
provides for indemnification from the assets of the Funds for all losses and
expenses of any Fund shareholder held liable for the obligations of their Fund.
The Trustees intend to conduct the operations of the Funds to avoid, to the
extent possible, liability of shareholders for liabilities of their Fund.
Trustee Liability. A Trustee shall be liable for such Trustee's own
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee, and for nothing else,
and shall not be liable for errors of judgment or mistakes of fact or law. All
persons extending credit to, contracting with or having any claim against the
Trust shall look only to the assets of the Fund with which such person dealt for
payment under such credit, contract, or claim.
Liquidation or Dissolution. In the event of the liquidation or dissolution
of the Trust, shareholders of the funds are entitled to receive, when and as
declared by the Trustees, the excess of the assets belonging to their fund, or
in the case of a class, belonging to that fund and allocable to that class, over
the liabilities belonging
26
to that fund or class. The assets shall be distributed to shareholders in
proportion to the relative NAV of the shares of that fund or class held by them
and recorded on the books of the Trust. The liquidation of any particular fund
or class thereof may be authorized at any time by vote of a majority of the
Trustees then in office. Shareholders will receive prior notice of any
liquidation effecting their fund or class.
ADDITIONAL INFORMATION
QUORUM AND VOTING
Shareholders of Olympus Fund will vote together at the Meeting. Each holder
of a whole or fractional share shall be entitled to one vote for each whole or
fractional dollar value of net asset value held in such shareholder's name. If
you are not the owner of record, but your shares are instead held for your
benefit by a financial intermediary such as a retirement plan service provider,
broker-dealer, bank trust department, insurance company, or other financial
intermediary, that financial intermediary may request that you instruct it how
to vote the shares you beneficially own. Your financial intermediary will
provide you with additional information.
Thirty percent of the outstanding shares entitled to vote at the Meeting
shall be a quorum for the transaction of business at the Meeting. Any lesser
number is sufficient for adjournments. In the event that the necessary quorum to
transact business or the vote required to approve the Merger is not obtained at
the Meeting, the persons named as proxies may propose one or more adjournments
of the Meeting, in accordance with applicable law, to permit further
solicitation of proxies. Any such adjournment will require the affirmative vote
of the holders of a majority of the shares of Olympus Fund, present in person or
by proxy at the Meeting. The persons named as proxies will vote the proxies
(including broker non-votes and abstentions), in accordance with applicable law,
in favor of adjournment if they determine additional solicitation is warranted
and in the interests of Olympus Fund's shareholders.
"Broker non-votes" are shares held by a broker or nominee for which an
executed proxy is received by the Trust, but are not voted because instructions
have not been received from beneficial owners or persons entitled to vote and
the broker or nominee does not have discretionary voting power. Abstentions and
"broker non-votes" are counted as shares eligible to vote at the Meeting in
determining whether a quorum is present, but do not represent votes cast with
respect to adjournment or the Merger. Accordingly, assuming the presence of a
quorum, abstentions and "broker non-votes" will have the effect of a vote
against the Merger.
Approval of the Merger will require the affirmative vote of a "majority of
the outstanding voting securities" of Olympus Fund within the meaning of the
1940 Act. This means the lesser of (1) 67% or more of the shares present at the
Meeting
27
if the holders of more than 50% of the outstanding shares are present or
represented by proxy, or (2) more than 50% of the outstanding shares.
SHARE OWNERSHIP
On the Record Date, there were 69,255,384 outstanding shares of Olympus
Fund with a per share net asset value of $30.29. On the Record Date, there were
115,079,374 outstanding shares of Orion Fund with a net asset value of $8.52.
Only shareholders of Olympus Fund vote on the Merger. Shareholders of Orion Fund
will not vote on the Merger. As of July 14, 2006, the officers and Trustees of
the Trust, as a group, beneficially owned less than 1% of the outstanding shares
of Olympus Fund.
Beneficial owners of 5% or more of the outstanding shares of Olympus Fund
as of the Record Date are shown below. To the best knowledge of the Trust, no
person beneficially owned more than 5% of the outstanding shares of Olympus Fund
except as shown below, and such owners may not be the beneficial owner of all or
a portion of the shares.
<Table>
<Caption>
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF FUND
- ------------------------------------ ---------------- ---------------
Charles Schwab & Co., Inc............. 10,592,299 15.3%
For the exclusive Benefit of Customers
101 Montgomery Street
San Francisco, CA 94104-4151
National Financial Services Co........ 5,620,113 8.1%
For the exclusive Benefit of Customers
P.O. Box 3730
Church Street Station
New York, NY 10007
</Table>
SOLICITATION OF PROXIES
Janus will pay for all costs related to the Merger, including the costs
associated with the drafting, printing, and mailing of this Proxy
Statement/Prospectus, the solicitation of proxies, and the Meeting. In addition
to solicitation of proxies by mail, certain officers and representatives of the
Trust, certain officers and employees of Janus or its affiliates, certain
financial services firms and their representatives, without extra compensation,
or a solicitor, may solicit proxies personally, by telephone, U.S. Mail,
facsimile, verbal, internet, or email communications.
Janus has engaged D.F. King & Co., Inc. ("D.F. King"), a professional proxy
solicitation firm, to assist in the solicitation of proxies, at an estimated
cost of $600,000, plus any out-of-pocket expenses. Such expenses will be paid by
Janus. Among other things, D.F. King will be (i) required to maintain the
confidentiality of all shareholder information; (ii) prohibited from selling or
otherwise disclosing shareholder information to any third party; and (iii)
required to comply with applicable telemarketing laws.
28
Brokers, banks, and other fiduciaries may be required to forward soliciting
material to their principals on behalf of Olympus Fund and to obtain
authorization for the execution of proxies. For those services, they will be
reimbursed by Janus for their expenses to the extent Janus or Olympus Fund would
have directly borne those expenses.
As the Meeting date approaches, certain shareholders whose votes have not
been received, may receive telephone calls from a representative of D.F. King.
Authorization to permit D.F. King to execute proxies may be obtained by
telephonic or electronically transmitted instructions from shareholders of
Olympus Fund. Proxies that are obtained telephonically will be recorded in
accordance with the procedures described below. Olympus Fund believes that these
procedures are reasonably designed to ensure that both the identity of the
shareholder casting the vote and the voting instructions of the shareholder are
accurately determined.
In all cases where a telephonic proxy is solicited, the D.F. King
representative is required to ask for each shareholder's full name, address,
title (if the shareholder is authorized to act on behalf of an entity, such as a
corporation), and to confirm that the shareholder has received the Proxy
Statement/Prospectus and proxy card(s) in the mail. If the information solicited
agrees with the information provided to D.F. King, then the D.F. King
representative has the responsibility to explain the process, read the proposal
listed on the proxy card, and ask for the shareholder's instructions on the
proposal. Although the D.F. King representative is permitted to answer questions
about the process, he or she is not permitted to recommend to the shareholder
how to vote. The D.F. King representative may read any recommendation set forth
in this Proxy Statement/Prospectus. The D.F. King representative will record the
shareholder's instructions. Within 72 hours, the shareholder will be sent a
confirmation of his or her vote asking the shareholder to call 1-800-628-8528
immediately if his or her instructions are not accurately reflected in the
confirmation.
Telephone Touch-Tone Voting. Shareholders may provide their voting
instructions through telephone touch-tone voting by following the instructions
on the enclosed proxy card(s). (You must have a valid social security number on
file for your account in Olympus Fund in order to vote through telephone
touch-tone voting.) Shareholders will have an opportunity to review their voting
instructions and make any necessary changes before submitting their voting
instructions and terminating their telephone call.
Internet Voting. Shareholders may provide their voting instructions
through Internet voting by following the instructions on the enclosed proxy
card(s). (You must have a valid social security number on file for your account
in Olympus Fund in order to vote through Internet voting.) Shareholders who vote
via the Internet, in addition to confirming their voting instructions prior to
submission and terminating their Internet link, will, upon request, receive an
e-mail confirming their voting instructions. If a shareholder wishes to
participate in the Meeting but does not wish to give a proxy by telephone or via
the Internet, the shareholder may still submit the
29
proxy card(s) originally sent with the Proxy Statement/Prospectus in the postage
paid envelope provided, or attend the Meeting in person. Shareholders requiring
additional information regarding the proxy or replacement proxy card(s), may
contact D.F. King at 1-800-628-8528. Any proxy given by a shareholder is
revocable until voted at the Meeting.
Revoking a Proxy. Any shareholder submitting a proxy has the power to
revoke it at any time before it is exercised by submitting to the Secretary of
the Trust at 151 Detroit Street, Denver, Colorado 80206, a written notice of
revocation or a subsequently executed proxy or by attending the Meeting and
voting in person. All properly executed and unrevoked proxies received in time
for the Meeting will be voted as specified in the proxy, or, if no specification
is made, will be voted FOR the Merger described in this Proxy
Statement/Prospectus.
Shares Held by Accounts of Insurance Companies. Shares of Olympus Fund may
be held by certain separate accounts of insurance companies to fund benefits
payable under certain variable annuity contracts and variable life insurance
policies. Your insurance company may request that you provide it with voting
instructions for your beneficially held shares of any such separate account. If
you do not provide voting instructions to your insurance company, it may vote
all of the shares held in that separate account in the same proportions as the
voting actually received from other variable contract holders for that separate
account.
LEGAL MATTERS
Information regarding material pending legal proceedings involving Janus or
the Funds is attached as Appendix D to this Proxy Statement/Prospectus.
SHAREHOLDER PROPOSALS FOR SUBSEQUENT MEETINGS
Olympus Fund and Orion Fund are not required, and do not intend, to hold
annual shareholder meetings. Shareholder meetings may be called from time to
time as described in the Trust Instrument and the Trust's Amended and Restated
Bylaws. Under the terms of a settlement reached between Janus and the SEC in
August 2004, commencing in 2005 and not less than every fifth calendar year
thereafter, the Trust will hold a meeting of shareholders to elect Trustees.
Under the proxy rules of the SEC, shareholder proposals that meet certain
conditions may be included in Olympus Fund's proxy statement for a particular
meeting. Those rules currently require that for future meetings, the shareholder
must be a record or beneficial owner of Olympus Fund shares either (i) with a
value of at least $2,000 or (ii) in an amount representing at least 1% of
Olympus Fund's securities to be voted, at the time the proposal is submitted and
for one year prior thereto, and must continue to own such shares through the
date on which the meeting is held. Another requirement relates to the timely
receipt by Olympus Fund of any such proposal. Under those rules, a proposal must
have been submitted within a reasonable time before Olympus Fund began to print
and mail this Proxy Statement/Prospectus in order to be included in this Proxy
Statement/Prospectus. A proposal submitted for
30
inclusion in Olympus Fund's proxy material for the next special meeting after
the meeting to which this Proxy Statement/Prospectus relates must be received by
Olympus Fund within a reasonable time before the Fund begins to print and mail
the proxy materials for that meeting.
Shareholders wishing to submit a proposal for inclusion in a proxy
statement subsequent to the Meeting, if any, should send their written proposal
to the Secretary of the Trust at 151 Detroit Street, Denver, Colorado 80206
within a reasonable time before Olympus Fund begins to print and mail the proxy
materials for that meeting. Notice of shareholder proposals to be presented at
the Meeting must have been received within a reasonable time before the Fund
began to mail this Proxy Statement/Prospectus. The timely submission of a
proposal does not guarantee its inclusion in the proxy materials.
OTHER MATTERS TO COME BEFORE THE MEETING
The Trustees are not aware of any matter that will be presented for action
at the Meeting other than the matters described in this Proxy
Statement/Prospectus. Should any other matters requiring a vote of shareholders
arise, the proxy in the accompanying form will confer upon the person or persons
entitled to vote the shares represented by such proxy the discretionary
authority to vote the shares as to any other matters in accordance with their
best judgment in the interest of the Trust and/or Fund.
AVAILABLE INFORMATION
INFORMATION AVAILABLE THROUGH THE SEC
Olympus Fund and Orion Fund are each subject to the information
requirements of the Securities Exchange Act of 1934, as amended, and the 1940
Act. In accordance therewith, each files reports and other information with the
SEC. Reports, proxy statements, registration statements, and other information
may be inspected without charge and copied at the Public Reference Room
maintained by the SEC at: 100 F Street, NE, Room 1580, Washington, DC 20549 and
at the following regional offices of the SEC: 3 World Financial Center, Room
4300, New York, NY 10281; 801 Brickell Ave., Suite 1800, Miami, FL 33131; 175 W.
Jackson Boulevard, Suite 900, Chicago, IL 60604; 1801 California Street, Suite
1500 Denver, CO 80202-2656; and 5670 Wilshire Boulevard, 11th Floor, Los
Angeles, CA 90036-3648. Copies of such materials also may be obtained from the
Public Reference Branch, Office of Consumer Affairs and Information Services,
Securities and Exchange Commission, Washington, D.C. 20549 at prescribed rates.
You can get text only copies, after paying a duplicating fee, by sending an
electronic request by e-mail to publicinfo@sec.gov or by writing to or calling
the Public Reference Room, Washington, D.C. 20549-0102 (1-202-942-8090).
Information on the operation of the Public Reference Room may also be obtained
by calling this number. You may also obtain reports and other information about
the Funds from the
31
Electronic Data Gathering Analysis and Retrieval (EDGAR) Database on the SEC's
website at http://www.sec.gov.
INFORMATION AVAILABLE THROUGH JANUS
You can make inquiries and request other information, including a Statement
of Additional Information, Annual Report, or Semiannual Report, free of charge,
by contacting a Janus representative at 1-800-525-3713 or notifying the Funds'
transfer agent, Janus Services LLC ("Janus Services"), in writing at 151 Detroit
Street, Denver, Colorado 80206. The Funds' Statement of Additional Information
and most recent Annual and Semiannual Reports are also available, free of
charge, on www.janus.com. Additional information about the Funds' investments is
available in the Funds' Annual and Semiannual Reports, including a discussion of
the market conditions and investment strategies that significantly affected the
Funds' performance during their last fiscal period. The Annual Report to
shareholders of the Funds, including financial statements, has previously been
sent to shareholders. Other information is also available from financial
intermediaries that sell shares of the Funds. The Statement of Additional
Information provides detailed information about the Funds and is incorporated
into this Proxy Statement/Prospectus by reference.
To avoid sending duplicate copies of materials to households, the Funds
mail only one copy of each report to shareholders having the same last name and
address on the Funds' records. The consolidation of these mailings benefits the
Funds through reduced mailing expenses. If a shareholder wants to receive
multiple copies of these materials or to receive only one copy in the future,
the shareholder should contact the Funds' transfer agent, Janus Services, at
1-800-525-3713 or notify the Funds' transfer agent in writing at 151 Detroit
Street, Denver, Colorado 80206.
32
SHAREHOLDER INQUIRIES
Shareholder inquiries regarding this Proxy Statement/Prospectus may be
addressed to our proxy solicitor, D.F. King & Co., Inc., by calling
1-800-628-8528.
PLEASE COMPLETE, SIGN, AND RETURN THE ENCLOSED PROXY CARD(S) OR VOTE BY
TELEPHONE OR INTERNET PROMPTLY. NO POSTAGE IS REQUIRED IF YOU MAIL YOUR PROXY
CARD(S) IN THE UNITED STATES.
By order of the Board of Trustees,
/s/ Kelley Abbott Howes
Kelley Abbott Howes
Chief Executive Officer and President
of
Janus Investment Fund
33
APPENDIX A
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this day of , 2006, by and between Janus Investment Fund, a
Massachusetts business trust (the "Trust"), on behalf of Janus Olympus Fund, a
series of the Trust (the "Predecessor Fund"), Janus Orion Fund, a series of the
Trust (the "Successor Fund"), and Janus Capital Management LLC, a Delaware
limited liability company ("JCM").
All references in this Agreement to action taken by the Predecessor Fund or
the Successor Fund shall be deemed to refer to action taken by the Trust on
behalf of the respective portfolio series.
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a) of the United States
Internal Revenue Code of 1986, as amended (the "Code"). The reorganization (the
"Reorganization") will consist of the transfer by the Predecessor Fund of all or
substantially all of its assets to the Successor Fund, in exchange solely for
shares of beneficial interest in the Successor Fund ("New Shares") having a net
asset value equal to the net asset value of the Predecessor Fund, the assumption
by the Successor Fund of all the liabilities of the Predecessor Fund, and the
distribution of the New Shares to the shareholders of the Predecessor Fund in
complete liquidation of the Predecessor Fund as provided herein, all upon the
terms and conditions hereinafter set forth in this Agreement.
WHEREAS, the Board of Trustees of the Trust has determined that it is in
the best interest of the Predecessor Fund and the Successor Fund, respectively,
that the assets of the Predecessor Fund be acquired by the Successor Fund
pursuant to this Agreement and in accordance with the applicable statutes of the
Commonwealth of Massachusetts and that the interests of existing shareholders
will not be diluted as a result of this transaction;
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. PLAN OF REORGANIZATION
1.1 Subject to the terms and conditions herein set forth, the Trust shall
(i) transfer all or substantially all of the assets of the Predecessor Fund, as
set forth in paragraph 1.2, to the Successor Fund, (ii) cause the Successor Fund
to deliver to the Trust full and fractional New Shares of the Successor Fund,
having a net asset value equal to the value of the net assets of the shares of
the Predecessor Fund as of the close of regular session trading on the New York
Stock Exchange on the Closing Date, as set forth in Article 2 and (iii) assume
all liabilities of the Predecessor
A-1
Fund, as set forth in paragraph 1.2. Such transactions shall take place at the
closing provided for in paragraph 2.1 (the "Closing").
1.2 The assets of the Predecessor Fund to be acquired by the Successor
Fund shall consist of all property, including, without limitation, all cash,
securities, commodities and futures interests, and dividends or interest
receivable which are owned by the Predecessor Fund and any deferred or prepaid
expenses shown as an asset on the books of the Predecessor Fund on the closing
date provided in paragraph 2.1 (the "Closing Date"). The Successor Fund will
assume all of the liabilities, expenses, costs, charges and reserves of the
Predecessor Fund of any kind, whether absolute, accrued, contingent or otherwise
in existence on the Closing Date.
1.3 The Predecessor Fund will distribute pro rata to its shareholders of
record, determined as of immediately after the close of business on the Closing
Date (the "Current Shareholders"), the New Shares received by the Trust pursuant
to paragraph 1.1. Such distribution and liquidation will be accomplished by the
transfer of the New Shares then credited to the accounts of the Predecessor Fund
on the books of the Successor Fund to open accounts on the share records of the
Successor Fund in the names of the Current Shareholders and representing the
respective pro rata number of the New Shares due such shareholders. All issued
and outstanding shares of the Predecessor Fund will simultaneously be canceled
on the books of the Trust. The Successor Fund shall not issue certificates
representing the New Shares in connection with such exchange. Ownership of New
Shares will be shown on the books of the Trust's transfer agent. As soon as
practicable after the Closing, the Trust shall take all steps necessary to
effect a complete liquidation of the Predecessor Fund.
2. CLOSING AND CLOSING DATE
2.1 The Closing Date shall be October 31, 2006, or such date as the
parties may agree to in writing. All acts taking place at the Closing shall be
deemed to take place simultaneously as of immediately after the close of
business on the Closing Date unless otherwise agreed to by the parties. The
close of business on the Closing Date shall be as of 4:00 p.m. New York Time.
The Closing shall be held at the offices of Janus Capital Management LLC ("Janus
Capital"), 151 Detroit Street, Denver, Colorado 80206, or at such other time
and/or place as the parties may agree.
2.2 The Trust shall cause Janus Services LLC (the "Transfer Agent"),
transfer agent of the Predecessor Fund, to deliver at the Closing a certificate
of an authorized officer stating that its records contain the names and
addresses of the Current Shareholders and the number and percentage ownership of
outstanding shares of the Predecessor Fund owned by each such shareholder
immediately prior to the Closing. The Successor Fund shall issue and deliver a
confirmation evidencing the New Shares to be credited on the Closing Date to the
Secretary of the Trust or provide evidence satisfactory to the Trust that such
New Shares have been credited to the accounts of the Predecessor Fund on the
books of the Successor
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Fund. At the Closing, each party shall deliver to the other such bills of sales,
checks, assignments, share certificates, if any, receipts or other documents as
such other party or its counsel may reasonably request.
3. REPRESENTATIONS AND WARRANTIES
3.1 The Trust, on behalf of the Predecessor Fund, hereby represents and
warrants to the Successor Fund as follows:
(i) the Trust is a business trust duly organized, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts and
has full corporate power and authority to conduct its business as presently
conducted;
(ii) the Trust has full power and authority to execute, deliver and
carry out the terms of this Agreement on behalf of the Predecessor Fund;
(iii) the execution and delivery of this Agreement on behalf of the
Predecessor Fund and the consummation of the transactions contemplated
hereby are duly authorized and no other proceedings on the part of the
Trust or the shareholders of the Predecessor Fund (other than as
contemplated in paragraph 4.1(vi)) are necessary to authorize this
Agreement and the transactions contemplated hereby;
(iv) this Agreement has been duly executed by the Trust on behalf of
the Predecessor Fund and constitutes its valid and binding obligation,
enforceable in accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other rights affecting
creditors' rights generally, and general equitable principles;
(v) neither the execution and delivery of this Agreement by the Trust
on behalf of the Predecessor Fund, nor the consummation by the Trust on
behalf of the Predecessor Fund of the transactions contemplated hereby,
will conflict with, result in a breach or violation of or constitute (or
with notice, lapse of time or both) a breach of or default under, the
Trust's Amended and Restated Agreement and Declaration of Trust
("Declaration of Trust") or By-Laws of the Trust, as each may be amended,
or any statute, regulation, order, judgment or decree, or any instrument,
contract or other agreement to which the Trust is a party or by which the
Trust or any of its assets is subject or bound; and
(vi) the unaudited statement of assets and liabilities of the
Predecessor Fund as of the Closing Date, determined in accordance with
generally accepted accounting principles consistently applied from the
prior audited period, accurately reflects all liabilities of the
Predecessor Fund as of the Closing Date; and
(vii) no authorization, consent or approval of any governmental or
other public body or authority or any other party is necessary (other than
as contemplated in paragraph 4.1(vi)) for the execution and delivery of
this
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Agreement by the Trust on behalf of the Predecessor Fund or the
consummation of any transactions contemplated hereby by the Trust, other
than as shall be obtained at or prior to the Closing.
3.2 The Trust, on behalf of the Successor Fund, hereby represents and
warrants to the Predecessor Fund as follows:
(i) the Trust is a business trust duly organized, validly existing and
in good standing under the laws of the Commonwealth of Massachusetts and
has full corporate power and authority to conduct its business as presently
conducted;
(ii) the Trust has full power and authority to execute, deliver and
carry out the terms of this Agreement on behalf of the Successor Fund;
(iii) the execution and delivery of this Agreement on behalf of the
Successor Fund and the consummation of the transactions contemplated hereby
are duly authorized and no other proceedings on the part of the Trust or
the shareholders of the Successor Fund are necessary to authorize this
Agreement and the transactions contemplated hereby;
(iv) this Agreement has been duly executed by the Trust on behalf of
the Successor Fund and constitutes its valid and binding obligation,
enforceable in accordance with its terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and other rights affecting
creditors' rights generally, and general equitable principles;
(v) neither the execution and delivery of this Agreement by the Trust
on behalf of the Successor Fund, nor the consummation by the Trust on
behalf of the Successor Fund of the transactions contemplated hereby, will
conflict with, result in a breach or violation of or constitute (or with
notice, lapse of time or both constitute) a breach of or default under, the
Declaration of Trust or By-Laws of the Trust, as each may be amended, or
any statute, regulation, order, judgment or decree, or any instrument,
contract or other agreement to which the Trust is a party or by which the
Trust or any of its assets is subject or bound; and
(vi) the net asset value per share of the Successor Fund as of the
close of regular session trading on the New York Stock Exchange on the
Closing Date reflects all liabilities of the Successor Fund as of that time
and date; and
(vii) no authorization, consent or approval of any governmental or
other public body or authority or any other party is necessary for the
execution and delivery of this Agreement by the Trust on behalf of the
Successor Fund or the consummation of any transactions contemplated hereby
by the Trust, other than as shall be obtained at or prior to the Closing.
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4. CONDITIONS PRECEDENT
4.1 The obligations of the Trust on behalf of each of the Predecessor Fund
and the Successor Fund to effectuate the Reorganization shall be subject to the
satisfaction of the following conditions:
(i) The Trust shall have filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form N-14 under
the Securities Act of 1933, as amended (the "Securities Act") and such
amendment or amendments thereto as are determined by the Board of Trustees
of the Trust to be necessary and appropriate to effect the registration of
the New Shares (the "Registration Statement"), and the Registration
Statement shall have become effective, and no stop-order suspending the
effectiveness of the Registration Statement shall have been issued, and no
proceeding for that purpose shall have been initiated or threatened by the
Commission (and not withdrawn or terminated);
(ii) The applicable New Shares shall have been duly qualified for
offering to the public in all states in which such qualification is
required for consummation of the transactions contemplated hereunder;
(iii) All representations and warranties of the Trust on behalf of the
Predecessor Fund contained in this Agreement shall be true and correct in
all material respects as of the date hereof and as of the Closing, with the
same force and effect as if then made, and the Trust on behalf of the
Successor Fund shall have received a certificate of an officer of the Trust
acting on behalf of the Predecessor Fund to that effect in form and
substance reasonably satisfactory to the Trust on behalf of the Successor
Fund;
(iv) All representations and warranties of the Trust on behalf of the
Successor Fund contained in this Agreement shall be true and correct in all
material respects as of the date hereof and as of the Closing, with the
same force and effect as if then made, and the Trust on behalf of the
Predecessor Fund shall have received a certificate of an officer of the
Trust acting on behalf of the Successor Fund to that effect in form and
substance reasonably satisfactory to the Trust on behalf of the Predecessor
Fund;
(v) The Trust on behalf of the Predecessor Fund and the Successor Fund
shall have received a favorable opinion of Goodwin Procter LLP satisfactory
to counsel for the Trust, to the effect that, for federal income tax
purposes:
(a) The acquisition by the Successor Fund of the assets of the
Predecessor Fund in exchange for the Successor Fund's assumption of the
liabilities of the Predecessor Fund and issuance of the New Shares,
followed by the distribution by the Predecessor Fund of such the New
Shares to the shareholders of the Predecessor Fund in exchange for their
shares of the Predecessor Fund, all as provided in paragraph 1 hereof,
will constitute a reorganization within the meaning of Section 368(a) of
the
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Code, and the Predecessor Fund and the Successor Fund will each be "a
party to a reorganization" within the meaning of Section 368(b) of the
Code;
(b) No gain or loss will be recognized to the Predecessor Fund (i)
upon the transfer of its assets to the Successor Fund in exchange for
the New Shares or (ii) upon the distribution of the New Shares to the
shareholders of the Predecessor Fund as contemplated in paragraph 1
hereof;
(c) No gain or loss will be recognized to the Successor Fund upon
the receipt of the assets of the Predecessor Fund in exchange for the
assumption of liabilities and Obligations and issuance of the New Shares
as contemplated in paragraph 1 hereof;
(d) The tax basis of the assets of the Predecessor Fund acquired by
the Successor Fund will be the same as the basis of those assets in the
hands of the Predecessor Fund immediately prior to the transfer, and the
holding period of the assets of the Predecessor Fund in the hands of the
Successor Fund will include the period during which those assets were
held by the Predecessor Fund;
(e) The shareholders of the Predecessor Fund will recognize no gain
or loss upon the exchange of all of their shares of the Predecessor Fund
for the New Shares;
(f) The tax basis of the New Shares to be received by each
shareholder of the Predecessor Fund will be the same in the aggregate as
the aggregate tax basis of the shares of the Predecessor Fund
surrendered in exchange therefor;
(g) The holding period of the New Shares to be received by the
shareholders of the Predecessor Fund will include the period during
which the shares of the Predecessor Fund surrendered in exchange
therefor were held, provided such shares of the Predecessor Fund were
held as a capital asset on the date of the exchange.
(h) Successor Fund will succeed to and take into account the items
of Predecessor Fund described in Section 381(c) of the Code, subject to
the conditions and limitations specified in Sections 381, 382, 383 and
384 of the Code and the regulations thereunder.
(vi) The shareholders of the Predecessor Fund shall have approved this
Agreement and Plan of Reorganization at a special meeting of the
shareholders of the Predecessor Fund.
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5. EXPENSES
All of the expenses and costs of the Reorganization and the transactions
contemplated thereby shall be borne by Janus Capital.
6. ENTIRE AGREEMENT
The Trust agrees on behalf of each of the Predecessor Fund and the
Successor Fund that this Agreement constitutes the entire agreement between the
parties.
7. TERMINATION
This Agreement and the transactions contemplated hereby may be terminated
and abandoned by resolution of the Board of Trustees of the Trust, at any time
prior to the Closing Date, if circumstances should develop that, in the opinion
of the Board of Trustees, make proceeding with the Agreement inadvisable.
8. AMENDMENTS
This agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by the parties.
9. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be given by prepaid
telegraph, telecopy or certified mail addressed to the parties hereto at their
principal place of business.
10. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY
10.1 The Article and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.2 This Agreement may be executed in any number of counterparts each of
which shall be deemed an original.
10.3 This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts.
10.4 This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and their respective
successors and assigns, any rights or remedies under or by reason of this
Agreement.
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10.5 It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but shall bind only the trust
property of the Trust, as provided in the Declaration of Trust of the Trust. The
execution and delivery by such officers of the Trust shall not be deemed to have
been made by any of them individually or to impose any liability on any of them
personally, but shall bind only the trust property of the Trust as provided in
the Declaration of Trust of the Trust. The Trust is a series company with
multiple series and has entered into this Agreement on behalf of the Predecessor
Fund and the Successor Fund.
10.6 The sole remedy of a party hereto for a breach of any representation
or warranty made in this Agreement by the other party shall be an election by
the non-breaching party not to complete the transactions contemplated herein.
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed as
of the date set forth above.
<Table>
ATTEST JANUS INVESTMENT FUND
For and on behalf of Janus Olympus Fund
Name: By:
------------------------- ------------------------------------
Name:
Title:
ATTEST JANUS INVESTMENT FUND
For and on behalf of Janus Orion Fund
Name: By:
------------------------- ------------------------------------
Name:
Title:
ATTEST JANUS CAPITAL MANAGEMENT LLC
Name: By:
------------------------- ------------------------------------
Name:
Title:
</Table>
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APPENDIX B
INVESTMENT POLICIES AND RESTRICTIONS
FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS:
With respect to 75% of its total assets, Olympus Fund may not purchase
securities of an issuer (other than the U.S. Government, its agencies,
instrumentalities or authorities, or repurchase agreements collateralized by
U.S. Government securities, and other investment companies) if: (a) such
purchase would, at the time, cause more than 5% of the Fund's total assets taken
at market value to be invested in the securities of such issuer or (b) such
purchase would, at the time, result in more that 10% of the outstanding voting
securities of such issuer being held by the Fund.
Each Fund may not:
- Invest 25% or more of the value of its total assets in any particular
industry (other than US Government securities).
- Invest directly in real estate or interests in real estate; however, the
Funds may own debt or equity securities issued by companies engaged in
those businesses.
- Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this limitation shall
not prevent the Funds from purchasing or selling foreign currencies,
options, futures, swaps, forward contracts, or other derivative
instruments, or from investing in securities or other instruments backed
by physical commodities).
- Lend any security or make any other loan if, as a result, more than
33 1/3% of the Fund's total assets would be lent to other parties (but
this limitation does not apply to investments in repurchase agreements,
commercial paper, debt securities, or loans, including assignments and
participation interests).
- Act as an underwriter of securities issued by others, except to the
extent that a Fund may be deemed an underwriter in connection with the
disposition of its portfolio securities.
- Borrow money except that the Funds may each borrow money for temporary or
emergency purposes (not for leveraging or investment). Borrowings from
banks will not, in any event, exceed one-third of the value of a Fund's
total assets (including the amount borrowed). This policy shall not
prohibit short sales transactions or futures, options, swaps, or forward
transactions. The Funds may not issue "senior securities" in
contravention of the 1940 Act.
As a fundamental policy, each Fund may, notwithstanding any other investment
policy or limitation, (whether or not fundamental), invest all of its assets in
the
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securities of a single open-end management investment company with substantially
the same fundamental investment objective, policies and limitations as such
Fund.
NON-FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS:
Non-fundamental investment restrictions and policies of the Funds are
substantially similar:
- The Funds may sell securities short if they own or have the right to
obtain securities equivalent in kind and amount to the securities sold
short without the payment of any additional consideration therefore
("short sales against the box"). In addition, the Funds may engage in
"naked" short sales, which involve selling a security that a Fund borrows
and does not own. The total market value of all of a Fund's naked short
sale positions will not exceed 8% of its assets. Transactions in futures,
options, swaps, and forward contracts are not deemed to constitute
selling securities short.
- The Funds do not currently intend to purchase securities on margin,
except that the Funds may obtain such short-term credits as are necessary
for the clearance of transactions, and provided that margin payments and
other deposits in connection with transactions in futures, options,
swaps, and forward contracts shall not be deemed to constitute purchasing
securities on margin.
- A Fund may not mortgage or pledge any securities owned or held by such
Fund in amounts that exceed, in the aggregate, 15% of that Fund's net
asset value, provided that this limitation does not apply to reverse
repurchase agreements, deposits of assets to margin, guarantee positions
in futures, options, swaps, or forward contracts, or the segregation of
assets in connection with such contracts.
- The Funds do not currently intend to purchase any security or enter into
a repurchase agreement if, as a result, more than 15% of their respective
net assets would be invested in repurchase agreements not entitling the
holder to payment of principal and interest within seven days and in
securities that are illiquid by virtue of legal or contractual
restrictions on resale or the absence of a readily available market. The
Trustees, or the Funds' investment adviser acting pursuant to authority
delegated by the Trustees, may determine that a readily available market
exists for securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933 ("Rule 144A Securities"), or any successor to such
rule, Section 4(2) commercial paper, and municipal lease obligations.
Accordingly, such securities may not be subject to the foregoing
limitation.
- The Funds may not invest in companies for the purpose of exercising
control of management.
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APPENDIX C
OTHER INVESTMENT TECHNIQUES AND RELATED RISKS
OF THE FUNDS
Unless otherwise stated within its specific investment policies, each Fund
may also invest in other types of domestic and foreign securities and use other
investment strategies, as described below. These securities and strategies are
not principal investment strategies of the Funds. If successful, they may
benefit the Funds by earning a return on the Funds' assets or reducing risk;
however, they may not achieve the Funds' objective. Additional information
regarding these investment techniques and risks is included in each Fund's
Statement of Additional Information. These securities and strategies may
include:
EQUITY AND DEBT SECURITIES
BANK LOANS include institutionally-traded floating and fixed-rate debt
securities generally acquired as a participation interest in a loan originated
by a lender or other financial institution, or as an assignment of a portion of
a loan previously attributable to a different lender.
BONDS are debt securities issued by a company, municipality, government, or
government agency. The issuer of a bond is required to pay the holder the amount
of the loan (or par value of the bond) at a specified maturity and to make
scheduled interest payments.
CERTIFICATES OF PARTICIPATION ("COPS") are certificates representing an
interest in a pool of securities. Holders are entitled to a proportionate
interest in the underlying securities. Municipal lease obligations are often
sold in the form of COPs. See "Municipal lease obligations" below.
COMMERCIAL PAPER is a short-term debt obligation with a maturity ranging
from 1 to 270 days issued by banks, corporations, and other borrowers to
investors seeking to invest idle cash. A Fund may purchase commercial paper
issued in private placements under Section 4(2) of the Securities Act of 1933.
CONVERTIBLE SECURITIES are preferred stocks or bonds that pay a fixed
dividend or interest payment and are convertible into common stock at a
specified price or conversion ratio.
DEBT SECURITIES are securities representing money borrowed that must be
repaid at a later date. Such securities have specific maturities and usually a
specific rate of interest or an original purchase discount.
DEPOSITARY RECEIPTS are receipts for shares of a foreign-based corporation
that entitle the holder to dividends and capital gains on the underlying
security. Receipts include those issued by domestic banks (American Depositary
Receipts), foreign
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banks (Global or European Depositary Receipts), and broker-dealers (depositary
shares).
EQUITY SECURITIES generally include domestic and foreign common stocks;
preferred stocks; securities convertible into common stocks or preferred stocks;
warrants to purchase common or preferred stocks; and other securities with
equity characteristics.
EXCHANGE-TRADED FUNDS are index-based investment companies which hold
substantially all of their assets in securities with equity characteristics. As
a shareholder of another investment company, a Fund would bear its pro rata
portion of the other investment company's expenses, including advisory fees, in
addition to the expenses the Fund bears directly in connection with its own
operations.
FIXED-INCOME SECURITIES are securities that pay a specified rate of return.
The term generally includes short- and long-term government, corporate, and
municipal obligations that pay a specified rate of interest, dividends, or
coupons for a specified period of time. Coupon and dividend rates may be fixed
for the life of the issue or, in the case of adjustable and floating rate
securities, for a shorter period.
HIGH-YIELD/HIGH-RISK BONDS are bonds that are rated below investment grade
by the primary rating agencies (i.e., BB+ or lower by Standard & Poor's and
Fitch, and Ba or lower by Moody's). Other terms commonly used to describe such
bonds include "lower rated bonds," "non-investment grade bonds," and "junk
bonds."
INDUSTRIAL DEVELOPMENT BONDS are revenue bonds that are issued by a public
authority but which may be backed only by the credit and security of a private
issuer and may involve greater credit risk. See "Municipal securities" below.
MORTGAGE- AND ASSET-BACKED SECURITIES are shares in a pool of mortgages or
other debt. These securities are generally pass-through securities, which means
that principal and interest payments on the underlying securities (less
servicing fees) are passed through to shareholders on a pro rata basis. These
securities involve prepayment risk, which is the risk that the underlying
mortgages or other debt may be refinanced or paid off prior to their maturities
during periods of declining interest rates. In that case, a Fund may have to
reinvest the proceeds from the securities at a lower rate. Potential market
gains on a security subject to prepayment risk may be more limited than
potential market gains on a comparable security that is not subject to
prepayment risk.
MUNICIPAL LEASE OBLIGATIONS are revenue bonds backed by leases or
installment purchase contracts for property or equipment. Lease obligations may
not be backed by the issuing municipality's credit and may involve risks not
normally associated with general obligation bonds and other revenue bonds. For
example, their interest may become taxable if the lease is assigned and the
holders may incur losses if the issuer does not appropriate funds for the lease
payments on an annual basis, which may result in termination of the lease and
possible default.
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MUNICIPAL SECURITIES are bonds or notes issued by a U.S. state or political
subdivision. A municipal security may be a general obligation backed by the full
faith and credit (i.e., the borrowing and taxing power) of a municipality or a
revenue obligation paid out of the revenues of a designated project, facility,
or revenue source.
PASS-THROUGH SECURITIES are shares or certificates of interest in a pool of
debt obligations that have been repackaged by an intermediary, such as a bank or
broker-dealer.
PASSIVE FOREIGN INVESTMENT COMPANIES (PFICS) are any foreign corporations
which generate certain amounts of passive income or hold certain amounts of
assets for the production of passive income. Passive income includes dividends,
interest, royalties, rents, and annuities. To avoid taxes and interest that a
Fund must pay if these investments are profitable, the Fund may make various
elections permitted by the tax laws. These elections could require that a Fund
recognize taxable income, which in turn must be distributed, before the
securities are sold and before cash is received to pay the distributions.
PAY-IN-KIND BONDS are debt securities that normally give the issuer an
option to pay cash at a coupon payment date or give the holder of the security a
similar bond with the same coupon rate and a face value equal to the amount of
the coupon payment that would have been made.
PREFERRED STOCKS are equity securities that generally pay dividends at a
specified rate and have preference over common stock in the payment of dividends
and liquidation. Preferred stock generally does not carry voting rights.
REAL ESTATE INVESTMENT TRUST (REIT) is an investment trust that operates
through the pooled capital of many investors who buy its shares. Investments are
in direct ownership of either income property or mortgage loans.
RULE 144A SECURITIES are securities that are not registered for sale to the
general public under the Securities Act of 1933, but that may be resold to
certain institutional investors.
STANDBY COMMITMENT is a right to sell a specified underlying security or
securities within a specified period of time and at an exercise price equal to
the amortized cost of the underlying security or securities plus accrued
interest, if any, at the time of exercise, that may be sold, transferred, or
assigned only with the underlying security or securities. A standby commitment
entitles the holder to receive same day settlement, and will be considered to be
from the party to whom the investment company will look for payment of the
exercise price.
STEP COUPON BONDS are high-quality issues with above-market interest rates
and a coupon that increases over the life of the bond. They may pay monthly,
semiannual, or annual interest payments. On the date of each coupon payment, the
issuer decides whether to call the bond at par, or whether to extend it until
the next payment date at the new coupon rate.
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STRIP BONDS are debt securities that are stripped of their interest
(usually by a financial intermediary) after the securities are issued. The
market value of these securities generally fluctuates more in response to
changes in interest rates than interest-paying securities of comparable
maturity.
TENDER OPTION BONDS are relatively long-term bonds that are coupled with
the option to tender the securities to a bank, broker-dealer, or other financial
institution at periodic intervals and receive the face value of the bond. This
investment structure is commonly used as a means of enhancing a security's
liquidity.
U.S. GOVERNMENT SECURITIES include direct obligations of the U.S.
Government that are supported by its full faith and credit. Treasury bills have
initial maturities of less than one year, Treasury notes have initial maturities
of one to ten years, and Treasury bonds may be issued with any maturity but
generally have maturities of at least ten years. U.S. Government securities also
include indirect obligations of the U.S. Government that are issued by federal
agencies and government sponsored entities. Unlike Treasury securities, agency
securities generally are not backed by the full faith and credit of the U.S.
Government. Some agency securities are supported by the right of the issuer to
borrow from the Treasury, others are supported by the discretionary authority of
the U.S. Government to purchase the agency's obligations, and others are
supported only by the credit of the sponsoring agency.
VARIABLE AND FLOATING RATE SECURITIES have variable or floating rates of
interest and, under certain limited circumstances, may have varying principal
amounts. Variable and floating rate securities pay interest at rates that are
adjusted periodically according to a specified formula, usually with reference
to some interest rate index or market interest rate (the "underlying index").
The floating rate tends to decrease the security's price sensitivity to changes
in interest rates.
WARRANTS are securities, typically issued with preferred stock or bonds,
which give the holder the right to buy a proportionate amount of common stock at
a specified price. The specified price is usually higher than the market price
at the time of issuance of the warrant. The right may last for a period of years
or indefinitely.
ZERO COUPON BONDS are debt securities that do not pay regular interest at
regular intervals, but are issued at a discount from face value. The discount
approximates the total amount of interest the security will accrue from the date
of issuance to maturity. The market value of these securities generally
fluctuates more in response to changes in interest rates than interest-paying
securities.
FUTURES, OPTIONS, AND OTHER DERIVATIVES
CREDIT DEFAULT SWAPS are a specific kind of counterparty agreement that
allows 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
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credit default swap agrees to insure this risk in exchange of regular periodic
payments.
EQUITY-LINKED STRUCTURED NOTES are debt securities which combine the
characteristics of common stock and the sale of an option. The return component
is based on the performance of a single equity security, a basket of equity
securities, or an equity index and the sale of an option which is recognized as
income. Equity-linked structured notes are typically offered in limited
transactions to financial institutions by investment banks. There is no
guaranteed return of principal with these securities. The appreciation potential
of these securities is limited by a maximum payment or call right and can be
influenced by many unpredictable factors.
FORWARD CONTRACTS are contracts to purchase or sell a specified amount of a
financial instrument for an agreed upon price at a specified time. Forward
contracts are not currently exchange-traded and are typically negotiated on an
individual basis. A Fund may enter into forward currency contracts for
investment purposes or to hedge against declines in the value of securities
denominated in, or whose value is tied to, a currency other than the U.S. dollar
or to reduce the impact of currency appreciation on purchases of such
securities. It may also enter into forward contracts to purchase or sell
securities or other financial indices.
FUTURES CONTRACTS are contracts that obligate the buyer to receive and the
seller to deliver an instrument or money at a specified price on a specified
date. A Fund may buy and sell futures contracts on foreign currencies,
securities, and financial indices including indices of U.S. Government, foreign
government, equity, or fixed-income securities. A Fund may also buy options on
futures contracts. An option on a futures contract gives the buyer the right,
but not the obligation, to buy or sell a futures contract at a specified price
on or before a specified date. Futures contracts and options on futures are
standardized and traded on designated exchanges.
INDEXED/STRUCTURED SECURITIES are typically short- to intermediate-term
debt securities whose value at maturity or interest rate is linked to
currencies, interest rates, equity securities, indices, commodity prices, or
other financial indicators. Such securities may be positively or negatively
indexed (e.g., their value may increase or decrease if the reference index or
instrument appreciates). Indexed/ structured securities may have return
characteristics similar to direct investments in the underlying instruments and
may be more volatile than the underlying instruments. A Fund bears the market
risk of an investment in the underlying instruments, as well as the credit risk
of the issuer.
INTEREST RATE SWAPS involve the exchange by two parties of their respective
commitments to pay or receive interest (e.g., an exchange of floating rate
payments for fixed rate payments).
INVERSE FLOATERS are debt instruments whose interest rate bears an inverse
relationship to the interest rate on another instrument or index. For example,
upon reset, the interest rate payable on the inverse floater may go down when
the underlying index has risen. Certain inverse floaters may have an interest
rate reset
C-5
mechanism that multiplies the effects of change in the underlying index. Such
mechanism may increase the volatility of the security's market value.
OPTIONS are the right, but not the obligation, to buy or sell a specified
amount of securities or other assets on or before a fixed date at a
predetermined price. A Fund may purchase and write put and call options on
securities, securities indices, and foreign currencies. A Fund may purchase or
write such options individually or in combination.
PARTICIPATORY NOTES are derivative securities which are linked to the
performance of an underlying Indian security and which allow investors to gain
market exposure to Indian securities without trading directly in the local
Indian market.
OTHER INVESTMENTS, STRATEGIES, AND/OR TECHNIQUES
REPURCHASE AGREEMENTS involve the purchase of a security by a Fund and a
simultaneous agreement by the seller (generally a bank or dealer) to repurchase
the security from the Fund at a specified date or upon demand. This technique
offers a method of earning income on idle cash. These securities involve the
risk that the seller will fail to repurchase the security, as agreed. In that
case, a Fund will bear the risk of market value fluctuations until the security
can be sold and may encounter delays and incur costs in liquidating the
security.
REVERSE REPURCHASE AGREEMENTS involve the sale of a security by a Fund to
another party (generally a bank or dealer) in return for cash and an agreement
by the Fund to buy the security back at a specified price and time. This
technique will be used primarily to provide cash to satisfy unusually high
redemption requests, or for other temporary or emergency purposes.
SHORT SALES in which a Fund may engage may be of two types, short sales
"against the box" or "naked" short sales. Short sales against the box involve
selling either a security that a Fund owns, or a security equivalent in kind or
amount to the security sold short that the Fund has the right to obtain, for
delivery at a specified date in the future. Naked short sales involve selling a
security that a Fund borrows and does not own. A Fund may enter into a short
sale to hedge against anticipated declines in the market price of a security or
to reduce portfolio volatility. If the value of a security sold short increases
prior to the scheduled delivery date, the Fund loses the opportunity to
participate in the gain. For naked short sales, the Fund will incur a loss if
the value of a security increases during this period because it will be paying
more for the security than it has received from the purchaser in the short sale.
If the price declines during this period, a Fund will realize a short-term
capital gain. Although a Fund's potential for gain as a result of a short sale
is limited to the price at which it sold the security short less the cost of
borrowing the security, its potential for loss is theoretically unlimited
because there is no limit to the cost of replacing the borrowed security.
WHEN-ISSUED, DELAYED DELIVERY, AND FORWARD COMMITMENT TRANSACTIONS
generally involve the purchase of a security with payment and delivery at some
time in the
C-6
future - i.e., beyond normal settlement. A Fund does not earn interest on such
securities until settlement and bears the risk of market value fluctuations in
between the purchase and settlement dates. New issues of stocks and bonds,
private placements, and U.S. Government securities may be sold in this manner.
ILLIQUID INVESTMENTS
Each Fund may invest up to 15% of its net assets in illiquid investments.
An illiquid investment is a security or other position that cannot be disposed
of quickly in the normal course of business. For example, some securities are
not registered under U.S. securities laws and cannot be sold to the U.S. public
because of SEC regulations (these are known as "restricted securities"). Under
procedures adopted by the Funds' Trustees, certain restricted securities may be
deemed liquid, and will not be counted toward this 15% limit.
FOREIGN SECURITIES
Unless otherwise stated within its specific investment policies, each Fund
may invest without limit in foreign equity and debt securities. The Funds may
invest directly in foreign securities denominated in a foreign currency and not
publicly traded in the United States. Other ways of investing in foreign
securities include depositary receipts or shares and passive foreign investment
companies.
SPECIAL SITUATIONS
Each Fund may invest in companies that demonstrate special situations or
turnarounds, meaning companies that have experienced significant business
problems but are believed to have favorable prospects for recovery. For example,
a special situation or turnaround may arise when, in the opinion of a Fund's
investment personnel, the securities of a particular issuer will be recognized
and appreciate in value due to a specific development with respect to that
issuer. Special situations may include significant changes in a company's
allocation of its existing capital, a restructuring of assets, or a redirection
of free cash flow. For example, issuers undergoing significant capital changes
may include companies involved in spin-offs, sales of divisions, mergers or
acquisitions, companies emerging from bankruptcy, or companies initiating large
changes in their debt to equity ratio. Developments creating a special situation
might include, among others, a new product or process, a technological
breakthrough, a management change or other extraordinary corporate event, or
differences in market supply of and demand for the security. A Fund's
performance could suffer if the anticipated development in a "special situation"
investment does not occur or does not attract the expected attention.
SECURITIES LENDING
The Funds may seek to earn additional income through securities lending.
Certain Funds may lend their portfolio securities to parties (typically brokers
or
C-7
other financial institutions) who need to borrow securities in order to complete
certain transactions such as covering short sales, avoiding failures to deliver
securities, or completing arbitrage activities. There is a risk of delay in
recovering a loaned security and/or a risk of loss in collateral rights if the
borrower fails financially.
C-8
APPENDIX D
LEGAL MATTERS
In the fall of 2003, the Securities and Exchange Commission ("SEC"), the
Office of the New York State Attorney General ("NYAG"), the Colorado Attorney
General ("COAG"), and the Colorado Division of Securities ("CDS") announced that
they were investigating alleged frequent trading practices in the mutual fund
industry. On August 18, 2004, Janus Capital announced that it had reached final
settlements with the SEC, the NYAG, the COAG, and the CDS related to such
regulators' investigations into Janus Capital's frequent trading arrangements.
A number of civil lawsuits were brought against Janus Capital and certain
of its affiliates, the Janus funds, and related entities and individuals based
on allegations similar to those announced by the above regulators and were filed
in several state and federal jurisdictions. Such lawsuits alleged a variety of
theories for recovery including, but not limited to, the federal securities
laws, other federal statutes (including ERISA), and various common law
doctrines. The Judicial Panel on Multidistrict Litigation transferred these
actions to the U.S. District Court for the District of Maryland (the "Court")
for coordinated proceedings. On September 29, 2004, five consolidated amended
complaints were filed in that Court that generally include: (i) claims by a
putative class of investors in certain Janus funds asserting claims on behalf of
the investor class; (ii) derivative claims by investors in certain Janus funds
ostensibly on behalf of such funds; (iii) claims on behalf of participants in
the Janus 401(k) plan; (iv) claims brought on behalf of shareholders of Janus
Capital Group Inc. ("JCGI") on a derivative basis against the Board of Directors
of JCGI; and (v) claims by a putative class of shareholders of JCGI asserting
claims on behalf of the shareholders. Each of the five complaints initially
named JCGI and/or Janus Capital as a defendant. In addition, the following were
also named as defendants in one or more of the actions: Janus Investment Fund
("JIF"), Janus Aspen Series ("JAS"), Janus Adviser Series ("JAD"), Janus
Distributors LLC, Enhanced Investment Technologies, LLC ("INTECH"), Bay Isle
Financial LLC ("Bay Isle"), Perkins, Wolf, McDonnell and Company, LLC
("Perkins"), the Advisory Committee of the Janus 401(k) plan, and the current or
former directors of JCGI.
On August 25, 2005, the Court entered orders dismissing most of the claims
asserted against Janus Capital and its affiliates by fund investors (actions (i)
and (ii) described above), except certain claims under Section 10(b) of the
Securities Exchange Act of 1934 and under Section 36(b) of the Investment
Company Act of 1940. The complaint in the 401(k) plan class action (action (iii)
described above) was voluntarily dismissed, but was refiled using a new named
plaintiff and asserting claims similar to the initial complaint. As a result of
the above events, JCGI, Janus Capital, the Advisory Committee of the Janus
401(k) plan, and the current or
D-1
former directors of JCGI are the remaining defendants in one or more of the
actions.
The Attorney General's Office for the State of West Virginia filed a
separate market timing related civil action against Janus Capital and several
other non-affiliated mutual fund companies, claiming violations under the West
Virginia Consumer Credit and Protection Act. The civil action requests certain
monetary penalties, among other relief.
This action has been removed to federal court and transferred to the
Multidistrict Litigation case in the U.S. District Court of Baltimore, Maryland
described above. In addition, the Auditor of the State of West Virginia, in his
capacity as securities commissioner, has issued an order indicating an intent to
initiate administrative proceedings against most of the defendants in the market
timing cases (including Janus Capital) and seeking disgorgement and other
monetary relief based on similar market timing allegations.
In addition to the "market timing" actions described above, Janus Capital
is a defendant in a consolidated lawsuit in the U.S. District Court for the
District of Colorado challenging the investment advisory fees charged by Janus
Capital to certain Janus funds. The action was filed in 2004 by fund investors
asserting breach of fiduciary duty under Section 36(b) of the Investment Company
Act of 1940. The plaintiffs seek declaratory and injunctive relief and an
unspecified amount of damages.
In 2001, Janus Capital's predecessor was also named as a defendant in a
class action suit in the U.S. District Court for the Southern District of New
York, alleging that certain underwriting firms and institutional investors
violated antitrust laws in connection with initial public offerings. The U.S.
District Court dismissed the plaintiff's antitrust claims in November 2003,
however, the U.S. Court of Appeals vacated that decision and remanded it for
further proceedings. In March 2006, the defendants, including Janus Capital,
filed a petition for a writ of certiorari with the United States Supreme Court
to review the U.S. Court of Appeal's decision.
Additional lawsuits may be filed against certain of the Janus funds, Janus
Capital, and related parties in the future. Janus Capital does not currently
believe that these pending actions will materially affect its ability to
continue providing services it has agreed to provide to the Janus funds.
D-2
STATEMENT OF ADDITIONAL INFORMATION
AUGUST , 2006
ACQUISITION OF THE ASSETS OF
JANUS OLYMPUS FUND
BY AND IN EXCHANGE FOR SHARES OF
JANUS ORION FUND
This Statement of Additional Information (the "SAI") expands upon and
supplements the information contained in the combined proxy statement and
prospectus (the "Proxy Statement/Prospectus") dated August , 2006, describing
the Agreement and Plan of Reorganization under which shareholders of Janus
Olympus Fund will receive shares of Janus Orion Fund (the "Merger").
This SAI is not a Prospectus and should be read in conjunction with the
Proxy Statement/Prospectus dated August , 2006, relating to the Merger. A copy
of the Proxy Statement/Prospectus may be obtained without charge by contacting
Janus Capital Management LLC ("Janus") at 151 Detroit Street, Denver, Colorado
80206 or by telephoning Janus toll-free at 1-800-525-3713. Each of the following
documents are incorporated by reference to this SAI:
(i) the Statement of Additional Information of Janus Olympus Fund and
Janus Orion Fund dated February 28, 2006, as supplemented, which includes
audited financial statements of Janus Olympus Fund and Janus Orion Fund for
the 12-month period ended October 31, 2005;
(ii) the Annual Report for Janus Olympus Fund and Janus Orion Fund for
the fiscal year ended October 31, 2005; and
(iii) the unaudited Semiannual Report for Janus Olympus Fund and Janus
Orion Fund for the fiscal period ended April 30, 2006.
FINANCIAL STATEMENTS
Historical financial information regarding Janus Olympus Fund and Janus
Orion Fund is included in the Annual Report of Janus Investment Fund, dated
October 31, 2005 and the unaudited Semiannual Report of Janus Investment Fund,
dated April 30, 2006, which are incorporated by reference herein.
PRO FORMA FINANCIAL STATEMENTS
The following pro forma combined financial statements are intended to show
the financial condition and related results of operations resulting from the
proposed merger of Olympus Fund and Orion Fund as if the merger occurred on the
dates presented. Please see the accompanying notes for additional information
about the pro forma financial statements.
PRO FORMA SCHEDULE OF INVESTMENTS
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
------------------------------------------ ------------------------------------------------
JANUS JANUS PRO FORMA JANUS JANUS PRO FORMA
OLYMPUS ORION JANUS ORION OLYMPUS ORION JANUS ORION
AS OF APRIL 30, 2006 FUND FUND FUND FUND FUND FUND
- -------------------- ------------ ------------ ------------ -------------- -------------- --------------
COMMON STOCK -- 96.5%
ADVERTISING SALES -- 0.5%
Lamar Advertising Co.*........... 349,435 349,435 $ 19,215,431 $ 19,215,431
AEROSPACE AND DEFENSE -- 1.0%
Boeing Co. ...................... 419,960 419,960 35,045,662 35,045,662
AGRICULTURAL CHEMICALS -- 1.0%
Potash Corporation of
Saskatchewan, Inc. (U.S.
Shares)........................ 380,045 380,045 35,982,661 35,982,661
AGRICULTURAL OPERATIONS -- 0.1%
BrasilAgro -- Companhia
Brasileira de Propriedades
Agricolas...................... 5,300 5,300 $ 2,507,570 2,507,570
APPAREL MANUFACTURERS -- 1.2%
Coach, Inc.*..................... 724,460 724,460 23,921,669 23,921,669
Quiksilver, Inc.*,#.............. 1,244,295 1,244,295 17,009,513 17,009,513
40,931,182
APPLICATIONS SOFTWARE -- 0.9%
Citrix Systems, Inc.*............ 415,425 415,425 16,583,766 16,583,766
Quest Software, Inc.*,#.......... 783,515 783,515 13,484,293 13,484,293
30,068,059
AUTOMOTIVE -- CARS AND LIGHT
TRUCKS -- 1.3%
BMW A.G.**,#..................... 446,264 446,264 24,293,868 24,293,868
Nissan Motor Company, Ltd. ...... 1,570,600 1,570,600 20,648,911 20,648,911
44,942,779
BEVERAGES -- WINE AND
SPIRITS -- 0.8%
Davide Campari -- Milano S.P.A... 2,860,628 2,860,628 27,969,655 27,969,655
BROADCAST SERVICES AND
PROGRAMMING -- 0.2%
Liberty Global, Inc. -- Class
A*............................. 259,455 259,455 5,373,313 5,373,313
BUILDING -- MOBILE HOME AND
MANUFACTURED HOMES -- 0.4%
Thor Industries, Inc. ........... 293,600 293,600 14,820,928 14,820,928
BUILDING -- RESIDENTIAL AND
COMMERCIAL -- 1.4%
Pulte Homes, Inc. ............... 577,560 577,560 21,571,866 21,571,866
Desarrolladora Homex S.A.
(ADR)*,#....................... 340,620 381,940 722,560 13,052,558 14,635,940 27,688,498
Rossi Residencial S.A. .......... 98,500 98,500 1,038,333 1,038,333
50,298,697
CASINO HOTELS -- 0.7%
Harrah's Entertainment, Inc. .... 295,055 295,055 24,088,290 24,088,290
CASINO SERVICES -- 0.8%
Scientific Games Corp. -- Class
A*,#........................... 760,705 760,705 28,975,253 28,975,253
CELLULAR
TELECOMMUNICATIONS -- 1.6%
China Mobile, Ltd. .............. 3,537,500 3,537,500 20,577,206 20,577,206
America Movil S.A. de
C.V. -- Series L (ADR)*........ 960,000 960,000 35,433,600 35,433,600
56,010,806
CHEMICALS -- SPECIALTY -- 0.7%
Cytec Industries, Inc.#.......... 420,860 420,860 25,449,404 25,449,404
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
------------------------------------------ ------------------------------------------------
JANUS JANUS PRO FORMA JANUS JANUS PRO FORMA
OLYMPUS ORION JANUS ORION OLYMPUS ORION JANUS ORION
AS OF APRIL 30, 2006 FUND FUND FUND FUND FUND FUND
- -------------------- ------------ ------------ ------------ -------------- -------------- --------------
COMMERCIAL BANKS -- 2.4%
Mizuho Financial Group, Inc. .... 3,998 3,998 34,093,514 34,093,514
Banco Marcro Bansud S.A.
(ADR)*......................... 495,425 495,425 11,478,997 11,478,997
Banco Nossa Caixa S.A. .......... 711,000 711,000 16,046,047 16,046,047
Finansbank A.S.*................. 4,178,657 4,178,657 21,801,689 21,801,689
83,420,247
COMMERCIAL SERVICES -- 2.0%
CoStar Group, Inc.*.............. 351,488 487,775 839,263 19,841,498 27,534,899 47,376,397
Park24 Company, Ltd. ............ 640,200 640,200 23,164,484 23,164,484
70,540,881
COMMERCIAL
SERVICES -- FINANCE -- 0.2%
Moody's Corp. ................... 134,845 134,845 8,361,738 8,361,738
COMPUTER SERVICES -- 0.5%
Ceridian Corp.*.................. 727,075 727,075 17,617,027 17,617,027
COMPUTERS -- 1.2%
Apple Computer, Inc.*............ 115,210 115,210 8,109,632 8,109,632
Research In Motion, Ltd. (U.S.
Shares)*,#..................... 206,600 230,715 437,315 15,831,758 17,679,690 33,511,448
41,621,080
COMPUTERS -- MEMORY
DEVICES -- 1.9%
EMC Corp.*....................... 1,923,395 1,923,395 25,985,066 25,985,066
SanDisk Corp.*................... 659,430 659,430 42,091,417 42,091,417
68,076,483
COSMETICS AND TOILETRIES -- 0.6%
Procter & Gamble Co. ............ 356,215 356,215 20,735,275 20,735,275
DATA PROCESSING AND
MANAGEMENT -- 0.7%
NAVTEQ Corp.*,#.................. 621,370 621,370 25,799,282 25,799,282
DIAGNOSTIC KITS -- 3.0%
Dade Behring Holdings, Inc.#..... 778,776 1,871,865 2,650,641 30,372,264 73,002,734 103,374,998
DIVERSIFIED MINERALS -- 0.7%
Caemi Mineracao e Metalurgica
S.A. .......................... 13,670,230 13,670,230 25,152,699 25,152,699
E-COMMERCE/PRODUCTS -- 1.0%
Submarino S.A. (GDR)*............ 193,300 83,000 276,300 10,352,471 4,445,190 14,797,661
Submarino S.A.*.................. 265,600 412,660 678,260 7,190,417 11,171,677 18,362,094
33,159,755
E-COMMERCE/SERVICES -- 1.7%
eBay, Inc.*...................... 605,320 605,320 20,829,061 20,829,061
IAC/InterActiveCorp*,#........... 1,391,769 1,391,769 40,180,371 40,180,371
61,009,432
ELECTRONIC
COMPONENTS -- SEMICONDUCTORS -- 2.3%
Advanced Micro Devices, Inc.*.... 366,485 366,485 11,855,790 11,855,790
Broadcom Corp. -- Class A*,#..... 550,855 550,855 22,645,649 22,645,649
PMC-Sierra, Inc.*,#.............. 1,182,935 1,182,935 14,703,882 14,703,882
MIPS Technologies, Inc.*......... 628,150 628,150 4,654,592 4,654,592
Texas Instruments, Inc.#......... 418,055 378,085 796,140 14,510,689 13,123,330 27,634,019
81,493,932
ELECTRONIC FORMS -- 1.1%
Adobe Systems, Inc.*............. 972,230 972,230 38,111,416 38,111,416
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
------------------------------------------ ------------------------------------------------
JANUS JANUS PRO FORMA JANUS JANUS PRO FORMA
OLYMPUS ORION JANUS ORION OLYMPUS ORION JANUS ORION
AS OF APRIL 30, 2006 FUND FUND FUND FUND FUND FUND
- -------------------- ------------ ------------ ------------ -------------- -------------- --------------
ELECTRONIC MEASURING
INSTRUMENTS -- 0.8%
Trimble Navigation, Ltd.*,#...... 138,354 467,890 606,244 6,555,213 22,168,628 28,723,841
ENERGY -- ALTERNATE
SOURCES -- 0.4%
Suntech Power Holdings Company,
Ltd. (ADR) *,#................. 380,300 380,300 13,040,487 13,040,487
ENGINEERING -- RESEARCH AND
DEVELOPMENT SERVICES -- 1.0%
ABB, Ltd.*,#..................... 2,460,267 2,460,267 35,112,664 35,112,664
ENTERTAINMENT SOFTWARE -- 0.3%
UbiSoft Entertainment S.A.*,#.... 190,677 190,677 9,449,173 9,449,173
ENTERPRISE
SOFTWARE/SERVICES -- 1.4%
SAP A.G. (ADR)**,#............... 896,610 896,610 48,981,804 48,981,804
ENTERTAINMENT SOFTWARE -- 1.0%
Electronic Arts, Inc.*........... 601,425 601,425 34,160,940 34,160,940
FINANCE -- CREDIT CARD -- 1.7%
American Express Co. ............ 451,595 451,595 24,300,327 24,300,327
Credit Saison Company, Ltd. ..... 644,600 644,600 33,796,707 33,796,707
58,097,034
FINANCE -- INVESTMENT
BANKERS/BROKERS -- 4.2%
Goldman Sachs Group, Inc. ....... 137,715 137,715 22,074,337 22,074,337
Merrill Lynch & Company, Inc. ... 400,110 400,110 30,512,389 30,512,389
Mitsubishi UFJ Securities
Company, Ltd. ................. 1,313,000 1,313,000 20,686,971 20,686,971
Nikko Cordial Corp. ............. 1,018,000 1,018,000 16,477,179 16,477,179
optionsXpress Holdings, Inc. .... 695,760 695,760 21,916,440 21,916,440
UBS A.G.**,#..................... 284,577 284,577 33,730,704 33,730,704
145,398,020
FINANCE -- MORTGAGE LOAN
BANKER -- 0.7%
Fannie Mae....................... 486,030 486,030 24,593,118 24,593,118
FINANCE -- OTHER SERVICES -- 3.0%
Chicago Mercantile Exchange
Holdings, Inc.#................ 41,825 62,060 103,885 19,155,850 28,423,480 47,579,330
Deutsche Boerse A.G.**,#......... 311,293 311,293 45,026,421 45,026,421
MarketAxess Holdings, Inc.*...... 1,001,720 1,001,720 11,179,195 11,179,195
103,784,946
FOOD -- RETAIL -- 2.3%
Whole Foods Market, Inc. ........ 1,155,474 1,155,474 70,922,994 70,922,994
Wild Oats Markets, Inc.*,#....... 530,681 530,681 9,117,100 9,117,100
80,040,094
FOOD -- WHOLESALE/DISTRIBUTION -- 0.7%
Sysco Corp.#..................... 777,745 777,745 23,246,798 23,246,798
HAZARDOUS WASTE DISPOSAL -- 0.6%
Stericycle, Inc.*,#.............. 319,270 319,270 21,020,737 21,020,737
HOME FURNISHINGS -- 0.6%
Tempur-Pedic International,
Inc.*,#........................ 1,303,305 1,303,305 20,579,186 20,579,186
HOTELS AND MOTELS -- 1.2%
Four Seasons Hotels, Inc. ....... 762,355 762,355 41,182,417 41,182,417
INSURANCE BROKERS -- 0.6%
Marsh & McLennan Companies,
Inc.#.......................... 732,500 732,500 22,465,775 22,465,775
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
------------------------------------------ ------------------------------------------------
JANUS JANUS PRO FORMA JANUS JANUS PRO FORMA
OLYMPUS ORION JANUS ORION OLYMPUS ORION JANUS ORION
AS OF APRIL 30, 2006 FUND FUND FUND FUND FUND FUND
- -------------------- ------------ ------------ ------------ -------------- -------------- --------------
INTERNET
CONTENT -- INFORMATION/NEWS -- 0.3%
CNET Networks, Inc.*,#........... 835,179 835,179 9,003,230 9,003,230
INTERNET INFRASTRUCTURE
SOFTWARE -- 0.3%
TIBCO Software, Inc.*,#.......... 1,039,960 1,039,960 8,964,455 8,964,455
INTERNET SECURITY -- 0.5%
McAfee, Inc.*,#.................. 699,225 699,225 18,242,780 18,242,780
INVESTMENT MANAGEMENT AND ADVISORY
SERVICES -- 1.3%
National Financial Partners
Corp.#......................... 848,945 848,945 44,145,140 44,145,140
MEDICAL -- BIOMEDICAL AND
GENETIC -- 5.1%
Celgene Corp.*................... 2,549,272 1,228,370 3,777,642 107,477,308 51,788,078 159,265,386
Genentech, Inc.*................. 242,310 242,310 19,314,530 19,314,530
178,579,916
MEDICAL -- DRUGS -- 3.8%
Cubist Pharmaceuticals, Inc.*.... 695,145 695,145 15,758,937 15,758,937
Merck & Company, Inc. ........... 1,009,100 1,009,100 34,733,222 34,733,222
Roche Holding A.G.**............. 377,310 168,756 546,066 58,017,269 25,948,854 83,966,123
134,458,282
MEDICAL -- GENERIC DRUGS -- 1.8%
Teva Pharmaceutical Industries,
Ltd. (ADR)#.................... 1,084,650 428,390 1,513,040 43,928,325 17,349,795 61,278,120
MEDICAL -- HMO -- 1.2%
Coventry Health Care, Inc.*...... 392,985 392,985 19,519,565 19,519,565
UnitedHealth Group, Inc. ........ 460,692 460,692 22,914,820 22,914,820
42,434,385
MEDICAL INSTRUMENTS -- 2.3%
Boston Scientific Corp.*,#....... 798,685 798,685 18,561,439 18,561,439
Intuitive Surgical, Inc.*........ 249,735 152,081 401,816 31,716,345 19,314,287 51,030,632
Kyphon, Inc.*,#.................. 277,025 277,025 11,510,389 11,510,389
81,102,460
MEDICAL PRODUCTS -- 1.4%
Johnson & Johnson................ 244,675 244,675 14,340,402 14,340,402
Varian Medical Systems,
Inc.*,#........................ 684,915 684,915 35,875,847 35,875,847
50,216,249
MULTI-LINE INSURANCE -- 0.8%
Assurant, Inc. .................. 554,210 554,210 26,696,296 26,696,296
NETWORKING PRODUCTS -- 1.3%
Cisco Systems, Inc.*............. 1,726,842 1,726,842 36,177,340 36,177,340
Juniper Networks, Inc. *,#....... 566,035 566,035 10,460,327 10,460,327
46,637,667
OIL COMPANIES -- EXPLORATION AND
PRODUCTION -- 0.9%
EOG Resources, Inc.#............. 260,860 203,950 464,810 18,320,198 14,323,409 32,643,607
OIL
COMPANIES -- INTEGRATED -- 0.3%
Amerada Hess Corp.#.............. 76,830 76,830 11,007,434 11,007,434
PRINTING -- COMMERCIAL -- 1.3%
VistaPrint, Ltd.*,#.............. 1,383,900 1,383,900 44,257,122 44,257,122
PUBLISHING -- NEWSPAPERS -- 0.7%
Dow Jones & Company, Inc.#....... 638,835 638,835 23,617,730 23,617,730
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
------------------------------------------ ------------------------------------------------
JANUS JANUS PRO FORMA JANUS JANUS PRO FORMA
OLYMPUS ORION JANUS ORION OLYMPUS ORION JANUS ORION
AS OF APRIL 30, 2006 FUND FUND FUND FUND FUND FUND
- -------------------- ------------ ------------ ------------ -------------- -------------- --------------
RADIO -- 0.7%
XM Satellite Radio Holdings,
Inc. -- Class A *,#............ 559,165 684,455 1,243,620 11,306,316 13,839,680 25,145,996
REAL ESTATE
MANAGEMENT/SERVICES -- 0.3%
Mitsubishi Estate Company,
Ltd. .......................... 416,000 416,000 9,097,089 9,097,089
REIT -- MORTGAGES -- 1.5%
CapitalSource, Inc.#............. 2,156,342 2,156,342 50,674,037 50,674,037
RETAIL -- APPAREL AND SHOE -- 0.7%
Nordstrom, Inc.#................. 640,935 640,935 24,567,039 24,567,039
RETAIL -- DISCOUNT -- 0.7%
Wal-Mart Stores, Inc. ........... 552,765 552,765 24,891,008 24,891,008
RETAIL -- DRUG STORE -- 0.4%
CVS Corp. ....................... 517,275 517,275 15,373,413 15,373,413
RETAIL -- RESTAURANTS -- 0.2%
Chipotle Mexican Grill,
Inc. -- Class A*,#............. 39,235 39,235 2,047,675 2,047,675
Tim Hortons, Inc.(U.S.
Shares)*,#..................... 133,385 133,385 3,621,403 3,621,403
5,669,078
SCHOOLS -- 0.7%
Apollo Group, Inc. -- Class
A*,#........................... 417,795 417,795 22,828,319 22,828,319
SEMICONDUCTOR
COMPONENTS/INTEGRATED
CIRCUITS -- 0.4%
Cypress Semiconductor Corp.*,#... 869,670 869,670 14,923,537 14,923,537
SEMICONDUCTOR EQUIPMENT -- 0.5%
ASM Lithography Holding N.V.
(U.S. Shares)*,**,#............ 743,460 743,460 15,724,179 15,724,179
SOAP AND CLEANING
PREPARATIONS -- 0.6%
Reckitt Benckiser PLC**.......... 538,650 538,650 19,635,314 19,635,314
STEEL -- PRODUCERS -- 1.1%
Arcelor Brasil S.A. ............. 2,118,722 2,118,722 39,085,193 39,085,193
STEEL -- SPECIALTY -- 0.3%
Companhia Siderurgica Nacional
S.A. (ADR)#.................... 255,689 255,689 9,002,810 9,002,810
STORAGE AND WAREHOUSING -- 0.7%
Mobile Mini, Inc.*............... 757,860 757,860 24,994,223 24,994,223
SUGAR -- 0.6%
Bajaj Hindusthan, Ltd. .......... 1,459,110 1,459,110 16,779,765 16,779,765
Bajaj Hindusthan, Ltd. (GDR)
(144A) sec..................... 335,300 335,300 3,854,676 3,854,676
20,634,441
TELECOMMUNICATION SERVICES -- 1.1%
NeuStar, Inc. -- Class A*,#...... 907,250 907,250 31,844,475 31,844,475
Time Warner Telecom,
Inc. -- Class A*,#............. 482,000 482,000 8,083,140 8,083,140
39,927,615
THERAPEUTICS -- 2.2%
Neurocrine Biosciences, Inc.*.... 642,369 642,369 36,846,286 36,846,286
United Therapeutics Corp.*....... 408,925 234,460 643,385 24,351,484 13,962,093 38,313,577
75,159,863
TRANSPORTATION -- MARINE -- 0.4%
Alexander & Baldwin, Inc.#....... 289,145 289,145 14,419,661 14,419,661
</Table>
<Table>
<Caption>
SHARES OR PRINCIPAL AMOUNT VALUE
------------------------------------------ ------------------------------------------------
JANUS JANUS PRO FORMA JANUS JANUS PRO FORMA
OLYMPUS ORION JANUS ORION OLYMPUS ORION JANUS ORION
AS OF APRIL 30, 2006 FUND FUND FUND FUND FUND FUND
- -------------------- ------------ ------------ ------------ -------------- -------------- --------------
TRANSPORTATION -- RAILROAD -- 0.3%
All America Latina Logistica
(GDR).......................... 190,500 190,500 12,049,787 12,049,787
TRANSPORTATION -- SERVICES -- 2.5%
C.H. Robinson Worldwide, Inc.#... 690,155 690,155 30,608,374 30,608,374
FedEx Corp. ..................... 189,450 189,450 21,811,379 21,811,379
United Parcel Service,
Inc. -- Class B................ 439,755 439,755 35,650,938 35,650,938
88,070,691
WEB HOSTING/DESIGN -- 0.5%
Equinix, Inc.*................... 275,340 275,340 18,144,906 18,144,906
WEB PORTALS/INTERNET SERVICE
PROVIDERS -- 2.7%
Answers Corp.*................... 22,735 22,735 275,094 275,094
Yahoo!, Inc.*.................... 2,198,520 674,215 2,872,735 72,067,486 22,100,767 94,168,253
94,443,347
WIRELESS EQUIPMENT -- 2.0%
Crown Castle International
Corp.*,#....................... 1,008,275 196,465 1,204,740 33,928,454 6,611,047 40,539,501
QUALCOMM, Inc. .................. 574,635 574,635 29,501,761 29,501,761
70,041,262
TOTAL COMMON STOCK (COST
$2,596,046,953).................. 61,123,630 51,678,817 112,802,447 2,306,895,681 1,070,922,969 3,377,818,650
MONEY MARKET -- 1.4%
Janus Institutional Cash Reserves
Fund, 4.83% (cost
$50,000,000)................... 50,000,000 50,000,000 50,000,000 50,000,000
PREFERRED STOCK -- 0.7%
ELECTRONIC
COMPONENTS -- SEMICONDUCTORS -- 0.7%
Samsung Electronics Company, Ltd.
(cost $18,295,111)............. 48,870 48,870 26,476,431 26,476,431
OTHER SECURITIES -- 16.2%
State Street Navigator Securities
Lending Prime Portfolio + (cost
$566,985,535).................. 316,899,102 250,086,433 566,985,535 316,899,102 250,086,433 566,985,535
TIME DEPOSIT -- 1.1%
ING Financial ETD 4.86%, 5/1/06
(cost $37,000,000)............. 19,900,000 17,100,000 37,000,000 19,900,000 17,100,000 37,000,000
TOTAL INVESTMENTS (TOTAL COST
$3,268,327,599) -- 115.9%........ 447,971,602 318,865,250 766,836,852 2,720,171,214 1,338,109,402 4,058,280,616
LIABILITIES, NET OF CASH,
RECEIVABLES AND OTHER
ASSETS -- -15.9%................. (302,136,913) (255,882,516) (558,019,429)
NET ASSETS -- 100%................ 2,418,034,301 1,082,226,886 3,500,261,187
</Table>
PRO FORMA SUMMARY OF INVESTMENTS BY COUNTRY, AS OF APRIL 30, 2006
<Table>
<Caption>
PRO FORMA PRO FORMA
JANUS OLYMPUS JANUS ORION JANUS ORION JANUS ORION
FUND FUND FUND FUND
-------------- -------------- -------------- -----------
% OF
INVESTMENT
COUNTRY VALUE SECURITIES
- ------- ------------------------------------------------ -----------
Argentina............... $ 11,478,997 $ 11,478,997 0.3%
Bermuda................. 44,257,122 44,257,122 1.1%
Brazil.................. $ 17,542,888 120,499,306 138,042,194 3.4%
Canada.................. 96,618,239 17,679,690 114,297,929 2.8%
Cayman Islands.......... 13,040,487 13,040,487 0.3%
France.................. 9,449,173 9,449,173 0.2%
Germany................. 118,302,093 118,302,093 2.9%
Hong Kong............... 20,577,206 20,577,206 0.5%
India................... 20,634,441 20,634,441 0.5%
Israel.................. 43,928,325 17,349,795 61,278,120 1.5%
Italy................... 27,969,655 27,969,655 0.7%
Japan................... 157,964,855 157,964,855 3.9%
Mexico.................. 13,052,558 50,069,540 63,122,098 1.5%
Netherlands............. 15,724,179 15,724,179 0.4%
South Korea............. 26,476,431 26,476,431 0.7%
Switzerland............. 91,747,973 61,061,518 152,809,491 3.8%
Turkey.................. 21,801,689 21,801,689 0.5%
United Kingdom.......... 19,635,314 19,635,314 0.5%
United States........... 2,085,560,666 935,858,476 3,021,419,142 74.5%
-------------- -------------- -------------- -----
Total................... $2,720,171,214 $1,338,109,402 $4,058,280,616 100.0%
============== ============== ============== =====
</Table>
PRO FORMA FORWARD CURRENCY CONTRACTS, OPEN AS OF APRIL 30, 2006
<Table>
<Caption>
PRO FORMA
JANUS OLYMPUS JANUS ORION JANUS ORION
FUND FUND FUND
-------------- -------------- --------------
CURRENCY UNITS CURRENCY UNITS CURRENCY UNITS
CURRENCY SOLD AND SETTLEMENT DATE SOLD SOLD SOLD
- --------------------------------- -------------- -------------- --------------
British Pound 6/28/06........... 4,600,000 -- 4,600,000
British Pound 8/10/06........... 400,000 -- 400,000
Euro 6/28/06.................... 28,750,000 -- 28,750,000
Euro 10/19/06................... 10,500,000 -- 10,500,000
Swiss Franc 6/28/06............. 57,500,000 -- 57,500,000
Swiss Franc 8/10/06............. 4,000,000 -- 4,000,000
---------- ---- ----------
</Table>
<Table>
<Caption>
PRO FORMA
JANUS OLYMPUS JANUS ORION JANUS ORION
FUND FUND FUND
-------------- -------------- --------------
CURRENCY VALUE CURRENCY VALUE CURRENCY VALUE
CURRENCY SOLD AND SETTLEMENT DATE IN $ U.S. IN $ U.S. IN $ U.S.
- --------------------------------- -------------- -------------- --------------
British Pound 6/28/06.......... $ 8,394,145 $ -- $ 8,394,145
British Pound 8/10/06.......... 730,440 -- 730,440
Euro 6/28/06................... 36,408,001 -- 36,408,001
Euro 10/19/06.................. 13,385,163 -- 13,385,163
Swiss Franc 6/28/06............ 46,680,489 -- 46,680,489
Swiss Franc 8/10/06............ 3,262,057 -- 3,262,057
------------ ----- ------------
Total.......................... $108,860,295 $108,860,295
</Table>
<Table>
<Caption>
PRO FORMA
JANUS OLYMPUS JANUS ORION JANUS ORION
FUND FUND FUND
------------- -------------- --------------
UNREALIZED UNREALIZED
CURRENCY SOLD AND SETTLEMENT DATE GAIN/(LOSS) GAIN/(LOSS)
- --------------------------------- ------------- --------------
British Pound 6/28/06.......... $ (167,735) $ -- $ (167,735)
British Pound 8/10/06.......... (35,396) -- (35,396)
Euro 6/28/06................... (828,151) -- (828,151)
Euro 10/19/06.................. (198,160) -- (198,160)
Swiss Franc 6/28/06............ (503,169) -- (503,169)
Swiss Franc 8/10/06............ (163,299) -- (163,299)
----------- ----- -----------
Total.......................... $(1,895,910) $(1,895,910)
</Table>
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
<Table>
<Caption>
JANUS JANUS PRO FORMA
OLYMPUS ORION JANUS ORION
AS OF APRIL 30, 2006 FUND FUND ADJUSTMENTS FUND
- -------------------- ---------- ---------- ----------- -----------
(ALL NUMBERS IN THOUSANDS EXCEPT NET ASSET VALUE PER SHARE)
ASSETS:
Investments at cost(1)................ $2,192,514 $1,075,813 $3,268,327
Investments at value(1)............... $2,720,171 $1,338,109 $4,058,280
Cash................................ 1,090 1,354 2,444
Cash denominated in foreign
currency(2)....................... 587 -- 587
Receivables:
Investments sold.................. 29,746 -- 29,746
Fund shares sold.................. 1,106 1,828 2,934
Dividends......................... 1,756 84 1,840
Interest.......................... 81 56 137
Other assets.......................... 16 5 21
Total Assets............................ 2,754,553 1,341,436 4,095,989
LIABILITIES:
Payables:
Collateral for securities loaned
(Note 3).......................... 316,899 250,086 566,985
Investments purchased............... 14,072 6,823 20,895
Fund shares repurchased............. 1,445 476 1,921
Dividends and distributions......... -- -- --
Advisory fees....................... 1,274 550 1,824
Transfer agent fees and expenses.... 553 212 765
Non-interested Trustees' fees and
expenses.......................... 2 1 3
Foreign tax liability............... 27 949 976
Accrued expenses...................... 351 112 463
Forward currency contracts............ 1,896 -- 1,896
Total Liabilities....................... 336,519 259,209 595,728
Net Assets.............................. $2,418,034 $1,082,227 $3,500,261
Net Assets Consist of:
Capital (par value and
paid-in-surplus).................... $3,418,918 $1,324,824 $4,743,742
Undistributed net investment
income/(loss)....................... 124 2,579 2,703
Undistributed net realized gain/(loss)
from investments and foreign
currency transactions............... (1,526,781) (506,526) (2,033,307)
Unrealized appreciation/(depreciation)
of investments and foreign currency
translations(3)..................... 525,773 261,350 787,123
Total Net Assets........................ $2,418,034 $1,082,227 $3,500,261
Shares Outstanding, $0.01 Par Value
(unlimited shares authorized)......... 70,953 114,120 184,153(4) 369,226
Net Asset Value Per Share............... $ 34.08 $ 9.48
</Table>
- ---------------
(1) Investments at cost and value include $307,516,553 and $243,484,769 of
securities loaned for Janus Olympus Fund and Janus Orion Fund, respectively.
(2) Includes cost of $574,272 for Janus Olympus Fund.
(3) Net of foreign taxes on investments of $26,574 and $948,727 for Janus
Olympus Fund and Janus Orion Fund, respectively.
(4) Reflects new shares issued. (Calculation: Total Net Assets/Net Asset Value
Per Share)
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
<Table>
<Caption>
JANUS JANUS PRO FORMA
OLYMPUS ORION JANUS ORION
FOR THE 12 MONTH PERIOD ENDED APRIL 30, 2006 FUND FUND ADJUSTMENTS FUND
- -------------------------------------------- -------- ---------- ----------- -----------
(ALL NUMBERS IN THOUSANDS)
INVESTMENT INCOME:
Interest................................... $ 1,689 $ 1,305 $ 2,994
Securities lending income.................. 427 273 700
Dividends.................................. 17,362 13,361 30,723
Foreign tax withheld....................... (555) (290) (845)
TOTAL INVESTMENT INCOME...................... 18,923 14,649 33,572
EXPENSES:
Advisory fees.............................. 14,815 4,870 19,685
Transfer agent fees and expenses........... 6,274 2,043 (100)(1) 8,217
Registration fees.......................... 15 36 (10)(1) 41
Postage and mailing expenses............... 346 117 (46)(1) 417
Custodian fees............................. 76 84 (7)(1) 153
Professional fees.......................... 33 (91) (33)(1) (91)
Non-interested Trustees' fees and
expenses................................. 73 29 102
Printing Expenses.......................... 415 263 (68)(1) 610
Other expenses............................. 401 190 (40)(1) 551
TOTAL EXPENSES............................... 22,448 7,541 (304) 29,685
EXPENSE AND FEE OFFSET....................... (330) (123) (453)
NET EXPENSES................................. 22,118 7,418 (304) 29,232
NET INVESTMENT INCOME/(LOSS)................. (3,195) 7,231 304 4,340
Net Realized and Unrealized Gain/(Loss) on
Investments:
Net realized gain/(loss) from securities
transactions............................. 324,457 84,611 409,068
Net realized gain/(loss) from foreign
currency transactions.................... 3,889 (87) 3,802
Change in net unrealized appreciation or
depreciation of investments and foreign
currency translations(2)................. 208,021 170,095 378,116
NET GAIN/(LOSS) ON INVESTMENTS............... 536,367 254,619 790,986
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.................. $533,172 $261,850 $ 304 $795,326
</Table>
- ---------------
(1) Reflects adjustment in expenses due to elimination of duplicative services.
(2) Net of foreign taxes on investments of $26,574 and $948,727 for Janus
Olympus Fund and Janus Orion Fund, respectively.
The accompanying unaudited pro forma financial statements are presented to
show the effect of the proposed acquisition of Janus Olympus Fund (Selling Fund)
by Janus Orion Fund (Acquiring Fund) as if the acquisition had taken place as of
April 30, 2006. The unaudited pro forma financial statements are presented for
the information of the reader and may not necessarily be representative of what
the actual combined financial statements would have been had the reorganization
occurred at April 30, 2006. The unaudited pro forma schedule of investments, and
statement of assets and liabilities reflect the financial position of the
Acquiring Fund and Selling Fund, as well as pro forma combined of the Acquiring
Fund, at April 30, 2006. The unaudited pro forma statement of operations
reflects the results of operations of the Acquiring Fund and the Selling Fund
for the 12 month period ended April 30, 2006. These statements have been derived
from the Funds' respective books and records utilized in calculating daily net
asset value at the date indicated above for both the Acquiring and Selling Fund
under accounting principles generally accepted in the United States of America
in the investment company industry. In accordance with U.S. generally accepted
accounting principles, the historical cost of investment securities will be
carried forward to the surviving entity in the event the termination is
consummated and the results of operations of the Acquiring Fund for
pre-combination periods will not be restated.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
ADR............................ American Depositary Receipt
GDR............................ Global Depositary Receipt
144A........................... Securities sold under Rule 144A of the
Securities Act of 1933 are subject to
legal and/or contractual restrictions on
resale and may not be publicly sold
without registration under the 1933 Act.
U.S. Shares.................... Securities of foreign companies trading on
an American Stock Exchange
- ---------------
* Non-income producing security.
** A portion of this holding has been segregated to cover margin or
segregation requirements on open forward currency contracts.
# Loaned security, a portion or all of the security is on loan as of April
30, 2006.
+ The security is purchased with the cash collateral received from Securities
on Loan (See Note 3 below).
SEC. SCHEDULE OF RESTRICTED AND ILLIQUID SECURITIES
<Table>
<Caption>
ACQUISITION ACQUISITION VALUE AS A %
DATE COST VALUE OF NET ASSETS
----------- ----------- ---------- -------------
JANUS ORION FUND
Bajaj Hindusthan, Ltd.
(GDR)(144A)............... 1/27/06 $2,722,636 $3,854,676 0.4%
</Table>
Aggregate collateral segregated to cover margin or segregation requirements
on open forward currency contracts as of April 30, 2006 for Janus Olympus Fund
is $162,878,399.
Repurchase Agreements held by a Fund are fully collateralized, and such
collateral is in the possession of the Fund's custodian or subcustodian. The
collateral is evaluated daily to ensure its market value exceeds the current
market value of the repurchase agreements, including accrued interest. In the
event of default on the obligation to repurchase, the Fund has the right to
liquidate the collateral and apply the proceeds in satisfaction of the
obligation. In the event of default or bankruptcy by the other party to the
agreement, realization and/or retention of the collateral or proceeds may be
subject to legal proceedings.
NOTE 1 -- PLAN OF REORGANIZATION
On July 5, 2006, the Board of Trustees of Janus Investment Fund approved an
Agreement and Plan of Reorganization (the "Plan") and authorized the submission
of the Plan to Shareholders for approval. If the Plan is approved by
Shareholders the Selling Fund (Janus Olympus Fund) will merge into the Acquiring
Fund (Janus Orion Fund). Janus Orion Fund will acquire all of the assets of
Janus Olympus Fund, subject to the liabilities of Janus Olympus Fund, in
exchange for a number of shares of Janus Orion Fund equal in value to the net
assets of Janus Olympus Fund at the time of the Merger. The Merger will be
accounted for as a tax-free merger of investment companies.
The accompanying unaudited pro forma portfolio of investments, and
unaudited statement of assets and liabilities and statement of operations should
be read in conjunction with the historical financial statements of each Fund,
which are included in their respective annual reports dated October 31, 2005 and
incorporated by reference in the Statement of Additional Information.
NOTE 2 -- INVESTMENT VALUATION
Both Janus Olympus Fund and Janus Orion Fund follow the following
investment valuation policy. Securities are valued at the last sales price or
the official closing price for securities traded on a principal securities
exchange (U.S. or foreign) and on the NASDAQ National Market. Securities traded
on over-the-counter markets and listed securities for which no sales are
reported are valued at the latest bid price (or yield equivalent thereof)
obtained from one or more dealers transacting in a market for such securities or
by a pricing service approved by the Fund's Trustees. Short-term securities with
maturities of 60 days or less may be valued at amortized cost, which
approximates market value. Debt securities with a remaining maturity of greater
than 60 days are valued in accordance with the evaluated bid price supplied by
the pricing service. The evaluated bid price supplied by the pricing service is
an evaluation that reflects such factors as security prices, yields, maturities
and ratings. Foreign securities and currencies are converted to U.S. dollars
using the applicable exchange rate in effect as of the daily close of the New
York Stock Exchange ("NYSE"). When market quotations are not readily available
or deemed unreliable, or events or circumstances that may affect the value
of portfolio securities held by the Funds are identified between the closing of
their principal markets and the time the net asset value ("NAV") is determined,
securities may be valued at their fair value as determined in good faith under
procedures adopted by and under the supervision of the Fund's Trustees. The
Funds may use a systematic fair valuation model provided by an independent third
party to value international equity securities in order to adjust for stale
pricing, which may occur between the close of certain foreign exchanges and the
NYSE.
FORWARD CURRENCY TRANSACTIONS
The Funds may enter into forward currency contracts in order to reduce
their exposure to changes in foreign currency exchange rates on their foreign
portfolio holdings and to lock in the U.S. dollar cost of firm purchase and sale
commitments for securities denominated in or exposed to foreign currencies. A
forward currency exchange contract is a commitment to purchase or sell a foreign
currency at a future date at a negotiated rate. The gain or loss arising from
the difference between the U.S. dollar cost of the original contract and the
value of the foreign currency in U.S. dollars upon closing a contract is
included in "Net realized gain/(loss) from foreign currency transactions" on the
Statement of Operations (if applicable).
Forward currency contracts held by the Funds are fully collateralized by
other securities, which are denoted in the accompanying Schedule of Investments
(if applicable). The collateral is evaluated daily to ensure its market value
equals or exceeds the current market value of the corresponding forward currency
contracts.
FOREIGN CURRENCY TRANSLATIONS
The Funds do not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held at the
date of the financial statements. Net unrealized appreciation or depreciation on
investments and foreign currency translation arise from changes in the value of
assets and liabilities, including investments in securities 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 security transactions and income.
Foreign-denominated assets and forward currency contracts may involve more
risks than domestic transactions, including currency risk, political and
economic risk, regulatory risk and market risk. Risks may arise from the
potential inability of a counterparty to meet the terms of a contract and from
unanticipated movements in the value of foreign currencies relative to the U.S.
dollar.
NOTE 3 -- SECURITIES LENDING
Under procedures adopted by the Trustees, the Funds may lend securities to
qualified parties (typically brokers or other financial institutions) who need
to borrow securities in order to complete certain transactions such as covering
short
sales, avoiding failures to deliver securities or completing arbitrage
activities. The Funds may seek to earn additional income through securities
lending. There is the risk of delay in recovering a loaned security or the risk
of loss in collateral rights if the borrower fails financially. In addition,
Janus Capital Management LLC ("Janus Capital") makes efforts to balance the
benefits and risks from granting such loans.
The Funds do not have the right to vote on securities while they are being
lent; however, the Funds may attempt to call back the loan and vote the proxy.
All loans will be continuously secured by collateral which may consist of cash,
U.S. Government securities, domestic and foreign short-term debt instruments,
letters of credit, money market mutual funds or other money market accounts, or
such other collateral permitted by the Securities and Exchange Commission
("SEC"). Cash collateral may be invested in affiliated money market funds or
other accounts advised by Janus Capital to the extent consistent with exemptive
relief obtained from the SEC or otherwise in compliance with applicable
regulation. Cash collateral may also be invested in unaffiliated money market
funds or other accounts.
State Street Bank and Trust Company (the "Lending Agent") may also invest
the cash collateral in the State Street Navigator Securities Lending Prime
Portfolio or investments in unaffiliated money market funds or accounts,
mutually agreed to by the Funds and the Lending Agent, that comply with Rule
2a-7 under the Investment Company Act of 1940, as amended, relating to money
market funds.
As of April 30, 2006, the Funds had on loan securities valued as indicated:
Janus Olympus Fund $307,516,553
Janus Orion Fund $243,484,769
As of April 30, 2006, the Funds received cash collateral for securities
lending activity as indicated:
Janus Olympus Fund $316,899,102
Janus Orion Fund $250,086,433
As of April 30, 2006, all cash collateral received was invested in the
State Street Navigator Securities Lending Prime Portfolio.
The value of the collateral must be at least 102% of the market value of
the loaned securities that are denominated in U.S. dollars and 105% of the
market value of the loaned securities that are not denominated in U.S. dollars.
Loaned securities and related collateral are marked-to-market each business day
based upon the market value of the respective securities at the close of
business, employing the most recent available pricing information. Collateral
levels are then adjusted based upon this mark-to-market evaluation.
The borrower pays fees at the Funds' direction to its Lending Agent. The
Lending Agent may retain a portion of the interest earned. The cash collateral
invested by the Lending Agent is disclosed in the Schedule of Investments. The
lending fees and the Funds' portion of the interest income earned on cash
collateral are included on the Statement of Operations.
NOTE 4 -- TRANSACTIONS WITH AFFILIATES
The Funds may invest in money market funds, including funds managed by
Janus Capital. During the 12 month period ended April 30, 2006, the Funds
recorded distributions from affiliated investment companies as affiliated
dividend income, and had the following affiliated purchases and sales:
<Table>
<Caption>
PURCHASES SALES DIVIDEND VALUE AT
SHARES/COST SHARES/COST INCOME 5/31/06
------------ ----------- -------- -----------
Janus Institutional
Cash Reserves Fund
Janus Olympus Fund....... $ 50,000,000 $ -- $ 25,932 $50,000,000
Janus Orion Fund......... 50,000,000 50,000,000 79,918 --
------------ ----------- -------- -----------
$100,000,000 $50,000,000 $105,850 $50,000,000
============ =========== ======== ===========
</Table>
NOTE 5 -- CAPITAL SHARES
The unaudited pro forma net asset value per share assumes additional shares
of the Acquiring Fund issued in connection with the proposed acquisition of the
Selling Fund as of April 30, 2006. The number of additional shares issued was
calculated by dividing the value of the assets, net of liabilities, of the
Selling Fund by the net asset value of the Acquiring Fund.
NOTE 6 -- UNAUDITED PRO FORMA ADJUSTMENTS
The accompanying unaudited pro forma financial statements reflect changes
in fund shares as if the Merger had taken place on April 30, 2006. The Selling
Fund's expenses were adjusted assuming the Acquiring Fund's fee and expense
structure was in effect for the 12 month period ended April 30, 2006 and for
estimated reductions due to the elimination of duplicate expenses. No
adjustments to securities positions were required to present the pro forma
financial statements.
NOTE 7 -- MERGER COSTS
Janus Capital Management LLC ("Janus Capital"), the investment adviser to
the Funds, will bear all costs in connection with the Merger.
NOTE 8 -- FEDERAL INCOME TAXES
No provision for income taxes is included in the accompanying financial
statements, as the Funds intend to distribute to shareholders all taxable
investment income and realized gains and otherwise comply with Subchapter M of
the Internal Revenue Code applicable to regulated investment companies.
The Acquiring Fund intends to offset any net capital gains with any
available capital loss carryforward until each carryforward has been fully
utilized or expires. The amount of capital loss carryforward which may offset
the Acquiring Fund's capital gains in any given year may be limited as a result
of the Merger.
PROXY TABULATOR EVERY SHAREHOLDER'S VOTE IS IMPORTANT
P.O. BOX 859232 *** 3 EASY WAYS TO VOTE YOUR PROXIES ***
BRAINTREE, MA 02185-9232
VOTE VIA THE TELEPHONE VOTE VIA THE INTERNET VOTE BY MAIL
1) Read the Proxy Statement
- ------------------------- 1) Read the Proxy Statement and 1) Read the Proxy Statement and
have this card at hand have this card at hand 2) Check the appropriate boxes
on this proxy card
2) Call toll-free at 2) Log on to WWW.2VOTEFUNDPROXY.COM
1-800-992-2416 and follow and follow the on-screen 3) Sign and date this proxy card
- ------------------------- the recorded instructions instructions
3) If you vote via the telephone, 3) If you vote via the Internet, 4) Mail your completed proxy card
you do not need to mail this you do not need to mail this in the enclosed envelope
proxy card proxy card
JANUS INVESTMENT FUND
JANUS OLYMPUS FUND SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 2, 2006
THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF JANUS INVESTMENT FUND ("TRUST"). The undersigned, revoking previous proxies,
hereby appoints Kelley A. Howes, Jesper Nergaard, and Stephanie Grauerholz-Lofton, or any of them, as attorneys and proxies, with
full power of substitution to each, to vote the shares which the undersigned is entitled to vote at the Special Meeting of
Shareholders ("Meeting") of Janus Olympus Fund to be held at the JW Marriott Hotel, 150 Clayton Lane, Denver, CO on October 2, 2006
at 10:00 a.m. Mountain Time and at any adjournment(s) or postponement(s) of such Meeting. As to any other matter that properly comes
before the Meeting or any adjournment(s) or postponement(s) thereof, the persons appointed above may vote in accordance with their
best judgment. The undersigned hereby acknowledges receipt of the accompanying Proxy Statement, Prospectus, and Notice of Special
Meeting.
NOTE: Please sign exactly as your name(s) appears on the
Proxy. If you are signing this Proxy for a corporation,
estate, trust or other fiduciary capacity, for example,
as a trustee, please state that capacity or title along
with your signature.
----------------------------- -----------------
Signature Date
----------------------------- -----------------
Signature (Joint Owners) Date
WHEN THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED HEREBY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS
PROXY WILL BE VOTED FOR THE PROPOSAL SET FORTH BELOW.
PLEASE MARK A BOX BELOW IN BLUE OR BLACK INK AS FOLLOWS. EXAMPLE: [ ]
FOR AGAINST ABSTAIN
o APPROVAL OF AN AGREEMENT AND PLAN OF REORGANIZATION THAT MERGES JANUS OLYMPUS FUND [ ] [ ] [ ]
INTO JANUS ORION FUND.
PLEASE SIGN ON REVERSE SIDE
JANUS
February 28, 2006
JANUS INVESTMENT FUND
JANUS ORION FUND
Prospectus
ELIMINATE PAPER MAIL. Set up e-Delivery of prospectuses, annual reports,
and statements at WWW.JANUS.COM.
The Securities and Exchange Commission has not approved or disapproved
of these securities or passed on the accuracy or adequacy of this
Prospectus. Any representation to the contrary is a criminal offense.
This Prospectus is for those shareholders investing directly with the
Fund.
Janus Investment Fund
Janus Olympus Fund
Janus Orion Fund
Supplement dated July 11, 2006
to Currently Effective Prospectuses
At a special meeting held on July 5, 2006, the Board of Trustees of Janus
Investment Fund approved an Agreement and Plan of Reorganization, which provides
for the merger of Janus Olympus Fund into Janus Orion Fund (the "Merger"). The
proposed Agreement and Plan of Reorganization (the "Plan") is subject to
approval by shareholders of Janus Olympus Fund at a Special Meeting of
Shareholders to be held on October 2, 2006 (or any adjournments or postponements
thereof).
If shareholders of Janus Olympus Fund approve the Plan, Janus Olympus Fund will
transfer its assets and liabilities to Janus Orion Fund in exchange for shares
of Janus Orion Fund. As of the effective date of the Merger, shareholders of
Janus Olympus Fund will receive shares of Janus Orion Fund equal in value to
their then current holdings in Janus Olympus Fund. The Merger is expected to be
effective on or about October 20, 2006. After the Merger is complete, Janus
Olympus Fund will be liquidated.
Effective at the close of trading on July 14, 2006, Janus Olympus Fund will be
closed to new investors pending approval of the Merger. Existing Janus Olympus
Fund shareholders may continue to purchase shares in their existing accounts
until at least the date of shareholder approval.
Janus Olympus Fund shareholders as of July 14, 2006 will receive the Proxy
Statement/Prospectus providing notice of the Special Meeting of Shareholders and
details regarding the Merger. If you purchased shares of Janus Olympus Fund
through a financial intermediary, your financial intermediary will generally be
forwarding these materials to you and requesting your vote. The Proxy Statement/
Prospectus will also be available on the SEC's website at www.sec.gov and at
janus.com or by calling Janus at 1-877-33JANUS.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<Table>
RISK/RETURN SUMMARY
Janus Orion Fund......................................... 2
FEES AND EXPENSES........................................... 5
PRINCIPAL INVESTMENT STRATEGIES AND RISKS
Frequently asked questions about principal investment
strategies............................................... 6
Risks.................................................... 7
Frequently asked questions about certain risks........... 8
General portfolio policies............................... 11
SHAREHOLDER'S MANUAL
Doing business with Janus................................ 16
Minimum investments...................................... 17
Types of account ownership............................... 17
To open an account or buy shares......................... 20
To exchange shares....................................... 21
To sell shares........................................... 21
Excessive trading........................................ 24
Shareholder services and account policies................ 33
MANAGEMENT OF THE FUND
Investment adviser....................................... 37
Management expenses...................................... 38
Investment personnel..................................... 39
OTHER INFORMATION........................................... 40
DISTRIBUTIONS AND TAXES..................................... 43
FINANCIAL HIGHLIGHTS........................................ 46
GLOSSARY OF INVESTMENT TERMS................................ 47
</Table>
Table of contents 1
RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------
JANUS ORION FUND
Janus Orion Fund (the "Fund") is designed for long-term investors who
primarily seek growth of capital and who can tolerate the greater risks
associated with common stock investments.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
JANUS ORION FUND seeks long-term growth of capital.
The Fund's Trustees may change this objective or the Fund's principal
investment strategies without a shareholder vote. If there is a material
change to the Fund's objective or principal investment strategies, you should
consider whether the Fund remains an appropriate investment for you. There is
no guarantee that the Fund will meet its objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund pursues its objective by normally investing primarily in a core
group of 20-30 domestic and foreign common stocks selected for their growth
potential. The Fund may invest in companies of any size, from larger, well-
established companies to smaller, emerging growth companies.
The portfolio manager applies a "bottom up" approach in choosing investments.
In other words, the portfolio manager looks at companies one at a time to
determine if a company is an attractive investment opportunity and if it is
consistent with the Fund's investment policies. If the portfolio manager is
unable to find such investments, the Fund's uninvested assets may be held in
cash or similar investments, subject to the Fund's specific investment
policies.
Within the parameters of its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities, which may include
investments in emerging markets. The Fund will limit its investment in high-
yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net
assets.
MAIN INVESTMENT RISKS
The biggest risk is that the Fund's returns may vary, and you could lose
money. The Fund invests primarily in common stocks, which tend to be more
volatile than many other investment choices.
The value of the Fund's portfolio may decrease if the value of an individual
company or multiple companies in the portfolio decreases. The value of the
Fund's portfolio could also decrease if the stock market goes down regardless
of how well the individual companies perform. If the value of the Fund's
portfolio decreases, the Fund's net asset value ("NAV") will also decrease,
which means if you sell your shares in the Fund you may lose money.
2 Janus Orion Fund prospectus
The Fund is classified as nondiversified. This means it may hold larger
positions in a smaller number of securities than a fund that is classified as
diversified. As a result, a single security's increase or decrease in value
may have a greater impact on the Fund's NAV and total return.
The Fund may have significant exposure to foreign markets, including emerging
markets. As a result, its returns and NAV may be affected to a large degree
by fluctuations in currency exchange rates or political or economic
conditions in a particular country. A market swing in one or more countries
or regions where the Fund has invested a significant amount of its assets may
have a greater effect on the Fund's performance than it would in a more
geographically diversified portfolio. The Fund's investments in emerging
market countries may involve risks greater than, or in addition to, the risks
of investing in more developed countries. As of October 31, 2005,
approximately 13.7% of the Fund's investments were in emerging markets.
To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV
may be affected by factors such as economic changes, political changes, or
developments specific to the company that issued the bond.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
PERFORMANCE INFORMATION
The following information provides some indication of the risks of investing
in the Fund by showing how the Fund's performance has varied over time. The
bar chart depicts the change in performance from year to year during the
periods indicated. The table compares the Fund's average annual returns for
the periods indicated to broad-based securities market indices. The indices
are not available for direct investment.
Risk/return summary 3
JANUS ORION FUND
<Table>
Annual returns for periods ended 12/31
(14.69)% (29.77)% 43.81% 14.90% 20.93%
2001 2002 2003 2004 2005
Best Quarter: 2nd-2003 23.59% Worst Quarter: 1st-2001 (22.54)%
</Table>
<Table>
<Caption>
Average annual total return for periods ended 12/31/05
------------------------------------------------------
Since Inception
1 year 5 years (6/30/00)
Janus Orion Fund
Return Before Taxes 20.93% 3.67% (3.08)%
Return After Taxes on Distributions 20.71% 3.63% (3.13)%
Return After Taxes on Distributions and Sale of
Fund Shares(1) 13.70% 3.13% (2.62)%
Russell 3000(R) Growth Index(2) 5.17% (3.15)% (7.91)%
(reflects no deduction for expenses, fees, or
taxes)
S&P 500(R) Index(3) 4.91% 0.54% (1.16)%
(reflects no deduction for expenses, fees, or
taxes)
--------------------------------
</Table>
(1) If the Fund incurs a loss, which generates a tax benefit, the Return
After Taxes on Distributions and Sale of Fund Shares may exceed the
Fund's other return figures.
(2) The Russell 3000(R) Growth Index measures the performance of those
Russell 3000(R) Index companies with higher price-to-book ratios and
higher forecasted growth values. The stocks in this index are also
members of either the Russell 1000(R) Growth or the Russell 2000(R)
Growth indices.
(3) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500
stocks, a widely recognized, unmanaged index of common stock prices.
After-tax returns are calculated using the historically highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your individual tax situation
and may differ from those shown in the preceding table. The after-tax return
information shown above does not apply to Fund shares held through a
tax-deferred account, such as a 401(k) plan or IRA.
The Fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
4 Janus Orion Fund prospectus
FEES AND EXPENSES
The following table describes the shareholder fees and annual fund operating
expenses that you may pay if you buy and hold shares of the Fund. All of the
fees and expenses shown were determined based on net assets as of the fiscal
year ended October 31, 2005.
SHAREHOLDER FEES are those paid directly from your investment and may include
sales loads, redemption fees, or exchange fees. The Fund is a no-load
investment, so you will generally not pay any shareholder fees when you buy
or sell shares of the Fund.
ANNUAL FUND OPERATING EXPENSES are paid out of the Fund's assets and include
fees for portfolio management, maintenance of shareholder accounts,
shareholder servicing, accounting, and other services. You do not pay these
fees directly but, as the example shows, these costs are borne indirectly by
all shareholders.
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)
<Table>
Sales charges............................................... None
Redemption fee.............................................. None(1)
Exchange fee................................................ None
</Table>
<Table>
<Caption>
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
Management Other Total Annual Fund
Fee(2) Expenses Operating Expenses
Janus Orion Fund 0.64% 0.38% 1.02%
</Table>
(1) The Fund may charge a fee to cover the cost of sending a wire transfer for
redemptions, and your bank may charge an additional fee to receive the
wire. For more information, please refer to the section "Payment of
Redemption Proceeds" in this Prospectus.
(2) The "Management Fee" is the investment advisory fee paid by the Fund to
Janus Capital.
EXAMPLE:
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated and then redeem all
of your shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based upon
these assumptions your costs would be as follows:
<Table>
<Caption>
1 Year 3 Years 5 Years 10 Years
--------------------------------------
Janus Orion Fund $ 104 $ 325 $ 563 $ 1,248
</Table>
Risk/return summary 5
PRINCIPAL INVESTMENT STRATEGIES AND RISKS
- --------------------------------------------------------------------------------
This section takes a closer look at the Fund's principal investment
strategies and certain risks of investing in the Fund. Strategies and
policies that are noted as "fundamental" cannot be changed without a
shareholder vote. Other, non-fundamental strategies and policies can be
changed by the Trustees without prior notice to shareholders.
Please carefully review the "Risks" section of this Prospectus for a
discussion of risks associated with certain investment techniques. We have
also included a "Glossary of Investment Terms" with descriptions of
investment terms used throughout this Prospectus.
FREQUENTLY ASKED QUESTIONS ABOUT PRINCIPAL INVESTMENT STRATEGIES
The following questions and answers are designed to help you better
understand the Fund's principal investment strategies.
1. HOW ARE COMMON STOCKS SELECTED?
Unless its investment objective or policies prescribe otherwise, the Fund may
invest substantially all of its assets in common stocks if the investment
personnel believe that common stocks will appreciate in value. The investment
personnel generally take a "bottom up" approach to selecting companies. This
means that they seek to identify individual companies with earnings growth
potential that may not be recognized by the market at large. The investment
personnel make this assessment by looking at companies one at a time,
regardless of size, country of organization, place of principal business
activity, or other similar selection criteria. The Fund may sell a holding
if, among other things, the security reaches the investment personnel's price
target, if the company has a deterioration of fundamentals such as failing to
meet key operating benchmarks, or if the investment personnel find a better
investment opportunity. The Fund may also sell a holding to meet redemptions.
Realization of income is not a significant consideration when choosing
investments for the Fund. Income realized on the Fund's investments may be
incidental to its objective.
2. ARE THE SAME CRITERIA USED TO SELECT FOREIGN SECURITIES?
Generally, yes. The investment personnel seek companies that meet their
selection criteria, regardless of where a company is located. Foreign
securities are generally selected on a stock-by-stock basis without regard to
any defined allocation among countries or geographic regions. However,
certain factors such as expected levels of inflation, government policies
influencing business conditions, the outlook for currency relationships, and
prospects for economic growth among countries, regions, or geographic areas
may warrant greater consideration in selecting foreign securities. There are
no limitations on the
6 Janus Orion Fund prospectus
countries in which the Fund may invest and the Fund may at times have
significant foreign exposure.
3. WHAT DOES "MARKET CAPITALIZATION" MEAN?
Market capitalization is the most commonly used measure of the size and value
of a company. It is computed by multiplying the current market price of a
share of the company's stock by the total number of its shares outstanding.
The Fund does not emphasize investments in companies of any particular size.
RISKS
Because the Fund may invest substantially all of its assets in common stocks,
the main risk is the risk that the value of the stocks it holds might
decrease in response to the activities of an individual company or in
response to general market and/or economic conditions. If this occurs, the
Fund's share price may also decrease. The Fund's performance may also be
significantly affected, positively or negatively, by certain types of
investments, such as foreign securities, derivative investments,
non-investment grade bonds, initial public offerings ("IPOs"), or companies
with relatively small market capitalizations. IPOs and other types of
investments may have a magnified performance impact on a Fund with a small
asset base. A Fund may not experience similar performance as its assets grow.
Janus Capital is the adviser to the Fund and the Janus Smart Portfolios (each
of which is a "fund of funds" that primarily invests in other Janus Capital
mutual funds). Because Janus Capital is the adviser to the Janus Smart
Portfolios and the Fund, it is subject to certain potential conflicts of
interest when allocating the assets of the Janus Smart Portfolios among such
funds. Purchases and redemptions of Fund shares by a Janus Smart Portfolio
due to reallocations or rebalancings may result in the Fund having to sell
securities or invest cash when it otherwise would not do so. Such
transactions could accelerate the realization of taxable income if sales of
securities resulted in gains and could also increase the Fund's transaction
costs. Large redemptions by a Janus Smart Portfolio may cause the Fund's
expenses to increase due to a resulting smaller asset base. In addition, the
Janus Smart Portfolios' portfolio manager, who also serves the role of
Director of Risk Management and Performance of Janus Capital, has regular and
continuous access to the holdings of the Fund as well as knowledge of, and
potential impact on, investment strategies and techniques of the Fund. Janus
Capital believes these potential conflicts may be mitigated through its
compliance monitoring, including that of asset allocations by the portfolio
manager. In addition, Janus Capital has retained an independent consultant to
provide research and consulting services with respect to asset allocation and
investments for the Janus Smart Portfolios.
Principal investment strategies and risks 7
The officers and Trustees of the Fund may also serve as officers and Trustees
of the Janus Smart Portfolios. Conflicts may arise as the officers and
Trustees seek to fulfill their fiduciary responsibilities to both the Janus
Smart Portfolios and the Fund. The Trustees intend to address any such
conflicts as deemed appropriate.
Janus Capital manages accounts which engage in short sales. The simultaneous
management of long and short portfolios creates potential conflicts of
interest, including the risk that short sale activity could adversely affect
the market value of long positions (and vice versa), the risk arising from
sequential orders in long and short positions, and the risks associated with
receiving opposing orders at the same time.
FREQUENTLY ASKED QUESTIONS ABOUT CERTAIN RISKS
The following questions and answers are designed to help you better
understand some of the risks of investing in the Fund.
1. HOW DOES THE FUND'S NONDIVERSIFICATION CLASSIFICATION AFFECT ITS RISK
PROFILE?
Diversification is a way to reduce risk by investing in a broad range of
stocks or other securities. A fund that is classified as "nondiversified" has
the ability to take larger positions in a smaller number of issuers than a
fund that is classified as "diversified." This gives a nondiversified fund
more flexibility to focus its investments in the most attractive companies
identified by the investment personnel. However, because the appreciation or
depreciation of a single stock may have a greater impact on the NAV of a
nondiversified fund, its share price can be expected to fluctuate more than a
comparable diversified fund. This fluctuation, if significant, may affect the
performance of the Fund. Since the Fund normally invests primarily in a core
portfolio of 20-30 common stocks, this risk may be increased.
2. WHAT IS "INDUSTRY RISK?"
Industry risk is the possibility that a group of related stocks will decline
in price due to industry-specific developments. Companies in the same or
similar industries may share common characteristics and are more likely to
react similarly to industry-specific market or economic developments. The
Fund's investments, if any, in multiple companies in a particular industry
increase the Fund's exposure to industry risk.
3. HOW COULD THE FUND'S INVESTMENTS IN FOREIGN SECURITIES AFFECT ITS
PERFORMANCE?
Unless otherwise limited by its specific investment policies, the Fund may
invest without limit in foreign securities either indirectly (e.g.,
depositary receipts) or directly in foreign markets, including emerging
markets. Investments in foreign securities, including those of foreign
governments, may involve greater risks than investing in domestic securities
because the Fund's performance may depend on
8 Janus Orion Fund prospectus
factors other than the performance of a particular company. These factors
include:
- CURRENCY RISK. As long as the Fund holds a foreign security, its value will
be affected by the value of the local currency relative to the U.S. dollar.
When the Fund sells a foreign denominated security, its value may be worth
less in U.S. dollars even if the security increases in value in its home
country. U.S. dollar-denominated securities of foreign issuers may also be
affected by currency risk due to the overall impact of exposure to the
issuer's local currency.
- POLITICAL AND ECONOMIC RISK. Foreign investments may be subject to
heightened political and economic risks, particularly in emerging markets
which may have relatively unstable governments, immature economic
structures, national policies restricting investments by foreigners,
different legal systems, and economies based on only a few industries. In
some countries, there is the risk that the government may take over the
assets or operations of a company or that the government may impose taxes
or limits on the removal of the Fund's assets from that country.
- REGULATORY RISK. There may be less government supervision of foreign
markets. As a result, foreign issuers may not be subject to the uniform
accounting, auditing, and financial reporting standards and practices
applicable to domestic issuers and there may be less publicly available
information about foreign issuers.
- MARKET RISK. Foreign securities markets, particularly those of emerging
market countries, may be less liquid and more volatile than domestic
markets. Certain markets may require payment for securities before delivery
and delays may be encountered in settling securities transactions. In some
foreign markets, there may not be protection against failure by other
parties to complete transactions. Such factors may hinder the Fund's
ability to buy and sell emerging market securities in a timely manner,
affecting the Fund's investment strategies and potentially affecting the
value of the Fund.
- TRANSACTION COSTS. Costs of buying, selling, and holding foreign
securities, including brokerage, tax, and custody costs, may be higher than
those involved in domestic transactions.
4. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN SECURITIES OF
COMPANIES FROM EMERGING MARKET COUNTRIES?
Within the parameters of its specific investment policies, the Fund may
invest an unlimited amount of its assets in a company or companies from one
or more "developing countries" or "emerging markets." Such countries include,
but are not limited to, countries included in the MSCI Emerging Markets
Index(SM). The
Principal investment strategies and risks 9
Fund has at times invested a significant portion of its assets in emerging
markets and may continue to do so. To the extent that the Fund invests a
significant amount of its assets in one or more countries, returns and NAV
may be affected to a large degree by events and economic conditions in such
countries. A summary of the Fund's investments by country is contained in the
Fund's shareholder report and in the Fund's Form N-Q filed with the SEC.
In many developing markets, there is less government supervision and
regulation of business and industry practices, stock exchanges, brokers, and
listed companies than in more developed markets. The securities markets of
many of the countries in which the Fund may invest may also be smaller, less
liquid, and subject to greater price volatility than those in the United
States. In the event of a default on any investments in foreign debt
obligations, it may be more difficult for the Fund to obtain or to enforce a
judgment against the issuers of such securities. The Fund may be subject to
emerging markets risk to the extent that it invests in companies which are
not considered to be from emerging markets, but which have customers,
products, or transactions associated with emerging markets.
5. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN HIGH-YIELD/HIGH-RISK
BONDS?
High-yield/high-risk bonds (or "junk" bonds) are bonds rated below investment
grade by the primary rating agencies such as Standard & Poor's Ratings
Service ("Standard & Poor's"), Fitch, Inc. ("Fitch"), and Moody's Investors
Service, Inc. ("Moody's") (i.e., BB+ or lower by Standard & Poor's and Fitch,
or Ba or lower by Moody's) or are unrated bonds of similar quality. The value
of lower quality bonds generally is more dependent on credit risk and default
risk than investment grade bonds. Issuers of high-yield/high-risk bonds may
not be as strong financially as those issuing bonds with higher credit
ratings and are more vulnerable to real or perceived economic changes,
political changes, or adverse developments specific to the issuer. In
addition, the junk bond market can experience sudden and sharp price swings.
The secondary market on which high-yield securities are traded may be less
liquid than the market for investment grade securities. The lack of a liquid
secondary market may have an adverse impact on the market price of the
security. When secondary markets for high-yield securities are less liquid
than the market for investment grade securities, it also may be more
difficult to value the securities because valuation may require more
research, and elements of judgment may play a larger role in the valuation
because there is less reliable, objective data available.
Please refer to the "Explanation of Rating Categories" section of the
Statement of Additional Information for a description of bond rating
categories.
10 Janus Orion Fund prospectus
6. HOW DOES THE FUND TRY TO REDUCE RISK?
The Fund may use futures, options, swap agreements, and other derivative
instruments individually or in combination to "hedge" or protect its
portfolio from adverse movements in securities prices and interest rates. The
Fund may also use a variety of currency hedging techniques, including the use
of forward currency contracts, to manage currency risk. There is no guarantee
that derivative investments will benefit the Fund. The Fund's performance
could be worse than if the Fund had not used such instruments.
7. THE FUND MAY INVEST IN SMALLER OR NEWER COMPANIES. DOES THIS CREATE ANY
SPECIAL RISKS?
Many attractive investment opportunities may be smaller, start-up companies
offering emerging products or services. Smaller or newer companies may suffer
more significant losses as well as realize more substantial growth than
larger or more established issuers because they may lack depth of management,
be unable to generate funds necessary for growth or potential development, or
be developing or marketing new products or services for which markets are not
yet established and may never become established. In addition, such companies
may be insignificant factors in their industries and may become subject to
intense competition from larger or more established companies. Securities of
smaller or newer companies may have more limited trading markets than the
markets for securities of larger or more established issuers, or may not be
publicly traded at all, and may be subject to wide price fluctuations.
Investments in such companies tend to be more volatile and somewhat more
speculative.
GENERAL PORTFOLIO POLICIES
In investing its portfolio assets, the Fund will follow the general policies
listed below. Except for the Fund's policies with respect to investments in
illiquid securities and borrowing, the percentage limitations included in
these policies and elsewhere in this Prospectus normally apply only at the
time of purchase of a security. So, for example, if the Fund exceeds a limit
as a result of market fluctuations or the sale of other securities, it will
not be required to dispose of any securities.
CASH POSITION
The Fund may not always stay fully invested in stocks and bonds. For example,
when the Fund's investment personnel believe that market conditions are
unfavorable for profitable investing, or when they are otherwise unable to
locate attractive investment opportunities, the Fund's cash or similar
investments may increase. In other words, cash or similar investments
generally are a residual - they represent the assets that remain after the
Fund has committed available assets to desirable investment opportunities.
When the Fund's investments in
Principal investment strategies and risks 11
cash or similar investments increase, it may not participate in market
advances or declines to the same extent that it would if the Fund remained
more fully invested in stocks or bonds.
In addition, the Fund may temporarily increase its cash position under
certain unusual circumstances, such as to protect its assets or maintain
liquidity in certain circumstances, for example, to meet unusually large
redemptions. The Fund's cash position may also increase temporarily due to
unusually large cash inflows. Under unusual circumstances such as these, the
Fund may invest up to 100% of its assets in cash or similar investments. In
this case, the Fund may not achieve its investment objective.
OTHER TYPES OF INVESTMENTS
Unless otherwise stated within its specific investment policies, the Fund may
also invest in other types of domestic and foreign securities and use other
investment strategies, as described in the "Glossary of Investment Terms."
These securities and strategies are not principal investment strategies of
the Fund. If successful, they may benefit the Fund by earning a return on the
Fund's assets or reducing risk; however, they may not achieve the Fund's
objective. These securities and strategies may include:
- debt securities
- indexed/structured securities
- high-yield/high-risk bonds (35% or less of the Fund's assets)
- options, futures, forwards, swap agreements, participatory notes, exchange-
traded funds, and other types of derivatives individually or in combination
for hedging purposes or for nonhedging purposes such as seeking to enhance
return; such techniques may also be used to gain exposure to the market
pending investment of cash balances or to meet liquidity needs
- short sales "against the box" and "naked" short sales (no more than 8% of
the Fund's assets may be invested in naked short sales)
- securities purchased on a when-issued, delayed delivery, or forward
commitment basis
ILLIQUID INVESTMENTS
The Fund may invest up to 15% of its net assets in illiquid investments. An
illiquid investment is a security or other position that cannot be disposed
of quickly in the normal course of business. For example, some securities are
not registered under U.S. securities laws and cannot be sold to the U.S.
public because of SEC regulations (these are known as "restricted
securities"). Under
12 Janus Orion Fund prospectus
procedures adopted by the Fund's Trustees, certain restricted securities may
be deemed liquid, and will not be counted toward this 15% limit.
FOREIGN SECURITIES
Unless otherwise stated within its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities. The Fund may
invest directly in foreign securities denominated in a foreign currency and
not publicly traded in the United States. Other ways of investing in foreign
securities include depositary receipts or shares and passive foreign
investment companies.
SPECIAL SITUATIONS
The Fund may invest in companies that demonstrate special situations or
turnarounds, meaning companies that have experienced significant business
problems but are believed to have favorable prospects for recovery. For
example, a special situation or turnaround may arise when, in the opinion of
the Fund's investment personnel, the securities of a particular issuer will
be recognized and appreciate in value due to a specific development with
respect to that issuer. Special situations may include significant changes in
a company's allocation of its existing capital, a restructuring of assets, or
a redirection of free cash flow. For example, issuers undergoing significant
capital changes may include companies involved in spin-offs, sales of
divisions, mergers or acquisitions, companies emerging from bankruptcy, or
companies initiating large changes in their debt to equity ratio.
Developments creating a special situation might include, among others, a new
product or process, a technological breakthrough, a management change or
other extraordinary corporate event, or differences in market supply of and
demand for the security. The Fund's performance could suffer if the
anticipated development in a "special situation" investment does not occur or
does not attract the expected attention.
SECURITIES LENDING
The Fund may seek to earn additional income through securities lending. The
Funds may lend its portfolio securities to parties (typically brokers or
other financial institutions) who need to borrow securities in order to
complete certain transactions such as covering short sales, avoiding failures
to deliver securities, or completing arbitrage activities. There is a risk of
delay in recovering a loaned security and/or a risk of loss in collateral
rights if the borrower fails financially.
PORTFOLIO TURNOVER
In general, the Fund intends to purchase securities for long-term investment,
although, to a limited extent, the Fund may purchase securities in
anticipation of relatively short-term price gains. Short-term transactions
may also result from liquidity needs, securities having reached a price or
yield objective, changes in interest rates or the credit standing of an
issuer, or by reason of economic or
Principal investment strategies and risks 13
other developments not foreseen at the time of the investment decision. The
Fund may also sell one security and simultaneously purchase the same or a
comparable security to take advantage of short-term differentials in bond
yields or securities prices. Portfolio turnover is affected by market
conditions, changes in the size of the Fund, the nature of the Fund's
investments, and the investment style of the investment personnel. Changes
are made in the Fund's portfolio whenever the investment personnel believe
such changes are desirable. Portfolio turnover rates are generally not a
factor in making buy and sell decisions.
Increased portfolio turnover may result in higher costs for brokerage
commissions, dealer mark-ups, and other transaction costs and may also result
in taxable capital gains. Higher costs associated with increased portfolio
turnover may offset gains in the Fund's performance. The "Financial
Highlights" section of this Prospectus shows the Fund's historical turnover
rates.
14 Janus Orion Fund prospectus
JANUS ORION FUND
Shareholder's Manual
This Shareholder's Manual is
for those shareholders
investing directly with the
Fund. This section will help
you become familiar with the
different types of accounts
you can establish with Janus.
It also explains in detail
the wide array of services
and features you can
establish on your account, as
well as describes account
policies and fees that may
apply to your account.
Account policies (including
fees), services, and features
may be modified or
discontinued without
shareholder approval or prior
notice.
(JANUS LOGO)
DOING BUSINESS WITH JANUS
- --------------------------------------------------------------------------------
ONLINE - www.janus.com - 24 HOURS A DAY, 7 DAYS A WEEK
- --------------------------------------------------------------------------------
ON www.janus.com* YOU CAN:
- - Open the following types of accounts: individual, joint, UGMA/UTMA,
Traditional and Roth IRAs, Simplified Employee Pension ("SEP") IRAs, and
Coverdell Education Savings Accounts
- - Review your account or complete portfolio
- - Buy, exchange, and sell Funds
- - View your personalized performance
- - Obtain Fund information and performance
- - Update personal information
- - Receive electronic daily, quarterly, and year-end statements, semiannual and
annual reports, prospectuses, and tax forms
* Certain account or transaction types may be restricted from being processed
through www.janus.com. If you would like more information about these
restrictions, please contact a Janus representative.
JANUS XPRESSLINE(TM)
1-888-979-7737
- - 24-HOUR AUTOMATED PHONE SYSTEM
JANUS REPRESENTATIVES
1-800-525-3713
TDD
For the speech and hearing impaired.
1-800-525-0056
MAILING ADDRESS
Janus
P.O. Box 173375
Denver, CO 80217-3375
FOR OVERNIGHT MAIL
Janus
720 S. Colorado Blvd., Suite 290A
Denver, CO 80246-1929
16 Janus Orion Fund prospectus
MINIMUM INVESTMENTS*
<Table>
To open a new regular Fund account $2,500
To open a new UGMA/UTMA account, Coverdell Education
Savings Account, or a retirement Fund account
- without an automatic investment program $1,000
- with an automatic investment program of $100 per
month $ 500
To add to any existing type of Fund account $ 100
</Table>
* The Fund reserves the right to change the amount of these minimums from
time to time or to waive them in whole or in part. Participants in certain
retirement plans, including but not limited to, 403(b)(7) accounts, Janus
prototype Money Purchase Pension and Profit Sharing plans, SEP IRAs, SAR
SEP IRAs, or outside qualified retirement plans, may not be subject to the
stated minimums. Employees of Janus Capital, its wholly-owned subsidiaries,
and Enhanced Investment Technologies, LLC (INTECH) may open Fund accounts
for $100.
MINIMUM INVESTMENT REQUIREMENTS
Due to the proportionately higher costs of maintaining small accounts, the
Fund reserves the right to deduct an annual $25 minimum balance fee per Fund
account with values below the minimums described under "Minimum Investments"
or to close Fund accounts valued at less than $100. This policy may not apply
to accounts that fall below the minimums solely as a result of market value
fluctuations or to those accounts not subject to a minimum investment
requirement. The fee or account closure will occur during the fourth quarter
of each calendar year. You may receive written notice before we charge the
$25 fee or close your account so that you may increase your account balance
to the required minimum. Please note that you may incur a tax liability as a
result of the fee being charged or the redemption.
TYPES OF ACCOUNT OWNERSHIP
Please refer to www.janus.com or an account application for specific
requirements to open and maintain an account.
INDIVIDUAL OR JOINT OWNERSHIP
Individual accounts are owned by one person. Joint accounts have two or more
owners.
TRUST
An established trust can open an account. The names of each trustee, the name
of the trust, and the date of the trust agreement must be included on the
application.
Shareholder's manual 17
BUSINESS ACCOUNTS
Corporations and partnerships may also open an account. The application must
be signed by an authorized officer of the corporation or a general partner of
the partnership.
TAX-DEFERRED ACCOUNTS
Please refer to www.janus.com or an account application for specific
requirements to open and maintain an account. Certain tax-deferred accounts
can only be opened and maintained via written request. Please contact a Janus
representative for more information.
If you are eligible, you may set up one or more tax-deferred accounts. A tax-
deferred account allows you to shelter your investment income and capital
gains from current income taxes. A contribution to certain of these plans may
also be tax deductible. The types of tax-deferred accounts that may be opened
with Janus are described below. Investors should consult their tax adviser or
legal counsel before selecting a tax-deferred account. You may initiate a
rollover or a transfer of assets from certain tax-deferred accounts via
www.janus.com.
INVESTING FOR YOUR RETIREMENT
Please visit www.janus.com or call a Janus representative for more complete
information regarding the different types of IRAs. Distributions from these
plans may be subject to income tax and to an additional tax if withdrawn
prior to age 59 1/2 or used for a nonqualifying purpose.
TRADITIONAL AND ROTH IRAS
Both IRAs allow most individuals with earned income to contribute up to the
lesser of $4,000 or 100% of compensation for tax years 2005 and 2006. In
addition, for the 2005 tax year IRA holders age 50 or older may contribute
$500 more than these limits; and for the 2006 tax year IRA holders age 50 or
older may contribute $1,000 more than these limits.
SIMPLIFIED EMPLOYEE PENSION (SEP) IRAS
This plan allows small business owners (including sole proprietors) to make
tax-deductible contributions for themselves and any eligible employee(s). A
SEP requires an IRA (a SEP-IRA) to be set up for each SEP participant.
PROFIT SHARING OR MONEY PURCHASE PENSION PLAN
These plans are open to corporations, partnerships, and small business owners
(including sole proprietors) for the benefit of their employees and
themselves. You may only open and maintain this type of account via written
request. Please contact a Janus representative for more information.
18 Janus Orion Fund prospectus
SECTION 403(b)(7) PLAN
Employees of educational organizations or other qualifying tax-exempt
organizations may be eligible to participate in a Section 403(b)(7) plan. You
may only open and maintain this type of account via written request. Please
contact a Janus representative for more information.
ACCOUNTS FOR THE BENEFIT OF A CHILD
CUSTODIAL ACCOUNTS (UGMA OR UTMA)
An UGMA/UTMA account is a custodial account managed for the benefit of a
minor.
COVERDELL EDUCATION SAVINGS ACCOUNT
This plan allows individuals, subject to certain income limitations, to
contribute up to $2,000 annually on behalf of any child under the age of 18.
Contributions are also allowed on behalf of children with special needs
beyond age 18. Distributions are generally subject to income tax if not used
for qualified education expenses.
Please refer to the chart on the following pages for information on opening
an account and conducting business with Janus. With certain limited
exceptions, the Fund is available only to U.S. citizens or residents.
Shareholder's manual 19
TO OPEN AN ACCOUNT OR BUY SHARES
Certain tax-deferred accounts can only be opened and maintained via written
request. Please contact a Janus representative for more information.
ONLINE AT www.janus.com
------------------------------------------------------------------------------
- You may open a new Fund account or you may buy shares in an existing Fund
account. You may elect to have Janus electronically withdraw funds from your
designated bank account. You may initiate a rollover or a transfer of assets
from certain tax-deferred accounts via www.janus.com. Janus.com will provide
real-time confirmation of your transaction.
BY TELEPHONE
------------------------------------------------------------------------------
- For an existing account, you may use Janus XpressLine(TM) to buy shares 24
hours a day, or you may call a Janus representative during normal business
hours. Janus will electronically withdraw funds from your designated bank
account.
- You may also buy shares by wiring money from your bank account to your Fund
account. For wiring instructions, call a Janus representative.
BY MAIL/IN WRITING
------------------------------------------------------------------------------
- To open your Fund account, complete and sign the appropriate application.
Make your check payable to Janus or elect a one-time electronic withdrawal
from your bank account as noted on the appropriate application.
- To buy additional shares, complete the remittance slip accompanying your
confirmation statement. If you are making a purchase into a retirement
account, please indicate whether the purchase is a rollover or a current or
prior year contribution. Send your check and remittance slip or written
instructions to the address listed on the slip.
BY AUTOMATED INVESTMENTS
------------------------------------------------------------------------------
- To buy additional shares through the Automatic Investment Program, you
select the frequency with which your money ($100 minimum) will be
electronically transferred from your bank account to your Fund account.
Certain tax-deferred accounts are not eligible for automated investments.
- You may buy additional shares using Payroll Deduction if your employer can
initiate this type of transaction. You may have all or a portion of your
paycheck ($100 minimum) invested directly into your Fund account.
-------------------------------------------------------------------------------
Note: For more information, refer to "Paying for Shares."
20 Janus Orion Fund prospectus
<Table>
TO EXCHANGE SHARES TO SELL SHARES
-------------------------------- --------------------------------
ONLINE AT www.janus.com ONLINE AT www.janus.com
-------------------------------- --------------------------------
- Exchanges may be made online - Redemptions may be made online
at www.janus.com. at www.janus.com.
BY TELEPHONE BY TELEPHONE
-------------------------------- --------------------------------
- Generally all accounts are - Generally all accounts are
automatically eligible to automatically eligible to sell
exchange shares by telephone. shares by telephone. To sell
To exchange all or a portion all or a portion of your
of your shares into any other shares, call Janus
available Janus fund, call XpressLine(TM) or a Janus
Janus XpressLine(TM) or a representative. The Fund
Janus representative. reserves the right to limit
the dollar amount that you may
redeem from your account by
telephone.
BY MAIL/IN WRITING BY MAIL/IN WRITING
-------------------------------- --------------------------------
- To request an exchange in - To request a redemption in
writing, please follow the writing, please follow the
instructions in "Written instructions in "Written
Instructions." Instructions."
BY SYSTEMATIC EXCHANGE BY SYSTEMATIC REDEMPTION
-------------------------------- --------------------------------
- You determine the amount of - This program allows you to
money you would like automati- sell shares worth a specific
cally exchanged from one Fund dollar amount from your Fund
account to another on any day account on a regular basis.
of the month.
-------------------------------- --------------------------------
Note: For more information, Note: For more information,
refer to "Exchanges." refer to "Payment of
Redemption Proceeds."
</Table>
Shareholder's manual 21
PAYING FOR SHARES
Please note the following when purchasing shares:
- Cash, credit cards, third party checks (with certain limited exceptions),
travelers cheques, credit card checks, or money orders will not be
accepted.
- All purchases must be made in U.S. dollars and checks must be drawn on U.S.
banks or an accepted Canadian bank.
- When purchasing shares through the Automatic Investment Program, if no date
or dollar amount is specified on your application, investments of $100 will
be made on the 20th of each month. Your first automatic investment may take
up to two weeks to establish. If the balance in the Janus fund account you
are buying into falls to zero as the result of a redemption or exchange,
your Automatic Investment Program will be discontinued.
- We may make additional attempts to debit your predesignated bank account
for automated investments that initially fail. You are liable for any costs
associated with these additional attempts. If your automated investment
fails, you may purchase shares of the Fund by submitting good funds via
another method accepted by the Fund (e.g., by wire transfer). In this case,
your purchase will be processed at the next NAV determined after we receive
good funds, not at the NAV available as of the date of the original
request.
- The Fund reserves the right to reject any purchase order, including
exchange purchases, for any reason. The Fund is not intended for excessive
trading. For more information about the Fund's policy on excessive trading,
see "Excessive Trading."
- If all or a portion of a purchase is received for investment without a
specific fund designation, for investment in one of our closed funds, or
for investment in a fund that is not yet available for public sale, the
undesignated amount or entire investment, as applicable, will be invested
in the Janus Money Market Fund-Investor Shares ("Money Market Fund"). For
investments without a specific fund designation, where you own a single
Fund account with a current balance greater than zero, the investment will
be applied to that Fund account. For investments without a specific fund
designation, where you own two or more Fund accounts with current balances
greater than zero, and for investments in closed funds, unless you later
direct Janus to (i) buy shares of another Janus fund or (ii) sell shares of
the Money Market Fund and return the proceeds (including any dividends
earned) to you, Janus will treat your inaction as approval of the purchase
of the Money Market Fund. If you hold shares of a closed fund and submit an
order directly to Janus for your account in that closed fund, your account
must be open and your order must clearly indicate that you are currently a
shareholder of the closed fund, or your money will be invested in the Money
Market Fund. If you submit an order to buy shares of a fund
22 Janus Orion Fund prospectus
that is not yet available for investment (during a subscription period),
your investment will be held in the Money Market Fund until the new fund's
commencement of operations. At that time, your investment (including any
dividends) will be automatically exchanged from the Money Market Fund to
the new fund. All orders for purchase, exchange, or sale will receive the
NAV as described under "Policies in Relation to Transactions."
- For Fund purchases by check, if your check does not clear for any reason,
your purchase will be cancelled.
- If your purchase is cancelled for any reason, you will be responsible for
any losses or fees imposed by your bank and may be responsible for losses
that may be incurred as a result of any decline in the value of the
cancelled purchase.
EXCHANGES
Please note the following when exchanging shares:
- An exchange represents the sale of shares from one Fund and the purchase of
shares of another Fund, which may produce a taxable gain or loss in a non-
retirement account.
- You may generally exchange shares of a Fund for shares of any fund in the
Trust.
- New Janus fund accounts established by exchange must be opened with $2,500
or the total account value if the value of the Janus fund account you are
exchanging from is less than $2,500.
- UGMA/UTMA accounts, Traditional or Roth IRAs, Simplified Employee Pension
IRAs, and Coverdell Education Savings Accounts established by exchange must
meet the minimum investment requirements previously described. If the value
of the Janus fund account you are exchanging from is less than the stated
minimum, you must exchange the entire balance.
- Exchanges between existing Janus fund accounts must meet the $100
subsequent investment requirement.
- For Systematic Exchanges, if no date is specified on your request,
systematic exchanges will be made on the 20th of each month. You may
establish this option for as little as $100 per exchange. If the balance in
the Janus fund account you are exchanging from falls below the Systematic
Exchange amount, all remaining shares will be exchanged and your Systematic
Exchange Program will be discontinued.
- The exchange privilege is not intended as a vehicle for short-term or
excessive trading. You may make up to four round trips in the Fund in a
12-month
Shareholder's manual 23
period, although the Fund at all times reserves the right to reject any
exchange purchase for any reason without prior notice. Generally, a "round
trip" is a redemption out of the Fund (by any means) followed by a purchase
back into the Fund (by any means). Different restrictions may apply if you
invest through an intermediary. The Fund will work with financial
intermediaries to apply the Fund's exchange limit. However, the Fund may
not always have the ability to monitor or enforce the trading activity in
such accounts. For more information about the Fund's policy on excessive
trading, see "Excessive Trading."
- The Janus funds reserve the right to reject any exchange request and to
modify or terminate the exchange privilege at any time.
- With certain limited exceptions, exchanges between Janus fund accounts will
be accepted only if the registrations are identical. If you are exchanging
into a closed Janus fund, you will need to meet criteria for investing in
the closed fund. For more information, see "Closed Fund Policies."
- If the shares you are exchanging are held in certificate form, you must
return the certificate to Janus prior to making any exchanges. Shares are
no longer available in certificate form.
Note: For the fastest and easiest way to exchange shares, log on to
www.janus.com* 24 hours a day, 7 days a week.
* Certain account types do not allow transactions via www.janus.com. For more
information, access www.janus.com or refer to this Shareholder's Manual.
EXCESSIVE TRADING
EXCESSIVE TRADING POLICIES AND PROCEDURES
The Board of Trustees has adopted policies and procedures with respect to
short-term and excessive trading of Fund shares ("excessive trading"). The
Fund is intended for long-term investment purposes only and the Fund will
take reasonable steps to attempt to detect and deter excessive trading.
Transactions placed in violation of the Fund's exchange limits or excessive
trading policies may be cancelled or revoked by the Fund by the next business
day following receipt by the Fund. The trading history of accounts determined
to be under common ownership or control within any of the Janus funds may be
considered in enforcing these policies and procedures. As described below,
however, the Fund may not be able to identify all instances of excessive
trading or completely eliminate the possibility of excessive trading. In
particular, it may be difficult to identify excessive trading in certain
omnibus accounts and other accounts traded through intermediaries. By their
nature, omnibus accounts, in which purchases and sales of the Fund's shares
by multiple investors are aggregated by the
24 Janus Orion Fund prospectus
intermediary and presented to the Fund on a net basis, may effectively
conceal the identity of individual investors and their transactions from the
Fund and its agent.
The Fund attempts to deter excessive trading through at least the following
methods:
- exchange limitations as described under "Exchanges;"
- redemption fees as described under "Redemption Fee" (where applicable on
certain Funds); and
- fair valuation of securities as described under "Pricing of Fund Shares."
The Fund monitors Fund share transactions, subject to the limitations
described below. Generally, a purchase of the Fund's shares followed by the
redemption of the Fund's shares within a 90-day period may result in
enforcement of the Fund's excessive trading policies and procedures with
respect to future purchase orders, provided that the Fund reserves the right
to reject any purchase request as explained above.
The Fund may suspend or permanently terminate the exchange privilege of any
investor who makes more than four round trips (as defined under "Exchanges")
in a Fund in a 12-month period and may bar future purchases into the Fund and
any of the other Janus funds by such investor. The Fund's exchange limits and
excessive trading policies generally do not apply to a money market fund,
although money market funds at all times reserve the right to reject any
purchase request (including exchange purchases) for any reason without prior
notice; and transactions in the Janus funds by the Janus Smart Portfolios
(each of which is a "fund of funds" that primarily invests in other Janus
mutual funds).
The Fund's Board of Trustees may approve from time to time a redemption fee
to be imposed by any Janus fund, subject to 60 days' notice to shareholders
of that fund.
Investors who place transactions through the same financial intermediary on
an omnibus basis may be deemed part of a group for the purpose of the Fund's
excessive trading policies and procedures and may be rejected in whole or in
part by the Fund. The Fund, however, cannot always identify or reasonably
detect excessive trading that may be facilitated by financial intermediaries
or made difficult to identify through the use of omnibus accounts by those
intermediaries that transmit purchase, exchange, and redemption orders to the
Fund, and thus the Fund may have difficulty curtailing such activity.
Transactions accepted by a financial intermediary in violation of the Fund's
excessive trading policies may be cancelled or revoked by the Fund by the
next business day following receipt by the Fund.
Shareholder's manual 25
In an attempt to detect and deter excessive trading in omnibus accounts, the
Fund or its agent may require intermediaries to impose restrictions on the
trading activity of accounts traded through those intermediaries. Such
restrictions may include, but are not limited to, requiring that trades be
placed by U.S. mail, prohibiting purchases for a designated period of time
(typically 30 to 90 days) by investors who have recently redeemed Fund
shares, requiring intermediaries to report information about customers who
purchase and redeem large amounts, and similar restrictions. The Fund's
ability to impose such restrictions with respect to accounts traded through
particular intermediaries may vary depending on the systems capabilities,
applicable contractual and legal restrictions, and cooperation of those
intermediaries.
Certain transactions in Fund shares, such as periodic rebalancing (no more
frequently than quarterly) or those which are made pursuant to systematic
purchase, exchange, or redemption programs generally do not raise excessive
trading concerns and normally do not require application of the Fund's
methods to detect and deter excessive trading.
The Fund also reserves the right to reject any purchase request (including
exchange purchases) by any investor or group of investors for any reason
without prior notice, including, in particular, if the trading activity in
the account(s) is deemed to be disruptive to the Fund. For example, the Fund
may refuse a purchase order if the Fund's investment personnel believe they
would be unable to invest the money effectively in accordance with the Fund's
investment policies or the Fund would otherwise be adversely affected due to
the size of the transaction, frequency of trading, or other factors.
The Fund's policies and procedures regarding excessive trading may be
modified at any time by the Fund's Board of Trustees.
EXCESSIVE TRADING RISKS
Excessive trading may present risks to the Fund's long-term shareholders.
Excessive trading into and out of the Fund may disrupt portfolio investment
strategies, may create taxable gains to remaining Fund shareholders, and may
increase Fund expenses, all of which may negatively impact investment returns
for all remaining shareholders, including long-term shareholders.
A Fund that invests in foreign securities may be at a greater risk for
excessive trading. Investors may attempt to take advantage of anticipated
price movements in securities held by a Fund based on events occurring after
the close of a foreign market that may not be reflected in the Fund's NAV
(referred to as "price arbitrage"). Such arbitrage opportunities may also
arise in a Fund which does not invest in foreign securities, for example,
when trading in a security held by the Fund is halted and does not resume
prior to the time the Fund calculates its
26 Janus Orion Fund prospectus
NAV (referred to as "stale pricing"). Funds that hold thinly-traded
securities, such as certain small-capitalization securities, may be subject
to attempted use of arbitrage techniques. To the extent that a Fund's
valuation of a security differs from the security's market value, short-term
arbitrage traders may dilute the NAV of the Fund, which negatively impacts
long-term shareholders. Although the Fund has adopted fair valuation policies
and procedures intended to reduce the Fund's exposure to price arbitrage,
stale pricing, and other potential pricing inefficiencies, under such
circumstances there is potential for short-term arbitrage trades to dilute
the value of Fund shares.
Although the Fund takes steps to detect and deter excessive trading pursuant
to the policies and procedures described in this Prospectus and approved by
the Board of Trustees, there is no assurance that these policies and
procedures will be effective in limiting excessive trading in all
circumstances. For example, the Fund may be unable to completely eliminate
the possibility of excessive trading in certain omnibus accounts and other
accounts traded through intermediaries. Omnibus accounts may effectively
conceal the identity of individual investors and their transactions from the
Fund and its agent. This makes the Fund's identification of excessive trading
transactions in the Fund through an omnibus account difficult and makes the
elimination of excessive trading in the account impractical without the
assistance of the intermediary. Although the Fund encourages intermediaries
to take necessary actions to detect and deter excessive trading, some
intermediaries may be unable or unwilling to do so, and accordingly, the Fund
cannot eliminate completely the possibility of excessive trading.
Shareholders that invest through an omnibus account should be aware that they
may be subject to the policies and procedures of their financial intermediary
with respect to excessive trading in the Fund.
PAYMENT OF REDEMPTION PROCEEDS
BY ELECTRONIC TRANSFER - Generally all accounts are automatically eligible
for the electronic redemption option if bank information is provided.
- NEXT DAY WIRE TRANSFER - Your redemption proceeds, less any applicable
redemption fee, can be electronically transferred to your predesignated
bank account on the next bank business day after receipt of your redemption
request (wire transfer). Wire transfers will be charged a fee for each wire
and your bank may charge an additional fee to receive the wire.
- ACH (AUTOMATED CLEARING HOUSE) TRANSFER - Your redemption proceeds, less
any applicable redemption fee, can be electronically transferred to your
predesignated bank account on or about the second bank business day after
receipt of your redemption request. There is no fee associated with this
type of electronic transfer.
Shareholder's manual 27
BY CHECK - Redemption proceeds, less any applicable redemption fee, will be
sent to the shareholder(s) of record at the address of record within seven
days after receipt of a valid redemption request. During the 10 days
following an address change, requests for redemption checks to be sent to a
new address require a signature guarantee.
BY SYSTEMATIC REDEMPTION - If no date is specified on your request,
systematic redemptions will be made on or about the 24th of each month. If
the balance in the Janus fund account you are selling from falls to zero,
your Systematic Redemption Program will be discontinued.
GENERALLY, ORDERS TO SELL SHARES MAY BE INITIATED AT ANY TIME ON
www.janus.com, BY TELEPHONE, OR IN WRITING. CERTAIN TAX-DEFERRED ACCOUNTS MAY
REQUIRE A WRITTEN REQUEST. IF THE SHARES BEING SOLD WERE PURCHASED BY CHECK
OR AUTOMATED INVESTMENT, THE FUND CAN DELAY THE PAYMENT OF YOUR SALE PROCEEDS
FOR UP TO 15 DAYS FROM THE DAY OF PURCHASE TO ALLOW THE PURCHASE TO CLEAR.
UNLESS YOU PROVIDE ALTERNATE INSTRUCTIONS, YOUR PROCEEDS WILL BE INVESTED IN
THE INVESTOR SHARES CLASS OF JANUS MONEY MARKET FUND DURING THE 15-DAY HOLD
PERIOD.
Note: For the fastest and easiest way to redeem shares, log on to
www.janus.com* 24 hours a day, 7 days a week.
* Certain account types do not allow transactions via www.janus.com. For more
information, access www.janus.com or refer to this Shareholder's Manual.
WRITTEN INSTRUCTIONS
To sell or exchange all or part of your shares in writing, your request
should be sent to one of the addresses listed under "Doing Business with
Janus." Please include the following information:
- the name of the Janus fund(s) being sold or exchanged;
- the account number(s);
- the amount of money or number of shares being sold or exchanged;
- the name(s) on the account;
- the signature(s) of all registered account owners (see account application
for signature requirements); and
- your daytime telephone number.
28 Janus Orion Fund prospectus
SIGNATURE GUARANTEE
A SIGNATURE GUARANTEE IS REQUIRED if any of the following is applicable:
- You request a redemption by check above a certain dollar amount.
- You would like a check made payable to anyone other than the shareholder(s)
of record.
- You would like a check mailed to an address which has been changed within
10 days of the redemption request.
- You would like a check mailed to an address other than the address of
record.
- You would like your redemption proceeds sent to a bank account other than a
bank account of record.
THE FUND RESERVES THE RIGHT TO REQUIRE A SIGNATURE GUARANTEE UNDER OTHER
CIRCUMSTANCES OR TO REJECT OR DELAY A REDEMPTION ON CERTAIN LEGAL GROUNDS.
A SIGNATURE GUARANTEE MAY BE REFUSED if any of the following is applicable:
- It does not appear valid or in good form.
- The transaction amount exceeds the surety bond limit of the signature
guarantee.
- The guarantee stamp has been reported as stolen, missing, or counterfeit.
HOW TO OBTAIN A SIGNATURE GUARANTEE
A signature guarantee assures that a signature is genuine. The signature
guarantee protects shareholders from unauthorized account transfers. The
following financial institutions may guarantee signatures: banks, savings and
loan associations, trust companies, credit unions, broker-dealers, and member
firms of a national securities exchange. Call your financial institution to
see if they have the ability to guarantee a signature. A signature guarantee
cannot be provided by a notary public.
If you live outside the United States, a foreign bank properly authorized to
do business in your country of residence or a U.S. consulate may be able to
authenticate your signature.
REDEMPTIONS IN-KIND
Shares normally will be sold for cash, although the Fund retains the right to
sell some or all of its shares in-kind under unusual circumstances, in order
to protect the interests of remaining shareholders, or to accommodate a
request by a particular shareholder that does not adversely affect the
interest of the remaining shareholders, by delivery of securities selected
from its assets at its
Shareholder's manual 29
discretion. However, the Fund is required to redeem shares solely for cash up
to the lesser of $250,000 or 1% of the NAV of the Fund during any 90-day
period for any one shareholder. Should redemptions by any shareholder exceed
such limitation, the Fund will have the option of redeeming the excess in
cash or in-kind. In-kind payment means payment will be made in portfolio
securities rather than cash. If this occurs, the redeeming shareholder might
incur brokerage or other transaction costs to convert the securities to cash.
PRICING OF FUND SHARES
NAV DETERMINATION
The per share NAV is computed by dividing the total value of the Fund's
securities and other assets, less liabilities, by the total number of Fund
shares outstanding. In the case of Funds with share classes, the NAV for each
class 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. The Fund's NAV is
calculated as of the close of the regular trading session of the New York
Stock Exchange ("NYSE") (normally 4:00 p.m. New York time) each day that the
NYSE is open ("business day"). However, the NAV may be calculated earlier if
trading on the NYSE is restricted, or as permitted by the SEC. Because
foreign securities markets may operate on days that are not business days in
the United States, the value of the Fund's holdings may change on days when
you will not be able to purchase or redeem the Fund's shares to the extent
that Fund is invested in such markets. All purchases, exchanges, and
redemptions will be duly processed at the NAV as described under "Policies in
Relation to Transactions" after your request is received in good order by the
Fund (or financial intermediary or plan sponsor, if applicable) or its agent.
Securities held by the Fund are generally valued at market value. Certain
short-term instruments maturing within 60 days or less are valued at
amortized cost, which approximates market value. If a market quotation is not
readily available or is deemed unreliable, or if an event that is expected to
affect the value of a portfolio security occurs after the close of the
principal exchange or market on which that security is traded, and before the
close of the NYSE, the fair value of a security (except for short-term
instruments maturing within 60 days or less) will be determined in good faith
under policies and procedures established by and under the supervision of the
Fund's Board of Trustees. Circumstances in which fair value pricing may be
utilized include, but are not limited to: (i) when significant events occur
which may affect the securities of a single issuer, such as mergers,
bankruptcies, or significant issuer-specific developments; (ii) when
significant events occur which may affect an entire market, such as natural
disasters or significant governmental actions; and (iii) when non-significant
events occur such as markets closing early or not opening, security trading
halts,
30 Janus Orion Fund prospectus
or pricing of nonvalued securities and restricted or nonpublic securities.
The Fund may use a systematic fair valuation model provided by an independent
pricing service to value foreign equity securities in order to adjust for
stale pricing, which may occur between the close of certain foreign exchanges
and of the NYSE. While fair value pricing may be more commonly used with
foreign equity securities, it may also be used with, among other things,
thinly-traded domestic securities or fixed-income securities.
Due to the subjective nature of fair value pricing, the Fund's value for a
particular security may be different from the last quoted market price. Fair
value pricing may reduce arbitrage activity involving the frequent buying and
selling of mutual fund shares by investors seeking to take advantage of a
perceived lag between a change in the value of a Fund's portfolio securities
and the reflection of such change in that Fund's NAV, as further described in
the "Excessive Trading" section of this Prospectus. While funds that invest
in foreign securities may be at a greater risk for arbitrage activity, such
activity may also arise in funds which do not invest in foreign securities,
for example, when trading in a security held by the Fund is halted and does
not resume prior to the time the Fund calculates its NAV (referred to as
"stale pricing"). Funds that hold thinly-traded securities, such as certain
small-capitalization securities, may be subject to attempted use of arbitrage
techniques. To the extent that the Fund's valuation of a security is
different from the security's market value, short-term arbitrage traders may
dilute the NAV of the Fund, which negatively impacts long-term shareholders.
The Fund's fair value pricing and excessive trading policies and procedures
may not completely eliminate short-term trading in certain omnibus accounts
and other accounts traded through intermediaries.
The value of the securities of other open-end funds held by the Fund, if any,
will be calculated using the NAV of such underlying funds, and the
prospectuses for such open-end funds explain the circumstances under which
they use fair value pricing and the effects of using fair value pricing.
POLICIES IN RELATION TO TRANSACTIONS
EXCHANGES - Exchange requests between the Fund and other Janus funds (other
than between Janus Money Market Fund and Janus Government Money Market Fund)
must be received in good order by the Fund or its agent prior to the close of
the regular trading session of the NYSE in order to receive that day's NAV.
Exchange requests between Janus Money Market Fund and Janus Government Money
Market Fund must be received in good order by a Fund or its agent prior to
5:00 p.m. (New York time) in order to receive that day's NAV. The money
market funds reserve the right to require exchange requests prior to these
times on days when the bond market or the NYSE close early.
Shareholder's manual 31
OTHER TRANSACTIONS - With the exception of certain money market fund
transactions (as described in the Janus Bond and Money Market Funds
prospectus), all phone and written requests, including but not limited to,
purchases by check or automated investment, wire transfers, and ACH transfer,
must be received in good order by the Fund or its agent prior to the close of
the regular trading session of the NYSE in order to receive the NAV
calculated at that time. Transactions involving funds which pay dividends
will generally begin to earn dividends, as applicable, on the first bank
business day following the date of purchase.
AVAILABILITY OF PORTFOLIO HOLDINGS INFORMATION
The non-money market funds' full portfolio holdings (excluding cash
equivalents, derivatives, and short positions), consisting of at least the
names of the holdings, are generally available monthly, with a 30-day lag, on
www.janus.com. They are posted to the website within approximately two
business days after month-end. The money market funds' full portfolio
holdings are generally available monthly, with no lag, on www.janus.com. They
are posted to the website within approximately six business days after
month-end. All of the funds' portfolio holdings remain available until the
following month's information is posted. The funds' full portfolio holdings
can be found on www.janus.com in Fund details under the Holdings & Details
tab.
In addition, the Fund's top portfolio holdings in order of position size and
as a percentage of the total portfolio, are published monthly with a 30-day
lag, and quarterly with a 15-day lag, on www.janus.com. The Fund discloses
its top five portfolio holdings. Security breakdowns (such as industry,
sector, regional, market capitalization, and asset allocation breakdowns, as
applicable) for the Fund are published quarterly, with a 15-day lag, on
www.janus.com. The Fund's top portfolio holdings, as well as the non-money
market funds' security breakdowns, are posted to the website within
approximately two business days after the end of the applicable period and
remain available until the following period's information is posted.
Specific portfolio level performance attribution information and statistics
for the Fund will be made available to any person monthly upon request, with
a 30-day lag, following the posting of the Fund's full portfolio holdings on
www.janus.com.
Notwithstanding the foregoing, Janus Capital may exclude from publication all
or any portion of portfolio holdings or change the time periods of disclosure
as deemed necessary to protect the interests of the Fund. A summary of the
Fund's portfolio holdings disclosure policies and procedures, which includes
a discussion of any exceptions, is contained in the Fund's Statement of
Additional Information.
32 Janus Orion Fund prospectus
Complete schedules of the Fund's portfolio holdings as of the end of the
Fund's first and third fiscal quarters are filed with the SEC within 60 days
of the end of such quarters on Form N-Q. 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 at 1-800-525-3713 (toll free). Complete schedules of the Fund's
portfolio holdings as of the end of the Fund's second and fourth fiscal
quarters are included in the Fund's semiannual and annual reports which are
filed with the SEC within 60 days of the end of such quarters. The semiannual
reports are filed on Form type N-CSRS and the annual reports are filed on
Form type N-CSR. Shareholder reports containing such portfolio holdings are
delivered to shareholders and are also available at www.janus.com.
SHAREHOLDER SERVICES AND ACCOUNT POLICIES
TRANSACTIONS THROUGH PROCESSING ORGANIZATIONS
You may buy or sell Fund shares through an organization that provides
recordkeeping and consulting services to 401(k) plans or other employee
benefit plans (a "Processing Organization"). Processing Organizations may
charge you a fee for this service and may require different minimum initial
and subsequent investments than the Fund. Processing Organizations may also
impose other charges or restrictions different from those applicable to
shareholders who invest in the Fund directly.
A Processing Organization, rather than its customers, may be the shareholder
of record of your shares. The Fund is not responsible for the failure of any
Processing Organization to carry out its obligations to its customers.
Certain Processing Organizations may receive compensation from Janus Capital
or its affiliates, and certain Processing Organizations may receive
compensation from the Fund for shareholder recordkeeping and similar
services.
TAXPAYER IDENTIFICATION NUMBER
On the application or other appropriate forms, you may be asked to certify
that your Social Security or employer identification number is correct and
that you are not subject to backup withholding for failing to report income
to the IRS. If you are subject to backup withholding, or you did not certify
your taxpayer identification number, the IRS requires the Fund to withhold a
certain percentage (at the currently applicable rate) of any dividends paid
and redemption or exchange proceeds. In addition to this backup withholding,
you may be subject to a $50 fee to reimburse the Fund for any penalty that
the IRS may impose.
Shareholder's manual 33
INVOLUNTARY REDEMPTIONS
The Fund reserves the right to close an account if the shareholder is deemed
to engage in activities which are illegal or otherwise believed to be
detrimental to the Fund. This includes, but is not limited to, accounts that
the Fund or its agent believe are engaged in market timing. Any time shares
are redeemed in a taxable account, it is considered a taxable event. You are
responsible for any tax liabilities associated with an involuntary redemption
of your account.
ONLINE AND TELEPHONE TRANSACTIONS
You may initiate many transactions through www.janus.com or by calling Janus
XpressLine(TM). You may also contact a Janus representative. Generally all
new accounts automatically receive online and telephone transaction
privileges including redemption privileges. If you do not want to receive
these privileges, please visit www.janus.com or call a Janus representative.
The Fund and its agents will not be responsible for any losses, costs, or
expenses resulting from unauthorized transactions when reasonable procedures
designed to verify the identity of the online user or caller are followed.
Your account information should be kept private, and you should immediately
review any account statements that you receive from Janus. Someone other than
you could act on your account if they are able to provide the required
identifying information. Contact Janus immediately about any transactions you
believe to be unauthorized.
Occasionally, we experience high call volumes due to unusual market activity
or other events that may make it difficult for you to reach a Janus
representative by telephone. If you are unable to reach a Janus
representative by telephone, please consider visiting www.janus.com, calling
Janus XpressLine(TM), or sending written instructions.
DISTRIBUTIONS
Generally, all income dividends and capital gains distributions will
automatically be reinvested in your Fund account. If you wish to change your
distribution option, please visit www.janus.com, call a Janus representative,
or send a written request signed by the shareholder(s) of record.
If you receive Fund distributions from an open non-retirement Fund account by
check, and a distribution check sent to you at your address of record has
been returned to Janus and you have failed to respond to follow up mailings
from Janus, the distribution check will automatically be reinvested in your
open Fund account at the next calculated NAV. Your non-retirement Fund
account distribution checks will also be reinvested in your Fund account if
you do not
34 Janus Orion Fund prospectus
cash them within one year of the date they were written. No interest will
accrue on amounts represented by uncashed distribution or redemption checks.
TEMPORARY SUSPENSION OF SERVICES
The Fund or its agents may, in case of emergency, temporarily suspend
telephone transactions and other shareholder services. The Fund may postpone
payment of redemption proceeds for up to seven calendar days. In addition,
the Fund may suspend redemptions and/or postpone payment of redemption
proceeds beyond seven calendar days when the New York Stock Exchange is
closed or during emergency circumstances, as determined by the Securities and
Exchange Commission. The exchange privilege may also be suspended in these
circumstances.
ADDRESS CHANGES
For the easiest way to change the address on your account, visit
www.janus.com. You may also call a Janus representative or send a written
request signed by the shareholder(s) of record. Include the name of the Janus
fund(s) you hold, the account number(s), the name(s) on the account, and both
the old and new addresses. Certain options may be suspended for 10 days
following an address change unless a signature guarantee is provided.
REGISTRATION CHANGES
To change the name on an account, the shares are generally transferred to a
new account. In some cases, legal documentation may be required. Please visit
www.janus.com or call a Janus representative for further instructions.
BANK ACCOUNT CHANGES
For the easiest way to change your bank account of record or add new bank
account information to your account, visit www.janus.com. You may also send a
written request signed by the shareholder(s) of record. Please note that you
may change or add bank information online at www.janus.com for purchases
only. Certain tax-deferred accounts may require a written notice and, in some
instances, bank privileges may not be available. We cannot accept changes or
additions to bank account redemption options online at www.janus.com or over
the telephone. If the added bank account is a joint tenant/tenants in common
account, at least one name on the bank account must match one name on the
Fund account.
Shareholder's manual 35
STATEMENTS, REPORTS, AND PROSPECTUSES
We will send you quarterly confirmations of all transactions. You may elect
on www.janus.com to discontinue delivery of your paper statements, and
instead receive them online. In addition, on www.janus.com, the Fund will
send you an immediate transaction confirmation statement after every
non-systematic transaction. If you have not elected to receive online
statements, your confirmation will be mailed within two days of the
transaction. The Fund reserves the right to charge a fee for additional
account statement requests.
The Fund produces financial reports that include a complete list of the
Fund's portfolio holdings semiannually, and updates its prospectus annually.
You may elect to receive these reports and prospectus updates electronically
on www.janus.com.
Unless you instruct Janus otherwise by contacting a Janus representative, the
Fund will mail only one report or prospectus to your household, even if more
than one person in your household has a Fund account. This process is known
as "householding," which reduces the amount of mail you receive and helps
lower Fund expenses. If you decide that you no longer want the mailing of
these documents to be combined with the other members of your household,
please call a Janus representative or send a written request signed by the
shareholder(s) of record. Individual copies will be sent within thirty (30)
days after the Fund receives your instructions.
36 Janus Orion Fund prospectus
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Janus Capital Management LLC ("Janus Capital" or "Janus"), 151 Detroit
Street, Denver, Colorado 80206-4805, is the investment adviser to the Fund
and is responsible for the day-to-day management of the Fund's investment
portfolio and furnishes continuous advice and recommendations concerning the
Fund's investments. Janus Capital also provides certain administrative and
other services, and is responsible for the other business affairs of the
Fund.
Janus Capital (together with its predecessors) has served as investment
adviser to Janus Fund since 1970 and currently serves as investment adviser
to all of the Janus funds, acts as subadviser for a number of private-label
mutual funds, and provides separate account advisory services for
institutional accounts.
Janus Capital furnishes certain administrative, compliance, and accounting
services for the Fund, and may be reimbursed by the Fund for its costs in
providing those services. In addition, employees of Janus Capital and/or its
affiliates serve as officers of the Trust and Janus Capital provides office
space for the Fund and pays the salaries, fees, and expenses of all Fund
officers and those Trustees who are considered interested persons of Janus
Capital.
From its own assets, Janus Capital or its affiliates may make payments based
on gross sales, current assets, or other measures to selected brokerage firms
or other financial intermediaries that were instrumental in the acquisition
or retention of shareholders for the Janus funds. The amount of these
payments is determined from time to time by Janus Capital, may be
substantial, and may differ for different financial intermediaries.
Eligibility requirements for such payments to institutional intermediaries
are determined by Janus Capital and/or its affiliates.
Janus Capital or its affiliates may pay fees, from their own assets, to
brokerage firms, banks, financial advisers, retirement plan service
providers, and other financial intermediaries for providing recordkeeping,
subaccounting, transaction processing, and other shareholder or
administrative services (including payments for processing transactions via
National Securities Clearing Corporation ("NSCC") or other means) in
connection with investments in the Janus funds. These fees are in addition to
any fees that may be paid by the Janus funds for these types of or other
services.
In addition, Janus Capital or its affiliates may also share certain marketing
expenses with, or pay for or sponsor informational meetings, seminars, client
awareness events, support for marketing materials, or business building
programs for such intermediaries to raise awareness of the Fund.
The receipt of (or prospect of receiving) payments described above are not
intended to, but may provide a financial intermediary and its salespersons
with an incentive to favor sales of Janus funds' shares over sales of other
mutual
Management of the Fund 37
funds (or non-mutual fund investments) with respect to which the financial
intermediary does not receive such payments or receives them in a lower
amount. These payment arrangements will not, however, change the price an
investor pays for shares or the amount that a Janus fund receives to invest
on behalf of the investor. You may wish to consider whether such arrangements
exist when evaluating any recommendations to purchase or sell shares of the
Fund.
MANAGEMENT EXPENSES
The Fund pays Janus Capital an investment advisory fee which is calculated
daily and paid monthly. The Fund's advisory agreement details the investment
advisory fee and other expenses that the Fund must pay.
The Fund incurs expenses not assumed by Janus Capital, including any transfer
agent and custodian fees and expenses, legal and auditing fees, printing and
mailing costs of sending reports and other information to existing
shareholders, and Independent Trustees' fees and expenses. The Fund is
subject to the following investment advisory fee schedule (expressed as an
annual rate).
<Table>
<Caption>
Average Daily Investment Advisory
Net Assets Fee (%)
Fund Name of Fund (annual rate)
- -------------------------------------------------------------------------------------------
Janus Orion Fund All Asset Levels 0.64
- -------------------------------------------------------------------------------------------
</Table>
A discussion regarding the basis for the Board of Trustees' approval of the
Fund's investment advisory agreement is included in the Fund's Statement of
Additional Information and will also be included in the annual and semiannual
reports to shareholders.
38 Janus Orion Fund prospectus
INVESTMENT PERSONNEL
PORTFOLIO MANAGER
RON SACHS
- --------------------------------------------------------------------------------
is Executive Vice President and Portfolio Manager of Janus Orion Fund,
which he has managed since its inception. He is also Portfolio Manager
of other Janus accounts. Mr. Sachs joined Janus Capital in 1996 as a
research analyst. Mr. Sachs holds a Bachelor's degree (cum laude) in
Economics from Princeton and a law degree from the University of
Michigan. Mr. Sachs has earned the right to use the Chartered Financial
Analyst designation.
Information about the Fund's investment personnel's compensation structure,
other accounts managed by the investment personnel, and the investment
personnel's range of ownership of securities in the Fund, is included in the
Fund's Statement of Additional Information.
Management of the Fund 39
OTHER INFORMATION
- --------------------------------------------------------------------------------
CLOSED FUND POLICIES
The Fund may discontinue sales of its shares to new investors if its
management and the Trustees believe that continued sales may adversely affect
the Fund's ability to achieve its investment objective. If sales of the Fund
are discontinued to new investors, it is expected that existing shareholders
invested in the Fund would be permitted to continue to purchase shares
through its existing Fund accounts and to reinvest any dividends or capital
gains distributions in such accounts, absent highly unusual circumstances. In
addition, it is expected that existing or new participants in
employer-sponsored retirement plans, including employees of Janus Capital
Group Inc. ("JCGI") and any of its subsidiaries covered under the JCGI
retirement plan, that currently offer the Fund as an investment option would
be able to direct contributions to the Fund through their plan, regardless of
whether they invested in such fund prior to its closing. In addition, in the
case of certain mergers or reorganizations, retirement plans would be able to
add a closed fund as an investment option and sponsors of certain wrap
programs with existing accounts in the Fund would be able to continue to
invest in the Fund on behalf of new customers. Such mergers, reorganizations,
acquisitions, or other business combinations are those in which one or more
companies involved in such transaction currently offers the Fund as an
investment option, and any company that as a result of such transaction
becomes affiliated with the company currently offering the Fund (as a parent
company, subsidiary, sister company, or otherwise). Such companies may
request to add the Fund as an investment option under its retirement plan. In
addition, new accounts may be permitted in the closed Fund for certain plans
and programs offered in connection with employer-sponsored retirement plans
where the retirement plan has an existing account in the closed Fund.
Requests will be reviewed by management on an individual basis, taking into
consideration whether the addition of the Fund may negatively impact existing
Fund shareholders. Janus Capital encourages its employees, particularly
members of the investment team, to own shares of the Janus funds.
Accordingly, upon prior approval of Janus Capital's senior management team,
members of the Janus investment team may open new accounts in a closed fund.
Additional information regarding general policies and exceptions can be found
in the closed funds' prospectuses.
PENDING LEGAL MATTERS
In the fall of 2003, the Securities and Exchange Commission ("SEC"), the
Office of the New York State Attorney General ("NYAG"), the Colorado Attorney
General ("COAG"), and the Colorado Division of Securities ("CDS") announced
that they were investigating alleged frequent trading practices in the mutual
fund industry. On August 18, 2004, Janus Capital announced that it had
reached final
40 Janus Orion Fund prospectus
settlements with the SEC, the NYAG, the COAG, and the CDS related to such
regulators' investigations into Janus Capital's frequent trading
arrangements.
A number of civil lawsuits were brought against Janus Capital and certain of
its affiliates, the Janus funds, and related entities and individuals based
on allegations similar to those announced by the above regulators and were
filed in several state and federal jurisdictions. Such lawsuits alleged a
variety of theories for recovery including, but not limited to, the federal
securities laws, other federal statutes (including ERISA), and various common
law doctrines. The Judicial Panel on Multidistrict Litigation transferred
these actions to the U.S. District Court for the District of Maryland (the
"Court") for coordinated proceedings. On September 29, 2004, five
consolidated amended complaints were filed in that Court that generally
include: (i) claims by a putative class of investors in the Janus funds
asserting claims on behalf of the investor class; (ii) derivative claims by
investors in the Janus funds ostensibly on behalf of the Janus funds; (iii)
claims on behalf of participants in the Janus 401(k) plan; (iv) claims
brought on behalf of shareholders of Janus Capital Group Inc. ("JCGI") on a
derivative basis against the Board of Directors of JCGI; and (v) claims by a
putative class of shareholders of JCGI asserting claims on behalf of the
shareholders. Each of the five complaints initially named JCGI and/or Janus
Capital as a defendant. In addition, the following were also named as
defendants in one or more of the actions: Janus Investment Fund ("JIF"),
Janus Aspen Series ("JAS"), Janus Adviser Series ("JAD"), Janus Distributors
LLC, Enhanced Investment Technologies, LLC ("INTECH"), Bay Isle Financial LLC
("Bay Isle"), Perkins, Wolf, McDonnell and Company, LLC ("Perkins"), the
Advisory Committee of the Janus 401(k) plan, and the current or former
directors of JCGI.
On August 25, 2005, the Court entered orders dismissing most of the claims
asserted against Janus Capital and its affiliates by fund investors (actions
(i) and (ii) described above), except certain claims under Section 10(b) of
the Securities Exchange Act of 1934 and under Section 36(b) of the Investment
Company Act of 1940. As a result, JCGI, Janus Capital, the Advisory Committee
of the Janus 401(k) plan, and the current or former directors of JCGI are the
remaining defendants in one or more of the actions. The complaint in the
401(k) plan class action (action (iii) described above) was voluntarily
dismissed, but was refiled using a new named plaintiff and asserting claims
similar to the initial complaint.
The Attorney General's Office for the State of West Virginia filed a separate
market timing related civil action against Janus Capital and several other
non-affiliated mutual fund companies, claiming violations under the West
Virginia Consumer Credit and Protection Act. The civil action requests
certain monetary penalties, among other relief. This action has been removed
to federal court and transferred to the Multidistrict Litigation case in the
U.S. District Court of
Other information 41
Baltimore, Maryland described above. In addition, the Auditor of the State of
West Virginia, in his capacity as securities commissioner, has issued an
order indicating an intent to initiate administrative proceedings against
most of the defendants in the market timing cases (including Janus Capital)
and seeking disgorgement and other monetary relief based on similar market
timing allegations.
In addition to the "market timing" actions described above, Janus Capital is
a defendant in a consolidated lawsuit in the U.S. District Court for the
District of Colorado challenging the investment advisory fees charged by
Janus Capital to certain Janus funds. The action was filed in 2004 by fund
investors asserting breach of fiduciary duty under Section 36(b) of the
Investment Company Act of 1940. The plaintiffs seek declaratory and
injunctive relief and an unspecified amount of damages.
In 2001, Janus Capital's predecessor was also named as a defendant in a class
action suit in the U.S. District Court for the Southern District of New York,
alleging that certain underwriting firms and institutional investors violated
antitrust laws in connection with initial public offerings. The U.S. District
Court dismissed the plaintiff's antitrust claims in November 2003, however,
the U.S. Court of Appeals vacated that decision and remanded it for further
proceedings.
Additional lawsuits may be filed against certain of the Janus funds, Janus
Capital, and related parties in the future. Janus Capital does not currently
believe that these pending actions will materially affect its ability to
continue providing services it has agreed to provide to the Janus funds.
DISTRIBUTION OF THE FUND
The Fund is distributed by Janus Distributors LLC, which is a member of the
National Association of Securities Dealers, Inc. ("NASD"). To obtain
information about NASD member firms and their associated persons, you may
contact NASD Regulation, Inc. at www.nasdr.com, or the Public Disclosure
Hotline at 800-289-9999. An investor brochure containing information
describing the Public Disclosure Program is available from NASD Regulation,
Inc.
42 Janus Orion Fund prospectus
DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DISTRIBUTIONS
To avoid taxation of the Fund, the Internal Revenue Code requires the Fund to
distribute all or substantially all of its net investment income and any net
capital gains realized on its investments at least annually. The Fund's
income from certain dividends, interest, and any net realized short-term
capital gains are paid to shareholders as ordinary income dividends. Certain
dividend income may be reported to shareholders as "qualified dividend
income," which is generally subject to reduced rates of taxation. Net
realized long-term capital gains are paid to shareholders as capital gains
distributions, regardless of how long you have held shares of the Fund.
Dividends and capital gains distributions are normally declared and
distributed in December. If necessary, dividends and net capital gains may be
distributed at other times as well.
HOW DISTRIBUTIONS AFFECT THE FUND'S NAV
Distributions are paid to shareholders as of the record date of a
distribution of the Fund, regardless of how long the shares have been held.
Undistributed dividends and net capital gains are included in the Fund's
daily NAV. The share price of the Fund drops by the amount of the
distribution, net of any subsequent market fluctuations. For example, assume
that on December 31, the Fund declared a dividend in the amount of $0.25 per
share. If the Fund's share price was $10.00 on December 30, the Fund's share
price on December 31 would be $9.75, barring market fluctuations. You should
be aware that distributions from a taxable mutual fund do not increase the
value of your investment and may create income tax obligations.
"BUYING A DIVIDEND"
If you purchase shares of the Fund just before a distribution, you will pay
the full price for the shares and receive a portion of the purchase price
back as a taxable distribution. This is referred to as "buying a dividend."
In the above example, if you bought shares on December 30, you would have
paid $10.00 per share. On December 31, the Fund would pay you $0.25 per share
as a dividend and your shares would now be worth $9.75 per share. Unless your
account is set up as a tax-deferred account, dividends paid to you would be
included in your gross income for tax purposes, even though you may not have
participated in the increase in NAV of the Fund, whether or not you
reinvested the dividends. Before buying shares of the Fund close to year-end,
you should consult with your tax adviser as to potential tax consequences of
any distributions that may be paid shortly after purchase.
Distributions and taxes 43
DISTRIBUTION OPTIONS
When you open an account it will automatically provide for reinvestment of
all distributions. If you have a non-retirement account, you may change your
distribution option at any time by logging on to www.janus.com, by calling a
Janus representative, or by writing the Fund at one of the addresses listed
in the Shareholder's Manual section of this Prospectus. The Fund offers the
following options:
REINVESTMENT OPTION. You may reinvest your income dividends and capital gains
distributions in additional shares.
CASH OPTION. You may receive your income dividends and capital gains
distributions in cash.
REINVEST AND CASH OPTION. You may receive either your income dividends or
capital gains distributions in cash and reinvest the other in additional
shares.
REDIRECT OPTION. You may direct your dividends or capital gains to purchase
shares of another Janus fund.
The Fund reserves the right to reinvest into your open non-retirement account
undeliverable and uncashed dividend and distribution checks that remain
outstanding for one year in shares of the Fund at the NAV next computed after
the check is cancelled. Subsequent distributions may also be reinvested.
TAXES
As with any investment, you should consider the tax consequences of investing
in the Fund. Any time you sell or exchange shares of a fund in a taxable
account, it is considered a taxable event. For federal income tax purposes,
an exchange is treated the same as a sale. Depending on the purchase price
and the sale price, you may have a gain or loss on the transaction; whether
long-term or short-term depends on how long you owned the shares. Any tax
liabilities generated by your transactions are your responsibility.
The following discussion does not apply to qualified tax-deferred accounts or
other non-taxable entities, nor is it a complete analysis of the federal
income tax implications of investing in the Fund. You should consult your own
tax adviser if you have any questions. Additionally, state or local taxes may
apply to your investment, depending upon the laws of your state of residence.
TAXES ON DISTRIBUTIONS
Dividends and distributions of the Fund are subject to federal income tax,
regardless of whether the distribution is made in cash or reinvested in
additional shares of the Fund. When gains from the sale of a security held by
the Fund are paid to shareholders, the rate at which the gain will be taxed
to shareholders
44 Janus Orion Fund prospectus
depends on the length of time the Fund held the security. In certain states,
a portion of the dividends and distributions (depending on the sources of the
Fund's income) may be exempt from state and local taxes. The Fund's dividends
and capital gains are distributed to (and may be taxable to) those persons
who are shareholders of the Fund at the record date of such payments. As a
result, although the Fund's total net income and net realized gain are the
results of its operations, the per share amount distributed or taxable to
shareholders is affected by the number of Fund shares outstanding at the
record date. Account tax information will be made available to shareholders
on or before January 31st of each year. Information regarding dividends and
distributions may also be reported to the Internal Revenue Service.
The Fund may be required to withhold U.S. federal income tax on all taxable
distributions and redemptions payable to shareholders who fail to provide
their correct taxpayer identification number, fail to make certain required
certifications, or who have been notified by the Internal Revenue Service
that they are subject to backup withholding. The current backup withholding
rate is applied.
TAXATION OF THE FUND
Dividends, interest, and some capital gains received by the Fund on foreign
securities may be subject to foreign tax withholding or other foreign taxes.
If the Fund is eligible, it may from year to year make the election permitted
under Section 853 of the Internal Revenue Code to pass through such taxes to
shareholders as a foreign tax credit. If such an election is not made, any
foreign taxes paid or accrued will represent an expense to the Fund.
The Fund does not expect to pay any federal income or excise taxes because it
intends to meet certain requirements of the Internal Revenue Code. It is
important that the Fund meet these requirements so that any earnings on your
investment will not be taxed twice.
Distributions and taxes 45
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years through October 31st of each
fiscal year shown. Items "Net asset value, beginning of period" through "Net
asset value, end of period" reflect financial results for a single Fund
share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the Fund (assuming reinvestment of all
dividends and distributions). This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the Fund's financial
statements, is included in the Annual Report, which is available upon
request, and incorporated by reference into the Statement of Additional
Information.
<Table>
<Caption>
JANUS ORION FUND
- -------------------------------------------------------------------------------------------------------------
Years ended October 31
2005 2004 2003 2002 2001
NET ASSET VALUE, BEGINNING OF PERIOD $6.25 $5.64 $4.33 $5.21 $8.81
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) 0.03 --(1) --(1) --(1) --(1)
Net gain/(loss) on securities (both realized
and unrealized) 1.52 0.61 1.31 (0.88) (3.58)
Total from investment operations 1.55 0.61 1.31 (0.88) (3.58)
LESS DISTRIBUTIONS AND OTHER:
Dividends (from net investment income) -- -- -- -- (0.02)
Distributions (from capital gains) -- -- -- -- --
Payment from affiliate -- --(2) -- -- --
Total distributions and other -- -- -- -- (0.02)
NET ASSET VALUE, END OF PERIOD $7.80 $6.25 $5.64 $4.33 $5.21
Total return 24.80% 10.82%(3) 29.95% (16.70)% (40.69)%
Net assets, end of period (in millions) $691 $530 $514 $421 $602
Average net assets for the period (in
millions) $590 $540 $431 $562 $762
Ratio of gross expenses to average net
assets(4) 1.02% 1.09% 1.10% 1.09% 1.06%
Ratio of net expenses to average net assets 1.01% 1.08% 1.08% 1.04% 1.03%
Ratio of net investment income/(loss) to
average net assets 0.52% (0.05)% (0.43)% (0.30)% (0.06)%
Portfolio turnover rate 68% 69% 72% 161% 206%
- -------------------------------------------------------------------------------------------------------------
</Table>
(1) Net investment income/(loss) aggregated less than $0.01 on a per share basis
for the fiscal year end.
(2) Payment from affiliate aggregated less than $0.01 on a per share basis for
the fiscal year end.
(3) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss
on a transaction resulting from certain trading, pricing, and/or shareholder
activity errors, which otherwise would have reduced total return by less
than 0.01%.
(4) The effect of non-recurring costs assumed by Janus Capital is included in
the ratio of gross expenses to average net assets and was less than 0.01%.
46 Janus Orion Fund prospectus
GLOSSARY OF INVESTMENT TERMS
- --------------------------------------------------------------------------------
This glossary provides a more detailed description of some of the types of
securities, investment strategies, and other instruments in which the Fund
may invest. The Fund may invest in these instruments to the extent permitted
by its investment objective and policies. The Fund is not limited by this
discussion and may invest in any other types of instruments not precluded by
the policies discussed elsewhere in this Prospectus.
I. EQUITY AND DEBT SECURITIES
BANK LOANS include institutionally-traded floating and fixed-rate debt
securities generally acquired as a participation interest in a loan
originated by a lender or other financial institution, or as an assignment of
a portion of a loan previously attributable to a different lender.
BONDS are debt securities issued by a company, municipality, government, or
government agency. The issuer of a bond is required to pay the holder the
amount of the loan (or par value of the bond) at a specified maturity and to
make scheduled interest payments.
CERTIFICATES OF PARTICIPATION ("COPS") are certificates representing an
interest in a pool of securities. Holders are entitled to a proportionate
interest in the underlying securities. Municipal lease obligations are often
sold in the form of COPs. See "Municipal lease obligations" below.
COMMERCIAL PAPER is a short-term debt obligation with a maturity ranging from
1 to 270 days issued by banks, corporations, and other borrowers to investors
seeking to invest idle cash. A Fund may purchase commercial paper issued in
private placements under Section 4(2) of the Securities Act of 1933.
COMMON STOCKS are equity securities representing shares of ownership in a
company and usually carry voting rights and earn dividends. Unlike preferred
stock, dividends on common stock are not fixed but are declared at the
discretion of the issuer's board of directors.
CONVERTIBLE SECURITIES are preferred stocks or bonds that pay a fixed
dividend or interest payment and are convertible into common stock at a
specified price or conversion ratio.
DEBT SECURITIES are securities representing money borrowed that must be
repaid at a later date. Such securities have specific maturities and usually
a specific rate of interest or an original purchase discount.
DEPOSITARY RECEIPTS are receipts for shares of a foreign-based corporation
that entitle the holder to dividends and capital gains on the underlying
security. Receipts include those issued by domestic banks (American
Depositary Receipts), foreign banks (Global or European Depositary Receipts),
and broker-dealers (depositary shares).
Glossary of investment terms 47
EQUITY SECURITIES generally include domestic and foreign common stocks;
preferred stocks; securities convertible into common stocks or preferred
stocks; warrants to purchase common or preferred stocks; and other securities
with equity characteristics.
EXCHANGE-TRADED FUNDS are index-based investment companies which hold
substantially all of their assets in securities with equity characteristics.
As a shareholder of another investment company, a Fund would bear its pro
rata portion of the other investment company's expenses, including advisory
fees, in addition to the expenses the Fund bears directly in connection with
its own operations.
FIXED-INCOME SECURITIES are securities that pay a specified rate of return.
The term generally includes short- and long-term government, corporate, and
municipal obligations that pay a specified rate of interest, dividends, or
coupons for a specified period of time. Coupon and dividend rates may be
fixed for the life of the issue or, in the case of adjustable and floating
rate securities, for a shorter period.
HIGH-YIELD/HIGH-RISK BONDS are bonds that are rated below investment grade by
the primary rating agencies (i.e., BB+ or lower by Standard & Poor's and
Fitch, and Ba or lower by Moody's). Other terms commonly used to describe
such bonds include "lower rated bonds," "non-investment grade bonds," and
"junk bonds."
INDUSTRIAL DEVELOPMENT BONDS are revenue bonds that are issued by a public
authority but which may be backed only by the credit and security of a
private issuer and may involve greater credit risk. See "Municipal
securities" below.
MORTGAGE- AND ASSET-BACKED SECURITIES are shares in a pool of mortgages or
other debt. These securities are generally pass-through securities, which
means that principal and interest payments on the underlying securities (less
servicing fees) are passed through to shareholders on a pro rata basis. These
securities involve prepayment risk, which is the risk that the underlying
mortgages or other debt may be refinanced or paid off prior to their
maturities during periods of declining interest rates. In that case, a Fund
may have to reinvest the proceeds from the securities at a lower rate.
Potential market gains on a security subject to prepayment risk may be more
limited than potential market gains on a comparable security that is not
subject to prepayment risk.
MORTGAGE DOLLAR ROLLS are transactions in which a Fund sells a
mortgage-related security, such as a security issued by GNMA, to a dealer and
simultaneously agrees to purchase a similar security (but not the same
security) in the future at a pre-determined price. A "dollar roll" can be
viewed as a collateralized borrowing in which a Fund pledges a
mortgage-related security to a dealer to obtain cash.
48 Janus Orion Fund prospectus
MUNICIPAL LEASE OBLIGATIONS are revenue bonds backed by leases or installment
purchase contracts for property or equipment. Lease obligations may not be
backed by the issuing municipality's credit and may involve risks not
normally associated with general obligation bonds and other revenue bonds.
For example, their interest may become taxable if the lease is assigned and
the holders may incur losses if the issuer does not appropriate funds for the
lease payments on an annual basis, which may result in termination of the
lease and possible default.
MUNICIPAL SECURITIES are bonds or notes issued by a U.S. state or political
subdivision. A municipal security may be a general obligation backed by the
full faith and credit (i.e., the borrowing and taxing power) of a
municipality or a revenue obligation paid out of the revenues of a designated
project, facility, or revenue source.
PASS-THROUGH SECURITIES are shares or certificates of interest in a pool of
debt obligations that have been repackaged by an intermediary, such as a bank
or broker-dealer.
PASSIVE FOREIGN INVESTMENT COMPANIES (PFICS) are any foreign corporations
which generate certain amounts of passive income or hold certain amounts of
assets for the production of passive income. Passive income includes
dividends, interest, royalties, rents, and annuities. To avoid taxes and
interest that a Fund must pay if these investments are profitable, the Fund
may make various elections permitted by the tax laws. These elections could
require that a Fund recognize taxable income, which in turn must be
distributed, before the securities are sold and before cash is received to
pay the distributions.
PAY-IN-KIND BONDS are debt securities that normally give the issuer an option
to pay cash at a coupon payment date or give the holder of the security a
similar bond with the same coupon rate and a face value equal to the amount
of the coupon payment that would have been made.
PREFERRED STOCKS are equity securities that generally pay dividends at a
specified rate and have preference over common stock in the payment of
dividends and liquidation. Preferred stock generally does not carry voting
rights.
REAL ESTATE INVESTMENT TRUST (REIT) is an investment trust that operates
through the pooled capital of many investors who buy its shares. Investments
are in direct ownership of either income property or mortgage loans.
RULE 144A SECURITIES are securities that are not registered for sale to the
general public under the Securities Act of 1933, but that may be resold to
certain institutional investors.
STANDBY COMMITMENT is a right to sell a specified underlying security or
securities within a specified period of time and at an exercise price equal
to the
Glossary of investment terms 49
amortized cost of the underlying security or securities plus accrued
interest, if any, at the time of exercise, that may be sold, transferred, or
assigned only with the underlying security or securities. A standby
commitment entitles the holder to receive same day settlement, and will be
considered to be from the party to whom the investment company will look for
payment of the exercise price.
STEP COUPON BONDS are high-quality issues with above-market interest rates
and a coupon that increases over the life of the bond. They may pay monthly,
semiannual, or annual interest payments. On the date of each coupon payment,
the issuer decides whether to call the bond at par, or whether to extend it
until the next payment date at the new coupon rate.
STRIP BONDS are debt securities that are stripped of their interest (usually
by a financial intermediary) after the securities are issued. The market
value of these securities generally fluctuates more in response to changes in
interest rates than interest-paying securities of comparable maturity.
TENDER OPTION BONDS are relatively long-term bonds that are coupled with the
option to tender the securities to a bank, broker-dealer, or other financial
institution at periodic intervals and receive the face value of the bond.
This investment structure is commonly used as a means of enhancing a
security's liquidity.
U.S. GOVERNMENT SECURITIES include direct obligations of the U.S. Government
that are supported by its full faith and credit. Treasury bills have initial
maturities of less than one year, Treasury notes have initial maturities of
one to ten years, and Treasury bonds may be issued with any maturity but
generally have maturities of at least ten years. U.S. Government securities
also include indirect obligations of the U.S. Government that are issued by
federal agencies and government sponsored entities. Unlike Treasury
securities, agency securities generally are not backed by the full faith and
credit of the U.S. Government. Some agency securities are supported by the
right of the issuer to borrow from the Treasury, others are supported by the
discretionary authority of the U.S. Government to purchase the agency's
obligations, and others are supported only by the credit of the sponsoring
agency.
VARIABLE AND FLOATING RATE SECURITIES have variable or floating rates of
interest and, under certain limited circumstances, may have varying principal
amounts. Variable and floating rate securities pay interest at rates that are
adjusted periodically according to a specified formula, usually with
reference to some interest rate index or market interest rate (the
"underlying index"). The floating rate tends to decrease the security's price
sensitivity to changes in interest rates.
WARRANTS are securities, typically issued with preferred stock or bonds,
which give the holder the right to buy a proportionate amount of common stock
at a specified price. The specified price is usually higher than the market
price at the
50 Janus Orion Fund prospectus
time of issuance of the warrant. The right may last for a period of years or
indefinitely.
ZERO COUPON BONDS are debt securities that do not pay regular interest at
regular intervals, but are issued at a discount from face value. The discount
approximates the total amount of interest the security will accrue from the
date of issuance to maturity. The market value of these securities generally
fluctuates more in response to changes in interest rates than interest-paying
securities.
II. FUTURES, OPTIONS, AND OTHER DERIVATIVES
CREDIT DEFAULT SWAPS are a specific kind of counterparty agreement that
allows 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 of regular periodic payments.
EQUITY-LINKED STRUCTURED NOTES are debt securities which combine the
characteristics of common stock and the sale of an option. The return
component is based on the performance of a single equity security, a basket
of equity securities, or an equity index and the sale of an option which is
recognized as income. Equity-linked structured notes are typically offered in
limited transactions to financial institutions by investment banks. There is
no guaranteed return of principal with these securities. The appreciation
potential of these securities is limited by a maximum payment or call right
and can be influenced by many unpredictable factors.
FORWARD CONTRACTS are contracts to purchase or sell a specified amount of a
financial instrument for an agreed upon price at a specified time. Forward
contracts are not currently exchange-traded and are typically negotiated on
an individual basis. A Fund may enter into forward currency contracts for
investment purposes or to hedge against declines in the value of securities
denominated in, or whose value is tied to, a currency other than the U.S.
dollar or to reduce the impact of currency appreciation on purchases of such
securities. It may also enter into forward contracts to purchase or sell
securities or other financial indices.
FUTURES CONTRACTS are contracts that obligate the buyer to receive and the
seller to deliver an instrument or money at a specified price on a specified
date. A Fund may buy and sell futures contracts on foreign currencies,
securities, and financial indices including indices of U.S. Government,
foreign government, equity, or fixed-income securities. A Fund may also buy
options on futures contracts. An option on a futures contract gives the buyer
the right, but not the obligation, to buy or sell a futures contract at a
specified price on or before a specified date. Futures contracts and options
on futures are standardized and traded on designated exchanges.
Glossary of investment terms 51
INDEXED/STRUCTURED SECURITIES are typically short- to intermediate-term debt
securities whose value at maturity or interest rate is linked to currencies,
interest rates, equity securities, indices, commodity prices, or other
financial indicators. Such securities may be positively or negatively indexed
(e.g., their value may increase or decrease if the reference index or
instrument appreciates). Indexed/ structured securities may have return
characteristics similar to direct investments in the underlying instruments
and may be more volatile than the underlying instruments. A Fund bears the
market risk of an investment in the underlying instruments, as well as the
credit risk of the issuer.
INTEREST RATE SWAPS involve the exchange by two parties of their respective
commitments to pay or receive interest (e.g., an exchange of floating rate
payments for fixed rate payments).
INVERSE FLOATERS are debt instruments whose interest rate bears an inverse
relationship to the interest rate on another instrument or index. For
example, upon reset, the interest rate payable on the inverse floater may go
down when the underlying index has risen. Certain inverse floaters may have
an interest rate reset mechanism that multiplies the effects of change in the
underlying index. Such mechanism may increase the volatility of the
security's market value.
OPTIONS are the right, but not the obligation, to buy or sell a specified
amount of securities or other assets on or before a fixed date at a
predetermined price. A Fund may purchase and write put and call options on
securities, securities indices, and foreign currencies. A Fund may purchase
or write such options individually or in combination.
PARTICIPATORY NOTES are derivative securities which are linked to the
performance of an underlying Indian security and which allow investors to
gain market exposure to Indian securities without trading directly in the
local Indian market.
III. OTHER INVESTMENTS, STRATEGIES, AND/OR TECHNIQUES
REPURCHASE AGREEMENTS involve the purchase of a security by a Fund and a
simultaneous agreement by the seller (generally a bank or dealer) to
repurchase the security from the Fund at a specified date or upon demand.
This technique offers a method of earning income on idle cash. These
securities involve the risk that the seller will fail to repurchase the
security, as agreed. In that case, a Fund will bear the risk of market value
fluctuations until the security can be sold and may encounter delays and
incur costs in liquidating the security.
REVERSE REPURCHASE AGREEMENTS involve the sale of a security by a Fund to
another party (generally a bank or dealer) in return for cash and an
agreement by the Fund to buy the security back at a specified price and time.
This technique will be used primarily to provide cash to satisfy unusually
high redemption requests, or for other temporary or emergency purposes.
52 Janus Orion Fund prospectus
SHORT SALES in which a Fund may engage may be of two types, short sales
"against the box" or "naked" short sales. Short sales against the box involve
selling either a security that a Fund owns, or a security equivalent in kind
or amount to the security sold short that the Fund has the right to obtain,
for delivery at a specified date in the future. Naked short sales involve
selling a security that a Fund borrows and does not own. A Fund may enter
into a short sale to hedge against anticipated declines in the market price
of a security or to reduce portfolio volatility. If the value of a security
sold short increases prior to the scheduled delivery date, the Fund loses the
opportunity to participate in the gain. For naked short sales, the Fund will
incur a loss if the value of a security increases during this period because
it will be paying more for the security than it has received from the
purchaser in the short sale. If the price declines during this period, a Fund
will realize a short-term capital gain. Although a Fund's potential for gain
as a result of a short sale is limited to the price at which it sold the
security short less the cost of borrowing the security, its potential for
loss is theoretically unlimited because there is no limit to the cost of
replacing the borrowed security.
WHEN-ISSUED, DELAYED DELIVERY, AND FORWARD COMMITMENT TRANSACTIONS generally
involve the purchase of a security with payment and delivery at some time in
the future - i.e., beyond normal settlement. A Fund does not earn interest on
such securities until settlement and bears the risk of market value
fluctuations in between the purchase and settlement dates. New issues of
stocks and bonds, private placements, and U.S. Government securities may be
sold in this manner.
Glossary of investment terms 53
You can make inquiries and request other
information, including a Statement of Additional
Information, Annual Report, or Semiannual Report,
free of charge, by contacting a Janus
representative at 1-800-525-3713. The Fund's
Statement of Additional Information and most
recent Annual and Semiannual Reports are also
available, free of charge, on www.janus.com.
Additional information about the Fund's
investments is available in the Fund's Annual and
Semiannual Reports. In the Fund's Annual and
Semiannual Reports, you will find a discussion of
the market conditions and investment strategies
that significantly affected the Fund's performance
during its last fiscal period. Other information
is also available from financial intermediaries
that sell shares of the Fund.
The Statement of Additional Information provides
detailed information about the Fund and is
incorporated into this Prospectus by reference.
You may review and copy information about the Fund
(including the Fund's Statement of Additional
Information) at the Public Reference Room of the
SEC or get text only copies, after paying a
duplicating fee, by sending an electronic request
by e-mail to publicinfo@sec.gov or by writing to
or calling the Public Reference Room, Washington,
D.C. 20549-0102 (1-202-942-8090). Information on
the operation of the Public Reference Room may
also be obtained by calling this number. You may
also obtain reports and other information about
the Fund from the Electronic Data Gathering
Analysis and Retrieval (EDGAR) Database on the
SEC's website at http://www.sec.gov.
(JANUS LOGO)
www.janus.com
PO Box 173375
Denver, CO 80217-3375
1-800-525-3713
The Trust's Investment Company Act File No. is 811-1879.
February 28, 2006
JANUS INVESTMENT FUND
JANUS ORION FUND
Prospectus
The Securities and Exchange Commission has not approved or disapproved
of these securities or passed on the accuracy or adequacy of this
Prospectus. Any representation to the contrary is a criminal offense.
This Prospectus is for those shareholders investing with the Fund
through financial intermediaries.
Janus Investment Fund
Janus Olympus Fund
Janus Orion Fund
Supplement dated July 11, 2006
to Currently Effective Prospectuses
At a special meeting held on July 5, 2006, the Board of Trustees of Janus
Investment Fund approved an Agreement and Plan of Reorganization, which provides
for the merger of Janus Olympus Fund into Janus Orion Fund (the "Merger"). The
proposed Agreement and Plan of Reorganization (the "Plan") is subject to
approval by shareholders of Janus Olympus Fund at a Special Meeting of
Shareholders to be held on October 2, 2006 (or any adjournments or postponements
thereof).
If shareholders of Janus Olympus Fund approve the Plan, Janus Olympus Fund will
transfer its assets and liabilities to Janus Orion Fund in exchange for shares
of Janus Orion Fund. As of the effective date of the Merger, shareholders of
Janus Olympus Fund will receive shares of Janus Orion Fund equal in value to
their then current holdings in Janus Olympus Fund. The Merger is expected to be
effective on or about October 20, 2006. After the Merger is complete, Janus
Olympus Fund will be liquidated.
Effective at the close of trading on July 14, 2006, Janus Olympus Fund will be
closed to new investors pending approval of the Merger. Existing Janus Olympus
Fund shareholders may continue to purchase shares in their existing accounts
until at least the date of shareholder approval.
Janus Olympus Fund shareholders as of July 14, 2006 will receive the Proxy
Statement/Prospectus providing notice of the Special Meeting of Shareholders and
details regarding the Merger. If you purchased shares of Janus Olympus Fund
through a financial intermediary, your financial intermediary will generally be
forwarding these materials to you and requesting your vote. The Proxy Statement/
Prospectus will also be available on the SEC's website at www.sec.gov and at
janus.com or by calling Janus at 1-877-33JANUS.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<Table>
RISK/RETURN SUMMARY
Janus Orion Fund......................................... 2
FEES AND EXPENSES........................................... 5
PRINCIPAL INVESTMENT STRATEGIES AND RISKS
Frequently asked questions about principal investment
strategies............................................... 6
Risks.................................................... 7
Frequently asked questions about certain risks........... 8
General portfolio policies............................... 11
SHAREHOLDER'S GUIDE
Pricing of fund shares................................... 16
Purchases................................................ 17
Tax-deferred accounts.................................... 18
Exchanges................................................ 19
Redemptions.............................................. 19
Excessive trading........................................ 21
Shareholder account policies............................. 25
MANAGEMENT OF THE FUND
Investment adviser....................................... 26
Management expenses...................................... 27
Investment personnel..................................... 28
OTHER INFORMATION........................................... 29
DISTRIBUTIONS AND TAXES..................................... 32
FINANCIAL HIGHLIGHTS........................................ 35
GLOSSARY OF INVESTMENT TERMS................................ 36
</Table>
Table of contents 1
RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------
JANUS ORION FUND
Janus Orion Fund (the "Fund") is designed for long-term investors who
primarily seek growth of capital and who can tolerate the greater risks
associated with common stock investments.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
JANUS ORION FUND seeks long-term growth of capital.
The Fund's Trustees may change this objective or the Fund's principal
investment strategies without a shareholder vote. If there is a material
change to the Fund's objective or principal investment strategies, you should
consider whether the Fund remains an appropriate investment for you. There is
no guarantee that the Fund will meet its objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund pursues its objective by normally investing primarily in a core
group of 20-30 domestic and foreign common stocks selected for their growth
potential. The Fund may invest in companies of any size, from larger, well-
established companies to smaller, emerging growth companies.
The portfolio manager applies a "bottom up" approach in choosing investments.
In other words, the portfolio manager looks at companies one at a time to
determine if a company is an attractive investment opportunity and if it is
consistent with the Fund's investment policies. If the portfolio manager is
unable to find such investments, the Fund's uninvested assets may be held in
cash or similar investments, subject to the Fund's specific investment
policies.
Within the parameters of its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities, which may include
investments in emerging markets. The Fund will limit its investment in high-
yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net
assets.
MAIN INVESTMENT RISKS
The biggest risk is that the Fund's returns may vary, and you could lose
money. The Fund invests primarily in common stocks, which tend to be more
volatile than many other investment choices.
The value of the Fund's portfolio may decrease if the value of an individual
company or multiple companies in the portfolio decreases. The value of the
Fund's portfolio could also decrease if the stock market goes down regardless
of how well the individual companies perform. If the value of the Fund's
portfolio decreases, the Fund's net asset value ("NAV") will also decrease,
which means if you sell your shares in the Fund you may lose money.
2 Janus Orion Fund prospectus
The Fund is classified as nondiversified. This means it may hold larger
positions in a smaller number of securities than a fund that is classified as
diversified. As a result, a single security's increase or decrease in value
may have a greater impact on the Fund's NAV and total return.
The Fund may have significant exposure to foreign markets, including emerging
markets. As a result, its returns and NAV may be affected to a large degree
by fluctuations in currency exchange rates or political or economic
conditions in a particular country. A market swing in one or more countries
or regions where the Fund has invested a significant amount of its assets may
have a greater effect on the Fund's performance than it would in a more
geographically diversified portfolio. The Fund's investments in emerging
market countries may involve risks greater than, or in addition to, the risks
of investing in more developed countries. As of October 31, 2005,
approximately 13.7% of the Fund's investments were in emerging markets.
To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV
may be affected by factors such as economic changes, political changes, or
developments specific to the company that issued the bond.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
PERFORMANCE INFORMATION
The following information provides some indication of the risks of investing
in the Fund by showing how the Fund's performance has varied over time. The
bar chart depicts the change in performance from year to year during the
periods indicated. The table compares the Fund's average annual returns for
the periods indicated to broad-based securities market indices. The indices
are not available for direct investment.
Risk/return summary 3
JANUS ORION FUND
<Table>
Annual returns for periods ended 12/31
(14.69)% (29.77)% 43.81% 14.90% 20.93%
2001 2002 2003 2004 2005
Best Quarter: 2nd-2003 23.59% Worst Quarter: 1st-2001 (22.54)%
</Table>
<Table>
<Caption>
Average annual total return for periods ended 12/31/05
------------------------------------------------------
Since Inception
1 year 5 years (6/30/00)
Janus Orion Fund
Return Before Taxes 20.93% 3.67% (3.08)%
Return After Taxes on Distributions 20.71% 3.63% (3.13)%
Return After Taxes on Distributions and Sale of
Fund Shares(1) 13.70% 3.13% (2.62)%
Russell 3000(R) Growth Index(2) 5.17% (3.15)% (7.91)%
(reflects no deduction for expenses, fees, or
taxes)
S&P 500(R) Index(3) 4.91% 0.54% (1.16)%
(reflects no deduction for expenses, fees, or
taxes)
--------------------------------
</Table>
(1) If the Fund incurs a loss, which generates a tax benefit, the Return
After Taxes on Distributions and Sale of Fund Shares may exceed the
Fund's other return figures.
(2) The Russell 3000(R) Growth Index measures the performance of those
Russell 3000(R) Index companies with higher price-to-book ratios and
higher forecasted growth values. The stocks in this index are also
members of either the Russell 1000(R) Growth or the Russell 2000(R)
Growth indices.
(3) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500
stocks, a widely recognized, unmanaged index of common stock prices.
After-tax returns are calculated using the historically highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your individual tax situation
and may differ from those shown in the preceding table. The after-tax return
information shown above does not apply to Fund shares held through a
tax-deferred account, such as a 401(k) plan or IRA.
The Fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
4 Janus Orion Fund prospectus
FEES AND EXPENSES
The following table describes the shareholder fees and annual fund operating
expenses that you may pay if you buy and hold shares of the Fund. All of the
fees and expenses shown were determined based on net assets as of the fiscal
year ended October 31, 2005.
SHAREHOLDER FEES are those paid directly from your investment and may include
sales loads, redemption fees, or exchange fees. The Fund is a no-load
investment, so you will generally not pay any shareholder fees when you buy
or sell shares of the Fund.
ANNUAL FUND OPERATING EXPENSES are paid out of the Fund's assets and include
fees for portfolio management, maintenance of shareholder accounts,
shareholder servicing, accounting, and other services. You do not pay these
fees directly but, as the example shows, these costs are borne indirectly by
all shareholders.
<Table>
<Caption>
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
Management Other Total Annual Fund
Fee(1) Expenses Operating Expenses
Janus Orion Fund 0.64% 0.38% 1.02%
</Table>
(1) The "Management Fee" is the investment advisory fee paid by the Fund to
Janus Capital.
EXAMPLE:
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds. The example assumes that you
invest $10,000 in the Fund for the time periods indicated and then redeem all
of your shares at the end of those periods. The example also assumes that your
investment has a 5% return each year and that the Fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based upon
these assumptions your costs would be as follows:
<Table>
<Caption>
1 Year 3 Years 5 Years 10 Years
--------------------------------------
Janus Orion Fund $ 104 $ 325 $ 563 $ 1,248
</Table>
Risk/return summary 5
PRINCIPAL INVESTMENT STRATEGIES AND RISKS
- --------------------------------------------------------------------------------
This section takes a closer look at the Fund's principal investment
strategies and certain risks of investing in the Fund. Strategies and
policies that are noted as "fundamental" cannot be changed without a
shareholder vote. Other, non-fundamental strategies and policies can be
changed by the Trustees without prior notice to shareholders.
Please carefully review the "Risks" section of this Prospectus for a
discussion of risks associated with certain investment techniques. We have
also included a "Glossary of Investment Terms" with descriptions of
investment terms used throughout this Prospectus.
FREQUENTLY ASKED QUESTIONS ABOUT PRINCIPAL INVESTMENT STRATEGIES
The following questions and answers are designed to help you better
understand the Fund's principal investment strategies.
1. HOW ARE COMMON STOCKS SELECTED?
Unless its investment objective or policies prescribe otherwise, the Fund may
invest substantially all of its assets in common stocks if the investment
personnel believe that common stocks will appreciate in value. The investment
personnel generally take a "bottom up" approach to selecting companies. This
means that they seek to identify individual companies with earnings growth
potential that may not be recognized by the market at large. The investment
personnel make this assessment by looking at companies one at a time,
regardless of size, country of organization, place of principal business
activity, or other similar selection criteria. The Fund may sell a holding
if, among other things, the security reaches the investment personnel's price
target, if the company has a deterioration of fundamentals such as failing to
meet key operating benchmarks, or if the investment personnel find a better
investment opportunity. The Fund may also sell a holding to meet redemptions.
Realization of income is not a significant consideration when choosing
investments for the Fund. Income realized on the Fund's investments may be
incidental to its objective.
2. ARE THE SAME CRITERIA USED TO SELECT FOREIGN SECURITIES?
Generally, yes. The investment personnel seek companies that meet their
selection criteria, regardless of where a company is located. Foreign
securities are generally selected on a stock-by-stock basis without regard to
any defined allocation among countries or geographic regions. However,
certain factors such as expected levels of inflation, government policies
influencing business conditions, the outlook for currency relationships, and
prospects for economic growth among countries, regions, or geographic areas
may warrant greater consideration in selecting foreign securities. There are
no limitations on the
6 Janus Orion Fund prospectus
countries in which the Fund may invest and the Fund may at times have
significant foreign exposure.
3. WHAT DOES "MARKET CAPITALIZATION" MEAN?
Market capitalization is the most commonly used measure of the size and value
of a company. It is computed by multiplying the current market price of a
share of the company's stock by the total number of its shares outstanding.
The Fund does not emphasize investments in companies of any particular size.
RISKS
Because the Fund may invest substantially all of its assets in common stocks,
the main risk is the risk that the value of the stocks it holds might
decrease in response to the activities of an individual company or in
response to general market and/or economic conditions. If this occurs, the
Fund's share price may also decrease. The Fund's performance may also be
significantly affected, positively or negatively, by certain types of
investments, such as foreign securities, derivative investments,
non-investment grade bonds, initial public offerings ("IPOs"), or companies
with relatively small market capitalizations. IPOs and other types of
investments may have a magnified performance impact on a Fund with a small
asset base. A Fund may not experience similar performance as its assets grow.
Janus Capital is the adviser to the Fund and the Janus Smart Portfolios (each
of which is a "fund of funds" that primarily invests in other Janus Capital
mutual funds). Because Janus Capital is the adviser to the Janus Smart
Portfolios and the funds, it is subject to certain potential conflicts of
interest when allocating the assets of the Janus Smart Portfolios among such
funds. Purchases and redemptions of Fund shares by a Janus Smart Portfolio
due to reallocations or rebalancings may result in the Fund having to sell
securities or invest cash when it otherwise would not do so. Such
transactions could accelerate the realization of taxable income if sales of
securities resulted in gains and could also increase the Fund's transaction
costs. Large redemptions by a Janus Smart Portfolio may cause the Fund's
expenses to increase due to a resulting smaller asset base. In addition, the
Janus Smart Portfolios' portfolio manager, who also serves the role of
Director of Risk Management and Performance of Janus Capital, has regular and
continuous access to the holdings of the Fund as well as knowledge of, and
potential impact on, investment strategies and techniques of the Fund. Janus
Capital believes these potential conflicts may be mitigated through its
compliance monitoring, including that of asset allocations by the portfolio
manager. In addition, Janus Capital has retained an independent consultant to
provide research and consulting services with respect to asset allocation and
investments for the Janus Smart Portfolios.
Principal investment strategies and risks 7
The officers and Trustees of the Fund may also serve as officers and Trustees
of the Janus Smart Portfolios. Conflicts may arise as the officers and
Trustees seek to fulfill their fiduciary responsibilities to both the Janus
Smart Portfolios and the Fund. The Trustees intend to address any such
conflicts as deemed appropriate.
Janus Capital manages accounts which engage in short sales. The simultaneous
management of long and short portfolios creates potential conflicts of
interest, including the risk that short sale activity could adversely affect
the market value of long positions (and vice versa), the risk arising from
sequential orders in long and short positions, and the risks associated with
receiving opposing orders at the same time.
FREQUENTLY ASKED QUESTIONS ABOUT CERTAIN RISKS
The following questions and answers are designed to help you better
understand some of the risks of investing in the Fund.
1. HOW DOES THE FUND'S NONDIVERSIFICATION CLASSIFICATION AFFECT ITS RISK
PROFILE?
Diversification is a way to reduce risk by investing in a broad range of
stocks or other securities. A fund that is classified as "nondiversified" has
the ability to take larger positions in a smaller number of issuers than a
fund that is classified as "diversified." This gives a nondiversified fund
more flexibility to focus its investments in the most attractive companies
identified by the investment personnel. However, because the appreciation or
depreciation of a single stock may have a greater impact on the NAV of a
nondiversified fund, its share price can be expected to fluctuate more than a
comparable diversified fund. This fluctuation, if significant, may affect the
performance of the Fund. Since the Fund normally invests primarily in a core
portfolio of 20-30 common stocks, this risk may be increased.
2. WHAT IS "INDUSTRY RISK?"
Industry risk is the possibility that a group of related stocks will decline
in price due to industry-specific developments. Companies in the same or
similar industries may share common characteristics and are more likely to
react similarly to industry-specific market or economic developments. The
Fund's investments, if any, in multiple companies in a particular industry
increase the Fund's exposure to industry risk.
3. HOW COULD THE FUND'S INVESTMENTS IN FOREIGN SECURITIES AFFECT ITS
PERFORMANCE?
Unless otherwise limited by its specific investment policies, the Fund may
invest without limit in foreign securities either indirectly (e.g.,
depositary receipts) or directly in foreign markets, including emerging
markets. Investments in foreign securities, including those of foreign
governments, may involve greater risks than investing in domestic securities
because the Fund's performance may depend on
8 Janus Orion Fund prospectus
factors other than the performance of a particular company. These factors
include:
- CURRENCY RISK. As long as the Fund holds a foreign security, its value will
be affected by the value of the local currency relative to the U.S. dollar.
When the Fund sells a foreign denominated security, its value may be worth
less in U.S. dollars even if the security increases in value in its home
country. U.S. dollar-denominated securities of foreign issuers may also be
affected by currency risk due to the overall impact of exposure to the
issuer's local currency.
- POLITICAL AND ECONOMIC RISK. Foreign investments may be subject to
heightened political and economic risks, particularly in emerging markets
which may have relatively unstable governments, immature economic
structures, national policies restricting investments by foreigners,
different legal systems, and economies based on only a few industries. In
some countries, there is the risk that the government may take over the
assets or operations of a company or that the government may impose taxes
or limits on the removal of the Fund's assets from that country.
- REGULATORY RISK. There may be less government supervision of foreign
markets. As a result, foreign issuers may not be subject to the uniform
accounting, auditing, and financial reporting standards and practices
applicable to domestic issuers and there may be less publicly available
information about foreign issuers.
- MARKET RISK. Foreign securities markets, particularly those of emerging
market countries, may be less liquid and more volatile than domestic
markets. Certain markets may require payment for securities before delivery
and delays may be encountered in settling securities transactions. In some
foreign markets, there may not be protection against failure by other
parties to complete transactions. Such factors may hinder the Fund's
ability to buy and sell emerging market securities in a timely manner,
affecting the Fund's investment strategies and potentially affecting the
value of the Fund.
- TRANSACTION COSTS. Costs of buying, selling, and holding foreign
securities, including brokerage, tax, and custody costs, may be higher than
those involved in domestic transactions.
4. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN SECURITIES OF
COMPANIES FROM EMERGING MARKET COUNTRIES?
Within the parameters of its specific investment policies, the Fund may
invest an unlimited amount of its assets in a company or companies from one
or more "developing countries" or "emerging markets." Such countries include,
but are not limited to, countries included in the MSCI Emerging Markets
Index(SM). The
Principal investment strategies and risks 9
Fund has at times invested a significant portion of its assets in emerging
markets and may continue to do so. To the extent that the Fund invests a
significant amount of its assets in one or more countries, returns and NAV
may be affected to a large degree by events and economic conditions in such
countries. A summary of the Fund's investments by country is contained in the
Fund's shareholder report and in the Fund's Form N-Q filed with the SEC.
In many developing markets, there is less government supervision and
regulation of business and industry practices, stock exchanges, brokers, and
listed companies than in more developed markets. The securities markets of
many of the countries in which the Fund may invest may also be smaller, less
liquid, and subject to greater price volatility than those in the United
States. In the event of a default on any investments in foreign debt
obligations, it may be more difficult for the Fund to obtain or to enforce a
judgment against the issuers of such securities. The Fund may be subject to
emerging markets risk to the extent that it invests in companies which are
not considered to be from emerging markets, but which have customers,
products, or transactions associated with emerging markets.
5. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN HIGH-YIELD/HIGH-RISK
BONDS?
High-yield/high-risk bonds (or "junk" bonds) are bonds rated below investment
grade by the primary rating agencies such as Standard & Poor's Ratings
Service ("Standard & Poor's"), Fitch, Inc. ("Fitch"), and Moody's Investors
Service, Inc. ("Moody's") (i.e., BB+ or lower by Standard & Poor's and Fitch,
or Ba or lower by Moody's) or are unrated bonds of similar quality. The value
of lower quality bonds generally is more dependent on credit risk and default
risk than investment grade bonds. Issuers of high-yield/high-risk bonds may
not be as strong financially as those issuing bonds with higher credit
ratings and are more vulnerable to real or perceived economic changes,
political changes, or adverse developments specific to the issuer. In
addition, the junk bond market can experience sudden and sharp price swings.
The secondary market on which high-yield securities are traded may be less
liquid than the market for investment grade securities. The lack of a liquid
secondary market may have an adverse impact on the market price of the
security. When secondary markets for high-yield securities are less liquid
than the market for investment grade securities, it also may be more
difficult to value the securities because valuation may require more
research, and elements of judgment may play a larger role in the valuation
because there is less reliable, objective data available.
Please refer to the "Explanation of Rating Categories" section of the
Statement of Additional Information for a description of bond rating
categories.
10 Janus Orion Fund prospectus
6. HOW DOES THE FUND TRY TO REDUCE RISK?
The Fund may use futures, options, swap agreements, and other derivative
instruments individually or in combination to "hedge" or protect its
portfolio from adverse movements in securities prices and interest rates. The
Fund may also use a variety of currency hedging techniques, including the use
of forward currency contracts, to manage currency risk. There is no guarantee
that derivative investments will benefit the Fund. The Fund's performance
could be worse than if the Fund had not used such instruments.
7. THE FUND MAY INVEST IN SMALLER OR NEWER COMPANIES. DOES THIS CREATE ANY
SPECIAL RISKS?
Many attractive investment opportunities may be smaller, start-up companies
offering emerging products or services. Smaller or newer companies may suffer
more significant losses as well as realize more substantial growth than
larger or more established issuers because they may lack depth of management,
be unable to generate funds necessary for growth or potential development, or
be developing or marketing new products or services for which markets are not
yet established and may never become established. In addition, such companies
may be insignificant factors in their industries and may become subject to
intense competition from larger or more established companies. Securities of
smaller or newer companies may have more limited trading markets than the
markets for securities of larger or more established issuers, or may not be
publicly traded at all, and may be subject to wide price fluctuations.
Investments in such companies tend to be more volatile and somewhat more
speculative.
GENERAL PORTFOLIO POLICIES
In investing its portfolio assets, the Fund will follow the general policies
listed below. Except for the Fund's policies with respect to investments in
illiquid securities and borrowing, the percentage limitations included in
these policies and elsewhere in this Prospectus normally apply only at the
time of purchase of a security. So, for example, if the Fund exceeds a limit
as a result of market fluctuations or the sale of other securities, it will
not be required to dispose of any securities.
CASH POSITION
The Fund may not always stay fully invested in stocks and bonds. For example,
when the Fund's investment personnel believe that market conditions are
unfavorable for profitable investing, or when they are otherwise unable to
locate attractive investment opportunities, the Fund's cash or similar
investments may increase. In other words, cash or similar investments
generally are a residual - they represent the assets that remain after the
Fund has committed available assets to desirable investment opportunities.
When the Fund's investments in
Principal investment strategies and risks 11
cash or similar investments increase, it may not participate in market
advances or declines to the same extent that it would if the Fund remained
more fully invested in stocks or bonds.
In addition, the Fund may temporarily increase its cash position under
certain unusual circumstances, such as to protect its assets or maintain
liquidity in certain circumstances, for example, to meet unusually large
redemptions. The Fund's cash position may also increase temporarily due to
unusually large cash inflows. Under unusual circumstances such as these, the
Fund may invest up to 100% of its assets in cash or similar investments. In
this case, the Fund may not achieve its investment objective.
OTHER TYPES OF INVESTMENTS
Unless otherwise stated within its specific investment policies, the Fund may
also invest in other types of domestic and foreign securities and use other
investment strategies, as described in the "Glossary of Investment Terms."
These securities and strategies are not principal investment strategies of
the Fund. If successful, they may benefit the Fund by earning a return on the
Fund's assets or reducing risk; however, they may not achieve the Fund's
objective. These securities and strategies may include:
- debt securities
- indexed/structured securities
- high-yield/high-risk bonds (35% or less of the Fund's assets)
- options, futures, forwards, swap agreements, participatory notes, exchange-
traded funds, and other types of derivatives individually or in combination
for hedging purposes or for nonhedging purposes such as seeking to enhance
return; such techniques may also be used to gain exposure to the market
pending investment of cash balances or to meet liquidity needs
- short sales "against the box" and "naked" short sales (no more than 8% of
the Fund's assets may be invested in naked short sales)
- securities purchased on a when-issued, delayed delivery, or forward
commitment basis
ILLIQUID INVESTMENTS
The Fund may invest up to 15% of its net assets in illiquid investments. An
illiquid investment is a security or other position that cannot be disposed
of quickly in the normal course of business. For example, some securities are
not registered under U.S. securities laws and cannot be sold to the U.S.
public because of SEC regulations (these are known as "restricted
securities"). Under
12 Janus Orion Fund prospectus
procedures adopted by the Fund's Trustees, certain restricted securities may
be deemed liquid, and will not be counted toward this 15% limit.
FOREIGN SECURITIES
Unless otherwise stated within its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities. The Fund may
invest directly in foreign securities denominated in a foreign currency and
not publicly traded in the United States. Other ways of investing in foreign
securities include depositary receipts or shares and passive foreign
investment companies.
SPECIAL SITUATIONS
The Fund may invest in companies that demonstrate special situations or
turnarounds, meaning companies that have experienced significant business
problems but are believed to have favorable prospects for recovery. For
example, a special situation or turnaround may arise when, in the opinion of
the Fund's investment personnel, the securities of a particular issuer will
be recognized and appreciate in value due to a specific development with
respect to that issuer. Special situations may include significant changes in
a company's allocation of its existing capital, a restructuring of assets, or
a redirection of free cash flow. For example, issuers undergoing significant
capital changes may include companies involved in spin-offs, sales of
divisions, mergers or acquisitions, companies emerging from bankruptcy, or
companies initiating large changes in their debt to equity ratio.
Developments creating a special situation might include, among others, a new
product or process, a technological breakthrough, a management change or
other extraordinary corporate event, or differences in market supply of and
demand for the security. The Fund's performance could suffer if the
anticipated development in a "special situation" investment does not occur or
does not attract the expected attention.
SECURITIES LENDING
The Fund may seek to earn additional income through securities lending.
Certain Funds may lend their portfolio securities to parties (typically
brokers or other financial institutions) who need to borrow securities in
order to complete certain transactions such as covering short sales, avoiding
failures to deliver securities, or completing arbitrage activities. There is
a risk of delay in recovering a loaned security and/or a risk of loss in
collateral rights if the borrower fails financially.
PORTFOLIO TURNOVER
In general, the Fund intends to purchase securities for long-term investment,
although, to a limited extent, the Fund may purchase securities in
anticipation of relatively short-term price gains. Short-term transactions
may also result from liquidity needs, securities having reached a price or
yield objective, changes in
Principal investment strategies and risks 13
interest rates or the credit standing of an issuer, or by reason of economic
or other developments not foreseen at the time of the investment decision.
The Fund may also sell one security and simultaneously purchase the same or a
comparable security to take advantage of short-term differentials in bond
yields or securities prices. Portfolio turnover is affected by market
conditions, changes in the size of the Fund, the nature of the Fund's
investments, and the investment style of the investment personnel. Changes
are made in the Fund's portfolio whenever the investment personnel believe
such changes are desirable. Portfolio turnover rates are generally not a
factor in making buy and sell decisions.
Increased portfolio turnover may result in higher costs for brokerage
commissions, dealer mark-ups, and other transaction costs and may also result
in taxable capital gains. Higher costs associated with increased portfolio
turnover may offset gains in the Fund's performance. The "Financial
Highlights" section of this Prospectus shows the Fund's historical turnover
rates.
14 Janus Orion Fund prospectus
JANUS ORION FUND
Shareholder's Guide
This Shareholder's Guide is
for those shareholders
investing with the Fund
through financial
intermediaries. This section
will help you become familiar
with the different types of
accounts you can establish
with the Fund. It also
explains how to purchase,
exchange, and redeem shares,
as well as describes account
policies and fees that may
apply to your account.
Account policies (including
fees), services, and features
may be modified or
discontinued without
shareholder approval or prior
notice.
(JANUS LOGO)
CONTACT YOUR FINANCIAL INTERMEDIARY OR PLAN SPONSOR, OR REFER TO YOUR PLAN
DOCUMENTS FOR INSTRUCTIONS ON HOW TO PURCHASE, EXCHANGE, OR REDEEM SHARES.
With certain limited exceptions, the Fund is available only to U.S. citizens
or residents.
PRICING OF FUND SHARES
NAV DETERMINATION
The per share NAV is computed by dividing the total value of the Fund's
securities and other assets, less liabilities, by the total number of Fund
shares outstanding. In the case of Funds with share classes, the NAV for each
class 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. The Fund's NAV is
calculated as of the close of the regular trading session of the New York
Stock Exchange ("NYSE") (normally 4:00 p.m. New York time) each day that the
NYSE is open ("business day"). However, the NAV may be calculated earlier if
trading on the NYSE is restricted, or as permitted by the SEC. Because
foreign securities markets may operate on days that are not business days in
the United States, the value of the Fund's holdings may change on days when
you will not be able to purchase or redeem the Fund's shares to the extent
that Fund is invested in such markets. All purchases, exchanges, and
redemptions will be duly processed at the NAV as described under "Purchases,"
"Exchanges," and "Redemptions" after your request is received in good order
by the Fund (or financial intermediary or plan sponsor, if applicable) or its
agent.
Securities held by the Fund are generally valued at market value. Certain
short-term instruments maturing within 60 days or less are valued at
amortized cost, which approximates market value. If a market quotation is not
readily available or is deemed unreliable, or if an event that is expected to
affect the value of a portfolio security occurs after the close of the
principal exchange or market on which that security is traded, and before the
close of the NYSE, the fair value of a security (except for short-term
instruments maturing within 60 days or less) will be determined in good faith
under policies and procedures established by and under the supervision of the
Fund's Board of Trustees. Circumstances in which fair value pricing may be
utilized include, but are not limited to: (i) when significant events occur
which may affect the securities of a single issuer, such as mergers,
bankruptcies, or significant issuer-specific developments; (ii) when
significant events occur which may affect an entire market, such as natural
disasters or significant governmental actions; and (iii) when non-significant
events occur such as markets closing early or not opening, security trading
halts, or pricing of nonvalued securities and restricted or nonpublic
securities. The Fund may use a systematic fair valuation model provided by an
independent
16 Janus Orion Fund prospectus
pricing service to value foreign equity securities in order to adjust for
stale pricing, which may occur between the close of certain foreign exchanges
and of the NYSE. While fair value pricing may be more commonly used with
foreign equity securities, it may also be used with, among other things,
thinly-traded domestic securities or fixed-income securities.
Due to the subjective nature of fair value pricing, the Fund's value for a
particular security may be different from the last quoted market price. Fair
value pricing may reduce arbitrage activity involving the frequent buying and
selling of mutual fund shares by investors seeking to take advantage of a
perceived lag between a change in the value of a Fund's portfolio securities
and the reflection of such change in that Fund's NAV, as further described in
the "Excessive Trading" section of this Prospectus. While funds that invest
in foreign securities may be at a greater risk for arbitrage activity, such
activity may also arise in funds which do not invest in foreign securities,
for example, when trading in a security held by the Fund is halted and does
not resume prior to the time the Fund calculates its NAV (referred to as
"stale pricing"). Funds that hold thinly-traded securities, such as certain
small-capitalization securities, may be subject to attempted use of arbitrage
techniques. To the extent that the Fund's valuation of a security is
different from the security's market value, short-term arbitrage traders may
dilute the NAV of the Fund, which negatively impacts long-term shareholders.
The Fund's fair value pricing and excessive trading policies and procedures
may not completely eliminate short-term trading in certain omnibus accounts
and other accounts traded through intermediaries.
The value of the securities of other open-end funds held by the Fund, if any,
will be calculated using the NAV of such underlying funds, and the
prospectuses for such open-end funds explain the circumstances under which
they use fair value pricing and the effects of using fair value pricing.
If you hold a Fund account through a financial intermediary or plan sponsor,
all purchases, exchanges, redemptions, or other account activity must be
processed through your financial intermediary or plan sponsor. Your financial
intermediary or plan sponsor is responsible for promptly transmitting
purchase, redemption, and other requests to the Fund under the arrangements
made between your financial intermediary or plan sponsor and its customers.
The Fund is not responsible for the failure of any financial intermediary or
plan sponsor to carry out its obligations to its customers.
PURCHASES
Contact your financial intermediary or plan sponsor, or refer to your plan
documents for information on how to invest in the Fund, including additional
information on minimum initial or subsequent investment requirements.
Shareholder's guide 17
Purchase requests must be received in good order by the Fund (financial
intermediary or plan sponsor, if applicable) or its agent prior to the close
of the regular trading session of the NYSE in order to receive that day's
NAV. The Fund reserves the right to require purchase requests and payments
from the financial intermediary or plan sponsor prior to these times on days
when the NYSE closes early.
The Fund reserves the right to reject any purchase order, including exchange
purchases, for any reason. The Fund is not intended for excessive trading.
For more information about the Fund's policy on excessive trading, see
"Excessive Trading."
MINIMUM INVESTMENT REQUIREMENTS
The minimum investment is $2,500 per Fund account for non-retirement accounts
and $500 per Fund account for certain tax-deferred accounts or UGMA/UTMA
accounts. Investors in a defined contribution plan through a third party
administrator should refer to their plan document or contact their plan
administrator for additional information. In addition, accounts held through
certain wrap programs may not be subject to these minimums. Investors should
refer to their intermediary for additional information. The Fund reserves the
right to annually request that intermediaries close Fund accounts that are
valued at less than $100, other than as a result solely of depreciation in
share value. Certain accounts held through intermediaries may not be subject
to closure due to the policies of the intermediaries. You may receive written
notice from your intermediary to increase your account balance to the
required minimum to avoid having your account closed. Please note that you
may incur a tax liability as a result of a redemption.
The Fund reserves the right to change the amount of these minimums from time
to time or to waive them in whole or in part.
SYSTEMATIC PURCHASE PLAN
You may arrange for periodic purchases by authorizing your financial
intermediary to withdraw the amount of your investment from your bank account
on a day or days you specify. Not all financial intermediaries offer this
plan. Contact your financial intermediary for details.
TAX-DEFERRED ACCOUNTS
If you are eligible and your financial intermediary or plan sponsor provides
this option, you may set up one or more tax-deferred accounts. A tax-deferred
account allows you to shelter your investment income and capital gains from
current income taxes. A contribution to certain of these plans may also be
tax
18 Janus Orion Fund prospectus
deductible. Investors should consult their tax adviser or legal counsel
before selecting a tax-deferred account.
EXCHANGES
Contact your financial intermediary or plan sponsor, or consult your plan
documents to exchange into other funds in the Trust. Be sure to read the
prospectus of the fund into which you are exchanging. An exchange is
generally a taxable transaction (except for certain tax-deferred accounts).
- Exchange requests between the Fund and other Janus funds (other than
between Janus Money Market Fund and Janus Government Money Market Fund)
must be received in good order by the Fund or its agent prior to the close
of the regular trading session of the NYSE in order to receive that day's
NAV. Exchange requests between Janus Money Market Fund and Janus Government
Money Market Fund must be received in good order by a fund or its agent
prior to 5:00 p.m. (New York time) in order to receive that day's NAV. The
money market funds reserve the right to require exchange requests prior to
these times on days when the bond market or the NYSE close early.
- You may generally exchange shares of the Fund for shares of another fund in
the Trust only if that fund is offered through your financial intermediary
or plan sponsor.
- You must meet the minimum investment amount for each fund.
- If you are exchanging into a closed fund, you will need to meet criteria
for investing in the closed fund. For more information, see "Closed Fund
Policies."
- The Janus funds reserve the right to reject any exchange request and to
modify or terminate the exchange privilege at any time.
- The exchange privilege is not intended as a vehicle for short-term or
excessive trading. You may make up to four round trips in the Fund in a
12-month period, although the Fund at all times reserves the right to
reject any exchange purchase for any reason without prior notice.
Generally, a "round trip" is a redemption out of the Fund (by any means)
followed by a purchase back into the Fund (by any means). The Fund will
work with financial intermediaries to apply the Fund's exchange limit.
However, the Fund may not always have the ability to monitor or enforce the
trading activity in such accounts. For more information about the Fund's
policy on excessive trading, see "Excessive Trading."
REDEMPTIONS
Please contact your financial intermediary or plan sponsor, or refer to the
appropriate plan documents for details including any restrictions on redemp-
Shareholder's guide 19
tions, redemption charges, redemption in-kind, automatic redemption, and
delays in honoring redemption requests.
Shares of the Fund may be redeemed on any business day on which the Fund's
NAV is calculated. Redemptions are duly processed at the NAV next calculated
after your redemption order is received in good order by the Fund or its
agent. Redemption proceeds, less any applicable redemption fee, will normally
be sent the business day following receipt of the redemption order, but in no
event later than seven days after receipt of such order.
The Fund reserves the right to annually request that intermediaries close
Fund accounts that are valued at less than $100, other than as a result
solely of depreciation in share value. Certain accounts held through
intermediaries may not be subject to closure due to the policies of the
intermediaries. You may receive written notice from your intermediary to
increase your account balance to the required minimum to avoid having your
account closed. Please note that you may incur a tax liability as a result of
a redemption.
REDEMPTIONS IN-KIND
Shares normally will be sold for cash, although the Fund retains the right to
sell some or all of its shares in-kind under unusual circumstances, in order
to protect the interests of remaining shareholders, or to accommodate a
request by a particular shareholder that does not adversely affect the
interest of the remaining shareholders, by delivery of securities selected
from its assets at its discretion. However, the Fund is required to redeem
shares solely for cash up to the lesser of $250,000 or 1% of the NAV of the
Fund during any 90-day period for any one shareholder. Should redemptions by
any shareholder exceed such limitation, the Fund will have the option of
redeeming the excess in cash or in-kind. In-kind payment means payment will
be made in portfolio securities rather than cash. If this occurs, the
redeeming shareholder might incur brokerage or other transaction costs to
convert the securities to cash.
SYSTEMATIC WITHDRAWAL PLAN
You may arrange for periodic redemptions by authorizing your financial
intermediary to redeem a specified amount from your account on a day or days
you specify. Not all financial intermediaries offer this plan. Contact your
financial intermediary for details.
20 Janus Orion Fund prospectus
EXCESSIVE TRADING
EXCESSIVE TRADING POLICIES AND PROCEDURES
The Board of Trustees has adopted policies and procedures with respect to
short-term and excessive trading of Fund shares ("excessive trading"). The
Fund is intended for long-term investment purposes only and the Fund will
take reasonable steps to attempt to detect and deter excessive trading.
Transactions placed in violation of the Fund's exchange limits or excessive
trading policies may be cancelled or revoked by the Fund by the next business
day following receipt by the Fund. The trading history of accounts determined
to be under common ownership or control within any of the Janus funds may be
considered in enforcing these policies and procedures. As described below,
however, the Fund may not be able to identify all instances of excessive
trading or completely eliminate the possibility of excessive trading. In
particular, it may be difficult to identify excessive trading in certain
omnibus accounts and other accounts traded through intermediaries. By their
nature, omnibus accounts, in which purchases and sales of the Fund's shares
by multiple investors are aggregated by the intermediary and presented to the
Fund on a net basis, may effectively conceal the identity of individual
investors and their transactions from the Fund and its agent.
The Fund attempts to deter excessive trading through at least the following
methods:
- exchange limitations as described under "Exchanges;"
- redemption fees as described under "Redemption Fee" (where applicable on
certain Funds); and
- fair valuation of securities as described under "Pricing of Fund Shares."
The Fund monitors Fund share transactions, subject to the limitations
described below. Generally, a purchase of the Fund's shares followed by the
redemption of the Fund's shares within a 90-day period may result in
enforcement of the Fund's excessive trading policies and procedures with
respect to future purchase orders, provided that the Fund reserves the right
to reject any purchase request as explained above.
The Fund may suspend or permanently terminate the exchange privilege of any
investor who makes more than four round trips (as defined under "Exchanges")
in a Fund in a 12-month period and may bar future purchases into the Fund and
any of the other Janus funds by such investor. The Fund's exchange limits and
excessive trading policies generally do not apply to a money market fund,
although money market funds at all times reserve the right to reject any
purchase request (including exchange purchases) for any reason without prior
Shareholder's guide 21
notice; and transactions in the Janus funds by the Janus Smart Portfolios
(each of which is a "fund of funds" that primarily invests in other Janus
mutual funds).
The Fund's Board of Trustees may approve from time to time a redemption fee
to be imposed by any Janus fund, subject to 60 days' notice to shareholders
of that fund.
Investors who place transactions through the same financial intermediary on
an omnibus basis may be deemed part of a group for the purpose of the Fund's
excessive trading policies and procedures and may be rejected in whole or in
part by the Fund. The Fund, however, cannot always identify or reasonably
detect excessive trading that may be facilitated by financial intermediaries
or made difficult to identify through the use of omnibus accounts by those
intermediaries that transmit purchase, exchange, and redemption orders to the
Fund, and thus the Fund may have difficulty curtailing such activity.
Transactions accepted by a financial intermediary in violation of the Fund's
excessive trading policies may be cancelled or revoked by the Fund by the
next business day following receipt by the Fund.
In an attempt to detect and deter excessive trading in omnibus accounts, the
Fund or its agent may require intermediaries to impose restrictions on the
trading activity of accounts traded through those intermediaries. Such
restrictions may include, but are not limited to, requiring that trades be
placed by U.S. mail, prohibiting purchases for a designated period of time
(typically 30 to 90 days) by investors who have recently redeemed Fund
shares, requiring intermediaries to report information about customers who
purchase and redeem large amounts, and similar restrictions. The Fund's
ability to impose such restrictions with respect to accounts traded through
particular intermediaries may vary depending on the systems capabilities,
applicable contractual and legal restrictions, and cooperation of those
intermediaries.
Certain transactions in Fund shares, such as periodic rebalancing (no more
frequently than quarterly) or those which are made pursuant to systematic
purchase, exchange, or redemption programs generally do not raise excessive
trading concerns and normally do not require application of the Fund's
methods to detect and deter excessive trading.
The Fund also reserves the right to reject any purchase request (including
exchange purchases) by any investor or group of investors for any reason
without prior notice, including, in particular, if the trading activity in
the account(s) is deemed to be disruptive to the Fund. For example, the Fund
may refuse a purchase order if the Fund's investment personnel believe they
would be unable to invest the money effectively in accordance with the Fund's
investment policies or the Fund would otherwise be adversely affected due to
the size of the transaction, frequency of trading, or other factors.
22 Janus Orion Fund prospectus
The Fund's policies and procedures regarding excessive trading may be
modified at any time by the Fund's Board of Trustees.
EXCESSIVE TRADING RISKS
Excessive trading may present risks to the Fund's long-term shareholders.
Excessive trading into and out of the Fund may disrupt portfolio investment
strategies, may create taxable gains to remaining Fund shareholders, and may
increase Fund expenses, all of which may negatively impact investment returns
for all remaining shareholders, including long-term shareholders.
A Fund that invests in foreign securities may be at a greater risk for
excessive trading. Investors may attempt to take advantage of anticipated
price movements in securities held by a Fund based on events occurring after
the close of a foreign market that may not be reflected in the Fund's NAV
(referred to as "price arbitrage"). Such arbitrage opportunities may also
arise in a Fund which does not invest in foreign securities, for example,
when trading in a security held by the Fund is halted and does not resume
prior to the time the Fund calculates its NAV (referred to as "stale
pricing"). Funds that hold thinly-traded securities, such as certain
small-capitalization securities, may be subject to attempted use of arbitrage
techniques. To the extent that a Fund's valuation of a security differs from
the security's market value, short-term arbitrage traders may dilute the NAV
of the Fund, which negatively impacts long-term shareholders. Although the
Fund has adopted fair valuation policies and procedures intended to reduce
the Fund's exposure to price arbitrage, stale pricing, and other potential
pricing inefficiencies, under such circumstances there is potential for
short-term arbitrage trades to dilute the value of Fund shares.
Although the Fund takes steps to detect and deter excessive trading pursuant
to the policies and procedures described in this Prospectus and approved by
the Board of Trustees, there is no assurance that these policies and
procedures will be effective in limiting excessive trading in all
circumstances. For example, the Fund may be unable to completely eliminate
the possibility of excessive trading in certain omnibus accounts and other
accounts traded through intermediaries. Omnibus accounts may effectively
conceal the identity of individual investors and their transactions from the
Fund and its agent. This makes the Fund's identification of excessive trading
transactions in the Fund through an omnibus account difficult and makes the
elimination of excessive trading in the account impractical without the
assistance of the intermediary. Although the Fund encourages intermediaries
to take necessary actions to detect and deter excessive trading, some
intermediaries may be unable or unwilling to do so, and accordingly, the Fund
cannot eliminate completely the possibility of excessive trading.
Shareholder's guide 23
Shareholders that invest through an omnibus account should be aware that they
may be subject to the policies and procedures of their financial intermediary
with respect to excessive trading in the Fund.
AVAILABILITY OF PORTFOLIO HOLDINGS INFORMATION
The non-money market funds' full portfolio holdings (excluding cash
equivalents, derivatives, and short positions), consisting of at least the
names of the holdings, are generally available monthly, with a 30-day lag, on
www.janus.com. They are posted to the website within approximately two
business days after month-end. The money market funds' full portfolio
holdings are generally available monthly, with no lag, on www.janus.com. They
are posted to the website within approximately six business days after
month-end. All of the funds' portfolio holdings remain available until the
following month's information is posted. The funds' full portfolio holdings
can be found on www.janus.com in Fund details under the Holdings & Details
tab.
In addition, the Fund's top portfolio holdings in order of position size and
as a percentage of the total portfolio, are published monthly with a 30-day
lag, and quarterly with a 15-day lag, on www.janus.com. The Fund discloses
its top five portfolio holdings. Security breakdowns (such as industry,
sector, regional, market capitalization, and asset allocation breakdowns, as
applicable) for the Fund are published quarterly, with a 15-day lag, on
www.janus.com. The Fund's top portfolio holdings, as well as the non-money
market funds' security breakdowns, are posted to the website within
approximately two business days after the end of the applicable period and
remain available until the following period's information is posted.
Specific portfolio level performance attribution information and statistics
for the Fund will be made available to any person monthly upon request, with
a 30-day lag, following the posting of the Fund's full portfolio holdings on
www.janus.com.
Notwithstanding the foregoing, Janus Capital may exclude from publication all
or any portion of portfolio holdings or change the time periods of disclosure
as deemed necessary to protect the interests of the Fund. A summary of the
Fund's portfolio holdings disclosure policies and procedures, which includes
a discussion of any exceptions, is contained in the Fund's Statement of
Additional Information.
Complete schedules of the Fund's portfolio holdings as of the end of the
Fund's first and third fiscal quarters are filed with the SEC within 60 days
of the end of such quarters on Form N-Q. 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
24 Janus Orion Fund prospectus
available without charge, upon request, by calling Janus at 1-800-525-0020
(toll free). Complete schedules of the Fund's portfolio holdings as of the
end of the Fund's second and fourth fiscal quarters are included in the
Fund's semiannual and annual reports which are filed with the SEC within 60
days of the end of such quarters. The semiannual reports are filed on Form
type N-CSRS and the annual reports are filed on Form type N-CSR. Shareholder
reports containing such portfolio holdings are available to shareholders
through their financial intermediary or plan sponsor and are also available
at www.janus.com.
SHAREHOLDER ACCOUNT POLICIES
TRANSACTIONS THROUGH FINANCIAL INTERMEDIARIES
Fund shares purchased or sold through a financial intermediary or plan
sponsor may be subject to a fee and may require different minimum initial and
subsequent investments than Fund shares purchased directly from Janus
Capital. Financial intermediaries or plan sponsors may also impose other
charges or restrictions different from those applicable to shareholders who
invest in the Fund directly.
A financial intermediary or plan sponsor, rather than its customers, may be
the shareholder of record of your shares. The Fund is not responsible for the
failure of any financial intermediary or plan sponsor to carry out its
obligations to its customers. Certain financial intermediaries and plan
sponsors may receive compensation from Janus Capital or its affiliates, and
certain financial intermediaries and plan sponsors may receive compensation
from the Fund for shareholder recordkeeping and similar services.
STATEMENTS AND REPORTS
Your financial intermediary or plan sponsor is responsible for sending you
periodic statements of all transactions, as required by applicable law.
Your financial intermediary or plan sponsor is responsible for providing
annual and semiannual reports, including the financial statements of the Fund
that you have authorized for investment. These reports show the Fund's
investments and the market value of such investments, as well as other
information about the Fund and its operations. Please contact your financial
intermediary or plan sponsor to obtain these reports. The Trust's fiscal year
ends October 31.
Shareholder's guide 25
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Janus Capital Management LLC ("Janus Capital" or "Janus"), 151 Detroit
Street, Denver, Colorado 80206-4805, is the investment adviser to the Fund
and is responsible for the day-to-day management of the Fund's investment
portfolio and furnishes continuous advice and recommendations concerning the
Fund's investments. Janus Capital also provides certain administrative and
other services, and is responsible for the other business affairs of the
Fund.
Janus Capital (together with its predecessors) has served as investment
adviser to Janus Fund since 1970 and currently serves as investment adviser
to all of the Janus funds, acts as subadviser for a number of private-label
mutual funds, and provides separate account advisory services for
institutional accounts.
Janus Capital furnishes certain administrative, compliance, and accounting
services for the Fund, and may be reimbursed by the Fund for its costs in
providing those services. In addition, employees of Janus Capital and/or its
affiliates serve as officers of the Trust and Janus Capital provides office
space for the Fund and pays the salaries, fees, and expenses of all Fund
officers and those Trustees who are considered interested persons of Janus
Capital.
From its own assets, Janus Capital or its affiliates may make payments based
on gross sales, current assets, or other measures to selected brokerage firms
or other financial intermediaries that were instrumental in the acquisition
or retention of shareholders for the Janus funds. The amount of these
payments is determined from time to time by Janus Capital, may be
substantial, and may differ for different financial intermediaries.
Eligibility requirements for such payments to institutional intermediaries
are determined by Janus Capital and/or its affiliates.
Janus Capital or its affiliates may pay fees, from their own assets, to
brokerage firms, banks, financial advisers, retirement plan service
providers, and other financial intermediaries for providing recordkeeping,
subaccounting, transaction processing, and other shareholder or
administrative services (including payments for processing transactions via
National Securities Clearing Corporation ("NSCC") or other means) in
connection with investments in the Janus funds. These fees are in addition to
any fees that may be paid by the Janus funds for these types of or other
services.
In addition, Janus Capital or its affiliates may also share certain marketing
expenses with, or pay for or sponsor informational meetings, seminars, client
awareness events, support for marketing materials, or business building
programs for such intermediaries to raise awareness of the Fund.
The receipt of (or prospect of receiving) payments described above are not
intended to, but may provide a financial intermediary and its salespersons
with an incentive to favor sales of Janus funds' shares over sales of other
mutual
26 Janus Orion Fund prospectus
funds (or non-mutual fund investments) with respect to which the financial
intermediary does not receive such payments or receives them in a lower
amount. These payment arrangements will not, however, change the price an
investor pays for shares or the amount that a Janus fund receives to invest
on behalf of the investor. You may wish to consider whether such arrangements
exist when evaluating any recommendations to purchase or sell shares of the
Fund.
MANAGEMENT EXPENSES
The Fund pays Janus Capital an investment advisory fee which is calculated
daily and paid monthly. The Fund's advisory agreement details the investment
advisory fee and other expenses that the Fund must pay.
The Fund incurs expenses not assumed by Janus Capital, including any transfer
agent and custodian fees and expenses, legal and auditing fees, printing and
mailing costs of sending reports and other information to existing
shareholders, and Independent Trustees' fees and expenses. The Fund is
subject to the following investment advisory fee schedule (expressed as an
annual rate).
<Table>
<Caption>
Average Daily Investment Advisory
Net Assets Fee (%)
Fund Name of Fund (annual rate)
- -------------------------------------------------------------------------------------------
Janus Orion Fund All Asset Levels 0.64
- -------------------------------------------------------------------------------------------
</Table>
A discussion regarding the basis for the Board of Trustees' approval of the
Fund's investment advisory agreement is included in the Fund's Statement of
Additional Information and will also be included in the annual and semiannual
reports to shareholders.
Management of the Fund 27
INVESTMENT PERSONNEL
PORTFOLIO MANAGER
RON SACHS
- --------------------------------------------------------------------------------
is Executive Vice President and Portfolio Manager of Janus Orion Fund,
which he has managed since its inception. He is also Portfolio Manager
of other Janus accounts. Mr. Sachs joined Janus Capital in 1996 as a
research analyst. Mr. Sachs holds a Bachelor's degree (cum laude) in
Economics from Princeton and a law degree from the University of
Michigan. Mr. Sachs has earned the right to use the Chartered Financial
Analyst designation.
Information about the Fund's investment personnel's compensation structure,
other accounts managed by the investment personnel, and the investment
personnel's range of ownership of securities in the Fund, is included in the
Fund's Statement of Additional Information.
28 Janus Orion Fund prospectus
OTHER INFORMATION
- --------------------------------------------------------------------------------
CLOSED FUND POLICIES
The Fund may discontinue sales of its shares to new investors if its
management and the Trustees believe that continued sales may adversely affect
the Fund's ability to achieve its investment objective. If sales of the Fund
are discontinued to new investors, it is expected that existing shareholders
invested in the Fund would be permitted to continue to purchase shares
through its existing Fund accounts and to reinvest any dividends or capital
gains distributions in such accounts, absent highly unusual circumstances. In
addition, it is expected that existing or new participants in
employer-sponsored retirement plans, including employees of Janus Capital
Group Inc. ("JCGI") and any of its subsidiaries covered under the JCGI
retirement plan, that currently offer the Fund as an investment option would
be able to direct contributions to the Fund through their plan, regardless of
whether they invested in such fund prior to its closing. In addition, in the
case of certain mergers or reorganizations, retirement plans would be able to
add a closed fund as an investment option and sponsors of certain wrap
programs with existing accounts in the Fund would be able to continue to
invest in the Fund on behalf of new customers. Such mergers, reorganizations,
acquisitions, or other business combinations are those in which one or more
companies involved in such transaction currently offers the Fund as an
investment option, and any company that as a result of such transaction
becomes affiliated with the company currently offering the Fund (as a parent
company, subsidiary, sister company, or otherwise). Such companies may
request to add the Fund as an investment option under its retirement plan. In
addition, new accounts may be permitted in the closed Fund for certain plans
and programs offered in connection with employer-sponsored retirement plans
where the retirement plan has an existing account in the closed Fund.
Requests will be reviewed by management on an individual basis, taking into
consideration whether the addition of the Fund may negatively impact existing
Fund shareholders. Janus Capital encourages its employees, particularly
members of the investment team, to own shares of the Janus funds.
Accordingly, upon prior approval of Janus Capital's senior management team,
members of the Janus investment team may open new accounts in a closed fund.
Additional information regarding general policies and exceptions can be found
in the closed funds' prospectuses.
PENDING LEGAL MATTERS
In the fall of 2003, the Securities and Exchange Commission ("SEC"), the
Office of the New York State Attorney General ("NYAG"), the Colorado Attorney
General ("COAG"), and the Colorado Division of Securities ("CDS") announced
that they were investigating alleged frequent trading practices in the mutual
fund industry. On August 18, 2004, Janus Capital announced that it had
reached final
Other information 29
settlements with the SEC, the NYAG, the COAG, and the CDS related to such
regulators' investigations into Janus Capital's frequent trading
arrangements.
A number of civil lawsuits were brought against Janus Capital and certain of
its affiliates, the Janus funds, and related entities and individuals based
on allegations similar to those announced by the above regulators and were
filed in several state and federal jurisdictions. Such lawsuits alleged a
variety of theories for recovery including, but not limited to, the federal
securities laws, other federal statutes (including ERISA), and various common
law doctrines. The Judicial Panel on Multidistrict Litigation transferred
these actions to the U.S. District Court for the District of Maryland (the
"Court") for coordinated proceedings. On September 29, 2004, five
consolidated amended complaints were filed in that Court that generally
include: (i) claims by a putative class of investors in the Janus funds
asserting claims on behalf of the investor class; (ii) derivative claims by
investors in the Janus funds ostensibly on behalf of the Janus funds; (iii)
claims on behalf of participants in the Janus 401(k) plan; (iv) claims
brought on behalf of shareholders of Janus Capital Group Inc. ("JCGI") on a
derivative basis against the Board of Directors of JCGI; and (v) claims by a
putative class of shareholders of JCGI asserting claims on behalf of the
shareholders. Each of the five complaints initially named JCGI and/or Janus
Capital as a defendant. In addition, the following were also named as
defendants in one or more of the actions: Janus Investment Fund ("JIF"),
Janus Aspen Series ("JAS"), Janus Adviser Series ("JAD"), Janus Distributors
LLC, Enhanced Investment Technologies, LLC ("INTECH"), Bay Isle Financial LLC
("Bay Isle"), Perkins, Wolf, McDonnell and Company, LLC ("Perkins"), the
Advisory Committee of the Janus 401(k) plan, and the current or former
directors of JCGI.
On August 25, 2005, the Court entered orders dismissing most of the claims
asserted against Janus Capital and its affiliates by fund investors (actions
(i) and (ii) described above), except certain claims under Section 10(b) of
the Securities Exchange Act of 1934 and under Section 36(b) of the Investment
Company Act of 1940. As a result, JCGI, Janus Capital, the Advisory Committee
of the Janus 401(k) plan, and the current or former directors of JCGI are the
remaining defendants in one or more of the actions. The complaint in the
401(k) plan class action (action (iii) described above) was voluntarily
dismissed, but was refiled using a new named plaintiff and asserting claims
similar to the initial complaint.
The Attorney General's Office for the State of West Virginia filed a separate
market timing related civil action against Janus Capital and several other
non-affiliated mutual fund companies, claiming violations under the West
Virginia Consumer Credit and Protection Act. The civil action requests
certain monetary penalties, among other relief. This action has been removed
to federal court and transferred to the Multidistrict Litigation case in the
U.S. District Court of
30 Janus Orion Fund prospectus
Baltimore, Maryland described above. In addition, the Auditor of the State of
West Virginia, in his capacity as securities commissioner, has issued an
order indicating an intent to initiate administrative proceedings against
most of the defendants in the market timing cases (including Janus Capital)
and seeking disgorgement and other monetary relief based on similar market
timing allegations.
In addition to the "market timing" actions described above, Janus Capital is
a defendant in a consolidated lawsuit in the U.S. District Court for the
District of Colorado challenging the investment advisory fees charged by
Janus Capital to certain Janus funds. The action was filed in 2004 by fund
investors asserting breach of fiduciary duty under Section 36(b) of the
Investment Company Act of 1940. The plaintiffs seek declaratory and
injunctive relief and an unspecified amount of damages.
In 2001, Janus Capital's predecessor was also named as a defendant in a class
action suit in the U.S. District Court for the Southern District of New York,
alleging that certain underwriting firms and institutional investors violated
antitrust laws in connection with initial public offerings. The U.S. District
Court dismissed the plaintiff's antitrust claims in November 2003, however,
the U.S. Court of Appeals vacated that decision and remanded it for further
proceedings.
Additional lawsuits may be filed against certain of the Janus funds, Janus
Capital, and related parties in the future. Janus Capital does not currently
believe that these pending actions will materially affect its ability to
continue providing services it has agreed to provide to the Janus funds.
DISTRIBUTION OF THE FUND
The Fund is distributed by Janus Distributors LLC, which is a member of the
National Association of Securities Dealers, Inc. ("NASD"). To obtain
information about NASD member firms and their associated persons, you may
contact NASD Regulation, Inc. at www.nasdr.com, or the Public Disclosure
Hotline at 800-289-9999. An investor brochure containing information
describing the Public Disclosure Program is available from NASD Regulation,
Inc.
Other information 31
DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DISTRIBUTIONS
To avoid taxation of the Fund, the Internal Revenue Code requires the Fund to
distribute all or substantially all of its net investment income and any net
capital gains realized on its investments at least annually. The Fund's
income from certain dividends, interest, and any net realized short-term
capital gains are paid to shareholders as ordinary income dividends. Certain
dividend income may be reported to shareholders as "qualified dividend
income," which is generally subject to reduced rates of taxation. Net
realized long-term capital gains are paid to shareholders as capital gains
distributions, regardless of how long you have held shares of the Fund.
Dividends and capital gains distributions are normally declared and
distributed in December. If necessary, dividends and net capital gains may be
distributed at other times as well.
HOW DISTRIBUTIONS AFFECT THE FUND'S NAV
Distributions are paid to shareholders as of the record date of a
distribution of the Fund, regardless of how long the shares have been held.
Undistributed dividends and net capital gains are included in the Fund's
daily NAV. The share price of the Fund drops by the amount of the
distribution, net of any subsequent market fluctuations. For example, assume
that on December 31, the Fund declared a dividend in the amount of $0.25 per
share. If the Fund's share price was $10.00 on December 30, the Fund's share
price on December 31 would be $9.75, barring market fluctuations. You should
be aware that distributions from a taxable mutual fund do not increase the
value of your investment and may create income tax obligations.
"BUYING A DIVIDEND"
If you purchase shares of the Fund just before a distribution, you will pay
the full price for the shares and receive a portion of the purchase price
back as a taxable distribution. This is referred to as "buying a dividend."
In the above example, if you bought shares on December 30, you would have
paid $10.00 per share. On December 31, the Fund would pay you $0.25 per share
as a dividend and your shares would now be worth $9.75 per share. Unless your
account is set up as a tax-deferred account, dividends paid to you would be
included in your gross income for tax purposes, even though you may not have
participated in the increase in NAV of the Fund, whether or not you
reinvested the dividends. Before buying shares of the Fund close to year-end,
you should consult with your tax adviser as to potential tax consequences of
any distributions that may be paid shortly after purchase.
32 Janus Orion Fund prospectus
TAXES
As with any investment, you should consider the tax consequences of investing
in the Fund. Any time you sell or exchange shares of a fund in a taxable
account, it is considered a taxable event. For federal income tax purposes,
an exchange is treated the same as a sale. Depending on the purchase price
and the sale price, you may have a gain or loss on the transaction; whether
long-term or short-term depends on how long you owned the shares. Any tax
liabilities generated by your transactions are your responsibility.
The following discussion does not apply to qualified tax-deferred accounts or
other non-taxable entities, nor is it a complete analysis of the federal
income tax implications of investing in the Fund. You should consult your own
tax adviser if you have any questions. Additionally, state or local taxes may
apply to your investment, depending upon the laws of your state of residence.
TAXES ON DISTRIBUTIONS
Dividends and distributions of the Fund are subject to federal income tax,
regardless of whether the distribution is made in cash or reinvested in
additional shares of the Fund. When gains from the sale of a security held by
the Fund are paid to shareholders, the rate at which the gain will be taxed
to shareholders depends on the length of time the Fund held the security. In
certain states, a portion of the dividends and distributions (depending on
the sources of the Fund's income) may be exempt from state and local taxes.
The Fund's dividends and capital gains are distributed to (and may be taxable
to) those persons who are shareholders of the Fund at the record date of such
payments. As a result, although the Fund's total net income and net realized
gain are the results of its operations, the per share amount distributed or
taxable to shareholders is affected by the number of Fund shares outstanding
at the record date. Account tax information will be made available to
shareholders on or before January 31st of each year. Information regarding
dividends and distributions may also be reported to the Internal Revenue
Service.
The Fund may be required to withhold U.S. federal income tax on all taxable
distributions and redemptions payable to shareholders who fail to provide
their correct taxpayer identification number, fail to make certain required
certifications, or who have been notified by the Internal Revenue Service
that they are subject to backup withholding. The current backup withholding
rate is applied.
TAXATION OF THE FUND
Dividends, interest, and some capital gains received by the Fund on foreign
securities may be subject to foreign tax withholding or other foreign taxes.
If the Fund is eligible, it may from year to year make the election permitted
under
Distributions and taxes 33
Section 853 of the Internal Revenue Code to pass through such taxes to
shareholders as a foreign tax credit. If such an election is not made, any
foreign taxes paid or accrued will represent an expense to the Fund.
The Fund does not expect to pay any federal income or excise taxes because it
intends to meet certain requirements of the Internal Revenue Code. It is
important that the Fund meet these requirements so that any earnings on your
investment will not be taxed twice.
34 Janus Orion Fund prospectus
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the Fund's
financial performance for the past 5 years through October 31st of each
fiscal year shown. Items "Net asset value, beginning of period" through "Net
asset value, end of period" reflect financial results for a single Fund
share.
The total returns in the table represent the rate that an investor would have
earned (or lost) on an investment in the Fund (assuming reinvestment of all
dividends and distributions). This information has been audited by
PricewaterhouseCoopers LLP, whose report, along with the Fund's financial
statements, is included in the Annual Report, which is available upon
request, and incorporated by reference into the Statement of Additional
Information.
<Table>
<Caption>
JANUS ORION FUND
- -------------------------------------------------------------------------------------------------------------
Years ended October 31
2005 2004 2003 2002 2001
NET ASSET VALUE, BEGINNING OF PERIOD $6.25 $5.64 $4.33 $5.21 $8.81
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) 0.03 --(1) --(1) --(1) --(1)
Net gain/(loss) on securities (both realized
and unrealized) 1.52 0.61 1.31 (0.88) (3.58)
Total from investment operations 1.55 0.61 1.31 (0.88) (3.58)
LESS DISTRIBUTIONS AND OTHER:
Dividends (from net investment income) -- -- -- -- (0.02)
Distributions (from capital gains) -- -- -- -- --
Payment from affiliate -- --(2) -- -- --
Total distributions and other -- -- -- -- (0.02)
NET ASSET VALUE, END OF PERIOD $7.80 $6.25 $5.64 $4.33 $5.21
Total return 24.80% 10.82%(3) 29.95% (16.70)% (40.69)%
Net assets, end of period (in millions) $691 $530 $514 $421 $602
Average net assets for the period (in
millions) $590 $540 $431 $562 $762
Ratio of gross expenses to average net
assets(4) 1.02% 1.09% 1.10% 1.09% 1.06%
Ratio of net expenses to average net assets 1.01% 1.08% 1.08% 1.04% 1.03%
Ratio of net investment income/(loss) to
average net assets 0.52% (0.05)% (0.43)% (0.30)% (0.06)%
Portfolio turnover rate 68% 69% 72% 161% 206%
- -------------------------------------------------------------------------------------------------------------
</Table>
(1) Net investment income/(loss) aggregated less than $0.01 on a per share basis
for the fiscal year end.
(2) Payment from affiliate aggregated less than $0.01 on a per share basis for
the fiscal year end.
(3) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss
on a transaction resulting from certain trading, pricing, and/or shareholder
activity errors, which otherwise would have reduced total return by less
than 0.01%.
(4) The effect of non-recurring costs assumed by Janus Capital is included in
the ratio of gross expenses to average net assets and was less than 0.01%.
Financial highlights 35
GLOSSARY OF INVESTMENT TERMS
- --------------------------------------------------------------------------------
This glossary provides a more detailed description of some of the types of
securities, investment strategies, and other instruments in which the Fund
may invest. The Fund may invest in these instruments to the extent permitted
by its investment objective and policies. The Fund is not limited by this
discussion and may invest in any other types of instruments not precluded by
the policies discussed elsewhere in this Prospectus.
I. EQUITY AND DEBT SECURITIES
BANK LOANS include institutionally-traded floating and fixed-rate debt
securities generally acquired as a participation interest in a loan
originated by a lender or other financial institution, or as an assignment of
a portion of a loan previously attributable to a different lender.
BONDS are debt securities issued by a company, municipality, government, or
government agency. The issuer of a bond is required to pay the holder the
amount of the loan (or par value of the bond) at a specified maturity and to
make scheduled interest payments.
CERTIFICATES OF PARTICIPATION ("COPS") are certificates representing an
interest in a pool of securities. Holders are entitled to a proportionate
interest in the underlying securities. Municipal lease obligations are often
sold in the form of COPs. See "Municipal lease obligations" below.
COMMERCIAL PAPER is a short-term debt obligation with a maturity ranging from
1 to 270 days issued by banks, corporations, and other borrowers to investors
seeking to invest idle cash. A Fund may purchase commercial paper issued in
private placements under Section 4(2) of the Securities Act of 1933.
COMMON STOCKS are equity securities representing shares of ownership in a
company and usually carry voting rights and earn dividends. Unlike preferred
stock, dividends on common stock are not fixed but are declared at the
discretion of the issuer's board of directors.
CONVERTIBLE SECURITIES are preferred stocks or bonds that pay a fixed
dividend or interest payment and are convertible into common stock at a
specified price or conversion ratio.
DEBT SECURITIES are securities representing money borrowed that must be
repaid at a later date. Such securities have specific maturities and usually
a specific rate of interest or an original purchase discount.
DEPOSITARY RECEIPTS are receipts for shares of a foreign-based corporation
that entitle the holder to dividends and capital gains on the underlying
security. Receipts include those issued by domestic banks (American
Depositary Receipts), foreign banks (Global or European Depositary Receipts),
and broker-dealers (depositary shares).
36 Janus Orion Fund prospectus
EQUITY SECURITIES generally include domestic and foreign common stocks;
preferred stocks; securities convertible into common stocks or preferred
stocks; warrants to purchase common or preferred stocks; and other securities
with equity characteristics.
EXCHANGE-TRADED FUNDS are index-based investment companies which hold
substantially all of their assets in securities with equity characteristics.
As a shareholder of another investment company, a Fund would bear its pro
rata portion of the other investment company's expenses, including advisory
fees, in addition to the expenses the Fund bears directly in connection with
its own operations.
FIXED-INCOME SECURITIES are securities that pay a specified rate of return.
The term generally includes short- and long-term government, corporate, and
municipal obligations that pay a specified rate of interest, dividends, or
coupons for a specified period of time. Coupon and dividend rates may be
fixed for the life of the issue or, in the case of adjustable and floating
rate securities, for a shorter period.
HIGH-YIELD/HIGH-RISK BONDS are bonds that are rated below investment grade by
the primary rating agencies (i.e., BB+ or lower by Standard & Poor's and
Fitch, and Ba or lower by Moody's). Other terms commonly used to describe
such bonds include "lower rated bonds," "non-investment grade bonds," and
"junk bonds."
INDUSTRIAL DEVELOPMENT BONDS are revenue bonds that are issued by a public
authority but which may be backed only by the credit and security of a
private issuer and may involve greater credit risk. See "Municipal
securities" below.
MORTGAGE- AND ASSET-BACKED SECURITIES are shares in a pool of mortgages or
other debt. These securities are generally pass-through securities, which
means that principal and interest payments on the underlying securities (less
servicing fees) are passed through to shareholders on a pro rata basis. These
securities involve prepayment risk, which is the risk that the underlying
mortgages or other debt may be refinanced or paid off prior to their
maturities during periods of declining interest rates. In that case, a Fund
may have to reinvest the proceeds from the securities at a lower rate.
Potential market gains on a security subject to prepayment risk may be more
limited than potential market gains on a comparable security that is not
subject to prepayment risk.
MORTGAGE DOLLAR ROLLS are transactions in which a Fund sells a
mortgage-related security, such as a security issued by GNMA, to a dealer and
simultaneously agrees to purchase a similar security (but not the same
security) in the future at a pre-determined price. A "dollar roll" can be
viewed as a collateralized borrowing in which a Fund pledges a
mortgage-related security to a dealer to obtain cash.
Glossary of investment terms 37
MUNICIPAL LEASE OBLIGATIONS are revenue bonds backed by leases or installment
purchase contracts for property or equipment. Lease obligations may not be
backed by the issuing municipality's credit and may involve risks not
normally associated with general obligation bonds and other revenue bonds.
For example, their interest may become taxable if the lease is assigned and
the holders may incur losses if the issuer does not appropriate funds for the
lease payments on an annual basis, which may result in termination of the
lease and possible default.
MUNICIPAL SECURITIES are bonds or notes issued by a U.S. state or political
subdivision. A municipal security may be a general obligation backed by the
full faith and credit (i.e., the borrowing and taxing power) of a
municipality or a revenue obligation paid out of the revenues of a designated
project, facility, or revenue source.
PASS-THROUGH SECURITIES are shares or certificates of interest in a pool of
debt obligations that have been repackaged by an intermediary, such as a bank
or broker-dealer.
PASSIVE FOREIGN INVESTMENT COMPANIES (PFICS) are any foreign corporations
which generate certain amounts of passive income or hold certain amounts of
assets for the production of passive income. Passive income includes
dividends, interest, royalties, rents, and annuities. To avoid taxes and
interest that a Fund must pay if these investments are profitable, the Fund
may make various elections permitted by the tax laws. These elections could
require that a Fund recognize taxable income, which in turn must be
distributed, before the securities are sold and before cash is received to
pay the distributions.
PAY-IN-KIND BONDS are debt securities that normally give the issuer an option
to pay cash at a coupon payment date or give the holder of the security a
similar bond with the same coupon rate and a face value equal to the amount
of the coupon payment that would have been made.
PREFERRED STOCKS are equity securities that generally pay dividends at a
specified rate and have preference over common stock in the payment of
dividends and liquidation. Preferred stock generally does not carry voting
rights.
REAL ESTATE INVESTMENT TRUST (REIT) is an investment trust that operates
through the pooled capital of many investors who buy its shares. Investments
are in direct ownership of either income property or mortgage loans.
RULE 144A SECURITIES are securities that are not registered for sale to the
general public under the Securities Act of 1933, but that may be resold to
certain institutional investors.
STANDBY COMMITMENT is a right to sell a specified underlying security or
securities within a specified period of time and at an exercise price equal
to the
38 Janus Orion Fund prospectus
amortized cost of the underlying security or securities plus accrued
interest, if any, at the time of exercise, that may be sold, transferred, or
assigned only with the underlying security or securities. A standby
commitment entitles the holder to receive same day settlement, and will be
considered to be from the party to whom the investment company will look for
payment of the exercise price.
STEP COUPON BONDS are high-quality issues with above-market interest rates
and a coupon that increases over the life of the bond. They may pay monthly,
semiannual, or annual interest payments. On the date of each coupon payment,
the issuer decides whether to call the bond at par, or whether to extend it
until the next payment date at the new coupon rate.
STRIP BONDS are debt securities that are stripped of their interest (usually
by a financial intermediary) after the securities are issued. The market
value of these securities generally fluctuates more in response to changes in
interest rates than interest-paying securities of comparable maturity.
TENDER OPTION BONDS are relatively long-term bonds that are coupled with the
option to tender the securities to a bank, broker-dealer, or other financial
institution at periodic intervals and receive the face value of the bond.
This investment structure is commonly used as a means of enhancing a
security's liquidity.
U.S. GOVERNMENT SECURITIES include direct obligations of the U.S. Government
that are supported by its full faith and credit. Treasury bills have initial
maturities of less than one year, Treasury notes have initial maturities of
one to ten years, and Treasury bonds may be issued with any maturity but
generally have maturities of at least ten years. U.S. Government securities
also include indirect obligations of the U.S. Government that are issued by
federal agencies and government sponsored entities. Unlike Treasury
securities, agency securities generally are not backed by the full faith and
credit of the U.S. Government. Some agency securities are supported by the
right of the issuer to borrow from the Treasury, others are supported by the
discretionary authority of the U.S. Government to purchase the agency's
obligations, and others are supported only by the credit of the sponsoring
agency.
VARIABLE AND FLOATING RATE SECURITIES have variable or floating rates of
interest and, under certain limited circumstances, may have varying principal
amounts. Variable and floating rate securities pay interest at rates that are
adjusted periodically according to a specified formula, usually with
reference to some interest rate index or market interest rate (the
"underlying index"). The floating rate tends to decrease the security's price
sensitivity to changes in interest rates.
WARRANTS are securities, typically issued with preferred stock or bonds,
which give the holder the right to buy a proportionate amount of common stock
at a specified price. The specified price is usually higher than the market
price at the
Glossary of investment terms 39
time of issuance of the warrant. The right may last for a period of years or
indefinitely.
ZERO COUPON BONDS are debt securities that do not pay regular interest at
regular intervals, but are issued at a discount from face value. The discount
approximates the total amount of interest the security will accrue from the
date of issuance to maturity. The market value of these securities generally
fluctuates more in response to changes in interest rates than interest-paying
securities.
II. FUTURES, OPTIONS, AND OTHER DERIVATIVES
CREDIT DEFAULT SWAPS are a specific kind of counterparty agreement that
allows 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 of regular periodic payments.
EQUITY-LINKED STRUCTURED NOTES are debt securities which combine the
characteristics of common stock and the sale of an option. The return
component is based on the performance of a single equity security, a basket
of equity securities, or an equity index and the sale of an option which is
recognized as income. Equity-linked structured notes are typically offered in
limited transactions to financial institutions by investment banks. There is
no guaranteed return of principal with these securities. The appreciation
potential of these securities is limited by a maximum payment or call right
and can be influenced by many unpredictable factors.
FORWARD CONTRACTS are contracts to purchase or sell a specified amount of a
financial instrument for an agreed upon price at a specified time. Forward
contracts are not currently exchange-traded and are typically negotiated on
an individual basis. A Fund may enter into forward currency contracts for
investment purposes or to hedge against declines in the value of securities
denominated in, or whose value is tied to, a currency other than the U.S.
dollar or to reduce the impact of currency appreciation on purchases of such
securities. It may also enter into forward contracts to purchase or sell
securities or other financial indices.
FUTURES CONTRACTS are contracts that obligate the buyer to receive and the
seller to deliver an instrument or money at a specified price on a specified
date. A Fund may buy and sell futures contracts on foreign currencies,
securities, and financial indices including indices of U.S. Government,
foreign government, equity, or fixed-income securities. A Fund may also buy
options on futures contracts. An option on a futures contract gives the buyer
the right, but not the obligation, to buy or sell a futures contract at a
specified price on or before a specified date. Futures contracts and options
on futures are standardized and traded on designated exchanges.
40 Janus Orion Fund prospectus
INDEXED/STRUCTURED SECURITIES are typically short- to intermediate-term debt
securities whose value at maturity or interest rate is linked to currencies,
interest rates, equity securities, indices, commodity prices, or other
financial indicators. Such securities may be positively or negatively indexed
(e.g., their value may increase or decrease if the reference index or
instrument appreciates). Indexed/ structured securities may have return
characteristics similar to direct investments in the underlying instruments
and may be more volatile than the underlying instruments. A Fund bears the
market risk of an investment in the underlying instruments, as well as the
credit risk of the issuer.
INTEREST RATE SWAPS involve the exchange by two parties of their respective
commitments to pay or receive interest (e.g., an exchange of floating rate
payments for fixed rate payments).
INVERSE FLOATERS are debt instruments whose interest rate bears an inverse
relationship to the interest rate on another instrument or index. For
example, upon reset, the interest rate payable on the inverse floater may go
down when the underlying index has risen. Certain inverse floaters may have
an interest rate reset mechanism that multiplies the effects of change in the
underlying index. Such mechanism may increase the volatility of the
security's market value.
OPTIONS are the right, but not the obligation, to buy or sell a specified
amount of securities or other assets on or before a fixed date at a
predetermined price. A Fund may purchase and write put and call options on
securities, securities indices, and foreign currencies. A Fund may purchase
or write such options individually or in combination.
PARTICIPATORY NOTES are derivative securities which are linked to the
performance of an underlying Indian security and which allow investors to
gain market exposure to Indian securities without trading directly in the
local Indian market.
III. OTHER INVESTMENTS, STRATEGIES, AND/OR TECHNIQUES
REPURCHASE AGREEMENTS involve the purchase of a security by a Fund and a
simultaneous agreement by the seller (generally a bank or dealer) to
repurchase the security from the Fund at a specified date or upon demand.
This technique offers a method of earning income on idle cash. These
securities involve the risk that the seller will fail to repurchase the
security, as agreed. In that case, a Fund will bear the risk of market value
fluctuations until the security can be sold and may encounter delays and
incur costs in liquidating the security.
REVERSE REPURCHASE AGREEMENTS involve the sale of a security by a Fund to
another party (generally a bank or dealer) in return for cash and an
agreement by the Fund to buy the security back at a specified price and time.
This technique will be used primarily to provide cash to satisfy unusually
high redemption requests, or for other temporary or emergency purposes.
Glossary of investment terms 41
SHORT SALES in which a Fund may engage may be of two types, short sales
"against the box" or "naked" short sales. Short sales against the box involve
selling either a security that a Fund owns, or a security equivalent in kind
or amount to the security sold short that the Fund has the right to obtain,
for delivery at a specified date in the future. Naked short sales involve
selling a security that a Fund borrows and does not own. A Fund may enter
into a short sale to hedge against anticipated declines in the market price
of a security or to reduce portfolio volatility. If the value of a security
sold short increases prior to the scheduled delivery date, the Fund loses the
opportunity to participate in the gain. For naked short sales, the Fund will
incur a loss if the value of a security increases during this period because
it will be paying more for the security than it has received from the
purchaser in the short sale. If the price declines during this period, a Fund
will realize a short-term capital gain. Although a Fund's potential for gain
as a result of a short sale is limited to the price at which it sold the
security short less the cost of borrowing the security, its potential for
loss is theoretically unlimited because there is no limit to the cost of
replacing the borrowed security.
WHEN-ISSUED, DELAYED DELIVERY, AND FORWARD COMMITMENT TRANSACTIONS generally
involve the purchase of a security with payment and delivery at some time in
the future - i.e., beyond normal settlement. A Fund does not earn interest on
such securities until settlement and bears the risk of market value
fluctuations in between the purchase and settlement dates. New issues of
stocks and bonds, private placements, and U.S. Government securities may be
sold in this manner.
42 Janus Orion Fund prospectus
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You can make inquiries and request other
information, including a Statement of Additional
Information, Annual Report, or Semiannual Report,
free of charge, by contacting your financial
intermediary or plan sponsor, or by contacting a
Janus representative at 1-800-525-0020. The Fund's
Statement of Additional Information and most
recent Annual and Semiannual Reports are also
available, free of charge, on www.janus.com.
Additional information about the Fund's
investments is available in the Fund's Annual and
Semiannual Reports. In the Fund's Annual and
Semiannual Reports, you will find a discussion of
the market conditions and investment strategies
that significantly affected the Fund's performance
during its last fiscal period. Other information
is also available from financial intermediaries
that sell shares of the Fund.
The Statement of Additional Information provides
detailed information about the Fund and is
incorporated into this Prospectus by reference.
You may review and copy information about the Fund
(including the Fund's Statement of Additional
Information) at the Public Reference Room of the
SEC or get text only copies, after paying a
duplicating fee, by sending an electronic request
by e-mail to publicinfo@sec.gov or by writing to
or calling the Public Reference Room, Washington,
D.C. 20549-0102 (1-202-942-8090). Information on
the operation of the Public Reference Room may
also be obtained by calling this number. You may
also obtain reports and other information about
the Fund from the Electronic Data Gathering
Analysis and Retrieval (EDGAR) Database on the
SEC's website at http://www.sec.gov.
(JANUS LOGO)
www.janus.com
151 Detroit Street
Denver, CO 80206-4805
1-800-525-0020
The Trust's Investment Company Act File No. is 811-1879.
February 28, 2006
GROWTH
Janus Fund
Janus Enterprise Fund
Janus Mercury Fund
Janus Olympus Fund
Janus Orion Fund
Janus Triton Fund
SPECIALTY GROWTH
Janus Global Life Sciences Fund
Janus Global Technology Fund
CORE
Janus Balanced Fund
Janus Contrarian Fund
Janus Core Equity Fund
Janus Growth and Income Fund
Janus Research Fund
RISK-MANAGED
INTECH Risk-Managed Stock Fund
(formerly named Janus Risk-Managed Stock
Fund)
VALUE
Janus Mid Cap Value Fund - Investor Shares
INTERNATIONAL & GLOBAL
Janus Global Opportunities Fund
Janus Overseas Fund
Janus Worldwide Fund
JANUS EQUITY FUNDS
Prospectus
ELIMINATE PAPER MAIL. Set up e-Delivery of prospectuses, annual reports,
and statements at WWW.JANUS.COM.
The Securities and Exchange Commission has not approved or disapproved
of these securities or passed on the accuracy or adequacy of this
Prospectus. Any representation to the contrary is a criminal offense.
This Prospectus is for those shareholders investing directly with the
Funds.
(JANUS LOGO)
This Prospectus describes eighteen portfolios (each, a
"Fund" and collectively, the "Funds") of Janus
Investment Fund (the "Trust"). Janus Capital Management
LLC ("Janus Capital" or "Janus") serves as investment
adviser to each Fund. INTECH Risk-Managed Stock Fund is
subadvised by Enhanced Investment Technologies, LLC
("INTECH"). Janus Mid Cap Value Fund is subadvised by
Perkins, Wolf, McDonnell and Company, LLC ("Perkins").
None of the Funds in this Prospectus, except Janus Mid
Cap Value Fund, have any class designations. Janus Mid
Cap Value Fund currently offers two classes of shares,
with the Investor Shares being offered by this
Prospectus.
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<Table>
RISK/RETURN SUMMARY
Janus Fund............................................... 2
Janus Enterprise Fund.................................... 5
Janus Mercury Fund....................................... 8
Janus Olympus Fund....................................... 11
Janus Orion Fund......................................... 14
Janus Triton Fund........................................ 17
Janus Global Life Sciences Fund.......................... 19
Janus Global Technology Fund............................. 23
Janus Balanced Fund...................................... 27
Janus Contrarian Fund.................................... 30
Janus Core Equity Fund................................... 33
Janus Growth and Income Fund............................. 36
Janus Research Fund...................................... 39
INTECH Risk-Managed Stock Fund........................... 42
Janus Mid Cap Value Fund - Investor Shares............... 45
Janus Global Opportunities Fund.......................... 49
Janus Overseas Fund...................................... 53
Janus Worldwide Fund..................................... 57
FEES AND EXPENSES........................................... 60
PRINCIPAL INVESTMENT STRATEGIES AND RISKS
Frequently asked questions about principal investment
strategies............................................... 63
Risks.................................................... 68
Frequently asked questions about certain risks........... 69
General portfolio policies............................... 74
SHAREHOLDER'S MANUAL
Doing business with Janus................................ 80
Minimum investments...................................... 81
Types of account ownership............................... 81
To open an account or buy shares......................... 84
To exchange shares....................................... 85
To sell shares........................................... 85
Excessive trading........................................ 88
Redemption fee........................................... 92
Shareholder services and account policies................ 98
MANAGEMENT OF THE FUNDS
Investment adviser....................................... 102
Management expenses...................................... 104
Subadvisers.............................................. 105
Investment personnel..................................... 106
OTHER INFORMATION........................................... 117
DISTRIBUTIONS AND TAXES..................................... 121
FINANCIAL HIGHLIGHTS........................................ 124
GLOSSARY OF INVESTMENT TERMS................................ 143
</Table>
Table of contents 1
RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------
JANUS FUND
Janus Fund (the "Fund") is designed for long-term investors who primarily
seek growth of capital and who can tolerate the greater risks associated with
common stock investments.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
JANUS FUND seeks long-term growth of capital in a manner consistent with
the preservation of capital.
The Fund's Trustees may change this objective or the Fund's principal
investment strategies without a shareholder vote. If there is a material
change to the Fund's objective or principal investment strategies, you should
consider whether the Fund remains an appropriate investment for you. There is
no guarantee that the Fund will meet its objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund pursues its objective by investing primarily in common stocks
selected for their growth potential. Although the Fund may invest in
companies of any size, it generally invests in larger, more established
companies. As of December 31, 2005, the Fund's weighted average market
capitalization was $60.9 billion.
The portfolio manager applies a "bottom up" approach in choosing investments.
In other words, the portfolio manager looks at companies one at a time to
determine if a company is an attractive investment opportunity and if it is
consistent with the Fund's investment policies. If the portfolio manager is
unable to find such investments, the Fund's uninvested assets may be held in
cash or similar investments, subject to the Fund's specific investment
policies.
Within the parameters of its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities, which may include
investments in emerging markets. The Fund will limit its investment in high-
yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net
assets.
MAIN INVESTMENT RISKS
The biggest risk is that the Fund's returns may vary, and you could lose
money. The Fund is designed for long-term investors interested in an equity
portfolio, including common stocks. Common stocks tend to be more volatile
than many other investment choices.
The value of the Fund's portfolio may decrease if the value of an individual
company or multiple companies in the portfolio decreases. The value of the
Fund's portfolio could also decrease if the stock market goes down regardless
of
2 Janus Equity Funds prospectus
how well the individual companies perform. If the value of the Fund's
portfolio decreases, the Fund's net asset value ("NAV") will also decrease,
which means if you sell your shares in the Fund you may lose money.
To the extent the Fund invests in foreign securities, returns and NAV may be
affected to a large degree by fluctuations in currency exchange rates or
political or economic changes in a particular country. To the extent the Fund
invests in high-yield/high-risk bonds, returns and NAV may be affected by
factors such as economic changes, political changes, or developments specific
to the company that issued the bond.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
PERFORMANCE INFORMATION
The following information provides some indication of the risks of investing
in the Fund by showing how the Fund's performance has varied over time. The
bar chart depicts the change in performance from year to year during the
periods indicated. The table compares the Fund's average annual returns for
the periods indicated to broad-based securities market indices. The indices
are not available for direct investment.
Risk/return summary 3
JANUS FUND
<Table>
Annual returns for periods ended 12/31
19.61% 22.72% 38.89% 47.13% (14.91)% (26.10)% (27.56)% 31.71% 4.69% 3.98%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Best Quarter: 4th-1998 28.44% Worst Quarter: 3rd-2001 (25.82)%
</Table>
<Table>
<Caption>
Average annual total return for periods ended 12/31/05
------------------------------------------------------
Since Inception
1 year 5 years 10 years (2/5/70)
Janus Fund
Return Before Taxes 3.98% (5.16)% 6.95% 13.82%
Return After Taxes on Distributions 3.97% (5.16)% 5.47% 10.82%
Return After Taxes on Distributions and
Sale of Fund Shares(1) 2.60% (4.31)% 5.50% 10.68%
Russell 1000(R) Growth Index(2) 5.26% (3.58)% 6.73% N/A
(reflects no deduction for expenses,
fees, or taxes)
S&P 500(R) Index(3) 4.91% 0.54% 9.07% 11.35%
(reflects no deduction for expenses,
fees, or taxes)
-----------------------------------------
</Table>
(1) If the Fund incurs a loss, which generates a tax benefit, the Return
After Taxes on Distributions and Sale of Fund Shares may exceed the
Fund's other return figures.
(2) The Russell 1000(R) Growth Index measures the performance of those
Russell 1000 companies with higher price-to-book ratios and higher
forecasted growth values.
(3) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500
stocks, a widely recognized, unmanaged index of common stock prices.
After-tax returns are calculated using the historically highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your individual tax situation
and may differ from those shown in the preceding table. The after-tax return
information shown above does not apply to Fund shares held through a
tax-deferred account, such as a 401(k) plan or IRA.
The Fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
4 Janus Equity Funds prospectus
JANUS ENTERPRISE FUND
Janus Enterprise Fund (the "Fund") is designed for long-term investors who
primarily seek growth of capital and who can tolerate the greater risks
associated with common stock investments.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
JANUS ENTERPRISE FUND seeks long-term growth of capital.
The Fund's Trustees may change this objective or the Fund's principal
investment strategies without a shareholder vote. If there is a material
change to the Fund's objective or principal investment strategies, you should
consider whether the Fund remains an appropriate investment for you. There is
no guarantee that the Fund will meet its objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund pursues its objective by investing primarily in common stocks
selected for their growth potential, and normally invests at least 50% of its
equity assets in medium-sized companies. Medium-sized companies are those
whose market capitalization falls within the range of companies in the
Russell Midcap(R) Growth Index. Market capitalization is a commonly used
measure of the size and value of a company. The market capitalizations within
the Index will vary, but as of December 31, 2005, they ranged from
approximately $978 million to $17.9 billion.
The portfolio manager applies a "bottom up" approach in choosing investments.
In other words, the portfolio manager looks at companies one at a time to
determine if a company is an attractive investment opportunity and if it is
consistent with the Fund's investment policies. If the portfolio manager is
unable to find such investments, the Fund's uninvested assets may be held in
cash or similar investments, subject to the Fund's specific investment
policies.
Within the parameters of its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities, which may include
investments in emerging markets. The Fund will limit its investment in high-
yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net
assets.
MAIN INVESTMENT RISKS
The biggest risk is that the Fund's returns may vary, and you could lose
money. The Fund is designed for long-term investors interested in an equity
portfolio, including common stocks. Common stocks tend to be more volatile
than many other investment choices.
Risk/return summary 5
The value of the Fund's portfolio may decrease if the value of an individual
company or multiple companies in the portfolio decreases. The value of the
Fund's portfolio could also decrease if the stock market goes down regardless
of how well the individual companies perform. If the value of the Fund's
portfolio decreases, the Fund's net asset value ("NAV") will also decrease,
which means if you sell your shares in the Fund you may lose money.
The Fund normally invests at least 50% of its equity assets in securities
issued by medium-sized companies. The Fund may also invest in securities
issued by small-sized companies. Medium-sized and small-sized companies tend
to be more volatile than securities issued by larger or more established
companies. As a result, the Fund's returns may be more volatile than those of
a fund holding securities of larger, more established companies.
To the extent the Fund invests in foreign securities, returns and NAV may be
affected to a large degree by fluctuations in currency exchange rates or
political or economic changes in a particular country. To the extent the Fund
invests in high-yield/high-risk bonds, returns and NAV may be affected by
factors such as economic changes, political changes, or developments specific
to the company that issued the bond.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
PERFORMANCE INFORMATION
The following information provides some indication of the risks of investing
in the Fund by showing how the Fund's performance has varied over time. The
bar chart depicts the change in performance from year to year during the
periods indicated. The table compares the Fund's average annual returns for
the periods indicated to broad-based securities market indices. The indices
are not available for direct investment.
6 Janus Equity Funds prospectus
JANUS ENTERPRISE FUND
<Table>
Annual returns for periods ended 12/31
11.65% 10.82% 33.75% 121.90% (30.52)% (39.93)% (28.28)% 35.82% 20.69% 11.40%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Best Quarter: 4th-1999 57.93% Worst Quarter: 1st-2001 (32.66)%
</Table>
<Table>
<Caption>
Average annual total return for periods ended 12/31/05
------------------------------------------------------
Since Inception
1 year 5 years 10 years (9/1/92)
Janus Enterprise Fund
Return Before Taxes 11.40% (4.68)% 7.22% 11.31%
Return After Taxes on Distributions 11.40% (4.68)% 6.54% 10.39%
Return After Taxes on Distributions and
Sale of Fund Shares(1) 7.41% (3.92)% 6.05% 9.72%
Russell Midcap(R) Growth Index(2) 12.10% 1.38% 9.27% 11.03%
(reflects no deduction for expenses,
fees, or taxes)
S&P MidCap 400 Index(3) 12.56% 8.60% 14.36% 14.71%
(reflects no deduction for expenses,
fees, or taxes)
------------------------------------------
</Table>
(1) If the Fund incurs a loss, which generates a tax benefit, the Return
After Taxes on Distributions and Sale of Fund Shares may exceed the
Fund's other return figures.
(2) The Russell Midcap(R) Growth Index measures the performance of those
Russell Midcap companies with higher price-to-book ratios and higher
forecasted growth values. The stocks are also members of the Russell
1000(R) Growth Index.
(3) The S&P MidCap 400 Index is an unmanaged group of 400 domestic stocks
chosen for their market size, liquidity, and industry group
representation.
After-tax returns are calculated using the historically highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your individual tax situation
and may differ from those shown in the preceding table. The after-tax return
information shown above does not apply to Fund shares held through a
tax-deferred account, such as a 401(k) plan or IRA.
The Fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
Risk/return summary 7
JANUS MERCURY FUND
Janus Mercury Fund (the "Fund") is designed for long-term investors who
primarily seek growth of capital and who can tolerate the greater risks
associated with common stock investments.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
JANUS MERCURY FUND seeks long-term growth of capital.
The Fund's Trustees may change this objective or the Fund's principal
investment strategies without a shareholder vote. If there is a material
change to the Fund's objective or principal investment strategies, you should
consider whether the Fund remains an appropriate investment for you. There is
no guarantee that the Fund will meet its objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund pursues its objective by investing primarily in common stocks
selected for their growth potential. The Fund may invest in companies of any
size, from larger, well-established companies to smaller, emerging growth
companies.
Janus Capital's equity research analysts (the "Research Team") select
investments for the Fund. The Research Team, comprised of sector specialists,
conducts fundamental analysis with a focus on "bottom-up" research,
quantitative modeling, and valuation analysis. Using this research process,
analysts rate their stocks based upon attractiveness. Analysts bring their
high conviction ideas to their respective sector teams. Sector teams compare
the appreciation potential of each of the team's high-conviction ideas and
construct a sector portfolio that is intended to maximize the best
risk-reward opportunities. Although the Research Team may find
high-conviction investment ideas anywhere in the world, the Research Team may
emphasize investments in securities of U.S. based issuers.
Positions may be sold when, among other things, there is no longer high
conviction in the return potential of the investment or if the risk
characteristics have caused a re-evaluation of the opportunity. This may
occur if the stock has appreciated and reflects the anticipated value, if
another company represents a better risk/reward opportunity or if the
investment's fundamental characteristics deteriorate. Securities may also be
sold from the portfolio to rebalance sector weightings.
Janus Capital's Director of Research oversees the investment process and is
responsible for day-to-day operations of the Fund. It is expected that the
Fund will be broadly diversified among a variety of industry sectors. The
Fund intends to be fully invested under normal circumstances, but may at
times hold cash or cash equivalents.
8 Janus Equity Funds prospectus
Within the parameters of its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities, which may include
investments in emerging markets. The Fund will limit its investment in high-
yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net
assets.
MAIN INVESTMENT RISKS
The biggest risk is that the Fund's returns may vary, and you could lose
money. The Fund is designed for long-term investors interested in an equity
portfolio, including common stocks. Common stocks tend to be more volatile
than many other investment choices.
The value of the Fund's portfolio may decrease if the value of an individual
company or multiple companies in the portfolio decreases. The value of the
Fund's portfolio could also decrease if the stock market goes down regardless
of how well the individual companies perform. If the value of the Fund's
portfolio decreases, the Fund's net asset value ("NAV") will also decrease,
which means if you sell your shares in the Fund you may lose money.
To the extent the Fund invests in foreign securities, returns and NAV may be
affected to a large degree by fluctuations in currency exchange rates or
political or economic changes in a particular country. To the extent the Fund
invests in high-yield/high-risk bonds, returns and NAV may be affected by
factors such as economic changes, political changes, or developments specific
to the company that issued the bond.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
PERFORMANCE INFORMATION
The following information provides some indication of the risks of investing
in the Fund by showing how the Fund's performance has varied over time. The
bar chart depicts the change in performance from year to year during the
periods indicated. The table compares the Fund's average annual returns for
the periods indicated to broad-based securities market indices. The indices
are not available for direct investment.
Risk/return summary 9
JANUS MERCURY FUND
<Table>
Annual returns for periods ended 12/31
17.67% 11.88% 58.41% 96.23% (22.75)% (29.78)% (29.00)% 32.11% 10.77% 6.82%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Best Quarter: 4th-1999 42.72% Worst Quarter: 1st-2001 (24.30)%
</Table>
<Table>
<Caption>
Average annual total return for periods ended 12/31/05
------------------------------------------------------
Since Inception
1 year 5 years 10 years (5/3/93)
Janus Mercury Fund
Return Before Taxes 6.82% (4.86)% 9.43% 12.71%
Return After Taxes on Distributions 6.78% (4.90)% 7.67% 10.82%
Return After Taxes on Distributions and
Sale of Fund Shares(1) 4.49% (4.08)% 7.39% 10.37%
Russell 1000(R) Growth Index(2) 5.26% (3.58)% 6.73% 8.75%
(reflects no deduction for expenses,
fees, or taxes)
S&P 500(R) Index(3) 4.91% 0.54% 9.07% 10.58%
(reflects no deduction for expenses,
fees, or taxes)
------------------------------------------
</Table>
(1) If the Fund incurs a loss, which generates a tax benefit, the Return
After Taxes on Distributions and Sale of Fund Shares may exceed the
Fund's other return figures.
(2) The Russell 1000(R) Growth Index measures the performance of those
Russell 1000 companies with higher price-to-book ratios and higher
forecasted growth values.
(3) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500
stocks, a widely recognized, unmanaged index of common stock prices.
After-tax returns are calculated using the historically highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your individual tax situation
and may differ from those shown in the preceding table. The after-tax return
information shown above does not apply to Fund shares held through a
tax-deferred account, such as a 401(k) plan or IRA.
The Fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
10 Janus Equity Funds prospectus
JANUS OLYMPUS FUND
Janus Olympus Fund (the "Fund") is designed for long-term investors who
primarily seek growth of capital and who can tolerate the greater risks
associated with common stock investments.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
JANUS OLYMPUS FUND seeks long-term growth of capital.
The Fund's Trustees may change this objective or the Fund's principal
investment strategies without a shareholder vote. If there is a material
change to the Fund's objective or principal investment strategies, you should
consider whether the Fund remains an appropriate investment for you. There is
no guarantee that the Fund will meet its objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund pursues its objective by investing primarily in common stocks
selected for their growth potential. The Fund may invest in companies of any
size, from larger, well-established companies to smaller, emerging growth
companies.
The portfolio manager applies a "bottom up" approach in choosing investments.
In other words, the portfolio manager looks at companies one at a time to
determine if a company is an attractive investment opportunity and if it is
consistent with the Fund's investment policies. If the portfolio manager is
unable to find such investments, the Fund's uninvested assets may be held in
cash or similar investments, subject to the Fund's specific investment
policies.
Within the parameters of its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities, which may include
investments in emerging markets. The Fund will limit its investment in high-
yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net
assets.
MAIN INVESTMENT RISKS
The biggest risk is that the Fund's returns may vary, and you could lose
money. The Fund is designed for long-term investors interested in an equity
portfolio, including common stocks. Common stocks tend to be more volatile
than many other investment choices.
The value of the Fund's portfolio may decrease if the value of an individual
company or multiple companies in the portfolio decreases. The value of the
Fund's portfolio could also decrease if the stock market goes down regardless
of how well the individual companies perform. If the value of the Fund's
portfolio decreases, the Fund's net asset value ("NAV") will also decrease,
which means if you sell your shares in the Fund you may lose money.
Risk/return summary 11
To the extent the Fund invests in foreign securities, returns and NAV may be
affected to a large degree by fluctuations in currency exchange rates or
political or economic changes in a particular country. To the extent the Fund
invests in high-yield/high-risk bonds, returns and NAV may be affected by
factors such as economic changes, political changes, or developments specific
to the company that issued the bond.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
PERFORMANCE INFORMATION
The following information provides some indication of the risks of investing
in the Fund by showing how the Fund's performance has varied over time. The
bar chart depicts the change in performance from year to year during the
periods indicated. The table compares the Fund's average annual returns for
the periods indicated to broad-based securities market indices. The indices
are not available for direct investment.
12 Janus Equity Funds prospectus
JANUS OLYMPUS FUND
<Table>
Annual returns for periods ended 12/31
21.73% 26.73% 56.97% 100.12% (21.63)% (32.05)% (28.19)% 31.65% 8.74% 14.21%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Best Quarter: 4th-1999 51.67% Worst Quarter: 1st-2001 (26.29)%
</Table>
<Table>
<Caption>
Average annual total return for periods ended 12/31/05
------------------------------------------------------
Since Inception
1 year 5 years 10 years (12/29/95)
Janus Olympus Fund
Return Before Taxes 14.21% (4.42)% 11.72% 11.72%
Return After Taxes on Distributions 14.21% (4.45)% 11.36% 11.35%
Return After Taxes on Distributions and
Sale of Fund Shares(1) 9.24% (3.72)% 10.33% 10.33%
Russell 1000(R) Growth Index(2) 5.26% (3.58)% 6.73% 6.73%
(reflects no deduction for expenses,
fees, or taxes)
S&P 500(R) Index(3) 4.91% 0.54% 9.07% 9.07%
(reflects no deduction for expenses,
fees, or taxes)
------------------------------------------
</Table>
(1) If the Fund incurs a loss, which generates a tax benefit, the Return
After Taxes on Distributions and Sale of Fund Shares may exceed the
Fund's other return figures.
(2) The Russell 1000(R) Growth Index measures the performance of those
Russell 1000 companies with higher price-to-book ratios and higher
forecasted growth values.
(3) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500
stocks, a widely recognized, unmanaged index of common stock prices.
After-tax returns are calculated using the historically highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your individual tax situation
and may differ from those shown in the preceding table. The after-tax return
information shown above does not apply to Fund shares held through a
tax-deferred account, such as a 401(k) plan or IRA.
The Fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
Risk/return summary 13
JANUS ORION FUND
Janus Orion Fund (the "Fund") is designed for long-term investors who
primarily seek growth of capital and who can tolerate the greater risks
associated with common stock investments.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
JANUS ORION FUND seeks long-term growth of capital.
The Fund's Trustees may change this objective or the Fund's principal
investment strategies without a shareholder vote. If there is a material
change to the Fund's objective or principal investment strategies, you should
consider whether the Fund remains an appropriate investment for you. There is
no guarantee that the Fund will meet its objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund pursues its objective by normally investing primarily in a core
group of 20-30 domestic and foreign common stocks selected for their growth
potential. The Fund may invest in companies of any size, from larger, well-
established companies to smaller, emerging growth companies.
The portfolio manager applies a "bottom up" approach in choosing investments.
In other words, the portfolio manager looks at companies one at a time to
determine if a company is an attractive investment opportunity and if it is
consistent with the Fund's investment policies. If the portfolio manager is
unable to find such investments, the Fund's uninvested assets may be held in
cash or similar investments, subject to the Fund's specific investment
policies.
Within the parameters of its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities, which may include
investments in emerging markets. The Fund will limit its investment in high-
yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net
assets.
MAIN INVESTMENT RISKS
The biggest risk is that the Fund's returns may vary, and you could lose
money. The Fund invests primarily in common stocks, which tend to be more
volatile than many other investment choices.
The value of the Fund's portfolio may decrease if the value of an individual
company or multiple companies in the portfolio decreases. The value of the
Fund's portfolio could also decrease if the stock market goes down regardless
of how well the individual companies perform. If the value of the Fund's
portfolio decreases, the Fund's net asset value ("NAV") will also decrease,
which means if you sell your shares in the Fund you may lose money.
14 Janus Equity Funds prospectus
The Fund is classified as nondiversified. This means it may hold larger
positions in a smaller number of securities than a fund that is classified as
diversified. As a result, a single security's increase or decrease in value
may have a greater impact on the Fund's NAV and total return.
The Fund may have significant exposure to foreign markets, including emerging
markets. As a result, its returns and NAV may be affected to a large degree
by fluctuations in currency exchange rates or political or economic
conditions in a particular country. A market swing in one or more countries
or regions where the Fund has invested a significant amount of its assets may
have a greater effect on the Fund's performance than it would in a more
geographically diversified portfolio. The Fund's investments in emerging
market countries may involve risks greater than, or in addition to, the risks
of investing in more developed countries. As of October 31, 2005,
approximately 13.7% of the Fund's investments were in emerging markets.
To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV
may be affected by factors such as economic changes, political changes, or
developments specific to the company that issued the bond.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
PERFORMANCE INFORMATION
The following information provides some indication of the risks of investing
in the Fund by showing how the Fund's performance has varied over time. The
bar chart depicts the change in performance from year to year during the
periods indicated. The table compares the Fund's average annual returns for
the periods indicated to broad-based securities market indices. The indices
are not available for direct investment.
Risk/return summary 15
JANUS ORION FUND
<Table>
Annual returns for periods ended 12/31
(14.69)% (29.77)% 43.81% 14.90% 20.93%
2001 2002 2003 2004 2005
Best Quarter: 2nd-2003 23.59% Worst Quarter: 1st-2001 (22.54)%
</Table>
<Table>
<Caption>
Average annual total return for periods ended 12/31/05
------------------------------------------------------
Since Inception
1 year 5 years (6/30/00)
Janus Orion Fund
Return Before Taxes 20.93% 3.67% (3.08)%
Return After Taxes on Distributions 20.71% 3.63% (3.13)%
Return After Taxes on Distributions and Sale of
Fund Shares(1) 13.70% 3.13% (2.62)%
Russell 3000(R) Growth Index(2) 5.17% (3.15)% (7.91)%
(reflects no deduction for expenses, fees, or
taxes)
S&P 500(R) Index(3) 4.91% 0.54% (1.16)%
(reflects no deduction for expenses, fees, or
taxes)
--------------------------------
</Table>
(1) If the Fund incurs a loss, which generates a tax benefit, the Return
After Taxes on Distributions and Sale of Fund Shares may exceed the
Fund's other return figures.
(2) The Russell 3000(R) Growth Index measures the performance of those
Russell 3000(R) Index companies with higher price-to-book ratios and
higher forecasted growth values. The stocks in this index are also
members of either the Russell 1000(R) Growth or the Russell 2000(R)
Growth indices.
(3) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500
stocks, a widely recognized, unmanaged index of common stock prices.
After-tax returns are calculated using the historically highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your individual tax situation
and may differ from those shown in the preceding table. The after-tax return
information shown above does not apply to Fund shares held through a
tax-deferred account, such as a 401(k) plan or IRA.
The Fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
16 Janus Equity Funds prospectus
JANUS TRITON FUND
Janus Triton Fund (the "Fund") is designed for long-term investors who
primarily seek growth of capital and who can tolerate the greater risks
associated with common stock investments.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
JANUS TRITON FUND seeks long-term growth of capital.
The Fund's Trustees may change this objective or the Fund's principal
investment strategies without a shareholder vote. If there is a material
change to the Fund's objective or principal investment strategies, you should
consider whether the Fund remains an appropriate investment for you. There is
no guarantee that the Fund will meet its objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund pursues its objective by investing primarily in common stocks
selected for their growth potential. In pursuing that objective, the Fund
invests in equity securities of small- and medium-sized companies. Generally,
small- and medium-sized companies have a market capitalization of less than
$10 billion. Market capitalization is a commonly used measure of the size and
value of a company.
The portfolio manager applies a "bottom up" approach in choosing investments.
In other words, the portfolio manager looks at companies one at a time to
determine if a company is an attractive investment opportunity and if it is
consistent with the Fund's investment policies. If the portfolio manager is
unable to find such investments, the Fund's uninvested assets may be held in
cash or similar investments, subject to the Fund's specific investment
policies.
Within the parameters of its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities, which may include
investments in emerging markets. The Fund will limit its investment in high-
yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net
assets.
MAIN INVESTMENT RISKS
The biggest risk is that the Fund's returns may vary, and you could lose
money. The Fund is designed for long-term investors interested in an equity
portfolio, including common stocks. Common stocks tend to be more volatile
than many other investment choices.
The value of the Fund's portfolio may decrease if the value of an individual
company or multiple companies in the portfolio decreases. The value of the
Fund's portfolio could also decrease if the stock market goes down regardless
of how well the individual companies perform. If the value of the Fund's
portfolio
Risk/return summary 17
decreases, the Fund's net asset value ("NAV") will also decrease, which means
if you sell your shares in the Fund you may lose money.
The Fund invests its equity assets in securities issued by small- and medium-
sized companies. Due to inherent risks such as limited product lines and/or
operating history, competitive threats, limited financial resources, and the
potential lack of management depth, small- and medium-sized companies tend to
be more volatile than securities issued by larger or more established
companies. As a result, these holdings could have a significant impact or
negative effect on the Fund's returns.
The Fund may have significant exposure to foreign markets, including emerging
markets. As a result, its returns and NAV may be affected to a large degree
by fluctuations in currency exchange rates or political or economic
conditions in a particular country. A market swing in one or more countries
or regions where the Fund has invested a significant amount of its assets may
have a greater effect on the Fund's performance than it would in a more
geographically diversified portfolio. The Fund's investments in emerging
market countries may involve risks greater than, or in addition to, the risks
of investing in more developed countries. As of October 31, 2005,
approximately 6.5% of the Fund's investments were in emerging markets.
To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV
may be affected by factors such as economic changes, political changes, or
developments specific to the company that issued the bond.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
PERFORMANCE INFORMATION
Since the Fund did not commence operations until February 25, 2005, it does
not have a full calendar year of operations. Performance information for
certain periods is included in the Fund's semiannual and annual reports. The
performance of this Fund is compared to the Russell 2500(TM) Growth Index,
which is the Fund's benchmark index. The Russell 2500(TM) Growth Index
measures the performance of those Russell 2500 companies with higher price-
to-book ratios and higher forecasted growth values.
18 Janus Equity Funds prospectus
JANUS GLOBAL LIFE SCIENCES FUND
Janus Global Life Sciences Fund (the "Fund") is designed for long-term
investors who primarily seek growth of capital and who can tolerate the
greater risks associated with common stock investments.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
JANUS GLOBAL LIFE SCIENCES FUND seeks long-term growth of capital.
The Fund's Trustees may change this objective or the Fund's principal
investment strategies without a shareholder vote. The Fund has a policy of
investing at least 80% of its net assets in the type of securities suggested
by its name. The Fund will notify you in writing at least 60 days before
making any changes to this policy. If there is a material change to the
Fund's objective or principal investment strategies, you should consider
whether the Fund remains an appropriate investment for you. There is no
guarantee that the Fund will meet its objective.
Strategies and policies that are noted as "fundamental" cannot be changed
without a shareholder vote.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests, under normal circumstances, at least 80% of its net assets
plus the amount of any borrowings for investment purposes, in securities of
companies that the portfolio manager believes have a life science
orientation. Generally speaking, the "life sciences" relate to maintaining or
improving quality of life. So, for example, companies with a "life science
orientation" include companies engaged in research, development, production,
or distribution of products or services related to health and personal care,
medicine, or pharmaceuticals. The Fund implements this policy by investing
primarily in equity securities of U.S. and foreign companies selected for
their growth potential. The Fund normally invests in issuers from several
different countries, which may include the United States. The Fund may, under
unusual circumstances, invest in a single country. As a fundamental policy,
the Fund normally invests at least 25% of its total assets in the "life
sciences" sector, which may include companies in the following industries:
health care; pharmaceuticals; agriculture; cosmetics/personal care; and
biotechnology. The Fund may have significant exposure to emerging markets.
For the Fund's 80% investment policy, assets are measured at the time of
purchase.
Risk/return summary 19
The portfolio manager applies a "bottom up" approach in choosing investments.
In other words, the portfolio manager looks at companies one at a time to
determine if a company is an attractive investment opportunity and if it is
consistent with the Fund's investment policies. If the portfolio manager is
unable to find such investments, the Fund's uninvested assets may be held in
cash or similar investments, subject to the Fund's specific investment
policies.
Within the parameters of its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities, which may include
investments in emerging markets. The Fund will limit its investment in high-
yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net
assets.
MAIN INVESTMENT RISKS
The biggest risk is that the Fund's returns may vary, and you could lose
money. The Fund is designed for long-term investors interested in an equity
portfolio, including common stocks. Common stocks tend to be more volatile
than many other investment choices.
The value of the Fund's portfolio may decrease if the value of an individual
company or multiple companies in the portfolio decreases. The value of the
Fund's portfolio could also decrease if the stock market goes down regardless
of how well the individual companies perform. If the value of the Fund's
portfolio decreases, the Fund's net asset value ("NAV") will also decrease,
which means if you sell your shares in the Fund you may lose money.
The Fund may have significant exposure to foreign markets, including emerging
markets. As a result, its returns and NAV may be affected to a large degree
by fluctuations in currency exchange rates or political or economic
conditions in a particular country. A market swing in one or more countries
or regions where the Fund has invested a significant amount of its assets may
have a greater effect on the Fund's performance than it would in a more
geographically diversified portfolio. The Fund's investments in emerging
market countries may involve risks greater than, or in addition to, the risks
of investing in more developed countries.
The Fund concentrates its investments in related industry groups. Because of
this, companies in its portfolio may share common characteristics and react
similarly to market developments. For example, many companies with a life
science orientation are highly regulated and may be dependent upon certain
types of technology. As a result, changes in government funding or subsidies,
new or anticipated legislative changes, or technological advances could
affect the value of such companies and, therefore, the Fund's NAV. The Fund's
returns may be more volatile than those of a less concentrated portfolio.
20 Janus Equity Funds prospectus
To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV
may be affected by factors such as economic changes, political changes, or
developments specific to the company that issued the bond.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
PERFORMANCE INFORMATION
The following information provides some indication of the risks of investing
in the Fund by showing how the Fund's performance has varied over time. The
bar chart depicts the change in performance from year to year during the
periods indicated. The table compares the Fund's average annual returns for
the periods indicated to broad-based securities market indices. The indices
are not available for direct investment.
Risk/return summary 21
JANUS GLOBAL LIFE SCIENCES FUND
<Table>
Annual returns for periods ended 12/31
61.00% 33.34% (18.09)% (30.11)% 27.44% 14.95% 11.45%
1999 2000 2001 2002 2003 2004 2005
Best Quarter: 4th-1999 31.32% Worst Quarter: 1st-2001 (26.25)%
</Table>
<Table>
<Caption>
Average annual total return for periods ended 12/31/05
------------------------------------------------------
Since Inception
1 year 5 years (12/31/98)
Janus Global Life Sciences Fund
Return Before Taxes 11.45% (1.34)% 10.46%
Return After Taxes on Distributions 11.45% (1.34)% 10.46%
Return After Taxes on Distributions and Sale of
Fund Shares(1) 7.44% (1.14)% 9.23%
S&P 500(R) Index(2) 4.91% 0.54% 1.77%
(reflects no deduction for expenses, fees, or
taxes)
Morgan Stanley Capital International World Health
Care Index(3) 9.00% (0.35)% 1.58%
(reflects no deduction for expenses, fees, or
taxes)
----------------------------------
</Table>
(1) If the Fund incurs a loss, which generates a tax benefit, the Return
After Taxes on Distributions and Sale of Fund Shares may exceed the
Fund's other return figures.
(2) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500
stocks, a widely recognized, unmanaged index of common stock prices.
(3) The Morgan Stanley Capital International World Health Care Index is a
capitalization weighted index that monitors the performance of health
care stocks from developed market countries in North America, Europe, and
the Asia/Pacific Region.
After-tax returns are calculated using the historically highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your individual tax situation
and may differ from those shown in the preceding table. The after-tax return
information shown above does not apply to Fund shares held through a
tax-deferred account, such as a 401(k) plan or IRA.
The Fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
22 Janus Equity Funds prospectus
JANUS GLOBAL TECHNOLOGY FUND
Janus Global Technology Fund (the "Fund") is designed for long-term investors
who primarily seek growth of capital and who can tolerate the greater risks
associated with common stock investments.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
JANUS GLOBAL TECHNOLOGY FUND seeks long-term growth of capital.
The Fund's Trustees may change this objective or the Fund's principal
investment strategies without a shareholder vote. The Fund has a policy of
investing at least 80% of its net assets in the type of securities suggested
by its name. The Fund will notify you in writing at least 60 days before
making any changes to this policy. If there is a material change to the
Fund's objective or principal investment strategies, you should consider
whether the Fund remains an appropriate investment for you. There is no
guarantee that the Fund will meet its objective.
PRINCIPAL INVESTMENT STRATEGIES
A team of technology analysts (the "Technology Team") selects investments for
the Fund. The Fund invests, under normal circumstances, at least 80% of its
net assets plus the amount of any borrowings for investment purposes, in
securities of companies that the Technology Team believes will benefit
significantly from advances or improvements in technology. These companies
generally fall into two categories:
a. companies that the Technology Team believes have or will develop products,
processes, or services that will provide significant technological
advancements or improvements; and
b. companies that the Technology Team believes rely extensively on technology
in connection with their operations or services.
The Fund implements this policy by investing primarily in equity securities
of U.S. and foreign companies selected for their growth potential. The Fund
normally invests in issuers from several different countries, which may
include the United States. The Fund may, under unusual circumstances, invest
in a single country. The Fund may have significant exposure to emerging
markets.
For the Fund's 80% investment policy, assets are measured at the time of
purchase.
The Technology Team applies a "bottom up" approach in choosing investments.
In other words, the Technology Team looks at companies one at a time to
determine if a company is an attractive investment opportunity and if it is
Risk/return summary 23
consistent with the Fund's investment policies. If the Technology Team is
unable to find such investments, the Fund's uninvested assets may be held in
cash or similar investments, subject to the Fund's specific investment
policies.
Within the parameters of its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities, which may include
investments in emerging markets. The Fund will limit its investment in high-
yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net
assets.
MAIN INVESTMENT RISKS
The biggest risk is that the Fund's returns may vary, and you could lose
money. The Fund is designed for long-term investors interested in an equity
portfolio, including common stocks. Common stocks tend to be more volatile
than many other investment choices.
The value of the Fund's portfolio may decrease if the value of an individual
company or multiple companies in the portfolio decreases. The value of the
Fund's portfolio could also decrease if the stock market goes down regardless
of how well the individual companies perform. If the value of the Fund's
portfolio decreases, the Fund's net asset value ("NAV") will also decrease,
which means if you sell your shares in the Fund you may lose money.
The Fund may have significant exposure to foreign markets, including emerging
markets. As a result, its returns and NAV may be affected to a large degree
by fluctuations in currency exchange rates or political or economic
conditions in a particular country. A market swing in one or more countries
or regions where the Fund has invested a significant amount of its assets may
have a greater effect on the Fund's performance than it would in a more
geographically diversified portfolio. The Fund's investments in emerging
market countries may involve risks greater than, or in addition to, the risks
of investing in more developed countries. As of October 31, 2005,
approximately 10.9% of the Fund's investments were in emerging markets.
Although the Fund does not concentrate its investments in specific
industries, it may invest in companies related in such a way that they react
similarly to certain market pressures. For example, competition among
technology companies may result in increasingly aggressive pricing of their
products and services, which may affect the profitability of companies in the
Fund's portfolio. In addition, because of the rapid pace of technological
development, products or services developed by companies in the Fund's
portfolio may become rapidly obsolete or have relatively short product
cycles. As a result, the Fund's returns may be considerably more volatile
than the returns of a fund that does not invest in similarly related
companies.
24 Janus Equity Funds prospectus
To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV
may be affected by factors such as economic changes, political changes, or
developments specific to the company that issued the bond.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
PERFORMANCE INFORMATION
The following information provides some indication of the risks of investing
in the Fund by showing how the Fund's performance has varied over time. The
bar chart depicts the change in performance from year to year during the
periods indicated. The table compares the Fund's average annual returns for
the periods indicated to broad-based securities market indices. The indices
are not available for direct investment.
Risk/return summary 25
JANUS GLOBAL TECHNOLOGY FUND
<Table>
Annual returns for periods ended 12/31
211.55% (33.67)% (39.96)% (40.94)% 47.14% 1.23% 11.50%
1999 2000 2001 2002 2003 2004 2005
Best Quarter: 4th-1999 73.95% Worst Quarter: 3rd-2001 (36.20)%
</Table>
<Table>
<Caption>
Average annual total return for periods ended 12/31/05
------------------------------------------------------
Since Inception
1 year 5 years (12/31/98)
Janus Global Technology Fund
Return Before Taxes 11.50% (10.05)% 2.85%
Return After Taxes on Distributions 11.49% (10.05)% 2.72%
Return After Taxes on Distributions and Sale of
Fund Shares(1) 7.49% (8.24)% 2.40%
S&P 500(R) Index(2) 4.91% 0.54% 1.77%
(reflects no deduction for expenses, fees, or
taxes)
Morgan Stanley Capital International World
Information Technology Index(3) 4.81% (7.19)% (3.09)%
(reflects no deduction for expenses, fees, or
taxes)
----------------------------------
</Table>
(1) If the Fund incurs a loss, which generates a tax benefit, the Return
After Taxes on Distributions and Sale of Fund Shares may exceed the
Fund's other return figures.
(2) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500
stocks, a widely recognized, unmanaged index of common stock prices.
(3) The Morgan Stanley Capital International World Information Technology
Index is a capitalization weighted index that monitors the performance of
information technology stocks from developed market countries in North
America, Europe, and the Asia/Pacific Region.
After-tax returns are calculated using the historically highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your individual tax situation
and may differ from those shown in the preceding table. The after-tax return
information shown above does not apply to Fund shares held through a
tax-deferred account, such as a 401(k) plan or IRA.
The Fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
26 Janus Equity Funds prospectus
JANUS BALANCED FUND
Janus Balanced Fund (the "Fund") is designed for long-term investors who
primarily seek growth of capital and who can tolerate the greater risks
associated with common stock investments. Although the Fund may also
emphasize some degree of income, it is not designed for investors who desire
a certain level of income.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
JANUS BALANCED FUND seeks long-term capital growth, consistent with
preservation of capital and balanced by current income.
The Fund's Trustees may change this objective or the Fund's principal
investment strategies without a shareholder vote. If there is a material
change to the Fund's objective or principal investment strategies, you should
consider whether the Fund remains an appropriate investment for you. There is
no guarantee that the Fund will meet its objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund pursues its objective by normally investing 50-60% of its assets in
equity securities selected primarily for their growth potential and 40-50% of
its assets in securities selected primarily for their income potential. The
Fund normally invests at least 25% of its assets in fixed-income senior
securities.
The portfolio managers apply a "bottom up" approach in choosing investments.
In other words, the portfolio managers look at companies one at a time to
determine if a company is an attractive investment opportunity and if it is
consistent with the Fund's investment policies. If the portfolio managers are
unable to find such investments, the Fund's uninvested assets may be held in
cash or similar investments, subject to the Fund's specific investment
policies.
Within the parameters of its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities, which may include
investments in emerging markets. The Fund will limit its investment in high-
yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net
assets.
MAIN INVESTMENT RISKS
The biggest risk is that the Fund's returns may vary, and you could lose
money. The Fund is designed for long-term investors interested in a balanced
portfolio, including common stocks and bonds. Common stocks tend to be more
volatile than many other investment choices.
The value of the Fund's portfolio may decrease if the value of an individual
company or multiple companies in the portfolio decreases. The value of the
Risk/return summary 27
Fund's portfolio could also decrease if the stock market goes down regardless
of how well the individual companies perform. If the value of the Fund's
portfolio decreases, the Fund's net asset value ("NAV") will also decrease,
which means if you sell your shares in the Fund you may lose money.
The income component of the Fund's holdings may include fixed-income
securities. A fundamental risk of fixed-income securities is that their value
will generally fall if interest rates rise. Since the value of a fixed-income
portfolio will generally decrease when interest rates rise, the Fund's NAV
may likewise decrease. Another fundamental risk associated with fixed-income
securities is credit risk, which is the risk that an issuer of a bond will be
unable to make principal and interest payments when due.
To the extent the Fund invests in foreign securities, returns and NAV may be
affected to a large degree by fluctuations in currency exchange rates or
political or economic changes in a particular country. To the extent the Fund
invests in high-yield/high-risk bonds, returns and NAV may be affected by
factors such as economic changes, political changes, or developments specific
to the company that issued the bond.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
PERFORMANCE INFORMATION
The following information provides some indication of the risks of investing
in the Fund by showing how the Fund's performance has varied over time. The
bar chart depicts the change in performance from year to year during the
periods indicated. The table compares the Fund's average annual returns for
the periods indicated to broad-based securities market indices. The indices
are not available for direct investment.
28 Janus Equity Funds prospectus
JANUS BALANCED FUND
<Table>
Annual returns for periods ended 12/31
15.30% 21.81% 31.20% 23.51% (2.16)% (5.04)% (6.56)% 13.74% 8.71% 7.75%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Best Quarter: 4th-1998 18.75% Worst Quarter: 3rd-2001 (5.94)%
</Table>
<Table>
<Caption>
Average annual total return for periods ended 12/31/05
------------------------------------------------------
Since Inception
1 year 5 years 10 years (9/1/92)
Janus Balanced Fund
Return Before Taxes 7.75% 3.40% 10.16% 11.31%
Return After Taxes on Distributions 7.19% 2.63% 8.44% 9.54%
Return After Taxes on Distributions and
Sale of Fund Shares(1) 5.15% 2.45% 7.88% 8.96%
S&P 500(R) Index(2) 4.91% 0.54% 9.07% 10.68%
(reflects no deduction for expenses, fees
or taxes)
Lehman Brothers Government/Credit Index(3) 2.37% 6.11% 6.17% 6.63%
(reflects no deduction for expenses,
fees, or taxes)
Balanced Index(4) 3.86% 3.39% 8.13% 9.13%
(reflects no deduction for expenses,
fees, or taxes)
-----------------------------------------
</Table>
(1) If the Fund incurs a loss, which generates a tax benefit, the Return
After Taxes on Distributions and Sale of Fund Shares may exceed the
Fund's other return figures.
(2) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500
stocks, a widely recognized, unmanaged index of common stock prices.
(3) The Lehman Brothers Government/Credit Index is composed of all bonds that
are of investment grade with at least one year until maturity.
(4) The Balanced Index is a hypothetical combination of unmanaged indices.
This internally calculated index combines the total returns from the S&P
500(R) Index (55%) and the Lehman Brothers Government/Credit Index (45%).
After-tax returns are calculated using the historically highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your individual tax situation
and may differ from those shown in the preceding table. The after-tax return
information shown above does not apply to Fund shares held through a
tax-deferred account, such as a 401(k) plan or IRA.
The Fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
Risk/return summary 29
JANUS CONTRARIAN FUND
Janus Contrarian Fund (the "Fund") is designed for long-term investors who
primarily seek growth of capital and who can tolerate the greater risks
associated with common stock investments.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
JANUS CONTRARIAN FUND seeks long-term growth of capital.
The Fund's Trustees may change this objective or the Fund's principal
investment strategies without a shareholder vote. If there is a material
change to the Fund's objective or principal investment strategies, you should
consider whether the Fund remains an appropriate investment for you. There is
no guarantee that the Fund will meet its objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund pursues its objective by investing, under normal circumstances, at
least 80% of its net assets plus the amount of any borrowings for investment
purposes, in equity securities with the potential for long-term growth of
capital. The portfolio manager emphasizes investments in companies with
attractive price/free cash flow, which is the relationship between the price
of a stock and the company's available cash from operations, minus capital
expenditures. The portfolio manager will typically seek attractively valued
companies that are improving their free cash flow and returns on invested
capital. These companies may also include special situations companies that
are experiencing management changes and/or are currently out of favor.
The portfolio manager applies a "bottom up" approach in choosing investments.
In other words, the portfolio manager looks at companies one at a time to
determine if a company is an attractive investment opportunity and if it is
consistent with the Fund's investment policies. If the portfolio manager is
unable to find such investments, the Fund's uninvested assets may be held in
cash or similar investments, subject to the Fund's specific investment
policies.
Within the parameters of its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities, which may include
investments in emerging markets. The Fund will limit its investment in high-
yield/high-risk bonds (also called "junk" bonds) to 20% or less of its net
assets.
MAIN INVESTMENT RISKS
The biggest risk is that the Fund's returns may vary, and you could lose
money. The Fund is designed for long-term investors interested in an equity
portfolio, including common stocks. Common stocks tend to be more volatile
than many other investment choices. "Value" stocks may perform differently
from the market
30 Janus Equity Funds prospectus
as a whole and other types of stocks and can continue to be undervalued by
the market for long periods of time.
The value of the Fund's portfolio may decrease if the value of an individual
company or multiple companies in the portfolio decreases or if the portfolio
manager's belief about a company's intrinsic worth is incorrect. The value of
the Fund's portfolio could also decrease if the stock market goes down
regardless of how well the individual companies perform. If the value of the
Fund's portfolio decreases, the Fund's net asset value ("NAV") will also
decrease, which means if you sell your shares in the Fund you may lose money.
The Fund is classified as nondiversified. This means it may hold larger
positions in a smaller number of securities than a fund that is classified as
diversified. As a result, a single security's increase or decrease in value
may have a greater impact on the Fund's NAV and total return.
The Fund may have significant exposure to foreign markets, including emerging
markets. As a result, its returns and NAV may be affected to a large degree
by fluctuations in currency exchange rates or political or economic
conditions in a particular country. A market swing in one or more countries
or regions where the Fund has invested a significant amount of its assets may
have a greater effect on the Fund's performance than it would in a more
geographically diversified portfolio. The Fund's investments in emerging
market countries may involve risks greater than, or in addition to, the risks
of investing in more developed countries. As of October 31, 2005,
approximately 22.2% of the Fund's investments were in emerging markets.
To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV
may be affected by factors such as economic changes, political changes, or
developments specific to the company that issued the bond.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
PERFORMANCE INFORMATION
The following information provides some indication of the risks of investing
in the Fund by showing how the Fund's performance has varied over time. The
bar chart depicts the change in performance from year to year during the
periods indicated. The table compares the Fund's average annual returns for
the periods indicated to a broad-based securities market index. The index is
not available for direct investment.
Risk/return summary 31
JANUS CONTRARIAN FUND
<Table>
Annual returns for periods ended 12/31
(11.74)% (23.70)% 53.26% 22.61% 16.02%
2001 2002 2003 2004 2005
Best Quarter: 2nd-2003 24.67% Worst Quarter: 3rd-2001 (22.31)%
</Table>
<Table>
<Caption>
Average annual total return for periods ended 12/31/05
------------------------------------------------------
Since Inception
1 year 5 years (2/29/00)
Janus Contrarian Fund
Return Before Taxes 16.02% 7.98% 8.17%
Return After Taxes on Distributions 15.77% 7.89% 7.92%
Return After Taxes on Distributions and Sale of Fund
Shares(1) 10.74% 6.90% 6.97%
S&P 500(R) Index(2) 4.91% 0.54% 0.04%
(reflects no deduction for expenses, fees, or taxes)
------------------------------
</Table>
(1) If the Fund incurs a loss, which generates a tax benefit, the Return
After Taxes on Distributions and Sale of Fund Shares may exceed the
Fund's other return figures.
(2) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500
stocks, a widely recognized, unmanaged index of common stock prices.
After-tax returns are calculated using the historically highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your individual tax situation
and may differ from those shown in the preceding table. The after-tax return
information shown above does not apply to Fund shares held through a
tax-deferred account, such as a 401(k) plan or IRA.
The Fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
32 Janus Equity Funds prospectus
JANUS CORE EQUITY FUND
Janus Core Equity Fund (the "Fund") is designed for long-term investors who
primarily seek growth of capital and who can tolerate the greater risks
associated with common stock investments.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
JANUS CORE EQUITY FUND seeks long-term growth of capital.
The Fund's Trustees may change this objective or the Fund's principal
investment strategies without a shareholder vote. The Fund has a policy of
investing at least 80% of its net assets in the type of securities suggested
by its name. The Fund will notify you in writing at least 60 days before
making any changes to this policy. If there is a material change to the
Fund's objective or principal investment strategies, you should consider
whether the Fund remains an appropriate investment for you. There is no
guarantee that the Fund will meet its objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund pursues its objective by investing, under normal circumstances, at
least 80% of its net assets plus the amount of any borrowings for investment
purposes, in equity securities selected for their growth potential. Eligible
equity securities in which the fund may invest include:
- domestic and foreign common stocks;
- preferred stocks;
- securities convertible into common stocks or preferred stocks, such as
convertible preferred stocks, bonds, and debentures; and
- other securities with equity characteristics.
The Fund may invest in companies of any size.
For the Fund's 80% investment policy, assets are measured at the time of
purchase.
The portfolio manager applies a "bottom up" approach in choosing investments.
In other words, the portfolio manager looks at companies one at a time to
determine if a company is an attractive investment opportunity and if it is
consistent with the Fund's investment policies. If the portfolio manager is
unable to find such investments, the Fund's uninvested assets may be held in
cash or similar investments, subject to the Fund's specific investment
policies.
Risk/return summary 33
Within the parameters of its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities, which may include
investments in emerging markets. The Fund will limit its investment in high-
yield/high-risk bonds (also called "junk" bonds) to 20% or less of its net
assets.
MAIN INVESTMENT RISKS
The biggest risk is that the Fund's returns may vary, and you could lose
money. The Fund is designed for long-term investors interested in an equity
portfolio, including common stocks. Common stocks tend to be more volatile
than many other investment choices.
The value of the Fund's portfolio may decrease if the value of an individual
company or multiple companies in the portfolio decreases. The value of the
Fund's portfolio could also decrease if the stock market goes down regardless
of how well the individual companies perform. If the value of the Fund's
portfolio decreases, the Fund's net asset value ("NAV") will also decrease,
which means if you sell your shares in the Fund you may lose money.
To the extent the Fund invests in foreign securities, returns and NAV may be
affected to a large degree by fluctuations in currency exchange rates or
political or economic changes in a particular country. To the extent the Fund
invests in high-yield/high-risk bonds, returns and NAV may be affected by
factors such as economic changes, political changes, or developments specific
to the company that issued the bond.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
PERFORMANCE INFORMATION
The following information provides some indication of the risks of investing
in the Fund by showing how the Fund's performance has varied over time. The
bar chart depicts the change in performance from year to year during the
periods indicated. The table compares the Fund's average annual returns for
the periods indicated to a broad-based securities market index. The index is
not available for direct investment.
34 Janus Equity Funds prospectus
JANUS CORE EQUITY FUND
<Table>
Annual returns for periods ended 12/31
31.08% 40.05% 38.50% (7.15)% (12.11)% (18.02)% 23.27% 13.77% 16.36%
1997 1998 1999 2000 2001 2002 2003 2004 2005
Best Quarter: 4th-1998 26.34% Worst Quarter: 3rd-2002 (15.25)%
</Table>
<Table>
<Caption>
Average annual total return for periods ended 12/31/05
------------------------------------------------------
Since Inception
1 year 5 years (6/28/96)
Janus Core Equity Fund
Return Before Taxes 16.36% 3.29% 13.04%
Return After Taxes on Distributions 16.31% 3.12% 11.93%
Return After Taxes on Distributions and Sale of
Fund Shares(1) 10.71% 2.72% 11.00%
S&P 500(R) Index(2) 4.91% 0.54% 8.46%
(reflects no deduction for expenses, fees, or
taxes)
---------------------------------
</Table>
(1) If the Fund incurs a loss, which generates a tax benefit, the Return
After Taxes on Distributions and Sale of Fund Shares may exceed the
Fund's other return figures.
(2) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500
stocks, a widely recognized, unmanaged index of common stock prices.
After-tax returns are calculated using the historically highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your individual tax situation
and may differ from those shown in the preceding table. The after-tax return
information shown above does not apply to Fund shares held through a
tax-deferred account, such as a 401(k) plan or IRA.
The Fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
Risk/return summary 35
JANUS GROWTH AND INCOME FUND
Janus Growth and Income Fund (the "Fund") is designed for long-term investors
who primarily seek growth of capital and who can tolerate the greater risks
associated with common stock investments. Although the Fund may also
emphasize some degree of income, it is not designed for investors who desire
a certain level of income.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
JANUS GROWTH AND INCOME FUND seeks long-term capital growth and current
income.
The Fund's Trustees may change this objective or the Fund's principal
investment strategies without a shareholder vote. If there is a material
change to the Fund's objective or principal investment strategies, you should
consider whether the Fund remains an appropriate investment for you. There is
no guarantee that the Fund will meet its objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund pursues its objective by normally emphasizing investments in common
stocks. It will normally invest up to 75% of its assets in equity securities
selected primarily for their growth potential, and at least 25% of its assets
in securities the portfolio manager believes have income potential. Equity
securities may make up part or all of this income component if they currently
pay dividends or the portfolio manager believes they have potential for
increasing or commencing dividend payments. Because of this investment
strategy, the Fund is not designed for investors who need consistent income.
The portfolio manager applies a "bottom up" approach in choosing investments.
In other words, the portfolio manager looks at companies one at a time to
determine if a company is an attractive investment opportunity and if it is
consistent with the Fund's investment policies. If the portfolio manager is
unable to find such investments, the Fund's uninvested assets may be held in
cash or similar investments, subject to the Fund's specific investment
policies.
Within the parameters of its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities, which may include
investments in emerging markets. The Fund will limit its investment in high-
yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net
assets.
36 Janus Equity Funds prospectus
MAIN INVESTMENT RISKS
The biggest risk is that the Fund's returns may vary, and you could lose
money. The Fund is designed for long-term investors interested in an equity
portfolio, including common stocks. Common stocks tend to be more volatile
than many other investment choices.
The value of the Fund's portfolio may decrease if the value of an individual
company or multiple companies in the portfolio decreases. The value of the
Fund's portfolio could also decrease if the stock market goes down regardless
of how well the individual companies perform. If the value of the Fund's
portfolio decreases, the Fund's net asset value ("NAV") will also decrease,
which means if you sell your shares in the Fund you may lose money.
The income component of the Fund's holdings may include fixed-income
securities. A fundamental risk of fixed-income securities is that their value
will generally fall if interest rates rise. Since the value of a fixed-income
portfolio will generally decrease when interest rates rise, the Fund's NAV
may likewise decrease. Another fundamental risk associated with fixed-income
securities is credit risk, which is the risk that an issuer of a bond will be
unable to make principal and interest payments when due.
To the extent the Fund invests in foreign securities, returns and NAV may be
affected to a large degree by fluctuations in currency exchange rates or
political or economic changes in a particular country. To the extent the Fund
invests in high-yield/high-risk bonds, returns and NAV may be affected by
factors such as economic changes, political changes, or developments specific
to the company that issued the bond.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
PERFORMANCE INFORMATION
The following information provides some indication of the risks of investing
in the Fund by showing how the Fund's performance has varied over time. The
bar chart depicts the change in performance from year to year during the
periods indicated. The table compares the Fund's average annual returns for
the periods indicated to broad-based securities market indices. The indices
are not available for direct investment.
Risk/return summary 37
JANUS GROWTH AND INCOME FUND
<Table>
Annual returns for periods ended 12/31
26.03% 34.66% 34.87% 51.18% (11.41)% (14.36)% (21.51)% 24.65% 11.89% 12.48%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Best Quarter: 4th-1999 29.20% Worst Quarter: 3rd-2002 (16.37)%
</Table>
<Table>
<Caption>
Average annual total return for periods ended 12/31/05
------------------------------------------------------
Since Inception
1 year 5 years 10 years (5/15/91)
Janus Growth and Income Fund
Return Before Taxes 12.48% 1.07% 12.45% 13.60%
Return After Taxes on Distributions 12.39% 0.86% 11.24% 12.31%
Return After Taxes on Distributions and
Sale of Fund Shares(1) 8.22% 0.79% 10.45% 11.62%
S&P 500(R) Index(2) 4.91% 0.54% 9.07% 10.90%
(reflects no deduction for expenses, fees,
or taxes)
Russell 1000(R) Growth Index(3) 5.26% (3.58)% 6.73% 9.04%
(reflects no deduction for expenses, fees,
or taxes)
-----------------------------------------
</Table>
(1) If the Fund incurs a loss, which generates a tax benefit, the Return
After Taxes on Distributions and Sale of Fund Shares may exceed the
Fund's other return figures.
(2) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500
stocks, a widely recognized, unmanaged index of common stock prices.
(3) The Russell 1000(R) Growth Index measures the performance of those
Russell 1000 companies with higher price-to-book ratios and higher
forecasted growth values.
After-tax returns are calculated using the historically highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your individual tax situation
and may differ from those shown in the preceding table. The after-tax return
information shown above does not apply to Fund shares held through a
tax-deferred account, such as a 401(k) plan or IRA.
The Fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
38 Janus Equity Funds prospectus
JANUS RESEARCH FUND
Janus Research Fund (the "Fund") is designed for long-term investors who
primarily seek growth of capital and who can tolerate the greater risks
associated with common stock investments.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
JANUS RESEARCH FUND seeks long-term growth of capital.
The Fund's Trustees may change this objective or the Fund's principal
investment strategies without a shareholder vote. If there is a material
change to the Fund's objective or principal investment strategies, you should
consider whether the Fund remains an appropriate investment for you. There is
no guarantee that the Fund will meet its objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund pursues its objective by investing primarily in common stocks
selected for their growth potential. The Fund may invest in companies of any
size and located anywhere in the world, from larger, well-established
companies to smaller, emerging growth companies.
Janus Capital's equity research analysts (the "Research Team") select
investments for the Fund which represent their high conviction investment
ideas in all market capitalizations, styles and geographies. The Research
Team, comprised of sector specialists, conducts fundamental analysis with a
focus on "bottom-up" research, quantitative modeling, and valuation analysis.
Using this research process, analysts rate their stocks based upon
attractiveness. Analysts bring their high conviction ideas to their
respective sector teams. Sector teams compare the appreciation potential of
each of the team's high-conviction ideas and construct a sector portfolio
that is intended to maximize the best risk-reward opportunities.
Positions may be sold when, among other things, there is no longer high
conviction in the return potential of the investment or if the risk
characteristics have caused a re-evaluation of the opportunity. This may
occur if the stock has appreciated and reflects the anticipated value, if
another company represents a better risk/reward opportunity or if the
investment's fundamental characteristics deteriorate. Securities may also be
sold from the portfolio to rebalance sector weightings.
Janus Capital's Director of Research oversees the investment process and is
responsible for the day-to-day management of the Fund. It is expected that
the Fund will be broadly diversified among a variety of industry sectors. The
Fund intends to be fully invested under normal circumstances. However, if the
Risk/return summary 39
Research Team does not have high conviction in enough investment
opportunities, the Fund's uninvested assets may be held in cash or similar
instruments.
Within the parameters of its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities, which may include
investments in emerging markets. The Fund will limit its investment in high-
yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net
assets.
MAIN INVESTMENT RISKS
The biggest risk is that the Fund's returns may vary, and you could lose
money. The Fund is designed for long-term investors interested in an equity
portfolio, including common stocks. Common stocks tend to be more volatile
than many other investment choices.
The value of the Fund's portfolio may decrease if the value of an individual
company or multiple companies in the portfolio decreases. The value of the
Fund's portfolio could also decrease if the stock market goes down regardless
of how well the individual companies perform. If the value of the Fund's
portfolio decreases, the Fund's net asset value ("NAV") will also decrease,
which means if you sell your shares in the Fund you may lose money.
The Fund may have significant exposure to foreign markets, including emerging
markets. As a result, its returns and NAV may be affected to a large degree
by fluctuations in currency exchange rates or political or economic
conditions in a particular country. A market swing in one or more countries
or regions where the Fund has invested a significant amount of its assets may
have a greater effect on the Fund's performance than it would in a more
geographically diversified portfolio. The Fund's investments in emerging
market countries may involve risks greater than, or in addition to, the risks
of investing in more developed countries. As of October 31, 2005,
approximately 8.3% of the Fund's investments were in emerging markets.
To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV
may be affected by factors such as economic changes, political changes, or
developments specific to the company that issued the bond.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
40 Janus Equity Funds prospectus
PERFORMANCE INFORMATION
Since the Fund did not commence operations until February 25, 2005, it does
not have a full calendar year of operations. Performance information for
certain periods is included in the Fund's semiannual and annual reports. The
performance of this Fund is compared to the Russell 1000(R) Index. The
Russell 1000(R) Index measures the performance of the 1,000 largest companies
in the Russell 3000(R) Index. The Russell 3000(R) Index will be the Fund's
secondary benchmark index.
Risk/return summary 41
INTECH RISK-MANAGED STOCK FUND
INTECH Risk-Managed Stock Fund (the "Fund") is designed for long-term
investors who primarily seek growth of capital and who can tolerate the
greater risks associated with common stock investments.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
INTECH RISK-MANAGED STOCK FUND seeks long-term growth of capital.
The Fund's Trustees may change this objective or the Fund's principal
investment strategies without a shareholder vote. The Fund has a policy of
investing at least 80% of its net assets in the type of securities suggested
by its name. The Fund will notify you in writing at least 60 days before
making any changes to this policy. If there is a material change to the
Fund's objective or principal investment strategies, you should consider
whether the Fund remains an appropriate investment for you. There is no
guarantee that the Fund will meet its objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests, under normal circumstances, at least 80% of its net assets
plus the amount of any borrowings for investment purposes, in common stocks
from the universe of the Fund's benchmark, which is the S&P 500(R) Index.
Stocks are selected for their potential contribution to the long-term growth
of capital, utilizing INTECH's mathematical process. The primary aim of the
strategy is to outperform the Fund's benchmark index.
The Fund pursues its objective by applying a mathematical process to
construct an investment portfolio from the universe of common stocks within
its benchmark index. The goal of this process is to build a portfolio of
stocks in a more efficient combination than the benchmark index. The process
seeks to capitalize on the natural volatility of the market by searching for
stocks within the index that have high relative volatility (providing the
potential for excess returns) but that essentially move in opposite
directions or have low correlation to each other (providing the potential for
lower relative risk). By constructing the portfolio in this manner and
continually rebalancing the portfolio to maintain "efficient" weightings,
INTECH's mathematical process seeks to create a portfolio that produces
returns in excess of its benchmark with an equal or lesser amount of risk.
For the Fund's 80% investment policy, assets are measured at the time of
purchase.
42 Janus Equity Funds prospectus
Within the parameters of its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities, which may include
investments in emerging markets.
MAIN INVESTMENT RISKS
The biggest risk is that the Fund's returns may vary, and you could lose
money. The Fund is designed for long-term investors interested in an equity
portfolio, including common stocks. Common stocks tend to be more volatile
than many other investment choices.
The value of the Fund's portfolio may decrease if the value of an individual
company or multiple companies in the portfolio decreases. The value of the
Fund's portfolio could also decrease if the stock market goes down regardless
of how well the individual companies perform. If the value of the Fund's
portfolio decreases, the Fund's net asset value ("NAV") will also decrease,
which means if you sell your shares in the Fund you may lose money.
The proprietary mathematical process used by INTECH may not achieve the
desired results. Additionally, the rebalancing techniques used by INTECH may
result in a higher portfolio turnover rate and related expenses compared to a
"buy and hold" fund strategy. A higher portfolio turnover rate increases the
likelihood of higher net taxable gains or losses for you as an investor.
There is a risk that if INTECH's method of identifying stocks with higher
volatility than the benchmark or its method of identifying stocks that tend
to move in the same or opposite direction relative to each other
(correlation) does not result in selecting stocks with continuing volatility
or the expected correlation, the Fund may not outperform the benchmark index.
To the extent the Fund invests in foreign securities, returns and NAV may be
affected to a large degree by fluctuations in currency exchange rates or
political or economic changes in a particular country.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
PERFORMANCE INFORMATION
The following information provides some indication of the risks of investing
in the Fund by showing how the Fund's performance has varied over time. The
bar chart depicts the change in performance from year to year during the
periods indicated. For certain periods, the Fund's performance reflects the
effect of expense waivers. Without the effect of these expense waivers, the
performance shown would have been lower. The table compares the Fund's
average annual returns for the periods indicated to a broad-based securities
market index. The index is not available for direct investment.
Risk/return summary 43
INTECH RISK-MANAGED STOCK FUND(1)
<Table>
Annual returns for calendar years ended 12/31
17.68% 11.06%
2004 2005
Best Quarter: 4th-2004 9.51% Worst Quarter: 3rd-2004 0.00%
</Table>
<Table>
<Caption>
Average annual total return for periods ended 12/31/05
------------------------------------------------------
Since Inception
1 year (2/28/03)
INTECH Risk-Managed Stock Fund(1)
Return Before Taxes 11.06% 21.08%
Return After Taxes on Distributions 9.96% 19.93%
Return After Taxes on Distributions and Sale of Fund
Shares(2) 8.28% 17.94%
S&P 500(R) Index(3) 4.91% 16.98%
(reflects no deduction for expenses, fees, or taxes)
----------------------
</Table>
(1) Formerly named Janus Risk-Managed Stock Fund.
(2) If the Fund incurs a loss, which generates a tax benefit, the Return
After Taxes on Distributions and Sale of Fund Shares may exceed the
Fund's other return figures.
(3) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500
stocks, a widely recognized, unmanaged index of common stock prices.
After-tax returns are calculated using the historically highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your individual tax situation
and may differ from those shown in the preceding table. The after-tax return
information shown above does not apply to Fund shares held through a
tax-deferred account, such as a 401(k) plan or IRA.
The Fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
44 Janus Equity Funds prospectus
JANUS MID CAP VALUE FUND - INVESTOR SHARES
Janus Mid Cap Value Fund (the "Fund") is designed for long-term investors who
primarily seek capital appreciation and who can tolerate the greater risks
associated with common stock investments.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
JANUS MID CAP VALUE FUND seeks capital appreciation.
The Fund's Trustees may change this objective or the Fund's principal
investment strategies without a shareholder vote. The Fund has a policy of
investing at least 80% of its net assets in the type of securities suggested
by its name. The Fund will notify you in writing at least 60 days before
making any changes to this policy. If there is a material change to the
Fund's objective or principal investment strategies, you should consider
whether the Fund remains an appropriate investment for you. There is no
guarantee that the Fund will meet its objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund pursues its objective by investing primarily in common stocks
selected for their capital appreciation potential. The Fund primarily invests
in the common stocks of mid-sized companies whose stock prices the portfolio
managers believe to be undervalued. The Fund invests, under normal
circumstances, at least 80% of its assets plus the amount of any borrowings
for investment purposes, in equity securities of companies whose market
capitalization falls, at the time of purchase, within the 12-month average of
the capitalization range of the Russell Midcap(R) Value Index. This average
is updated monthly. The market capitalizations within the index will vary,
but as of December 31, 2005, they ranged from approximately $56.3 million to
$18.1 billion.
For the Fund's 80% investment policy, assets are measured at the time of
purchase.
The Fund focuses on companies that have fallen out of favor with the market
or that appear to be temporarily misunderstood by the investment community.
To a lesser degree, the Fund also invests in companies that demonstrate
special situations or turnarounds, meaning companies that have experienced
significant business problems but are believed to have favorable prospects
for recovery. The Fund's portfolio managers generally look for companies
with:
- a low price relative to their assets, earnings, cash flow, or business
franchise
Risk/return summary 45
- products and services that give them a competitive advantage
- quality balance sheets and strong management
Within the parameters of its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities, which may include
investments in emerging markets. The Fund will limit its investment in high-
yield/high-risk bonds (also called "junk" bonds) to 20% or less of its net
assets.
MAIN INVESTMENT RISKS
The biggest risk is that the Fund's returns may vary, and you could lose
money. The Fund is designed for long-term investors interested in an equity
portfolio, including common stocks. Common stocks tend to be more volatile
than many other investment choices. "Value" stocks may perform differently
from the market as a whole and other types of stocks and can continue to be
undervalued by the market for long periods of time.
The value of the Fund's portfolio may decrease if the value of an individual
company or multiple companies in the portfolio decreases or if the portfolio
managers' belief about a company's intrinsic worth is incorrect. The value of
the Fund's portfolio could also decrease if the stock market goes down
regardless of how well the individual companies perform. If the value of the
Fund's portfolio decreases, the Fund's net asset value ("NAV") will also
decrease, which means if you sell your shares in the Fund you may lose money.
The Fund's share price may fluctuate more than that of funds primarily
invested in large companies. Mid-sized companies may pose greater market,
liquidity, and information risks because of narrow product lines, limited
financial resources, less depth in management, or a limited trading market
for their stocks. The Fund's investments may often be focused in a small
number of business sectors, which may pose greater market and liquidity
risks.
To the extent the Fund invests in foreign securities, returns and NAV may be
affected to a large degree by fluctuations in currency exchange rates or
political or economic changes in a particular country. To the extent the Fund
invests in high-yield/high-risk bonds, returns and NAV may be affected by
factors such as economic changes, political changes, or developments specific
to the company that issued the bond.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
46 Janus Equity Funds prospectus
PERFORMANCE INFORMATION
The following information provides some indication of the risks of investing
in the Fund by showing how the Fund's performance has varied over time.
Pursuant to a tax-free reorganization on April 21, 2003, all of the assets of
Berger Mid Cap Value Fund - Investor Shares were transferred to Janus Mid Cap
Value Fund - Investor Shares. The performance information provided for
periods prior to April 21, 2003 is for Berger Mid Cap Value Fund - Investor
Shares, the predecessor to Janus Mid Cap Value Fund - Investor Shares.
The bar chart depicts the change in performance from year to year during the
periods indicated. The table compares the Fund's average annual returns for
the periods indicated to a broad-based securities market index. The index is
not available for direct investment.
JANUS MID CAP VALUE FUND - INVESTOR SHARES
<Table>
Annual returns for periods ended 12/31
21.56% 27.34% 20.52% (13.09)% 39.33% 18.36% 10.36%
1999 2000 2001 2002 2003 2004 2005
Best Quarter: 4th-2001 21.28% Worst Quarter: 3rd-2002 (17.66)%
</Table>
<Table>
<Caption>
Average annual total return for periods ended 12/31/05
------------------------------------------------------
Since Inception
1 year 5 years (8/12/98)
Janus Mid Cap Value Fund - Investor Shares
Return Before Taxes 10.36% 13.77% 17.90%
Return After Taxes on Distributions 8.31% 12.74% 16.14%
Return After Taxes on Distributions and Sale of
Fund Shares(1) 7.96% 11.67% 15.02%
Russell Midcap(R) Value Index(2) 12.65% 12.21% 11.55%
(reflects no deduction for expenses, fees, or
taxes)
-------------------------------
</Table>
(1) If the Fund incurs a loss, which generates a tax benefit, the Return
After Taxes on Distributions and Sale of Fund Shares may exceed the
Fund's other return figures.
(2) The Russell Midcap(R) Value Index measures the performance of those
Russell Midcap companies with lower price-to-book ratios and lower
forecasted growth values. The stocks are also members of the Russell
1000(R) Value Index.
Risk/return summary 47
After-tax returns are calculated using distributions for Janus Mid Cap Value
Fund - Investor Shares for the period April 21, 2003 to December 31, 2005 and
for Berger Mid Cap Value Fund - Investor Shares for the periods prior to
April 21, 2003. If Janus Mid Cap Value Fund - Investor Shares had been
available during those earlier periods, distributions may have been different
and thus, after-tax returns may have been different from those shown.
After-tax returns are calculated using the historically highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your individual tax situation
and may differ from those shown in the preceding table. The after-tax return
information shown above does not apply to Fund shares held through a
tax-deferred account, such as a 401(k) plan or IRA.
The Fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
48 Janus Equity Funds prospectus
JANUS GLOBAL OPPORTUNITIES FUND
Janus Global Opportunities Fund (the "Fund") is designed for long-term
investors who primarily seek growth of capital and who can tolerate the
greater risks associated with common stock investments.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
JANUS GLOBAL OPPORTUNITIES FUND seeks long-term growth of capital.
The Fund's Trustees may change this objective or the Fund's principal
investment strategies without a shareholder vote. If there is a material
change to the Fund's objective or principal investment strategies, you should
consider whether the Fund remains an appropriate investment for you. There is
no guarantee that the Fund will meet its objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund pursues its objective by investing primarily in common stocks of
companies of any size located throughout the world with the potential for
long-term growth of capital. The Fund normally invests in issuers from
several different countries, which may include the United States. The Fund
may, under unusual circumstances, invest in a single country. The portfolio
managers emphasize investments in companies with attractive price/free cash
flow, which is the relationship between the price of a stock and the
company's available cash from operations, minus capital expenditures. The
portfolio managers will typically seek attractively valued companies that are
improving their free cash flow and returns on invested capital. These
companies may also include special situations companies that are experiencing
management changes and/or are temporarily out of favor. The Fund may have
significant exposure to emerging markets.
The portfolio managers apply a "bottom up" approach in choosing investments.
In other words, the portfolio managers look at companies one at a time to
determine if a company is an attractive investment opportunity and if it is
consistent with the Fund's investment policies. If the portfolio managers are
unable to find such investments, the Fund's uninvested assets may be held in
cash or similar investments, subject to the Fund's specific investment
policies.
Within the parameters of its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities, which may include
investments in emerging markets. The Fund will limit its investment in high-
yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net
assets.
Risk/return summary 49
MAIN INVESTMENT RISKS
The biggest risk is that the Fund's returns may vary, and you could lose
money. The Fund is designed for long-term investors interested in an equity
portfolio, including common stocks. Common stocks tend to be more volatile
than many other investment choices. "Value" stocks may perform differently
from the market as a whole and other types of stocks and can continue to be
undervalued by the market for long periods of time.
The value of the Fund's portfolio may decrease if the value of an individual
company or multiple companies in the portfolio decreases or if the portfolio
managers' belief about a company's intrinsic worth is incorrect. The value of
the Fund's portfolio could also decrease if the stock market goes down
regardless of how well the individual companies perform. If the value of the
Fund's portfolio decreases, the Fund's net asset value ("NAV") will also
decrease, which means if you sell your shares in the Fund you may lose money.
The Fund is classified as nondiversified. This means it may hold larger
positions in a smaller number of securities than a fund that is classified as
diversified. As a result, a single security's increase or decrease in value
may have a greater impact on the Fund's NAV and total return.
The Fund may have significant exposure to foreign markets, including emerging
markets. As a result, its returns and NAV may be affected to a large degree
by fluctuations in currency exchange rates or political or economic
conditions in a particular country. A market swing in one or more countries
or regions where the Fund has invested a significant amount of its assets may
have a greater effect on the Fund's performance than it would in a more
geographically diversified portfolio. The Fund's investments in emerging
market countries may involve risks greater than, or in addition to, the risks
of investing in more developed countries.
To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV
may be affected by factors such as economic changes, political changes, or
developments specific to the company that issued the bond.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
50 Janus Equity Funds prospectus
PERFORMANCE INFORMATION
The following information provides some indication of the risks of investing
in the Fund by showing how the Fund's performance has varied over time. The
bar chart depicts the change in performance from year to year during the
periods indicated. The table compares the Fund's average annual returns for
the periods indicated to a broad-based securities market index. The index is
not available for direct investment.
JANUS GLOBAL OPPORTUNITIES FUND
<Table>
Annual returns for periods ended 12/31
(15.91)% 38.41% 15.33% 4.07%
2002 2003 2004 2005
Best Quarter: 2nd-2003 22.21% Worst Quarter: 3rd-2002 (21.31)%
</Table>
<Table>
<Caption>
Average annual total return for periods ended 12/31/05
------------------------------------------------------
Since Inception
1 year (6/29/01)
Janus Global Opportunities Fund
Return Before Taxes 4.07% 9.39%
Return After Taxes on Distributions 3.95% 9.35%
Return After Taxes on Distributions and Sale of Fund
Shares(1) 2.80% 8.18%
Morgan Stanley Capital International World Index(SM)(2) 9.49% 4.99%
(reflects no deduction for expenses, fees, or taxes)
----------------------
</Table>
(1) If the Fund incurs a loss, which generates a tax benefit, the Return
After Taxes on Distributions and Sale of Fund Shares may exceed the
Fund's other return figures.
(2) The Morgan Stanley Capital International World Index(SM) is a market
capitalization weighted index composed of companies representative of the
market structure of developed market countries in North America, Europe,
and the Asia/Pacific Region.
Risk/return summary 51
After-tax returns are calculated using the historically highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your individual tax situation
and may differ from those shown in the preceding table. The after-tax return
information shown above does not apply to Fund shares held through a
tax-deferred account, such as a 401(k) plan or IRA.
The Fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
52 Janus Equity Funds prospectus
JANUS OVERSEAS FUND
Janus Overseas Fund (the "Fund") is designed for long-term investors who
primarily seek growth of capital and who can tolerate the greater risks
associated with common stock investments.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
JANUS OVERSEAS FUND seeks long-term growth of capital.
The Fund's Trustees may change this objective or the Fund's principal
investment strategies without a shareholder vote. The Fund has a policy of
investing at least 80% of its net assets in the type of securities suggested
by its name. The Fund will notify you in writing at least 60 days before
making any changes to this policy. If there is a material change to the
Fund's objective or principal investment strategies, you should consider
whether the Fund remains an appropriate investment for you. There is no
guarantee that the Fund will meet its objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund invests, under normal circumstances, at least 80% of its net assets
plus the amount of any borrowings for investment purposes, in securities of
issuers from countries outside of the United States. The Fund normally
invests in securities of issuers from several different countries, excluding
the United States. Although the Fund intends to invest substantially all of
its assets in issuers located outside the United States, it may at times
invest in U.S. issuers, and it may, under unusual circumstances, invest all
of its assets in a single country. The Fund may have significant exposure to
emerging markets.
For the Fund's 80% investment policy, assets are measured at the time of
purchase.
The portfolio manager applies a "bottom up" approach in choosing investments.
In other words, the portfolio manager looks at companies one at a time to
determine if a company is an attractive investment opportunity and if it is
consistent with the Fund's investment policies. If the portfolio manager is
unable to find such investments, the Fund's uninvested assets may be held in
cash or similar investments, subject to the Fund's specific investment
policies.
Within the parameters of its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities, which may include
investments in emerging markets. The Fund will limit its investment in high-
yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net
assets.
Risk/return summary 53
MAIN INVESTMENT RISKS
The biggest risk is that the Fund's returns may vary, and you could lose
money. The Fund is designed for long-term investors interested in an equity
portfolio, including common stocks. Common stocks tend to be more volatile
than many other investment choices.
The value of the Fund's portfolio may decrease if the value of an individual
company or multiple companies in the portfolio decreases. The value of the
Fund's portfolio could also decrease if the stock market goes down regardless
of how well the individual companies perform. If the value of the Fund's
portfolio decreases, the Fund's net asset value ("NAV") will also decrease,
which means if you sell your shares in the Fund you may lose money.
The Fund may have significant exposure to foreign markets, including emerging
markets. As a result, its returns and NAV may be affected to a large degree
by fluctuations in currency exchange rates or political or economic
conditions in a particular country. A market swing in one or more countries
or regions where the Fund has invested a significant amount of its assets may
have a greater effect on the Fund's performance than it would in a more
geographically diversified portfolio. The Fund's investments in emerging
market countries may involve risks greater than, or in addition to, the risks
of investing in more developed countries. As of October 31, 2005,
approximately 37.5% of the Fund's investments were in emerging markets.
To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV
may be affected by factors such as economic changes, political changes, or
developments specific to the company that issued the bond.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
PERFORMANCE INFORMATION
The following information provides some indication of the risks of investing
in the Fund by showing how the Fund's performance has varied over time. The
bar chart depicts the change in performance from year to year during the
periods indicated. The table compares the Fund's average annual returns for
the periods indicated to broad-based securities market indices. The indices
are not available for direct investment.
54 Janus Equity Funds prospectus
JANUS OVERSEAS FUND
<Table>
Annual returns for periods ended 12/31
28.83% 18.25% 16.03% 86.06% (18.57)% (23.11)% (23.89)% 36.79% 18.58% 32.39%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Best Quarter: 4th-1999 60.63% Worst Quarter: 3rd-2001 (20.82)%
</Table>
<Table>
<Caption>
Average annual total return for periods ended 12/31/05
------------------------------------------------------
Since Inception
1 year 5 years 10 years (5/2/94)
Janus Overseas Fund
Return Before Taxes 32.39% 4.67% 12.90% 12.92%
Return After Taxes on Distributions 32.21% 4.56% 12.27% 12.31%
Return After Taxes on Distributions and
Sale of Fund Shares(1) 21.28% 4.01% 11.29% 11.39%
Morgan Stanley Capital International
EAFE(R) Index(2) 13.54% 4.55% 5.84% 5.93%
(reflects no deduction for expenses,
fees, or taxes)
Morgan Stanley Capital International
EAFE(R) Growth Index(3) 13.28% 1.92% 3.33% 3.70%(4)
(reflects no deduction for expenses,
fees, or taxes)
-----------------------------------------
</Table>
(1) If the Fund incurs a loss, which generates a tax benefit, the Return
After Taxes on Distributions and Sale of Fund Shares may exceed the
Fund's other return figures.
(2) The Morgan Stanley Capital International ("MSCI") EAFE(R) Index is a
market capitalization weighted index composed of companies representative
of the market structure of developed market countries in Europe,
Australasia, and the Far East.
(3) The MSCI EAFE(R) Growth Index is a subset of the MSCI EAFE(R) Index and
contains constituents of the MSCI EAFE(R) Index which are categorized as
growth securities. The MSCI EAFE(R) Index (Europe, Australasia, Far East)
is an unmanaged free float-adjusted market capitalization index that is
designed to measure developed market equity performance.
(4) The average annual total return was calculated based on historical
information from April 30, 1994 to December 31, 2005 for the MSCI EAFE(R)
Growth Index.
Risk/return summary 55
After-tax returns are calculated using the historically highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your individual tax situation
and may differ from those shown in the preceding table. The after-tax return
information shown above does not apply to Fund shares held through a
tax-deferred account, such as a 401(k) plan or IRA.
The Fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
56 Janus Equity Funds prospectus
JANUS WORLDWIDE FUND
Janus Worldwide Fund (the "Fund") is designed for long-term investors who
primarily seek growth of capital and who can tolerate the greater risks
associated with common stock investments.
INVESTMENT OBJECTIVE
- --------------------------------------------------------------------------------
JANUS WORLDWIDE FUND seeks long-term growth of capital in a manner
consistent with the preservation of capital.
The Fund's Trustees may change this objective or the Fund's principal
investment strategies without a shareholder vote. If there is a material
change to the Fund's objective or principal investment strategies, you should
consider whether the Fund remains an appropriate investment for you. There is
no guarantee that the Fund will meet its objective.
PRINCIPAL INVESTMENT STRATEGIES
The Fund pursues its objective by investing primarily in common stocks of
companies of any size located throughout the world. The Fund normally invests
in issuers from several different countries, including the United States. The
Fund may, under unusual circumstances, invest in a single country. The Fund
may have significant exposure to emerging markets.
The portfolio manager applies a "bottom up" approach in choosing investments.
In other words, the portfolio manager looks at companies one at a time to
determine if a company is an attractive investment opportunity and if it is
consistent with the Fund's investment policies. If the portfolio manager is
unable to find such investments, the Fund's uninvested assets may be held in
cash or similar investments, subject to the Fund's specific investment
policies.
Within the parameters of its specific investment policies, the Fund may
invest without limit in foreign equity and debt securities, which may include
investments in emerging markets. The Fund will limit its investment in high-
yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net
assets.
MAIN INVESTMENT RISKS
The biggest risk is that the Fund's returns may vary, and you could lose
money. The Fund is designed for long-term investors interested in an equity
portfolio, including common stocks. Common stocks tend to be more volatile
than many other investment choices.
The value of the Fund's portfolio may decrease if the value of an individual
company or multiple companies in the portfolio decreases. The value of the
Fund's portfolio could also decrease if the stock market goes down regardless
of
Risk/return summary 57
how well the individual companies perform. If the value of the Fund's
portfolio decreases, the Fund's net asset value ("NAV") will also decrease,
which means if you sell your shares in the Fund you may lose money.
The Fund may have significant exposure to foreign markets, including emerging
markets. As a result, its returns and NAV may be affected to a large degree
by fluctuations in currency exchange rates or political or economic
conditions in a particular country. A market swing in one or more countries
or regions where the Fund has invested a significant amount of its assets may
have a greater effect on the Fund's performance than it would in a more
geographically diversified portfolio. The Fund's investments in emerging
market countries may involve risks greater than, or in addition to, the risks
of investing in more developed countries. As of October 31, 2005,
approximately 6% of the Fund's investments were in emerging markets.
To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV
may be affected by factors such as economic changes, political changes, or
developments specific to the company that issued the bond.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
PERFORMANCE INFORMATION
The following information provides some indication of the risks of investing
in the Fund by showing how the Fund's performance has varied over time. The
bar chart depicts the change in performance from year to year during the
periods indicated. The table compares the Fund's average annual returns for
the periods indicated to a broad-based securities market index. The index is
not available for direct investment.
58 Janus Equity Funds prospectus
JANUS WORLDWIDE FUND
<Table>
Annual returns for periods ended 12/31
26.40% 20.48% 25.87% 64.37% (16.87)% (22.88)% (26.01)% 24.23% 5.54% 5.84%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Best Quarter: 4th-1999 42.11% Worst Quarter: 3rd-2001 (20.80)%
</Table>
<Table>
<Caption>
Average annual total return for periods ended 12/31/05
------------------------------------------------------
Since Inception
1 year 5 years 10 years (5/15/91)
Janus Worldwide Fund
Return Before Taxes 5.84% (4.56)% 7.57% 10.91%
Return After Taxes on Distributions 5.65% (4.63)% 6.77% 9.99%
Return After Taxes on Distributions and
Sale of Fund Shares(1) 4.02% (3.79)% 6.36% 9.43%
Morgan Stanley Capital International World
Index(SM)(2) 9.49% 2.18% 7.04% 8.07%
(reflects no deduction for expenses,
fees, or taxes)
-----------------------------------------
</Table>
(1) If the Fund incurs a loss, which generates a tax benefit, the Return
After Taxes on Distributions and Sale of Fund Shares may exceed the
Fund's other return figures.
(2) The Morgan Stanley Capital International World Index(SM) is a market
capitalization weighted index composed of companies representative of the
market structure of developed market countries in North America, Europe,
and the Asia/Pacific Region.
After-tax returns are calculated using the historically highest individual
federal marginal income tax rates and do not reflect the impact of state and
local taxes. Actual after-tax returns depend on your individual tax situation
and may differ from those shown in the preceding table. The after-tax return
information shown above does not apply to Fund shares held through a
tax-deferred account, such as a 401(k) plan or IRA.
The Fund's past performance (before and after taxes) does not necessarily
indicate how it will perform in the future.
Risk/return summary 59
FEES AND EXPENSES
The following table describes the shareholder fees and annual fund operating
expenses that you may pay if you buy and hold shares of the Funds. All of the
fees and expenses shown were determined based on net assets as of the fiscal
year or period ended October 31, 2005. Contractual waivers agreed to by Janus
Capital, where applicable, are included under "Net Annual Fund Operating
Expenses."
SHAREHOLDER FEES are those paid directly from your investment and may include
sales loads, redemption fees, or exchange fees. The Funds are no-load
investments, so you will generally not pay any shareholder fees when you buy
or sell shares of the Funds. However, if you sell shares of Janus Global Life
Sciences Fund, Janus Global Technology Fund, INTECH Risk-Managed Stock Fund,
Janus Global Opportunities Fund, Janus Overseas Fund, or Janus Worldwide Fund
that you have held for three months or less, you may pay a redemption fee.
ANNUAL FUND OPERATING EXPENSES are paid out of a Fund's assets and include
fees for portfolio management, maintenance of shareholder accounts,
shareholder servicing, accounting, and other services. You do not pay these
fees directly but, as the examples show, these costs are borne indirectly by
all shareholders.
60 Janus Equity Funds prospectus
SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT)
<Table>
Sales charges............................................... None
Redemption fee on shares of Janus Global Life Sciences Fund,
Janus Global Technology Fund, INTECH Risk-Managed Stock
Fund, Janus Global Opportunities Fund, Janus Overseas Fund,
and Janus Worldwide Fund held for three months or less (as
a % of amount redeemed).................................... 2.00%(1)(2)(3)
Exchange fee................................................ None(3)
</Table>
<Table>
<Caption>
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
Total Net
Management Other Annual Fund Expense Annual Fund
Fee(4) Expenses Operating Expenses Waivers Operating Expenses
GROWTH
Janus Fund 0.64% 0.24% 0.88% N/A 0.88%
Janus Enterprise Fund 0.64% 0.32% 0.96% N/A 0.96%
Janus Mercury Fund(5) 0.64% 0.29% 0.93% N/A 0.93%
Janus Olympus Fund 0.64% 0.33% 0.97% N/A 0.97%
Janus Orion Fund 0.64% 0.38% 1.02% N/A 1.02%
Janus Triton Fund 0.64% 1.21% 1.85%(6) 0.58% 1.27%(6)
SPECIALTY GROWTH
Janus Global Life Sciences Fund 0.64% 0.33% 0.97% N/A 0.97%
Janus Global Technology Fund 0.64% 0.40% 1.04% N/A 1.04%
CORE
Janus Balanced Fund 0.55% 0.25% 0.80% N/A 0.80%
Janus Contrarian Fund(5) 0.64% 0.29% 0.93% N/A 0.93%
Janus Core Equity Fund 0.60% 0.30% 0.90% N/A 0.90%
Janus Growth and Income Fund 0.62% 0.26% 0.88% N/A 0.88%
Janus Research Fund(5) 0.64% 0.97% 1.61%(6) 0.34% 1.27%(6)
RISK-MANAGED
INTECH Risk-Managed Stock
Fund(5)(7) 0.50% 0.39%(8) 0.89% N/A 0.89%
VALUE
Janus Mid Cap Value Fund -
Investor Shares(5) 0.64% 0.29%(8) 0.93% N/A 0.93%
INTERNATIONAL & GLOBAL
Janus Global Opportunities Fund 0.64% 0.39% 1.03% N/A 1.03%
Janus Overseas Fund 0.64% 0.26% 0.90% N/A 0.90%
Janus Worldwide Fund(5) 0.60% 0.25% 0.85% N/A 0.85%
</Table>
(1) Each Fund may charge a fee to cover the cost of sending a wire transfer
for redemptions, and your bank may charge an additional fee to receive
the wire. For more information, please refer to the section "Payment of
Redemption Proceeds" in this Prospectus.
(2) The redemption fee may be waived in certain circumstances, as described in
the Shareholder's Manual.
(3) An exchange of Janus Global Life Sciences Fund, Janus Global Technology
Fund, INTECH Risk-Managed Stock Fund, Janus Global Opportunities Fund,
Janus Overseas Fund, or Janus Worldwide Fund shares held for three months
or less may be subject to the Funds' 2.00% redemption fee.
(4) The "Management Fee" is the investment advisory fee paid by the Funds to
Janus Capital.
(5) Effective January 1, 2006 for Janus Research Fund and INTECH Risk-Managed
Stock Fund and effective February 1, 2006 for Janus Mercury Fund, Janus
Contrarian Fund, Janus Mid Cap Value Fund, and Janus Worldwide Fund, the
Fund's investment advisory fee rate changed from a fixed rate to a rate
that adjusts upward or downward based upon the Fund's performance relative
to its benchmark index. This change will not impact the investment
advisory fee shown until one year after the effective date when the
performance adjustment takes effect. Details discussing the change are
included in the Statement of Additional Information.
(6) Annual Fund Operating Expenses are stated both with and without a
contractual expense waiver by Janus Capital. Janus Capital has
contractually agreed to waive the Fund's total operating expenses
(excluding brokerage commissions, interest, taxes, and extraordinary
expenses) to a certain limit until at least March 1, 2007. The expense
waiver shown reflects the application of such limit. The expense waiver is
detailed in the Statement of Additional Information.
(7) Formerly named Janus Risk-Managed Stock Fund.
(8) Included in Other Expenses is an administrative services fee of 0.05% of
the average daily net assets of the Fund to compensate Janus Capital for
providing certain administrative services including, but not limited to,
recordkeeping and registration functions.
Risk/return summary 61
EXAMPLES:
THE FOLLOWING EXAMPLES ARE BASED ON EXPENSES WITHOUT WAIVERS. These examples
are intended to help you compare the cost of investing in the Funds with the
cost of investing in other mutual funds. The examples assume that you invest
$10,000 in each Fund for the time periods indicated and then redeem all of
your shares at the end of those periods. The examples also assume that your
investment has a 5% return each year and that the Funds' operating expenses
without waivers remain the same. Although your actual costs may be higher or
lower, based upon these assumptions your costs would be as follows:
<Table>
<Caption>
1 Year 3 Years 5 Years 10 Years
--------------------------------------
GROWTH
Janus Fund $ 90 $ 281 $ 488 $ 1,084
Janus Enterprise Fund $ 98 $ 306 $ 531 $ 1,178
Janus Mercury Fund $ 95 $ 296 $ 515 $ 1,143
Janus Olympus Fund $ 99 $ 309 $ 536 $ 1,190
Janus Orion Fund $ 104 $ 325 $ 563 $ 1,248
Janus Triton Fund $ 188 $ 582 $ 1,001 $ 2,169
SPECIALTY GROWTH
Janus Global Life Sciences Fund $ 99 $ 309 $ 536 $ 1,190
Janus Global Technology Fund $ 106 $ 331 $ 574 $ 1,271
CORE
Janus Balanced Fund $ 82 $ 255 $ 444 $ 990
Janus Contrarian Fund $ 95 $ 296 $ 515 $ 1,143
Janus Core Equity Fund $ 92 $ 287 $ 498 $ 1,108
Janus Growth and Income Fund $ 90 $ 281 $ 488 $ 1,084
Janus Research Fund $ 164 $ 508 $ 876 $ 1,911
RISK-MANAGED
INTECH Risk-Managed Stock Fund(1) $ 91 $ 284 $ 493 $ 1,096
VALUE
Janus Mid Cap Value Fund - Investor Shares $ 95 $ 296 $ 515 $ 1,143
INTERNATIONAL & GLOBAL
Janus Global Opportunities Fund $ 105 $ 328 $ 569 $ 1,259
Janus Overseas Fund $ 92 $ 287 $ 498 $ 1,108
Janus Worldwide Fund $ 87 $ 271 $ 471 $ 1,049
</Table>
(1) Formerly named Janus Risk-Managed Stock Fund.
62 Janus Equity Funds prospectus
PRINCIPAL INVESTMENT STRATEGIES AND RISKS
- --------------------------------------------------------------------------------
This section takes a closer look at the Funds' principal investment
strategies and certain risks of investing in the Funds. Strategies and
policies that are noted as "fundamental" cannot be changed without a
shareholder vote. Other, non-fundamental strategies and policies can be
changed by the Trustees without prior notice to shareholders.
Please carefully review the "Risks" section of this Prospectus for a
discussion of risks associated with certain investment techniques. We have
also included a "Glossary of Investment Terms" with descriptions of
investment terms used throughout this Prospectus.
FREQUENTLY ASKED QUESTIONS ABOUT PRINCIPAL INVESTMENT STRATEGIES
The following questions and answers are designed to help you better
understand the Funds' principal investment strategies.
1. HOW ARE COMMON STOCKS SELECTED FOR THE FUNDS MANAGED BY JANUS?
Unless its investment objective or policies prescribe otherwise, each of the
Funds may invest substantially all of its assets in common stocks if its
investment personnel believe that common stocks will appreciate in value. The
investment personnel generally take a "bottom up" approach to selecting
companies. This means that they seek to identify individual companies with
earnings growth potential that may not be recognized by the market at large.
The investment personnel make this assessment by looking at companies one at
a time, regardless of size, country of organization, place of principal
business activity, or other similar selection criteria. The Funds may sell a
holding if, among other things, the security reaches the investment
personnel's price target, if the company has a deterioration of fundamentals
such as failing to meet key operating benchmarks, or if the investment
personnel find a better investment opportunity. The Funds may also sell a
holding to meet redemptions.
Janus Balanced Fund and Janus Growth and Income Fund may each emphasize
varying degrees of income. Realization of income is not a significant
consideration when choosing investments for the other Funds. Income realized
on the Funds' investments may be incidental to their objectives. In the case
of Janus Balanced Fund and Janus Growth and Income Fund, the investment
personnel may consider dividend-paying characteristics to a greater degree in
selecting common stocks.
Janus Contrarian Fund and Janus Global Opportunities Fund emphasize
investments in companies with attractive prices compared to their free cash
flow. The investment personnel will typically seek attractively valued
companies that are improving their free cash flow and improving their returns
on invested capital. These companies may also include special situations
companies that are experiencing management changes and/or are temporarily out
of favor.
Principal investment strategies and risks 63
2. HOW ARE COMMON STOCKS SELECTED BY INTECH FOR INTECH RISK-MANAGED STOCK FUND?
INTECH applies a mathematical portfolio management process to construct an
investment portfolio for the Fund. INTECH developed the formulas underlying
this mathematical process.
The mathematical process is designed to take advantage of market volatility
(variation in stock prices), rather than using fundamental research or
market/ economic trends to predict the future returns of stocks. The process
seeks to generate a return in excess of the Fund's benchmark over the long
term, while controlling the risk relative to the benchmark. The mathematical
process involves:
- selecting stocks primarily from stocks within the Fund's benchmark;
- periodically determining a target weighting of these stocks and rebalancing
to the target weighting; and
- monitoring the total risk and volatility of the Fund's holdings with
respect to its benchmark index.
INTECH seeks to outperform the Fund's benchmark index through its
mathematical process. INTECH seeks to identify stocks for the Fund in a
manner that does not increase the overall portfolio volatility above that of
the benchmark index. More volatile stocks may tend to reside on the smaller
cap end of the benchmark index. INTECH employs risk controls designed to
minimize the risk of significant underperformance relative to the benchmark
index. However, the proprietary mathematical process used by INTECH may not
achieve the desired results.
The Fund may use exchange-traded funds, as well as futures, options, and
other derivatives, to gain exposure to the stock market pending investment of
cash balances or to meet liquidity needs.
3. HOW ARE COMMON STOCKS SELECTED BY PERKINS FOR JANUS MID CAP VALUE FUND?
Janus Mid Cap Value Fund's investment personnel focus on companies that have
fallen out of favor with the market or appear to be temporarily misunderstood
by the investment community. The investment personnel of the Fund look for
companies with strong fundamentals and competent management. They generally
look for companies with products and services that give them a competitive
advantage.
4. ARE THE SAME CRITERIA USED BY JANUS AND PERKINS TO SELECT FOREIGN SECURITIES?
Generally, yes. The investment personnel seek companies that meet their
selection criteria, regardless of where a company is located. Foreign
securities are generally selected on a stock-by-stock basis without regard to
any defined
64 Janus Equity Funds prospectus
allocation among countries or geographic regions. However, certain factors
such as expected levels of inflation, government policies influencing
business conditions, the outlook for currency relationships, and prospects
for economic growth among countries, regions, or geographic areas may warrant
greater consideration in selecting foreign securities. There are no
limitations on the countries in which the Funds may invest and the Funds may
at times have significant foreign exposure.
5. ARE THE SAME CRITERIA USED BY INTECH TO SELECT FOREIGN SECURITIES?
Generally, yes. To the extent that foreign securities may be included in the
Fund's benchmark index, INTECH's mathematical portfolio process may select
foreign securities from within the benchmark index, regardless of where a
company is located. There are no limitations on the countries in which the
Fund may invest.
6. WHAT IS A "SPECIAL SITUATION"?
Each Fund may invest in special situations or turnarounds. A special
situation arises when the investment personnel believe that the securities of
an issuer will be recognized and appreciate in value due to a specific
development with respect to that issuer. Special situations may include
significant changes in a company's allocation of its existing capital, a
restructuring of assets, or a redirection of free cash flow. For example,
issuers undergoing significant capital changes may include companies involved
in spin-offs, sales of divisions, mergers or acquisitions, companies emerging
from bankruptcy, or companies initiating large changes in their debt to
equity ratio. Companies that are redirecting cash flows may be reducing debt,
repurchasing shares, or paying dividends. Special situations may also result
from: (i) significant changes in industry structure through regulatory
developments or shifts in competition; (ii) a new or improved product,
service, operation, or technological advance; (iii) changes in senior
management; or (iv) significant changes in cost structure. A Fund's
performance could suffer if the anticipated development in a "special
situation" investment does not occur or does not attract the expected
attention.
7. WHAT DOES "MARKET CAPITALIZATION" MEAN?
Market capitalization is the most commonly used measure of the size and value
of a company. It is computed by multiplying the current market price of a
share of the company's stock by the total number of its shares outstanding.
As noted previously, market capitalization is an important investment
criterion for Janus Enterprise Fund, Janus Triton Fund, and Janus Mid Cap
Value Fund. Although the other Funds offered by this Prospectus do not
emphasize investments in companies of any particular size, Funds with a
larger asset base (e.g., Janus Fund and Janus Worldwide Fund) are more likely
to invest in larger, more established issuers.
Principal investment strategies and risks 65
8. WHAT DOES "LIFE SCIENCE ORIENTATION" MEAN IN RELATION TO JANUS GLOBAL LIFE
SCIENCES FUND?
Generally speaking, the "life sciences" relate to maintaining or improving
quality of life. So, for example, companies with a "life science orientation"
include companies engaged in research, development, production, or
distribution of products or services related to health and personal care,
medicine, or pharmaceuticals. Life science oriented companies also include
companies that the investment personnel believe have growth potential
primarily as a result of particular products, technology, patents, or other
market advantages in the life sciences. Life sciences encompass a variety of
industries, including health care, nutrition, agriculture, medical
diagnostics, nuclear and biochemical research and development, and health
care facilities ownership and operation.
9. WHAT IS JANUS GLOBAL TECHNOLOGY FUND'S INDUSTRY POLICY?
Janus Global Technology Fund will not concentrate its investments in any
particular industry or group of related industries. As a result, its
investment personnel may have more flexibility to find companies that they
believe will benefit from advances or improvements in technology in a number
of industries. Nevertheless, the Fund may hold a significant portion of its
assets in industries such as: aerospace/defense; biotechnology; computers;
office/business equipment; semiconductors; software; telecommunications; and
telecommunications equipment.
10. HOW DO THE INVESTMENT PERSONNEL FOR JANUS CONTRARIAN FUND, JANUS MID CAP
VALUE FUND, AND JANUS GLOBAL OPPORTUNITIES FUND DETERMINE THAT A COMPANY MAY
BE UNDERVALUED?
A company may be undervalued when, in the opinion of the Funds' investment
personnel, the company is selling for a price that is below its intrinsic
worth. A company may be undervalued due to market or economic conditions,
temporary earnings declines, unfavorable developments affecting the company,
or other factors. Such factors may provide buying opportunities at attractive
prices compared to historical or market price-earnings ratios, price/free
cash flow, book value, or return on equity. The investment personnel believe
that buying these securities at a price that is below their intrinsic worth
may generate greater returns for the Funds than those obtained by paying
premium prices for companies currently in favor in the market.
11. HOW DO JANUS BALANCED FUND AND JANUS GROWTH AND INCOME FUND DIFFER FROM EACH
OTHER?
Janus Balanced Fund places a greater emphasis on the income component of its
portfolio and will normally invest 40-50% of its net assets in securities
selected primarily for their income potential. Growth and Income Fund will
normally
66 Janus Equity Funds prospectus
invest at least 25% of its net assets in securities the investment personnel
believe have income potential. As a result, Janus Balanced Fund is expected
to be less volatile than Janus Growth and Income Fund. Janus Growth and
Income Fund places a greater emphasis on growth stocks and may derive a
greater portion of its income from dividend-paying common stocks. Because of
these factors, its NAV can be expected to fluctuate more than Janus Balanced
Fund.
12. HOW ARE ASSETS ALLOCATED BETWEEN THE GROWTH AND INCOME COMPONENTS OF JANUS
BALANCED FUND'S AND JANUS GROWTH AND INCOME FUND'S PORTFOLIOS?
Janus Balanced Fund and Janus Growth and Income Fund shift assets to varying
degrees between the growth and income components of their portfolio holdings
based on the investment personnel's analyses of relevant market, financial,
and economic conditions. If the investment personnel believe that growth
securities will provide better returns than the yields then available or
expected on income-producing securities, that Fund will place a greater
emphasis on the growth component. Janus Balanced Fund's growth component will
normally be 50-60% of its net assets. Janus Growth and Income Fund's growth
component will normally be up to 75% of its net assets. In addition, the
Funds' income component may consist of dividend-paying stocks which exhibit
growth characteristics.
13. WHAT TYPES OF SECURITIES MAKE UP THE GROWTH COMPONENT OF JANUS BALANCED
FUND'S AND JANUS GROWTH AND INCOME FUND'S PORTFOLIOS?
The growth component of these Funds' portfolios is expected to consist
primarily of common stocks, but may also include preferred stocks,
convertible securities, or other securities selected primarily for their
growth potential.
14. WHAT TYPES OF SECURITIES MAKE UP THE INCOME COMPONENT OF JANUS BALANCED
FUND'S AND JANUS GROWTH AND INCOME FUND'S PORTFOLIOS?
The income component of Janus Balanced Fund's holdings will consist primarily
of fixed-income securities while Janus Growth and Income Fund's income
component will consist largely of equities and other securities that the
investment personnel believe have income potential. Such securities may
include equity securities, convertible securities, equity derivatives
(including equity-linked structured notes, such as PERCs, PERQs, YESs, and
YEELDs), and all types of debt securities. Equity securities may be included
in the income component of a Fund if they currently pay dividends or the
investment personnel believe they have the potential for either increasing
their dividends or commencing dividends, if none are currently paid.
Accordingly, Janus Growth and Income Fund's income component may also exhibit
growth characteristics.
Principal investment strategies and risks 67
15. HOW COULD INTEREST RATES AFFECT THE VALUE OF MY JANUS BALANCED FUND OR JANUS
GROWTH AND INCOME FUND INVESTMENT?
Generally, a fixed-income security will increase in value when interest rates
fall and decrease in value when interest rates rise. Longer-term securities
are generally more sensitive to interest rate changes than shorter-term
securities, but they generally offer higher yields to compensate investors
for the associated risks. High-yield bond prices are generally less directly
responsive to interest rate changes than investment grade issues and may not
always follow this pattern. The income component of Janus Balanced Fund's and
Janus Growth and Income Fund's holdings may include fixed-income securities.
16. WHAT ARE U.S. GOVERNMENT SECURITIES?
The Funds, particularly Janus Balanced Fund, may invest in U.S. Government
securities. U.S. Government securities include those issued directly by the
U.S. Treasury and those issued or guaranteed by various U.S. Government
agencies and instrumentalities. Some government securities are backed by the
"full faith and credit" of the United States. Other government securities are
backed only by the rights of the issuer to borrow from the U.S. Treasury.
Others are supported by the discretionary authority of the U.S. Government to
purchase the obligations. Certain other government securities are supported
only by the credit of the issuer. For securities not backed by the full faith
and credit of the United States, a Fund must look principally to the agency
or instrumentality issuing or guaranteeing the securities for repayment and
may not be able to assert a claim against the United States if the agency or
instrumentality does not meet its commitment. Although they are high-quality,
such securities may involve increased risk of loss of principal and interest
compared to government debt securities that are backed by the full faith and
credit of the United States.
RISKS
Because the Funds may invest substantially all of their assets in common
stocks, the main risk is the risk that the value of the stocks they hold
might decrease in response to the activities of an individual company or in
response to general market and/or economic conditions. If this occurs, a
Fund's share price may also decrease. A Fund's performance may also be
significantly affected, positively or negatively, by certain types of
investments, such as foreign securities, derivative investments,
non-investment grade bonds, initial public offerings ("IPOs"), or companies
with relatively small market capitalizations. IPOs and other types of
investments may have a magnified performance impact on a Fund with a small
asset base. A Fund may not experience similar performance as its assets grow.
Janus Global Life Sciences Fund's and Janus Global Technology Fund's
performance may also be affected by industry risk to a greater extent than
the other Funds.
68 Janus Equity Funds prospectus
Janus Capital is the adviser to the Funds and the Janus Smart Portfolios
(each of which is a "fund of funds" that primarily invests in other Janus
Capital mutual funds). Because Janus Capital is the adviser to the Janus
Smart Portfolios and the Funds, it is subject to certain potential conflicts
of interest when allocating the assets of the Janus Smart Portfolios among
such Funds. Purchases and redemptions of Fund shares by a Janus Smart
Portfolio due to reallocations or rebalancings may result in a Fund having to
sell securities or invest cash when it otherwise would not do so. Such
transactions could accelerate the realization of taxable income if sales of
securities resulted in gains and could also increase a Fund's transaction
costs. Large redemptions by a Janus Smart Portfolio may cause a Fund's
expenses to increase due to a resulting smaller asset base. In addition, the
Janus Smart Portfolios' portfolio manager, who also serves the role of
Director of Risk Management and Performance of Janus Capital, has regular and
continuous access to the holdings of the Funds as well as knowledge of, and
potential impact on, investment strategies and techniques of the Funds. Janus
Capital believes these potential conflicts may be mitigated through its
compliance monitoring, including that of asset allocations by the portfolio
manager. In addition, Janus Capital has retained an independent consultant to
provide research and consulting services with respect to asset allocation and
investments for the Janus Smart Portfolios.
The officers and Trustees of the Funds may also serve as officers and
Trustees of the Janus Smart Portfolios. Conflicts may arise as the officers
and Trustees seek to fulfill their fiduciary responsibilities to both the
Janus Smart Portfolios and the Funds. The Trustees intend to address any such
conflicts as deemed appropriate.
Janus Capital manages accounts which engage in short sales. The simultaneous
management of long and short portfolios creates potential conflicts of
interest, including the risk that short sale activity could adversely affect
the market value of long positions (and vice versa), the risk arising from
sequential orders in long and short positions, and the risks associated with
receiving opposing orders at the same time.
FREQUENTLY ASKED QUESTIONS ABOUT CERTAIN RISKS
The following questions and answers are designed to help you better
understand some of the risks of investing in the Funds.
1. HOW DOES THE NONDIVERSIFICATION CLASSIFICATION OF JANUS ORION FUND, JANUS
CONTRARIAN FUND, AND JANUS GLOBAL OPPORTUNITIES FUND AFFECT THEIR RISK
PROFILE?
Diversification is a way to reduce risk by investing in a broad range of
stocks or other securities. A fund that is classified as "nondiversified" has
the ability to take larger positions in a smaller number of issuers than a
fund that is classified as "diversified." This gives a nondiversified fund
more flexibility to focus its investments in the most attractive companies
identified by the investment
Principal investment strategies and risks 69
personnel. However, because the appreciation or depreciation of a single
stock may have a greater impact on the NAV of a nondiversified fund, its
share price can be expected to fluctuate more than a comparable diversified
fund. This fluctuation, if significant, may affect the performance of a Fund.
Since Janus Orion Fund normally invests primarily in a core portfolio of
20-30 common stocks, this risk may be increased.
2. WHAT IS "INDUSTRY RISK"?
Industry risk is the possibility that a group of related stocks will decline
in price due to industry-specific developments. Companies in the same or
similar industries may share common characteristics and are more likely to
react similarly to industry-specific market or economic developments. Each
Fund's investments, if any, in multiple companies in a particular industry
increase that Fund's exposure to industry risk. In the life sciences, for
example, many companies are subject to government regulation and approval of
their products and services, which may affect their price or availability. In
addition, the products and services offered by these companies may quickly
become obsolete in the face of scientific or technological developments. The
economic outlook of such companies may fluctuate dramatically due to changes
in regulatory or competitive environments. Similarly, in technology-related
industries, competitive pressures may have a significant effect on the
performance of companies in which a Fund may invest. In addition, technology
and technology-related companies often progress at an accelerated rate, and
these companies may be subject to short product cycles and aggressive
pricing, which may increase their volatility.
Janus Global Life Sciences Fund invests in a concentrated portfolio, which
may result in greater exposure to related industries. As a result, this Fund
may be more volatile than a less concentrated portfolio.
3. WHAT ARE THE RISKS ASSOCIATED WITH VALUE INVESTING?
If the investment personnel's perception of a company's worth is not realized
in the time frame they expect, the overall performance of Janus Contrarian
Fund, Janus Mid Cap Value Fund, and Janus Global Opportunities Fund may
suffer. In general, the investment personnel believe this risk is mitigated
by investing in companies that are undervalued in the market in relation to
earnings, cash flow, dividends, and/or assets.
4. HOW COULD THE FUNDS' INVESTMENTS IN FOREIGN SECURITIES AFFECT THEIR
PERFORMANCE?
Unless otherwise limited by its specific investment policies, each Fund may
invest without limit in foreign securities either indirectly (e.g.,
depositary receipts) or directly in foreign markets, including emerging
markets. Investments in foreign securities, including those of foreign
governments, may involve greater
70 Janus Equity Funds prospectus
risks than investing in domestic securities because a Fund's performance may
depend on factors other than the performance of a particular company. These
factors include:
- CURRENCY RISK. As long as a Fund holds a foreign security, its value will
be affected by the value of the local currency relative to the U.S. dollar.
When a Fund sells a foreign denominated security, its value may be worth
less in U.S. dollars even if the security increases in value in its home
country. U.S. dollar-denominated securities of foreign issuers may also be
affected by currency risk due to the overall impact of exposure to the
issuer's local currency.
- POLITICAL AND ECONOMIC RISK. Foreign investments may be subject to
heightened political and economic risks, particularly in emerging markets
which may have relatively unstable governments, immature economic
structures, national policies restricting investments by foreigners,
different legal systems, and economies based on only a few industries. In
some countries, there is the risk that the government may take over the
assets or operations of a company or that the government may impose taxes
or limits on the removal of a Fund's assets from that country.
- REGULATORY RISK. There may be less government supervision of foreign
markets. As a result, foreign issuers may not be subject to the uniform
accounting, auditing, and financial reporting standards and practices
applicable to domestic issuers and there may be less publicly available
information about foreign issuers.
- MARKET RISK. Foreign securities markets, particularly those of emerging
market countries, may be less liquid and more volatile than domestic
markets. Certain markets may require payment for securities before delivery
and delays may be encountered in settling securities transactions. In some
foreign markets, there may not be protection against failure by other
parties to complete transactions. Such factors may hinder a Fund's ability
to buy and sell emerging market securities in a timely manner, affecting
the Fund's investment strategies and potentially affecting the value of the
Fund.
- TRANSACTION COSTS. Costs of buying, selling, and holding foreign
securities, including brokerage, tax, and custody costs, may be higher than
those involved in domestic transactions.
5. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN SECURITIES OF
COMPANIES FROM EMERGING MARKET COUNTRIES?
Within the parameters of their specific investment policies, the Funds,
particularly Janus Global Life Sciences Fund, Janus Global Technology Fund,
Janus Global Opportunities Fund, Janus Overseas Fund, and Janus Worldwide
Principal investment strategies and risks 71
Fund, may invest an unlimited amount of their assets in a company or
companies from one or more "developing countries" or "emerging markets." Such
countries include, but are not limited to, countries included in the MSCI
Emerging Markets Index(SM). Janus Orion Fund, Janus Triton Fund, Janus
Contrarian Fund, and Janus Research Fund have at times invested a significant
portion of their assets in emerging markets and may continue to do so. To the
extent that a Fund invests a significant amount of its assets in one or more
countries, returns and NAV may be affected to a large degree by events and
economic conditions in such countries. A summary of each Fund's investments
by country is contained in the Funds' shareholder reports and in the Funds'
Form N-Q filed with the SEC.
In many developing markets, there is less government supervision and
regulation of business and industry practices, stock exchanges, brokers, and
listed companies than in more developed markets. The securities markets of
many of the countries in which the Funds may invest may also be smaller, less
liquid, and subject to greater price volatility than those in the United
States. In the event of a default on any investments in foreign debt
obligations, it may be more difficult for the Funds to obtain or to enforce a
judgment against the issuers of such securities. The Funds may be subject to
emerging markets risk to the extent that they invest in companies which are
not considered to be from emerging markets, but which have customers,
products, or transactions associated with emerging markets.
6. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN HIGH-YIELD/HIGH-RISK
BONDS?
High-yield/high-risk bonds (or "junk" bonds) are bonds rated below investment
grade by the primary rating agencies such as Standard & Poor's Ratings
Service ("Standard & Poor's"), Fitch, Inc. ("Fitch"), and Moody's Investors
Service, Inc. ("Moody's") (i.e., BB+ or lower by Standard & Poor's and Fitch,
or Ba or lower by Moody's) or are unrated bonds of similar quality. The value
of lower quality bonds generally is more dependent on credit risk and default
risk than investment grade bonds. Issuers of high-yield/high-risk bonds may
not be as strong financially as those issuing bonds with higher credit
ratings and are more vulnerable to real or perceived economic changes,
political changes, or adverse developments specific to the issuer. In
addition, the junk bond market can experience sudden and sharp price swings.
The secondary market on which high-yield securities are traded may be less
liquid than the market for investment grade securities. The lack of a liquid
secondary market may have an adverse impact on the market price of the
security. When secondary markets for high-yield securities are less liquid
than the market for investment grade securities, it also may be more
difficult to value the securities because valuation may require more
research, and elements of
72 Janus Equity Funds prospectus
judgment may play a larger role in the valuation because there is less
reliable, objective data available.
Please refer to the "Explanation of Rating Categories" section of the
Statement of Additional Information for a description of bond rating
categories.
7. HOW DO THE FUNDS TRY TO REDUCE RISK?
The Funds may use futures, options, swap agreements, and other derivative
instruments individually or in combination to "hedge" or protect their
portfolios from adverse movements in securities prices and interest rates.
The Funds may also use a variety of currency hedging techniques, including
the use of forward currency contracts, to manage currency risk. There is no
guarantee that derivative investments will benefit the Funds. A Fund's
performance could be worse than if the Fund had not used such instruments.
INTECH Risk-Managed Stock Fund's subadviser, INTECH, approaches risk
management from a perspective that evaluates risk relative to a direct
investment in the benchmark index. Risk controls are designed to minimize the
risk of significant underperformance relative to the benchmark index.
INTECH Risk-Managed Stock Fund normally remains as fully invested as possible
and does not seek to lessen the effects of a declining market through hedging
or temporary defensive positions. However, they may use futures and options
and may invest in exchange-traded funds to gain exposure to the stock market
pending investment of cash balances or to meet liquidity needs. There is no
guarantee that these types of derivative investments will work and their use
could cause lower returns or even losses to the Fund.
8. CERTAIN FUNDS MAY INVEST IN SMALLER OR NEWER COMPANIES. DOES THIS CREATE ANY
SPECIAL RISKS?
Many attractive investment opportunities may be smaller, start-up companies
offering emerging products or services. Smaller or newer companies may suffer
more significant losses as well as realize more substantial growth than
larger or more established issuers because they may lack depth of management,
be unable to generate funds necessary for growth or potential development, or
be developing or marketing new products or services for which markets are not
yet established and may never become established. In addition, such companies
may be insignificant factors in their industries and may become subject to
intense competition from larger or more established companies. Securities of
smaller or newer companies may have more limited trading markets than the
markets for securities of larger or more established issuers, or may not be
publicly traded at all, and may be subject to wide price fluctuations.
Investments in such companies tend to be more volatile and somewhat more
speculative.
Principal investment strategies and risks 73
GENERAL PORTFOLIO POLICIES
Unless otherwise stated, each of the following general policies apply to all
of the Funds. Except for the Funds' policies with respect to investments in
illiquid securities and borrowing, the percentage limitations included in
these policies and elsewhere in this Prospectus normally apply only at the
time of purchase of a security. So, for example, if a Fund exceeds a limit as
a result of market fluctuations or the sale of other securities, it will not
be required to dispose of any securities.
WAITING PERIOD
Janus Mercury Fund and Janus Research Fund may be subject to a waiting period
prior to purchases or sales of securities in order to attempt to provide
equitable dissemination of the Research Team's ideas to other Janus fund
investment personnel. A waiting period may not be applicable where the idea
is already disseminated among other Janus fund investment personnel. Any
waiting period may adversely affect the purchase or sale price of a security,
due to the time delay. This may, in turn, affect the return on your
investment in the Funds.
CASH POSITION
INTECH Risk-Managed Stock Fund, subadvised by INTECH, normally remains as
fully invested as possible and does not seek to lessen the effects of a
declining market through hedging or temporary defensive positions. INTECH
Risk-Managed Stock Fund may use exchange-traded funds as well as futures,
options, and other derivatives to gain exposure to the stock market pending
investment of cash balances or to meet liquidity needs. There is no guarantee
that these types of derivative investments will work and their use could
cause lower returns or even losses to the Fund.
Except as described above for INTECH Risk-Managed Stock Fund, the Funds may
not always stay fully invested in stocks and bonds. For example, when a
Fund's investment personnel believe that market conditions are unfavorable
for profitable investing, or when they are otherwise unable to locate
attractive investment opportunities, a Fund's cash or similar investments may
increase. In other words, cash or similar investments generally are a
residual - they represent the assets that remain after a Fund has committed
available assets to desirable investment opportunities. Partly because the
Funds' investment personnel act independently of each other, the cash
positions of the Funds may vary significantly. When a Fund's investments in
cash or similar investments increase, it may not participate in market
advances or declines to the same extent that it would if the Fund remained
more fully invested in stocks or bonds.
In addition, a Fund may temporarily increase its cash position under certain
unusual circumstances, such as to protect its assets or maintain liquidity in
74 Janus Equity Funds prospectus
certain circumstances, for example, to meet unusually large redemptions. A
Fund's cash position may also increase temporarily due to unusually large
cash inflows. Under unusual circumstances such as these, a Fund may invest up
to 100% of its assets in cash or similar investments. In this case, the Fund
may not achieve its investment objective.
OTHER TYPES OF INVESTMENTS
Unless otherwise stated within its specific investment policies, each Fund
may also invest in other types of domestic and foreign securities and use
other investment strategies, as described in the "Glossary of Investment
Terms." These securities and strategies are not principal investment
strategies of the Funds. If successful, they may benefit the Funds by earning
a return on the Funds' assets or reducing risk; however, they may not achieve
the Funds' objectives. These securities and strategies may include:
- debt securities
- indexed/structured securities
- high-yield/high-risk bonds (20% or less of Janus Contrarian Fund's, Janus
Core Equity Fund's, and Janus Mid Cap Value Fund's assets and 35% or less
of each of the other Fund's assets, with the exception of INTECH
Risk-Managed Stock Fund, which does not intend to invest in
high-yield/high-risk bonds)
- options, futures, forwards, swap agreements, participatory notes, exchange-
traded funds, and other types of derivatives individually or in combination
for hedging purposes or for nonhedging purposes such as seeking to enhance
return; such techniques may also be used to gain exposure to the market
pending investment of cash balances or to meet liquidity needs
- short sales "against the box" and "naked" short sales, with the exception
of INTECH Risk-Managed Stock Fund, which does not intend to invest in short
sales (no more than 8% of a Fund's assets may be invested in naked short
sales)
- securities purchased on a when-issued, delayed delivery, or forward
commitment basis
- bank loans, which may be acquired through loan participations and
assignments (for Janus Balanced Fund only; no more than 5% of the Fund's
total assets)
ILLIQUID INVESTMENTS
Each Fund may invest up to 15% of its net assets in illiquid investments. An
illiquid investment is a security or other position that cannot be disposed
of quickly in the normal course of business. For example, some securities are
not
Principal investment strategies and risks 75
registered under U.S. securities laws and cannot be sold to the U.S. public
because of SEC regulations (these are known as "restricted securities").
Under procedures adopted by the Funds' Trustees, certain restricted
securities may be deemed liquid, and will not be counted toward this 15%
limit. INTECH Risk-Managed Stock Fund does not intend to invest in illiquid
investments.
FOREIGN SECURITIES
Unless otherwise stated within its specific investment policies, each Fund
may invest without limit in foreign equity and debt securities. The Funds may
invest directly in foreign securities denominated in a foreign currency and
not publicly traded in the United States. Other ways of investing in foreign
securities include depositary receipts or shares and passive foreign
investment companies. INTECH Risk-Managed Stock Fund's investments in foreign
securities are limited to the extent those securities are included in its
benchmark index.
SPECIAL SITUATIONS
Each Fund may invest in companies that demonstrate special situations or
turnarounds, meaning companies that have experienced significant business
problems but are believed to have favorable prospects for recovery. For
example, a special situation or turnaround may arise when, in the opinion of
a Fund's investment personnel, the securities of a particular issuer will be
recognized and appreciate in value due to a specific development with respect
to that issuer. Special situations may include significant changes in a
company's allocation of its existing capital, a restructuring of assets, or a
redirection of free cash flow. For example, issuers undergoing significant
capital changes may include companies involved in spin-offs, sales of
divisions, mergers or acquisitions, companies emerging from bankruptcy, or
companies initiating large changes in their debt to equity ratio.
Developments creating a special situation might include, among others, a new
product or process, a technological breakthrough, a management change or
other extraordinary corporate event, or differences in market supply of and
demand for the security. A Fund's performance could suffer if the anticipated
development in a "special situation" investment does not occur or does not
attract the expected attention.
SECURITIES LENDING
The Funds may seek to earn additional income through securities lending.
Certain Funds may lend their portfolio securities to parties (typically
brokers or other financial institutions) who need to borrow securities in
order to complete certain transactions such as covering short sales, avoiding
failures to deliver securities, or completing arbitrage activities. There is
a risk of delay in recovering a loaned security and/or a risk of loss in
collateral rights if the borrower fails financially.
76 Janus Equity Funds prospectus
PORTFOLIO TURNOVER
In general, the Funds intend to purchase securities for long-term investment,
although, to a limited extent, each Fund may purchase securities in
anticipation of relatively short-term price gains. Short-term transactions
may also result from liquidity needs, securities having reached a price or
yield objective, changes in interest rates or the credit standing of an
issuer, or by reason of economic or other developments not foreseen at the
time of the investment decision. A Fund may also sell one security and
simultaneously purchase the same or a comparable security to take advantage
of short-term differentials in bond yields or securities prices. Portfolio
turnover is affected by market conditions, changes in the size of a Fund, the
nature of a Fund's investments, and the investment style of the investment
personnel. Changes are made in a Fund's portfolio whenever its investment
personnel believe such changes are desirable. Portfolio turnover rates are
generally not a factor in making buy and sell decisions.
In general, INTECH Risk-Managed Stock Fund intends to purchase securities for
long-term investment, although, to a limited extent, portfolio securities may
be held for relatively shorter periods. Short-term transactions may also
result from liquidity needs, securities having reached a price objective,
changes in the credit standing of an issuer, or by reason of economic or
other developments not foreseen at the time of the investment. As a result of
INTECH's investment process, the Fund may sell one security and
simultaneously purchase the same or a comparable security. Portfolio turnover
may also be affected by market conditions, changes in the size of the Fund,
and the nature of the Fund's investments. Portfolio turnover rates are not a
factor in making buy and sell decisions.
The rebalancing techniques used by INTECH Risk-Managed Stock Fund may result
in a higher portfolio turnover compared to a "buy and hold" fund strategy.
INTECH periodically rebalances the stocks in the portfolio to their target
weighting versus the Fund's benchmark index, as determined by INTECH's
mathematical process.
Increased portfolio turnover may result in higher costs for brokerage
commissions, dealer mark-ups, and other transaction costs and may also result
in taxable capital gains. Higher costs associated with increased portfolio
turnover may offset gains in a Fund's performance. The "Financial Highlights"
section of this Prospectus shows the Funds' historical turnover rates.
Principal investment strategies and risks 77
- --------------------------------------------------------------------------------
JANUS EQUITY FUNDS
Shareholder's Manual
This Shareholder's Manual is
for those shareholders
investing directly with the
Funds. This section will help
you become familiar with the
different types of accounts
you can establish with Janus.
It also explains in detail
the wide array of services
and features you can
establish on your account, as
well as describes account
policies and fees that may
apply to your account.
Account policies (including
fees), services, and features
may be modified or
discontinued without
shareholder approval or prior
notice.
(JANUS LOGO)
DOING BUSINESS WITH JANUS
- --------------------------------------------------------------------------------
ONLINE - www.janus.com - 24 HOURS A DAY, 7 DAYS A WEEK
- --------------------------------------------------------------------------------
ON www.janus.com* YOU CAN:
- - Open the following types of accounts: individual, joint, UGMA/UTMA,
Traditional and Roth IRAs, Simplified Employee Pension ("SEP") IRAs, and
Coverdell Education Savings Accounts
- - Review your account or complete portfolio
- - Buy, exchange, and sell Funds
- - View your personalized performance
- - Obtain Fund information and performance
- - Update personal information
- - Receive electronic daily, quarterly, and year-end statements, semiannual and
annual reports, prospectuses, and tax forms
* Certain account or transaction types may be restricted from being processed
through www.janus.com. If you would like more information about these
restrictions, please contact a Janus representative.
JANUS XPRESSLINE(TM)
1-888-979-7737
- - 24-HOUR AUTOMATED PHONE SYSTEM
JANUS REPRESENTATIVES
1-800-525-3713
TDD
For the speech and hearing impaired.
1-800-525-0056
MAILING ADDRESS
Janus
P.O. Box 173375
Denver, CO 80217-3375
FOR OVERNIGHT MAIL
Janus
720 S. Colorado Blvd., Suite 290A
Denver, CO 80246-1929
80 Janus Equity Funds prospectus
MINIMUM INVESTMENTS*
<Table>
To open a new regular Fund account $2,500
To open a new UGMA/UTMA account, Coverdell Education
Savings Account, or a retirement Fund account
- without an automatic investment program $1,000
- with an automatic investment program of $100 per
month $ 500
To add to any existing type of Fund account $ 100
</Table>
* The Funds reserve the right to change the amount of these minimums from
time to time or to waive them in whole or in part. Participants in certain
retirement plans, including but not limited to, 403(b)(7) accounts, Janus
prototype Money Purchase Pension and Profit Sharing plans, SEP IRAs, SAR
SEP IRAs, or outside qualified retirement plans, may not be subject to the
stated minimums. Employees of Janus Capital, its wholly-owned subsidiaries,
and INTECH may open Fund accounts for $100.
MINIMUM INVESTMENT REQUIREMENTS
Due to the proportionately higher costs of maintaining small accounts, the
Funds reserve the right to deduct an annual $25 minimum balance fee per Fund
account with values below the minimums described under "Minimum Investments"
or to close Fund accounts valued at less than $100. This policy may not apply
to accounts that fall below the minimums solely as a result of market value
fluctuations or to those accounts not subject to a minimum investment
requirement. The fee or account closure will occur during the fourth quarter
of each calendar year. You may receive written notice before we charge the
$25 fee or close your account so that you may increase your account balance
to the required minimum. Please note that you may incur a tax liability as a
result of the fee being charged or the redemption.
TYPES OF ACCOUNT OWNERSHIP
Please refer to www.janus.com or an account application for specific
requirements to open and maintain an account.
INDIVIDUAL OR JOINT OWNERSHIP
Individual accounts are owned by one person. Joint accounts have two or more
owners.
TRUST
An established trust can open an account. The names of each trustee, the name
of the trust, and the date of the trust agreement must be included on the
application.
Shareholder's manual 81
BUSINESS ACCOUNTS
Corporations and partnerships may also open an account. The application must
be signed by an authorized officer of the corporation or a general partner of
the partnership.
TAX-DEFERRED ACCOUNTS
Please refer to www.janus.com or an account application for specific
requirements to open and maintain an account. Certain tax-deferred accounts
can only be opened and maintained via written request. Please contact a Janus
representative for more information.
If you are eligible, you may set up one or more tax-deferred accounts. A tax-
deferred account allows you to shelter your investment income and capital
gains from current income taxes. A contribution to certain of these plans may
also be tax deductible. The types of tax-deferred accounts that may be opened
with Janus are described below. Investors should consult their tax adviser or
legal counsel before selecting a tax-deferred account. You may initiate a
rollover or a transfer of assets from certain tax-deferred accounts via
www.janus.com.
INVESTING FOR YOUR RETIREMENT
Please visit www.janus.com or call a Janus representative for more complete
information regarding the different types of IRAs. Distributions from these
plans may be subject to income tax and to an additional tax if withdrawn
prior to age 59 1/2 or used for a nonqualifying purpose.
TRADITIONAL AND ROTH IRAS
Both IRAs allow most individuals with earned income to contribute up to the
lesser of $4,000 or 100% of compensation for tax years 2005 and 2006. In
addition, for the 2005 tax year IRA holders age 50 or older may contribute
$500 more than these limits; and for the 2006 tax year IRA holders age 50 or
older may contribute $1,000 more than these limits.
SIMPLIFIED EMPLOYEE PENSION (SEP) IRAS
This plan allows small business owners (including sole proprietors) to make
tax-deductible contributions for themselves and any eligible employee(s). A
SEP requires an IRA (a SEP-IRA) to be set up for each SEP participant.
PROFIT SHARING OR MONEY PURCHASE PENSION PLAN
These plans are open to corporations, partnerships, and small business owners
(including sole proprietors) for the benefit of their employees and
themselves. You may only open and maintain this type of account via written
request. Please contact a Janus representative for more information.
82 Janus Equity Funds prospectus
SECTION 403(b)(7) PLAN
Employees of educational organizations or other qualifying tax-exempt
organizations may be eligible to participate in a Section 403(b)(7) plan. You
may only open and maintain this type of account via written request. Please
contact a Janus representative for more information.
ACCOUNTS FOR THE BENEFIT OF A CHILD
CUSTODIAL ACCOUNTS (UGMA OR UTMA)
An UGMA/UTMA account is a custodial account managed for the benefit of a
minor.
COVERDELL EDUCATION SAVINGS ACCOUNT
This plan allows individuals, subject to certain income limitations, to
contribute up to $2,000 annually on behalf of any child under the age of 18.
Contributions are also allowed on behalf of children with special needs
beyond age 18. Distributions are generally subject to income tax if not used
for qualified education expenses.
Please refer to the chart on the following pages for information on opening
an account and conducting business with Janus. With certain limited
exceptions, the Funds are available only to U.S. citizens or residents.
Shareholder's manual 83
TO OPEN AN ACCOUNT OR BUY SHARES
Certain tax-deferred accounts can only be opened and maintained via written
request. Please contact a Janus representative for more information.
ONLINE AT www.janus.com
------------------------------------------------------------------------------
- You may open a new Fund account or you may buy shares in an existing Fund
account. You may elect to have Janus electronically withdraw funds from your
designated bank account. You may initiate a rollover or a transfer of assets
from certain tax-deferred accounts via www.janus.com. Janus.com will provide
real-time confirmation of your transaction.
BY TELEPHONE
------------------------------------------------------------------------------
- For an existing account, you may use Janus XpressLine(TM) to buy shares 24
hours a day, or you may call a Janus representative during normal business
hours. Janus will electronically withdraw funds from your designated bank
account.
- You may also buy shares by wiring money from your bank account to your Fund
account. For wiring instructions, call a Janus representative.
BY MAIL/IN WRITING
------------------------------------------------------------------------------
- To open your Fund account, complete and sign the appropriate application.
Make your check payable to Janus or elect a one-time electronic withdrawal
from your bank account as noted on the appropriate application.
- To buy additional shares, complete the remittance slip accompanying your
confirmation statement. If you are making a purchase into a retirement
account, please indicate whether the purchase is a rollover or a current or
prior year contribution. Send your check and remittance slip or written
instructions to the address listed on the slip.
BY AUTOMATED INVESTMENTS
------------------------------------------------------------------------------
- To buy additional shares through the Automatic Investment Program, you select
the frequency with which your money ($100 minimum) will be electronically
transferred from your bank account to your Fund account. Certain tax-deferred
accounts are not eligible for automated investments.
- You may buy additional shares using Payroll Deduction if your employer can
initiate this type of transaction. You may have all or a portion of your
paycheck ($100 minimum) invested directly into your Fund account.
-----------------------------------------------------------------------------
Note: For more information, refer to "Paying for Shares."
84 Janus Equity Funds prospectus
<Table>
TO EXCHANGE SHARES TO SELL SHARES
ONLINE AT www.janus.com ONLINE AT www.janus.com
-------------------------------- --------------------------------
- Exchanges may be made online - Redemptions may be made online
at www.janus.com. at www.janus.com.
BY TELEPHONE BY TELEPHONE
-------------------------------- --------------------------------
- Generally all accounts are - Generally all accounts are
automatically eligible to automatically eligible to sell
exchange shares by telephone. shares by telephone. To sell
To exchange all or a portion all or a portion of your
of your shares into any other shares, call Janus
available Janus fund, call XpressLine(TM) or a Janus
Janus XpressLine(TM) or a representative. The Funds
Janus representative. reserve the right to limit the
dollar amount that you may
redeem from your account by
telephone.
BY MAIL/IN WRITING BY MAIL/IN WRITING
-------------------------------- --------------------------------
- To request an exchange in - To request a redemption in
writing, please follow the writing, please follow the
instructions in "Written instructions in "Written
Instructions." Instructions."
BY SYSTEMATIC EXCHANGE BY SYSTEMATIC REDEMPTION
-------------------------------- --------------------------------
- You determine the amount of - This program allows you to
money you would like automati- sell shares worth a specific
cally exchanged from one Fund dollar amount from your Fund
account to another on any day account on a regular basis.
of the month.
-------------------------------- --------------------------------
Note: For more information, Note: For more information,
refer to "Exchanges." refer to "Payment of
Redemption Proceeds."
</Table>
Shareholder's manual 85
PAYING FOR SHARES
Please note the following when purchasing shares:
- Cash, credit cards, third party checks (with certain limited exceptions),
travelers cheques, credit card checks, or money orders will not be
accepted.
- All purchases must be made in U.S. dollars and checks must be drawn on U.S.
banks or an accepted Canadian bank.
- When purchasing shares through the Automatic Investment Program, if no date
or dollar amount is specified on your application, investments of $100 will
be made on the 20th of each month. Your first automatic investment may take
up to two weeks to establish. If the balance in the Janus fund account you
are buying into falls to zero as the result of a redemption or exchange,
your Automatic Investment Program will be discontinued.
- We may make additional attempts to debit your predesignated bank account
for automated investments that initially fail. You are liable for any costs
associated with these additional attempts. If your automated investment
fails, you may purchase shares of the Funds by submitting good funds via
another method accepted by the Funds (e.g., by wire transfer). In this
case, your purchase will be processed at the next NAV determined after we
receive good funds, not at the NAV available as of the date of the original
request.
- Each Fund reserves the right to reject any purchase order, including
exchange purchases, for any reason. The Funds are not intended for
excessive trading. For more information about the Funds' policy on
excessive trading, see "Excessive Trading."
- If all or a portion of a purchase is received for investment without a
specific fund designation, for investment in one of our closed funds, or
for investment in a fund that is not yet available for public sale, the
undesignated amount or entire investment, as applicable, will be invested
in the Janus Money Market Fund-Investor Shares ("Money Market Fund"). For
investments without a specific fund designation, where you own a single
Fund account with a current balance greater than zero, the investment will
be applied to that Fund account. For investments without a specific fund
designation, where you own two or more Fund accounts with current balances
greater than zero, and for investments in closed funds, unless you later
direct Janus to (i) buy shares of another Janus fund or (ii) sell shares of
the Money Market Fund and return the proceeds (including any dividends
earned) to you, Janus will treat your inaction as approval of the purchase
of the Money Market Fund. If you hold shares of a closed fund and submit an
order directly to Janus for your account in that closed fund, your account
must be open and your order must clearly indicate that you are currently a
shareholder of the closed fund, or your money will be invested in the Money
Market Fund. If you submit an order to buy shares of a fund
86 Janus Equity Funds prospectus
that is not yet available for investment (during a subscription period),
your investment will be held in the Money Market Fund until the new fund's
commencement of operations. At that time, your investment (including any
dividends) will be automatically exchanged from the Money Market Fund to
the new fund. All orders for purchase, exchange, or sale will receive the
NAV as described under "Policies in Relation to Transactions."
- For Fund purchases by check, if your check does not clear for any reason,
your purchase will be cancelled.
- If your purchase is cancelled for any reason, you will be responsible for
any losses or fees imposed by your bank and may be responsible for losses
that may be incurred as a result of any decline in the value of the
cancelled purchase.
EXCHANGES
Please note the following when exchanging shares:
- An exchange represents the sale of shares from one Fund and the purchase of
shares of another Fund, which may produce a taxable gain or loss in a non-
retirement account.
- You may generally exchange shares of a Fund for shares of any fund in the
Trust.
- New Janus fund accounts established by exchange must be opened with $2,500
or the total account value if the value of the Janus fund account you are
exchanging from is less than $2,500.
- UGMA/UTMA accounts, Traditional or Roth IRAs, Simplified Employee Pension
IRAs, and Coverdell Education Savings Accounts established by exchange must
meet the minimum investment requirements previously described. If the value
of the Janus fund account you are exchanging from is less than the stated
minimum, you must exchange the entire balance.
- Exchanges between existing Janus fund accounts must meet the $100
subsequent investment requirement.
- For Systematic Exchanges, if no date is specified on your request,
systematic exchanges will be made on the 20th of each month. You may
establish this option for as little as $100 per exchange. If the balance in
the Janus fund account you are exchanging from falls below the Systematic
Exchange amount, all remaining shares will be exchanged and your Systematic
Exchange Program will be discontinued.
- The exchange privilege is not intended as a vehicle for short-term or
excessive trading. You may make up to four round trips in a Fund in a
12-month period, although the Funds at all times reserve the right to
reject any exchange
Shareholder's manual 87
purchase for any reason without prior notice. Generally, a "round trip" is
a redemption out of a Fund (by any means) followed by a purchase back into
the same Fund (by any means). Different restrictions may apply if you
invest through an intermediary. The Funds will work with financial
intermediaries to apply the Funds' exchange limit. However, the Funds may
not always have the ability to monitor or enforce the trading activity in
such accounts. For more information about the Funds' policy on excessive
trading, see "Excessive Trading."
- The Janus funds reserve the right to reject any exchange request and to
modify or terminate the exchange privilege at any time.
- An exchange from JANUS GLOBAL LIFE SCIENCES FUND, JANUS GLOBAL TECHNOLOGY
FUND, INTECH RISK-MANAGED STOCK FUND, JANUS GLOBAL OPPORTUNITIES FUND,
JANUS OVERSEAS FUND, or JANUS WORLDWIDE FUND of shares held for three
months or less may be subject to the Funds' redemption fee. For more
information on redemption fees, including a discussion of the circumstances
in which the redemption fee may not apply, see "Redemption Fee."
- With certain limited exceptions, exchanges between Janus fund accounts will
be accepted only if the registrations are identical. If you are exchanging
into a closed Janus fund, you will need to meet criteria for investing in
the closed fund. For more information, see "Closed Fund Policies."
- If the shares you are exchanging are held in certificate form, you must
return the certificate to Janus prior to making any exchanges. Shares are
no longer available in certificate form.
Note: For the fastest and easiest way to exchange shares, log on to
www.janus.com* 24 hours a day, 7 days a week.
* Certain account types do not allow transactions via www.janus.com. For more
information, access www.janus.com or refer to this Shareholder's Manual.
EXCESSIVE TRADING
EXCESSIVE TRADING POLICIES AND PROCEDURES
The Board of Trustees has adopted policies and procedures with respect to
short-term and excessive trading of Fund shares ("excessive trading"). The
Funds are intended for long-term investment purposes only and the Funds will
take reasonable steps to attempt to detect and deter excessive trading.
Transactions placed in violation of the Funds' exchange limits or excessive
trading policies may be cancelled or revoked by the Fund by the next business
day following receipt by the Fund. The trading history of accounts determined
to be under common ownership or control within any of the Janus funds may be
considered
88 Janus Equity Funds prospectus
in enforcing these policies and procedures. As described below, however, the
Funds may not be able to identify all instances of excessive trading or
completely eliminate the possibility of excessive trading. In particular, it
may be difficult to identify excessive trading in certain omnibus accounts
and other accounts traded through intermediaries. By their nature, omnibus
accounts, in which purchases and sales of the Funds' shares by multiple
investors are aggregated by the intermediary and presented to the Funds on a
net basis, may effectively conceal the identity of individual investors and
their transactions from the Funds and their agents.
The Funds attempt to deter excessive trading through at least the following
methods:
- exchange limitations as described under "Exchanges;"
- redemption fees as described under "Redemption Fee" (where applicable on
certain Funds); and
- fair valuation of securities as described under "Pricing of Fund Shares."
The Funds monitor Fund share transactions, subject to the limitations
described below. Generally, a purchase of a Fund's shares followed by the
redemption of the Fund's shares within a 90-day period may result in
enforcement of a Fund's excessive trading policies and procedures with
respect to future purchase orders, provided that the Funds reserve the right
to reject any purchase request as explained above.
The Funds may suspend or permanently terminate the exchange privilege of any
investor who makes more than four round trips (as defined under "Exchanges")
in a Fund in a 12-month period and may bar future purchases into the Fund and
any of the other Janus funds by such investor. The Funds' exchange limits and
excessive trading policies generally do not apply to a money market fund,
although money market funds at all times reserve the right to reject any
purchase request (including exchange purchases) for any reason without prior
notice; and transactions in the Janus funds by the Janus Smart Portfolios
(each of which is a "fund of funds" that primarily invests in other Janus
mutual funds).
The Funds' Board of Trustees may approve from time to time a redemption fee
to be imposed by any Janus fund, subject to 60 days' notice to shareholders
of that fund.
Investors who place transactions through the same financial intermediary on
an omnibus basis may be deemed part of a group for the purpose of the Funds'
excessive trading policies and procedures and may be rejected in whole or in
part by a Fund. The Funds, however, cannot always identify or reasonably
detect excessive trading that may be facilitated by financial intermediaries
or made difficult to identify through the use of omnibus accounts by those
intermediaries
Shareholder's manual 89
that transmit purchase, exchange, and redemption orders to the Funds, and
thus the Funds may have difficulty curtailing such activity. Transactions
accepted by a financial intermediary in violation of the Funds' excessive
trading policies may be cancelled or revoked by a Fund by the next business
day following receipt by that Fund.
In an attempt to detect and deter excessive trading in omnibus accounts, the
Funds or their agents may require intermediaries to impose restrictions on
the trading activity of accounts traded through those intermediaries. Such
restrictions may include, but are not limited to, requiring that trades be
placed by U.S. mail, prohibiting purchases for a designated period of time
(typically 30 to 90 days) by investors who have recently redeemed Fund
shares, requiring intermediaries to report information about customers who
purchase and redeem large amounts, and similar restrictions. The Funds'
ability to impose such restrictions with respect to accounts traded through
particular intermediaries may vary depending on the systems capabilities,
applicable contractual and legal restrictions, and cooperation of those
intermediaries.
Certain transactions in Fund shares, such as periodic rebalancing (no more
frequently than quarterly) or those which are made pursuant to systematic
purchase, exchange, or redemption programs generally do not raise excessive
trading concerns and normally do not require application of the Funds'
methods to detect and deter excessive trading.
Each Fund also reserves the right to reject any purchase request (including
exchange purchases) by any investor or group of investors for any reason
without prior notice, including, in particular, if the trading activity in
the account(s) is deemed to be disruptive to a Fund. For example, a Fund may
refuse a purchase order if the Fund's investment personnel believe they would
be unable to invest the money effectively in accordance with the Fund's
investment policies or the Fund would otherwise be adversely affected due to
the size of the transaction, frequency of trading, or other factors.
The Funds' policies and procedures regarding excessive trading may be
modified at any time by the Funds' Board of Trustees.
EXCESSIVE TRADING RISKS
Excessive trading may present risks to a Fund's long-term shareholders.
Excessive trading into and out of a Fund may disrupt portfolio investment
strategies, may create taxable gains to remaining Fund shareholders, and may
increase Fund expenses, all of which may negatively impact investment returns
for all remaining shareholders, including long-term shareholders.
Funds that invest in foreign securities may be at a greater risk for
excessive trading. Investors may attempt to take advantage of anticipated
price movements
90 Janus Equity Funds prospectus
in securities held by a Fund based on events occurring after the close of a
foreign market that may not be reflected in the Fund's NAV (referred to as
"price arbitrage"). Such arbitrage opportunities may also arise in Funds
which do not invest in foreign securities, for example, when trading in a
security held by a Fund is halted and does not resume prior to the time the
Fund calculates its NAV (referred to as "stale pricing"). Funds that hold
thinly-traded securities, such as certain small-capitalization securities,
may be subject to attempted use of arbitrage techniques. To the extent that a
Fund's valuation of a security differs from the security's market value,
short-term arbitrage traders may dilute the NAV of a Fund, which negatively
impacts long-term shareholders. Although the Funds have adopted fair
valuation policies and procedures intended to reduce the Funds' exposure to
price arbitrage, stale pricing, and other potential pricing inefficiencies,
under such circumstances there is potential for short-term arbitrage trades
to dilute the value of Fund shares.
Although the Funds take steps to detect and deter excessive trading pursuant
to the policies and procedures described in this Prospectus and approved by
the Board of Trustees, there is no assurance that these policies and
procedures will be effective in limiting excessive trading in all
circumstances. For example, the Funds may be unable to completely eliminate
the possibility of excessive trading in certain omnibus accounts and other
accounts traded through intermediaries. Omnibus accounts may effectively
conceal the identity of individual investors and their transactions from the
Funds and their agents. This makes the Funds' identification of excessive
trading transactions in the Funds through an omnibus account difficult and
makes the elimination of excessive trading in the account impractical without
the assistance of the intermediary. Although the Funds encourage
intermediaries to take necessary actions to detect and deter excessive
trading, some intermediaries may be unable or unwilling to do so, and
accordingly, the Funds cannot eliminate completely the possibility of
excessive trading.
Shareholders that invest through an omnibus account should be aware that they
may be subject to the policies and procedures of their financial intermediary
with respect to excessive trading in the Funds.
PAYMENT OF REDEMPTION PROCEEDS
BY ELECTRONIC TRANSFER - Generally all accounts are automatically eligible
for the electronic redemption option if bank information is provided.
- NEXT DAY WIRE TRANSFER - Your redemption proceeds, less any applicable
redemption fee, can be electronically transferred to your predesignated
bank account on the next bank business day after receipt of your redemption
request (wire transfer). Wire transfers will be charged a fee for each wire
and your bank may charge an additional fee to receive the wire.
Shareholder's manual 91
- ACH (AUTOMATED CLEARING HOUSE) TRANSFER - Your redemption proceeds, less
any applicable redemption fee, can be electronically transferred to your
predesignated bank account on or about the second bank business day after
receipt of your redemption request. There is no fee associated with this
type of electronic transfer.
BY CHECK - Redemption proceeds, less any applicable redemption fee, will be
sent to the shareholder(s) of record at the address of record within seven
days after receipt of a valid redemption request. During the 10 days
following an address change, requests for redemption checks to be sent to a
new address require a signature guarantee.
BY SYSTEMATIC REDEMPTION - If no date is specified on your request,
systematic redemptions will be made on or about the 24th of each month. If
the balance in the Janus fund account you are selling from falls to zero,
your Systematic Redemption Program will be discontinued.
GENERALLY, ORDERS TO SELL SHARES MAY BE INITIATED AT ANY TIME ON
www.janus.com, BY TELEPHONE, OR IN WRITING. CERTAIN TAX-DEFERRED ACCOUNTS MAY
REQUIRE A WRITTEN REQUEST. IF THE SHARES BEING SOLD WERE PURCHASED BY CHECK
OR AUTOMATED INVESTMENT, THE FUNDS CAN DELAY THE PAYMENT OF YOUR SALE
PROCEEDS FOR UP TO 15 DAYS FROM THE DAY OF PURCHASE TO ALLOW THE PURCHASE TO
CLEAR. UNLESS YOU PROVIDE ALTERNATE INSTRUCTIONS, YOUR PROCEEDS WILL BE
INVESTED IN THE INVESTOR SHARES CLASS OF JANUS MONEY MARKET FUND DURING THE
15-DAY HOLD PERIOD.
Note: For the fastest and easiest way to redeem shares, log on to
www.janus.com* 24 hours a day, 7 days a week.
* Certain account types do not allow transactions via www.janus.com. For more
information, access www.janus.com or refer to this Shareholder's Manual.
REDEMPTION FEE
Redemptions (and exchanges) of shares from JANUS GLOBAL LIFE SCIENCES FUND,
JANUS GLOBAL TECHNOLOGY FUND, INTECH RISK-MANAGED STOCK FUND, JANUS GLOBAL
OPPORTUNITIES FUND, JANUS OVERSEAS FUND, or JANUS WORLDWIDE FUND held for
three months or less may be subject to the Funds' redemption fee. The
redemption fee is 2.00% of a shareholder's redemption proceeds. This fee is
paid to the Funds rather than Janus Capital, and is designed to deter
excessive short-term trading and to offset the brokerage commissions, market
impact, and other costs associated with changes in the Funds' asset level and
cash flow due to short-term money movements in and out of the Funds.
Certain intermediaries have agreed to charge the Funds' redemption fee on
their customers' accounts. In this case, the amount of the fee and the
holding period
92 Janus Equity Funds prospectus
will generally be consistent with the Funds'. However, due to operational
requirements, the intermediaries' methods for tracking and calculating the
fee may differ in some respects from the Funds'.
The redemption fee does not apply to certain types of accounts held through
intermediaries, including: (i) certain employer-sponsored retirement plans;
(ii) certain broker wrap fee and other fee-based programs; (iii) certain
omnibus accounts where the omnibus account holder does not have the
operational capability to impose a redemption fee on its underlying
customers' accounts; and (iv) certain intermediaries that do not have or
report to the Funds sufficient information to impose a redemption fee on
their customers' accounts.
In addition, the redemption fee does not apply to: (i) premature
distributions from retirement accounts that are exempt from IRS penalty due
to the disability of or medical expenses incurred by the shareholder; (ii)
required minimum distributions from retirement accounts; (iii) return of
excess contributions in retirement accounts; (iv) redemptions resulting in
the settlement of an estate due to the death of the shareholder; (v)
involuntary redemptions imposed by Janus Capital; and (vi) reinvested
distributions (dividends and capital gains).
If you purchase Fund shares through a financial intermediary, you should
contact your financial intermediary or refer to your plan documents for more
information on whether the redemption fee will be applied to redemptions of
your shares. When cooperation from a financial intermediary is necessary to
impose a redemption fee on its customers' accounts, different or additional
exemptions may be applied by the financial intermediary. Redemption fees may
be waived under certain circumstances involving involuntary redemptions
imposed by intermediaries.
In addition to the circumstances previously noted, each Fund reserves the
right to waive the redemption fee at its discretion where it believes such
waiver is in the best interests of the Fund, including but not limited to
when it determines that imposition of the redemption fee is not necessary to
protect the Fund from the effects of short-term trading. In addition, each
Fund reserves the right to modify or eliminate the redemption fee or waivers
at any time. If there is a material change to the Funds' redemption fee, the
Funds will notify you at least 60 days prior to the effective date of the
change.
WRITTEN INSTRUCTIONS
To sell or exchange all or part of your shares in writing, your request
should be sent to one of the addresses listed under "Doing Business with
Janus." Please include the following information:
- the name of the Janus fund(s) being sold or exchanged;
- the account number(s);
Shareholder's manual 93
- the amount of money or number of shares being sold or exchanged;
- the name(s) on the account;
- the signature(s) of all registered account owners (see account application
for signature requirements); and
- your daytime telephone number.
SIGNATURE GUARANTEE
A SIGNATURE GUARANTEE IS REQUIRED if any of the following is applicable:
- You request a redemption by check above a certain dollar amount.
- You would like a check made payable to anyone other than the shareholder(s)
of record.
- You would like a check mailed to an address which has been changed within
10 days of the redemption request.
- You would like a check mailed to an address other than the address of
record.
- You would like your redemption proceeds sent to a bank account other than a
bank account of record.
THE FUNDS RESERVE THE RIGHT TO REQUIRE A SIGNATURE GUARANTEE UNDER OTHER
CIRCUMSTANCES OR TO REJECT OR DELAY A REDEMPTION ON CERTAIN LEGAL GROUNDS.
A SIGNATURE GUARANTEE MAY BE REFUSED if any of the following is applicable:
- It does not appear valid or in good form.
- The transaction amount exceeds the surety bond limit of the signature
guarantee.
- The guarantee stamp has been reported as stolen, missing, or counterfeit.
HOW TO OBTAIN A SIGNATURE GUARANTEE
A signature guarantee assures that a signature is genuine. The signature
guarantee protects shareholders from unauthorized account transfers. The
following financial institutions may guarantee signatures: banks, savings and
loan associations, trust companies, credit unions, broker-dealers, and member
firms of a national securities exchange. Call your financial institution to
see if they have the ability to guarantee a signature. A signature guarantee
cannot be provided by a notary public.
If you live outside the United States, a foreign bank properly authorized to
do business in your country of residence or a U.S. consulate may be able to
authenticate your signature.
94 Janus Equity Funds prospectus
REDEMPTIONS IN-KIND
Shares normally will be sold for cash, although each Fund retains the right
to sell some or all of its shares in-kind under unusual circumstances, in
order to protect the interests of remaining shareholders, or to accommodate a
request by a particular shareholder that does not adversely affect the
interest of the remaining shareholders, by delivery of securities selected
from its assets at its discretion. However, each Fund is required to redeem
shares solely for cash up to the lesser of $250,000 or 1% of the NAV of that
Fund during any 90-day period for any one shareholder. Should redemptions by
any shareholder exceed such limitation, a Fund will have the option of
redeeming the excess in cash or in-kind. In-kind payment means payment will
be made in portfolio securities rather than cash. If this occurs, the
redeeming shareholder might incur brokerage or other transaction costs to
convert the securities to cash.
PRICING OF FUND SHARES
NAV DETERMINATION
The per share NAV is computed by dividing the total value of a Fund's
securities and other assets, less liabilities, by the total number of Fund
shares outstanding. In the case of Funds with share classes, the NAV for each
class 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. A Fund's NAV is calculated
as of the close of the regular trading session of the New York Stock Exchange
("NYSE") (normally 4:00 p.m. New York time) each day that the NYSE is open
("business day"). However, the NAV may be calculated earlier if trading on
the NYSE is restricted, or as permitted by the SEC. Because foreign
securities markets may operate on days that are not business days in the
United States, the value of a Fund's holdings may change on days when you
will not be able to purchase or redeem a Fund's shares to the extent that
Fund is invested in such markets. All purchases, exchanges, and redemptions
will be duly processed at the NAV as described under "Policies in Relation to
Transactions" after your request is received in good order by a Fund (or
financial intermediary or plan sponsor, if applicable) or its agent.
Securities held by the Funds are generally valued at market value. Certain
short-term instruments maturing within 60 days or less are valued at
amortized cost, which approximates market value. If a market quotation is not
readily available or is deemed unreliable, or if an event that is expected to
affect the value of a portfolio security occurs after the close of the
principal exchange or market on which that security is traded, and before the
close of the NYSE, the fair value of a security (except for short-term
instruments maturing within 60 days or less) will be determined in good faith
under policies and procedures established by and under the supervision of the
Funds' Board of Trustees. Circumstances in
Shareholder's manual 95
which fair value pricing may be utilized include, but are not limited to: (i)
when significant events occur which may affect the securities of a single
issuer, such as mergers, bankruptcies, or significant issuer-specific
developments; (ii) when significant events occur which may affect an entire
market, such as natural disasters or significant governmental actions; and
(iii) when non-significant events occur such as markets closing early or not
opening, security trading halts, or pricing of nonvalued securities and
restricted or nonpublic securities. The Funds may use a systematic fair
valuation model provided by an independent pricing service to value foreign
equity securities in order to adjust for stale pricing, which may occur
between the close of certain foreign exchanges and of the NYSE. While fair
value pricing may be more commonly used with foreign equity securities, it
may also be used with, among other things, thinly-traded domestic securities
or fixed-income securities.
Due to the subjective nature of fair value pricing, a Fund's value for a
particular security may be different from the last quoted market price. Fair
value pricing may reduce arbitrage activity involving the frequent buying and
selling of mutual fund shares by investors seeking to take advantage of a
perceived lag between a change in the value of a Fund's portfolio securities
and the reflection of such change in that Fund's NAV, as further described in
the "Excessive Trading" section of this Prospectus. While funds that invest
in foreign securities may be at a greater risk for arbitrage activity, such
activity may also arise in funds which do not invest in foreign securities,
for example, when trading in a security held by a Fund is halted and does not
resume prior to the time the Fund calculates its NAV (referred to as "stale
pricing"). Funds that hold thinly-traded securities, such as certain
small-capitalization securities, may be subject to attempted use of arbitrage
techniques. To the extent that a Fund's valuation of a security is different
from the security's market value, short-term arbitrage traders may dilute the
NAV of a Fund, which negatively impacts long-term shareholders. The Funds'
fair value pricing and excessive trading policies and procedures may not
completely eliminate short-term trading in certain omnibus accounts and other
accounts traded through intermediaries.
The value of the securities of other open-end funds held by a Fund, if any,
will be calculated using the NAV of such underlying funds, and the
prospectuses for such open-end funds explain the circumstances under which
they use fair value pricing and the effects of using fair value pricing.
POLICIES IN RELATION TO TRANSACTIONS
EXCHANGES - Exchange requests between Funds (other than between Janus Money
Market Fund and Janus Government Money Market Fund) must be received in good
order by a Fund or its agent prior to the close of the regular trading
session of the NYSE in order to receive that day's NAV. Exchange
96 Janus Equity Funds prospectus
requests between Janus Money Market Fund and Janus Government Money Market
Fund must be received in good order by a Fund or its agent prior to 5:00 p.m.
(New York time) in order to receive that day's NAV. The money market funds
reserve the right to require exchange requests prior to these times on days
when the bond market or the NYSE close early.
OTHER TRANSACTIONS - With the exception of certain money market fund
transactions (as described in the Janus Bond and Money Market Funds
prospectus), all phone and written requests, including but not limited to,
purchases by check or automated investment, wire transfers, and ACH transfer,
must be received in good order by the Fund or its agent prior to the close of
the regular trading session of the NYSE in order to receive the NAV
calculated at that time. Transactions involving funds which pay dividends
will generally begin to earn dividends, as applicable, on the first bank
business day following the date of purchase.
AVAILABILITY OF PORTFOLIO HOLDINGS INFORMATION
The non-money market funds' full portfolio holdings (excluding cash
equivalents, derivatives, and short positions), consisting of at least the
names of the holdings, are generally available monthly, with a 30-day lag, on
www.janus.com. They are posted to the website within approximately two
business days after month-end. The money market funds' full portfolio
holdings are generally available monthly, with no lag, on www.janus.com. They
are posted to the website within approximately six business days after
month-end. All of the funds' portfolio holdings remain available until the
following month's information is posted. The funds' full portfolio holdings
can be found on www.janus.com in Fund details under the Holdings & Details
tab.
In addition, the funds' top portfolio holdings in order of position size and
as a percentage of the total portfolio, are published monthly with a 30-day
lag, and quarterly with a 15-day lag, on www.janus.com. Most funds disclose
their top ten portfolio holdings. However, certain funds disclose only their
top five portfolio holdings. Security breakdowns (such as industry, sector,
regional, market capitalization, and asset allocation breakdowns, as
applicable) for the non-money market funds are published quarterly, with a
15-day lag, on www.janus.com. The funds' top portfolio holdings, as well as
the non-money market funds' security breakdowns, are posted to the website
within approximately two business days after the end of the applicable period
and remain available until the following period's information is posted.
Specific portfolio level performance attribution information and statistics
for the funds will be made available to any person monthly upon request, with
a 30-day lag, following the posting of the funds' full portfolio holdings on
www.janus.com.
Shareholder's manual 97
Notwithstanding the foregoing, Janus Capital may exclude from publication all
or any portion of portfolio holdings or change the time periods of disclosure
as deemed necessary to protect the interests of the Funds. A summary of the
Funds' portfolio holdings disclosure policies and procedures, which includes
a discussion of any exceptions, is contained in the Funds' Statement of
Additional Information.
Complete schedules of the Funds' portfolio holdings as of the end of the
Funds' first and third fiscal quarters are filed with the SEC within 60 days
of the end of such quarters on Form N-Q. The Funds' 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 at 1-800-525-3713 (toll free). Complete schedules of the Funds'
portfolio holdings as of the end of the Funds' second and fourth fiscal
quarters are included in the Funds' semiannual and annual reports which are
filed with the SEC within 60 days of the end of such quarters. The semiannual
reports are filed on Form type N-CSRS and the annual reports are filed on
Form type N-CSR. Shareholder reports containing such portfolio holdings are
delivered to shareholders and are also available at www.janus.com.
SHAREHOLDER SERVICES AND ACCOUNT POLICIES
TRANSACTIONS THROUGH PROCESSING ORGANIZATIONS
You may buy or sell Fund shares through an organization that provides
recordkeeping and consulting services to 401(k) plans or other employee
benefit plans (a "Processing Organization"). Processing Organizations may
charge you a fee for this service and may require different minimum initial
and subsequent investments than the Funds. Processing Organizations may also
impose other charges or restrictions different from those applicable to
shareholders who invest in the Funds directly.
A Processing Organization, rather than its customers, may be the shareholder
of record of your shares. The Funds are not responsible for the failure of
any Processing Organization to carry out its obligations to its customers.
Certain Processing Organizations may receive compensation from Janus Capital
or its affiliates, and certain Processing Organizations may receive
compensation from the Funds for shareholder recordkeeping and similar
services.
TAXPAYER IDENTIFICATION NUMBER
On the application or other appropriate forms, you may be asked to certify
that your Social Security or employer identification number is correct and
that you are not subject to backup withholding for failing to report income
to the IRS. If
98 Janus Equity Funds prospectus
you are subject to backup withholding, or you did not certify your taxpayer
identification number, the IRS requires the Funds to withhold a certain
percentage (at the currently applicable rate) of any dividends paid and
redemption or exchange proceeds. In addition to this backup withholding, you
may be subject to a $50 fee to reimburse the Funds for any penalty that the
IRS may impose.
INVOLUNTARY REDEMPTIONS
The Funds reserve the right to close an account if the shareholder is deemed
to engage in activities which are illegal or otherwise believed to be
detrimental to the Funds. This includes, but is not limited to, accounts that
a Fund or its agent believe are engaged in market timing. Any time shares are
redeemed in a taxable account, it is considered a taxable event. You are
responsible for any tax liabilities associated with an involuntary redemption
of your account.
ONLINE AND TELEPHONE TRANSACTIONS
You may initiate many transactions through www.janus.com or by calling Janus
XpressLine(TM). You may also contact a Janus representative. Generally all
new accounts automatically receive online and telephone transaction
privileges including redemption privileges. If you do not want to receive
these privileges, please visit www.janus.com or call a Janus representative.
The Funds and their agents will not be responsible for any losses, costs, or
expenses resulting from unauthorized transactions when reasonable procedures
designed to verify the identity of the online user or caller are followed.
Your account information should be kept private, and you should immediately
review any account statements that you receive from Janus. Someone other than
you could act on your account if they are able to provide the required
identifying information. Contact Janus immediately about any transactions you
believe to be unauthorized.
Occasionally, we experience high call volumes due to unusual market activity
or other events that may make it difficult for you to reach a Janus
representative by telephone. If you are unable to reach a Janus
representative by telephone, please consider visiting www.janus.com, calling
Janus XpressLine(TM), or sending written instructions.
DISTRIBUTIONS
Generally, all income dividends and capital gains distributions will
automatically be reinvested in your Fund account. If you wish to change your
distribution option, please visit www.janus.com, call a Janus representative,
or send a written request signed by the shareholder(s) of record.
Shareholder's manual 99
If you receive Fund distributions from an open non-retirement Fund account by
check, and a distribution check sent to you at your address of record has
been returned to Janus and you have failed to respond to follow up mailings
from Janus, the distribution check will automatically be reinvested in your
open Fund account at the next calculated NAV. Your non-retirement Fund
account distribution checks will also be reinvested in your Fund account if
you do not cash them within one year of the date they were written. No
interest will accrue on amounts represented by uncashed distribution or
redemption checks.
TEMPORARY SUSPENSION OF SERVICES
The Funds or their agents may, in case of emergency, temporarily suspend
telephone transactions and other shareholder services. The Funds may postpone
payment of redemption proceeds for up to seven calendar days. In addition,
the Funds may suspend redemptions and/or postpone payment of redemption
proceeds beyond seven calendar days when the New York Stock Exchange is
closed or during emergency circumstances, as determined by the Securities and
Exchange Commission. The exchange privilege may also be suspended in these
circumstances.
ADDRESS CHANGES
For the easiest way to change the address on your account, visit
www.janus.com. You may also call a Janus representative or send a written
request signed by the shareholder(s) of record. Include the name of the Janus
fund(s) you hold, the account number(s), the name(s) on the account, and both
the old and new addresses. Certain options may be suspended for 10 days
following an address change unless a signature guarantee is provided.
REGISTRATION CHANGES
To change the name on an account, the shares are generally transferred to a
new account. In some cases, legal documentation may be required. Please visit
www.janus.com or call a Janus representative for further instructions.
BANK ACCOUNT CHANGES
For the easiest way to change your bank account of record or add new bank
account information to your account, visit www.janus.com. You may also send a
written request signed by the shareholder(s) of record. Please note that you
may change or add bank information online at www.janus.com for purchases
only. Certain tax-deferred accounts may require a written notice and, in some
instances, bank privileges may not be available. We cannot accept changes or
additions to bank account redemption options online at www.janus.com or over
the telephone. If the added bank account is a joint tenant/tenants in common
100 Janus Equity Funds prospectus
account, at least one name on the bank account must match one name on the
Fund account.
STATEMENTS, REPORTS, AND PROSPECTUSES
We will send you quarterly confirmations of all transactions. You may elect
on www.janus.com to discontinue delivery of your paper statements, and
instead receive them online. In addition, on www.janus.com, the Funds will
send you an immediate transaction confirmation statement after every
non-systematic transaction. If you have not elected to receive online
statements, your confirmation will be mailed within two days of the
transaction. The Funds reserve the right to charge a fee for additional
account statement requests.
The Funds produce financial reports that include a complete list of each of
the Funds' portfolio holdings semiannually, and update their prospectus
annually. You may elect to receive these reports and prospectus updates
electronically on www.janus.com.
Unless you instruct Janus otherwise by contacting a Janus representative, the
Funds will mail only one report or prospectus to your household, even if more
than one person in your household has a Fund account. This process is known
as "householding," which reduces the amount of mail you receive and helps
lower Fund expenses. If you decide that you no longer want the mailing of
these documents to be combined with the other members of your household,
please call a Janus representative or send a written request signed by the
shareholder(s) of record. Individual copies will be sent within thirty (30)
days after the Funds receive your instructions.
Shareholder's manual 101
MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Janus Capital Management LLC, 151 Detroit Street, Denver, Colorado
80206-4805, is the investment adviser to each of the Funds. Janus Capital is
responsible for the day-to-day management of the Funds' investment portfolios
and furnishes continuous advice and recommendations concerning the Funds'
investments for all the Funds except INTECH Risk-Managed Stock Fund and Janus
Mid Cap Value Fund. INTECH is responsible for the day-to-day management of
the investment portfolio of INTECH Risk-Managed Stock Fund. Perkins is
responsible for the day-to-day management of the investment portfolio of
Janus Mid Cap Value Fund. Janus Capital provides certain administrative and
other services, and is responsible for the other business affairs of all the
Funds.
Janus Capital (together with its predecessors) has served as investment
adviser to Janus Fund since 1970 and currently serves as investment adviser
to all of the Janus funds, acts as subadviser for a number of private-label
mutual funds, and provides separate account advisory services for
institutional accounts.
Janus Capital furnishes certain administrative, compliance, and accounting
services for the Funds, and may be reimbursed by the Funds for its costs in
providing those services. In addition, employees of Janus Capital and/or its
affiliates serve as officers of the Trust and Janus Capital provides office
space for the Funds and pays the salaries, fees, and expenses of all Fund
officers and those Trustees who are considered interested persons of Janus
Capital.
From its own assets, Janus Capital or its affiliates may make payments based
on gross sales, current assets, or other measures to selected brokerage firms
or other financial intermediaries that were instrumental in the acquisition
or retention of shareholders for the Janus funds. The amount of these
payments is determined from time to time by Janus Capital, may be
substantial, and may differ for different financial intermediaries.
Eligibility requirements for such payments to institutional intermediaries
are determined by Janus Capital and/or its affiliates.
Janus Capital or its affiliates may pay fees, from their own assets, to
brokerage firms, banks, financial advisers, retirement plan service
providers, and other financial intermediaries for providing recordkeeping,
subaccounting, transaction processing, and other shareholder or
administrative services (including payments for processing transactions via
National Securities Clearing Corporation ("NSCC") or other means) in
connection with investments in the Janus funds. These fees are in addition to
any fees that may be paid by the Janus funds for these types of or other
services.
In addition, Janus Capital or its affiliates may also share certain marketing
expenses with, or pay for or sponsor informational meetings, seminars, client
awareness events, support for marketing materials, or business building
programs for such intermediaries to raise awareness of the Funds.
102 Janus Equity Funds prospectus
The receipt of (or prospect of receiving) payments described above are not
intended to, but may provide a financial intermediary and its salespersons
with an incentive to favor sales of Janus funds' shares over sales of other
mutual funds (or non-mutual fund investments) with respect to which the
financial intermediary does not receive such payments or receives them in a
lower amount. These payment arrangements will not, however, change the price
an investor pays for shares or the amount that a Janus fund receives to
invest on behalf of the investor. You may wish to consider whether such
arrangements exist when evaluating any recommendations to purchase or sell
shares of the Funds.
Management of the Funds 103
MANAGEMENT EXPENSES
Each Fund pays Janus Capital an investment advisory fee which is calculated
daily and paid monthly. Each Fund's advisory agreement details the investment
advisory fee and other expenses that the Funds must pay. Janus Capital pays
INTECH a subadvisory fee from its investment advisory fee for managing INTECH
Risk-Managed Stock Fund. Janus Mid Cap Value Fund pays Perkins a subadvisory
fee directly.
Each Fund incurs expenses not assumed by Janus Capital, including any
transfer agent and custodian fees and expenses, legal and auditing fees,
printing and mailing costs of sending reports and other information to
existing shareholders, and Independent Trustees' fees and expenses. Each of
the Funds is subject to the following investment advisory fee schedule
(expressed as an annual rate).
<Table>
<Caption>
Average Daily Investment Advisory
Net Assets Fees (%)
Fund Name of Fund (annual rate)
- ---------------------------------------------------------------------------------------------------
GROWTH
Janus Fund All Asset Levels 0.64
Janus Enterprise Fund All Asset Levels 0.64
Janus Mercury Fund(1) All Asset Levels 0.64
Janus Olympus Fund All Asset Levels 0.64
Janus Orion Fund All Asset Levels 0.64
Janus Triton Fund All Asset Levels 0.64(2)
SPECIALTY GROWTH
Janus Global Life Sciences Fund All Asset Levels 0.64
Janus Global Technology Fund All Asset Levels 0.64
CORE
Janus Balanced Fund All Asset Levels 0.55
Janus Contrarian Fund(1) All Asset Levels 0.64
Janus Core Equity Fund All Asset Levels 0.60
Janus Growth and Income Fund All Asset Levels 0.62
Janus Research Fund(1) All Asset Levels 0.64(2)
RISK-MANAGED
INTECH Risk-Managed Stock Fund(1)(3) All Asset Levels 0.50
VALUE
Janus Mid Cap Value Fund(1) All Asset Levels 0.64
INTERNATIONAL & GLOBAL
Janus Global Opportunities Fund All Asset Levels 0.64
Janus Overseas Fund All Asset Levels 0.64
Janus Worldwide Fund(1) All Asset Levels 0.60
- ---------------------------------------------------------------------------------------------------
</Table>
(1) Effective January 1, 2006 for Janus Research Fund and INTECH Risk-Managed
Stock Fund and effective February 1, 2006 for Janus Mercury Fund, Janus
Contrarian Fund, Janus Mid Cap Value Fund, and Janus Worldwide Fund, the
Fund's investment advisory fee rate changed from a fixed rate to a rate that
adjusts upward or downward based upon the Fund's performance relative to its
benchmark index. This change will not impact the investment advisory fee
shown until one year after the effective date when the performance
adjustment takes effect. Details discussing the change are included in the
Statement of Additional Information.
104 Janus Equity Funds prospectus
(2) Janus Capital has agreed to limit the Fund's total operating expenses
(excluding brokerage commissions, interest, taxes, and extraordinary
expenses) to a certain level until March 1, 2007. Application of the expense
waiver and its effect on annual fund operating expenses is reflected in the
Annual Fund Operating Expenses table in the "Fees and Expenses" section of
this Prospectus, and additional information is included in the Statement of
Additional Information. The waiver is not reflected in the fee rate shown
above.
(3) Formerly named Janus Risk-Managed Stock Fund.
For the fiscal year ended October 31, 2005, Janus Triton Fund and Janus
Research Fund paid Janus Capital investment advisory fees (net of any fee
waivers or reductions) of 0.06% and 0.30% respectively, based upon each
Fund's average net assets.
A discussion regarding the basis for the Board of Trustees' approval of the
Funds' investment advisory agreements and subadvisory agreements (as
applicable) is included in the Funds' Statement of Additional Information and
will also be included in the annual and semiannual reports to shareholders.
ADMINISTRATIVE SERVICES FEE
Janus Capital receives an administrative services fee at an annual rate of up
to 0.05% of the average daily net assets of INTECH Risk-Managed Stock Fund
and Janus Mid Cap Value Fund for providing certain administrative services
including, but not limited to, recordkeeping and registration functions.
SUBADVISERS
ENHANCED INVESTMENT TECHNOLOGIES, LLC serves as subadviser to INTECH
Risk-Managed Stock Fund. INTECH, 2401 PGA Boulevard, Suite 100, Palm Beach
Gardens, Florida 33410, also serves as investment adviser or subadviser to
other U.S. registered and unregistered investment companies, offshore
investment funds, and other institutional accounts and registered investment
companies. As subadviser, INTECH provides day-to-day management of the
investment operations of the Fund. Janus Capital indirectly owns
approximately 82.5% of the outstanding voting shares of INTECH.
PERKINS, WOLF, MCDONNELL AND COMPANY, LLC serves as subadviser to Janus Mid
Cap Value Fund, and has served in such capacity since that Fund's inception
in 1998. Perkins, 311 S. Wacker Drive, Suite 6000, Chicago, Illinois 60606,
has been in the investment management business since 1984 and provides
day-to-day management of the Fund's portfolio operations, as well as other
mutual funds and separate accounts. Janus Capital has a 30% ownership stake
in Perkins.
Management of the Funds 105
INVESTMENT PERSONNEL
Unless otherwise noted, the Portfolio Manager has primary responsibility for
the day-to-day management of the Fund described.
JANUS PORTFOLIO MANAGERS
JONATHAN D. COLEMAN
- --------------------------------------------------------------------------------
is Executive Vice President and Portfolio Manager of Janus Enterprise
Fund, which he has managed since February 2002. He is also Portfolio
Manager of other Janus accounts. He joined Janus Capital in 1994 as a
research analyst. Mr. Coleman holds a Bachelor's degree in Political
Economy and Spanish from Williams College, where he was a member of Phi
Beta Kappa. As a Fulbright Fellow, he conducted research on economic
integration in Central America. Mr. Coleman has earned the right to use
the Chartered Financial Analyst designation.
DAVID J. CORKINS
- --------------------------------------------------------------------------------
is Executive Vice President and Portfolio Manager of Janus Fund, which
he has managed since February 2006. Mr. Corkins was Portfolio Manager of
Janus Mercury Fund from February 2003 to January 2006 and Portfolio
Manager of Janus Growth and Income Fund from August 1997 to December
2003. Mr. Corkins is also Portfolio Manager of other Janus accounts. He
joined Janus Capital in 1995 as a research analyst. Mr. Corkins holds a
Bachelor of Arts degree in English and Russian from Dartmouth and he
received his Master's degree in Business Administration from Columbia
University.
DAVID C. DECKER
- --------------------------------------------------------------------------------
is Executive Vice President and Portfolio Manager of Janus Contrarian
Fund, which he has managed since its inception. Mr. Decker is also
Portfolio Manager of other Janus accounts. He joined Janus Capital in
1992 as a research analyst. Mr. Decker holds a Master of Business
Administration degree with an emphasis in Finance from The Fuqua School
of Business at Duke University and a Bachelor of Arts degree in
Economics and Political Science from Tufts University. Mr. Decker has
earned the right to use the Chartered Financial Analyst designation.
106 Janus Equity Funds prospectus
GREGORY R. KOLB
- --------------------------------------------------------------------------------
is Co-Portfolio Manager of Janus Global Opportunities Fund, which he has
co-managed since May 2005. He joined Janus Capital in 2001 as an equity
research analyst. Prior to joining Janus Capital, Mr. Kolb was an
associate director in UBS Warburg's Financial Institutions Investment
Banking Group from 2000 to 2001. He holds a Bachelor's degree in
Business Administration from Miami University (of Ohio) where he
graduated magna cum laude with honors. Mr. Kolb and Jason Yee are
jointly and primarily responsible for the day-to-day management of Janus
Global Opportunities Fund. He has earned the right to use the Chartered
Financial Analyst designation.
BRENT A. LYNN
- --------------------------------------------------------------------------------
is Executive Vice President and Portfolio Manager of Janus Overseas
Fund, which he has co-managed or managed since January 2001. Mr. Lynn is
also Portfolio Manager of other Janus accounts. He joined Janus Capital
in 1991 as a research analyst. Mr. Lynn holds a Bachelor of Arts degree
in Economics and a Master's degree in Economics and Industrial
Engineering from Stanford University. Mr. Lynn has earned the right to
use the Chartered Financial Analyst designation.
THOMAS R. MALLEY
- --------------------------------------------------------------------------------
is Executive Vice President and Portfolio Manager of Janus Global Life
Sciences Fund, which he has managed since inception. Mr. Malley is also
Portfolio Manager of other Janus accounts. He joined Janus Capital in
1991 as a research analyst. Mr. Malley holds a Bachelor of Science
degree in Biology from Stanford University. Mr. Malley has earned the
right to use the Chartered Financial Analyst designation.
MARC PINTO
- --------------------------------------------------------------------------------
is Executive Vice President and Co-Portfolio Manager of Janus Balanced
Fund, which he has co-managed since May 2005. Mr. Pinto is also
Portfolio Manager of other Janus accounts. He joined Janus Capital in
1994 as an analyst. He holds a Bachelor's degree in History from Yale
University and a Master's degree in Business Administration from Harvard
University. Mr. Pinto and Gibson Smith are jointly responsible for the
day-to-day management of Janus Balanced Fund. Mr. Pinto focuses on the
equity portion of the Fund. He has earned the right to use the Chartered
Financial Analyst designation.
Management of the Funds 107
BLAINE P. ROLLINS
- --------------------------------------------------------------------------------
is Executive Vice President and Portfolio Manager of Janus Triton Fund,
which he has managed since February 2006. Mr. Rollins was Portfolio
Manager of Janus Fund from January 2000 to January 2006. Mr. Rollins is
also Portfolio Manager of other Janus accounts. Mr. Rollins joined Janus
Capital in 1990. He holds a Bachelor of Science degree in Finance from
the University of Colorado. Mr. Rollins has earned the right to use the
Chartered Financial Analyst designation.
RON SACHS
- --------------------------------------------------------------------------------
is Executive Vice President and Portfolio Manager of Janus Orion Fund,
which he has managed since its inception. Mr. Sachs was Portfolio
Manager of Janus Triton Fund from February 2005 to January 2006. He is
also Portfolio Manager of other Janus accounts. Mr. Sachs joined Janus
Capital in 1996 as a research analyst. Mr. Sachs holds a Bachelor's
degree (cum laude) in Economics from Princeton and a law degree from the
University of Michigan. Mr. Sachs has earned the right to use the
Chartered Financial Analyst designation.
GIBSON SMITH
- --------------------------------------------------------------------------------
is Executive Vice President and Co-Portfolio Manager of Janus Balanced
Fund, which he has co-managed since May 2005. Mr. Smith is also
Portfolio Manager of other Janus accounts. He joined Janus Capital in
2001 as a fixed-income analyst. Prior to joining Janus Capital, Mr.
Smith worked in the fixed-income division at Morgan Stanley from 1991 to
2001. He holds a Bachelor's degree in Economics from the University of
Colorado. Mr. Smith and Marc Pinto are jointly responsible for the
day-to-day management of Janus Balanced Fund. Mr. Smith focuses on the
fixed-income portion of the Fund.
MINYOUNG SOHN
- --------------------------------------------------------------------------------
is Executive Vice President and Portfolio Manager of Janus Core Equity
Fund and Janus Growth and Income Fund, which he has managed since May
2005 and January 2004, respectively. Mr. Sohn is also Portfolio Manager
of other Janus accounts. He joined Janus Capital in 1998 as a research
analyst. Mr. Sohn holds a Bachelor of Arts degree (cum laude) in
Government and Economics from Dartmouth College. Mr. Sohn has earned the
right to use the Chartered Financial Analyst designation.
108 Janus Equity Funds prospectus
JASON P. YEE
- --------------------------------------------------------------------------------
is Executive Vice President and Co-Portfolio Manager of Janus Global
Opportunities Fund and Portfolio Manager of Janus Worldwide Fund, which
he has co-managed or managed since its inception and July 2004,
respectively. Mr. Yee is also Portfolio Manager of other Janus accounts.
He joined Janus Capital in 1992, working as a research analyst until
1996. He re-joined Janus Capital in 2000 as a research analyst. He holds
a Bachelor of Science in Mechanical Engineering from Stanford
University. Mr. Yee and Gregory Kolb are jointly and primarily
responsible for the day-to-day management of Janus Global Opportunities
Fund. Mr. Yee has earned the right to use the Chartered Financial
Analyst designation.
CLAIRE YOUNG
- --------------------------------------------------------------------------------
is Executive Vice President and Portfolio Manager of Janus Olympus Fund,
which she has managed since August 1997. She is also Portfolio Manager
of other Janus accounts. Ms. Young joined Janus Capital in 1992. She
holds a Bachelor of Science degree in Electrical Engineering from Yale
University. Ms. Young has earned the right to use the Chartered
Financial Analyst designation.
Management of the Funds 109
JANUS INVESTMENT TEAMS
RESEARCH TEAM
- --------------------------------------------------------------------------------
The Research Team selects investments for Janus Mercury Fund and Janus
Research Fund, and has done so since February 2006 and inception,
respectively. Janus Capital's Director of Research, James P. Goff, leads
the team and is responsible for the day-to-day operations of Janus
Mercury Fund and Janus Research Fund. He was Portfolio Manager of Janus
Enterprise Fund from its inception in September 1992 through January
2002. Mr. Goff joined Janus Capital in 1988. He holds a Bachelor of Arts
degree (magna cum laude) in Economics from Yale University. Mr. Goff has
earned the right to use the Chartered Financial Analyst designation.
TECHNOLOGY TEAM
- --------------------------------------------------------------------------------
A team of technology analysts selects investments for Janus Global
Technology Fund, and has done so since February 2006. J. Brad
Slingerlend and Burton H. Wilson, Janus Capital research analysts,
co-head the team and are jointly and primarily responsible for the
day-to-day management of Janus Global Technology Fund. Neither Mr.
Slingerlend nor Mr. Wilson has any limitations on his role. Mr.
Slingerlend is an equity research analyst and leader of the technology
research team. He joined Janus Capital in 2000. Mr. Slingerlend has a
Bachelor's degree in Economics and Astrophysics from Williams College.
He has earned the right to use the Chartered Financial Analyst
designation. Mr. Wilson is an equity research analyst focused primarily
on technology companies. He joined Janus Capital in 2005. Prior to
joining Janus Capital, Mr. Wilson was a research analyst at Lincoln
Equity Management from 2000 to 2004. He holds a Bachelor of Arts degree
in Mathematics from the University of Virginia, a Law degree from the
University of Virginia School of Law, and a Master's degree in Business
Administration from the University of California at Berkeley's Haas
School of Business.
110 Janus Equity Funds prospectus
JANUS ASSISTANT PORTFOLIO MANAGERS
ANDREW ACKER
- --------------------------------------------------------------------------------
is Assistant Portfolio Manager of Janus Global Life Sciences Fund. He
joined Janus Capital in 1999 as a securities analyst. Mr. Acker holds a
Bachelor of Science degree (magna cum laude) in Biochemical Sciences
from Harvard College, where he was a member of Phi Beta Kappa. He also
holds a Master's degree in Business Administration with honors from
Harvard Business School. Mr. Acker has earned the right to use the
Chartered Financial Analyst designation.
MATTHEW ANKRUM
- --------------------------------------------------------------------------------
is Assistant Portfolio Manager of Janus Contrarian Fund. He joined Janus
Capital in 1996 as a research analyst. Mr. Ankrum holds a Bachelor's
degree in Finance with honors from the University of Wisconsin and
received a Master's degree in Business Administration with honors from
the University of Chicago. He has earned the right to use the Chartered
Financial Analyst designation.
BRIAN DEMAIN
- --------------------------------------------------------------------------------
is Assistant Portfolio Manager of Janus Enterprise Fund. He served as
Assistant Portfolio Manager of Janus Olympus Fund from October 2003 to
August 2004. Mr. Demain joined Janus Capital in 1999 as a securities
analyst. He holds a Bachelor's degree in Economics from Princeton
University, where he graduated summa cum laude and was a recipient of
the Daniel L. Rubinfeld '67 Prize in Empirical Economics for his senior
thesis. Mr. Demain has earned the right to use the Chartered Financial
Analyst designation.
DOUGLAS A. KIRKPATRICK
- --------------------------------------------------------------------------------
is Assistant Portfolio Manager of Janus Worldwide Fund. He joined Janus
Capital in 2001 as an equity research analyst. Prior to joining Janus
Capital, Mr. Kirkpatrick worked as an analyst for Artisan Partners LP
from 1997 to 2001. Mr. Kirkpatrick holds Bachelor's degrees in
Mechanical Engineering and Political Science from Rice University, a
Master's degree in Environmental Engineering from the University of
Houston, and a Master of Business Administration degree from the
University of California at Berkeley. He has earned the right to use the
Chartered Financial Analyst designation.
Management of the Funds 111
GREGORY R. KOLB
- --------------------------------------------------------------------------------
is Assistant Portfolio Manager of Janus Worldwide Fund. He joined Janus
Capital in 2001 as an equity research analyst. Prior to joining Janus
Capital, Mr. Kolb was an associate director in UBS Warburg's Financial
Institutions Investment Banking Group from 2000 to 2001. Mr. Kolb holds
a Bachelor's degree in Business Administration from Miami University (of
Ohio) where he graduated magna cum laude with honors. He has earned the
right to use the Chartered Financial Analyst designation.
GARTH YETTICK
- --------------------------------------------------------------------------------
is Assistant Portfolio Manager of Janus Overseas Fund. He joined Janus
Capital in 1997. Mr. Yettick holds a Bachelor's degree (magna cum laude)
in Computer Science and Mathematics from Harvard College, where he was
elected to Phi Beta Kappa. He has earned the right to use the Chartered
Financial Analyst designation.
112 Janus Equity Funds prospectus
INTECH INVESTMENT TEAM
No one person of the investment team is primarily responsible for
implementing the investment strategies of INTECH Risk-Managed Stock Fund. A
team of investment professionals consisting of Dr. Robert Fernholz, David E.
Hurley, Dr. Cary Maguire, and Joseph Runnels works together to implement the
mathematical portfolio management process.
E. Robert Fernholz is Chief Investment Officer ("CIO") of INTECH. Dr.
Fernholz joined INTECH in June of 1987. He received his A.B. in Mathematics
from Princeton University and his Ph.D. in Mathematics from Columbia
University. As CIO, Dr. Fernholz sets policy for the investment strategy,
reviews proposed changes, and assures adherence to policy. Dr. Fernholz
implements and supervises the optimization process. He has 21 years of
investment experience. David E. Hurley is Executive Vice President and Chief
Operating Officer of INTECH. Mr. Hurley joined INTECH in January 1988. He
received his B.S. in Engineering from the United States Military Academy. Mr.
Hurley is responsible for daily oversight of all aspects of the investment
process from a portfolio management perspective. Mr. Hurley has oversight,
supervisory, and support responsibility for the day-to-day implementation of
the portfolio management and trading process. Mr. Hurley has earned the right
to use the Chartered Financial Analyst designation. Cary Maguire is Senior
Investment Officer of INTECH. Dr. Maguire joined INTECH in November 1991. He
received his Ph.D. in Physics from Princeton University. He holds an M.B.A.
from Southern Methodist University. Dr. Maguire is a Phi Beta Kappa graduate
of Stanford with degrees in Chemistry and Music. Dr. Maguire implements the
optimization process and supervises implementation of the portfolio
management and trading process. He conducts mathematical research on the
investment process and reviews and recommends improvements to the CIO. Joseph
W. Runnels is Vice President of Portfolio Management at INTECH. Mr. Runnels
joined INTECH in June 1998. Mr. Runnels holds a B.S. in Business
Administration from Murray State University. Mr. Runnels implements the
day-to-day portfolio management and trading process for client portfolios. He
also handles brokerage relationships and supervises the daily execution of
trading for client accounts. Mr. Runnels has earned the right to use the
Chartered Financial Analyst designation.
Management of the Funds 113
PERKINS PORTFOLIO MANAGERS
JEFFREY R. KAUTZ
- --------------------------------------------------------------------------------
is Co-Manager of Janus Mid Cap Value Fund, and he managed the Fund's
predecessor since February 2002. He is also Portfolio Manager of other
Janus accounts. Mr. Kautz has served as a research analyst for the value
products of Perkins since October 1997. He holds a Bachelor of Science
degree in Mechanical Engineering from the University of Illinois, and a
Master of Business Administration in Finance from the University of
Chicago. Mr. Kautz is jointly and primarily responsible for the
day-to-day management of the Fund and has full investment discretion
over the Fund. Mr. Kautz has earned the right to use the Chartered
Financial Analyst designation.
ROBERT H. PERKINS
- --------------------------------------------------------------------------------
is Co-Manager of Janus Mid Cap Value Fund, and he managed the Fund's
predecessor since 1998. He is also Portfolio Manager of other Janus
accounts. Mr. Perkins has been a portfolio manager since 1970 and serves
as President and a director of Perkins. Mr. Perkins holds a Bachelor of
Science degree in Business from Miami University. Mr. Perkins is jointly
and primarily responsible for the day-to-day management of the Fund and
has full investment discretion over the Fund.
THOMAS M. PERKINS
- --------------------------------------------------------------------------------
is the lead Manager of Janus Mid Cap Value Fund and was the lead Manager
of the Fund's predecessor since 1998. He is also Portfolio Manager of
other Janus accounts. Mr. Perkins has been a portfolio manager since
1974 and joined Perkins as a portfolio manager in 1998. Previously, he
was a portfolio manager of valuation sensitive growth portfolios for
Alliance Capital from 1984 to June 1998. Mr. Perkins holds a Bachelor of
Arts degree in History from Harvard University. Mr. Perkins is jointly
and primarily responsible for the day-to-day management of the Fund, has
full investment discretion over the Fund, and as lead co-manager, has
ultimate decision-making authority for the Fund's daily investment
decisions.
Information about the Funds' investment personnel's compensation structure,
other accounts managed by the investment personnel, and the investment
personnel's range of ownership of securities in the Funds, is included in the
Funds' Statement of Additional Information.
114 Janus Equity Funds prospectus
PERFORMANCE OF COMPARABLE ACCOUNTS MANAGED BY INTECH
INTECH RISK-MANAGED STOCK FUND COMPARABLE ACCOUNTS
PERFORMANCE OF INTECH LARGE CAP CORE COMPOSITE AND INTECH ENHANCED PLUS
COMPOSITE
The following chart shows the historical performance of the INTECH Large Cap
Core Composite (formerly named INTECH Large Cap Core Aggressive Composite) and
the INTECH Enhanced Plus Composite (formerly named INTECH Large Cap Core
Composite). The accounts in the Composites are managed by INTECH and have
investment objectives, policies, and strategies that are substantially similar
to those of INTECH Risk-Managed Stock Fund. Both Composites and the Fund are
managed using INTECH's Large Cap Core Strategy and use the S&P 500(R) Index as
their benchmark index. Both Composites and the Fund seek to outperform the
benchmark index while managing downside risk. The Large Cap Core version of
the strategy and the Fund seek this goal in a more aggressive manner and are
expected to have portfolio characteristics (e.g., beta and weightings) that
differ from the index to a greater degree than the Enhanced Plus Composite.
Accordingly, their performance is expected to be more volatile relative to the
benchmark index.
As of December 31, 2005, the INTECH Large Cap Core Composite consisted of 5
advisory accounts, including 3 mutual fund portfolios. As of this date, the
total assets of the INTECH Large Cap Core Composite were approximately $3.2
billion. The Janus mutual funds for which INTECH acts as subadviser are
included in the INTECH Large Cap Core Composite. As of December 31, 2005, the
INTECH Enhanced Plus Composite consisted of 40 advisory accounts. As of this
date, the total assets of the INTECH Enhanced Plus Composite were
approximately $6.3 billion. All accounts that have investment objectives,
policies, and strategies that are substantially similar to the Fund's are
included in these Composites. The performance shows the historical track
record of INTECH and should not be relied upon as an indication of the future
performance of the Fund. Total returns represent the performance of the
Composites and not the Fund.
Composite performance shown reflects the deduction of advisory fees and
transaction costs charged to accounts in each Composite. INTECH Risk-Managed
Stock Fund's fees and expenses are generally expected to be higher than those
reflected in the Composites. In addition, except for the mutual fund accounts
in the Composites, the fees and expenses of the Composites do not include
custody fees or other expenses normally paid by mutual funds, including
INTECH Risk-Managed Stock Fund. Therefore, if the Composites were subject to
the fees and expenses payable by the Fund, then the performance of the
Composites for the periods shown would be lower.
Management of the Funds 115
Except for the mutual fund accounts, the accounts in the Composites were not
subject to investment limitations, diversification requirements, or other
restrictions of the Investment Company Act of 1940 or Subchapter M of the
Internal Revenue Code. If these restrictions had been imposed, the
performance of the Composites for the periods shown may have been lower.
<Table>
<Caption>
Average annual total returns for periods ended 12/31/05
-------------------------------------------------------
Since Inception
1 Year 5 Years 10 Years Inception Date(1)
INTECH Large Cap Core Composite(2) 11.19% N/A N/A 6.40% 07/31/2001
S&P 500(R) Index(3) 4.91% N/A N/A 2.44% 07/31/2001
INTECH Enhanced Plus Composite(4) 8.80% 3.94% 11.09% 11.88% 06/30/1987
S&P 500(R) Index(3) 4.91% 0.54% 9.07% 10.47% 06/30/1987
</Table>
(1) Total returns and expenses are not annualized for the first year of
operations.
(2) Formerly named INTECH Large Cap Core Aggressive Composite.
(3) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500 stocks,
a widely recognized, unmanaged index of common stock prices.
(4) Formerly named INTECH Large Cap Core Composite.
116 Janus Equity Funds prospectus
OTHER INFORMATION
- --------------------------------------------------------------------------------
CLASSES OF SHARES
Janus Mid Cap Value Fund currently offers two classes of shares. This
Prospectus only describes the Investor Shares of Janus Mid Cap Value Fund,
which are available to the general public. Institutional Shares of Janus Mid
Cap Value Fund are closed to new investors, although current investors of
Institutional Shares may continue to invest in the Fund, as outlined in the
Shareholder's Guide to the Fund's Institutional Shares prospectus. The
Institutional Shares of the Fund are designed for pension and profit-sharing
plans, employee benefit trusts, endowments, foundations and corporations, as
well as high net worth individuals and financial intermediaries who are
willing to maintain a minimum account balance of $250,000. Because the
expenses of each class may differ, the performance of each class is expected
to differ. Certain financial intermediaries may offer only one class of
shares. If you would like additional information about Institutional Shares,
please call 1-800-525-0020.
CLOSED FUND POLICIES
The Funds may discontinue sales of their shares to new investors if their
management and the Trustees believe that continued sales may adversely affect
a Fund's ability to achieve its investment objective. If sales of a Fund are
discontinued to new investors, it is expected that existing shareholders
invested in that Fund would be permitted to continue to purchase shares
through their existing Fund accounts and to reinvest any dividends or capital
gains distributions in such accounts, absent highly unusual circumstances. In
addition, it is expected that existing or new participants in
employer-sponsored retirement plans, including employees of Janus Capital
Group Inc. ("JCGI") and any of its subsidiaries covered under the JCGI
retirement plan, that currently offer one or more funds as an investment
option would be able to direct contributions to that fund through their plan,
regardless of whether they invested in such fund prior to its closing. In
addition, in the case of certain mergers or reorganizations, retirement plans
would be able to add a closed fund as an investment option and, for certain
Funds, sponsors of certain wrap programs with existing accounts in that Fund
would be able to continue to invest in the Fund on behalf of new customers.
Such mergers, reorganizations, acquisitions, or other business combinations
are those in which one or more companies involved in such transaction
currently offers the Fund as an investment option, and any company that as a
result of such transaction becomes affiliated with the company currently
offering the Fund (as a parent company, subsidiary, sister company, or
otherwise). Such companies may request to add the Fund as an investment
option under its retirement plan. In addition, new accounts may be permitted
in a closed Fund for certain plans and programs offered in connection with
employer-sponsored retirement plans where the retirement plan has an existing
account in the closed Fund. Requests will be reviewed by management on an
Other information 117
individual basis, taking into consideration whether the addition of the Fund
may negatively impact existing Fund shareholders. Janus Capital encourages
its employees, particularly members of the investment team, to own shares of
the Janus funds. Accordingly, upon prior approval of Janus Capital's senior
management team, members of the Janus investment team may open new accounts
in a closed fund. Additional information regarding general policies and
exceptions can be found in the closed funds' prospectuses.
PENDING LEGAL MATTERS
In the fall of 2003, the Securities and Exchange Commission ("SEC"), the
Office of the New York State Attorney General ("NYAG"), the Colorado Attorney
General ("COAG"), and the Colorado Division of Securities ("CDS") announced
that they were investigating alleged frequent trading practices in the mutual
fund industry. On August 18, 2004, Janus Capital announced that it had
reached final settlements with the SEC, the NYAG, the COAG, and the CDS
related to such regulators' investigations into Janus Capital's frequent
trading arrangements.
A number of civil lawsuits were brought against Janus Capital and certain of
its affiliates, the Janus funds, and related entities and individuals based
on allegations similar to those announced by the above regulators and were
filed in several state and federal jurisdictions. Such lawsuits alleged a
variety of theories for recovery including, but not limited to, the federal
securities laws, other federal statutes (including ERISA), and various common
law doctrines. The Judicial Panel on Multidistrict Litigation transferred
these actions to the U.S. District Court for the District of Maryland (the
"Court") for coordinated proceedings. On September 29, 2004, five
consolidated amended complaints were filed in that Court that generally
include: (i) claims by a putative class of investors in the Janus funds
asserting claims on behalf of the investor class; (ii) derivative claims by
investors in the Janus funds ostensibly on behalf of the Janus funds; (iii)
claims on behalf of participants in the Janus 401(k) plan; (iv) claims
brought on behalf of shareholders of Janus Capital Group Inc. ("JCGI") on a
derivative basis against the Board of Directors of JCGI; and (v) claims by a
putative class of shareholders of JCGI asserting claims on behalf of the
shareholders. Each of the five complaints initially named JCGI and/or Janus
Capital as a defendant. In addition, the following were also named as
defendants in one or more of the actions: Janus Investment Fund ("JIF"),
Janus Aspen Series ("JAS"), Janus Adviser Series ("JAD"), Janus Distributors
LLC, Enhanced Investment Technologies, LLC ("INTECH"), Bay Isle Financial LLC
("Bay Isle"), Perkins, Wolf, McDonnell and Company, LLC ("Perkins"), the
Advisory Committee of the Janus 401(k) plan, and the current or former
directors of JCGI.
118 Janus Equity Funds prospectus
On August 25, 2005, the Court entered orders dismissing most of the claims
asserted against Janus Capital and its affiliates by fund investors (actions
(i) and (ii) described above), except certain claims under Section 10(b) of
the Securities Exchange Act of 1934 and under Section 36(b) of the Investment
Company Act of 1940. As a result, JCGI, Janus Capital, the Advisory Committee
of the Janus 401(k) plan, and the current or former directors of JCGI are the
remaining defendants in one or more of the actions. The complaint in the
401(k) plan class action (action (iii) described above) was voluntarily
dismissed, but was refiled using a new named plaintiff and asserting claims
similar to the initial complaint.
The Attorney General's Office for the State of West Virginia filed a separate
market timing related civil action against Janus Capital and several other
non-affiliated mutual fund companies, claiming violations under the West
Virginia Consumer Credit and Protection Act. The civil action requests
certain monetary penalties, among other relief. This action has been removed
to federal court and transferred to the Multidistrict Litigation case in the
U.S. District Court of Baltimore, Maryland described above. In addition, the
Auditor of the State of West Virginia, in his capacity as securities
commissioner, has issued an order indicating an intent to initiate
administrative proceedings against most of the defendants in the market
timing cases (including Janus Capital) and seeking disgorgement and other
monetary relief based on similar market timing allegations.
In addition to the "market timing" actions described above, Janus Capital is
a defendant in a consolidated lawsuit in the U.S. District Court for the
District of Colorado challenging the investment advisory fees charged by
Janus Capital to certain Janus funds. The action was filed in 2004 by fund
investors asserting breach of fiduciary duty under Section 36(b) of the
Investment Company Act of 1940. The plaintiffs seek declaratory and
injunctive relief and an unspecified amount of damages.
In 2001, Janus Capital's predecessor was also named as a defendant in a class
action suit in the U.S. District Court for the Southern District of New York,
alleging that certain underwriting firms and institutional investors violated
antitrust laws in connection with initial public offerings. The U.S. District
Court dismissed the plaintiff's antitrust claims in November 2003, however,
the U.S. Court of Appeals vacated that decision and remanded it for further
proceedings.
Additional lawsuits may be filed against certain of the Janus funds, Janus
Capital, and related parties in the future. Janus Capital does not currently
believe that these pending actions will materially affect its ability to
continue providing services it has agreed to provide to the Janus funds.
Other information 119
DISTRIBUTION OF THE FUNDS
The Funds are distributed by Janus Distributors LLC, which is a member of the
National Association of Securities Dealers, Inc. ("NASD"). To obtain
information about NASD member firms and their associated persons, you may
contact NASD Regulation, Inc. at www.nasdr.com, or the Public Disclosure
Hotline at 800-289-9999. An investor brochure containing information
describing the Public Disclosure Program is available from NASD Regulation,
Inc.
120 Janus Equity Funds prospectus
DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
DISTRIBUTIONS
To avoid taxation of the Funds, the Internal Revenue Code requires each Fund
to distribute all or substantially all of its net investment income and any
net capital gains realized on its investments at least annually. A Fund's
income from certain dividends, interest, and any net realized short-term
capital gains are paid to shareholders as ordinary income dividends. Certain
dividend income may be reported to shareholders as "qualified dividend
income," which is generally subject to reduced rates of taxation. Net
realized long-term capital gains are paid to shareholders as capital gains
distributions, regardless of how long you have held shares of the Fund.
DISTRIBUTION SCHEDULE
<Table>
<Caption>
Dividends Capital Gains
Janus Balanced Fund and Normally declared and Normally declared and
Janus Growth and Income Fund distributed in March, June, distributed in December
September, and December
--------------------------------------------------------------------------------------
All other Equity Funds Normally declared and Normally declared and
distributed in December distributed in December
</Table>
If necessary, dividends and net capital gains may be distributed at other
times as well.
HOW DISTRIBUTIONS AFFECT A FUND'S NAV
Distributions are paid to shareholders as of the record date of a
distribution of a Fund, regardless of how long the shares have been held.
Undistributed dividends and net capital gains are included in each Fund's
daily NAV. The share price of a Fund drops by the amount of the distribution,
net of any subsequent market fluctuations. For example, assume that on
December 31, a Fund declared a dividend in the amount of $0.25 per share. If
the Fund's share price was $10.00 on December 30, the Fund's share price on
December 31 would be $9.75, barring market fluctuations. You should be aware
that distributions from a taxable mutual fund do not increase the value of
your investment and may create income tax obligations.
"BUYING A DIVIDEND"
If you purchase shares of a Fund just before a distribution, you will pay the
full price for the shares and receive a portion of the purchase price back as
a taxable distribution. This is referred to as "buying a dividend." In the
above example, if you bought shares on December 30, you would have paid
$10.00 per share. On December 31, the Fund would pay you $0.25 per share as a
dividend and your shares would now be worth $9.75 per share. Unless your
account is set up as a tax-deferred account, dividends paid to you would be
included in your gross
Distributions and taxes 121
income for tax purposes, even though you may not have participated in the
increase in NAV of the Fund, whether or not you reinvested the dividends.
Before buying shares of a Fund close to year-end, you should consult with
your tax adviser as to potential tax consequences of any distributions that
may be paid shortly after purchase.
DISTRIBUTION OPTIONS
When you open an account, it will automatically provide for reinvestment of
all distributions. If you have a non-retirement account, you may change your
distribution option at any time by logging on to www.janus.com, by calling a
Janus representative, or by writing the Funds at one of the addresses listed
in the Shareholder's Manual section of this Prospectus. The Funds offer the
following options:
REINVESTMENT OPTION. You may reinvest your income dividends and capital gains
distributions in additional shares.
CASH OPTION. You may receive your income dividends and capital gains
distributions in cash.
REINVEST AND CASH OPTION. You may receive either your income dividends or
capital gains distributions in cash and reinvest the other in additional
shares.
REDIRECT OPTION. You may direct your dividends or capital gains to purchase
shares of another Janus fund.
The Funds reserve the right to reinvest into your open non-retirement account
undeliverable and uncashed dividend and distribution checks that remain
outstanding for one year in shares of the applicable Fund at the NAV next
computed after the check is cancelled. Subsequent distributions may also be
reinvested.
TAXES
As with any investment, you should consider the tax consequences of investing
in the Funds. Any time you sell or exchange shares of a fund in a taxable
account, it is considered a taxable event. For federal income tax purposes,
an exchange is treated the same as a sale. Depending on the purchase price
and the sale price, you may have a gain or loss on the transaction; whether
long-term or short-term depends on how long you owned the shares. Any tax
liabilities generated by your transactions are your responsibility.
The following discussion does not apply to qualified tax-deferred accounts or
other non-taxable entities, nor is it a complete analysis of the federal
income tax implications of investing in the Funds. You should consult your
own tax adviser if you have any questions. Additionally, state or local taxes
may apply to your investment, depending upon the laws of your state of
residence.
122 Janus Equity Funds prospectus
TAXES ON DISTRIBUTIONS
Dividends and distributions of the Funds are subject to federal income tax,
regardless of whether the distribution is made in cash or reinvested in
additional shares of a Fund. When gains from the sale of a security held by a
Fund are paid to shareholders, the rate at which the gain will be taxed to
shareholders depends on the length of time the Fund held the security. In
certain states, a portion of the dividends and distributions (depending on
the sources of a Fund's income) may be exempt from state and local taxes. A
Fund's dividends and capital gains are distributed to (and may be taxable to)
those persons who are shareholders of the Fund at the record date of such
payments. As a result, although a Fund's total net income and net realized
gain are the results of its operations, the per share amount distributed or
taxable to shareholders is affected by the number of Fund shares outstanding
at the record date. Account tax information will be made available to
shareholders on or before January 31st of each year. Information regarding
dividends and distributions may also be reported to the Internal Revenue
Service.
The Funds may be required to withhold U.S. federal income tax on all taxable
distributions and redemptions payable to shareholders who fail to provide
their correct taxpayer identification number, fail to make certain required
certifications, or who have been notified by the Internal Revenue Service
that they are subject to backup withholding. The current backup withholding
rate is applied.
TAXATION OF THE FUNDS
Dividends, interest, and some capital gains received by the Funds on foreign
securities may be subject to foreign tax withholding or other foreign taxes.
If a Fund is eligible, it may from year to year make the election permitted
under Section 853 of the Internal Revenue Code to pass through such taxes to
shareholders as a foreign tax credit. If such an election is not made, any
foreign taxes paid or accrued will represent an expense to the Funds.
The Funds do not expect to pay any federal income or excise taxes because
they intend to meet certain requirements of the Internal Revenue Code. It is
important that the Funds meet these requirements so that any earnings on your
investment will not be taxed twice.
Distributions and taxes 123
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The financial highlights tables are intended to help you understand the
Funds' financial performance for the past 5 years through October 31st of
each fiscal year shown (or for Funds with a performance history shorter than
5 years, through October 31st of each fiscal period shown). Items "Net asset
value, beginning of period" through "Net asset value, end of period" reflect
financial results for a single Fund share.
The total returns in the tables represent the rate that an investor would
have earned (or lost) on an investment in each of the Funds (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, whose report, along with the Funds'
financial statements, is included in the Annual Report, which is available
upon request, and incorporated by reference into the Statement of Additional
Information.
The information for Janus Mid Cap Value Fund has been derived from the
financial statements of Berger Mid Cap Value Fund, which was reorganized into
the Fund on April 21, 2003. Berger Mid Cap Value Fund had a fiscal year end
of September 30. Following the reorganization, Janus Mid Cap Value Fund
changed its fiscal year end to October 31.
124 Janus Equity Funds prospectus
<Table>
<Caption>
JANUS FUND
- -------------------------------------------------------------------------------------------------------------
Years ended October 31
2005 2004 2003 2002 2001
NET ASSET VALUE, BEGINNING OF PERIOD $22.69 $22.52 $18.39 $22.11 $44.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) 0.02 --(1) --(1) --(1) --(1)
Net gain/(loss) on securities (both realized
and unrealized) 1.73 0.17 4.13 (3.72) (17.50)
Total from investment operations 1.75 0.17 4.13 (3.72) (17.50)
LESS DISTRIBUTIONS AND OTHER:
Dividends (from net investment income) -- -- -- -- --
Distributions (from capital gains) -- -- -- -- (4.39)
Payment from affiliate --(2) --(2) -- -- --
Total distributions and other -- -- -- -- (4.39)
NET ASSET VALUE, END OF PERIOD $24.44 $22.69 $22.52 $18.39 $22.11
Total return 7.71%(3) 0.75%(3) 22.46% (16.82)% (43.42)%
Net assets, end of period (in millions) $11,143 $13,277 $17,426 $16,320 $23,513
Average net assets for the period (in
millions) $12,310 $15,433 $16,207 $21,651 $34,255
Ratio of gross expenses to average net
assets(4) 0.88% 0.90% 0.89% 0.85% 0.84%
Ratio of net expenses to average net assets 0.87% 0.90% 0.89% 0.84% 0.83%
Ratio of net investment income/(loss) to
average net assets 0.07% (0.17)% (0.17)% (0.24)% (0.16)%
Portfolio turnover rate 78% 21% 22% 27% 51%
- -------------------------------------------------------------------------------------------------------------
</Table>
(1) Net investment income/(loss) aggregated less than $0.01 on a per share basis
for the fiscal year end.
(2) Payment from affiliate aggregated less than $0.01 on a per share basis for
the fiscal year end.
(3) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss
on a transaction resulting from certain trading, pricing, and/or shareholder
activity errors, which otherwise would have reduced total return by less
than 0.01%.
(4) The effect of non-recurring costs assumed by Janus Capital is included in
the ratio of gross expenses to average net assets and was less than 0.01%.
Financial highlights 125
<Table>
<Caption>
JANUS ENTERPRISE FUND
- --------------------------------------------------------------------------------------------------------------
Years ended October 31
2005 2004 2003 2002 2001
NET ASSET VALUE, BEGINNING OF PERIOD $33.73 $30.02 $22.93 $29.67 $68.41
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) --(1) --(1) --(1) --(1) --(1)
Net gain/(loss) on securities (both realized
and unrealized) 5.75 3.71 7.09 (6.74) (38.74)
Total from investment operations 5.75 3.71 7.09 (6.74) (38.74)
LESS DISTRIBUTIONS:
Dividends (from net investment income) -- -- -- -- --
Distributions (from capital gains) -- -- -- -- --
Total distributions -- -- -- -- --
NET ASSET VALUE, END OF PERIOD $39.48 $33.73 $30.02 $22.93 $29.67
Total return 17.05% 12.36% 30.92% (22.72)% (56.63)%
Net assets, end of period (in millions) $1,704 $1,680 $1,917 $1,854 $3,072
Average net assets for the period (in
millions) $1,729 $1,796 $1,742 $2,518 $4,858
Ratio of gross expenses to average net
assets(2) 0.96% 1.04% 1.02% 0.93% 0.92%
Ratio of net expenses to average net assets 0.95% 1.03% 1.02% 0.90% 0.90%
Ratio of net investment income/(loss) to
average net assets (0.30)% (0.46)% (0.46)% (0.43)% (0.55)%
Portfolio turnover rate 28% 27% 32% 64% 85%
- --------------------------------------------------------------------------------------------------------------
</Table>
(1) Net investment income/(loss) aggregated less than $0.01 on a per share basis
for the fiscal year end.
(2) The effect of non-recurring costs assumed by Janus Capital is included in
the ratio of gross expenses to average net assets and was less than 0.01%.
126 Janus Equity Funds prospectus
<Table>
<Caption>
JANUS MERCURY FUND
- -------------------------------------------------------------------------------------------------------------
Years ended October 31
2005 2004 2003 2002 2001
NET ASSET VALUE, BEGINNING OF PERIOD $19.48 $18.14 $14.92 $19.14 $40.59
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) 0.09 --(1) --(1) --(1) 0.04
Net gain/(loss) on securities (both realized
and unrealized) 2.51 1.34 3.22 (4.18) (17.05)
Total from investment operations 2.60 1.34 3.22 (4.18) (17.01)
LESS DISTRIBUTIONS:
Dividends (from net investment income) (0.03) -- -- (0.04) (0.03)
Distributions (from capital gains) -- -- -- -- (4.41)
Total distributions (0.03) -- -- (0.04) (4.44)
NET ASSET VALUE, END OF PERIOD $22.05 $19.48 $18.14 $14.92 $19.14
Total return 13.35% 7.39% 21.58% (21.88)% (46.21)%
Net assets, end of period (in millions) $4,473 $4,472 $5,282 $5,034 $7,910
Average net assets for the period (in
millions) $4,448 $5,007 $5,089 $6,784 $11,243
Ratio of gross expenses to average net
assets(2) 0.93% 0.97% 0.96% 0.94% 0.89%
Ratio of net expenses to average net assets 0.92% 0.97% 0.95% 0.92% 0.88%
Ratio of net investment income/(loss) to
average net assets 0.42% (0.26)% (0.31)% (0.07)% 0.16%
Portfolio turnover rate 38% 43% 54% 97% 83%
- -------------------------------------------------------------------------------------------------------------
</Table>
(1) Net investment income/(loss) aggregated less than $0.01 on a per share basis
for the fiscal year end.
(2) The effect of non-recurring costs assumed by Janus Capital is included in
the ratio of gross expenses to average net assets and was less than 0.01%.
Financial highlights 127
<Table>
<Caption>
JANUS OLYMPUS FUND
- -------------------------------------------------------------------------------------------------------------
Years ended October 31
2005 2004 2003 2002 2001
NET ASSET VALUE, BEGINNING OF PERIOD $26.30 $25.22 $20.60 $24.59 $50.50
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) 0.01 --(1) --(1) --(1) 0.13
Net gain/(loss) on securities (both realized
and unrealized) 4.65 1.08 4.62 (3.88) (25.42)
Total from investment operations 4.66 1.08 4.62 (3.88) (25.29)
LESS DISTRIBUTIONS AND OTHER:
Dividends (from net investment income) -- -- -- (0.11) (0.23)
Distributions (from capital gains) -- -- -- -- (0.39)
Payment from affiliate --(2) --(2) -- -- --
Total distributions and other -- -- -- (0.11) (0.62)
NET ASSET VALUE, END OF PERIOD $30.96 $26.30 $25.22 $20.60 $24.59
Total return 17.72%(3) 4.28%(3) 22.38% (15.89)% (50.61)%
Net assets, end of period (in millions) $2,257 $2,360 $2,772 $2,136 $3,074
Average net assets for the period (in
millions) $2,283 $2,576 $2,379 $2,883 $4,767
Ratio of gross expenses to average net
assets(4) 0.97% 1.03% 0.99% 0.94% 0.91%
Ratio of net expenses to average net assets 0.96% 1.03% 0.98% 0.91% 0.89%
Ratio of net investment income/(loss) to
average net assets 0.03% (0.36)% (0.14)% (0.13)% 0.34%
Portfolio turnover rate 119% 76% 84% 90% 118%
- -------------------------------------------------------------------------------------------------------------
</Table>
(1) Net investment income/(loss) aggregated less than $0.01 on a per share basis
for the fiscal year end.
(2) Payment from affiliate aggregated less than $0.01 on a per share basis for
the fiscal year end.
(3) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss
on a transaction resulting from certain trading, pricing, and/or shareholder
activity errors, which otherwise would have reduced total return by less
than 0.01%.
(4) The effect of non-recurring costs assumed by Janus Capital is included in
the ratio of gross expenses to average net assets and was less than 0.01%.
128 Janus Equity Funds prospectus
<Table>
<Caption>
JANUS ORION FUND
- -------------------------------------------------------------------------------------------------------------
Years ended October 31
2005 2004 2003 2002 2001
NET ASSET VALUE, BEGINNING OF PERIOD $6.25 $5.64 $4.33 $5.21 $8.81
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) 0.03 --(1) --(1) --(1) --(1)
Net gain/(loss) on securities (both realized
and unrealized) 1.52 0.61 1.31 (0.88) (3.58)
Total from investment operations 1.55 0.61 1.31 (0.88) (3.58)
LESS DISTRIBUTIONS AND OTHER:
Dividends (from net investment income) -- -- -- -- (0.02)
Distributions (from capital gains) -- -- -- -- --
Payment from affiliate -- --(2) -- -- --
Total distributions and other -- -- -- -- (0.02)
NET ASSET VALUE, END OF PERIOD $7.80 $6.25 $5.64 $4.33 $5.21
Total return 24.80% 10.82%(3) 29.95% (16.70)% (40.69)%
Net assets, end of period (in millions) $691 $530 $514 $421 $602
Average net assets for the period (in
millions) $590 $540 $431 $562 $762
Ratio of gross expenses to average net
assets(4) 1.02% 1.09% 1.10% 1.09% 1.06%
Ratio of net expenses to average net assets 1.01% 1.08% 1.08% 1.04% 1.03%
Ratio of net investment income/(loss) to
average net assets 0.52% (0.05)% (0.43)% (0.30)% (0.06)%
Portfolio turnover rate 68% 69% 72% 161% 206%
- -------------------------------------------------------------------------------------------------------------
</Table>
(1) Net investment income/(loss) aggregated less than $0.01 on a per share basis
for the fiscal year end.
(2) Payment from affiliate aggregated less than $0.01 on a per share basis for
the fiscal year end.
(3) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss
on a transaction resulting from certain trading, pricing, and/or shareholder
activity errors, which otherwise would have reduced total return by less
than 0.01%.
(4) The effect of non-recurring costs assumed by Janus Capital is included in
the ratio of gross expenses to average net assets and was less than 0.01%.
Financial highlights 129
<Table>
<Caption>
JANUS TRITON FUND
- --------------------------------------------------------------------------
Period ended
October 31
2005(1)
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) --
Net gain/(loss) on securities (both realized and
unrealized) 0.86
Total from investment operations 0.86
LESS DISTRIBUTIONS:
Dividends (from net investment income) --
Distributions (from capital gains) --
Total distributions --
NET ASSET VALUE, END OF PERIOD $10.86
Total return(2) 8.60%
Net assets, end of period (in millions) $38
Average net assets for the period (in millions) $26
Ratio of gross expenses to average net assets(3)(4) 1.27%(5)
Ratio of net expenses to average net assets(3) 1.25%
Ratio of net investment income/(loss) to average net
assets(3) (0.24)%
Portfolio turnover rate(3) 48%
- --------------------------------------------------------------------------
</Table>
(1) Fiscal period from February 25, 2005 (inception) through October 31, 2005.
(2) Total return is not annualized for periods of less than one full year.
(3) Annualized for periods of less than one full year.
(4) The effect of non-recurring costs assumed by Janus Capital is included in
the ratio of gross expenses to average net assets and was less than 0.01%.
(5) The ratio was 1.85% in 2005 before waiver of certain fees incurred by the
Fund.
130 Janus Equity Funds prospectus
<Table>
<Caption>
JANUS GLOBAL LIFE SCIENCES FUND
- --------------------------------------------------------------------------------------------------------------
Years ended October 31
2005 2004 2003 2002 2001
NET ASSET VALUE, BEGINNING OF PERIOD $16.08 $14.61 $12.82 $16.96 $22.41
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) --(1) --(1) --(1) --(1) --(1)
Net gain/(loss) on securities (both realized
and unrealized) 3.29 1.47 1.79 (4.14) (5.43)
Total from investment operations 3.29 1.47 1.79 (4.14) (5.43)
LESS DISTRIBUTIONS AND OTHER:
Dividends (from net investment income) -- -- -- -- (0.02)
Distributions (from capital gains) -- -- -- -- --
Redemption fees --(2) --(2) --(2) N/A N/A
Payment from affiliate -- --(3) -- -- --
Total distributions and other -- -- -- -- (0.02)
NET ASSET VALUE, END OF PERIOD $19.37 $16.08 $14.61 $12.82 $16.96
Total return 20.46% 10.06%(4) 13.87% (24.35)% (24.26)%
Net assets, end of period (in millions) $1,150 $1,183 $1,264 $1,390 $2,415
Average net assets for the period (in
millions) $1,182 $1,288 $1,296 $1,928 $2,958
Ratio of gross expenses to average net
assets(5) 0.97% 1.02% 0.99% 0.89% 0.93%
Ratio of net expenses to average net assets 0.96% 1.01% 0.98% 0.88% 0.91%
Ratio of net investment income/(loss) to
average net assets (0.49)% (0.52)% (0.28)% (0.42)% (0.32)%
Portfolio turnover rate 77% 78% 135% 73% 84%
- --------------------------------------------------------------------------------------------------------------
</Table>
(1) Net investment income/(loss) aggregated less than $0.01 on a per share basis
for the fiscal year end.
(2) Redemption fees aggregated less than $0.01 on a per share basis for the
fiscal year end.
(3) Payment from affiliate aggregated less than $0.01 on a per share basis for
the fiscal year end.
(4) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss
on a transaction resulting from certain trading errors, which otherwise
would have reduced total return by less than 0.01%.
(5) The effect of non-recurring costs assumed by Janus Capital is included in
the ratio of gross expenses to average net assets and was less than 0.01%.
Financial highlights 131
<Table>
<Caption>
JANUS GLOBAL TECHNOLOGY FUND
- -------------------------------------------------------------------------------------------------------------
Years ended October 31
2005 2004 2003 2002 2001
NET ASSET VALUE, BEGINNING OF PERIOD $9.70 $10.44 $7.41 $10.83 $27.44
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) 0.01 0.02 --(1) (0.01) 0.36
Net gain/(loss) on securities (both realized
and unrealized) 1.17 (0.76) 3.03 (3.41) (16.64)
Total from investment operations 1.18 (0.74) 3.03 (3.42) (16.28)
LESS DISTRIBUTIONS AND OTHER:
Dividends (from net investment income) -- -- -- -- (0.16)
Distributions (from capital gains) -- -- -- -- --
Tax return of capital -- -- -- -- (0.17)
Redemption fees --(2) --(2) --(2) N/A N/A
Payment from affiliate -- --(3) -- -- --
Total distributions and other -- -- -- -- (0.33)
NET ASSET VALUE, END OF PERIOD $10.88 $9.70 $10.44 $7.41 $10.83
Total return 12.16% (7.09)%(4) 41.08% (31.67)% (59.95)%
Net assets, end of period (in millions) $994 $1,255 $1,656 $1,250 $2,276
Average net assets for the period (in
millions) $1,110 $1,481 $1,333 $1,907 $4,010
Ratio of gross expenses to average net
assets(5) 1.04% 1.07% 1.07% 0.96% 0.92%
Ratio of net expenses to average net assets 1.03% 1.07% 1.06% 0.94% 0.90%
Ratio of net investment income/(loss) to
average net assets 0.07% (0.37)% (0.27)% (0.14)% 0.55%
Portfolio turnover rate 31% 24% 48% 66% 60%
- -------------------------------------------------------------------------------------------------------------
</Table>
(1) Net investment income/(loss) aggregated less than $0.01 on a per share basis
for the fiscal year end.
(2) Redemption fees aggregated less than $0.01 on a per share basis for the
fiscal year end.
(3) Payment from affiliate aggregated less than $0.01 on a per share basis for
the fiscal year end.
(4) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss
on a transaction resulting from certain trading errors, which otherwise
would have reduced total return by less than 0.01%.
(5) The effect of non-recurring costs assumed by Janus Capital is included in
the ratio of gross expenses to average net assets and was less than 0.01%.
132 Janus Equity Funds prospectus
<Table>
<Caption>
JANUS BALANCED FUND
- -------------------------------------------------------------------------------------------------------------
Years ended October 31
2005 2004 2003 2002 2001
NET ASSET VALUE, BEGINNING OF PERIOD $20.33 $19.34 $18.08 $19.27 $22.83
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) 0.42 0.38 0.38 0.47 0.56
Net gain/(loss) on securities (both realized and
unrealized) 1.28 0.99 1.28 (1.20) (2.48)
Total from investment operations 1.70 1.37 1.66 (0.73) (1.92)
LESS DISTRIBUTIONS AND OTHER:
Dividends (from net investment income) (0.41) (0.38) (0.40) (0.46) (0.61)
Distributions (from capital gains) -- -- -- -- (1.03)
Payment from affiliate --(1) --(1) -- -- --
Total distributions and other (0.41) (0.38) (0.40) (0.46) (1.64)
NET ASSET VALUE, END OF PERIOD $21.62 $20.33 $19.34 $18.08 $19.27
Total return 8.43%(2) 7.11%(2) 9.34% (3.85)% (8.83)%
Net assets, end of period (in millions) $2,507 $2,849 $3,929 $3,936 $4,410
Average net assets for the period (in millions) $2,721 $3,235 $4,004 $4,278 $4,663
Ratio of gross expenses to average net assets(3) 0.80% 0.87% 0.89% 0.86% 0.85%
Ratio of net expenses to average net assets 0.79% 0.87% 0.88% 0.84% 0.83%
Ratio of net investment income/(loss) to average
net assets 1.93% 1.82% 2.00% 2.44% 2.79%
Portfolio turnover rate 47% 45% 73% 88% 117%
- -------------------------------------------------------------------------------------------------------------
</Table>
(1) Payment from affiliate aggregated less than $0.01 on a per share basis for
the fiscal year end.
(2) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss
on a transaction resulting from certain trading, pricing, and/or shareholder
activity errors, which otherwise would have reduced total return by less
than 0.01%.
(3) The effect of non-recurring costs assumed by Janus Capital is included in
the ratio of gross expenses to average net assets and was less than 0.01%.
Financial highlights 133
<Table>
<Caption>
JANUS CONTRARIAN FUND
- ------------------------------------------------------------------------------------------------------------
Years ended October 31
2005 2004 2003 2002 2001
NET ASSET VALUE, BEGINNING OF PERIOD $11.74 $9.97 $6.95 $8.42 $11.29
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) 0.05 0.01 --(1) --(1) 0.03
Net gain/(loss) on securities (both realized
and unrealized) 2.44 1.76 3.03 (1.45) (2.65)
Total from investment operations 2.49 1.77 3.03 (1.45) (2.62)
LESS DISTRIBUTIONS AND OTHER:
Dividends (from net investment income) (0.03) -- (0.01)(2) (0.02) (0.02)
Distributions (from capital gains) -- -- -- -- (0.23)
Payment from affiliate --(3) --(3) -- -- --
Total distributions and other (0.03) -- (0.01) (0.02) (0.25)
NET ASSET VALUE, END OF PERIOD $14.20 $11.74 $9.97 $6.95 $8.42
Total return 21.19%(4) 17.75%(4) 43.57% (17.23)% (23.61)%
Net assets, end of period (in millions) $2,906 $2,384 $2,499 $1,287 $1,955
Average net assets for the period (in
millions) $2,716 $2,497 $1,863 $1,808 $2,666
Ratio of gross expenses to average net
assets(5) 0.93% 0.98% 1.02% 1.01% 0.92%
Ratio of net expenses to average net assets 0.93% 0.98% 1.01% 0.98% 0.91%
Ratio of net investment income to average net
assets 0.45% 0.07% (0.17)% 0.03% 0.29%
Portfolio turnover rate 42% 30% 44% 60% 77%
- ------------------------------------------------------------------------------------------------------------
</Table>
(1) Net investment income/(loss) aggregated less than $0.01 on a per share basis
for the fiscal year end.
(2) Dividends (from net investment income) includes tax return of capital, less
than $0.01 per share.
(3) Payment from affiliate aggregated less than $0.01 on a per share basis for
the fiscal year end.
(4) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss
on a transaction resulting from certain trading, pricing, and/or shareholder
activity errors, which otherwise would have reduced total return by less
than 0.01%.
(5) The effect of non-recurring costs assumed by Janus Capital is included in
the ratio of gross expenses to average net assets and was less than 0.01%.
134 Janus Equity Funds prospectus
<Table>
<Caption>
JANUS CORE EQUITY FUND
- -----------------------------------------------------------------------------------------------------------
Years ended October 31
2005 2004 2003 2002 2001
NET ASSET VALUE, BEGINNING OF PERIOD $18.78 $17.04 $14.99 $16.78 $24.25
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) 0.11 0.05 0.07 0.11 0.17
Net gain/(loss) on securities (both realized
and unrealized) 3.34 1.75 2.09 (1.81) (4.98)
Total from investment operations 3.45 1.80 2.16 (1.70) (4.81)
LESS DISTRIBUTIONS AND OTHER:
Dividends (from net investment income) (0.08) (0.06) (0.11) (0.09) (0.13)
Distributions (from capital gains) -- -- -- -- (2.53)
Payment from affiliate --(1) -- -- -- --
Total distributions and other (0.08) (0.06) (0.11) (0.09) (2.66)
NET ASSET VALUE, END OF PERIOD $22.15 $18.78 $17.04 $14.99 $16.78
Total return 18.44%(2) 10.61% 14.54% (10.26)% (21.70)%
Net assets, end of period (in millions) $721 $613 $708 $707 $733
Average net assets for the period (in
millions) $653 $654 $708 $802 $876
Ratio of gross expenses to average net
assets(3) 0.90% 0.97% 0.97% 0.92% 0.95%
Ratio of net expenses to average net assets 0.89% 0.97% 0.96% 0.89% 0.93%
Ratio of net investment income/(loss) to
average net assets 0.50% 0.24% 0.40% 0.66% 0.85%
Portfolio turnover rate 74% 58% 77% 98% 115%
- -----------------------------------------------------------------------------------------------------------
</Table>
(1) Payment from affiliate aggregated less than $0.01 on a per share basis for
the fiscal year end.
(2) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss
on a transaction resulting from certain trading, pricing, and/or shareholder
activity errors, which otherwise would have reduced total return by less
than 0.01%.
(3) The effect of non-recurring costs assumed by Janus Capital is included in
the ratio of gross expenses to average net assets and was less than 0.01%.
Financial highlights 135
<Table>
<Caption>
JANUS GROWTH AND INCOME FUND
- -------------------------------------------------------------------------------------------------------------
Years ended October 31
2005 2004 2003 2002 2001
NET ASSET VALUE, BEGINNING OF PERIOD $29.29 $27.12 $23.70 $27.99 $40.88
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) 0.24 0.07 0.17 0.20 0.32
Net gain/(loss) on securities (both realized
and unrealized) 4.66 2.17 3.43 (4.28) (11.24)
Total from investment operations 4.90 2.24 3.60 (4.08) (10.92)
LESS DISTRIBUTIONS AND OTHER:
Dividends (from net investment income) (0.22) (0.07) (0.18) (0.21) (0.35)
Distributions (from capital gains) -- -- -- -- (1.62)
Payment from affiliate --(1) --(1) -- -- --
Total distributions and other (0.22) (0.07) (0.18) (0.21) (1.97)
NET ASSET VALUE, END OF PERIOD $33.97 $29.29 $27.12 $23.70 $27.99
Total return 16.79%(2) 8.28%(2) 15.20% (14.62)% (27.66)%
Net assets, end of period (in millions) $5,735 $5,177 $6,003 $5,328 $6,575
Average net assets for the period (in millions) $5,455 $5,568 $5,715 $6,480 $7,758
Ratio of gross expenses to average net
assets(3) 0.88% 0.92% 0.91% 0.90% 0.87%
Ratio of net expenses to average net assets 0.87% 0.92% 0.91% 0.88% 0.86%
Ratio of net investment income/(loss) to
average net assets 0.68% 0.24% 0.67% 0.73% 0.96%
Portfolio turnover rate 38% 41% 50% 49% 59%
- -------------------------------------------------------------------------------------------------------------
</Table>
(1) Payment from affiliate aggregated less than $0.01 on a per share basis for
the fiscal year end.
(2) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss
on a transaction resulting from certain trading, pricing, and/or shareholder
activity errors, which otherwise would have reduced total return by less
than 0.01%.
(3) The effect of non-recurring costs assumed by Janus Capital is included in
the ratio of gross expenses to average net assets and was less than 0.01%.
136 Janus Equity Funds prospectus
<Table>
<Caption>
JANUS RESEARCH FUND
- --------------------------------------------------------------------------
Period ended
October 31
2005(1)
NET ASSET VALUE, BEGINNING OF PERIOD $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) (0.01)
Net gain/(loss) on securities (both realized and
unrealized) 1.12
Total from investment operations 1.11
LESS DISTRIBUTIONS AND OTHER:
Dividends (from net investment income) --
Distributions (from capital gains) --
Payment from affiliate --(2)
Total distributions and other --
NET ASSET VALUE, END OF PERIOD $11.11
Total return(3) 11.10%(4)
Net assets, end of period (in millions) $47
Average net assets for the period (in millions) $30
Ratio of gross expenses to average net assets(5)(6) 1.27%(7)
Ratio of net expenses to average net assets(5) 1.25%
Ratio of net investment income/(loss) to average net
assets(5) (0.24)%
Portfolio turnover rate(5) 86%
- --------------------------------------------------------------------------
</Table>
(1) Fiscal period from February 25, 2005 (inception) through October 31, 2005.
(2) Payment from affiliate aggregated less than $0.01 on a per share basis for
the fiscal period end.
(3) Total return is not annualized for periods of less than one full year.
(4) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss
on a transaction resulting from certain trading, pricing, and/or shareholder
activity errors, which otherwise would have reduced total return by less
than 0.01%.
(5) Annualized for periods of less than one full year.
(6) The effect of non-recurring costs assumed by Janus Capital is included in
the ratio of gross expenses to average net assets and was less than 0.01%.
(7) The ratio was 1.61% before waiver of certain fees incurred by the Fund.
Financial highlights 137
<Table>
<Caption>
INTECH RISK-MANAGED STOCK FUND(1)
- ---------------------------------------------------------------------------------------------
Years or Period
ended October 31
2005 2004 2003(2)
NET ASSET VALUE, BEGINNING OF PERIOD $13.98 $12.44 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) 0.12 0.08 0.01
Net gain/(loss) on securities (both realized and
unrealized) 1.89 1.75 2.43
Total from investment operations 2.01 1.83 2.44
LESS DISTRIBUTIONS AND OTHER:
Dividends (from net investment income) (0.08) (0.03) --
Distributions (from capital gains) (0.63) (0.26) --
Redemption fees --(3) --(3) --(3)
Total distributions and other (0.71) (0.29) --
NET ASSET VALUE, END OF PERIOD $15.28 $13.98 $12.44
Total return(4) 14.79% 15.06% 24.40%
Net assets, end of period (in millions) $379 $182 $89
Average net assets for the period (in millions) $308 $130 $51
Ratio of gross expenses to average net assets(5)(6) 0.89% 0.69%(7) 1.13%(7)
Ratio of net expenses to average net assets(5) 0.88% 0.69% 1.13%
Ratio of net investment income/(loss) to average net
assets(5) 0.92% 0.72% 0.24%
Portfolio turnover rate(5) 81% 71% 39%
- ---------------------------------------------------------------------------------------------
</Table>
(1) Formerly named Janus Risk-Managed Stock Fund.
(2) Fiscal period from February 28, 2003 (inception) through October 31, 2003.
(3) Redemption fees aggregated less than $0.01 on a per share basis for the
period or year end.
(4) Total return is not annualized for periods of less than one full year.
(5) Annualized for periods of less than one full year.
(6) The effect of non-recurring costs assumed by Janus Capital is included in
the ratio of gross expenses to average net assets and was less than 0.01%.
(7) The ratio was 1.07% in 2004 and 1.78% in 2003 before waiver of certain fees
incurred by the Fund.
138 Janus Equity Funds prospectus
<Table>
<Caption>
JANUS MID CAP VALUE FUND - INVESTOR SHARES(1)
- ----------------------------------------------------------------------------------------------------------------
Years or Periods Years ended
ended October 31 September 30
2005 2004 2003(2) 2003(3) 2002 2001
NET ASSET VALUE, BEGINNING OF PERIOD $22.22 $18.94 $15.15 $13.71 $14.30 $14.43
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) 0.14 0.10 0.03 0.03 0.02 0.06
Net gain/(loss) on securities (both
realized and unrealized) 2.89 3.28 3.76 1.44 (0.23) 1.27
Total from investment operations 3.03 3.38 3.79 1.47 (0.21) 1.33
LESS DISTRIBUTIONS AND OTHER:
Dividends (from net investment income) (0.08) (0.10) -- (0.03) (0.03) (0.10)
Distributions (from capital gains) (1.93) -- -- -- (0.35) (1.36)
Payment from affiliate --(4) --(4) -- -- -- --
Total distributions and other (2.01) (0.10) -- (0.03) (0.38) (1.46)
NET ASSET VALUE, END OF PERIOD $23.24 $22.22 $18.94 $15.15 $13.71 $14.30
Total return(5) 14.26%(6) 17.92%(7) 25.02% 10.73% (1.96)% 9.70%
Net assets, end of period (in millions) $4,188 $2,979 $1,494 $1,034 $782 $149
Average net assets for the period (in
millions) $3,797 $2,245 $1,262 $962 N/A N/A
Ratio of gross expenses to average net
assets(8)(9)(10) 0.93% 0.94% 1.08% 1.14%(11) 1.17% 1.22%
Ratio of net expenses to average net
assets(8)(9) 0.92% 0.94% 1.08% 1.14% N/A N/A
Ratio of net investment income/(loss)
to average net assets(9) 0.67% 0.56% 0.45% 0.44% 0.28% 0.78%
Portfolio turnover rate(9) 86% 91% 97% 94% 65% 116%
- ----------------------------------------------------------------------------------------------------------------
</Table>
(1) Berger Mid Cap Value Fund prior to reorganization.
(2) Fiscal period May 1, 2003 through October 31, 2003.
(3) Fiscal period October 1, 2002 through April 30, 2003.
(4) Payment from affiliate aggregated less than $0.01 on a per share basis for
the fiscal year end.
(5) Total return is not annualized for periods of less than one full year.
(6) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a
loss on a transaction resulting from certain trading, pricing, and/or
shareholder activity errors, which otherwise would have reduced total
return by 0.01%.
(7) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a
loss on a transaction resulting from certain trading, pricing, and/or
shareholder activity errors, which otherwise would have reduced total
return by less than 0.01%.
(8) Certain prior year amounts have been reclassified to conform to current
year presentation.
(9) Annualized for periods of less than one full year.
(10) The effect of non-recurring costs assumed by Janus Capital is included in
the ratio of gross expenses to average net assets and was less than 0.01%.
(11) The ratio was 1.17% in 2003 before waiver of certain fees incurred by the
Fund.
Financial highlights 139
<Table>
<Caption>
JANUS GLOBAL OPPORTUNITIES FUND
- -------------------------------------------------------------------------------------------------------
Years or Period ended October 31
2005 2004 2003 2002 2001(1)
NET ASSET VALUE, BEGINNING OF PERIOD $12.93 $11.66 $8.64 $9.68 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) 0.10 0.03 0.03 0.03 0.02
Net gain/(loss) on securities (both
realized and unrealized) 0.91 1.27 3.02 (1.04) (0.34)
Total from investment operations 1.01 1.30 3.05 (1.01) (0.32)
LESS DISTRIBUTIONS AND OTHER:
Dividends (from net investment
income) (0.03) (0.03) (0.04) (0.02) --
Distributions (from capital gains) -- -- -- (0.01) --
Redemption fees --(2) --(2) 0.01 N/A N/A
Payment from affiliate --(3) -- -- -- --
Total distributions and other (0.03) (0.03) (0.03) (0.03) --
NET ASSET VALUE, END OF PERIOD $13.91 $12.93 $11.66 $8.64 $9.68
Total return(4) 7.78%(5) 11.18% 35.51% (10.59)% (3.10)%
Net assets, end of period (in
millions) $178 $207 $144 $149 $63
Average net assets for the period (in
millions) $219 $175 $133 $155 $55
Ratio of gross expenses to average
net assets(6)(7) 1.03% 1.09% 1.17% 1.19% 1.52%
Ratio of net expenses to average net
assets(6) 1.02% 1.09% 1.16% 1.16% 1.50%
Ratio of net investment income/(loss)
to average net assets(6) 0.62% 0.24% 0.27% 0.40% 0.64%
Portfolio turnover rate(6) 36% 37% 31% 84% 0%
- -------------------------------------------------------------------------------------------------------
</Table>
(1) Fiscal period from June 29, 2001 (inception) through October 31, 2001.
(2) Redemption fees aggregated less than $0.01 on a per share basis for the
fiscal year end.
(3) Payment from affiliate aggregated less than $0.01 on a per share basis for
the fiscal year end.
(4) Total return is not annualized for periods of less than one full year.
(5) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss
on a transaction resulting from certain trading, pricing, and/or shareholder
activity errors, which otherwise would have reduced total return by less
than 0.01%.
(6) Annualized for periods of less than one full year.
(7) The effect of non-recurring costs assumed by Janus Capital is included in
the ratio of gross expenses to average net assets and was less than 0.01%.
140 Janus Equity Funds prospectus
<Table>
<Caption>
JANUS OVERSEAS FUND
- -----------------------------------------------------------------------------------------------------------
Years ended October 31
2005 2004 2003 2002 2001
NET ASSET VALUE, BEGINNING OF PERIOD $21.62 $19.50 $15.44 $18.44 $33.44
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) 0.21 0.18 0.24 0.15 0.28
Net gain/(loss) on securities (both realized
and unrealized) 6.82 2.18 3.98 (3.05) (11.42)
Total from investment operations 7.03 2.36 4.22 (2.90) (11.14)
LESS DISTRIBUTIONS AND OTHER:
Dividends (from net investment income) (0.23) (0.24) (0.16) (0.10) (0.20)
Distributions (from capital gains) -- -- -- -- (3.66)
Redemption fees --(1) --(1) --(1) N/A N/A
Payment from affiliate --(2) --(2) -- -- --
Total distributions and other (0.23) (0.24) (0.16) (0.10) (3.86)
NET ASSET VALUE, END OF PERIOD $28.42 $21.62 $19.50 $15.44 $18.44
Total return 32.74%(3) 12.24%(3) 27.62% (15.78)% (37.09)%
Net assets, end of period (in millions) $2,555 $2,090 $2,811 $3,243 $4,989
Average net assets for the period (in
millions) $2,272 $2,497 $2,898 $4,446 $6,946
Ratio of gross expenses to average net
assets(4) 0.90% 0.93% 0.94% 0.91% 0.87%
Ratio of net expenses to average net assets 0.89% 0.93% 0.94% 0.89% 0.85%
Ratio of net investment income/(loss) to
average net assets 0.88% 0.72% 1.21% 0.69% 0.77%
Portfolio turnover rate 57% 58% 104% 63% 65%
- -----------------------------------------------------------------------------------------------------------
</Table>
(1) Redemption fees aggregated less than $0.01 on a per share basis for the
fiscal year end.
(2) Payment from affiliate aggregated less than $0.01 on a per share basis for
the fiscal year end.
(3) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss
on a transaction resulting from certain trading, pricing, and/or shareholder
activity errors, which otherwise would have reduced total return by less
than 0.01%.
(4) The effect of non-recurring costs assumed by Janus Capital is included in
the ratio of gross expenses to average net assets and was less than 0.01%.
Financial highlights 141
<Table>
<Caption>
JANUS WORLDWIDE FUND
- -------------------------------------------------------------------------------------------------------------
Years ended October 31
2005 2004 2003 2002 2001
NET ASSET VALUE, BEGINNING OF PERIOD $38.12 $37.34 $32.87 $40.17 $70.74
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) 0.46 0.30 0.37 0.27 0.39
Net gain/(loss) on securities (both realized
and unrealized) 3.14 0.84 4.41 (7.56) (24.04)
Total from investment operations 3.60 1.14 4.78 (7.29) (23.65)
LESS DISTRIBUTIONS AND OTHER:
Dividends (from net investment income) (0.31) (0.36) (0.31) (0.01) (0.41)
Distributions (from capital gains) -- -- -- -- (6.51)
Redemption fees --(1) --(1) --(1) N/A N/A
Payment from affiliate --(2) --(2) -- -- --
Total distributions and other (0.31) (0.36) (0.31) (0.01) (6.92)
NET ASSET VALUE, END OF PERIOD $41.41 $38.12 $37.34 $32.87 $40.17
Total return 9.47%(3) 3.06%(3) 14.65% (18.15)% (36.56)%
Net assets, end of period (in millions) $4,958 $7,074 $11,341 $13,465 $20,331
Average net assets for the period (in millions) $5,984 $9,278 $12,124 $18,185 $27,993
Ratio of gross expenses to average net
assets(4) 0.85% 0.92% 0.93% 0.87% 0.87%
Ratio of net expenses to average net assets 0.85% 0.92% 0.92% 0.86% 0.85%
Ratio of net investment income/(loss) to
average net assets 0.90% 0.61% 0.99% 0.62% 0.53%
Portfolio turnover rate 33% 120% 108% 73% 78%
- -------------------------------------------------------------------------------------------------------------
</Table>
(1) Redemption fees aggregated less than $0.01 on a per share basis for the
fiscal year end.
(2) Payment from affiliate aggregated less than $0.01 on a per share basis for
the fiscal year end.
(3) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss
on a transaction resulting from certain trading and/or pricing errors, which
otherwise would have reduced total return by less than 0.01%.
(4) The effect of non-recurring costs assumed by Janus Capital is included in
the ratio of gross expenses to average net assets and was less than 0.01%.
142 Janus Equity Funds prospectus
GLOSSARY OF INVESTMENT TERMS
- --------------------------------------------------------------------------------
This glossary provides a more detailed description of some of the types of
securities, investment strategies, and other instruments in which the Funds
may invest. The Funds may invest in these instruments to the extent permitted
by their investment objectives and policies. The Funds are not limited by
this discussion and may invest in any other types of instruments not
precluded by the policies discussed elsewhere in this Prospectus.
I. EQUITY AND DEBT SECURITIES
BANK LOANS include institutionally-traded floating and fixed-rate debt
securities generally acquired as a participation interest in a loan
originated by a lender or other financial institution, or as an assignment of
a portion of a loan previously attributable to a different lender.
BONDS are debt securities issued by a company, municipality, government, or
government agency. The issuer of a bond is required to pay the holder the
amount of the loan (or par value of the bond) at a specified maturity and to
make scheduled interest payments.
CERTIFICATES OF PARTICIPATION ("COPS") are certificates representing an
interest in a pool of securities. Holders are entitled to a proportionate
interest in the underlying securities. Municipal lease obligations are often
sold in the form of COPs. See "Municipal lease obligations" below.
COMMERCIAL PAPER is a short-term debt obligation with a maturity ranging from
1 to 270 days issued by banks, corporations, and other borrowers to investors
seeking to invest idle cash. A Fund may purchase commercial paper issued in
private placements under Section 4(2) of the Securities Act of 1933.
COMMON STOCKS are equity securities representing shares of ownership in a
company and usually carry voting rights and earn dividends. Unlike preferred
stock, dividends on common stock are not fixed but are declared at the
discretion of the issuer's board of directors.
CONVERTIBLE SECURITIES are preferred stocks or bonds that pay a fixed
dividend or interest payment and are convertible into common stock at a
specified price or conversion ratio.
DEBT SECURITIES are securities representing money borrowed that must be
repaid at a later date. Such securities have specific maturities and usually
a specific rate of interest or an original purchase discount.
DEPOSITARY RECEIPTS are receipts for shares of a foreign-based corporation
that entitle the holder to dividends and capital gains on the underlying
security. Receipts include those issued by domestic banks (American
Depositary Receipts), foreign banks (Global or European Depositary Receipts),
and broker-dealers (depositary shares).
Glossary of investment terms 143
EQUITY SECURITIES generally include domestic and foreign common stocks;
preferred stocks; securities convertible into common stocks or preferred
stocks; warrants to purchase common or preferred stocks; and other securities
with equity characteristics.
EXCHANGE-TRADED FUNDS are index-based investment companies which hold
substantially all of their assets in securities with equity characteristics.
As a shareholder of another investment company, a Fund would bear its pro
rata portion of the other investment company's expenses, including advisory
fees, in addition to the expenses the Fund bears directly in connection with
its own operations.
FIXED-INCOME SECURITIES are securities that pay a specified rate of return.
The term generally includes short- and long-term government, corporate, and
municipal obligations that pay a specified rate of interest, dividends, or
coupons for a specified period of time. Coupon and dividend rates may be
fixed for the life of the issue or, in the case of adjustable and floating
rate securities, for a shorter period.
HIGH-YIELD/HIGH-RISK BONDS are bonds that are rated below investment grade by
the primary rating agencies (i.e., BB+ or lower by Standard & Poor's and
Fitch, and Ba or lower by Moody's). Other terms commonly used to describe
such bonds include "lower rated bonds," "non-investment grade bonds," and
"junk bonds."
INDUSTRIAL DEVELOPMENT BONDS are revenue bonds that are issued by a public
authority but which may be backed only by the credit and security of a
private issuer and may involve greater credit risk. See "Municipal
securities" below.
MORTGAGE- AND ASSET-BACKED SECURITIES are shares in a pool of mortgages or
other debt. These securities are generally pass-through securities, which
means that principal and interest payments on the underlying securities (less
servicing fees) are passed through to shareholders on a pro rata basis. These
securities involve prepayment risk, which is the risk that the underlying
mortgages or other debt may be refinanced or paid off prior to their
maturities during periods of declining interest rates. In that case, a Fund
may have to reinvest the proceeds from the securities at a lower rate.
Potential market gains on a security subject to prepayment risk may be more
limited than potential market gains on a comparable security that is not
subject to prepayment risk.
MORTGAGE DOLLAR ROLLS are transactions in which a Fund sells a
mortgage-related security, such as a security issued by GNMA, to a dealer and
simultaneously agrees to purchase a similar security (but not the same
security) in the future at a pre-determined price. A "dollar roll" can be
viewed as a collateralized borrowing in which a Fund pledges a
mortgage-related security to a dealer to obtain cash.
144 Janus Equity Funds prospectus
MUNICIPAL LEASE OBLIGATIONS are revenue bonds backed by leases or installment
purchase contracts for property or equipment. Lease obligations may not be
backed by the issuing municipality's credit and may involve risks not
normally associated with general obligation bonds and other revenue bonds.
For example, their interest may become taxable if the lease is assigned and
the holders may incur losses if the issuer does not appropriate funds for the
lease payments on an annual basis, which may result in termination of the
lease and possible default.
MUNICIPAL SECURITIES are bonds or notes issued by a U.S. state or political
subdivision. A municipal security may be a general obligation backed by the
full faith and credit (i.e., the borrowing and taxing power) of a
municipality or a revenue obligation paid out of the revenues of a designated
project, facility, or revenue source.
PASS-THROUGH SECURITIES are shares or certificates of interest in a pool of
debt obligations that have been repackaged by an intermediary, such as a bank
or broker-dealer.
PASSIVE FOREIGN INVESTMENT COMPANIES (PFICS) are any foreign corporations
which generate certain amounts of passive income or hold certain amounts of
assets for the production of passive income. Passive income includes
dividends, interest, royalties, rents, and annuities. To avoid taxes and
interest that a Fund must pay if these investments are profitable, the Fund
may make various elections permitted by the tax laws. These elections could
require that a Fund recognize taxable income, which in turn must be
distributed, before the securities are sold and before cash is received to
pay the distributions.
PAY-IN-KIND BONDS are debt securities that normally give the issuer an option
to pay cash at a coupon payment date or give the holder of the security a
similar bond with the same coupon rate and a face value equal to the amount
of the coupon payment that would have been made.
PREFERRED STOCKS are equity securities that generally pay dividends at a
specified rate and have preference over common stock in the payment of
dividends and liquidation. Preferred stock generally does not carry voting
rights.
REAL ESTATE INVESTMENT TRUST (REIT) is an investment trust that operates
through the pooled capital of many investors who buy its shares. Investments
are in direct ownership of either income property or mortgage loans.
RULE 144A SECURITIES are securities that are not registered for sale to the
general public under the Securities Act of 1933, but that may be resold to
certain institutional investors.
STANDBY COMMITMENT is a right to sell a specified underlying security or
securities within a specified period of time and at an exercise price equal
to the
Glossary of investment terms 145
amortized cost of the underlying security or securities plus accrued
interest, if any, at the time of exercise, that may be sold, transferred, or
assigned only with the underlying security or securities. A standby
commitment entitles the holder to receive same day settlement, and will be
considered to be from the party to whom the investment company will look for
payment of the exercise price.
STEP COUPON BONDS are high-quality issues with above-market interest rates
and a coupon that increases over the life of the bond. They may pay monthly,
semiannual, or annual interest payments. On the date of each coupon payment,
the issuer decides whether to call the bond at par, or whether to extend it
until the next payment date at the new coupon rate.
STRIP BONDS are debt securities that are stripped of their interest (usually
by a financial intermediary) after the securities are issued. The market
value of these securities generally fluctuates more in response to changes in
interest rates than interest-paying securities of comparable maturity.
TENDER OPTION BONDS are relatively long-term bonds that are coupled with the
option to tender the securities to a bank, broker-dealer, or other financial
institution at periodic intervals and receive the face value of the bond.
This investment structure is commonly used as a means of enhancing a
security's liquidity.
U.S. GOVERNMENT SECURITIES include direct obligations of the U.S. Government
that are supported by its full faith and credit. Treasury bills have initial
maturities of less than one year, Treasury notes have initial maturities of
one to ten years, and Treasury bonds may be issued with any maturity but
generally have maturities of at least ten years. U.S. Government securities
also include indirect obligations of the U.S. Government that are issued by
federal agencies and government sponsored entities. Unlike Treasury
securities, agency securities generally are not backed by the full faith and
credit of the U.S. Government. Some agency securities are supported by the
right of the issuer to borrow from the Treasury, others are supported by the
discretionary authority of the U.S. Government to purchase the agency's
obligations, and others are supported only by the credit of the sponsoring
agency.
VARIABLE AND FLOATING RATE SECURITIES have variable or floating rates of
interest and, under certain limited circumstances, may have varying principal
amounts. Variable and floating rate securities pay interest at rates that are
adjusted periodically according to a specified formula, usually with
reference to some interest rate index or market interest rate (the
"underlying index"). The floating rate tends to decrease the security's price
sensitivity to changes in interest rates.
WARRANTS are securities, typically issued with preferred stock or bonds,
which give the holder the right to buy a proportionate amount of common stock
at a specified price. The specified price is usually higher than the market
price at the
146 Janus Equity Funds prospectus
time of issuance of the warrant. The right may last for a period of years or
indefinitely.
ZERO COUPON BONDS are debt securities that do not pay regular interest at
regular intervals, but are issued at a discount from face value. The discount
approximates the total amount of interest the security will accrue from the
date of issuance to maturity. The market value of these securities generally
fluctuates more in response to changes in interest rates than interest-paying
securities.
II. FUTURES, OPTIONS, AND OTHER DERIVATIVES
CREDIT DEFAULT SWAPS are a specific kind of counterparty agreement that
allows 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 of regular periodic payments.
EQUITY-LINKED STRUCTURED NOTES are debt securities which combine the
characteristics of common stock and the sale of an option. The return
component is based on the performance of a single equity security, a basket
of equity securities, or an equity index and the sale of an option which is
recognized as income. Equity-linked structured notes are typically offered in
limited transactions to financial institutions by investment banks. There is
no guaranteed return of principal with these securities. The appreciation
potential of these securities is limited by a maximum payment or call right
and can be influenced by many unpredictable factors.
FORWARD CONTRACTS are contracts to purchase or sell a specified amount of a
financial instrument for an agreed upon price at a specified time. Forward
contracts are not currently exchange-traded and are typically negotiated on
an individual basis. A Fund may enter into forward currency contracts for
investment purposes or to hedge against declines in the value of securities
denominated in, or whose value is tied to, a currency other than the U.S.
dollar or to reduce the impact of currency appreciation on purchases of such
securities. It may also enter into forward contracts to purchase or sell
securities or other financial indices.
FUTURES CONTRACTS are contracts that obligate the buyer to receive and the
seller to deliver an instrument or money at a specified price on a specified
date. A Fund may buy and sell futures contracts on foreign currencies,
securities, and financial indices including indices of U.S. Government,
foreign government, equity, or fixed-income securities. A Fund may also buy
options on futures contracts. An option on a futures contract gives the buyer
the right, but not the obligation, to buy or sell a futures contract at a
specified price on or before a specified date. Futures contracts and options
on futures are standardized and traded on designated exchanges.
Glossary of investment terms 147
INDEXED/STRUCTURED SECURITIES are typically short- to intermediate-term debt
securities whose value at maturity or interest rate is linked to currencies,
interest rates, equity securities, indices, commodity prices, or other
financial indicators. Such securities may be positively or negatively indexed
(e.g., their value may increase or decrease if the reference index or
instrument appreciates). Indexed/ structured securities may have return
characteristics similar to direct investments in the underlying instruments
and may be more volatile than the underlying instruments. A Fund bears the
market risk of an investment in the underlying instruments, as well as the
credit risk of the issuer.
INTEREST RATE SWAPS involve the exchange by two parties of their respective
commitments to pay or receive interest (e.g., an exchange of floating rate
payments for fixed rate payments).
INVERSE FLOATERS are debt instruments whose interest rate bears an inverse
relationship to the interest rate on another instrument or index. For
example, upon reset, the interest rate payable on the inverse floater may go
down when the underlying index has risen. Certain inverse floaters may have
an interest rate reset mechanism that multiplies the effects of change in the
underlying index. Such mechanism may increase the volatility of the
security's market value.
OPTIONS are the right, but not the obligation, to buy or sell a specified
amount of securities or other assets on or before a fixed date at a
predetermined price. A Fund may purchase and write put and call options on
securities, securities indices, and foreign currencies. A Fund may purchase
or write such options individually or in combination.
PARTICIPATORY NOTES are derivative securities which are linked to the
performance of an underlying Indian security and which allow investors to
gain market exposure to Indian securities without trading directly in the
local Indian market.
III. OTHER INVESTMENTS, STRATEGIES, AND/OR TECHNIQUES
REPURCHASE AGREEMENTS involve the purchase of a security by a Fund and a
simultaneous agreement by the seller (generally a bank or dealer) to
repurchase the security from the Fund at a specified date or upon demand.
This technique offers a method of earning income on idle cash. These
securities involve the risk that the seller will fail to repurchase the
security, as agreed. In that case, a Fund will bear the risk of market value
fluctuations until the security can be sold and may encounter delays and
incur costs in liquidating the security.
REVERSE REPURCHASE AGREEMENTS involve the sale of a security by a Fund to
another party (generally a bank or dealer) in return for cash and an
agreement by the Fund to buy the security back at a specified price and time.
This technique will be used primarily to provide cash to satisfy unusually
high redemption requests, or for other temporary or emergency purposes.
148 Janus Equity Funds prospectus
SHORT SALES in which a Fund may engage may be of two types, short sales
"against the box" or "naked" short sales. Short sales against the box involve
selling either a security that a Fund owns, or a security equivalent in kind
or amount to the security sold short that the Fund has the right to obtain,
for delivery at a specified date in the future. Naked short sales involve
selling a security that a Fund borrows and does not own. A Fund may enter
into a short sale to hedge against anticipated declines in the market price
of a security or to reduce portfolio volatility. If the value of a security
sold short increases prior to the scheduled delivery date, the Fund loses the
opportunity to participate in the gain. For naked short sales, the Fund will
incur a loss if the value of a security increases during this period because
it will be paying more for the security than it has received from the
purchaser in the short sale. If the price declines during this period, a Fund
will realize a short-term capital gain. Although a Fund's potential for gain
as a result of a short sale is limited to the price at which it sold the
security short less the cost of borrowing the security, its potential for
loss is theoretically unlimited because there is no limit to the cost of
replacing the borrowed security.
WHEN-ISSUED, DELAYED DELIVERY, AND FORWARD COMMITMENT TRANSACTIONS generally
involve the purchase of a security with payment and delivery at some time in
the future - i.e., beyond normal settlement. A Fund does not earn interest on
such securities until settlement and bears the risk of market value
fluctuations in between the purchase and settlement dates. New issues of
stocks and bonds, private placements, and U.S. Government securities may be
sold in this manner.
Glossary of investment terms 149
You can make inquiries and request other
information, including a Statement of Additional
Information, Annual Report, or Semiannual Report,
free of charge, by contacting a Janus
representative at 1-800-525-3713. The Funds'
Statement of Additional Information and most
recent Annual and Semiannual Reports are also
available, free of charge, on www.janus.com.
Additional information about the Funds'
investments is available in the Funds' Annual and
Semiannual Reports. In the Funds' Annual and
Semiannual Reports, you will find a discussion of
the market conditions and investment strategies
that significantly affected the Funds' performance
during their last fiscal period. Other information
is also available from financial intermediaries
that sell shares of the Funds.
The Statement of Additional Information provides
detailed information about the Funds and is
incorporated into this Prospectus by reference.
You may review and copy information about the
Funds (including the Funds' Statement of
Additional Information) at the Public Reference
Room of the SEC or get text only copies, after
paying a duplicating fee, by sending an electronic
request by e-mail to publicinfo@sec.gov or by
writing to or calling the Public Reference Room,
Washington, D.C. 20549-0102 (1-202-942-8090).
Information on the operation of the Public
Reference Room may also be obtained by calling
this number. You may also obtain reports and other
information about the Funds from the Electronic
Data Gathering Analysis and Retrieval (EDGAR)
Database on the SEC's website at
http://www.sec.gov.
(JANUS LOGO)
www.janus.com
PO Box 173375
Denver, CO 80217-3375
1-800-525-3713
The Trust's Investment Company Act File No. is 811-1879.
February 28, 2006
GROWTH
Janus Fund
Janus Enterprise Fund
Janus Mercury Fund
Janus Olympus Fund
Janus Orion Fund
Janus Triton Fund
Janus Twenty Fund*
Janus Venture Fund*
SPECIALTY GROWTH
Janus Global Life Sciences Fund
Janus Global Technology Fund
CORE
Janus Balanced Fund
Janus Contrarian Fund
Janus Core Equity Fund
Janus Growth and Income Fund
Janus Research Fund
RISK-MANAGED
INTECH Risk-Managed Stock Fund
(formerly named Janus
Risk-Managed Stock Fund)
VALUE
Janus Mid Cap Value Fund -
Investor Shares
Janus Mid Cap Value Fund -
Institutional Shares*
Janus Small Cap Value Fund -
Investor Shares*
Janus Small Cap Value Fund -
Institutional Shares*
INTERNATIONAL & GLOBAL
Janus Global Opportunities Fund
Janus Overseas Fund
Janus Worldwide Fund
BOND
Janus Flexible Bond Fund
Janus High-Yield Fund
Janus Short-Term Bond Fund
Janus Federal Tax-Exempt Fund
JANUS EQUITY AND BOND FUNDS
Statement of Additional Information
This Statement of Additional Information ("SAI") expands upon and
supplements the information contained in the current Prospectuses for
the Funds listed above, each of which is a separate series of Janus
Investment Fund, a Massachusetts business trust (the "Trust"). Janus
Capital Management LLC ("Janus Capital") is the investment adviser of
each Fund. In addition, subadvisers are responsible for the day-to-day
operations of certain Funds.
This SAI is not a Prospectus and should be read in conjunction with the
Funds' Prospectuses dated February 28, 2006, and any supplements
thereto, which are incorporated by reference into this SAI and may be
obtained from the Trust on www.janus.com, by calling 1-800-525-3713, or
by writing the Funds at the address shown on the back of this SAI. This
SAI contains additional and more detailed information about the Funds'
operations and activities than the Prospectuses. The Annual and
Semiannual Reports, which contain important financial information about
the Funds, are incorporated by reference into this SAI and are also
available, without charge, on www.janus.com, by calling 1-800-525-3713,
or by writing the Funds at the address shown on the back cover of this
SAI.
* These Funds/Classes are closed to new investors. However, current
investors may continue to invest in the Funds and/or may open new Fund
accounts. The Funds may resume sales of their shares to new investors at
some future date, but they have no present intention to do so. If you
are a current Fund shareholder and close an existing Fund account, you
will not be able to make additional investments in the Fund unless you
meet one of the specified criteria. You may be required to demonstrate
eligibility to purchase shares of the Fund before your investment is
accepted. See the "Shareholder's Manual" or "Shareholder's Guide"
section of the Funds' Prospectuses for more details.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<Table>
Classification, Portfolio Turnover, Investment Policies
and Restrictions, and Investment Strategies and
Risks................................................. 2
Investment Adviser and Subadvisers....................... 44
Custodian, Transfer Agent, and Certain Affiliations...... 76
Portfolio Transactions and Brokerage..................... 78
Trustees and Officers.................................... 86
Purchase of Shares....................................... 110
Net Asset Value Determination......................... 110
Reinvestment of Dividends and Distributions........... 111
Redemption of Shares..................................... 113
Shareholder Accounts..................................... 114
Online and Telephone Transactions..................... 114
Systematic Redemptions................................ 114
Tax-Deferred Accounts.................................... 115
Income Dividends, Capital Gains Distributions, and Tax
Status................................................ 116
Principal Shareholders................................... 118
Miscellaneous Information................................ 122
Shares of the Trust................................... 122
Shareholder Meetings.................................. 123
Voting Rights......................................... 123
Master/Feeder Option.................................. 124
Independent Registered Public Accounting Firm......... 124
Registration Statement................................ 124
Financial Statements..................................... 125
Appendix A............................................... 126
Explanation of Rating Categories...................... 126
</Table>
1
CLASSIFICATION, PORTFOLIO TURNOVER, INVESTMENT POLICIES
AND RESTRICTIONS, AND INVESTMENT STRATEGIES AND RISKS
- --------------------------------------------------------------------------------
JANUS INVESTMENT FUND
This Statement of Additional Information includes information about 25 series
of the Trust. Each Fund is a series of Janus Investment Fund (the "Trust"),
an open-end, management investment company.
EQUITY FUNDS. Janus Fund, Janus Enterprise Fund, Janus Mercury Fund, Janus
Olympus Fund, Janus Orion Fund, Janus Triton Fund, Janus Twenty Fund, Janus
Venture Fund, Janus Global Life Sciences Fund, Janus Global Technology Fund,
Janus Balanced Fund, Janus Contrarian Fund, Janus Core Equity Fund, Janus
Growth and Income Fund, Janus Research Fund, INTECH Risk-Managed Stock Fund,
Janus Mid Cap Value Fund, Janus Small Cap Value Fund, Janus Global
Opportunities Fund, Janus Overseas Fund, and Janus Worldwide Fund are
referred to collectively in this SAI as the "Equity Funds."
BOND FUNDS. Janus Flexible Bond Fund, Janus High-Yield Fund, Janus Short-
Term Bond Fund, and Janus Federal Tax-Exempt Fund are referred to
collectively in this SAI as the "Bond Funds."
CLASSIFICATION
The Investment Company Act of 1940 ("1940 Act") classifies mutual funds as
either diversified or nondiversified. Janus Orion Fund, Janus Twenty Fund,
Janus Contrarian Fund, and Janus Global Opportunities Fund are classified as
nondiversified. Janus Fund, Janus Enterprise Fund, Janus Mercury Fund, Janus
Olympus Fund, Janus Triton Fund, Janus Venture Fund, Janus Global Life
Sciences Fund, Janus Global Technology Fund, Janus Balanced Fund, Janus Core
Equity Fund, Janus Growth and Income Fund, Janus Research Fund, INTECH
Risk-Managed Stock Fund, Janus Mid Cap Value Fund, Janus Small Cap Value
Fund, Janus Overseas Fund, Janus Worldwide Fund, Janus Flexible Bond Fund,
Janus High-Yield Fund, Janus Short-Term Bond Fund, and Janus Federal Tax-
Exempt Fund are classified as diversified.
SUBADVISERS
FUND SUBADVISED BY INTECH. Enhanced Investment Technologies, LLC ("INTECH")
is the investment subadviser for INTECH Risk-Managed Stock Fund.
FUNDS SUBADVISED BY PERKINS. Perkins, Wolf, McDonnell and Company, LLC
("Perkins") is the investment subadviser for Janus Mid Cap Value Fund and
Janus Small Cap Value Fund.
2
PORTFOLIO TURNOVER
The portfolio turnover rate for Janus Fund for the fiscal year ended October
31, 2005 was 78% compared to 21% for the fiscal year ended October 31, 2004.
The increase in the Fund's portfolio turnover rate was primarily due to an
increase in the number of fund holdings.The portfolio turnover rate for Janus
Worldwide Fund for the fiscal year ended October 31, 2005 was 33% compared to
120% for the fiscal year ended October 31, 2004. The decline in the Fund's
portfolio turnover rate was primarily due to a restructuring of the Fund's
portfolio as a result of a change in portfolio management. The portfolio
turnover rate for Janus Federal Tax-Exempt Fund for the fiscal year ended
October 31, 2005 was 149% compared to 52% for the fiscal year ended October
31, 2004. The increase in the Fund's portfolio turnover rate was primarily
due to a restructuring of the Fund's portfolio as a result of a change in the
Fund's portfolio management.
INVESTMENT POLICIES AND RESTRICTIONS APPLICABLE TO ALL FUNDS
The Funds are subject to certain fundamental policies and restrictions that
may not be changed without shareholder approval. Shareholder approval means
approval by the lesser of: (i) more than 50% of the outstanding voting
securities of the Trust (or a particular Fund or particular class of shares
if a matter affects just that Fund or that class of shares) or (ii) 67% or
more of the voting securities present at a meeting if the holders of more
than 50% of the outstanding voting securities of the Trust (or a particular
Fund or class of shares) are present or represented by proxy. The following
policies are fundamental policies of the Funds. Each of these policies
applies to all of the Funds, except policies (1) and (2), which apply only to
the Funds specifically listed in those policies.
As used in the policies and restrictions set forth below and as used
elsewhere in this SAI, the term "U.S. Government securities" shall have the
meaning set forth in the Investment Company Act of 1940, as amended (the
"1940 Act"). The 1940 Act defines U.S. Government securities as securities
issued or guaranteed by the United States Government, its agencies, or
instrumentalities. U.S. Government securities may also include repurchase
agreements collateralized and municipal securities escrowed with or refunded
with escrowed U.S. Government securities.
(1) With respect to 75% of its total assets, Janus Fund, Janus Enterprise
Fund, Janus Mercury Fund, Janus Olympus Fund, Janus Triton Fund, Janus
Venture Fund, Janus Global Life Sciences Fund, Janus Global Technology Fund,
Janus Balanced Fund, Janus Core Equity Fund, Janus Growth and Income Fund,
Janus
3
Research Fund, INTECH Risk-Managed Stock Fund, Janus Mid Cap Value Fund,
Janus Small Cap Value Fund, Janus Overseas Fund, Janus Worldwide Fund, Janus
Flexible Bond Fund, Janus High-Yield Fund, Janus Short-Term Bond Fund, and
Janus Federal Tax-Exempt Fund may not purchase securities of an issuer (other
than the U.S. Government, its agencies, instrumentalities or authorities, or
repurchase agreements collateralized by U.S. Government securities, and other
investment companies) if: (a) such purchase would, at the time, cause more
than 5% of the Fund's total assets taken at market value to be invested in
the securities of such issuer or (b) such purchase would, at the time, result
in more than 10% of the outstanding voting securities of such issuer being
held by the Fund.
Each Fund may not:
(2) Invest 25% or more of the value of its total assets in any particular
industry (other than U.S. Government securities). This policy does not apply
to Janus Global Life Sciences Fund. This policy does not apply to Janus
Federal Tax-Exempt Fund regarding municipal obligations only. For the
purposes of this limitation only, industrial development bonds issued by
nongovernmental users shall not be deemed to be municipal obligations.
Industrial development bonds shall be classified according to the industry of
the entity that has the ultimate responsibility for the payment of principal
and interest on the obligation.
(3) Invest directly in real estate or interests in real estate; however, the
Funds may own debt or equity securities issued by companies engaged in those
businesses.
(4) Purchase or sell physical commodities unless acquired as a result of
ownership of securities or other instruments (but this limitation shall not
prevent the Funds from purchasing or selling foreign currencies, options,
futures, swaps, forward contracts, or other derivative instruments, or from
investing in securities or other instruments backed by physical commodities).
(5) Lend any security or make any other loan if, as a result, more than
33 1/3% of the Fund's total assets would be lent to other parties (but this
limitation does not apply to investments in repurchase agreements, commercial
paper, debt securities, or loans, including assignments and participation
interests).
(6) Act as an underwriter of securities issued by others, except to the
extent that the Fund may be deemed an underwriter in connection with the
disposition of portfolio securities of the Fund.
(7) Borrow money except that the Fund may borrow money for temporary or
emergency purposes (not for leveraging or investment). Borrowings from banks
4
will not, in any event, exceed one-third of the value of a Fund's total
assets (including the amount borrowed). This policy shall not prohibit short
sales transactions or futures, options, swaps, or forward transactions. The
Funds may not issue "senior securities" in contravention of the 1940 Act.
As a fundamental policy, each Fund may, notwithstanding any other investment
policy or limitation (whether or not fundamental), invest all of its assets
in the securities of a single open-end management investment company with
substantially the same fundamental investment objectives, policies, and
limitations as such Fund.
The Trustees have adopted additional investment restrictions for the Funds.
These restrictions are operating policies of the Funds and may be changed by
the Trustees without shareholder approval. The additional restrictions
adopted by the Trustees to date include the following:
(a) If a Fund is an approved underlying fund in a Janus fund of funds, the
Fund may not acquire the securities of other investment companies or
registered unit investment trusts in excess of the limits of Section 12(d)(1)
of the 1940 Act in reliance on subparagraph (F) or subparagraph (G) of
Section 12(d)(1).
(b) The Funds may sell securities short if they own or have the right to
obtain securities equivalent in kind and amount to the securities sold short
without the payment of any additional consideration therefore ("short sales
against the box"). In addition, the Equity Funds may engage in "naked" short
sales, which involve selling a security that a Fund borrows and does not own.
The total market value of all of a Fund's naked short sale positions will not
exceed 8% of its assets. Transactions in futures, options, swaps, and forward
contracts are not deemed to constitute selling securities short.
(c) The Funds do not currently intend to purchase securities on margin,
except that the Funds may obtain such short-term credits as are necessary for
the clearance of transactions, and provided that margin payments and other
deposits in connection with transactions in futures, options, swaps, and
forward contracts shall not be deemed to constitute purchasing securities on
margin.
(d) A Fund may not mortgage or pledge any securities owned or held by such
Fund in amounts that exceed, in the aggregate, 15% of that Fund's net asset
value ("NAV"), provided that this limitation does not apply to reverse
repurchase agreements, deposits of assets to margin, guarantee positions in
futures, options, swaps, or forward contracts, or the segregation of assets
in connection with such contracts.
5
(e) The Funds do not currently intend to purchase any security or enter into
a repurchase agreement if, as a result, more than 15% of their respective net
assets would be invested in repurchase agreements not entitling the holder to
payment of principal and interest within seven days and in securities that
are illiquid by virtue of legal or contractual restrictions on resale or the
absence of a readily available market. The Trustees, or the Funds' investment
adviser acting pursuant to authority delegated by the Trustees, may determine
that a readily available market exists for securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933 ("Rule 144A
Securities"), or any successor to such rule, Section 4(2) commercial paper,
and municipal lease obligations. Accordingly, such securities may not be
subject to the foregoing limitation.
(f) The Funds may not invest in companies for the purpose of exercising
control of management.
Under the terms of an exemptive order received from the Securities and
Exchange Commission ("SEC"), each of the Funds may borrow money from or lend
money to other funds that permit such transactions and for which Janus
Capital or one of its affiliates serves as investment adviser. All such
borrowing and lending will be subject to the above limits and to the limits
and other conditions in such exemptive order. A Fund will borrow money
through the program only when the costs are equal to or lower than the cost
of bank loans. Interfund loans and borrowings normally extend overnight, but
can have a maximum duration of seven days. A Fund will lend through the
program only when the returns are higher than those available from other
short-term instruments (such as repurchase agreements). A Fund may have to
borrow from a bank at a higher interest rate if an interfund loan is called
or not renewed. Any delay in repayment to a lending Fund could result in a
lost investment opportunity or additional borrowing costs.
For the purposes of these investment restrictions, the identification of the
issuer of a municipal obligation depends on the terms and conditions of the
security. When assets and revenues of a political subdivision are separate
from those of the government that created the subdivision and the security is
backed only by the assets and revenues of the subdivision, the subdivision is
deemed to be the sole issuer. Similarly, in the case of an industrial
development bond, if the bond is backed only by assets and revenues of a
nongovernmental user, then the nongovernmental user would be deemed to be the
sole issuer. If, however, in either case, the creating government or some
other entity guarantees the security, the guarantee would be considered a
separate security that would be treated as an issue of the guaranteeing
entity.
6
For purposes of each Fund's policies on investing in particular industries,
the Funds will rely primarily on industry or industry group classifications
as published by Bloomberg L.P. To the extent that Bloomberg L.P. industry
classifications are so broad that the primary economic characteristics in a
single class are materially different, the Funds may further classify issuers
in accordance with industry classifications as published by the SEC.
INVESTMENT POLICIES APPLICABLE TO CERTAIN FUNDS
JANUS GLOBAL LIFE SCIENCES FUND. As a fundamental policy, Janus Global Life
Sciences Fund will normally invest at least 25% of its total assets, in the
aggregate, in the following industry groups: health care, pharmaceuticals,
agriculture, cosmetics/personal care, and biotechnology. Janus Global Life
Sciences Fund does not have a policy to concentrate in any industry other
than those listed above.
JANUS BALANCED FUND. As an operational policy, at least 25% of the assets of
Janus Balanced Fund will normally be invested in fixed-income senior
securities.
JANUS SHORT-TERM BOND FUND. As an operational policy, under normal
circumstances, Janus Short-Term Bond Fund expects to maintain an average
weighted effective maturity of three years or less. The investment personnel
may consider estimated prepayment dates or call dates of certain securities
in computing the portfolio's effective maturity.
JANUS FEDERAL TAX-EXEMPT FUND. As a fundamental policy, Janus Federal Tax-
Exempt Fund will normally invest at least 80% of its net assets in securities
whose income is not subject to federal income taxes, including the
alternative minimum tax.
INVESTMENT STRATEGIES AND RISKS
Cash Position
As discussed in the Prospectuses, a Fund's cash position may temporarily
increase under various circumstances. Securities that the Funds may invest in
as a means of receiving a return on idle cash include domestic or foreign
denominated commercial paper, certificates of deposit, repurchase agreements,
or other short-term debt obligations. These securities may include U.S. and
foreign short-term cash instruments. Each Fund may also invest in money
market funds, including funds managed by Janus Capital. (See "Investment
Company Securities.")
INTECH Risk-Managed Stock Fund normally remains as fully invested as possible
and does not seek to lessen the effects of a declining market through
7
hedging or temporary defensive positions. The Fund may use exchange-traded
funds as well as futures, options, and other derivatives to gain exposure to
the stock market pending investment of cash balances or to meet liquidity
needs. The Fund may invest in U.S. Government securities and other
short-term, interest-bearing securities without regard to the Fund's
otherwise applicable percentage limits, policies, or its normal investment
emphasis, when INTECH believes market, economic, or political conditions
warrant a temporary defensive position.
Illiquid Investments
Each Fund may invest up to 15% of its net assets in illiquid investments
(i.e., securities that are not readily marketable). The Trustees have
authorized Janus Capital to make liquidity determinations with respect to
certain securities, including Rule 144A Securities, commercial paper, and
municipal lease obligations purchased by the Funds. Under the guidelines
established by the Trustees, Janus Capital will consider the following
factors: (i) the frequency of trades and quoted prices for the security; (ii)
the number of dealers willing to purchase or sell the security and the number
of other potential purchasers; (iii) the willingness of dealers to undertake
to make a market in the security; and (iv) the nature of the security and the
nature of the marketplace trades, including the time needed to dispose of the
security, the method of soliciting offers, and the mechanics of the transfer.
In the case of commercial paper, Janus Capital will also consider whether the
paper is traded flat or in default as to principal and interest and any
ratings of the paper by a nationally recognized statistical rating
organization ("NRSRO"). Certain securities previously deemed liquid may
become illiquid in any subsequent assessment of the foregoing factors or
other changes. Foreign securities that may be freely traded on or through the
facilities of an offshore exchange or other established offshore securities
market are not restricted under the Funds' liquidity procedures if traded in
that market. Such securities will be treated as "restricted" if traded in the
United States because foreign securities are not registered for sale under
the U.S. Securities Act of 1933.
If illiquid securities exceed 15% of a Fund's net assets after the time of
purchase, the Fund will take steps to reduce in an orderly fashion its
holdings of illiquid securities. Because illiquid securities may not be
readily marketable, the investment personnel may not be able to dispose of
them in a timely manner. As a result, the Fund may be forced to hold illiquid
securities while their price depreciates. Depreciation in the price of
illiquid securities may cause the NAV of a Fund to decline.
8
Each Fund may invest up to 5% of its total assets in venture capital
investments, although no more than 0.5% of its total assets will be invested
in any one venture capital company. Venture capital investments are
investments in new and early stage companies whose securities are not
publicly traded. These investments may present significant opportunities for
capital appreciation but involve a high degree of risk that can result in
substantial losses. The Funds may not be able to sell such investments when
the investment personnel deem it appropriate to do so due to restrictions on
their sale. In addition, the Funds may be forced to sell their venture
capital investments at less than fair market value. Where venture capital
investments must be registered prior to their sale, the Funds may be
obligated to pay all or part of the registration expenses. Any of these
situations may result in a decrease in a Fund's NAV.
Securities Lending
Under procedures adopted by the Trustees, the Funds may lend securities to
qualified parties (typically brokers or other financial institutions) who
need to borrow securities in order to complete certain transactions such as
covering short sales, avoiding failures to deliver securities, or completing
arbitrage activities. The Funds may seek to earn additional income through
securities lending. There is the risk of delay in recovering a loaned
security or the risk of loss in collateral rights if the borrower fails
financially. In addition, Janus Capital makes efforts to balance the benefits
and risks from granting such loans. The Funds do not have the right to vote
on securities while they are being lent; however, the Funds may attempt to
call back the loan and vote the proxy if time permits. All loans will be
continuously secured by collateral which may consist of cash, U.S. Government
securities, domestic and foreign short-term debt instruments, letters of
credit, money market mutual funds or other money market accounts, or such
other collateral as permitted by the SEC. Cash collateral may be invested in
affiliated money market funds or other accounts advised by Janus Capital to
the extent consistent with exemptive relief obtained from the SEC. Cash
collateral may also be invested in unaffiliated money market funds or other
accounts.
Foreign Securities
Unless otherwise limited by its specific investment policies, each Fund may
invest without limit in foreign securities either indirectly (e.g.,
depositary receipts) or directly in foreign markets, including emerging
markets. Investments in foreign securities, including those of foreign
governments, may involve greater risks than investing in domestic securities
because a Fund's performance may
9
depend on factors other than the performance of a particular company. These
factors include:
CURRENCY RISK. As long as a Fund holds a foreign security, its value will be
affected by the value of the local currency relative to the U.S. dollar. When
a Fund sells a foreign denominated security, its value may be worth less in
U.S. dollars even if the security increases in value in its home country.
U.S. dollar-denominated securities of foreign issuers may also be affected by
currency risk due to the overall impact of exposure to the issuer's local
currency.
POLITICAL AND ECONOMIC RISK. Foreign investments may be subject to heightened
political and economic risks, particularly in emerging markets which may have
relatively unstable governments, immature economic structures, national
policies restricting investments by foreigners, different legal systems, and
economies based on only a few industries. In some countries, there is the
risk that the government may take over the assets or operations of a company
or that the government may impose taxes or limits on the removal of a Fund's
assets from that country.
REGULATORY RISK. There may be less government supervision of foreign markets.
As a result, foreign issuers may not be subject to the uniform accounting,
auditing, and financial reporting standards and practices applicable to
domestic issuers and there may be less publicly available information about
foreign issuers.
MARKET RISK. Foreign securities markets, particularly those of emerging
market countries, may be less liquid and more volatile than domestic markets.
Certain markets may require payment for securities before delivery and delays
may be encountered in settling securities transactions. In some foreign
markets, there may not be protection against failure by other parties to
complete transactions. Such factors may hinder a Fund's ability to buy and
sell emerging market securities in a timely manner, affecting the Fund's
investment strategies and potentially affecting the value of the Fund.
TRANSACTION COSTS. Costs of buying, selling, and holding foreign securities,
including brokerage, tax, and custody costs, may be higher than those
involved in domestic transactions.
EMERGING MARKETS. Within the parameters of their specific investment
policies, the Funds, particularly Janus Global Life Sciences Fund, Janus
Global Technology Fund, Janus Global Opportunities Fund, Janus Overseas Fund,
and Janus Worldwide Fund, may invest an unlimited amount of their assets in a
company or companies from one or more "developing countries" or "emerging
markets." Such countries include, but are not limited to, countries included
in
10
the Morgan Stanley Capital International ("MSCI") Emerging Markets Index(SM).
Janus Orion Fund, Janus Triton Fund, Janus Contrarian Fund, and Janus
Research Fund have at times invested a significant portion of their assets in
emerging markets and may continue to do so. Investing in emerging markets
involves certain risks not typically associated with investing in the United
States, and imposes risks greater than, or in addition to, risks of investing
in more developed foreign countries. In many developing markets, there is
less government supervision and regulation of business and industry
practices, stock exchanges, brokers, and listed companies than in more
developed markets. There is a risk in developing countries that a future
economic or political crisis could lead to price controls, forced mergers of
companies, expropriation or confiscatory taxation, seizure, nationalization,
or creation of government monopolies, any of which may have a detrimental
effect on a Fund's investments. Many emerging market countries have
experienced substantial, and in some periods extremely high, rates of
inflation or deflation for many years, and future inflation may adversely
affect the economies and securities markets of such countries. The securities
markets of many of the countries in which the Funds may invest may also be
smaller, less liquid, and subject to greater price volatility than those in
the United States. In the event of a default on any investments in foreign
debt obligations, it may be more difficult for the Funds to obtain or to
enforce a judgment against the issuers of such securities. In addition, there
may be little financial or accounting information available with respect to
issuers of emerging market securities, and it may be difficult as a result to
assess the value of an investment in such securities. The Funds may be
subject to emerging markets risk to the extent that they invest in companies
which are not considered to be from emerging markets, but which have
customers, products, or transactions associated with emerging markets. A
summary of each Fund's investments by country is contained in the Funds'
shareholder reports and the Funds' Form N-Q, which are filed with the SEC.
Short Sales
Each Fund may engage in "short sales against the box." This technique
involves selling either a security that a Fund owns, or a security equivalent
in kind and amount to the security sold short that the Fund has the right to
obtain, for delivery at a specified date in the future. A Fund may enter into
a short sale against the box to hedge against anticipated declines in the
market price of portfolio securities. If the value of the securities sold
short increases prior to the scheduled delivery date, a Fund loses the
opportunity to participate in the gain.
The Equity Funds may also engage in "naked" short sales (no more than 8% of a
Fund's assets may be invested in naked short sales). In a naked short sale
11
transaction, a Fund sells a security it does not own to a purchaser at a
specified price. To complete a naked short sale, a Fund must: (i) borrow the
security to deliver it to the purchaser and (ii) buy that same security in
the market to return it to the lender. A Fund may sell securities short only
on a fully collateralized basis, as permitted by SEC interpretations. At the
time of a short sale, a Fund will establish and maintain a segregated account
consisting of liquid assets equal in value to the purchase price due on the
settlement date under the short sale period. The value of the liquid assets
will be marked-to-market daily. A Fund will engage in naked short sales when
its investment personnel anticipate that the security's market purchase price
will be less than its borrowing price. Naked short sales involve the same
fundamental risk as short sales against the box, as described in the previous
paragraph. In addition, naked short sales carry risks of loss if the value of
a security sold short increases prior to the scheduled delivery date and a
Fund must pay more for the security than it has received from the purchaser
in the short sale. The total market value of all of a Fund's naked short sale
positions will not exceed 8% of its assets. If a naked short sale is not
successful, the Funds' losses are potentially unlimited in cases where the
Fund is unable to close out its short position.
Zero Coupon, Step Coupon, and Pay-In-Kind Securities
Within the parameters of its specific investment policies, each Fund may
invest up to 10% (without limit for Janus Flexible Bond Fund and Janus
High-Yield Fund) of its assets in zero coupon, pay-in-kind, and step coupon
securities. Zero coupon bonds are issued and traded at a discount from their
face value. They do not entitle the holder to any periodic payment of
interest prior to maturity. Step coupon bonds are high-quality issues with
above-market interest rates and a coupon that increases over the life of the
bond. They may pay monthly, semiannual, or annual interest payments. On the
date of each coupon payment, the issuer decides whether to call the bond at
par or whether to extend it until the next payment date at the new coupon
rate. Pay-in-kind bonds normally give the issuer an option to pay cash at a
coupon payment date or give the holder of the security a similar bond with
the same coupon rate and a face value equal to the amount of the coupon
payment that would have been made. For the purposes of any Fund's restriction
on investing in income-producing securities, income-producing securities
include securities that make periodic interest payments as well as those that
make interest payments on a deferred basis or pay interest only at maturity
(e.g., Treasury bills or zero coupon bonds).
Current federal income tax law requires holders of zero coupon securities and
step coupon securities to report the portion of the original issue discount
on such securities that accrues during a given year as interest income, even
though
12
the holders receive no cash payments of interest during the year. In order to
qualify as a "regulated investment company" under Subchapter M of the
Internal Revenue Code of 1986, as amended, and the regulations thereunder
(the "Code"), a Fund must distribute its investment company taxable income,
including the original issue discount accrued on zero coupon or step coupon
bonds. Because a Fund will not receive cash payments on a current basis with
respect to accrued original-issue discount on zero coupon bonds or step
coupon bonds during the period before interest payments begin, in some years
that Fund may have to distribute cash obtained from other sources in order to
satisfy the distribution requirements under the Code. A Fund might obtain
such cash from selling other portfolio holdings which might cause that Fund
to incur capital gains or losses on the sale. Additionally, these actions are
likely to reduce the assets to which Fund expenses could be allocated and to
reduce the rate of return for that Fund. In some circumstances, such sales
might be necessary in order to satisfy cash distribution requirements even
though investment considerations might otherwise make it undesirable for a
Fund to sell the securities at the time.
Generally, the market prices of zero coupon, step coupon, and pay-in-kind
securities are more volatile than the prices of securities that pay interest
periodically and in cash and are likely to respond to changes in interest
rates to a greater degree than other types of debt securities having similar
maturities and credit quality.
Pass-Through Securities
The Funds may invest in various types of pass-through securities, such as
mortgage-backed securities, asset-backed securities, credit-linked trust
certificates, traded custody receipts, and participation interests. A
pass-through security is a share or certificate of interest in a pool of debt
obligations that have been repackaged by an intermediary, such as a bank or
broker-dealer. The purchaser of a pass-through security receives an undivided
interest in the underlying pool of securities. The issuers of the underlying
securities make interest and principal payments to the intermediary which are
passed through to purchasers, such as the Funds. The most common type of
pass-through securities are mortgage-backed securities. Ginnie Mae
Certificates are mortgage-backed securities that evidence an undivided
interest in a pool of mortgage loans. Ginnie Mae Certificates differ from
bonds in that principal is paid back monthly by the borrowers over the term
of the loan rather than returned in a lump sum at maturity. A Fund will
generally purchase "modified pass-through" Ginnie Mae Certificates, which
entitle the holder to receive a share of all interest and principal payments
paid and owned on the mortgage pool, net of fees paid to
13
the "issuer" and Ginnie Mae, regardless of whether or not the mortgagor
actually makes the payment. Ginnie Mae Certificates are backed as to the
timely payment of principal and interest by the full faith and credit of the
U.S. Government.
Freddie Mac issues two types of mortgage pass-through securities: mortgage
participation certificates ("PCs") and guaranteed mortgage certificates
("GMCs"). PCs resemble Ginnie Mae Certificates in that each PC represents a
pro rata share of all interest and principal payments made and owned on the
underlying pool. Freddie Mac guarantees timely payments of interest on PCs
and the full return of principal. GMCs also represent a pro rata interest in
a pool of mortgages. However, these instruments pay interest semiannually and
return principal once a year in guaranteed minimum payments. This type of
security is guaranteed by Freddie Mac as to timely payment of principal and
interest but it is not guaranteed by the full faith and credit of the U.S.
Government.
Fannie Mae issues guaranteed mortgage pass-through certificates ("Fannie Mae
Certificates"). Fannie Mae Certificates resemble Ginnie Mae Certificates in
that each Fannie Mae Certificate represents a pro rata share of all interest
and principal payments made and owned on the underlying pool. This type of
security is guaranteed by Fannie Mae as to timely payment of principal and
interest but it is not guaranteed by the full faith and credit of the U.S.
Government.
Except for GMCs, each of the mortgage-backed securities described above is
characterized by monthly payments to the holder, reflecting the monthly
payments made by the borrowers who received the underlying mortgage loans.
The payments to the security holders (such as the Funds), like the payments
on the underlying loans, represent both principal and interest. Although the
underlying mortgage loans are for specified periods of time, such as 20 or 30
years, the borrowers can, and typically do, pay them off sooner. Thus, the
security holders frequently receive prepayments of principal in addition to
the principal that is part of the regular monthly payments. The investment
personnel will consider estimated prepayment rates in calculating the
average-weighted maturity of a Fund. A borrower is more likely to prepay a
mortgage that bears a relatively high rate of interest. This means that in
times of declining interest rates, higher yielding mortgage-backed securities
held by a Fund might be converted to cash and that Fund will be forced to
accept lower interest rates when that cash is used to purchase additional
securities in the mortgage-backed securities sector or in other investment
sectors. Additionally, prepayments during such periods will limit a Fund's
ability to participate in as large a market gain as may be experienced with a
comparable security not subject to prepayment.
14
Asset-backed securities represent interests in pools of consumer loans and
are backed by paper or accounts receivables originated by banks, credit card
companies, or other providers of credit. Generally, the originating bank or
credit provider is neither the obligor nor the guarantor of the security, and
interest and principal payments ultimately depend upon payment of the
underlying loans by individuals. Tax-exempt asset-backed securities include
units of beneficial interests in pools of purchase contracts, financing
leases, and sales agreements that may be created when a municipality enters
into an installment purchase contract or lease with a vendor. Such securities
may be secured by the assets purchased or leased by the municipality;
however, if the municipality stops making payments, there generally will be
no recourse against the vendor. The market for tax-exempt, asset-backed
securities is still relatively new. These obligations are likely to involve
unscheduled prepayments of principal.
The Funds also may invest in pass-through securities, which are interests
evidencing direct ownership of a pool of debt securities. Holders of the
interests are entitled to receive distributions of interest, principal, and
other payments on each of the underlying debt securities (less expenses), and
in some cases distributions of the underlying debt securities. The underlying
debt securities have a specified maturity but are subject to prepayment risk
because if an issuer prepays the principal, a Fund may have additional cash
to invest at a time when prevailing interest rates have declined and
reinvestment of such additional funds is made at a lower rate. The value of
the underlying debt securities may change due to changes in market interest
rates. If interest rates rise, the value of the underlying debt securities,
and therefore the value of the pass-through security, may decline. If the
underlying debt securities are high-yield securities, the risks associated
with high-yield/high-risk securities discussed in this SAI and in the Funds'
Prospectuses may apply.
Investment Company Securities
From time to time, the Funds may invest in securities of other investment
companies, subject to the provisions of Section 12(d)(1) of the 1940 Act and
any applicable SEC exemptive orders. Section 12(d)(1) prohibits a Fund from
acquiring: (i) more than 3% of another investment company's voting stock;
(ii) securities of another investment company with a value in excess of 5% of
a Fund's total assets; or (iii) securities of such other investment company
and all other investment companies owned by a Fund having a value in excess
of 10% of the Fund's total assets. In addition, Section 12(d)(1) prohibits
another investment company from selling its shares to a Fund if, after the
sale: (i) the Fund owns more than 3% of the other investment company's voting
stock or (ii) the Fund and other investment companies, and companies
controlled by
15
them, own more than 10% of the voting stock of such other investment company.
If a Fund is an approved underlying fund in a Janus fund of funds, the Fund
may not acquire the securities of other investment companies or registered
unit investment trusts in excess of the limits of Section 12(d)(1) of the
1940 Act in reliance on subparagraph (F) or subparagraph (G) of Section
12(d)(1). The Funds may invest in securities of money market funds managed by
Janus Capital in excess of the limitations of Section 12(d)(1) under the
terms of an SEC exemptive order obtained by Janus Capital and the Janus
funds. Cash collateral may also be invested in unaffiliated money market
funds or other accounts in excess of limitations of Section 12(d)(1), subject
to an appropriate SEC exemptive order.
Investment companies may include index-based investments such as exchange-
traded funds ("ETFs"), which hold substantially all of their assets in
securities representing their specific index. Accordingly, the main risk of
investing in index-based investments is the same as investing in a portfolio
of equity securities comprising the index. As a shareholder of another
investment company, a Fund would bear its pro rata portion of the other
investment company's expenses, including advisory fees, in addition to the
expenses the Fund bears directly in connection with its own operation. The
market prices of index-based investments will fluctuate in accordance with
both changes in the market value of their underlying portfolio securities and
due to supply and demand for the instruments on the exchanges on which they
are traded (which may result in their trading at a discount or premium to
their NAVs). Index-based investments may not replicate exactly the
performance of their specific index because of transaction costs and because
of the temporary unavailability of certain component securities of the index.
Depositary Receipts
The Funds may invest in sponsored and unsponsored American Depositary
Receipts ("ADRs"), which are receipts issued by an American bank or trust
company evidencing ownership of underlying securities issued by a foreign
issuer. ADRs, in registered form, are designed for use in U.S. securities
markets. Unsponsored ADRs may be created without the participation of the
foreign issuer. Holders of these ADRs generally bear all the costs of the ADR
facility, whereas foreign issuers typically bear certain costs in a sponsored
ADR. The bank or trust company depositary of an unsponsored ADR may be under
no obligation to distribute shareholder communications received from the
foreign issuer or to pass through voting rights. The Funds may also invest in
European Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs"),
and in other similar instruments representing securities of foreign
companies. EDRs and GDRs
16
are securities that are typically issued by foreign banks or foreign trust
companies, although U.S. banks or U.S. trust companies may issue them. EDRs
and GDRs are structured similarly to the arrangements of ADRs. EDRs, in
bearer form, are designed for use in European securities markets.
Depositary Receipts are generally subject to the same sort of risks as direct
investments in a foreign country, such as currency risk, political and
economic risk, and market risk, because their values depend on the
performance of a foreign security denominated in its home currency. The risks
of foreign investing are addressed in some detail in the Funds' Prospectuses.
U.S. Government Securities
To the extent permitted by its investment objective and policies, each Fund,
particularly Janus Balanced Fund, Janus Flexible Bond Fund, and Janus Short-
Term Bond Fund, may invest in U.S. Government securities. The 1940 Act
defines U.S. Government securities to include securities issued or guaranteed
by the U.S. Government, its agencies, and instrumentalities. U.S. Government
securities may also include repurchase agreements collateralized by and
municipal securities escrowed with or refunded with U.S. Government
securities. U.S. Government securities in which a Fund may invest include
U.S. Treasury securities and obligations issued or guaranteed by U.S.
Government agencies and instrumentalities that are backed by the full faith
and credit of the U.S. Government, such as those issued or guaranteed by the
Small Business Administration, Maritime Administration, Export-Import Bank of
the United States, Farmers Home Administration, Federal Housing
Administration, and Ginnie Mae. In addition, U.S. Government securities in
which a Fund may invest include securities backed only by the rights of the
issuers to borrow from the U.S. Treasury, such as those issued by the Federal
Farm Credit Bank, Federal Intermediate Credit Banks, Tennessee Valley
Authority, and Freddie Mac. Securities issued by Fannie Mae, the Federal Home
Loan Banks, and the Student Loan Marketing Association ("Sallie Mae") are
supported by the discretionary authority of the U.S. Government to purchase
the obligations. There is no guarantee that the U.S. Government will support
securities not backed by its full faith and credit. Accordingly, although
these securities have historically involved little risk of loss of principal
if held to maturity, they may involve more risk than securities backed by the
full faith and credit of the U.S. Government because the Funds must look
principally to the agency or instrumentality issuing or guaranteeing the
securities for repayment and may not be able to assert a claim against the
United States if the agency or instrumentality does not meet its commitment.
17
Municipal Obligations
The Funds may invest in municipal obligations issued by states, territories,
and possessions of the United States and the District of Columbia. Janus
Federal Tax-Exempt Fund may, at times, invest more than 25% of the value of
its assets in industrial development bonds, a type of revenue bond which,
although issued by a public authority, may be backed only by the credit and
security of a private issuer, thus presenting a greater credit risk.
The value of municipal obligations can be affected by changes in their actual
or perceived credit quality. The credit quality of municipal obligations can
be affected by, among other things, the financial condition of the issuer or
guarantor, the issuer's future borrowing plans and sources of revenue, the
economic feasibility of the revenue bond project or general borrowing
purpose, political or economic developments in the region where the security
is issued, and the liquidity of the security. Because municipal securities
are generally traded over-the-counter, the liquidity of a particular issue
often depends on the willingness of dealers to make a market in the security.
The liquidity of some municipal obligations may be enhanced by demand
features, which would enable a Fund to demand payment on short notice from
the issuer or a financial intermediary.
Other Income-Producing Securities
Other types of income-producing securities that the Funds may purchase
include, but are not limited to, the following types of securities:
VARIABLE AND FLOATING RATE OBLIGATIONS. These types of securities have
variable or floating rates of interest and, under certain limited
circumstances, may have varying principal amounts. Variable and floating rate
securities pay interest at rates that are adjusted periodically according to
a specified formula, usually with reference to some interest rate index or
market interest rate (the "underlying index"). The floating rate tends to
decrease the security's price sensitivity to changes in interest rates. These
types of securities are relatively long-term instruments that often carry
demand features permitting the holder to demand payment of principal at any
time or at specified intervals prior to maturity.
In order to most effectively use these investments, the investment personnel
must correctly assess probable movements in interest rates. This involves
different skills than those used to select most portfolio securities. If the
investment personnel incorrectly forecast such movements, a Fund could be
adversely affected by the use of variable or floating rate obligations.
18
STANDBY COMMITMENTS. These instruments, which are similar to a put, give a
Fund the option to obligate a broker-dealer or bank to repurchase a security
held by that Fund at a specified price.
TENDER OPTION BONDS. Tender option bonds are relatively long-term bonds that
are coupled with the option to tender the securities to a bank,
broker-dealer, or other financial institution at periodic intervals and
receive the face value of the bond. This investment structure is commonly
used as a means of enhancing a security's liquidity.
INVERSE FLOATERS. Inverse floaters are debt instruments whose interest bears
an inverse relationship to the interest rate on another security. No Fund
will invest more than 5% of its assets in inverse floaters. Similar to
variable and floating rate obligations, effective use of inverse floaters
requires skills different from those needed to select most portfolio
securities. If movements in interest rates are incorrectly anticipated, a
Fund could lose money or its NAV could decline by the use of inverse
floaters.
STRIP BONDS. Strip bonds are debt securities that are stripped of their
interest (usually by a financial intermediary) after the securities are
issued. The market value of these securities generally fluctuates more in
response to changes in interest rates than interest-paying securities of
comparable maturity.
The Funds will purchase standby commitments, tender option bonds, and
instruments with demand features primarily for the purpose of increasing the
liquidity of their portfolio holdings.
Repurchase and Reverse Repurchase Agreements
In a repurchase agreement, a Fund purchases a security and simultaneously
commits to resell that security to the seller at an agreed upon price on an
agreed upon date within a number of days (usually not more than seven) from
the date of purchase. The resale price consists of the purchase price plus an
agreed upon incremental amount that is unrelated to the coupon rate or
maturity of the purchased security. A repurchase agreement involves the
obligation of the seller to pay the agreed upon price, which obligation is in
effect secured by the value (at least equal to the amount of the agreed upon
resale price and marked-to-market daily) of the underlying security or
"collateral." A risk associated with repurchase agreements is the failure of
the seller to repurchase the securities as agreed, which may cause a Fund to
suffer a loss if the market value of such securities declines before they can
be liquidated on the open market. In the event of bankruptcy or insolvency of
the seller, a Fund may encounter delays and incur costs in liquidating the
underlying security. Repurchase agreements that mature in more than seven
days are subject to the 15% limit on illiquid
19
investments. While it is not possible to eliminate all risks from these
transactions, it is the policy of the Funds to limit repurchase agreements to
those parties whose creditworthiness has been reviewed and found satisfactory
by Janus Capital.
A Fund may use reverse repurchase agreements to obtain cash to satisfy
unusually heavy redemption requests or for other temporary or emergency
purposes without the necessity of selling portfolio securities, or to earn
additional income on portfolio securities, such as Treasury bills or notes.
In a reverse repurchase agreement, a Fund sells a portfolio security to
another party, such as a bank or broker-dealer, in return for cash and agrees
to repurchase the instrument at a particular price and time. While a reverse
repurchase agreement is outstanding, a Fund will maintain cash and
appropriate liquid assets in a segregated custodial account to cover its
obligation under the agreement. A Fund will enter into reverse repurchase
agreements only with parties that Janus Capital deems creditworthy. Using
reverse repurchase agreements to earn additional income involves the risk
that the interest earned on the invested proceeds is less than the expense of
the reverse repurchase agreement transaction. This technique may also have a
leveraging effect on a Fund's portfolio, although the Fund's intent to
segregate assets in the amount of the reverse repurchase agreement minimizes
this effect.
Mortgage Dollar Rolls
The Bond Funds also may enter into "mortgage dollar rolls," which are similar
to reverse repurchase agreements in certain respects. In a "mortgage dollar
roll" transaction, a Fund sells a mortgage-related security (such as a GNMA
security) to a dealer and simultaneously agrees to repurchase a similar
security (but not the same security) in the future at a pre-determined price.
A "dollar roll" can be viewed, like a reverse repurchase agreement, as a
collateralized borrowing in which a Fund pledges a mortgage-related security
to a dealer to obtain cash. Unlike in the case of reverse repurchase
agreements, the dealer with which a Fund enters into a dollar roll
transaction is not obligated to return the same securities as those
originally sold by the Fund, but only securities which are "substantially
identical." To be considered "substantially identical," the securities
returned to a Fund generally must: (i) be collateralized by the same types of
underlying mortgages; (ii) be issued by the same agency and be part of the
same program; (iii) have a similar original stated maturity; (iv) have
identical net coupon rates; (v) have similar market yields (and, therefore,
price); and (vi) satisfy "good delivery" requirements, meaning that the
aggregate principal amounts of the securities delivered and received back
must be within 2.5% of the initial amount delivered.
20
A Fund's obligations under a dollar roll agreement must be covered by cash,
U.S. Government securities, or other liquid high grade debt obligations equal
in value to the securities subject to repurchase by a Fund, maintained in a
segregated account. To the extent that the Fund collateralizes its
obligations under a dollar roll agreement, the asset coverage requirements of
the 1940 Act will not apply to such transactions. Furthermore, under certain
circumstances, an underlying mortgage-backed security that is part of a
dollar roll transaction may be considered illiquid. During the roll period, a
Fund foregoes principal and interest paid on the mortgage-backed security. A
Fund is compensated by the difference between the current sales price and the
lower forward price purchase price, often referred to as the "drop," as well
as the interest earned on the cash proceeds of the initial sales.
Successful use of mortgage dollar rolls depends on a Fund's ability to
predict interest rates and mortgage payments. Dollar roll transactions
involve the risk that the market value of the securities a Fund is required
to purchase may decline below the agreed upon repurchase price.
Bank Loans
Janus Balanced Fund and the Bond Funds may invest in bank loans (no more than
5% of a Fund's total assets), which include institutionally traded floating
rate securities generally acquired as an assignment or participation interest
in loans originated by a lender or financial institution. Assignments and
participations involve credit risk and liquidity risk. Interest rates on
floating rate securities adjust with general interest rate changes and/or
issuer credit quality. The interest rates paid on a floating rate security in
which a Fund invests generally are readjusted every 45-60 days, on average,
to an increment over a designated benchmark rate, such as the one-month,
three-month, six-month, or one-year London Interbank Offered Rate ("LIBOR").
When a Fund purchases an assignment, it typically acquires direct rights
against the borrower in the loan. However, the rights and obligations
acquired by a Fund as the purchaser of an assignment may differ from, and be
more limited than, those held by the assigning lender. A Fund may be required
generally to rely upon the assigning bank to demand payment and enforce its
rights against the borrower, but may otherwise be entitled to all of such
bank's rights in the loan. Additional risks are involved in purchasing
assignments. For example, if a loan is foreclosed, a Fund may become part
owner of any collateral securing the loan, and may bear the costs and
liabilities associated with owning and disposing of any collateral. Legal
theories of lender liability could conceivably be applied against a Fund. In
addition, there is no assurance that the liquidation of any
21
collateral from a secured loan would satisfy a borrower's obligations or that
any collateral could be liquidated.
When a Fund purchases a participation interest, it typically will have a
contractual relationship with the lender and not with the borrower. As a
result, a Fund may have the right to receive payments of principal, interest,
and any fees to which it is entitled only from the lender and only upon
receipt by the lender of the payments from the borrower. A Fund generally
will have no right to enforce compliance by the borrower with the terms of
the underlying loan agreement, nor any rights with respect to set-off against
the borrower and the Fund may not directly benefit from any collateral
supporting the underlying loan. As a result, a Fund may assume the credit
risk of both the borrower and the lender. The failure by a Fund to receive
scheduled interest or principal payments may adversely affect the income of
the Fund and may likely reduce the value of its assets, which would be
reflected in a reduction in the Fund's NAV.
The borrower of a loan in which a Fund holds a participation interest may,
either at its own election or pursuant to the terms of the loan
documentation, prepay amounts of the loan from time to time. There is no
assurance that a Fund will be able to reinvest the proceeds of any loan
prepayment at the same interest rate or on the same terms as those of the
original loan participation.
A Fund may have difficulty trading assignments and participations to third
parties. There may be restrictions on transfer and only limited opportunities
may exist to sell such securities in secondary markets. As a result, a Fund
may be unable to sell assignments or participations at the desired time or
only at a price less than fair market value.
Notwithstanding its intention generally not to receive material, nonpublic
information with respect to its management of investments in floating rate
loans, Janus Capital may from time to time come into possession of material,
nonpublic information about the issuers of loans that may be held in a Fund's
holdings. Possession of such information may in some instances occur despite
Janus Capital's efforts to avoid such possession, but in other instances
Janus Capital may choose to receive such information (for example, in
connection with participation in a creditor's committee with respect to a
financially distressed issuer). As, and to the extent, required by applicable
law, Janus Capital's ability to trade in these loans for the account of a
Fund could potentially be limited by its possession of such information. Such
limitations on Janus Capital's ability to trade could have an adverse effect
on a Fund by, for example, preventing the Fund from selling a loan that is
experiencing a material decline in value. In
22
some instances, these trading restrictions could continue in effect for a
substantial period of time.
High-Yield/High-Risk Bonds
Janus High-Yield Fund may invest without limit in bonds that are rated below
investment grade (i.e., bonds rated BB+ or lower by Standard & Poor's Ratings
Service and Fitch, Inc., or Ba or lower by Moody's Investors Service, Inc.).
Within the parameters of its specific investment policies, no other Fund
intends to invest more than 35% of its net assets in such bonds, and Janus
Contrarian Fund, Janus Core Equity Fund, Janus Mid Cap Value Fund, and Janus
Small Cap Value Fund will, under normal circumstances, limit their
investments in such bonds to 20% or less of their net assets. INTECH
Risk-Managed Stock Fund does not intend to invest in high-yield/high-risk
bonds. Lower rated bonds involve a higher degree of credit risk, which is the
risk that the issuer will not make interest or principal payments when due.
In the event of an unanticipated default, a Fund would experience a reduction
in its income, and could expect a decline in the market value of the bonds so
affected.
Any Fund may also invest in unrated bonds of foreign and domestic issuers.
For the Funds subject to such limit, unrated bonds will be included in each
Fund's limit on investments in bonds rated below investment grade unless its
investment personnel deem such securities to be the equivalent of investment
grade bonds. Unrated bonds, while not necessarily of lower quality than rated
bonds, may not have as broad a market. Because of the size and perceived
demand of the issue, among other factors, certain municipalities may not
incur the costs of obtaining a rating. A Fund's investment personnel will
analyze the creditworthiness of the issuer, as well as any financial
institution or other party responsible for payments on the bond, in
determining whether to purchase unrated municipal bonds.
The secondary market on which high-yield securities are traded may be less
liquid than the market for investment grade securities. The lack of a liquid
secondary market may have an adverse impact on the market price of the
security. When secondary markets for high-yield securities are less liquid
than the market for investment grade securities, it also may be more
difficult to value the securities because valuation may require more
research, and elements of judgment may play a larger role in the valuation
because there is less reliable, objective data available.
Please refer to the "Explanation of Rating Categories" section of this SAI
for a description of bond rating categories.
23
Defaulted Securities
A Fund may hold defaulted securities if its investment personnel believe,
based upon their analysis of the financial condition, results of operations
and economic outlook of an issuer, that there is potential for resumption of
income payments and that the securities offer an unusual opportunity for
capital appreciation. For the Funds subject to such limit, defaulted
securities will be included in each Fund's limit on investments in bonds
rated below investment grade. Notwithstanding the investment personnel's
belief about the resumption of income, however, the purchase of any security
on which payment of interest or dividends is suspended involves a high degree
of risk. Such risk includes, among other things, the following:
FINANCIAL AND MARKET RISKS. Investments in securities that are in default
involve a high degree of financial and market risks that can result in
substantial or, at times, even total losses. Issuers of defaulted securities
may have substantial capital needs and may become involved in bankruptcy or
reorganization proceedings. Among the problems involved in investments in
such issuers is the fact that it may be difficult to obtain information about
the condition of such issuers. The market prices of such securities also are
subject to abrupt and erratic movements and above average price volatility,
and the spread between the bid and asked prices of such securities may be
greater than normally expected.
DISPOSITION OF PORTFOLIO SECURITIES. Although these Funds generally will
purchase securities for which their investment personnel expect an active
market to be maintained, defaulted securities may be less actively traded
than other securities and it may be difficult to dispose of substantial
holdings of such securities at prevailing market prices. The Funds will limit
holdings of any such securities to amounts that the investment personnel
believe could be readily sold, and holdings of such securities would, in any
event, be limited so as not to limit the Funds' ability to readily dispose of
securities to meet redemptions.
OTHER. Defaulted securities require active monitoring and may, at times,
require participation in bankruptcy or receivership proceedings on behalf of
the Funds.
Futures, Options, and Other Derivative Instruments
FUTURES CONTRACTS. The Funds may enter into contracts for the purchase or
sale for future delivery of equity securities, fixed-income securities,
foreign currencies, or contracts based on financial indices, including
indices of U.S. Government securities, foreign government securities, equity
or fixed-income securities. U.S. futures contracts are traded on exchanges
which have been designated "contract markets" by the Commodity Futures
Trading Commission ("CFTC") and must be executed through a futures commission
merchant ("FCM"), or brokerage firm,
24
which is a member of the relevant contract market. Through their clearing
corporations, the exchanges guarantee performance of the contracts as between
the clearing members of the exchange.
The buyer or seller of a futures contract is not required to deliver or pay
for the underlying instrument unless the contract is held until the delivery
date. However, both the buyer and seller are required to deposit "initial
margin" for the benefit of the FCM when the contract is entered into. Initial
margin deposits are equal to a percentage of the contract's value, as set by
the exchange on which the contract is traded, and currently may be maintained
in cash or certain other liquid assets by the Funds' custodian or
subcustodian for the benefit of the FCM. Initial margin payments are similar
to good faith deposits or performance bonds. Unlike margin extended by a
securities broker, initial margin payments do not constitute purchasing
securities on margin for purposes of a Fund's investment limitations. If the
value of either party's position declines, that party will be required to
make additional "variation margin" payments for the benefit of the FCM to
settle the change in value on a daily basis. The party that has a gain may be
entitled to receive all or a portion of this amount. In the event of the
bankruptcy of the FCM that holds margin on behalf of a Fund, that Fund may be
entitled to return of margin owed to such Fund only in proportion to the
amount received by the FCM's other customers. Janus Capital or the subadviser
will attempt to minimize the risk by careful monitoring of the
creditworthiness of the FCMs with which the Funds do business and by
depositing margin payments in a segregated account with the Funds' custodian
or with the FCM. Effective February 13, 2006, the FCM may no longer maintain
margin assets with the Funds' custodian or subcustodian and may be required
to hold such accounts directly with the FCM prior to the above referenced
effective date.
The Funds may enter into futures contracts and related options as permitted
under CFTC Rule 4.5. The Funds have claimed exclusion from the definition of
the term "commodity pool operator" adopted by the CFTC and the National
Futures Association, which regulate trading in the futures markets.
Therefore, the Funds are not subject to commodity pool operator registration
and regulation under the Commodity Exchange Act.
Although a Fund will segregate cash and liquid assets in an amount sufficient
to cover its open futures obligations, the segregated assets would be
available to that Fund immediately upon closing out the futures position;
however, closing out open futures positions through customary settlement
procedures could take several days. Because a Fund's cash that may otherwise
be invested would be held uninvested or invested in other liquid assets so
long as the futures position
25
remains open, such Fund's return could be diminished due to the opportunity
losses of foregoing other potential investments.
The Funds may enter into futures contracts to gain exposure to the stock
market pending investment of cash balances or to meet liquidity needs. A Fund
may also enter into futures contracts to protect that Fund from fluctuations
in the value of individual securities or the securities markets generally, or
interest rates without actually buying or selling the underlying debt or
equity security. For example, if the Fund anticipates an increase in the
price of stocks, and it intends to purchase stocks at a later time, that Fund
could enter into a futures contract to purchase a stock index as a temporary
substitute for stock purchases. If an increase in the market occurs that
influences the stock index as anticipated, the value of the futures contracts
will increase, thereby serving as a hedge against that Fund not participating
in a market advance. This technique is sometimes known as an anticipatory
hedge. A Fund may also use this technique with respect to an individual
company's stock. To the extent a Fund enters into futures contracts for this
purpose, the segregated assets maintained to cover such Fund's obligations
with respect to the futures contracts will consist of liquid assets from its
portfolio in an amount equal to the difference between the contract price and
the aggregate value of the initial and variation margin payments made by that
Fund with respect to the futures contracts. Conversely, if a Fund holds
stocks and seeks to protect itself from a decrease in stock prices, the Fund
might sell stock index futures contracts, thereby hoping to offset the
potential decline in the value of its portfolio securities by a corresponding
increase in the value of the futures contract position. Similarly, if a Fund
holds an individual company's stock and expects the price of that stock to
decline, the Fund may sell a futures contract on that stock in hopes of
offsetting the potential decline in the company's stock price. A Fund could
protect against a decline in stock prices by selling portfolio securities and
investing in money market instruments, but the use of futures contracts
enables it to maintain a defensive position without having to sell portfolio
securities.
If a Fund owns bonds and the investment personnel expect interest rates to
increase, that Fund may take a short position in interest rate futures
contracts. Taking such a position would have much the same effect as that
Fund selling bonds in its portfolio. If interest rates increase as
anticipated, the value of the bonds would decline, but the value of that
Fund's interest rate futures contract will increase, thereby keeping the NAV
of that Fund from declining as much as it may have otherwise. If, on the
other hand, the investment personnel expect interest rates to decline, that
Fund may take a long position in interest rate futures contracts in
anticipation of later closing out the futures position and purchasing the
bonds. Although a Fund can accomplish similar results by buying
26
securities with long maturities and selling securities with short maturities,
given the greater liquidity of the futures market than the cash market, it
may be possible to accomplish the same result more easily and more quickly by
using futures contracts as an investment tool to reduce risk.
The ordinary spreads between prices in the cash and futures markets, due to
differences in the nature of those markets, are subject to distortions.
First, all participants in the futures market are subject to initial margin
and variation margin requirements. Rather than meeting additional variation
margin requirements, investors may close out futures contracts through
offsetting transactions which could distort the normal price relationship
between the cash and futures markets. Second, the liquidity of the futures
market depends on participants entering into offsetting transactions rather
than making or taking delivery of the instrument underlying a futures
contract. To the extent participants decide to make or take delivery,
liquidity in the futures market could be reduced and prices in the futures
market distorted. Third, from the point of view of speculators, the margin
deposit requirements in the futures market are less onerous than margin
requirements in the securities market. Therefore, increased participation by
speculators in the futures market may cause temporary price distortions. Due
to the possibility of the foregoing distortions, a correct forecast of
general price trends by the investment personnel still may not result in a
successful use of futures.
Futures contracts entail risks. There is no guarantee that derivative
investments will benefit the Funds. A Fund's performance could be worse than
if the Fund had not used such instruments. For example, if a Fund has hedged
against the effects of a possible decrease in prices of securities held in
its portfolio and prices increase instead, that Fund will lose part or all of
the benefit of the increased value of these securities because of offsetting
losses in its futures positions. This risk may be magnified for single stock
futures transactions, as the Fund's investment personnel must predict the
direction of the price of an individual stock, as opposed to securities
prices generally. In addition, if a Fund has insufficient cash, it may have
to sell securities from its portfolio to meet daily variation margin
requirements. Those sales may be, but will not necessarily be, at increased
prices which reflect the rising market and may occur at a time when the sales
are disadvantageous to such Fund.
The prices of futures contracts depend primarily on the value of their
underlying instruments. Because there are a limited number of types of
futures contracts, it is possible that the standardized futures contracts
available to a Fund will not match exactly such Fund's current or potential
investments. A Fund may buy and sell futures contracts based on underlying
instruments with different
27
characteristics from the securities in which it typically invests - for
example, by hedging investments in portfolio securities with a futures
contract based on a broad index of securities - which involves a risk that
the futures position will not correlate precisely with the performance of
such Fund's investments.
Futures prices can also diverge from the prices of their underlying
instruments, even if the underlying instruments closely correlate with a
Fund's investments, such as with a single stock futures contract. Futures
prices are affected by factors such as current and anticipated short-term
interest rates, changes in volatility of the underlying instruments, and the
time remaining until expiration of the contract. Those factors may affect
securities prices differently from futures prices. Imperfect correlations
between a Fund's investments and its futures positions also may result from
differing levels of demand in the futures markets and the securities markets,
from structural differences in how futures and securities are traded, and
from imposition of daily price fluctuation limits for futures contracts. A
Fund may buy or sell futures contracts with a greater or lesser value than
the securities it wishes to hedge or is considering purchasing in order to
attempt to compensate for differences in historical volatility between the
futures contract and the securities, although this may not be successful in
all cases. If price changes in a Fund's futures positions are poorly
correlated with its other investments, its futures positions may fail to
produce desired gains or result in losses that are not offset by the gains in
that Fund's other investments.
Because futures contracts are generally settled within a day from the date
they are closed out, compared with a settlement period of three days for some
types of securities, the futures markets can provide superior liquidity to
the securities markets. Nevertheless, there is no assurance that a liquid
secondary market will exist for any particular futures contract at any
particular time. In addition, futures exchanges may establish daily price
fluctuation limits for futures contracts and may halt trading if a contract's
price moves upward or downward more than the limit in a given day. On
volatile trading days when the price fluctuation limit is reached, it may be
impossible for a Fund to enter into new positions or close out existing
positions. If the secondary market for a futures contract is not liquid
because of price fluctuation limits or otherwise, a Fund may not be able to
promptly liquidate unfavorable futures positions and potentially could be
required to continue to hold a futures position until the delivery date,
regardless of changes in its value. As a result, such Fund's access to other
assets held to cover its futures positions also could be impaired.
28
OPTIONS ON FUTURES CONTRACTS. The Funds may buy and write put and call
options on futures contracts. An option on a future gives a Fund the right
(but not the obligation) to buy or sell a futures contract at a specified
price on or before a specified date. The purchase of a call option on a
futures contract is similar in some respects to the purchase of a call option
on an individual security. As with other option transactions, securities will
be segregated to cover applicable margin or segregation requirements on open
futures contracts. Depending on the pricing of the option compared to either
the price of the futures contract upon which it is based or the price of the
underlying instrument, ownership of the option may or may not be less risky
than ownership of the futures contract or the underlying instrument. As with
the purchase of futures contracts, when a Fund is not fully invested it may
buy a call option on a futures contract to hedge against a market advance.
The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the security or foreign currency which is
deliverable under, or of the index comprising, the futures contract. If the
futures price at the expiration of the option is below the exercise price, a
Fund will retain the full amount of the option premium which provides a
partial hedge against any decline that may have occurred in that Fund's
portfolio holdings. The writing of a put option on a futures contract
constitutes a partial hedge against increasing prices of the security or
foreign currency which is deliverable under, or of the index comprising, the
futures contract. If the futures price at expiration of the option is higher
than the exercise price, a Fund will retain the full amount of the option
premium which provides a partial hedge against any increase in the price of
securities which that Fund is considering buying. If a call or put option a
Fund has written is exercised, such Fund will incur a loss which will be
reduced by the amount of the premium it received. Depending on the degree of
correlation between the change in the value of its portfolio securities and
changes in the value of the futures positions, a Fund's losses from existing
options on futures may to some extent be reduced or increased by changes in
the value of portfolio securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities.
For example, a Fund may buy a put option on a futures contract to hedge its
portfolio against the risk of falling prices or rising interest rates.
The amount of risk a Fund assumes when it buys an option on a futures
contract is the premium paid for the option plus related transaction costs.
In addition to the correlation risks discussed above, the purchase of an
option also
29
entails the risk that changes in the value of the underlying futures contract
will not be fully reflected in the value of the options bought.
FORWARD CONTRACTS. A forward contract is an agreement between two parties in
which one party is obligated to deliver a stated amount of a stated asset at
a specified time in the future and the other party is obligated to pay a
specified amount for the assets at the time of delivery. The Funds may enter
into forward contracts to purchase and sell government securities, equity or
income securities, foreign currencies, or other financial instruments.
Currently, the Funds do not intend to invest in forward contracts other than
forward currency contracts. Forward contracts generally are traded in an
interbank market conducted directly between traders (usually large commercial
banks) and their customers. Unlike futures contracts, which are standardized
contracts, forward contracts can be specifically drawn to meet the needs of
the parties that enter into them. The parties to a forward contract may agree
to offset or terminate the contract before its maturity, or may hold the
contract to maturity and complete the contemplated exchange.
The following discussion summarizes the Funds' principal uses of forward
foreign currency exchange contracts ("forward currency contracts"). A Fund
may enter into forward currency contracts with stated contract values of up
to the value of that Fund's assets. A forward currency contract is an
obligation to buy or sell an amount of a specified currency for an agreed
price (which may be in U.S. dollars or a foreign currency). A Fund may invest
for nonhedging purposes such as seeking to enhance return. A Fund will
exchange foreign currencies for U.S. dollars and for other foreign currencies
in the normal course of business and may buy and sell currencies through
forward currency contracts in order to fix a price for securities it has
agreed to buy or sell ("transaction hedge"). A Fund also may hedge some or
all of its investments denominated in a foreign currency or exposed to
foreign currency fluctuations against a decline in the value of that currency
relative to the U.S. dollar by entering into forward currency contracts to
sell an amount of that currency (or a proxy currency whose performance is
expected to replicate or exceed the performance of that currency relative to
the U.S. dollar) approximating the value of some or all of its portfolio
securities denominated in or exposed to that currency ("position hedge") or
by participating in options or futures contracts with respect to the
currency. A Fund also may enter into a forward currency contract with respect
to a currency where the Fund is considering the purchase or sale of
investments denominated in that currency but has not yet selected the
specific investments ("anticipatory hedge"). In any of these circumstances a
Fund may, alternatively, enter into a forward currency contract to purchase
or sell one foreign currency for a second currency that is expected to
perform more favorably relative to the
30
U.S. dollar if the investment personnel believe there is a reasonable degree
of correlation between movements in the two currencies ("cross-hedge").
These types of hedging minimize the effect of currency appreciation as well
as depreciation, but do not eliminate fluctuations in the underlying U.S.
dollar equivalent value of the proceeds of or rates of return on a Fund's
foreign currency denominated portfolio securities. The matching of the
increase in value of a forward contract and the decline in the U.S. dollar
equivalent value of the foreign currency denominated asset that is the
subject of the hedge generally will not be precise. Shifting a Fund's
currency exposure from one foreign currency to another removes that Fund's
opportunity to profit from increases in the value of the original currency
and involves a risk of increased losses to such Fund if its investment
personnel's projection of future exchange rates is inaccurate. Proxy hedges
and cross-hedges may result in losses if the currency used to hedge does not
perform similarly to the currency in which hedged securities are denominated.
Unforeseen changes in currency prices may result in poorer overall
performance for a Fund than if it had not entered into such contracts.
In general, the Funds cover outstanding forward currency contracts by
maintaining liquid portfolio securities denominated in or whose value is tied
to the currency underlying the forward contract or the currency being hedged.
To the extent that a Fund is not able to cover its forward currency positions
with underlying portfolio securities, the Funds' custodian segregates cash or
other liquid assets having a value equal to the aggregate amount of such
Fund's commitments under forward contracts entered into with respect to
position hedges, cross-hedges, and anticipatory hedges. If the value of the
securities used to cover a position or the value of segregated assets
declines, a Fund will find alternative cover or segregate additional cash or
other liquid assets on a daily basis so that the value of the covered and
segregated assets will be equal to the amount of such Fund's commitments with
respect to such contracts. As an alternative to segregating assets, a Fund
may buy call options permitting such Fund to buy the amount of foreign
currency being hedged by a forward sale contract or a Fund may buy put
options permitting it to sell the amount of foreign currency subject to a
forward buy contract.
While forward contracts are not currently regulated by the CFTC, the CFTC may
in the future assert authority to regulate forward contracts. In such event,
the Funds' ability to utilize forward contracts may be restricted. In
addition, a Fund may not always be able to enter into forward contracts at
attractive prices and may be limited in its ability to use these contracts to
hedge Fund assets.
31
OPTIONS ON FOREIGN CURRENCIES. The Funds may buy and write options on foreign
currencies in a manner similar to that in which futures or forward contracts
on foreign currencies will be utilized. For example, a decline in the U.S.
dollar value of a foreign currency in which portfolio securities are
denominated will reduce the U.S. dollar value of such securities, even if
their value in the foreign currency remains constant. In order to protect
against such diminutions in the value of portfolio securities, a Fund may buy
put options on the foreign currency. If the value of the currency declines,
such Fund will have the right to sell such currency for a fixed amount in
U.S. dollars, thereby offsetting, in whole or in part, the adverse effect on
its portfolio.
Conversely, when a rise in the U.S. dollar value of a currency in which
securities to be acquired are denominated is projected, thereby increasing
the cost of such securities, a Fund may buy call options on the foreign
currency. The purchase of such options could offset, at least partially, the
effects of the adverse movements in exchange rates. As in the case of other
types of options, however, the benefit to a Fund from purchases of foreign
currency options will be reduced by the amount of the premium and related
transaction costs. In addition, if currency exchange rates do not move in the
direction or to the extent projected, a Fund could sustain losses on
transactions in foreign currency options that would require such Fund to
forego a portion or all of the benefits of advantageous changes in those
rates.
The Funds may also write options on foreign currencies. For example, to hedge
against a potential decline in the U.S. dollar value of foreign currency
denominated securities due to adverse fluctuations in exchange rates, a Fund
could, instead of purchasing a put option, write a call option on the
relevant currency. If the expected decline occurs, the option will most
likely not be exercised and the decline in value of portfolio securities will
be offset by the amount of the premium received.
Similarly, instead of purchasing a call option to hedge against a potential
increase in the U.S. dollar cost of securities to be acquired, a Fund could
write a put option on the relevant currency which, if rates move in the
manner projected, should expire unexercised and allow that Fund to hedge the
increased cost up to the amount of the premium. As in the case of other types
of options, however, the writing of a foreign currency option will constitute
only a partial hedge up to the amount of the premium. If exchange rates do
not move in the expected direction, the option may be exercised and a Fund
would be required to buy or sell the underlying currency at a loss which may
not be offset by the amount of the premium. Through the writing of options on
foreign currencies, a Fund also may lose all or a portion of the benefits
which might otherwise have been obtained from favorable movements in exchange
rates.
32
The Funds may write covered call options on foreign currencies. A call option
written on a foreign currency by a Fund is "covered" if that Fund owns the
foreign currency underlying the call or has an absolute and immediate right
to acquire that foreign currency without additional cash consideration (or
for additional cash consideration held in a segregated account by its
custodian) upon conversion or exchange of other foreign currencies held in
its portfolio. A call option is also covered if a Fund has a call on the same
foreign currency in the same principal amount as the call written if the
exercise price of the call held: (i) is equal to or less than the exercise
price of the call written or (ii) is greater than the exercise price of the
call written, if the difference is maintained by such Fund in cash or other
liquid assets in a segregated account with the Funds' custodian.
The Funds also may write call options on foreign currencies for cross-hedging
purposes. A call option on a foreign currency is for cross-hedging purposes
if it is designed to provide a hedge against a decline due to an adverse
change in the exchange rate in the U.S. dollar value of a security which a
Fund owns or has the right to acquire and which is denominated in the
currency underlying the option. Call options on foreign currencies which are
entered into for cross-hedging purposes are not covered. However, in such
circumstances, a Fund will collateralize the option by segregating cash or
other liquid assets in an amount not less than the value of the underlying
foreign currency in U.S. dollars marked-to-market daily.
OPTIONS ON SECURITIES. In an effort to increase current income and to reduce
fluctuations in NAV, the Funds may write covered put and call options and buy
put and call options on securities that are traded on United States and
foreign securities exchanges and over-the-counter. The Funds may write and
buy options on the same types of securities that the Funds may purchase
directly.
A put option written by a Fund is "covered" if that Fund: (i) segregates cash
not available for investment or other liquid assets with a value equal to the
exercise price of the put with the Funds' custodian or (ii) holds a put on
the same security and in the same principal amount as the put written, and
the exercise price of the put held is equal to or greater than the exercise
price of the put written. The premium paid by the buyer of an option will
reflect, among other things, the relationship of the exercise price to the
market price and the volatility of the underlying security, the remaining
term of the option, supply and demand, and interest rates.
A call option written by a Fund is "covered" if that Fund owns the underlying
security covered by the call or has an absolute and immediate right to
acquire that security without additional cash consideration (or for
additional cash
33
consideration held in a segregated account by the Funds' custodian) upon
conversion or exchange of other securities held in its portfolio. A call
option is also deemed to be covered if a Fund holds a call on the same
security and in the same principal amount as the call written and the
exercise price of the call held: (i) is equal to or less than the exercise
price of the call written or (ii) is greater than the exercise price of the
call written if the difference is maintained by that Fund in cash and other
liquid assets in a segregated account with its custodian.
The Funds also may write call options that are not covered for cross-hedging
purposes. A Fund collateralizes its obligation under a written call option
for cross-hedging purposes by segregating cash or other liquid assets in an
amount not less than the market value of the underlying security,
marked-to-market daily. A Fund would write a call option for cross-hedging
purposes, instead of writing a covered call option, when the premium to be
received from the cross-hedge transaction would exceed that which would be
received from writing a covered call option and its investment personnel
believe that writing the option would achieve the desired hedge.
The writer of an option may have no control over when the underlying
securities must be sold, in the case of a call option, or bought, in the case
of a put option, since with regard to certain options, the writer may be
assigned an exercise notice at any time prior to the termination of the
obligation. Whether or not an option expires unexercised, the writer retains
the amount of the premium. This amount, of course, may, in the case of a
covered call option, be offset by a decline in the market value of the
underlying security during the option period. If a call option is exercised,
the writer experiences a profit or loss from the sale of the underlying
security. If a put option is exercised, the writer must fulfill the
obligation to buy the underlying security at the exercise price, which will
usually exceed the then market value of the underlying security.
The writer of an option that wishes to terminate its obligation may effect a
"closing purchase transaction." This is accomplished by buying an option of
the same series as the option previously written. The effect of the purchase
is that the writer's position will be canceled by the clearing corporation.
However, a writer may not effect a closing purchase transaction after being
notified of the exercise of an option. Likewise, an investor who is the
holder of an option may liquidate its position by effecting a "closing sale
transaction." This is accomplished by selling an option of the same series as
the option previously bought. There is no guarantee that either a closing
purchase or a closing sale transaction can be effected.
34
In the case of a written call option, effecting a closing transaction will
permit a Fund to write another call option on the underlying security with
either a different exercise price or expiration date or both. In the case of
a written put option, such transaction will permit a Fund to write another
put option to the extent that the exercise price is secured by deposited
liquid assets. Effecting a closing transaction also will permit a Fund to use
the cash or proceeds from the concurrent sale of any securities subject to
the option for other investments. If a Fund desires to sell a particular
security from its portfolio on which it has written a call option, such Fund
will effect a closing transaction prior to or concurrent with the sale of the
security.
A Fund will realize a profit from a closing transaction if the price of the
purchase transaction is less than the premium received from writing the
option or the price received from a sale transaction is more than the premium
paid to buy the option. A Fund will realize a loss from a closing transaction
if the price of the purchase transaction is more than the premium received
from writing the option or the price received from a sale transaction is less
than the premium paid to buy the option. Because increases in the market
price of a call option generally will reflect increases in the market price
of the underlying security, any loss resulting from the repurchase of a call
option is likely to be offset in whole or in part by appreciation of the
underlying security owned by a Fund.
An option position may be closed out only where a secondary market for an
option of the same series exists. If a secondary market does not exist, the
Fund may not be able to effect closing transactions in particular options and
the Fund would have to exercise the options in order to realize any profit.
If a Fund is unable to effect a closing purchase transaction in a secondary
market, it will not be able to sell the underlying security until the option
expires or it delivers the underlying security upon exercise. The absence of
a liquid secondary market may be due to the following: (i) insufficient
trading interest in certain options; (ii) restrictions imposed by a national
securities exchange ("Exchange") on which the option is traded on opening or
closing transactions or both; (iii) trading halts, suspensions, or other
restrictions imposed with respect to particular classes or series of options
or underlying securities; (iv) unusual or unforeseen circumstances that
interrupt normal operations on an Exchange; (v) the facilities of an Exchange
or of the Options Clearing Corporation ("OCC") may not at all times be
adequate to handle current trading volume; or (vi) one or more Exchanges
could, for economic or other reasons, decide or be compelled at some future
date to discontinue the trading of options (or a particular class or series
of options), in which event the secondary market on that Exchange (or in that
class or series of options) would cease to exist, although outstanding
options on that
35
Exchange that had been issued by the OCC as a result of trades on that
Exchange would continue to be exercisable in accordance with their terms.
A Fund may write options in connection with buy-and-write transactions. In
other words, a Fund may buy a security and then write a call option against
that security. The exercise price of such call will depend upon the expected
price movement of the underlying security. The exercise price of a call
option may be below ("in-the-money"), equal to ("at-the-money") or above
("out-of-the-money") the current value of the underlying security at the time
the option is written. Buy-and-write transactions using in-the-money call
options may be used when it is expected that the price of the underlying
security will remain flat or decline moderately during the option period.
Buy-and-write transactions using at-the-money call options may be used when
it is expected that the price of the underlying security will remain fixed or
advance moderately during the option period. Buy-and-write transactions using
out-of-the-money call options may be used when it is expected that the
premiums received from writing the call option plus the appreciation in the
market price of the underlying security up to the exercise price will be
greater than the appreciation in the price of the underlying security alone.
If the call options are exercised in such transactions, a Fund's maximum gain
will be the premium received by it for writing the option, adjusted upwards
or downwards by the difference between that Fund's purchase price of the
security and the exercise price. If the options are not exercised and the
price of the underlying security declines, the amount of such decline will be
offset by the amount of premium received.
The writing of covered put options is similar in terms of risk and return
characteristics to buy-and-write transactions. If the market price of the
underlying security rises or otherwise is above the exercise price, the put
option will expire worthless and a Fund's gain will be limited to the premium
received. If the market price of the underlying security declines or
otherwise is below the exercise price, a Fund may elect to close the position
or take delivery of the security at the exercise price and that Fund's return
will be the premium received from the put options minus the amount by which
the market price of the security is below the exercise price.
A Fund may buy put options to hedge against a decline in the value of its
portfolio. By using put options in this way, a 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.
A Fund may buy call options to hedge against an increase in the price of
securities that it may buy in the future. The premium paid for the call
option plus any transaction costs will reduce the benefit, if any, realized
by such Fund
36
upon exercise of the option, and, unless the price of the underlying security
rises sufficiently, the option may expire worthless to that Fund.
A Fund may write straddles (combinations of put and call options on the same
underlying security), which are generally a nonhedging technique used for
purposes such as seeking to enhance return. Because combined options
positions involve multiple trades, they result in higher transaction costs
and may be more difficult to open and close out than individual options
contracts. The straddle rules of the Internal Revenue Code require deferral
of certain losses realized on positions of a straddle to the extent that a
Fund has unrealized gains in offsetting positions at year end. The holding
period of the securities comprising the straddle will be suspended until the
straddle is terminated.
EURODOLLAR INSTRUMENTS. A Fund may make investments in Eurodollar
instruments. Eurodollar instruments are U.S. dollar-denominated futures
contracts or options thereon which are linked to the London Interbank Offered
Rate ("LIBOR"), although foreign currency denominated instruments are
available from time to time. Eurodollar futures contracts enable purchasers
to obtain a fixed rate for the lending of funds and sellers to obtain a fixed
rate for borrowings. A Fund might use Eurodollar futures contracts and
options thereon to hedge against changes in LIBOR, to which many interest
rate swaps and fixed-income instruments are linked.
SWAPS AND SWAP-RELATED PRODUCTS. A Fund may enter into interest rate swaps,
caps, and floors on either an asset-based or liability-based basis, depending
upon whether it is hedging its assets or its liabilities, and will usually
enter into interest rate swaps on a net basis (i.e., the two payment streams
are netted out, with a Fund receiving or paying, as the case may be, only the
net amount of the two payments). The net amount of the excess, if any, of a
Fund's obligations over its entitlement with respect to each interest rate
swap will be calculated on a daily basis and an amount of cash or other
liquid assets having an aggregate NAV at least equal to the accrued excess
will be maintained in a segregated account by the Funds' custodian. If a Fund
enters into an interest rate swap on other than a net basis, it would
maintain a segregated account in the full amount accrued on a daily basis of
its obligations with respect to the swap. A Fund will not enter into any
interest rate swap, cap, or floor transaction unless the unsecured senior
debt or the claims-paying ability of the other party thereto is rated in one
of the three highest rating categories of at least one NRSRO at the time of
entering into such transaction. Janus Capital or the subadviser will monitor
the creditworthiness of all counterparties on an ongoing basis. If there is a
default by the other party to such a transaction, a Fund will have
contractual remedies pursuant to the agreements related to the transaction.
37
The swap market has grown substantially in recent years with a large number
of banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. Janus Capital has determined that,
as a result, the swap market has become relatively liquid. Caps and floors
are more recent innovations for which standardized documentation has not yet
been developed and, accordingly, they are less liquid than swaps. To the
extent a Fund sells (i.e., writes) caps and floors, it will segregate cash or
other liquid assets having an aggregate NAV at least equal to the full
amount, accrued on a daily basis, of its obligations with respect to any caps
or floors.
There is no limit on the amount of interest rate swap transactions that may
be entered into by a Fund. These transactions may in some instances involve
the delivery of securities or other underlying assets by a Fund or its
counterparty to collateralize obligations under the swap. Under the
documentation currently used in those markets, the risk of loss with respect
to interest rate swaps is limited to the net amount of the payments that a
Fund is contractually obligated to make. If the other party to an interest
rate swap that is not collateralized defaults, a Fund would risk the loss of
the net amount of the payments that it contractually is entitled to receive.
A Fund may buy and sell (i.e., write) caps and floors without limitation,
subject to the segregation requirement described above.
A Bond Fund may enter into credit default swap agreements (with values not to
exceed 10% of the net asset value of such Fund) for investment purposes and
to add leverage to its portfolio. As the seller in a credit default swap
contract, a Fund would be required to pay the par (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, a 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, a Fund would keep the
stream of payments and would have no payment obligations. As the seller, a
Fund would effectively add leverage to its portfolio because, in addition to
its total net assets, that Fund would be subject to investment exposure on
the notional amount of the swap.
A Bond Fund may also purchase credit default swap contracts in order to hedge
against the risk of default of debt securities held in its portfolio, in
which case that Fund would function as the counterparty referenced in the
preceding paragraph. This would involve the risk that the investment may
expire worthless and would only generate income in the event of an actual
default by the issuer of the underlying obligation (as opposed to a credit
downgrade or other indication of financial instability). It would also
involve credit risk - that the
38
seller may fail to satisfy its payment obligations to a Fund in the event of
a default.
ADDITIONAL RISKS OF OPTIONS ON FOREIGN CURRENCIES, FORWARD CONTRACTS, AND
FOREIGN INSTRUMENTS. Unlike transactions entered into by the Funds in futures
contracts, options on foreign currencies and forward contracts are not traded
on contract markets regulated by the CFTC or (with the exception of certain
foreign currency options) by the SEC. To the contrary, such instruments are
traded through financial institutions acting as market-makers, although
foreign currency options are also traded on certain Exchanges, such as the
Philadelphia Stock Exchange and the Chicago Board Options Exchange, subject
to SEC regulation. Similarly, options on currencies may be traded
over-the-counter. In an over-the-counter trading environment, many of the
protections afforded to Exchange participants will not be available. For
example, there are no daily price fluctuation limits, and adverse market
movements could therefore continue to an unlimited extent over a period of
time. Although the buyer of an option cannot lose more than the amount of the
premium plus related transaction costs, this entire amount could be lost.
Moreover, an option writer and a buyer or seller of futures or forward
contracts could lose amounts substantially in excess of any premium received
or initial margin or collateral posted due to the potential additional margin
and collateral requirements associated with such positions.
Options on foreign currencies traded on Exchanges are within the jurisdiction
of the SEC, as are other securities traded on Exchanges. As a result, many of
the protections provided to traders on organized Exchanges will be available
with respect to such transactions. In particular, all foreign currency option
positions entered into on an Exchange are cleared and guaranteed by the OCC,
thereby reducing the risk of counterparty default. Further, a liquid
secondary market in options traded on an Exchange may be more readily
available than in the over-the-counter market, potentially permitting a Fund
to liquidate open positions at a profit prior to exercise or expiration, or
to limit losses in the event of adverse market movements.
The purchase and sale of exchange-traded foreign currency options, however,
is subject to the risks of the availability of a liquid secondary market
described above, as well as the risks regarding adverse market movements,
margining of options written, the nature of the foreign currency market,
possible intervention by governmental authorities, and the effects of other
political and economic events. In addition, exchange-traded options on
foreign currencies involve certain risks not presented by the
over-the-counter market. For example, exercise and settlement of such options
must be made exclusively through the OCC, which has established banking
relationships in applicable foreign countries for this
39
purpose. As a result, the OCC may, if it determines that foreign governmental
restrictions or taxes would prevent the orderly settlement of foreign
currency option exercises, or would result in undue burdens on the OCC or its
clearing member, impose special procedures on exercise and settlement, such
as technical changes in the mechanics of delivery of currency, the fixing of
dollar settlement prices, or prohibitions on exercise.
In addition, options on U.S. Government securities, futures contracts,
options on futures contracts, forward contracts, and options on foreign
currencies may be traded on foreign exchanges and over-the-counter in foreign
countries. Such transactions are subject to the risk of governmental actions
affecting trading in or the prices of foreign currencies or securities. The
value of such positions also could be adversely affected by: (i) other
complex foreign political and economic factors; (ii) lesser availability than
in the United States of data on which to make trading decisions; (iii) delays
in a Fund's ability to act upon economic events occurring in foreign markets
during nonbusiness hours in the United States; (iv) the imposition of
different exercise and settlement terms and procedures and margin
requirements than in the United States; and (v) low trading volume.
A Fund may from time to time participate on committees formed by creditors to
negotiate with the management of financially troubled issuers of securities
held by that Fund. Such participation may subject a Fund to expenses such as
legal fees and may make that Fund an "insider" of the issuer for purposes of
the federal securities laws, and therefore may restrict that Fund's ability
to trade in or acquire additional positions in a particular security or other
securities of the issuer when it might otherwise desire to do so.
Participation by a Fund on such committees also may expose that Fund to
potential liabilities under the federal bankruptcy laws or other laws
governing the rights of creditors and debtors. A Fund would participate on
such committees only when Janus Capital believes that such participation is
necessary or desirable to enforce that Fund's rights as a creditor or to
protect the value of securities held by that Fund.
PORTFOLIO HOLDINGS DISCLOSURE POLICIES AND PROCEDURES
The Mutual Fund Holdings Disclosure Policies and Procedures adopted by Janus
Capital and the Funds, including all funds managed within the Janus fund
complex, are designed to be in the best interests of the Funds and to protect
the confidentiality of the Funds' portfolio holdings. The following describes
those policies and procedures.
The non-money market funds' full portfolio holdings (excluding cash
equivalents, derivatives, and short positions), consisting of at least the
names of the holdings, are generally available monthly, with a 30-day lag, on
40
www.janus.com. They are posted to the website within approximately two
business days after month-end. The money market funds' full portfolio
holdings are generally available monthly, with no lag, on www.janus.com. They
are posted to the website within approximately six business days after
month-end. All of the Janus funds' portfolio holdings remain available until
a Form N-CSR or Form N-Q is filed with the SEC for the period that includes
the date as of which the website information is current. The top ten
portfolio holdings for each fund (except that certain funds publish the top
five portfolio holdings) are published monthly with a 30-day lag, and
quarterly with a 15-day lag, on www.janus.com approximately two business days
after the end of the applicable period. Security breakdowns (such as
industry, sector, regional, market capitalization, and asset allocation
breakdowns, as applicable) for certain funds are published monthly with a
30-day lag, and quarterly, with a 15-day lag, on www.janus.com.
Specific portfolio level performance attribution information and statistics
for the funds will be made available to any person monthly upon request, with
a 30-day lag, following the posting of the funds' full portfolio holdings on
www.janus.com. Janus Capital may exclude from publication all or any portion
of portfolio holdings or change the time periods of disclosure as deemed
necessary to protect the interests of the funds.
The funds' Trustees, officers, and primary service providers, including
investment advisers, distributors, administrators, transfer agents,
custodians, and their respective personnel, may receive or have access to
nonpublic portfolio holdings information. In addition, third parties,
including but not limited to those that provide services to the Janus funds,
Janus Capital, and its affiliates, such as trade execution measurement
systems providers, independent pricing services, proxy voting service
providers, the funds' insurers, computer systems service providers, lenders,
counsel, accountants/auditors, and rating and ranking organizations may also
receive or have access to nonpublic portfolio holdings information. Other
recipients of nonpublic portfolio holdings information may include, but may
not be limited to, third parties such as consultants, data aggregators, and
asset allocation services which calculate information derived from holdings
for use by Janus Capital, and which supply their analyses (but not the
holdings themselves) to their clients. Such parties, either by agreement or
by virtue of their duties, are required to maintain confidentiality with
respect to such nonpublic portfolio holdings.
Nonpublic portfolio holdings information may be disclosed to certain third
parties upon a good faith determination made by Janus Capital's Chief
Compliance Officer or senior management team that a fund has a legitimate
41
business purpose for such disclosure and the recipient agrees to maintain
confidentiality. Preapproval by the Chief Compliance Officer or senior
management team is not required for certain routine service providers and in
response to regulatory, administrative, and judicial requirements. The Chief
Compliance Officer reports to the Janus funds' Trustees regarding material
compliance matters with respect to the portfolio holdings disclosure policies
and procedures.
As of the date of this SAI, the following non-affiliated third parties, which
consist of service providers and consultants as described above, receive or
may have access to nonpublic portfolio holdings information, which may
include the full holdings of a Fund. Certain of the arrangements below
reflect relationships of an affiliated subadviser, INTECH, and its products.
<Table>
<Caption>
NAME FREQUENCY LAG TIME
- ---- --------- --------
Brockhouse & Cooper Inc. Quarterly Current
Callan Associates Inc. Quarterly Current
Cambridge Associates LLC Quarterly Current
Charles River Systems, Inc. As needed Current
CheckFree Investment Services Quarterly Current
Citibank, N.A. Daily Current
CMS BondEdge As needed Current
CRA RogersCasey Quarterly Current
Deloitte & Touche LLP As needed Current
Deloitte Tax LLP As needed Current
eVestment Alliance, LLC Quarterly Current
Eagle Investment Systems Corp. As needed Current
Ernst & Young LLP As needed Current
FactSet Research Systems, Inc. As needed Current
Financial Models Company, Inc. As needed Current
FT Interactive Data Corporation Daily Current
Informa Investment Solutions, Inc. Quarterly Current
Institutional Shareholder Services,
Inc. Daily Current
International Data Corporation Daily Current
Investment Manager Selection Ltd. Quarterly 30 days
Investment Technology Group, Inc. Daily Current
Investor Force, Inc. Quarterly Current
Lehman Brothers Inc. Daily Current
Marco Consulting Group, Inc. Monthly Current
Markit Loans, Inc. Daily Current
</Table>
42
<Table>
<Caption>
NAME FREQUENCY LAG TIME
- ---- --------- --------
Mercer Investment Consulting, Inc. Quarterly Current
Money Manager Review Quarterly Current
Moody's Investors Service Inc. Weekly 7 days or more
Morningstar Inc. Quarterly Current
New England Pension Consultants Quarterly Current
Nomura Funds Research and
Technologies Co., Ltd. Monthly Current
Nomura Securities Co., Ltd. As needed Current
PricewaterhouseCoopers LLP As needed Current
Reuters America Inc. Daily Current
Russell/Mellon Analytical Services,
LLC Monthly Current
Sapient Corporation As needed Current
Schroder Investment Management
Limited Quarterly 30 days
Standard & Poor's Daily Current
Standard & Poor's Financial Services Weekly 2 days or more
Standard & Poor's Securities
Evaluation Daily Current
State Street Bank and Trust Company Daily Current
Summit Strategies Group Monthly; Quarterly Current
The Macgregor Group, Inc. As needed Current
Thomson Financial Quarterly Current
Wall Street On Demand, Inc. Monthly; Quarterly 30 days; 15 days
Wilshire Associates Incorporated As needed Current
Yanni Partners, Inc. Quarterly Current
Zephyr Associates, Inc. Quarterly Current
</Table>
In addition to the categories of persons and names of persons described above
who may receive nonpublic portfolio holdings information, brokers executing
portfolio trades on behalf of the funds may receive nonpublic portfolio
holdings information.
Janus Capital manages accounts other than registered investment companies,
such as separate accounts. Janus Capital also manages products sponsored by
companies other than Janus Capital, including registered investment companies
and separate accounts. These other products may be managed in a similar
fashion to certain Janus funds and thus may have similar portfolio holdings.
43
INVESTMENT ADVISER AND SUBADVISERS
- --------------------------------------------------------------------------------
INVESTMENT ADVISER - JANUS CAPITAL MANAGEMENT LLC
As stated in the Prospectuses, each Fund has an Investment Advisory Agreement
with Janus Capital Management LLC, 151 Detroit Street, Denver, Colorado
80206-4805. Janus Capital is a direct subsidiary of Janus Capital Group Inc.
("JCGI"), a publicly traded company with principal operations in financial
asset management businesses. JCGI owns approximately 95% of Janus Capital,
with the remaining 5% held by Janus Management Holdings Corporation.
Each Advisory Agreement provides that Janus Capital will furnish continuous
advice and recommendations concerning the Funds' investments, provide office
space for the Funds, and pay the salaries, fees, and expenses of all Fund
officers and of those Trustees who are considered to be interested persons of
Janus Capital. Janus Capital is also authorized to perform the management and
administrative services necessary for the operation of the Funds. As
discussed below, Janus Capital has delegated certain of these duties to
INTECH and Perkins pursuant to subadvisory agreements ("Sub-Advisory
Agreements") between Janus Capital and each Subadviser.
Janus Capital and its affiliates may make payments out of their own assets to
selected broker-dealer firms or institutions that are or are expected to be
instrumental in the acquisition or retention of shareholders for the Funds or
other Janus funds or that perform recordkeeping or other services with
respect to shareholder accounts. The amount of these payments is determined
from time to time by Janus Capital, may be substantial, and may differ for
different financial intermediaries. Eligibility requirements for such
payments to institutional intermediaries are determined by Janus Capital
and/or its affiliates.
In addition, from their own assets, Janus Capital, Janus Distributors LLC
("Janus Distributors"), or their affiliates may pay brokerage firms, banks,
financial advisers, retirement plan service providers, and other financial
intermediaries fees for providing recordkeeping, subaccounting, transaction
processing, and other shareholder or administrative services in connection
with investments in the Janus funds. These fees are in addition to any fees
that may be paid by the Janus funds for these types of or other services. You
may wish to consider whether such arrangements exist when evaluating any
recommendations to purchase or sell shares of the Funds.
Janus Capital or its affiliates may also share certain marketing expenses
with, or pay for or sponsor informational meetings, seminars, client
awareness events, support for marketing materials, or business building
programs for such intermediaries to raise awareness of the Funds.
44
The Funds pay custodian and transfer agent fees and expenses, brokerage
commissions and dealer spreads, and other expenses in connection with the
execution of portfolio transactions, legal and accounting expenses, interest
and taxes, a portion of trade or other investment company dues and expenses,
registration fees, expenses of shareholders' meetings and reports to
shareholders, fees and expenses of Fund Trustees who are not interested
persons of Janus Capital, and other costs of complying with applicable laws
regulating the sale of Fund shares. Pursuant to the Advisory Agreements,
Janus Capital furnishes certain other services, including NAV determination,
portfolio accounting, recordkeeping, and blue sky registration and monitoring
services, for which the Funds may reimburse Janus Capital for its costs.
45
The Funds pay a monthly investment advisory fee to Janus Capital for its
services. The fee is based on the average daily net assets of each Fund and
calculated at the annual rate as shown below for each Fund. The following
table reflects the Funds' investment advisory fee rates effective during the
most recent fiscal year.
<Table>
<Caption>
Investment Advisory
Average Daily Net Fees (%)
Fund Name Assets of Fund (annual rate)
- ------------------------------------------------------------------------
GROWTH
Janus Fund All Asset Levels 0.64
Janus Enterprise Fund All Asset Levels 0.64
Janus Mercury Fund All Asset Levels 0.64
Janus Olympus Fund All Asset Levels 0.64
Janus Orion Fund All Asset Levels 0.64
Janus Triton Fund All Asset Levels 0.64
Janus Twenty Fund All Asset Levels 0.64
Janus Venture Fund All Asset Levels 0.64
SPECIALTY GROWTH
Janus Global Life Sciences
Fund All Asset Levels 0.64
Janus Global Technology Fund All Asset Levels 0.64
CORE
Janus Balanced Fund All Asset Levels 0.55
Janus Contrarian Fund All Asset Levels 0.64
Janus Core Equity Fund All Asset Levels 0.60
Janus Growth and Income Fund All Asset Levels 0.62
Janus Research Fund All Asset Levels 0.64
RISK-MANAGED
INTECH Risk-Managed Stock
Fund(1) All Asset Levels 0.50
VALUE
Janus Mid Cap Value Fund(2) All Asset Levels 0.64
Janus Small Cap Value
Fund(2) All Asset Levels 0.72
INTERNATIONAL & GLOBAL
Janus Global Opportunities
Fund All Asset Levels 0.64
Janus Overseas Fund All Asset Levels 0.64
Janus Worldwide Fund All Asset Levels 0.60
BOND
Janus Flexible Bond Fund First $300 Million 0.58
Over $300 Million 0.48
Janus High-Yield Fund First $300 Million 0.65
Over $300 Million 0.55
Janus Short-Term Bond Fund First $300 Million 0.64
Over $300 Million 0.54
Janus Federal Tax-Exempt
Fund First $300 Million 0.50
Over $300 Million 0.45
</Table>
(1) Formerly named Janus Risk-Managed Stock Fund.
(2) 50% of the investment advisory fee (less any fee waivers or expense
reimbursements) is payable directly by the Fund to Perkins, the Fund's
subadviser.
46
PERFORMANCE-BASED INVESTMENT ADVISORY FEE
APPLIES TO JANUS MERCURY FUND, JANUS CONTRARIAN FUND, JANUS RESEARCH FUND,
INTECH RISK-MANAGED STOCK FUND, JANUS MID CAP VALUE FUND, AND JANUS WORLDWIDE
FUND ONLY
Effective January 1, 2006 for Janus Research Fund and INTECH Risk-Managed
Stock Fund and effective February 1, 2006 for Janus Mercury Fund, Janus
Contrarian Fund, Janus Mid Cap Value Fund, and Janus Worldwide Fund, each
such Fund implemented a revised investment advisory agreement that includes a
change in the investment advisory fee rate from a fixed rate to a rate that
adjusts upward or downward based upon each Fund's performance relative to its
respective benchmark index. This change will not impact the investment
advisory fee shown in the table above until one year after the effective date
when the performance adjustment takes effect. The following discussion
provides additional details regarding these changes.
Shareholders of Janus Mercury Fund, Janus Contrarian Fund, Janus Research
Fund, INTECH Risk-Managed Stock Fund, Janus Mid Cap Value Fund, and Janus
Worldwide Fund, voting separately, approved an amended investment advisory
agreement between the Trust, on behalf of their Fund, and Janus Capital
("Amendment"). The Amendment introduced a performance incentive investment
advisory fee structure for each Fund whereby each Fund's investment advisory
fee rate adjusts upward or downward based upon the Fund's performance
relative to its benchmark index.
Under the Amendment, the investment advisory fee paid to Janus Capital by
each Fund consists of two components: (i) a base fee calculated by applying
the current specified fixed-rate of the advisory fee to the Fund's average
daily net assets during the previous month ("Base Fee"), plus or minus (ii) a
performance-fee adjustment ("Performance Adjustment") calculated by applying
a variable rate of up to 0.15% (positive or negative) to the Fund's average
daily net assets during the applicable performance measurement period. The
performance measurement period generally will be the previous 36 months,
although no Performance Adjustment will be made until the Amendment has been
in effect for at least 12 months and, accordingly, only the Fund's Base Fee
rate will apply for the initial 12 months. When the Amendment has been in
effect for at least 12 months, but less than 36 months, the performance
measurement period will be equal to the time that has elapsed since the
Amendment took effect. The amended fee schedule for each Fund became
effective on January 1, 2006 or February 1, 2006, as noted above.
47
For each Fund, the fixed rate used in computing the Base Fee is the same as
that used in computing the fee paid to Janus Capital by the Fund under its
investment advisory agreement effective during the most recent fiscal year.
The Performance Adjustment may result in an increase or decrease in the
investment advisory fee paid by a Fund, depending upon the investment
performance of the Fund relative to its benchmark index over the performance
measurement period. No Performance Adjustment is applied unless the
difference between the Fund's investment performance and the investment
record of the Fund's benchmark index is 0.50% or greater (positive or
negative) during the applicable performance measurement period. Because the
Performance Adjustment is tied to a Fund's relative performance to its
benchmark index (and not its absolute performance), the Performance
Adjustment could increase Janus Capital's fee even if the Fund's shares lose
value during the performance measurement period and could decrease Janus
Capital's fee even if the Fund's shares increase in value during the
performance measurement period. For purposes of computing the Base Fee and
the Performance Adjustment, net assets are averaged over different periods
(average daily net assets during the previous month for the Base Fee, versus
average daily net assets during the performance measurement period for the
Performance Adjustment). Performance of a Fund is calculated net of expenses
whereas a Fund's benchmark index does not have any fees or expenses.
Reinvestment of dividends and distributions are included in calculating both
the performance of a Fund and the Fund's benchmark index.
The investment performance of Janus Mid Cap Value Fund's Investor Shares
("Investor Shares") is used for purposes of calculating Janus Mid Cap Value
Fund's Performance Adjustment. For the Funds other than Janus Mid Cap Value
Fund, should the Trustees subsequently decide to divide shares of a Fund into
two or more separate classes, the oldest class of shares will be used for
purposes of determining the Performance Adjustment. After Janus Capital
determines whether a particular Fund's performance was above or below its
benchmark index by comparing the investment performance of the Investor
Shares for Janus Mid Cap Value Fund or the oldest class of shares for the
other Funds against the investment record of that Fund's benchmark index,
Janus Capital will apply the same Performance Adjustment (positive or
negative) across each other class of shares of the Fund.
The Trustees may determine that a class of shares of a Fund other than
Investor Shares for Janus Mid Cap Value Fund or the oldest class of shares
for the other Funds is the most appropriate for use in calculating the
Performance Adjustment. If a different class of shares is substituted in
calculating the Performance Adjustment, the use of that successor class of
shares may apply to the entire performance measurement period so long as the
successor class was
48
outstanding at the beginning of such period. If the successor class of shares
was not outstanding for all or a portion of the performance measurement
period, it may only be used in calculating that portion of the Performance
Adjustment attributable to the period during which the successor class was
outstanding and any prior portion of the performance measurement period would
be calculated using the class of shares previously designated. Any change to
the class of shares used to calculate the Performance Adjustment is subject
to applicable law. It is currently the position of the staff of the SEC (the
"Staff") that any changes to a class of shares selected for purposes of
calculating the Performance Adjustment will require shareholder approval. If
there is a change in the Staff's position, the Trustees will notify the
shareholders of such change in position at such time as the Trustees may
determine that a change in such selected class is appropriate.
Each Fund's benchmark index is identified below. The Trustees may from time
to time determine that another securities index is a more appropriate
benchmark index for purposes of evaluating the performance of that Fund. In
that event, the Trustees will approve the substitution of a successor index
for the Fund's benchmark index. However, the calculation of the Performance
Adjustment for any portion of the performance measurement period prior to the
adoption of the successor index will still be based upon the Fund's
performance compared to its former benchmark index. Any change to a
particular Fund's benchmark index for purposes of calculating the Performance
Adjustment is subject to applicable law. It is currently the position of the
Staff that any changes to a Fund's benchmark index will require shareholder
approval. If there is a change in the Staff's position, the Trustees will
notify the shareholders of such change in position at such time as the
Trustees may determine that a change in a Fund's benchmark index is
appropriate.
The Base Fee for each Fund (which is the same as the annual investment
advisory fee rate paid by the Fund during the most recent fiscal year) and
the Fund's benchmark index used for purposes of calculating the Performance
Adjustment are shown in the following table:
<Table>
<Caption>
Base Fee(%)
Fund Name Benchmark Index (annual rate)
---------------------------------------------------------------------------------------------
Janus Mercury Fund Russell 1000(R) Growth Index(1) 0.64
Janus Contrarian Fund S&P 500(R) Index(2) 0.64
Janus Research Fund Russell 1000(R) Index(3) 0.64
INTECH Risk-Managed Stock Fund(4) S&P 500(R) Index(2) 0.50(5)
Janus Mid Cap Value Fund Russell Midcap(R) Value 0.64(7)
Index(6)
Janus Worldwide Fund MSCI World(SM) Index(8) 0.60
</Table>
49
(1) The Russell 1000(R) Growth Index measures the performance of those Russell
1000 companies with higher price-to-book ratios and higher forecasted growth
rates.
(2) The S&P 500(R) Index is Standard & Poor's composite index of 500 stocks, a
widely recognized, unmanaged index of common stock prices.
(3) The Russell 1000(R) Index measures the performance of the largest 1000
companies in the Russell 3000(R) Index.
(4) Formerly named Janus Risk-Managed Stock Fund.
(5) Janus Capital, and not INTECH Risk-Managed Stock Fund, pays INTECH, the
Fund's subadviser, a fee for its services provided pursuant to a
Sub-Advisory Agreement between Janus Capital, on behalf of the Fund, and
INTECH. For the fiscal year ended October 31, 2005, that fee was calculated
at an annual rate of 0.26% of the Fund's average daily net assets.
(6) The Russell Midcap(R) Value Index measures the performance of those Russell
Midcap companies with lower price-to-book ratios and lower forecasted growth
rates.
(7) This amount is reduced by the amount payable by Janus Mid Cap Value Fund to
Perkins, the subadviser to Janus Mid Cap Value Fund, pursuant to a
Sub-Advisory Agreement between Janus Capital and Perkins. Under this
Sub-Advisory Agreement, Janus Mid Cap Value Fund pays Perkins a fee equal to
50% of the advisory fee otherwise payable by the Fund to Janus Capital (net
of any reimbursements of expenses incurred or fees waived by Janus Capital).
For the fiscal year ended October 31, 2005, Janus Mid Cap Value Fund paid
Perkins a subadvisory fee at the annual rate of 0.32% of the Fund's average
daily net assets.
(8) The MSCI World(SM) Index is a market capitalization weighted index composed
of companies representative of the market structure of developed market
countries in North America, Europe, and the Asia/Pacific Region.
Janus Capital agreed by contract to waive the advisory fee payable by certain
Funds in an amount equal to the amount, if any, that such Fund's normal
operating expenses in any fiscal year, including the investment advisory fee,
but excluding brokerage commissions, interest, taxes, and extraordinary
expenses, exceed the annual rate shown below. For information about how these
expense limits affect the total expenses of the Funds, see the table in the
"Fees and Expenses" section of each Fund's Prospectus. Janus Capital has
agreed to continue such waivers until at least March 1, 2007.
<Table>
<Caption>
Expense Limit
Fund Name Percentage (%)
- -----------------------------------------------
GROWTH
Janus Triton Fund 1.25
CORE
Janus Research Fund 1.25
BOND
Janus Flexible Bond Fund 0.93
Janus High-Yield Fund 0.90
Janus Short-Term Bond Fund 0.64
Janus Federal Tax-Exempt
Fund 0.55
</Table>
50
The following table summarizes the advisory fees paid by the Funds and any
advisory fee waivers for the last three fiscal years or periods ended October
31. The information presented in the table below reflects the investment
advisory fees in effect during each of the fiscal years or periods shown.
<Table>
<Caption>
2005 2004 2003
----------------------------- -------------------------- --------------------------------
Fund Name Advisory Fees Waivers Advisory Fees Waivers Advisory Fees Waivers
- ------------------------------------------------------------------------------------------------------------------------------
GROWTH
Janus Fund $78,753,161 -- $99,852,014 -- $105,343,428 --
Janus Enterprise Fund $11,062,904 -- $11,614,927 -- $ 11,320,918 --
Janus Mercury Fund $28,459,376 -- $32,392,574 -- $ 33,066,871 --
Janus Olympus Fund $14,610,128 -- $16,663,966 -- $ 15,461,581 --
Janus Orion Fund $ 3,778,695 -- $ 3,494,094 -- $ 2,802,306 --
Janus Triton Fund $ 113,098(1) $102,399 $ -- -- $ -- --
Janus Twenty Fund $60,430,919 -- $60,268,045 -- $ 63,331,924 --
Janus Venture Fund $ 8,753,760 -- $ 8,770,064 -- $ 6,423,011 --
SPECIALTY GROWTH
Janus Global Life
Sciences Fund $ 7,563,145 -- $ 8,332,957 -- $ 8,424,615 --
Janus Global
Technology Fund $ 7,103,412 -- $ 9,581,054 -- $ 8,661,205 --
CORE
Janus Balanced Fund $14,963,890 -- $20,059,059 -- $ 26,024,299 --
Janus Contrarian Fund $17,384,508 -- $16,155,221 -- $ 12,107,699 --
Janus Core Equity Fund $ 3,917,480 -- $ 4,146,417 -- $ 4,602,152 --
Janus Growth and
Income Fund $33,818,943 -- $35,671,875 -- $ 37,147,147 --
Janus Research Fund $ 130,634(1) $ 70,326 $ -- -- $ -- --
RISK-MANAGED
INTECH Risk-Managed
Stock Fund(2) $ 1,542,157 -- $ 763,771 $ 488,229 $ 223,037(3) $ 223,037(3)
VALUE
Janus Mid Cap Value
Fund $27,930,032 -- $16,992,386 $ 500,763 $ 9,406,097(4) --
Janus Small Cap Value
Fund $19,771,643 -- $22,982,646 $2,659,228 $ 23,728,560(5) --
INTERNATIONAL & GLOBAL
Janus Global
Opportunities Fund $ 1,400,774 -- $ 1,131,557 -- $ 864,076 --
Janus Overseas Fund $14,542,082 -- $16,156,904 -- $ 18,835,257 --
Janus Worldwide Fund $35,836,772 -- $58,977,220 -- $ 78,796,638 --
</Table>
51
<Table>
<Caption>
2005 2004 2003
----------------------------- -------------------------- --------------------------------
Fund Name Advisory Fees Waivers Advisory Fees Waivers Advisory Fees Waivers
- ------------------------------------------------------------------------------------------------------------------------------
BOND
Janus Flexible Bond
Fund $ 5,279,211 -- $ 7,113,293 -- $ 9,825,976 --
Janus High-Yield Fund $ 3,319,464 -- $ 3,912,620 -- $ 5,774,135 --
Janus Short-Term Bond
Fund $ 1,494,629 $744,392 $ 1,926,252 $1,061,867 $ 2,811,827 $1,192,047
Janus Federal
Tax-Exempt Fund $ 605,134 $376,646 $ 863,282 $ 553,328 $ 1,372,560 $ 576,408
</Table>
(1) February 25, 2005 (inception) to October 31, 2005.
(2) Formerly named Janus Risk-Managed Stock Fund.
(3) February 28, 2003 (inception) to October 31, 2003.
(4) $4,224,022 of the Advisory Fees for Janus Mid Cap Value Fund were paid to
Berger Financial Group LLC, the Fund's former adviser, for the period
October 1, 2002 to April 20, 2003, with the remaining $5,182,075 being paid
to Janus Capital for the period April 21, 2003 to October 31, 2003.
(5) $11,538,890 of the Advisory Fees for Janus Small Cap Value Fund were paid to
Berger Financial Group LLC, the Fund's former adviser, for the period
October 1, 2002 to April 20, 2003, with the remaining $12,189,670 being paid
to Janus Capital for the period April 21, 2003 to October 31, 2003.
Janus Services LLC ("Janus Services") receives an administrative services fee
at an annual rate of up to 0.05% of the average daily net assets of INTECH
Risk-Managed Stock Fund, Janus Mid Cap Value Fund, and Janus Small Cap Value
Fund for providing or procuring recordkeeping, subaccounting, and other
administrative services to investors of the Fund. Janus Services expects to
use a significant portion of this fee to compensate retirement plan service
providers, brokers, bank trust departments, financial advisers, and other
financial intermediaries for providing these services (at an annual rate of
up to 0.05% of the average daily net assets of the shares attributable to
their customers). Services provided by these financial intermediaries may
include but are not limited to recordkeeping, processing and aggregating
purchase and redemption transactions, providing periodic statements,
forwarding prospectuses, shareholder reports, and other materials to existing
customers, and other administrative services.
52
The following table summarizes the administration fees paid by certain Funds
for the fiscal years ended October 31.
<Table>
<Caption>
2005 2004
Fund Name Administration Fees Administration Fees
------------------------------------------------------------------------------
RISK-MANAGED
INTECH Risk-Managed Stock
Fund(1) $ 154,216 $ 64,759
VALUE
Janus Mid Cap Value Fund $2,197,481 $1,319,999
Janus Small Cap Value Fund $1,381,716 $1,558,406
</Table>
(1) Formerly named Janus Risk-Managed Stock Fund.
Janus Small Cap Value Fund's Advisory Agreement is dated July 1, 2004. INTECH
Risk-Managed Stock Fund's Advisory Agreement is dated July 1, 2004, as
amended January 1, 2006. Janus Research Fund's Advisory Agreement is dated
December 2, 2004, as amended January 1, 2006. Janus Triton Fund's Advisory
Agreement is dated December 2, 2004, as amended February 1, 2006. Each of the
remaining Fund's Advisory Agreement is dated July 1, 2004, as amended
February 1, 2006. Each Fund's Advisory Agreement is in effect for an initial
one-year period and thereafter from year to year so long as such continuance
is approved annually by a majority of the Funds' Trustees who are not parties
to the Advisory Agreements or "interested persons" (as defined by the 1940
Act) of any such party (the "Independent Trustees"), and by either a majority
of the outstanding voting shares of each Fund or the Trustees of the Funds.
Each Advisory Agreement: (i) may be terminated without the payment of any
penalty by a Fund or Janus Capital on 60 days' written notice; (ii)
terminates automatically in the event of its assignment; and (iii) generally,
may not be amended without the approval by vote of a majority of the Trustees
of the affected Fund, including a majority of the Independent Trustees and,
to the extent required by the 1940 Act, the vote of a majority of the
outstanding voting securities of that Fund.
SUBADVISERS
Janus Capital has entered into Sub-Advisory Agreements on behalf of INTECH
Risk-Managed Stock Fund, Janus Mid Cap Value Fund, and Janus Small Cap Value
Fund.
ENHANCED INVESTMENT TECHNOLOGIES, LLC
Janus Capital has entered into a Sub-Advisory Agreement with Enhanced
Investment Technologies, LLC, 2401 PGA Boulevard, Suite 100, Palm Beach
Gardens, Florida 33410, on behalf of INTECH Risk-Managed Stock Fund.
53
INTECH has been in the investment advisory business since 1987. INTECH also
serves as investment adviser or subadviser to other U.S. registered and
unregistered investment companies, offshore investment funds, and other
institutional accounts. Janus Capital owns approximately 82.5% of the
outstanding voting shares of INTECH.
Under the Sub-Advisory Agreement between Janus Capital and INTECH, INTECH is
responsible for the day-to-day investment operations of INTECH Risk-Managed
Stock Fund. Investments will be acquired, held, disposed of, or loaned,
consistent with the investment objectives, policies, and restrictions
established by the Trustees and set forth in the Trust's registration
statement. INTECH is also obligated to: (i) place all orders for the purchase
and sale of investments for the Fund with brokers or dealers selected by
INTECH; (ii) perform certain limited related administrative functions; (iii)
provide the Trustees with oral or written reports regarding the investment
portfolio of the Fund; and (iv) maintain all books and records required under
federal securities law relating to day-to-day portfolio management of the
Funds. The Sub-Advisory Agreement provides that INTECH shall not be liable
for any error of judgment or mistake of law or for any loss arising out of
any investment or for any act or omission taken with respect to the Fund,
except for willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its
obligations and duties under the Sub-Advisory Agreement and except to the
extent otherwise provided by law.
The Sub-Advisory Agreement is dated July 1, 2004, as amended January 1, 2006,
and will continue in effect until January 1, 2007, and thereafter from year
to year if such continuation is specifically approved at least annually by
the Trustees or by vote of a majority of the outstanding shares of the Fund
and in either case by vote of a majority of the Independent Trustees of the
Fund. The Sub-Advisory Agreement is subject to termination by the Fund or the
subadviser on 60 days' written notice and terminates automatically in the
event of its assignment and in the event of termination of the Investment
Advisory Agreement.
PERKINS, WOLF, MCDONNELL AND COMPANY, LLC
Janus Capital has entered into Sub-Advisory Agreements on behalf of Janus Mid
Cap Value Fund and Janus Small Cap Value Fund with Perkins, Wolf, McDonnell
and Company, LLC, 311 S. Wacker Drive, Suite 6000, Chicago, Illinois 60606.
Perkins: (i) manages the investment operations of the Funds; (ii) keeps Janus
Capital fully informed as to the valuation of assets of the Funds, their
condition, investment decisions and conditions; (iii) maintains all books and
records
54
required under federal securities law relating to day-to-day portfolio
management of the Funds; (iv) performs certain limited related administrative
functions; and (v) provides the Trustees and Janus Capital with economic,
operational, and investment data and reports.
Perkins and its predecessor have been in the investment advisory business
since 1984. Perkins also serves as investment adviser or subadviser to
separately managed accounts and other registered investment companies. Janus
Capital has a 30% ownership stake in Perkins.
Under the Sub-Advisory Agreements between Janus Capital and Perkins,
investments will be acquired, held, disposed of or loaned, consistent with
the investment objectives, policies and restrictions established by the
Trustees and set forth in the Trust's registration statement. The
Sub-Advisory Agreements provide that Perkins shall not be liable for any
error of judgment or mistake of law or for any loss arising out of any
investment or for any act or omission taken with respect to the Funds, except
for willful malfeasance, bad faith or gross negligence in the performance of
its duties, or by reason of reckless disregard of its obligations and duties
under the Sub-Advisory Agreements and except to the extent otherwise provided
by law.
Under the Sub-Advisory Agreements, Janus Mid Cap Value Fund and Janus Small
Cap Value Fund each pay Perkins a fee equal to 50% of the advisory fee Janus
Capital receives from each Fund (calculated after any fee waivers and expense
reimbursements). As a result of the reduction of the advisory fees paid by
Janus Mid Cap Value Fund and Janus Small Cap Value Fund to Janus Capital in
connection with the Assurance of Discontinuance entered into with the New
York Attorney General in August 2004, Janus Capital has agreed to pay Perkins
a fee equivalent to approximately one-half of the reduction with respect to
each Fund. The agreement with respect to Janus Mid Cap Value Fund will
terminate effective February 1, 2007.
The Sub-Advisory Agreements with Perkins will continue in effect until
February 1, 2007 for Janus Mid Cap Value Fund and July 1, 2006 for Janus
Small Cap Value Fund, and thereafter from year to year if such continuation
is specifically approved at least annually by the Trustees or by vote of a
majority of the outstanding shares of the Funds and in either case by vote of
a majority of the Independent Trustees of the Funds. The Sub-Advisory
Agreements are subject to termination without cause by Janus Capital or the
Trust on 60 days' written notice, or material breach of Janus Capital's or
Perkins' duties if that breach is not cured within a 20-day period after
notice of breach, or if Perkins is unable to discharge its duties and
obligations, and terminates automatically in the event of the assignment or
termination of each Fund's respective Investment
55
Advisory Agreement. Perkins may terminate the Sub-Advisory Agreements upon
three years' notice.
Janus Capital and Perkins have also entered into a Relationship Agreement,
which sets forth a framework of mutual cooperation between the parties with
respect to the developing, marketing, and servicing of products. Among other
things, Janus Capital agrees that it will not terminate or recommend to the
Trustees that they terminate the Sub-Advisory Agreements with Perkins, except
for cause, as long as the Relationship Agreement is in effect. Among other
things, Perkins agrees to provide Janus Capital with exclusive rights to
certain value investment products and limit its ability to terminate the
Sub-Advisory Agreement without cause. Accordingly, both Janus Capital and
Perkins have financial incentives to maintain the relationship between the
parties.
Under each Sub-Advisory Agreement, the respective subadviser was compensated
according to the following schedule for the fiscal year ended October 31,
2005.
<Table>
<Caption>
Fund Name Subadviser Annual Rate(%)
-----------------------------------------------------------------------------------------
INTECH Risk-Managed Stock Fund(1) INTECH 0.26
Janus Mid Cap Value Fund Perkins 0.32
Janus Small Cap Value Fund Perkins 0.36
</Table>
(1) Formerly named Janus Risk-Managed Stock Fund.
INTECH Risk-Managed Stock Fund pays no fees directly to INTECH. Janus Capital
pays these subadvisory fees out of its advisory fees.
During the fiscal year ended October 31, 2005, Janus Mid Cap Value Fund and
Janus Small Cap Value Fund paid subadvisory fees to Perkins in the amount of
$13,965,016 and $9,885,822, respectively.
PERFORMANCE-BASED SUB-ADVISORY FEE
APPLIES TO INTECH RISK-MANAGED STOCK FUND
Effective January 1, 2006, the subadvisory fee rate for INTECH Risk-Managed
Stock Fund changed from a fixed rate to a rate that adjusts upward or
downward based upon the Fund's performance relative to its benchmark index.
This change will not impact the subadvisory fee shown for INTECH Risk-
Managed Stock Fund in the table above until January 1, 2007. Janus Capital,
and not INTECH Risk-Managed Stock Fund, pays this fee. The following
discussion provides additional details regarding this change.
On December 29, 2005, shareholders of INTECH Risk-Managed Stock Fund approved
an amended subadvisory agreement between Janus Capital, on behalf of the
Fund, and INTECH that introduces a performance incentive subadvisory
56
fee structure. The subadvisory fee rate payable by Janus Capital to INTECH
changed from a fixed rate to a rate that adjusts upward or downward based
upon the performance of the Fund relative to its benchmark index, the S&P
500(R) Index. Under the Amended Sub-Advisory Agreement, the subadvisory fee
rate paid by Janus Capital to INTECH consists of two components: (i) a base
advisory fee calculated and accrued daily and payable monthly equal to 0.26%
of the Fund's average daily net assets during the previous month ("Base
Fee"), plus or minus (ii) half of any performance fee adjustment paid to
Janus Capital by the Fund ("Performance Adjustment") pursuant to the
investment advisory agreement between Janus Capital and the Trust, on behalf
of the Fund as approved by shareholders on December 29, 2005. No Performance
Adjustment is paid to INTECH until the amended subadvisory agreement has been
in effect for at least 12 months (which is January 1, 2007).
The Base Fee rate is the same as the current annual fixed-rate fee paid by
Janus Capital to INTECH under its Sub-Advisory Agreement. The Performance
Adjustment is calculated monthly and may result in an increase or decrease in
the subadvisory fee rate paid by Janus Capital to INTECH, depending upon the
investment performance of the Fund relative to the S&P 500(R) Index over the
performance measurement period. For purposes of computing the Base Fee and
the Performance Adjustment, net assets are averaged over different periods
(average daily net assets during the previous month for the Base Fee versus
average daily net assets over the performance measurement period for the
Performance Adjustment).
The amended subadvisory agreement and the new fee schedule became effective
on January 1, 2006. For the first 12 months after the effective date, only
the Base Fee rate applies. When the amended subadvisory agreement has been in
effect for at least 12 months, but less than 36 months, the performance
measurement period equals the time that has elapsed since the amended
subadvisory agreement took effect and the Performance Adjustment will be
calculated for that performance measurement period. Once the Fund has 36
months of performance history from the effective date, the Performance
Adjustment is calculated using a rolling 36 month period.
APPLIES TO JANUS MID CAP VALUE FUND
As a result of shareholder approval of Janus Mid Cap Value Fund's amended
investment advisory agreement between Janus Capital and the Trust, on behalf
of the Fund, effective February 1, 2006, the subadvisory fee paid to Perkins
changed from a fixed-rate fee to a fee that adjusts upward or downward based
upon the performance of the Fund relative to the Russell Midcap(R) Value
Index, the Fund's benchmark index. In accordance with the Sub-Advisory
Agreement,
57
Perkins receives a fee from the Fund equal to 50% of the advisory fee payable
to Janus Capital from the Fund before reduction of the Janus fee by the
amount of the fee payable to Perkins (net of any reimbursement of expenses
incurred or fees waived by Janus Capital).
APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
A discussion regarding the basis for the Board of Trustees' approval of
continuation of Janus Small Cap Value Fund's investment advisory agreement is
included in the Fund's annual report to shareholders.
AMENDMENTS TO ADVISORY AGREEMENTS TO CONFORM TO PREVAILING INDUSTRY PRACTICE
APPLIES TO ALL FUNDS EXCEPT INTECH RISK-MANAGED STOCK FUND, JANUS MID CAP
VALUE FUND, AND JANUS SMALL CAP VALUE FUND
On September 20, 2005, the Board of Trustees, including all of the
Independent Trustees, voted unanimously to approve an amended Investment
Advisory Agreement ("Amended Agreement") for each applicable Fund and
authorized the submission of each Amended Agreement to the Fund's
shareholders for approval. Shareholders approved the Amended Agreement for
their Fund at a special meeting of Shareholders held on December 29, 2005 for
Janus Fund, Janus Orion Fund, Janus Triton Fund, Janus Twenty Fund, Janus
Venture Fund, Janus Research Fund, Janus Short-Term Bond Fund, and Janus
Federal Tax-Exempt Fund; and on January 9, 2006 for Janus Enterprise Fund,
Janus Mercury Fund, Janus Olympus Fund, Janus Global Life Sciences Fund,
Janus Global Technology Fund, Janus Balanced Fund, Janus Contrarian Fund,
Janus Core Equity Fund, Janus Growth and Income Fund, Janus Global
Opportunities Fund, Janus Overseas Fund, Janus Worldwide Fund, Janus Flexible
Bond Fund, and Janus High-Yield Fund.
In approving the proposed Amended Agreements, the Trustees considered the
recommendations of an independent compliance consultant engaged by Janus
Capital regarding the form of each of those agreements and concluded that the
proposed changes were consistent with industry practice and would reflect an
appropriate delegation of authority to Janus Capital clarifying its
investment discretion over the Funds it manages.
In connection with their most recent consideration of the investment advisory
agreements for all of the Funds, the Trustees received and reviewed a
substantial amount of information provided by Janus Capital and the
respective subadvisers for subadvised Funds in response to requests of the
Independent Trustees and their counsel. They also received and reviewed a
considerable amount of
58
information and analysis provided to the Trustees by an independent fee
consultant. Throughout their consideration of the agreements, the Independent
Trustees were advised by their independent legal counsel. The Independent
Trustees met on two separate occasions with Janus Capital management to
consider the agreements, and at each of those meetings they also met
separately in executive session with their counsel.
Based on their evaluation of the information provided by Janus Capital,
subadvisers, the independent fee consultant, Lipper Inc. ("Lipper"), and
other information, the Trustees determined that the overall arrangements
between the Funds and Janus Capital were fair and reasonable in light of the
nature 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.
In considering the 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 agreements are discussed separately below.
NATURE, EXTENT, AND QUALITY OF SERVICES
The Trustees reviewed the nature, extent, and quality of the services of
Janus Capital and the subadvisers to the Funds, taking into account the
investment objective and strategy of each Fund and the knowledge the Trustees
gained from their regular meetings with management on at least a quarterly
basis. In addition, the Trustees reviewed the resources and key personnel of
Janus Capital and each subadviser, especially those who provide investment
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, serving as the Funds' administrator, monitoring
adherence to the Funds' investment restrictions, producing shareholder
reports, providing support services for the Trustees and Trustee committees,
and overseeing the activities of other service providers, including
monitoring compliance with various policies and procedures of the Funds and
with applicable securities laws and regulations. The Trustees also reviewed
the enhanced compliance program of Janus Capital and the actions taken by
Janus Capital in response to various legal and regulatory proceedings since
the fall of 2003.
The Trustees concluded that the nature, extent, and quality of the services
provided by Janus Capital and, if applicable, the subadviser to each Fund
were
59
appropriate and consistent with the terms of the respective advisory
agreements, that the quality of those services had been consistent with or
superior to quality norms in the industry, and that 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 continuing ability to attract and retain well-qualified
personnel.
PERFORMANCE OF THE FUNDS
The Trustees considered the short-term and longer term performance of each
Fund. They reviewed information comparing each Fund's performance with the
performance of comparable funds and peer groups identified by Lipper and with
the Fund's benchmark index. They concluded that the performance of most Funds
was good to very good. Although the performance of some Funds lagged that of
their peers for certain periods, they also concluded that Janus Capital had
taken appropriate steps to address the under-performance and that the more
recent performance of most of those Funds had been improving.
COSTS OF SERVICES PROVIDED
The Trustees examined information on the fees and expenses of each Fund in
comparison to information for other comparable funds as provided by Lipper.
They noted that the rate of management (investment advisory and
administrative) fees for each Fund, after contractual expense limitations,
was below the mean management fee rate of the respective peer group of funds
selected by Lipper.
The Trustees considered the methodology used by Janus Capital in determining
compensation payable to portfolio managers, the very competitive environment
for investment management talent and the competitive market for mutual funds
in different distribution channels.
The Trustees also reviewed Janus Capital's management fees for its separate
account clients and for its subadvised funds (for which Janus Capital
provides only portfolio management services). Although in most instances
subadvisory and separate account fee rates for various investment strategies
were lower than management fees for Funds having a similar strategy, the
Trustees noted that Janus Capital performs significant additional services
for the Funds that it does not provide to those other clients, including
administrative services, oversight of the Funds' other service providers,
trustee support, regulatory compliance, and numerous other services.
Moreover, they noted that the spread between the average fees charged to the
Funds and the fees that Janus Capital charged to its separate account clients
was significantly smaller than the average spread for
60
such fees of other advisers, based on publicly available data and research
conducted by their independent fee consultant.
The Trustees also considered the profitability to Janus Capital and its
affiliates of their relationships with each Fund and found Janus Capital's
profitability not to be unreasonable.
Finally, the Trustees considered the financial condition of Janus Capital,
which they found to be sound.
The Trustees concluded that the management fees and any other compensation
payable by each Fund to Janus Capital and its affiliates, as well as the fees
paid by Janus Capital or a Fund to the subadvisers of subadvised Funds, were
reasonable in relation to the nature and quality of the services provided,
taking into account the fees charged by other advisers for managing
comparable mutual funds with similar strategies and the fees Janus Capital
charges to other clients. The Trustees also concluded that the overall
expense ratio of each Fund was reasonable, taking into account the size of
the Fund, the quality of services provided by Janus Capital, the investment
performance of the Fund, and the expense limitations agreed to by Janus
Capital.
ECONOMIES OF SCALE
The Trustees received and considered information about the potential of Janus
Capital to experience economies of scale as the assets of the Funds increase.
They noted that, although each Fund (except four Funds that have breakpoints)
pays an advisory fee at a fixed rate as a percentage of net assets, without
any breakpoints, the management fee paid by each Fund, after any applicable
contractual expense limitations, was below the mean management fee rate of
the Fund's peer group selected by Lipper. The Trustees also took note 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 many of the
Funds have declined in the past few years, the Funds have benefited from
having advisory fee rates that have remained constant rather than fees with
breakpoints and higher fee rates at lower asset levels in which the effective
fee rate might have increased as assets declined. The Trustees considered
certain Amended Agreements that included a change to the advisory fee to
reflect a performance-based structure under which the rate of fee would
increase or decrease from the current fixed rate if the Fund outperforms or
underperforms its benchmark index over a trailing period. Such a fee
structure is likely to increase or decrease Janus Capital's economies of
scale, depending on whether the effective rate of the fee is increased or
decreased. The Trustees also noted that the Funds share
61
directly in economies of scale through lower charges of third-party service
providers based on the combined scale of all of the Funds. Based on all of
the information they reviewed, the Trustees concluded that the fee structure
in each of the advisory agreements was reasonable and that the current rates
of fees reflect a sharing between Janus Capital and the Fund of economies of
scale at the current asset level of the Fund.
OTHER BENEFITS TO THE ADVISER
The Trustees also considered benefits that accrue to Janus Capital and its
affiliates from their relationship with the Funds. They recognized that
affiliates of Janus Capital separately serve the Funds as transfer agent and
distributor, respectively. The Trustees also considered Janus Capital's use
of commissions paid by most Funds on their portfolio brokerage transactions
to obtain proprietary research products and services benefiting the Funds
and/or other clients of Janus Capital, as well as Janus Capital's agreement
not to use any Fund's portfolio brokerage transactions to obtain third party
research through brokers. The Trustees concluded that Janus Capital's use of
"soft" commission dollars to obtain proprietary research products and
services was consistent with regulatory requirements and was likely to
benefit the Funds. The Trustees also concluded that, other than the services
provided by Janus Capital and its affiliates pursuant to the agreements and
the fees to be paid by each Fund therefore, the Funds and Janus Capital may
potentially benefit from their relationship with each other in other ways.
They concluded that Janus Capital benefits from the receipt of proprietary
research products and services acquired through commissions paid on portfolio
transactions of the Funds and that the Funds benefit from Janus Capital's
receipt of those products and services, as well as research products and
services acquired through commissions paid by other clients of Janus Capital.
They further concluded that success of each Fund could attract other business
to Janus Capital or its other Funds and that the success of Janus Capital
could enhance Janus Capital's ability to serve the Funds.
After full consideration of the above factors as well as other factors, the
Trustees, including all of the Independent Trustees, concluded that the
current Investment Advisory Agreement for each Fund was in the best interest
of the Fund and its shareholders. In approving the Amended Agreements, the
Independent Trustees also concluded that the Amended Agreement, as proposed,
was in the best interest of the Fund and its shareholders.
62
PERFORMANCE-BASED INVESTMENT ADVISORY FEE PROPOSAL
APPLIES TO JANUS MERCURY FUND, JANUS CONTRARIAN FUND, JANUS RESEARCH FUND,
INTECH RISK-MANAGED STOCK FUND, JANUS MID CAP VALUE FUND, AND JANUS WORLDWIDE
FUND
On September 20, 2005 and October 19, 2005, the Board of Trustees, including
all of the Independent Trustees, voted unanimously to approve an Amended
Investment Advisory Agreement for the Fund ("Proposed Agreement") and
authorized the submission of the Proposed Agreement to the Fund's
shareholders for approval. The Proposed Agreement changed the advisory fee
paid by the Fund from a fixed rate to a rate that adjusts upward or downward
based upon the Fund's performance relative to a selected benchmark index.
Shareholders of the Fund approved the Proposed Agreement at a special meeting
of Shareholders held on December 29, 2005 for Janus Research Fund and INTECH
Risk-Managed Stock Fund; and on January 9, 2006 for Janus Mercury Fund, Janus
Contrarian Fund, Janus Mid Cap Value Fund, and Janus Worldwide Fund.
For more than a year the Independent Trustees and their independent fee
consultant, in consultation with independent legal counsel to the Independent
Trustees, have explored the possibility of modifying the fee structure for
certain funds to provide for a performance-based adjustment to the current
investment advisory fee rate that would increase or decrease the fee based on
whether the Fund's total return performance exceeds or lags a stated relevant
benchmark index.
The Independent Trustees also worked with Janus Capital to develop a
performance structure that was acceptable to Janus Capital. In doing so, the
Independent Trustees were seeking to provide a closer alignment of the
interests of Janus Capital with those of the Funds and their shareholders.
They believe that the fee structure proposed for each Fund will achieve that
objective. Included as part of their analysis of the overall performance fee
structure, the Trustees, in consultation with their independent fee
consultant, considered the appropriate performance range for achieving the
maximum and minimum advisory fee that would result in the Performance
Adjustment of up to 0.15% (positive or negative) of a Fund's average daily
net assets during the applicable performance measurement period. The Trustees
reviewed information provided by Janus Capital and prepared by their
independent fee consultant with respect to an appropriate deviation of
excess/under returns relative to a Fund's benchmark index, taking into
consideration expected tracking error of the Fund, expected returns and
potential risks and economics involved both for Janus Capital and the Fund's
shareholders. The Trustees also reviewed the structure of performance fees
applied by other mutual fund complexes. Based on this
63
information, the Trustees determined that a performance range that
approximates one standard deviation of excess/under returns relative to a
Fund's benchmark index was appropriate for calculating the maximum range
(positive or negative) of the Performance Adjustment.
As described above, the Performance Adjustment that will be added to or
subtracted from the "Base Fee" (as defined in the Proposed Agreement) as a
result of a Fund's performance relative to its benchmark index is a variable
up to 0.15% of average net assets during the performance measurement period.
Importantly, the performance is computed after deducting the Fund's operating
expenses (including advisory fees), which means that in order to receive any
upward adjustment from the Base Fee, Janus Capital must deliver a total
return after expenses that exceeds the return of the benchmark index, which
does not incur any expenses.
The Trustees determined that the benchmark index specified in each of the
Proposed Agreements for purposes of computing the performance fee adjustments
is appropriate for the respective Fund based on a number of factors,
including the fact that the index is broad-based and is composed of
securities of the types in which the Fund may invest. The Trustees believe
that divergence between the Fund's performance and performance of the index
can be attributed, in part, to the ability of the portfolio manager in making
investment decisions within the parameters of the Fund's investment objective
and investment policies and restrictions.
The Trustees determined that the class of shares of each Fund selected for
purposes of calculating the Performance Adjustment as applied to the Fund is
the most appropriate class for use in calculating such Fund's Performance
Adjustment. In making that determination, the Trustees considered the fee
structure and expenses paid by each class of shares, any fees paid to or
retained by Janus Capital or its affiliates, as well as the distribution
channel for each class of shares.
The time periods to be used in determining any Performance Adjustment were
also judged to be of appropriate length to ensure proper correlation and to
prevent fee adjustments from being based upon random or insignificant
differences between the performance of the Fund and of the index. In that
regard the Trustees concluded that it would be appropriate for there to be no
adjustment from the Base Fee for the first 12 months after the effective date
of each Proposed Agreement before implementation of any Performance
Adjustment, and that, once implemented, the Performance Adjustment should
reflect only the Fund's performance subsequent to that effective date.
Moreover, the Trustees believed that, upon reaching the thirty sixth month
after the effective
64
date, the performance measurement period would be fully implemented, and that
the Performance Adjustment should thereafter be based upon a thirty-six month
rolling performance measurement period.
In addition to considering the performance fee structure reflected in each
Proposed Agreement, in approving each of those agreements, the Trustees
followed the process and considered the factors and reached the conclusions
described above under "Amendments to Advisory Agreements to Conform to
Prevailing Industry Practice."
PERFORMANCE-BASED SUB-ADVISORY FEE PROPOSAL
APPLIES TO INTECH RISK-MANAGED STOCK FUND
On September 20, 2005, the Board of Trustees, including all of the
Independent Trustees, voted unanimously to approve amendments to the current
Sub-Advisory Agreement ("Proposed Amended Sub-Advisory Agreement") for INTECH
Risk-Managed Stock Fund and authorized the submission of the Proposed Amended
Sub-Advisory Agreement to the Fund's shareholders for approval. Shareholders
of the Fund approved the Proposed Amended Sub-Advisory Agreement at a Special
Meeting of Shareholders held on December 29, 2005.
The Trustees determined that, if the fees paid by the Fund to Janus Capital
are to be performance-based, the fees paid by Janus Capital to INTECH should
be determined under a corresponding performance-based fee structure. In
approving the proposed performance fee structure for the Proposed Amended
Sub-Advisory Agreement, the Trustees considered the factors and reached the
conclusions described above under "Performance-Based Advisory Fee Proposal."
In addition, in approving the Proposed Amended Sub-Advisory Agreement, the
Trustees followed the process and considered the factors and reached the
conclusions described above under "Amendments to Advisory Agreements to
Conform to Prevailing Industry Practice."
ADDITIONAL INFORMATION ABOUT JANUS CAPITAL AND THE SUBADVISERS
Janus Capital acts as subadviser for a number of private-label mutual funds
and provides separate account advisory services for institutional accounts.
Janus Capital may also manage its own proprietary accounts. Investment
decisions for each account managed by Janus Capital, including the Funds, are
made independently from those for any other account that is or may in the
future become managed by Janus Capital or its affiliates. If, however, a
number of accounts managed by Janus Capital are contemporaneously engaged in
the purchase or sale of the same security, the orders may be aggregated
and/or the
65
transactions may be averaged as to price and allocated to each account in
accordance with allocation procedures adopted by Janus Capital. Partial fills
for the accounts of two or more investment personnel will be allocated pro
rata under procedures adopted by Janus Capital. Circumstances may arise under
which Janus Capital may determine that, although it may be desirable and/or
suitable that a particular security or other investment be purchased or sold
for more than one account, there exists a limited supply or demand for the
security or other investment. Janus Capital seeks to allocate the opportunity
to purchase or sell that security or other investment among accounts on an
equitable basis by taking into consideration factors including, but not
limited to, size of the portfolio, concentration of holdings, investment
objectives and guidelines, purchase costs, and cash availability. Janus
Capital, however, cannot assure equality of allocations among all its
accounts, nor can it assure that the opportunity to purchase or sell a
security or other investment will be proportionally allocated among accounts
according to any particular or predetermined standards or criteria. In some
cases, these allocation procedures may adversely affect the price paid or
received by an account or the size of the position obtained or liquidated for
an account. In others, however, the accounts' ability to participate in
volume transactions may produce better executions and prices for the
accounts.
With respect to allocations of initial public offerings ("IPOs"), under IPO
allocation procedures adopted by Janus Capital, Janus Capital accounts and
Perkins accounts will participate in an IPO if the investment personnel
believe the IPO is an appropriate investment based on the account's
investment restrictions, risk profile, asset composition, and/or cash levels.
These IPO allocation procedures require that each account be assigned to a
pre-defined group ("IPO Group"), based on objective criteria set forth in the
procedures. Generally, an account may not participate in an IPO unless it is
assigned to an IPO Group that correlates with the pre-offering market
capitalization ("IPO Classification") of the company. If, however, the
investment personnel intend to build a long-term position in the company and
purchase securities in both the initial offering and in the immediate
aftermarket, then all accounts participating in that IPO will receive IPO
shares and any immediate aftermarket shares purchased at a blended price
equal to the average price paid for all IPO and immediate aftermarket shares.
If there is no immediate aftermarket activity, all shares purchased will be
allocated pro rata to the participating accounts, subject to a de minimis
exception standard. These IPO allocation procedures may result in certain
accounts, particularly larger accounts, receiving fewer IPOs than other
accounts, which may impact performance.
66
Janus Capital is permitted to adjust its allocation procedures to eliminate
fractional shares or odd lots, and has the discretion to deviate from its
allocation procedures in certain circumstances. For example, additional
securities may be allocated to the investment personnel who are instrumental
in originating or developing an investment opportunity or to comply with the
investment personnel's request to ensure that their accounts receive
sufficient securities to satisfy specialized investment objectives.
Janus Capital manages long and short portfolios. The simultaneous management
of long and short portfolios creates potential conflicts of interest
including the risk that short sale activity could adversely affect the market
value of long positions (and vice versa), the risk arising from sequential
orders in long and short positions, and the risks associated with receiving
opposing orders at the same time. Janus Capital has adopted procedures that
it believes are reasonably designed to mitigate these conflicts.
INTECH has adopted its own allocation procedures, which apply to INTECH
Risk-Managed Stock Fund. INTECH, the subadviser for INTECH Risk-Managed Stock
Fund, generates regular daily trades for all of its clients, including INTECH
Risk-Managed Stock Fund, using proprietary trade system software. Before
submission for execution, trades are reviewed by the trader for errors or
discrepancies. Trades are submitted to designated brokers in a single
electronic file at one time during the day, pre-allocated to individual
clients. If an order is not completely filled, executed shares are allocated
to client accounts in proportion to the order.
Perkins, the subadviser for Janus Mid Cap Value Fund and Janus Small Cap
Value Fund, may buy and sell securities, or engage in other investments, on
behalf of multiple clients, including Janus Mid Cap Value Fund and Janus
Small Cap Value Fund. Perkins seeks to allocate trades among its clients on
an equitable basis, taking into consideration such factors as the size of the
client's portfolio, concentration of holdings, investment objectives and
guidelines, purchase costs, and cash availability.
Pursuant to an exemptive order granted by the SEC, the Funds and other funds
advised by Janus Capital or its affiliates may also transfer daily uninvested
cash balances into one or more joint trading accounts. Assets in the joint
trading accounts are invested in money market instruments and the proceeds
are allocated to the participating funds on a pro rata basis.
Each account managed by Janus Capital or the subadvisers has its own
investment objective and policies and is managed accordingly by the
respective investment personnel. As a result, from time to time, two or more
different
67
managed accounts may pursue divergent investment strategies with respect to
investments or categories of investments.
Janus Capital, INTECH, and Janus Distributors currently have in place Ethics
Rules, which are comprised of the Personal Trading Code of Ethics, Gift
Policy, Portfolio Holdings Disclosure Policy, and Outside Employment Policy.
The Ethics Rules are designed to ensure Janus Capital, INTECH, and Janus
Distributors personnel: (i) observe applicable legal (including compliance
with applicable federal securities laws) and ethical standards in the
performance of their duties; (ii) at all times place the interests of the
Fund shareholders first; (iii) disclose all actual or potential conflicts;
(iv) adhere to the highest standards of loyalty, candor, and care in all
matters relating to the Fund shareholders; (v) conduct all personal trading,
including transactions in the Funds and other securities, consistent with the
Ethics Rules and in such a manner as to avoid any actual or potential
conflict of interest or any abuse of their position of trust and
responsibility; and (vi) not use any material nonpublic information in
securities trading. The Ethics Rules are on file with and available from the
SEC through the SEC website at http://www.sec.gov.
Under the Personal Trading Code of Ethics (the "Code of Ethics"), all Janus
Capital, INTECH, and Janus Distributors personnel, as well as the Trustees
and Officers of the Funds, are required to conduct their personal investment
activities in a manner that Janus Capital believes is not detrimental to the
Funds. In addition, Janus Capital, INTECH, and Janus Distributors personnel
are not permitted to transact in securities held by the Funds for their
personal accounts except under circumstances specified in the Code of Ethics.
All personnel of Janus Capital, INTECH, Janus Distributors, and the Funds, as
well as certain other designated employees deemed to have access to current
trading information, are required to pre-clear all transactions in securities
not otherwise exempt. Requests for trading authorization will be denied when,
among other reasons, the proposed personal transaction would be contrary to
the provisions of the Code of Ethics.
In addition to the pre-clearance requirement described above, the Code of
Ethics subjects such personnel to various trading restrictions and reporting
obligations. All reportable transactions are reviewed for compliance with the
Code of Ethics and under certain circumstances Janus Capital, INTECH, and
Janus Distributors personnel may be required to forfeit their profits made
from personal trading.
Perkins has adopted its own Code of Ethics, (the "Code"), which Perkins has
certified complies with Rule 17j-1 under the 1940 Act. The Code establishes
policies and procedures that govern certain types of personal securities
transactions by employees of Perkins. Subject to the requirements and
68
restrictions of the Code, individuals are permitted to make personal
securities transactions, including transactions in securities that may be
purchased or held by the Funds. The Code has provisions that require the
employees of Perkins to conduct their personal securities transactions in a
manner that does not operate adversely to the interests of the Funds and to
avoid serving their own personal interests ahead of the Funds and their
shareholders.
PROXY VOTING POLICIES AND PROCEDURES
Each Fund's Board of Trustees has delegated to Janus Capital or the Fund's
subadviser, as applicable, the authority to vote all proxies relating to such
Fund's portfolio securities in accordance with Janus Capital's or the
applicable subadviser's own policies and procedures. Summaries of Janus
Capital's or the applicable subadviser's policies and procedures are
available: (i) without charge, upon request, by calling 1-800-525-3713; (ii)
on the Funds' website at www.janus.com; and (iii) on the SEC's website at
http://www.sec.gov.
Each Fund's proxy voting record for the one-year period ending each June 30th
is available, free of charge, through www.janus.com and from the SEC through
the SEC website at http://www.sec.gov.
Janus Capital Management LLC
Proxy Voting Summary for Mutual Funds
Janus Capital votes proxies in the best interest of its shareholders and
without regard to any other Janus Capital relationship (business or
otherwise). Janus Capital will not accept direction as to how to vote
individual proxies for which it has voting responsibility from any other
person or organization (other than the research and information provided by
the Proxy Voting Service).
PROXY VOTING PROCEDURES
Janus Capital has developed proxy voting guidelines (the "Janus Guidelines")
that influence how Janus Capital's portfolio managers vote proxies on
securities held by the portfolios Janus Capital manages. The Janus
Guidelines, which include recommendations on most major corporate issues,
have been developed by the Janus Proxy Voting Committee (the "Proxy Voting
Committee") in consultation with Janus Capital's portfolio managers and Janus
Capital's Chief Investment Officer. In creating proxy voting recommendations,
the Proxy Voting Committee analyzes proxy proposals from the prior year and
evaluates whether those proposals would adversely affect shareholders'
interests. Once the Proxy Voting Committee establishes its recommendations,
they are distributed to Janus Capital's portfolio managers and Janus
Capital's Chief Investment Officer for input. Once agreed upon, the
recommendations are implemented as the Janus
69
Guidelines. Janus Capital's portfolio managers are responsible for proxy
votes on securities they own in the portfolios they manage. Most portfolio
managers vote consistently with the Janus Guidelines; however, a portfolio
manager may choose to vote differently than the Janus Guidelines. Janus
Capital has engaged an independent Proxy Voting Service to assist in the
voting of proxies. The Proxy Voting Service also provides research and
recommendations on proxy issues.
The role of the Proxy Voting Committee is to work with Janus Capital's
portfolio management and Janus Capital's Chief Investment Officer to develop
the Janus Guidelines. The Proxy Voting Committee also serves as a resource to
portfolio management with respect to proxy voting and oversees the proxy
voting process. The Proxy Voting Committee's oversight responsibilities
include monitoring for and resolving material conflicts of interest with
respect to proxy voting. Janus Capital believes that application of the Janus
Guidelines to vote mutual fund proxies should, in most cases, adequately
address any possible conflicts of interest since the Janus Guidelines are
pre-determined. However, for proxy votes that are inconsistent with the Janus
Guidelines, the Proxy Voting Committee will review the proxy votes in order
to determine whether a portfolio manager's voting rationale appears
reasonable. If the Proxy Voting Committee does not agree that a portfolio
manager's rationale is reasonable, the Proxy Voting Committee will refer the
matter to Janus Capital's Chief Investment Officer (or Director of Research).
PROXY VOTING POLICIES
As discussed above, the Proxy Voting Committee has developed the Janus
Guidelines for use in voting proxies. Below is a summary of some of the more
significant Janus Guidelines.
BOARD OF DIRECTORS ISSUES
Janus Capital will generally vote in favor of slates of director candidates
that are comprised of a majority of independent directors. Janus Capital will
generally vote in favor of proposals to increase the minimum number of
independent directors. Janus Capital will generally oppose non-independent
directors who serve on the audit, compensation, and/or nominating committees
of the board.
AUDITOR ISSUES
Janus Capital will generally oppose proposals asking for approval of auditors
that have a substantial nonaudit relationship with a company.
70
EXECUTIVE COMPENSATION ISSUES
Janus Capital reviews executive compensation plans on a case-by-case basis
using research provided by the Proxy Voting Service. Janus Capital will
generally oppose proposed equity-based compensation plans which contain stock
option plans that are excessively dilutive. In addition, Janus Capital will
generally oppose proposals regarding the issuance of options with an exercise
price below market price and the issuance of reload options (stock option
that is automatically granted if an outstanding stock option is exercised
during a window period). Janus Capital will also generally oppose proposals
regarding the repricing of underwater options.
GENERAL CORPORATE ISSUES
Janus Capital will generally oppose proposals regarding supermajority voting
rights. Janus Capital will generally oppose proposals for different classes
of stock with different voting rights. Janus Capital will generally oppose
proposals seeking to implement measures designed to prevent or obstruct
corporate takeovers. Janus Capital will review proposals relating to mergers,
acquisitions, tender offers, and other similar actions on a case-by-case
basis.
SHAREHOLDER PROPOSALS
If a shareholder proposal is specifically addressed by the Janus Guidelines,
Janus Capital will generally vote pursuant to that Janus Guideline. Janus
Capital will generally abstain from voting shareholder proposals that are
moral or ethical in nature or place arbitrary constraints on the board or
management of a company. Janus Capital will solicit additional research from
its Proxy Voting Service for proposals outside the scope of the Janus
Guidelines.
A complete copy of Janus Capital's proxy voting policies and procedures,
including specific guidelines, is available on www.janus.com.
Enhanced Investment Technologies, LLC
Proxy Voting Procedures
The following are the procedures for INTECH with respect to the voting of
proxies on behalf of all clients for which INTECH has been delegated the
responsibility for voting proxies and the keeping of records relating to
proxy voting.
GENERAL POLICY. INTECH's investment process involves buy and sell decisions
that are determined solely by a mathematical formula that selects target
holdings and weightings without any consideration of the fundamentals of
individual companies or other company-specific factors. As such, extensive
corporate research analysis is not performed. Accordingly, INTECH has engaged
Institu-
71
tional Shareholder Services ("ISS") to vote all proxies on behalf of client
accounts in accordance, at the client's discretion, with the ISS or PVS Proxy
Voting Guidelines (individually and collectively referred to as "ISS
Recommendations"). Concurrent with the adoption of these procedures, INTECH
will not accept direction in the voting of proxies for which it has voting
responsibility from any person or organization other than the ISS
Recommendations. INTECH will only accept direction from a client to vote
proxies for the client's account pursuant to the ISS or PVS Proxy Voting
Guidelines.
DELEGATION OF PROXY VOTING ADMINISTRATION. INTECH has engaged the services of
the Investment Accounting Operations Group of Janus Capital to provide the
administration for its proxy voting.
JANUS INVESTMENT ACCOUNTING OPERATIONS GROUP. The Janus Investment Accounting
Operations Group works with the ISS and is responsible to INTECH for ensuring
that all proxies are voted consistent with the ISS or PVS Proxy Voting
Guidelines.
VOTING AND USE OF PROXY VOTING SERVICE. Pursuant to its relationship with
Janus Capital, INTECH has engaged ISS, an independent Proxy Voting Service,
to assist in the voting of proxies. ISS is responsible for coordinating with
the clients' custodians to ensure that all proxy materials received by the
custodians relating to the clients' portfolio securities are processed in a
timely fashion. ISS is responsible for working with the Janus Investment
Accounting Operations Group to coordinate the actual votes cast. In addition,
ISS is responsible for maintaining copies of all proxy statements received by
issuers and to promptly provide such materials to INTECH or Janus Capital
upon request. ISS will process all proxy votes in accordance with the ISS or
PVS Proxy Voting Guidelines. Janus Capital has instructed ISS to vote all
Janus mutual fund proxies, for which INTECH has voting authority, in
accordance with the ISS Guidelines. In absence of specific client direction,
INTECH will direct ISS to vote proxies in accordance with PVS Guidelines.
CONFLICTS OF INTEREST. INTECH has adopted the following procedures and
controls to avoid conflicts of interest that may arise in connection with
proxy voting:
- ISS shall vote all proxies on INTECH's behalf in accordance with the ISS or
PVS Proxy Voting Guidelines. In its capacity as administrator, Janus
Capital shall conduct periodic reviews of proxy voting records on a sample
basis to ensure that all votes are actually cast in accordance with this
policy.
- The Janus Investment Accounting Operations Group is not authorized to
override any recommendation except upon the receipt of express written
72
authorization from the client directing INTECH to vote in a specified
manner. All overrides, other than client overrides, shall be approved by
the INTECH Chief Compliance Officer. The Janus Investment Accounting
Operations Group shall maintain records of all overrides, including all
required authorizations.
- Without limiting the foregoing, the Janus Investment Accounting Operations
Group shall not give any consideration to the manner in which votes are
being cast on behalf of Janus Capital or its affiliates with respect to a
particular matter.
- Any attempts to influence the proxy voting process shall be reported
immediately to the INTECH Chief Compliance Officer.
- All client accounts are prohibited from investing in securities of Janus
Capital or securities of its publicly traded affiliates. INTECH maintains a
Restricted List of securities that may not be purchased on behalf of the
individual accounts which includes, among other things, affiliates of such
accounts. The trading system is designed to prohibit transactions in all
securities on the Restricted List.
In light of the foregoing policies, it is not expected that any conflicts
will arise in the proxy voting process. In the unusual circumstance that ISS
seeks direction on any matter or INTECH is otherwise in a position of
evaluating a proposal on a case-by-case basis, the matter shall be referred
to the INTECH Chief Compliance Officer to determine whether a material
conflict exists. To the extent that a conflict of interest is identified,
INTECH will vote the proxy according to the ISS recommendation.
REPORTING AND RECORD RETENTION. Upon request, on a quarterly basis, INTECH
will provide its clients with the proxy voting record for that client's
account. Janus Capital, on INTECH's behalf, retains proxy statements received
regarding client securities, records of votes cast on behalf of clients, and
records of client requests for proxy voting information. In addition, INTECH
will retain copies of its Proxy Voting Procedures and the ISS and PVS
Guidelines. Proxy statements received from issuers are either available on
the SEC's EDGAR database or are kept by a third party voting service and are
available on request. All proxy voting materials and supporting documentation
are retained for a minimum of 6 years.
REVIEW OF POLICY. INTECH shall periodically review this policy and the
services provided by ISS to determine whether the continued use of ISS and
the ISS Recommendations is in the best interest of clients.
73
Perkins, Wolf, McDonnell and Company, LLC
Proxy Voting Summary for Mutual Funds
Perkins votes proxies in the best interest of its shareholders and without
regard to any other Perkins relationship (business or otherwise). Perkins
will not accept direction as to how to vote individual proxies for which it
has voting responsibility from any other person or organization (other than
the research and information provided by the Proxy Voting Service).
PROXY VOTING PROCEDURES
Perkins has developed proxy voting guidelines (the "Perkins Wolf Guidelines")
that influence how Perkins portfolio managers vote proxies on securities held
by the portfolios Perkins manages. The Perkins Wolf Guidelines, which include
recommendations on most major corporate issues, have been developed by the
Perkins Wolf Proxy Voting Committee (the "Proxy Voting Committee"). Perkins
portfolio managers are responsible for proxy votes on securities they own in
the portfolios they manage. Most portfolio managers vote consistently with
the Perkins Wolf Guidelines, however, a portfolio manager may choose to vote
differently than the Perkins Wolf Guidelines. Perkins has delegated the
administration of its proxy voting to Janus Capital. Janus Capital, on
Perkins' behalf, has engaged an independent Proxy Voting Service to assist in
the voting of proxies. The Proxy Voting Service also provides research and
recommendations on proxy issues.
The role of the Proxy Voting Committee is to develop the Perkins Wolf
Guidelines. The Proxy Voting Committee also serves as a resource to portfolio
management with respect to proxy voting and oversees the proxy voting
process. The Proxy Voting Committee's oversight responsibilities include
monitoring for and resolving material conflicts of interest with respect to
proxy voting. Perkins believes that application of the Perkins Wolf
Guidelines to vote mutual fund proxies should, in most cases, adequately
address any possible conflicts of interest since the Perkins Wolf Guidelines
are pre-determined. However, for proxy votes that are inconsistent with the
Perkins Wolf Guidelines, the Proxy Voting Committee will review the proxy
votes in order to determine whether the portfolio manager's voting rationale
appears reasonable. If the Proxy Voting Committee does not agree that the
portfolio manager's rationale is reasonable, the Proxy Voting Committee will
refer the matter to the Chief Investment Officer (or the Director of
Research).
74
PROXY VOTING POLICIES
As discussed above, the Proxy Voting Committee has developed the Perkins Wolf
Guidelines for use in voting proxies. Below is a summary of some of the more
significant Perkins Wolf Guidelines.
BOARD OF DIRECTORS ISSUES
Perkins will generally vote in favor of slates of director candidates that
are comprised of a majority of independent directors. Perkins will generally
vote in favor of proposals to increase the minimum number of independent
directors. Perkins will generally oppose non-independent directors who serve
on the audit, compensation, and/or nominating committees of the board.
AUDITOR ISSUES
Perkins will generally oppose proposals asking for approval of auditors that
have a substantial nonaudit relationship with a company.
EXECUTIVE COMPENSATION ISSUES
Perkins reviews executive compensation plans on a case-by-case basis using
research provided by the Proxy Voting Service. Perkins will generally oppose
proposed equity-based compensation plans which contain stock option plans
that are excessively dilutive. In addition, Perkins will generally oppose
proposals regarding the issuance of options with an exercise price below
market price and the issuance of reload options (stock option that is
automatically granted if an outstanding stock option is exercised during a
window period).
GENERAL CORPORATE ISSUES
Perkins will generally oppose proposals regarding supermajority voting
rights. Perkins will generally oppose proposals for different classes of
stock with different voting rights. Perkins will generally oppose proposals
seeking to implement measures designed to prevent or obstruct corporate
takeovers. Perkins will review proposals relating to mergers, acquisitions,
tender offers, and other similar actions on a case-by-case basis.
SHAREHOLDER PROPOSALS
If a shareholder proposal is specifically addressed by the Perkins Wolf
Guidelines, Perkins will generally vote pursuant to that Perkins Wolf
Guideline. Perkins will generally abstain from voting shareholder proposals
that are moral or ethical in nature or place arbitrary constraints on the
board or management of a company. Perkins Wolf will solicit additional
research from its Proxy Voting Service for proposals outside the scope of the
Perkins Wolf Guidelines.
75
CUSTODIAN, TRANSFER AGENT, AND CERTAIN
AFFILIATIONS
- --------------------------------------------------------------------------------
State Street Bank and Trust Company, P.O. Box 0351, Boston, Massachusetts
02117-0351 is the custodian of the domestic securities and cash of the Funds.
State Street is the designated Foreign Custody Manager (as the term is
defined in Rule 17f-5 under the 1940 Act) of the Funds' securities and cash
held outside the United States. The Funds' Trustees have delegated to State
Street certain responsibilities for such assets, as permitted by Rule 17f-5.
State Street and the foreign subcustodians selected by it hold the Funds'
assets in safekeeping and collect and remit the income thereon, subject to
the instructions of each Fund.
Janus Services LLC ("Janus Services"), P.O. Box 173375, Denver, Colorado
80217-3375, a wholly-owned subsidiary of Janus Capital, is the Funds'
transfer agent. In addition, Janus Services provides certain other
administrative, recordkeeping, and shareholder relations services for the
Funds.
For transfer agency and other services, Janus Services receives an
asset-weighted average annual fee based on the proportion of each Fund's
total net assets sold directly and the proportion of each Fund's net assets
sold through financial intermediaries. The applicable fee rates are 0.16% of
net assets on the proportion of assets sold directly and 0.21% on the
proportion of assets sold through intermediaries. Janus Services also
receives $4 per open shareholder account in each Fund, except Janus Twenty
Fund, Janus Venture Fund, Janus Mid Cap Value Fund-Institutional Shares, and
Janus Small Cap Value Fund. In addition, the Funds pay DST Systems, Inc.
("DST") license fees at the annual rate of $3.06 per shareholder account for
the Equity Funds and $3.98 per shareholder account for the Bond Funds for the
use of DST's shareholder accounting system. The Funds also pay DST at an
annual rate of $1.10 per closed shareholder account, as well as postage and
forms costs that a DST affiliate incurs in mailing Fund shareholder
transaction confirmations.
For Janus Mid Cap Value Fund and Janus Small Cap Value Fund, due to the
differences in the shareholder bases of Investor Shares and Institutional
Shares, the transfer agency fee structure is expected to result in different
overall transfer agency expenses incurred by each class. By written
agreement, Janus Services has agreed until March 1, 2007, to waive the
transfer agency fees payable by the Institutional Shares of Janus Mid Cap
Value Fund and Janus Small Cap Value Fund so that the total expenses of the
Institutional Shares do not exceed the total expenses of the Institutional
Shares of Berger Mid Cap Value Fund and Berger Small Cap Value Fund.
76
Transfer Agency fees paid on behalf of Janus Mid Cap Value
Fund - Institutional Shares and Janus Small Cap Value Fund - Institutional
Shares for the fiscal year ended October 31, 2005, are summarized below.
<Table>
<Caption>
Fund Name Transfer Agency Fees Transfer Agency Waivers
- -----------------------------------------------------------------------------------------------
VALUE
Janus Mid Cap Value Fund - Institutional $ 956,395 $ 649,551
Shares
Janus Small Cap Value Fund - Institutional $2,207,159 $2,207,159(1)
Shares
</Table>
(1) The waiver exceeded the transfer agency fees.
Janus Distributors LLC, 151 Detroit Street, Denver, Colorado 80206-4805, a
wholly-owned subsidiary of Janus Capital, is the principal underwriter for
the Funds. Janus Distributors is registered as a broker-dealer under the
Securities Exchange Act of 1934 and is a member of the National Association
of Securities Dealers, Inc. Janus Distributors acts as the agent of the Funds
in connection with the sale of their shares in all states in which such
shares are registered and in which Janus Distributors is qualified as a
broker-dealer. Under the Distribution Agreement, Janus Distributors
continuously offers each Fund's shares and accepts orders at NAV. No sales
charges are paid by investors. Promotional expenses in connection with offers
and sales of shares are paid by Janus Capital. The cash-compensation rate at
which Janus Distributors pays its registered representatives for sales of
institutional products may differ based on a type of fund or a specific
trust. The receipt of (or prospect of receiving) compensation described above
may provide an incentive for a registered representative to favor sales of
funds for which they receive a higher compensation rate. You may wish to
consider these arrangements when evaluating any recommendations of registered
representatives. Janus Capital periodically monitors sales compensation paid
to its registered representatives in order to attempt to identify potential
conflicts of interest.
77
PORTFOLIO TRANSACTIONS AND BROKERAGE
- --------------------------------------------------------------------------------
Janus Capital places all portfolio transactions of the Funds, except for
INTECH Risk-Managed Stock Fund. With respect to INTECH Risk-Managed Stock
Fund, INTECH places portfolio transactions using its proprietary trade system
software. With respect to Janus Mid Cap Value Fund and Janus Small Cap Value
Fund, Janus Capital places all portfolio transactions solely upon Perkins'
direction.
Janus Capital and Perkins have a policy of seeking to obtain the "best
execution" of all portfolio transactions (the best net prices under the
circumstances based upon a number of factors including and subject to the
factors discussed below) provided that Janus Capital and Perkins may
occasionally pay higher commissions for research services as described below.
The Funds may trade foreign securities in foreign countries because the best
available market for these securities is often on foreign exchanges. In
transactions on foreign stock exchanges, brokers' commissions are frequently
fixed and are often higher than in the United States, where commissions are
negotiated.
Janus Capital considers a number of factors in seeking best execution in
selecting brokers and dealers and in negotiating commissions on agency
transactions. In seeking best execution on trades for funds subadvised by
Perkins, Janus Capital acts on behalf of and in consultation with Perkins.
Those factors include, but are not limited to: Janus Capital's and Perkins'
knowledge of currently available negotiated commission rates or prices of
securities currently available and other current transaction costs; the
nature of the security being traded; the size and type of the transaction;
the nature and character of the markets for the security to be purchased or
sold; the desired timing of the trade; the activity existing and expected in
the market for the particular security; confidentiality, including trade
anonymity; liquidity; the quality of the execution, clearance, and settlement
services; financial stability of the broker or dealer; the existence of
actual or apparent operational problems of any broker or dealer; rebates of
commissions by a broker to a Fund or to a third party service provider to the
Fund to pay Fund expenses; and the value of research products or services
provided by brokers. In recognition of the value of the foregoing factors,
Janus Capital may place portfolio transactions with a broker or dealer with
whom it has negotiated a commission that is in excess of the commission
another broker or dealer would have charged for effecting that transaction if
Janus Capital (or Janus Capital acting on behalf of and in consultation with
Perkins) determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage, research, and other
services provided by such broker or dealer viewed in terms of either that
particular transaction or of the overall responsibilities of Janus Capital or
Perkins, as applicable. Research may include furnishing advice, either
directly or through publications or writings, as to the value of securities,
the advisability of purchasing or selling specific securities,
78
and the availability of securities or purchasers or sellers of securities;
furnishing seminars, information, analyses, and reports concerning issuers,
industries, securities, trading markets and methods, legislative
developments, changes in accounting practices, economic factors and trends,
and portfolio strategy; access to research analysts, corporate management
personnel, industry experts, economists, and government officials; and other
research products and services that assist Janus Capital or Perkins, as
applicable, in carrying out their responsibilities. Research received from
brokers or dealers is supplemental to Janus Capital's and Perkins' own
research efforts. Because Janus Capital and Perkins receive a benefit from
research they receive from broker-dealers, Janus Capital and Perkins may have
an incentive to continue to use those broker-dealers to effect transactions.
Janus Capital and Perkins do not consider a broker-dealer's sale of Fund
shares when choosing a broker-dealer to effect transactions.
For the fiscal year ended October 31, 2005, the total brokerage commissions
paid by the Funds to brokers and dealers in transactions identified for
execution primarily on the basis of research and other services provided to
the Funds are summarized below.
<Table>
<Caption>
Fund Name Commissions Transactions
- -------------------------------------------------------------------------------------------
GROWTH
Janus Fund $1,555,900 $1,443,632,343
Janus Enterprise Fund $ 36,444 $ 23,985,732
Janus Mercury Fund $ 328,850 $ 226,519,262
Janus Olympus Fund $ 212,458 $ 143,628,979
Janus Orion Fund $ 7,000 $ 3,801,381
Janus Twenty Fund $ 276,478 $ 403,457,239
Janus Venture Fund $ 13,568 $ 4,566,906
SPECIALTY GROWTH
Janus Global Life Sciences Fund $ 90,650 $ 88,072,680
Janus Global Technology Fund $ 19,393 $ 8,645,426
CORE
Janus Balanced Fund $ 135,630 $ 117,287,301
Janus Contrarian Fund $ 100,629 $ 76,684,650
Janus Core Equity Fund $ 5,510 $ 3,581,674
Janus Growth and Income Fund $ 321,952 $ 285,263,435
VALUE
Janus Mid Cap Value Fund $ 593,145 $ 329,063,087
Janus Small Cap Value Fund $ 461,713 $ 165,209,931
INTERNATIONAL & GLOBAL
Janus Global Opportunities Fund $ 162 $ 146,814
Janus Overseas Fund $ 16,269 $ 18,579,549
Janus Worldwide Fund $ 256,803 $ 227,127,412
</Table>
Note: Funds that are not included in the table did not pay any commissions
related to research for the stated period.
79
Janus Capital and Perkins do not guarantee any broker the placement of a pre-
determined amount of securities transactions in return for the research or
brokerage services it provides. Janus Capital and Perkins do, however, have
internal procedures for allocating transactions in a manner consistent with
their execution policies to brokers that they have identified as providing
research, research-related products or services, or execution-related
services of a particular benefit to their clients. Brokerage and research
products and services furnished by brokers may be used in servicing any or
all of the clients of Janus Capital or Perkins and such research may not
necessarily be used by Janus Capital or Perkins in connection with the
accounts which paid commissions to the broker providing such brokerage and
research products and services. Similarly, research and brokerage services
earned from equity trades may be used for fixed-income or other clients that
normally do not pay brokerage commissions. Perkins may make its own separate
arrangements with and maintain internal allocation procedures for allocating
transactions to brokers who provide research products and services to
encourage them to provide services expected to be useful to Perkins' clients,
including Janus Mid Cap Value Fund and Janus Small Cap Value Fund.
Janus Capital and Perkins may also use step-out transactions in order to
receive research products and related services. In a step-out transaction,
Janus Capital or Perkins directs trades to a broker-dealer with the
instruction that the broker-dealer execute the transaction, but "step-out"
all or a portion of the transaction or commission in favor of another
broker-dealer that provides such products and/or services. The second
broker-dealer may clear and settle and receive commissions for the
stepped-out portion. In a new issue designation, Janus Capital or Perkins
directs purchase orders to a broker-dealer that is a selling group member or
underwriter of an equity or fixed-income new issue offering. Janus Capital or
Perkins directs that broker-dealer to designate a portion of the
broker-dealer's commission on the new issue purchase to a second broker-
dealer(s) that provides such products and/or services. Given Janus Capital's
and Perkins' receipt of such products and services in connection with
step-out transactions and new issue designations, Janus Capital and Perkins
have an incentive to continue to engage in such transactions; however, Janus
Capital and Perkins only intend to utilize step-out transactions and new
issue designations when they believe that doing so would help achieve best
execution.
INTECH has a policy of seeking to obtain best execution (obtaining the most
favorable price and efficient execution). INTECH seeks to effect each
transaction at a price and commission, if any, that provides the most
favorable total cost or proceeds reasonably attainable in the circumstances.
INTECH may, however, pay a higher commission than would otherwise be
necessary for a particular
80
transaction when, in INTECH's opinion, to do so will further the goal of
obtaining the best available execution. Commissions are negotiated with the
broker on the basis of the quality and quantity of execution services that
the broker provides, in light of generally prevailing commission rates with
respect to any securities transactions involving a commission payment.
Periodically, reviews are conducted of the allocation among brokers of orders
for equity securities and the commissions that were paid.
INTECH does not consider research services in selecting brokers. For INTECH
Risk-Managed Stock Fund, regular daily trades are generated by INTECH using
proprietary trade system software. Before submission for execution, trades
are reviewed by the trader for errors or discrepancies. Trades are submitted
to designated brokers at one time during the day, to the extent possible,
pre-allocated to individual clients. In the event that an order is not
completely filled, executed shares are allocated to client accounts in
proportion to the order.
When the Funds purchase or sell a security in the over-the-counter market,
the transaction takes place directly with a principal market-maker, without
the use of a broker, except in those circumstances where in the opinion of
Janus Capital or the subadviser better prices and executions will be achieved
through the use of a broker.
81
The following table lists the total amount of brokerage commissions paid by
each Fund for the fiscal years or periods ending on October 31st of each year
shown.
<Table>
<Caption>
Fund Name 2005 2004 2003
- ---------------------------------------------------------------------------------------------
GROWTH
Janus Fund $19,080,866 $10,899,367 $11,107,484
Janus Enterprise Fund $ 1,054,497 $ 1,349,388 $ 1,713,305
Janus Mercury Fund $ 4,024,464 $ 6,141,944 $ 8,890,662
Janus Olympus Fund $ 5,277,667 $ 5,165,131 $ 4,666,433
Janus Orion Fund $ 1,028,489 $ 982,716 $ 976,633
Janus Triton Fund $ 50,283(1) $ -- $ --
Janus Twenty Fund $ 5,483,852 $ 3,518,479 $ 8,737,644
Janus Venture Fund $ 2,243,832 $ 2,460,168 $ 2,691,820
SPECIALTY GROWTH
Janus Global Life Sciences Fund $ 1,846,934 $ 2,414,542 $ 4,491,853
Janus Global Technology Fund $ 1,487,767 $ 1,616,996 $ 2,166,710
CORE
Janus Balanced Fund $ 1,432,847 $ 2,913,667 $ 4,042,300
Janus Contrarian Fund $ 2,902,293 $ 3,242,196 $ 3,836,124
Janus Core Equity Fund $ 887,329 $ 890,152 $ 1,324,629
Janus Growth and Income Fund $ 4,005,977 $ 6,087,632 $ 6,078,554
Janus Research Fund $ 66,080(1) $ -- $ --
RISK-MANAGED
INTECH Risk-Managed Stock Fund(2) $ 274,228 $ 125,130 $ 57,905(3)
VALUE
Janus Mid Cap Value Fund $ 9,052,306 $ 8,517,971 $ 3,484,851
Janus Small Cap Value Fund $ 4,553,152 $ 6,808,976 $ 5,517,841
INTERNATIONAL & GLOBAL
Janus Global Opportunities Fund $ 239,905 $ 205,663 $ 200,420
Janus Overseas Fund $ 4,969,340 $ 5,768,783 $12,190,106
Janus Worldwide Fund $ 7,943,862 $37,095,464 $41,907,461
BOND
Janus Flexible Bond Fund $ 5,738 $ 4,166 $ 9,408
Janus High-Yield Fund $ 7,836 $ 42,935 $ 14,578
Janus Short-Term Bond Fund $ -- $ -- $ --
Janus Federal Tax-Exempt Fund $ -- $ -- $ 2,504
</Table>
(1) February 25, 2005 (inception) to October 31, 2005.
(2) Formerly named Janus Risk-Managed Stock Fund.
(3) February 28, 2003 (inception) to October 31, 2003.
Brokerage commissions paid by a Fund may vary significantly from year to year
because of portfolio turnover rates, shareholder purchase/redemption
activity, varying market conditions, changes to investment strategies or
processes, and other factors.
82
Included in such brokerage commissions are the following amounts paid to DST
Securities, Inc. ("DSTS"), a wholly-owned broker-dealer subsidiary of DST.
DST was an affiliate of JCGI prior to June 16, 2004. The following amounts
served to reduce each Fund's out-of-pocket expenses through the use of
credits against the charges of DST and its affiliates. Information is not
shown for the fiscal year ended October 31, 2005 because DST was not
considered an "affiliate" of the Funds during this period.
<Table>
<Caption>
Commission Paid Commission Paid
through DSTS for Reduction through DSTS for Reduction
the Period Ended of the Period Ended of
Fund Name October 31, 2004 Expenses(1) October 31, 2003 Expenses(1)
- ----------------------------------------------------------------------------------------------------------------
GROWTH
Janus Fund $ -- $ -- $ 56,202 $ 42,162
Janus Enterprise Fund $ -- $ -- $ 3,844 $ 2,884
Janus Mercury Fund $ 22,505 $ 16,883 $145,246 $108,962
Janus Olympus Fund $ 9,169 $ 6,878 $ 18,453 $ 13,843
Janus Orion Fund $ -- $ -- $ 6,000 $ 4,501
Janus Twenty Fund $ -- $ -- $ 19,206 $ 14,408
SPECIALTY GROWTH
Janus Global Life Sciences Fund $ -- $ -- $ 40,200 $ 30,158
Janus Global Technology Fund $ 6,266 $ 4,701 $ 4,215 $ 3,162
CORE
Janus Balanced Fund $ 6,000 $ 4,501 $ 64,655 $ 48,503
Janus Contrarian Fund $ 5,800 $ 4,351 $ 26,526 $ 19,899
Janus Core Equity Fund $ -- $ -- $ 13,394 $ 10,048
Janus Growth and Income Fund $ 12,000 $ 9,002 $108,981 $ 81,756
INTERNATIONAL & GLOBAL
Janus Global Opportunities Fund $ -- $ -- $ 464 $ 348
Janus Overseas Fund $ -- $ -- $ 13,600 $ 10,203
Janus Worldwide Fund $ 33,215 $ 24,917 $143,086 $107,341
</Table>
(1) The difference between commissions paid through DSTS and expenses reduced
constitute commissions paid to an unaffiliated clearing broker.
Note: Funds that did not execute trades with DSTS during the periods indicated
are not included in the table.
83
As of October 31, 2005, certain Funds owned securities of their regular
broker-dealers (or parents), as shown below.
<Table>
<Caption>
Name of Value of
Fund Name Broker-Dealer Securities Owned
- ----------------------------------------------------------------------------------------
GROWTH
Janus Fund Citigroup Global Markets, Inc. $108,200,000
Merrill Lynch & Company, Inc. 77,973,827
Morgan Stanley Co. 39,079,438
UBS A.G. 51,155,270
Janus Enterprise Fund Bear Stearns & Company, Inc. $ 24,100,000
Janus Mercury Fund Citigroup, Inc. $ 33,419,308
Goldman Sachs Group, Inc. 50,581,488
JP Morgan Chase & Co. 146,445,027
Janus Olympus Fund Citigroup, Inc. $ 27,885,971
UBS A.G. 19,214,963
Janus Orion Fund Bear Stearns & Company, Inc. $ 6,300,000
Janus Triton Fund Bear Stearns & Company, Inc. $ 3,600,000
Janus Twenty Fund Goldman Sachs Group, Inc. $209,191,003
Citigroup Global Markets, Inc. 41,100,000
SPECIALTY GROWTH
Janus Global Life Sciences
Fund Bear Stearns & Company, Inc. $ 4,400,000
Janus Global Technology Fund Bear Stearns & Company, Inc. 13,400,000
CORE
Janus Balanced Fund Bank of America Corp. $ 18,553,415
Citigroup, Inc. 3,423,978
Citigroup, Inc. 10,322,685
Credit Suisse First Boston
USA, Inc. 9,100,059
JP Morgan Chase & Co. 53,409,538
JP Morgan Chase & Co. 7,314,865
Merrill Lynch & Company, Inc. 76,182,147
Janus Contrarian Fund Bear Stearns & Company, Inc. $ 6,800,000
JP Morgan Chase & Co. 69,343,632
Janus Core Equity Fund Bear Stearns & Company, Inc. $ 23,400,000
Citigroup, Inc. 18,234,403
JP Morgan Chase & Co. 20,282,903
Merrill Lynch & Company, Inc. 25,861,040
Janus Growth and Income Fund Citigroup, Inc. $150,158,858
Goldman Sachs Group, Inc. 127,175,544
JP Morgan Chase & Co. 107,708,575
Lehman Brothers Holdings, Inc. 46,345,370
Merrill Lynch & Company, Inc. 73,252,260
Morgan Stanley Co. 70,075,183
</Table>
84
<Table>
<Caption>
Name of Value of
Fund Name Broker-Dealer Securities Owned
- ----------------------------------------------------------------------------------------
Janus Research Fund Bear Stearns & Company, Inc. $ 700,000
Citigroup, Inc. 653,281
JP Morgan Chase & Co. 671,793
Merrill Lynch & Company, Inc. 645,458
UBS A.G. 657,841
RISK-MANAGED
INTECH Risk-Managed Stock
Fund(1) Bank of America Corp. $ 3,797,770
Bear Stearns & Company, Inc. 14,800,000
Bear Stearns Companies, Inc. 190,440
Citigroup, Inc. 2,485,854
Goldman Sachs Group, Inc. 2,325,208
Lehman Brothers Holdings, Inc. 2,584,872
Merrill Lynch & Company, Inc. 420,810
Morgan Stanley Co. 516,895
VALUE
Janus Small Cap Value Fund Bear Stearns & Company, Inc. $ 55,000,000
INTERNATIONAL & GLOBAL
Janus Global Opportunities
Fund Bear Stearns & Company, Inc. $ 1,900,000
JP Morgan Chase & Co. 9,249,113
Janus Worldwide Fund Citigroup, Inc. $ 76,421,012
JP Morgan Chase & Co. 223,396,208
UBS A.G. 69,792,779
BOND
Janus Flexible Bond Fund Bear Stearns & Company, Inc. $ 12,900,000
Goldman Sachs Group, Inc. 1,853,125
Janus High-Yield Fund Bear Stearns & Company, Inc. $ 28,900,000
Janus Short-Term Bond Fund Citigroup, Inc. $ 4,495,824
Lehman Brothers Holdings, Inc. 1,317,017
Morgan Stanley Co. 2,156,010
</Table>
(1) Formerly named Janus Risk-Managed Stock Fund.
85
TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------
The following are the Trustees and officers of the Trust, together with a
brief description of their principal occupations during the last five years
(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. The
retirement age for Trustees is 72. The Funds' Nominating and Governance
Committee will consider nominees for the position of Trustee recommended by
shareholders. Shareholders may submit the name of a candidate for
consideration by the Committee by submitting their recommendations to the
Trust's Secretary. Each Trustee is currently a Trustee of two other
registered investment companies advised by Janus Capital: Janus Aspen Series
and Janus Adviser Series. As of the date of this SAI, collectively, the three
registered investment companies consist of 69 series or funds.
In April 2003, the Trustees established an Advisory Board to provide the
Trustees with advice regarding certain Janus funds that, in connection with
the reorganization of the Berger family of funds into the Janus funds,
received assets from the Berger funds. The Advisory Board was designated by a
majority vote of the Trustees and served a two-year term, which ended March
2005.
The Trust's officers are elected annually by the Trustees for a one-year
term. Each portfolio manager also manages other Janus Capital accounts.
Certain officers also serve as officers of Janus Aspen Series and Janus
Adviser Series.
86
<Table>
<Caption>
- ------------------------------------------------------------------------------------------------------------------------
TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS/
FUNDS IN FUND
NAME, AGE AS OF COMPLEX OTHER
DECEMBER 31, 2005, POSITIONS HELD LENGTH OF TIME PRINCIPAL OCCUPATIONS DURING OVERSEEN BY DIRECTORSHIPS
AND ADDRESS WITH FUNDS SERVED THE PAST FIVE YEARS TRUSTEE HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES*
- ------------------------------------------------------------------------------------------------------------------------
Dennis B. Mullen Chairman 3/04-Present Chief Executive Officer of Red 69** Chairman of the
151 Detroit Street Robin Gourmet Burgers, Inc. Board (since
Denver, CO 80206 Trustee 2/71-Present (since 2005). Formerly, 2005) and
Age 62 private investor. Director of Red
Robin Gourmet
Burgers, Inc.;
and Director of
Janus World
Funds Plc
(Dublin-based,
non-U.S.
funds).
- ------------------------------------------------------------------------------------------------------------------------
Jerome S. Contro Trustee 11/05-Present Partner of Tango Group, a 69 Trustee and
151 Detroit Street private investment firm (since Chairman of RS
Denver, CO 80206 1999). Investment
Age 49 Trust (since
2001); Director
of IZZE
Beverages and
MyFamily.com,
Inc.
(genealogical
research
website).
- ------------------------------------------------------------------------------------------------------------------------
William F. McCalpin Trustee 6/02-Present Executive Vice President and 69 Trustee of
151 Detroit Street Chief Operating Officer of The Asian Cultural
Denver, CO 80206 Rockefeller Brothers Fund (a Council.
Age 48 private family foundation);
and Vice President of Asian
Cultural Council.
- ------------------------------------------------------------------------------------------------------------------------
</Table>
* All current Trustees of the Trust (Messrs. Mullen, McCalpin, McCarter, Rothe,
Stewart, Waldinger, and Bailey) were elected as Trustees of the Trust at a
Special Meeting of Shareholders on November 22, 2005. In addition, at this
Special Meeting, shareholders elected two new Trustees, Mr. Contro and Ms.
Wolf.
** Mr. Mullen also serves as director of Janus World Funds Plc ("JWF"),
consisting of 21 funds. Including JWF and the 69 funds comprising the Janus
Funds, Mr. Mullen oversees 90 funds.
87
<Table>
<Caption>
- ------------------------------------------------------------------------------------------------------------------------
TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS/
FUNDS IN FUND
NAME, AGE AS OF COMPLEX OTHER
DECEMBER 31, 2005, POSITIONS HELD LENGTH OF TIME PRINCIPAL OCCUPATIONS DURING OVERSEEN BY DIRECTORSHIPS
AND ADDRESS WITH FUNDS SERVED THE PAST FIVE YEARS TRUSTEE HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES* (CONT'D.)
- ------------------------------------------------------------------------------------------------------------------------
John W. McCarter, Trustee 6/02-Present President and Chief Executive 69 Chairman of the
Jr. Officer of The Field Museum of Board and
151 Detroit Street Natural History (Chicago, IL). Director of
Denver, CO 80206 Divergence Inc.
Age 67 (biotechnology
firm); Director
of W.W.
Grainger, Inc.
(industrial
distributor);
and Trustee of
Harris Insight
Funds Trust (19
portfolios),
WTTW (Chicago
public
television
station) and
the University
of Chicago.
- ------------------------------------------------------------------------------------------------------------------------
James T. Rothe Trustee 1/97-Present Co-founder and Managing 69 Director of Red
151 Detroit Street Director of Roaring Fork Robin Gourmet
Denver, CO 80206 Capital Management, LLC Burgers, Inc.
Age 62 (private investment in public
equity firm); 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.
- ------------------------------------------------------------------------------------------------------------------------
William D. Stewart Trustee 6/84-Present Corporate Vice President and 69 N/A
151 Detroit Street General Manager of MKS
Denver, CO 80206 Instruments - HPS Products,
Age 61 Boulder, CO (a manufacturer of
vacuum fittings and valves).
- ------------------------------------------------------------------------------------------------------------------------
</Table>
* All current Trustees of the Trust (Messrs. Mullen, McCalpin, McCarter, Rothe,
Stewart, Waldinger, and Bailey) were elected as Trustees of the Trust at a
Special Meeting of Shareholders on November 22, 2005. In addition, at this
Special Meeting, shareholders elected two new Trustees, Mr. Contro and Ms.
Wolf.
88
<Table>
<Caption>
- ------------------------------------------------------------------------------------------------------------------------
TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------
NUMBER OF
PORTFOLIOS/
FUNDS IN FUND
NAME, AGE AS OF COMPLEX OTHER
DECEMBER 31, 2005, POSITIONS HELD LENGTH OF TIME PRINCIPAL OCCUPATIONS DURING OVERSEEN BY DIRECTORSHIPS
AND ADDRESS WITH FUNDS SERVED THE PAST FIVE YEARS TRUSTEE HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES* (CONT'D.)
- ------------------------------------------------------------------------------------------------------------------------
Martin H. Waldinger Trustee 8/69-Present Private Investor and 69 N/A
151 Detroit Street Consultant to California
Denver, CO 80206 Planned Unit Developments.
Age 67 Formerly, CEO and President of
Marwal, Inc. (homeowner
association management
company).
- ------------------------------------------------------------------------------------------------------------------------
Linda S. Wolf Trustee 11/05-Present Retired. Formerly, Chairman 69 Director of
151 Detroit Street and Chief Executive Officer of Wal-Mart, The
Denver, CO 80206 Leo Burnett (Worldwide) Field Museum of
Age 58 (advertising agency) (2001- Natural History
2005); and President of Leo (Chicago, IL),
Burnett (USA) (advertising Children's
agency) (1996-2000). Memorial
Hospital
(Chicago, IL),
Chicago Council
on Foreign
Relations, and
Economic Club
of Chicago.
- ------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE*
- ------------------------------------------------------------------------------------------------------------------------
Thomas H. Bailey** Trustee 6/69-Present Retired. Formerly, President 69 N/A
151 Detroit Street (1978-2002) and Chief
Denver, CO 80206 Executive Officer (1994- 2002)
Age 68 of Janus Capital or Janus
Capital Corporation; Chairman
and Director (1978-2002) of
Janus Capital Corporation;
President and Director
(1994-2002) of The Janus
Foundation; and Director
(1997-2001) of Janus
Distributors, Inc.
- ------------------------------------------------------------------------------------------------------------------------
</Table>
* All current Trustees of the Trust (Messrs. Mullen, McCalpin, McCarter, Rothe,
Stewart, Waldinger, and Bailey) were elected as Trustees of the Trust at a
Special Meeting of Shareholders on November 22, 2005. In addition, at this
Special Meeting, shareholders elected two new Trustees, Mr. Contro and Ms.
Wolf.
** The Funds are treating Mr. Bailey as an "interested person" of the Trust by
virtue of his past positions and continuing relationships with Janus Capital
and ownership of shares of Janus Capital's parent company.
89
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------------------------
OFFICERS
- ----------------------------------------------------------------------------------------------------------------
TERM OF
NAME, AGE AS OF OFFICE* AND
DECEMBER 31, 2005, POSITIONS HELD WITH LENGTH OF PRINCIPAL OCCUPATIONS DURING THE PAST FIVE
AND ADDRESS FUNDS TIME SERVED YEARS
- ----------------------------------------------------------------------------------------------------------------
William Bales Executive Vice President 2/97-Present Vice President of Janus Capital and
151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus accounts.
Denver, CO 80206 Janus Venture Fund
Age 37
- ----------------------------------------------------------------------------------------------------------------
Jonathan D. Coleman Executive Vice President 2/02-Present Vice President of Janus Capital and
151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus accounts.
Denver, CO 80206 Janus Enterprise Fund Formerly, Analyst (1994-1997 and 2000-2002)
Age 34 for Janus Capital Corporation.
- ----------------------------------------------------------------------------------------------------------------
David J. Corkins Executive Vice President 2/06-Present Vice President of Janus Capital and
151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus accounts.
Denver, CO 80206 Janus Fund Formerly, Portfolio Manager (2003-2006) for
Age 39 Janus Mercury Fund, and Portfolio Manager
(1997-2003) for Janus Growth and Income
Fund.
- ----------------------------------------------------------------------------------------------------------------
David C. Decker Executive Vice President 9/96-Present Vice President of Janus Capital and
151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus accounts.
Denver, CO 80206 Janus Contrarian Fund
Age 39
- ----------------------------------------------------------------------------------------------------------------
James P. Goff Executive Vice President 2/06-Present Vice President and Director of Research of
151 Detroit Street Janus Mercury Fund 2/05-Present Janus Capital. Formerly, Portfolio Manager
Denver, CO 80206 Janus Research Fund (1992-2002) for Janus Enterprise Fund.
Age 41
- ----------------------------------------------------------------------------------------------------------------
Gregory R. Kolb Executive Vice President 5/05-Present Vice President of Janus Capital and
151 Detroit Street and Co-Portfolio Manager Assistant Portfolio Manager for other Janus
Denver, CO 80206 Janus Global accounts. Formerly, Analyst (2001-2005) for
Age 29 Opportunities Fund Janus Capital Corporation.
- ----------------------------------------------------------------------------------------------------------------
Brent A. Lynn Executive Vice President 1/01-Present Vice President of Janus Capital and
151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus accounts.
Denver, CO 80206 Janus Overseas Fund Formerly, Analyst (1991-2001) for Janus
Age 41 Capital Corporation.
- ----------------------------------------------------------------------------------------------------------------
Thomas R. Malley Executive Vice President 11/98-Present Vice President of Janus Capital and
151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus accounts.
Denver, CO 80206 Janus Global Life
Age 37 Sciences Fund
- ----------------------------------------------------------------------------------------------------------------
Douglas E. Nelson Executive Vice President 2/05-Present Vice President of Janus Capital. Formerly,
151 Detroit Street and Portfolio Manager Vice President of Public Finance
Denver, CO 80206 Janus Federal Tax-Exempt (2003-2005) for George K. Baum & Co.; and
Age 46 Fund Credit Analyst and Assistant Vice President
(1996-2003) for Delaware Management.
- ----------------------------------------------------------------------------------------------------------------
Marc Pinto Executive Vice President 5/05-Present Vice President of Janus Capital and
151 Detroit Street and Co-Portfolio Manager Portfolio Manager for other Janus accounts.
Denver, CO 80206 Janus Balanced Fund
Age 44
- ----------------------------------------------------------------------------------------------------------------
</Table>
* Officers are elected 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.
90
<Table>
- --------------------------------------------------------------------------------------------------------------
OFFICERS
- --------------------------------------------------------------------------------------------------------------
TERM OF
NAME, AGE AS OF OFFICE* AND
DECEMBER 31, 2005, LENGTH OF PRINCIPAL OCCUPATIONS DURING THE PAST
AND ADDRESS POSITIONS HELD WITH FUNDS TIME SERVED FIVE YEARS
- --------------------------------------------------------------------------------------------------------------
Blaine P. Rollins Executive Vice President 2/06-Present Vice President of Janus Capital and
151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus
Denver, CO 80206 Janus Triton Fund accounts. Formerly, Portfolio Manager
Age 38 (2000-2006) for Janus Fund.
- --------------------------------------------------------------------------------------------------------------
Ron Sachs Executive Vice President 4/00-Present Vice President of Janus Capital and
151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus
Denver, CO 80206 Janus Orion Fund accounts. Formerly, Portfolio Manager
Age 38 (2005-2006) for Janus Triton Fund.
- --------------------------------------------------------------------------------------------------------------
Scott W. Schoelzel Executive Vice President 8/97-Present Vice President of Janus Capital and
151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus
Denver, CO 80206 Janus Twenty Fund accounts.
Age 47
- --------------------------------------------------------------------------------------------------------------
Gibson Smith Executive Vice President 7/03-Present Vice President of Janus Capital and
151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus
Denver, CO 80206 Janus High-Yield Fund and accounts. Formerly, Analyst (2001-2003)
Age 37 Janus Short-Term Bond for Janus Capital Corporation; and
Fund worked in the fixed-income division
(1991-2001) for Morgan Stanley.
Executive Vice President 5/05-Present
and Co-Portfolio Manager
Janus Balanced Fund
- --------------------------------------------------------------------------------------------------------------
Minyoung Sohn Executive Vice President 5/05-Present Vice President of Janus Capital and
151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus
Denver, CO 80206 Janus Core Equity Fund accounts. Formerly, Analyst (1998-2003)
Age 30 for Janus Capital Corporation.
Executive Vice President 1/04-Present
and Portfolio Manager
Janus Growth and Income
Fund
- --------------------------------------------------------------------------------------------------------------
Ronald V. Speaker Executive Vice President 7/92-Present Vice President of Janus Capital and
151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus
Denver, CO 80206 Janus Flexible Bond Fund accounts.
Age 41
- --------------------------------------------------------------------------------------------------------------
Jason P. Yee Executive Vice President 7/04-Present Vice President of Janus Capital and
151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus
Denver, CO 80206 Janus Worldwide Fund accounts. Formerly, Analyst (2000-2001)
Age 36 for Janus Capital Corporation.
Executive Vice President 3/01-Present
and Co-Portfolio Manager
Janus Global
Opportunities Fund
- --------------------------------------------------------------------------------------------------------------
Claire Young Executive Vice President 8/97-Present Vice President of Janus Capital and
151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus
Denver, CO 80206 Janus Olympus Fund accounts.
Age 40
- --------------------------------------------------------------------------------------------------------------
</Table>
* Officers are elected 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.
91
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------------
OFFICERS
- -------------------------------------------------------------------------------------------------------------
TERM OF
NAME, AGE AS OF OFFICE* AND
DECEMBER 31, 2005, LENGTH OF PRINCIPAL OCCUPATIONS DURING THE PAST FIVE
AND ADDRESS POSITIONS HELD WITH FUNDS TIME SERVED YEARS
- -------------------------------------------------------------------------------------------------------------
Stephanie Chief Legal Counsel and 1/06-Present Associate Counsel of Janus Capital.
Grauerholz-Lofton Secretary Formerly, Associate of Vedder, Price,
151 Detroit Street Kaufman & Kammholz, P.C. (1999-2003).
Denver, CO 80206
Age 35
- -------------------------------------------------------------------------------------------------------------
Kelley Abbott Howes President and Chief 1/06-Present Senior Vice President and General Counsel
151 Detroit Street Executive Officer of Janus Capital and Janus Services LLC;
Denver, CO 80206 and Senior Vice President and Assistant
Age 40 General Counsel of Janus Distributors LLC.
Formerly, Vice President (1999-2005) of
Janus Distributors LLC; Vice President
(2000-2004) and Assistant General Counsel
(2002-2004) of Janus Services LLC; and Vice
President and Assistant General Counsel
(1999-2004) of Janus Capital.
- -------------------------------------------------------------------------------------------------------------
David R. Kowalski Vice President and Chief 6/02-Present Senior Vice President and Chief Compliance
151 Detroit Street Compliance Officer Officer of Janus Capital, Janus
Denver, CO 80206 Distributors LLC, and Janus Services LLC;
Age 48 Chief Compliance Officer of Bay Isle
Financial LLC; and Vice President of
Enhanced Investment Technologies, LLC.
Formerly, Chief Compliance Officer of
Enhanced Investment Technologies, LLC
(2003-2005); Vice President of Janus
Capital (2000-2005), Janus Distributors LLC
(2000-2001), and Janus Services LLC
(2004-2005); and Assistant Vice President
of Janus Services LLC (2000-2004).
- -------------------------------------------------------------------------------------------------------------
Jesper Nergaard Chief Financial Officer 3/05-Present Vice President of Janus Capital. Formerly,
151 Detroit Street Director of Financial Reporting for
Denver, CO 80206 Vice President, 2/05-Present OppenheimerFunds, Inc. (2004-2005); Site
Age 43 Treasurer, and Principal Manager and First Vice President of Mellon
Accounting Officer Global Securities Services (2003); and
Director of Fund Accounting, Project
Development, and Training of INVESCO Funds
Group (1994-2003).
- -------------------------------------------------------------------------------------------------------------
</Table>
* Officers are elected 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.
92
The Trustees are responsible for major decisions relating to the
establishment or change of each Fund's objective(s), policies, and
techniques. The Trustees also supervise the operation of the Funds by their
officers and review the investment decisions of the officers, although the
Trustees do not actively participate on a regular basis in making such
decisions. The Board of Trustees has seven standing committees that each
perform specialized functions: an Audit Committee, Brokerage Committee,
Investment Oversight Committee, Legal and Regulatory Committee, Money Market
Committee, Nominating and Governance Committee, and Pricing Committee. Each
committee is comprised entirely of Independent Trustees. Information about
each committee's functions is provided in the following table.
<Table>
<Caption>
- --------------------------------------------------------------------------------------------
NUMBER OF
MEETINGS HELD
MEMBERS DURING LAST
FUNCTIONS (INDEPENDENT TRUSTEES) FISCAL YEAR
- --------------------------------------------------------------------------------------------
AUDIT Reviews the financial reporting John W. McCarter, Jr. 4
COMMITTEE process, the system of internal (Chairman)
controls over financial reporting, Dennis B. Mullen
disclosure controls and procedures, William D. Stewart
Form N-CSR filings, and the audit
process. The Committee's review of the
audit process includes, among other
things, the appointment, compensation,
and oversight of the auditors and
pre-approval of all audit and nonaudit
services.
- --------------------------------------------------------------------------------------------
BROKERAGE Reviews and makes recommendations James T. Rothe 5
COMMITTEE regarding matters related to the (Chairman)
Trust's use of brokerage commissions William F. McCalpin
and placement of portfolio Dennis B. Mullen
transactions.
- --------------------------------------------------------------------------------------------
INVESTMENT Oversees the investment activities of Dennis B. Mullen 6
OVERSIGHT the Trust's non-money market Funds. (Chairman)
COMMITTEE Jerome S. Contro(1)
William F. McCalpin
John W. McCarter, Jr.
James T. Rothe
William D. Stewart
Martin H. Waldinger
Linda S. Wolf (1)
- --------------------------------------------------------------------------------------------
LEGAL AND Oversees compliance with various William F. McCalpin 4
REGULATORY procedures adopted by the Trust, (Chairman)
COMMITTEE reviews registration statements on William D. Stewart
Form N-1A, oversees the implementation Martin H. Waldinger
and administration of the Trust's
Proxy Voting Guidelines.
- --------------------------------------------------------------------------------------------
</Table>
93
<Table>
<Caption>
- --------------------------------------------------------------------------------------------
NUMBER OF
MEETINGS HELD
MEMBERS DURING LAST
FUNCTIONS (INDEPENDENT TRUSTEES) FISCAL YEAR
- --------------------------------------------------------------------------------------------
MONEY Reviews various matters related to the Martin H. Waldinger 4
MARKET operations of the Janus Money Market (Chairman)
COMMITTEE Funds, including compliance with their William F. McCalpin
Money Market Fund Procedures. James T. Rothe
- --------------------------------------------------------------------------------------------
NOMINATING Identifies and recommends individuals Dennis B. Mullen 5
AND for election as Trustee, consults with (Chairman)
GOVERNANCE Management in planning Trustee John W. McCarter, Jr.
COMMITTEE meetings, and oversees the William D. Stewart
administration of, and ensures
compliance with, the Trust's
Governance Procedures and Guidelines.
- --------------------------------------------------------------------------------------------
PRICING Determines a fair value of securities William D. Stewart 15
COMMITTEE for which market quotations are not (Chairman)
readily available or are deemed not to James T. Rothe
be reliable, pursuant to procedures Martin H. Waldinger
adopted by the Trustees.
- --------------------------------------------------------------------------------------------
</Table>
(1) Mr. Contro and Ms. Wolf became members of the Investment Oversight Committee
on November 22, 2005, when they were elected Trustees of the Trust.
94
Under the Trust's Governance Procedures and Guidelines, the Trustees are
expected to invest in one or more (but not necessarily all) funds of the
Trust for which they serve as Trustees (which, effective January 1, 2006,
shall include amounts held under a deferred fee agreement that are valued
based on "shadow investments" in such funds), to the extent they are directly
eligible to do so. Such investments, including the amount and which funds,
are dictated by each Trustee's individual financial circumstances and
investment goals. The table below gives the dollar range of shares of the
Funds that the Trustees own and which are described in this SAI, as well as
the aggregate dollar range of shares of all funds advised by Janus Capital
and overseen by the Trustees (collectively, the "Janus Funds"), owned by each
Trustee as of December 31, 2005.
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------
AGGREGATE DOLLAR RANGE
OF EQUITY SECURITIES IN
ALL REGISTERED
INVESTMENT COMPANIES
OVERSEEN BY TRUSTEE IN
NAME OF TRUSTEE DOLLAR RANGE OF EQUITY SECURITIES IN THE FUNDS JANUS FUNDS
- -------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- -------------------------------------------------------------------------------------------------------
DENNIS B. MULLEN Janus Enterprise Fund over $100,000 over $100,000
Janus Mercury Fund over $100,000
Janus Olympus Fund over $100,000
Janus Triton Fund over $100,000
Janus Global Life Sciences Fund over $100,000
Janus Global Technology Fund over $100,000
Janus Research Fund over $100,000
Janus Contrarian Fund over $100,000
Janus Global Opportunities Fund over $100,000
Janus Overseas Fund $50,001 - $100,000
- -------------------------------------------------------------------------------------------------------
JEROME S. CONTRO Janus Core Equity Fund $50,001 - $100,000 over $100,000
Janus Mid Cap Value Fund $50,001 - $100,000
- -------------------------------------------------------------------------------------------------------
WILLIAM F. MCCALPIN Janus Enterprise Fund $10,001 - $50,000 over $100,000
Janus Global Life Sciences Fund $1 - $10,000
Janus Global Technology Fund $1 - $10,000
Janus Balanced Fund $10,001 - $50,000
Janus Contrarian Fund $10,001 - $50,000
Janus Research Fund $1 - $10,000
INTECH Risk-Managed Stock Fund $10,001 - $50,000
Janus Worldwide Fund $10,001 - $50,000
Janus Short-Term Bond Fund $10,001 - $50,000
- -------------------------------------------------------------------------------------------------------
JOHN W. MCCARTER, JR. Janus Enterprise Fund $10,001 - $50,000 over $100,000
Janus Mercury Fund $10,001 - $50,000
Janus Olympus Fund $10,001 - $50,000
Janus Orion Fund $10,001 - $50,000
Janus Global Life Sciences Fund $10,001 - $50,000
Janus Contrarian Fund $10,001 - $50,000
Janus Core Equity Fund $50,001 - $100,000
Janus Growth and Income Fund $50,001 - $100,000
INTECH Risk-Managed Stock Fund $10,001 - $50,000
Janus Overseas Fund $10,001 - $50,000
- -------------------------------------------------------------------------------------------------------
</Table>
95
<Table>
<Caption>
- -------------------------------------------------------------------------------------------------------
AGGREGATE DOLLAR RANGE
OF EQUITY SECURITIES IN
ALL REGISTERED
INVESTMENT COMPANIES
OVERSEEN BY TRUSTEE IN
NAME OF TRUSTEE DOLLAR RANGE OF EQUITY SECURITIES IN THE FUNDS JANUS FUNDS
- -------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- -------------------------------------------------------------------------------------------------------
JAMES T. ROTHE Janus Enterprise Fund $50,001 - $100,000 over $100,000
Janus Triton Fund $10,001 - $50,000
Janus Global Life Sciences Fund $50,001 - $100,000
Janus Contrarian Fund $50,001 - $100,000
Janus Research Fund $50,001 - $100,000
INTECH Risk-Managed Stock Fund $50,001 - $100,000
Janus Small Cap $10,001 - $50,000
Value - Investor Shares
- -------------------------------------------------------------------------------------------------------
WILLIAM D. STEWART Janus Research Fund over $100,000 over $100,000
INTECH Risk-Managed Stock Fund over $100,000
Janus Global Opportunities Fund over $100,000
Janus Flexible Bond Fund $1 - $10,000
- -------------------------------------------------------------------------------------------------------
MARTIN H. WALDINGER Janus Core Equity Fund over $100,000 over $100,000
INTECH Risk-Managed Stock Fund over $100,000
- -------------------------------------------------------------------------------------------------------
LINDA S. WOLF Janus Growth and Income Fund over $100,000 over $100,000
Janus Overseas Fund over $100,000
- -------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
- -------------------------------------------------------------------------------------------------------
THOMAS H. BAILEY Janus Fund over $100,000 over $100,000
Janus Enterprise Fund over $100,000
Janus Mercury Fund over $100,000
Janus Olympus Fund over $100,000
Janus Orion Fund over $100,000
Janus Triton Fund $10,001 - $50,000
Janus Twenty Fund $50,001 - $100,000
Janus Venture Fund $50,001 - $100,000
Janus Global Life Sciences Fund over $100,000
Janus Global Technology Fund over $100,000
Janus Balanced Fund $50,001 - $100,000
Janus Contrarian Fund over $100,000
Janus Core Equity Fund over $100,000
Janus Research Fund $10,001 - $50,000
Janus Growth and Income Fund over $100,000
Janus Global Opportunities Fund over $100,000
Janus Overseas Fund $10,001 - $50,000
Janus Worldwide Fund over $100,000
Janus Flexible Bond Fund over $100,000
Janus High-Yield Fund over $100,000
- -------------------------------------------------------------------------------------------------------
</Table>
96
The Trust pays each Independent Trustee an annual retainer plus a fee for
each regular in-person meeting of the Trustees attended, a fee for in-person
meetings of committees attended if convened on a date other than that of a
regularly scheduled meeting, and a fee for telephone meetings of the Trustees
and committees. In addition, committee chairs and the Chairman of the Board
of Trustees receive an additional supplemental retainer. Each current
Independent Trustee also receives fees from other Janus funds for serving as
Trustee of those funds. Janus Capital pays persons who are directors,
officers, or employees of Janus Capital or any affiliate thereof, or any
Trustee considered an "interested" Trustee for their services as Trustees or
officers. The following table shows the aggregate compensation paid to each
Independent Trustee by the Funds described in this SAI and all Janus Funds
for the periods indicated. None of the Trustees receives any pension or
retirement benefits from the Funds or the Janus Funds. Effective January 1,
2006, the Trustees established a deferred compensation plan under which the
Trustees may elect to defer receipt of all, or a portion, of the compensation
they earn for their services to the Funds, in lieu of receiving current
payments of such compensation. Any deferred amount is treated as though an
equivalent dollar amount has been invested in shares of one or more funds
advised by Janus Capital ("shadow investments"). Given that the deferred
compensation plan was effective January 1, 2006 (after the periods indicated
in the table below), any deferred amounts are not included in the table.
<Table>
<Caption>
Aggregate Compensation Total Compensation
from the Funds for from the Janus Funds for
fiscal year ended calendar year ended
Name of Person, Position October 31, 2005 December 31, 2005(1)(2)
- -----------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
Dennis B. Mullen, Chairman and Trustee(3) $240,000 $441,130
Jerome S. Contro, Trustee(4) $ 0 $ 71,444
William F. McCalpin, Trustee $165,685 $265,000
John W. McCarter, Jr., Trustee $171,191 $267,167
James T. Rothe, Trustee $165,685 $303,500
William D. Stewart, Trustee $174,640 $272,000
Martin H. Waldinger, Trustee $165,686 $262,000
Linda S. Wolf, Trustee(4) $ 36,129 $146,444
</Table>
(1) For Mr. Mullen, includes compensation for service on the boards of five
Janus trusts comprised of 92 portfolios (21 portfolios of which are for
service on the board of Janus World Funds Plc, an offshore product). For
Messrs. McCalpin, McCarter, Stewart, and Waldinger, includes compensation
for service on the boards of three Janus trusts comprised of 69 portfolios.
For Mr. Rothe, includes compensation for service on the boards of four Janus
trusts comprised of 71 portfolios.
(2) Total compensation received from the Janus Funds includes the following
additional compensation for preparation and participation in depositions
related to excessive fee litigation: Dennis B. Mullen
97
$36,000; William F. McCalpin $21,000; John W. McCarter, Jr. $27,000; James
T. Rothe $27,000; William D. Stewart $27,000; and Martin H. Waldinger
$18,000.
(3) Aggregate compensation received from the Funds includes additional
compensation paid for service as Independent Chairman of the Board of
Trustees. Total compensation received from the Janus Funds includes
additional compensation paid for service as Independent Chairman of the
boards of three Janus trusts, including the Trust, and compensation for
service as a director of Janus World Funds Plc.
(4) At a Special Meeting of Shareholders on November 22, 2005, shareholders of
the Trust elected two new Trustees, Jerome S. Contro and Linda S. Wolf.
Prior to such election, Mr. Contro and Ms. Wolf were consultants to the
Trustees and were paid by the Trust in this capacity. As of the fiscal year
ended October 31, 2005, Ms. Wolf received aggregate compensation of $41,910
from the Trust for serving as a consultant to the Trustees. Mr. Contro did
not receive any compensation from the Trust as of the fiscal year ended
October 31, 2005.
The following table shows the aggregate compensation paid to each member of
the former Advisory Board by Janus Enterprise Fund, Janus Olympus Fund, Janus
Venture Fund, Janus Global Technology Fund, Janus Balanced Fund, Janus Growth
and Income Fund, Janus Mid Cap Value Fund, Janus Small Cap Value Fund, Janus
Overseas Fund, and all Janus Funds for the periods indicated. None of the
Advisory Board members received pension or retirement benefits from such
Funds or the Janus Funds. The Advisory Board's two-year term ended March
2005.
<Table>
<Caption>
Aggregate Compensation Total Compensation
from the Funds for from the Janus Funds for
fiscal year ended calendar year ended
Name of Person, Position October 31, 2005 December 31, 2005
- ------------------------------------------------------------------------------------------------------
Katherine A. Cattanach, Advisory Board Chairperson $ 9,943 $ 5,000
Harry T. Lewis, Jr., Advisory Board Member $ 9,943 $ 5,000
Michael Owen, Advisory Board Member $ 9,943 $ 5,000
Albert C. Yates, Advisory Board Member $ 9,943 $ 5,000
</Table>
98
JANUS INVESTMENT PERSONNEL
OTHER ACCOUNTS MANAGED
The following table provides information relating to other accounts managed
by the portfolio managers as of October 31, 2005. No accounts included in the
totals listed below have a performance-based advisory fee.
<Table>
<Caption>
Other Registered Other Pooled
Investment Investment
Companies Vehicles Other Accounts
- --------------------------------------------------------------------------------------------------------------
William H. Bales Number of Other Accounts Managed 2 None None
Assets in Other Accounts Managed $ 101,353,781 None None
Jonathan D. Coleman Number of Other Accounts Managed 2 1 3
Assets in Other Accounts Managed $ 857,639,237 $ 37,281,746 $ 11,424,389
David J. Corkins Number of Other Accounts Managed 2 None None
Assets in Other Accounts Managed $ 1,536,009,688 None None
David C. Decker Number of Other Accounts Managed 2 None 3
Assets in Other Accounts Managed $ 2,981,851,032 None $ 16,126,269
James P. Goff Number of Other Accounts Managed None None 2
Assets in Other Accounts Managed None None $ 9,594,513
Gregory R. Kolb Number of Other Accounts Managed None None None
Assets in Other Accounts Managed None None None
Brent A. Lynn Number of Other Accounts Managed 2 1 None
Assets in Other Accounts Managed $ 1,461,318,631 $ 75,745,122 None
Thomas R. Malley Number of Other Accounts Managed 3 None None
Assets in Other Accounts Managed $ 515,534,857 None None
Douglas E. Nelson Number of Other Accounts Managed None None None
Assets in Other Accounts Managed None None None
Marc Pinto Number of Other Accounts Managed 9 2 28
Assets in Other Accounts Managed $ 4,523,215,336 $ 83,568,319 $ 444,844,473
Blaine P. Rollins Number of Other Accounts Managed 3 None 1
Assets in Other Accounts Managed $ 1,621,998,885 None $ 34,679,264
Ron Sachs Number of Other Accounts Managed 3 None None
Assets in Other Accounts Managed $ 126,414,686 None None
Scott W. Schoelzel Number of Other Accounts Managed 13 1 11
Assets in Other Accounts Managed $ 4,735,886,371 $ 33,181,186 $ 137,678,554
J. Bradley Slingerlend(1) Number of Other Accounts Managed None None None
Assets in Other Accounts Managed None None None
Gibson Smith Number of Other Accounts Managed 6 None 2
Assets in Other Accounts Managed $ 4,326,452,345 None $ 234,921,237
Minyoung Sohn Number of Other Accounts Managed 6 None 1
Assets in Other Accounts Managed $ 634,543,036 None $ 6,669,463
Ronald V. Speaker Number of Other Accounts Managed 3 None 6
Assets in Other Accounts Managed $ 1,316,628,610 None $ 896,949,925
Burton H. Wilson(1) Number of Other Accounts Managed None None None
Assets in Other Accounts Managed None None None
</Table>
99
<Table>
<Caption>
Other Registered Other Pooled
Investment Investment
Companies Vehicles Other Accounts
- --------------------------------------------------------------------------------------------------------------
Jason P. Yee Number of Other Accounts Managed 5 None 3
Assets in Other Accounts Managed $ 2,091,243,303 None $ 60,525,580
Claire Young Number of Other Accounts Managed 3 None 3
Assets in Other Accounts Managed $ 882,029,697 None $ 6,612,938
</Table>
(1) Effective February 1, 2006, J. Bradley Slingerlend and Burton H. Wilson
became jointly and primarily responsible for the day-to-day management of
Janus Global Technology Fund.
MATERIAL CONFLICTS
As shown in the table above, certain Funds' portfolio managers may manage
other accounts with investment strategies similar to the Funds, including
other Janus funds, private-label mutual funds for which Janus Capital serves
as subadviser, and separately managed accounts. Fees earned by Janus Capital
may vary among these accounts and the portfolio managers may personally
invest in some but not all of these accounts. These factors could create
conflicts of interest because a portfolio manager may have incentives to
favor certain accounts over others, resulting in other accounts outperforming
a Fund. A conflict may also exist if a portfolio manager identified a limited
investment opportunity that may be appropriate for more than one account, but
a Fund is not able to take full advantage of that opportunity due to the need
to allocate that opportunity among multiple accounts. In addition, the
portfolio manager may execute transactions for another account that may
adversely impact the value of securities held by the Fund. However, Janus
Capital believes that these risks are mitigated by the fact that accounts
with like investment strategies managed by a particular portfolio manager are
generally managed in a similar fashion, subject to exceptions to account for
particular investment restrictions or policies applicable only to certain
accounts, certain portfolio holdings that may be transferred in-kind when an
account is opened, differences in cash flows and account sizes, and similar
factors. In addition, Janus Capital has adopted trade allocation procedures
that require equitable allocation of trade orders for a particular security
among participating accounts. These procedures are described in further
detail under "Additional Information About Janus Capital."
COMPENSATION
The following describes the structure and method of calculating a portfolio
manager's compensation as of October 31, 2005.
A portfolio manager is compensated for managing a Fund and any other funds,
portfolios, or accounts managed by the portfolio manager (collectively, the
100
"Managed Funds") through two components: fixed compensation and variable
compensation.
FIXED COMPENSATION: Fixed compensation is paid in cash and is comprised of an
annual base salary and an additional amount calculated based on factors such
as the complexity of managing funds and other accounts, scope of
responsibility (including assets under management), tenure, and long-term
performance as a portfolio manager.
VARIABLE COMPENSATION: Variable compensation is paid in the form of cash and
long-term incentive awards (consisting of Janus Capital Group Inc. ("JCGI")
restricted stock, stock options, and a cash deferred award that is credited
with income, gains, and losses based on the performance of Janus mutual fund
investments selected by the portfolio manager). Variable compensation is
structured to pay the portfolio manager primarily on individual performance
(and leadership criteria, as applicable), with additional compensation
available for team performance and a lesser component based on net asset
flows in the Managed Funds. Variable compensation is based on pre-tax
performance of the Managed Funds.
A portfolio manager's individual performance compensation is determined by
applying a multiplier against the portfolio manager's fixed compensation. The
multiplier is tied to the Managed Funds' aggregate asset-weighted Lipper peer
group performance ranking for one- and three-year performance periods, if
applicable, with a greater emphasis on three-year results. The portfolio
manager is also eligible to receive additional individual performance
compensation if the Managed Funds achieve a certain rank in their Lipper peer
performance groups in each of three, four, or five consecutive years
(performance periods may be from commencement of a portfolio manager's tenure
managing a Fund). Equity portfolio manager compensation is also subject to
reduction in the event that the Managed Funds incur material negative
absolute performance. Portfolio managers are not eligible to earn any
individual performance compensation if the Managed Funds' performance does
not meet or exceed a certain ranking in their Lipper peer performance group.
Equity and fixed-income portfolio managers are also eligible to participate
in team performance compensation pools. Equity portfolio managers participate
in a designated equity team compensation pool and fixed-income portfolio
managers participate in a designated fixed-income team compensation pool. The
compensation pools generally are each derived from a formula tied to the
team's aggregate asset-weighted Lipper peer group performance ranking for the
one-year performance period. Compensation from each pool is then allocated
among the eligible respective participants in each pool at the discretion of
Janus Capital. No
101
team performance compensation is paid to any portfolio manager if the
aggregate asset-weighted team performance for the one-year period for their
respective pool does not meet or exceed a certain ranking in the relevant
Lipper peer group.
Portfolio managers may elect to defer payment of a designated percentage of
their fixed compensation and/or up to all of their variable compensation in
accordance with JCGI's Executive Income Deferral Program.
COMPENSATION
The following describes the structure and method of calculating James Goff's,
the Director of Research, compensation as of October 31, 2005.
Mr. Goff is compensated for his role as Director of Research and for managing
a Fund and any other funds, portfolios, or accounts managed by Mr. Goff
(collectively, the "Managed Funds") through two components: fixed
compensation and variable compensation.
FIXED COMPENSATION: Fixed compensation is paid in cash and is comprised of an
annual base salary and an additional amount calculated based on factors such
as his scope of responsibility, tenure, and his performance as the Director
of Research and for managing funds.
VARIABLE COMPENSATION: Variable compensation is paid in the form of cash and
long-term incentive awards (consisting of a mixture of Janus Capital Group
Inc. ("JCGI") restricted stock, stock options, and a cash deferred award that
is credited with income, gains, and losses based on the performance of Janus
mutual fund investments selected by Mr. Goff). Variable compensation is
structured to pay Mr. Goff primarily on team performance, with additional
compensation available for individual performance (which includes a
subjective component based on leadership, contributions to Janus Capital and
the development of analysts), with a lesser component based on net asset
flows in the Managed Funds. Variable compensation is based on pre-tax
performance of the Managed Funds.
Mr. Goff's individual performance compensation is based on fixed amounts tied
and interpolated to the Managed Funds' aggregate asset-weighted Lipper peer
group performance ranking for a rolling three-year performance period, or
since inception date if shorter. Mr. Goff is not eligible to earn any
individual performance compensation if the Managed Funds' performance does
not meet or exceed a certain ranking in their Lipper peer performance group.
Mr. Goff is also eligible to participate in a team performance compensation
component derived from a formula tied to the team's aggregate asset-weighted
102
Lipper peer group performance ranking for one and three-year performance
periods, with equal weighting. No team performance compensation is paid to
Mr. Goff if the aggregate asset-weighted team performance for the one and
three-year periods does not meet or exceed a certain ranking in the relevant
Lipper peer group. Mr. Goff may elect to defer payment of a designated
percentage of their fixed compensation and/or up to all of their variable
compensation in accordance with JCGI's Executive Income Deferral Program.
COMPENSATION
The following describes the structure and method of calculating J. Bradley
Slingerlend's and Burton H. Wilson's (the "Investment Personnel")
compensation as of February 1, 2006:
The Investment Personnel are compensated for their responsibilities as
analysts and for their management and leadership roles with respect to the
Portfolio and any other funds, portfolios, or accounts for which they have
responsibilities through two components: fixed compensation and variable
compensation.
FIXED COMPENSATION: Fixed compensation is paid in cash and is comprised of an
annual base salary and an additional amount calculated based on factors such
as scope of responsibility, tenure, and long-term performance.
VARIABLE COMPENSATION: Variable compensation is paid in the form of cash and
long-term incentive awards (consisting of a mixture of JCGI restricted stock,
stock options, and a cash-deferred award that is credited with income, gains,
and losses based on the performance of Janus mutual fund investments selected
by the Investment Personnel). Variable compensation is based on pre-tax
performance of the Janus mutual funds.
The Investment Personnel are eligible for variable compensation through
participation in two compensation pools: an analyst-managed fund performance
pool and a team performance pool. Aggregate compensation available in each
pool is derived from a formula tied to the aggregate asset-weighted Lipper
peer group performance ranking of certain Janus mutual funds for one- and
three-year periods, subject to a reduction in the event of absolute negative
performance. Aggregate compensation in each pool is allocated among the
eligible respective participants at the discretion of Janus Capital based on
factors which may include performance of investment recommendations, team
contributions, scope of coverage, and subjective criteria. In the case of the
analyst-managed fund performance pool, no performance compensation is paid to
any team member if the team's aggregate asset-weighted performance for the
one- or three-year periods does not meet or exceed a certain ranking.
103
Each Fund's Lipper peer group for compensation purposes is shown in the
following table.
<Table>
<Caption>
Fund Lipper Peer Group
- ----------------------------------------------------------------------------------------
GROWTH
Janus Fund Multi-Cap Growth Funds
Janus Enterprise Fund Mid-Cap Growth Funds
Janus Mercury Fund Large-Cap Growth Funds
Janus Olympus Fund Multi-Cap Growth Funds
Janus Orion Fund Multi-Cap Growth Funds
Janus Triton Fund Small-Cap Growth Funds
Janus Twenty Fund Large-Cap Growth Funds
Janus Venture Fund Small-Cap Growth Funds
SPECIALTY GROWTH
Janus Global Life Sciences Fund Health/Biotechnology Funds
Janus Global Technology Fund Science & Technology Funds
CORE
Janus Balanced Fund Balanced Funds
Janus Contrarian Fund Multi-Cap Core Funds
Janus Core Equity Fund Large-Cap Core Funds
Janus Growth and Income Fund Large-Cap Core Funds
Janus Research Fund Multi-Cap Growth Funds
INTERNATIONAL & GLOBAL
Janus Global Opportunities Fund Global Funds
Janus Overseas Fund International Funds
Janus Worldwide Fund Global Funds
BOND
Janus Flexible Bond Fund Intermediate Investment Grade Debt Funds
Janus High-Yield Fund High Current Yield Funds
Janus Short-Term Bond Fund Short Investment Grade Debt Funds
Janus Federal Tax-Exempt Fund General Municipal Debt Funds
</Table>
104
INTECH INVESTMENT PERSONNEL
OTHER ACCOUNTS MANAGED
The following table provides information relating to other accounts managed
by the investment personnel as of October 31, 2005. To the extent that any of
the accounts pay advisory fees based on account performance, information on
those accounts is separately listed.
<Table>
<Caption>
Other Registered Other Pooled
Investment Investment
Companies Vehicles Other Accounts(1)
- ----------------------------------------------------------------------------------------------------------------
Robert Fernholz Number of Other Accounts Managed 9 5 290
Assets in Other Accounts Managed $ 3,174,362,421 $ 3,485,947,487 $ 31,637,659,503
David E. Hurley Number of Other Accounts Managed 9 5 290
Assets in Other Accounts Managed $ 3,174,362,421 $ 3,485,947,487 $ 31,637,659,503
Cary Maguire Number of Other Accounts Managed 9 5 290
Assets in Other Accounts Managed $ 3,174,362,421 $ 3,485,947,487 $ 31,637,659,503
Joseph Runnels Number of Other Accounts Managed 9 5 290
Assets in Other Accounts Managed $ 3,174,362,421 $ 3,485,947,487 $ 31,637,659,503
</Table>
(1) 35 of the accounts included in the totals, consisting of $5,831,357,139 of
the total assets in the category, have performance-based advisory fees.
MATERIAL CONFLICTS
As shown in the table above, INTECH Risk-Managed Stock Fund's investment
personnel may manage other accounts with investment strategies similar to the
Fund. Fees earned by the adviser may vary among these accounts and the
investment personnel may personally invest in some but not all of these
accounts. These factors could create conflicts of interest because the
investment personnel may have incentives to favor certain accounts over
others, resulting in other accounts outperforming the Fund. A conflict may
also exist if the investment personnel identified a limited investment
opportunity that may be appropriate for more than one account, but the Fund
is not able to take full advantage of that opportunity due to the need to
allocate that opportunity among multiple accounts. In addition, the
investment personnel may execute transactions for another account that may
adversely impact the value of securities held by the Fund. However, INTECH
believes that these risks are mitigated by the fact that accounts with like
investment strategies managed by the investment personnel are generally
managed in a similar fashion, subject to exceptions to account for particular
investment restrictions or policies applicable only to certain accounts,
portfolio holdings that may be transferred in-kind when an account is opened,
differences in cash flows and account sizes, and similar
105
factors. In addition, INTECH generates regular daily trades for all of its
clients using proprietary trade system software. Trades are submitted to
designated brokers in a single electronic file at one time during the day,
pre-allocated to individual clients. If an order is not completely filled,
executed shares are allocated to client accounts in proportion to the order.
These procedures are described in further detail under "Additional
Information About Janus Capital and the Subadvisers."
COMPENSATION
As described under "Investment Adviser and Subadvisers," Janus Capital has
entered into Sub-Advisory Agreements on behalf of INTECH Risk-Managed Stock
Fund. The compensation structure of the investment personnel is determined by
INTECH and is summarized by INTECH below. The following describes the
structure and method of calculating the investment personnel's compensation
as of October 31, 2005.
For managing the Fund and all other accounts, the investment personnel
receive base pay in the form of a fixed annual salary paid by INTECH, and
which is not directly based on performance or assets of the Fund or other
accounts. The investment personnel are also eligible for a cash bonus as
determined by INTECH, and which is not directly based on performance or
assets of the Fund or other accounts. The investment personnel, as part
owners of INTECH, also receive compensation by virtue of their ownership
interest in INTECH.
The investment personnel may elect to defer payment of a designated
percentage of their fixed compensation and/or up to all of their variable
compensation in accordance with JCGI's Executive Income Deferral Program.
106
PERKINS INVESTMENT PERSONNEL
OTHER ACCOUNTS MANAGED
The following table provides information relating to other accounts managed
by the portfolio managers as of October 31, 2005. No accounts included in the
totals listed below have a performance-based advisory fee.
<Table>
<Caption>
Other Registered Other Pooled
Investment Investment
Companies Vehicles Other Accounts
- -------------------------------------------------------------------------------------------------------------
Jeffrey Kautz Number of Other Accounts Managed 4 None 124
Assets in Other Accounts Managed $ 477,839,455 None $ 660,645,882
Robert Perkins Number of Other Accounts Managed 6 None 127
Assets in Other Accounts Managed $ 745,848,325 None $ 1,599,219,679
Thomas Perkins Number of Other Accounts Managed 2 None 115
Assets in Other Accounts Managed $ 268,008,870 None $ 1,120,912,274
Todd H. Perkins Number of Other Accounts Managed 6 None 127
Assets in Other Accounts Managed $ 745,848,325 None $ 1,599,219,679
</Table>
MATERIAL CONFLICTS
As shown in the table above, Janus Mid Cap Value Fund's and Janus Small Cap
Value Fund's portfolio managers may manage other funds and accounts with
investment strategies similar to the Funds. Fees earned by the adviser may
vary among these accounts and the portfolio managers may personally invest in
some but not all of these accounts. These factors could create conflicts of
interest because a portfolio manager may have incentives to favor certain
accounts over others, resulting in other accounts or funds outperforming the
Funds. A conflict may also exist if a portfolio manager identified a limited
investment opportunity that may be appropriate for more than one account, but
the Funds are not able to take full advantage of that opportunity due to the
need to allocate that opportunity among multiple accounts. In addition, the
portfolio managers may execute transactions for another account that may
adversely impact the value of securities held by the Funds. However, Perkins
believes that these risks are mitigated by the fact that accounts with like
investment strategies managed by the portfolio managers are generally managed
in a similar fashion, subject to exceptions to account for particular
investment restrictions or policies applicable only to certain accounts,
portfolio holdings that may be transferred in-kind when an account is opened,
differences in cash flows and account sizes and similar factors. Information
regarding Perkins' trade allocation procedures is described under "Additional
Information About Janus Capital and the Subadvisers."
107
COMPENSATION
As described under "Investment Adviser and Subadvisers," Janus Capital has
entered into a Sub-Advisory Agreement on behalf of Janus Mid Cap Value Fund
and Janus Small Cap Value Fund. The compensation structure of the portfolio
managers is determined by Perkins and is summarized by Perkins below.
For managing the Funds, the portfolio managers receive base pay in the form
of a fixed annual salary paid by Perkins, Wolf, McDonnell and Company, LLC.
The portfolio managers, as part owners of Perkins, also receive compensation
by virtue of their ownership interests in Perkins. Portfolio managers are
also entitled to participate in such life insurance, medical, profit sharing
and other programs as may be made generally available from time to time by
Perkins for the benefit of its employees generally.
OWNERSHIP OF SECURITIES
As of the fiscal year ended October 31, 2005, the portfolio managers of the
Funds described in this SAI beneficially owned securities of the Fund(s) they
manage in the dollar range shown in the following table. The last column of
the table also reflects each portfolio manger's aggregate beneficial
ownership of all funds advised by Janus Capital within the Janus family of
funds (collectively, the "Janus Funds").
<Table>
<Caption>
Aggregate Dollar Range
of Equity Securities in
Portfolio Manager Dollar Range of Equity Securities in the Fund(s) Managed(1) Janus Funds(1)
- --------------------------------------------------------------------------------------------------------------------
JANUS CAPITAL
William H. Bales Janus Venture Fund $500,001-$1,000,000 Over $1,000,000
Jonathan Coleman Janus Enterprise Fund Over $1,000,000 Over $1,000,000
David J. Corkins Janus Mercury Fund $100,001-$500,000 Over $1,000,000
David C. Decker Janus Contrarian Fund Over $1,000,000 Over $1,000,000
James P. Goff Janus Research Fund Over $1,000,000 Over $1,000,000
Gregory R. Kolb Janus Global Opportunities Fund $100,001-$500,000 $500,001-$1,000,000
C. Mike Lu Janus Global Technology Fund Over $1,000,000 Over $1,000,000
Brent A. Lynn Janus Overseas Fund Over $1,000,000 Over $1,000,000
Thomas R. Malley Janus Global Life Sciences Fund $100,001-$500,000 $500,001-$1,000,000
Douglas E. Nelson Janus Federal Tax-Exempt Fund $1-$10,000 $100,001-$500,000
Marc Pinto Janus Balanced Fund $500,001-$1,000,000 Over $1,000,000
Blaine P. Rollins Janus Fund Over $1,000,000 Over $1,000,000
Ron Sachs Janus Orion Fund Over $1,000,000 Over $1,000,000
Janus Triton Fund Over $1,000,000
</Table>
108
<Table>
<Caption>
Aggregate Dollar Range
of Equity Securities in
Portfolio Manager Dollar Range of Equity Securities in the Fund(s) Managed(1) Janus Funds(1)
- --------------------------------------------------------------------------------------------------------------------
Scott W. Schoelzel Janus Twenty Fund Over $1,000,000 Over $1,000,000
Gibson Smith Janus Balanced Fund $10,001-$50,000 Over $1,000,000
Janus High-Yield Fund $100,001-$500,000
Janus Short-Term Bond Fund $10,001-$50,000
Minyoung Sohn Janus Core Equity Fund $100,001-$500,000 Over $1,000,000
Janus Growth and Income Fund $500,001-$1,000,000
Ronald V. Speaker Janus Flexible Bond Fund Over $1,000,000 Over $1,000,000
Jason P. Yee Janus Global Opportunities Fund $100,001-$500,000 Over $1,000,000
Janus Worldwide Fund $100,001-$500,000
Claire Young Janus Olympus Fund Over $1,000,000 Over $1,000,000
INTECH
Robert Fernholz INTECH Risk-Managed Stock Fund(2) $500,001-$1,000,000 $500,001-$1,000,000
David E. Hurley INTECH Risk-Managed Stock Fund(2) None $1-$10,000
Cary Maquire INTECH Risk-Managed Stock Fund(2) None $100,001-$500,000
Joseph Runnels INTECH Risk-Managed Stock Fund(2) $1-$10,000 $10,001-$50,000
PERKINS
Jeffrey Kautz Janus Mid Cap Value Fund $100,001-$500,000 $100,001-$500,000
Robert Perkins Janus Mid Cap Value Fund Over $1,000,000 Over $1,000,000
Janus Small Cap Value Fund Over $1,000,000
Thomas Perkins Janus Mid Cap Value Fund Over $1,000,000 Over $1,000,000
Janus Small Cap Value Fund $100,001-$500,000
Todd H. Perkins Janus Small Cap Value Fund $100,001-$500,000 $500,001-$1,000,000
</Table>
(1) Ownership shown may include amounts held under a deferred fee agreement or
similar plan that are valued based on "shadow investments" in one or more
Funds at the election of the investment personnel.
(2) Formerly named Janus Risk-Managed Stock Fund.
109
PURCHASE OF SHARES
- --------------------------------------------------------------------------------
Although Janus Twenty Fund, Janus Venture Fund, Janus Mid Cap Value Fund -
Institutional Shares and Janus Small Cap Value Fund are closed, certain
investors may continue to invest in the Funds and/or open new Fund accounts.
Once an account is closed, additional investments will not be accepted unless
you meet one of the specified criteria. You may be required to demonstrate
your eligibility to purchase shares of a Fund before your investment is
accepted. Shares of the Funds are sold at the NAV per share as determined as
of the close of the regular trading session of the New York Stock Exchange
(the "NYSE") next occurring after a purchase order is received in good order
by a Fund. The "Shareholder's Manual" or "Shareholder's Guide" section of the
Funds' Prospectuses contains detailed information about the purchase of
shares.
NET ASSET VALUE DETERMINATION
As stated in the Funds' Prospectuses, the net asset value ("NAV") of the
shares of each Fund is determined once each day the NYSE is open, as of the
close of its regular trading session (normally 4:00 p.m., New York time,
Monday through Friday). The per share NAV of each Fund is determined by
dividing the total value of a Fund's securities and other assets, less
liabilities, attributable to the Fund, by the total number of shares
outstanding. In the case of Funds with share classes, the NAV for each class
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. In determining NAV,
securities listed on an Exchange, the Nasdaq National Market, and foreign
markets are generally valued at the closing prices on such markets, or if
such price is lacking for the trading period immediately preceding the time
of determination, such securities are valued at their current bid price.
Municipal securities held by the Funds are traded primarily in the
over-the-counter market. Valuations of such securities are furnished by one
or more pricing services employed by the Funds and approved by the Trustees
and are based upon a computerized matrix system or appraisals obtained by a
pricing service, in each case in reliance upon information concerning market
transactions and quotations from recognized municipal securities dealers.
Other securities that are traded on the over-the-counter market are generally
valued at their closing bid prices. Foreign securities and currencies are
converted to U.S. dollars using the applicable exchange rate in effect at the
close of the NYSE. Each Fund will determine the market value of individual
securities held by it by using prices provided by one or more professional
pricing services which may provide market prices to other funds, or, as
needed, by obtaining market quotations from independent broker-dealers.
Short-term securities maturing within 60 days or less are valued on an
amortized cost basis. Debt securities with a remaining maturity of greater
than 60 days are valued in accordance with the evaluated bid
110
price supplied by the pricing service. The evaluated bid price supplied by
the pricing service is an evaluation that reflects such factors as security
prices, yields, maturities, and ratings. Securities for which market
quotations are not readily available or are deemed unreliable are valued at
fair value determined in good faith under procedures established by and under
the supervision of the Trustees (the "Valuation Procedures"). Circumstances
in which fair value pricing may be utilized include, but are not limited to:
(i) when significant events occur which may affect the securities of a single
issuer, such as mergers, bankruptcies, or significant issuer specific
developments; (ii) when significant events occur which may affect an entire
market, such as natural disasters or significant governmental actions; and
(iii) when non-significant events occur such as markets closing early or not
opening, security trading halts, or pricing of nonvalued securities and
restricted or nonpublic securities. The Funds may use a systematic fair
valuation model provided by an independent third party to value international
equity securities in order to adjust for stale pricing, which may occur
between the close of certain foreign exchanges and the NYSE.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of
business on each business day in New York (i.e., a day on which the NYSE is
open). In addition, European or Far Eastern securities trading generally or
in a particular country or countries may not take place on all business days
in New York. Furthermore, trading takes place in Japanese markets on certain
Saturdays and in various foreign markets on days which are not business days
in New York and on which a Fund's NAV is not calculated. A Fund calculates
its NAV per share, and therefore effects sales, redemptions, and repurchases
of its shares, as of the close of the NYSE once on each day on which the NYSE
is open. Such calculation may not take place contemporaneously with the
determination of the prices of the foreign portfolio securities used in such
calculation. If an event that is expected to affect the value of a portfolio
security occurs after the close of the principal exchange or market on which
that security is traded, and before the close of the NYSE, then that security
may be valued in good faith under the Valuation Procedures.
REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS
If investors do not elect online at www.janus.com, in writing, or by phone to
receive their dividends and distributions in cash, all income dividends and
capital gains distributions, if any, on a Fund's shares are reinvested
automatically in additional shares of that Fund at the NAV determined on the
payment date. Checks for cash dividends and distributions and confirmations
of reinvestments are usually sent to shareholders within ten days after the
record date. Any
111
election of the manner in which a shareholder wishes to receive dividends and
distributions (which may be made online at www.janus.com or by phone) will
apply to dividends and distributions the record dates of which fall on or
after the date that a Fund receives such notice. Changes to distribution
options must be received at least three days prior to the record date to be
effective for such date. Investors receiving cash distributions and dividends
may elect online at www.janus.com, in writing, or by phone to change back to
automatic reinvestment at any time.
112
REDEMPTION OF SHARES
- --------------------------------------------------------------------------------
Procedures for redeeming shares are set forth in the "Shareholder's Manual"
or "Shareholder's Guide" section of the Funds' Prospectuses. Shares normally
will be redeemed for cash, although each Fund retains the right to redeem
some or all of its shares in-kind under unusual circumstances, in order to
protect the interests of remaining shareholders, or to accommodate a request
by a particular shareholder that does not adversely affect the interest of
the remaining shareholders, by delivery of securities selected from its
assets at its discretion. However, the Funds are governed by Rule 18f-1 under
the 1940 Act, which requires each Fund to redeem shares solely for cash up to
the lesser of $250,000 or 1% of the NAV of that Fund during any 90-day period
for any one shareholder. Should redemptions by any shareholder exceed such
limitation, a Fund will have the option of redeeming the excess in cash or
in-kind. If shares are redeemed in-kind, the redeeming shareholder may incur
brokerage costs in converting the assets to cash. The method of valuing
securities used to make redemptions in-kind will be the same as the method of
valuing portfolio securities described under "Purchase of Shares - Net Asset
Value Determination" and such valuation will be made as of the same time the
redemption price is determined.
The right to require the Funds to redeem their shares may be suspended, or
the date of payment may be postponed, whenever: (i) trading on the NYSE is
restricted, as determined by the SEC, or the NYSE is closed (except for
holidays and weekends); (ii) the SEC permits such suspension and so orders;
or (iii) an emergency exists as determined by the SEC so that disposal of
securities or determination of NAV is not reasonably practicable.
113
SHAREHOLDER ACCOUNTS
- --------------------------------------------------------------------------------
Detailed information about the general procedures for shareholder accounts
and specific types of accounts is set forth in the Funds' Prospectuses and at
www.janus.com. Applications for specific types of accounts may be obtained by
visiting www.janus.com, calling a Janus representative, or writing to the
Funds at P.O. Box 173375, Denver, Colorado 80217-3375.
ONLINE AND TELEPHONE TRANSACTIONS
As stated in the Prospectuses, shareholders may initiate a number of
transactions at www.janus.com and by telephone. The Funds, their transfer
agent, and their distributor disclaim responsibility for the authenticity of
instructions received at www.janus.com and by telephone. Such entities will
employ reasonable procedures to confirm that instructions communicated online
and by telephone are genuine. Such procedures may include, among others,
requiring personal identification prior to acting upon online and telephone
instructions, providing written confirmation of online and telephone
transactions, and tape recording telephone conversations. Your account
information should be kept private, and you should immediately review any
account statements that you receive from Janus Capital. Someone other than
you could act on your account if they are able to provide the required
identifying information. Contact Janus Capital immediately about any
transactions you believe to be unauthorized.
SYSTEMATIC REDEMPTIONS
As stated in the "Shareholder's Manual" or "Shareholder's Guide" section of
the Funds' Prospectuses, if you have a regular account or are eligible for
distributions from a retirement plan, you may establish a systematic
redemption option. The payments will be made from the proceeds of periodic
redemptions of shares in the account at the NAV. Depending on the size or
frequency of the disbursements requested, and the fluctuation in value of a
Fund's portfolio holdings, redemptions for the purpose of making such
disbursements may reduce or even exhaust the shareholder's account.
Information about requirements to establish a systematic redemption option
may be obtained by visiting www.janus.com, calling a Janus representative, or
writing the Funds.
114
TAX-DEFERRED ACCOUNTS
- --------------------------------------------------------------------------------
The Funds offer several different types of tax-deferred accounts that an
investor may establish to invest in Fund shares, depending on rules
prescribed by the Internal Revenue Code. Traditional and Roth Individual
Retirement Accounts ("IRAs") may be used by most individuals who have taxable
compensation. Simplified Employee Pensions ("SEPs") and Defined Contribution
Plans (Profit Sharing or Money Purchase Pension Plans) may be used by most
employers, including corporations, partnerships, and small business owners
(including sole proprietors), for the benefit of business owners and their
employees. In addition, the Funds offer a Section 403(b)(7) Plan for
employees of educational organizations and other qualifying tax-exempt
organizations. Investors should consult their tax adviser or legal counsel
before selecting a tax-deferred account.
Contributions under Traditional and Roth IRAs, SEPs, Defined Contribution
Plans, and Section 403(b)(7) Plans are subject to specific contribution
limitations. Generally, such contributions may be invested at the direction
of the participant.
Distributions from tax-deferred retirement accounts may be subject to
ordinary income tax and may be subject to an additional 10% tax if withdrawn
prior to age 59 1/2 or used for a nonqualifying purpose. Additionally,
shareholders generally must start withdrawing retirement plan assets no later
than April 1 of the year after they reach age 70 1/2. Several exceptions to
these general rules may apply and several methods exist to determine the
amount and timing of the minimum annual distribution (if any). Shareholders
should consult with their tax adviser or legal counsel prior to receiving any
distribution from any tax-deferred account, in order to determine the income
tax impact of any such distribution.
Coverdell Education Savings Accounts (formerly Education IRAs) allow
individuals, subject to certain income limitations, to contribute up to
$2,000 annually on behalf of any child under the age of 18. Contributions are
also allowed on behalf of children with special needs beyond age 18.
Distributions are generally subject to income tax if not used for qualified
education expenses.
To receive additional information about Traditional and Roth IRAs, SEPs,
Defined Contribution Plans, Section 403(b)(7) Plans, and Coverdell Education
Savings Accounts along with the necessary materials to establish an account,
please visit www.janus.com, call a Janus representative, or write to the
Funds at P.O. Box 173375, Denver, Colorado 80217-3375. No contribution to a
Traditional or Roth IRA, SEP, Defined Contribution Plan, Section 403(b)(7)
Plan, or Coverdell Education Savings Account can be made until the
appropriate forms to establish any such plan have been completed.
115
INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS,
AND TAX STATUS
- --------------------------------------------------------------------------------
The following is intended to be a general summary of certain U.S. federal
income tax consequences of investing in the Funds. It is not intended to be a
complete discussion of all such federal income tax consequences, nor does it
purport to deal with all categories of investors. This discussion reflects
applicable tax laws of the United States as of the date of this SAI. However,
tax laws may change or be subject to new interpretation by the courts or the
IRS, possibly with retroactive effect. Investors are therefore advised to
consult with their own tax advisers before making an investment in the Funds.
It is a policy of the Funds to make distributions of substantially all of
their investment income and any net realized capital gains. Any capital gains
realized during each fiscal year ended October 31, as defined by the Internal
Revenue Code, are normally declared and payable to shareholders in December
but, if necessary, may be distributed at other times as well. Janus Fund,
Janus Enterprise Fund, Janus Mercury Fund, Janus Olympus, Janus Orion Fund,
Janus Triton Fund, Janus Twenty Fund, Janus Venture Fund, Janus Global Life
Sciences Fund, Janus Global Technology Fund, Janus Contrarian Fund, Janus
Core Equity Fund, Janus Research Fund, INTECH Risk-Managed Stock Fund, Janus
Mid Cap Value Fund, Janus Small Cap Value Fund, Janus Global Opportunities
Fund, Janus Overseas Fund, and Janus Worldwide Fund declare and make annual
distributions of income (if any); Janus Balanced Fund and Janus Growth and
Income Fund declare and make quarterly distributions of income; and Janus
Flexible Bond Fund, Janus High-Yield Fund, Janus Short-Term Bond Fund, and
Janus Federal Tax-Exempt Fund declare dividends daily and make monthly
distributions of income. If a month begins on a Saturday, Sunday, or holiday,
dividends for daily dividend Funds for those days are declared at the end of
the preceding month. Janus Federal Tax-Exempt Fund will use the "average
annual method" to determine the designated percentage of each distribution
that is tax-exempt. Under this method, the percentage of income designated as
tax-exempt is based on the percentage of tax-exempt income earned for each
annual period, and may be substantially different from the Fund's income that
was tax-exempt during any monthly period.
The Funds intend to qualify as regulated investment companies by satisfying
certain requirements prescribed by Subchapter M of the Internal Revenue Code.
If a Fund failed to qualify as a regulated investment company in any taxable
year, the Fund may be subject to tax on its taxable income at corporate
rates. In addition, all distributions from earnings and profits, including
any distributions of net tax-exempt income and net long-term capital gains,
would generally be taxable to shareholders as ordinary income but may, at
least in part, qualify for the dividends received deduction applicable to
corporations or the reduced rate of taxation applicable to noncorporate
holders for "qualified dividend income."
116
In addition, the Funds could be required to recognize unrealized gains, pay
taxes and interest, and make distributions before requalifying as regulated
investment companies that are accorded special tax treatment.
The Funds may purchase securities of certain foreign corporations considered
to be passive foreign investment companies by the Internal Revenue Code. In
order to avoid taxes and interest that must be paid by the Funds, the Funds
may make various elections permitted by the tax laws. However, these
elections could require that the Funds recognize taxable income, which in
turn must be distributed even though the Funds may not have received any
income upon such an event.
Some foreign securities purchased by the Funds may be subject to foreign
taxes which could reduce the yield on such securities. If the amount of
foreign taxes is significant in a particular year, the Funds that qualify
under Section 853 of the Internal Revenue Code may elect to pass through such
taxes to shareholders, who will each decide whether to deduct such taxes or
claim a foreign tax credit. If such election is not made by a Fund, any
foreign taxes paid or accrued will represent an expense to the Fund, which
will reduce its investment company taxable income.
117
PRINCIPAL SHAREHOLDERS
- --------------------------------------------------------------------------------
As of January 31, 2006, the officers and Trustees as a group owned 2.17% of
Janus Triton Fund, 5.65% of Janus Research Fund, 1.02% of Janus Global
Opportunities Fund, and less than 1% of the outstanding shares of each of the
other Funds in this SAI.
As of January 31, 2006, Charles Schwab & Co., Inc. ("Schwab"), 101 Montgomery
Street, San Francisco, CA 94104-4122, and National Financial Services Co.
("National Financial"), P.O. Box 3908, Church Street Station, New York, NY
10008-3908, owned of record 5% or more of the outstanding shares of the Funds
for the exclusive benefit of their customers, as shown below:
<Table>
<Caption>
Fund Name Held by Schwab
- ----------------------------------------------------------------------------
Janus Fund 11.2%
Janus Enterprise Fund 10.7%
Janus Mercury Fund 12.2%
Janus Olympus Fund 14.7%
Janus Orion Fund 9.5%
Janus Triton Fund 32.7%(1)
Janus Twenty Fund 8.8%
Janus Venture Fund 9.6%
Janus Global Life Sciences Fund 14.1%
Janus Global Technology Fund 12.4%
Janus Balanced Fund 17.3%
Janus Contrarian Fund 13.1%
Janus Core Equity Fund 19.7%
Janus Growth and Income Fund 28.6%
Janus Research Fund 19.7%
INTECH Risk-Managed Stock Fund(2) 8.9%
Janus Mid Cap Value Fund - Investor Shares 25.7%
Janus Mid Cap Value Fund - Institutional Shares 19.1%
Janus Small Cap Value Fund - Investor Shares 8.0%
Janus Small Cap Value Fund - Institutional Shares 7.6%
Janus Global Opportunities Fund 17.0%
Janus Overseas Fund 22.3%
Janus Worldwide Fund 19.5%
Janus Flexible Bond Fund 19.6%
Janus High-Yield Fund 24.2%
Janus Short-Term Bond Fund 11.8%
Janus Federal Tax-Exempt Fund 5.9%
</Table>
(1) 5% or more of the outstanding shares of the Fund may be held for the
exclusive benefit of an individual shareholder.
(2) Formerly named Janus Risk-Managed Stock Fund
118
<Table>
<Caption>
Held by
National
Fund Name Financial
- ----------------------------------------------------------------------------
Janus Fund 6.2%
Janus Enterprise Fund 13.7%
Janus Mercury Fund 21.9%
Janus Olympus Fund 7.7%
Janus Orion Fund 9.7%
Janus Triton Fund 8.5%
Janus Twenty Fund 7.5%
Janus Global Life Sciences Fund 10.1%
Janus Global Technology Fund 7.7%
Janus Balanced Fund 14.9%
Janus Contrarian Fund 8.2%
Janus Core Equity Fund 12.3%
Janus Growth and Income Fund 8.7%
INTECH Risk-Managed Stock Fund(1) 5.3%
Janus Mid Cap Value Fund - Investor Shares 24.5%
Janus Small Cap Value Fund - Investor Shares 19.0%
Janus Small Cap Value Fund - Institutional Shares 11.1%
Janus Overseas Fund 16.5%
Janus Worldwide Fund 16.3%
Janus Flexible Bond Fund 11.5%
Janus High-Yield Fund 16.2%
Janus Short-Term Bond Fund 5.1%
</Table>
(1) Formerly named Janus Risk-Managed Stock Fund
According to the information provided by Schwab and National Financial, this
ownership is by nominee only and does not represent beneficial ownership of
such shares, because they have no investment discretion or voting power with
respect to such shares.
119
As of January 31, 2006, the following shareholders owned 5% or more of the
shares of the following Funds:
<Table>
<Caption>
Percentage
Fund Name Shareholder and Address of Record Ownership
- ------------------------------------------------------------------------------------------------
Janus Enterprise Fund Merrill Lynch Pierce Fenner & Smith Inc. 5.9%
For the sole Benefit of Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246
Janus Balanced Fund The Guardian Insurance & Annuity Company Inc. 5.5%
1560 Valley Center Parkway, Suite 100
Bethlehem, PA 18017-2275
Janus Small Cap Value Fund Northern Trust Company 11.7%
- Investor Shares FBO Triad Hospitals Inc.
P.O. Box 92994
Chicago, IL 60675-2994
Merrill Lynch Pierce Fenner & Smith Inc. 7.8%
For the sole Benefit of Customers
4800 Deer Lake Drive East
Jacksonville, FL 32246
Janus Small Cap Value Fund JP Morgan Chase Bank 15.4%
- Institutional Shares Plan for EE of Participating AMR CO
Subsidiaries
4 New York Plaza, 2nd Floor
New York, NY 10004-2413
Vanguard Fiduciary Trust Company 11.6%
P.O. Box 2600
Valley Forge, PA 19482-2600
Mitra & Company 8.3%
1000 N. Water Street
Milwaukee, WI 53202-6648
Janus High-Yield Fund Citigroup Global Markets Inc. 8.7%
388 Greenwich Street
New York, NY 10013-2375
</Table>
120
As of January 31, 2006, the following shareholder owned more than 25% of the
shares of the following Fund:
<Table>
<Caption>
Percentage
Fund Name Shareholder and Address of Record Ownership
- ------------------------------------------------------------------------------------------------
Janus Mid Cap Value Fund Prudential Investment Management Service(1) 73.2%
- Institutional Shares FBO Mutual Fund Clients
100 Mullberry Street
3 Gateway Center, 11th Floor
Newark, NJ 07102-4000
</Table>
(1) This entity could be deemed to be a "control person" and may have the power
to control any of the Shares of the Fund.
To the knowledge of the Funds, no other shareholder owned 5% or more of the
outstanding shares of any Fund included in this SAI as of January 31, 2006.
121
MISCELLANEOUS INFORMATION
- --------------------------------------------------------------------------------
Each Fund is a series of the Trust, an open-end management investment company
registered under the 1940 Act and organized as a Massachusetts business trust
on February 11, 1986. As of the date of this SAI, the Trust offers 32
separate series, two of which currently offer two classes of shares and three
of which currently offer three classes of shares. Additional series and/or
classes may be created from time to time.
Janus Capital reserves the right to the name "Janus." In the event that Janus
Capital does not continue to provide investment advice to the Funds, the
Funds must cease to use the name "Janus" as soon as reasonably practicable.
Under Massachusetts law, shareholders of the Funds could, under certain
circumstances, be held liable for the obligations of their Fund. However, the
Amended and Restated Agreement and Declaration of Trust disclaims shareholder
liability for acts or obligations of the Funds and requires that notice of
this disclaimer be given in each agreement, obligation, or instrument entered
into or executed by the Funds or the Trustees. The Amended and Restated
Agreement and Declaration of Trust also provides for indemnification from the
assets of the Funds for all losses and expenses of any Fund shareholder held
liable for the obligations of their Fund. Thus, the risk of a shareholder
incurring a financial loss on account of its liability as a shareholder of
one of the Funds is limited to circumstances in which their Fund would be
unable to meet its obligations. The possibility that these circumstances
would occur is remote. The Trustees intend to conduct the operations of the
Funds to avoid, to the extent possible, liability of shareholders for
liabilities of their Fund.
SHARES OF THE TRUST
The Trust is authorized to issue an unlimited number of shares of beneficial
interest with a par value of one cent per share for each series of the Trust.
Shares of each Fund are fully paid and nonassessable when issued. All shares
of a Fund participate equally in dividends and other distributions by the
shares of the same class of that Fund, and in residual assets of that class
of that Fund in the event of liquidation. Shares of each Fund have no
preemptive, conversion, or subscription rights. Shares of each Fund may be
transferred by endorsement or stock power as is customary, but a Fund is not
bound to recognize any transfer until it is recorded on its books.
Of the Funds discussed in this SAI, two Funds offer two classes of shares.
The Shares discussed in this SAI are generally offered directly to investors
or through financial intermediaries. See the Funds' Prospectuses for further
detail.
122
SHAREHOLDER MEETINGS
The Trust does not intend to hold annual or regular shareholder meetings
unless otherwise required by the Amended and Restated Agreement and
Declaration of Trust or the 1940 Act. Special meetings may be called for a
specific Fund or for the Trust as a whole for purposes such as changing
fundamental policies, electing or removing Trustees, making any changes to
the Amended and Restated Agreement and Declaration of Trust that would
materially adversely affect shareholders' rights, determining whether to
bring certain derivative actions, or for any other purpose requiring a
shareholder vote under applicable law or the Trust's governing documents, or
as the Trustees consider necessary or desirable. Under the Amended and
Restated Agreement and Declaration of Trust, special meetings of shareholders
of the Trust or of any Fund shall be called subject to certain conditions,
upon written request of shareholders owning Shares representing at least 10%
of the Shares then outstanding. The Funds will assist these shareholders in
communicating with other shareholders in connection with such a meeting
similar to that referred to in Section 16(c) of the 1940 Act.
The Trustees of the Trust (including Mr. Contro and Ms. Wolf, new Trustees),
were elected at a Special Meeting of Shareholders on November 22, 2005. Under
the Amended and Restated Agreement and Declaration of Trust, each Trustee
will continue in office until the termination of the Trust or his or her
earlier death, retirement, resignation, incapacity, or removal. Vacancies
will be filled by appointment by a majority of the remaining Trustees,
subject to the 1940 Act. Commencing in 2005 and not less than every fifth
calendar year thereafter, a meeting of shareholders shall be held to elect
Trustees.
VOTING RIGHTS
As a shareholder, you are entitled to one vote for each whole dollar and a
proportionate fractional vote for each fractional dollar of NAV of the Fund
that you own. Generally, all Funds and classes vote together as a single
group, except where a separate vote of one or more Funds or classes is
required by law or where the interests of one or more Funds or classes are
affected differently from other Funds or classes. Shares of all series of the
Trust have noncumulative voting rights, which means that the holders of more
than 50% of the value of shares of all series of the Trust voting for the
election of Trustees can elect 100% of the Trustees if they choose to do so.
In such event, the holders of the remaining value of shares will not be able
to elect any Trustees.
123
MASTER/FEEDER OPTION
The Trust may in the future seek to achieve a Fund's objective by investing
all of that Fund's assets in another investment company having the same
investment objective and substantially the same investment policies and
restrictions as those applicable to that Fund. Unless otherwise required by
law, this policy may be implemented by the Trustees without shareholder
approval.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP, 1670 Broadway, Suite 1000, Denver, Colorado
80202, Independent Registered Public Accounting Firm for the Funds, audits
the Funds' annual financial statements and reviews their tax returns.
REGISTRATION STATEMENT
The Trust has filed with the SEC, Washington, D.C., a Registration Statement
under the Securities Act of 1933, as amended, with respect to the securities
to which this SAI relates. If further information is desired with respect to
the Funds or such securities, reference is made to the Registration Statement
and the exhibits filed as a part thereof.
124
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following audited financial statements are hereby incorporated into this
SAI by reference to the following annual reports:
DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORTS DATED OCTOBER 31, 2005
Schedules of Investments as of October 31, 2005
Statements of Operations for the period ended October 31, 2005
Statements of Assets and Liabilities as of October 31, 2005
Statements of Changes in Net Assets for each of the periods indicated
Financial Highlights for each of the periods indicated
Notes to Financial Statements
Report of Independent Registered Public Accounting Firm
The portions of such Annual Report that are not specifically listed above are
not incorporated by reference into this SAI and are not part of the
Registration Statement.
125
APPENDIX A
- --------------------------------------------------------------------------------
EXPLANATION OF RATING CATEGORIES
The following is a description of credit ratings issued by three of the major
credit rating agencies. Credit ratings evaluate only the safety of principal
and interest payments, not the market value risk of lower quality securities.
Credit rating agencies may fail to change credit ratings to reflect
subsequent events on a timely basis. Although Janus Capital and Perkins
consider security ratings when making investment decisions, they also perform
their own investment analysis and do not rely solely on the ratings assigned
by credit agencies.
STANDARD & POOR'S
RATINGS SERVICE
<Table>
BOND RATING EXPLANATION
-----------------------------------------------------------------------------
Investment Grade
AAA...................... Highest rating; extremely strong capacity to pay
principal and interest.
AA....................... High quality; very strong capacity to pay principal
and interest.
A........................ Strong capacity to pay principal and interest;
somewhat more susceptible to the adverse effects of
changing circumstances and economic conditions.
BBB-..................... Adequate capacity to pay principal and interest;
normally exhibit adequate protection parameters,
but adverse economic conditions or changing
circumstances more likely to lead to a weakened
capacity to pay principal and interest than for
higher rated bonds.
Non-Investment Grade
BB+, B, CCC, CC, C....... Predominantly speculative with respect to the
issuer's capacity to meet required interest and
principal payments. BB - lowest degree of
speculation; C - the highest degree of speculation.
Quality and protective characteristics outweighed
by large uncertainties or major risk exposure to
adverse conditions.
D........................ In default.
</Table>
126
FITCH, INC.
<Table>
LONG-TERM BOND RATING EXPLANATION
-----------------------------------------------------------------------------
Investment Grade
AAA...................... Highest rating; extremely strong capacity to pay
principal and interest.
AA....................... High quality; very strong capacity to pay principal
and interest.
A........................ Strong capacity to pay principal and interest;
somewhat more susceptible to the adverse effects of
changing circumstances and economic conditions.
BBB-..................... Adequate capacity to pay principal and interest;
normally exhibit adequate protection parameters,
but adverse economic conditions or changing
circumstances more likely to lead to a weakened
capacity to pay principal and interest than for
higher rated bonds.
Non-Investment Grade
BB+, B, CCC, CC, C....... Predominantly speculative with respect to the
issuer's capacity to meet required interest and
principal payments. BB - lowest degree of
speculation; C - the highest degree of speculation.
Quality and protective characteristics outweighed
by large uncertainties or major risk exposure to
adverse conditions.
D........................ In default.
</Table>
127
MOODY'S INVESTORS
SERVICE, INC.
<Table>
BOND RATING EXPLANATION
-----------------------------------------------------------------------------
Investment Grade
Aaa...................... Highest quality, smallest degree of investment
risk.
Aa....................... High quality; together with Aaa bonds, they compose
the high-grade bond group.
A........................ Upper to medium-grade obligations; many favorable
investment attributes.
Baa...................... Medium-grade obligations; neither highly protected
nor poorly secured. Interest and principal appear
adequate for the present but certain protective
elements may be lacking or may be unreliable over
any great length of time.
Non-Investment Grade
Ba....................... More uncertain, with speculative elements.
Protection of interest and principal payments not
well safeguarded during good and bad times.
B........................ Lack characteristics of desirable investment;
potentially low assurance of timely interest and
principal payments or maintenance of other contract
terms over time.
Caa...................... Poor standing, may be in default; elements of
danger with respect to principal or interest
payments.
Ca....................... Speculative in a high degree; could be in default
or have other marked shortcomings.
C........................ Lowest rated; extremely poor prospects of ever
attaining investment standing.
</Table>
Unrated securities will be treated as non-investment grade securities unless
the investment personnel determine that such securities are the equivalent of
investment grade securities. When calculating the quality assigned to
securities that receive different ratings from two or more agencies ("split
rated securities"), the security will receive: (i) the middle rating from the
three reporting agencies if three agencies provide a rating for the security;
(ii) the lowest rating if only two agencies provide a rating for the
security; or (iii) the rating assigned if only one agency rates the security.
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(JANUS LOGO)
www.janus.com
PO Box 173375
Denver, CO 80217-3375
1-800-525-3713
2005 Annual Report
Janus Growth Funds
Growth
Janus Fund
Janus Enterprise Fund
Janus Mercury Fund
Janus Olympus Fund
Janus Orion Fund
Janus Triton Fund
Janus Twenty Fund
Janus Venture Fund
Specialty Growth
Janus Global Life Sciences Fund
Janus Global Technology Fund
(JANUS LOGO)
Table of Contents
JANUS GROWTH FUNDS
President and CIO Letter to Shareholders 1
Portfolio Managers' Commentaries and Schedules of Investments
Janus Fund 6
Janus Enterprise Fund 12
Janus Mercury Fund 18
Janus Olympus Fund 23
Janus Orion Fund 28
Janus Triton Fund 33
Janus Twenty Fund 38
Janus Venture Fund 42
Janus Global Life Sciences Fund 48
Janus Global Technology Fund 53
Statements of Assets and Liabilities 58
Statements of Operations 60
Statements of Changes in Net Assets 62
Financial Highlights 66
Notes to Schedules of Investments 72
Notes to Financial Statements 75
Report of Independent Registered Public Accounting Firm 84
Additional Information 85
Explanations of Charts, Tables and Financial Statements 89
Designation Requirements 91
Trustees and Officers 92
Please consider the charges, risks, expenses and investment objectives carefully
before investing. For a prospectus containing this and other information, please
call Janus at 1-800-525-3713 or download the file from www.janus.com. Read it
carefully before you invest or send money.
DEAR SHAREHOLDER,
I am pleased to provide you with an update on Janus and the performance of your
investments. We have positive news to share with you on a number of fronts,
including improved performance, research team enhancements, and new product
launches, all of which position us well as we look into 2006.
PERFORMANCE UPDATE
Starting with the most important metric, overall relative performance continued
to improve over the period. As of October 31, 2005, 75% of the Janus managed
equity funds were outperforming their Lipper peers.
In particular, our growth/blend disciplines posted very strong performance over
the past 12-months and bear special mention. For example, Janus Twenty*, Janus
Orion, Janus Core Equity, Janus Growth and Income, Janus Contrarian and Janus
Overseas Funds, were ranked in the top 2% of their respective Lipper categories
for the one-year period ended October 31, 2005. While recent performance is
important, I am even prouder of the solid performance we delivered over the
three-year period, with 69% of our funds ranked in the top two Lipper quartiles.
MARKET RECAP
From the constant drum beat of Federal Reserve rate hikes to the recent spike in
energy prices caused by dramatic hurricanes, it has been an active twelve months
for the U.S. economy and equity markets.
Despite ongoing worries about inflation and interest rates, the equity markets
were able to battle through the lows of last fall and notch decent mid- to
high-single digit returns over the past 12-months.(1)
The sectors that made the largest positive contribution to the overall gains of
the market, specifically the S&P 500(R) Index, during this time were healthcare
and energy. Not coincidentally, given that Janus' research focuses on seeking to
identify the most compelling investment candidates in the market, the healthcare
and energy sectors made the largest contribution to our firm-wide performance.
For example, UnitedHealth Group was the number one contributor to firm-wide
performance, and rose almost 60% during the time period. A combination of rising
enrollment trends, tight cost control and innovative new products and services
has enabled UnitedHealth to outpace its competition over the last few years and
become the gold standard in the HMO industry.
On the biotechnology side, advances in cancer research and new drug approvals
have powered Janus holdings like Genentech, Roche and Celgene, all of which I
believe are very well positioned to address the enormous unmet medical needs of
cancer patients worldwide through potential blockbuster drugs like Avastin and
Remodulin.
Our search for the global top energy investments took us from the natural gas
fields of West Texas to deep water drilling platforms off the coast of India to
Canadian oil sands fields. Investments in EOG Resources, Reliance Industries and
Suncor Energy all generated handsome gains for some of our Funds, many of which
were overweight the sector during the year.
INVESTMENT TEAM UPDATE
The improvement in firm-wide performance can be traced to the research
enhancements that have been implemented over the last few years. The senior
analysts that have been added to the research team made meaningful contributions
to the Funds from day one. The research associate group expanded its reach with
each passing quarter and continued to undertake critical work in uncovering
emerging trends in the marketplace. The Risk Committee, headed by Dan Scherman,
worked closely with portfolio managers to identify and assess the appropriate
risk profile for each Fund.
Each of these initiatives represented key goals we articulated to fund holders
last year, and I'm pleased to report that not only have we fulfilled each goal,
but also that the initiatives had a positive impact on several of the Funds.
UPDATE ON NEW FUNDS
I'd be remiss if I didn't highlight the solid performance posted by our two
newest Fund offerings -- Janus Triton Fund and Janus Research Fund. While still
in its early days, Janus Triton Fund populated its portfolio with a compelling
collection of small and mid-cap investment ideas and handsomely outperformed its
benchmark, the Russell 2500(TM) Growth Index.
(GARY BLACK PHOTO)
Gary Black
President and Chief
Investment Officer
Janus Growth Funds October 31, 2005 1
CONTINUED
Janus Research Fund represents a truly differentiated portfolio offered by
Janus, in that it is an analyst-driven portfolio populated with the highest
conviction ideas of each analyst. As such, the portfolio is style-agnostic and
offers exposure to all market capitalizations, sectors and geographies of the
global market. We are very pleased with the initial performance of both these
Funds.
We are also expanding our fund lineup. As of December 30, 2005, investors will
be able to take advantage of three new investment options called Janus Smart
Portfolios. These portfolios are offered in three risk profiles: Growth,
Moderate and Conservative, and they invest in the underlying Janus stock and
bond Funds to deliver a simple, diversified strategy for investors.
GROWTH VERSUS VALUE
In past letters we have been rather vocal in sharing our opinion that growth is
poised to return to favor in the market place. After five consecutive years of
outperformance by the value style, we are most encouraged by early signs that
the market is indeed beginning to rotate back into the growth style.
For example, the Russell 1000(R) Growth Index has outperformed the Russell
1000(R) Value Index for two straight quarters. This outperformance (growth
beating value for two consecutive quarters) has not occurred since the first
half of the year 2000. Encouragingly, this trend continued in the first month of
the fourth quarter as well. Because a sizeable portion of Janus' assets are
growth oriented, this rotation should represent a growing breeze at our backs as
we transition into 2006.
MARKET OUTLOOK
Given the twin headwinds of inflation and rate hikes, there has been a growing
debate in the market about the potential for an economic slowdown as we enter
2006. In addition to the interest rate and inflation outlook, flattening home
prices, rising consumer debt and potentially slowing corporate earnings all
point to clouds on the horizon. Additionally, we are watching the tightening
spread between short- and long-term bonds for any discernable signs that a
recession may be looming on the horizon.
While in aggregate these issues are worrisome, based on the economic data
available today, we do not believe the economy will slow down dramatically in
2006. While interest rate hikes and rising inflation make for good newspaper
headlines, it is important to note that the underlying fundamentals supporting
further economic expansion remain intact and should enable the economy to
navigate through these economic cross-currents. The economy's resilience has
often been underestimated, and there is an expectation that this dynamic will be
demonstrated once again as we transition into the New Year.
Regardless of the macro-economic climate, we remain focused on leveraging our
fundamental, grass-roots research to identify the most promising risk/reward
investments we can locate on a global basis.
CEO SUCCESSION
As many of you know, on October 26, 2005 the board of directors of Janus Capital
Group announced that I would succeed Steve Scheid as chief executive officer on
January 3, 2006. Steve will remain chairman of the board.
I want to end this letter by thanking Steve Scheid for his contribution to Janus
over the last 18 months as chief executive officer. He has worked tirelessly to
rebuild trust in the Janus brand and restructure our organization for success. I
hope you'll join me in congratulating Steve on his accomplishments.
Thank you for your investment in Janus.
Sincerely,
/s/ Gary Black
Gary Black
The information in the Janus Smart Portfolio prospectus is not complete and may
be changed. The securities may not be sold until the registration statement
filed with the Securities Exchange Commission is effective. The prospectus is
not an offer to sell these securities and is not soliciting an offer to buy
these securities in any state where the offer is not permitted.
*Closed to new investors.
(1) Based on 1-year returns for the Russell 1000(R) Growth Index and S&P 500(R)
Index which returned 8.81% and 8.72% for the period ended October 31, 2005.
2 Janus Growth Funds October 31, 2005
CONTINUED
See complete Lipper rankings on page 4. Lipper Inc. - A Reuters Company, is a
nationally recognized organization that ranks the performance of mutual funds
within a universe of funds that have similar investment objectives. Rankings are
historical with capital gains and dividends reinvested.
The Fund's portfolios may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
The S&P 500(R) Index is the Standard & Poor's composite index of 500 stocks, a
widely recognized, unmanaged index of common stock prices. The Russell 2500(TM)
Growth Index measures the performance of those Russell 2500 companies with
higher price-to-book ratios and higher forecasted growth values. The Russell
1000(R) Growth Index measures the performance of those Russell 1000 companies
with higher price-to-book ratios and higher forecasted growth values. The
Russell 1000(R) Value Index measures the performance of those Russell 1000
companies with lower price-to-book ratios and lower forecasted growth values.
As of October 31, 2005, EOG Resources, Inc. was 1.1% of Janus Core Equity Fund,
1.6% of Janus Research Fund, 0.7% of Janus Growth and Income Fund and 0.6% of
Janus Risk-Managed Stock Fund.
As of October 31, 2005, Reliance Industries, Ltd. was 4.4% of Janus Contrarian
Fund, 1.6% of Janus Research Fund, 1.9% of Janus Worldwide Fund and 6.5% of
Janus Overseas Fund.
As of October 31, 2005, Suncor Energy, Inc. was 2.3% of Janus Core Equity Fund,
1.6% of Janus Research Fund, 0.9% of Janus Balanced Fund, 3.4% of Janus Growth
and Income Fund, 1.6% of Janus Overseas Fund and 2.1% of Janus Contrarian Fund.
As of October 31, 2005, UnitedHealth Group, Inc. was 1.3% of Janus Research
Fund, 0.4% of Janus Balanced Fund, 3.8% of Janus Growth and Income Fund, 0.7% of
Janus Risk-Managed Stock Fund and 3.0% of Janus Worldwide Fund.
As of October 31, 2005, Roche Holding A.G. was 3.2% of Janus Core Equity Fund,
3.3% of Janus Orion Fund, 2.7% of Janus Balanced Fund, 2.7% of Janus Growth and
Income Fund, 0.9% of Janus Worldwide Fund and 2.5% of Janus Overseas Fund.
As of October 31, 2005, Celgene Corp. was 1.9% of Janus Core Equity Fund, 1.3%
of Janus Research Fund and 1.2% of Janus Balanced Fund.
There is no guarantee that any Fund included in this report holds these
securities. Please see the back of the report for individual holding percentages
as of October 31, 2005.
There is no assurance that any Janus fund currently holds any of these
securities.
Positive performance of holdings does not indicate positive portfolio returns.
Growth and value investing each have their own unique risks and potential for
rewards, and may not be suitable for all investors. A growth investing strategy
typically carries a higher risk of loss and a higher potential for reward than a
value investing strategy. A growth investing strategy emphasizes capital
appreciation; a value investing strategy emphasizes investments in companies
believed to be undervalued.
A fund's performance for very short time periods may not be indicative of future
performance.
Janus Growth Funds October 31, 2005 3
Lipper Rankings (unaudited)
LIPPER RANKINGS - BASED ON TOTAL RETURN AS OF 10/31/05
----------------------------------------------------------------------
ONE YEAR THREE YEAR FIVE YEAR
---------------------- ---------------------- ----------------------
RANK/ RANK/ RANK/
PERCENTILE TOTAL PERCENTILE TOTAL PERCENTILE TOTAL
LIPPER CATEGORY RANK (%) FUNDS RANK (%) FUNDS RANK (%) FUNDS
-------------------------------- ---------- ---------- ---------- ---------- ---------- ----------
JANUS INVESTMENT FUNDS
(Inception Date)
Janus Fund (2/70) Large-Cap Growth Funds 69 467/679 54 311/581 71 325/457
Janus Enterprise
Fund(1) (9/92) Mid-Cap Growth Funds 25 135/542 13 54/445 88 286/325
Janus Mercury
Fund(1) (5/93) Large-Cap Growth Funds 21 141/679 8 44/581 74 335/457
Janus Olympus
Fund(1) (12/95) Multi-Cap Growth Funds 18 74/414 54 194/359 73 189/261
Janus Orion
Fund (6/00) Multi-Cap Growth Funds 2 5/414 8 27/359 23 60/261
Janus Twenty
Fund* (4/85) Large-Cap Growth Funds 1 5/679 4 18/581 47 212/457
Janus Venture
Fund* (4/85) Small-Cap Growth Funds 63 325/515 15 63/435 53 168/322
Janus Balanced
Fund(1) (9/92) Balanced Funds 23 142/634 73 338/466 44 163/374
Janus Core Equity
Fund(1) (6/96) Large-Cap Core Funds 1 6/877 7 52/763 10 57/606
Janus Growth and
Income Fund(1) (5/91) Large-Cap Core Funds 2 16/877 12 8/763 40 241/606
Janus Risk-Managed
Stock Fund (2/03) Multi-Cap Core Funds 12 87/761 -- -- -- --
Janus Contrarian
Fund(2) (2/00) Multi-Cap Core Funds 2 15/761 1 5/270 17 68/403
Janus Federal
Tax-Exempt Fund (5/93) General Municipal Debt 78 207/267 84 212/252 81 178/221
Janus Flexible Bond
Fund(1)(3) (7/87) Intermediate Inv Grade Debt Funds 61 279/461 36 144/403 35 102/294
Janus High-Yield
Fund (12/95) High Current Yield Funds 58 244/426 94 340/363 51 151/300
Janus Short-Term Bond
Fund(1) (9/92) Short Investment Grade Debt 65 142/218 20 32/166 49 57/116
Janus Global Life
Sciences Fund (12/98) Health/Biotechnology Funds 19 33/178 30 48/161 71 73/102
Janus Global
Opportunities
Fund(1) (6/01) Global Funds 94 308/328 37 102/282 -- --
Janus Global
Technology Fund
(12/98) Science and Technology Funds 25 71/287 72 190/263 55 117/212
Janus Overseas
Fund(1) (5/94) International Funds 1 4/880 13 97/749 68 368/548
Janus Worldwide
Fund(1) (5/91) Global Funds 87 286/328 97 273/282 96 197/206
Janus Mid Cap Value
Fund - Inv(1)(4)
(8/98) Mid-Cap Value Funds 56 139/248 29 58/201 11 11/102
Janus Small Cap
Value Fund - Inv*(4)
(10/87) Small-Cap Core Funds 71 426/604 71 346/492 24 82/345
LIPPER RANKINGS -
BASED ON TOTAL RETURN AS OF 10/31/05
----------------------------------------------
TEN YEAR SINCE INCEPTION
---------------------- ----------------------
RANK/ RANK/
PERCENTILE TOTAL PERCENTILE TOTAL
RANK (%) FUNDS RANK (%) FUNDS
---------- ---------- ---------- ----------
JANUS INVESTMENT FUNDS
(Inception Date)
Janus Fund (2/70) 43 65/151 5 1/20
Janus Enterprise
Fund(1) (9/92) 60 73/121 35 18/51
Janus Mercury
Fund(1) (5/93) 6 8/151 2 1/84
Janus Olympus
Fund(1) (12/95) -- -- 14 12/88
Janus Orion
Fund (6/00) -- -- 37 86/237
Janus Twenty
Fund* (4/85) 2 2/151 5 2/40
Janus Venture
Fund* (4/85) 43 41/96 10 1/9
Janus Balanced
Fund(1) (9/92) 7 11/175 5 3/72
Janus Core Equity
Fund(1) (6/96) -- -- 2 4/263
Janus Growth and
Income Fund(1) (5/91) 3 5/223 5 5/102
Janus Risk-Managed
Stock Fund (2/03) -- -- 19 113/605
Janus Contrarian
Fund(2) (2/00) -- N/A 16 53/340
Janus Federal
Tax-Exempt Fund (5/93) 72 103/144 83 66/79
Janus Flexible Bond
Fund(1)(3) (7/87) 11 15/139 16 4/24
Janus High-Yield
Fund (12/95) -- -- 3 3/104
Janus Short-Term Bond
Fund(1) (9/92) 18 11/62 43 11/25
Janus Global Life
Sciences Fund (12/98) -- -- 33 16/48
Janus Global
Opportunities
Fund(1) (6/01) -- -- 15 34/230
Janus Global
Technology Fund
(12/98) -- -- 22 17/78
Janus Overseas
Fund(1) (5/94) 5 8/196 2 2/122
Janus Worldwide
Fund(1) (5/91) 47 35/74 28 5/17
Janus Mid Cap Value
Fund - Inv(1)(4)
(8/98) -- -- 4 3/79
Janus Small Cap
Value Fund - Inv*(4)
(10/87) N/A N/A N/A N/A
(1)The date of the Lipper ranking is slightly different from when the Fund
began operations since Lipper provides fund rankings as of the last day of the
month or the first Thursday after fund inception.
(2)Janus Contrarian Fund buys stock in overlooked or underappreciated companies
of any size, in any sector. Overlooked and underappreciated stocks present
special risks.
(3)Effective February 28, 2005, Janus Flexible Income Fund changed its name to
Janus Flexible Bond Fund and added to its investment policy to state that at
least 80% of its net assets (plus borrowings for investment purposes) will be
invested in bonds.
(4)Rating is for the Investor share class only; other classes may have
different performance characteristics.
*Closed to new investors.
Data presented represents past performance, which is no guarantee of future
results.
Janus Contrarian Fund, Janus Overseas Fund, Janus Global Technology Fund and
Janus Orion Fund may have significant exposure to emerging markets which may
lead to greater price volatility.
A fund's performance may be affected by risks that include those associated with
non-diversification, investments in foreign securities, non-investment grade
debt securities, undervalued companies or companies with a relatively small
market capitalization. Please see a Janus prospectus for more detailed
information.
There is no assurance that the investment process will consistently lead to
successful investing.
Growth and value investing each have their own unique risks and potential for
rewards, and may not be suitable for all investors. A growth investing strategy
typically carries a higher risk of loss and a higher potential for reward than a
value investing strategy. A growth investing strategy emphasizes capital
appreciation; a value investing strategy emphasizes investments in companies
believed to be undervalued.
Lipper Inc. - A Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical with capital gains and
dividends reinvested.
4 Janus Growth Funds October 31, 2005
Useful Information About Your Fund Report
PORTFOLIO MANAGER COMMENTARIES
The portfolio manager commentaries in this report include valuable insight from
the portfolio managers as well as statistical information to help you understand
how your Fund's performance and characteristics stack up against those of
comparable indices.
Please keep in mind that the opinions expressed by the portfolio managers in
their commentaries are just that: opinions. The commentary is a reflection of
the portfolio manager's best judgment at the time this report was compiled,
which was October 31, 2005. As the investing environment changes, so could the
portfolio managers' opinions. These views are unique to each manager and aren't
necessarily shared by their fellow employees or by Janus in general.
FUND EXPENSES
We believe it's important for our shareholders to have a clear understanding of
Fund expenses and the impact they have on investment return.
THE FOLLOWING IS IMPORTANT INFORMATION REGARDING EACH FUND'S EXPENSE EXAMPLE,
WHICH APPEARS IN EACH FUND'S PORTFOLIO MANAGER COMMENTARY WITHIN THIS ANNUAL
REPORT. PLEASE REFER TO THIS INFORMATION WHEN REVIEWING THE EXPENSE EXAMPLE FOR
EACH FUND.
Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs
such as redemption fees (where applicable) (and any related exchange fees) and
(2) ongoing costs, including management fees and other Fund expenses. The
example is intended to help you understand your ongoing costs (in dollars) of
investing in a 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 on an investment of $1,000 invested at the
beginning of the period and held for the six-month period from May 1, 2005 to
October 31, 2005.
Actual Expenses
The first line of the table in each example provides information about actual
account values and actual expenses. You may use the information in this line,
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 first line under the heading entitled "Expenses Paid During the
Period" to estimate the expenses you paid on your account during the period.
Hypothetical Example for Comparison Purposes
The second line of the table in each example provides information about
hypothetical account values and hypothetical expenses based on the Fund's actual
expense ratio and an assumed rate of return of 5% per year before expenses. This
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.
Janus Capital Management LLC ("Janus Capital") has contractually agreed to waive
Janus Triton Fund's total operating expenses, excluding brokerage commissions,
interest, taxes and extraordinary expenses to certain limits until at least
March 1, 2007. Expenses in the example reflect the application of this waiver.
Had the waiver not been in effect, your expenses would have been higher. More
information regarding the waiver is available in the Funds' Prospectuses.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as
redemption fees (where applicable). These fees are fully described in the
prospectus. Therefore, the second line of each table is useful in comparing
ongoing costs only, and will not help you determine the relative total costs of
owning different funds. In addition, if these transactional costs were included,
your costs would have been higher.
Janus Growth Funds October 31, 2005 5
Janus Fund (unaudited)
FUND SNAPSHOT
For more than 30 years, this traditional growth fund has exemplified Janus'
research and stock-picking abilities.
PERFORMANCE OVERVIEW
During the 12 months ended October 31, 2005, large-capitalization growth
companies re-emerged as a viable choice for many investors, ending a lengthy dry
spell. As the transition proved gradual, returns followed in modest fashion,
contributing to a 7.71% gain by Janus Fund. In comparison, its primary
benchmark, the Russell 1000(R) Growth Index, posted an 8.81% return and its
secondary benchmark, the S&P 500(R) Index returned 8.72% for the same period.
Healthcare related investments enhanced the Fund's returns, particularly those
in the food and drug retailing and the diversified healthcare equipment and
services groups. While posting solid returns and offering strong growth
prospects, stocks tied to the drug business -- not including the beleaguered
large pharmaceuticals -- and health maintenance organization (HMO) operators
provided the largest lift. The Fund's semiconductor holdings slumped amid a
mid-period downturn within the cyclical chip industry, while its media positions
lagged as part of a general disenchantment with future growth outlooks.
STRATEGY IN THIS ENVIRONMENT
Persistent worries over oil prices and the Federal Reserve's ongoing campaign to
raise interest rates undermined the equity markets for much of the period. The
devastation caused by Hurricanes Katrina and Rita, along with the resulting
disruption in the energy and raw materials markets, compounded investors'
malaise. As the near-term impact on the economy, inflationary factors and
consumer confidence all proved tough to gauge, investors adopted a more
defensive mindset. By the period's end, this translated into what appeared to be
a growing preference for large-cap growth stocks, which featured valuations at
the low end of historical ranges and increased protection against more cyclical
alternatives.
Against this backdrop, we relied heavily on the expertise of the Janus research
team, as more than 80% of the Fund's holdings are rated either "buy" or "strong
buy" by our internal analysts. We've also flattened the Fund's profile,
diversifying its holdings across a larger group of industries to gain exposure
to what we believe are pockets of strength throughout the market.
FUND COMPOSITION
As of October 31, 2005, equities accounted for 92.9% of the Fund, including
16.8% in foreign holdings. Of total net assets, the Fund's top 10 equity
holdings represented 27.6% and cash comprised 7.1%.
DRUG-RELATED STOCKS AND GLOBAL MATERIALS PRODUCER KEYED PERFORMANCE
Avoiding large pharmaceutical companies, which faced safety issues and looming
patent expirations, we focused the Fund's life sciences investments on companies
such as Alcon, a large-cap pharmaceutical company known for its eye-care
products. The company rose due to its excellent pipeline of lens and drug
products as well as its disciplined business practices, and maintained a bright
outlook due to the aging of the baby boomer population, which has spurred demand
in recent years.
Two other leading gainers that offered a different spin on the healthcare
industry were drugstore giant Walgreen and prescription benefit management
company Caremark Rx. Both companies generated steady returns and, in our
opinion, stand to benefit from the new Medicare prescription benefit scheduled
to take effect on January 1.
Another advancer was Companhia Vale do Rio Doce, a Brazilian mining company that
exports iron ore and other key raw materials. During the period, prices for
these materials increased on the back of extensive growth in the Chinese and
Indian markets, as well as supply shortages in the U.S. resulting from
Hurricanes Katrina and Rita.
(BLAINE ROLLINS PHOTO)
Blaine Rollins
portfolio manager
Top 10 Equity Holdings -- (% of Net Assets)
OCTOBER 31, 2005 OCTOBER 31, 2004
---------------- ----------------
Boeing Co. 4.0% 1.3%
Cisco Systems, Inc. 3.9% 4.8%
Comcast Corp. - Special Class A 3.4% 7.2%
Procter & Gamble Co. 3.2% 1.3%
Yahoo!, Inc. 2.7% 0.6%
UnitedHealth Group, Inc. 2.6% 0.4%
Alcon, Inc. (U.S. Shares) 2.1% 1.3%
Caremark Rx, Inc. 2.1% 0.8%
Microsoft Corp. 1.8% --
United Parcel Service, Inc. - Class B 1.8% 3.1%
6 Janus Growth Funds October 31, 2005
(unaudited)
SEMICONDUCTOR AND NETWORK INFRASTRUCTURE COMPANIES HINDERED RETURNS
The semiconductor chip industry can offer numerous challenges -- something we've
experienced firsthand as longtime owners of Maxim Integrated Products, the
developer of analog chips for use in products ranging from cellular handsets to
automobiles. Although we trimmed the Fund's legacy position in the stock, its
poor performance during the period still hampered our results. The stock was
hurt in part by dissatisfaction with the company's efforts to shore up its
balance sheet. However, it did recover somewhat in the closing months of the
period, as orders picked up and its valuation proved appealing.
We exhibited similar patience with Cisco, the world's leading developer of
networking equipment. Although the company did not suffer any fundamental
disappointments -- indeed, it generated strong cash flows which it used in part
to fund a steady stock buyback effort -- its top-line growth proved
unsatisfactory to some. Enterprise spending, which affects approximately
two-thirds of Cisco's business, has picked up, but not as briskly as many had
hoped. Nevertheless, we're seeing favorable trends for Cisco, such as an effort
to push broadband services through wireless networks.
Elsewhere, Univision Communications, a Spanish-language media company serving
the U.S. Hispanic population, struggled to recover from a volatile 2004. Our
patience with Univision wore thin, so we decided to exit our position and
redeploy our assets in what we feel are other, more attractive growth
opportunities.
INVESTMENT STRATEGY AND OUTLOOK
In the coming months, we will be watching the consumer closely. It's possible
that interest rates will dictate the consumer's mood. For example, if rates keep
climbing, concern over credit card bills and adjustable rate mortgage loans
could grow. On the other hand, the Gulf Coast rebuilding effort may provide some
stimulus to the job market, which in turn could bolster consumer confidence.
We also plan to keep an eye on international opportunities. We continue to seek
stocks that we believe are positioned to benefit from exponential growth in
emerging markets such as China and India, most notably in the commercial
aerospace arena. In addition, we've seen a resurgence in Japanese consumerism
after nearly 15 down years. Given this development, we are exploring high-end
retailers that cater to the Japanese market.
Domestically, we are excited about the individualization of media content, which
allows each distinct consumer to tailor entertainment offerings to personal
tastes and preferences. In a sector that's struggling to find its way, we
believe this trend offers some solid upside potential.
As always, we will continue to use bottom-up research and careful analysis to
make all investment choices.
Thank you for your investment in Janus Fund.
SIGNIFICANT AREAS OF INVESTMENT -- Fund vs. Index (% of Net Assets)
(BAR CHART)
RUSSELL 1000(R)
GROWTH INDEX JANUS FUND
--------------- ----------
Aerospace and Defense 1.4% 6.5%
Networking Products 2.0% 4.9%
Medical - HMO 2.3% 3.7%
Web Portals/Internet
Service Providers 1.7% 3.7%
Cable Television 0.8% 3.4%
Janus Growth Funds October 31, 2005 7
Janus Fund (unaudited)
Performance
Average Annual Total Return -- for the periods ended October 31, 2005
One Five Ten Since
Year Year Year Inception*
------------ ------------ ------------ ------------
Janus Fund 7.71% (8.96)% 6.90% 13.74%
Russell 1000(R) Growth Index 8.81% (7.93)% 6.78% 11.91%**
S&P 500(R) Index 8.72% (1.74)% 9.34% 11.29%
Lipper Ranking - based
on total returns for
Large-Cap Growth Funds 467/679 325/457 65/151 1/20
(PERFORMANCE GRAPH)
S&P 500(R) RUSSELL 1000(R)
JANUS FUND INDEX GROWTH INDEX
------------ -------------- ---------------
2/5/1970* $ 10,000 $ 10,000
10/31/1970 $ 10,192 $ 9,975
10/31/1977 $ 22,205 $ 14,396
12/31/1978** $ 27,921 $ 15,945 $ 10,000
10/31/1984 $ 101,317 $ 37,167 $ 21,122
10/31/1991 $ 325,172 $ 112,638 $ 65,638
10/31/1998 $ 879,727 $ 373,915 $ 210,834
10/31/2005 $ 996,933 $ 456,725 $ 204,700
Data presented represents past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 1-800-525-3713 or visit www.janus.com for performance current to the
most recent month-end.
See Notes to Schedules of Investments for index definitions.
Total return includes reinvestment of dividends, distributions and capital
gains. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
*The Fund's inception date -- February 5, 1970
**The Russell 1000(R) Growth Index's since inception returns calculated from
December 31, 1978
FUND EXPENSES
The example below shows you the ongoing costs (in dollars) of investing in your
Fund and allows you to compare these costs with those of other mutual funds.
Please refer to page 5 for a detailed explanation of the information presented
in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD
EXPENSE EXAMPLE (5/1/05) (10/31/05) (5/1/05-10/31/05)*
- --------------- ----------------------- -------------------- ---------------------------
Actual $ 1,000.00 $ 1,060.80 $ 4.52
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,020.82 $ 4.43
*Expenses are equal to the annualized expense ratio of 0.87%, multiplied by the
average account value over the period, multiplied by 184/365 (to reflect the
one-half year period).
See "Explanations of Charts, Tables and Financial Statements."
The Fund's portfolio may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
There is no assurance that the investment process will consistently lead to
successful investing.
Lipper Inc. - A Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical with capital gains and
dividends reinvested.
Effective February 25, 2005, Janus Fund changed its primary benchmark from the
S&P 500(R) Index to the Russell 1000(R) Growth Index. The new primary benchmark
will provide a more appropriate comparison to the Fund's investment style. The
Russell 1000(R) Growth Index measures the performance of those Russell 1000
companies with higher price-to-book ratios and higher forecasted growth values.
The Fund will retain the S&P 500(R) Index as a secondary benchmark index.
8 Janus Growth Funds October 31, 2005
Janus Fund
Schedule of Investments
As of October 31, 2005
Shares or Principal Amount Value
- --------------------------------------------------- --------------
Common Stock - 92.9%
Aerospace and Defense - 6.5%
5,401,628 BAE Systems PLC** $ 31,598,811
6,818,235 Boeing Co. 440,730,710
377,880 General Dynamics Corp.# 43,947,444
2,892,145 Lockheed Martin Corp.# 175,148,301
555,575 Northrop Grumman Corp.# 29,806,599
--------------
721,231,865
Agricultural Chemicals - 0.2%
1,932,280 CF Industries Holdings, Inc.*,# 26,704,110
Agricultural Operations - 0.8%
1,488,285 Monsanto Co.# 93,776,838
Airlines - 0.5%
1,240,825 AMR Corp.# 16,763,546
2,256,160 Southwest Airlines Co. 36,121,121
--------------
52,884,667
Apparel Manufacturers - 0.6%
5,848,713 Burberry Group PLC**,# 39,700,894
939,860 Coach, Inc.*,# 30,244,695
--------------
69,945,589
Applications Software - 2.1%
870,995 Citrix Systems, Inc.*,# 24,013,332
8,020,820 Microsoft Corp. 206,135,074
--------------
230,148,406
Athletic Footwear - 1.1%
1,398,670 NIKE, Inc. - Class B# 117,558,214
Automotive - Cars and Light Trucks - 0.2%
515,083 BMW A.G.**,# 22,401,891
Beverages - Non-Alcoholic - 0.8%
1,549,975 PepsiCo, Inc.# 91,572,523
Beverages - Wine and Spirits - 0.5%
1,024,200 Diageo PLC (ADR)**,# 60,868,206
Building - Residential and Commercial - 1.2%
1,157,393 D.R. Horton, Inc.# 35,520,391
51,855 NVR, Inc.*,# 35,546,603
1,710,060 Pulte Homes, Inc.# 64,623,167
--------------
135,690,161
Building Products - Cement and Aggregate - 0.3%
698,520 Cemex S.A. de C.V. (ADR)# 36,371,936
Cable Television - 3.4%
13,820,741 Comcast Corp. - Special Class A* 378,826,511
Casino Hotels - 0.6%
1,070,870 Harrah's Entertainment, Inc. 64,766,218
Chemicals - Diversified - 0.4%
1,499,000 Lyondell Chemical Co.# 40,173,200
Chemicals - Specialty - 0.3%
360,399 Syngenta A.G.* 38,629,652
Commercial Banks - 0.7%
4,356 Mizuho Financial Group, Inc. 28,887,828
597,120 UBS A.G. (ADR)# 51,155,270
--------------
80,043,098
Commercial Services - 0.2%
653,225 Iron Mountain, Inc.*,# 25,475,775
Shares or Principal Amount Value
- --------------------------------------------------- --------------
Commercial Services - Finance - 1.5%
933,260 Moody's Corp.# $ 49,705,428
2,922,772 Paychex, Inc.# 113,286,642
--------------
162,992,070
Computers - 2.8%
2,043,980 Dell, Inc.*,# 65,162,082
3,447,075 Hewlett-Packard Co.# 96,655,983
2,450,745 Research In Motion, Ltd. (U.S. Shares)*,# 150,696,311
--------------
312,514,376
Computers - Memory Devices - 0.9%
7,217,115 EMC Corp.* 100,750,925
Containers - Metal and Glass - 0.5%
1,373,160 Ball Corp.# 54,061,309
Cosmetics and Toiletries - 3.2%
6,362,690 Procter & Gamble Co. 356,247,013
Cruise Lines - 0.1%
117,445 Carnival Corp. (U.S. Shares)# 5,833,493
Data Processing and Management - 0.8%
1,367,505 First Data Corp. 55,315,577
833,505 NAVTEQ Corp.*,# 32,606,716
--------------
87,922,293
Dental Supplies and Equipment - 0.8%
2,217,997 Patterson Companies, Inc.*,# 91,780,716
Distribution/Wholesale - 0.5%
7,139,500 Esprit Holdings, Ltd. 50,331,352
Diversified Financial Services - 0.4%
718,240 Morgan Stanley Co.* 39,079,438
Diversified Minerals - 1.7%
4,683,275 Companhia Vale do Rio Doce (ADR) 193,559,756
Diversified Operations - 1.3%
2,377,470 General Electric Co. 80,620,008
1,884,570 Honeywell International, Inc. 64,452,294
--------------
145,072,302
E-Commerce/Services - 1.6%
4,377,034 eBay, Inc.* 173,330,546
Electric - Generation - 0.3%
1,961,425 AES Corp.*,# 31,167,043
Electric Products - Miscellaneous - 0.5%
870,785 Emerson Electric Co. 60,563,097
Electronic Components - Miscellaneous - 0.6%
2,516,415 Koninklijke (Royal) Philips Electronics N.V.
(U.S. Shares)**,# 65,829,416
Electronic Components - Semiconductors - 0.7%
2,565,950 Texas Instruments, Inc.# 73,257,873
Electronic Forms - 0.7%
2,413,820 Adobe Systems, Inc.# 77,845,695
Enterprise Software/Services - 1.6%
5,055,205 Oracle Corp.*,# 64,099,999
2,752,660 SAP A.G. (ADR)**,# 118,199,221
--------------
182,299,220
Entertainment Software - 0.5%
889,615 Electronic Arts, Inc.* 50,601,301
Finance - Credit Card - 0.4%
994,700 Credit Saison Co., Ltd. 44,860,192
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds October 31, 2005 9
Janus Fund
Schedule of Investments
As of October 31, 2005
Shares or Principal Amount Value
- --------------------------------------------------- --------------
Finance - Investment Bankers/Brokers - 0.7%
1,204,415 Merrill Lynch & Company, Inc.# $ 77,973,827
Finance - Other Services - 0.3%
86,365 Chicago Mercantile Exchange Holdings, Inc.# 31,536,180
Financial Guarantee Insurance - 0.5%
938,835 MBIA, Inc.*,# 54,677,750
Food - Confectionary - 0.5%
728,845 Wm. Wrigley Jr. Co.# 50,654,728
Food - Retail - 1.2%
913,375 Whole Foods Market, Inc.# 131,644,739
Food - Wholesale/Distribution - 0.4%
1,393,290 Sysco Corp.# 44,459,884
Investment Management and Advisory
Services - 0.2%
370,080 T. Rowe Price Group, Inc.# 24,247,642
Medical - Biomedical and Genetic - 2.8%
1,609,790 Amgen, Inc.*,# 121,957,690
1,229,500 Celgene Corp.* 68,974,950
1,191,780 Genentech, Inc.* 107,975,268
269,710 Invitrogen Corp.*,# 17,150,859
--------------
316,058,767
Medical - Drugs - 2.9%
1,088,485 Abbott Laboratories 46,859,279
3,642,855 Eli Lilly and Co.# 181,377,751
308,496 Roche Holding A.G. 46,082,390
715,420 Sanofi-Aventis (ADR)** 28,702,650
528,300 Wyeth 23,541,048
--------------
326,563,118
Medical - Generic Drugs - 1.7%
4,890,145 Teva Pharmaceutical Industries, Ltd. (ADR)# 186,412,327
Medical - HMO - 3.7%
2,268,945 Coventry Health Care, Inc.* 122,500,341
5,011,460 UnitedHealth Group, Inc.# 290,113,418
--------------
412,613,759
Medical Instruments - 1.2%
415,575 Intuitive Surgical, Inc.*,# 36,873,970
1,775,465 Medtronic, Inc. 100,597,847
--------------
137,471,817
Medical Products - 1.0%
860,665 Johnson & Johnson 53,894,842
1,347,460 Varian Medical Systems, Inc.*,# 61,390,278
--------------
115,285,120
Metal - Diversified - 0.5%
1,516,510 Inco, Ltd. (U.S. Shares)# 60,994,032
Metal Processors and Fabricators - 1.0%
2,367,960 Precision Castparts Corp.# 112,146,586
Motorcycle and Motor Scooter
Manufacturing - 0.9%
1,952,040 Harley-Davidson, Inc.# 96,684,541
Multi-Line Insurance - 0.1%
299,465 HCC Insurance Holdings, Inc.# 8,983,950
Networking Products - 4.9%
24,935,210 Cisco Systems, Inc.*,# 435,119,414
4,908,595 Juniper Networks, Inc.*,# 114,517,521
--------------
549,636,935
Shares or Principal Amount Value
- --------------------------------------------------- --------------
Oil - Field Services - 1.7%
1,761,760 Halliburton Co.# $ 104,120,016
Schlumberger, Ltd. (U.S.
891,690 Shares)**,# 80,938,701
--------------
185,058,717
Oil Companies - Exploration and
Production - 0.6%
508,630 Apache Corp. 32,465,853
557,520 EOG Resources, Inc.# 37,788,706
--------------
70,254,559
Oil Companies - Integrated - 1.4%
2,608,520 Exxon Mobil Corp. 146,442,313
Suncor Energy, Inc. (U.S.
255,725 Shares) 13,714,532
--------------
160,156,845
Optical Supplies - 2.1%
1,763,530 Alcon, Inc. (U.S. Shares)# 234,373,137
Pharmacy Services - 2.1%
4,463,260 Caremark Rx, Inc.*,# 233,874,824
Property and Casualty Insurance - 1.0%
436,690 Chubb Corp. 40,599,069
1,650,695 W. R. Berkley Corp. 72,135,372
--------------
112,734,441
Reinsurance - 0.2%
Montpelier Re Holdings, Ltd.
1,346,215 (U.S. Shares) # 27,058,922
Retail - Apparel and Shoe - 0.7%
Industria de Diseno Textil
978,491 S.A.** 28,953,324
1,343,305 Nordstrom, Inc. 46,545,518
--------------
75,498,842
Retail - Building Products - 0.7%
1,307,570 Lowe's Companies, Inc. 79,461,029
Retail - Consumer Electronics - 0.5%
1,225,162 Best Buy Company, Inc.# 54,225,670
Retail - Discount - 1.0%
551,574 Costco Wholesale Corp. 26,674,119
1,469,045 Target Corp.# 81,811,116
--------------
108,485,235
Retail - Drug Store - 0.9%
2,264,480 Walgreen Co.# 102,875,326
Retail - Office Supplies - 0.6%
3,008,497 Staples, Inc. 68,383,137
Semiconductor Components/Integrated Circuits - 1.6%
2,717,725 Linear Technology Corp.# 90,255,647
2,499,160 Maxim Integrated Products,
Inc.#,L. 86,670,869
--------------
176,926,516
Semiconductor Equipment - 0.5%
3,221,225 Applied Materials, Inc. 52,763,666
Soap and Cleaning Preparations - 0.6%
2,137,086 Reckitt Benckiser PLC** 64,569,903
Telecommunication Equipment - Fiber Optics - 0.9%
4,999,845 Corning, Inc.*,# 100,446,886
Television - 0.2%
2,639,741 British Sky Broadcasting Group
PLC**,# 23,829,016
Textile-Home Furnishings - 0.3%
367,565 Mohawk Industries, Inc.* 28,688,448
Therapeutics - 0.9%
2,226,405 Gilead Sciences, Inc.*,# 105,197,636
See Notes to Schedules of Investments and Financial Statements.
10 Janus Growth Funds October 31, 2005
Schedule of Investments
As of October 31, 2005
Shares or Principal Amount Value
- --------------------------------------------------- --------------
Transportation - Services - 1.8%
2,755,475 United Parcel Service, Inc. - Class B# $ 200,984,347
Transportation - Truck - 0.1%
805,480 J.B. Hunt Transport Services, Inc.# 15,634,367
Web Portals/Internet Service Providers -
3.7%
297,335 Google, Inc. - Class A*,# 110,650,247
8,104,240 Yahoo!, Inc.* 299,613,752
--------------
410,263,999
Wireless Equipment - 2.5%
1,893,905 Crown Castle International Corp.*,# 46,438,551
8,428,275 Nokia Oyj (ADR)** 141,763,586
2,142,190 QUALCOMM, Inc. 85,173,474
--------------
273,375,611
- --------------------------------------------------- --------------
Total Common Stock (cost $8,321,971,602) 10,350,135,067
Money Markets - 2.3%
Janus Institutional Cash Reserves Fund
160,000,000 3.87% 160,000,000
Janus Money Market Fund
100,000,000 3.86% 100,000,000
- --------------------------------------------------- --------------
Total Money Markets (cost $260,000,000) 260,000,000
Other Securities - 6.0%
State Street Navigator Securities Lending
671,968,719 Prime Portfolio+ (cost $671,968,719) 671,968,719
Repurchase Agreements - 1.3%
Cantor Fitzgerald & Co., 4.05%
dated 10/31/05, maturing 11/1/05
to be repurchased at $11,201,260
collateralized by $21,388,881
in U.S. Government Agencies
0% - 7.50%, 12/15/12 - 5/15/35
$ 11,200,000 with a value of $11,424,360 11,200,000
Citigroup Global Markets Inc., 4.05%
dated 10/31/05, maturing 11/1/05
to be repurchased at $108,212,173
collateralized by $133,766,879
in U.S. Government Agencies
0% - 5.00%, 3/1/34 - 8/1/35
108,200,000 with a value of $110,364,000 108,200,000
Fortis Bank N.V., 4.06%
dated 10/31/05, maturing 11/1/05
to be repurchased at $26,302,966
collateralized by $31,660,372
in U.S. Government Agencies
4.05% - 5.50%, 2/1/10 - 10/25/35
26,300,000 with a value of $26,826,000 26,300,000
- --------------------------------------------------- --------------
Total Repurchase Agreements (cost
$145,700,000) 145,700,000
Time Deposit - 0.7%
Societe Generale, ETD
75,000,000 4.0625%, 11/1/05 (cost $75,000,000) 75,000,000
- --------------------------------------------------- --------------
Total Investments (total cost 11,502,803,786
$9,474,640,321) -- 103.2%
Liabilities, net of Cash, Receivables and
Other Assets -- (3.2)% (359,883,207)
- --------------------------------------------------- --------------
Net Assets -- 100% $11,142,920,579
Summary of Investments by Country
% of Investment
Country Value Securities
- ------------ ---------------- ----------------
Bermuda $ 77,390,274 0.7%
Brazil 193,559,756 1.7%
Canada 225,404,875 2.0%
Finland 141,763,586 1.2%
France 28,702,650 0.2%
Germany 140,601,112 1.2%
Israel 186,412,327 1.6%
Japan 73,748,020 0.6%
Mexico 36,371,936 0.3%
Netherlands 146,768,117 1.3%
Panama 5,833,493 0.1%
Spain 28,953,324 0.3%
Switzerland 370,240,449 3.2%
United Kingdom 220,566,830 1.9%
United States++ 9,626,487,037 83.7%
---------------- ----------------
Total $ 11,502,803,786 100.0%
++Includes Short-Term Securities and Other Securities (73.7% excluding
Short-Term Securities and Other Securities)
Forward Currency Contracts, Open
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- ------------------------- ------------ --------------- ------------
British Pound 12/2/05 38,700,000 $ 68,466,734 $ 2,183,986
British Pound 1/27/06 4,900,000 8,666,339 (35,969)
British Pound 2/23/06 18,900,000 33,430,356 684,144
Euro 1/27/06 128,900,000 155,223,931 2,906,249
Euro 2/9/06 8,500,000 10,243,591 487,064
------------ ------------
Total $276,030,951 $ 6,225,474
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds October 31, 2005 11
Janus Enterprise Fund (unaudited)
FUND SNAPSHOT
This growth fund pursues companies that have grown large enough to be well
established but are small enough to still have room to grow.
Dear Enterprise Shareholder,
"My goal isn't to be brilliant or flashy in individual races, just to be
consistent over the long run." -- Four time America's Cup winner Dennis Connor
In managing your Fund, I believe consistency of process is the best way to
generate good investment performance over the long-run. While consistency of
process may not lead to flashy performance in the near-term, I am hopeful it
leads to long-term success. In my opinion, winning the long-term race in the
investment world requires balancing risk and reward -- seeking the reward by
growing your investment when the market is favorable and being cognizant of the
risk by attempting to limit losses of capital when the environment is less
favorable.
I continue to look for the best balance of risk/reward in companies with
exciting growth opportunities, but that also possess predictable revenue
streams, expanding profit margins and a balance sheet appropriate to the
business model. I also remain committed to finding growth stocks in a wide
variety of industries rather than just focusing on a few, as well as
constructing a Fund that is not overly concentrated in a few large holdings.
Janus' strong team of analysts is an invaluable resource in these endeavors and
I am greatly indebted to their hard work and subject expertise.
In my letter to you last year, I wrote about the virtues of patience as
exhibited by low turnover, or frequency of trading, for the Fund. This strategy
seeks to result in lower trading costs to you as a shareholder and also in a
lower tax burden over time. I am happy to report that your turnover rate
remained consistent, and I believe below average relative to other mid-cap
growth funds. For the fiscal year 2004, the turnover rate in your Fund was 27%,
and for the most recent fiscal year the turnover rate was 28%.
PERFORMANCE OVERVIEW
During the 12 months ended October 31, 2005, Janus Enterprise Fund gained
17.05%. By comparison, the Fund's primary benchmark, the Russell Midcap(R)
Growth Index and its secondary benchmark, the S&P MidCap 400 Index, returned
15.91% and 17.65%, respectively. Mid-cap stocks, following a multi-year trend,
continued to outperform large-cap stocks. While this will not continue
indefinitely, mid-cap stocks continue to have many attributes which made them
attractive, most notably their ability to grow earnings at attractive rates.
Strong corporate earnings growth overpowered numerous concerns which buffeted
the market during this period. Rising raw materials prices, increasing interest
rates and declining consumer confidence are potential negatives which will bear
watching in the coming months.
I'd now like to discuss the Fund's performance over the last 12 months in some
greater detail, giving you some specific examples of stock picks that both
helped and hurt performance. Effective stock selection within the otherwise flat
technology hardware and equipment sector contributed significantly to the Fund's
outperformance, as did select holdings from the retailing group. The Fund was
underweight relative to the benchmark in both areas. Modestly overweight
positions in the transportation and energy sectors added to the Fund's returns
as well. Setbacks among stocks in the consumer durables and materials groups
diminished returns.
(JONATHAN COLEMAN PHOTO)
Jonathan Coleman
portfolio manager
Top 10 Equity Holdings -- (% of Net Assets)
OCTOBER 31, 2005 OCTOBER 31, 2004
---------------- ----------------
EOG Resources, Inc. 3.2% 2.1%
Celgene Corp. 3.0% 1.6%
Nextel Partners, Inc. - Class A 2.9% 1.0%
Lamar Advertising Co. 2.8% 2.9%
Kinder Morgan, Inc. 2.4% 2.8%
T. Rowe Price Group, Inc. 2.2% 2.0%
Ball Corp. 2.0% 2.8%
Dean Foods Co. 1.9% 1.2%
Paychex, Inc. 1.9% 1.6%
Advanced Micro Devices, Inc. 1.8% 1.4%
12 Janus Growth Funds October 31, 2005
(unaudited)
LEADERS INCLUDED LONGTIME ENERGY HOLDING
EOG Resources, one of the Fund's longtime energy holdings, benefited from the
extended rise in natural gas prices. The company has an impressive track record
of extracting gas from the fields it owns, while also effectively replacing the
gas it extracts with newfound reserves elsewhere on land it controls. Such
"reserve replacement" helps provide long-term visibility as to the future stream
of cash the company can generate. While high natural gas prices could continue
to help EOG, the company is exploring a new gas field that could yield promising
results in 2006. As the stock appreciated this year I used the opportunity to
trim the position, although it remained among the top holdings in the Fund.
Biotechnology concern Celgene was an exceptionally strong performer, as an
advisory review panel gave a positive vote to the company's Revlimid treatment
for the blood cancer myelodysplastic syndromes (MDS). This is a vital step
toward ultimate approval from the Food and Drug Administration, which we are
hopeful will come in early 2006. Janus' surveys of physicians indicate that
market response to Revlimid could be decidedly positive if it's approved. A
number of specialists indicated that the drug would be heavily utilized in the
appropriate patient population. We have owned Celgene for several years,
attracted to its significant development pipeline of new drugs such as Revlimid,
its existing drug Thalomid, which generates profits for the company today, and
its cash-rich balance sheet, which funds future drug development.
SELECT BIOTECHNOLOGY AND SEMICONDUCTOR HOLDINGS WORKED AGAINST US
As it inevitably occurs, I also make mistakes in selecting stocks for the Fund,
and this year was no exception. Two of the biggest laggards during the period
came from the biotechnology and semiconductor space, where rewards can be high,
but so can risks. Biotechnology firm Pharmion was a disappointment as it
reported slower than expected growth in its Vidaza treatment for MDS. Our
surveys of physicians showed that the increasing percentage of new patients
taking Vidaza was adequate to meet the company's financial projections. What we
missed is that existing patients were dropping off treatment faster than
expected due to a poor marketing effort from Pharmion. With continuing concerns
about the company's ability to effectively market Vidaza, we decided to sell the
stock. We've learned a valuable lesson and will incorporate such analysis in our
future surveys.
Another significant disappointment was semiconductor company International
Rectifier, which declined after posting disappointing revenue and earnings
growth in two consecutive quarters. We believe the company is transitioning from
a commodity, low-margin supplier to a more value-added, higher-margin model. The
transition has clearly not been without its challenges, but we believe there are
still a number of attractive elements to the company. First, it has expertise in
fast-growing areas such as semiconductors used to control various functions in
hybrid automobiles. Additionally, the company has over $900 million in cash on
its balance sheet, a portion of which it has elected to return to shareholders
via a stock repurchase. While I am disappointed in the short-term performance, I
believe the long-term investment thesis is largely unchanged and I have only
reduced the position modestly.
SUMMARY
As I did last year, I would like to close by reiterating to you that I am an
investor alongside you in Janus Enterprise Fund. I still contribute a portion of
every paycheck I receive to the Fund. As of October 31, 2005, my aggregate
holdings of the Fund placed me as the largest investor in the Fund. Since
becoming manager of the Fund in February 2002, I have not sold a single share of
the Fund. I take the obligation of trust very seriously and work every day to
support the trust you have placed in me and in Janus.
Thank you for your investment in Janus Enterprise Fund.
SIGNIFICANT AREAS OF INVESTMENT -- Fund vs. Index (% of Net Assets)
(BAR CHART)
Janus Enterprise Russell Midcap(R)
Fund Growth Index
---------------- -----------------
Oil Companies -- Exploration and Production 4.1% 4.0%
Medical -- Biomedical and Genetic 3.9% 2.5%
Commercial Services -- Finance 3.7% 2.3%
Electronic Components -- Semiconductors 3.2% 4.1%
Therapeutics 2.9% 0.1%
Janus Growth Funds October 31, 2005 13
Janus Enterprise Fund (unaudited)
Performance
Average Annual Total Return -- for the periods ended October 31, 2005
ONE FIVE TEN SINCE
YEAR YEAR YEAR INCEPTION*
---- ---- ---- ----------
Janus Enterprise Fund 17.05% (10.41)% 7.37% 10.96%
Russell Midcap(R)
Growth Index 15.91% (3.71)% 9.05% 10.64%
S&P MidCap 400 Index 17.65% 7.32% 14.19% 14.44%
Lipper Ranking - based
on total returns for
Mid-Cap Growth Funds 135/542 286/325 73/121 18/51
(PERFORMANCE GRAPH)
JANUS ENTERPRISE RUSSELL MIDCAP(R) S&P MIDCAP
FUND GROWTH INDEX 400 INDEX
---------------- ----------------- ----------
9/1/1992* $10,000 $10,000 $10,000
10/31/1993 $14,594 $12,484 $12,619
10/31/1996 $23,634 $18,760 $18,375
10/31/1999 $55,706 $32,964 $31,495
10/31/2002 $22,834 $21,549 $34,567
10/31/2005 $39,315 $37,842 $59,034
Data presented represents past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 1-800-525-3713 or visit www.janus.com for performance current to the
most recent month-end.
See Notes to Schedules of Investments for index definitions.
Total return includes reinvestment of dividends, distributions and capital
gains. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
The date of the Lipper ranking is slightly different from when the Fund began
operations since Lipper provides fund rankings as of the last day of the month
or the first Thursday after fund inception.
* The Fund's inception date -- September 1, 1992
FUND EXPENSES
The example below shows you the ongoing costs (in dollars) of investing in your
Fund and allows you to compare these costs with those of other mutual funds.
Please refer to page 5 for a detailed explanation of the information presented
in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD
EXPENSE EXAMPLE (5/1/05) (10/31/05) (5/1/05-10/31/05)*
- --------------- ----------------------- -------------------- ---------------------------
Actual $1,000.00 $1,130.60 $4.94
Hypothetical
(5% return before expenses) $1,000.00 $1,020.57 $4.69
*Expenses are equal to the annualized expense ratio of 0.92%, multiplied by the
average account value over the period, multiplied by 184/365 (to reflect the
one-half year period).
See "Explanations of Charts, Tables and Financial Statements."
The Fund's portfolio may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
There is no assurance that the investment process will consistently lead to
successful investing.
Lipper Inc. - A Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical with capital gains and
dividends reinvested.
Funds that emphasize investments in small-sized companies may experience greater
price volatility.
14 Janus Growth Funds October 31, 2005
Janus Enterprise Fund
Schedule of Investments
As of October 31, 2005
Shares or Principal Amount Value
- --------------------------------------------------- --------------
Common Stock - 98.0%
Advertising Sales - 2.8%
1,057,650 Lamar Advertising Co.*,# $ 47,192,343
Airlines - 1.1%
372,978 Ryanair Holdings PLC (ADR)*,# 18,488,519
Apparel Manufacturers - 0.6%
347,875 Coach, Inc.* 11,194,618
Applications Software - 0.5%
314,705 Citrix Systems, Inc.*,# 8,676,417
Audio and Video Products - 1.6%
267,680 Harman International Industries, Inc. 26,730,525
Batteries and Battery Systems - 0.4%
139,195 Energizer Holdings, Inc.*,# 7,027,956
Broadcast Services and Programming - 0.4%
545,665 CKX, Inc.*,# 6,842,639
Building - Mobile Home and Manufactured Homes - 1.3%
686,580 Thor Industries, Inc.# 22,403,105
Building - Residential and Commercial - 1.1%
28,025 NVR, Inc.*,# 19,211,138
Casino Services - 0.5%
285,290 Scientific Games Corp. - Class A*,# 8,547,288
Cellular Telecommunications - 2.9%
1,937,478 Nextel Partners, Inc. - Class A*,# 48,727,572
Commercial Services - 1.0%
420,962 Iron Mountain, Inc.*,# 16,417,518
Commercial Services - Finance - 3.7%
522,455 Jackson Hewitt Tax Service, Inc.# 12,915,088
337,111 Moody's Corp.# 17,954,532
828,716 Paychex, Inc. 32,121,032
--------------
62,990,652
Computer Services - 0.4%
321,070 Ceridian Corp.* 7,034,644
Computers - 0.9%
257,287 Apple Computer, Inc.* 14,817,158
Computers - Integrated Systems - 0.7%
407,170 NCR Corp.*,# 12,304,677
Containers - Metal and Glass - 2.8%
888,855 Ball Corp. 34,994,221
701,200 Owens-Illinois, Inc.* 13,350,848
--------------
48,345,069
Cruise Lines - 0.7%
292,080 Royal Caribbean Cruises, Ltd. (U.S. Shares)# 12,103,795
Data Processing and Management - 1.3%
553,975 NAVTEQ Corp.*,# 21,671,502
Dental Supplies and Equipment - 1.0%
429,475 Patterson Companies, Inc.*,# 17,771,676
Diagnostic Kits - 0.4%
184,570 Dade Behring Holdings, Inc. 6,646,366
E-Commerce/Services - 0.3%
199,920 IAC/InterActiveCorp* 5,117,952
Electric Products - Miscellaneous - 1.6%
684,250 AMETEK, Inc.# 27,869,503
Shares or Principal Amount Value
- --------------------------------------------------- --------------
Electronic Components - Semiconductors - 3.2%
1,346,395 Advanced Micro Devices, Inc.*,# $ 31,263,292
665,380 ATI Technologies, Inc. (U.S. Shares)*,# 9,614,741
459,165 International Rectifier Corp.*,# 13,586,692
--------------
54,464,725
Electronic Measuring Instruments - 0.2%
130,815 Trimble Navigation, Ltd.* 3,776,629
Entertainment Software - 1.3%
707,901 Activision, Inc.*,# 11,163,599
181,835 Electronic Arts, Inc.* 10,342,775
--------------
21,506,374
Fiduciary Banks - 1.4%
253,462 Investors Financial Services Corp.# 9,677,179
280,590 Northern Trust Corp. 15,039,624
--------------
24,716,803
Finance - Commercial - 0.5%
392,985 CapitalSource, Inc.*,# 8,645,670
Finance - Other Services - 1.4%
64,560 Chicago Mercantile Exchange Holdings, Inc.# 23,574,084
Food - Canned - 0.9%
582,729 TreeHouse Foods, Inc.* 15,057,717
Food - Dairy Products - 1.9%
895,202 Dean Foods Co.* 32,361,552
Hotels and Motels - 1.3%
387,975 Starwood Hotels & Resorts Worldwide, Inc. 22,669,379
Human Resources - 2.0%
540,525 Manpower, Inc. 24,474,972
271,105 Robert Half International, Inc. 9,998,352
--------------
34,473,324
Independent Power Producer - 1.1%
1,506,835 Reliant Energy, Inc.*,# 19,136,805
Industrial Automation and Robotics - 0.5%
164,585 Rockwell Automation, Inc. 8,747,693
Instruments - Scientific - 1.1%
349,962 Fisher Scientific International, Inc.* 19,772,853
Insurance Brokers - 0.5%
220,520 Willis Group Holdings, Ltd. 8,190,113
Internet Infrastructure Software - 1.3%
289,990 F5 Networks, Inc.*,# 15,088,180
929,120 TIBCO Software, Inc.*,# 7,052,021
--------------
22,140,201
Internet Security - 0.7%
Check Point Software Technologies, Ltd.
511,180 (U.S. Shares)* 11,429,985
Investment Management and Advisory Services - 2.7%
178,065 National Financial Partners Corp.# 8,053,880
566,865 T. Rowe Price Group, Inc. 37,140,995
--------------
45,194,875
Leisure and Recreation Products - 0.6%
268,405 Brunswick Corp.# 10,234,283
Machinery - Construction and Mining - 1.6%
498,710 Terex Corp.*,# 27,414,089
Machinery - Pumps - 0.6%
302,820 Graco, Inc.# 10,377,641
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds October 31, 2005 15
Janus Enterprise Fund
Schedule of Investments
As of October 31, 2005
Shares or Principal Amount Value
- ------------------------------------------ --------------
Medical - Biomedical and Genetic - 3.9%
900,230 Celgene Corp.* $ 50,502,903
248,160 Invitrogen Corp.*,# 15,780,494
--------------
66,283,397
Medical - Drugs - 0.9%
135,435 Forest Laboratories, Inc.* 5,134,341
119,655 Merck KGaA 9,891,782
--------------
15,026,123
Medical - HMO - 1.6%
500,118 Coventry Health Care, Inc.* 27,001,371
Medical - Nursing Homes - 0.8%
373,885 Manor Care, Inc.# 13,927,216
Medical Instruments - 1.8%
113,810 Foxhollow Technologies, Inc.*,# 5,156,731
69,435 Intuitive Surgical, Inc.*,# 6,160,968
407,665 St. Jude Medical, Inc.* 19,596,456
--------------
30,914,155
Medical Products - 1.4%
89,000 Synthes, Inc. 9,422,189
298,385 Varian Medical Systems, Inc.*,# 13,594,421
--------------
23,016,610
Miscellaneous Manufacturing - 0.7%
6,378,270 FKI PLC 11,515,364
Motion Pictures and Services - 0.7%
Lions Gate Entertainment Corp.
1,208,450 (U.S. Shares)*,# 11,601,120
Multi-Line Insurance - 1.2%
556,875 Assurant, Inc.# 21,272,625
Oil Companies - Exploration and Production
- - 4.1%
798,985 EOG Resources, Inc. 54,155,203
340,345 Murphy Oil Corp.# 15,945,163
--------------
70,100,366
Optical Supplies - 0.9%
115,250 Alcon, Inc. (U.S. Shares)# 15,316,725
Pipelines - 2.4%
457,606 Kinder Morgan, Inc.# 41,596,385
Printing - Commercial - 0.6%
300,165 R.R. Donnelley & Sons Co.# 10,511,778
Property and Casualty Insurance - 0.9%
348,785 W. R. Berkley Corp. 15,241,905
Recreational Vehicles - 0.6%
227,975 Polaris Industries, Inc.# 10,279,393
Reinsurance - 2.1%
10,527 Berkshire Hathaway, Inc. -
Class B* 29,633,505
272,435 Montpelier Re Holdings, Ltd.
(U.S. Shares)# 5,475,944
--------------
35,109,449
Respiratory Products - 0.8%
402,590 Respironics, Inc.*,# 14,440,903
Retail - Auto Parts - 0.7%
297,309 Advance Auto Parts, Inc.*,# 11,149,088
Retail - Office Supplies - 2.0%
299,625 Office Depot, Inc.* 8,248,676
1,118,815 Staples, Inc. 25,430,665
--------------
33,679,341
Shares or Principal Amount Value
- ------------------------------------------ --------------
Retail - Restaurants - 0.8%
261,791 Yum! Brands, Inc. $ 13,317,308
Schools - 1.4%
237,369 Apollo Group, Inc. - Class A*,# 14,958,994
90,535 Strayer Education, Inc.# 8,103,788
--------------
23,062,782
Semiconductor Components/Integrated
Circuits - 2.4%
352,845 Linear Technology Corp.# 11,717,982
617,665 Marvell Technology Group, Ltd.*,# 28,665,833
--------------
40,383,815
Semiconductor Equipment - 1.3%
258,550 KLA-Tencor Corp. 11,968,280
433,920 Novellus Systems, Inc.*,# 9,485,491
--------------
21,453,771
Telecommunication Equipment - 0.7%
403,340 Adtran, Inc. 12,201,035
Telecommunication Services - 0.9%
611,140 Amdocs, Ltd. (U.S. Shares)* 16,176,876
Television - 0.9%
571,573 Univision Communications, Inc. - Class A*,# 14,940,918
Textile-Home Furnishings - 0.9%
200,485 Mohawk Industries, Inc.*,# 15,647,854
Therapeutics - 2.9%
366,228 Gilead Sciences, Inc.* 17,304,273
486,527 Neurocrine Biosciences, Inc.* 25,698,356
91,860 United Therapeutics Corp.* 6,784,780
--------------
49,787,409
Toys - 1.1%
1,044,122 Marvel Entertainment, Inc.* 18,376,547
Transportation - Marine - 0.6%
219,495 Alexander & Baldwin, Inc.# 10,742,085
Transportation - Railroad - 0.8%
183,385 Canadian National Railway Co. (U.S. Shares) 13,291,745
Transportation - Services - 0.8%
226,860 Expeditors International of Washington, Inc.# 13,763,596
Transportation - Truck - 0.4%
326,940 J.B. Hunt Transport Services, Inc.# 6,345,905
Wireless Equipment - 1.2%
830,135 Crown Castle International Corp.* 20,354,910
- ------------------------------------------ --------------
Total Common Stock (cost $1,126,308,283) 1,669,847,297
Other Securities - 19.1%
325,512,940 State Street Navigator Securities Lending
Prime Portfolio+ (cost $325,512,940) 325,512,940
Repurchase Agreement - 1.4%
Bear Stearns & Company, Inc., 4.1125%
dated 10/31/05, maturing 11/1/05
to be repurchased at $24,102,753
collateralized by $32,629,472
in U.S. Government Agencies
0%, 10/1/35; with a value of $24,582,189
$ 24,100,000 (cost $24,100,000) 24,100,000
- ------------------------------------------ --------------
Total Investments (total cost
$1,475,921,223)
-- 118.5% 2,019,460,237
Liabilities, net of Cash, Receivables and
Other Assets -- (18.5)% (315,918,660)
- ------------------------------------------ --------------
Net Assets -- 100% $1,703,541,577
See Notes to Schedules of Investments and Financial Statements.
16 Janus Growth Funds October 31, 2005
Schedule of Investments
As of October 31, 2005
Summary of Investments by Country
% of Investment
Country Value Securities
- ------- -------------- ---------------
Bermuda $ 42,331,890 2.1%
Canada 34,507,606 1.7%
Germany 9,891,782 0.5%
Ireland 18,488,519 0.9%
Israel 11,429,985 0.6%
Liberia 12,103,795 0.6%
Switzerland 15,316,725 0.7%
United Kingdom 27,692,240 1.4%
United States++ 1,847,697,695 91.5%
--------------
Total $2,019,460,237 100.0%
++Includes Short-Term Securities and Other Securities (74.2% excluding
Short-Term Securities and Other Securities)
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds October 31, 2005 17
Janus Mercury Fund (unaudited)
FUND SNAPSHOT
This diversified growth fund typically pursues larger companies believed to be
well-positioned for future growth.
PERFORMANCE OVERVIEW
Despite skyrocketing oil prices and steadily rising interest rates, the economy
continued to grow during the 12-month period ended October 31, 2005. Company
profits remained solid, giving a boost to stock prices. Even so, optimism
faltered in the wake of Hurricane Katrina. Against this backdrop, the Fund
posted a 13.35% gain, topping the 8.81% return of its primary benchmark, the
Russell 1000(R) Growth Index as well as its secondary benchmark, the S&P 500(R)
Index, which returned 8.72%.
The Fund's outperformance versus its benchmark can be attributed to our approach
of seeking opportunities across many different sectors of the market -- and then
carefully constructing the Fund one company at a time. However, sector
weightings can and often do have an impact on performance. For instance, during
the period, the Fund's exposure to healthcare stocks materially contributed to
its strong relative performance, due primarily to our strong stock selection in
this group. Several well-chosen stocks in the technology hardware and equipment
sector also helped boost our results. Meanwhile, areas of weakness for the Fund
included the banking, diversified financials and capital goods sectors, where
select holdings experienced setbacks.
STRATEGY IN THIS ENVIRONMENT
Although I am mindful of the economic factors that could impact the Fund's
results, my focus -- first and foremost -- is on individual company
fundamentals. I believe our research is best focused on analyzing companies one
by one, understanding what truly drives free cash flow, and whether those
companies will outperform. I place less emphasis on aggressive allocations
amongst various sectors and short-term considerations. Instead, I favor holdings
with the most attractive risk/reward characteristics for the long-term.
FUND COMPOSITION
As of October 31, 2005, equities comprised 98.1% of the Fund, which included
19.7% in foreign holdings. The Fund's 10 largest holdings by weight represented
30.5% of its total net assets and cash accounted for 1.9% of total net assets.
LEADERS INCLUDED PHARMACEUTICAL, TRANSPORTATION AND HEALTHCARE STOCKS
Reviewing our list of top contributors, it's worth noting that pharmaceuticals
and transportation have proven to be among the Fund's best-performing sectors
for two years running -- a rare occurrence, to be sure. In fact, this is the
first time in my 10 years managing investments at Janus that I can recall the
same two industry groups emerging as repeat winners. Standing out in the
pharmaceutical category was Swiss concern Roche. Although the company boasts a
solid diagnostics business, its double-digit annual gain was largely thanks to
its majority stake in biotechnology firm Genentech and its growing portfolio of
cancer therapies, including Avastin, Rituxan and Tarceva. The drug maker also is
restructuring its balance sheet, exiting unrelated businesses to focus solely on
pharmaceuticals and diagnostics. As we see it, Roche's tremendous revenue growth
and improving fundamentals, both in top-line sales and operating margins, add up
to a very attractive business and a potentially profitable long-term investment.
In transportation, Canadian National Railway moved ahead. The railroad, which
operates passenger- and product-hauling lines in Canada and the U.S., easily
outdistanced earnings estimates for the past year. Although I expect the
railroad's fast-paced earnings growth to slow somewhat in the future, our
research indicates that its margins and cash flow generation should remain
strong as Canadian National benefits from projected rising customer demand
driven by surging Asian imports and expanding domestic markets.
(DAVID CORKINS PHOTO)
David Corkins
portfolio manager
Top 10 Equity Holdings -- (% of Net Assets)
OCTOBER 31, 2005 OCTOBER 31, 2004
---------------- ----------------
Roche Holding A.G. 3.8% 3.7%
UnitedHealth Group, Inc. 3.5% 3.0%
Yahoo!, Inc. 3.4% 3.2%
General Electric Co. 3.3% --
JP Morgan Chase & Co. 3.3% 2.9%
Microsoft Corp. 2.9% 3.1%
Berkshire Hathaway, Inc. - Class B 2.8% 3.8%
Procter & Gamble Co. 2.7% --
Canadian National Railway Co.
(U.S. Shares) 2.5% 3.2%
Texas Instruments, Inc. 2.3% 2.4%
18 Janus Growth Funds October 31, 2005
(unaudited)
The market for managed healthcare has continued to expand as well, which has
aided our position in UnitedHealth Group, one of the nation's largest health
insurers. Indeed, in reporting its third-quarter results in mid-October, the
company announced that it served 11.4 million people, an increase of nearly a
half-million this year alone. This robust growth helped drive profits up 21% for
the period. Overall growth and earnings in 2005 have been exceptionally strong,
and the forecast for 2006 -- following the introduction of UnitedHealth's new
prescription drug plan and close of its acquisition of PacifiCare Health Systems
- -- looks equally impressive.
Given the intense focus on soaring oil and gas prices during the year, our
discussion of winners would not be complete without mentioning one of our best
performers in the energy group, BJ Services. The oilfield services provider
benefited as crude oil prices hit record highs of over $70 a barrel after
Hurricane Katrina hit the Gulf Coast in August. BJ Services also got a lift
after reporting fiscal third-quarter earnings that beat analysts' expectations.
The company's announcement that it will raise prices on domestic pressure
pumping services gave BJ Services an added boost.
MANUFACTURING AND FINANCIAL SERVICES HOLDINGS WORKED AGAINST US
My longtime investors know that I prefer to invest in a diverse and eclectic
group of equities representing a broad spectrum of the market's offerings.
Roughly three-quarters of the Fund's holdings are what I consider "classic"
growth stocks. The remaining one-quarter consists of what I refer to as
"turnaround" names. This makes for what I believe to be a well-balanced
portfolio of holdings that may outperform in strong markets as well as weaker
economic environments.
Unfortunately, our investment in industrial conglomerate Tyco International
suffered as turnaround efforts at the firm stalled. The company -- whose myriad
businesses include security and fire protection systems, electronics,
healthcare, engineering products and plastics and adhesives -- reduced its
earnings outlook for the fiscal year on weak growth in its plastics unit, tepid
revenue and working capital issues. Although we believe the stock still has
upside potential, and management is focused on further restructuring efforts, we
decided to reduce our position in the stock as the balance of risk and reward
has become less favorable.
Another of the Fund's "turnaround" names, Fannie Mae turned down rather than up
during the reporting period and disappointed us. The leading U.S. mortgage
lender already was pressured from investigations into alleged accounting
irregularities that led it to restate earnings for the past several years when
it fell further after charges of additional violations surfaced in September. As
we see it, the stock's risk/reward tradeoff still may be attractive and we are
continuing to hold the position as we monitor its progress.
INVESTMENT STRATEGY AND OUTLOOK
Looking ahead, a flattening yield curve suggests that the economy soon may be
facing a headwind amid persistent worries about plunging consumer confidence and
lackluster spending. Still, I feel confident about the strength of corporate
balance sheets and profits. Bond credit spreads have widened, as well, which
supports a belief that risk is being priced more effectively in the market.
Regardless of what direction the economy takes, I will continue to focus on
companies that should benefit from a focus on free cash flow generation and
return on capital. As always, the goal of our rigorous efforts is to enhance the
value of your investment with us.
It has been almost 3 years since I took over the management of the Mercury Fund
at the end of February 2003. Since that time the Fund has returned 17.72% on an
annualized, absolute basis and outperformed 87% of its peers in the Lipper
Large-Cap Growth Universe. The entire investment team at Janus has worked
diligently to generate these results and it wouldn't have been possible without
the combined efforts of the analysts, associates and portfolio managers. To
paraphrase Will Rogers, to be successful you have to know, love and believe in
what you are doing. Our group continues to work hard to grow your investment and
appreciates your confidence.
Thank you for your investment in Janus Mercury Fund.
SIGNIFICANT AREAS OF INVESTMENT -- Fund vs. Index (% of Net Assets)
(BAR CHART)
JANUS MERCURY RUSSELL 1000(R)
FUND GROWTH INDEX
------------- -----------------
Diversified Operations 6.4% 6.4%
Medical -- Drugs 6.1% 3.8%
Medical -- HMO 6.0% 2.3%
Finance -- Investment Bankers/Brokers 5.2% 0.7%
Web Portals/Internet Service Providers 4.4% 1.7%
Janus Growth Funds October 31, 2005 19
Janus Mercury Fund (unaudited)
Performance
Average Annual Total Return -- for the periods ended October 31, 2005
ONE FIVE TEN SINCE
YEAR YEAR YEAR INCEPTION*
---- ---- ---- ----------
Janus Mercury Fund 13.35% (9.06)% 9.40% 12.49%
Russell 1000(R)
Growth Index 8.81% (7.93)% 6.78% 8.53%
S&P 500(R) Index 8.72% (1.74)% 9.34% 10.39%
Lipper Ranking - based
on total returns for
Large-Cap Growth Funds 141/679 335/457 8/151 1/84
(PERFORMANCE GRAPH)
JANUS MERCURY S&P RUSSELL 1000(R)
FUND 500(R) INDEX GROWTH INDEX
------------- ------------ -----------------
5/3/1993* $10,000 $10,000 $10,000
10/31/1995 $17,724 $14,084 $14,435
10/31/1997 $24,523 $23,090 $22,987
10/31/1999 $56,907 $35,398 $38,464
10/31/2001 $37,644 $28,201 $25,255
10/31/2003 $35,754 $28,921 $24,729
10/31/2005 $43,521 $34,405 $27,818
Data presented represents past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 1-800-525-3713 or visit www.janus.com for performance current to the
most recent month-end.
See Notes to Schedules of Investments for index definitions.
Total return includes reinvestment of dividends, distributions and capital
gains. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
The date of the Lipper ranking is slightly different from when the Fund began
operations since Lipper provides fund rankings as of the last day of the month
or the first Thursday after fund inception.
* The Fund's inception date -- May 3, 1993
FUND EXPENSES
The example below shows you the ongoing costs (in dollars) of investing in your
Fund and allows you to compare these costs with those of other mutual funds.
Please refer to page 5 for a detailed explanation of the information presented
in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD
EXPENSE EXAMPLE (5/1/05) (10/31/05) (5/1/05-10/31/05)*
- ----------------------- -------------------- --------------------------- ------------------
Actual $1,000.00 $1,095.40 $4.81
Hypothetical
(5% return before expenses) $1,000.00 $1,020.62 $4.63
*Expenses are equal to the annualized expense ratio of 0.91%, multiplied by the
average account value over the period, multiplied by 184/365 (to reflect the
one-half year period).
See "Explanations of Charts, Tables and Financial Statements."
The Fund's portfolio may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
There is no assurance that the investment process will consistently lead to
successful investing.
Lipper Inc. - A Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical with capital gains and
dividends reinvested.
Effective February 25, 2005, Janus Mercury Fund changed its primary benchmark
from the S&P 500(R) Index to the Russell 1000(R) Growth Index. The new primary
benchmark will provide a more appropriate comparison to the Fund's investment
style. The Fund will retain the S&P 500(R) Index as a secondary benchmark
index.
20 Janus Growth Funds October 31, 2005
Janus Mercury Fund
Schedule of Investments
As of October 31, 2005
Shares or Principal Amount Value
- -------------------------- --------------
Common Stock - 97.7%
Advertising Sales - 0.7%
732,410 Lamar Advertising Co.*,# $ 32,680,134
Aerospace and Defense - 1.2%
856,930 Lockheed Martin Corp.# 51,895,681
Agricultural Operations - 0.4%
645,870 Delta and Pine Land Co.# 16,114,457
Applications Software - 2.9%
4,988,505 Microsoft Corp. 128,204,579
Athletic Footwear - 1.6%
867,800 NIKE, Inc. - Class B# 72,938,590
Audio and Video Products - 0.8%
346,365 Harman International Industries, Inc.# 34,588,009
Automotive - Cars and Light Trucks - 1.0%
1,012,369 BMW A.G.**,# 44,029,759
Broadcast Services and Programming - 2.5%
1,186,050 Liberty Global, Inc. - Class A*,# 29,378,459
1,186,050 Liberty Global, Inc. - Class C*,# 28,133,106
6,649,443 Liberty Media Corp. - Class A*,# 52,996,060
--------------
110,507,625
Cable Television - 1.0%
1,577,285 Comcast Corp. - Special Class A* 43,233,382
Cellular Telecommunications - 0.7%
1,223,240 Nextel Partners, Inc. - Class A*,# 30,764,486
Chemicals - Specialty - 1.8%
75,454 Givaudan S.A.** 48,630,919
351,670 Syngenta A.G. (ADR)*,**,# 7,557,388
244,497 Syngenta A.G.*,** 26,206,604
--------------
82,394,911
Computers - 2.3%
1,376,405 Dell, Inc.*,# 43,879,791
2,074,260 Hewlett-Packard Co.# 58,162,251
--------------
102,042,042
Cosmetics and Toiletries - 2.7%
2,176,090 Procter & Gamble Co. 121,839,279
Data Processing and Management - 0.8%
770,940 Automatic Data Processing, Inc.# 35,972,060
Diversified Operations - 6.4%
4,323,900 General Electric Co. 146,623,448
857,522 Louis Vuitton Moet Hennessy S.A.**,# 69,421,041
3,306,125 Smiths Group PLC 53,398,217
674,540 Tyco International, Ltd. (U.S. Shares) 17,801,111
--------------
287,243,817
E-Commerce/Products - 0.3%
329,460 Amazon.com, Inc.* 13,138,865
E-Commerce/Services - 0.8%
609,340 eBay, Inc.* 24,129,864
428,320 IAC/InterActiveCorp* 10,964,992
--------------
35,094,856
Electronic Components - Semiconductors -
4.4%
1,066,785 Advanced Micro Devices, Inc.* 24,770,748
127,236 Samsung Electronics Company, Ltd.** 67,274,207
3,601,315 Texas Instruments, Inc.# 102,817,542
--------------
194,862,497
Shares or Principal Amount Value
- -------------------------- --------------
Electronic Forms - 0.7%
966,780 Adobe Systems, Inc.# $ 31,178,655
Enterprise Software/Services - 0.6%
2,192,182 Oracle Corp.*,# 27,796,868
Entertainment Software - 1.5%
1,212,130 Electronic Arts, Inc.* 68,945,954
Finance - Investment Bankers/Brokers - 5.2%
729,998 Citigroup, Inc.# 33,419,308
400,265 Goldman Sachs Group, Inc.# 50,581,488
3,999,045 JP Morgan Chase & Co. 146,445,027
--------------
230,445,823
Finance - Mortgage Loan Banker - 0.5%
460,460 Fannie Mae 21,881,059
Finance - Other Services - 0.3%
33,405 Chicago Mercantile Exchange Holdings, Inc. 12,197,836
Food - Dairy Products - 0.7%
841,960 Dean Foods Co.*,# 30,436,854
Food - Retail - 1.1%
340,675 Whole Foods Market, Inc.# 49,101,488
Hotels and Motels - 2.1%
1,603,520 Starwood Hotels & Resorts Worldwide, Inc.# 93,693,674
Independent Power Producer - 0.5%
1,814,535 Reliant Energy, Inc.*,# 23,044,595
Internet Security - 0.5%
Check Point Software Technologies, Ltd.
902,545 (U.S. Shares)*,# 20,180,906
Medical - Biomedical and Genetic - 1.2%
963,115 Celgene Corp.* 54,030,752
Medical - Drugs - 6.1%
1,131,955 Eli Lilly and Co.# 56,360,039
1,138,109 Roche Holding A.G.** 170,007,983
607,481 Sanofi-Aventis**,# 48,632,843
--------------
275,000,865
Medical - HMO - 6.0%
523,590 Aetna, Inc. 46,369,130
1,190,087 Coventry Health Care, Inc.* 64,252,797
2,721,925 UnitedHealth Group, Inc. 157,572,238
--------------
268,194,165
Medical - Hospitals - 0.4%
414,579 LifePoint Hospitals, Inc.*,# 16,210,039
Medical - Nursing Homes - 0.8%
975,075 Manor Care, Inc.# 36,321,544
Motion Pictures and Services - 0.3%
1,464,750 Lions Gate Entertainment Corp. (U.S. Shares)*,# 14,061,600
Motorcycle and Motor Scooter Manufacturing - 0.6%
573,575 Harley-Davidson, Inc.# 28,409,170
Multi-Line Insurance - 0.8%
569,620 American International Group, Inc.# 36,911,376
Multimedia - 0.6%
1,018,610 Walt Disney Co.# 24,823,526
Networking Products - 1.9%
4,876,775 Cisco Systems, Inc.*,# 85,099,724
Oil - Field Services - 1.3%
1,725,660 BJ Services Co. 59,966,685
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds October 31, 2005 21
Janus Mercury Fund
Schedule of Investments
As of October 31, 2005
Shares or Principal Amount Value
- --------------------------------------------------- --------------
Oil and Gas Drilling - 0.5%
490,535 Global Santa Fe Corp.# $ 21,853,334
Oil Companies - Exploration and Production - 1.3%
492,765 Apache Corp. 31,453,190
722,895 EnCana Corp. (U.S. Shares) 33,151,965
--------------
64,605,155
Oil Companies - Integrated - 3.8%
224,655 Amerada Hess Corp.# 28,104,341
1,347,810 BP PLC (ADR)# 89,494,584
970,780 Exxon Mobil Corp. 54,499,589
--------------
172,098,514
Pharmacy Services - 2.2%
1,872,525 Caremark Rx, Inc.*,# 98,120,310
Printing - Commercial - 0.5%
591,700 R.R. Donnelley & Sons Co.# 20,721,334
Reinsurance - 2.8%
45,381 Berkshire Hathaway, Inc. - Class B*,# 127,747,515
Retail - Building Products - 1.0%
743,265 Lowe's Companies, Inc. 45,168,214
Retail - Consumer Electronics - 0.9%
951,422 Best Buy Company, Inc. 42,109,938
Retail - Office Supplies - 1.6%
3,056,847 Staples, Inc. 69,482,132
Retail - Pet Food and Supplies - 0.4%
749,830 PETsMART, Inc.# 17,621,005
Savings/Loan/Thrifts - 0.7%
2,153,826 NewAlliance Bancshares, Inc.# 31,058,171
Semiconductor Components/Integrated Circuits - 1.5%
1,872,110 Maxim Integrated Products, Inc.# 64,924,775
Steel - Producers - 0.8%
179,775 POSCO** 36,419,935
Telecommunication Equipment - Fiber Optics - 0.8%
1,780,950 Corning, Inc.*,# 35,779,286
Television - 0.5%
796,950 Univision Communications, Inc. - Class A*,# 20,832,273
Therapeutics - 0.4%
360,835 Neurocrine Biosciences, Inc.* 19,059,305
Toys - 0.5%
1,246,427 Marvel Entertainment, Inc.*,# 21,937,115
Transportation - Railroad - 3.4%
1,545,900 Canadian National Railway Co. (U.S. Shares) 112,046,832
586,187 Union Pacific Corp.# 40,552,417
--------------
152,599,249
Transportation - Services - 2.7%
1,689,980 C.H. Robinson Worldwide, Inc.# 59,588,695
677,875 FedEx Corp.# 62,317,049
--------------
121,905,744
Web Portals/Internet Service Providers - 4.4%
117,110 Google, Inc. - Class A* 43,581,315
4,120,365 Yahoo!, Inc.*,# 152,329,894
--------------
195,911,209
Wireless Equipment - 1.0%
1,921,500 Motorola, Inc.# 42,580,440
- --------------------------------------------------- --------------
Total Common Stock (cost $3,278,936,926) 4,368,013,140
Shares or Principal Amount Value
- --------------------------------------------------- --------------
Preferred Stock - 0.4%
U.S. Government Agency - 0.4%
286,800 Fannie Mae, 7.00% (cost $14,340,000) $ 15,702,300
Other Securities - 5.9%
264,912,132 State Street Navigator Securities Lending
Prime Portfolio+ (cost $264,912,132) 264,912,132
Time Deposit - 1.9%
Societe Generale, ETD
$ 87,100,000 4.00%, 11/1/05 (cost $87,100,000) 87,100,000
- --------------------------------------------------- --------------
Total Investments (total cost
$3,645,289,058) -- 105.9% 4,735,727,572
Liabilities, net of Cash, Receivables and
Other Assets -- (5.9)% (262,297,061)
- --------------------------------------------------- --------------
Net Assets -- 100% $4,473,430,511
Summary of Investments by Country
% of Investment
Country Value Securities
- --------------------- --------------- ---------------
Bermuda $ 17,801,111 0.4%
Canada 159,260,397 3.4%
Cayman Islands 21,853,334 0.5%
France 118,053,884 2.5%
Germany 44,029,759 0.9%
Israel 20,180,906 0.4%
South Korea 103,694,142 2.2%
Switzerland 252,402,894 5.3%
United Kingdom 142,892,801 3.0%
United States++ 3,855,558,344 81.4%
--------------- -----------
Total $ 4,735,727,572 100.0%
++Includes Short-Term Securities and Other Securities (74.0% excluding
Short-Term Securities and Other Securities)
Forward Currency Contracts, Open
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- ----------------- -------------- --------------- ----------
Euro 12/2/05 4,500,000 $ 5,401,686 $ 64,104
Euro 1/27/06 17,100,000 20,592,158 384,412
Euro 2/9/06 6,080,000 7,327,181 348,394
Euro 2/23/06 15,300,000 18,453,525 639,804
South Korean Won
11/30/05 6,800,000,000 6,521,531 128,836
South Korean Won
5/11/06 29,350,000,000 28,292,762 (71,609)
Swiss Franc 1/27/06 56,100,000 43,891,425 597,631
Swiss Franc 2/23/06 42,900,000 33,649,947 1,086,895
-------------- ------------ ----------
Total $164,130,215 $3,178,467
See Notes to Schedules of Investments and Financial Statements.
22 Janus Growth Funds October 31, 2005
Janus Olympus Fund (unaudited)
FUND SNAPSHOT
This growth fund invests in what we believe are the #1 or #2 market leaders in
their respective industries.
PERFORMANCE OVERVIEW
Janus Olympus Fund gained 17.72% for the year ended October 31, 2005, versus its
primary benchmark, the Russell 1000(R) Growth Index, which returned 8.81% and
its secondary benchmark, the S&P 500(R) Index, which gained 8.72%.
FUND STRATEGY IN A FLATTISH MARKET
To review the past 12 months, the market appreciated toward the end of 2004 but
has since remained essentially flat. In this flat market, there have been few
identifiable secular trends other than the increased demand for oil and tight
supply conditions. Such a flat, trendless market is sometimes called a
"stock-picker's market." Indeed, while the annual gain of the Dow Jones
Industrial Average, S&P 500(R) and Russell 1000(R) Growth indices were all less
than 9%, several individual stocks far surpassed the market gains. Our strategy
during the past year was to focus on identifying investments that each had their
own catalyst for value creation and share price appreciation regardless of
economic or interest rate climate. We feel that this strategy helped generate
the healthy returns of the past year.
DIFFERENTIATED RESEARCH IDENTIFIED STRONG PERFORMERS
In reviewing the top performers of the past year, I am struck that 7 of the top
10 are healthcare-related, where our analysts' outstanding research revealed
unique potential in several companies. Outside of healthcare, the research team
again utilized in-depth analysis to identify underappreciated value in a variety
of industries.
The Fund's largest position and strongest performance contributor was Celgene, a
biotechnology company focused on hematological disease. Celgene has created a
new formulation of its multiple myeloma drug, Thalomid, with fewer side effects
and greater efficacy. Specifically, the new drug, Revlimid, has shown the
ability to slow disease progression and enable patients to remain transfusion
independent for over two years. We believe the drug will be approved by the Food
and Drug Administration in the coming year, which should boost sales and profits
significantly.
Another pharmaceutical company, eye-care giant Alcon, also provided outstanding
returns. The demand for Alcon's products has grown with the aging population,
new product introductions, better geographic penetration and firm pricing. The
company has taken market share in interocular lenses for cataract surgery after
introducing Restor, a multi-focal lens that eliminates the need for reading
glasses for some patients.
On the health services side, UnitedHealth Group continued to have a positive
impact on the Fund. The company benefits from increasing utilization of
healthcare and corporate America's desire to share more healthcare costs with
its employees. Also, UnitedHealth's pending merger with PacifiCare will enable
the company to re-enter California, cut overlapping expenses and consolidate the
company's lead among seniors, which is a focus as Medicare Part D rolls out next
year.
Outside of healthcare, retail and energy stocks were also top contributors.
Whole Foods Market, the leading organic and natural foods retailer, continued to
be one of the most exciting and best-performing investments in the Fund. The
company is refining its store model to a larger, higher return-on-investment
format with unique prepared food offerings that generate excitement and intense
loyalty among its customers. With only 3% market share of total U.S. grocery
sales, I believe Whole Foods has tremendous growth potential over the next
several years as the company penetrates new markets.
(CLAIRE YOUNG PHOTO)
Claire Young
portfolio manager
Top 10 Equity Holdings -- (% of Net Assets)
<Table>
<Caption>
OCTOBER 31, 2005 OCTOBER 31, 2004
---------------- ----------------
Celgene Corp. 3.7% 1.6%
Yahoo!, Inc. 3.4% 3.6%
Roche Holding A.G 3.2% 2.0%
Whole Foods Market, Inc. 3.0% 1.6%
UnitedHealth Group, Inc. 2.4% 2.1%
Alcon, Inc. (U.S. Shares) 2.3% 1.2%
Teva Pharmaceutical
Industries, Ltd. (ADR) 2.1% --
Four Seasons Hotels, Inc. 2.0% 2.4%
Varian Medical Systems, Inc. 2.0% 1.9%
Research In Motion,
Ltd. (U.S. Shares) 1.8% --
</Table>
Janus Growth Funds October 31, 2005 23
Janus Olympus Fund (unaudited)
In the energy sector, EOG Resources, a North American natural gas producer, also
rallied as higher natural gas prices and better than expected reserves in the
Barnett Shale region supported the asset value of the company.
STOCK-SPECIFIC ISSUES WEIGHED DOWN FUND RESULTS
While our research identified exceptional values, there were some unforeseen
events which produced the biggest detriments to Fund performance. The largest
performance detractor was Elan of Ireland, which faltered early in the year
after its multiple sclerosis drug Tysabri was quickly withdrawn from the market
after it allegedly contributed to the deaths of two patients in an experimental
trial when used in combination with another drug, Avonex. We elected to
liquidate the position as the investment thesis for Elan disappeared with its
potential revenue stream. Another weak performer was McAfee, an anti-virus and
security software vendor, which suffered when Microsoft announced a series of
acquisitions and new product introductions aimed at the company's offerings. I
opted to exit the position as these fears continue to proliferate.
Unfortunately, two of our top positions disappointed us with their performance
during the year. Research In Motion, the designer, manufacturer and marketer of
Blackberry wireless systems, was plagued by uncertainties due to its legal
wrangling with NTP on push email patents. As we believe the long-term adoption
of wireless email systems is still in nascent stages, we have elected to
maintain our position in the company. Meanwhile, Four Seasons, the leading
luxury hotel management company, suffered from a series of earnings
disappointments stemming from several one-time issues such as inconsistent bonus
accrual accounting and lumpy condominium selling fee income. The environment for
high-end hotel properties, however, remains strong as limited new supply is
added and both occupancy and room rates continue to rise, so we are eagerly
awaiting a potential rebound in the stock.
INVESTMENT STRATEGY AND OUTLOOK
Looking ahead, in my opinion the economy has remained surprisingly robust
despite many headwinds -- devastation from Hurricane Katrina, high budget
deficits that at some point will impact monetary policy, moderating consumer
demand due to high oil prices and slowing house price appreciation, and
corporate profit squeezes from rising raw material prices and weak end-user
pricing ability. In this environment, I expect to see the market to continue to
favor companies that provide strong earnings growth despite these impediments,
so the Fund remains invested predominantly in stocks that we believe can grow
organically and have specific catalysts to improve shareholder value.
Thanks for your confidence and investment in Janus Olympus Fund.
SIGNIFICANT AREAS OF INVESTMENT -- Fund vs. Index (% of Net Assets)
(BAR CHART)
JANUS OLYMPUS FUND RUSSELL 1000(R) GROWTH INDEX
------------------ --------------------------
Medical - Biomedical and Genetic 6.7% 3.2%
Computers 4.5% 4.0%
Web Portals/Internet Service Providers 4.5% 1.7%
Medical - Drugs 4.0% 3.8%
Medical - HMO 3.9% 2.3%
24 Janus Growth Funds October 31, 2005
(unaudited)
Performance
Average Annual Total Return -- for the periods ended October 31, 2005
<Table>
<Caption>
ONE FIVE SINCE
YEAR YEAR INCEPTION*
------------ ------------ ------------
Janus Olympus Fund 17.72% (8.99)% 11.30%
Russell 1000(R) Growth Index 8.81% (7.93)% 6.42%
S&P 500(R) Index 8.72% (1.74)% 8.82%
Lipper Ranking - based on
total returns for Multi-Cap Growth Funds 74/414 189/261 12/88
</Table>
(PERFORMANCE GRAPH)
JANUS OLYMPUS FUND S & P 500(R) INDEX RUSSELL 1000(R) GROWTH INDEX
------------------ ------------------ ----------------------------
12/29/1995* $ 10,000 $ 10,000 $ 10,000
10/31/1997 $ 15,477 $ 15,408 $ 15,241
10/31/1999 $ 35,884 $ 23,622 $ 25,502
10/31/2001 $ 22,694 $ 18,819 $ 16,744
10/31/2003 $ 23,359 $ 19,300 $ 16,396
10/31/2005 $ 28,686 $ 22,960 $ 18,444
Data presented represents past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 1-800-525-3713 or visit www.janus.com for performance current to the
most recent month-end.
See Notes to Schedules of Investments for index definitions.
Total return includes reinvestment of dividends, distributions and capital
gains. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
The date of the Lipper ranking is slightly different from when the Fund began
operations since Lipper provides fund rankings as of the last day of the month
or the first Thursday after fund inception.
* The Fund's inception date -- December 29, 1995
FUND EXPENSES
The example below shows you the ongoing costs (in dollars) of investing in your
Fund and allows you to compare these costs with those of other mutual funds.
Please refer to page 5 for a detailed explanation of the information presented
in these charts.
<Table>
<Caption>
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD
EXPENSE EXAMPLE (5/1/05) (10/31/05) (5/1/05-10/31/05)*
- --------------------------- ----------------------- -------------------- ---------------------------
Actual $ 1,000.00 $ 1,148.40 $ 5.20
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,020.37 $ 4.89
</Table>
*Expenses are equal to the annualized expense ratio of 0.96%, multiplied by the
average account value over the period, multiplied by 184/365 (to reflect the
one-half year period).
See "Explanations of Charts, Tables and Financial Statements."
The Fund's portfolio may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
There is no assurance that the investment process will consistently lead to
successful investing.
Lipper Inc. - A Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical with capital gains and
dividends reinvested.
Effective February 25, 2005, Janus Olympus Fund changed its primary benchmark
from the S&P 500(R) Index to the Russell 1000(R) Growth Index. The new primary
benchmark will provide a more appropriate comparison to the Fund's investment
style. The Fund will retain the S&P 500(R) Index as a secondary benchmark
index.
Janus Growth Funds October 31, 2005 25
Janus Olympus Fund
Schedule of Investments
As of October 31, 2005
<Table>
<Caption>
Shares or Principal Amount Value
- ------------------------------------------------ --------------
Common Stock - 95.4%
Aerospace and Defense - 1.3%
454,310 Boeing Co. $ 29,366,598
Apparel Manufacturers - 0.6%
1,220,850 Quiksilver, Inc.*,# 14,076,401
Applications Software - 2.3%
492,235 Citrix Systems, Inc.* 13,570,919
106,933 Infosys Technologies, Ltd. 5,988,201
376,275 Mercury Interactive Corp.* 13,090,607
707,950 Microsoft Corp. 18,194,315
--------------
50,844,042
Athletic Footwear - 1.3%
357,020 NIKE, Inc. - Class B 30,007,531
Audio and Video Products - 0.6%
129,650 Harman International Industries, Inc.# 12,946,849
Automotive - Truck Parts and Equipment - Original - 0.3%
179,010 Autoliv, Inc. 7,690,270
Building - Mobile Home and Manufactured Homes - 0.8%
524,615 Thor Industries, Inc.# 17,118,187
Casino Services - 0.5%
412,070 Scientific Games Corp. - Class A*,# 12,345,617
Cellular Telecommunications - 0.9%
4,145,500 China Mobile, Ltd. 18,449,162
70,210 China Mobile, Ltd. (ADR)# 1,576,215
--------------
20,025,377
Commercial Banks - 1.8%
3,175 Mizuho Financial Group, Inc. 21,055,752
226,254 UBS A.G.** 19,214,963
--------------
40,270,715
Commercial Services - 0.7%
351,488 CoStar Group, Inc.* 16,853,850
Computer Services - 0.5%
444,400 Park24 Company, Ltd. 10,460,064
Computers - 4.5%
282,325 Apple Computer, Inc.* 16,259,097
217,025 Dell, Inc.* 6,918,757
829,225 Hewlett-Packard Co. 23,251,468
30,190,000 Lenovo Group, Ltd. 14,798,829
660,720 Research In Motion, Ltd. (U.S. Shares)*,# 40,627,672
--------------
101,855,823
Computers - Memory Devices - 1.4%
1,754,610 EMC Corp.* 24,494,355
107,695 SanDisk Corp.* 6,342,159
--------------
30,836,514
Containers - Metal and Glass - 0.7%
407,220 Ball Corp. 16,032,251
Cosmetics and Toiletries - 1.2%
476,360 Procter & Gamble Co. 26,671,396
Data Processing and Management - 1.6%
95,370 First Data Corp. 3,857,717
796,695 NAVTEQ Corp.*,# 31,166,708
--------------
35,024,425
Dental Supplies and Equipment - 1.2%
667,940 Patterson Companies, Inc.*,# 27,639,357
</Table>
<Table>
<Caption>
Shares or Principal Amount Value
- ----------------------------------------------- --------------
Diagnostic Kits - 0.6%
373,175 Dade Behring Holdings, Inc. $ 13,438,032
Distribution/Wholesale - 0.6%
2,069,500 Esprit Holdings, Ltd. 14,589,360
Diversified Operations - 0.1%
2,164,000 Melco International Development, Ltd. 2,079,669
E-Commerce/Services - 1.1%
622,180 eBay, Inc.* 24,638,328
Electric - Generation - 0.2%
329,975 AES Corp.* 5,243,303
Electronic Forms - 1.8%
1,258,525 Adobe Systems, Inc. 40,587,431
Enterprise Software/Services - 2.6%
1,719,915 Oracle Corp.* 21,808,522
855,055 SAP A.G. (ADR)**,# 36,716,062
--------------
58,524,584
Entertainment Software - 1.2%
460,630 Electronic Arts, Inc.* 26,200,634
Finance - Credit Card - 1.0%
511,500 Credit Saison Co., Ltd. 23,068,250
Finance - Investment Bankers/Brokers - 1.8%
609,130 Citigroup, Inc. 27,885,971
1,089,000 Mitsubishi UFJ Securities Company, Ltd. 12,357,779
--------------
40,243,750
Finance - Mortgage Loan Banker - 1.1%
499,570 Fannie Mae# 23,739,566
Finance - Other Services - 1.7%
42,990 Chicago Mercantile Exchange Holdings, Inc. 15,697,799
243,263 Deutsche Boerse A.G.**,# 22,879,975
--------------
38,577,774
Financial Guarantee Insurance - 1.1%
441,480 MBIA, Inc.* 25,711,795
Food - Retail - 3.0%
466,817 Whole Foods Market, Inc.# 67,282,334
Food - Wholesale/Distribution - 0.8%
538,125 Sysco Corp. 17,171,569
Hazardous Waste Disposal - 0.9%
364,930 Stericycle, Inc.*,# 21,005,371
Hotels and Motels - 2.0%
861,745 Four Seasons Hotels, Inc. 46,215,384
Medical - Biomedical and Genetic - 6.7%
179,945 Alexion Pharmaceuticals, Inc.# 4,928,694
1,503,536 Celgene Corp.* 84,348,369
398,005 Genentech, Inc.* 36,059,252
389,900 Invitrogen Corp.*,# 24,793,741
--------------
150,130,056
Medical - Drugs - 4.0%
481,122 Roche Holding A.G.** 71,868,846
243,055 Sanofi-Aventis**,# 19,458,149
--------------
91,326,995
Medical - Generic Drugs - 2.1%
1,271,440 Teva Pharmaceutical Industries, Ltd. (ADR) # 48,467,293
</Table>
See Notes to Schedules of Investments and Financial Statements.
26 Janus Growth Funds October 31, 2005
Schedule of Investments
As of October 31, 2005
<Table>
<Caption>
Shares or Principal Amount Value
- ----------------------------------------------- --------------
Medical - HMO - 3.9%
633,660 Coventry Health Care, Inc.* $ 34,211,303
935,452 UnitedHealth Group, Inc. 54,153,317
--------------
88,364,620
Medical - Hospitals - 0.5%
268,730 Triad Hospitals, Inc.* 11,052,865
Medical - Nursing Homes - 0.6%
373,700 Manor Care, Inc. 13,920,325
Medical Information Systems - 0.2%
48,950 Cerner Corp.*,# 4,133,828
Medical Instruments - 2.6%
339,065 Intuitive Surgical, Inc.*,# 30,085,237
24,095 Kyphon, Inc.*,# 965,969
499,005 Medtronic, Inc. 28,273,623
--------------
59,324,829
Medical Products - 2.7%
245,810 Cooper Companies, Inc.# 16,921,560
972,555 Varian Medical Systems, Inc.*,# 44,309,606
--------------
61,231,166
Motorcycle and Motor Scooter
Manufacturing - 1.0%
474,605 Harley-Davidson, Inc.# 23,507,186
Multi-Line Insurance - 0.8%
283,680 American International Group, Inc. 18,382,464
Networking Products - 2.5%
2,185,602 Cisco Systems, Inc.* 38,138,755
759,090 Juniper Networks, Inc.*,# 17,709,570
--------------
55,848,325
Oil - Field Services - 0.6%
215,440 Halliburton Co. 12,732,504
Oil and Gas Drilling - 0.6%
251,655 Transocean, Inc.* 14,467,646
Oil Companies - Exploration and Production - 1.7%
287,005 Apache Corp. 18,319,529
286,605 EOG Resources, Inc.# 19,426,087
--------------
37,745,616
Oil Companies - Integrated - 1.8%
306,525 BP PLC (ADR)** 20,353,260
351,880 Exxon Mobil Corp. 19,754,543
--------------
40,107,803
Optical Supplies - 2.3%
382,835 Alcon, Inc. (U.S. Shares)** 50,878,772
Pharmacy Services - 1.2%
518,190 Caremark Rx, Inc.* 27,153,156
Retail - Apparel and Shoe - 1.0%
658,790 Nordstrom, Inc. 22,827,074
Retail - Jewelry - 1.3%
727,190 Tiffany & Co. 28,651,286
Semiconductor Components/Integrated Circuits - 0.3%
574,225 Cypress Semiconductor Corp.*,# 7,809,460
Semiconductor Equipment - 0.9%
425,140 KLA-Tencor Corp.# 19,679,731
Soap and Cleaning Preparations - 0.7%
544,906 Reckitt Benckiser PLC** 16,463,786
Telecommunication Services - 0.9%
733,755 Amdocs, Ltd. (U.S. Shares)*,** 19,422,495
Therapeutics - 2.6%
753,094 Neurocrine Biosciences, Inc.* 39,778,425
265,702 United Therapeutics Corp.*,# 19,624,750
--------------
59,403,175
</Table>
<Table>
<Caption>
Shares or Principal Amount Value
- -------------------------------------------------- ---------------
Transportation - Services - 2.6%
709,380 C.H. Robinson Worldwide, Inc.# $ 25,012,739
United Parcel Service, Inc. -
452,000 Class B 32,968,880
---------------
57,981,619
Web Portals/Internet Service Providers -
4.5%
66,705 Google, Inc. - Class A* 24,823,599
2,072,190 Yahoo!, Inc.* 76,608,864
---------------
101,432,463
Wireless Equipment - 1.0%
Crown Castle International
902,220 Corp.*,# 22,122,434
- -------------------------------------------------- ---------------
Total Common Stock (cost $1,694,013,638) 2,152,951,373
Preferred Stock - 1.1%
Electronic Components - Semiconductors - 1.1%
Samsung Electronics Company, Ltd.
59,410 (cost $22,309,175) 24,185,105
Other Securities - 8.6%
State Street Navigator Securities
Lending
Prime Portfolio+ (cost
195,028,151 $195,028,151) 195,028,151
Time Deposit - 1.0%
Societe Generale, ETD
$ 22,900,000 4.00%, 11/1/05 (cost $22,900,000) 22,900,000
- -------------------------------------------------- ---------------
Total Investments (total cost
$1,934,250,964) -- 106.1% 2,395,064,629
Liabilities, net of Cash, Receivables and
Other Assets -- (6.1)% (138,176,343)
- -------------------------------------------------- ---------------
Net Assets -- 100% $ 2,256,888,286
% of Investment
Country Value Securities
- -------------------------------------------------- --------------------- -----------------
Bermuda $ 14,589,360 0.6%
Canada 86,843,056 3.6%
Cayman Islands 14,467,646 0.6%
France 19,458,149 0.8%
Germany 59,596,037 2.5%
Hong Kong 36,903,875 1.5%
India 5,988,201 0.3%
Israel 48,467,293 2.0%
Japan 66,941,845 2.8%
South Korea 24,185,105 1.0%
Switzerland 141,962,581 5.9%
United Kingdom 56,239,541 2.4%
United States++ 1,819,421,940 76.0%
- -------------------------------------------------- --------------------- -----------------
Total $ 2,395,064,629 100.0%
</Table>
++Includes Short-Term Securities and Other Securities (66.9% excluding
Short-Term Securities and Other Securities)
Forward Currency Contracts, Open
<Table>
<Caption>
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- ------------------------ ----------- --------------- -------------
British Pound 12/2/05 4,150,000 $ 7,342,040 $ 234,200
British Pound 1/27/06 4,600,000 8,135,747 (33,767)
British Pound 2/23/06 2,150,000 3,802,924 77,826
Euro 12/2/05 2,000,000 2,400,749 28,492
Euro 1/27/06 28,750,000 34,621,319 440,351
Swiss Franc 1/27/06 49,000,000 38,336,538 458,370
Swiss Franc 2/23/06 4,000,000 3,137,524 101,342
-------------- ------------
Total $ 97,776,841 $ 1,306,814
</Table>
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds October 31, 2005 27
Janus Orion Fund (unaudited)
FUND SNAPSHOT
This focused growth fund invests in a small number of well-researched companies,
hand-picked for their upside potential.
PERFORMANCE OVERVIEW
The stock market managed modest gains over the year ended October 31, 2005,
despite the headwinds of the Federal Reserve raising interest rates repeatedly,
higher energy and commodity prices. These factors, as well as a resurgent dollar
in 2005, all threaten to negatively impact corporate earnings across many
sectors. With all of these threats, companies capable of delivering strong
earnings growth should be richly rewarded by the market. Many of the companies
we own in Janus Orion Fund delivered on, and sometimes exceeded expectations. I
am pleased to report that the Fund outperformed both its primary and secondary
benchmarks, the Russell 3000(R) Growth Index and the S&P 500(R) Index, during
the 12 month period, gaining 24.80% compared to the 8.99% and 8.72% returns of
the Indices, respectively. Janus Orion Fund's strategy of owning what we believe
are good businesses that can perform in any market environment continued to
deliver.
CONTRIBUTORS INCLUDED A DIVERSIFIED FINANCIAL COMPANY AND A TECHNOLOGY HARDWARE
AND EQUIPMENT FIRM
Chicago Mercantile Exchange led the list of strong performers in the Fund during
the period. This leading futures exchange's position as the most cost-efficient
pool of liquidity for offloading a variety of risks creates a strong barrier to
competition. A competitive advantage is an important characteristic I look for
when considering investments for the Fund. The stock weakened on short-term
pricing concerns driven by a mix shift in trading volumes that resulted in lower
average revenues per trade. This year, the company exercised some of its pricing
power, and the mix of trades improved. I believe the Chicago Mercantile Exchange
continues to have tremendous growth opportunities in businesses that leverage
its already-dominant position in interest rate and stock index futures.
Another important contributor during the period was Corning, the leading
materials sciences company in fiber optics and flat panel displays. The strength
of Corning's businesses is best understood by looking at both the strong margins
generated and the near-exclusive nature of many of its customer relationships.
For many purposes, I believe Corning's capabilities are unmatched. I established
a position in the company in early 2005 because I believed the market was
missing both the near-term strength in many of Corning's businesses and the
long-term franchise value. Janus' fundamental checks with customers and
competitors in Asia gave us confidence that both near-term trends and long-term
competitive positioning were solid. The stock was up significantly during the
period, making the risk/reward tradeoff for owning it less attractive, so we
sold our position entirely.
Finally, Caemi, one of the only pure-play opportunities to invest in iron ore
demand was a strong contributor. Our research into companies in the steel and
iron ore sector identified iron ore suppliers as an industry with the potential
for extraordinary long-term pricing power. We invested in Caemi as our analysis
indicated that investors misunderstood the medium-term cash generation potential
and longer-term competitive positioning of the company.
SELECT CONSUMER DURABLES AND INTERNET RETAILERS HELD BACK PERFORMANCE
Tempur-Pedic, the leading branded memory-foam mattress and pillow manufacturer
and marketer, was a significant underperformer. The company announced two
consecutive disappointing quarters. The primary culprits were a slowdown in
(RON SACHS PHOTO)
Ron Sachs
portfolio manager
Top 10 Equity Holdings -- (% of Net Assets)
<Table>
<Caption>
OCTOBER 31, 2005 OCTOBER 31, 2004
---------------- ----------------
Dade Behring Holdings, Inc. 6.8% 8.6%
CapitalSource, Inc. 4.6% 3.9%
Celgene Corp. 4.5% 1.2%
National Financial Partners Corp. 4.4% 1.7%
Chicago Mercantile
Exchange Holdings, Inc. 3.9% 4.7%
EOG Resources, Inc. 3.6% 2.2%
CoStar Group, Inc. 3.4% --
Cisco Systems, Inc. 3.3% --
Roche Holding A.G. 3.3% 4.0%
Companhia Siderurgica
de Tubarao 3.2% 3.2%
</Table>
28 Janus Growth Funds October 31, 2005
(unaudited)
consumer spending and higher raw material prices. Tempur-Pedic doesn't seem to
have a good handle on the causes of a slowdown in same-store sales of its
mattresses, and other investors abandoned the stock. I still believe
Tempur-Pedic is a differentiated brand capable of strong growth and
industry-leading profit margins. In our opinion, the stock price doesn't reflect
the company's prospects, so we continue to hold the position, albeit with
limited tolerance for continued excuses from management.
Another underperformer during the period was Expedia, a recent spin-out of the
travel-related businesses from IAC/InterActiveCorp. We believe Expedia is an
important aggregator and distributor of travel services and has strong market
positions in most of its businesses that can assure reasonable margins. While
the competitive moat may not be easily understood, we feel the stock price
indicates few other investors believe that there is any moat at all. A recent
bounce in the share price after Expedia's financial results exceeded most
skeptics' expectations still leaves the valuation compelling, in our opinion,
and our thesis remains intact. We consequently continue to hold the position.
STRATEGY IN THE MONTHS AHEAD
Going forward, I will continue to work to deliver strong risk-adjusted returns
to the Fund's shareholders. Despite strong performance for the Fund over the
last 12 months, I believe this market continues to present opportunities to buy
great businesses at attractive prices.
Thank you for your investment.
SIGNIFICANT AREAS OF INVESTMENT -- Fund vs. Index (% of Net Assets)
(BAR CHART)
JANUS ORION FUND RUSSELL 3000(R) GROWTH INDEX
---------------- --------------------------
Diagnostic Kits 6.8% 0.1%
Finance - Other Services 5.6% 0.2%
Finance - Commercials 4.6% 0.0%
Medical - Biomedical and Genetic 4.5% 3.2%
Investment Management and Advisory Services 4.4% 0.7%
Janus Growth Funds October 31, 2005 29
Janus Orion Fund (unaudited)
Performance
Average Annual Total Return -- for the periods ended October 31, 2005
<Table>
<Caption>
ONE FIVE SINCE
YEAR YEAR INCEPTION*
------------ ------------ ------------
Janus Orion Fund 24.80% (2.35)% (4.50)%
Russell 3000(R) Growth Index 8.99% (7.48)% (8.84)%
S&P 500(R) Index 8.72% (1.74)% (1.88)%
Lipper Ranking - based
on total returns for
Multi-Cap Growth Funds 5/414 60/261 86/237
</Table>
(PERFORMANCE GRAPH)
JANUS ORION FUND S & P 500(R) INDEX RUSSELL 3000(R) GROWTH INDEX
---------------- ------------------ ----------------------------
6/30/2000* $10,000 $10,000 $10,000
10/31/2000 $ 8,810 $ 9,861 $ 9,001
10/31/2001 $ 5,225 $ 7,405 $ 5,460
10/31/2002 $ 4,353 $ 6,287 $ 4,383
10/31/2003 $ 5,657 $ 7,594 $ 5,407
10/31/2004 $ 6,268 $ 8,310 $ 5,598
10/31/2005 $ 7,823 $ 9,035 $ 6,102
Data presented represents past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 1-800-525-3713 or visit www.janus.com for performance current to the
most recent month-end.
See Notes to Schedules of Investments for index definitions.
Total return includes reinvestment of dividends, distributions and capital
gains. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
*The Fund's inception date -- June 30, 2000
FUND EXPENSES
The example below shows you the ongoing costs (in dollars) of investing in your
Fund and allows you to compare these costs with those of other mutual funds.
Please refer to page 5 for a detailed explanation of the information presented
in these charts.
<Table>
<Caption>
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD
EXPENSE EXAMPLE (5/1/05) (10/31/05) (5/1/05-10/31/05)*
----------------------- -------------------- ---------------------------
Actual $ 1,000.00 $ 1,153.80 $ 5.48
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,020.11 $ 5.14
</Table>
*Expenses are equal to the annualized expense ratio of 1.01%, multiplied by the
average account value over the period, multiplied by 184/365 (to reflect the
one-half year period).
See "Explanations of Charts, Tables and Financial Statements."
The Fund's portfolio may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
The Fund is classified as "nondiversified," meaning it has the ability to take
larger positions in a smaller number of issuers than a fund that is classified
as "diversified." Nondiversified funds may experience greater price volatility.
Concentration may lead to greater price volatility.
There is no assurance that the investment process will consistently lead to
successful investing.
This Fund may have significant exposure to emerging markets which may lead to
greater price volatility.
Lipper Inc. - A Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical with capital gains and
dividends reinvested.
Effective February 25, 2005, Janus Orion Fund changed its primary benchmark from
the S&P 500(R) Index to the Russell 3000(R) Growth Index. The new primary
benchmark will provide a more appropriate comparison to the Fund's investment
style. The Russell 3000(R) Growth Index measures the performance of those
Russell 3000(R) Index companies with higher price-to-book ratios and higher
forecasted growth values. The stocks in this index are also members of either
the Russell 1000(R) Growth or the Russell 2000(R) Growth indices. The Fund will
retain the S&P 500(R) Index as a secondary benchmark index.
30 Janus Growth Funds October 31, 2005
Janus Orion Fund
Schedule of Investments
As of October 31, 2005
<Table>
<Caption>
Shares or Principal Amount Value
- ------------------------------------------------ --------------
Common Stock - 100.7%
Beverages - Wine and Spirits - 2.5%
2,585,584 Davide Campari - Milano S.P.A. $ 17,538,627
Broadcast Services and Programming - 1.6%
234,510 Liberty Global, Inc. - Class A*,# 5,808,813
234,510 Liberty Global, Inc. - Class C*,# 5,562,577
--------------
11,371,390
Building - Residential and Commercial -
2.6%
345,215 Desarrolladora Homex S.A. (ADR)*,# 10,318,476
112,730 KB Home# 7,366,906
--------------
17,685,382
Cable Television - 1.6%
13,928 Jupiter Telecommunications Company, Ltd.* 11,162,979
Commercial Banks - 3.2%
643,000 Banco Nossa Caixa S.A.* 10,622,435
3,776,887 Finansbank A.S.* 11,457,815
--------------
22,080,250
Commercial Services - 3.4%
487,180 CoStar Group, Inc.* 23,360,281
Computers - 1.8%
208,530 Research In Motion, Ltd. (U.S. Shares)* 12,822,510
Cosmetics and Toiletries - 1.4%
226,197 Alberto-Culver Co.# 9,819,212
Data Processing and Management - 1.7%
306,395 NAVTEQ Corp.* 11,986,172
Diagnostic Kits - 6.8%
1,308,720 Dade Behring Holdings, Inc. 47,127,006
Diversified Minerals - 2.8%
12,356,230 Caemi Mineracao e Metalurgica S.A. 19,644,419
Diversified Operations - 2.1%
181,909 Louis Vuitton Moet Hennessy S.A.# 14,726,517
E-Commerce/Products - 0.7%
215,900 Submarino S.A.* 2,953,069
69,230 Submarino S.A. (GDR)* 1,893,468
--------------
4,846,537
E-Commerce/Services - 4.0%
618,499 Expedia, Inc.* 11,621,596
618,499 IAC/InterActiveCorp*,# 15,833,575
--------------
27,455,171
Electronic Components - Semiconductors -
1.9%
567,755 MIPS Technologies, Inc.* 3,185,106
341,735 Texas Instruments, Inc. 9,756,534
--------------
12,941,640
Electronic Measuring Instruments - 1.8%
422,905 Trimble Navigation, Ltd.*,# 12,209,267
Entertainment Software - 1.1%
172,344 UbiSoft Entertainment S.A.*,# 7,947,888
Finance - Commercial - 4.6%
1,444,050 CapitalSource, Inc.*,# 31,769,100
Finance - Other Services - 5.6%
74,795 Chicago Mercantile Exchange Holdings, Inc.# 27,311,394
905,405 MarketAxess Holdings, Inc.*,# 11,172,698
--------------
38,484,092
Home Furnishings - 1.9%
Tempur-Pedic International,
1,177,995 Inc.*,# 13,028,625
</Table>
<Table>
<Caption>
Shares or Principal Amount Value
- --------------------------------------------------- --------------
Investment Management and Advisory Services - 4.4%
671,140 National Financial Partners Corp.# $ 30,355,662
Life and Health Insurance - 1.0%
444,150 Universal American Financial Corp.*,# 6,573,420
Medical - Biomedical and Genetic - 4.5%
555,130 Celgene Corp.* 31,142,793
Medical - Drugs - 3.3%
152,530 Roche Holding A.G. 22,784,564
Medical - Generic Drugs - 3.3%
369,805 Taro Pharmaceutical Industries, Ltd.*,# 8,135,710
387,200 Teva Pharmaceutical Industries, Ltd. (ADR)# 14,760,064
--------------
22,895,774
Medical - HMO - 1.9%
158,685 PacifiCare Health Systems, Inc.*,# 13,069,297
Medical Instruments - 1.9%
150,435 Intuitive Surgical, Inc.*,# 13,348,098
Multi-Line Insurance - 2.8%
500,925 Assurant, Inc.# 19,135,335
Networking Products - 3.3%
1,305,955 Cisco Systems, Inc.* 22,788,915
Oil Companies - Exploration and Production - 3.6%
368,685 EOG Resources, Inc. 24,989,469
Oil Companies - Integrated - 2.5%
138,890 Amerada Hess Corp. 17,375,139
Steel - Producers - 3.9%
356,960 Companhia Siderurgica de Tubarao 21,876,044
255,689 Companhia Siderurgica Nacional S.A. (ADR)*,# 4,909,229
--------------
26,785,273
Telecommunication Equipment - 1.6%
362,420 Adtran, Inc.# 10,963,205
Therapeutics - 2.3%
211,915 United Therapeutics Corp.*,# 15,652,042
Transportation - Marine - 1.8%
261,345 Alexander & Baldwin, Inc.# 12,790,224
Transportation - Railroad - 1.0%
172,200 All America Latina Logistica 6,652,313
Transportation - Services - 2.3%
171,235 FedEx Corp. 15,741,634
Web Portals/Internet Service Providers - 2.2%
408,835 Yahoo!, Inc.* 15,114,630
- --------------------------------------------------- --------------
Total Common Stock (cost $563,944,198) 696,164,852
Other Securities - 17.1%
1,671,255 Foreign Bonds+ 1,671,255
State Street Navigator Securities Lending
116,474,462 Prime Portfolio+ 116,474,462
- --------------------------------------------------- --------------
Total Other Securities (cost $118,145,717) 118,145,717
Repurchase Agreement - 0.9%
Bear Stearns & Company, Inc., 4.1125%
dated 10/31/05, maturing 11/1/05
to be repurchased at $6,300,720
collateralized by $8,529,696
in U.S. Government Agencies
0%, 10/1/35; with a value of $6,426,050
$ 6,300,000 (cost $6,300,000) 6,300,000
- --------------------------------------------------- --------------
Total Investments (total cost
$688,389,915) -- 118.7% 820,610,569
Liabilities, net of Cash, Receivables and
Other Assets -- (18.7)% (129,210,042)
- --------------------------------------------------- --------------
Net Assets -- 100% $ 691,400,527
</Table>
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds October 31, 2005 31
Janus Orion Fund
Schedule of Investments
As of October 31, 2005
Summary of Investments by Country
<Table>
<Caption>
% of Investment
Country Value Securities
- --------------------------------- ----------------- ---------------
Brazil $ 68,550,977 8.3%
Canada 12,822,510 1.6%
France 22,674,405 2.8%
Israel 22,895,774 2.8%
Italy 17,538,627 2.1%
Japan 11,162,979 1.4%
Mexico 10,318,476 1.2%
Switzerland 22,784,564 2.8%
Turkey 11,457,815 1.4%
United States++ 620,404,442 75.6%
----------------- -----------
Total $ 820,610,569 100.0%
</Table>
++Includes Short-Term Securities and Other Securities (60.4% excluding
Short-Term Securities and Other Securities)
See Notes to Schedules of Investments and Financial Statements.
32 Janus Growth Funds October 31, 2005
Janus Triton Fund (unaudited)
FUND SNAPSHOT
A unique growth fund that focuses on small- and mid-sized companies believed to
have solid growth potential.
PERFORMANCE OVERVIEW
I'm pleased to see that the hard work we did preparing for Janus Triton Fund's
launch has paid off. Janus' small- and mid-capitalization research team
delivered great investment ideas, and the rest of the research analysts and
portfolio managers at Janus continued to identify smaller-capitalization
investments appropriate for the Fund. I have been able to leverage their work to
build a portfolio of companies that I believe will deliver strong results in any
market environment. The early results give me confidence that our strategy of
taking advantage of Janus' in-depth research capabilities to identify and invest
in what I feel are good businesses with good growth opportunities at highly
attractive valuations while exercising prudent risk controls can potentially
yield attractive risk-adjusted returns in any market environment. While I
believe eight months of performance is far too short a time period to get a true
indication of what a fund is capable of, I am happy to report that your Fund has
outperformed its benchmark, the Russell 2500(TM) Growth Index since inception.
During this period, Janus Triton Fund gained 8.60% compared to 2.94% for the
Index.
STANDOUTS INCLUDED A MEDICAL DEVICE MANUFACTURER, ONLINE RETAILER AND DATA
SERVICE COMPANY
Strong performers included Intuitive Surgical, the maker of minimally invasive
robotic surgery tools known as the da Vinci Surgical System. Intuitive
Surgical's strong stock performance was driven by accelerating placements of the
da Vinci System. Placements are a critical driver of future growth as the number
of surgeries in a hospital increase over time and as operating rooms outfitted
with the da Vinci System enable surgeons to improve their comfort with the
technology.
Submarino, a leading online retailer of books, music and electronics in Brazil
was another strong contributor. Brazil is an ideal market for online retail
because high real interest rates make it prohibitively expensive for
bricks-and-mortar retailers to stock a deep inventory. Moreover, the high
concentration of disposable income in a tight geography drive attractive
shipping economics and speed. We spent a great deal of time over the past few
years understanding the positive dynamics in many of Brazil's major export
industries and companies in iron, steel, soybeans and pulp. As a result of our
research, we believe this export strength provides a great Brazilian economic
environment for Submarino's smartly-executed online retail strategy to yield
good results. Visiting Submarino's lean, yet efficient, offices and distribution
facilities, and comparing its product offering and strategy with that of online
and offline competitors, gave us a good understanding of the company's strong
competitive positioning. We are impressed with the company's management and like
the fact that Submarino has chosen to have its shares traded on the Brazilian
Stock Exchange's Novo Mercado, which ensures a higher standard of corporate
governance than those that opt not to trade on the Novo Mercado. Despite its
impressive share performance in the period, we continue to believe the stock
offers a compelling risk/reward profile.
CoStar Group, the leading data service for commercial real estate professionals,
was another important positive contributor to performance. CoStar essentially
provides every piece of data that a commercial real estate agent, tenant or
investor needs to understand the rental market, pricing of available properties
and the potential value of an individual building or a portfolio of properties.
CoStar's business is a natural monopoly -- once the company establishes itself
as the best source of this information, local real estate companies have shut
down their own database building operations and begun contributing their data to
CoStar.
(RON SACHS PHOTO)
Ron Sachs
portfolio manager
Top 10 Equity Holdings -- (% of Net Assets)
<Table>
<Caption>
OCTOBER 31, 2005
----------------
National Financial Partners Corp. 4.3%
CoStar Group, Inc. 3.6%
Intuitive Surgical, Inc. 3.2%
Trimble Navigation, Ltd. 3.1%
Dade Behring Holdings, Inc. 3.0%
CapitalSource, Inc. 3.0%
MarketAxess Holdings, Inc. 2.8%
Landstar System, Inc. 2.6%
Tempur-Pedic International, Inc. 2.5%
VistaPrint, Ltd. 2.4%
</Table>
Janus Growth Funds October 31, 2005 33
Janus Triton Fund (unaudited)
This additional data improves CoStar's product and its value to customers. I
believe CoStar is still in its early stages of growth. Our research suggests
that customers love and need CoStar's product -- important qualities to look for
in a business.
DETRACTORS INCLUDED CONSUMER DURABLES AND CONSUMER PRODUCTS COMPANIES
Tempur-Pedic, the leading branded memory-foam mattress and pillow manufacturer
and marketer was a significant underperformer. The company announced two
consecutive disappointing quarters. The primary culprits were a slowdown in
consumer spending and higher raw material prices. Tempur-Pedic doesn't seem to
have a good handle on the causes of a slowdown in same-store sales of its
mattresses and other investors abandoned the stock. I still believe Tempur-Pedic
is a differentiated brand capable of strong growth and industry-leading profit
margins. Furthermore, our research has convinced us that its new, lower-priced
mattress offering will significantly expand the potential market for its
products and weaken the possibility of knock-off memory foam mattresses. In our
opinion, the stock price doesn't reflect the company's prospects, so we continue
to hold the position, albeit with limited tolerance for continued shortfalls.
Another underperformer during the period was Spectrum Brands, a diversified
consumer products company with significant presence in the battery and specialty
pet supplies businesses. The stock declined as some recent acquisitions failed
to deliver on expectations and raw materials costs compressed margins. I am
disappointed by management's failure to accurately forecast these events and am
concerned that the competitive environment in its key battery and pet supplies
businesses has become structurally less attractive. While we hold only a small
position in the stock, we will continue to closely monitor developments at the
company and will size our position accordingly.
GOING FORWARD
Despite the prognostication of many market observers, small- and
mid-capitalization stocks continued to outperform their larger-capitalization
counterparts. We are seeking many compelling investment opportunities in
smaller-capitalization companies and look forward to reporting results.
Thank you for your investment in Janus Triton Fund.
SIGNIFICANT AREAS OF INVESTMENT -- Fund vs. Index (% of Net Assets)
(BAR CHART)
JANUS TRITON FUND RUSSELL 2500(TM) GROWTH INDEX
----------------- -----------------------------
Therapeutics 6.6% 1.9%
Investment Management and Advisory Services 4.3% 1.2%
E-Commerce/Products 4.2% 0.2%
Transportation - Marine 3.7% 0.1%
Commercial Services 3.6% 1.3%
34 Janus Growth Funds October 31, 2005
(unaudited)
Performance
Cumulative Total Return -- for the period ended October 31, 2005
<Table>
<Caption>
SINCE
INCEPTION*
----------
Janus Triton Fund 8.60%
Russell 2500(TM) Growth Index 2.94%
</Table>
(PERFORMANCE GRAPH)
JANUS TRITON FUND RUSSELL 2500(TM) GROWTH INDEX
----------------- --------------------------------
2/25/2005* $ 10,000 $ 10,000
2/28/2005 $ 10,010 $ 9,942
4/30/2005 $ 9,600 $ 9,145
10/31/2005 $ 10,860 $ 10,294
Data presented represents past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 1-800-525-3713 or visit www.janus.com for performance current to the
most recent month-end.
See Notes to Schedules of Investments for index definitions.
Total return includes reinvestment of dividends, distributions and capital
gains. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
*The Fund's inception date -- February 25, 2005
FUND EXPENSES
The example below shows you the ongoing costs (in dollars) of investing in your
Fund and allows you to compare these costs with those of other mutual funds.
Please refer to page 5 for a detailed explanation of the information presented
in these charts.
<Table>
<Caption>
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD
EXPENSE EXAMPLE (5/1/05) (10/31/05) (5/1/05-10/31/05)*
- ----------------------------- ----------------------- -------------------- --------------------------
Actual $ 1,000.00 $ 1,131.30 $ 6.82
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,018.80 $ 6.46
</Table>
*Expenses are equal to the annualized expense ratio of 1.27%, multiplied by the
average account value over the period, multiplied by 184/365 (to reflect the
one-half year period). Expenses may include the effect of contractual waivers by
Janus Capital.
See "Explanations of Charts, Tables and Financial Statements."
The Fund's portfolio may differ significantly from the securities held in the
index. The index is not available for direct investment; therefore its
performance does not reflect the expenses associated with the active management
of an actual portfolio.
Janus Capital Management LLC has contractually agreed to waive the Fund's total
operating expenses to levels indicated in the Statement of Additional
Information until at least March 1, 2007. Without such waivers, yields and total
return would have been lower.
There is no assurance that the investment process will consistently lead to
successful investing.
Funds that emphasize investments in smaller companies may experience greater
price volatility.
Janus Growth Funds October 31, 2005 35
Janus Triton Fund
Schedule of Investments
As of October 31, 2005
<Table>
<Caption>
Shares or Principal Amount Value
- --------------------------------------------------- --------------
Common Stock - 90.2%
Advertising Sales - 2.2%
31,715 Focus Media Holding, Ltd. (ADR)* $ 832,836
Advertising Services - 1.0%
6,335 R.H. Donnelley Corp.* 391,060
Auction House - Art Dealer - 2.2%
19,930 Ritchie Bros. Autioneers, Inc. (U.S. Shares) 817,529
Beverages - Wine and Spirits - 0.7%
36,493 Davide Campari - Milano S.P.A. 247,541
Broadcast Services and Programming - 0.2%
6,505 CKX, Inc.* 81,573
Building - Mobile Home and Manufactured Homes - 1.5%
16,875 Thor Industries, Inc. 550,631
Commercial Services - 3.6%
28,560 CoStar Group, Inc.* 1,369,452
Consumer Products - Miscellaneous - 0.9%
16,295 Spectrum Brands, Inc.* 337,307
Cosmetics and Toiletries - 1.5%
13,410 Alberto-Culver Co. 582,128
Data Processing and Management - 1.5%
14,435 NAVTEQ Corp.* 564,697
Diagnostic Equipment - 1.6%
24,070 Cytyc Corp.* 610,175
Diagnostic Kits - 3.0%
31,525 Dade Behring Holdings, Inc. 1,135,215
E-Commerce/Products - 4.2%
14,645 Blue Nile, Inc.* 525,316
12,130 Submarino S.A. (GDR)* 331,760
53,600 Submarino S.A.* 733,138
--------------
1,590,214
Electronic Components - Semiconductors -
2.6%
366,467 ARM Holdings PLC 705,405
49,785 MIPS Technologies, Inc.* 279,294
--------------
984,699
Electronic Measuring Instruments - 3.1%
40,895 Trimble Navigation, Ltd.* 1,180,639
Entertainment Software - 3.5%
48,886 Activision, Inc.* 770,932
11,837 UbiSoft Entertainment S.A.* 545,880
--------------
1,316,812
Finance - Commercial - 3.0%
51,240 CapitalSource, Inc.* 1,127,280
Finance - Other Services - 3.5%
10,945 International Securities Exchange, Inc.* 269,356
84,935 MarketAxess Holdings, Inc.* 1,048,098
--------------
1,317,454
Home Furnishings - 2.5%
84,745 Tempur-Pedic International, Inc.* 937,280
Internet Infrastructure Software - 2.3%
16,655 F5 Networks, Inc.* 866,560
Investment Management and Advisory Services - 4.3%
36,120 National Financial Partners Corp. 1,633,707
Life and Health Insurance - 1.5%
37,665 Universal American Financial Corp.* 557,442
</Table>
<Table>
<Caption>
Shares or Principal Amount Value
- --------------------------------------------------- --------------
Machinery - Construction and Mining - 1.6%
10,860 Terex Corp.* $ 596,974
Medical - Biomedical and Genetic - 2.1%
14,025 Celgene Corp.* 786,803
Medical - Drugs - 2.3%
99,340 Ligand Pharmaceuticals, Inc. - Class B* 859,291
Medical - Generic Drugs - 1.4%
24,300 Taro Pharmaceutical Industries, Ltd.* 534,600
Medical - HMO - 1.9%
8,650 PacifiCare Health Systems, Inc.* 712,414
Medical Instruments - 3.2%
13,440 Intuitive Surgical, Inc.* 1,192,531
Metal Processors and Fabricators - 0.8%
37,125 Earle M. Jorgensen Co.* 314,820
Oil Companies - Exploration and
Production - 1.7%
29,035 Western Oil Sands, Inc. - Class A* 624,409
Printing - Commercial - 2.4%
52,525 VistaPrint, Ltd.* 889,248
REIT - Mortgages - 2.8%
20,200 Newcastle Investment Corp. 531,058
11,135 Redwood Trust, Inc. 518,334
--------------
1,049,392
Retail - Computer Equipment - 0.7%
7,873 GameStop Corp. - Class A* 279,334
Telecommunication Equipment - 1.4%
17,225 Adtran, Inc. 521,056
Telecommunication Services - 0.6%
7,940 NeuStar, Inc. - Class A* 242,964
Therapeutics - 6.6%
143,145 Cypress Bioscience, Inc.* 724,314
16,645 Neurocrine Biosciences, Inc.* 879,188
11,450 United Therapeutics Corp.* 845,697
--------------
2,449,199
Transportation - Marine - 3.7%
12,100 Alexander & Baldwin, Inc. 592,174
71,680 Horizon Lines, Inc. - Class A* 812,134
--------------
1,404,308
Transportation - Railroad - 2.2%
21,910 All America Latina Logistica 846,412
Transportation - Truck - 2.6%
25,710 Landstar System, Inc.* 990,349
Wireless Equipment - 1.8%
28,395 American Tower Corp. - Class A 677,221
- --------------------------------------------------- --------------
Total Common Stock (cost $31,837,225) 34,003,556
Repurchase Agreement - 9.6%
Bear Stearns & Company, Inc., 4.1125%
dated 10/31/05, maturing 11/1/05
to be repurchased at $3,600,411
collateralized by $4,874,112
in U.S. Government Agencies
0%, 10/1/35; with a value of $3,672,028
$ 3,600,000 (cost $3,600,000) 3,600,000
- --------------------------------------------------- --------------
Total Investments (total cost
$35,437,225) -- 99.8% 37,603,556
Cash, Receivables and Other Assets, net
of Liabilities -- 0.2% 91,058
- --------------------------------------------------- --------------
Net Assets -- 100% $ 37,694,614
</Table>
See Notes to Schedules of Investments and Financial Statements.
36 Janus Growth Funds October 31, 2005
Schedule of Investments
As of October 31, 2005
Summary of Investments by Country
<Table>
<Caption>
% of Investment
Country Value Securities
- --------------------------- ---------------- ---------------
Bermuda $ 889,248 2.4%
Brazil 1,911,310 5.1%
Canada 1,441,938 3.8%
Cayman Islands 832,836 2.2%
France 545,880 1.5%
Israel 534,600 1.4%
Italy 247,541 0.7%
United Kingdom 705,405 1.9%
United States++ 30,494,798 81.0%
---------------- --------------
Total $ 37,603,556 100.0%
</Table>
++Includes Short-Term Securities (71.5% excluding Short-Term Securities)
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds October 31, 2005 37
Janus Twenty Fund (unaudited)(closed to new investors)
FUND SNAPSHOT
This focused growth fund invests in a concentrated portfolio of 20-30 companies,
including well-known market leaders whose products and services consumers may
use more of every day.
PERFORMANCE OVERVIEW
Vince Lombardi, the famous football coach of the Green Bay Packers, once said,
"It's not whether you get knocked down, it's whether you get back up." I think
this quote is especially appropriate at this point in Janus Twenty Funds'
history. After delivering outsized returns for our investors in the late 1990s,
we performed poorly in the first few years of this decade. Since that time
however, we have learned from our bear market experiences, refined our research
process and over the past three years have delivered the type of performance we
expect of ourselves for our investors.
Specifically, for the one-year period ended October 31, 2005, Janus Twenty Fund
returned 20.31%. For the same period, the Russell 1000(R) Growth Index returned
8.81% while the S&P 500(R) Index returned 8.72%. These results placed the Fund
back in the top 1% of all Large-Cap Growth Funds over the past year, according
to Lipper Analytical Services.
Janus Twenty Fund's trailing three-year performance is just as strong. For the
three-year period ended October 31, 2005, the Fund had an annualized return of
16.54%, placing it back in the top 4% of all Lipper Large Cap Growth Funds.
Even the Fund's five-year performance is now on the mend. For the trailing
five-year period ended October 31, 2005, which includes the entire brunt of the
bear market, Janus Twenty Fund's performance is back in the top half of its
Lipper Large-Cap Growth competitors.
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
------------- -------------- --------------- -------------
Lipper Quartile 1st 1st 2nd 1st
(Rank as of 10/31/05,
based on total returns) (5 out of 679) (18 out of 581) (212 out of 457) (2 out of 151)
Data presented reflects past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call Janus at 800.525.3713 or visit www.janus.com for performance current
to the most recent month-end.
STEWARDSHIP
Throughout this entire time, our commitment to good stewardship has never
wavered. Continuing a long established trend, Janus Twenty Fund's operating
expenses this year were 0.86% versus a peer group average of 1.46%, and its
turnover rate was just 44% versus a peer group average of 97%. The Fund remains
closed to new investors and as has been the case for many years, in addition to
being the Fund's manager, I am also one of its single largest investors.
WHAT WENT RIGHT
As for specific investments, some of the Fund's largest and longest-held
securities contributed to the performance. UnitedHealth, Roche Holdings,
Genentech and Electronic Arts all made meaningfully positive contributions again
this year. A couple of newer holdings, such as Celegene, also contributed. Our
investment in ConocoPhillips, which was part of a broader investment in the "oil
complex," was one of the Fund's single biggest contributors. ConocoPhillips is a
vertically integrated international oil company with a number of business
segments including exploration and production, refining, marketing and retail
sales. We were initially struck by the company's low price-to-earnings ratio and
its seemingly low market value of $63 billion dollars versus Exxon's nearly $350
billion dollar market value. We also
(SCOTT SCHOELZEL PHOTO)
Scott Schoelzel
portfolio manager
Top 10 Equity Holdings -- (% of Net Assets)
OCTOBER 31, 2005 OCTOBER 31, 2004
---------------- ----------------
UnitedHealth Group, Inc. 9.8% 12.5%
Genentech, Inc. 7.0% 6.0%
ConocoPhillips 6.3% --
Roche Holding A.G. 6.0% 7.2%
Electronic Arts, Inc. 4.9% 5.5%
NIKE, Inc. - Class B 4.1% 6.0%
eBay, Inc. 4.1% 17.3%
Wells Fargo & Co. 3.8% 3.6%
Apache Corp. 3.5% --
Occidental Petroleum Corp. 3.4% --
38 Janus Growth Funds October 31, 2005
(unaudited)
believed that the diversity of Conoco's businesses would help mitigate the
increasingly wild swings in the price of the commodity. Finally, we were
impressed by Conoco's sheer earnings power. In addition to reinvesting in its
various businesses for growth, ConocoPhillips has had ample funds to
meaningfully raise its dividend and opportunistically buy its own shares in the
open market. As we articulated in our last correspondence, we are not believers
in "$100 oil," but do believe there is still a fair amount of tightness in the
world's oil complex as worldwide demand continues to grow and replacement
reserves become more difficult to secure.
Another outsized contributor to the Fund's performance was Celgene. Celgene is a
biotechnology company that focuses on the discovery, development and sales of
drugs used in the treatment of various blood borne cancers and inflammatory
diseases. Celgene's newest drug, Revlimid, recently received a 90-day review
extension by the Food and Drug Administration. During this time we expect the
few lingering regulatory issues will be ironed out, which will allow Celgene to
begin marketing Revlimid for the treatment of myelodysplastic syndrome (MDS).
MDS, in plain English, is a "pre-leukemia" blood disorder. Early next year, we
also expect that Revlimid will be approved for the treatment of multiple
myeloma, another "leukemia like" blood disorder. Additionally, early data seems
to indicate that Revlimid has significant promise in at least two other types of
cancer -- chronic lymphocytic leukemia and cutaneous T-cell Lymphoma. The total
addressable market for Revlimid continues to grow and I believe Celgene is well
positioned to capitalize on its discoveries. Finally, Celgene has a robust
pipeline of drugs in the earlier stages development which are of keen interest
to us as well.
WHAT WENT WRONG
Of course, not everything went our way this year. In analyzing the Fund's
performance, I am pleased to report that the few losses we sustained over the
course of the year were, with one exception, quite small. By far the biggest
detractor to the Fund's performance was our position in eBay, which occurred in
the first half of the year. Since that time eBay has rebounded quite nicely, and
we believe the position is appropriately sized in the Fund. We were very
disciplined about cutting losses quickly and, no doubt, this discipline has
positively contributed to the Fund's performance.
FUND OUTLOOK
Going forward, I am increasingly optimistic about the future of the
financial markets. I expect that the two primary headwinds we have been
navigating these past 18 months, namely higher interest rates and higher oil
prices, will begin to abate. Specifically, sometime in the calendar year 2006, I
expect the Federal Reserve, under its new leadership, to move toward a more
neutral position on interest rates. I also expect that the year-over-year
increases in the price of oil will begin to moderate, leading to a much more
favorable environment for stocks, particularly growth stocks.
Janus Twenty Fund's improved results over the period have been increasingly
gratifying and I appreciate every single investor's continued commitment to the
Fund. There is certainly more work to be done, but we are proud of the progress
we have made these past few years. The Fund's improved performance, its
efficient operating metrics, the stewardship of the Fund, as well as the depth,
breadth and experience of our research analysts are once again a cut above our
peers. While no one knows what the future will hold, I am confident in our team,
our experience and in our commitment to our investors.
Thank you for your investment and continued confidence in Janus.
SIGNIFICANT AREAS OF INVESTMENT -- Fund vs. Index (% of Net Assets)
(BAR CHART)
<Table>
<Caption>
JANUS TWENTY FUND RUSSELL 1000(R) GROWTH INDEX
----------------- --------------------------
Oil Companies - Integrated 16.3% 0.0%
Medical - HMO 10.6% 2.3%
Medical - Biomedical and Genetic 9.6% 3.2%
Oil Companies - Exploration and Production 6.8% 1.1%
Medical - Drugs 6.0% 3.8%
</Table>
Janus Growth Funds October 31, 2005 39
Janus Twenty Fund (unaudited)
Performance
Average Annual Total Return -- for the periods ended October 31, 2005
ONE FIVE TEN SINCE
YEAR YEAR YEAR INCEPTION*
------- ------- ------- -----------
Janus Twenty Fund 20.31% (6.77)% 11.32% 13.43%
Russell 1000(R) Growth Index 8.81% (7.93)% 6.78% 11.25%
S&P 500(R) Index 8.72% (1.74)% 9.34% 12.46%
Lipper Ranking - based on total
returns for Large-Cap Growth Funds 5/679 212/457 2/151 2/40
(PERFORMANCE GRAPH)
<Table>
<Caption>
JANUS TWENTY FUND S & P 500(R) INDEX RUSSELL 1000(R) GROWTH INDEX
---------------- ------------------------------- ---------------------------------
4/30/1985* $ 10,000 $ 10,000 $ 10,000
10/31/1990 $ 18,574 $ 20,507 $ 20,325
10/31/1995 $ 45,344 $ 45,440 $ 46,176
10/31/2000 $ 188,040 $ 121,164 $ 134,519
10/31/2005 $ 132,459 $ 111,006 $ 88,984
</Table>
Data presented represents past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 1-800-525-3713 or visit www.janus.com for performance current to the
most recent month-end.
See Notes to Schedules of Investments for index definitions.
Total return includes reinvestment of dividends, distributions and capital
gains. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
*The Fund's inception date -- April 30, 1985
FUND EXPENSES
The example below shows you the ongoing costs (in dollars) of investing in your
Fund and allows you to compare these costs with those of other mutual funds.
Please refer to page 5 for a detailed explanation of the information presented
in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD
EXPENSE EXAMPLE (5/1/05) (10/31/05) (5/1/05-10/31/05)*
- ---------------------------- ----------------------- -------------------- ---------------------------
Actual $ 1,000.00 $ 1,155.80 $ 4.67
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,020.87 $ 4.38
*Expenses are equal to the annualized expense ratio of 0.86%, multiplied by the
average account value over the period, multiplied by 184/365 (to reflect the
one-half year period).
See "Explanations of Charts, Tables and Financial Statements."
The Fund's portfolio may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
The Fund is classified as "nondiversified," meaning it has the ability to take
larger positions in a smaller number of issuers than a fund that is classified
as "diversified." Nondiversified funds may experience greater price volatility.
Concentration may lead to greater price volatility.
There is no assurance that the investment process will consistently lead to
successful investing.
Lipper Inc. - A Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical with capital gains and
dividends reinvested.
Closed to new investors.
Effective February 25, 2005, Janus Twenty Fund changed its primary benchmark
from the S&P 500(R) Index to the Russell 1000(R) Growth Index. The new primary
benchmark will provide a more appropriate comparison to the Fund's investment
style. The Fund will retain the S&P 500(R) Index as a secondary benchmark
index.
40 Janus Growth Funds October 31, 2005
Janus Twenty Fund
Schedule of Investments
As of October 31, 2005
Shares or Principal Amount Value
- --------------------------------------------------- -----------------------
Common Stock - 92.2%
Athletic Footwear - 4.1%
4,730,930 NIKE, Inc. - Class B# $ 397,634,667
Casino Hotels - 2.0%
3,221,810 Harrah's Entertainment, Inc. 194,855,069
Chemicals - Specialty - 1.4%
1,291,840 Syngenta A.G.* 138,466,893
Coal - 1.5%
1,800,000 Peabody Energy Corp.# 140,688,000
Computers - 2.4%
1,250,000 Apple Computer, Inc.* 71,987,500
Research In Motion, Ltd. (U.S.
2,645,620 Shares)*,# 162,679,174
-----------------------
234,666,674
Cosmetics and Toiletries - 3.3%
5,694,740 Procter & Gamble Co. 318,848,493
E-Commerce/Services - 4.1%
9,969,878 eBay, Inc.*,# 394,807,169
Entertainment Software - 4.9%
8,280,630 Electronic Arts, Inc.* 471,002,234
Finance - Consumer Loans - 1.1%
1,828,090 SLM Corp.# 101,513,838
Finance - Investment Bankers/Brokers - 2.2%
1,655,385 Goldman Sachs Group, Inc.# 209,191,003
Medical - Biomedical and Genetic - 9.6%
4,490,190 Celgene Corp.* 251,899,659
7,440,195 Genentech, Inc.*,# 674,081,666
-----------------------
925,981,325
Medical - Drugs - 6.0%
3,847,005 Roche Holding A.G. 574,656,349
Medical - HMO - 10.6%
898,715 Aetna, Inc. 79,590,200
16,225,220 UnitedHealth Group, Inc.# 939,277,985
-----------------------
1,018,868,185
Oil Companies - Exploration and
Production - 6.8%
5,268,280 Apache Corp. 336,274,312
2,509,355 EnCana Corp. (U.S. Shares) 115,079,020
3,052,487 EOG Resources, Inc.# 206,897,569
-----------------------
658,250,901
Oil Companies - Integrated - 16.3%
1,290,765 Amerada Hess Corp.# 161,474,702
4,764,910 BP PLC (ADR)# 316,390,024
9,273,605 ConocoPhillips# 606,308,294
2,568,710 Exxon Mobil Corp. 144,207,379
4,188,610 Occidental Petroleum Corp.# 330,397,557
-----------------------
1,558,777,956
Oil Refining and Marketing - 1.5%
1,359,590 Valero Energy Corp. 143,083,252
Optical Supplies - 3.2%
2,280,710 Alcon, Inc. (U.S. Shares)# 303,106,359
Retail - Consumer Electronics - 0.8%
1,750,000 Best Buy Company, Inc.# 77,455,000
Retail - Restaurants - 0.5%
1,815,090 Starbucks Corp.*,# 51,330,745
Super-Regional Banks - 3.8%
6,048,780 Wells Fargo & Co. 364,136,556
Shares or Principal Amount Value
- ------------------------------------------------------ -------------------------
Web Portals/Internet Service Providers -
5.0%
781,150 Google, Inc. - Class A*,# $ 290,697,161
5,230,650 Yahoo!, Inc.* 193,377,131
-------------------------
484,074,292
Wireless Equipment - 1.1%
2,713,880 QUALCOMM, Inc. 107,903,869
- ------------------------------------------------------ -------------------------
Total Common Stock (cost $5,799,984,277) 8,869,298,829
Money Market -- 2.6%
200,000,000 Janus Institutional Cash
Reserves Fund
3.87 % 200,000,000
50,000,000 Janus Money Market Fund
3.86 % 50,000,000
- ------------------------------------------------------ -------------------------
Total Money Market (cost $250,000,000) 250,000,000
Other Securities - 2.5%
State Street Navigator Securities
Lending
Prime Portfolio+ (cost
237,785,188 $237,785,188) 237,785,188
Repurchase Agreements - 0.4%
Cantor Fitzgerald and Co., 4.05%
dated 10/31/05, maturing 11/1/05
to be repurchased at $200,023
collateralized by $381,944
in U.S. Government Agencies
0% - 7.50%, 12/15/12 - 5/15/35
$ 200,000 with a value of 204,006 200,000
Citigroup Global Markets, Inc.,
4.05%
dated 10/31/05, maturing 11/1/05
to be repurchased at $41,104,624
collateralized by $50,811,633
in U.S. Government Agencies
0% - 5.00%,3/1/34 - 8/1/35
41,100,000 with a value of 41,922,000 41,100,000
- ------------------------------------------------------ -------------------------
Total Repurchase Agreements (cost
$41,300,000) 41,300,000
Short-Term U.S. Government Agencies - 0.3%
Federal Home Loan Bank System
25,000,000 3.85%, 2/3/06 (cost $24,748,680) 24,718,750
Time Deposits - 3.8%
Societe Generale, ETD
68,400,000 4.00%, 11/1/05 68,400,000
UBS Finance (DE), Inc.
297,800,000 3.98%, 11/1/05 297,800,000
- ------------------------------------------------------ -------------------------
Total Time Deposits (cost $366,200,000) 366,200,000
- ------------------------------------------------------ -------------------------
Total Investments (total cost
$6,720,018,145) -- 101.8% 9,789,302,767
Liabilities, net of Cash, Receivables and
Other Assets -- (1.8)% (176,800,147)
- ------------------------------------------------------ -------------------------
Net Assets -- 100% $ 9,612,502,620
</Table>
<Table>
<Caption>
Summary of Investments by Country % of Investment
Country Value Securities
- -------------------------------- ---------------- ---------------
Canada $ 277,758,194 2.9%
Switzerland 1,016,229,601 10.4%
United Kingdom 316,390,024 3.2%
United States++ 8,178,924,948 83.5%
- --------------------- ---------------- ---------------
Total $ 9,789,302,767 100.0%
++Includes Short-Term Securities and Other Securities (74.2% excluding
Short-Term Securities and Other Securities)
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds October 31, 2005 41
Janus Venture Fund (unaudited) (closed to new investors)
FUND SNAPSHOT
This growth fund focuses on small companies, where there's less Wall Street
coverage and more opportunity for a research edge.
PERFORMANCE OVERVIEW
Against a volatile backdrop of soaring energy costs and rising interest rates,
small-capitalization stocks closed out our fiscal year ended October 31, 2005,
in positive territory, surpassing their large-cap peers. To be sure, although
the brisk tailwind small caps enjoyed at the end of last year moderated somewhat
in 2005, small-caps had a good showing as the economy picked up strength, and
corporate profits grew. In this environment, the Fund gained 10.18%,
underperforming the 10.91% return of its primary benchmark, the Russell 2000(R)
Growth Index, as well as its secondary benchmark, the broader Russell 2000(R)
Index, which advanced 12.08%.
The Fund's performance compared to its benchmark is attributable to our emphasis
on under-covered small-cap companies that we believe offer the greatest
opportunity for growth if they execute as we expect. Specifically, our
performance can be linked to strong stock selection within the real estate
sector and the commercial services and supplies sector. Our gains were held in
check, however, by the weak results posted by select holdings in the software
and services sector.
STRATEGY IN THIS ENVIRONMENT
My approach to stock selection in this investment environment -- which has been
characterized by solid economic growth that has provided a springboard for
corporate profits and, in turn, stock prices -- essentially is unchanged.
Although uncertain economic conditions may prompt me to make adjustments on the
margins, my goal is to uncover companies not widely followed by Wall Street that
boast strong fundamentals and have plenty of room to grow.
FUND COMPOSITION
As of October 31, 2005, the Fund was 100% invested in equities, with foreign
stocks accounting for 12.3% of the Fund. The Fund's 10 largest holdings by
weight represented 24.9% of its total net assets.
TOP CONTRIBUTORS INCLUDE REAL ESTATE, ENERGY AND COMMERCIAL SERVICES HOLDINGS
Commercial real estate services firm CB Richard Ellis continued its winning
streak, amply rewarding us during the reporting period. Our research showing
that all the stock's key drivers -- including rental rates and property values
- -- were headed in the right direction was confirmed when the company announced
that third-quarter profits jumped more than fourfold as compared to the same
quarter a year ago. Fueling these higher results were favorable investment
markets and leasing trends in both the U.S. and Europe. As CB Richard Ellis
closed in on the upper end of the Fund's market-capitalization range, we elected
to trim the position.
In energy, Western Oil Sands supported our performance. The company owns a 20%
stake in the Athabasca Oil Sands Project, where crude oil is extracted from
sands mined from a tar pit in northern Alberta. It is a costly process indeed,
and one that is not practical from a business standpoint unless the price of oil
remains high. However, as long as that price hovers in the $60 per barrel range
- -- a reasonable assumption considering China and India are propping up worldwide
demand levels -- we believe Western Oil Sands should continue operating
profitably.
"Operating profitably" certainly describes TALX, our top contributor. The
company provides automated employment and income verification, as well as other
outsourced employee self-service applications. Not only did the stock post an
extraordinary
(WILL BALES PHOTO)
Will Bales
portfolio manager
Top 10 Equity Holdings -- (% of Net Assets)
OCTOBER 31, 2005 OCTOBER 31, 2004
---------------- ----------------
TALX Corp. 3.7% 2.2%
Euronet Worldwide, Inc. 2.9% 4.0%
CB Richard Ellis Group, Inc. 2.6% 2.6%
Ultimate Software Group, Inc. 2.5% 1.8%
Western Oil Sands, Inc. - Class A 2.3% 1.2%
CoStar Group, Inc. 2.3% 0.2%
Carter's, Inc. 2.2% 1.1%
World Fuel Services Corp. 2.2% 0.5%
Lions Gate Entertainment Corp.
(U.S. Shares) 2.1% 1.4%
Jarden Corp. 2.1% 1.4%
42 Janus Growth Funds October 31, 2005
(unaudited)
triple-digit return for the 12-month period, but management also reported fiscal
second-quarter profits that rose 77% on strong revenue gains. Additionally, we
were gratified by TALX's announcement guiding up revenues for the full year
2006.
Turning to the retail sector, Carter's is a well-known name to most Americans.
Founded in 1865, the popular baby clothier did not go public until 2003. We
scrutinized the firm from top to bottom prior to the IPO, and liking what we
saw, stepped up and bought its stock in the secondary market. Our confidence has
paid off in the form of robust sales and profit growth. Driving the company's
success has been its strategy of getting its products in the doors of every
department store in the U.S. Building on that success, in July Carter's acquired
Oshkosh B'Gosh, a deal that combines two respected children's brands with
complementary products and distribution channels.
SOFTWARE AND SERVICES STOCKS LEAD OUR LIST OF LAGGARDS
On the downside, online recruitment-software and services provider and
relatively new holding Workstream sold off sharply during the 12-month period
and undercut our performance. Despite its stumble, what we find so compelling
about Workstream is the scalability of its on-demand workforce management
software. Problems started to arise, however, when brisk sales turned into a
mounting backlog of unfilled orders. Nevertheless, extensive conversations with
Workstream's new chief financial officer, Steve Lerch, convinced me that his
plan to put more structure and accountability in place at the fast-growing
company eventually would reap benefits. Consequently, we chose to continue to
hold Workstream.
Another holding in the online area, Greenfield Online, also worked against us.
The company is a leading independent provider of online consumer-panel surveys
to the global marketing research industry. Although it reported second-quarter
revenues that surged 157% over the same period last year, the stock plunged on
investor concerns that the firm overpaid for its recent acquisition of Ciao,
which the company purchased in an effort to boost its share of the European
online-survey market. We tend to agree with this theory and therefore liquidated
our position in Greenfield Online.
INVESTMENT STRATEGY AND OUTLOOK
Given persistent fears that higher oil and gas prices could curb economic
growth, the market likely will remain in a narrow trading range. Amid this
climate of uncertainty, however, my confidence is not diminished. On the
contrary, still-low interest rates and an improving labor market should continue
to spur the economy. Moreover, in times such as these, I believe small-cap
investors have an edge. Because our focus is on finding "under the radar"
companies, we feel we can gain an advantage by investing early in these
undiscovered gems whose compelling fundamentals and exciting growth prospects
could maximize the Fund's potential for positive returns.
Thank you for your investment in Janus Venture Fund.
SIGNIFICANT AREAS OF INVESTMENT -- Fund vs. Index (% of Net Assets)
(BAR CHART)
<Table>
<Caption>
JANUS VENTURE FUND RUSSELL 2000(R) GROWTH INDEX
------------------ ----------------------------
Commercial Services - Finance 5.0% 0.8%
Oil Companies - Exploration and Production 3.8% 2.3%
Enterprise Software/Services 3.8% 1.0%
Computers - Voice Recognition 3.7% 0.2%
Apparel Manufacturers 3.6% 0.6%
</Table>
Janus Growth Funds October 31, 2005 43
Janus Venture Fund (unaudited)
Performance
Average Annual Total Return -- for the periods ended October 31, 2005
ONE FIVE TEN SINCE
YEAR YEAR YEAR INCEPTION*
--------- --------- --------- ----------
Janus Venture Fund 10.18% (1.84)% 8.70% 13.13%
Russell 2000(R)
Growth Index 10.91% (1.62)% 4.81% 7.67%
Russell 2000(R) Index 12.08% 6.75% 9.53% 10.62%
Lipper Ranking -
based on total returns
for Small-Cap
Growth Funds 325/515 168/322 41/96 1/9
(PERFORMANCE GRAPH)
<Table>
<Caption>
JANUS VENTURE FUND RUSSELL 2000(R) INDEX RUSSELL 2000(R) GROWTH INDEX
------------------ ------------------------- ----------------------------
4/30/1985* $ 10,000 $ 10,000 $ 10,000
10/31/1990 $ 22,329 $ 11,744 $ 11,230
10/31/1995 $ 54,465 $ 31,853 $ 28,432
10/31/2000 $137,615 $ 57,112 $ 49,333
10/31/2005 $125,408 $ 79,158 $ 45,463
</Table>
Data presented represents past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 1-800-525-3713 or visit www.janus.com for performance current to the
most recent month-end.
See Notes to Schedules of Investments for index definitions.
Total return includes reinvestment of dividends, distributions and capital
gains. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
*The Fund's inception date -- April 30, 1985
FUND EXPENSES
The example below shows you the ongoing costs (in dollars) of investing in your
Fund and allows you to compare these costs with those of other mutual funds.
Please refer to page 5 for a detailed explanation of the information presented
in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD
EXPENSE EXAMPLE (5/1/05) (10/31/05) (5/1/05-10/31/05)*
- ---------------------------- ----------------------- -------------------- ---------------------------
Actual $ 1,000.00 $ 1,085.20 $ 4.57
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,020.82 $ 4.43
*Expenses are equal to the annualized expense ratio of 0.87%, multiplied by the
average account value over the period, multiplied by 184/365 (to reflect the
one-half year period).
See "Explanations of Charts, Tables and Financial Statements."
The Fund's portfolio may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
Funds that emphasize investments in smaller companies may experience greater
price volatility.
The Fund has been significantly impacted, either positively or negatively, by
investing in initial public offerings ("IPOs").
There is no assurance that the investment process will consistently lead to
successful investing.
Lipper Inc. - A Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical with capital gains and
dividends reinvested.
Effective February 25, 2005, Janus Venture Fund changed its primary benchmark
from the Russell 2000(R) Index to the Russell 2000(R) Growth Index. The new
primary benchmark will provide a more appropriate comparison to the Fund's
investment style. The Fund will retain the Russell 2000(R) Index as a secondary
benchmark index.
44 Janus Growth Funds October 31, 2005
Janus Venture Fund
Schedule of Investments
As of October 31, 2005
Shares or Principal Amount Value
- --------------------------------------------------- -----------------------
Common Stock - 100.2%
Advanced Materials/Products - 0.5%
147,416 Ceradyne, Inc.*,# $ 5,778,707
Aerospace and Defense - Equipment - 0.6%
524,500 K&F Industries Holdings, Inc.*,# 8,203,180
Airlines - 0.2
341,535 WestJet Airlines, Ltd.*,(B),(O) 3,036,252
Apparel Manufacturers - 3.6%
448,270 Carter's, Inc.*,# 28,308,250
810,655 Quiksilver, Inc.* 9,346,851
286,244 Volcom, Inc.*,# 8,753,342
-----------------------
46,408,443
Applications Software - 1.6%
687,310 American Reprographics Co.*,# 11,581,173
610,060 Quest Software, Inc.*,# 8,485,935
-----------------------
20,067,108
Athletic Equipment - 0.1%
307,105 Orange 21, Inc.*,L. 1,099,436
Building - Residential and Commercial - 0.4%
190,580 WCI Communities, Inc.*,# 4,768,312
Casino Services - 1.4%
533,335 Mikohn Gaming Corp.*,# 5,594,684
482,140 Shuffle Master, Inc.*,# 12,227,071
-----------------------
17,821,755
Cellular Telecommunications - 0.8%
1,199,485 UbiquiTel, Inc.* 10,363,550
Commercial Services - 3.0%
610,295 CoStar Group, Inc.* 29,263,646
2,346,939 Intermap Technologies,Ltd.*,L. 9,995,007
-----------------------
39,258,653
Commercial Services - Finance - 5.0%
Euronet Worldwide,
1,351,376 Inc.*,#,L. 37,973,665
544,620 Heartland Payment Systems, Inc.* 13,190,696
332,980 iPayment Holdings, Inc.# 11,973,961
91,715 Wright Express Corp.*,# 1,979,210
-----------------------
65,117,532
Communications Software - 0.7%
596,132 InPhonic, Inc.*,# 8,620,069
Computer Services - 2.7%
335,665 Anteon International Corp. 15,172,058
3,078,095 LivePerson, Inc.*,L. 13,666,742
644,992 TechTeam Global, Inc.*,L. 6,011,325
-----------------------
34,850,125
Computer Software - 0.9%
813,544 Blackbaud, Inc.# 11,715,034
Computers - Peripheral Equipment - 0.5%
799,760 TransAct Technologies,Inc.*,L. 5,822,253
Computers - Voice Recognition - 3.7%
1,204,484 TALX Corp.L. 47,613,252
Consulting Services - 2.9%
478,300 Advisory Board Co.* 23,077,975
88,755 Huron Consulting Group, Inc.*,# 2,356,445
20,250 LECG Corp.*,# 447,323
546,125 Navigant Consulting, Inc.*,# 11,452,241
-----------------------
37,333,984
Shares or Principal Amount Value
- --------------------------------------------------- -----------------------
Consumer Products - Miscellaneous - 2.7%
808,765 Jarden Corp.*,# $ 27,328,170
640,125 Prestige Brands Holdings, Inc.*,# 7,713,506
-----------------------
35,041,676
Data Processing and Management - 1.1%
1,988,583 Infocrossing, Inc.*,L. 13,741,109
Decision Support Software - 0.7%
717,386 Wind River Systems, Inc.*,# 9,397,757
Direct Marketing - 1.4%
1,704,932 ValueVision Media, Inc.(O),(S),L. 15,347,787
211,690 ValueVision Media, Inc. - Class A*,# 2,078,796
-----------------------
17,426,583
Distribution/Wholesale - 1.4%
481,880 Beacon Roofing Supply, Inc.*,# 13,136,049
249,889 MWI Veterinary Supply, Inc.*,# 5,602,511
-----------------------
18,738,560
Diversified Minerals - 0.1%
277,245 Birch Mountain Resources, Ltd. (U.S. Shares)* 1,364,045
Drug Delivery Systems - 1.0%
134,605 Conor Medsystems, Inc.*,# 3,020,536
867,370 I-Flow Corp.*,# 10,469,156
-----------------------
13,489,692
E-Commerce/Products - 1.4%
116,005 Baby Universe, Inc. 957,041
159,360 Submarino S.A. (GDR)* 4,358,560
912,530 Submarino S.A.* 12,481,537
-----------------------
17,797,138
E-Commerce/Services - 0.6%
4,957,152 Workstream, Inc. (U.S. Shares)*,L. 7,534,871
E-Marketing/Information - 1.3%
995,685 ValueClick, Inc.*,# 17,424,488
E-Services/Consulting - 1.0%
804,165 GSI Commerce, Inc.*,# 12,850,557
Educational Software - 0.3%
158,565 Blackboard, Inc.*,# 4,455,677
Electronic Components - Semiconductors -
0.4%
1,011,147 MIPS Technologies, Inc.* 5,672,535
Electronic Measuring Instruments - 0.6%
250,000 Trimble Navigation, Ltd.* 7,217,500
Enterprise Software/Services - 3.8%
183,440 Emageon, Inc.*,# 2,404,898
1,365,599 Omnicell, Inc.*,#,L. 14,475,349
1,900,000 Ultimate Software Group, Inc.*,L. 32,281,000
-----------------------
49,161,247
Finance - Commercial - 0.8%
476,675 CapitalSource, Inc.*,# 10,486,850
Finance - Other Services - 1.2%
624,060 International Securities Exchange, Inc.*,# 15,358,117
Food - Canned - 0.9%
468,575 TreeHouse Foods, Inc.* 12,107,978
Gambling-Non Hotel - 0.9%
492,250 Century Casinos, Inc.*,# 3,701,720
1,035,841 Century Casinos, Inc.*,L. 7,373,948
-----------------------
11,075,668
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds October 31, 2005 45
Janus Venture Fund
Schedule of Investments
As of October 31, 2005
Shares or Principal Amount Value
- --------------------------------------------------- -----------------------
Hotels and Motels - 2.0%
174,740 Four Seasons Hotels, Inc. $ 9,371,306
569,445 Orient-Express Hotel, Ltd. - Class A # 16,058,349
-----------------------
25,429,655
Human Resources - 0.7%
324,950 Barrett Business Services, Inc. 8,676,165
Identification Systems and Devices - 0.7%
359,430 Cogent, Inc.*,# 9,542,867
Industrial Audio and Video Products - 1.2%
794,468 Sonic Solutions*,# 15,206,118
Internet Applications Software - 0.4%
376,490 eResearch Technology, Inc.*,# 5,395,102
Internet Content - Info/News - 0.7%
2,308,435 Harris Interactive, Inc.* 9,626,174
Internet Infrastructure Software - 1.1%
273,845 F5 Networks, Inc.*,# 14,248,155
Investment Companies - 0.2%
230,960 UTEK Corp.(O),(S) 2,795,771
Investment Management and Advisory Services - 0.8%
444,630 Calamos Asset Management, Inc. - Class A# 10,800,063
Life and Health Insurance - 0.4%
397,880 American Equity Investment Life Holding Co.# 4,631,323
Marine Services - 0.4%
1,748,955 Odyssey Marine Exploration, Inc.*,# 5,544,187
Medical - Biomedical and Genetic - 0.5%
139,240 Coley Pharmaceutical Group*,# 2,062,144
290,470 Illumina, Inc.*,# 4,522,618
-----------------------
6,584,762
Medical - Drugs - 0.5%
176,305 Adams Respiratory Therapeutics, Inc.* ,# 6,593,807
Medical - HMO - 1.5%
973,779 Centene Corp.* 19,621,647
Medical - Hospitals - 1.8%
642,502 United Surgical Partners
International, Inc.*,# 23,033,697
Medical - Outpatient and Home Medical Care - 1.7%
637,955 Hythiam, Inc.*,# 3,572,548
602,940 LHC Group LLC*,# 9,767,628
293,609 Radiation Therapy Services, Inc.*,# 8,820,014
-----------------------
22,160,190
Medical - Wholesale Drug Distributors -
0.7%
6,100,000 DrugMax, Inc.(O),(S),L. 8,784,000
Medical Instruments - 2.0%
280,165 AtriCure, Inc.* 3,401,203
272,600 CryoCor, Inc.* 1,673,764
464,590 ev3, Inc.*,# 6,964,204
182,085 Foxhollow Technologies, Inc.*,# 8,250,272
111,945 Symmetry Medical, Inc.*,# 2,478,462
92,970 Ventana Medical Systems, Inc.*,# 3,563,540
-----------------------
26,331,445
Medical Products - 3.4%
939,425 PSS World Medical, Inc.*,# 13,086,190
842,620 SeraCare Life Sciences, Inc.*,L. 17,153,636
764,729 ThermoGenesis Corp.*,# 3,808,350
523,480 Wright Medical Group, Inc.*,# 9,741,963
-----------------------
43,790,139
Shares or Principal Amount Value
- --------------------------------------------------- ----------------------
Metal - Diversified - 0.4%
711,503 Aur Resources, Inc. $ 5,512,025
Motion Pictures and Services - 2.1%
2,880,100 Lions Gate Entertainment Corp.(U.S. Shares)*,# 27,648,960
Networking Products - 0.6%
580,175 Ixia*,# 7,321,809
Non-Hazardous Waste Disposal - 0.5%
1,857,255 Waste Services, Inc.*,# 6,946,134
Office Furnishings - Original - 0.7%
545,040 Knoll, Inc.# 8,682,487
Oil - Field Services - 0.7%
644,820 Key Energy Services, Inc.*,# 8,705,070
Oil Companies - Exploration and Production - 3.8%
179,270 Bill Barrett Corp.*,# 5,706,164
277,860 Carrizo Oil & Gas, Inc.*,# 7,207,688
1,157,115 Gasco Energy, Inc.* 7,035,259
1,368,891 Western Oil Sands, Inc. - Class A* 29,438,516
-----------------------
49,387,627
Optical Recognition Equipment - 1.3%
903,050 Optimal Robotics Corp. - Class A
(U.S. Shares)*,# 16,859,944
Pharmacy Services - 1.2%
446,875 HealthExtras, Inc.*,# 9,406,719
1,591,512 Ronco Fi-Tek, Inc.(O),(S),L. 6,000,000
-----------------------
15,406,719
Printing - Commercial - 0.1%
185,255 Cenveo, Inc.*,# 1,830,319
Real Estate Management/Services - 2.6%
688,375 CB Richard Ellis Group, Inc.* 33,627,119
Research and Development - 0.9%
461,905 PRA International*,# 12,268,197
Retail - Computer Equipment - 0.6%
394,085 Insight Enterprises, Inc.* 8,086,624
Retail - Petroleum Products - 2.2%
885,290 World Fuel Services Corp.# 28,240,751
Schools - 0.5%
532,440 Educate, Inc.*,# 6,272,143
Semiconductor Components/Integrated Circuits - 0.4%
249,227 Hittite Microwave Corp.*,# 5,757,144
Semiconductor Equipment - 0.8%
101,615 FormFactor, Inc.*,# 2,501,761
619,005 Rudolph Technologies, Inc.*,# 7,539,481
-----------------------
10,041,242
Telecommunication Equipment - 0.5%
2,128,965 Axesstel, Inc.*,L. 5,961,102
Therapeutics - 3.2%
718,850 MGI Pharma, Inc.*,# 13,485,625
246,796 Neurocrine Biosciences, Inc.* 13,035,765
156,365 United Therapeutics Corp.* 11,549,119
543,405 ViaCell, Inc.*,# 2,744,195
-----------------------
40,814,704
Toys - 1.5%
1,078,010 Marvel Entertainment, Inc.*,# 18,972,976
Transactional Software - 1.4%
848,125 Open Solutions, Inc.*,# 18,158,356
See Notes to Schedules of Investments and Financial Statements.
46 Janus Growth Funds October 31, 2005
Schedule of Investments
As of October 31, 2005
Shares or Principal Amount Value
- --------------------------------------------------- -----------------------
Transportation - Railroad - 1.2%
397,700 All America Latina Logistica $ 15,363,675
Transportation - Services - 1.4%
683,125 Pacer International, Inc.*,# 17,658,781
Travel Services - 0.2%
1,145,454 OneTravel Holdings, Inc.(S)L. 2,141,999
Web Hosting/Design - 0.5%
176,535 Equinix, Inc.*,# 6,512,376
148,540 Terremark Worldwide, Inc.*,# 414,427
-----------------------
6,926,803
- --------------------------------------------------- -----------------------
Total Common Stock (cost $992,115,387) 1,295,607,670
Preferred Stock - 0%
Computers - Peripheral Equipment - 0%
Candescent Technologies Corp.
665,000 - Series E(B),o,(O)(cost $3,657,500) 0
Warrants - 0.1%
Data Processing and Management - 0%
521,660 Infocrossing, Inc. - expires 5/10/07(B),(O) 0
Medical - Wholesale Drug Distributors -
0.1%
3,050,000 DrugMax, Inc.(O),(S) 1,399,950
Travel Services - 0%
458,181 OneTravel Holdings, Inc.(O),(S) 0
- --------------------------------------------------- -----------------------
Total Warrants (cost $381,250) 1,399,950
Other Securities - 19.8%
State Street Navigator
Securities Lending
255,798,830 Prime Portfolio+ 255,798,830
3,859 U.S. Treasury Bonds+ 3,859
- --------------------------------------------------- -----------------------
Total Other Securities (cost $255,802,689) 255,802,689
- --------------------------------------------------- -----------------------
Total Investments (total cost 1,552,810,309
$1,251,956,826) -- 120.1%
Liabilities, net of Cash, Receivables and
Other Assets -- (20.1)% (259,660,042)
- --------------------------------------------------- -----------------------
Net Assets -- 100% $1,293,150,267
Summary of Investments by Country
% of Investment
Country Value Securities
- --------------- -------------- ---------------
Bermuda $ 16,058,349 1.0%
Brazil 32,203,772 2.1%
Canada 110,760,926 7.1%
United States++ 1,393,787,262 89.8%
-------------- ---------------
Total $1,552,810,309 100.0%
++Includes Other Securities (73.3% excluding Other Securities)
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds October 31, 2005 47
Janus Global Life Sciences Fund (unaudited)
FUND SNAPSHOT
This fund seeks companies around the world that are dedicated to improving the
quality of life for a growing and aging world.
PERFORMANCE OVERVIEW
During the 12 months ended October 31, 2005, Janus Global Life Sciences Fund
posted a 20.46% gain. By comparison, the Fund's primary benchmark, the S&P
500(R) Index returned 8.72%, while its secondary benchmark, the Morgan Stanley
Capital International (MSCI) World Health Care Index(SM), advanced 13.14%.
The Fund's sizeable outperformance to the more comparable MSCI World Health Care
Index(SM) stemmed in part from overweight stakes relative to the Index in the
biotechnology and managed healthcare groups. While the biotechnology sector is
more prone to volatility, which we indeed experienced during the past 12 months,
well-run managed health systems provided steady growth, backed by expanding
revenues and improved cost controls. The Fund's sole investment in the life and
health insurance space proved disappointing and represented the largest
detractor, on a sector basis, from performance. Also weighing negatively on
performance was our slightly underweight stake in healthcare distributors as
compared to the MSCI World Health Care Index(SM). This sector ranked among the
best performers in the life sciences arena.
STRATEGY IN THIS ENVIRONMENT
As spiking oil prices and rising interest rates cast an air of uncertainty over
the broader equity market for much of the period, many investors turned to
proven steady growth names to bolster returns. Health maintenance organization
(HMO) operators generally performed well as a result. Through the latter months
of the period, anticipation built for the January startup of the new Medicare
prescription drug benefit and an expansion of the government health plan's HMO
offerings. Groups that rallied in response included drugmakers, biotech concerns
and drug distributors, as well as HMO operators that cater to Medicare
beneficiaries.
While maintaining a steady presence in the HMO space, where fundamentals
supported the large gains, we found the biotechnology space intriguing. Filled
with names that are dependent on one or two novel treatments, the sector holds
high risks, but can offer significant rewards. Other areas that we believed were
well positioned to profit from current and future conditions included
pharmaceuticals and services and supplies, which include drug distributors.
FUND COMPOSITION
As of October 31, 2005, the Fund was 98.2% invested in equities, including a
17.4% share in foreign stocks. Meanwhile, the Fund's top 10 equity holdings
accounted for 33.6% of its total net assets and cash holdings represented 1.8%
of total net assets.
BIOTECHNOLOGY INNOVATORS JOINED HMOS AND PHARMACY BENEFIT MANAGERS ATOP FUND
From within the high-risk/reward realm of small biotechnology outfits, two firms
contributed significantly to the Fund's performance during the period. Celgene
surged as it offered an encouraging outlook for its Thalomid drug, which is
currently approved for treating leprosy but demonstrated effectiveness in a
clinical trial at halting multiple myeloma, a blood-borne cancer. Meanwhile, its
Revlimid drug for myelodysplastic syndromes (MDS), a bone marrow disease that
can cause cancer, was granted priority review status by the Food and Drug
Administration (FDA).
Elsewhere, United Therapeutics, a stock that was added to the Fund during the
period, posted better-than-expected sales results for its Remodulin treatment
for pulmonary hypertension. The company is also developing an inhaled version of
Remodulin that has the potential to add significantly to sales and profits while
leveraging the company's existing marketing base.
(THOMAS MALLEY PHOTO)
Thomas Malley
portfolio manager
Top 10 Equity Holdings -- (% of Net Assets)
OCTOBER 31, 2005 OCTOBER 31, 2004
---------------- ----------------
Celgene Corp. 4.3% 2.1%
Roche Holding A.G. 3.8% 3.4%
Coventry Health Care, Inc. 3.5% 0.7%
Aetna, Inc. 3.5% 3.3%
United Therapeutics Corp. 3.5% --
UnitedHealth Group, Inc. 3.5% 3.2%
Gilead Sciences, Inc. 3.4% 3.0%
Teva Pharmaceutical Industries, Ltd. (ADR) 2.9% 1.0%
Genzyme Corp. 2.7% 3.0%
Caremark Rx, Inc. 2.5% 2.7%
48 Janus Growth Funds October 31, 2005
(unaudited)
Medicare-related optimism lifted Caremark Rx, a pharmacy benefit manager. As the
government plan gains momentum, the company should enjoy expanded volumes, which
would enhance its already-solid profits and cash flow.
Strong results across the HMO space were reinforced by decent enrollment growth,
better pricing and good margins. Share repurchase plans added to confidence in
company fundamentals, as well as growing anticipation that increased Medicare
spending will translate into a larger Medicare HMO market. Fund holdings that
performed well against this backdrop were Aetna and Pacificare Health Systems,
both of which are actively targeting smaller, non-public firms for acquisition
as a way to improve leverage with expanded networks and specialized technology.
After United Healthcare announced their intent to acquire Pacificare, we sold
the stock at a large profit.
DRUG, BIOTECHNOLOGY AND MEDICAID HMO COMPANIES HINDERED RETURNS
The largest detractor from performance, Elan of Ireland, faltered early in the
year after its multiple sclerosis drug Tysabri was quickly withdrawn from the
market after it allegedly contributed to the death of two patients in an
experimental trial when used in combination with another drug, Avonex. Albeit
not as dramatically, biotechnology firm Pharmion also administered a downside
surprise by reporting unsatisfactory sales growth of its Vidaza treatment for
MDS. We liquidated our holdings in both companies.
Additionally, MGI Pharma dropped as it raised concerns over near-term revenue
levels. Nonetheless, our research leads us to believe that its Aloxi treatment
for chemotherapy-related nausea and vomiting could help the company make a
comeback, along with Dacogen, an MDS treatment that's awaiting FDA approval. As
a result, when the stock declined, we viewed it as a buying opportunity and
added to our position.
Elsewhere, we believe the government's healthplan for needy individuals --
Medicaid -- holds strong growth prospects, but it can prove challenging.
Offering managed care services to aid recipients in 10 states, Centene lagged as
two of its competitors, Amerigroup and Molina, struggled with operational
controls and posted disappointing earnings. More adept at reserving and managing
costs, winning price increases and creating the right benefits design for its
Medicaid HMO offerings, we believe Centene is in a better position than its
peers so we increased our position.
INVESTMENT STRATEGY AND OUTLOOK
Medicare considerations will likely drive the life science sector for the next
12-18 months, as the new spending programs drive volume growth rates higher for
a number of companies. Yet it's important to remember that government programs
don't always result in positive long-term impacts on business, and it remains to
be seen what kind of prices are negotiated on the massive new volumes expected
to pass through the system.
Separately, a slowing of the economy could stimulate further interest in drug
and HMO stocks due to their defensive nature in the coming months. Of course, if
the economy swings too far and the gross domestic product growth rate is
negative, companies may start cutting back on healthcare spending, which will
hurt the sector.
On the regulatory front, the lasting impact of recent turmoil at the FDA, in
which commissioner Lester Crawford resigned and his temporary replacement Andrew
von Eschenbach took a leave of absence from his position as director of the
National Cancer Institute, is an unknown but one we'll watch carefully.
While remaining cognizant of the broader trends surrounding the life sciences
arena, we'll continue to strive for an optimal blend of investments to attempt
to maximize the Fund's returns.
Thank you for your investment in Janus Global Life Sciences Fund.
SIGNIFICANT AREAS OF INVESTMENT -- Fund vs. Index (% of Net Assets)
(BAR CHART)
<Table>
<Caption>
JANUS GLOBAL LIFE SCIENCES FUND S&P 500(R) INDEX
------------------------------- ----------------
Medical - Drugs 26.3% 4.6%
Medical - Biomedical and Genetic 15.5% 1.3%
Medical - HMO 12.2% 1.5%
Therapeutics 11.6% 0.2%
Medical - Hospitals 4.1% 0.3%
</Table>
Janus Growth Funds October 31, 2005 49
Janus Global Life Sciences Fund (unaudited)
Performance
Average Annual Total Return -- for the periods ended October 31, 2005
ONE FIVE SINCE
YEAR YEAR INCEPTION*
--------- --------- ----------
Janus Global Life Sciences Fund 20.46% (2.87)% 10.16%
S&P 500(R) Index 8.72% (1.74)% 1.25%
Morgan Stanley Capital International
World Health Care Index(SM) 13.14% 0.31% 1.10%
Lipper Ranking - based on total returns
for Health/Biotechnology Funds 33/178 73/102 16/48
(PERFORMANCE GRAPH)
<Table>
<Caption>
MORGAN STANLEY CAPITAL INTERNATIONAL
JANUS GLOBAL LIFE SCIENCES FUND S & P 500(R) INDEX WORLD HEALTH CARE INDEX (SM)
------------------------------- ------------------- ------------------------------------
12/31/1998* $ 10,000 $ 10,000 $ 10,000
10/31/1999 $ 11,970 $ 11,203 $ 9,671
10/31/2001 $ 16,974 $ 8,926 $ 9,845
10/31/2003 $ 14,622 $ 9,153 $ 8,885
10/31/2005 $ 19,376 $ 10,889 $ 10,774
</Table>
Data presented represents past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 1-800-525-3713 or visit www.janus.com for performance current to the
most recent month-end.
See Notes to Schedules of Investments for index definitions.
Total return includes reinvestment of dividends, distributions and capital
gains. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
* The Fund's inception date -- December 31, 1998
FUND EXPENSES
The example below shows you the ongoing costs (in dollars) of investing in your
Fund and allows you to compare these costs with those of other mutual funds.
Please refer to page 5 for a detailed explanation of the information presented
in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD
EXPENSE EXAMPLE (5/1/05) (10/31/05) (5/1/05-10/31/05)*
- ---------------------------- ----------------------- -------------------- ---------------------------
Actual $ 1,000.00 $ 1,108.80 $ 5.16
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,020.32 $ 4.94
*Expenses are equal to the annualized expense ratio of 0.97%, multiplied by the
average account value over the period, multiplied by 184/365 (to reflect the
one-half year period).
See "Explanations of Charts, Tables and Financial Statements."
The Fund's portfolio may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
The Fund emphasizes investments in certain industry groups, which may react
similarly to market developments (resulting in greater price volatility), and
may have significant exposure to foreign markets (which include risks such as
currency fluctuation and political uncertainty).
There is no assurance that the investment process will consistently lead to
successful investing.
A 2% redemption fee may be imposed on shares held for 3 months or less.
Performance shown does not reflect this redemption fee and, if reflected,
performance would have been lower.
Lipper Inc. - A Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical with capital gains and
dividends reinvested.
Effective February 25, 2005, Janus Global Life Sciences Fund added the Morgan
Stanley Capital International World Health Care Index(SM) as a secondary
benchmark index. The Morgan Stanley Capital International World Health Care
Index(SM) is a capitalization weighted index that monitors the performance of
healthcare stocks from developed market countries in North America, Europe and
the Asia/Pacific Region.
Returns have sustained significant gains due to market volatility in the
healthcare sector.
50 Janus Growth Funds October 31, 2005
Janus Global Life Sciences Fund
Schedule of Investments
As of October 31, 2005
Shares or Principal Amount Value
- --------------------------------------------------- -----------------------
Common Stock - 98.2%
Chemicals - Specialty - 1.5%
164,375 Syngenta A.G.*,** $ 17,618,664
Dental Supplies and Equipment - 1.5%
410,810 Patterson Companies, Inc.*,# 16,999,318
Diagnostic Equipment - 1.1%
489,623 Cytyc Corp.*,# 12,411,943
Diagnostic Kits - 1.0%
328,696 Dade Behring Holdings, Inc. 11,836,343
Drug Delivery Systems - 0.3%
142,439 Conor Medsystems, Inc.* 3,196,331
Food - Canned - 1.0%
452,631 TreeHouse Foods, Inc.* 11,695,985
Food - Dairy Products - 1.2%
375,445 Dean Foods Co.* 13,572,337
Instruments - Scientific - 2.2%
Fisher Scientific
448,245 International, Inc.*,# 25,325,843
Life and Health Insurance - 1.0%
Universal American Financial
783,210 Corp.*,# 11,591,508
Medical - Biomedical and Genetic - 15.5%
435,320 Alexion Pharmaceuticals, Inc.# 11,923,415
170,685 Amgen, Inc.* 12,931,096
872,270 Celgene Corp.* 48,934,346
1,070,066 Fibrogen, Inc.*,(O),Section 4,868,800
278,290 Genentech, Inc.* 25,213,074
428,895 Genzyme Corp.* 31,009,109
328,000 ICOS Corp.*,# 8,849,440
399,460 Invitrogen Corp.*,# 25,401,661
637,547 Nektar Therapeutics*,# 9,601,458
-----------------------
178,732,399
Medical - Drugs - 26.3%
347,870 Abbott Laboratories 14,975,804
1,183,599 Adolor Corp.*,# 12,546,149
304,090 AstraZeneca Group PLC (ADR)**,# 13,653,641
1,191,810 Cubist Pharmaceuticals, Inc.*,# 24,086,480
294,030 Eli Lilly and Co. 14,639,754
491,080 Endo Pharmaceuticals Holdings, Inc.* 13,219,874
329,330 Forest Laboratories, Inc.* 12,484,900
411,090 Idenix Pharmaceuticals, Inc.* 8,554,783
859,775 K-V Pharmaceutical Co. - Class A*,# 14,727,946
1,415,280 Ligand Pharmaceuticals, Inc. - Class B*,# 12,242,172
225,346 Merck KGaA** 18,629,172
274,420 Novartis A.G.** 14,760,171
288,589 Roche Holding A.G** 43,108,730
282,607 Sanofi-Aventis**,# 22,624,546
619,825 Schering-Plough Corp. 12,607,241
229,515 Sepracor, Inc.*,# 12,910,219
Shire Pharmaceuticals Group PLC
549,210 (ADR)** ,# 19,683,686
391,020 Wyeth 17,423,851
-----------------------
302,879,119
Medical - Generic Drugs - 2.9%
858,870 Teva Pharmaceutical Industries, Ltd. (ADR)# 32,740,124
Medical - HMO - 12.2%
459,380 Aetna, Inc. 40,682,693
931,350 Centene Corp.* 18,766,703
755,252 Coventry Health Care, Inc.* 40,776,055
697,860 UnitedHealth Group, Inc. 40,399,115
-----------------------
140,624,566
Shares or Principal Amount Value
- --------------------------------------------------- ----------------------
Medical - Hospitals - 4.1%
683,560 LifePoint Hospitals, Inc.*,# $ 26,727,196
209,740 Triad Hospitals, Inc.* 8,626,606
United Surgical Partners International,
311,874 Inc.*,# 11,180,683
----------------------
46,534,485
Medical - Nursing Homes - 1.5%
452,655 Manor Care, Inc.# 16,861,399
Medical - Wholesale Drug Distributors - 1.6%
290,300 Cardinal Health, Inc. 18,146,653
Medical Instruments - 3.0%
214,255 Medtronic, Inc. 12,139,688
461,715 St. Jude Medical, Inc.* 22,194,640
----------------------
34,334,328
Medical Products - 3.5%
304,035 Baxter International, Inc. 11,623,258
169,025 Cooper Companies, Inc.# 11,635,681
271,085 Johnson & Johnson 16,975,343
----------------------
40,234,282
Optical Supplies - 1.5%
130,510 Alcon, Inc. (U.S. Shares)** 17,344,779
Pharmacy Services - 3.7%
541,400 Caremark Rx, Inc.* 28,369,360
261,685 Medco Health Solutions, Inc.* 14,785,203
----------------------
43,154,563
Therapeutics - 11.6%
836,760 Gilead Sciences, Inc.* 39,536,910
1,142,720 MGI Pharma, Inc.*,# 21,437,427
872,955 Nabi Biopharmaceuticals*,# 11,217,472
381,005 Neurocrine Biosciences, Inc.* 20,124,684
550,544 United Therapeutics Corp.* 40,663,180
----------------------
132,979,673
- --------------------------------------------------- ----------------------
Total Common Stock (cost $846,412,891) 1,128,814,642
Other Securities - 15.9%
State Street Navigator Securities Lending
183,652,404 Prime Portfolio+ (cost $183,652,404) 183,652,404
Repurchase Agreement - 0.4%
Bear Stearns & Company, Inc., 4.1125%
dated 10/31/05, maturing 11/1/05
to be repurchased at $4,400,503
collateralized by $5,957,248
Bin U.S. Government Agencies
$ 4,400,000 0%, 10/1/35; with a value of $4,488,035
(cost $4,400,000) 4,400,000
- --------------------------------------------------- ----------------------
Total Investments (total cost 1,316,867,046
$1,034,465,295) -- 114.5%
Liabilities, net of Cash, Receivables and
Other Assets -- (14.5)% (167,200,728)
- --------------------------------------------------- ----------------------
Net Assets -- 100% $1,149,666,318
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds October 31, 2005 51
Janus Global Life Sciences Fund
Schedule of Investments
As of October 31, 2005
Summary of Investments by Country
% of Investment
Country Value Securities
- --------------- -------------- ---------------
France $ 22,624,546 1.7%
Germany 18,629,172 1.4%
Israel 32,740,124 2.5%
Switzerland 92,832,344 7.1%
United Kingdom 33,337,327 2.5%
United States++ 1,116,703,533 84.8%
-------------- ---------------
Total $1,316,867,046 100.0%
++Includes Short-Term and Other Securities (70.5% excluding Short-Term and Other
Securities)
Forward Currency Contracts, Open
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- ------------------------------ ------------- --------------- ------------
British Pound 12/2/05 2,800,000 $ 4,953,666 $ 158,014
British Pound 2/23/06 6,700,000 11,850,973 242,527
Euro 1/27/06 16,800,000 20,230,892 377,668
Swiss Franc 1/27/06 26,500,000 20,733,026 297,023
Swiss Franc 2/23/06 22,200,000 17,413,259 562,449
------------- --------------- ------------
Total $ 75,181,816 $ 1,637,681
See Notes to Schedules of Investments and Financial Statements.
52 Janus Growth Funds October 31, 2005
Janus Global Technology Fund (unaudited)
FUND SNAPSHOT
This fund pursues forward-thinking companies around the globe that are advancing
the frontiers of technology in profitable ways.
PERFORMANCE OVERVIEW
During the 12 months ended October 31, 2005, Janus Global Technology Fund
advanced 12.16%. By comparison, the Fund's primary benchmark, the S&P 500 (R)
Index, returned 8.72%, while its secondary benchmark, the Morgan Stanley Capital
International (MSCI) World Information Technology Index SM , gained 5.73%.
Selective, end-demand driven stock-picking contributed to the Fund's significant
outperformance, especially within the communications equipment, semiconductors
and electronic manufacturing services (EMS) sectors. Diminishing gains were
underperforming investments in the Internet software and services sector and in
the computer hardware group.
STRATEGY IN THIS ENVIRONMENT
Investors grappled with fears of rising inflation, higher interest rates and
lackluster growth throughout the period. Additionally, those invested in the
information technology (IT) sector contended with shifting perceptions on
sub-sector outlook as well as volatile global currency fluctuations. However,
the major end-user segments saw relatively healthy fundamental demand growth
across most sectors of IT.
While demand generally proved steady, few compelling, broad-based IT trends
emerged during the period. In such an environment, our style of bottom-up
analysis of individual stocks took on greater importance as we needed to
maintain higher levels of conviction in our top holdings. We had to dig deeper
to ferret out potential gaps between market perception and actual fundamentals.
Also, as part of our disciplined approach, we trimmed positions whenever we felt
valuations fairly reflected near-term or medium-term fundamentals or market
expectations. This strategy allowed for gains, especially as the market
aggressively bid up companies that beat Wall Street's expectations and severely
punished those that merely met expectations.
FUND COMPOSITION
As of October 31, 2005, the Fund was 97.6% invested in equities, including a
44.6% share in foreign stocks. Meanwhile, the Fund's 10 largest holdings
accounted for 30.8% of its total net assets and cash holdings represented 2.4%
of total net assets.
GLASS PRODUCER AND ELECTRONIC MANUFACTURERS RANKED AMONG FUND'S LEADERS
This past year proved to be a challenging period for many LCD display vendors
and component suppliers, as severe price competition, initiated by plasma TV
vendors, significantly squeezed profitability -- resulting in profitless
prosperity for most in the supply chain. The Fund, however, profited from its
stake in glassmaker Corning, one of two companies worldwide capable of producing
large, high-quality sheets of motherglass required to manufacture large-sized
LCD televisions. Its advanced development and production capabilities give
Corning considerable pricing power, thus enabling it to capture the benefits of
rising unit volumes without forfeiting profitability.
Another long-term holding, contract manufacturer Hon Hai Precision, similarly
rewarded our conviction in an otherwise challenged sector. While the rest of the
EMS industry struggles to achieve top-line and earnings growth, Hon Hai
consistently posts double-digit growth in revenues and earnings. Through a
combination of extreme cost control, strategic customer
(MIKE LU PHOTO)
Mike Lu
portfolio manager
Top 10 Equity Holdings -- (% of Net Assets)
OCTOBER 31, 2005 OCTOBER 31, 2004
---------------- ----------------
Yahoo!, Inc. 4.3% 3.6%
Nokia Oyj (ADR) 4.2% 3.8%
Samsung Electronics Company, Ltd. 3.1% 2.4%
Hon Hai Precision Industry
Company, Ltd. 3.0% 2.8%
Marvell Technology Group, Ltd. 2.9% 2.4%
Cisco Systems, Inc. 2.8% 2.1%
Texas Instruments, Inc. 2.8% 3.5%
EMC Corp. 2.6% 1.5%
Corning, Inc. 2.6% 2.0%
Logitech International S.A 2.5% 1.6%
Janus Growth Funds October 31, 2005 53
Janus Global Technology Fund (unaudited)
relationships, superior mechanical design and manufacturing capabilities and
emerging design expertise, Hon Hai continues to gain market share at key PC,
consumer electronics and enterprise IT accounts.
Also boosting returns was semiconductor chip manufacturer Texas Instruments.
While known primarily for its advanced digital and analog chipsets for high
feature-content mobile handsets, Texas Instruments was able to extend its
high-end design expertise and volume advantage into the low-end by creating
cost-effective integrated chipset solutions -- all the while maintaining robust
margins. Given that much of the recent strength in the wireless handset space
came from new subscriber growth in emerging markets -- in particular China,
India and Latin America -- the company's strong offerings in low-end handset
chipsets enabled it to garner disproportionate market share.
TELECOMMUNICATION EQUIPMENT CONCERN AND E-COMMERCE LEADER DETRACTED
Our investment in UTStarcom, a developer of wireless communications network
equipment, worked against us. Having built a significant business in China,
where its PAS service allowed for low-cost, limited range wireless calls,
UTStarcom struggled as competitive GSM service pricing declined and China
started to plan for 3G services. Although the PAS subscriber base is still
growing, and the company is working on advanced IP data infrastructure products,
we are much less confident about its fundamental growth potential and
competitive positioning -- thus we exited our position during the period.
Our stake in online marketplace builder eBay diminished returns. As has happened
many times in the Internet space, investor sentiment swung from extreme
pessimism to extreme optimism and back again, sending stock prices on a volatile
ride. We were fortunate to have abided by our valuation discipline and trimmed
our holdings significantly prior to the sharp decline in January, which resulted
from a reduced short-term earnings outlook driven largely by unanticipated need
to increase spending in research and development. Given eBay's track record of
software and business process innovations, we believe that such expenditures
will enhance its longer-term competitive positioning in the still-developing
e-commerce space. Additionally, we believe the company's business model
continues to be viable and that its present-day investments will pave the way
for more robust future growth.
INVESTMENT STRATEGY AND OUTLOOK
Looking forward, we are encouraged by the reasonable valuations and expectations
we're finding in many sub-sectors of technology, although we remain cautious
about macroeconomic influences on consumer IT spending. While occasional bouts
of volatility suggest that some degree of speculative fervor has returned to the
market, we haven't seen it appear broadly across the IT space. In fact, there
are still a number of areas where investor sentiments appear to be overly
conservative given the corresponding growth potential. As usual, our efforts are
focused on identifying segments and firms that are benefiting from strong
end-user demand -- particularly in areas that may not be well-recognized. The
increasing market volatility places a greater premium on individual, bottom-up
stock selection -- exactly our approach.
Thank you for your investment in Janus Global Technology Fund.
SIGNIFICANT AREAS OF INVESTMENT -- Fund vs. Index (% of Net Assets)
(BAR CHART)
JANUS GLOBAL TECHNOLOGY FUND S&P 500(R) INDEX
---------------------------- ----------------------------
Electronic Components - Semiconductors 13.4% 2.4%
Wireless Equipment 8.0% 1.1%
Semiconductor Components/Integrated Circuits 7.0% 0.3%
Applications Software 5.6% 2.4%
Web Portals/Internet Service Providers 4.9% 0.4%
54 Janus Growth Funds October 31, 2005
(unaudited)
Performance
Average Annual Total Return -for the periods ended October 31, 2005
ONE FIVE SINCE
YEAR YEAR INCEPTION*
---------- ---------- ----------
Janus Global Technology Fund 12.16% (16.65)% 1.57%
S&P 500(R) Index 8.72% (1.74)% 1.25%
Morgan Stanley % %
Capital International
World Information
Technology Index (SM) 5.73% (13.43) (4.13)
Lipper Ranking - based
on total returns for
Science and Technology
Funds 71/287 117/212 17/78
(PERFORMANCE GRAPH)
MORGAN STANLEY CAPITAL INTERNATIONAL
JANUS GLOBAL TECHNOLOGY FUND S & P 500(R) INDEX WORLD INFORMATION TECHNOLOGY INDEX(SM)
---------------------------- ------------------ --------------------------------------
12/31/1998* $ 10,000 $ 10,000 $ 10,000
10/31/1999 $ 20,940 $ 11,203 $ 14,235
10/31/2001 $ 11,069 $ 8,926 $ 7,203
10/31/2003 $ 10,670 $ 9,153 $ 7,248
10/31/2005 $ 11,120 $ 10,889 $ 7,497
Data presented represents past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 1-800-525-3713 or visit www.janus.com for performance current to the
most recent month-end.
See Notes to Schedules of Investments for index definitions.
Total return includes reinvestment of dividends, distributions and capital
gains. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
*The Fund's inception date -- December 31, 1998
FUND EXPENSES
The example below shows you the ongoing costs (in dollars) of investing in your
Fund and allows you to compare these costs with those of other mutual funds.
Please refer to page 5 for a detailed explanation of the information presented
in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD
EXPENSE EXAMPLE (5/1/05) (10/31/05) (5/1/05-10/31/05)*
- --------------------------- --------------------------- --------------------------- ---------------------------
Actual $ 1,000.00 $ 1,131.00 $ 5.21
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,020.32 $ 4.94
*Expenses are equal to the annualized expense ratio of 0.97%, multiplied by the
average account value over the period, multiplied by 184/365 (to reflect the
one-half year period).
See "Explanations of Charts, Tables and Financial Statements."
The Fund's portfolio may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
There is no assurance that the investment process will consistently lead to
successful investing.
A 2% redemption fee may be imposed on shares held for 3 months or less.
Performance shown does not reflect this redemption fee and, if reflected,
performance would have been lower.
Lipper Inc. - A Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical with capital gains and
dividends reinvested.
This Fund may at times have significant exposure to certain industry groups,
which may react similarly to market developments (resulting in greater price
volatility). The Fund also may have significant exposure to foreign markets
(which include risks such as currency fluctuation and political uncertainty).
This Fund has been significantly impacted, either positively or negatively, by
investing in initial public offerings (IPOs).
This Fund may have significant exposure to emerging markets which may lead to
greater price volatility.
Returns have sustained significant gains due to market volatility in the
information technology sector.
Janus Growth Funds October 31, 2005 55
Janus Global Technology Fund
Schedule of Investments
As of October 31, 2005
Shares or Principal Amount Value
- ----------------------------------------------- --------------
Common Stock - 96.7%
Applications Software - 5.6%
696,075 Citrix Systems, Inc.* $ 19,190,788
204,931 Infosys Technologies, Ltd. 11,476,045
39,765 Mercury Interactive Corp.* 1,383,424
843,295 Microsoft Corp. 21,672,682
159,420 Quest Software, Inc.*,# 2,217,532
--------------
55,940,471
Audio and Video Products - 1.0%
214,800 Sony Corp.** 6,937,960
148,448 Thomson**,# 2,798,489
--------------
9,736,449
Chemicals - Diversified - 0.4%
79,600 Shin-Etsu Chemical Company, Ltd.** 3,788,197
Commercial Services - Finance - 1.3%
323,780 Paychex, Inc. 12,549,713
Computer Aided Design - 1.5%
292,493 Dassault Systemes S.A.**,# 15,101,207
Computer Services - 2.6%
275,867 Atos Origin S.A.*,**,# 18,944,139
2,877,706 LogicaCMG PLC** 7,232,849
--------------
26,176,988
Computers - 4.8%
2,596,880 Acer, Inc.** 5,255,448
717,745 Dell, Inc.* 22,881,710
207,255 Hewlett-Packard Co. 5,811,430
215,530 Research In Motion, Ltd. (U.S. Shares)* 13,252,940
--------------
47,201,528
Computers - Integrated Systems - 0.2%
123,200 3D Systems Corp.*,# 2,224,992
Computers - Memory Devices - 2.6%
1,883,905 EMC Corp.* 26,299,314
Computers - Peripheral Equipment - 2.5%
663,998 Logitech International S.A.* 25,157,096
Data Processing and Management - 0.5%
131,085 NAVTEQ Corp.* 5,128,045
Diversified Operations - 0.7%
775,000 Hutchison Whampoa, Ltd. 7,338,012
E-Commerce/Products - 2.0%
359,513 Amazon.com, Inc.* 14,337,378
220,700 Submarino S.A.* 3,018,723
77,965 Submarino S.A. (GDR)* 2,132,374
--------------
19,488,475
E-Commerce/Services - 1.3%
315,505 eBay, Inc.* 12,493,998
Electric Products - Miscellaneous - 1.1%
2,389,000 Toshiba Corp.** 10,999,948
Electronic Components - Miscellaneous - 4.2%
6,986,026 Hon Hai Precision Industry Company, Ltd.** 30,191,609
438,972 Koninklijke (Royal) Philips Electronics N.V.** 11,468,690
--------------
41,660,299
Electronic Components - Semiconductors - 13.2%
914,555 Advanced Micro Devices, Inc.*,# 21,235,967
9,656,733 ARM Holdings PLC** 18,588,061
569,482 ATI Technologies, Inc. (U.S. Shares)*,# 8,229,015
Shares or Principal Amount Value
- ----------------------------------------------- --------------
Electronic Components - Semiconductors -
(continued)
363,750 Broadcom Corp. - Class A* $ 15,444,825
141,470 Fairchild Semiconductor International, Inc.* 2,178,638
218,141 Infineon Technologies A.G.*,** 2,041,779
81,680 International Rectifier Corp.*,# 2,416,911
228,575 MEMC Electronic Materials, Inc.* 4,100,636
57,640 Samsung Electronics Company, Ltd.** 30,476,323
944,800 Texas Instruments, Inc. 26,974,041
--------------
131,686,196
Electronic Forms - 1.0%
295,460 Adobe Systems, Inc. 9,528,585
Electronic Measuring Instruments - 1.1%
152,800 Advantest Corp.** 10,973,353
Enterprise Software/Services - 4.4%
1,549,025 Oracle Corp.* 19,641,637
140,044 SAP A.G.** 23,972,010
--------------
43,613,647
Entertainment Software - 3.4%
607,200 Activision, Inc.* 9,575,544
421,900 Electronic Arts, Inc.* 23,997,672
--------------
33,573,216
Industrial Automation and Robotics - 0.2%
78,365 Cognex Corp. 2,239,672
Internet Connectivity Services - 1.0%
275,190 NDS Group PLC*,** 10,071,954
Internet Infrastructure Software - 0.8%
149,905 F5 Networks, Inc.*,# 7,799,557
Internet Security - 1.9%
Check Point Software Technologies, Ltd.
562,875 (U.S. Shares)* 12,585,885
195,210 McAfee, Inc.* 5,862,156
--------------
18,448,041
Miscellaneous Manufacturing - 0.3%
143,409 Applied Films Corp.*,# 2,785,003
Networking Products - 4.2%
1,597,934 Cisco Systems, Inc.* 27,883,949
2,065,000 D-Link Corp.** 2,234,162
505,845 Juniper Networks, Inc.* 11,801,364
--------------
41,919,475
Retail - Consumer Electronics - 0.4%
1,004,611 Carphone Warehouse PLC** 3,485,207
Semiconductor Components/Integrated
Circuits - 7.0%
262,362 CSR PLC*,** 3,341,230
558,070 Cypress Semiconductor Corp.*,# 7,589,752
625,000 Marvell Technology Group, Ltd.* 29,006,249
450,570 Maxim Integrated Products, Inc. 15,625,768
5,814,000 Powerchip Semiconductor Corp.** 2,755,245
Taiwan Semiconductor Manufacturing
7,514,646 Company, Ltd.** 11,646,621
--------------
69,964,865
Semiconductor Equipment - 3.7%
315,090 Applied Materials, Inc. 5,161,174
ASM Lithography Holding N.V.
379,645 (U.S. Shares)*,**,# 6,446,372
382,830 KLA-Tencor Corp.# 17,721,201
212,720 Lam Research Corp.* 7,177,173
See Notes to Schedules of Investments and Financial Statements.
56 Janus Growth Funds October 31, 2005
Schedule of Investments
As of October 31, 2005
Shares or Principal Amount Value
- ----------------------------------------------- --------------
36,505,920
Telecommunication Equipment - 3.9%
423,345 Adtran, Inc. $ 12,806,186
683,455 Alcatel S.A. (ADR)**,# 8,023,762
434,935 Harris Corp.# 17,875,828
--------------
38,705,776
Telecommunication Equipment - Fiber
Optics - 2.6%
1,271,105 Corning, Inc.* 25,536,499
Telecommunication Services - 1.1%
407,830 Amdocs, Ltd. (U.S. Shares)*,** 10,795,260
Television - 1.4%
1,562,734 British Sky Broadcasting Group PLC** 14,106,843
Web Hosting/Design - 0.5%
109,435 Macromedia, Inc.* 4,806,385
Web Portals/Internet Service Providers -
4.9%
3,092 Yahoo Japan Corp.** 3,267,039
3,092 Yahoo Japan Corp.*,** 3,320,162
1,142,468 Yahoo!, Inc.* 42,237,041
--------------
48,824,242
Wireless Equipment - 7.4%
886,075 Motorola, Inc. 19,635,422
2,485,285 Nokia Oyj (ADR)** 41,802,495
146,040 QUALCOMM, Inc. 5,806,550
228,655 Telefonaktiebolaget LM Ericsson (ADR)# 7,502,171
--------------
74,746,638
- ----------------------------------------------- --------------
Total Common Stock (cost $677,774,258) 961,401,066
Corporate Bonds - 0%
Computers - Peripheral Equipment - 0%
Candescent Technologies Corp.,
8.00%, convertible senior subordinated
debentures, due 5/1/03 (144A)++,(Y),(O),(S).
$ 31,700,000 (cost $4,368,283) 0
Preferred Stock - 0.8%
Electronic Components - Semiconductors -
0.2%
6,000 Samsung Electronics Company, Ltd.** 2,442,529
Wireless Equipment - 0.6%
Crown Castle International Corp.,
102,750 convertible, 6.25% 5,265,937
- ----------------------------------------------- --------------
Total Preferred Stock (cost $7,340,956) 7,708,466
Rights - 0.1%
Computer Services - 0.1%
1,438,853 LogicaCMG PLC** (cost $0) 865,904
Other Securities - 6.5%
State Street Navigator Securities Lending
64,340,213 Prime Portfolio+ (cost $64,340,213) 64,340,213
Repurchase Agreement - 1.3%
Bear Stearns & Company, Inc., 4.1125%
dated 10/31/05, maturing 11/1/05
to be repurchased at $13,401,531
collateralized by $18,142,528
in U.S. Government Agencies
0%, 10/1/35; with a value of $13,668,105
$ 13,400,000 (cost $13,400,000) 13,400,000
- ----------------------------------------------- --------------
Total Investments (total cost $767,223,710) 1,047,715,649
- 105.4%
Liabilities, net of Cash, Receivables and
Other Assets - (5.4)% (54,053,020)
- ----------------------------------------------- --------------
Net Assets - 100% $ 993,662,629
Summary of Investments by Country
% of Investment
Country Value Securities
- --------------- -------------- --------------
Bermuda $ 29,006,249 2.8%
Brazil 5,151,097 0.5%
Canada 21,481,955 2.1%
Finland 41,802,495 4.0%
France 44,867,597 4.3%
Germany 26,013,789 2.5%
Hong Kong 7,338,012 0.7%
India 11,476,045 1.1%
Israel 12,585,885 1.2%
Japan 39,286,659 3.7%
Netherlands 17,915,062 1.7%
South Korea 32,918,852 3.1%
Sweden 7,502,171 0.7%
Switzerland 25,157,096 2.4%
Taiwan 52,083,085 5.0%
United Kingdom 68,487,308 6.5%
United States++ 604,642,292 57.7%
-------------- --------------
Total $1,047,715,649 100.0%
++Includes Short-Term Securities and Other Securities (50.3% excluding
Short-Term Securities and Other Securities)
Forward Currency Contracts, Open
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- ---------------------- --------------- --------------- ---------------
British Pound 12/2/05 935,000 $ 1,654,170 $ 52,539
British Pound 2/23/06 10,050,000 17,776,459 363,791
Euro 12/2/05 9,900,000 11,883,710 (6,680)
Euro 1/27/06 28,500,000 34,320,264 640,686
Japanese Yen 1/27/06 740,000,000 6,425,325 281,088
Japanese Yen 2/23/06 1,105,000,000 9,626,658 681,177
South Korean Won
11/30/05 10,825,000,000 10,381,701 213,121
South Korean Won
5/11/06 5,300,000,000 5,109,085 (12,931)
Taiwan Dollar 11/30/05 410,000,000 12,290,536 707,875
Taiwan Dollar 5/11/06 440,000,000 13,345,668 (33,513)
--------------- ---------------
Total $ 122,813,576 $ 2,887,153
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds October 31, 2005 57
Statements of Assets and Liabilities
For the fiscal year ended October 31,
2005 Janus Janus Janus Janus
(all numbers in thousands except net Janus Enterprise Mercury Olympus Orion
asset value per share) Fund Fund Fund Fund Fund
- --------------------------------------- --------------- ---------------- -------------- --------------------- ----------------
Assets:
Investments at cost(1) $ 9,474,640 $ 1,475,921 $ 3,645,289 $ 1,934,251 $ 688,390
Investments at value(1) $ 11,502,804 $ 2,019,460 $ 4,735,728 $ 2,395,065 $ 820,611
Cash -- 1,542 1,181 1,079 1,085
Cash denominated in foreign currency
(2) 8 -- 11 30 255
Receivables:
Investments sold 542,311 18,960 23,721 113,505 3,995
Fund shares sold 1,733 1,667 1,839 766 2,885
Dividends 6,836 687 2,387 377 32
Interest 619 37 42 36 19
Other assets 305 30 75 53 15
Forward currency contracts 6,261 -- 3,250 1,341 --
--------------- ---------------- -------------- --------------------- ----------------
Total Assets 12,060,877 2,042,383 4,768,234 2,512,252 828,897
Liabilities:
Payables:
Due to custodian 3,724 -- -- -- --
Securities loaned (Note 1) 671,969 325,513 264,912 195,028 118,146
Investments purchased 220,860 9,673 22,071 56,679 17,025
Fund shares repurchased 12,473 2,106 3,851 1,539 1,430
Advisory fees 6,058 918 2,404 1,205 365
Transfer agent fees and expenses 2,138 436 1,059 571 166
Non-interested Trustees' fees and
expenses 33 7 10 5 6
Foreign tax liability -- -- -- 19 195
Accrued expenses 665 188 424 284 163
Forward currency contracts 36 -- 72 34 --
--------------- ---------------- -------------- --------------------- ----------------
Total Liabilities 917,956 338,841 294,803 255,364 137,496
--------------- ---------------- -------------- --------------------- ----------------
Net Assets $ 11,142,921 $ 1,703,542 $ 4,473,431 $ 2,256,888 $ 691,401
Net Assets Consist of:
Capital (par value and paid in
surplus)* $ 15,821,953 $ 5,524,920 $ 9,543,780 $ 3,483,159 $ 1,104,988
Undistributed net investment
income/(loss)* 8,030 -- 12,423 705 2,980
Undistributed net realized
gain/(loss) from investments
and foreign currency transactions* (6,721,485 (4,364,917 (6,176,390 (1,689,147) (548,508)
Unrealized appreciation/(depreciation)
of investments and foreign currency
translations 2,034,423 543,539 1,093,618 462,171(3) 131,941(3)
--------------- ---------------- -------------- --------------------- ----------------
Total Net Assets $ 11,142,921 $ 1,703,542 $ 4,473,431 $ 2,256,888 $ 691,401
Shares Outstanding, $0.01 Par Value
(unlimited shares
authorized) 455,877 43,147 202,882 72,891 88,687
Net Asset Value Per Share $ 24.44 $ 39.48 $ 22.05 $ 30.96 $ 7.80
*See Note 4 in Notes to Financial Statements
(1) Investments at cost and value include $655,388,835, $318,210,960,
$256,286,119, $190,305,807, $115,018,097, $232,876,291, $248,886,903,
$178,742,923 and $62,525,079 of securities loaned for Janus Fund, Janus
Enterprise Fund, Janus Mercury Fund, Janus Olympus Fund, Janus Orion Fund, Janus
Twenty Fund, Janus Venture Fund, Janus Global Life Sciences Fund and Janus
Global Technology Fund, respectively (Note 1).
(2) Includes cost of $7,779, $11,479, $9,381, $71,032, $137,421 and $1,311,529
for Janus Fund, Janus Mercury Fund, Janus Triton Fund, Janus Venture Fund, Janus
Global Life Sciences Fund and Janus Global Technology Fund, respectively.
(3) Net of foreign taxes on investments of $18,496, $194,649, $6,002, $105,812
and $11,382 for Janus Olympus Fund, Janus Orion Fund, Janus Triton Fund, Janus
Venture Fund, and Janus Global Technology Fund, respectively.
See Notes to Financial Statements.
58 Janus Growth Funds October 31, 2005
For the fiscal year ended October 31, Janus Janus
2005 Janus Janus Janus Global Life Global
(all numbers in thousands except net Triton Twenty Venture Sciences Technology
asset value per share) Fund Fund Fund Fund Fund
- -------------------------------------- ------------ ----------- ------------- -------------- ---------------
Assets:
Investments at cost(1) $ 35,437 $ 6,720,018 $1,251,957 $ 1,034,465 $ 767,224
Investments at value (1) $ 37,604 $ 9,789,303 $1,552,810 $ 1,316,867 $ 1,047,716
Cash 161 1,767 10,048 1,516 1,505
Cash denominated in foreign currency
(2) 9 -- 71 -- 1,313
Receivables:
Investments sold -- 102,018 895 20,720 13,770
Fund shares sold 156 4,006 113 232 183
Dividends -- 7,038 14 135 405
Interest -- 462 -- 17 14
Other assets 1 250 129 21 24
Forward currency contracts -- -- -- 1,638 2,941
------------ ----------- ------------- -------------- ---------------
Total Assets 37,931 9,904,844 1,564,080 1,341,146 1,067,871
Liabilities:
Payables:
Due to custodian -- -- -- -- --
Securities loaned (Note 1) -- 237,785 255,803 183,652 64,340
Investments purchased 109 39,684 13,313 5,959 7,650
Fund shares repurchased 28 7,649 674 752 1,129
Advisory fees 14 5,101 702 626 545
Transfer agent fees and expenses 16 1,705 238 288 292
Non-interested Trustees' fees and
expenses 1 26 1 1 2
Foreign tax liability 6 -- 106 -- 11
Accrued expenses 62 391 93 202 185
Forward currency contracts -- -- -- -- 54
------------ ----------- ------------- -------------- ---------------
Total Liabilities 236 292,341 270,930 191,480 74,208
------------ ----------- ------------- -------------- ---------------
Net Assets $ 37,695 $ 9,612,503 $1,293,150 $ 1,149,666 $ 993,663
Net Assets Consist of:
Capital (par value and paid in
surplus)* $ 35,617 $ 9,814,463 $ 990,249 $ 1,791,386 $ 3,490,337
Undistributed net investment
income/(loss)* -- 20,284 75 -- 725
Undistributed net realized gain/(loss)
from investments and foreign currency
transactions* (82) (3,291,550 2,003 (925,757) (2,780,770)
Unrealized appreciation/(depreciation)
of investments and foreign currency
translations 2,160(3) 3,069,306 300,823(3) 284,037 283,371(3)
------------ ----------- ------------- -------------- ---------------
Total Net Assets $ 37,695 $ 9,612,503 $1,293,150 $ 1,149,666 $ 993,663
Shares Outstanding, $0.01 Par Value
(unlimited shares authorized) 3,471 201,813 22,760 59,368 91,292
Net Asset Value Per Share $ 10.86 $ 47.63 $ 56.82 $ 19.37 $ 10.88
Janus Growth Funds October 31, 2005 59
Statements of Operations
Janus Janus Janus Janus
For the fiscal year ended October 31, 2005 Janus Enterprise Mercury Olympus Orion
(all numbers in thousands) Fund Fund Fund Fund Fund
- -------------------------------------------------------- ----------- ----------- ----------- ----------- -----------
Investment Income:
Interest $ 5,343 $ 628 $ 2,031 $ 1,381 $ 397
Securities lending income 958 180 503 363 171
Dividends 105,364 10,631 58,770 21,361 8,932
Dividends from affiliates 6,576 -- 194 -- --
Foreign tax withheld (2,700) (70) (1,563) (396) (467)
----------- ----------- ----------- ----------- -----------
Total Income 115,541 11,369 59,935 22,709 9,033
Expenses:
Advisory fees 78,753 11,063 28,459 14,610 3,779
Transfer agent fees and expenses 26,758 4,716 11,227 6,255 1,689
Registration fees 12 19 65 12 33
Postage and mailing expenses 743 311 647 469 140
Custodian fees 132 28 98 54 58
Professional fees 58 33 38 31 22
Non-interested Trustees' fees and expenses 250 43 94 62 26
Printing expenses 964 329 671 575 223
System fees 21 20 21 21 19
Other expenses 459 85 173 95 39
Non-recurring costs (Note 2) 4 -- 1 1 --
Costs assumed by Janus Capital Management LLC (Note 2) (4) -- (1) (1) --
----------- ----------- ----------- ----------- -----------
Total Expenses 108,150 16,647 41,493 22,184 6,028
Expense and Fee Offset (672) (175) (359) (237) (86)
----------- ----------- ----------- ----------- -----------
Net Expenses 107,478 16,472 41,134 21,947 5,942
Less: Excess Expense Reimbursement N/A N/A N/A N/A N/A
----------- ----------- ----------- ----------- -----------
Net Expenses after Expense Reimbursement 107,478 16,472 41,134 21,947 5,942
Net Investment Income/(Loss) 8,063 (5,103) 18,801 762 3,091
Net Realized and Unrealized Gain/(Loss) on Investments:
Net realized gain/(loss) from securities transactions 2,411,657 178,555 415,416 297,819 67,401
Net realized gain/(loss) from foreign currency
transactions 4,561 (25) (3,527) 4,233 (111)
Change in net unrealized appreciation or depreciation of
investments and foreign currency translations (1,439,602) 97,620 146,894 72,243(2) 56,341(2)
Payment from affiliate (Note 2) 1 -- -- 1 --
----------- ----------- ----------- ----------- -----------
Net Gain/(Loss) on Investments 976,617 276,150 558,783 374,296 123,631
----------- ----------- ----------- ----------- -----------
Net Increase/(Decrease) in Net Assets
Resulting from Operations $ 984,680 $ 271,047 $ 577,584 $ 375,058 $ 126,722
(1) Period from February 25, 2005 (inception date) through October 31, 2005.
(2) Net of foreign taxes on investments of $18,496, $194,649, $6,002, $105,812
and $11,382 for Janus Olympus Fund, Janus Orion Fund, Janus Triton Fund, Janus
Venture Fund and Janus Global Technology Fund, respectively.
See Notes to Financial Statements.
60 Janus Growth Funds October 31, 2005
Janus Janus
Janus Janus Janus Global Life Global
For the fiscal year ended October 31, 2005 Triton Twenty Venture Sciences Technology
(all numbers in thousands) Fund (1) Fund Fund Fund Fund
- ----------------------------------------------------- ----------- ----------- ----------- ----------- -----------
Investment Income:
Interest $ 92 $ 7,355 $ 52 $ 438 $ 835
Securities lending income -- 221 702 209 322
Dividends 87 91,833 2,157 5,189 11,889
Dividends from affiliates -- 3,049 250 -- --
Foreign tax withheld (1) (1,344) (25) (326) (892)
----------- ----------- ----------- ----------- -----------
Total Income 178 101,114 3,136 5,510 12,154
Expenses:
Advisory fees 113 60,431 8,754 7,563 7,103
Transfer agent fees and expenses 71 18,849 2,639 3,174 3,446
Registration fees 43 14 15 33 34
Postage and mailing expenses 10 715 144 193 308
Custodian fees 9 125 41 39 109
Professional fees 21 39 34 33 49
Non-interested Trustees' fees and expenses 4 204 42 31 31
Printing expenses 36 778 194 260 408
System fees 15 20 21 21 20
Other expenses 5 296 65 70 62
Non-recurring costs (Note 2) N/A 2 -- -- --
Costs assumed by Janus Capital Management LLC
(Note 2) N/A (2) -- -- --
----------- ----------- ----------- ----------- -----------
Total Expenses 327 81,471 11,949 11,417 11,570
Expense and Fee Offset (4) (420) (77) (125) (174)
----------- ----------- ----------- ----------- -----------
Net Expenses 323 81,051 11,872 11,292 11,396
Less: Excess Expense Reimbursement (102) N/A N/A N/A N/A
----------- ----------- ----------- ----------- -----------
Net Expenses after Expense Reimbursement 221 81,051 11,872 11,292 11,396
Net Investment Income/(Loss) (43) 20,063 (8,736) (5,782) 758
Net Realized and Unrealized Gain/(Loss) on
Investments:
Net realized gain/(loss) from securities
transactions (47) 1,468,818 118,503 170,328 100,964
Net realized gain/(loss) from foreign currency
transactions 7 221 (741) 4,678 (1,293)
Change in net unrealized appreciation or
depreciation of investments and foreign
currency translations 2,161(2) 254,049 25,372(2) 51,675 33,644(2)
Payment from affiliate (Note 2) -- 7 -- -- --
----------- ----------- ----------- ----------- -----------
Net Gain/(Loss) on Investments 2,121 1,723,095 143,134 226,681 133,315
----------- ----------- ----------- ----------- -----------
Net Increase/(Decrease) in Net Assets
Resulting from Operations $ 2,078 $ 1,743,158 $ 134,398 $ 220,899 $ 134,073
Janus Growth Funds October 31, 2005 61
Statements of Changes in Net Assets
For the fiscal year ended October 31 Janus Janus Janus
(all numbers in thousands) Fund Enterprise Fund Mercury Fund
--------------------------- --------------------------- ---------------------------
2005 2004 2005 2004 2005 2004
------------ ------------ ------------ ------------ ------------ ------------
Operations:
Net investment income/(loss) $ 8,063 $ (26,012) $ (5,103) $ (8,346) $ 18,801 $ (12,867)
Net realized gain/(loss) from
investment transactions 2,416,218 1,188,041 178,530 161,121 411,889 525,432
Change in unrealized net appreciation/
(depreciation) of investments
and foreign currency translations (1,439,602) (979,530) 97,620 58,551 146,894 (133,875)
Payment from affiliate (Note 2) 1 1 -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations 984,680 182,500 271,047 211,326 577,584 378,690
Dividends and Distributions
to Shareholders:
Net investment income* -- -- -- -- (6,427) --
Net realized gain/(loss) from
investment transactions* -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Net Decrease from Dividends and
Distributions -- -- -- -- (6,427) --
Capital Share Transactions:
Shares sold 378,642 806,462 228,604 206,603 703,654 334,794
Reinvested dividends and distributions -- -- -- -- 6,103 --
Shares repurchased (3,497,874) (5,137,947) (476,067) (654,677) (1,278,997) (1,524,134)
------------ ------------ ------------ ------------ ------------ ------------
Net Increase/(Decrease) from Capital
Share Transactions (3,119,232) (4,331,485) (247,463) (448,074) (569,240) (1,189,340)
Net Increase/(Decrease) in Net Assets (2,134,552) (4,148,985) 23,584 (236,748) 1,917 (810,650)
Net Assets:
Beginning of period 13,277,473 17,426,458 1,679,958 1,916,706 4,471,514 5,282,164
End of period $ 11,142,921 $ 13,277,473 $ 1,703,542 $ 1,679,958 $ 4,473,431 $ 4,471,514
------------ ------------ ------------ ------------ ------------ ------------
Undistributed net investment
income/(loss)* $ 8,030 $ 4 $ -- $ -- $ 12,423 $ --
For the fiscal year ended October 31 Janus Janus
(all numbers in thousands) Olympus Fund Orion Fund
--------------------------- ---------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
Operations:
Net investment income/(loss) $ 762 $ (9,322) $ 3,091 $ (279)
Net realized gain/(loss) from
investment transactions 302,052 195,651 67,290 79,274
Change in unrealized net appreciation/
(depreciation) of investments
and foreign currency translations 72,243 (72,028) 56,341 (25,291)
Payment from affiliate (Note 2) 1 -- -- --
------------ ------------ ------------ ------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations 375,058 114,301 126,722 53,704
Dividends and Distributions
to Shareholders:
Net investment income* -- -- -- --
Net realized gain/(loss) from
investment transactions* -- -- -- --
------------ ------------ ------------ ------------
Net Decrease from Dividends and
Distributions -- -- -- --
Capital Share Transactions:
Shares sold 94,217 159,960 167,198 114,957
Reinvested dividends and distributions -- -- -- --
Shares repurchased (572,853) (686,004) (132,323) (152,565)
------------ ------------ ------------ ------------
Net Increase/(Decrease) from Capital
Share Transactions (478,636) (526,044) 34,875 (37,608)
Net Increase/(Decrease) in Net Assets (103,578) (411,743) 161,597 16,096
Net Assets:
Beginning of period 2,360,466 2,772,209 529,804 513,708
End of period $ 2,256,888 $ 2,360,466 $ 691,401 $ 529,804
------------ ------------ ------------ ------------
Undistributed net investment
income/(loss)* $ 705 $ 4 $ 2,980 $ --
*See Note 4 in Notes to Financial Statements.
See Notes to Financial Statements.
62 Janus Growth Funds October 31, 2005
Janus Growth Funds October 31, 2005 63
Statements of Changes in Net Assets (continued)
For the fiscal year ended Janus Janus Janus Janus
October 31 Triton Twenty Venture Global Life
(all numbers in thousands) Fund Fund Fund Sciences Fund
----------- ------------------------- ------------------------- -------------------------
2005(1) 2005 2004 2005 2004 2005 2004
----------- ----------- ----------- ----------- ----------- ----------- -----------
Operations:
Net investment income/(loss) $ (43) $ 20,063 $ 5,468 $ (8,736) $ (10,045) $ (5,782) $ (6,667)
Net realized gain/(loss) from
investment transactions (40) 1,469,039 27,978 117,762 188,709 175,006 150,113
Change in unrealized net
appreciation/(depreciation)
of investments and foreign
currency translations 2,161 254,049 1,443,157 25,372 (75,305) 51,675 (22,597)
Payment from affiliate (Note 2) -- 7 3 -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Increase/(Decrease) in
Net Assets Resulting from
Operations 2,078 1,743,158 1,476,606 134,398 103,359 220,899 120,849
Dividends and Distributions
to Shareholders:
Net investment income* -- (2,651) (47,904) -- -- -- --
Net realized gain/(loss) from
investment transactions* -- -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Decrease from Dividends
and Distributions -- (2,651) (47,904) -- -- -- --
Capital Share Transactions:
Shares sold 45,861 542,721 495,152 36,715 56,264 51,664 132,205
Redemption fees N/A N/A N/A N/A N/A 35 112
Reinvested dividends and
distributions -- 2,597 46,952 -- -- -- --
Shares repurchased (10,244) (1,696,801) (2,768,819) (205,051) (224,893) (306,428) (333,890)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Increase/(Decrease) from
Capital Share Transactions 35,617 (1,151,483) (2,226,715) (168,336) (168,629) (254,729) (201,573)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Increase/(Decrease) in
Net Assets 37,695 589,024 (798,013) (33,938) (65,270) (33,830) (80,724)
Net Assets:
Beginning of period -- 9,023,479 9,821,492 1,327,088 1,392,358 1,183,496 1,264,220
End of Period $ 37,695 $ 9,612,503 $ 9,023,479 $ 1,293,150 $ 1,327,088 $ 1,149,666 $ 1,183,496
----------- ----------- ----------- ----------- ----------- ----------- -----------
Undistributed net investment
income/(loss)* $ -- $ 20,284 $ 2,651 $ 75 $ 7 $ -- $ --
For the fiscal year ended Janus
October 31 Global Technology
(all numbers in thousands) Fund
-------------------------
2005 2004
----------- -----------
Operations:
Net investment income/(loss) $ 758 $ (5,454)
Net realized gain/(loss) from
investment transactions 99,671 67,393
Change in unrealized net
appreciation/(depreciation)
of investments and foreign
currency translations 33,644 (173,129)
Payment from affiliate (Note 2) -- 4
----------- -----------
Net Increase/(Decrease) in
Net Assets Resulting from
Operations 134,073 (111,186)
Dividends and Distributions
to Shareholders:
Net investment income* -- --
Net realized gain/(loss) from
investment transactions* -- --
----------- -----------
Net Decrease from Dividends
and Distributions -- --
Capital Share Transactions:
Shares sold 46,171 163,947
Redemption fees 80 167
Reinvested dividends and
distributions -- --
Shares repurchased (441,684) (453,636)
----------- -----------
Net Increase/(Decrease) from
Capital Share Transactions (395,433) (289,522)
----------- -----------
Net Increase/(Decrease) in
Net Assets (261,360) (400,708)
Net Assets:
Beginning of period 1,255,023 1,655,731
End of Period $ 993,663 $ 1,255,023
----------- -----------
Undistributed net investment
income/(loss)* $ 725 $ --
*See Note 4 in Notes to Financial Statements.
(1)Period from February 25, 2005 (inception date) through October 31, 2005.
See Notes to Financial Statements.
64 Janus Growth Funds October 31, 2005
Janus Growth Funds October 31, 2005 65
Financial Highlights
Janus Fund
--------------------------------------------------------
For a share outstanding during each fiscal year
ended October 31 2005 2004 2003
- ------------------------------------------------- -------------- -------------- --------------
Net Asset Value, Beginning of Period $ 22.69 $ 22.52 $ 18.39
Income from Investment Operations:
Net investment income/(loss) .02 --(1) --(1)
Net gains/(losses) on securities (both realized
and unrealized) 1.73 .17 4.13
-------------- -------------- --------------
Total from Investment Operations 1.75 .17 4.13
Less Distributions and Other:
Dividends (from net investment income)* -- -- --
Distributions (from capital gains)* -- -- --
Payment from affiliate --(2) --(2) --
Total Distributions and Other -- -- --
-------------- -------------- --------------
Net Asset Value, End of Period $ 24.44 $ 22.69 $ 22.52
Total Return 7.71%(3) 0.75%(3) 22.46%
Net Assets, End of Period (in thousands) $ 11,142,921 $ 13,277,473 $ 17,426,458
Average Net Assets for the Period (in thousands) $ 12,310,464 $ 15,433,191 $ 16,206,681
Ratio of Gross Expenses to Average Net Assets (4)(5) 0.88% 0.90% 0.89%
Ratio of Net Expenses to Average Net Assets (4) 0.87% 0.90% 0.89%
Ratio of Net Investment Income/(Loss) to
Average Net Assets 0.07% (0.17)% (0.17)%
Portfolio Turnover Rate 78% 21% 22%
Janus Fund
--------------------------------
For a share outstanding during each fiscal year
ended October 31 2002 2001
- ------------------------------------------------ -------------- --------------
Net Asset Value, Beginning of Period $ 22.11 $ 44.00
Income from Investment Operations:
Net investment income/(loss) --(1) --(1)
Net gains/(losses) on securities (both realized
and unrealized) (3.72) (17.50)
-------------- --------------
Total from Investment Operations (3.72) (17.50)
Less Distributions and Other:
Dividends (from net investment income)* -- --
Distributions (from capital gains)* -- (4.39)
Payment from affiliate -- --
Total Distributions and Other -- (4.39)
-------------- --------------
Net Asset Value, End of Period $ 18.39 $ 22.11
Total Return (16.82)% (43.42)%
Net Assets, End of Period (in thousands) $ 16,320,421 $ 23,513,436
Average Net Assets for the Period (in thousands) $ 21,651,285 $ 34,254,548
Ratio of Gross Expenses to Average Net Assets(4)(5) 0.85% 0.84%
Ratio of Net Expenses to Average Net Assets(4) 0.84% 0.83%
Ratio of Net Investment Income/(Loss) to
Average Net Assets (0.24)% (0.16)%
Portfolio Turnover Rate 27% 51%
Janus Enterprise Fund
--------------------------------------------------------
For a share outstanding during each fiscal year
ended October 31 2005 2004 2003
- ----------------------------------------------- -------------- -------------- --------------
Net Asset Value, Beginning of Period $ 33.73 $ 30.02 $ 22.93
Income from Investment Operations:
Net investment income/(loss) --(1) --(1) --(1)
Net gains/(losses) on securities (both realized
and unrealized) 5.75 3.71 7.09
-------------- -------------- --------------
Total from Investment Operations 5.75 3.71 7.09
Less Distributions:
Dividends (from net investment income)* -- -- --
Distributions (from capital gains)* -- -- --
-------------- -------------- --------------
Total Distributions -- -- --
-------------- -------------- --------------
Net Asset Value, End of Period $ 39.48 $ 33.73 $ 30.02
Total Return 17.05% 12.36% 30.92%
Net Assets, End of Period (in thousands) $ 1,703,542 $ 1,679,958 $ 1,916,706
Average Net Assets for the Period (in thousands) $ 1,728,579 $ 1,795,534 $ 1,741,680
Ratio of Gross Expenses to Average Net Assets(4)(5) 0.96% 1.04% 1.02%
Ratio of Net Expenses to Average Net Assets(4) 0.95% 1.03% 1.02%
Ratio of Net Investment Income/(Loss) to
Average Net Assets (0.30)% (0.46)% (0.46)%
Portfolio Turnover Rate 28% 27% 32%
Janus Enterprise Fund
--------------------------------
For a share outstanding during each fiscal year
ended October 31 2002 2001
- ----------------------------------------------- -------------- --------------
Net Asset Value, Beginning of Period $ 29.67 $ 68.41
Income from Investment Operations:
Net investment income/(loss) --(1) --(1)
Net gains/(losses) on securities (both realized
and unrealized) (6.74) (38.74)
-------------- --------------
Total from Investment Operations (6.74) (38.74)
Less Distributions:
Dividends (from net investment income)* -- --
Distributions (from capital gains)* -- --
-------------- --------------
Total Distributions -- --
-------------- --------------
Net Asset Value, End of Period $ 22.93 $ 29.67
Total Return (22.72)% (56.63)%
Net Assets, End of Period (in thousands) $ 1,854,192 $ 3,071,818
Average Net Assets for the Period (in thousands) $ 2,518,273 $ 4,858,360
Ratio of Gross Expenses to Average Net Assets (4)(5) 0.93% 0.92%
Ratio of Net Expenses to Average Net Assets (4) 0.90% 0.90%
Ratio of Net Investment Income/(Loss) to
Average Net Assets (0.43)% (0.55)%
Portfolio Turnover Rate 64% 85%
*See Note 4 in Notes to Financial Statements.
(1)Net investment income/(loss) aggregated less than $.01 on a per share basis
for the fiscal year ended.
(2)Payment from affiliate aggregated less than $.01 on a per share basis for
the fiscal year ended.
(3)During the year ended October 31, 2005 and the fiscal year ended October 31,
2004, Janus Capital and/or Janus Services LLC ("Janus Services") fully
reimbursed the Fund for a loss on a transaction resulting from certain trading,
pricing and/or shareholder activity errors, which otherwise would have reduced
total return by less than 0.01%.
(4)See "Explanations of Charts, Tables and Financial Statements."
(5)The effect of non-recurring costs assumed by Janus Capital (Note 2) is
included in the ratio of gross expenses to average net assets and was less than
0.01%.
See Notes to Financial Statements.
66 Janus Growth Funds October 31, 2005
Janus Mercury Fund
--------------------------------------------------------
For a share outstanding during each fiscal year
ended October 31 2005 2004 2003
- ----------------------------------------------- -------------- -------------- --------------
Net Asset Value, Beginning of Period $ 19.48 $ 18.14 $ 14.92
Income from Investment Operations:
Net investment income/(loss) .09 --(1) --(1)
Net gains/(losses) on securities (both realized
and unrealized) 2.51 1.34 3.22
-------------- -------------- --------------
Total from Investment Operations 2.60 1.34 3.22
Less Distributions:
Dividends (from net investment income)* (.03) -- --
Distributions (from capital gains)* -- -- --
-------------- -------------- --------------
Total Distributions (.03) -- --
-------------- -------------- --------------
Net Asset Value, End of Period $ 22.05 $ 19.48 $ 18.14
Total Return 13.35% 7.39% 21.58%
Net Assets, End of Period (in thousands) $ 4,473,431 $ 4,471,514 $ 5,282,164
Average Net Assets for the Period (in thousands) $ 4,447,616 $ 5,007,156 $ 5,088,567
Ratio of Gross Expenses to Average Net Assets(2)(3) 0.93% 0.97% 0.96%
Ratio of Net Expenses to Average Net Assets(2) 0.92% 0.97% 0.95%
Ratio of Net Investment Income/(Loss) to Average %
Net Assets 0.42% (0.26) (0.31)
Portfolio Turnover Rate 38% 43% 54%
Janus Mercury Fund
--------------------------------
For a share outstanding during each fiscal year
ended October 31 2002 2001
- ----------------------------------------------- -------------- --------------
Net Asset Value, Beginning of Period $ 19.14 $ 40.59
Income from Investment Operations:
Net investment income/(loss) --(1) .04
Net gains/(losses) on securities (both realized
and unrealized) (4.18) (17.05)
-------------- --------------
Total from Investment Operations (4.18) (17.01)
Less Distributions:
Dividends (from net investment income)* (.04) (.03)
Distributions (from capital gains)* -- (4.41)
-------------- --------------
Total Distributions (.04) (4.44)
-------------- --------------
Net Asset Value, End of Period $ 14.92 $ 19.14
Total Return (21.88)% (46.21)%
Net Assets, End of Period (in thousands) $ 5,034,041 $ 7,910,482
Average Net Assets for the Period (in thousands) $ 6,783,864 $ 11,243,108
Ratio of Gross Expenses to Average Net Assets(2)(3) 0.94% 0.89%
Ratio of Net Expenses to Average Net Assets(2) 0.92% 0.88%
Ratio of Net Investment Income/(Loss) to Average
Net Assets (0.07)% 0.16%
Portfolio Turnover Rate 97% 83%
Janus Olympus Fund
--------------------------------------------------------
For a share outstanding during each fiscal year
ended October 31 2005 2004 2003
- ----------------------------------------------- -------------- -------------- --------------
Net Asset Value, Beginning of Period $ 26.30 $ 25.22 $ 20.60
Income from Investment Operations:
Net investment income/(loss) .01 --(1) --(1)
Net gains/(losses) on securities (both realized
and unrealized) 4.65 1.08 4.62
-------------- -------------- --------------
Total from Investment Operations 4.66 1.08 4.62
Less Distributions and Other:
Dividends (from net investment income)* -- -- --
Distributions (from capital gains)* -- -- --
Payment from affiliate --(4) --(4) --
-------------- -------------- --------------
Total Distributions and Other -- -- --
-------------- -------------- --------------
Net Asset Value, End of Period $ 30.96 $ 26.30 $ 25.22
Total Return 17.72%(5) 4.28%(5) 22.38%
Net Assets, End of Period (in thousands) $ 2,256,888 $ 2,360,466 $ 2,772,209
Average Net Assets for the Period (in thousands) $ 2,282,832 $ 2,575,897 $ 2,378,814
Ratio of Gross Expenses to Average Net Assets(2)(3) 0.97% 1.03% 0.99%
Ratio of Net Expenses to Average Net Assets(2) 0.96% 1.03% 0.98%
Ratio of Net Investment Income/(Loss) to Average
Net Assets 0.03% (0.36)% (0.14)%
Portfolio Turnover Rate 119% 76% 84%
Janus Olympus Fund
--------------------------------
For a share outstanding during each fiscal year
ended October 31 2002 2001
- ----------------------------------------------- -------------- --------------
Net Asset Value, Beginning of Period $ 24.59 $ 50.50
Income from Investment Operations:
Net investment income/(loss) --(1) .13
Net gains/(losses) on securities (both realized
and unrealized) (3.88) (25.42)
-------------- --------------
Total from Investment Operations (3.88) (25.29)
Less Distributions and Other:
Dividends (from net investment income)* (.11) (.23)
Distributions (from capital gains)* -- (.39)
Payment from affiliate -- --
-------------- --------------
Total Distributions and Other (.11) (.62)
-------------- --------------
Net Asset Value, End of Period $ 20.60 $ 24.59
Total Return (15.89)% (50.61)%
Net Assets, End of Period (in thousands) $ 2,136,167 $ 3,074,317
Average Net Assets for the Period (in thousands) $ 2,882,934 $ 4,767,090
Ratio of Gross Expenses to Average Net Assets(2)(3) 0.94% 0.91%
Ratio of Net Expenses to Average Net Assets(2) 0.91% 0.89%
Ratio of Net Investment Income/(Loss) to Average
Net Assets (0.13)% 0.34%
Portfolio Turnover Rate 90% 118%
*See Note 4 in Notes to Financial Statements.
(1)Net investment income/(loss) aggregated less than $.01 on a per share basis
for the fiscal year ended.
(2)See "Explanations of Charts, Tables and Financial Statements."
(3)The effect of non-recurring costs assumed by Janus Capital (Note 2) is
included in the ratio of gross expenses to average net assets and was less than
0.01%.
(4)Payment from affiliate aggregated less than $.01 on a per share basis for
the fiscal year ended.
(5)During the fiscal year ended October 31, 2005 and the fiscal year ended
October 31, 2004, Janus Capital and/or Janus Services fully reimbursed the Fund
for a loss on a transaction resulting from certain trading, pricing and/or
shareholder activity errors, which otherwise would have reduced total return by
less than 0.01%.
See Notes to Financial Statements.
Janus Growth Funds October 31, 2005 67
Financial Highlights (continued)
Janus Orion Fund
-------------------------------------------------------------------------------------
For a share outstanding during each
fiscal year ended October 31 2005 2004 2003 2002 2001
- --------------------------------------- -------------- ---------------- --------------- ---------------- ----------------
Net Asset Value, Beginning of Period $ 6.25 $ 5.64 $ 4.33 $ 5.21 $ 8.81
Income from Investment Operations:
Net investment income/(loss) .03 --(1) --(1) --(1) --(1)
Net gains/(losses) on securities
(both realized and unrealized) 1.52 .61 1.31 (.88) (3.58)
-------------- ---------------- --------------- ---------------- ----------------
Total from Investment Operations 1.55 .61 1.31 (.88) (3.58)
Less Distributions and Other:
Dividends (from net investment income)* -- -- -- -- (.02)
Distributions (from capital gains)* -- -- -- -- --
Payment from affiliate -- --(2) -- -- --
-------------- ---------------- --------------- ---------------- ----------------
Total Distributions and Other -- -- -- -- (.02)
-------------- ---------------- --------------- ---------------- ----------------
Net Asset Value, End of Period $ 7.80 $ 6.25 $ 5.64 $ 4.33 $ 5.21
Total Return 24.80% 10.82%(3) 29.95% (16.70)% (40.69)%
Net Assets, End of Period
(in thousands) $ 691,401 $ 529,804 $ 513,708 $ 421,458 $ 602,303
Average Net Assets for the Period
(in thousands) $ 590,421 $ 540,305 $ 431,124 $ 562,457 $ 762,142
Ratio of Gross Expenses to Average
Net Assets(4)(5) 1.02% 1.09% 1.10% 1.09% 1.06%
Ratio of Net Expenses to Average Net
Assets(4) 1.01% 1.08% 1.08% 1.04% 1.03%
Ratio of Net Investment Income/(Loss)
to Average Net Assets 0.52% (0.05) (0.43) (0.30) (0.06)
Portfolio Turnover Rate 68% 69% 72% 161% 206%
Janus Triton Fund
--------------------
For a share outstanding during the period ended October 31 2005(6)
- ------------------------------------------------------------------ --------------------
Net Asset Value, Beginning of Period $ 10.00
Income from Investment Operations:
Net investment income/(loss) --
Net gains/(losses) on securities (both realized and unrealized) .86
--------------------
Total from Investment Operations .86
Less Distributions:
Dividends from net investment income* --
Distributions from net realized gains* --
--------------------
Total Distributions --
--------------------
Net Asset Value, End of Period $ 10.86
Total Return** 8.60%
Net Assets, End of Period $ 37,695
Average Net Assets for the Period $ 25,904
Ratio of Gross Expenses to Average Net Assets***(4)(5) 1.27%(7)
Ratio of Net Expenses to Average Net Assets***(4) 1.25%
Ratio of Net Invest Income to Average Net Assets*** (0.24)%
Portfolio Turnover Rate*** 48%
*See Note 4 in Notes to Financial Statements.
**Total return not annualized for periods of less than one full year.
***Annualized for periods of less than one full year.
(1)Net investment income/(loss) aggregated less than $.01 on a per share basis
for the fiscal year ended.
(2)Payment from affiliate aggregated less than $.01 on a per share basis for
the fiscal year ended.
(3)During the fiscal year ended October 31, 2004, Janus Capital and/or Janus
Services fully reimbursed the Fund for a loss on a transaction resulting from
certain trading, pricing and/or shareholder activity errors, which otherwise
would have reduced total return by less than 0.01%.
(4)See "Explanations of Charts, Tables and Financial Statements."
(5)The effect of non-recurring costs assumed by Janus Capital (Note 2) is
included in the ratio of gross expenses to average net assets and was less than
0.01%.
(6)Period from February 25, 2005 (inception date) through October 31, 2005.
(7)The ratio was 1.85% in 2005 before waiver of certain fees incurred by the
Fund.
See Notes to Financial Statements.
68 Janus Growth Funds October 31, 2005
Janus Twenty Fund
------------------------------------------------------------------------------------
For a share outstanding during each
fiscal year ended October 31 2005 2004 2003 2002 2001
- ------------------------------------ ---------------- ---------------- ------------- --------------- ----------------
Net Asset Value, Beginning of Period $ 39.60 $ 34.06 $ 30.47 $ 36.31 $ 71.07
Income from Investment Operations:
Net investment income/(loss) .10 .03 .17 .21 .32
Net gains/(losses) on securities
(both realized and unrealized) 7.94 5.68 3.63 (5.71) (33.33)
---------------- ---------------- ------------- --------------- ----------------
Total from Investment Operations 8.04 5.71 3.80 (5.50) (33.01)
Less Distributions and Other:
Dividends (from net investment
income)* (.01) (.17) (.21) (.34) --
Distributions (from capital gains)* -- -- -- -- (1.75)
Payment from affiliate --(1) --(1) -- -- --
---------------- ---------------- ------------- --------------- ----------------
Total Distributions and Other (.01) (.17) (.21) (.34) (1.75)
---------------- ---------------- ------------- --------------- ----------------
Net Asset Value, End of Period $ 47.63 $ 39.60 $ 34.06 $ 30.47 $ 36.31
Total Return 20.31%(2) 16.85%(2) 12.60% (15.35)% (47.43)%
Net Assets, End of Period
(in thousands) $ 9,612,503 $ 9,023,479 $ 9,821,492 $ 10,107,243 $ 14,378,453
Average Net Assets for the Period
(in thousands) $ 9,458,921 $ 9,319,532 $ 9,749,457 $ 12,572,984 $ 20,320,750
Ratio of Gross Expenses to Average
Net Assets(3)(4) 0.86% 0.89% 0.88% 0.84% 0.84%
Ratio of Net Expenses to Average
Net Assets(3) 0.86% 0.89% 0.88% 0.83% 0.84%
Ratio of Net Investment Income/(Loss)
to Average Net Assets 0.21% 0.06% 0.52% 0.56% 0.63%
Portfolio Turnover Rate 44% 14% 44% 53% 50%
Janus Venture Fund
---------------------------------------------------------------------------------------
For a share outstanding during each
fiscal year ended October 31 2005 2004 2003 2002 2001
- ------------------------------------ ---------------- ----------------- ----------------- -------------- ---------------
Net Asset Value, Beginning of Period $ 51.57 $ 47.77 $ 31.59 $ 36.99 $ 82.39
Income from Investment Operations:
Net investment income/(loss) --(5) --(5) --(5) --(5) --(5)
Net gains/(losses) on securities
(both realized and unrealized) 5.25 3.80 16.18 (5.40) (29.02)
---------------- ----------------- ----------------- -------------- ---------------
Total from Investment Operations 5.25 3.80 16.18 (5.40) (29.02)
Less Distributions:
Dividends (from net investment
income)* -- -- -- -- --
Distributions (from capital gains)* -- -- -- -- (16.38)
---------------- ----------------- ----------------- -------------- ---------------
Total Distributions -- -- -- -- (16.38)
---------------- ----------------- ----------------- -------------- ---------------
Net Asset Value, End of Period $ 56.82 $ 51.57 $ 47.77 $ 31.59 $ 36.99
Total Return 10.18% 7.95% 51.22% (14.60)% (40.67)%
Net Assets, End of Period
(in thousands) $ 1,293,150 $ 1,327,088 $ 1,392,358 $ 756,323 $ 1,009,278
Average Net Assets for the Period
(in thousands) $ 1,367,775 $ 1,355,755 $ 988,156 $ 992,760 $ 1,312,759
Ratio of Gross Expenses to Average
Net Assets(3)(4) 0.87% 0.90% 0.94% 0.88% 0.87%
Ratio of Net Expenses to Average Net
Assets(3) 0.87% 0.90% 0.93% 0.87% 0.86%
Ratio of Net Investment Income/(Loss)
to Average Net Assets (0.64) (0.74) (0.67) (0.73) (0.36)
Portfolio Turnover Rate 63% 61% 75% 90% 70%
*See Note 4 in Notes to Financial Statements.
(1)Payment from affiliate aggregated less than $.01 on a per share basis for
the fiscal year ended.
(2)During the fiscal year ended October 31, 2005 and the fiscal year ended
October 31, 2004, Janus Capital and/or Janus Services fully reimbursed the Fund
for a loss on a transaction resulting from certain trading, pricing and/or
shareholder activity errors, which otherwise would have reduced total return by
less than 0.01%.
(3)See "Explanations of Charts, Tables and Financial Statements."
(4)The effect of non-recurring costs assumed by Janus Capital (Note 2) is
included in the ratio of gross expenses to average net assets and was less than
0.01%.
(5)Net investment income/(loss) aggregated less than $.01 on a per share basis
for the fiscal year ended.
See Notes to Financial Statements.
Janus Growth Funds October 31, 2005 69
Financial Highlights (continued)
Janus Global Life Sciences Fund
-----------------------------------------------------------------------------------------
For a share outstanding during each
fiscal year ended October 31 2005 2004 2003 2002 2001
- --------------------------------------- ----------------- ------------------ --------------- ---------------- ---------------
Net Asset Value, Beginning of Period $ 16.08 $ 14.61 $ 12.82 $ 16.96 $ 22.41
Income from Investment Operations:
Net investment income/(loss) --(1) --(1) --(1) --(1) --(1)
Net gains/(losses) on securities
(both realized and unrealized) 3.29 1.47 1.79 (4.14) (5.43)
----------------- ------------------ --------------- ---------------- ---------------
Total from Investment Operations 3.29 1.47 1.79 (4.14) (5.43)
Less Distributions and Other:
Dividends (from net investment
income)* -- -- -- -- (.02)
Distributions (from capital gains)* -- -- -- -- --
Redemption fees --(2) --(2) --(2) N/A N/A
Payment from affiliate -- --(3) -- -- --
----------------- ------------------ --------------- ---------------- ---------------
Total Distributions and Other -- -- -- -- (.02)
----------------- ------------------ --------------- ---------------- ---------------
Net Asset Value, End of Period $ 19.37 $ 16.08 $ 14.61 $ 12.82 $ 16.96
Total Return 20.46% 10.06%(4) 13.87% (24.35)% (24.26)%
Net Assets, End of Period
(in thousands) $ 1,149,666 $ 1,183,496 $ 1,264,220 $ 1,389,723 $ 2,415,086
Average Net Assets for the Period
(in thousands) $ 1,181,741 $ 1,288,416 $ 1,296,095 $ 1,927,734 $ 2,957,777
Ratio of Gross Expenses to Average
Net Assets(5)(6) 0.97% 1.02% 0.99% 0.89% 0.93%
Ratio of Net Expenses to Average Net
Assets(5) 0.96% 1.01% 0.98% 0.88% 0.91%
Ratio of Net Investment Income/(Loss)
to Average Net Assets (0.49)% (0.52)% (0.28)% (0.42)% (0.32)%
Portfolio Turnover Rate 77% 78% 135% 73% 84%
Janus Global Technology Fund
-----------------------------------------------------------------------------------------
For a share outstanding during each
fiscal year ended October 31 2005 2004 2003 2002 2001
- --------------------------------------- ----------------- ------------------ --------------- ---------------- ---------------
Net Asset Value, Beginning of Period $ 9.70 $ 10.44 $ 7.41 $ 10.83 $ 27.44
Income from Investment Operations:
Net investment income/(loss) .01 .02 --(1) (.01) .36
Net gains/(losses) on securities
(both realized and unrealized) 1.17 (.76) 3.03 (3.41) (16.64)
----------------- ------------------ --------------- ---------------- ---------------
Total from Investment Operations 1.18 (.74) 3.03 (3.42) (16.28)
Less Distributions and Other:
Dividends (from net investment
income)* -- -- -- -- (.16)
Distributions (from capital gains)* -- -- -- -- --
Tax return of capital* -- -- -- (.17)
Redemption fees --(2) --(2) --(2) N/A N/A
Payment from affiliate -- --(3) -- -- --
----------------- ------------------ --------------- ---------------- ---------------
Total Distributions and Other -- -- -- -- (.33)
----------------- ------------------ --------------- ---------------- ---------------
Net Asset Value, End of Period $ 10.88 $ 9.70 $ 10.44 $ 7.41 $ 10.83
Total Return 12.16% (7.09)%(4) 41.08% (31.67)% (59.95)%
Net Assets, End of Period
(in thousands) $ 993,663 $ 1,255,023 $ 1,655,731 $ 1,249,514 $ 2,275,691
Average Net Assets for the Period
(in thousands) $ 1,109,908 $ 1,480,508 $ 1,332,510 $ 1,906,518 $ 4,009,850
Ratio of Gross Expenses to Average
Net Assets(5)(6) 1.04% 1.07% 1.07% 0.96% 0.92%
Ratio of Net Expenses to Average Net
Assets(5) 1.03% 1.07% 1.06% 0.94% 0.90%
Ratio of Net Investment Income/(Loss)
to Average Net Assets 0.07% (0.37)% (0.27)% (0.14)% 0.55%
Portfolio Turnover Rate 31% 24% 48% 66% 60%
*See Note 4 in Notes to Financial Statements.
(1)Net investment income/(loss) aggregated less than $.01 on a per share basis
for the fiscal year ended.
(2)Redemption fees aggregated less than $.01 on a per share basis for the
fiscal year ended.
(3)Payment from affiliate aggregated less than $.01 on a per share basis for
the fiscal year ended.
(4)During the fiscal year ended October 31, 2004, Janus Capital and/or Janus
Services fully reimbursed the Fund for a loss on a transaction resulting from a
certain trading, which otherwise would have reduced total return by less than
0.01%.
(5)See "Explanations of Charts, Tables and Financial Statements."
(6)The effect of non-recurring costs assumed by Janus Capital (Note 2) is
included in the ratio of gross expenses to average net assets and was less than
0.01%.
See Notes to Financial Statements.
70 Janus Growth Funds October 31, 2005
Notes to Schedules of Investments
Lipper Health/Biotechnology Funds Funds that invest at least 65% of their equity portfolio in shares of companies
engaged in healthcare, medicine, and biotechnology.
Lipper Large-Cap Growth Funds Funds that, by portfolio practice, invest at least 75% of their equity assets in
companies with market capitalizations (on a three-year weighted basis) greater than
300% of the dollar-weighted median market capitalization of the middle 1,000
securities of the S&P SuperComposite 1500 Index. Large-cap growth funds-to-earnings
ratio, price-to-book ratio, and three-year sales-per-share growth value, typically
have an above-average price compared to the S&P 500(R) Index.
Lipper Mid-Cap Growth Funds Funds that, by portfolio practice, invest at least 75% of their equity assets in
companies with market capitalizations (on a three-year weighted basis) less than 300%
of the dollar-weighted median market capitalization of the middle 1,000 securities of
the S&P SuperComposite 1500 Index. Mid-cap growth funds typically have an
above-average price-to-earnings ratio, price-to-book ratio, and three-year
sales-per-share growth value, compared to the S&P MidCap 400 Index.
Lipper Multi-Cap Growth Funds Funds that, by portfolio practice, invest in a variety of market capitalization ranges
without concentrating 75% of their equity assets in any one market capitalization
range over an extended period of time. Multi-cap funds typically have between 25% to
75% of their assets invested in companies with market capitalizations (on a three-year
weighted basis) above 300% of the dollar-weighted median market capitalization of the
middle 1,000 securities of the S&P SuperComposite 1500 Index. Multi-cap growth funds
typically have an above-average price-to-earnings ratio, price-to-book ratio, and
three-year sales-per-share growth value, compared to the S&P SuperComposite 1500 Index.
Lipper Science and Technology Funds Funds that invest at least 65% of their equity portfolio in science and technology
stocks.
Lipper Small-Cap Growth Funds Funds that, by portfolio practice, invest at least 75% of their equity assets in
companies with market capitalizations (on a three-year weighted basis) less than 250%
of the dollar-weighted median of the smallest 500 of the middle 1,000 securities of
the S&P SuperComposite 1500 Index. Small-cap growth funds typically have an
above-average price-to-earnings ratio, price-to-book ratio, and three-year
sales-per-share growth value, compared to the S&P SmallCap 600 Index.
Morgan Stanley Capital Is a capitalization weighted index that monitors the performance of information
International World Information technology stocks from around the world.
Technology Index(SM)
The Morgan Stanley Capital Is a capitalization weighted index that monitors the performance of healthcare stocks
International World Health Care from developed market countries in North America, Europe, and the Asia/Pacific Region.
Index
Russell 1000(R) Growth Index Measures the performance of those Russell 1000 companies with higher price-to-book
ratios and higher forecasted growth values.
Russell 1000(R) Value Index Measures the performance of those Russell 1000 companies with lower price-to-book
ratios and lower forecasted growth values.
Russell 2000(R)Growth Index Measures the performance of those Russell 2000 companies with higher price-to-book
ratios and higher forecasted growth values.
Russell 2000(R) Index Measures the performance of the 2,000 smallest companies in the Russell 3000(R)Index.
Russell 2500(TM) Growth Index Measures the performance of those Russell 2500 companies with higher price-to-book
ratios and higher forecasted growth values.
Russell 3000(R) Growth Index Measures the performance of those Russell 3000(R) Index companies with higher
price-to-book ratios and higher forecasted growth values. The stocks in this index are
also members of either the Russell 1000(R) Growth or the Russell 2000(R) Growth
indices.
Russell Midcap(R) Growth Index Consists of stocks from the Russell Midcap(R) Index with a greater-than-average
growth orientation. The Russell Midcap (R) Index consists of the smallest 800 companies
in the Russell 1000(R) Index, as ranked by total market capitalization.
Janus Growth Funds October 31, 2005 71
Notes to Schedules of Investments (continued)
S&P 500(R) Index The Standard & Poor's Composite Index of 500 stocks is a widely recognized, unmanaged
index of common stock prices.
S&P MidCap 400 Index An unmanaged group of 400 domestic stocks chosen for their market size, liquidity and
industry group representation.
144A Securities sold under Rule 144A of the Securities Act of 1933 are subject to legal
and/or contractual restrictions on resale and may not be publicly sold without
registration under the 1933 Act.
ADR American Depositary Receipt
ETD Euro Time Deposit
GDR Global Depositary Receipt
PLC Public Limited Company
REIT Real Estate Investment Trust
U.S. Shares Securities of foreign companies trading on an American Stock Exchange
*Non-income-producing security.
**A portion of this security has been segregated by the custodian to cover
margin or segregation requirements on open futures contracts and/or forward
currency contracts.
++Rate is subject to change. Rate shown reflects current rate.
(Y)Security is a defaulted security in Janus Global Technology Fund with
accrued interest in the amount of $1,268,000 that was written-off December 10,
2001.
(B)Security is illiquid.
#Loaned security, a portion or all of the security is on loan as of October 31,
2005.
+The security is purchased with the cash collateral received from Securities on
Loan (Note 1).
oSecurity is a defaulted security.
(O)SCHEDULE OF FAIR VALUED SECURITIES (AS OF OCTOBER 31, 2005)
Value as a %
Value of Net Assets
----- -------------
Janus Venture Fund
Candescent Technologies Corp. - Series E $ -- 0.0%
DrugMax, Inc. 8,784,000 0.7%
DrugMax, Inc. 1,399,950 0.1%
Infocrossing, Inc. - expires 5/10/07 -- 0.0%
OneTravel Holdings, Inc. -- 0.0%
Ronco Fi-Tek, Inc. 6,000,000 0.5%
UTEK Corp. 2,795,771 0.2%
ValueVision Media, Inc. 15,347,787 1.2%
WestJet Airlines, Ltd. 3,036,252 0.2%
------------ ---
$ 37,363,760 2.9%
Janus Global Life Sciences Fund
Fibrogen, Inc. $ 4,868,800 0.4%
------------ ---
Janus Global Technology Fund
Candescent Technologies Corp., 8.00%
convertible senior subordinated
debentures
due 5/1/03 (144A) $ -- 0.0%
Securities are valued at "fair value" pursuant to procedures adopted by the
Fund's Trustees. The Schedule of Fair Valued Securities does not include
international activities fair valued pursuant to a systematic fair valuation
model.
72 Janus Growth Funds October 31, 2005
(S)SECTION SCHEDULE OF RESTRICTED AND ILLIQUID SECURITIES
Acquisition Acquisition Value as a %
Date Cost Value of Net Assets
----------- ----------- ----- -------------
Janus Venture Fund
DrugMax, Inc.(O) 9/23/05 $ 6,649,000 $ 8,784,000 0.7%
DrugMax, Inc.(O) 9/23/05 381,250 1,399,950 0.1%
OneTravel Holdings, Inc.(O) 4/14/05 -- -- 0.0%
OneTravel Holdings, Inc. 4/14/05 6,300,000 2,141,999 0.2%
Ronco Fi-Tek, Inc.(O) 6/24/05 6,000,000 6,000,000 0.5%
UTEK Corp.(O) 8/12/05 2,575,204 2,795,771 0.2%
ValueVision Media, Inc.(O) 10/3/05 - 10/5/05 2,349,839 15,347,787 1.2%
------------- ----------- ---
$ 24,255,293 $36,469,507 2.9%
Janus Global Life Sciences Fund
Fibrogen, Inc.(O) 12/28/04 $ 4,868,800 $ 4,868,800 0.4%
Janus Global Technology Fund
Candescent Technologies
Corp., 8.00%
convertible senior
subordinated debentures
due 5/1/03 (144A)(O) 3/6/00 - 2/23/01 $ 2,614,147 $ -- 0.0%
The Funds have registration rights for certain restricted securities held as of
October 31, 2005. The issuer incurs all registration costs.
Janus Growth Funds October 31, 2005 73
Notes to Schedules of Investments (continued)
L. The Investment Company Act of 1940 defines affiliates as those companies in
which a fund holds 5% or more of the outstanding voting securities at any time
during the period ended October 31, 2005.
Purchases Sales Realized Dividend Value
Shares Cost Shares Cost Gain/(Loss) Income at 10/31/05
------ ---- ------ ---- ----------- ------ -----------
Janus Fund
Maxim Integrated
Products, Inc. -- $ -- 17,687,550 $ 291,557,103 $ 394,015,244 $ 5,456,717 $ 86,670,869
Janus Venture Fund
1-800-FLOWERS.COM
Inc. - Class A 100,000 $ 751,660 1,625,100 $ 15,458,460 $ (3,635,673) $ -- $ --
Authentidate
Holding Corp. -- -- 1,310,000 18,012,500 (14,352,405) -- --
Axesstel, Inc. 2,128,965 8,515,860 -- -- -- -- 5,961,102
Century Casinos,
Inc. 1,035,841 7,180,103 -- -- -- -- 7,373,948
DrugMax, Inc. 6,100,000 6,649,000 -- -- -- -- 8,784,000
Euronet
Worldwide, Inc. -- -- 958,617 15,266,195 11,658,867 -- 37,973,665
Infocrossing,
Inc. 100,000 1,722,595 1,875 32,675 (2,855) -- 13,741,109
Intermap
Technologies,
Ltd. 2,346,939 9,812,288 -- -- -- -- 9,995,007
LivePerson, Inc. 109,815 216,336 -- -- -- -- 13,666,742
Omnicell, Inc. 43,645 489,605 100,000 1,494,780 (828,594) -- 14,475,349
OneTravel
Holdings, Inc. 1,145,454 6,300,000 -- -- -- -- 2,141,999
Orange 21, Inc. 402,120 3,486,304 95,015 968,203 (618,098) -- 1,099,436
Restoration
Hardware, Inc. -- -- 2,133,107 13,511,633 1,327,513 -- --
Ronco Fi-Tek,
Inc. 1,591,512 6,000,000 -- -- -- -- 6,000,000
SeraCare Life
Sciences, Inc. 842,620 10,349,379 -- -- -- -- 17,153,636
TALX Corp.(1) 510,912 -- 328,251 6,366,070 5,582,185 249,941 47,613,252
TechTeam Global,
Inc. 644,992 8,326,760 -- -- -- -- 6,011,325
Tier
Technologies,
Inc. - Class B -- -- 1,551,485 20,798,442 (8,520,136) -- --
TransAct
Technologies,
Inc. 226,210 2,919,480 231,800 4,323,258 (1,976,498) -- 5,822,253
Transcommunity
Financial Corp. 213,715 1,709,720 213,715 1,709,720 23,996 -- --
Ultimate
Software Group,
Inc. -- -- -- -- -- -- 32,281,000
ValueVision
Media, Inc. 1,704,932 18,754,252 -- -- -- -- 15,347,787
Workstream, Inc.
(U.S. Shares) 4,957,152 19,278,821 -- -- -- -- 7,534,871
--------- ------------- --------- ---------- ------------ ------------- -------------
$ 112,462,163 97,941,937 $(11,341,698) $ 249,941 $ 252,976,481
(1)Adjusted for 3 for 2 stock split 2/18/05
Aggregate collateral segregated to cover margin, segregation requirements on
open futures contracts, forward currency contracts and/or mortgage backed
securities (with extended settlement dates) as of October 31, 2005 are noted
below.
Fund Aggregate Value
- ---- ---------------
Growth
Janus Fund $ 552,201,365
Janus Mercury
Fund 415,160,547
Janus Olympus
Fund 255,906,114
Specialty Growth
Janus Global
Life Sciences
Fund 134,428,717
Janus Global
Technology Fund 300,410,918
Variable rate notes are notes for which the interest rate is based on an index
or market interest rates and is subject to change. Rates in the security
description are as of October 31, 2005.
Repurchase Agreements held by a Fund are fully collateralized, and such
collateral is in the possession of a Fund's custodian or subcustodian. The
collateral is evaluated daily to ensure its market value equals or exceeds the
current market value of the repurchase agreements, including accrued interest.
In the event of default on the obligation to repurchase, the Fund has the right
to liquidate the collateral and apply the proceeds in satisfaction of the
obligation. In the event of default or bankruptcy by the other party to the
agreement, realization and/or retention of the collateral or proceeds may be
subject to legal proceedings.
74 Janus Growth Funds October 31, 2005
Notes to Financial Statements
The following section describes the organization and significant accounting
policies and provides more detailed information about the schedules and tables
that appear throughout this report. In addition, the Notes to Financial
Statements explain the methods used in preparing and presenting this report.
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Janus Fund, Janus Enterprise Fund, Janus Mercury Fund, Janus Olympus Fund, Janus
Orion Fund, Janus Triton Fund, Janus Twenty Fund, Janus Venture Fund, Janus
Global Life Sciences Fund and Janus Global Technology Fund (collectively the
"Funds" and individually a "Fund") are series funds. The Funds are part of Janus
Investment Fund (the "Trust"), which was 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. The Trust has
twenty-nine funds. Each of the Funds in this report is classified as diversified
as defined in the 1940 Act, with the exception of Janus Orion Fund, Janus Twenty
Fund and Janus Global Technology Fund, which are classified as nondiversified.
The Funds are no-load investments.
Janus Capital Management LLC ("Janus Capital") invested $5,000,000 of initial
seed capital in Janus Triton Fund on February 25, 2005. Janus Capital redeemed
the initial seed capital of $5,000,000 on March 28, 2005.
The following accounting policies have been consistently followed by the Funds
and are in conformity with accounting principles generally accepted in the
United States of America in the investment company industry.
INVESTMENT VALUATION
Securities are valued at the closing price for securities traded on a principal
securities exchange (U.S. or foreign) and on the NASDAQ National Market.
Securities traded on over-the-counter markets and listed securities for which no
sales are reported are valued at the latest bid price (or yield equivalent
thereof) obtained from one or more dealers transacting in a market for such
securities or by a pricing service approved by the Funds' Trustees. Short-term
securities maturing within 60 days or less for which market quotations are not
readily available are valued on the basis of amortized cost, which approximates
market value. Foreign securities and currencies are converted to U.S. dollars
using the applicable exchange rate in effect as of the daily close of the New
York Stock Exchange ("NYSE"). When market quotations are not readily available
or deemed unreliable, or events or circumstances that may affect the value of
portfolio securities held by the Funds are identified between the closing of
their principal markets and the time the net asset value ("NAV") is determined,
securities may be valued at fair value as determined in good faith under
procedures established by and under the supervision of the Funds' Trustees. The
Funds may use a systematic fair valuation model provided by an independent third
party to value international equity securities in order to adjust for stale
pricing, which may occur between the close of certain foreign exchanges and the
NYSE.
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 Trust is
informed of the dividend if such information is obtained subsequent to the
ex-dividend date. Interest income is recorded on the accrual basis and includes
amortization of 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.
EXPENSES
Each Fund bears expenses incurred specifically on its behalf as well as a
portion of general expenses, which may be allocated pro rata to each of the
Funds.
SECURITIES LENDING
Under procedures adopted by the Trustees, the Funds may lend securities to
qualified parties (typically brokers or other financial institutions) who need
to borrow securities in order to complete certain transactions such as covering
short sales, avoiding failures to deliver securities or completing arbitrage
activities. The Funds may seek to earn additional income through securities
lending. There is the risk of delay in recovering a loaned security or the risk
of loss in collateral rights if the borrower fails financially. In addition,
Janus Capital makes efforts to balance the benefits and risks from granting such
loans.
The Funds will not have the right to vote on securities while they are being
lent; however, the Funds may attempt to call back the loan and vote the proxy.
All loans will be continuously secured by collateral which may consist of cash,
U.S. Government securities, domestic and foreign short-term debt instruments,
letters of credit or such other collateral permitted by the Securities and
Exchange Commission ("SEC").
State Street Bank and Trust Company (the "Lending Agent") may also invest the
cash collateral in the State Street Navigator Securities Lending Prime Portfolio
or investments in unaffiliated money market funds or accounts, mutually agreed
to by the Funds and the Lending Agent that complies with Rule 2a-7 of the 1940
Act relating to money market funds.
Janus Growth Funds October 31, 2005 75
Notes to Financial Statements (unaudited)(continued)
As of October 31, 2005, the Funds had on loan securities valued as indicated:
Value at
Fund October 31, 2005
- ---- ----------------
Growth
Janus Fund $ 655,388,835
Janus Enterprise Fund 318,210,960
Janus Mercury Fund 256,286,119
Janus Olympus Fund 190,305,807
Janus Orion Fund 115,018,097
Janus Twenty Fund 232,876,291
Janus Venture Fund 248,886,903
Specialty Growth
Janus Global Life Sciences Fund 178,742,923
Janus Global Technology Fund 62,525,079
As of October 31, 2005, the Funds received cash collateral for securities
lending activity as indicated:
Cash Collateral at
Fund October 31, 2005
- ---- ------------------
Growth
Janus Fund $ 671,968,719
Janus Enterprise Fund 325,512,940
Janus Mercury Fund 264,912,132
Janus Olympus Fund 195,028,151
Janus Orion Fund 118,145,717
Janus Twenty Fund 237,785,188
Janus Venture Fund 255,802,689
Specialty Growth
Janus Global Life Sciences Fund 183,652,404
Janus Global Technology Fund 64,340,213
As of October 31, 2005, all cash collateral received was invested in the State
Street Navigator Securities Lending Prime Portfolio, except for Janus Orion
Fund, which also invested $1,671,255 in foreign bonds and Janus Venture Fund,
which also invested $3,859 in U.S treasury bonds.
The value of the collateral must be at least 102% of the market value of the
loaned securities that are denominated in U.S. dollars and 105% of the market
value of the loaned securities which are not denominated in U.S. dollars. Loaned
securities and related collateral are marked-to-market each business day based
upon the market value of the respective securities at the close of business,
employing the most recent available pricing information. Collateral levels are
then adjusted based on this mark-to-market evaluation.
The borrower pays fees at the Funds' direction to its Lending Agent. The Lending
Agent may retain a portion of the interest earned. The cash collateral invested
by the Lending Agent is disclosed in the Schedule of Investments. The lending
fees and the Funds' portion of the interest income earned on cash collateral is
included on the Statement of Operations (if applicable).
During the fiscal year ended October 31, 2005, there were no securities lending
arrangements for Janus Triton Fund.
INTERFUND LENDING
Pursuant to an exemptive order received from the SEC, each of the Funds may be
party to an interfund lending agreement between the Funds and other Janus
Capital sponsored mutual funds, which permit it to borrow or lend cash at a rate
beneficial to both the borrowing and lending funds. Outstanding borrowings from
all sources totaling 10% or more of a borrowing Fund's total assets must be
collateralized at 102% of the outstanding principal value of the loan; loans of
less than 10% may be unsecured. During the fiscal year ended October 31, 2005,
there were no outstanding borrowing or lending arrangements for the Funds.
FORWARD CURRENCY TRANSACTIONS
The Funds may enter into forward currency contracts in order to reduce their
exposure to changes in foreign currency exchange rates on their foreign
portfolio holdings and to lock in the U.S. dollar cost of firm purchase and sale
commitments for securities denominated in or exposed to foreign currencies. A
forward currency exchange contract is a commitment to purchase or sell a foreign
currency at a future date at a negotiated rate. The gain or loss arising from
the difference between the U.S. dollar cost of the original contract and the
value of the foreign currency in U.S. dollars upon closing a contract is
included in net realized gain or loss from foreign currency transactions on the
Statement of Operations (if applicable).
Forward currency contracts held by the Funds are fully collateralized by other
securities, which are denoted in the accompanying Schedule of Investments (if
applicable). The collateral is evaluated daily to ensure its market value equals
or exceeds the current market value of the corresponding forward currency
contracts.
FOREIGN CURRENCY TRANSLATIONS
The Funds do not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held at the date of the
financial statements. Net unrealized appreciation or depreciation on investments
and foreign currency translation arise from changes in the value of assets and
liabilities, including investments in securities 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 security transactions and income.
Foreign-denominated assets and forward currency contracts may involve more risks
than domestic transactions, including currency risk, political and economic
risk, regulatory risk and
76 Janus Growth Funds October 31, 2005
market risk. Risks may arise from the potential inability of a counterparty to
meet the terms of a contract and from unanticipated movements in the value of
foreign currencies relative to the U.S. dollar.
WHEN-ISSUED SECURITIES
The Funds may purchase or sell securities on a when-issued or forward commitment
basis. The price of the underlying securities and date when the securities will
be delivered and paid for are fixed at the time the transaction is negotiated.
Losses may arise due to changes in the market value of the securities or from
the inability of counterparties to meet the terms of the contract. In connection
with such purchases, the Funds may hold liquid assets as collateral with the
Funds' custodian sufficient to cover the purchase price. As of October 31, 2005,
there were no Funds invested in when-issued securities.
INITIAL PUBLIC OFFERINGS
The Funds may invest in initial public offerings ("IPOs"). IPOs and other
investment techniques may have a magnified performance impact on a fund with a
small asset base. The Funds may not experience similar performance as their
assets grow.
RESTRICTED SECURITY TRANSACTIONS
Restricted securities held by a Fund may not be sold except in exempt
transactions or in a public offering registered under the Securities Act of
1933. The risk of investing in such securities is generally greater than the
risk of investing in the securities of widely held, publicly traded companies.
Lack of a secondary market and resale restrictions may result in the inability
of a Fund to sell a security at a fair price and may substantially delay the
sale of the security. In addition, these securities may exhibit greater price
volatility than securities for which secondary markets exist.
DIVIDEND DISTRIBUTIONS
Each Fund generally declares and distributes dividends of net investment income
and capital gains (if any) annually. The majority of dividends and capital gains
distributions from a Fund will be automatically reinvested into additional
shares of that Fund, based on the discretion of the shareholder.
ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of income and expenses during
the reporting period. Actual results could differ from those estimates.
FEDERAL INCOME TAXES
No provision for income taxes is included in the accompanying financial
statements, as the Funds intend to distribute to shareholders all taxable
investment income and realized gains and otherwise comply with Subchapter M of
the Internal Revenue Code applicable to regulated investment companies.
2. INVESTMENT ADVISORY AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
Each Fund pays a monthly advisory fee to Janus Capital based upon average daily
net assets and calculated at the annual rate of 0.64%.
Until at least March 1, 2007, provided that Janus Capital remains investment
adviser to the Funds, Janus Capital has agreed to reimburse the Janus Triton
Fund by the amount, if any, that such Fund's normal operating expenses in any
fiscal year, including the investment advisory fee, but excluding the brokerage
commissions, interest, taxes and extraordinary expenses, exceed the annual rate
of 1.25%. If applicable, amounts reimbursed to the Fund by Janus Capital are
disclosed as Excess Expense Reimbursement on the Statement of Operations.
Each of the Funds pays Janus Services LLC ("Janus Services"), a wholly-owned
subsidiary of Janus Capital, an asset-weighted average annual fee based on the
proportion of each of the Fund's total net assets sold directly and the
proportion of each Fund's net assets sold through financial intermediaries. The
applicable fee rates are 0.16% of net assets on the proportion of assets sold
directly and 0.21% on the proportion of assets sold through intermediaries. In
addition, Janus Services receives $4.00 per open shareholder account (excluding
Janus Twenty Fund and Janus Venture Fund) for transfer agent services plus
reimbursement of certain out-of-pocket expenses (primarily postage and telephone
charges).
During the fiscal year ended October 31, 2005, Janus Services reimbursed the
following Funds as a result of dilutions caused by incorrectly processed
shareholder activity as indicated in the table below.
Funds
- -----
Growth
Janus Fund $ 947
Janus Olympus Fund 1,143
Janus Twenty Fund 6,605
For the fiscal year ended October 31, 2005, Janus Capital assumed $23,556 of
legal, consulting and Trustee costs and fees incurred by the funds in Janus
Investment Fund, Janus Aspen Series and Janus Adviser Series ("Portfolios") in
connection with the regulatory and civil litigation matters discussed in Note 6.
These non-recurring costs were allocated to all Portfolios, except Janus
Research Fund and Janus Triton Fund, based on the Portfolios' respective net
assets at July 31, 2004. Additionally, all future non-recurring costs will be
allocated to all Portfolios based on the Portfolios' respective net assets at
July 31, 2004. These non-recurring costs and
Janus Growth Funds October 31, 2005 77
Notes to Financial Statements (continued)
offsetting waivers are shown on the Statement of Operations. The effect of
non-recurring costs was de minimis.
Certain officers and Trustees of the Funds may also be officers and/or directors
of Janus Capital; however, such officers and Trustees receive no compensation
from the Funds.
The Funds' expenses may be reduced by expense offsets from an unaffiliated
custodian. Such credits or offsets are included in Expense and Fee Offsets on
the Statement of Operations. Custody credits received reduce Custodian Fees. The
Funds could have employed the assets used by the custodian to produce income if
it had not entered into an expense offset arrangement.
A 2.00% redemption fee may be imposed on shares of Janus Global Life Sciences
Fund and Janus Global Technology Fund held for three months or less. This fee is
paid to the Funds rather than Janus Capital, and is designed to deter excessive
short-term trading and to offset the brokerage commissions, market impact, and
other costs associated with changes in the Funds' asset level and cash flow due
to short-term money movements in and out of the Funds. The redemption fee is
accounted for as an addition to Paid-in Capital. Total redemption fees received
by Janus Global Life Sciences Fund and Janus Global Technology Fund were $35,415
and $80,384, respectively, for the fiscal year ended October 31, 2005.
The Funds may invest in money market funds, including funds managed by Janus
Capital. During the fiscal year ended October 31, 2005, the following Funds
recorded distributions from affiliated investment companies as affiliated
dividend income, and had the following affiliated purchases and sales:
Purchases Sales Dividend Value
Shares/Cost Shares/Cost Income at 10/31/05
-------------- -------------- -------------- --------------
Janus Institutional Cash Reserves
Fund
Janus Fund $ 310,000,000 $ 200,000,000 $ 986,248 $ 160,000,000
Janus Mercury Fund 60,000,000 60,000,000 194,715 --
Janus Twenty Fund 1,090,000,000 890,000,000 2,426,621 200,000,000
-------------- -------------- -------------- --------------
$1,460,000,000 $1,150,000,000 $ 3,607,584 $ 360,000,000
Janus Government Money Market Fund
Janus Twenty Fund $ 150,000,000 $ 150,000,000 $ 596,020 $--
Janus Money Market Fund
Janus Fund $ 100,000,000 $-- $ 133,233 $ 100,000,000
Janus Twenty Fund 50,000,000 -- 25,863 50,000,000
-------------- -------------- -------------- --------------
$ 150,000,000 $-- $ 159,096 $ 150,000,000
3. PURCHASES AND SALES OF INVESTMENT SECURITIES
For the fiscal year ended October 31, 2005, the aggregate cost of purchases and
proceeds from sales of investment securities (excluding short-term securities)
were as follows:
Purchase of Long- Proceeds from Sales
Term U.S. of Long-Term U.S.
Purchase of Proceeds from Sales Government Government
Fund Securities of Securities Obligations Obligations
- ---- ---------- ------------------- ----------------- -------------------
Growth
Janus Fund $ 9,406,967,675 $12,971,729,303 $ -- $ --
Janus Enterprise
Fund 478,766,539 742,033,476 -- --
Janus Mercury Fund 1,644,423,762 2,278,706,041 -- --
Janus Olympus Fund 2,653,484,751 3,041,361,597 -- --
Janus Orion Fund 459,877,736 396,305,081 -- --
Janus Triton Fund(1) 38,960,374 7,076,607 -- --
Janus Twenty Fund 3,990,464,774 5,744,479,845 -- --
Janus Venture Fund 854,255,331 1,033,344,391 3,585,000 3,824,909
Specialty Growth
Janus Global Life
Sciences Fund 892,797,076 1,168,604,715 -- --
Janus Global
Technology Fund 341,443,778 719,423,354 -- --
(1)Period from February 25, 2005 (inception date) through October 31, 2005.
78 Janus Growth Funds October 31, 2005
4. FEDERAL INCOME TAX
The tax components of capital shown in the table below represent: (1)
distribution requirements the Funds must satisfy under the income tax
regulations, (2) losses or deductions the Funds 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 (reduced by foreign
tax liability).
Other book to tax differences in the current year primarily consist of foreign
currency contract adjustments. The Funds have elected to treat gains and losses
on forward foreign currency contracts as capital gains and losses. Other foreign
currency gains and losses on debt instruments are treated as ordinary income for
federal income tax purposes pursuant to Section 988 of the Internal Revenue
Code.
Undistributed Undistributed Other Book Net Tax
Ordinary Long-Term Accumulated to Tax Appreciation/
Fund Income Gains Capital Losses Differences (Depreciation)
- ---------------- ------------- ------------- -------------- ------------ --------------
Growth
Janus Fund(1) $ 7,997,326 $ -- $(6,699,726,031) $ 66,893 $ 2,012,629,912
Janus Enterprise
Fund(1) -- -- (4,364,759,259) -- 543,380,822
Janus Mercury
Fund 12,422,837 -- (6,153,773,590) 1,512,941 1,069,488,574
Janus Olympus
Fund(1) 636,996 -- (1,684,106,645) 137,224 457,061,778
Janus Orion
Fund 3,064,672 -- (548,470,090) (170,054) 131,988,459
Janus Triton
Fund(2) -- 53,233 -- (90) 2,024,821
Janus Twenty
Fund 20,136,432 -- $(3,275,743,627) 169,261 3,053,477,786
Janus Venture
Fund(1) -- 65,399,672 (62,903,935) 150,398 300,255,418
Specialty Growth
Janus Global Life
Sciences Fund -- -- (915,468,385) (1,899) 273,750,987
Janus Global
Technology Fund 719,402 -- (2,773,738,382) 2,247,082 274,097,627
(1)Capital loss carryovers subject to annual limitations.
(2)Period from February 25, 2005 (inception date) through October 31, 2005.
Accumulated capital losses noted below represent net capital loss carryovers, as
of October 31, 2005, that may be available to offset future realized capital
gains and thereby reduce future taxable gains distributions. The table below
shows the expiration dates of the carryovers.
Capital Loss Carryover Expiration Schedule
For the year ended October 31, 2005
October 31, October 31, October 31, October 31, October 31, Accumulated
Fund 2007 2008 2009 2010 2011 Capital Losses
- ---- ----------- ----------- ----------- ----------- ----------- --------------
Growth
Janus Fund(1) $ -- $ (27,832,088) $(3,409,665,900) $(2,692,706,41) $ (569,521,625) $(6,699,726,031)
Janus
Enterprise
Fund(1) (2,880,396) (220,932,903) (2,924,501,200) (1,180,687,781) (35,756,979) (4,364,759,259)
Janus Mercury
Fund -- -- (3,254,153,236) (2,677,021,633) (222,598,721) (6,153,773,590)
Janus Olympus
Fund(1) -- (3,298,969) (1,147,259,588) (533,548,088) -- (1,684,106,645)
Janus Orion
Fund -- -- (480,697,899) (67,772,191) -- (548,470,090)
Janus Triton
Fund(2) -- -- -- -- -- --
Janus Twenty
Fund -- -- (2,514,552,821) (117,584,500) (643,606,306) (3,275,743,627)
Janus Venture
Fund(1) -- -- (50,323,147) (12,580,788) -- (62,903,935)
Specialty Growth
Janus Global
Life
Sciences Fund -- (109,162,517) (451,314,670) (251,753,591) (103,237,607) (915,468,385)
Janus Global
Technology
Fund -- (6,230,420) (1,827,246,526) (857,178,929) (83,082,507) (2,773,738,382)
(1)Capital loss carryovers subject to annual limitations.
(2)Period from February 25, 2005 (inception date) through October 31, 2005.
Janus Growth Funds October 31, 2005 79
Notes to Financial Statements (continued)
During the year ended October 31, 2005, the following capital loss carryovers
were utilized by the Funds as indicated in the table below.
Fund Capital Carryover Loss Utilized
- ---- -------------------------------
Growth
Janus Fund $ 2,439,165,545
Janus Enterprise Fund 178,030,460
Janus Mercury Fund 337,995,565
Janus Olympus Fund 299,430,515
Janus Orion Fund 65,588,058
Janus Twenty Fund 1,463,811,386
Janus Venture Fund 52,004,445
Specialty Growth
Janus Global Life Sciences Fund 170,843,244
Janus Global Technology Fund 97,986,731
The aggregate cost of investments and the composition of unrealized appreciation
and depreciation of investment securities for federal income tax purposes as of
October 31, 2005 are noted below.
Unrealized appreciation and unrealized depreciation in the table below exclude
appreciation/depreciation on foreign currency translations. The primary
difference between book and tax appreciation or depreciation of investments is
wash sale loss deferrals.
Federal Tax Unrealized Unrealized
Fund Cost Appreciation (Depreciation)
- ---- ----------- ------------ --------------
Growth
Janus Fund $ 9,490,173,874 $ 2,211,777,463 $ (199,147,551)
Janus Enterprise Fund 1,476,079,415 579,947,055 (36,566,233)
Janus Mercury Fund 3,666,238,998 1,146,874,095 (77,385,521)
Janus Olympus Fund 1,937,984,355 478,854,067 (21,773,793)
Janus Orion Fund 688,427,461 156,560,507 (24,377,399)
Janus Triton Fund(1) 35,572,733 4,266,139 (2,235,316)
Janus Twenty Fund 6,735,824,981 3,131,026,971 (77,549,185)
Janus Venture Fund 1,252,449,079 381,523,108 (81,161,878)
Specialty Growth
Janus Global Life Sciences Fund 1,043,116,059 309,902,792 (36,151,805)
Janus Global Technology Fund 773,606,640 305,668,068 (31,559,059)
(1)Period from February 25, 2005 (inception date) through October 31, 2005.
Income and capital gains distributions are determined in accordance with income
tax regulations that may differ from accounting principles generally accepted in
the United States of America. These differences are due to differing treatments
for items such as net short-term gains, deferral of wash sale losses, foreign
currency transactions, net investment losses and capital loss carryovers.
Certain permanent differences such as tax returns of capital and net investment
losses noted below have been reclassified to paid-in capital.
For the fiscal year
ended October 31, 2005 Distributions
- ---------------------- ---------------------------------------------------
From Ordinary From Long-Term Tax Return of Net Investment
Fund Income Capital Gains Capital Loss
- ---- ------------- -------------- ------------- --------------
Growth
Janus Fund $ -- $ -- $ -- $ --
Janus Enterprise Fund -- -- -- (5,127,872)
Janus Mercury Fund 6,427,322 -- -- --
Janus Olympus Fund -- -- -- --
Janus Orion Fund -- -- -- --
Janus Triton Fund(1) -- -- -- --
Janus Twenty Fund 2,651,260 -- -- --
Janus Venture Fund -- -- -- (8,870,191)
Specialty Growth
Janus Global Life
Sciences Fund -- -- -- (5,796,869)
Janus Global
Technology Fund -- -- -- --
(1)Period from February 25, 2005 (inception date) through October 31, 2005.
80 Janus Growth Funds October 31, 2005
For the fiscal year
ended October 31, 2004 Distributions
- ---------------------- -------------------------------------------------
From Ordinary From Long-Term Tax Return of Net Investment
Fund Income Capital Gains Capital Loss
- ---- ------------- -------------- ------------- --------------
Growth
Janus Fund $ -- $ -- $ -- $(25,568,519)
Janus Enterprise Fund -- -- -- (8,348,708)
Janus Mercury Fund -- -- -- (13,151,657)
Janus Olympus Fund -- -- -- (9,357,108)
Janus Orion Fund -- -- -- (351,902)
Janus Twenty Fund 47,904,085 -- -- --
Janus Venture Fund -- -- -- (10,052,626)
Specialty Growth
Janus Global Life Sciences
Fund -- -- -- (7,055,029)
Janus Global Technology
Fund -- -- -- (5,547,781)
5. CAPITAL SHARE TRANSACTIONS
Janus Janus Janus
For the fiscal year Janus Enterprise Mercury Olympus
ended Fund Fund Fund Fund
October 31 (all --------------------- --------------------- --------------------- ---------------------
numbers in thousands) 2005 2004 2005 2004 2005 2004 2005 2004
- --------------------- -------- -------- -------- -------- -------- -------- -------- --------
Transactions in Fund Shares
Shares sold 15,753 34,887 6,111 6,421 33,707 17,149 3,301 6,107
Reinvested distributions -- -- -- -- 289 -- -- --
Shares repurchased (145,132) (223,406) (12,764) (20,472) (60,613) (78,824) (20,158) (26,302)
-------- -------- -------- -------- -------- -------- -------- --------
Net
Increase/(Decrease)
in Capital Share
Transactions (129,379) (188,519) (6,653) (14,051) (26,617) (61,675) (16,857) (20,195)
Shares Outstanding,
Beginning of Period 585,256 773,775 49,800 63,851 229,499 291,174 89,748 109,943
-------- -------- -------- -------- -------- -------- -------- --------
Shares Outstanding,
End of Period 455,877 585,256 43,147 49,800 202,882 229,499 72,891 89,748
Janus Janus Janus Janus
Orion Triton Twenty Venture
For the fiscal year ended Fund Fund Fund Fund
October 31 (all numbers in --------------------- -------- --------------------- ---------------------
thousands) 2005 2004 2005(1) 2005 2004 2005 2004
- -------------------------- -------- -------- -------- -------- -------- -------- --------
Transactions in Fund Shares
Shares sold 22,671 18,664 4,486 12,470 13,158 653 1,126
Reinvested distributions -- -- -- 59 1,362 -- --
Shares repurchased (18,685) (24,998) (1,015) (38,601) (75,000) (3,628) (4,539)
-------- -------- -------- -------- -------- -------- --------
Net Increase/(Decrease) in
Capital Share Transactions 3,986 (6,334) 3,471 (26,072) (60,480) (2,975) (3,413)
Shares Outstanding,
Beginning of Period 84,701 91,035 0 227,885 288,365 25,735 29,148
-------- -------- -------- -------- -------- -------- --------
Shares Outstanding, End of
Period 88,687 84,701 3,471 201,813 227,885 22,760 25,735
Janus Janus
Global Life Sciences Global Technology
Fund Fund
For the fiscal year ended ----------------------- -----------------------
October 31(all numbers in thousands) 2005 2004 2005 2004
- ------------------------------------ -------- -------- -------- --------
Transactions in Fund Shares
Shares sold 2,837 7,843 4,449 15,459
Reinvested distributions -- -- -- --
Shares repurchased (17,065) (20,764) (42,493) (44,697)
-------- -------- -------- --------
Net Increase/(Decrease) in Capital Share
Transactions (14,228) (12,921) (38,044) (29,238)
Shares Outstanding, Beginning of Period 73,596 86,517 129,336 158,574
-------- -------- -------- --------
Shares Outstanding, End of Period 59,368 73,596 91,292 129,336
(1)Period from February 25, 2005 (inception date) through October 31, 2005.
Janus Growth Funds October 31, 2005 81
Notes to Financial Statements (continued)
6. LEGAL MATTERS
In the fall of 2003, the Securities and Exchange Commission ("SEC"), the Office
of the New York State Attorney General ("NYAG"), the Colorado Attorney General
("COAG") and the Colorado Division of Securities ("CDS") announced that they
were investigating alleged frequent trading practices in the mutual fund
industry. On August 18, 2004, Janus Capital announced that it had reached final
settlements with the SEC, the NYAG, the COAG, and the CDS related to such
regulators' investigations into Janus Capital's frequent trading arrangements.
A number of civil lawsuits were brought against Janus Capital and certain of its
affiliates, the Janus funds, and related entities and individuals based on
allegations similar to those announced by the above regulators and were filed in
several state and federal jurisdictions. Such lawsuits alleged a variety of
theories for recovery including, but not limited to, the federal securities
laws, other federal statutes (including ERISA), and various common law
doctrines. The Judicial Panel on Multidistrict Litigation transferred these
actions to the U.S. District Court for the District of Maryland (the "Court")
for coordinated proceedings. On September 29, 2004, five consolidated amended
complaints were filed in that Court that generally include: (i) claims by a
putative class of investors in the Janus funds asserting claims on behalf of the
investor class; (ii) derivative claims by investors in the Janus funds
ostensibly on behalf of the Janus funds; (iii) claims on behalf of participants
in the Janus 401(k) plan; (iv) claims brought on behalf of shareholders of Janus
Capital Group Inc. ("JCGI") on a derivative basis against the Board of Directors
of JCGI; and (v) claims by a putative class of shareholders of JCGI asserting
claims on behalf of the shareholders. Each of the five complaints initially
named JCGI and/or Janus Capital as a defendant. In addition, the following were
also named as defendants in one or more of the actions: Janus Investment Fund
("JIF"), Janus Aspen Series ("JAS"), Janus Adviser Series ("JAD"), Janus
Distributors LLC, Enhanced Investment Technologies, LLC ("INTECH"), Bay Isle
Financial LLC ("Bay Isle"), Perkins, Wolf, McDonnell and Company, LLC
("Perkins"), the Advisory Committee of the Janus 401(k) plan, and the current or
former directors of JCGI.
On August 25, 2005, the Court entered orders dismissing most of the claims
asserted against Janus Capital and its affiliates by fund investors (actions (i)
and (ii) described above), except certain claims under Section 10(b) of the
Securities Exchange Act of 1934 and under Section 36(b) of the Investment
Company Act of 1940. As a result, JCGI, Janus Capital, the Advisory Committee of
the Janus 401(k) plan, and the current or former directors of JCGI are the
remaining defendants in one or more of the actions. The complaint in the 401(k)
plan class action (action (iii) described above) was voluntarily dismissed, but
was recently refiled using a new named plaintiff and asserting claims similar to
the initial complaint.
The Attorney General's Office for the State of West Virginia filed a separate
market timing related civil action against Janus Capital and several other
non-affiliated mutual fund companies, claiming violations under the West
Virginia Consumer Credit and Protection Act. The civil action requests certain
monetary penalties, among other relief. A request to transfer this action to the
Multidistrict Litigation case in the U.S. District Court of Baltimore, Maryland,
described above is pending. In addition, the Auditor of the State of West
Virginia, in his capacity as securities commissioner, has issued an order
indicating an intent to initiate administrative proceedings against most of the
defendants in the market timing cases (including Janus Capital) and seeking
disgorgement and other monetary relief based on similar market timing
allegations.
In addition to the "market timing" actions described above, Janus Capital is a
defendant in a consolidated lawsuit in the U.S. District Court for the District
of Colorado challenging the investment advisory fees charged by Janus Capital to
certain Janus funds. The action was filed by fund investors asserting breach of
fiduciary duty under Section 36(b) of the Investment Company Act of 1940.
A lawsuit was also filed against Janus Capital and certain affiliates in the
U.S. District Court for the District of Colorado alleging that Janus Capital
failed to ensure that certain Janus funds participated in securities class
action settlements for which the funds were eligible. The complaint asserts
claims under Sections 36(a), 36(b), and 47(b) of the Investment Company Act,
breach of fiduciary duty and negligence.
In 2001, Janus Capital's predecessor was also named as a defendant in a class
action suit in the U.S. District Court for the Southern District of New York,
alleging that certain underwriting firms and institutional investors violated
antitrust laws in connection with initial public offerings. The U.S. District
Court dismissed the plaintiff's antitrust claims in November 2003, however, the
U.S. Court of Appeals recently vacated that decision and remanded it for further
proceedings.
Additional lawsuits may be filed against certain of the Janus funds, Janus
Capital, and related parties in the future. Janus Capital does not currently
believe that these pending actions will materially affect its ability to
continue providing services it has agreed to provide to the Janus funds.
82 Janus Growth Funds October 31, 2005
7. SUBSEQUENT EVENTS
Several proposals regarding the Funds were presented to shareholders at a
Special Meeting of Shareholders on November 22, 2005 and potentially any
adjournments thereof to be held during 2005. A Proxy Statement that describes
each of the proposals has been mailed to shareholders of record as of September
9, 2005.
PROPOSAL 1. Elect nine Trustees, including eight "independent" candidates (seven
of which currently serve as Trustees of the Trust).
PROPOSAL 2. Approve elimination of Janus Flexible Bond Fund's fundamental policy
regarding investments in income-producing securities.
PROPOSAL 3.a. For shareholders of each Fund (except Janus Mid Cap Value Fund,
Janus Risk-Managed Stock Fund, and Janus Small Cap Value Fund), to approve
conforming amendments to the Fund's investment advisory agreement with Janus
Capital.
PROPOSAL 3.b. To approve a proposed amendment to the investment advisory
agreement between Janus Capital and the following Funds that would introduce a
performance incentive investment advisory fee structure: Janus Contrarian Fund,
Janus Mercury Fund, Janus Mid Cap Value Fund, Janus Research Fund, Janus
Risk-Managed Stock Fund, and Janus Worldwide Fund.
PROPOSAL 4. To approve an amended subadvisory agreement between Janus Capital,
on behalf of Janus Risk-Managed Stock Fund and INTECH that would introduce a
performance incentive subadvisory fee structure.
Further information about each of these proposals is provided in the Proxy
Statement filed with the SEC that is available electronically on www.janus.com
during the period of the proxy solicitation.
Janus Growth Funds October 31, 2005 83
Report of Independent Registered Public Accounting Firm
To the Trustees and Shareholders
of Janus Investment Fund
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Janus Fund, Janus Enterprise Fund,
Janus Mercury Fund, Janus Olympus Fund, Janus Orion Fund, Janus Triton Fund,
Janus Twenty Fund, Janus Venture Fund, Janus Global Life Sciences Fund and Janus
Global Technology Fund (ten of the portfolios constituting the Janus Investment
Fund, hereafter referred to as the "Funds") at October 31, 2005, the results of
each of their operations for the year then ended, the changes in each of their
net assets and the financial highlights for each of the periods indicated, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and financial highlights (hereafter referred
to as "financial statements") are the responsibility of the Funds' 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 at October 31, 2005 by
correspondence with the custodian, transfer agent and brokers, and the
application of alternative procedures where securities purchased had not been
received, provide a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS, LLP
PricewaterhouseCoopers LLP
Denver, Colorado
December 9, 2005
84 Janus Growth Funds October 31, 2005
Additional Information(unaudited)
PROXY VOTING POLICIES AND VOTING RECORD
A description of the policies and procedures that the Funds use to determine how
to vote proxies relating to their portfolio securities is available: (i) without
charge, upon request, by calling 1-800-525-3713 (toll free); (ii) on the Fund's
website at www.janus.com; and (iii) on the SEC's website at http://www.sec.gov.
Additionally, information regarding each Fund's proxy voting record for the most
recent twelve month period ended June 30 is also available, free of charge,
through www.janus.com and from the SEC's website at http://www.sec.gov.
QUARTERLY PORTFOLIO HOLDINGS
The Funds file their 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 Funds' 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 at 1-800-525-3713 (toll
free).
APPROVAL OF ADVISORY AGREEMENTS DURING THE PERIOD
APPROVAL OF ADVISORY AGREEMENT FOR JANUS TRITON FUND
The Trustees of Janus Investment Fund, more than eighty-five percent of whom
have never been affiliated with Janus Triton Fund's (the "New Fund") adviser
("Independent Trustees"), considered the proposed investment advisory agreement
for the New Fund. In the course of their consideration of the agreement the
Independent Trustees met in executive session and were advised by their
independent legal counsel. The Independent Trustees received and reviewed a
substantial amount of information provided by Janus Capital Management LLC (the
"Adviser") in response to requests of the Trustees and their counsel. They also
received and reviewed a considerable amount of information provided to the
Trustees by their independent fee consultant. Based on their evaluation of that
information and other information, the Trustees, including all of the
Independent Trustees, at a meeting held on December 2, 2004, approved the
investment advisory agreement for the New Fund for a period through July 1,
2006.
In considering the agreements and reaching their conclusions, the Trustees
reviewed and analyzed various factors that they determined were relevant,
including the factors described as follows.
1. NATURE, EXTENT AND QUALITY OF SERVICES
The Trustees' analysis of the nature, extent and quality of the Adviser's
services to the New Fund took into account the investment objective and strategy
of the New Fund and the knowledge of the Trustees gained from the Trustees'
regular meetings with management throughout the prior year. In addition, the
Trustees reviewed the Adviser's resources and key personnel, especially those
who would be providing investment management services to the New Fund. The
Trustees also considered other services to be provided to the New Fund by the
Adviser, such as selecting broker-dealers for executing portfolio transactions,
serving as the New Fund's administrator, monitoring adherence to the New Fund's
investment restrictions, producing shareholder reports, providing support
services for the Trustees and Trustee committees and overseeing the activities
of other service providers, including monitoring compliance with various Fund
policies and procedures and with applicable securities laws and regulations. The
Trustees concluded that the nature, extent and quality of the services to be
provided by the Adviser to the New Fund were appropriate and consistent with the
terms of the respective proposed advisory agreements and that the New Fund was
likely to benefit from services provided under its agreement with the Adviser.
They also concluded that the quality of the Adviser's services to the other
Janus funds had been consistent with or superior to quality norms in the
industry and that the Adviser had sufficient personnel, with the appropriate
education and experience, to serve the New Fund effectively and had demonstrated
its continuing ability to attract and retain well qualified personnel.
The Trustees also reviewed the response of the Adviser to various legal and
regulatory proceedings since the fall of 2003.
2. COSTS OF SERVICES PROVIDED
The Trustees examined the fee information and expense for the New Fund in
comparison to information for other comparable funds as provided by Lipper Inc.
They noted that both the rate of investment advisory fee and the estimated
expense ratio for the New Fund were below both the median and the mean advisory
fees and the expense ratios, respectively, for the respective groups of
comparable funds.
The Trustees considered the methodology used by the Adviser in determining
compensation payable to portfolio managers and the competition for investment
management
Janus Growth Funds October 31, 2005 85
talent, and they also considered the competitive market for mutual funds in
different distribution channels.
The Trustees had also reviewed the Adviser's management fees for its
institutional separate accounts and for its subadvised funds (funds for which
the Adviser provides portfolio management services only). In most instances
sub-advisory and institutional separate account fees are lower than the New
Fund's management fee. However, the Trustees noted that the Adviser performs
significant additional services for the New Fund that it does not provide to
those other clients, including administrative services, oversight of the New
Fund's other service providers, trustee support, regulatory compliance and
numerous other services. The Trustees had also considered the profitability to
the Adviser and its affiliates of their relationships with the other Janus Funds
in connection with their consideration of the advisory agreements for those
funds and had found the profitability not to be unreasonable.
Finally, the Trustees considered the financial condition of the Adviser, which
they found to be sound.
The Trustees concluded that the management fees and other compensation to be
paid by the New Fund to the Adviser and its affiliates were reasonable in
relation to the nature and quality of the services to be provided, taking into
account the fees charged by other advisers for managing comparable mutual funds
with similar strategies and the fees the Adviser charges to other clients, and
that the estimated overall expense ratio of the New Fund, taking into account
the expense limitations agreed to by the Adviser, was comparable to or more
favorable than the mean or median expense ratio of its peers.
3. BENEFITS DERIVED FROM THE RELATIONSHIP WITH THE NEW FUND
The Trustees also considered benefits that would accrue to the Adviser and its
affiliates from their relationship with the New Fund. The Trustees recognized
that two affiliates of the Adviser would serve the New Fund as transfer agent
and distributor and that the transfer agent would receive compensation from the
New Fund for its services to the New Fund. The Trustees also considered the
Adviser's use of commissions to be paid by the New Fund on their portfolio
brokerage transactions to obtain proprietary research products and services
benefiting the New Fund and/or other clients of the Adviser and the Adviser's
agreement not to use the New Fund's portfolio brokerage transactions to obtain
third party research through brokers. The Trustees concluded that the Adviser's
use of "soft" commission dollars to obtain proprietary research products and
services was consistent with regulatory requirements and would benefit the New
Fund. The Trustees concluded that, other than the services to be provided by the
Adviser and its affiliates pursuant to the proposed agreements and the fees to
be paid by the New Fund therefor, the New Fund and the Adviser may potentially
benefit from their relationship with each other in other ways. They concluded
that the Adviser would benefit from the receipt of proprietary research products
and services to be acquired through commissions paid on portfolio transactions
of the New Fund and that the New Fund would benefit from the Adviser's receipt
of those products and services as well as research products and services
acquired through commissions paid by other clients of the Adviser. They also
concluded that success of the New Fund could attract other business to the
Adviser or its other funds and that the success of the Adviser could enhance the
Adviser's ability to serve the New Fund.
After full consideration of the above factors as well as other factors, the
Trustees, including all of the Independent Trustees, concluded that approval of
the New Fund's agreement was in the best interest of the New Fund and its
shareholders.
APPROVAL OF ADVISORY AGREEMENT FOR JANUS FUND, JANUS ENTERPRISE FUND, JANUS
MERCURY FUND, JANUS OLYMPUS FUND, JANUS ORION FUND, JANUS TWENTY FUND, JANUS
VENTURE FUND, JANUS GLOBAL LIFE SCIENCES FUND AND JANUS GLOBAL TECHNOLOGY FUND
The Trustees of Janus Investment Fund, more than eighty-five percent of whom
have never been affiliated with the Funds' adviser ("Independent Trustees"),
oversee the management of each of the Funds and, as required by law, determine
annually whether to continue the investment advisory agreements for each of the
Funds and the sub-advisory agreements for the three Funds that utilize
sub-advisers.
In connection with their most recent consideration of those agreements for all
of the Funds, the Trustees received and reviewed a substantial amount of
information provided by Janus Capital (the "Adviser") and the respective
sub-advisers in response to requests of the Independent Trustees and their
counsel. They also received and reviewed a considerable amount of information
and analysis provided to the Trustees by their independent fee consultant.
Throughout their consideration of the agreements the Independent Trustees were
advised by their independent legal counsel. The Independent Trustees met on two
separate occasions with
86 Janus Growth Funds October 31, 2005
management to consider the agreements, and at each of those meetings they also
met separately in executive session with their counsel.
At a meeting held on June 14, 2005, based on their evaluation of the information
provided by the Adviser, sub-advisers and the independent fee consultant and
other information, the Trustees determined that the overall arrangements between
the Funds and the Adviser were fair and reasonable in light of the nature and
quality of the services provided by the Adviser, its affiliates and the
sub-advisers, 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, including all of the Independent Trustees, unanimously
approved the continuation of the investment advisory agreement for each Fund,
and of the sub-advisory agreement for each sub-advised Fund, for an additional
one-year period, subject to earlier termination as provided in each agreement.
In considering the continuation of the 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.
NATURE, EXTENT AND QUALITY OF SERVICES
The Trustees reviewed the nature, extent and quality of the services of the
Adviser and the sub-advisers to the Funds, taking into account the investment
objective and strategy of each Fund and the knowledge the Trustees gained from
their regular meetings with management on at least a quarterly basis. In
addition, the Trustees reviewed the resources and key personnel of the Adviser
and sub-advisers, especially those who provide investment management services to
the Funds. The Trustees also considered other services provided to the Funds by
the Adviser or sub-advisers, such as managing the execution of portfolio
transactions and the selection of broker-dealers for those transactions, serving
as the Funds' administrator, monitoring adherence to the Funds' investment
restrictions, producing shareholder reports, providing support services for the
Trustees and Trustee committees and overseeing the activities of other service
providers, including monitoring compliance with various policies and procedures
of the Funds and with applicable securities laws and regulations. The Trustees
also reviewed the enhanced compliance program of the Adviser and the actions
taken by the Adviser in response to various legal and regulatory proceedings
since the fall of 2003.
The Trustees concluded that the nature, extent and quality of the services
provided by the Adviser or sub-adviser to each Fund were appropriate and
consistent with the terms of the respective advisory agreements, that the
quality of those services had been consistent with or superior to quality norms
in the industry and that the Funds were likely to benefit from the continued
provision of those services. They also concluded that the Adviser and each
sub-adviser had sufficient personnel, with the appropriate education and
experience, to serve the Funds effectively and had demonstrated its continuing
ability to attract and retain well-qualified personnel.
PERFORMANCE OF THE FUNDS
The Trustees considered the short-term and longer term performance of each Fund.
They reviewed information comparing each Fund's performance with the performance
of comparable funds and peer groups identified by Lipper Inc. and with the
Fund's benchmark. They concluded that the performance of most Funds was good to
very good. Although the performance of some Funds lagged that of their peers for
certain periods, they also concluded that the Adviser had taken appropriate
steps to address the under-performance and that the more recent performance of
most of those Funds had been improving.
COSTS OF SERVICES PROVIDED
The Trustees examined information on the fees and expenses of each Fund in
comparison to information for other comparable funds as provided by Lipper. They
noted that the rate of management fees for each Fund, after contractual expense
limitations, was below the mean management fee rate of the respective peer group
of funds selected by Lipper and for more than two-thirds of the Funds was in the
lowest cost quartile.
The Trustees considered the methodology used by the Adviser in determining
compensation payable to portfolio managers, the very competitive environment for
investment management talent and the competitive market for mutual funds in
different distribution channels.
The Trustees also reviewed the Adviser's management fees for its separate
account clients and for its sub-advised funds (for which the Adviser provides
only portfolio management services). Although in most instances sub-advisory and
separate account fee rates for various investment strategies were lower than
management fees for Funds having a similar strategy, the Trustees noted that the
Adviser performs
Janus Growth Funds October 31, 2005 87
Additional Information (unaudited) (continued)
significant additional services for the Funds that it does not provide to those
other clients, including administrative services, oversight of the Funds' other
service providers, trustee support, regulatory compliance and numerous other
services. Moreover, they noted that the spread between the average fees charged
to the Funds and the fees that the Adviser charged to its separate account
clients was significantly smaller than the average spread for such fees of other
advisers, based on publicly available data and research conducted by their
independent fee consultant.
The Trustees also considered the profitability to the Adviser and its affiliates
of their relationships with each Fund and found the Adviser's profitability not
to be unreasonable.
Finally, the Trustees considered the financial condition of the Adviser, which
they found to be sound.
The Trustees concluded that the management fees and other compensation payable
by each Fund to the Adviser and its affiliates, as well as the fees paid by the
Adviser to the sub-advisers of sub-advised Funds, were reasonable in relation to
the nature and quality of the services provided, taking into account the fees
charged by other advisers for managing comparable mutual funds with similar
strategies and the fees the Adviser charges to other clients. The Trustees also
concluded that the overall expense ratio of each Fund was reasonable, taking
into account the size of the Fund, the quality of services provided by the
Adviser, the investment performance of the Fund and the expense limitations
agreed to by the Adviser.
ECONOMIES OF SCALE
The Trustees received and considered information about the potential of the
Adviser to experience economies of scale as the assets of the Funds increase.
They noted that, although each Fund pays an advisory fee at a fixed rate as a
percentage of net assets, without any breakpoints, the management fee paid by
each Fund after contractual expense limitations was below the mean management
fee rate of the Fund's peer group selected by Lipper; and, for those Funds whose
expenses are being reduced by the contractual expense limitations of the
Adviser, the Adviser is subsidizing the Funds because they have not reached
adequate scale. Moreover, as the assets of many of the Funds have declined in
the past few years the Funds have benefited from having advisory fee rates that
have remained constant rather than increasing as assets decline. The Trustees
also noted that the Funds share directly in economies of scale through lower
charges of third-party service providers based on the combined scale of all of
the Funds. Based on all of the information they reviewed, 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 the Adviser and the Fund of economies
of scale at the current asset level of the Fund.
OTHER BENEFITS TO THE ADVISER
The Trustees also considered benefits that accrue to the Adviser and its
affiliates from their relationship with the Funds. They recognized that
affiliates of the Adviser separately serve the Funds as transfer agent and
distributor, respectively. The Trustees also considered the Adviser's use of
commissions paid by most Funds on their portfolio brokerage transactions to
obtain proprietary research products and services benefiting the Funds and/or
other clients of the Adviser, as well as the Adviser's agreement not to use any
Fund's portfolio brokerage transactions to obtain third party research through
brokers. The Trustees concluded that the Adviser's use of "soft" commission
dollars to obtain proprietary research products and services was consistent with
regulatory requirements and was likely to benefit the Funds. The Trustees also
concluded that, other than the services provided by the Adviser and its
affiliates pursuant to the agreements and the fees to be paid by each Fund
therefor, the Funds and the Adviser may potentially benefit from their
relationship with each other in other ways. They concluded that the Adviser
benefits from the receipt of proprietary research products and services acquired
through commissions paid on portfolio transactions of the Funds and that the
Funds benefit from the Adviser's receipt of those products and services, as well
as research products and services acquired through commissions paid by other
clients of the Adviser. They further concluded that success of each Fund could
attract other business to the Adviser or its other Funds and that the success of
the Adviser could enhance the Adviser's ability to serve the Funds.
After full consideration of the above factors as well as other factors, the
Trustees, including all of the Independent Trustees, concluded that the
continuation of the investment advisory agreement for each Fund was in the best
interest of the Fund and its shareholders.
88 Janus Growth Funds October 31, 2005
Explanations of Charts, Tables and
Financial Statements (unaudited)
1. PERFORMANCE OVERVIEWS
Performance overview graphs compare the performance of a hypothetical $10,000
investment in each Fund (from inception) with one or more widely used market
indices. The hypothetical example does not represent the returns of any
particular investment.
When comparing the performance of a Fund with an index, keep in mind that market
indices do not include brokerage commissions that would be incurred if you
purchased the individual securities in the index. They also do not include taxes
payable on dividends and interest or operating expenses incurred if you
maintained a Fund invested in the index.
Average annual total returns are also quoted for each Fund. 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 any dividends, distributions
and capital gains, 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.
2. SCHEDULES OF INVESTMENTS
Following the performance overview section is each Fund's Schedule of
Investments. This schedule reports the industry concentrations and types of
securities held in each 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. Certain short-term investments maturing within 60 days are valued at
amortized cost, which approximates market value.
Funds that invest in foreign securities also provide a summary of investments by
country. This summary reports the Fund's exposure to different countries by
providing the percentage of securities invested in each country. The country of
each security represents the country in which the company is incorporated.
2A. FORWARD CURRENCY CONTRACTS
A table listing forward currency contracts follows each Fund's Schedule of
Investments (if applicable). Forward currency contracts are agreements to
deliver or receive a preset amount of currency at a future date. Forward
currency contracts are used to hedge against foreign currency risk in the Fund's
long-term holdings.
The table provides the name of the foreign currency, the settlement date of the
contract, the amount of the contract, the value of the currency in U.S. dollars
and the amount of unrealized gain or loss. The amount of unrealized gain or loss
reflects the change in currency exchange rates from the time the contract was
opened to the last day of the reporting period.
2B. FUTURES
A table listing futures contracts follows each Fund's Schedule of Investments
(if applicable). Futures contracts are contracts that obligate the buyer to
receive and the seller to deliver an instrument or money at a specified price on
a specified date. Futures are used to hedge against adverse movements in
securities prices, currency risk or interest rates.
The table provides the name of the contract, number of contracts held, the
expiration date, the principal amount, value and the amount of unrealized gain
or loss. The amount of unrealized gain or loss reflects the marked-to-market
amount for the last day of the reporting period.
3. STATEMENT OF ASSETS AND LIABILITIES
This statement is often referred to as the "balance sheet." It lists the assets
and liabilities of the Funds on the last day of the reporting period.
The Funds' assets are calculated by adding the value of the securities owned,
the receivable for securities sold but not yet settled, the receivable for
dividends declared but not yet received on stocks owned and the receivable for
Fund shares sold to investors but not yet settled. The Funds' 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
Funds' net assets. Because Funds must distribute substantially all earnings,
you'll 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
Funds' net assets (assets minus liabilities) by the number of shares
outstanding.
Janus Growth Funds October 31, 2005 89
Explanations of Charts, Tables and
Financial Statements (unaudited) (continued)
4. STATEMENT OF OPERATIONS
This statement details the Funds' income, expenses, gains and losses on
securities and currency transactions, and appreciation or depreciation of
current Fund holdings.
The first section in this statement, entitled "Investment Income," reports the
dividends earned from stocks and interest earned from interest-bearing
securities in the Funds.
The next section reports the expenses incurred by the Funds, 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, if any, are also shown.
The last section lists the increase or decrease in the value of securities held
in the Funds. Funds realize a gain (or loss) when they sell their position in a
particular security. An unrealized gain (or loss) refers to the change in net
appreciation or depreciation of the Funds during the 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.
5. STATEMENT OF CHANGES IN NET ASSETS
This statement reports the increase or decrease in the Funds' net assets during
the reporting period. Changes in the Funds' net assets are attributable to
investment operations, dividends, distributions and capital share transactions.
This is important to investors because it shows exactly what caused the Funds'
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 Funds' investment performance. The
Funds' net assets may also change as a result of dividend and capital gains
distributions to investors. If investors receive their dividends in cash, money
is taken out of the Fund to pay the distribution. If investors reinvest their
dividends, the Funds' net assets will not be affected. If you compare each
Fund's "Net Decrease from Dividends and Distributions" to the "Reinvested
dividends and distributions," you'll notice that dividend distributions had
little effect on each Fund's net assets. This is because the majority of Janus
investors reinvest their distributions.
The reinvestment of dividends is included under "Capital Share Transactions."
"Capital Shares" refers to the money investors contribute to the Funds through
purchases or withdrawals via redemptions. The "Redemption Fees" refers to the
fee paid to the Funds for shares held for three months or less by a shareholder.
The Funds' net assets will increase and decrease in value as investors purchase
and redeem shares from the Funds.
6. FINANCIAL HIGHLIGHTS
This schedule provides a per-share breakdown of the components that affect the
Funds' NAV for current and past reporting periods. Not only does this table
provide you with total return, it also reports total distributions, asset size,
expense ratios and portfolio turnover rate.
The first line in the table reflects the NAV per share at the beginning of the
reporting period. The next line reports the net investment income per share,
which comprises dividends and interest income earned on securities held by the
Funds. Following is the total of gains/(losses), realized and unrealized.
Dividends and distributions are then subtracted to arrive at the NAV per share
at the end of the period.
The next line reflects the average annual total return reported the last day of
the period.
Also included are the expense ratios, or the percentage of net assets that were
used to cover operating expenses during the period. Expense ratios vary across
the Funds for a number of reasons, including the differences in management fees,
the average shareholder account size, the frequency of dividend payments and the
extent of foreign investments, which entail greater transaction costs.
The Funds' expenses may be reduced through expense reduction arrangements. These
arrangements may include the use of uninvested cash balances earning interest,
or balance credits. The Statement of Operations reflects total expenses before
any such offset, the amount of offset and the net expenses. The expense ratios
listed in the Financial Highlights reflect total expenses prior to any expense
offsets (gross expense ratio) and after the expense offsets (net expense ratio).
Both expense ratios reflect expenses after waivers (reimbursements), if
applicable.
The ratio of net investment income/(loss) summarizes the income earned less
expenses divided by the average net assets of a Fund during the reporting
period. Don't confuse this ratio with a Fund's yield. The net investment income
ratio is not a true measure of a Fund's yield because it doesn't take into
account the dividends distributed to the Fund's investors.
The next ratio is the portfolio turnover rate, which measures the buying and
selling activity in a Fund. Portfolio turnover is affected by market conditions,
changes in the asset size of a Fund, the nature of the Fund's investments and
the investment style of the portfolio manager. A 100% rate implies that an
amount equal to the value of the entire portfolio is turned over in a year; a
50% rate means that an amount equal to the value of half the portfolio is traded
in a year; and a 200% rate means that an amount equal to the value of the
portfolio is traded every six months.
90 Janus Growth Funds October 31, 2005
Designation Requirements (unaudited)
For federal income tax purposes, the Funds designated the following for the year
ended October 31, 2005:
DIVIDENDS RECEIVED DEDUCTION PERCENTAGE
Fund
- ----
Growth
Janus Fund 100%
Janus Mercury Fund 100%
Janus Olympus Fund 100%
Janus Orion Fund 36%
Janus Triton Fund 53%
Janus Twenty Fund 100%
Specialty Growth
Janus Global Technology Fund 100%
QUALIFIED DIVIDEND INCOME PERCENTAGE
Fund
- ----
Janus Fund 100%
Janus Mercury Fund 100%
Janus Olympus Fund 100%
Janus Orion Fund 100%
Janus Triton Fund 68%
Janus Twenty Fund 100%
Specialty Growth
Janus Global Technology Fund 100%
Due to the uncertainty regarding procedures for identifying qualified foreign
corporations, the qualified dividend income percentages reported on the 2005
Form 1099-DIV may be substantially lower than the percentages reported above.
Janus Growth Funds October 31, 2005 91
Trustees and Officers (unaudited)
The Funds' Statement of Additional Information includes additional information
about the Trustees and officers and is available, without charge, by calling
1-800-525-3713.
The following are the Trustees and officers of the Trust, together with a brief
description of their principal occupations during the last five years.
Each Trustee has served in that capacity since he was originally elected or
appointed. The Trustees do not serve a specified term of office. Each Trustee
will hold office until the termination of the Trust or his earlier death,
resignation, retirement, incapacity, or removal. The retirement age for Trustees
is 72. The Funds' Nominating and Governance Committee will consider nominees for
the position of Trustee recommended by shareholders. Shareholders may submit the
name of a candidate for consideration by the Committee by submitting their
recommendations to the Trust's Secretary. Each Trustee is currently a Trustee of
two other registered investment companies advised by Janus Capital: Janus Aspen
Series and Janus Adviser Series. Collectively, the three registered investment
companies consist of 65 series or funds.
In April 2003, the Trustees established an Advisory Board to provide the
Trustees advice regarding Janus Balanced Fund, Janus Growth and Income Fund,
Janus Mid Cap Value Fund, Janus Small Cap Value Fund and certain other Janus
funds that, in connection with the reorganization of the Berger family of funds
into the Janus funds, received assets from the Berger funds. The Advisory Board
was designated by a majority vote of the Trustees and served a two-year term,
which ended effective March 2005.
The Trust's officers are elected annually by the Trustees for a one-year term.
Each portfolio manager also manages other Janus Capital accounts. Certain
Trustees and officers also serve as officers of Janus Aspen Series and Janus
Aspen Series.
TRUSTEES
Number of
Funds in
Fund
Positions Complex
Name, Age and Held Length of Principal Occupations Overseen Other Directorships
Address with Funds Time Served During the Past Five Years by Trustee Held by Trustee
- ------------- ---------- ----------- -------------------------- ---------- -------------------
Independent Trustees
Dennis B. Mullen Chairman 3/04-Present Chief Executive Officer of Red Robin 65* Chairman of the Board (since
151 Detroit Trustee 2/71-Present Gourmet Burgers, Inc. (since 2005). 2005) and Director of Red Robin
Street Formerly, private investor. Gourmet Burgers, Inc.; and
Denver, CO Director of Janus World Funds
80206 Plc (Dublin-based, non-U.S.
Age 62 funds).
William F. Trustee 6/02-Present Executive Vice President and Chief 65 Trustee of Asian Cultural
McCalpin Operating Officer of the Rockefeller Council.
151 Detroit Brothers Fund (a private family
Street Foundation); and Vice President of
Denver, CO Asian Cultural Council.
80206
Age 48
John W. Trustee 6/02-Present President and Chief Executive 65 Chairman of the Board and
McCarter, Jr. Officer of The Field Museum of Director of Divergence Inc.
151 Detroit Natural History (Chicago, IL). (biotechnology firm); Director
Street of A.M. Castle & Co. (metals
Denver, CO distributor) and W.W. Grainger,
80206 Inc. (industrial distributor);
Age 67 and Trustee of Harris Insight
Funds Trust (19 portfolios),
WTTW (Chicago public television
station), the University of
Chicago, and Chicago Public
Education Fund.
*Mr. Mullen also serves as director of Janus World Funds Plc ("JWF"),
consisting of 21 funds. Including JWF and the 65 funds comprising the Janus
Funds, Mr. Mullen oversees 86 funds.
92 Janus Growth Funds October 31, 2005
TRUSTEES (CONT.)
Number of
Funds in
Fund
Positions Complex
Name, Age and Held Length of Principal Occupations Overseen Other Directorships
Address with Funds Time Served During the Past Five Years by Trustee Held by Trustee
- ------------- ---------- ----------- -------------------------- ---------- -------------------
Independent Trustees (cont.)
James T. Rothe Trustee 1/97-Present Co-founder and Managing Director of 65 Director of Red Robin Gourmet
151 Detroit Roaring Fork Capital Partners Burgers, Inc.
Street (private equity firm); and Professor
Denver, CO Emeritus of Business of the
80206 University of Colorado, Colorado
Age 61 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 University (American
Graduate School of International
Management), Phoenix, AZ.
William D. Trustee 6/84-Present Corporate Vice President and General 65 N/A
Stewart Manager of MKS Instruments -- HPS
151 Detroit Products, Boulder, CO (a
Street manufacturer of vacuum fittings and
Denver, CO valves).
80206
Age 61
Martin H. Trustee 8/69-Present Private Investor and Consultant to 65 N/A
Waldinger California Planned Unit
151 Detroit Developments. Formerly, CEO and
Street President of Marwal, Inc. (homeowner
Denver, CO association management company).
80206
Age 67
Interested Trustee
Thomas H. Trustee 6/69-Present Retired. Formerly, President 65 N/A
Bailey** (1978-2002) and Chief Executive
151 Detroit Officer (1994-2002) of Janus Capital
Street or Janus Capital Corporation;
Denver, CO Chairman and Director (1978-2002) of
80206 Janus Capital Corporation; President
Age 68 and Director (1994-2002) of the
Janus Foundation; and Director
(1997-2001) of Janus Distributors,
Inc.
**The Funds are treating Mr. Bailey as an "interested person" of the Trust by
virtue of his past positions with Janus Capital and ownership of shares of Janus
Capital's parent company.
Janus Growth Funds October 31, 2005 93
Trustees and Officers (unaudited) (continued)
OFFICERS
Term of
Name, Office* and
Age and Positions Held Length of Principal Occupations
Address with Funds Time Served During the Past Five Years
- ------- -------------- ----------- --------------------------
William Bales Executive Vice 2/97-Present Vice President of Janus Capital and Portfolio
151 Detroit Street President and Manager for other Janus accounts.
Denver, CO 80206 Portfolio Manager
Age 36 Janus Venture Fund
Jonathan D. Coleman Executive Vice 2/02-Present Vice President of Janus Capital and Portfolio Manager
151 Detroit Street President and for other Janus accounts. Formerly, Analyst
Denver, CO 80206 Portfolio Manager (1994-1997 and 2000-2002) Janus Capital Corporation
Age 34 Janus Enterprise Fund
David J. Corkins Executive Vice 2/03-Present Vice President of Janus Capital Corporation and
151 Detroit Street President and Portfolio Manager for other Janus accounts. Formerly,
Denver, CO 80206 Portfolio Manager Portfolio Manager (1997-2003)for Janus Growth and
Age 39 Janus Mercury Fund Income Fund.
C. Mike Lu Executive Vice 11/98-Present Vice President of Janus Capital and Portfolio Manager
151 Detroit Street President and for other Janus accounts.
Denver, CO 80206 Portfolio Manager
Age 36 Janus Global
Technology Fund
Thomas R. Malley Executive Vice 11/98-Present Vice President of Janus Capital and Portfolio Manager
151 Detroit Street President and for other Janus accounts.
Denver, CO 80206 Portfolio Manager
Age 37 Janus Global Life
Sciences Fund
Blaine P. Rollins Executive Vice President 1/00-Present Vice President of Janus Capital and Portfolio Manager
151 Detroit and Portfolio Manager for other Janus accounts.
Denver, CO 80206 Janus Fund
Age 38
Ron Sachs Executive Vice 4/00-Present Vice President of Janus Capital and Portfolio Manager
151 Detroit Street President and for other Janus accounts.
Denver, CO 80206 Portfolio Manager
Age 38 Janus Orion Fund
Executive Vice 2/05-Present
President and
Portfolio Manager
Janus Triton Fund
Scott W. Schoelzel Executive Vice 8/97-Present Vice President of Janus Capital and Portfolio Manager
151 Detroit Street President and for other Janus accounts.
Denver, CO 80206 Portfolio Manager
Age 47 Janus Twenty Fund
Claire Young Executive Vice 8/97-Present Vice President of Janus Capital and Portfolio Manager
151 Detroit Street President and for other Janus accounts.
Denver, CO 80206 Portfolio Manager
Age 40 Janus Olympus Fund
Bonnie M. Howe Vice President 2/99-Present Vice President and Assistant General Counsel of Janus
151 Detroit Street Capital, Janus Distributors LLC, and Janus Services
Denver, CO 80206 LLC.
Age 40
*Officers are elected annually by the Trustees for a one-year term.
94 Janus Growth Funds October 31, 2005
OFFICERS (CONT.)
Term of
Name, Office* and
Age and Positions Held Length of Principal Occupations
Address with Funds Time Served During the Past Five Years
- ------- -------------- ----------- --------------------------
Kelley Abbott Howes General Counsel 4/04-Present Senior Vice President and General Counsel of Janus Capital
151 Detroit Street Vice President and 12/99-Present and Janus Services LLC; and Senior Vice President and
Denver, CO 80206 Secretary Assistant General Counsel of Distributors LLC. Formerly,
Age 40 Vice President (1999-2005) of Janus Distributors LLC; Vice
Janus President (2000-2004) and Assistant General Counsel
(2002-2004) of Janus Services LLC; and Vice President and
Assistant General Counsel (1999-2004) of Janus Capital.
David R. Kowalski Vice President and 6/02-Present Senior Vice President and Chief Compliance Officer of Janus
151 Detroit Street Chief Compliance Capital, Janus Distributors LLC, and Janus Services LLC;
Denver, CO 80206 Officer Chief Compliance Officer of Bay Isle Financial LLC; and
Age 48 Vice President and Chief Compliance Officer of Enhanced
Investment Technologies, LLC. Formerly, Vice President of
Janus Capital (2000-2005), Janus Distributors LLC
(2000-2001), and Janus Services LLC (2004-2005); and
Assistant Vice President of Janus Services LLC (2002-2004).
Girard C. Miller** President and Chief 1/03-Present Executive Vice President and Chief Operating Officer of
151 Detroit Street Executive Officer Janus Capital Group Inc.and Janus Capital; President of
Denver, CO 80206 Janus Distributors LLC and Janus Capital International LLC;
Age 54 Executive Vice President of Janus Services LLC; President
and Director of Janus Management Holdings Corporation; and
Chief Operating Officer and President of Capital Group
Partners, Inc. Formerly, Director of Capital Group
Partners, Inc. (2003-2004); and President and Chief
Executive Officer of ICMA Retirement Corporation
(1993-2003).
Jesper Nergaard Chief Financial Officer 3/05-Present Vice President of Janus Capital. Formerly, Director of
151 Detroit Street Financial Reporting for OppenheimerFunds, Inc. (2004-2005);
Denver, CO 80206 Vice President, Site Manager and First Vice President of Mellon Global
Age 43 Treasurer, and 2/05-Present Securities Services (2003); and Director of Fund
Principal Accounting, Project Development, and Training of INVESCO
Accounting Officer Funds Group (1994-2003).
*Officers are elected annually by the Trustees for a one-year term.
**Mr. Miller intends to resign his positions with Janus Capital Group Inc. and
its subsidiaries effective January 3, 2006. A successor to his positions with
the Trust will be appointed by the Trustees prior to this date.
Janus Growth Funds October 31, 2005 95
Notes
96 Janus Growth Funds October 31, 2005
Notes
Janus Growth Funds October 31, 2005 97
JANUS PROVIDES ACCESS TO A WIDE RANGE OF INVESTMENT DISCIPLINES.
GROWTH
Janus growth funds focus on companies believed to be the leaders in their
respective industries, with solid management teams, expanding market share,
margins and efficiencies.
CORE
Janus core funds seek investments in more stable and predictable companies.
These funds look for a strategic combination of steady growth and for certain
funds, some degree of income.
RISK-MANAGED
Janus risk-managed funds seek to outperform their respective indices while
maintaining a risk profile equal to or lower than the index itself. Managed by
INTECH, these funds use a mathematical process in an attempt to build a more
"efficient" portfolio than
the index.
VALUE
Janus value funds invest in companies they believe are poised for a turnaround
or are trading at a significant discount to fair value. The goal is to gain
unique insight into a company's true value and identify and evaluate potential
catalysts that may unlock
shareholder value.
INTERNATIONAL & GLOBAL
Janus international and global funds seek to leverage Janus' research
capabilities by taking advantage of inefficiencies in foreign markets, where
accurate information and analytical insight are often at a premium.
BOND & MONEY MARKET
Janus bond funds attempt to provide less risk relative to equities while seeking
to deliver a competitive total return through high current income and
appreciation. Janus money market funds seek maximum current income consistent
with stability of capital.
For more information about our funds, go to www.janus.com.
Please consider the charges, risks, expenses and investment objectives carefully
before investing. For a prospectus containing this and other information, please
call Janus at 1-800-525-3713 or download the file from www.janus.com. Read it
carefully before you invest or send money.
An investment in a money market fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the Fund
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Fund.
(JANUS LOGO)
151 Detroit Street
Denver, CO 80206
1-800-525-3713
Funds distributed by Janus Distributors LLC (12/05)
C-1205-10 111-02-105 12-05
2006 Semiannual Report
Janus Growth Funds
Growth
Janus Fund
Janus Enterprise Fund
Janus Mercury Fund
Janus Olympus Fund
Janus Orion Fund
Janus Triton Fund
Janus Twenty Fund
Janus Venture Fund
Specialty Growth
Janus Global Life Sciences Fund
Janus Global Technology Fund
Look Inside. . .
o Portfolio manager perspective
o Investment strategy behind your fund
o Fund performance, characteristics and holdings
(JANUS LOGO)
Table of Contents
JANUS GROWTH FUNDS
President and CEO Letter to Shareholders 1
Portfolio Managers' Commentaries and Schedules of Investments
Janus Fund 6
Janus Enterprise Fund 14
Janus Mercury Fund 21
Janus Olympus Fund 28
Janus Orion Fund 35
Janus Triton Fund 41
Janus Twenty Fund 47
Janus Venture Fund 52
Janus Global Life Sciences Fund 59
Janus Global Technology Fund 65
Statements of Assets and Liabilities 72
Statements of Operations 74
Statements of Changes in Net Assets 76
Financial Highlights 80
Notes to Schedules of Investments and Securities Sold Short 85
Notes to Financial Statements 89
Additional Information 97
Explanations of Charts, Tables and Financial Statements 101
Shareholder Meeting 104
Please consider the charges, risks, expenses and investment objectives carefully
before investing. For a prospectus containing this and other information, please
call Janus at 1-800-525-3713 or download the file from www.janus.com. Read it
carefully before you invest or send money.
CEO'S LETTER
(GARY BLACK PHOTO)
Gary Black
President and Chief Executive Officer
DEAR SHAREHOLDERS,
Before offering my perspective on the economy, the markets and the progress
we've made at Janus during the six months ended April 30, 2006, I'd like to
thank you for your continued confidence and investment in Janus' funds. Your
unwavering support is the driving force behind our desire to deliver the strong,
consistent fund performance that you've come to expect from Janus.
As you'll read on the following pages, our fund managers continued to deliver
excellent performance -- for the one-year period ended April 30, 2006, 68% of
Janus' retail funds ranked within Lipper's top two quartiles based on total
returns. For the five years ended April 30, 2006, 57% of our retail funds earned
first- or second-quartile Lipper rankings -- up from 30% a year ago. Over the
past three years, Janus' U.S. equity funds have gained an average of 21%
annually, versus a 12% gain for the Russell 1000(R) Growth Index and a 15% gain
for the S&P 500(R) Index. (See performance and complete ranking figures on pages
3-4).
STAYING FOCUSED ON CONSISTENT PERFORMANCE
While we're pleased to report solid performance across different time periods,
our goal is to ensure consistency in our investment returns across different
market cycles as well. We employ several tools to help us meet this goal,
beginning with detailed research processes that help us single out what we feel
are the best investments for our funds. The very talented and experienced
individuals at the heart of these processes -- our research analysts and
portfolio managers -- are what distinguish Janus from its asset management
peers. Additionally, our robust risk management tools and disciplined buy/sell
strategies help in our efforts to deliver consistent performance over full
market cycles.
....OUR GOAL IS TO ENSURE CONSISTENCY IN OUR INVESTMENT RETURNS ACROSS DIFFERENT
MARKET CYCLES...
We recently appointed Chief Investment Officers to oversee our various
investment disciplines. Jonathan Coleman and David Decker oversee our U.S.
Growth and Core funds, Jason Yee is responsible for our Global and International
funds, and Gibson Smith has oversight of our Fixed-Income and Money Market
funds. In their respective roles, these individuals serve as player-coaches with
the portfolio managers and analysts who work with them and focus on driving
performance of the products they oversee.
Combined, we believe these elements of our research process will help us as we
strive to deliver strong fund performance in all market environments.
CORPORATE PROFITS REMAINED STRONG
On that note, I'd like to summarize the environment we -- and other investors --
operated in during the past six months. Stronger-than-expected economic data and
growing anticipation of a possible conclusion to monetary tightening by the
Federal Reserve drove U.S. equity markets higher during the period.
Notwithstanding a sharp spike in energy prices in early 2006 and clear signs of
a slowdown in the U.S. housing market, corporate profits continued to grow at a
healthy clip and consumer spending remained robust. Financial markets observed a
smooth transition in leadership at the Federal Reserve Board after Chairman Alan
Greenspan's long tenure, and investors appeared to conclude that incoming
Chairman Ben Bernanke would pursue a similar course to that of his predecessor,
namely, to contain inflation and promote long-term economic growth. Perhaps the
biggest risk, in our opinion, is that the Federal Reserve could increase
short-term rates too aggressively to curb potential inflation, which could cause
longer-term growth to stall.
Areas of particular strength in the market included economically sensitive
sectors such as financial services, industrials and energy, all of which
benefited from continued evidence of strong U.S. economic growth. Overseas
markets also delivered healthy returns, with Japan's economic recovery
reawakening domestic Japanese investors to the Japanese equity market, and rapid
industrialization and growing consumer wealth driving significant gains in
emerging equity markets like Brazil, China and India.
GREATER DIVERSIFICATION SOUGHT BY INVESTORS
It was encouraging to see equity markets worldwide climb higher during the
period. And yet, if there's one thing that all investors can consistently count
on, it's that there is no consistency in the markets. This year's gains could be
next year's losses. With this in mind, more and more investors seem to be making
a concerted effort to maintain a
Janus Growth Funds April 30, 2006 1
CONTINUED
diversified portfolio. In recognition of this, we launched Janus Smart
Portfolios in late December 2005. These Portfolios are geared toward investors
who may not have the time to allocate their assets according to their specific
goals and risk tolerance.
Janus Smart Portfolios invest in a combination of funds that leverage the
fundamental research approach of Janus with funds supported by the risk-managed,
mathematical investment process of INTECH (a Janus subsidiary). We believe the
unique combination of these two different investment styles, assembled with the
view of providing long-term diversification and market opportunity, will be of
great benefit to shareholders as they invest toward their goals. And with three
different portfolios to choose from -- Growth, Moderate and Conservative --
investors can choose the level of risk they are willing to take in pursuit of
their goals.
A COMPELLING CASE FOR GROWTH
In summary, the economic outlook appears positive to us, and we find valuations
for U.S. equities attractive. The combination of those two factors continues to
make a solid case for growth investing. Although future interest rate increases
are becoming less likely, we will continue to closely monitor the actions of the
Federal Reserve. Regardless of the macroeconomic climate ahead, we remain
dedicated to rewarding your trust and confidence in Janus with strong,
consistent fund performance.
Sincerely,
/s/ GARY BLACK
Gary Black
Chief Executive Officer and
Chief Investment Officer
2 Janus Growth Funds April 30, 2006
Lipper Rankings
LIPPER RANKINGS
- BASED ON TOTAL
RETURN AS OF 4/30/06
------------------------
ONE YEAR
------------------------
LIPPER PERCENTILE RANK/
CATEGORY RANK (%) TOTAL FUNDS
-------------------------------------------- ----------- -----------
JANUS INVESTMENT FUNDS
(Inception Date)
Janus Fund (2/70) Large-Cap Growth Funds 43 296/698
Janus Enterprise Fund(1) (9/92) Mid-Cap Growth Funds 58 324/563
Janus Mercury Fund(1) (5/93) Large-Cap Growth Funds 31 210/698
Janus Olympus Fund(1) (12/95) Multi-Cap Growth Funds 44 186/423
Janus Orion Fund (6/00) Multi-Cap Growth Funds 3 11/423
Janus Triton Fund (2/05) Small-Cap Growth Funds 12 59/533
Janus Twenty Fund* (4/85) Large-Cap Growth Funds 6 36/698
Janus Venture Fund* (4/85) Small-Cap Growth Funds 59 311/533
Janus Global Life Sciences Fund (12/98) Health/Biotechnology Funds 33 57/176
Janus Global Technology Fund (12/98) Science & Technology Funds 33 94/292
Janus Balanced Fund(1) (9/92) Mixed-Asset Target Allocation Moderate Funds 13 49/395
Janus Contrarian Fund (2/00) Multi-Cap Core Funds 1 3/834
Janus Core Equity Fund(1) (6/96) Large-Cap Core Funds 2 9/864
Janus Growth and Income Fund(1) (5/91) Large-Cap Core Funds 5 35/864
Janus Research Fund (2/05) Multi-Cap Growth Funds 8 31/423
INTECH Risk-Managed Stock Fund (2/03) Multi-Cap Core Funds 58 483/834
Janus Mid Cap Value Fund - Inv(1)(2) (8/98) Mid-Cap Value Funds 75 201/267
Janus Small Cap Value Fund - Inv*(2) (10/87) Small-Cap Core Funds 97 612/633
Janus Federal Tax-Exempt Fund (5/93) General Municipal Debt Funds 60 155/260
Janus Flexible Bond Fund(1) (7/87) Intermediate Investment Grade Debt Funds 37 172/473
Janus High-Yield Fund (12/95) High Current Yield Funds 38 164/439
Janus Short-Term Bond Fund(1) (9/92) Short Investment Grade Debt Funds 30 68/228
Janus Global Opportunities Fund(1) (6/01) Global Funds 100 360/362
Janus Overseas Fund (1) (5/94) International Funds 1 2/910
Janus Worldwide Fund (1) (5/91) Global Funds 94 339/362
LIPPER RANKINGS - BASED ON TOTAL RETURN AS OF 4/30/06
----------------------------------------------------------------------------
THREE YEAR FIVE YEAR TEN YEAR
------------------------ ------------------------ ------------------------
PERCENTILE RANK/ PERCENTILE RANK/ PERCENTILE RANK/
RANK (%) TOTAL FUNDS RANK (%) TOTAL FUNDS RANK (%) TOTAL FUNDS
----------- ----------- ----------- ----------- ----------- -----------
JANUS INVESTMENT FUNDS
(Inception Date)
Janus Fund (2/70) 48 280/590 79 374/474 44 72/165
Janus Enterprise Fund(1) (9/92) 30 134/461 72 257/357 69 88/128
Janus Mercury Fund(1) (5/93) 9 53/590 65 306/474 11 18/165
Janus Olympus Fund(1) (12/95) 53 190/359 66 188/288 27 25/95
Janus Orion Fund (6/00) 1 3/359 3 8/288 N/A N/A
Janus Triton Fund (2/05) N/A N/A N/A N/A N/A N/A
Janus Twenty Fund* (4/85) 2 6/590 12 56/474 2 2/165
Janus Venture Fund* (4/85) 10 45/453 20 70/363 38 44/117
Janus Global Life Sciences Fund (12/98) 25 39/161 43 55/127 N/A N/A
Janus Global Technology Fund (12/98) 43 113/265 58 132/230 N/A N/A
Janus Balanced Fund(1) (9/92) 52 140/271 39 81/210 3 2/81
Janus Contrarian Fund (2/00) 1 3/588 3 11/421 N/A N/A
Janus Core Equity Fund(1) (6/96) 3 20/746 3 16/618 N/A N/A
Janus Growth and Income Fund(1) (5/91) 9 65/746 15 90/618 3 5/240
Janus Research Fund (2/05) N/A N/A N/A N/A N/A N/A
INTECH Risk-Managed Stock Fund (2/03) 22 129/588 N/A N/A N/A N/A
Janus Mid Cap Value Fund - Inv(1)(2) (8/98) 53 114/216 35 51/146 N/A N/A
Janus Small Cap Value Fund - Inv*(2) (10/87) 91 456/504 65 243/373 N/A N/A
Janus Federal Tax-Exempt Fund (5/93) 89 221/249 71 156/221 86 122/142
Janus Flexible Bond Fund(1) (7/87) 36 146/406 24 74/320 24 35/147
Janus High-Yield Fund (12/95) 72 276/385 55 169/311 9 10/111
Janus Short-Term Bond Fund(1) (9/92) 21 38/181 49 63/129 20 13/66
Janus Global Opportunities Fund(1) (6/01) 54 154/286 N/A N/A N/A N/A
Janus Overseas Fund(1) (5/94) 1 2/770 19 114/599 4 8/230
Janus Worldwide Fund(1) (5/91) 98 279/286 99 217/220 68 56/82
LIPPER RANKINGS
- BASED ON TOTAL
RETURN AS OF 4/30/06
------------------------
SINCE INCEPTION
------------------------
PERCENTILE RANK/
RANK (%) TOTAL FUNDS
----------- -----------
JANUS INVESTMENT FUNDS
(Inception Date)
Janus Fund (2/70) 5 1/19
Janus Enterprise Fund(1) (9/92) 40 20/49
Janus Mercury Fund(1) (5/93) 2 1/84
Janus Olympus Fund(1) (12/95) 15 13/88
Janus Orion Fund (6/00) 27 61/230
Janus Triton Fund (2/05) 3 14/520
Janus Twenty Fund* (4/85) 3 1/40
Janus Venture Fund* (4/85) 10 1/10
Janus Global Life Sciences Fund (12/98) 31 15/48
Janus Global Technology Fund (12/98) 23 17/76
Janus Balanced Fund(1) (9/92) 4 1/27
Janus Contrarian Fund (2/00) 9 29/332
Janus Core Equity Fund(1) (6/96) 2 3/248
Janus Growth and Income Fund(1) (5/91) 6 5/96
Janus Research Fund (2/05) 7 26/410
INTECH Risk-Managed Stock Fund (2/03) 26 150/586
Janus Mid Cap Value Fund - Inv(1)(2) (8/98) 5 4/81
Janus Small Cap Value Fund - Inv*(2) (10/87) N/A N/A
Janus Federal Tax-Exempt Fund (5/93) 83 64/77
Janus Flexible Bond Fund(1) (7/87) 24 6/25
Janus High-Yield Fund (12/95) 3 3/104
Janus Short-Term Bond Fund(1) (9/92) 43 11/25
Janus Global Opportunities Fund(1) (6/01) 23 50/224
Janus Overseas Fund(1) (5/94) 2 2/120
Janus Worldwide Fund(1) (5/91) 28 5/17
(1)The date of the Lipper ranking is slightly different from when the Fund began
operations since Lipper provides fund rankings as of the last day of the month
or the first Thursday after fund inception.
(2)Rating is for the Investor share class only; other classes may have different
performance characteristics.
*Closed to new investors.
Data presented represents past performance, which is no guarantee of future
results.
There is no assurance that the investment process will consistently lead to
successful investing.
Lipper Inc. - A Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical with capital gains and
dividends reinvested.
Janus Growth Funds April 30, 2006 3
Performance
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED 4/30/06
---------------------------------------------------------------
SINCE
ONE YEAR THREE YEAR FIVE YEAR 10 YEAR INCEPTION
---------- ---------- ---------- ---------- ----------
FUND/INDEX (Inception Date)
Janus Fund(2/70) 17.28% 11.85% (2.62)% 6.67% 13.86%
Janus Contrarian Fund(1)(2)(3)(2/00) 38.81% 31.63% 10.68% N/A 9.63%
Janus Core Equity Fund(3)(6/96) 31.00% 19.14% 5.74% N/A 13.43%
Janus Enterprise Fund(9/92) 29.21% 22.74% 1.87% 6.69% 11.63%
Janus Growth and Income Fund(5/91) 25.82% 16.82% 3.44% 12.02% 13.80%
Janus Mercury Fund(5/93) 19.00% 15.42% (1.74)% 8.56% 12.70%
Janus Mid Cap Value Fund - Investor Shares(3)(4)(8/98) 20.64% 23.27% 12.45% N/A 17.97%
Janus Olympus Fund(12/95) 26.44% 16.83% 0.45% 9.78% 11.77%
Janus Orion Fund(1)(5)(6)(7)(6/00) 41.50% 27.95% 10.72% N/A (0.73)%
Janus Small Cap Value Fund - Investor Shares*(10/87) 20.30% 20.76% 10.80% 15.60% N/A
Janus Twenty Fund*(4)(6)(4/85) 24.20% 19.02% 2.05% 10.70% 13.48%
Janus Venture Fund*(8)(4/85) 32.58% 27.53% 9.14% 9.29% 13.88%
INTECH Risk-Managed Stock Fund(3)(2/03) 17.81% 19.16% N/A N/A 20.50%
S&P 500(R) Index 15.42% 14.68% 2.70% 8.94% N/A
Russell 1000(R) Growth Index 15.18% 12.05% (0.76)% 6.21% N/A
Data presented reflects past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 800.525.3713 or visit www.janus.com for performance current to the
most recent month-end.
The average performance of Janus' U.S. equity funds over the past three years
was calculated using the three-year total returns of the 13 funds contained in
the performance chart above. The 13 funds reflected in the performance chart
above are those which Janus categorizes as U.S. equity funds and which have
performance histories of three or more years.
*Closed to new investors
(1)This Fund may have significant exposure to emerging markets. In general,
emerging market investments have historically been subject to significant gains
and/or losses. As such, the Fund's returns and NAV may be subject to such
volatility.
(2)The Fund has experienced significant gains due, in part, to its investments
in India. While holdings are subject to change without notice, the Fund's
returns and NAV may be affected to a large degree by fluctuations in currency
exchange rates or political or economic conditions in India.
(3)The Fund will invest at least 80% of its net assets in the type of securities
described by its name.
(4)Due to certain investment strategies, the Fund may have an increased position
in cash.
(5)The Fund has experienced significant gains due, in part, to its investments
in Brazil. While holdings are subject to change without notice, the Fund's
returns and NAV may be affected to a large degree by fluctuations in currency
exchange rates or political or economic conditions in Brazil.
(6)Returns have sustained significant gains due to market volatility in the
healthcare sector.
(7)Returns have sustained significant gains due to market volatility in the
financials sector.
(8)This Fund has been significantly impacted, either positively or negatively,
by investing in initial public offerings (IPOs).
Total return includes reinvestment of dividends, distributions and capital
gains.
A fund's performance may be affected by risks that include those associated with
non-diversification, investments in foreign securities and emerging markets,
non-investment grade debt securities, undervalued or overlooked companies,
companies with relatively small market capitalizations and investments in
specific industries or countries. Please see a Janus prospectus or janus.com for
more information about fund holdings and details.
The proprietary mathematical process used by Enhanced Investment Technologies
LLC ("INTECH") may not achieve the desired results. Since the portfolio is
regularly balanced, this may result in a higher portfolio turnover rate, higher
expenses and potentially higher net taxable gains or losses compared to a "buy
and hold" or index fund strategy.
There is no assurance that the investment process will consistently lead to
successful investing.
Returns shown for Janus Mid Cap Value Fund prior to 4/21/03 are those of Berger
Mid Cap Value Fund.
Returns shown for Janus Small Cap Value Fund prior to 4/21/03 are those of
Berger Small Cap Value Fund.
Effective 2/1/06, Blaine Rollins is no longer the portfolio manager of Janus
Fund, and David Corkins is now the Fund manager.
Effective 2/1/06, David Corkins is no longer the portfolio manager of Janus
Mercury Fund. A research team now selects the investments for Janus Mercury Fund
led by the Director of Research, Jim Goff.
Effective 2/28/06, Janus Risk-Managed Stock Fund changed its name to INTECH
Risk-Managed Stock Fund.
Janus Capital Group Inc. has a 30% ownership stake in the investment advisory
business of Perkins, Wolf, McDonnell and Company, LLC.
INTECH is a subsidiary of Janus Capital Group Inc.
A Fund's portfolio may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
The S&P 500(R) Index is the Standard & Poor's composite index of 500 stocks, a
widely recognized, unmanaged index of common stock prices.
The Russell 1000(R) Growth Index measures the performance of those Russell 1000
companies with higher price-to-book ratios and higher forecasted growth values.
4 Janus Growth Funds April 30, 2006
Useful Information About Your Fund Report
PORTFOLIO MANAGER COMMENTARIES
The portfolio manager commentaries in this report include valuable insight from
the portfolio managers as well as statistical information to help you understand
how your Fund's performance and characteristics stack up against those of
comparable indices.
Please keep in mind that the opinions expressed by the portfolio managers in
their commentaries are just that: opinions. They are a reflection of their best
judgment at the time this report was compiled, which was April 30, 2006. As the
investing environment changes, so could their opinions. These views are unique
to each manager and aren't necessarily shared by their fellow employees or by
Janus in general.
FUND EXPENSES
We believe it's important for our shareholders to have a clear understanding of
Fund expenses and the impact they have on investment return.
THE FOLLOWING IS IMPORTANT INFORMATION REGARDING EACH FUND'S EXPENSE EXAMPLE,
WHICH APPEARS IN EACH FUND'S PORTFOLIO MANAGER COMMENTARY WITHIN THIS SEMIANNUAL
REPORT. PLEASE REFER TO THIS INFORMATION WHEN REVIEWING THE EXPENSE EXAMPLE FOR
EACH FUND.
Example
As a shareholder of a Fund, you incur two types of costs: (1) transaction costs,
including redemption fees (where applicable) (and any related exchange fees) and
(2) ongoing costs, including management fees and other Fund expenses. The
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 on an investment of $1,000 invested at the
beginning of the period and held for the six-month period from November 1, 2005
to April 30, 2006.
Actual Expenses
The first line of the table in each example provides information about actual
account values and actual expenses. You may use the information in this line,
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 first line under the heading entitled "Expenses Paid During the
Period" to estimate the expenses you paid on your account during the period.
Hypothetical Example for Comparison Purposes
The second line of the table in each example 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.
Janus Capital Management LLC ("Janus Capital") has contractually agreed to waive
Janus Triton Fund's total operating expenses, excluding brokerage commissions,
interest, taxes and extraordinary expenses, to certain limits until at least
March 1, 2007. Expenses in the example reflect the application of this waiver.
Had the waiver not been in effect, your expenses would have been higher. More
information regarding the waiver is available in the Funds' prospectuses.
Please note that the expenses shown in the tables are meant to highlight your
ongoing costs only and do not reflect any transaction costs, such as redemption
fees (where applicable). These fees are fully described in the prospectus.
Therefore, the second line of each table is 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.
Janus Growth Funds April 30, 2006 5
Janus Fund (unaudited)
TICKER: JANSX
FUND SNAPSHOT
For more than 35 years, this traditional growth fund has exemplified Janus'
research and stock-picking abilities.
(DAVID CORKINS PHOTO)
David Corkins
portfolio manager
PERFORMANCE OVERVIEW
I very much appreciate the opportunity to speak directly with you for the first
time since taking over management of Janus Fund effective February 1, 2006. My
hope with this letter is to review the Fund's performance over the last 6
months, further explain our investment process so that all shareholders
understand what we do, and finally, share our outlook for the Fund going
forward.
PERFORMANCE REVIEW
Our goal with the Fund is superior long-term returns for shareholders. What does
that mean in practice? These potential long-term returns start with positive
absolute performance and follow with consistent execution in up and down
markets. For the six months ending April 30, 2006, Janus Fund returned 10.51%.
By comparison, our primary benchmark the Russell 1000(R) Growth Index returned
7.06% and our secondary benchmark the S&P 500(R) Index returned 9.64%.
OUR INVESTMENT PROCESS
Some of the best advice I ever received about managing investments was succinct:
"Know your companies." We believe that understanding the leverage points in a
company's business model allows you to properly assess risk as well as calculate
the free cash flow and returns on invested capital that drive value creation.
Knowing your companies also allows you to potentially take advantage of the
inherent volatility in the market. You are more likely to be able to buy when
others are fearful and sell when others are greedy. Most importantly, knowing my
companies helps me invest with conviction (more concentrated and with lower
turnover) and hold on for the long-run.
Likewise, I believe it is imperative that investors in Janus Fund understand our
investment process and strategy. I believe in the classic Janus investment style
that I learned from previous portfolio managers, the most influential being Tom
Bailey, Jim Craig, Tom Marsico and Helen Young Hayes. For me, this style means
fundamental, grass-roots growth investing which is a combination of qualitative
and quantitative analysis. The quantitative aspect means in-depth, detailed,
financial modeling of a company to understand the leverage points in the
business, the free cash flow, and the returns on capital. This model allows me
to move onto the qualitative focus, which is using the financial information to
speak with management, competitors and suppliers to gain a more complete
understanding of the company. The next piece of the investment mosaic is to
understand the valuation, risk and reward for this investment given the current
price of the security and the macro-economic factors impacting it. Finally, the
last part of the puzzle is to consider overall portfolio construction, risk and
return in addition to the sum of each of the individual securities.
What I've learned over the last 10 years managing money is that this investment
method must be iterative -- it's a never-ending process of building a deeper and
deeper knowledge base about a company. The better your model, the more
information you can extract; the more information you get the better your model.
Like most businesses, at the end of the day, the harder you work, the better
your results.
I also believe it is imperative to think like a partner -- I would like my
fellow investors to have a good appreciation for their manager's investment in
the Fund, as well as how I am compensated for managing the Fund. In that vein, I
have made a 7-figure investment in the Fund because I believe in the team and
our investment process. I am eating our cooking. In terms of compensation, I am
strongly incented with pay for performance: my incentive pay is primarily based
on how well the Fund performs relative to its peers over a three-year basis, as
well as whether the return is positive on an absolute basis.
WHAT WENT RIGHT?
An eclectic group of securities performed quite strongly, and the Fund performed
well within the pharmaceutical, semiconductor, financial and capital goods
sectors. Since our primary focus is on individual company selection, rather than
large sector trading bets, one measure of health for the Fund is whether the
winners were from diverse areas of the economy.
The largest single contributor to the Fund's results was Boeing. Boeing is an
excellent example of what we look for in a stock: strong competitive
positioning, attractive industry dynamics, improving free cash flow and returns
on invested capital and management focused on shareholder value. As the leading
American aerospace manufacturer, Boeing has benefited from a
6 Janus Growth Funds April 30, 2006
(unaudited)
continued expansion of the aerospace cycle as demand from emerging markets, like
China, India and the Middle East, accelerates for fuel-efficient planes given
high commodity input costs. Low-cost carriers have also started to spend on next
generation planes given the change in domestic networks from hub-and-spoke to
point-to-point. Legacy carriers such as United are emerging from bankruptcy and
we believe will likely extend the cycle towards 2010 as they pull in orders to
remain competitive with the lower-cost carriers. At the same time, a major
competitor Airbus has stumbled in next generation product design with a poorly
received A350. Finally, we believe a new CEO at Boeing will likely bring a much
needed focus on costs, production and return on capital.
We have done extensive research on Boeing and the aerospace industry. We've met
with management at various levels of the company as well as interviewed numerous
competitors and suppliers, both domestically and overseas. Primary analyst
Jeremiah Buckley and the rest of the team continue to build our financial model
of the company and gain a deeper knowledge base of the industry. One area of
caution remains the defense business, which we believe is seeing a possible
slowdown in orders as the U.S. defense cycle wanes from previous years'
strength.
Other contributors to the Fund's strong performance were financial companies
such as JP Morgan Chase, which is beginning to show the fruits of its
waste-cutting and renewed focus on revenue growth and returns. Analyst Gabe
Bodhi has done excellent work on this company, which holds a particular interest
for me since I worked at its predecessor for seven years before I joined Janus.
We hope new leadership at the company will drive returns on capital and free
cash flow on a sustainable basis.
I believe our healthcare team does exceptional fundamental research under the
aegis of Tom Malley. Analyst Tony Yao helped lead the effort on Celgene which
gained over 50% for shareholders due to strong clinical trials for Revlimid.
Final product launch for the drug implies long-term success in multiple myeloma
(a bone marrow-based cancer) and myelodysplastic syndromes (MDS -- a blood-borne
cancer) indications, as well as possible success in chronic lymphocytic leukemia
(CLL), another blood cancer. Celgene also has a deep pipeline behind current
products in the areas of sickle-cell and inflammatory disease.
WHAT WENT WRONG?
It's usually more productive to focus on what went wrong rather than
over-emphasizing those areas and stocks that performed well. Learning from one's
mistakes is a key to longevity in this business.
Two sectors in particular caused relative weakness in the Fund's performance:
healthcare services and media. The biggest underperformers in these areas were
UnitedHealth Group and Comcast. We have cut our position in UnitedHealth Group
meaningfully and sold our position in Comcast.
UnitedHealth Group has been a long-time holding in the Fund. The company is the
leading HMO and specialty healthcare services provider in the United States.
Operational tenets run deep within the company, pricing and margins remain
attractive, demographics continue to drive demand and free cash flow generation
is strong. Emerging specialty businesses diversify the business mix from more
cyclical commercial underwriting trends. So with all those competitive
strengths, what caused us to meaningfully reduce our position in the name?
First, the company's outperformance caused its valuation to rise close to our
fair value and meaningfully shifted the risk/reward profile; second, industry
dynamics have resulted in an excess of capital and nascent signs of price
competition; and third, serious questions have arisen regarding options grant
timing. We realized profits in the name and reinvested the proceeds in other
stocks with more attractive risk/reward prospects.
Comcast was eliminated completely. Another long-time holding of the Fund,
Comcast was sold as the company's business model continues to become more
capital intensive and competitive threats from phone and satellite providers
rise. Although cable systems offer an excellent gateway into the home, we
believe the transition of the media business towards digital and Internet
protocols (IP) threatens the primacy of the cable network model and implies
lower returns in the future.
We are looking diligently in the media sector for attractive businesses as many
of these leading franchises have been sold by disappointed investors looking for
growth. Although valuations are becoming much more attractive, many of the
high-margin business models are under assault from the move from analog to
digital distribution as well as the emergence of the Internet as a media
delivery vehicle. We have yet to make significant new investments in the sector.
We also remain cautious on the consumer discretionary areas of the economy in
the short-run as a combination of rising energy prices, increased debt payments
driven by interest rate increases, and higher healthcare costs squeezes the U.S.
consumer. In the longer-term, we believe these areas are ripe for investment as
the cyclical pressures ease.
Janus Growth Funds April 30, 2006 7
Janus Fund (unaudited)
LOOKING FORWARD
Our outlook remains cautious. Markets have performed strongly year-to-date due
to a combination of very strong economic data as well as the anticipation of a
conclusion to Federal Reserve monetary tightening. Small-cap stocks and emerging
markets have led the way with strong performance coming in just a few months.
Yet clearly the market is in transition after three years of strong
outperformance. This transition is driven by higher interest rates and a weaker
U.S. dollar. We're cautiously watching several signs to better understand how
this transition plays out. One area of focus is monetary liquidity and the U.S.
dollar. Money supply growth has been slowing sequentially, Fed Repos have slowed
dramatically, yet money flow into equities is quite strong and foreigners have
been the driving force. Foreigners were huge beneficiaries of the dollar index,
which rallied strongly throughout 2005. In 2006, however, the dollar index is
beginning to roll over and the question remains how much of a rate increase or
non-inflationary growth is necessary to keep foreigners in our currency and
equity market.
Within Janus Fund, our response in general has been to transition from business
models that are dependent on an economic tailwind to stronger franchises that
have more control over their own sales and margins regardless of macro-economic
conditions. In addition, we are cautiously watching the yield curve and U.S.
dollar in anticipation of further transition as the economy continues to move
forward.
In sum, I am honored with the opportunity to manage Janus Fund. My investment
and incentives are aligned with yours. As a former English major, I can't finish
this letter without a favorite quote from an old media hand like Samuel Goldwyn:
"The harder I work, the luckier I get." It gives me comfort to know the entire
investment team at Janus is working very hard every day to find attractive
opportunities to grow our principal.
Thank you for your investment in Janus Fund.
JANUS FUND AT A GLANCE
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- HOLDINGS
CONTRIBUTION
------------
Boeing Co.
Commercial jet aircraft company - U.S. 0.93%
JP Morgan Chase & Co.
Financial products and services provider - U.S. 0.46%
Nokia Oyj (ADR)
Telecommunications company - Finland 0.44%
Companhia Vale do Rio Doce (ADR)
Iron ore producer/seller - Brazil 0.44%
Schlumberger, Ltd. (U.S. Shares)
Oil services company - U.S. 0.42%
5 LARGEST DETRACTORS FROM PERFORMANCE -- HOLDINGS
CONTRIBUTION
------------
UnitedHealth Group, Inc.
Organized health systems company - U.S. (0.42%)
Yahoo!, Inc.
Global Internet media company - U.S. (0.37%)
Alcon, Inc. (U.S. Shares)
Eye care company - U.S. (0.32%)
Juniper Networks, Inc.
Internet infrastructure solutions provider - U.S. (0.26%)
Caremark Rx, Inc.
Pharmaceutical services provider - U.S. (0.23%)
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING
FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING
----------------- ----------------- ---------------------------
Capital Goods 1.97% 9.84% 11.43%
Diversified Financials 1.52% 6.47% 3.65%
Materials 1.33% 5.42% 2.06%
Energy 1.28% 5.69% 3.69%
Technology Hardware and Equipment 1.20% 8.81% 10.64%
5 LOWEST CONTRIBUTORS/DETRACTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING
FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING
------------------ ----------------- ---------------------------
Healthcare Equipment & Services (1.33%) 10.91% 9.05%
Food & Staples Retailing (0.19%) 2.07% 3.47%
Media (0.10%) 0.94% 3.03%
Food, Beverage & Tobacco (0.01%) 1.65% 4.48%
Commercial Services & Supplies 0.00% 0.00% 1.03%
8 Janus Growth Funds April 30, 2006
(unaudited)
5 LARGEST EQUITY HOLDINGS --(% of Net Assets)
AS OF APRIL 30, 2006
Boeing Co.
Aerospace and Defense 3.3%
Procter & Gamble Co.
Cosmetics and Toiletries 3.1%
JP Morgan Chase & Co.
Finance - Investment Bankers/Brokers 2.8%
Yahoo!, Inc.
Web Portals/Internet Service Providers 2.7%
General Electric Co.
Diversified Operations 2.5%
-----
14.4%
ASSET ALLOCATION --(% of Net Assets)
AS OF APRIL 30, 2006
(PIE CHART)
COMMON STOCK 98.0%
CASH AND CASH EQUIVALENTS 2.0%
Emerging markets comprised 3.7% of total net assets.
5 LARGEST COUNTRY ALLOCATIONS --(% of Investment Securities)
(BAR CHARTS)
AS OF APRIL 30, 2006 AS OF OCTOBER 31, 2005
- --------------------------- --------------------------
United States 78.9% United States 83.7%
Switzerland 5.6% Switzerland 3.2%
Japan 2.7% Canada 2.0%
Canada 2.1% United Kingdom 1.9%
Germany 2.0% Brazil 1.7%
Janus Growth Funds April 30, 2006 9
Janus Fund (unaudited)
PERFORMANCE
(PERFORMANCE GRAPH)
Initial investment of $10,000
JANUS FUND RUSSELL 1000(R) GROWTH INDEX S & P 500(R) INDEX
---------- ---------------------------- ------------------
4/30/1996 10,000 10,000 10,000
4/30/1998 15,873 17,344 17,652
4/30/2000 28,906 27,996 23,682
4/30/2002 16,209 15,154 18,008
4/30/2004 16,111 15,789 19,183
4/30/2006 19,068 18,259 23,544
Average Annual Total Return -- for the periods ended April 30, 2006
FISCAL ONE FIVE TEN SINCE
YEAR-TO-DATE YEAR YEAR YEAR INCEPTION*
------------ ------------ ------------ ------------ ------------
Janus Fund 10.51% 17.28% (2.62)% 6.67% 13.86%
Russell 1000(R)
Growth Index 7.06% 15.18% (0.76)% 6.21% 11.96%**
S&P 500(R) Index 9.64% 15.42% 2.70% 8.94% 11.41%
Lipper Quartile N/A 2nd 4th 2nd 1st
Lipper Ranking - based
on total return for
Large-Cap Growth
Funds N/A*** 296/698 374/474 72/165 1/19
Visit janus.com to view up to date performance and characteristic information
Data presented represents past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 800.525.3713 or visit www.janus.com for performance current to the
most recent month-end.
See Notes to Schedules of Investments for index definitions.
Total return includes reinvestment of dividends, distributions and capital
gains. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
*The Fund's inception date -- February 5, 1970
**The Russell 1000(R) Growth Index's since inception returns calculated from
December 31, 1978
***The Fund's fiscal year-to-date Lipper ranking is not available.
See "Explanations of Charts, Tables and Financial Statements."
The Fund's portfolio may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
There is no assurance that the investment process will consistently lead to
successful investing.
Lipper Inc. - A Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical with capital gains and
dividends reinvested.
Effective 2/1/06, Blaine Rollins is no longer the portfolio manager of Janus
Fund, and David Corkins is now the Fund manager.
FUND EXPENSES
The example below shows you the ongoing costs (in dollars) of investing in your
Fund and allows you to compare these costs with those of other mutual funds.
Please refer to page 5 for a detailed explanation of the information presented
in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD
EXPENSE EXAMPLE (11/1/05) (4/30/06) (11/1/05-4/30/06)*
- ---------------------------------- --------------------------- -------------------------- ----------------------------------
Actual $ 1,000.00 $ 1,105.10 $ 4.75
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,020.28 $ 4.56
*Expenses are equal to the annualized expense ratio of 0.91%, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
10 Janus Growth Funds April 30, 2006
Janus Fund
Schedule of Investments (unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- --------------------------------------------- --------------
Common Stock - 98.0%
Aerospace and Defense - 4.7%
5,401,628 BAE Systems PLC** $ 41,124,397
4,658,990 Boeing Co. 388,792,715
1,494,360 Lockheed Martin Corp. 113,421,924
--------------
543,339,036
Agricultural Chemicals - 1.8%
1,386,690 Monsanto Co. 115,649,946
648,568 Syngenta A.G.* 90,471,105
--------------
206,121,051
Apparel Manufacturers - 0.5%
1,617,560 Coach, Inc.* 53,411,831
Applications Software - 1.9%
9,041,305 Microsoft Corp. 218,347,516
Automotive - Cars and Light Trucks - 1.5%
2,375,506 BMW A.G.**,# 129,318,586
3,368,400 Nissan Motor Company, Ltd.** 44,284,853
--------------
173,603,439
Automotive - Truck Parts and Equipment -
Original - 0.1%
694,895 Lear Corp.# 16,385,624
Beverages - Non-Alcoholic - 0.8%
1,549,975 PepsiCo, Inc. 90,270,544
Broadcast Services and Programming - 0.5%
7,548,271 Liberty Media Corp. - Class A* 63,028,063
Building - Residential and Commercial - 0.3%
51,365 NVR, Inc.*,# 38,780,575
Building and Construction Products -
Miscellaneous - 0.3%
1,172,145 Masco Corp. 37,391,426
Building Products - Cement and Aggregate -
0.6%
1,093,265 Cemex S.A. de C.V. (ADR)# 73,817,253
Casino Hotels - 0.7%
1,053,425 Harrah's Entertainment, Inc. 86,001,617
Cellular Telecommunications - 0.7%
2,077,100 America Movil S.A. de C.V. - Series L (ADR) 76,665,761
Chemicals - Diversified - 0.5%
1,068,600 Shin-Etsu Chemical Company, Ltd.** 61,751,969
Commercial Banks - 0.6%
8,504 Mizuho Financial Group, Inc.** 72,519,071
Commercial Services - Finance - 1.3%
893,515 Moody's Corp. 55,406,865
2,408,627 Paychex, Inc. 97,284,445
--------------
152,691,310
Computers - 2.1%
2,061,165 Apple Computer, Inc.* 145,085,405
1,309,440 Research In Motion, Ltd. (U.S. Shares)* 100,342,387
--------------
245,427,792
Computers - Memory Devices - 2.1%
13,063,415 EMC Corp.* 176,486,737
1,016,710 SanDisk Corp.* 64,896,599
--------------
241,383,336
Containers - Metal and Glass - 0.6%
1,596,965 Ball Corp. 63,846,661
Shares or Principal Amount Value
- -------------------------------------------- ---------------
Cosmetics and Toiletries - 3.1%
6,249,985 Procter & Gamble Co. $ 363,811,627
Dental Supplies and Equipment - 0.5%
1,886,277 Patterson Companies, Inc.*,# 61,454,905
Distribution/Wholesale - 0.5%
7,139,500 Esprit Holdings, Ltd. 56,999,607
Diversified Minerals - 1.0%
2,258,405 Companhia Vale do Rio Doce (ADR) 116,353,026
Diversified Operations - 2.5%
8,492,190 General Electric Co. 293,744,852
E-Commerce/Services - 1.5%
2,214,603 eBay, Inc.* 76,204,489
3,356,212 IAC/InterActiveCorp* 96,893,841
--------------
173,098,330
Electric - Generation - 0.5%
3,510,260 AES Corp.* 59,569,112
Electric Products - Miscellaneous - 0.6%
766,410 Emerson Electric Co. 65,106,530
Electronic Components - Semiconductors - 3.8%
6,626,115 Advanced Micro Devices, Inc.* 214,354,820
6,601,680 Texas Instruments, Inc. 229,144,312
--------------
443,499,132
Electronic Forms - 0.8%
2,421,850 Adobe Systems, Inc.* 94,936,520
Enterprise Software/Services - 2.3%
2,238,595 CA, Inc. 56,770,769
6,886,240 Oracle Corp.* 100,470,242
2,069,110 SAP A.G. (ADR)** 113,035,479
--------------
270,276,490
Entertainment Software - 1.6%
3,255,821 Electronic Arts, Inc.* 184,930,633
Finance - Credit Card - 1.6%
2,210,720 American Express Co. 118,958,844
1,167,700 Credit Saison Company, Ltd.** 61,223,106
--------------
180,181,950
Finance - Investment Bankers/Brokers - 6.2%
7,197,950 JP Morgan Chase & Co. 326,642,971
1,759,205 Merrill Lynch & Company, Inc. 134,156,973
2,449,000 Mitsubishi UFJ Securities Company, Ltd.** 38,585,219
1,060,786 UBS A.G.# 125,734,190
823,125 UBS A.G. (ADR) 96,182,156
--------------
721,301,509
Finance - Mortgage Loan Banker - 1.1%
2,474,885 Fannie Mae 125,229,181
Finance - Other Services - 0.5%
137,307 Chicago Mercantile Exchange Holdings, Inc.# 62,886,606
Food - Dairy Products - 0.7%
2,051,140 Dean Foods Co.* 81,245,655
Food - Retail - 1.0%
1,843,510 Whole Foods Market, Inc. 113,154,644
Food - Wholesale/Distribution - 0.5%
2,048,465 Sysco Corp. 61,228,619
Independent Power Producer - 0.5%
1,312,855 NRG Energy, Inc.* 62,478,769
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds April 30, 2006 11
Janus Fund
Schedule of Investments (unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- -------------------------------------------- --------------
Insurance Brokers - 0.5%
1,928,360 Marsh & McLennan Companies, Inc. $ 59,142,801
Internet Infrastructure Software - 0.4%
1,429,260 Akamai Technologies, Inc.*,# 48,151,769
Machinery - Construction and Mining - 0.3%
434,950 Joy Global, Inc. 28,571,866
Medical - Biomedical and Genetic - 2.3%
1,463,595 Amgen, Inc.* 99,085,382
2,783,120 Celgene Corp.* 117,336,339
646,288 Genentech, Inc.* 51,515,616
--------------
267,937,337
Medical - Drugs - 5.0%
2,834,040 Abbott Laboratories 121,126,870
5,398,875 Merck & Company, Inc. 185,829,277
1,786,843 Roche Holding A.G.# 274,754,845
--------------
581,710,992
Medical - Generic Drugs - 1.1%
3,143,006 Teva Pharmaceutical Industries, Ltd. (ADR)# 127,291,743
Medical - HMO - 2.8%
638,063 Aetna, Inc. 24,565,426
3,616,950 Coventry Health Care, Inc.* 179,653,906
2,424,730 UnitedHealth Group, Inc. 120,606,070
--------------
324,825,402
Medical - Wholesale Drug Distributors - 1.0%
1,732,795 Cardinal Health, Inc. 116,703,743
Medical Instruments - 1.2%
3,732,975 Boston Scientific Corp.* 86,754,339
425,575 Intuitive Surgical, Inc.* 54,048,025
--------------
140,802,364
Medical Products - 0.5%
1,031,070 Varian Medical Systems, Inc.*,# 54,007,447
Metal Processors and Fabricators - 1.2%
2,269,510 Precision Castparts Corp. 142,933,740
Networking Products - 0.8%
4,616,155 Cisco Systems, Inc.* 96,708,447
Oil - Field Services - 2.5%
2,093,520 Halliburton Co. 163,608,588
1,783,380 Schlumberger, Ltd. (U.S. Shares)**,# 123,302,893
--------------
286,911,481
Oil Companies - Exploration and Production -
1.9%
943,615 Apache Corp. 67,034,410
1,452,895 EnCana Corp. (U.S. Shares)# 72,717,395
1,128,900 EOG Resources, Inc.# 79,282,646
--------------
219,034,451
Oil Companies - Integrated - 2.5%
407,740 Amerada Hess Corp. 58,416,910
3,761,455 Exxon Mobil Corp. 237,272,581
--------------
295,689,491
Oil Refining and Marketing - 0.3%
451,895 Valero Energy Corp. 29,255,682
Optical Supplies - 0.8%
854,800 Alcon, Inc. (U.S. Shares) 86,941,708
Pharmacy Services - 1.1%
2,683,925 Caremark Rx, Inc. 122,252,784
Shares or Principal Amount Value
- --------------------------------------------- --------------
Real Estate Management/Services - 0.4%
2,020,000 Mitsubishi Estate Company, Ltd.** $ 44,173,363
Reinsurance - 0.7%
27,981 Berkshire Hathaway, Inc. - Class B* 82,599,912
Retail - Apparel and Shoe - 1.2%
2,171,841 Industria de Diseno Textil S.A.** 88,365,301
1,302,815 Nordstrom, Inc. 49,936,899
--------------
138,302,200
Retail - Building Products - 0.7%
1,302,775 Lowe's Companies, Inc. 82,139,964
Retail - Office Supplies - 1.3%
5,628,642 Staples, Inc. 148,652,435
Savings/Loan/Thrifts - 0.3%
2,111,534 NewAlliance Bancshares, Inc.# 30,490,551
Semiconductor Components/Integrated Circuits -
0.5%
967,845 Marvell Technology Group, Ltd.* 55,254,271
Soap and Cleaning Preparations - 0.9%
2,837,113 Reckitt Benckiser PLC** 103,420,783
Steel - Producers - 0.3%
2,509,858 Tata Steel, Ltd. 35,448,251
Telecommunication Services - 0.4%
1,432,795 NeuStar, Inc. - Class A* 50,291,105
Telephone - Integrated - 0.4%
8,382,820 Level 3 Communications, Inc.*,# 45,267,228
Television - 0.2%
751,618 Univision Communications, Inc. - Class A*,# 26,825,246
Therapeutics - 1.7%
1,603,410 Amylin Pharmaceuticals, Inc.*,# 69,828,506
2,287,100 Gilead Sciences, Inc.* 131,508,250
--------------
201,336,756
Transportation - Railroad - 1.3%
1,923,680 Canadian National Railway Co. (U.S. Shares) 86,392,468
667,665 Union Pacific Corp. 60,897,725
--------------
147,290,193
Transportation - Services - 2.1%
2,532,595 C.H. Robinson Worldwide, Inc. 112,320,588
1,559,300 United Parcel Service, Inc. - Class B 126,412,451
--------------
238,733,039
Web Portals/Internet Service Providers - 3.7%
303,565 Google, Inc. - Class A* 126,871,956
9,409,395 Yahoo!, Inc.* 308,439,968
--------------
435,311,924
Wireless Equipment - 3.3%
2,381,030 Crown Castle International Corp.* 80,121,660
6,938,865 Nokia Oyj (ADR)** 157,234,680
2,938,305 QUALCOMM, Inc. 150,852,579
--------------
388,208,919
--------------
Total Common Stock (cost $9,245,435,979) 11,388,890,960
Money Markets - 1.6%
Janus Institutional Cash Reserves Fund
165,000,000 4.83% 165,000,000
Janus Money Market Fund
25,000,000 4.77% 25,000,000
--------------
Total Money Markets (cost $190,000,000) 190,000,000
See Notes to Schedules of Investments and Financial Statements.
12 Janus Growth Funds April 30, 2006
Schedule of Investments (unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- --------------------------------------- ----------------
Other Securities - 4.5%
State Street Navigator Securities Lending
522,862,639 Prime Portfolio+ (cost $522,862,639) $ 522,862,639
Time Deposit - 0.1%
ING Financial, ETD
$ 11,900,000 4.86%, 5/1/06 (cost $11,900,000) 11,900,000
---------------
Total Investments (total cost 12,113,653,599
$9,970,198,618) -- 104.2%
Liabilities, net of Cash, Receivables and (488,270,828)
Other Assets -- (4.2)%
---------------
Net Assets -- 100% $11,625,382,771
Summary of Investments by Country
% of Investment
Country Value Securities
- --------------- ---------------- ----------------
Bermuda $ 112,253,878 0.9%
Brazil 116,353,026 1.0%
Canada 259,452,250 2.1%
Finland 157,234,680 1.3%
Germany 242,354,065 2.0%
India 35,448,251 0.3%
Israel 127,291,743 1.1%
Japan 322,537,581 2.7%
Mexico 150,483,014 1.2%
Netherlands 123,302,893 1.0%
Spain 88,365,301 0.7%
Switzerland 674,084,004 5.6%
United Kingdom 144,545,180 1.2%
United States++ 9,559,947,733 78.9%
---------------- ----------------
Total $ 12,113,653,599 100.0%
++Includes Short-Term Securities and Other Securities (72.9% excluding
Short-Term Securities and Other Securities)
Forward Currency Contracts, Open
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- ---------------------- ---------------- ---------------- ----------------
British Pound 10/19/06 20,700,000 $ 37,843,245 $ (787,968)
Euro 6/28/06 88,900,000 112,579,871 (2,560,788)
Euro 8/24/06 8,500,000 10,800,699 (495,299)
Japanese Yen 8/24/06 9,000,000,000 80,376,886 (2,372,173)
---------------- ----------------
Total $ 241,600,701 $ (6,216,228)
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds April 30, 2006 13
Janus Enterprise Fund (unaudited)
TICKER: JAENX
FUND SNAPSHOT
This growth fund pursues companies that have grown large enough to be well
established but are small enough to still have room to grow.
(JONATHAN COLEMAN PHOTO)
Jonathan Coleman
portfolio manager
PERFORMANCE OVERVIEW
During the six months ended April 30, 2006, as mid-cap stocks continued to
outpace large-cap stocks, Janus Enterprise Fund advanced 14.29%. Meanwhile, the
Fund's primary benchmark, the Russell Midcap(R) Growth Index returned 15.18%.
The Fund's secondary benchmark, the S&P MidCap 400 Index, returned 15.27% for
the same time period. While this short-term underperformance is disappointing,
rest assured that we will not change our investment philosophy to chase
momentary hot trends. In short, we look for companies with strong competitive
barriers to entry, diverse and predictable revenue streams, an ability to expand
profit margins over time, a strong stewardship of investors' capital, and
appropriate valuations which we believe provide a reasonable risk and reward
tradeoff.
As the performance of the market would suggest, the prior six months have been a
strong period, particularly for small- and mid-sized companies. While
deciphering the exact reasons for market strength (or weakness) in any period
can be perilous, let me offer a few suggestions. First, the six-month period
captures a significant rebound from the hurricane-related malaise that plagued
the market last October. Consumer confidence, and therefore consumer spending,
accelerated after a brief slowdown. As a result, GDP and corporate earnings have
grown faster than expected. Additionally, the market has anticipated that the
Federal Reserve may be close to ending the series of rate hikes it began in
mid-2004. Finally, while energy prices remain elevated, the economy has so far
proved to be much more resilient than in the 1970s, the last such period of
sustained high energy prices.
Market strength has also been relatively concentrated, with certain groups
experiencing very significant price moves in short periods of time. Of
particular strength were the capital goods, materials, and telecommunications
services industries. These industries are experiencing accelerating demand for
their products and services, driven in large part by a surge in capital spending
after several years of retrenchment. Given my long-standing investment
philosophy that we should have exposure to a broad array of industries rather
than a highly concentrated portfolio, there are inevitably periods when our
breadth of holdings works against us. This certainly occurred during the last
six months. Nevertheless, I do believe that over an entire cycle of up and down
markets the approach has considerable merit.
INVESTMENT STRATEGY
As always, there were certain sectors which were positive and negative
contributors to performance. I am pleased to report that given the strong market
performance, we had positive absolute returns in every sector except for
utilities, where we sustained a small loss. Contributing to the Fund's
underperformance versus its benchmark were holdings in the materials, healthcare
equipment and services, and energy sectors. While we made money in these sectors
on an absolute basis, we were either underweight in a strong group or did a poor
job of stock selection within the group during the six-month period. We did a
better job with our picks in the automobiles and components, media, and
pharmaceuticals and biotechnology sectors. Of particular strength was long time
holding Celgene, which I have written about in past letters. The company
received Federal Drug Administration approval for its cancer-fighting agent
Revlimid and the early market uptake appears positive.
HEAVY EQUIPMENT AND RV MANUFACTURER BOOSTED PERFORMANCE
I'd like to discuss a couple of stocks that worked well for us during the period
and give you some context on how they fit into our investment philosophy.
Industrial heavy equipment manufacturer Terex produced very strong results
during the period, aided by increasing demand for its mining, crane and aerial
lift businesses. We became interested in Terex after meeting with the company in
early 2005 and spending time understanding the company's strategic priorities.
Several years ago Terex undertook a strategic review of the business, deciding
to de-emphasize acquisitions and instead focus on driving returns on invested
capital higher. The company has been able to do this by improving operating
margins and reducing its working capital such as inventories and accounts
receivable, which unnecessarily tie up cash. Our investment philosophy has
consistently been predicated on investing in companies which are growing
revenues and earnings while also increasing returns on invested capital. Terex
has done just that, showing impressive operating leverage in recent quarters. To
be more specific, revenue increased 27% in 2005 versus 2004, while operating
profit increased 75% when compared to the prior year. Importantly, returns on
invested capital have also increased more than five percentage points over the
prior year. These factors led to very strong share price performance. As Terex
has become more fairly valued by the market, we have used the opportunity to
trim back our holdings.
Towable recreational vehicle (RV) manufacturer Thor Industries is perhaps best
known for its iconic Airstream trailer brand. Thor is run by CEO Wade Thompson,
who purchased a loss-making Airstream from conglomerate Beatrice International
Holdings in 1980. Mr. Thompson is a manager who thinks like an owner, because he
in fact owns 30% of the company. As a result, he allocates capital with the care
that we value in our core holdings and rewards his managers who expand market
share and do so profitably. The proof is in the numbers. Thor has been
profitable every year since going public in 1987 and boasts returns on invested
capital of greater than 30% in an industry when many competitors struggle with
profitability. We believe that Thor can capitalize on a demographic tailwind as
baby boomers enter their retirement years. The propensity to purchase an RV
increases dramatically after the age of 50 and we believe Thor has the product
breadth to serve the demand. Thor's business has held up very well in spite of
the increases in gasoline prices, in part because the majority of its sales are
in towable RVs, as opposed to larger more expensive motorized RVs. Consumers
have traded down to the cheaper product, which has benefited Thor at the expense
of some competitors. While we admire Thor and its management tremendously, we
have used the strength in the stock to lighten our position.
HEALTHCARE INDUSTRY HOLDINGS DETRACTED FROM PERFORMANCE
I'd also like to discuss some of our losers in the period, explain our
investment rationale, and tell you what we have done in response to the
disappointments. Several of our most significant losses in the
14 Janus Growth Funds April 30, 2006
(unaudited)
period came in the healthcare industry. Implantable cardiac device manufacturer
St. Jude Medical has been a holding in the Fund for over 4 years and has
delivered good returns over that period. St. Jude has proven very adept at
developing new products with large addressable end markets. This product
innovation has driven compounded annual growth in sales of greater than 20% over
the last 4 years. Nevertheless, the company has recently experienced a slowing
growth rate for its products as the potential patient population for its devices
has become more fully penetrated by St. Jude and its competitors. While we
believe St. Jude has an enviable franchise, we have become increasingly
concerned that the market slowdown could last for an extended period of time. As
a result, we have trimmed the position considerably. We continue to monitor
market trends closely and, for now, hold our remaining St. Jude shares given
their reasonable current valuation.
We also experienced disappointing performance from a more recent purchase,
Patterson Companies. Established in 1877, Patterson is a dental and veterinary
supply distributor that has an enviable long-term track record of earnings
growth, most recently having compounded earnings growth of 21% over the last 9
years. Additionally, the company boasts very high returns on its capital, with
returns on equity of 16% or higher each of the last 5 years. As the numbers
suggest, this is not the proverbial flash in the pan. I have long admired the
company, but I had not owned the stock in the past. In the last 4 quarters the
company's growth rate has slowed, causing the stock to underperform sharply. We
believe this slowing growth rate is a temporary phenomenon and we initiated a
position. In retrospect, we started purchasing too soon, as the stock has
continued to perform poorly relative to the market since our purchase. Over the
long-term we like the opportunity for Patterson to continue to gain share in the
very fragmented dental and veterinary markets. We are impressed with the
company's 12% operating margins, which are quite strong for a distributor. We
have modestly added to our position, as our research suggests signs of better
financial results in future periods.
SUMMARY
As I always do in this space, I would like to reiterate to you that I am an
investor alongside you in Janus Enterprise Fund. I invest a portion of every
paycheck in the Fund and I have never sold a share of the Fund as long as I have
managed it. I take the obligation of trust very seriously and work every day to
support the trust you have placed in me and in Janus.
Thank you for your investment in Janus Enterprise Fund.
JANUS ENTERPRISE FUND AT A GLANCE
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- HOLDINGS
CONTRIBUTION
------------
Celgene Corp. 1.44%
Biopharmaceutical company - U.S.
Terex Corp.
Diversified global manufacturer - U.S. 0.87%
Thor Industries, Inc.
Recreation vehicle producer/seller - U.S. 0.81%
Advanced Micro Devices, Inc.
Integrated circuits provider - U.S. 0.79%
Lamar Advertising Co.
Outdoor advertising company - U.S. 0.74%
5 LARGEST DETRACTORS FROM PERFORMANCE -- HOLDINGS
CONTRIBUTION
------------
Reliant Energy, Inc. (0.28%)
Electricity and energy services provider - U.S.
St. Jude Medical, Inc.
Cardiovascular medical devices servicer - U.S. (0.25%)
Patterson Companies, Inc.
Dental, veterinary and rehabilitation supplies
distributor - U.S. (0.24%)
Alcon, Inc. (U.S. Shares)
Eye care company - U.S. (0.22%)
Coventry Health Care, Inc.
Managed company - U.S. (0.14%)
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING
FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING
--------------------------- --------------------------- ---------------------------
Semiconductor & Semiconductor Equipment 1.79% 7.67% 7.46%
Pharmaceuticals & Biotechnology 1.78% 8.35% 5.58%
Capital Goods 1.61% 4.27% 7.58%
Diversified Financials 1.51% 6.82% 4.80%
Media 1.02% 5.17% 3.82%
5 LOWEST CONTRIBUTORS/DETRACTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING
FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING
--------------------------- --------------------------- ---------------------------
Utilities (0.28%) 0.01% 0.91%
Banks 0.00% 0.19% 1.65%
Food & Staples Retailing 0.00% 0.00% 0.52%
Household & Personal Products 0.00% 0.40% 0.61%
Materials 0.01% 3.77% 2.98%
Janus Growth Funds April 30, 2006 15
Janus Enterprise Fund (unaudited)
5 LARGEST EQUITY HOLDINGS --(% of Net Assets)
AS OF APRIL 30, 2006
Lamar Advertising Co.
Advertising Sales 3.4%
Celgene Corp.
Medical - Biomedical and Genetic 3.4%
EOG Resources, Inc.
Oil Companies - Exploration and Production 3.0%
T. Rowe Price Group, Inc.
Investment Management and Advisory Services 2.5%
Nextel Partners, Inc. - Class A
Cellular Telecommunications 2.4%
----
14.7%
ASSET ALLOCATION --(% of Net Assets)
AS OF APRIL 30, 2006
(PIE CHART)
COMMON STOCK 97.6%
CASH AND CASH EQUIVALENTS 1.6%
EQUITY-LINKED STRUCTURED NOTES 0.8%
Emerging markets comprised 0.4% of total net assets.
5 LARGEST COUNTRY ALLOCATIONS --(% of Investment Securities)
(BAR CHARTS)
AS OF APRIL 30, 2006 AS OF OCTOBER 31, 2005
- ------------------------------- --------------------------------
United States 91.8% United States 91.5%
Canada 3.0% Bermuda 2.1%
Bermuda 2.3% Canada 1.7%
United Kingdom 1.1% United Kingdom 1.4%
Ireland 0.8% Ireland 0.9%
16 Janus Growth Funds April 30, 2006
(unaudited)
PERFORMANCE
(PERFORMANCE GRAPH)
Initial investment of $10,000
JANUS ENTERPRISE FUND RUSSELL MIDCAP(R) GROWTH INDEX S & P MIDCAP 400 INDEX
---------------------------------- ---------------------------------- ----------------------------------
4/30/1996 10,000 10,000 10,000
4/30/1998 12,269 14,636 16,290
4/30/2000 31,642 25,159 21,415
4/30/2002 12,049 15,081 24,431
4/30/2004 13,748 17,109 27,096
4/30/2006 19,110 23,494 38,155
Average Annual Total Return --for the periods ended April 30, 2006
FISCAL ONE FIVE TEN SINCE
YEAR-TO-DATE YEAR YEAR YEAR INCEPTION*
------------ ------------ ------------ ------------ ------------
Janus Enterprise Fund 14.29% 29.21% 1.87% 6.69% 11.63%
Russell Midcap(R)
Growth Index 15.18% 28.27% 5.77% 8.92% 11.38%
S&P MidCap 400 Index 15.27% 28.32% 10.73% 14.33% 15.07%
Lipper Quartile N/A 3rd 3rd 3rd 2nd
Lipper Ranking - based
on total return for
Mid-Cap Growth Funds N/A** 324/563 257/357 88/128 20/49
Visit janus.com to view up to date performance and characteristic information
Data presented represents past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 800.525.3713 or visit www.janus.com for performance current to the
most recent month-end.
See Notes to Schedules of Investments for index definitions.
Total return includes reinvestment of dividends, distributions and capital
gains. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
The date of the Lipper ranking is slightly different from when the Fund began
operations since Lipper provides fund rankings as of the last day of the month
or the first Thursday after fund inception.
*The Fund's inception date -- September 1, 1992
**The Fund's fiscal year-to-date Lipper ranking is not available.
See "Explanations of Charts, Tables and Financial Statements."
The Fund's portfolio may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
There is no assurance that the investment process will consistently lead to
successful investing.
Lipper Inc. - A Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical with capital gains and
dividends reinvested.
Funds that emphasize investments in small-sized companies may experience greater
price volatility.
FUND EXPENSES
The example below shows you the ongoing costs (in dollars) of investing in your
Fund and allows you to compare these costs with those of other mutual funds.
Please refer to page 5 for a detailed explanation of the information presented
in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD
EXPENSE EXAMPLE (11/1/05) (4/30/06) (11/1/05-4/30/06)*
- --------------------------- ------------------------- ------------------------- --------------------------
Actual $ 1,000.00 $ 1,142.90 $ 5.21
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,019.93 $ 4.91
*Expenses are equal to the annualized expense ratio of 0.98%, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
Janus Growth Funds April 30, 2006 17
Janus Enterprise Fund
Schedule of Investments (unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- -------------------------------------------- --------------
Common Stock - 97.6%
Advertising Sales - 3.4%
1,167,170 Lamar Advertising Co.* $ 64,182,677
Agricultural Chemicals - 1.3%
Potash Corporation of Saskatchewan, Inc.
268,530 (U.S. Shares) 25,424,420
Airlines - 0.9%
372,978 Ryanair Holdings PLC (ADR)*,# 17,559,804
Apparel Manufacturers - 0.8%
445,600 Coach, Inc.* 14,713,712
Applications Software - 0.5%
221,060 Citrix Systems, Inc.* 8,824,715
Batteries and Battery Systems - 0.4%
139,195 Energizer Holdings, Inc.*,# 7,119,824
Broadcast Services and Programming - 0.4%
545,665 CKX, Inc.*,# 7,699,333
Building - Mobile Home and Manufactured Homes
- - 1.2%
433,475 Thor Industries, Inc. 21,881,818
Building - Residential and Commercial - 1.0%
25,410 NVR, Inc.*,# 19,184,550
Casino Services - 0.8%
391,190 Scientific Games Corp. - Class A*,# 14,900,427
Cellular Telecommunications - 2.4%
1,609,163 Nextel Partners, Inc. - Class A*,# 45,603,679
Coal - 0.5%
401,000 Alpha Natural Resources, Inc.*,# 10,069,110
Commercial Banks - 0.5%
183,970 SVB Financial Group*,# 9,340,157
Commercial Services - 0.9%
420,962 Iron Mountain, Inc.*,# 16,459,614
Commercial Services - Finance - 3.4%
456,910 Jackson Hewitt Tax Service, Inc.# 13,652,471
337,111 Moody's Corp. 20,904,253
716,691 Paychex, Inc. 28,947,149
--------------
63,503,873
Computer Services - 1.6%
689,225 Ceridian Corp.* 16,699,921
457,655 IHS, Inc. - Class A*,# 12,960,790
--------------
29,660,711
Computers - 1.0%
257,287 Apple Computer, Inc.* 18,110,432
Computers - Memory Devices - 0.3%
98,490 SanDisk Corp.* 6,286,617
Containers - Metal and Glass - 3.0%
888,855 Ball Corp. 35,536,423
1,180,980 Owens-Illinois, Inc.* 21,588,314
--------------
57,124,737
Data Processing and Management - 0.7%
307,850 NAVTEQ Corp.*,# 12,781,932
Dental Supplies and Equipment - 0.8%
481,330 Patterson Companies, Inc.*,# 15,681,731
Diagnostic Kits - 1.5%
721,650 Dade Behring Holdings, Inc. 28,144,350
Shares or Principal Amount Value
- -------------------------------------------- --------------
Distribution/Wholesale - 0.7%
886,500 Esprit Holdings, Ltd. $ 7,077,548
2,278,000 Li & Fung, Ltd. 5,406,111
--------------
12,483,659
E-Commerce/Products - 0.4%
151,000 Submarino S.A. (GDR)* 8,087,032
E-Commerce/Services - 1.1%
708,220 IAC/InterActiveCorp* 20,446,311
Electric Products - Miscellaneous - 1.2%
478,365 AMETEK, Inc.# 23,569,044
Electronic Components - Semiconductors - 3.2%
893,135 Advanced Micro Devices, Inc.* 28,892,917
665,380 ATI Technologies, Inc. (U.S. Shares)*,# 10,326,698
445,695 International Rectifier Corp.*,# 20,145,414
--------------
59,365,029
Electronic Measuring Instruments - 0.8%
303,582 Trimble Navigation, Ltd.* 14,383,715
Entertainment Software - 1.6%
1,333,031 Activision, Inc.* 18,915,710
181,835 Electronic Arts, Inc.* 10,328,228
--------------
29,243,938
Fiduciary Banks - 0.9%
280,590 Northern Trust Corp. 16,523,945
Finance - Investment Bankers/Brokers - 0.5%
280,435 optionsXpress Holdings, Inc. 8,833,703
Finance - Other Services - 1.5%
61,875 Chicago Mercantile Exchange Holdings, Inc. 28,338,750
Food - Canned - 0.8%
582,729 TreeHouse Foods, Inc.* 15,267,500
Food - Dairy Products - 2.4%
1,125,537 Dean Foods Co.* 44,582,521
Hotels and Motels - 0.6%
32,680 Four Seasons Hotels, Inc. 1,765,374
160,935 Starwood Hotels & Resorts Worldwide, Inc. 9,234,450
--------------
10,999,824
Human Resources - 1.2%
335,405 Manpower, Inc. 21,851,636
Industrial Automation and Robotics - 0.6%
164,585 Rockwell Automation, Inc. 11,925,829
Instruments - Controls - 0.4%
117,590 Mettler-Toledo International, Inc.* 7,619,832
Instruments - Scientific - 1.2%
317,887 Fisher Scientific International, Inc.* 22,426,928
Insurance Brokers - 0.4%
220,520 Willis Group Holdings, Ltd. 7,751,278
Internet Content - Information/News - 0.3%
543,715 CNET Networks, Inc.*,# 5,861,248
Investment Management and Advisory Services -
3.0%
178,065 National Financial Partners Corp.# 9,259,380
566,865 T. Rowe Price Group, Inc.# 47,724,364
--------------
56,983,744
Leisure and Recreation Products - 0.5%
236,295 Brunswick Corp.# 9,267,490
See Notes to Schedules of Investments and Financial Statements.
18 Janus Growth Funds April 30, 2006
Schedule of Investments (unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- -------------------------------------------- --------------
Machinery - Construction and Mining - 0.8%
168,455 Terex Corp.* $ 14,579,780
Machinery - Pumps - 0.6%
252,575 Graco, Inc.# 11,807,881
Medical - Biomedical and Genetic - 4.2%
1,496,490 Celgene Corp.* 63,092,017
248,160 Invitrogen Corp.*,# 16,381,042
--------------
79,473,059
Medical - Drugs - 0.4%
179,370 Forest Laboratories, Inc.* 7,242,961
Medical - HMO - 1.3%
500,118 Coventry Health Care, Inc.* 24,840,861
Medical - Nursing Homes - 0.9%
373,885 Manor Care, Inc.# 16,394,857
Medical Instruments - 2.0%
100,200 Intuitive Surgical, Inc.* 12,725,400
344,460 Kyphon, Inc.*,# 14,312,313
274,160 St. Jude Medical, Inc.* 10,823,837
--------------
37,861,550
Medical Labs and Testing Services - 0.4%
131,200 Covance, Inc.*,# 7,655,520
Medical Products - 0.8%
298,385 Varian Medical Systems, Inc.* 15,629,406
Motion Pictures and Services - 0.5%
Lions Gate Entertainment
1,040,940 Corp. (U.S. Shares)* 10,169,984
Multi-Line Insurance - 1.1%
425,345 Assurant, Inc. 20,488,869
Networking Products - 0.4%
401,950 Juniper Networks, Inc.* 7,428,036
Oil Companies - Exploration and Production -
4.2%
256,350 Chesapeake Energy Corp.# 8,121,168
133,030 Complete Production Services, Inc.* 3,515,983
798,985 EOG Resources, Inc. 56,112,716
210,155 Forest Oil Corp.*,# 7,685,368
170,078 Mariner Energy, Inc.* 3,308,017
--------------
78,743,252
Optical Supplies - 0.6%
115,250 Alcon, Inc. (U.S. Shares) 11,722,078
Pipelines - 2.1%
457,606 Kinder Morgan, Inc.# 40,278,480
Property and Casualty Insurance - 1.0%
523,177 W. R. Berkley Corp. 19,577,283
Radio - 0.6%
531,670 XM Satellite Radio Holdings, Inc. - Class A*,# 10,750,367
Recreational Vehicles - 0.8%
332,030 Polaris Industries, Inc.# 15,904,237
Reinsurance - 1.7%
10,527 Berkshire Hathaway, Inc. - Class B* 31,075,704
REIT - Mortgages - 1.0%
812,335 CapitalSource, Inc.# 19,089,873
Respiratory Products - 0.9%
437,975 Respironics, Inc.* 16,038,645
Shares or Principal Amount Value
- -------------------------------------------- --------------
Retail - Apparel and Shoe - 0.3%
138,620 Nordstrom, Inc. $ 5,313,305
Retail - Auto Parts - 0.6%
297,309 Advance Auto Parts, Inc. 11,957,768
Retail - Office Supplies - 2.2%
299,625 Office Depot, Inc.*,# 12,158,783
1,118,815 Staples, Inc.# 29,547,904
--------------
41,706,687
Schools - 0.6%
211,359 Apollo Group, Inc. - Class A*,# 11,548,656
Semiconductor Components/Integrated Circuits -
3.2%
1,019,410 Cypress Semiconductor Corp.*,# 17,493,076
352,845 Linear Technology Corp.# 12,525,998
519,155 Marvell Technology Group, Ltd.* 29,638,558
--------------
59,657,632
Semiconductor Equipment - 0.7%
258,550 KLA-Tencor Corp. 12,451,768
Telecommunication Services - 1.6%
611,140 Amdocs, Ltd. (U.S. Shares)* 22,734,408
393,515 Time Warner Telecom, Inc. - Class A*,# 6,599,247
--------------
29,333,655
Telephone - Integrated - 0.2%
820,150 Level 3 Communications, Inc.*,# 4,428,810
Television - 0.9%
464,738 Univision Communications, Inc. - Class A*,# 16,586,499
Therapeutics - 2.9%
366,228 Gilead Sciences, Inc.* 21,058,110
486,527 Neurocrine Biosciences, Inc.* 27,907,189
91,860 United Therapeutics Corp.* 5,470,263
--------------
54,435,562
Toys - 1.1%
1,044,122 Marvel Entertainment, Inc.*,# 20,370,820
Transportation - Equipment and Leasing - 0.2%
98,440 GATX Corp.# 4,606,992
Transportation - Marine - 0.6%
219,495 Alexander & Baldwin, Inc. 10,946,216
Transportation - Railroad - 0.9%
Canadian National Railway
366,770 Co. (U.S. Shares) 16,471,641
Transportation - Services - 1.0%
226,860 Expeditors International of Washington, Inc.# 19,421,485
Transportation - Truck - 1.4%
229,565 Con-Way, Inc.# 12,791,362
327,920 Landstar System, Inc.# 13,933,321
--------------
26,724,683
Web Hosting/Design - 0.8%
222,981 Equinix, Inc.* 14,694,448
Wireless Equipment - 1.5%
830,135 Crown Castle International Corp.*,# 27,934,043
--------------
Total Common Stock (cost $1,185,206,182) 1,835,414,532
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds April 30, 2006 19
Janus Enterprise Fund
Schedule of Investments(unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- --------------------------------------------- --------------
Equity-Linked Structured Notes - 0.8%
Finance - Investment Bankers/Brokers - 0.8%
Morgan Stanley Co., convertible
(Celgene Corp.), 0% (144A)(S)
376,070 (cost $13,162,450) $ 15,166,903
Other Securities - 12.2%
State Street Navigator Securities Lending
229,175,404 Prime Portfolio+ (cost $229,175,404) 229,175,404
Time Deposit - 2.3%
ING Financial, ETD
$ 44,200,000 4.86%, 5/1/06 (cost $44,200,000) 44,200,000
--------------
Total Investments (total cost $1,471,744,036) 2,123,956,839
- -- 112.9%
Liabilities, net of Cash, Receivables and
Other Assets -- (12.9)% (241,860,248)
--------------
Net Assets -- 100% $1,882,096,591
Summary of Investments by Country
% of Investment
Country Value Securities
- --------------- --------------- ---------------
Bermuda $ 49,873,495 2.3%
Brazil 8,087,032 0.4%
Canada 64,158,117 3.0%
Ireland 17,559,804 0.8%
Switzerland 11,722,078 0.6%
United Kingdom 22,734,408 1.1%
United States++ 1,949,821,905 91.8%
--------------- ---------------
Total $ 2,123,956,839 100.0%
++Includes Short-Term Securities and Other Securities (78.9% excluding
Short-Term Securities and Other Securities)
See Notes to Schedules of Investments and Financial Statements.
20 Janus Growth Funds April 30, 2006
Janus Mercury Fund(unaudited)
TICKER: JAMRX
FUND SNAPSHOT
This diversified growth fund typically pursues larger companies believed to be
well-positioned for future growth.
TEAM BASED APPROACH
LED BY JIM GOFF
DIRECTOR OF RESEARCH
PERFORMANCE OVERVIEW
Preoccupation with rising interest rates and historically high oil prices failed
to deter the enthusiasm of U.S. investors during the six-month period ended
April 30, 2006. As a result, the major domestic indexes settled near five-year
highs. During the period, Janus Mercury Fund gained 8.63%, topping its primary
benchmark, the Russell 1000(R) Growth Index, which returned 7.06%. The Fund's
results slightly underperformed those of its secondary benchmark, the S&P 500(R)
Index, which returned 9.64% during the period.
OUR INVESTMENT PROCESS
The Fund spent a portion of the period in transition as portfolio manager David
Corkins stepped down after three successful years at the helm so that he could
take over as manager of Janus Fund, effective February 1. We consequently moved
the management of this Fund to a team-based model, where ideas for investments
come from Janus' entire research team. Janus' eight sector teams each manage a
portion of the Fund in-line with the representation of its sector in the Russell
1000(R) Growth Index. Each sector sleeve is composed of the highest conviction
"buy-rated" stock ideas from Janus' sector specialists.
As Janus expects to cover 1,200 companies in 2006, I feel confident that there
will be no shortage of good ideas from our experienced Janus research team. By
focusing on what we believe are the best prospects for the long haul, we hope to
deliver Index-beating returns in a moderate risk fashion.
CONTRIBUTORS TO FUND PERFORMANCE
The top-performing individual stock during the period was Canadian National
Railway, which extended a rally that ran through the latter part of 2005 and
into 2006. The North American freight train system operator delivered robust
earnings growth, supported by solid gains in its coal, intermodal and grain
transporting segments.
Biotechnology company Celgene also contributed significantly to gains. The stock
started 2006 on a roll after the Food and Drug Administration approved its
Revlimid treatment for myelodysplastic syndromes, a blood-borne cancer, in the
final days of December. Less than two months later, it received another boost
when regulators granted priority status to Celgene's application to approve
Revlimid for the treatment of multiple myeloma, a bone marrow-based cancer. The
accelerated decision is expected by the end of June, and we anticipate the drug
will be well received by the medical community for both indications.
A newer holding, Tata Steel of India, outperformed as it posted double-digit
gains in finished steel production -- benefiting from sustained high global
demand for the metal. Janus research analyst Laurent Saltiel believes this
Indian steel producer is well exposed to the fastest-growing region of the
world. Based on a recent study on 23 world class steel makers, Tata Steel has
been ranked the best steel company in the world by World Steel Dynamics, a
leading steel industry consultant. Tata Steel owes its competitiveness to high
productivity, low labor costs, integration into coal and iron ore production and
high manufacturing quality standards. We expect Tata to continue to have strong
positive sales growth and returns of capital.
Financial services giant JP Morgan Chase advanced as it announced highly
regarded industry executive James Dimon would ascend to the role of chief
executive officer six months ahead of schedule. The market is beginning to
realize the increased returns and profit that may result from the merger of the
legacy Bank One and JP Morgan Chase businesses. Meanwhile, we believe the
company's earnings growth remains healthy, supported by increasing margins from
merger savings and broad returns across its consumer and wholesale banking
franchises. While we remain upbeat on the bank's outlook, we took some profits
to keep our position size within our range of comfort.
DETRACTORS FROM FUND PERFORMANCE
The period's worst performer was health insurer Aetna, which slipped as costs
crept up. Disheartened by the increasing emphasis on membership numbers -- and
not cash flow performance -- we trimmed the Fund's exposure.
Also weighing significantly on returns was Internet services provider Yahoo!.
Frequently compared to Web search giant Google (another Fund holding), Yahoo!
has taken longer to effectively grow search advertising revenues, which has
disappointed some investors. We see the momentum building, but because it has
occurred at a slower pace than anticipated,
Janus Growth Funds April 30, 2006 21
Janus Mercury Fund (unaudited)
we're closely monitoring the situation and have scaled back our position. That
said, we believe the company's valuation is not much higher than the broader
market, it has good fundamentals and its growth prospects are solid, so we
remain invested.
Higher energy and raw material prices hurt returns at glass container and
packaging concern Owens-Illinois, a newer position. The company is making
progress on an ambitious long-term cost-cutting plan that will boost returns,
but investors reacted strongly to disappointing near-term earnings. We expected
that this company would require some patience when we purchased it, and we still
see upside potential.
LOOKING FORWARD
Of course, we know that even the best-researched ideas can falter. But by
leveraging the top picks from Janus' exceptional analyst team and taking a
methodical approach to building and maintaining this Fund, we believe we are
offering exposure to market leaders from a broad cross-section of the stock
universe. At the same time, by keeping the Fund well-diversified, we're
diminishing the potential risk factors that result from outsized investments in
a small group of companies or industries.
Thank you for your continued investment in Janus Mercury Fund.
JANUS MERCURY FUND AT A GLANCE
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- HOLDINGS
CONTRIBUTION
------------
Canadian National Railway Co. (U.S. Shares)
Railroad track operator - Canada 0.65%
Samsung Electronics Company, Ltd.
Diversified electronics company - Korea 0.58%
Celgene Corp.
Global biopharmaceutical company - U.S. 0.57%
Tata Steel, Ltd.
Steel company - India 0.55%
JP Morgan Chase & Co.
Financial products and services provider - U.S. 0.49%
5 LARGEST DETRACTORS FROM PERFORMANCE -- HOLDINGS
CONTRIBUTION
------------
Aetna, Inc.
Healthcare and related benefits provider - U.S. (0.34%)
Yahoo!, Inc.
Global Internet media company - U.S. (0.26%)
Coventry Health Care, Inc.
Managed company - U.S. (0.20%)
Whole Foods Market, Inc.
Natural food supermarkets owner/operator - U.S. (0.19%)
Owens-Illinois, Inc.
Plastic and glass packaging manufacturer - U.S. (0.17%)
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING
FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING
--------------------------- --------------------------- ---------------------------
Transportation 1.41% 4.90% 1.84%
Semiconductors & Semiconductor
Equipment 1.10% 7.13% 3.15%
Pharmaceuticals & Biotechnology 1.05% 9.33% 7.88%
Energy 0.84% 6.78% 9.65%
Materials 0.81% 3.32% 3.01%
5 LOWEST CONTRIBUTORS/DETRACTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING
FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING
--------------------------- --------------------------- ---------------------------
Healthcare Equipment & Services (0.43%) 9.02% 5.17%
Food & Staples Retailing (0.19%) 1.95% 2.38%
Utilities (0.10%) 0.69% 3.30%
Commercial Services & Supplies (0.05%) 0.35% 0.73%
Consumer Durables & Apparel 0.01% 4.86% 1.31%
22 Janus Growth Funds April 30, 2006
(unaudited)
5 LARGEST EQUITY HOLDINGS --(% of Net Assets)
AS OF APRIL 30, 2006
General Electric Co.
Diversified Operations 2.4%
United Parcel Service, Inc. - Class B
Transportation - Services 2.3%
Roche Holding A.G
Medical - Drugs 1.9%
Dean Foods Co.
Food - Dairy Products 1.9%
Procter & Gamble Co.
Cosmetics and Toiletries 1.8%
----
10.3%
ASSET ALLOCATION --(% of Net Assets)
AS OF APRIL 30, 2006
(PIE CHART)
COMMON STOCK 95.8%
CASH AND CASH EQUIVALENTS 3.3%
EQUITY-LINKED STRUCTURED NOTES 0.9%
Emerging markets comprised 5.0% of total net assets.
5 LARGEST COUNTRY ALLOCATIONS --(% of Investment Securities)
(BAR CHARTS)
AS OF APRIL 30, 2006 AS OF OCTOBER 31, 2005
- ------------------------------- --------------------------------
United States 81.0% United States 81.4%
Switzerland 2.5% Switzerland 5.3%
United Kingdom 2.5% Canada 3.4%
India 2.3% United Kingdom 3.0%
Bermuda 2.2% France 2.5%
Janus Growth Funds April 30, 2006 23
Janus Mercury Fund (unaudited)
PERFORMANCE
(PERFORMANCE GRAPH)
Initial investment of $10,000
JANUS MERCURY FUND S & P 500(R) INDEX RUSSELL 1000(R) GROWTH INDEX
-------------------------------- -------------------------------- --------------------------------
4/30/1996 10,000 10,000 10,000
4/30/1998 14,427 17,652 17,344
4/30/2000 37,396 23,682 27,996
4/30/2002 17,125 18,008 15,154
4/30/2004 18,424 19,183 15,789
4/30/2006 22,746 23,544 18,259
Average Annual Total Return -- for the periods ended April 30, 2006
FISCAL ONE FIVE TEN SINCE
YEAR-TO-DATE YEAR YEAR YEAR INCEPTION*
------------ ------------ ------------ ------------ ------------
Janus Mercury Fund 8.63% 19.00% (1.74)% 8.56% 12.70%
Russell 1000(R)
Growth Index 7.06% 15.18% (0.76)% 6.21% 8.76%
S&P 500(R) Index 9.64% 15.42% 2.70% 8.94% 10.76%
Lipper Quartile N/A 2nd 3rd 1st 1st
Lipper Ranking - based
on total return for
Large-Cap Growth
Funds N/A** 210/698 306/474 18/165 1/84
Visit janus.com to view up to date performance and characteristic information
Data presented represents past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 800.525.3713 or visit www.janus.com for performance current to the
most recent month-end.
See Notes to Schedules of Investments for index definitions.
Total return includes reinvestment of dividends, distributions and capital
gains. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
The date of the Lipper ranking is slightly different from when the Fund began
operations since Lipper provides fund rankings as of the last day of the month
or the first Thursday after fund inception.
*The Fund's inception date -- May 3, 1993
**The Fund's fiscal year-to-date Lipper ranking is not available.
See "Explanations of Charts, Tables and Financial Statements."
The Fund's portfolio may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
There is no assurance that the investment process will consistently lead to
successful investing.
Lipper Inc. - A Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical with capital gains and
dividends reinvested.
Effective 2/1/06, David Corkins is no longer the portfolio manager of Janus
Mercury Fund. A research team now selects the investments for Janus Mercury Fund
led by the Director of Research, Jim Goff.
FUND EXPENSES
The example below shows you the ongoing costs (in dollars) of investing in your
Fund and allows you to compare these costs with those of other mutual funds.
Please refer to page 5 for a detailed explanation of the information presented
in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD
EXPENSE EXAMPLE (11/1/05) (4/30/06) (11/1/05-4/30/06)*
- --------------------------- --------------------------- --------------------------- ---------------------------
Actual $ 1,000.00 $ 1,086.30 $ 4.97
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,020.03 $ 4.81
*Expenses are equal to the annualized expense ratio of 0.96%, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
24 Janus Growth Funds April 30, 2006
Janus Mercury Fund
Schedule of Investments (unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- -------------------------------------------- --------------
Common Stock - 95.8%
Advertising Sales - 0.4%
314,250 Lamar Advertising Co.* $ 17,280,608
Aerospace and Defense - 1.9%
1,734,500 BAE Systems PLC** 13,205,328
780,380 Boeing Co. 65,122,711
--------------
78,328,039
Agricultural Chemicals - 1.0%
Potash Corporation of Saskatchewan, Inc.
260,540 (U.S. Shares)** 24,667,927
121,803 Syngenta A.G.*,** 16,990,743
--------------
41,658,670
Agricultural Operations - 0.5%
370,675 Bunge, Ltd. 19,775,511
Apparel Manufacturers - 1.1%
987,660 Coach, Inc.* 32,612,534
955,690 Quiksilver, Inc.*,# 13,064,282
--------------
45,676,816
Applications Software - 1.0%
1,712,650 Microsoft Corp. 41,360,498
Athletic Footwear - 0.8%
375,650 NIKE, Inc. - Class B 30,743,196
Automotive - Cars and Light Trucks - 1.7%
782,508 BMW A.G.**,# 42,598,431
132,220 Hyundai Motor Company, Ltd.** 11,621,117
983,600 Nissan Motor Company, Ltd.**,# 12,931,535
--------------
67,151,083
Beverages - Wine and Spirits - 0.6%
124,010 Pernod Ricard S.A.**,# 24,046,650
Broadcast Services and Programming - 0.4%
818,295 Liberty Global, Inc. - Class A* 16,946,889
Building - Mobile Home and Manufactured Homes
- - 0.2%
195,030 Thor Industries, Inc. 9,845,114
Building - Residential and Commercial - 2.0%
51,535 NVR, Inc.*,# 38,908,925
1,081,995 Pulte Homes, Inc.# 40,412,513
--------------
79,321,438
Casino Hotels - 0.4%
209,920 Harrah's Entertainment, Inc.# 17,137,869
Cellular Telecommunications - 0.8%
4,289,500 China Mobile, Ltd.# 24,951,498
142,600 Hikari Tsushin, Inc.**,# 8,816,616
--------------
33,768,114
Commercial Banks - 0.9%
575,585 Commerce Bancorp, Inc.# 23,219,099
223,590 SVB Financial Group*,# 11,351,664
--------------
34,570,763
Commercial Services - Finance - 0.8%
769,745 Paychex, Inc. 31,090,001
Computer Services - 0.7%
1,132,480 Ceridian Corp.* 27,439,990
Computers - 0.7%
423,050 Apple Computer, Inc.* 29,778,490
Shares or Principal Amount Value
- -------------------------------------------- --------------
Computers - Memory Devices - 2.3%
3,230,985 EMC Corp.* $ 43,650,607
784,745 SanDisk Corp.*,# 50,090,274
--------------
93,740,881
Containers - Metal and Glass - 1.9%
624,080 Ball Corp. 24,950,718
2,903,845 Owens-Illinois, Inc.* 53,082,287
--------------
78,033,005
Cosmetics and Toiletries - 2.9%
747,840 Colgate-Palmolive Co. 44,212,301
1,250,695 Procter & Gamble Co. 72,802,956
--------------
117,015,257
Data Processing and Management - 0.4%
373,455 NAVTEQ Corp.*,# 15,505,852
Dental Supplies and Equipment - 0.8%
941,720 Patterson Companies, Inc.*,# 30,681,238
Diagnostic Kits - 0.7%
753,555 Dade Behring Holdings, Inc. 29,388,645
Distribution/Wholesale - 0.6%
3,190,000 Esprit Holdings, Ltd.# 25,467,994
Diversified Operations - 3.5%
2,806,400 General Electric Co. 97,073,375
1,640,615 Tyco International, Ltd. (U.S. Shares) 43,230,205
--------------
140,303,580
E-Commerce/Products - 0.3%
380,000 Submarino S.A.* 10,287,494
E-Commerce/Services - 0.8%
1,071,755 IAC/InterActiveCorp* 30,941,567
Electric - Generation - 0.7%
1,732,360 AES Corp.* 29,398,149
Electronic Components - Semiconductors - 4.9%
1,635,690 Advanced Micro Devices, Inc.* 52,914,571
6,888,374 ARM Holdings PLC** 17,083,389
952,430 Microsemi Corp.*,# 26,020,388
41,822 Samsung Electronics Company, Ltd.** 28,555,309
791,220 SiRF Technology Holdings, Inc.*,# 27,020,163
1,493,570 Texas Instruments, Inc. 51,841,814
--------------
203,435,634
Electronic Forms - 1.0%
991,785 Adobe Systems, Inc.* 38,877,972
Energy - Alternate Sources - 0.7%
Suntech Power Holdings Company, Ltd.
780,575 (ADR)* ,# 26,765,917
Enterprise Software/Services - 1.3%
3,697,617 Oracle Corp.* 53,948,232
Entertainment Software - 1.2%
1,129,675 Activision, Inc.* 16,030,088
559,884 Electronic Arts, Inc.* 31,801,411
--------------
47,831,499
Finance - Credit Card - 1.1%
826,755 American Express Co. 44,487,687
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds April 30, 2006 25
Janus Mercury Fund
Schedule of Investments(unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- -------------------------- -----
Finance - Investment Bankers/Brokers - 2.8%
886,220 JP Morgan Chase & Co. $ 40,216,664
473,485 Merrill Lynch & Company, Inc. 36,107,966
689,170 optionsXpress Holdings, Inc. 21,708,855
138,400 UBS A.G. (ADR)** 16,172,040
--------------
114,205,525
Finance - Mortgage Loan Banker - 0.9%
700,445 Fannie Mae 35,442,517
Food - Dairy Products - 1.9%
1,928,045 Dean Foods Co.* 76,369,862
Food - Retail - 1.6%
417,575 Metro A.G.**,# 23,632,941
686,245 Whole Foods Market, Inc. 42,121,718
--------------
65,754,659
Food - Wholesale/Distribution - 1.0%
1,367,600 Sysco Corp. 40,877,564
Hotels and Motels - 0.3%
198,100 Four Seasons Hotels, Inc.** 10,701,362
Independent Power Producer - 0.8%
665,460 NRG Energy, Inc.* 31,669,241
Insurance Brokers - 0.7%
632,305 Marsh & McLennan Companies, Inc.# 19,392,794
247,605 Willis Group Holdings, Ltd. 8,703,316
--------------
28,096,110
Internet Infrastructure Software - 0.4%
513,150 Akamai Technologies, Inc.*,# 17,288,024
Internet Security - 0.4%
Check Point Software Technologies, Ltd.
790,255 (U.S. Shares)* ,# 15,291,434
Investment Management and Advisory Services -
0.4%
350,185 National Financial Partners Corp.# 18,209,620
Medical - Biomedical and Genetic - 3.2%
516,685 Amgen, Inc.* 34,979,575
1,399,770 Celgene Corp.* 59,014,302
422,862 Genentech, Inc.* 33,706,330
--------------
127,700,207
Medical - Drugs - 4.1%
819,725 Abbott Laboratories 35,035,047
716,153 Cubist Pharmaceuticals, Inc.* 16,235,189
1,158,555 Merck & Company, Inc. 39,877,462
497,108 Roche Holding A.G.** 76,438,070
--------------
167,585,768
Medical - Generic Drugs - 0.9%
881,809 Teva Pharmaceutical Industries, Ltd. (ADR)# 35,713,265
Medical - HMO - 3.0%
525,470 Aetna, Inc. 20,230,595
1,375,602 Coventry Health Care, Inc.* 68,326,151
673,665 UnitedHealth Group, Inc. 33,508,097
--------------
122,064,843
Medical - Nursing Homes - 1.1%
980,640 Manor Care, Inc.# 43,001,064
Medical Instruments - 1.0%
306,870 Intuitive Surgical, Inc.* 38,972,490
Shares or Principal Amount Value
- -------------------------- -----
Medical Products - 0.8%
621,590 Varian Medical Systems, Inc.*,# $ 32,558,884
Networking Products - 1.2%
2,573,795 Juniper Networks, Inc.*,# 47,563,732
Oil - Field Services - 0.8%
424,620 Halliburton Co.# 33,184,053
Oil Companies - Exploration and Production -
2.2%
459,760 Apache Corp. 32,661,351
266,729 EnCana Corp.** 13,331,082
276,505 EnCana Corp. (U.S. Shares)** 13,839,075
434,725 EOG Resources, Inc. 30,530,737
--------------
90,362,245
Oil Companies - Integrated - 0.7%
210,070 Amerada Hess Corp. 30,096,729
Oil Refining and Marketing - 1.7%
1,547,602 Reliance Industries, Ltd. 34,774,514
524,330 Valero Energy Corp. 33,945,124
--------------
68,719,638
Real Estate Operating/Development - 0.9%
8,536,000 Capitaland, Ltd.# 26,457,335
159,665 St. Joe Co.# 8,966,786
--------------
35,424,121
Recreational Vehicles - 0.4%
320,950 Polaris Industries, Inc.# 15,373,505
Reinsurance - 0.9%
11,905 Berkshire Hathaway, Inc. - Class B* 35,143,560
Retail - Apparel and Shoe - 1.4%
616,369 Industria de Diseno Textil S.A.**,# 25,078,094
775,245 Nordstrom, Inc.# 29,715,141
--------------
54,793,235
Retail - Auto Parts - 0.2%
196,005 Advance Auto Parts, Inc. 7,883,321
Retail - Computer Equipment - 0.4%
331,845 GameStop Corp. - Class A*,# 15,663,084
Retail - Office Supplies - 0.9%
1,396,182 Staples, Inc. 36,873,167
Retail - Regional Department Stores - 0.9%
462,700 Federated Department Stores, Inc. 36,021,195
Schools - 0.5%
365,065 Apollo Group, Inc. - Class A* 19,947,152
Semiconductor Components/Integrated Circuits
- - 2.2%
2,803,760 Cypress Semiconductor Corp.*,# 48,112,522
1,172,900 Maxim Integrated Products, Inc. 41,356,454
--------------
89,468,976
Semiconductor Equipment - 0.7%
ASM Lithography
Holding N.V.
1,367,775 (U.S. Shares)*,**,# 28,928,441
Soap and Cleaning Preparations - 0.6%
630,416 Reckitt Benckiser PLC** 22,980,444
Steel - Producers - 1.4%
3,934,530 Tata Steel, Ltd. 55,569,759
Sugar - 0.3%
1,029,334 Bajaj Hindusthan, Ltd. 11,837,341
See Notes to Schedules of Investments and Financial Statements.
26 Janus Growth Funds April 30, 2006
Schedule of Investments (unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- -------------------------- -----
Telecommunication Services - 0.8%
922,665 Amdocs, Ltd. (U.S. Shares)*,** $ 34,323,138
Television - 0.5%
2,244,737 British Sky Broadcasting Group PLC**,# 21,510,801
Therapeutics - 1.7%
307,245 Gilead Sciences, Inc.* 17,666,588
330,785 Neurocrine Biosciences, Inc.* 18,973,828
532,528 United Therapeutics Corp.* 31,712,042
--------------
68,352,458
Tobacco - 0.5%
268,995 Altria Group, Inc. 19,679,674
Toys - 0.5%
1,121,082 Marvel Entertainment, Inc.*,# 21,872,310
Transportation - Railroad - 0.3%
Canadian National Railway Co.
264,370 (U.S. Shares)** 11,872,857
Transportation - Services - 2.3%
1,141,050 United Parcel Service, Inc. - Class B 92,504,924
Transportation - Truck - 0.4%
417,970 Landstar System, Inc. 17,759,545
Web Hosting/Design - 0.4%
270,699 Equinix, Inc.* 17,839,064
Web Portals/Internet Service Providers - 2.1%
80,415 Google, Inc. - Class A* 33,608,645
1,551,860 Yahoo!, Inc.*,# 50,869,971
--------------
84,478,616
Wireless Equipment - 1.7%
570,765 Crown Castle International Corp.* 19,206,242
953,455 QUALCOMM, Inc. 48,950,380
--------------
68,156,622
--------------
Total Common Stock (cost $3,464,684,973) 3,877,716,488
Equity-Linked Structured Notes - 0.9%
Finance - Investment Bankers/Brokers - 0.9%
Morgan Stanley Co., convertible
(Celgene Corp.), 0% (144A)(S)
858,580 (cost $30,050,300) 34,626,531
Money Market - 2.0%
Janus Institutional Cash Reserves Fund
80,000,000 4.83% (cost $80,000,000) 80,000,000
Other Securities - 9.7%
5,354,957 Foreign Bonds+ 5,354,957
State Street Navigator Securities Lending
388,879,576 Prime Portfolio+ 388,879,576
--------------
Total Other Securities (cost $394,234,533) 394,234,533
Shares or Principal Amount Value
- -------------------------- -----
Time Deposit - 0.3%
ING Financial, ETD
$ 13,400,000 4.86%, 5/1/06 (cost $13,400,000) $ 13,400,000
--------------
Total Investments (total cost $3,982,369,806) --
108.7% 4,399,977,552
Liabilities, net of Cash, Receivables and
Other Assets -- (8.7)% (352,647,579)
--------------
Net Assets -- 100% $4,047,329,973
Summary of Investments by Country
% of Investment
Country Value Securities
- ------- ----- ---------------
Bermuda $ 97,177,026 2.2%
Brazil 10,287,494 0.2%
Canada 74,412,303 1.7%
Cayman Islands 26,765,917 0.6%
France 24,046,650 0.5%
Germany 66,231,372 1.4%
Hong Kong 24,951,498 0.6%
India 102,181,614 2.3%
Israel 51,004,699 1.2%
Japan 21,748,151 0.5%
Netherlands 28,928,441 0.7%
Singapore 26,457,335 0.6%
South Korea 40,176,426 0.9%
Spain 25,078,094 0.6%
Switzerland 109,600,853 2.5%
United Kingdom 109,103,100 2.5%
United States++ 3,561,826,579 81.0%
-------------- -----
Total $4,399,977,552 100.0%
++ Includes Short-Term Securities and Other Securities (69.9% excluding
Short-Term Securities and Other Securities)
Forward Currency Contracts, Open
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- ----------------- ---------- --------------- -----------
British Pound 6/28/06 7,000,000 $ 12,773,699 $ (334,699)
British Pound 10/19/06 13,000,000 23,766,289 (494,859)
Canadian Dollar 6/28/06 7,500,000 6,721,193 (150,891)
Euro 6/28/06 8,100,000 10,257,559 (233,323)
Euro 8/24/06 41,080,000 52,199,141 (1,823,249)
Euro 10/19/06 4,500,000 5,736,498 (84,926)
Japanese Yen 8/24/06 950,000,000 8,484,227 (84,803)
South Korean Won 10/19/06 17,750,000,000 18,937,778 (99,889)
Swiss Franc 6/28/06 57,800,000 46,924,040 (530,026)
--------------- -----------
Total $ 185,800,424 $ (3,836,665)
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds April 30, 2006 27
Janus Olympus Fund (unaudited)
TICKER: JAOLX
FUND SNAPSHOT
This growth fund invests in what we believe are the market leaders in their
respective industries.
(CLAIRE YOUNG PHOTO)
Claire Young
portfolio manager
PERFORMANCE OVERVIEW
Equity markets were volatile in the fourth quarter of 2005, as investors
confronted uneven economic growth and rising interest rates. Consumer confidence
continued to recover from its post-hurricane lows, despite relatively lackluster
retail spending during the holiday season. New hiring was restrained and there
were signs that higher interest rates were starting to temper the strength in
home buying. In the first quarter of 2006, however, equity markets posted solid
gains, supported by healthy earnings reports, retreating energy prices and
resilient economic growth. Indeed, the performance of the economy remained
impressive, especially this late into a Federal Reserve (Fed) credit tightening
cycle. Consumer spending and housing market activity continued at a healthy,
albeit more moderate pace, and corporations projected increases in capital
investment. Meanwhile, inflation remained relatively benign by historic
standards, despite spikes in fuel prices both at the end of last year and in the
first three months of this year. As the Fed continued to step up overnight
lending rates, investors began to hope for a near-term end to credit tightening.
Against this backdrop, Janus Olympus Fund advanced 10.11%, outpacing both its
primary and secondary benchmarks, the Russell 1000(R) Growth Index and the S&P
500(R) Index, which returned 7.06% and 9.64%, respectively.
CONTRIBUTORS TO FUND PERFORMANCE
Biotechnology company Celgene was the Fund's strongest contributor, reflecting
the expanding market opportunities tied to its cancer drug, Revlimid. Originally
formulated as a drug for blood-borne cancers, Revlimid has shown potential in
the treatment of leukemia and non-Hodgkin's lymphoma. Specifically, Revlimid has
shown the ability to slow disease progression and enable patients to remain
transfusion independent for over two years. We believe the drug will be approved
for these additional uses by the Food and Drug Administration in the coming
year, which should boost sales and profits significantly.
Another standout was Deutsche Boerse, owner of the Frankfurt Stock Exchange. The
German company continues to capitalize on growth in the European financial
derivatives market, and recently reported an 80% surge in quarterly earnings.
Deutsche Boerse has also benefited from consolidation in the European exchange
market, and we believe its hybrid floor-and-electronic trading operation may
prove to be the model for other exchanges around the world. We are impressed
with the company's business prospects, positioning and valuation, as well as its
commitment to returning cash to shareholders in the form of stock repurchase and
dividends.
The Fund remains significantly overweight in the healthcare arena, where one of
our strongest performers was Intuitive Surgical, maker of the innovative Da
Vinci automated surgical system. With this system surgeons use computer-guided
robotic arms to pinpoint their procedures, allowing for smaller incisions,
shorter hospital stays and speedier recoveries. We particularly like this
company because it not only makes money on the initial sale of the system, but
also from consumables that must be replaced after every few procedures.
Among our technology holdings, we benefited from our stake in Germany's SAP, the
world's largest seller of business applications software. SAP continues to
project double-digit growth in licensing revenues and earnings, and recently
captured investor attention with its plans to enter the fast-growing market for
on-demand, subscription-based business applications software. Such online
software has become a popular alternative with end-users, given the minimal
upfront investment and quick turnaround time.
We also benefited from a rebound in shares of Research in Motion, maker of the
BlackBerry wireless email system. The company was able to settle a patent
infringement suit brought by rival NTP, avoiding an injunction on sales of its
popular BlackBerry device. We anticipate investor subscriber growth to rebound
now that uncertainty over the future of the BlackBerry service has lifted.
DETRACTORS FROM FUND PERFORMANCE
On the downside, high-end grocery chain Whole Foods Market stumbled as recent
operating performance was stunted by costs associated with the rollout if its
new higher-volume, higher-margin stores. The company is refining its store model
to a larger, "higher return-on-investment" format with unique prepared food
offerings that attempt to generate excitement and intense loyalty among its
customers. We expect these new venues to bolster the company's profitability
going forward.
28 Janus Growth Funds April 30, 2006
(unaudited)
With only 3% market share of total U.S. grocery sales, we believe Whole Foods
has tremendous growth potential over the next several years as the company
penetrates new markets.
Also detracting from performance was Internet search and media company Yahoo!,
which lost favor with investors after reporting fourth-quarter financial results
that only met expectations. However, Yahoo! has benefited from the ongoing
migration of advertising dollars from traditional media into the growing
Internet space, which allows advertisers to better target and track media
spending. We remain confident in the underlying fundamentals supporting Yahoo!,
and we will continue to closely monitor their valuations.
LOOKING AHEAD
In my opinion the economy has remained surprisingly robust despite many
headwinds -- devastation from Hurricane Katrina, high budget deficits that at
some point will impact monetary policy, moderating consumer demand due to high
oil prices and slowing house price appreciation, and corporate profit squeezes
from rising raw material prices and weak end-user pricing ability. We remain
cautiously optimistic on the economic and market outlook and believe that the
economy will continue to grow, albeit at a slower pace. Moreover, we believe
that the Federal Reserve may be close to ending this round of credit tightening,
which could help alleviate some market uncertainty. In this environment, we
expect to see the market continue to favor companies that provide strong
earnings growth despite these impediments, so the Fund remains invested
predominantly in stocks that we believe can grow organically and have specific
catalysts to improve shareholder value.
Thank you for your continued investment in Janus Olympus Fund.
JANUS OLYMPUS FUND AT A GLANCE
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- HOLDINGS
CONTRIBUTION
------------
Celgene Corp.
Biopharmaceutical company - U.S. 1.84%
Deutsche Boerse A.G.
Marketplace organizer for the trading of
shares & securities - Germany 0.72%
Intuitive Surgical, Inc.
Medical equipment manufacturer - U.S. 0.71%
Research In Motion, Ltd. (U.S. Shares)
Wireless solutions provider for mobile
communications - U.S. 0.54%
SAP A.G. (ADR)
Software company - Germany 0.49%
5 LARGEST DETRACTORS FROM PERFORMANCE -- HOLDINGS
CONTRIBUTION
------------
Whole Foods Market, Inc.
Natural food supermarkets owner/operator - U.S. (0.36%)
Yahoo!, Inc.
Global Internet media company - U.S. (0.36%)
Alcon, Inc. (U.S. Shares)
Eye care company - U.S. (0.31%)
UnitedHealth Group, Inc.
Organized health systems company - U.S. (0.29%)
United Therapeutics Corp.
Pharmaceutical developer - U.S. (0.22%)
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING
FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING
----------------- ----------------- ---------------------------
Pharmaceuticals & Biotechnology 2.12% 16.74% 7.88%
Diversified Financials 2.06% 8.35% 8.08%
Technology Hardware & Equipment 1.18% 8.76% 7.04%
Software & Services 1.04% 14.94% 5.44%
Automobiles & Components 0.83% 2.36% 0.56%
5 LOWEST CONTRIBUTORS/DETRACTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING
FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING
----------------- ----------------- ---------------------------
Food & Staples Retailing (0.55%) 4.26% 2.38%
Retailing (0.02%) 2.25% 3.59%
Media 0.00% 1.26% 3.32%
Utilities 0.00% 0.10% 3.30%
Other* 0.00% 0.00% 0.00%
* Industry not classified by Global Industry Classification Standard.
Janus Growth Funds April 30, 2006 29
Janus Olympus Fund (unaudited)
5 LARGEST EQUITY HOLDINGS --(% of Net Assets)
AS OF APRIL 30, 2006
Celgene Corp.
Medical - Biomedical and Genetic 4.5%
Yahoo!, Inc.
Web Portal/Internet Service Providers 3.0%
Whole Foods Market, Inc.
Food - Retail 2.9%
Roche Holding A.G.
Medical - Drugs 2.4%
SAP A.G. (ADR)
Enterprise Software/Services 2.0%
----
14.8%
ASSET ALLOCATION --(% of Net Assets)
AS OF APRIL 30, 2006
(PIE CHART)
Common Stock 95.4%
Cash and Cash Equivalents 3.5%
Preferred Stock 1.1%
Emerging markets comprised 4.2% of total net assets.
5 LARGEST COUNTRY ALLOCATIONS --(% of Investment Securities)
(BAR CHART)
AS OF APRIL 30, 2006
--------------------
United States 76.7%
Japan 5.8%
Germany 4.3%
Canada 3.6%
Switzerland 3.4%
AS OF OCTOBER 31, 2005
----------------------
United States 76.0%
Switzerland 5.9%
Canada 3.6%
Japan 2.8%
Germany 2.5%
30 Janus Growth Funds April 30, 2006
(unaudited)
PERFORMANCE
Average Annual Total Return -- for the periods ended April 30, 2006
FISCAL ONE FIVE TEN SINCE
YEAR-TO-DATE YEAR YEAR YEAR INCEPTION*
------------ ---- ---- ---- ----------
Janus Olympus Fund 10.11% 26.44% 0.45% 9.78% 11.77%
Russell 1000(R)
Growth Index 7.06% 15.18% (0.76)% 6.21% 6.81%
S&P 500(R) Index 9.64% 15.42% 2.70% 8.94% 9.34%
Lipper Quartile N/A 2nd 3rd 2nd 1st
Lipper Ranking - based
on total return for
Multi-Cap Growth
Funds N/A** 186/423 188/288 25/95 13/88
(PERFORMANCE GRAPH)
Initial Investment of $10,000
JANUS OLYMPUS FUND S & P 500(R) INDEX RUSSELL 1000(R) GROWTH INDEX
------------------ -------------------- --------------------------------
4/30/1996 10,000 10,000 10,000
4/30/1998 14,866 17,652 17,344
4/30/2000 39,537 23,682 27,996
4/30/2002 19,613 18,008 15,154
4/30/2004 19,299 19,183 15,789
4/30/2006 25,421 23,544 18,259
Visit janus.com to view up to date performance and characteristic information
Data presented represents past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 800.525.3713 or visit www.janus.com for performance current to the
most recent month-end.
See Notes to Schedules of Investments for index definitions.
Total return includes reinvestment of dividends, distributions and capital
gains. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
The date of the Lipper ranking is slightly different from when the Fund began
operations since Lipper provides fund rankings as of the last day of the month
or the first Thursday after fund inception.
*The Fund's inception date -- December 29, 1995
**The Fund's fiscal year-to-date Lipper ranking is not available.
See "Explanations of Charts, Tables and Financial Statements."
The Fund's portfolio may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
There is no assurance that the investment process will consistently lead to
successful investing.
Lipper Inc. - A Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical with capital gains and
dividends reinvested.
FUND EXPENSES
The example below shows you the ongoing costs (in dollars) of investing in your
Fund and allows you to compare these costs with those of other mutual funds.
Please refer to page 5 for a detailed explanation of the information presented
in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD
EXPENSE EXAMPLE (11/1/05) (4/30/06) (11/1/05-4/30/06)*
- --------------- ----------------------- -------------------- ---------------------------
Actual $ 1,000.00 $ 1,101.10 $ 5.11
Hypothetical
(5% return before expenses) $ 1,000.00 $ 1,019.93 $ 4.91
*Expenses are equal to the annualized expense ratio of 0.98%, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
Janus Growth Funds April 30, 2006 31
Janus Olympus Fund
Schedule of Investments(unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- -------------------------------------------- --------------
Common Stock - 95.4%
Advertising Sales - 0.8%
349,435 Lamar Advertising Co.* $ 19,215,431
Aerospace and Defense - 1.4%
419,960 Boeing Co. 35,045,662
Agricultural Chemicals - 1.5%
Potash Corporation of Saskatchewan, Inc.
380,045 (U.S. Shares) 35,982,661
Apparel Manufacturers - 1.7%
724,460 Coach, Inc.* 23,921,669
1,244,295 Quiksilver, Inc.*,# 17,009,513
--------------
40,931,182
Applications Software - 1.2%
415,425 Citrix Systems, Inc.* 16,583,766
783,515 Quest Software, Inc.*,# 13,484,293
--------------
30,068,059
Automotive - Cars and Light Trucks - 1.9%
446,264 BMW A.G.**,# 24,293,868
1,570,600 Nissan Motor Company, Ltd. 20,648,911
--------------
44,942,779
Building - Mobile Home and Manufactured Homes - 0.6%
293,600 Thor Industries, Inc. 14,820,928
Building - Residential and Commercial - 1.4%
340,620 Desarrolladora Homex S.A. (ADR)*,# 13,052,558
577,560 Pulte Homes, Inc. 21,571,866
--------------
34,624,424
Casino Hotels - 1.0%
295,055 Harrah's Entertainment, Inc. 24,088,290
Casino Services - 1.2%
760,705 Scientific Games Corp. - Class A*,# 28,975,253
Cellular Telecommunications - 0.9%
3,537,500 China Mobile, Ltd. 20,577,206
Commercial Banks - 1.4%
3,998 Mizuho Financial Group, Inc. 34,093,514
Commercial Services - 1.8%
351,488 CoStar Group, Inc.* 19,841,498
640,200 Park24 Company, Ltd. 23,164,484
--------------
43,005,982
Commercial Services - Finance - 0.3%
134,845 Moody's Corp. 8,361,738
Computer Services - 0.7%
727,075 Ceridian Corp.* 17,617,027
Computers - 1.0%
115,210 Apple Computer, Inc.* 8,109,632
206,600 Research In Motion, Ltd. (U.S. Shares)*,# 15,831,758
--------------
23,941,390
Computers - Memory Devices - 2.8%
1,923,395 EMC Corp.* 25,985,066
659,430 SanDisk Corp.* 42,091,417
--------------
68,076,483
Cosmetics and Toiletries - 0.9%
356,215 Procter & Gamble Co. 20,735,275
Shares or Principal Amount Value
- -------------------------------------------- --------------
Data Processing and Management - 1.1%
621,370 NAVTEQ Corp.*,# $ 25,799,282
Diagnostic Kits - 1.3%
778,776 Dade Behring Holdings, Inc.# 30,372,264
E-Commerce/Products - 0.7%
265,600 Submarino S.A.* 7,190,417
193,300 Submarino S.A. (GDR)* 10,352,471
--------------
17,542,888
E-Commerce/Services - 0.9%
605,320 eBay, Inc.* 20,829,061
Electronic Components - Semiconductors - 2.6%
366,485 Advanced Micro Devices, Inc.* 11,855,790
550,855 Broadcom Corp. - Class A*,# 22,645,649
1,182,935 PMC-Sierra, Inc.*,# 14,703,882
418,055 Texas Instruments, Inc. 14,510,689
--------------
63,716,010
Electronic Forms - 1.6%
972,230 Adobe Systems, Inc.* 38,111,416
Electronic Measuring Instruments - 0.3%
138,354 Trimble Navigation, Ltd.*,# 6,555,213
Energy - Alternate Sources - 0.5%
Suntech Power Holdings
380,300 Company, Ltd. (ADR)*,# 13,040,487
Enterprise Software/Services - 2.0%
896,610 SAP A.G. (ADR)**,# 48,981,804
Entertainment Software - 1.4%
601,425 Electronic Arts, Inc.* 34,160,940
Finance - Credit Card - 2.4%
451,595 American Express Co. 24,300,327
644,600 Credit Saison Company, Ltd. 33,796,707
--------------
58,097,034
Finance - Investment Bankers/Brokers - 6.0%
137,715 Goldman Sachs Group, Inc. 22,074,337
400,110 Merrill Lynch & Company, Inc. 30,512,389
1,313,000 Mitsubishi UFJ Securities Company, Ltd. 20,686,971
1,018,000 Nikko Cordial Corp. 16,477,179
695,760 optionsXpress Holdings, Inc. 21,916,440
284,577 UBS A.G.**,# 33,730,704
--------------
145,398,020
Finance - Mortgage Loan Banker - 1.0%
486,030 Fannie Mae 24,593,118
Finance - Other Services - 2.7%
41,825 Chicago Mercantile Exchange Holdings, Inc.# 19,155,850
311,293 Deutsche Boerse A.G.**,# 45,026,421
--------------
64,182,271
Food - Retail - 3.3%
1,155,474 Whole Foods Market, Inc. 70,922,994
530,681 Wild Oats Markets, Inc.*,# 9,117,100
--------------
80,040,094
Food - Wholesale/Distribution - 1.0%
777,745 Sysco Corp.# 23,246,798
Hazardous Waste Disposal - 0.9%
319,270 Stericycle, Inc.*,# 21,020,737
See Notes to Schedules of Investments and Financial Statements.
32 Janus Growth Funds April 30, 2006
Schedule of Investments(unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- -------------------------- --------------
Hotels and Motels - 1.7%
762,355 Four Seasons Hotels, Inc. $ 41,182,417
Insurance Brokers - 0.9%
732,500 Marsh & McLennan Companies, Inc.# 22,465,775
Internet Infrastructure Software - 0.4%
1,039,960 TIBCO Software, Inc.*,# 8,964,455
Internet Security - 0.8%
699,225 McAfee, Inc.*,# 18,242,780
Medical - Biomedical and Genetic - 5.2%
2,549,272 Celgene Corp.* 107,477,308
242,310 Genentech, Inc.* 19,314,530
--------------
126,791,838
Medical - Drugs - 4.5%
695,145 Cubist Pharmaceuticals, Inc.* 15,758,937
1,009,100 Merck & Company, Inc. 34,733,222
377,310 Roche Holding A.G.** 58,017,269
--------------
108,509,428
Medical - Generic Drugs - 1.8%
1,084,650 Teva Pharmaceutical Industries, Ltd. (ADR)# 43,928,325
Medical - HMO - 1.8%
392,985 Coventry Health Care, Inc.* 19,519,565
460,692 UnitedHealth Group, Inc. 22,914,820
--------------
42,434,385
Medical Instruments - 2.6%
798,685 Boston Scientific Corp.*,# 18,561,439
249,735 Intuitive Surgical, Inc.* 31,716,345
277,025 Kyphon, Inc.*,# 11,510,389
--------------
61,788,173
Medical Products - 2.1%
244,675 Johnson & Johnson 14,340,402
684,915 Varian Medical Systems, Inc.*,# 35,875,847
--------------
50,216,249
Networking Products - 1.9%
1,726,842 Cisco Systems, Inc.* 36,177,340
566,035 Juniper Networks, Inc.*,# 10,460,327
--------------
46,637,667
Oil Companies - Exploration and Production -
0.8%
260,860 EOG Resources, Inc.# 18,320,198
Publishing - Newspapers - 1.0%
638,835 Dow Jones & Company, Inc.# 23,617,730
Radio - 0.5%
559,165 XM Satellite Radio Holdings, Inc.- Class A*,# 11,306,316
Real Estate Management/Services - 0.4%
416,000 Mitsubishi Estate Company, Ltd. 9,097,089
Retail - Apparel and Shoe - 1.0%
640,935 Nordstrom, Inc.# 24,567,039
Retail - Discount - 1.0%
552,765 Wal-Mart Stores, Inc. 24,891,008
Shares or Principal Amount Value
- -------------------------- --------------
Retail - Drug Store - 0.6%
517,275 CVS Corp. $ 15,373,413
Retail - Restaurants - 0.1%
133,385 Tim Hortons, Inc. (U.S. Shares)*,# 3,621,403
Schools - 0.9%
417,795 Apollo Group, Inc. - Class A*,# 22,828,319
Semiconductor Components/Integrated Circuits -
0.6%
869,670 Cypress Semiconductor Corp.*,# 14,923,537
Semiconductor Equipment - 0.7%
ASM Lithography Holding N.V.
743,460 (U.S. Shares)* , ** ,# 15,724,179
Soap and Cleaning Preparations - 0.8%
538,650 Reckitt Benckiser PLC** 19,635,314
Telecommunication Services - 0.3%
482,000 Time Warner Telecom, Inc. - Class A*,# 8,083,140
Therapeutics - 2.5%
642,369 Neurocrine Biosciences, Inc.* 36,846,286
408,925 United Therapeutics Corp.* 24,351,484
--------------
61,197,770
Transportation - Services - 2.7%
690,155 C.H. Robinson Worldwide, Inc.# 30,608,374
439,755 United Parcel Service, Inc. - Class B 35,650,938
--------------
66,259,312
Web Portals/Internet Service Providers - 3.0%
2,198,520 Yahoo!, Inc.* 72,067,486
Wireless Equipment - 2.6%
1,008,275 Crown Castle International Corp.*,# 33,928,454
574,635 QUALCOMM, Inc. 29,501,761
--------------
63,430,215
--------------
Total Common Stock (cost $1,787,420,204) 2,306,895,681
Preferred Stock - 1.1%
Electronic Components - Semiconductors - 1.1%
Samsung Electronics Company, Ltd.
48,870 (cost $18,295,111) 26,476,431
Money Market - 2.1%
Janus Institutional Cash Reserves Fund
50,000,000 4.83% (cost $50,000,000) 50,000,000
Other Securities - 13.1%
State Street Navigator Securities Lending
316,899,102 Prime Portfolio+ (cost $316,899,102) 316,899,102
Time Deposit - 0.8%
ING Financial, ETD
$ 19,900,000 4.86%, 5/1/06 (cost $19,900,000) 19,900,000
--------------
Total Investments (total cost $2,192,514,417)
- -- 112.5% 2,720,171,214
Liabilities, net of Cash, Receivables and
Other Assets -- (12.5)% (302,136,913)
--------------
Net Assets -- 100% $2,418,034,301
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds April 30, 2006 33
Janus Olympus Fund
Schedule of Investments (unaudited)
As of April 30, 2006
Summary of Investments by Country
% of Investment
Country Value Securities
- ------- ----- ---------------
Brazil $ 17,542,888 0.6%
Canada 96,618,239 3.6%
Cayman Islands 13,040,487 0.5%
Germany 118,302,093 4.3%
Hong Kong 20,577,206 0.7%
Israel 43,928,325 1.6%
Japan 157,964,855 5.8%
Mexico 13,052,558 0.5%
Netherlands 15,724,179 0.6%
South Korea 26,476,431 1.0%
Switzerland 91,747,973 3.4%
United Kingdom 19,635,314 0.7%
United States++ 2,085,560,666 76.7%
-------------- -----
Total $2,720,171,214 100.0%
++ Includes Short-Term Securities and Other Securities (62.5% excluding
Short-Term Securities and Other Securities)
Forward Currency Contracts, Open
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- ----------------- ---------- --------------- -----------
British Pound 6/28/06 4,600,000 $ 8,394,145 $ (167,735)
British Pound 8/10/06 400,000 730,440 (35,396)
Euro 6/28/06 28,750,000 36,408,001 (828,151)
Euro 10/19/06 10,500,000 13,385,163 (198,160)
Swiss Franc 6/28/06 57,500,000 46,680,489 (503,169)
Swiss Franc 8/10/06 4,000,000 3,262,057 (163,299)
-------------- ------------
Total $ 108,860,295 $ (1,895,910)
See Notes to Schedules of Investments and Financial Statements.
34 Janus Growth Funds April 30, 2006
Janus Orion Fund (unaudited)
TICKER: JORNX
FUND SNAPSHOT
This focused growth fund invests in a small number of well-researched companies,
hand-picked for their upside potential.
(RON SACHS PHOTO)
Ron Sachs
portfolio manager
PERFORMANCE OVERVIEW
Equity markets roared out of the gate in early 2006, and I am happy to report
that the stocks we held in Janus Orion Fund performed well. The Fund was up
22.45% during the six-month period ended April 30, 2006, versus a return of
8.19% for the Fund's primary benchmark, the Russell 3000(R) Growth Index, and a
return of 9.64% for the S&P 500(R) Index, the Fund's secondary benchmark. More
importantly, longer-term performance has also been strong. Janus Orion Fund was
up 10.72%, annualized for the five-year period ended April 30, 2006, versus a
loss of 0.22% for the Russell 3000(R) Growth Index and a return of 2.70% for
the S&P 500(R) Index.
INVESTMENT STRATEGY
I believe it's important to invest with a longer time horizon in mind and have
therefore been working to focus on the long term for each stock we analyze and
own in the Fund. Few investors focus on the long-term because it is very
difficult to do. I must admit that ignoring the short-term noise is challenging
when almost every waking hour is spent thinking about companies, stocks and the
market. Even the academic literature on investment psychology demonstrates that
a short-term focus is wired into our "investment-DNA." The more I understand how
this myopia colors investment decision making, the more I believe that taking
advantage of the mistakes caused by short-term thinking may lead to good
results. That said, it is difficult to ignore some short-term data points on
companies in the Fund that I believe are material to stock price movements.
Don't expect me to completely disregard the short-term, but do expect me to
endeavor to focus more of my analysis on the long-term. I believe thinking about
the long-term competitive positioning of the businesses we own is my strength
and the strength of the entire Janus research team.
Products of this thinking can be seen in our investments. We own some
fast-growing companies with very wide competitive moats that have protected
their businesses. Examples and important contributors to the Fund include
VistaPrint, Intuitive Surgical and Celgene. I realize that the short-term
thinking of the market can lead to short-term volatility in these positions
because the stocks appear expensive relative to near-term earnings expectations,
but I truly believe that the best strategy is to establish positions in these
great businesses for the long-term., I adjust position sizes in an attempt to
take advantage of opportunities the market may give us and to reflect the risk
of near-term volatility. At the same time, I try not to let the fear of
short-term volatility cause me to miss the best long-term opportunities where
our valuation models indicate the potential for a significant increase in
valuation. For a variety of reasons, most professional investment managers are
especially sensitive to short-term volatility in individual holdings -- I take
advantage of the investment opportunities that their individual position myopia
present to us.
You will notice that the number of holdings in the Fund has increased. I am
troubled by this. I believe the best investment strategy is to build a
concentrated portfolio where our best ideas are meaningful positions that can
make a significant impact on the Fund. Position size should increase with our
level of conviction that the risk/reward tradeoff for owning the stock is
heavily skewed in our favor. You and I both want the best ideas to be big enough
positions to impact positive Fund returns. Another way of explaining my view on
portfolio concentration is that I believe our 100th best idea should be sold to
increase position sizes in our 99 better ideas, if we have conviction in those
ideas.
As of April 30, 2006, the Fund is less concentrated than I would like primarily
because strong performance has changed the risk/reward tradeoff in many
holdings. Also, a number of interesting new ideas were small positions in the
Fund during the period. I intend to either develop the conviction to make these
positions bigger or to determine through further analysis that the stocks aren't
the best risk/reward tradeoffs available and sell them, which may lead to a more
concentrated portfolio.
CELGENE, ABB AND TRIMBLE NAVIGATION WERE IMPORTANT CONTRIBUTORS
Celgene, a leading developer of cancer compounds, was a big contributor to the
Fund. Celgene's progress in demonstrating the opportunity for its existing and
new compounds for the treatment of a variety of cancers has been rewarded by the
market. In my opinion, the market continues to underestimate the size of the
opportunity for Celgene's compounds and the profitability of its business model.
That said, I believe the risk/reward tradeoff in the stock has changed as its
shares have rapidly appreciated. As a result, I may look for opportunities to
take profits and reinvest the proceeds in more compelling ideas.
ABB, a leading supplier of electricity transmission and distribution systems
based in Zurich, Switzerland, was a standout performer. The company has had
continued success in improving margins, as it rationalizes its production
facilities and takes advantage of a sustained environment of strong demand to
drive improved pricing. ABB's leading market position and technological
leadership enable the company to earn attractive returns. I believe the global
demand for electricity should continue to grow at multiples of the rate of
Janus Growth Funds April 30, 2006 35
Janus Orion Fund (unaudited)
economic growth, providing a tailwind to the operational improvements the
company is working to deliver.
Trimble Navigation was another strong performer. Trimble is a leader in GPS
systems for industrial, farming, mining and construction industries. I believe
the complexity of these systems and the distribution relationships Trimble has
established with heavy equipment suppliers to these industries will create a
long-term barrier to competition. Use of GPS gives Trimble customers a high
return on investment because Trimble systems drive cost savings in terms of
fewer hours of labor and fewer mistakes that need to be corrected. GPS system
penetration in these markets remains very low, despite the great results these
systems have delivered. That low penetration gives me confidence that Trimble
should continue to demonstrate strong growth.
YAHOO! DETRACTED FROM PERFORMANCE
Yahoo!, a leading search engine and online media provider, was the largest
detractor from performance for the period. I believe Yahoo!'s large base of
regular and registered users is a long-term competitive advantage. The company
will soon restructure its paid-search algorithm with the goals of driving more
relevant search results and higher revenues from each search. We expect to see
these improvements later in 2006 and 2007, and the stock market may wait for
clear evidence that the improved revenue generation strategies are working
before rewarding Yahoo! shareholders. We don't believe the company's stock price
reflects either the short-term opportunity to dramatically improve revenues from
paid search or the longer-term opportunity to drive more traditional display
advertising. We waited for a pullback in the shares for our buying opportunity,
but were clearly premature.
LOOKING FORWARD
I remain optimistic that we can continue to identify great businesses at
reasonable prices in our attempt to deliver strong results in varying economic
environments. I look forward to continuing to update you on the Fund's
performance.
Thank you for your investment in Janus Orion Fund.
JANUS ORION FUND AT A GLANCE
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- HOLDINGS
CONTRIBUTION
------------
Celgene Corp.
Biopharmaceutical company - U.S. 2.25%
ABB, Ltd.
Holding company - U.S. 1.61%
Arcelor Brasil S.A.
Steel producer - Brazil 1.60%
Finansbank A.S.
International banking network - Turkey 1.19%
Trimble Navigation, Ltd.
Developer of advanced positioning product (GPS) solutions - U.S. 1.12%
5 LARGEST DETRACTORS FROM PERFORMANCE -- HOLDINGS
CONTRIBUTION
------------
Yahoo!, Inc.
Global Internet media company - U.S. (0.49%)
XM Satellite Radio Holdings, Inc. - Class A
Audio entertainment provider - U.S. (0.47%)
United Therapeutics Corp.
Pharmaceutical developer - U.S. (0.42%)
Taro Pharmaceutical Industries, Ltd.
Pharmaceutical company - U.S. (0.39%)
CNET Networks, Inc.
Global web information provider - U.S. (0.27%)
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING
FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING
----------------- ----------------- ---------------------------
Materials 3.02% 7.07% 3.01%
Retailing 2.46% 8.13% 3.59%
Banks 1.82% 3.90% 7.48%
Pharmaceuticals & Biotechnology 1.72% 12.04% 7.88%
Food, Beverage & Tobacco 1.67% 3.29% 4.61%
5 LOWEST CONTRIBUTORS/DETRACTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING
FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING
----------------- ----------------- ---------------------------
Media (0.87%) 2.23% 3.32%
Software & Services (0.25%) 4.26% 5.44%
Automobiles & Components 0.00% 0.00% 0.56%
Utilities 0.00% 0.00% 3.30%
Household & Personal Products 0.02% 0.66% 2.44%
36 Janus Growth Funds April 30, 2006
(unaudited)
5 LARGEST EQUITY HOLDINGS --(% of Net Assets)
AS OF APRIL 30, 2006
Dade Behring Holdings, Inc.
Diagnostic Kits 6.7%
Celgene Corp.
Medical - Biomedical and Genetic 4.8%
CapitalSource, Inc.
REIT - Mortgages 4.7%
VistaPrint, Ltd.
Printing - Commercial 4.1%
National Financial Partners Corp.
Investment Management and Advisory Services 4.1%
----
24.4%
ASSET ALLOCATION --(% of Net Assets)
AS OF APRIL 30, 2006
(PIE CHART)
Common Stock 98.9%
Cash and Cash Equivalents 1.1%
Emerging markets comprised 22.3% of total net assets.
5 LARGEST COUNTRY ALLOCATIONS --(% of Investment Securities)
(BAR CHARTS)
AS OF APRIL 30, 2006
--------------------
United States 69.9%
Brazil 9.0%
Switzerland 4.6%
Mexico 3.7%
Bermuda 3.3%
AS OF OCTOBER 31, 2005
----------------------
United States 75.6%
Brazil 8.3%
Israel 2.8%
Switzerland 2.8%
France 2.8%
Janus Growth Funds April 30, 2006 37
Janus Orion Fund (unaudited)
PERFORMANCE
(PERFORMANCE GRAPH)
Initial investment of $10,000
JANUS ORION FUND S & P 500(R) INDEX RUSSELL 3000(R) GROWTH INDEX
---------------- ------------------------ --------------------------------
6/30/2000 $ 10,000 $ 10,000 $ 10,000
4/30/2002 $ 5,556 $ 7,576 $ 5,389
4/30/2004 $ 6,158 $ 8,071 $ 5,630
4/30/2006 $ 9,579 $ 9,905 $ 6,602
Average Annual Total Return -- for the periods ended April 30, 2006
FISCAL YEAR- ONE FIVE SINCE
TO-DATE YEAR YEAR INCEPTION*
------------ ---- ---- ----------
Janus Orion Fund 22.45% 41.50% 10.72% (0.73)%
Russell 3000(R) Growth Index 8.19% 16.90% (0.22)% (6.87)%
S&P 500(R) Index 9.64% 15.42% 2.70% (0.16)%
Lipper Quartile N/A 1st 1st 2nd
Lipper Ranking - based
on total return for
Multi-Cap Growth Funds N/A** 11/423 8/288 61/230
Visit janus.com to view up to date performance and characteristic information
Data presented represents past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 800.525.3713 or visit www.janus.com for performance current to the
most recent month-end.
See Notes to Schedules of Investments for index definitions.
Total return includes reinvestment of dividends, distributions and capital
gains. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
*The Fund's inception date -- June 30, 2000
**The Fund's fiscal year-to-date Lipper ranking is not available.
See "Explanations of Charts, Tables and Financial Statements."
The Fund's portfolio may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
The Fund is classified as "nondiversified," meaning it has the ability to take
larger positions in a smaller number of issuers than a fund that is classified
as "diversified." Nondiversified funds may experience greater price volatility.
Concentration may lead to greater price volatility.
There is no assurance that the investment process will consistently lead to
successful investing.
The Fund may have significant exposure to emerging markets. In general, emerging
market investments have historically been subject to significant gains and/or
losses. As such, the Fund's returns and NAV may be subject to such volatility.
The Fund has experienced significant gains due, in part, to its investments in
Brazil. While holdings are subject to change without notice, the Fund's returns
and NAV may be affected to a large degree by fluctuations in currency exchange
rates or political or economic conditions in Brazil. This Fund may have
significant exposure to emerging markets which may lead to greater price
volatility.
Lipper Inc. - A Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical with capital gains and
dividends reinvested.
Returns have sustained significant gains due to market volatility in the
financials and healthcare sectors.
FUND EXPENSES
The example below shows you the ongoing costs (in dollars) of investing in your
Fund and allows you to compare these costs with those of other mutual funds.
Please refer to page 5 for a detailed explanation of the information presented
in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD
EXPENSE EXAMPLE (11/1/05) (4/30/06) (11/1/05-4/30/06)*
- --------------- ----------------------- -------------------- ---------------------------
Actual $ 1,000.00 $ 1,224.50 $ 5.41
Hypothetical (5% return before
expenses) $ 1,000.00 $ 1,019.93 $ 4.91
*Expenses are equal to the annualized expense ratio of 0.98%, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
38 Janus Growth Funds April 30, 2006
Janus Orion Fund
Schedule of Investments(unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- -------------------------- -----
Common Stock - 98.9%
Agricultural Operations - 0.2%
BrasilAgro - Companhia Brasileira de
5,300 Propriedades Agricolas $ 2,507,570
Beverages - Wine and Spirits - 2.6%
2,860,628 Davide Campari - Milano S.P.A. 27,969,655
Broadcast Services and Programming - 0.5%
259,455 Liberty Global, Inc. - Class A* 5,373,313
Building - Residential and Commercial - 1.5%
381,940 Desarrolladora Homex S.A. (ADR)*,# 14,635,940
98,500 Rossi Residencial S.A. 1,038,333
--------------
15,674,273
Cellular Telecommunications - 3.3%
960,000 America Movil S.A. de C.V. - Series L (ADR)# 35,433,600
Chemicals - Specialty - 2.4%
420,860 Cytec Industries, Inc.# 25,449,404
Commercial Banks - 4.6%
495,425 Banco Marcro Bansud S.A. (ADR)* 11,478,997
711,000 Banco Nossa Caixa S.A. 16,046,047
4,178,657 Finansbank A.S.* 21,801,689
--------------
49,326,733
Commercial Services - 2.5%
487,775 CoStar Group, Inc.* 27,534,899
Computers - 1.6%
230,715 Research In Motion, Ltd. (U.S. Shares)* 17,679,690
Diagnostic Kits - 6.7%
1,871,865 Dade Behring Holdings, Inc.# 73,002,734
Diversified Minerals - 2.3%
13,670,230 Caemi Mineracao e Metalurgica S.A. 25,152,699
E-Commerce/Products - 1.4%
412,660 Submarino S.A.* 11,171,677
83,000 Submarino S.A. (GDR)* 4,445,190
--------------
15,616,867
E-Commerce/Services - 3.7%
1,391,769 IAC/InterActiveCorp* 40,180,371
Electronic Components - Semiconductors - 1.6%
628,150 MIPS Technologies, Inc.* 4,654,592
378,085 Texas Instruments, Inc.# 13,123,330
--------------
17,777,922
Electronic Measuring Instruments - 2.1%
467,890 Trimble Navigation, Ltd.* 22,168,628
Engineering - Research and Development
Services - 3.2%
2,460,267 ABB, Ltd.*,# 35,112,664
Entertainment Software - 0.9%
190,677 UbiSoft Entertainment S.A.*,# 9,449,173
Finance - Other Services - 3.7%
62,060 Chicago Mercantile Exchange Holdings, Inc.# 28,423,480
1,001,720 MarketAxess Holdings, Inc.* 11,179,195
--------------
39,602,675
Home Furnishings - 1.9%
1,303,305 Tempur-Pedic International, Inc.*,# 20,579,186
Internet Content - Information/News - 0.8%
835,179 CNET Networks, Inc.*,# 9,003,230
Shares or Principal Amount Value
- -------------------------- -----
Investment Management and Advisory Services -
4.1%
848,945 National Financial Partners Corp.# $ 44,145,140
Medical - Biomedical and Genetic - 4.8%
1,228,370 Celgene Corp.* 51,788,078
Medical - Drugs - 2.4%
168,756 Roche Holding A.G. 25,948,854
Medical - Generic Drugs - 1.6%
428,390 Teva Pharmaceutical Industries, Ltd. (ADR)# 17,349,795
Medical Instruments - 1.8%
152,081 Intuitive Surgical, Inc.* 19,314,287
Multi-Line Insurance - 2.5%
554,210 Assurant, Inc. 26,696,296
Oil Companies - Exploration and Production -
1.3%
203,950 EOG Resources, Inc. 14,323,409
Oil Companies - Integrated - 1.0%
76,830 Amerada Hess Corp.# 11,007,434
Printing - Commercial - 4.1%
1,383,900 VistaPrint, Ltd.*,# 44,257,122
Radio - 1.3%
684,455 XM Satellite Radio Holdings, Inc. - Class A*,# 13,839,680
REIT - Mortgages - 4.7%
2,156,342 CapitalSource, Inc.# 50,674,037
Retail - Restaurants - 0.2%
39,235 Chipotle Mexican Grill, Inc. - Class A*,# 2,047,675
Steel - Producers - 3.6%
2,118,722 Arcelor Brasil S.A. 39,085,193
Steel - Specialty - 0.8%
255,689 Companhia Siderurgica Nacional S.A. (ADR)# 9,002,810
Storage and Warehousing - 2.3%
757,860 Mobile Mini, Inc.* 24,994,223
Sugar - 1.9%
1,459,110 Bajaj Hindusthan, Ltd. 16,779,765
335,300 Bajaj Hindusthan, Ltd. (GDR) (144A)Section 3,854,676
--------------
20,634,441
Telecommunication Services - 2.9%
907,250 NeuStar, Inc. - Class A*,# 31,844,475
Therapeutics - 1.3%
234,460 United Therapeutics Corp.* 13,962,093
Transportation - Marine - 1.3%
289,145 Alexander & Baldwin, Inc.# 14,419,661
Transportation - Railroad - 1.1%
190,500 All America Latina Logistica (GDR) 12,049,787
Transportation - Services - 2.0%
189,450 FedEx Corp. 21,811,379
Web Hosting/Design - 1.7%
275,340 Equinix, Inc.* 18,144,906
Web Portals/Internet Service Providers - 2.1%
22,735 Answers Corp.* 275,094
674,215 Yahoo!, Inc.* 22,100,767
--------------
22,375,861
Wireless Equipment - 0.6%
196,465 Crown Castle International Corp.*# 6,611,047
--------------
Total Common Stock (cost $808,626,749) 1,070,922,969
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds April 30, 2006 39
Janus Orion Fund
Schedule of Investments(unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- -------------------------- -----
Other Securities - 23.1%
State Street Navigator Securities Lending
250,086,433 Prime Portfolio+ (cost $250,086,433) $ 250,086,433
Time Deposit - 1.6%
ING Financial, ETD
$ 17,100,000 4.86%, 5/1/06 (cost $17,100,000) 17,100,000
---------------
Total Investments (total cost
$1,075,813,182) -- 123.6% 1,338,109,402
Liabilities, net of Cash, Receivables and
Other Assets -- (23.6)% (255,882,516)
---------------
Net Assets -- 100% $1,082,226,886
Summary of Investments by Country
% of Investment
Country Value Securities
- ------- ----- ---------------
Argentina $ 11,478,997 0.9%
Bermuda 44,257,122 3.3%
Brazil 120,499,306 9.0%
Canada 17,679,690 1.3%
France 9,449,173 0.7%
India 20,634,441 1.6%
Israel 17,349,795 1.3%
Italy 27,969,655 2.1%
Mexico 50,069,540 3.7%
Switzerland 61,061,518 4.6%
Turkey 21,801,689 1.6%
United States++ 935,858,476 69.9%
-------------- ------
Total $1,338,109,402 100.0%
++Includes Short-Term Securities and Other Securities (50.0% excluding
Short-Term Securities and Other Securities)
See Notes to Schedules of Investments and Financial Statements.
40 Janus Growth Funds April 30, 2006
Janus Triton Fund (unaudited)
TICKER: JATTX
FUND SNAPSHOT
A growth fund that focuses on small- and mid-sized companies believed to have
solid growth potential.
(BLAINE ROLLINS PHOTO)
Blaine Rollins
portfolio manager
PERFORMANCE OVERVIEW
Janus Triton Fund finished the six months ended April 2006, on a strong note,
with small- and medium-sized companies (areas in which Janus Triton Fund
primarily invests) as the star performers. This may have taken some investors by
surprise, as many market forecasters had predicted that smaller stocks -- after
leading the way in 2005 -- might take a backseat in 2006. Instead, small- and
mid-caps continued to surge, seemingly unaffected by market uncertainty over
interest rates, which has been the most significant macroeconomic issue in
recent months. Early in 2006, the new Federal Reserve Board (Fed) Chairman, Ben
Bernanke, expressed his intention to stay focused on containing inflation -- a
message some investors interpreted as a sign that the Fed's tightening campaign
may last longer than expected. This news may have mitigated gains in some areas,
but didn't keep the small- and mid-cap markets from enjoying a bullish quarter.
For the six-month period, the Fund returned 26.98% significantly outperforming
its benchmark, the Russell 2500(TM) Growth Index, which gave back 19.11%.
Since taking over management of the Fund on February 1, I have continued in the
same vein as Ron Sachs, the Fund's previous manager, employing a disciplined,
bottom-up investment process, leveraging Janus' in-depth research and focusing
on what I believe are solid growth companies with top-line revenue growth and
strong management teams. Going forward, I expect to increase the breadth of the
Fund by adding more positions and diversifying across more geographies.
CONTRIBUTORS INCLUDED ADVERTISING, PRINTING AND AGRIBUSINESS STOCKS
Although we do not specifically target geographical locations -- and typically
have more stringent growth requirements for companies in emerging markets -- our
careful selection process, which entails researching potential investments on a
name-by-name basis, has yielded many opportunities abroad. Indeed, the leading
performer in the period was Focus Media, a Chinese advertising firm that uses
liquid crystal display (LCD) panels to target consumers in 44 major Chinese
cities.
Another international standout was VistaPrint, a family-run company that
operates its business online. This innovative company uses technology to bring
long-run print economics to small businesses. It runs all of its business
through a Web site where consumers and businesses can purchase business cards,
stationery, and other customized printed products that VistaPrint then ships
from two centralized locations in North America and Europe. VistaPrint's cost
advantage has allowed the company to deliver superior print quality to customers
at a significant savings and has generated fantastic margins and returns on
capital. The stock has been strong as the company has continued to deliver rapid
revenue and earnings growth. We believe VistaPrint should be a long-term share
gainer in a huge market for small business and consumer printing. Due to the
company's success in marketing a basic "bricks and mortar" idea using the World
Wide Web, it has established one of the top brand name presences for small
businesses in the world.
The Fund's third-best performer was another foreign stock, Cosan, a Brazilian
company that refines sugar and ethanol from sugar cane. There is a sugar
shortage occurring in the world as populations in developing countries are
becoming wealthier and changing their diets to include more sugar. On the supply
side, the removal of global tariffs (especially in Europe) is causing a decline
in the most uneconomical production. A further wrench into the supply/demand
balance has been rising energy costs, which has put upward pressure on
alternative fuels, ethanol among them. The easiest way to produce ethanol is
from sugar cane and the most efficient producers can make it today for $1 per
gallon, thus putting the breakeven of ethanol production at about $23 per barrel
of crude oil. Our attraction to this company is based on commodity conditions
rather than "emerging market" themes.
DETRACTORS INCLUDED INTERNET,
TELECOMMUNICATIONS AND HEALTHCARE STOCKS
Elsewhere, hurting our performance was March Networks, a provider of Internet
protocol (IP) based digital video surveillance solutions. We found a great
business, in our opinion, but our purchase was ill-timed. We bought the stock
after an exceptional quarter and just before Cisco's acquired entry into the
business, and therefore suffered a loss during the period. Nonetheless, we
believe the business is extremely high quality. Validation of the company's
technology came from Wal-Mart, which last year signed a contract to roll out the
product to most of the U.S. store base for video recording
Janus Growth Funds April 30, 2006 41
Janus Triton Fund (unaudited)
all cash register checkouts. We therefore maintained a position in March
Networks.
Another laggard was Hikari Tsushin, a Japanese company whose core business is
the provision of financial call center outsourcing services for insurance
companies. We saw Hikari's stock fall in sympathy with other Japanese companies
spooked by the Livedoor scandal (Livedoor is not a Fund holding). Livedoor, a
provider of services such as concert ticket sales through the Internet, was
recently accused of doctoring its financial reports. We remain confident in
Hikari, and continue to own the stock for its growing financial call center
business, which we believe supports the valuation of the entire enterprise.
Taro Pharmaceuticals was another disappointment during the period. This company
focuses on generic ointments and creams, a business that has some very
attractive characteristics because of the limited number of competitors that
typically enter each product category. It also has superior product line
breadth. Unfortunately, Taro's recent results show that the competitive dynamics
in its businesses are similar to the cutthroat competition in the pill-based
generics industry. Taro's lackluster results indicate that distributors have
greater leverage over Taro than our industry analysis leads us to believe. That
said, we have subsequently liquidated the holding.
LOOKING FORWARD
The small- and mid-cap markets are always rife with opportunity, and we are
looking forward to continuing our search for companies poised for growth. Our
strategy of buying great businesses at attractive prices remains unchanged. We
also expect to maintain a significant cash level in the Fund. Given the high
quality of our research, we believe that having funds on hand to facilitate
quick action when necessary may be a boon to our shareholders over time.
Thank you for your investment in Janus Triton Fund.
JANUS TRITON FUND AT A GLANCE
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- HOLDINGS
CONTRIBUTION
------------
Focus Media Holding, Ltd. (ADR)
Out-of-home advertising network operator - China 2.72%
VistaPrint, Ltd.
Online graphic design supplier - U.S. 2.51%
Cosan S.A. Industria e Comercio
Food and beverage producer and distributor - Brazil 1.96%
Submarino S.A.
Internet retailer - Brazil 1.83%
Trimble Navigation, Ltd.
Developer of advanced positioning product (GPS)
solutions - U.S. 1.74%
5 LARGEST DETRACTORS FROM PERFORMANCE -- HOLDINGS
CONTRIBUTION
------------
March Networks Corp.
Internet protocol-based digital video surveillance
producer - Canada (0.95%)
Hikari Tsushin, Inc.
Communications and technology distributor - Japan (0.60%)
Taro Pharmaceuticals, Inc. - Class B
Pharmaceutical company - U.S. (0.49%)
United Therapeutics Corp.
Biotechnology company - U.S. (0.43%)
China GrenTech Corporation, Ltd. (ADR)
Wireless communications products and services
provider - China (0.34%)
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING
FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING
----------------- ----------------- ---------------------------
Retailing 4.65% 11.01% 6.39%
Technology Hardware & Equipment 2.96% 5.04% 7.42%
Food, Beverage & Tobacco 2.96% 3.31% 0.38%
Media 2.76% 3.13% 2.30%
Pharmaceuticals & Biotechnology 2.58% 10.62% 6.41%
5 LOWEST CONTRIBUTORS/DETRACTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING
FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING
----------------- ----------------- ---------------------------
Household & Personal Products (0.20%) 0.84% 0.79%
Food & Staples Retailing (0.16%) 0.37% 0.33%
Utilities 0.00% 0.00% 0.37%
Materials 0.03% 1.31% 3.47%
Banks 0.04% 0.42% 3.21%
42 Janus Growth Funds April 30, 2006
(unaudited)
5 LARGEST EQUITY HOLDINGS -- (% of Net Assets)
AS OF APRIL 30, 2006
VistaPrint, Ltd.
Printing - Commercial 3.5%
W-H Energy Services, Inc.
Oil - Field Services 2.8%
Bankrate, Inc.
Commercial Services - Finance 2.4%
Kenexa Corp.
Human Resources 2.1%
Cosan S.A. Industria e Comercio
Sugar 2.0%
----
12.8%
ASSET ALLOCATION -- (% of Net Assets)
AS OF APRIL 30, 2006
(PIE CHART)
Common Stock 88.7%
Cash and Cash Equivalents 11.3%
Emerging markets comprised 12.3% of total net assets.
5 LARGEST COUNTRY ALLOCATIONS -- (% of Investment Securities)
(BAR CHARTS)
AS OF APRIL 30, 2006
--------------------
United States 72.2%
Brazil 6.2%
Cayman Islands 3.9%
Bermuda 3.5%
Japan 2.4%
AS OF OCTOBER 31, 2005
----------------------
United States 81.0%
Brazil 5.1%
Canada 3.8%
Bermuda 2.4%
Cayman Islands 2.2%
Janus Growth Funds April 30, 2006 43
Janus Triton Fund (unaudited)
PERFORMANCE
(PERFORMANCE GRAPH)
Initial investment of $10,000
JANUS TRITON FUND RUSSELL 2500(TM) GROWTH INDEX
----------------- --------------------------------
2/25/2005* $ 10,000 $ 10,000
4/30/2005 $ 9,600 $ 9,145
10/31/2005 $ 10,860 $ 10,294
4/30/2006 $ 13,780 $ 12,261
Average Annual Total Return --for the periods ended April 30, 2006
FISCAL YEAR- ONE SINCE
TO-DATE YEAR INCEPTION*
------------ ---- ----------
Janus Triton Fund 26.98% 43.55% 31.37%
Russell 2500(TM) Growth Index 19.11% 34.07% 18.93%
Lipper Quartile N/A 1st 1st
Lipper Ranking - based on total return
for Small-Cap Growth Funds N/A** 59/533 14/520
Visit janus.com to view up to date performance and characteristic information
Data presented represents past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 800.525.3713 or visit www.janus.com for performance current to the
most recent month-end.
See Notes to Schedules of Investments for index definitions.
Total return includes reinvestment of dividends, distributions and capital
gains. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
*The Fund's inception date -- February 25, 2005
**The Fund's fiscal year-to-date Lipper ranking is not available.
See "Explanations of Charts, Tables and Financial Statements."
The Fund's portfolio may differ significantly from the securities held in the
index. The index is not available for direct investment; therefore its
performance does not reflect the expenses associated with the active management
of an actual portfolio.
Janus Capital Management LLC has contractually agreed to waive the Fund's total
operating expenses to levels indicated in the prospectus until at least March 1,
2007. Without such waivers, total return would have been lower.
There is no assurance that the investment process will consistently lead to
successful investing.
Funds that emphasize investments in smaller companies may experience greater
price volatility.
The Fund may have significant exposure to emerging markets. In general, emerging
market investments have historically been subject to significant gains and/or
losses. As such, the Fund's returns and NAV may be subject to such volatility.
Due to certain investment strategies, the Fund may have an increased position in
cash for temporary defensive purposes.
FUND EXPENSES
The example below shows you the ongoing costs (in dollars) of investing in your
Fund and allows you to compare these costs with those of other mutual funds.
Please refer to page 5 for a detailed explanation of the information presented
in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD
EXPENSE EXAMPLE (11/1/05) (4/30/06) (11/1/05-4/30/06)*
- --------------- ----------------------- -------------------- ---------------------------
Actual $ 1,000.00 $ 1,269.80 $ 6.08
Hypothetical (5% return before
expenses) $ 1,000.00 $ 1,019.44 $ 5.41
*Expenses are equal to the annualized expense ratio of 1.08%, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period). Expenses may include the effect of contractual waivers by
Janus Capital.
44 Janus Growth Funds April 30, 2006
Janus Triton Fund
Schedule of Investments (unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- -------------------------- -----
Common Stock - 88.7%
Advertising Sales - 1.3%
35,325 Focus Media Holding, Ltd. (ADR)* $ 2,133,277
Aerospace and Defense - 0.6%
38,130 TransDigm Group, Inc.* 942,955
Apparel Manufacturers - 1.8%
55,735 Quiksilver, Inc.* 761,897
62,705 Volcom, Inc.* 2,236,688
--------------
2,998,585
Applications Software - 0.9%
87,335 Quest Software, Inc.* 1,503,035
Auction House - Art Dealer - 1.6%
13,500 Ritchie Bros. Auctioneers, Inc. (U.S. Shares) 727,650
66,665 Sotheby's Holdings, Inc. - Class A* 1,999,283
--------------
2,726,933
Beverages - Wine and Spirits - 0.4%
61,855 Davide Campari - Milano S.P.A. 604,784
Building - Residential and Commercial - 0.9%
39,730 Desarrolladora Homex S.A. (ADR)* 1,522,454
Building and Construction Products -
Miscellaneous - 0.9%
23,065 NCI Building Systems, Inc.* 1,498,994
Business to Business/E-Commerce - 1.3%
231,110 webMethods, Inc.* 2,211,723
Cellular Telecommunications - 0.8%
21,100 Hikari Tsushin, Inc. 1,304,562
Chemicals - Specialty - 0.8%
21,090 Cytec Industries, Inc. 1,275,312
Commercial Banks - 0.7%
23,450 SVB Financial Group* 1,190,557
Commercial Services - 1.3%
38,580 CoStar Group, Inc.* 2,177,841
Commercial Services - Finance - 2.4%
83,710 Bankrate, Inc.* 4,040,682
Computers - Memory Devices - 0.5%
13,785 SanDisk Corp.* 879,897
Diagnostic Equipment - 0.5%
22,860 Neurometrix, Inc.* 862,279
Dialysis Centers - 0.6%
84,415 Dialysis Corporation of America* 1,065,317
Diversified Operations - 0.8%
542,562 Triveni Engineering & Industries, Ltd. 1,258,526
E-Commerce/Products - 1.9%
114,960 Submarino S.A.* 3,112,238
Electric - Distribution - 0.4%
79,500 Equatorial Energia S.A.* 590,441
Electronic Components - Semiconductors - 5.7%
439,123 ARM Holdings PLC 1,089,039
70,225 LSI Logic Corp.* 747,896
28,665 Microsemi Corp.* 783,128
74,475 MIPS Technologies, Inc.* 551,860
41,150 Netlogic Microsystems, Inc.* 1,657,111
109,165 PMC-Sierra, Inc.* 1,356,921
66,454 Silicon-On-Insulator Technologies (SOITEC)* 2,168,910
29,675 SiRF Technology Holdings, Inc.* 1,013,401
--------------
9,368,266
Shares or Principal Amount Value
- -------------------------- -----
Electronic Measuring Instruments - 0.7%
23,855 Trimble Navigation, Ltd.* $ 1,130,250
E-Marketing/Information - 0.8%
127,455 24/7 Real Media, Inc.* 1,289,845
Enterprise Software/Services - 1.7%
12,300 Nomura Research Institute, Ltd. 1,527,440
92,205 Omnicell, Inc.* 1,228,171
--------------
2,755,611
E-Services/Consulting - 1.0%
87,545 RightNow Technologies, Inc.* 1,620,458
Fiduciary Banks - 0.8%
21,660 Northern Trust Corp. 1,275,557
Finance - Investment Bankers/Brokers - 2.4%
70,000 Mitsubishi UFJ Securities Company, Ltd. 1,102,885
93,550 optionsXpress Holdings, Inc. 2,946,825
--------------
4,049,710
Finance - Other Services - 0.6%
86,070 MarketAxess Holdings, Inc.* 960,541
Food - Retail - 1.1%
15,340 Whole Foods Market, Inc. 941,569
48,920 Wild Oats Markets, Inc.* 840,446
--------------
1,782,015
Human Resources - 4.9%
183,000 104Corp. 1,646,117
118,200 51job, Inc. (ADR)* 2,976,276
104,410 Kenexa Corp.* 3,469,544
--------------
8,091,937
Internet Applications Software - 1.3%
95,818 March Networks Corp.* 2,218,799
Internet Connectivity Services - 1.6%
115,410 Redback Networks, Inc.* 2,585,184
Investment Management and Advisory Services -
0.5%
15,665 National Financial Partners Corp. 814,580
Leisure and Recreation Products - 0.6%
32,335 WMS Industries, Inc.* 1,010,469
Machinery - Electrical - 0.6%
28,550 Baldor Electric Co. 947,860
Machinery - Material Handling - 1.0%
64,560 Columbus McKinnon Corp.* 1,728,271
Medical - Drugs - 0.7%
50,510 Cubist Pharmaceuticals, Inc.* 1,145,062
Medical Instruments - 3.5%
115,655 Abaxis, Inc.* 3,020,909
418,610 Cambridge Heart, Inc.* 1,218,155
12,650 Intuitive Surgical, Inc.* 1,606,550
--------------
5,845,614
Medical Laser Systems - 0.7%
105,900 IRIDEX Corp.* 1,209,378
Metal Processors and Fabricators - 0.9%
24,675 Precision Castparts Corp. 1,554,032
MRI and Medical Diagnostic Imaging Center -
0.8%
51,210 Nighthawk Radiology Holdings, Inc.* 1,240,818
Multimedia - 0.7%
4,836,000 Tom Group, Ltd.* 1,085,298
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds April 30, 2006 45
Janus Triton Fund
Schedule of Investments(unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- ------------------------------------------------ ---------------------
Office Furnishings - Original - 1.0%
73,340 Knoll, Inc. $ 1,595,145
Oil - Field Services - 2.8%
92,005 W-H Energy Services, Inc.* 4,623,251
Oil Companies - Exploration and
Production - 0.2%
11,130 Complete Production Services, Inc.* 294,166
Printing - Commercial - 3.5%
180,595 VistaPrint, Ltd.* 5,775,428
Public Thoroughfares - 0.5%
68,400 Obrascon Huarte Lain Brasil S.A.* 835,417
Real Estate Operating/Development
- - 0.2%
26,060 Gafisa S.A.* 265,969
Recreational Vehicles - 0.5%
16,165 Polaris Industries, Inc. 774,304
REIT - Mortgages - 1.3%
93,124 CapitalSource, Inc. 2,188,414
Research and Development - 1.5%
691,240 Qinetiq PLC* 2,539,933
Respiratory Products - 0.6%
28,320 Respironics, Inc.* 1,037,078
Retail - Apparel and Shoe - 2.5%
83,485 American Eagle Outfitters, Inc. 2,704,914
78,540 Bebe Stores, Inc. 1,388,587
---------------------
4,093,501
Retail - Computer Equipment - 1.8%
43,883 GameStop Corp. - Class A* 2,071,277
21,665 GameStop Corp. - Class B* 920,113
---------------------
2,991,390
Semiconductor Components/Integrated
Circuits - 1.8%
22,245 Actions Semiconductor Company, Ltd. (ADR)* 221,115
Advanced Semiconductor
2,152,000 Manufacturing Corp.* 535,689
129,440 Cypress Semiconductor Corp.* 2,221,191
---------------------
2,977,995
Sugar - 3.6%
233,309 Bajaj Hindusthan, Ltd. 2,683,054
42,800 Cosan S.A. Industria e Comercio* 3,293,569
---------------------
5,976,623
Telecommunication Services - 2.5%
68,740 NeuStar, Inc. - Class A* 2,412,774
99,430 Time Warner Telecom, Inc. - Class A* 1,667,441
---------------------
4,080,215
Therapeutics - 1.7%
14,970 Neurocrine Biosciences, Inc.* 858,679
58,165 Nuvelo, Inc.* 952,161
17,920 United Therapeutics Corp.* 1,067,136
---------------------
2,877,976
Transportation - Equipment and
Leasing - 0.8%
28,535 GATX Corp. 1,335,438
Transportation - Marine - 1.0%
126,320 Horizon Lines, Inc. - Class A 1,729,321
Transportation - Railroad - 1.3%
34,210 All America Latina Logistica (GDR) 2,163,901
Shares or Principal Amount Value
- ------------------------------------------------ ----------------------
Transportation - Truck - 1.9%
29,620 Landstar System, Inc. $ 1,258,554
64,010 Swift Transportation Company, Inc.* 1,917,099
----------------------
3,175,653
Water Treatment Services - 1.5%
81,190 Woongjin Coway Company, Ltd. 2,410,221
Web Hosting/Design - 1.6%
40,285 Equinix, Inc.* 2,654,782
Wireless Equipment - 1.6%
24,685 EFJ, Inc.* 252,281
94,105 SBA Communications Corp. - Class A* 2,363,917
----------------------
2,616,198
----------------------
Total Common Stock (cost $132,671,100) 146,622,266
Repurchase Agreement - 6.5%
Bear Stearns & Company, Inc., 4.830%
dated 4/28/06, maturing 5/1/06
to be repurchased at $10,804,347
collateralized by $11,767,217
in U.S. Government Agencies
4.50% - 5.00%, 8/25/25 - 10/15/32
with a value of $11,016,044
$ 10,800,000 (cost $10,800,000) 10,800,000
Time Deposit - 4.8%
Dexia CLF Finance Co., ETD
8,000,000 4.85%, 5/1/06 (cost $8,000,000) 8,000,000
----------------------
Total Investments (total cost $151,471,100)
- -- 100% 165,422,266
Liabilities, net of Cash, Receivables and Other
Assets -- 0% (51,376)
----------------------
Net Assets -- 100% $ 165,370,890
----------------------
Summary of Investments by Country
% of Investments
Country Value Securities
- --------------------------- ------------ ----------------
Bermuda $ 5,775,428 3.5%
Brazil 10,261,535 6.2%
Canada 2,946,449 1.8%
Cayman Islands 6,415,966 3.9%
China 535,689 0.3%
France 2,168,909 1.3%
India 3,941,580 2.4%
Italy 604,784 0.4%
Japan 3,934,887 2.4%
Mexico 1,522,454 0.9%
South Korea 2,410,221 1.5%
Taiwan 1,646,117 1.0%
United Kingdom 3,628,972 2.2%
United States++ 119,629,275 72.2%
------------ ----------------
Total $165,422,266 100.0%
++Includes Short-Term Securities (61.0% excluding Short-Term Securities)
See Notes to Schedules of Investments and Financial Statements.
46 Janus Growth Funds April 30, 2006
Janus Twenty Fund (unaudited) (closed to new investors)
TICKER: JAVLX
FUND SNAPSHOT
This focused growth fund invests in a concentrated portfolio of 20-30 companies,
including many market leaders whose products and services are being used more
often every day.
[SCOTT SCHOELSEL PHOTO]
Scott Schoelzel
portfolio manager
PERFORMANCE OVERVIEW
For the six months ended April 30, 2006, Janus Twenty Fund returned 7.46%. This
compares to a 7.06% return for our primary benchmark, the Russell 1000(R)
Growth Index, and a 9.64% return for our secondary benchmark, the S&P 500(R)
Index. In addition to the Fund's performance, the operating metrics of the Fund
remained stellar. Turnover remained a modest 31%, and the Fund's expenses
remained among the most competitive in the industry at 0.87%. These total
results, when added to the peer-beating returns we have delivered over the past
few years, add to our conviction that we continue to head in the right
direction. Janus Twenty Fund remains in the top quartile of all Lipper Large Cap
Growth Funds for the 1-, 3-, 5- and 10-year periods.
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
------------ ------------ ------------- ------------
Lipper Quartile 1st 1st 1st 1st
(Rank as of 4/30/06,
based on total return for Lipper Large-Cap Growth Funds) (36 out of 698) (6 out of 590) (56 out of 474) (2 out of 165)
I am particularly pleased with our performance during this period, as we had to
navigate the reduction of two of our largest and longest-held positions,
UnitedHealth Group and Genentech. One of the criticisms leveled at Janus over
the years has been that we lacked a "sell discipline." Needless to say, I would
argue otherwise, and I think these large, timely sales are illustrative of our
selling prowess.
TWO OF OUR LARGEST AND LONGEST HELD POSITIONS WERE REDUCED
Our position in UnitedHealth was established many years ago, and we have watched
it nearly triple in value as it grew to become one of the largest positions in
the portfolio, cresting at just over 15% of the Fund's assets at its peak. We
have begun to meaningfully reduce the position, with the bulk of the sales
occurring during this six-month period. More specifically, we sold nearly 65% of
the entire position (over 10 million shares) during the past six months at
prices within 15% of UnitedHealth's all-time high, and before the controversy
surrounding the timing of the pricing of the company's stock options for its
senior executives became front-page news. In fairness, we had no idea
UnitedHealth would become entangled in an option pricing investigation, but this
occurred after the stock had begun to fall. Meanwhile, our proactive sales were
based on the belief that there was some underappreciated maturation of the
company's insured business, and our market surveys began to detect an
increasingly competitive pricing environment.
During the period we also sold just over 50% of our position in biotechnology
company, Genentech. Like UnitedHealth, Genentech was one of our largest and
longest-held positions. Genentech had more than quadrupled in value since the
stock was acquired, and there were certainly many opportunities to sell the
stock along the way. Nevertheless, after nearly seven years we felt that much of
what we had anticipated for the company in terms of new indications for their
cancer-fighting lineup of bio-engineered drugs was more fully reflected in the
price, and we began to cut the position size in half, with all of the sales
occurring within 20% of the stock's all-time high.
To be fair, the reduction in these two positions was far from perfect. We didn't
(nor was it our intention to) sell the positions to zero. We believe both
investments still have merits, and while both detracted from Janus Twenty Fund's
positive performance during the period, I am confident that the net result of
our sales did indeed benefit the Fund's investors.
HOLDINGS ON THE POSITIVE SIDE OF THE LEDGER
Celgene, an emerging powerhouse in the biotechnology field, and ConocoPhillips,
the vertically integrated international oil company contributed to Fund
performance. I wrote about both of these companies in my last letter to you and,
once again, they were among the Fund's strongest performers. In October, Celgene
had just received approval for the sale of its cancer-fighting drug, Revlimid.
Since that time, Revlimid sales have gotten off to a fast start and we are
pleased with the company's progress. Of possibly greater interest, we anticipate
that Celgene will receive additional approvals for use of Revlimid, which we
believe should expand the company's market opportunities.
Our investment in ConocoPhillips continues to progress and is emblematic of the
Funds' overweighted investment in the "oil complex." As we have said from the
beginning, we are not believers in "$100 oil," but we do continue to believe
there is
Janus Growth Funds April 30, 2006 47
Janus Twenty Fund (unaudited)
an ongoing tightness in the oil complex globally, and we have purchased the
stocks we think are best positioned to capitalize on this ongoing opportunity.
There is a lot of skepticism about the sustainability of the imbalances
currently present in the oil markets, as evidenced by Conoco's very low
price/earnings multiple* of 6. We continue to closely monitor supply increases,
refining capacity and above all, global demand. While we expect continued
volatility in these markets, we believe the natural decline curve of the world's
reservoirs to be understated and the world's demand to be stronger than largely
recognized, particularly in the Middle East.
FUND OUTLOOK
On the macro front, six months ago I thought we would start to see interest
rates begin to crest and the year-over-year change in the price of oil begin to
moderate, thereby laying the foundation for an improving equities market. At the
time of this writing, neither has happened as quickly as I anticipated. Though
oil has shown some signs of moderating (albeit at an overall higher level), the
continued rise in interest rates has been of some concern. The Federal Reserve
now has raised rates 14 consecutive times, yet gross domestic product growth
continues to be stronger than expected with corresponding strength in the
commodities markets, especially copper and gold. This, together with a continued
weakness in the U.S. dollar, has the markets on edge. I do think that oil,
commodities and interest rates will moderate, but the soft slowdown I was
anticipating could end up being more abrupt. Despite these continued
macroeconomic headwinds, we believe there are still companies that will continue
to thrive in this environment, and I am confident that our analysts will
continue to do masterful work in uncovering those opportunities for our
investors. Finally, as has been the case for many years, not only am I the
portfolio manager of Janus Twenty Fund, but I am also one of the Fund's largest
investors; side by side with each of you.
Thank you for your continued confidence and investment in Janus Twenty Fund.
*Price earnings multiple is a valuation ratio of a company's current share price
compared to its per-share earnings.
JANUS TWENTY FUND AT A GLANCE
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- HOLDINGS
CONTRIBUTION
------------
Celgene Corp.
Biopharmaceutical company - U.S. 1.65%
Occidental Petroleum Corp.
Crude oil and natural gas company - U.S. 1.23%
Peabody Energy Corp.
Coal company - U.S. 1.15%
Harrah's Entertainment, Inc.
Casino operator - U.S. 0.94%
Goldman Sachs Group, Inc.
Investment banking and securities firm - U.S. 0.73%
5 LARGEST DETRACTORS FROM PERFORMANCE -- HOLDINGS
CONTRIBUTION
------------
Alcon, Inc. (U.S. Shares)
Eye care company - U.S. (0.89%)
Genentech, Inc.
Biotechnology company - U.S. (0.80%)
UnitedHealth Group, Inc
Organized health systems company - U.S. (0.79%)
eBay, Inc.
Online marketplace - U.S. (0.44%)
Yahoo!, Inc.
Global Internet media company - U.S. (0.28%)
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING
GROUP FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING
- ----------------------------------- ----------------- ----------------- ---------------------------
Energy 4.40% 29.04% 9.65%
Technology Hardware & Equipment 1.18% 5.52% 7.04%
Consumer Services 1.13% 3.66% 1.65%
Pharmaceuticals & Biotechnology 0.96% 16.81% 7.88%
Banks 0.73% 4.47% 7.48%
5 LARGEST DETRACTORS FROM PERFORMANCE -- SECTORS
FUND WEIGHTING
GROUP FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING
- ----------------------------------- ----------------- ----------------- ---------------------------
Healthcare Equipment & Services (1.90%) 11.86% 5.17%
Software & Services (0.15%) 12.70% 5.44%
Consumer Durables & Apparel (0.11%) 3.45% 1.31%
Food Beverage & Tobacco (0.05%) 0.04% 4.61%
Food & Staples Retailing (0.01%) 0.08% 2.38%
48 Janus Growth Funds April 30, 2006
(unaudited)
5 LARGEST EQUITY HOLDINGS -- (% of Net Assets)
AS OF APRIL 30, 2006
ConocoPhillips
Oil Companies - Integrated 6.4%
Wells Fargo & Co.
Super-Regional Banks 4.5%
Occidental Petroleum Corp.
Oil Companies - Integrated 4.4%
Celgene Corp.
Medical - Biomedical and Genetic 4.1%
Roche Holding A.G.
Medical - Drugs 4.0%
------
23.4%
ASSET ALLOCATION -- (% of Net Assets)
AS OF APRIL 30, 2006
(PIE CHART)
<Table>
Common Stock 85.5%
Cash and Cash Equivalents 14.5%
</Table>
5 LARGEST COUNTRY ALLOCATIONS -- (% of Investment Securities)
(BAR CHARTS)
AS OF APRIL 30, 2006
------------------------------
United States 81.4%
Switzerland 9.2%
Canada 4.3%
United Kingdom 3.5%
Bermuda 1.0%
</Table>
<Table>
AS OF OCTOBER 31, 2005
------------------------------
United States 83.5%
Switzerland 10.4%
United Kingdom 3.2%
Canada 2.9%
</Table>
Janus Growth Funds April 30, 2006 49
Janus Twenty Fund (unaudited)
PERFORMANCE
(PERFORMANCE GRAPH}
<Table>
<Caption>
Initial investment of $10,000
JANUS TWENTY FUND S & P 500(R) INDEX RUSSELL 1000(R) GROWTH INDEX
----------------- ------------------- --------------------------------
4/30/1996 10,000 10,000 10,000
4/30/1998 18,772 17,652 17,344
4/30/2000 41,155 23,682 27,996
4/30/2002 17,863 18,008 15,154
4/30/2004 20,584 19,183 15,789
4/30/2006 27,645 23,544 18,259
</Table>
Average Annual Total Return -- for the periods ended April 30, 2006
FISCAL ONE FIVE TEN SINCE
YEAR-TO-DATE YEAR YEAR YEAR INCEPTION*
------------- ------------ ------------ ------------- ----------
Janus Twenty Fund 7.46% 24.20% 2.05% 10.70% 13.48%
Russell 1000(R)
Growth Index 7.06% 15.18% (0.76)% 6.21% 11.33%
S&P 500(R) Index 9.64% 15.42% 2.70% 8.94% 12.64%
Lipper Quartile N/A 1st 1st 1st 1st
Lipper Ranking - based
on total return for
Large-Cap Growth
Funds N/A** 36/698 56/474 2/165 1/40
Visit janus.com to view up to date performance and characteristic information
Data presented represents past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 800.525.3713 or visit www.janus.com for performance current to the
most recent month-end.
See Notes to Schedules of Investments for index definitions.
Total return includes reinvestment of dividends, distributions and capital
gains. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
*The Fund's inception date -- April 30, 1985
**The Fund's fiscal year-to-date Lipper ranking is not available.
See "Explanations of Charts, Tables and Financial Statements."
The Fund's portfolio may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
The Fund is classified as "nondiversified," meaning it has the ability to take
larger positions in a smaller number of issuers than a fund that is classified
as "diversified." Nondiversified funds may experience greater price volatility.
Concentration may lead to greater price volatility.
Due to certain investment strategies, the Fund may have an increased position in
cash for temporary defensive purposes.
There is no assurance that the investment process will consistently lead to
successful investing.
Lipper Inc. - A Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical with capital gains and
dividends reinvested.
Closed to new investors.
Returns have sustained significant gains due to market volatility in the
healthcare sector.
FUND EXPENSES
The example below shows you the ongoing costs (in dollars) of investing in your
Fund and allows you to compare these costs with those of other mutual funds.
Please refer to page 5 for a detailed explanation of the information presented
in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD
EXPENSE EXAMPLE (11/1/05) (4/30/06) (11/1/05-4/30/06)*
- ---------------------- ----------------------- -------------------- ---------------------------
Actual $ 1,000.00 $ 1,074.60 $ 4.53
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.43 $ 4.41
*Expenses are equal to the annualized expense ratio of 0.88%, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
50 Janus Growth Funds April 30, 2006
Janus Twenty Fund
Schedule of Investments (unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- ----------------------------------------------- ----------------------
Common Stock - 85.5%
Agricultural Chemicals - 5.3%
Potash Corporation of Saskatchewan, Inc.
2,448,265 (U.S. Shares) $ 231,801,730
2,064,226 Syngenta A.G.* 287,946,378
----------------------
519,748,108
Agricultural Operations - 1.0%
1,877,315 Bunge, Ltd.# 100,154,755
Athletic Footwear - 2.0%
2,365,465 NIKE, Inc. - Class B# 193,589,656
Casino Hotels - 3.8%
4,535,340 Harrah's Entertainment, Inc.# 370,265,158
Coal - 2.5%
3,867,870 Peabody Energy Corp.# 247,002,178
Computers - 4.2%
2,893,185 Apple Computer, Inc.* 203,651,292
2,645,620 Research In Motion, Ltd. (U.S. Shares)*,# 202,733,861
----------------------
406,385,153
Computers - Memory Devices - 0.8%
6,032,545 EMC Corp.* 81,499,683
Cosmetics and Toiletries - 3.4%
5,694,740 Procter & Gamble Co. 331,490,815
E-Commerce/Services - 1.0%
2,825,268 eBay, Inc.*.# 97,217,472
Entertainment Software - 3.8%
6,540,970 Electronic Arts, Inc.* 371,527,096
Finance - Consumer Loans - 0.4%
812,550 SLM Corp. 42,967,644
Finance - Investment Bankers/Brokers - 3.3%
2,012,435 Goldman Sachs Group, Inc. 322,573,206
Food - Retail - 0.3%
527,555 Whole Foods Market, Inc.# 32,381,326
Machinery - Farm - 1.0%
1,147,550 Deere & Co. 100,731,939
Medical - Biomedical and Genetic - 7.2%
9,580,736 Celgene Corp.* 403,923,830
3,703,431 Genentech, Inc.*,# 295,200,485
----------------------
699,124,315
Medical - Drugs - 4.0%
2,574,542 Roche Holding A.G. 395,875,794
Medical - HMO - 3.0%
5,923,260 UnitedHealth Group, Inc. 294,622,952
Oil Companies - Exploration and Production -
6.0%
5,268,280 Apache Corp. 374,258,611
3,052,487 EOG Resources, Inc.# 214,376,162
----------------------
588,634,773
Oil Companies - Integrated - 16.4%
1,348,515 Amerada Hess Corp.# 193,201,744
4,764,910 BP PLC (ADR)# 351,269,165
9,273,605 ConocoPhillips 620,404,176
4,188,610 Occidental Petroleum Corp. 430,337,791
----------------------
1,595,212,876
Oil Refining and Marketing - 2.2%
3,333,975 Valero Energy Corp. 215,841,542
Optical Supplies - 2.4%
2,280,710 Alcon, Inc. (U.S. Shares)# 231,971,014
Retail - Apparel and Shoe - 0.6%
1,467,404 Industria de Diseno Textil S.A. 59,704,000
Retail - Restaurants - 0.7%
1,883,830 Starbucks Corp.*,# 70,210,344
Shares or Principal Amount Value
- ------------------------------------------------ ----------------------
Super-Regional Banks - 4.5%
6,354,825 Wells Fargo & Co. $ 436,512,929
Therapeutics - 1.0%
2,000,000 Amylin Pharmaceuticals, Inc.*,# 87,100,000
Web Portals/Internet Service
Providers - 2.7%
626,395 Google, Inc. - Class A*,# 261,795,526
Wireless Equipment - 2.0%
3,701,505 QUALCOMM, Inc. 190,035,267
----------------------
Total Common Stock (cost $5,664,599,433) 8,344,175,521
Money Market - 11.9%
200,000,000 Janus Government Money
Market Fund 4.76% 200,000,000
485,000,000 Janus Institutional Cash Reserves
Fund 4.83% 485,000,000
475,000,000 Janus Money Market Fund, 4.77% 475,000,000
----------------------
Total Money Market (cost $1,160,000,000) 1,160,000,000
Other Securities - 3.6%
State Street Navigator Securities Lending
355,131,715 Prime Portfolio+ (cost $355,131,715) 355,131,715
Repurchase Agreements - 0.9%
$41,600,000 Bear Stearns & Company, Inc.,
4.830%
dated 4/28/06, maturing 5/1/06
to be repurchased at $41,616,744
collateralized by $45,325,577
in U.S. Government Agencies
4.50% - 5.00%, 8/25/25 - 10/15/32
with a value of $42,432,170 (cost $41,600,000) 41,600,000
48,700,000 Fortis Bank N.V., 4.850%
dated 4/28/06, maturing 5/1/06
to be repurchased at $48,719,683
collateralized by $60,754,512
in U.S. Government Agencies
5.048% - 7.125%, 2/15/23 - 10/25/35
with a value of $49,674,057 (cost $48,700,000) 48,700,000
----------------------
Total Repurchase Agreements (cost $90,300,000) 90,300,000
Short-Term Corporate Note - 0.3%
Wells Fargo & Co., 4.84%, 5/24/06
25,000,000 (amortized cost $24,922,694) 24,922,694
Time Deposit - 0.2%
Dexia CLF Finance Co., ETD
19,700,000 4.85%, 5/1/06 (cost $19,700,000) 19,700,000
----------------------
Total Investments (total cost $7,314,653,842)
- -- 102.4% 9,994,229,930
Liabilities, net of Cash, Receivables and
Other Assets -- (2.4)% (238,766,149)
----------------------
Net Assets -- 100% $9,755,463,781
Summary of Investments by Country
% of Investment
Country Value Securities
- --------------- --------------- ---------------
Bermuda $ 100,154,755 1.0%
Canada 434,535,591 4.3%
Spain 59,704,000 0.6%
Switzerland 915,793,186 9.2%
United Kingdom 351,269,165 3.5%
United States++ 8,132,773,233 81.4%
--------------- ---------------
Total $ 9,994,229,930 100.0%
++ Includes Short-Term Securities and Other Securities (64.9% excluding
Short-Term Securities and Other Securities)
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds April 30, 2006 51
Janus Venture Fund (unaudited) (closed to new investors)
TICKER: JAVTX
FUND SNAPSHOT
This growth fund focuses on small companies, where there's less Wall Street
coverage and more opportunity for a research edge.
(WILL BALES PHOTO)
Will Bales
portfolio manager
PERFORMANCE OVERVIEW
Volatile energy markets and the Federal Reserve's unwavering campaign to raise
short-term interest rates dimmed investor enthusiasm at the end of 2005.
Overshadowing solid corporate profit growth and healthy gross domestic product
reports, the malaise weighed on consumers, who responded with a relatively
lackluster holiday shopping season. In the first three months of 2006, however,
there was a strong rally across several major equity indices, with the S&P
500(R) Index posting its best first-quarter performance in six years. Despite a
strong earnings season and healthy financial indicators, enthusiasm was somewhat
dampened by fears of consumer spending slowing as oil prices exceeded $70 per
barrel, and the expectation that the Federal Reserve would continue its steady
inching up of interest rates. In this environment, Janus Venture Fund returned
22.17%, outperforming both its primary and secondary benchmarks, the Russell
2000(R) Growth Index and the Russell 2000(R) Index, which returned 20.31% and
18.91%, respectively.
HOLDINGS THAT CONTRIBUTED TO FUND PERFORMANCE
The strongest contributor to the Fund's performance over the six-month period
from November 2005 to April 30, 2006 was Ultimate Software, a provider of
web-based payroll and employee management software geared toward helping
mid-sized companies more efficiently manage employee communications, benefits,
payroll and staffing functions. Ultimate Software's method of charging per
employee per month is achieving scale in terms of both the number of customers
overall and the number of large customers in particular, which has enabled the
company to raise its prices. With its recurring revenue-type model and current
pricing power, Ultimate appears to be solidifying its position in the industry.
Also posting positive returns was documentation company American Reprographics,
which advanced as the market increasingly recognized the viability of its
business plan. By digitizing the blueprint and document development process for
the architectural and construction industries, among others, American
Reprographics is streamlining a traditionally time- and labor-intensive process.
Within the financial sector, the International Securities Exchange (ISE), an
electronic exchange for options trading located in New York, continued to show
significant year-over-year growth. As a result it contributed significantly to
our performance. Created by former E*TRADE and New York Stock Exchange
executives, ISE was demutualized in 2002, and has since become the world's
largest equity options exchange based on volume. Consolidation discussions among
exchanges worldwide have generated a great deal of interest in recent years, and
more consolidations are anticipated. The exchanges have very good business
models due to their incremental margins, which is attractive to investors
seeking potential gains in unpredictable markets.
HOLDINGS THAT DETRACTED FROM FUND PERFORMANCE
On the downside, SeraCare Life Sciences, a manufacturer of diagnostic tests for
various diseases, was the Fund's poorest performer during the period. At the end
of 2005, a recently hired audit firm had expressed concerns over the company's
revenue recognition practices. We discussed the matter with management and found
that due to differing client requirements, there are a myriad of ways the
customers accepted products from the company. We were convinced that SeraCare's
fundamentals were sound and felt that the company's problems would prove to be
short-lived, and padded our stake as a result. However, in March, the company's
internal audit committee recommended restating the financial statements for up
to three quarters. Shortly thereafter, as there was no way to value the company
without the restatements, SeraCare was delisted by NASDAQ and the Securities and
Exchange Commission, and we sold our entire position.
Another disappointment came from medical device firm FoxHollow Technologies. The
company developed a catheter device -- the Silver Hawk -- that treats peripheral
artery disease, which affects blood flow through the legs. While conducting
ongoing studies into the effectiveness of its device, FoxHollow continued
aggressive marketing efforts, which resulted in near-term pressure on earnings.
In turn, the CEO, Robert Thomas, stepped aside. We continue to believe in the
firm and decided to increase our stake on the weakness at the end of 2005,
though we are watching new developments closely.
Optimal Group, an online payment processing company, lagged on uncertainty
regarding Internet gaming. A large
52 Janus Growth Funds April 30, 2006
(unaudited)
portion of Optimal's business is credit card processing for international online
gambling. The entire industry is currently down because of uncertainty regarding
whether Congress will legalize or prohibit Internet gaming.
LOOKING AHEAD
Although it looks as if the Fed may be close to ending its rate-hike campaign,
the behavior of long-term rates, which moved little through 2005, continues to
lurk as an unknown in 2006. Any sharp moves could further dampen consumer
attitudes, as could the worsening turmoil in the energy markets. In addition,
the direction of the housing market is uncertain and there are whispers of a
global slowdown. These headwinds will not change our long-term focus on
investing in small-cap companies with promising growth potential.
Thank you for your continued investment with Janus.
JANUS VENTURE FUND AT A GLANCE
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- HOLDINGS
CONTRIBUTION
------------
Ultimate Software Group, Inc.
Web-based payroll software solutions provider - U.S. 1.36%
Submarino S.A.
Internet retailer - Brazil 1.32%
Equinix, Inc.
Internet exchange services producer - U.S. 1.18%
American Reprographics Co.
Reprographic technology and services provider - U.S. 1.06%
International Securities Exchange, Inc.
Fully electronic equity trading platform provider - U.S. 1.00%
5 LARGEST DETRACTORS FROM PERFORMANCE -- HOLDINGS
CONTRIBUTION
------------
SeraCare Life Sciences, Inc.
Plasma-based diagnostic products producer - U.S. (0.61%)
Axesstel, Inc.
Developer of broadband data products for
telecommunications markets - U.S. (0.33%)
FoxHollow Technologies, Inc.
Medical devices producer - U.S. (0.32%)
Optimal Robotics Corp. - Class A (U.S. Shares)
Payments and services company - U.S. (0.25%)
Idenix Pharmaceuticals, Inc.
Biopharmaceutical company - U.S. (0.25%)
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING
GROUP FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING
- -------------------------------- ----------------- ----------------- ---------------------------
Software & Services 6.57% 22.76% 7.58%
Commercial Services & Supplies 3.11% 10.45% 3.46%
Diversified Financials 2.17% 4.23% 2.06%
Healthcare Equipment & Services 2.08% 15.95% 6.87%
Energy 2.07% 6.60% 6.44%
5 LOWEST CONTRIBUTORS/DETRACTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING
GROUP FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING
- -------------------------------- ----------------- ----------------- ---------------------------
Pharmaceuticals & Biotechnology (0.23%) 5.42% 5.57%
Telecommunication Services (0.04%) 0.99% 1.42%
Utilities 0.00% 0.00% 2.38%
Household & Personal Products 0.00% 0.00% 0.53%
Food & Staples Retailing 0.00% 0.00% 0.80%
Janus Growth Funds April 30, 2006 53
Janus Venture Fund (unaudited)
5 LARGEST EQUITY HOLDINGS -- (% of Net Assets)
AS OF APRIL 30, 2006
Ultimate Software Group, Inc.
Enterprise Software/Services 3.1%
Jarden Corp.
Consumer Products - Miscellaneous 2.4%
CoStar Group, Inc.
Commercial Services 2.3%
Submarino S.A.
E-Commerce/Products 2.3%
TALX Corp.
Computers - Voice Recognition 2.1%
---------------------
12.2%
ASSET ALLOCATION -- (% of Net Assets)
AS OF APRIL 30, 2006
(PIE CHART)
<Table>
Common Stock 99.8%
Warrants 0.2%
</Table>
Emerging markets comprised 5.0% of total net assets.
*Includes cash and cash equivalents of (0.2)%.
5 LARGEST COUNTRY ALLOCATIONS -- (% of Investment Securities)
(BAR CHARTS)
AS OF APRIL 30, 2006
----------------------
United States 88.7%
Canada 6.0%
Brazil 3.5%
Bermuda 1.3%
India 0.5%
</Table>
<Table>
<Caption>
AS OF OCTOBER 31, 2005
----------------------
United States 89.8%
Canada 7.1%
Brazil 2.1%
Bermuda 1.0%
</Table>
54 Janus Growth Funds April 30, 2006
(unaudited)
PERFORMANCE
Average Annual Total Return --for the periods ended April 30, 2006
FISCAL ONE FIVE TEN SINCE
YEAR-TO-DATE YEAR YEAR YEAR INCEPTION*
------------ ------------ ------------ ------------ ------------
Janus Venture Fund 22.17% 32.58% 9.14% 9.29% 13.88%
Russell 2000(R)
Growth Index 20.31% 36.13% 6.05% 4.70% 8.43%
Russell 2000(R) Index 18.91% 33.47% 10.90% 9.58% 11.27%
Lipper Quartile N/A 3rd 1st 2nd 1st
Lipper Ranking - based
on total return for
Small-Cap Growth
Funds N/A** 311/533 70/363 44/117 1/10
(PERFORMANCE GRAPH)
<Table>
<Caption>
Initial Investment of $10,000
JANUS VENTURE RUSSELL 2000(R) INDEX RUSSELL 2000(R) GROWTH INDEX
------------- ------------------------- --------------------------------
4/30/1996 10,000 10,000 10,000
4/30/1998 12,062 14,248 12,424
4/30/2000 24,712 15,311 15,707
4/30/2002 15,363 15,866 10,797
4/30/2004 17,546 17,854 11,694
4/30/2006 24,321 24,953 15,831
</Table>
Visit janus.com to view up to date performance and characteristic information
Data presented represents past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 800.525.3713 or visit www.janus.com for performance current to the
most recent month-end.
See Notes to Schedules of Investments for index definitions.
Total return includes reinvestment of dividends, distributions and capital
gains. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
*The Fund's inception date -- April 30, 1985
**The Fund's fiscal year-to-date Lipper ranking is not available.
See "Explanations of Charts, Tables and Financial Statements."
The Fund's portfolio may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
Funds that emphasize investments in smaller companies may experience greater
price volatility.
The Fund has been significantly impacted, either positively or negatively, by
investing in initial public offerings ("IPOs").
There is no assurance that the investment process will consistently lead to
successful investing.
Lipper Inc. - A Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical with capital gains and
dividends reinvested.
Closed to new investors.
FUND EXPENSES
The example below shows you the ongoing costs (in dollars) of investing in your
Fund and allows you to compare these costs with those of other mutual funds.
Please refer to page 5 for a detailed explanation of the information presented
in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD
EXPENSE EXAMPLE (11/1/05) (4/30/06) (11/1/05-4/30/06)*
- ---------------------------------------- ----------------------- -------------------- ---------------------------
Actual $ 1,000.00 $ 1,221.70 $ 5.01
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.28 $ 4.56
*Expenses are equal to the annualized expense ratio of 0.91%, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
Janus Growth Funds April 30, 2006 55
Janus Venture Fund
Schedule of Investments (unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- ----------------------------------------------- ---------------------
Common Stock - 100.0%
Advanced Materials/Products - 0.8%
215,851 Ceradyne, Inc.*'# $ 11,440,103
Aerospace and Defense - 0.5%
301,305 TransDigm Group, Inc.* 7,451,273
Apparel Manufacturers - 3.8%
391,625 Carter's, Inc.*'# 26,379,859
810,655 Quiksilver, Inc.*'# 11,081,654
514,154 Volcom, Inc.*'# 18,339,873
---------------------
55,801,386
Applications Software - 2.4%
687,310 American Reprographics Co.*'# 24,378,885
610,060 Quest Software, Inc.*'# 10,499,133
---------------------
34,878,018
Auction House - Art Dealer - 1.0%
462,760 Sotheby's Holdings, Inc. - Class A*'# 13,878,172
Building - Residential and Commercial - 0.4%
148,000 Rossi Residencial S.A. 1,560,134
190,580 WCI Communities, Inc.*'# 4,884,566
---------------------
6,444,700
Commercial Banks - 0.1%
23,190 SVB Financial Group*,# 1,177,356
Commercial Services - 3.6%
610,295 CoStar Group, Inc.* 34,451,152
2,346,939 Intermap Technologies, Ltd.*,L. 12,951,669
115,690 Providence Service Corp.*'# 3,623,411
346,800 Traffic.com, Inc.*'# 2,174,436
---------------------
53,200,668
Commercial Services - Finance - 3.3%
193,212 Bankrate, Inc.*'# 9,326,343
615,431 Euronet Worldwide, Inc.*'# 21,995,503
544,620 Heartland Payment Systems, Inc.*'# 14,290,829
91,715 Wright Express Corp.*'# 2,823,905
---------------------
48,436,580
Computer Services - 1.4%
3,080,025 LivePerson, Inc.*,L. 21,159,772
Computer Software - 1.2%
813,544 Blackbaud, Inc. 17,092,559
Computers - Voice Recognition - 2.1%
1,214,822 TALX Corp.#,L. 31,597,520
Consulting Services - 4.0%
478,300 Advisory Board Co.*'# 26,842,195
643,125 Huron Consulting Group, Inc.*'# 22,863,094
446,125 Navigant Consulting, Inc.*'# 9,404,315
---------------------
59,109,604
Consumer Products - Miscellaneous - 2.4%
1,044,990 Jarden Corp.*'# 35,529,660
Data Processing and Management - 1.8%
2,158,853 Infocrossing, Inc.*'#,L. 26,920,897
Dialysis Centers - 0%
13,350 Dialysis Corporation of America* 168,477
Shares or Principal Amount Value
- ------------------------------------------------ ---------------------
Direct Marketing - 1.6%
1,704,932 ValueVision Media, Inc.*,L. $ 21,311,650
211,690 ValueVision Media, Inc. - Class A* 2,646,125
---------------------
23,957,775
Distribution/Wholesale - 1.8%
481,880 Beacon Roofing Supply, Inc.*'# 17,829,560
249,889 MWI Veterinary Supply, Inc.*'# 8,883,554
---------------------
26,713,114
Drug Delivery Systems - 0.8%
904,930 I-Flow Corp.*'# 12,379,442
E-Commerce/Products - 2.4%
29,670 Baby Universe, Inc.*'# 265,843
46,420 Blue Nile, Inc.*'# 1,615,416
1,235,550 Submarino S.A.* 33,449,246
---------------------
35,330,505
E-Commerce/Services - 0.5%
4,957,152 Workstream, Inc. (U.S. Shares)*,L. 6,692,155
E-Marketing/Information - 1.2%
232,475 Liquidity Services, Inc.* 3,136,088
896,380 ValueClick, Inc.*,# 15,104,003
---------------------
18,240,091
E-Services/Consulting - 1.0%
804,165 GSI Commerce, Inc.* 14,064,846
Electronic Components - Semiconductors
- - 0.7%
1,011,147 MIPS Technologies, Inc.* 7,492,600
92,675 SiRF Technology Holdings, Inc.* 3,164,851
---------------------
10,657,451
Electronic Measuring Instruments - 1.0%
296,781 Trimble Navigation, Ltd.*'# 14,061,484
Enterprise Software/Services - 5.0%
183,440 Emageon, Inc.*'# 3,256,060
1,927,879 Omnicell, Inc.*,L. 25,679,348
1,775,000 Ultimate Software Group, Inc.*,L. 45,386,749
---------------------
74,322,157
Entertainment Software - 0.3%
1,943,905 Excapsa Software, Inc.* 3,987,916
Finance - Investment Bankers/Brokers - 0.9%
417,485 optionsXpress Holdings, Inc. 13,150,778
Finance - Other Services - 2.0%
624,060 International Securities Exchange, Inc.# 27,427,437
185,015 MarketAxess Holdings, Inc.* 2,064,767
---------------------
29,492,204
Food - Canned - 0.8%
468,575 TreeHouse Foods, Inc.* 12,276,665
Footwear and Related Apparel - 0.3%
160,845 Crocs, Inc.*,# 4,809,266
Gambling - Non-Hotel - 1.1%
1,528,091 Century Casinos, Inc.*,L. 15,449,000
Hotels and Motels - 2.2%
174,740 Four Seasons Hotels, Inc. 9,439,455
569,445 Orient-Express Hotel, Ltd. - Class A 23,347,245
---------------------
32,786,700
See Notes to Schedules of Investments and Financial Statements.
56 Janus Growth Funds April 30, 2006
Schedule of Investments (unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- ------------------------------------------------ ---------------------
Human Resources - 1.9%
347,695 Barrett Business Services, Inc.* $ 9,186,102
334,420 Kenexa Corp.*'# 11,112,777
298,770 Resources Connection, Inc.*'# 8,036,913
---------------------
28,335,792
Industrial Audio and Video Products - 1.0%
794,468 Sonic Solutions*'# 14,077,973
Internet Applications Software - 0.8%
354,835 DealerTrack Holdings, Inc.*'# 7,912,820
229,610 Vocus, Inc.*'# 3,503,849
---------------------
11,416,669
Internet Content - Entertainment - 0.8%
2,308,435 Harris Interactive, Inc.*'# 11,149,741
Investment Companies - 0.3%
230,960 UTEK Corp.* 3,736,933
Investment Management and Advisory Services -
0.8%
302,505 Calamos Asset Management, Inc. - Class A# 11,725,094
Leisure and Recreation Products - 0.2%
94,050 WMS Industries, Inc.*'# 2,939,063
Marine Services - 0.4%
1,748,955 Odyssey Marine Exploration, Inc.*'# 6,173,811
Medical - Biomedical and Genetic - 0.2%
139,240 Coley Pharmaceutical Group*'# 2,226,448
Medical - Drugs - 0.7%
176,305 Adams Respiratory Therapeutics, Inc.*'# 7,561,721
50,000 Cubist Pharmaceuticals, Inc.* 1,133,500
196,264 Idenix Pharmaceuticals, Inc.*'# 1,970,491
---------------------
10,665,712
Medical - HMO - 2.6%
973,779 Centene Corp.* 25,016,383
325,130 WellCare Health Plans, Inc.*'# 13,616,444
---------------------
38,632,827
Medical - Hospitals - 1.4%
United Surgical Partners
642,502 International, Inc.*'# 21,208,991
Medical - Outpatient and Home Medical Care -
3.1%
1,549,375 Hythiam, Inc.*'#,L. 13,851,413
602,940 LHC Group LLC*'# 10,491,156
852,209 Radiation Therapy Services, Inc.*'# 21,773,939
---------------------
46,116,508
Medical - Wholesale Drug Distributors - 0.3%
6,100,000 DrugMax, Inc.*,L. 3,965,000
590,098 DrugMax, Inc.* 383,564
---------------------
4,348,564
Medical Instruments - 2.7%
41,974 CONMED Corp. 915,453
259,605 Dexcom, Inc.*'# 6,531,662
464,590 ev3, Inc.*'# 7,289,417
298,150 FoxHollow Technologies, Inc.*'# 9,287,373
92,485 Intuitive Surgical, Inc.* 11,745,594
92,970 Ventana Medical Systems, Inc.*'# 4,527,639
---------------------
40,297,138
Medical Labs and Testing Services - 0.2%
142,544 Bio-Reference Laboratories, Inc.*'# 2,722,590
Shares or Principal Amount Value
- ------------------------------------------------ ---------------------
Medical Products - 1.3%
939,425 PSS World Medical, Inc.*'# $ 16,947,227
665,834 ThermoGenesis Corp.*'# 2,749,894
---------------------
19,697,121
Miscellaneous Manufacturing - 1.2%
505,410 American Railcar Industries, Inc. 18,043,137
Motion Pictures and Services - 1.9%
Lions Gate Entertainment Corp.
2,880,100 (U.S. Shares)* 28,138,577
Music - 0.5%
3,562,500 Genius Products, Inc.*,(O),(S),L. 5,775,525
1,187,500 Genius Products, Inc.* 2,291,875
---------------------
8,067,400
Office Furnishings - Original - 0.8%
545,040 Knoll, Inc.# 11,854,620
Oil - Field Services - 1.9%
229,860 Basic Energy Services, Inc.*'# 7,661,234
168,592 Flint Energy Services, Ltd.* 9,575,235
644,820 Key Energy Services, Inc.*'# 11,019,974
---------------------
28,256,443
Oil Companies - Exploration and Production -
2.3%
277,860 Carrizo Oil & Gas, Inc.*'# 8,163,527
103,235 Complete Production Services, Inc.* 2,728,501
1,157,115 Gasco Energy, Inc.*'# 6,479,844
518,645 Western Oil Sands, Inc. - Class A* 15,683,903
---------------------
33,055,775
Optical Recognition Equipment - 1.0%
Optimal Robotics Corp. - Class A
951,750 (U.S. Shares)*'# 14,647,433
Pharmacy Services - 1.2%
446,875 HealthExtras, Inc.*'# 12,986,188
1,591,512 Ronco Fi-Tek, Inc.*,(O),(S),L. 5,100,000
---------------------
18,086,188
Quarrying - 0.2%
Birch Mountain Resources, Ltd.
277,245 (U.S. Shares)*'# 2,059,930
Real Estate Operating/Development - 0.3%
454,470 Gafisa S.A.* 4,638,338
REIT - Mortgages - 0.8%
503,349 CapitalSource, Inc.# 11,828,702
Research and Development - 0.3%
185,350 PRA International*'# 4,311,241
Resorts and Theme Parks - 0.6%
236,755 Intrawest Corp. (U.S. Shares) 8,499,505
Retail - Apparel and Shoe - 0.2%
185,355 Bebe Stores, Inc. 3,277,076
Retail - Computer Equipment - 0.5%
394,085 Insight Enterprises, Inc.*'# 7,791,060
Retail - Petroleum Products - 2.1%
763,405 World Fuel Services Corp.# 30,566,736
Semiconductor Components/Integrated Circuits -
0.5%
202,857 Hittite Microwave Corp.*'# 7,893,166
Sugar - 0.6%
2,077,918 Balrampur Chini Mills, Ltd. 8,705,042
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds April 30, 2006 57
Janus Venture Fund
Schedule of Investments (unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- ------------------------------------------------ ----------------------
Telecommunication Services - 1.0%
422,685 NeuStar, Inc. - Class A*'# $ 14,836,244
Therapeutics - 2.9%
718,850 MGI Pharma, Inc.*'# 13,428,118
246,796 Neurocrine Biosciences, Inc.* 14,156,219
202,080 United Therapeutics Corp.* 12,033,864
543,405 ViaCell, Inc.*'# 3,146,315
----------------------
42,764,516
Toys - 1.4%
1,078,010 Marvel Entertainment, Inc.*'# 21,031,975
Transactional Software - 1.7%
893,710 Open Solutions, Inc.*'# 24,326,786
Transportation - Railroad - 1.7%
397,700 All America Latina Logistica (GDR) 25,155,907
Transportation - Services - 1.1%
491,425 Pacer International, Inc.# 16,850,963
Travel Services - 0.1%
1,145,454 OneTravel Holdings, Inc.*,L. 630,000
Web Hosting/Design - 2.1%
473,610 Equinix, Inc.* 31,210,899
- ------------------------------------------------ ----------------------
Total Common Stock (cost $1,005,548,027) 1,474,656,928
Shares or Principal Amount Value
- ------------------------------------------------ ----------------------
Preferred Stock - 0%
Computers - Peripheral Equipment - 0%
Candescent Technologies Corp. -
665,000 Series E(B),o,(O) (cost $3,657,500) $ 0
Warrants - 0.2%
Data Processing and Management - 0.2%
Infocrossing, Inc. - expires
521,660 10/16/08(B),(O) 2,404,853
Medical - Wholesale Drug Distributors - 0%
DrugMax, Inc. - expires
3,050,000 9/29/10(O),(S) 0
Music - 0%
Genius Products, Inc. - expires
1,425,000 12/5/10(O),(S) 529,245
Travel Services - 0%
OneTravel Holdings, Inc. -
458,181 expires 4/14/10(O),(S) 0
- ------------------------------------------------ ----------------------
Total Warrants (cost $1,464,250) 2,934,098
Other Securities - 24.7%
State Street Navigator Securities Lending
364,896,141 Prime Portfolio+ (cost $364,896,141) 364,896,141
- ------------------------------------------------ ----------------------
Total Investments (total cost
$1,375,565,918) -- 124.9% $1,842,487,167
Liabilities, net of Cash, Receivables
and Other Assets -- (24.9)% (367,391,779)
- ------------------------------------------------ ----------------------
Net Assets -- 100% $1,475,095,388
Summary of Investments by Country
% of Investment
Country Value Securities
- --------------- -------------- ---------------
Bermuda $ 23,347,245 1.3%
Brazil 64,803,625 3.5%
Canada 111,675,778 6.0%
India 8,705,042 0.5%
United States++ 1,633,955,477 88.7%
-------------- ---------------
Total $1,842,487,167 100.0%
++Includes Other Securities (68.9% excluding Other Securities)
See Notes to Schedules of Investments and Financial Statements.
58 Janus Growth Funds April 30, 2006
Janus Global Life Sciences Fund (unaudited)
TICKER: JAGLX
FUND SNAPSHOT
This fund seeks companies around the world that are dedicated to improving the
quality of life for a growing and aging world.
(THOMAS MALLEY PHOTO)
Thomas Malley
portfolio manager
PERFORMANCE OVERVIEW
Although the outlook for long-term interest rates remained murky and the Federal
Reserve kept pushing up short-term yields, small capitalization stocks sparkled
during the six-month period ended April 30, 2006, posting double-digit gains
that topped the otherwise solid returns posted by mid-cap and large-cap
equities.
In the life sciences sector, investors soured on biotechnology and managed
healthcare companies late in the period, resulting in a sizeable pullback in
both groups, which had previously been standouts. While valuation concerns arose
in the biotechnology space, especially in relation to more speculative names,
rising medical costs weighed on managed healthcare companies. As a result, the
two groups closed out the period ranked among the poorest performing sectors in
the industry.
Elsewhere, government reimbursement uncertainties proved increasingly worrisome
to medical device companies. Interestingly, large pharmaceutical companies,
which have contended with such concerns for much longer, tended to fair better
during the period. Holding significant exposure to biotechnology companies and
health insurers, the Fund generated a 4.44% return during the period, trailing
its benchmarks, the S&P 500(R) Index and the Morgan Stanley Capital
International World Health Care Index(SM), which advanced 9.64% and 6.63%,
respectively.
Our exposure to the biotechnology group focused heavily on small capitalization
companies, which tend to be tied to drug-related developments. During much of
the period, we also sensed an urgency among larger pharmaceutical concerns to
acquire cutting edge compounds. We have found that once a small company
announces measurable success in a Phase III trial, the market immediately
figures the company has added leverage, in terms of a possible licensing deal or
potential acquisition, and generally pushes the stock upward. As the price
climbs, however, risk factors increase as well, and we regularly assess our
reasons for investing.
DETRACTORS FROM FUND PERFORMANCE
The largest detractor from performance, United Therapeutics, rose sharply during
the first 8 months of 2005 on good earnings growth. However, it fell during the
period as the company suffered from inventory destocking and higher market
costs. United Therapeutics was one of the names that perhaps got ahead of itself
before falling in the wake of a disappointing earnings report. The company's
Remodulin treatment for high blood pressure has enjoyed increased sales and it
is developing an inhaled version of the drug that we believe holds further
promise. In addition, United Therapeutics recently expanded its sales force and
has an ovarian cancer antibody, Ovarex, in Phase III trials. Given the potential
catalysts for future growth, we continue to hold the stock.
We upped our exposure to another biotechnology laggard, Idenix Pharmaceuticals.
The company's stock dropped overmisperceptions that experiential trials on the
hepatitis C drug it's developing with Novartis of Switzerland were scrapped.
Instead, side effects from the treatment prompted researchers to cut the dosage
level, and Novartis responded by reiterating its support for the drug
development effort.
Conversely, the outlook for LifePoint Hospitals worsened, prompting us to exit
the stock. The aftereffects of Hurricane Katrina lingered longer than
anticipated for this owner and operator of 53 rural hospitals, including five in
Louisiana. Issues with Medicare reimbursement policies and the integration of
Province Healthcare, which was acquired in 2005, added to the company's woes,
which convinced us to move on.
CONTRIBUTORS TO FUND PERFORMANCE
While investing in small biotechnology companies can indeed be precarious, the
Fund also enjoyed some stellar returns from the group, including top performer
Adolor, which surged as it released preliminary trial data that showed its
Entereg treatment was effective at helping patients recover more quickly from
opiod-induced constipation after surgery. On track for a 2007 approval from the
Food and Drug Administration (FDA), the drug significantly reduced
post-operative intestinal distress among trial subjects. It's also being studied
for relief of bowel dysfunction from chronic opiod use.
Another innovative company, Alexion Pharmaceuticals, reported positive
developments in Phase III trials for its Soliris treatment for paroxysmal
nocturnal hemoglobinuria (PNH). The disease, in which a body's immune system
attacks red blood cells, affects about 10,000 people in North America and
Europe. If approved, Soliris will significantly reduce the number of required
blood transfusions for PNH sufferers, which represents a large quality of life
benefit. Pleased with the stock's rally, we took the opportunity to book some
profits.
Gilead Sciences continued to see success in the uptake of its once-a-day HIV
medication, Truvada, which has steadily taken market share from
GlaxoSmithKline's Combivir. Looking ahead, the company has filed for FDA
approval of another once-daily combination pill which will mix Truvada and the
popular Sustiva treatment from Bristol-Myers Squibb. Given the developments and
rise in the stock price, we pared our exposure during the period.
Adding to 2006 gains was Celgene, a biotechnology concern that initiated a fresh
rally in the closing days of December when the FDA approved its Revlimid drug
for
Janus Growth Funds April 30, 2006 59
Janus Global Life Sciences Fund (unaudited)
treating myelodysplastic syndromes (MDS), a blood-borne cancer. Weeks later, the
FDA announced that it had granted a priority review of the company's application
for Revlimid to treat multiple myeloma, a bone marrow-based cancer, and a
decision was expected by the end of June. Meanwhile, our surveys of physicians
suggest Revlimid will enjoy high adoption rates for both indications, so our
outlook for the company remains bright. We have moved our position into a six
month structured note with Goldman Sachs to reduce volatility to the Fund during
the launch period of Revlimid. Our investment position remains the same and at
the end of the note, we will receive our old shares back.
Moving beyond healthcare, we actively look for stocks that improve the quality
of life in other areas of the market as well. One such industry is agribusiness,
an area of the economy that is gaining increased attention as consumer wealth
rises across the globe. A new position that meets this criteria and lifted
returns immediately was Brazilian agribusiness Cosan, the world's largest
processor of sugar cane. Along with Syngenta, another Top 10 performer in the
Fund, Cosan has benefited from increases in core food prices around the world,
due in part to greater demand from fast-growing Asian countries. Another new
name included Stada Arzneimittel of Germany, a leader in the growing European
generic drug market.
LOOKING AHEAD
Increasingly, concerns over future Medicare reimbursement levels are dominating
discussions within the domestic life sciences sector. From the government plan's
massive drug spend to decisions on medical devices and HMO services, fears over
healthcare companies' future abilities to effectively raise prices are
widespread. Interestingly, in Japan and Europe, price cuts are part of the
fundamental equation and are now built into stock prices.
While acknowledging that the U.S. reimbursement debate will likely add to market
volatility, we feel good about the long-term potential in the life sciences
sector. We believe many of our companies are improving the practices of
healthcare and improving the treatment of disease and we're excited about the
potential for strong positive developments. Of course, to attempt to mitigate
dramatic swings within any individual sector, we will continue to run what we
believe to be a balanced, well-diversified portfolio of holdings.
Thank you for your continued investment in Janus Global Life Sciences Fund.
JANUS GLOBAL LIFE SCIENCES FUND AT A GLANCE
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- HOLDINGS
CONTRIBUTION
------------
Adolor Corp.
Therapeutic-based biopharmaceutical company - U.S. 1.54%
Celgene Corp.
Global biopharmaceutical company - U.S. 1.06%
Cosan S.A. Industria e Comercio
Food and beverage producer and distributor - Brazil 0.88%
Alexion Pharmaceuticals, Inc.
Biopharmaceutical company - U.S. 0.86%
Gilead Sciences, Inc.
Biopharmaceutical company - U.S. 0.76%
5 LARGEST DETRACTORS FROM PERFORMANCE -- HOLDINGS
CONTRIBUTION
------------
United Therapeutics Corp.
Vascular pharmaceutical developer - U.S. (0.73%)
Nabi Biopharmaceuticals
Biopharmaceutical company - U.S. (0.72%)
Idenix Pharmaceuticals, Inc.
Biopharmaceutical company - U.S. (0.68%)
Aetna, Inc.
Healthcare and related benefits provider - U.S. (0.66%)
LifePoint Hospitals, Inc.
Health care services provider - U.S. (0.51%)
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING
FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING
----------------- ---------------- ---------------------------
Pharmaceuticals & Biotechnology 5.90% 58.24% 7.88%
Food, Beverage & Tobacco 0.74% 2.13% 4.61%
Materials 0.64% 2.51% 3.01%
Insurance 0.03% 0.31% 4.75%
Commercial Services & Supplies 0.00% 0.00% 0.73%
5 LOWEST CONTRIBUTORS/DETRACTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING
FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING
----------------- ---------------- ---------------------------
Healthcare Equipment & Services (2.90%) 36.82% 5.17%
Utilities 0.00% 0.00% 3.30%
Transportation 0.00% 0.00% 1.84%
Telecommunication Services 0.00% 0.00% 3.15%
Technology Hardware & Equipment 0.00% 0.00% 7.04%
60 Janus Growth Funds April 30, 2006
(unaudited)
5 LARGEST HOLDINGS -- (% of Net Assets)
AS OF APRIL 30, 2006
Goldman Sachs Group, Inc., convertible,
(Celgene Corp.), 0%
Finance - Investment Bankers/Brokers 5.2%
Roche Holding A.G.
Medical - Drugs 4.2%
Coventry Health Care, Inc.
Medical - HMO 3.5%
Aetna, Inc.
Medical - HMO 3.5%
United Therapeutics Corp.
Therapeutics 3.1%
--------------
19.5%
ASSET ALLOCATION -- (% of Net Assets)
AS OF APRIL 30, 2006
(PIE CHART)
<Table>
Common Stock 93.4%*
Equity Linked Structured Notes 5.2%
Cash and Cash Equivalents 1.1%
Preferred Stock 0.3%
</Table>
Emerging markets comprised 4.4% of total net assets.
*Includes short sale of (0.8%).
5 LARGEST COUNTRY ALLOCATIONS -- (% of Investment Securities)
(BAR CHARTS)
AS OF APRIL 30, 2006
----------------------
United States 83.5%
Switzerland 8.6%
Brazil 2.1%
United Kingdom 1.9%
Israel 1.8%
</Table>
<Table>
<Caption>
AS OF OCTOBER 31, 2005
----------------------
United States 84.8%
Switzerland 7.1%
United Kingdom 2.5%
Israel 2.5%
France 1.7%
Janus Growth Funds April 30, 2006 61
Janus Global Life Sciences Fund (unaudited)
PERFORMANCE
(PERFORMANCE GRAPH)
<Table>
<Caption>
Initial investment of $10,000
MORGAN STANLEY CAPITAL
INTERNATIONAL WORLD
JANUS GLOBAL LIFE SCIENCES FUND S&P INDEX HEALTH CARE INDEX(SM)
------------------------------- ------------------------ --------------------------
12/31/1998* $ 10,000 $ 10,000 $ 10,000
4/30/2000 $ 17,220 $ 12,009 $ 9,447
4/30/2002 $ 15,873 $ 9,132 $ 9,440
4/30/2004 $ 17,474 $ 9,728 $ 9,908
4/30/2006 $ 20,236 $ 11,939 $ 11,487
</Table>
Average Annual Total Return --for the periods ended April 30, 2006
FISCAL SINCE
YEAR-TO-DATE ONE YEAR FIVE YEAR INCEPTION*
------------ --------- ------------ ------------
Janus Global Life Sciences 4.44% 15.74% 3.59% 10.10%
Fund
S&P 500(R) Index 9.64% 15.42% 2.70% 2.45%
Morgan Stanley Capital
International World Health
Care Index(SM) 6.63% 8.46% 2.84% 1.91%
Lipper Quartile N/A 2nd 2nd 2nd
Lipper Ranking - based on
total return for
Health/Biotechnology Funds N/A** 57/176 55/127 15/48
Visit janus.com to view up to date performance and characteristic information
Data presented represents past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 800.525.3713 or visit www.janus.com for performance current to the
most recent month-end.
See Notes to Schedules of Investments for index definitions.
Total return includes reinvestment of dividends, distributions and capital
gains. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
*The Fund's inception date -- December 31, 1998
**The Fund's fiscal year-to-date Lipper ranking is not available.
See "Explanations of Charts, Tables and Financial Statements."
The Fund's portfolio may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
The Fund emphasizes investments in certain industry groups, which may react
similarly to market developments (resulting in greater price volatility), and
may have significant exposure to foreign markets (which include risks such as
currency fluctuation and political uncertainty).
There is no assurance that the investment process will consistently lead to
successful investing.
A 2% redemption fee may be imposed on shares held for 3 months or less.
Performance shown does not reflect this redemption fee and, if reflected,
performance would have been lower.
Lipper Inc. - A Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical with capital gains and
dividends reinvested.
Returns have sustained significant gains due to market volatility in the
healthcare sector.
The Fund will invest at least 80% of its net assets in the type of securities
described by its name.
FUND EXPENSES
The example below shows you the ongoing costs (in dollars) of investing in your
Fund and allows you to compare these costs with those of other mutual funds.
Please refer to page 5 for a detailed explanation of the information presented
in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD
EXPENSE EXAMPLE (11/1/05) (4/30/06) (11/1/05-4/30/06)*
- --------------------------------------------- ----------------------- -------------------- ---------------------------
Actual $ 1,000.00 $ 1,044.40 $ 5.02
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.89 $ 4.96
*Expenses are equal to the annualized expense ratio of 0.99%, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
62 Janus Growth Funds April 30, 2006
Janus Global Life Sciences Fund
Schedule of Investments and Securities Sold Short (unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- ------------------------------------------------ ----------------------
Common Stock -- 94.2%
Agricultural Chemicals - 2.9%
228,405 Syngenta A.G.*,** $ 31,861,043
Dental Supplies and Equipment - 1.4%
476,605 Patterson Companies, Inc.*,# 15,527,791
Diagnostic Kits - 2.0%
566,076 Dade Behring Holdings, Inc. 22,076,964
Drug Delivery Systems - 1.2%
337,935 Hospira, Inc.* 13,027,394
Food - Dairy Products - 1.2%
353,700 Dean Foods Co.* 14,010,057
Instruments - Scientific - 2.2%
348,790 Fisher Scientific International, Inc.*,# 24,607,135
Medical - Biomedical and Genetic - 10.0%
443,900 Advanced Magnetics, Inc.*,# 11,585,790
533,280 Alexion Pharmaceuticals, Inc.* 18,126,187
239,080 Amgen, Inc.*,** 16,185,716
1,271,821 Fibrogen, Inc.*,(O),(S) 9,106,238
209,500 Genentech, Inc.* 16,699,245
201,300 Genmab A/S*,# 7,131,719
175,140 Genzyme Corp.* 10,711,562
325,845 Invitrogen Corp.*,# 21,509,029
----------------------
111,055,486
Medical - Drugs - 28.6%
438,955 Abbott Laboratories 18,760,937
1,229,248 Adolor Corp.*,# 28,911,913
1,163,340 Cubist Pharmaceuticals, Inc.* 26,372,918
516,825 Endo Pharmaceuticals Holdings, Inc.* 16,254,146
475,580 Forest Laboratories, Inc.* 19,203,920
653,784 Idenix Pharmaceuticals, Inc.*,# 6,563,991
513,175 K-V Pharmaceutical Co. - Class A*,# 11,074,317
1,346,445 Ligand Pharmaceuticals, Inc. - Class B*,# 16,493,951
765,535 Merck & Company, Inc. 26,349,715
321,039 Novartis A.G.**,# 18,417,937
907,225 Pfizer, Inc. 22,980,009
308,325 Roche Holding A.G.** 47,409,753
505,770 Shire PLC (ADR)**,# 23,953,267
416,486 Stada Arzneimittel A.G.# 20,087,631
314,625 Wyeth 15,312,799
----------------------
318,147,204
Medical - Generic Drugs - 3.0%
178,110 Barr Pharmaceuticals, Inc.* 10,784,561
559,510 Teva Pharmaceutical Industries, Ltd. (ADR)# 22,660,155
----------------------
33,444,716
Medical - HMO - 11.3%
998,455 Aetna, Inc. 38,440,518
900,750 Centene Corp.*,# 23,140,268
788,267 Coventry Health Care, Inc.* 39,153,221
493,130 UnitedHealth Group, Inc. 24,528,286
----------------------
125,262,293
Medical - Hospitals - 0.9%
United Surgical Partners
291,799 International, Inc.*,# 9,632,285
Medical - Nursing Homes -- 1.7%
432,305 Manor Care, Inc.# 18,956,574
Shares or Principal Amount Value
- ------------------------------------------------ ----------------------
Medical - Wholesale Drug Distributors - 2.9%
486,750 Cardinal Health, Inc. $ 32,782,613
Medical Instruments - 2.3%
755,725 Boston Scientific Corp.* 17,563,049
720,985 Stereotaxis, Inc.*,# 8,536,462
----------------------
26,099,511
Medical Products - 2.2%
267,695 Stryker Corp. 11,711,656
241,355 Varian Medical Systems, Inc.* 12,642,175
----------------------
24,353,831
Optical Supplies - 1.1%
120,010 Alcon, Inc. (U.S. Shares)** 12,206,217
Pharmacy Services - 1.6%
331,950 Medco Health Solutions, Inc.* 17,669,699
Physical Therapy and Rehabilitation Centers
- - 1.7%
4,097,185 HEALTHSOUTH Corp.*,# 18,765,107
Respiratory Products - 1.4%
418,860 Respironics, Inc.* 15,338,653
Sugar - 2.4%
342,900 Cosan S.A. Industria e Comercio* 26,387,034
Therapeutics - 12.2%
318,255 Amylin Pharmaceuticals, Inc.*,# 13,860,005
588,160 Gilead Sciences, Inc.* 33,819,200
1,094,490 MGI Pharma, Inc.*,# 20,445,073
367,920 Neurocrine Biosciences, Inc.* 21,103,891
763,560 Nuvelo, Inc.*,# 12,499,477
578,984 United Therapeutics Corp.* 34,478,498
----------------------
136,206,144
----------------------
Total Common Stock (cost $818,081,137) 1,047,417,751
Preferred Stock - 0.3%
Medical - Biomedical and Genetic - 0.3%
Cougar Technology, Inc.(O),(S)
1,678,901 (cost $2,904,499) 2,904,499
Equity-Linked Structured Note - 5.2%
Finance - Investment Bankers/Brokers - 5.2%
Goldman Sachs Group, Inc., convertible
721,700 (Celgene Corp.), 0%(B) (cost $50,584,242) 57,727,340
Other Securities - 15.6%
State Street Navigator Securities Lending
174,002,620 Prime Portfolio+ (cost $174,002,620) 174,002,620
Securities Sold Short - (0.8)%
Medical - Nursing Homes - (0.8)%
Kindred Healthcare, Inc.*
354,350 (proceeds $8,353,528) (8,596,531)
----------------------
Total Investments and Securities Sold Short
(total cost $1,037,218,970) -- 114.5% 1,273,455,679
Liabilities, net of Cash, Receivables and
Other Assets -- (14.5)% (160,986,274)
----------------------
Net Assets -- 100% $1,112,469,405
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds April 30, 2006 63
Janus Global Life Sciences Fund
Schedule of Investments and Securities Sold Short (unaudited)
As of April 30, 2006
Summary of Investments by Country
% of Investment
Country Value Securities
- --------------- -------------- --------------
Brazil $ 26,387,034 2.1%
Denmark 7,131,719 0.5%
Germany 20,087,631 1.6%
Israel 22,660,155 1.8%
Switzerland 109,894,950 8.6%
United Kingdom 23,953,267 1.9%
United States++ 1,063,340,923 83.5%
-------------- --------------
Total $1,273,455,679 100.0%
++ Includes Other Securities (69.8% excluding Other Securities)
Forward Currency Contracts, Open
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- ---------------------- ------------ --------------- ------------
British Pound 8/10/06 2,500,000 $ 4,565,248 $ (221,223)
British Pound 10/19/06 600,000 1,096,905 (22,839)
Swiss Franc 6/28/06 26,750,000 21,716,576 (405,334)
Swiss Franc 8/10/06 4,700,000 3,832,917 (191,877)
--------------- ------------
Total $ 31,211,646 $ (841,273)
See Notes to Schedules of Investments and Financial Statements.
64 Janus Growth Funds April 30, 2006
Janus Global Technology Fund (unaudited)
TICKER: JAGTX
FUND SNAPSHOT
This fund pursues forward-thinking companies around the globe that are advancing
the frontiers of technology in profitable ways.
TEAM BASED APPROACH
LED BY BRAD SLINGERLEND AND BARNEY WILSON
PERFORMANCE OVERVIEW
As inflationary fears and budget deficit concerns simmered beneath an otherwise
healthy domestic economic environment, global equities generally outperformed
U.S. stocks during the six-month period ended April 30, 2006.
The Federal Reserve did little to help underlying sentiments as it continued its
steady drumbeat of quarter-point rate hikes -- adding 1.00% to the overnight
lending rate during the period.
Buoyed by a number of solid overseas companies, Janus Global Technology Fund
generated a 19.01% return during the period, outperforming its benchmarks, the
S&P 500(R) Index, which advanced 9.64%, and the Morgan Stanley Capital
International World Information Technology Index(SM), which gained 12.02%.
INVESTMENT STRATEGY
On February 1, 2006, we assumed management responsibility for the Fund and it
spent part of the period in transition. While the Fund has always relied on the
excellent work done by the Janus technology research team, we've decided to
sharpen its focus on the group's best ideas. Accordingly, we're striving for 90%
of the Fund's holdings to be "buy" or "strong buy" rated by Janus analysts. As
part of the refinement process during the period, we scaled back the number of
the Fund's holdings and finished within our ideal target of between 50 and 70
names.
CONTRIBUTORS TO FUND PERFORMANCE
Leading the way on a performance basis was Hon Hai Precision. The Taiwanese
contract manufacturer reported a phenomenal 68.3% gain in sales during 2005
while it expanded its share of the personal computer, consumer electronic and
enterprise technology markets. As the growth rate slowed somewhat through the
first four months of 2006, we're watching carefully to assess this long-term
holding's prospects going forward.
Elsewhere, wireless technology developer Research in Motion (RIM) of Canada
rallied after resolving a problematic patent issue with its popular BlackBerry
communications service. Having tracked the company for several years, we
frequently supplemented its own information with subscriber data from wireless
service carriers. Thus, we believed that separate from the legal issues, it was
still a high growth company with great returns and a courtroom battle wasn't
going to stop that from continuing. We added heavily to the Fund's stake in 2005
as a reflection of our conviction. Once the settlement with rival NTP was
announced in March, RIM's stock appreciated significantly and we were pleased to
take some profits.
Glassworks innovator Corning is another longtime holding that rewarded us during
the period. Again, by leveraging our global research efforts and the wide reach
of the Janus technology analyst team, we determined the full extent of the
company's leadership position in the liquid crystal display (LCD) market.
Following discussions with Corning customers and plant visits in the U.S. and
Asia, we concluded that the company, relying on a proprietary manufacturing
technology, frequently leads the industry into the next generation of glass
displays, both in size and related technology. This edge has proven critical as
television manufacturers keep expanding the market for large LCD screens. The
first-mover advantage translates into higher margins, which are especially
valuable when end-market demand accelerates quicker than anticipated, which
happened during the period. However, as Corning's stock climbed, it reached our
target price so we liquidated the position.
Our global research efforts also led us to SOITEC, a French developer of silicon
technology that essentially provides an insulation layer for semiconductor
chips. The structure allows microprocessors to run faster with lower heat, which
provides a performance advantage for chip manufacturers. Currently used in a
small number of circumstances, we believe the technology will gain traction and
proliferate through the chip industry and we'll see more supplier agreements
such as the one it recently signed with Advanced Micro Devices. Based on our
confidence in the company, we significantly increased the Fund's exposure.
A company with a similarly promising outlook that's already well-entrenched in
the industry is business software developer SAP of Germany. Validating SAP's
strong marketing message that the company's enterprise software improves
business metrics and makes companies more competitive, we believe the return on
investment for SAP clients is remarkably high. As the company has consistently
delivered on its promises, we believe SAP's growth rate will exceed that of the
technology sector for a multi-year period.
DETRACTORS FROM FUND PERFORMANCE
Weighing on performance was Internet services outfit Yahoo!, which sagged amid
mixed reviews of its search-generated revenue growth rate. We actually believed
the response was overblown, viewed the compelling valuation as an opportunity
and increased the Fund's position. Ultimately, we believe the potential for paid
search and other advertising revenues, along with the increasing complexity of
content available on the Web, outweighs any short-term setbacks.
We witnessed another opportunistic shortfall in Internet protocol (IP) network
gear Juniper Networks. Underwhelming quarterly results contributed to an
extended selloff in the stock, although we added to the Fund's stake. We believe
the sagging revenues will prove to be of temporary consequence, rather than the
early inklings of a long-term fundamental problem. Eventually, we believe that
voice, video and data
Janus Growth Funds April 30, 2006 65
Janus Global Technology Fund (unaudited)
delivery will all converge on IP networks, leading to steady demand for
Juniper's equipment, perhaps most notably from the large telecommunication
services carriers which will need to upgrade their networks.
Computer maker Dell also declined amid short-term revenue growth issues.
Although we locked in some profits on the stock as share prices approached
near-term targets, we continue to hold a significant stake in the company.
Ultimately, we believe the value of its well-honed direct-distribution model and
its track record of strong execution will return to the fore, especially
considering double-digit growth projections for computer sales during 2006.
Online auction host eBay continued to disappoint as its flagship domestic
marketplace business faltered. Despite steady growth in merchandise listings,
the increase in revenue gains eased modestly, tempering management's optimism.
The company's PayPal division is a steady outperformer and the voice over
Internet protocol service provider Skype boasts high user volumes, although
generating revenues from that business has proven challenging. While maintaining
a stake in eBay, we're carefully gauging its ability to execute and drive new
earnings going forward.
LOOKING AHEAD
As Janus' grassroots research efforts delve deep into company fundamentals, our
analysts frequently find stocks that are undervalued in relation to the
company's potential. Furthermore, by narrowing the Fund's focus to the team's
top 50-70 ideas, we believe we're concentrating on the best prospects for
appreciation in the world.
In the coming quarters, the emphasis on company-level research will likely gain
in importance as we don't believe any dramatic, broad-based themes will emerge
from the technology sector. Instead, we believe exciting names with potential
exist in virtually all corners of the technology universe, independent of any
overall outlook for the group.
By seeking out and investing in companies that are underestimated, misunderstood
and undervalued by the broader market, we will attempt to continue to deliver
benchmark-beating returns from the technology sector.
Thank you for your investment in Janus Global Technology Fund.
JANUS GLOBAL TECHNOLOGY FUND AT A GLANCE
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- HOLDINGS
CONTRIBUTION
------------
Hon Hai Precision Industry Company, Ltd.
Personal computer parts company - Taiwan 1.56%
Marvell Technology Group, Ltd.
Communication-related integrated circuits provider - U.S. 1.17%
Advanced Micro Devices, Inc.
Integrated circuits provider - U.S. 0.97%
Broadcom Corp. - Class A
Integrated silicon solutions provider - U.S. 0.94%
Samsung Electronics Company, Ltd.
Diversified electronics manufacturer - Korea 0.91%
5 LARGEST DETRACTORS FROM PERFORMANCE -- HOLDINGS
CONTRIBUTION
------------
Yahoo!, Inc.
Global Internet media company - U.S. (0.49%)
Juniper Networks, Inc.
Internet infrastructure solutions provider - U.S. (0.42%)
Dell, Inc.
Worldwide computer systems and services - U.S. (0.38%)
eBay, Inc.
Online marketplace - U.S. (0.20%)
Check Point Software Technologies, Ltd. (U.S. Shares)
Internet security provider - U.S. (0.18%)
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING
FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING
----------------- ----------------- ---------------------------
Semiconductors & Semiconductor Equipment 8.31% 26.59% 3.15%
Technology Hardware & Equipment 6.04% 31.06% 7.04%
Software & Services 3.60% 32.24% 5.44%
Consumer Durables & Apparel 0.83% 2.18% 1.31%
Retailing 0.43% 2.91% 3.59%
5 LOWEST CONTRIBUTORS/DETRACTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING
FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING
----------------- ----------------- ---------------------------
Pharmaceuticals & Biotechnology (0.05%) 0.32% 7.88%
Utilities 0.00% 0.00% 3.30%
Transportation 0.00% 0.00% 1.84%
Real Estate 0.00% 0.00% 0.79%
Insurance 0.00% 0.00% 4.75%
66 Janus Growth Funds April 30, 2006
(unaudited)
5 LARGEST EQUITY HOLDINGS -- (% of Net Assets)
AS OF APRIL 30, 2006
Yahoo!, Inc.
Web Portals/Internet Service Providers 3.8%
Advanced Micro Devices, Inc.
Electronic Components - Semiconductors 3.2%
Oracle Corp.
Enterprise Software/Services 2.9%
Amdocs, Ltd. (U.S. Shares)
Telecommunication Services 2.9%
QUALCOMM, Inc.
Wireless Equipment 2.7%
-----------
15.5%
ASSET ALLOCATION -- (% of Net Assets)
AS OF APRIL 30, 2006
(PIE CHART)
<Table>
Common Stock 96.8%
Cash and Cash Equivalents 2.7%
Preferred Stock 0.5%
</Table>
Emerging markets comprised 9.1% of total net assets.
5 LARGEST COUNTRY ALLOCATIONS -- (% of Investment Securities)
(BAR CHARTS)
AS OF APRIL 30, 2006
----------------------
United States 67.7%
United Kingdom 7.2%
Netherlands 3.2%
Japan 2.9%
Cayman Islands 2.7%
</Table>
<Table>
<Caption>
AS OF OCTOBER 31, 2005
----------------------
United States 57.7%
United Kingdom 6.5%
Taiwan 5.0%
France 4.3%
Finland 4.0%
Janus Growth Funds April 30, 2006 67
Janus Global Technology Fund (unaudited)
PERFORMANCE
(PERFORMANCE GRAPH)
<Table>
<Caption>
Initial investment of $10,000
MORGAN STANLEY CAPITAL
INTERNATIONAL WORLD
JANUS GLOBAL TECHNOLOGY FUND S&P 500(R) INDEX INFORMATION TECHNOLOGY INDEX(SM)
---------------------------- ----------------- ---------------------------------
12-31-1998* $ 10,000 $ 10,000 $ 10,000
4/30/2000 $ 32,616 $ 12,009 $ 20,215
4/30/2002 $ 10,190 $ 9,132 $ 6,779
4/30/2004 $ 10,282 $ 9,728 $ 7,083
4/30/2006 $ 13,234 $ 11,939 $ 8,398
</Table>
Average Annual Total Return -- for the periods ended April 30, 2006
FISCAL SINCE
YEAR-TO-DATE ONE YEAR FIVE YEAR INCEPTION*
------------ ----------- ------------ -------------
Janus Global Technology Fund 19.01% 34.60% (4.49)% 3.90%
S&P 500(R) Index 9.64% 15.42% 2.70% 2.45%
Morgan Stanley Capital
International World
Information
Technology Index(SM) 12.02% 22.49% (3.36)% (2.35)%
Lipper Quartile N/A 2nd 3rd 1st
Lipper Ranking - based on
total return for Science &
Technology Funds N/A** 94/292 132/230 17/76
Visit janus.com to view up to date performance and characteristic information
Data presented represents past performance, which is no guarantee of future
results. Investment results and principal value will fluctuate so that shares,
when redeemed, may be worth more or less than their original cost. Due to market
volatility, current performance may be higher or lower than the performance
shown. Call 800.525.3713 or visit www.janus.com for performance current to the
most recent month-end.
See Notes to Schedules of Investments for index definitions.
Total return includes reinvestment of dividends, distributions and capital
gains. The returns shown do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund shares.
*The Fund's inception date -- December 31, 1998
**The Fund's fiscal year-to-date Lipper ranking is not available.
See "Explanations of Charts, Tables and Financial Statements."
The Fund's portfolio may differ significantly from the securities held in the
indices. The indices are not available for direct investment; therefore their
performance does not reflect the expenses associated with the active management
of an actual portfolio.
There is no assurance that the investment process will consistently lead to
successful investing.
A 2% redemption fee may be imposed on shares held for 3 months or less.
Performance shown does not reflect this redemption fee and, if reflected,
performance would have been lower.
Lipper Inc. - A Reuters Company, is a nationally recognized organization that
ranks the performance of mutual funds within a universe of funds that have
similar investment objectives. Rankings are historical with capital gains and
dividends reinvested.
This Fund may at times have significant exposure to certain industry groups,
which may react similarly to market developments (resulting in greater price
volatility). The Fund also may have significant exposure to foreign markets
(which include risks such as currency fluctuation and political uncertainty).
Returns have sustained significant gains due to market volatility in the
information technology sector.
Effective 2/1/06, Mike Lu is no longer the portfolio manager of Janus Global
Technology Fund. Brad Slingerlend and Barney Wilson are now leading the Janus
Technology Team in selecting investments for the Fund.
The Fund will invest at least 80% of its net assets in the type of securities
described by its name.
FUND EXPENSES
The example below shows you the ongoing costs (in dollars) of investing in your
Fund and allows you to compare these costs with those of other mutual funds.
Please refer to page 5 for a detailed explanation of the information presented
in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD
EXPENSE EXAMPLE (11/1/05) (4/30/06) (11/1/05-4/30/06)*
- ---------------------------------------- ----------------------- -------------------- ---------------------------
Actual $ 1,000.00 $ 1,190.10 $ 5.81
Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.49 $ 5.36
*Expenses are equal to the annualized expense ratio of 1.07%, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
68 Janus Growth Funds April 30, 2006
Janus Global Technology Fund
Schedule of Investments (unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- ------------------------------------------------ ----------------------
Common Stock - 96.8%
Applications Software - 5.5%
285,885 Citrix Systems, Inc.* $ 11,412,529
187,877 Infosys Technologies, Ltd. 13,137,372
845,450 Microsoft Corp. 20,417,618
843,085 Quest Software, Inc.* 14,509,493
----------------------
59,477,012
Audio and Video Products - 1.3%
276,300 Sony Corp.** 13,879,910
Chemicals - Diversified - 0.6%
108,600 Shin-Etsu Chemical Company, Ltd.** 6,275,748
Commercial Services - Finance - 1.3%
343,235 Paychex, Inc. 13,863,262
Computer Services - 1.2%
517,490 Ceridian Corp.* 12,538,783
Computers - 3.8%
209,355 Apple Computer, Inc.* 14,736,498
410,465 Dell, Inc.* 10,754,183
205,105 Research In Motion, Ltd. (U.S. Shares)* 15,717,197
----------------------
41,207,878
Computers - Memory Devices - 4.3%
1,996,425 EMC Corp.* 26,971,702
303,405 SanDisk Corp.* 19,366,341
----------------------
46,338,043
Computers - Peripheral Equipment - 1.2%
322,018 Logitech International S.A.* 13,371,978
Data Processing and Management - 0.9%
231,270 NAVTEQ Corp.* 9,602,330
E-Commerce/Products - 2.6%
325,608 Amazon.com, Inc.*,# 11,464,658
592,030 Submarino S.A.* 16,027,645
----------------------
27,492,303
E-Commerce/Services - 1.0%
315,505 eBay, Inc.* 10,856,527
Electric Products - Miscellaneous - 1.3%
2,238,000 Toshiba Corp.** 14,249,769
Electronic Components - Miscellaneous - 2.5%
2,125,026 Hon Hai Precision Industry Company, Ltd.** 14,419,487
367,912 Koninklijke (Royal) Philips Electronics N.V.** 12,694,783
----------------------
27,114,270
Electronic Components - Semiconductors - 17.1%
1,060,245 Advanced Micro Devices, Inc.* 34,298,926
10,164,115 ARM Holdings PLC** 25,207,331
338,540 International Rectifier Corp.*,# 15,302,008
1,141,490 LSI Logic Corp.* 12,156,869
410,610 Microsemi Corp.*,# 11,217,865
924,658 MIPS Technologies, Inc.* 6,851,716
38,600 Samsung Electronics Company, Ltd.** 26,355,386
Silicon-On-Insulator Technologies
406,976 (SOITEC)* , ** ,# 13,282,788
314,420 SiRF Technology Holdings, Inc.*,# 10,737,443
833,715 Texas Instruments, Inc. 28,938,248
----------------------
184,348,580
Electronic Forms - 2.1%
568,245 Adobe Systems, Inc.* 22,275,204
Shares or Principal Amount Value
- ------------------------------------------------ ---------------------
Electronic Measuring Instruments - 0.7%
166,585 Trimble Navigation, Ltd.* $ 7,892,797
Energy - Alternate Sources - 2.5%
Suntech Power Holdings
780,900 Company, Ltd. (ADR)* 26,777,061
Enterprise Software/Services - 5.3%
481,410 CA, Inc.# 12,208,558
2,146,740 Oracle Corp.* 31,320,936
63,967 SAP A.G.** 13,993,588
---------------------
57,523,082
Entertainment Software - 2.8%
1,026,980 Activision, Inc.* 14,572,846
282,055 Electronic Arts, Inc.* 16,020,724
---------------------
30,593,570
Internet Connectivity Services - 1.4%
288,911 NDS Group PLC (ADR)*,** 14,561,114
Internet Infrastructure Software - 1.7%
180,625 Akamai Technologies, Inc.*,# 6,085,256
1,386,990 TIBCO Software, Inc.*,# 11,955,854
---------------------
18,041,110
Internet Security - 2.3%
Check Point Software Technologies, Ltd.
562,875 (U.S. Shares)* 10,891,631
550,755 McAfee, Inc.* 14,369,198
---------------------
25,260,829
Medical - Drugs - 1.2%
568,024 Cubist Pharmaceuticals, Inc.* 12,877,104
Networking Products - 3.8%
656,249 Cisco Systems, Inc.* 13,748,417
1,467,360 Juniper Networks, Inc.* 27,116,812
---------------------
40,865,229
Semiconductor Components/Integrated Circuits - 7.2%
Actions Semiconductor
530,134 Company, Ltd. (ADR)* ,# 5,269,532
Advanced Semiconductor
10,378,000 Manufacturing Corp.* 2,583,357
1,518,470 Cypress Semiconductor Corp.*,# 26,056,946
205,145 Marvell Technology Group, Ltd.* 11,711,728
497,355 Maxim Integrated Products, Inc. 17,536,737
Taiwan Semiconductor
6,801,646 Manufacturing Company, Ltd.** 14,517,398
---------------------
77,675,698
Semiconductor Equipment - 3.4%
ASM Lithography Holding N.V.
1,151,475 (U.S. Shares)* , ** ,# 24,353,696
244,610 KLA-Tencor Corp. 11,780,418
---------------------
36,134,114
Telecommunication Equipment - 1.1%
987,019 Arris Group, Inc.*,# 11,696,175
Telecommunication Services - 4.3%
829,690 Amdocs, Ltd. (U.S. Shares)*,** 30,864,468
433,665 NeuStar, Inc. - Class A* 15,221,642
---------------------
46,086,110
See Notes to Schedules of Investments and Financial Statements.
Janus Growth Funds April 30, 2006 69
Janus Global Technology Fund
Schedule of Investments (unaudited)
As of April 30, 2006
Shares or Principal Amount Value
- -------------------------------------- -------------------
Television - 1.2%
1,340,443 British Sky Broadcasting Group PLC** $ 12,845,158
Web Hosting/Design - 0.6%
96,580 Equinix, Inc.* 6,364,622
Web Portals/Internet Service Providers - 5.3%
38,140 Google, Inc. - Class A* 15,940,232
1,261,728 Yahoo!, Inc.* 41,359,443
-------------------
57,299,675
Wireless Equipment - 5.3%
642,870 Nokia Oyj (ADR)** 14,567,434
568,190 QUALCOMM, Inc. 29,170,875
370,890 Telefonaktiebolaget LM Ericsson (ADR)# 13,155,468
-------------------
56,893,777
-------------------
Total Common Stock (cost $778,455,685) 1,042,278,822
Corporate Bonds - 0%
Candescent Technologies Corp., 8.00%
convertible senior subordinated debentures
$ 31,700,000 due 5/1/03 (144A) (cost $4,368,283)++,(Y),(0),(S) 0
Preferred Stock - 0.5%
Wireless Equipment - 0.5%
Crown Castle International Corp.
102,750 convertible, 6.25% (cost $5,137,500) 5,651,250
Other Securities - 7.1%
State Street Navigator Securities Lending
76,982,279 Prime Portfolio+ (cost $76,982,279) 76,982,279
Time Deposit - 4.6%
ING Financial, ETD, 4.86%, 5/1/06
$ 49,800,000 (cost $49,800,000) 49,800,000
-------------------
Total Investments (total cost $914,743,747) --
109.0% 1,174,712,351
Liabilities, net of Cash, Receivables and
Other Assets -- (9.0)% (96,805,525)
-------------------
Net Assets -- 100% $ 1,077,906,826
Summary of Investments by Country
% of Investments
Country Value Securities
- ------------------------------------- ---------------- ----------------
Bermuda $ 11,711,728 1.0%
Brazil 16,027,645 1.4%
Canada 15,717,197 1.3%
Cayman Islands 32,046,593 2.7%
China 2,583,357 0.2%
Finland 14,567,434 1.2%
France 13,282,788 1.1%
Germany 13,993,588 1.2%
India 13,137,372 1.1%
Israel 10,891,631 0.9%
Japan 34,405,427 2.9%
Netherlands 37,048,479 3.2%
South Korea 26,355,386 2.2%
Sweden 13,155,468 1.1%
Switzerland 13,371,978 1.1%
Taiwan 28,936,885 2.5%
United Kingdom 83,478,071 7.2%
United States++ 794,001,324 67.7%
---------------- ----------------
Total $ 1,174,712,351 100.0%
++ Includes Short-Term Securities and Other Securities (56.8% excluding
Short-Term Securities and Other Securities)
Forward Currency Contracts, Open
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- ------------------------- ---------------- ---------------- ----------------
British Pound 10/19/06 7,735,000 $ 14,140,942 $ (294,441)
Euro 6/28/06 13,500,000 17,095,931 (527,230)
Japanese Yen 6/28/06 924,000,000 8,187,333 31,845
South Korean Won 10/19/06 6,200,000,000 6,614,886 (34,891)
Taiwan Dollar 10/19/06 213,000,000 6,824,225 (56,950)
---------------- ----------------
Total $ 52,863,317 $ (881,667)
See Notes to Schedules of Investments and Financial Statements.
70 Janus Growth Funds April 30, 2006
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Janus Growth Funds April 30, 2006 71
Statements of Assets and Liabilities
As of April 30, 2006 (unaudited) Janus Janus Janus Janus
(all numbers in thousands except net asset Janus Enterprise Mercury Olympus Orion
value per share) Fund Fund Fund Fund Fund
- ---------------------------------------------- ------------ ------------ ------------ ------------ ------------
Assets:
Investments at cost(1) $ 9,970,199 $ 1,471,744 $ 3,982,370 $ 2,192,514 $ 1,075,813
Investments at value(1) $ 12,113,654 $ 2,123,957 $ 4,399,978 $ 2,720,171 $ 1,338,109
Cash 16,950 1,198 1,019 1,090 1,354
Cash denominated in foreign currency(2) 2,190 50 217 587 --
Deposits with broker for short sales -- -- -- -- --
Receivables:
Investments sold 261,846 -- 71,439 29,746 --
Fund shares sold 2,226 930 795 1,106 1,828
Dividends 12,367 744 2,891 1,756 84
Interest 985 33 84 81 56
Other assets 200 10 24 16 5
Forward currency contracts -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Total Assets 12,410,418 2,126,922 4,476,447 2,754,553 1,341,436
Liabilities:
Payables:
Short sales, at value(3) -- -- -- -- --
Due to custodian -- -- -- -- --
Collateral for securities loaned (Note 1) 522,863 229,175 394,235 316,899 250,086
Investments purchased 199,533 12,588 20,541 14,072 6,823
Fund shares repurchased 45,845 1,330 3,045 1,445 476
Dividends and distributions -- -- -- -- --
Advisory fees 6,140 993 2,145 1,274 550
Transfer agent fees and expenses 2,183 437 974 553 212
Non-interested Trustees' fees and expenses 1 2 4 2 1
Foreign tax liability 666 -- 3,620 27 949
Accrued expenses 1,588 300 716 351 112
Forward currency contracts 6,216 -- 3,837 1,896 --
------------ ------------ ------------ ------------ ------------
Total Liabilities 785,035 244,825 429,117 336,519 259,209
------------ ------------ ------------ ------------ ------------
Net Assets $ 11,625,383 $ 1,882,097 $ 4,047,330 $ 2,418,034 $ 1,082,227
Net Assets Consist of:
Capital (par value and paid in surplus)* $ 15,163,970 $ 5,462,489 $ 8,760,686 $ 3,418,918 $ 1,324,824
Undistributed net investment income/(loss)* 21,559 (1,134) 3,927 124 2,579
Undistributed net realized gain/(loss) from
investments and foreign currency transactions* (5,696,955) (4,231,473) (5,127,467) (1,526,781) (506,526)
Unrealized appreciation/(depreciation) of
investments and foreign currency translations 2,136,809(4) 652,215 410,184(4) 525,773(4) 261,350(4)
------------ ------------ ------------ ------------ ------------
Total Net Assets $ 11,625,383 $ 1,882,097 $ 4,047,330 $ 2,418,034 $ 1,082,227
Shares Outstanding, $0.01 Par Value
(unlimited shares authorized) 430,725 41,709 169,382 70,953 114,120
Net Asset Value Per Share $ 26.99 $ 45.12 $ 23.89 $ 34.08 $ 9.48
Janus Janus
As of April 30, 2006 (unaudited) Janus Janus Janus Global Life Global
(all numbers in thousands except net asset Triton Twenty Venture Sciences Technology
value per share) Fund Fund Fund Fund Fund
- ---------------------------------------------- ------------ ------------ ------------ ------------ ------------
Assets:
Investments at cost(1) $ 151,471 $ 7,314,654 $ 1,375,566 $ 1,045,572 $ 914,744
Investments at value(1) $ 165,422 $ 9,994,230 $ 1,842,487 $ 1,282,052 $ 1,174,712
Cash 156 1,375 -- -- 1,581
Cash denominated in foreign currency(2) 298 -- 53 -- 151
Deposits with broker for short sales -- -- -- 8,354 --
Receivables:
Investments sold 3,320 230,835 32,621 14,400 464
Fund shares sold 1,003 2,670 184 168 196
Dividends 50 4,845 101 175 583
Interest 8 3,906 95 39 66
Other assets -- 96 27 14 15
Forward currency contracts -- -- -- -- 32
------------ ------------ ------------ ------------ ------------
Total Assets 170,257 10,237,957 1,875,568 1,305,202 1,177,800
Liabilities:
Payables:
Short sales, at value(3) -- -- -- 8,597(3) --
Due to custodian -- -- 10,938 1,390 --
Collateral for securities loaned (Note 1) -- 355,132 364,896 174,003 76,982
Investments purchased 4,436 113,023 22,452 5,244 20,005
Fund shares repurchased 196 6,338 455 1,438 857
Dividends and distributions -- -- -- -- --
Advisory fees 81 5,040 771 601 570
Transfer agent fees and expenses 29 1,650 235 270 271
Non-interested Trustees' fees and expenses -- 3 3 3 3
Foreign tax liability 98 -- 487 99 59
Accrued expenses 46 1,307 236 247 232
Forward currency contracts -- -- -- 841 914
------------ ------------ ------------ ------------ ------------
Total Liabilities 4,886 482,493 400,473 192,733 99,893
------------ ------------ ------------ ------------ ------------
Net Assets $ 165,371 $ 9,755,464 $ 1,475,095 $ 1,112,469 $ 1,077,907
Net Assets Consist of:
Capital (par value and paid in surplus)* $ 145,102 $ 9,273,238 $ 961,148 $ 1,702,561 $ 3,392,671
Undistributed net investment income/(loss)* 101 20,420 (3,289) (2,505) (2,679)
Undistributed net realized gain/(loss) from
investments and foreign currency transactions* 6,313 (2,218,536) 50,782 (822,886) (2,571,128)
Unrealized appreciation/(depreciation) of
investments and foreign currency translations 13,855(4) 2,680,342 466,454(4) 235,299(4) 259,043(4)
------------ ------------ ------------ ------------ ------------
Total Net Assets $ 165,371 $ 9,755,464 $ 1,475,095 $ 1,112,469 $ 1,077,907
Shares Outstanding, $0.01 Par Value
(unlimited shares authorized) 12,049 190,971 22,346 55,003 83,312
Net Asset Value Per Share $ 13.73 $ 51.08 $ 66.01 $ 20.23 $ 12.94
* See Note 4 in Notes to Financial Statements
(1) Investments at cost and value include $505,930,469, $223,640,930,
$381,881,851, $307,516,553, $243,484,769, $347,802,617, $355,947,289,
$168,908,989 and $74,889,311 of securities loaned for Janus Fund, Janus
Enterprise Fund, Janus Mercury Fund, Janus Olympus Fund, Janus Orion Fund, Janus
Twenty Fund, Janus Venture Fund, Janus Global Life Sciences Fund and Janus
Global Technology Fund, respectively (Note 1).
(2) Includes cost of $2,144,138, $49,480, $212,366, $574,272, $296,403, $53,492
and $150,818 for Janus Fund, Janus Enterprise Fund, Janus Mercury Fund, Janus
Olympus Fund, Janus Triton Fund, Janus Venture Fund and Janus Global Technology
Fund, respectively.
(3) Includes proceeds of $8,353,528 on short sales for Janus Global Life
Sciences Fund.
(4) Net of foreign taxes on investments of $665,761, $3,619,824, $26,574,
$948,727, $97,695, $486,618, $99,084 and $59,234 for Janus Fund, Janus Mercury
Fund, Janus Olympus Fund, Janus Orion Fund, Janus Triton Fund, Janus Venture
Fund, Janus Global Life Sciences Fund and Janus Global Technology Fund,
respectively.
See Notes to Financial Statements.
72 Janus Growth Funds April 30, 2006
Janus Growth Funds April 30, 2006 73
Statements of Operations
Janus Janus Janus Janus
For the six-month period ended April 30, Janus Enterprise Mercury Olympus Orion
2006 (unaudited) (all numbers in thousands) Fund Fund Fund Fund Fund
- ------------------------------------------- ------------ ------------ ------------ ------------ ------------
Investment Income:
Interest $ 4,318 $ 709 $ 1,485 $ 830 $ 1,067
Securities lending income 744 141 226 174 152
Dividends 65,810 6,766 22,910 10,888 8,862
Dividends from affiliates 3,834 86 489 26 80
Foreign tax withheld (1,758) (20) (600) (401) (207)
------------ ------------ ------------ ------------ ------------
Total Investment Income 72,948 7,682 24,510 11,517 9,954
Expenses:
Advisory fees 36,533 5,845 13,926 7,578 2,851
Transfer agent fees and expenses 12,447 2,388 5,484 3,131 1,138
Registration fees 140 21 34 10 19
Postage and mailing expenses 298 126 238 182 50
Custodian fees 125 13 63 50 52
Professional fees 32 17 20 16 17
Non-interested Trustees' fees and expenses 149 29 67 40 15
Printing expenses 353 147 260 241 51
Other expenses 1,765 322 766 339 160
Non-recurring costs (Note 2) -- -- -- -- --
Costs assumed by Janus Capital Management
LLC (Note 2) -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Total Expenses 51,842 8,908 20,858 11,587 4,353
Expense and Fee Offset (420) (92) (275) (127) (50)
------------ ------------ ------------ ------------ ------------
Net Expenses 51,422 8,816 20,583 11,460 4,303
Net Investment Income/(Loss) 21,526 (1,134) 3,927 57 5,651
Net Realized and Unrealized Gain/(Loss)
on Investments:
Net realized gain/(loss) from securities
transactions 1,020,240 133,446 1,050,667 162,790 42,057
Net realized gain/(loss) from foreign
currency transactions 4,290 (1) (1,745) (424) (75)(1)
Net realized gain/(loss) from short sales -- -- -- -- --
Net realized gain/(loss) from option
contracts -- -- -- -- --
Change in net unrealized appreciation or
depreciation of investments and foreign
currency translations 102,385(2) 108,675 (683,433)(2) 63,601(2) 129,409(2)
Payment from affiliate (Note 2) 47 -- -- 1 --
------------ ------------ ------------ ------------ ------------
Net Gain/(Loss) on Investments 1,126,962 242,120 365,489 225,968 171,391
------------ ------------ ------------ ------------ ------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations $ 1,148,488 $ 240,986 $ 369,416 $ 226,025 $ 177,042
Janus Janus
Janus Janus Janus Global Life Global
For the six-month period ended April 30, Triton Twenty Venture Sciences Technology
2006 (unaudited) (all numbers in thousands) Fund Fund Fund Fund Fund
- ------------------------------------------- ------------ ------------ ------------ ------------ ------------
Investment Income:
Interest $ 324 $ 9,989 $ 12 $ 146 $ 580
Securities lending income -- 105 485 166 136
Dividends 392 41,107 2,300 3,021 2,337
Dividends from affiliates -- 12,852 96 -- --
Foreign tax withheld (6) (1,223) (21) (149) (170)
------------ ------------ ------------ ------------ ------------
Total Investment Income 710 62,830 2,872 3,184 2,883
Expenses:
Advisory fees 290 30,877 4,415 3,732 3,406
Transfer agent fees and expenses 110 9,615 1,322 1,544 1,626
Registration fees 23 25 11 14 18
Postage and mailing expenses 3 280 62 56 131
Custodian fees 16 102 103 35 71
Professional fees 18 21 18 18 28
Non-interested Trustees' fees and expenses 3 132 29 26 23
Printing expenses 8 354 84 96 131
Other expenses 19 1,443 238 230 233
Non-recurring costs (Note 2) -- -- -- -- --
Costs assumed by Janus Capital Management
LLC (Note 2) -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Total Expenses 490 42,849 6,282 5,751 5,667
Expense and Fee Offset (6) (292) (46) (62) (99)
------------ ------------ ------------ ------------ ------------
Net Expenses 484 42,557 6,236 5,689 5,568
Net Investment Income/(Loss) 226 20,273 (3,364) (2,505) (2,685)
Net Realized and Unrealized Gain/(Loss)
on Investments:
Net realized gain/(loss) from securities
transactions 6,534 1,073,122 114,121 101,400 209,720
Net realized gain/(loss) from foreign
currency transactions (50)(1) (108) 57 1,420(1) (78)(1)
Net realized gain/(loss) from short sales -- -- -- 15 --
Net realized gain/(loss) from option
contracts -- -- -- 37 --
Change in net unrealized appreciation or
depreciation of investments and foreign
currency translations 11,694(2) (388,964) 165,631(2) (48,739)(2) (24,328)(2)
Payment from affiliate (Note 2) -- 17 -- -- 4
------------ ------------ ------------ ------------ ------------
Net Gain/(Loss) on Investments 18,178 684,067 279,809 54,133 185,318
------------ ------------ ------------ ------------ ------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations $ 18,404 $ 704,340 $ 276,445 $ 51,628 $ 182,633
(1) Net of foreign taxes on investments of $8,190, $13,096, $883 and $3,591 for
Janus Orion Fund, Janus Triton Fund, Janus Global Life Sciences Fund and Janus
Global Technology Fund, respectively.
(2) Net of foreign taxes on investments of $665,761, $3,619,824, $26,574,
$948,727, $97,695, $486,618, $99,084 and $59,234 for Janus Fund, Janus Mercury
Fund, Janus Olympus Fund, Janus Orion Fund, Janus Triton Fund, Janus Venture
Fund, Janus Global Life Sciences Fund and Janus Global Technology Fund,
respectively.
See Notes to Financial Statements.
74 Janus Growth Funds April 30, 2006
Janus Growth Funds April 30, 2006 75
Statements of Changes in Net Assets
For the six-month period ended April 30, 2006
(unaudited) and the fiscal year ended Janus Janus Janus
October 31, 2005 (all numbers in thousands) Fund Enterprise Fund Mercury Fund
--------------------------- --------------------------- ---------------------------
2006 2005 2006 2005 2006 2005
------------ ------------ ------------ ------------ ------------ ------------
Operations:
Net investment income/(loss) $ 21,526 $ 8,063 $ (1,134) $ (5,103) $ 3,927 $ 18,801
Net realized gain/(loss) from investment
transactions 1,024,530 2,416,218 133,445 178,530 1,048,922 411,889
Change in unrealized net
appreciation/(depreciation) of investments
and foreign currency translations 102,385 (1,439,602) 108,675 97,620 (683,433) 146,894
Payment from affiliate (Note 2) 47 1 -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Net Increase/(Decrease) in Net Assets
Resulting from Operations 1,148,488 984,680 240,986 271,047 369,416 577,584
Dividends and Distributions to
Shareholders:
Net investment income* (7,997) -- -- -- (12,423) (6,427)
Net realized gain/(loss) from
investment transactions* -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Net Decrease from Dividends and
Distributions (7,997) -- -- -- (12,423) (6,427)
Capital Share Transactions:
Shares sold 835,253 378,642 149,492 228,604 192,578 703,654
Reinvested dividends and distributions 7,772 -- -- -- 11,886 6,103
Shares repurchased (1,501,054) (3,497,874) (211,923) (476,067) (987,558) (1,278,997)
------------ ------------ ------------ ------------ ------------ ------------
Net Increase/(Decrease) from Capital
Share Transactions (658,029) (3,119,232) (62,431) (247,463) (783,094) (569,240)
Net Increase/(Decrease) in Net Assets 482,462 (2,134,552) 178,555 23,584 (426,101) 1,917
Net Assets:
Beginning of period 11,142,921 13,277,473 1,703,542 1,679,958 4,473,431 4,471,514
End of period $ 11,625,383 $ 11,142,921 $ 1,882,097 $ 1,703,542 $ 4,047,330 $ 4,473,431
------------ ------------ ------------ ------------ ------------ ------------
Undistributed net investment
income/(loss)* $ 21,559 $ 8,030 $ (1,134) $ -- $ 3,927 $ 12,423
For the six-month period ended April 30, 2006
(unaudited) and the fiscal year ended October 31, 2005 Janus Janus
(all numbers in thousands) Olympus Fund Orion Fund
--------------------------- ---------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Operations:
Net investment income/(loss) $ 57 $ 762 $ 5,651 $ 3,091
Net realized gain/(loss) from investment transactions 162,366 302,052 41,982 67,290
Change in unrealized net appreciation/(depreciation)
of investments and foreign currency translations 63,601 72,243 129,409 56,341
Payment from affiliate (Note 2) 1 1 -- --
------------ ------------ ------------ ------------
Net Increase/(Decrease) in Net Assets Resulting
from Operations 226,025 375,058 177,042 126,722
Dividends and Distributions to Shareholders:
Net investment income* (637) -- (6,052) --
Net realized gain/(loss) from investment transactions* -- -- -- --
------------ ------------ ------------ ------------
Net Decrease from Dividends and Distributions (637) -- (6,052) --
Capital Share Transactions:
Shares sold 135,323 94,217 308,061 167,198
Reinvested dividends and distributions 624 -- 5,942 --
Shares repurchased (200,189) (572,853) (94,167) (132,323)
------------ ------------ ------------ ------------
Net Increase/(Decrease) from Capital Share Transactions (64,242) (478,636) 219,836 34,875
Net Increase/(Decrease) in Net Assets 161,146 (103,578) 390,826 161,597
Net Assets:
Beginning of period 2,256,888 2,360,466 691,401 529,804
End of period $ 2,418,034 $ 2,256,888 $ 1,082,227 $ 691,401
------------ ------------ ------------ ------------
Undistributed net investment income/(loss)* $ 124 $ 705 $ 2,579 $ 2,980
*See Note 4 in Notes to Financial Statements.
See Notes to Financial Statements.
76 Janus Growth Funds April 30, 2006
Janus Growth Funds April 30, 2006 77
Statements of Changes in Net Assets (continued)
For the six-month period ended
April 30, 2006 (unaudited) and for the Janus Janus Janus
fiscal year or period ended Triton Twenty Venture
October 31, 2005 (all numbers in thousands) Fund Fund Fund
------------------------- ------------------------- -------------------------
2006 2005(1) 2006 2005 2006 2005
----------- ----------- ----------- ----------- ----------- -----------
Operations:
Net investment income/(loss) $ 226 $ (43) $ 20,273 $ 20,063 $ (3,364) $ (8,736)
Net realized gain/(loss) from investment
transactions 6,484 (40) 1,073,014 1,469,039 114,178 117,762
Net realized gain/(loss) from short sales -- -- -- -- -- --
Net realized gain/(loss) from option contracts -- -- -- -- -- --
Change in unrealized net
appreciation/(depreciation) of investments and
foreign currency translations 11,694 2,161 (388,964) 254,049 165,631 25,372
Payment from affiliate (Note 2) -- -- 17 7 -- --
----------- ----------- ----------- ----------- ----------- -----------
Net Increase/(Decrease) in Net Assets Resulting
from Operations 18,404 2,078 704,340 1,743,158 276,445 134,398
Dividends and Distributions to Shareholders:
Net investment income* (125) -- (20,136) (2,651) -- --
Net realized gain/(loss) from investment
transactions* (88) -- -- -- (65,399) --
----------- ----------- ----------- ----------- ----------- -----------
Net Decrease from Dividends and Distributions (213) -- (20,136) (2,651) (65,399) --
Capital Share Transactions:
Shares sold 123,872 45,861 232,842 542,721 17,012 36,715
Redemption fees N/A N/A N/A N/A N/A N/A
Reinvested dividends and distributions 209 -- 19,712 2,597 62,815 --
Shares repurchased (14,596) (10,244) (793,797) (1,696,801) (108,928) (205,051)
----------- ----------- ----------- ----------- ----------- -----------
Net Increase/(Decrease) from Capital Share
Transactions 109,485 35,617 (541,243) (1,151,483) (29,101) (168,336)
----------- ----------- ----------- ----------- ----------- -----------
Net Increase/(Decrease) in Net Assets 127,676 37,695 142,961 589,024 181,945 (33,938)
Net Assets:
Beginning of period 37,695 -- 9,612,503 9,023,479 1,293,150 1,327,088
End of Period $ 165,371 $ 37,695 $ 9,755,464 $ 9,612,503 $ 1,475,095 $ 1,293,150
----------- ----------- ----------- ----------- ----------- -----------
Undistributed net investment income/(loss)* $ 101 $ -- $ 20,420 $ 20,284 $ (3,289) $ 75
For the six-month period ended April 30, 2006 (unaudited) Janus Janus
and for the fiscal year or period ended October 31, 2005 Global Life Global Technology
(all numbers in thousands) Sciences Fund Fund
--------------------------- ---------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
Operations:
Net investment income/(loss) $ (2,505) $ (5,782) $ (2,685) $ 758
Net realized gain/(loss) from investment transactions 102,820 175,006 209,642 99,671
Net realized gain/(loss) from short sales 15 -- -- --
Net realized gain/(loss) from option contracts 37 -- -- --
Change in unrealized net appreciation/(depreciation) of investments and
foreign currency translations (48,739) 51,675 (24,328) 33,644
Payment from affiliate (Note 2) -- -- 4 --
------------ ------------ ------------ ------------
Net Increase/(Decrease) in Net Assets Resulting from Operations 51,628 220,899 182,633 134,073
Dividends and Distributions to Shareholders:
Net investment income* -- -- (719) --
Net realized gain/(loss) from investment transactions* -- -- -- --
------------ ------------ ------------ ------------
Net Decrease from Dividends and Distributions -- -- (719) --
Capital Share Transactions:
Shares sold 42,048 51,664 40,983 46,171
Redemption fees 35 35 54 80
Reinvested dividends and distributions -- -- 703 --
Shares repurchased (130,908) (306,428) (139,410) (441,684)
------------ ------------ ------------ ------------
Net Increase/(Decrease) from Capital Share Transactions (88,825) (254,729) (97,670) (395,433)
------------ ------------ ------------ ------------
Net Increase/(Decrease) in Net Assets (37,197) (33,830) 84,244 (261,360)
Net Assets:
Beginning of period 1,149,666 1,183,496 993,663 1,255,023
End of Period $ 1,112,469 $ 1,149,666 $ 1,077,907 $ 993,663
------------ ------------ ------------ ------------
Undistributed net investment income/(loss)* $ (2,505) $ -- $ (2,679) $ 725
*See Note 4 in Notes to Financial Statements.
(1)Period from February 25, 2005 (inception date) through October 31, 2005.
See Notes to Financial Statements.
78 Janus Growth Funds April 30, 2006
Janus Growth Funds April 30, 2006 79
Financial Highlights
Janus Fund
-------------------------------------------------------------------------------------------------------------
For a share
outstanding
during the
six-month
period ended
April 30, 2006
(unaudited) and
through each
fiscal year
ended October 31 2006 2005 2004 2003 2002 2001
- ------------------ -------------- -------------- -------------- -------------- -------------- --------------
Net Asset
Value,
Beginning of
Period $ 24.44 $ 22.69 $ 22.52 $ 18.39 $ 22.11 $ 44.00
Income from
Investment
Operations:
Net investment
income/(loss) .05 .02 --(1) --(1) --(1) --(1)
Net gains/(losses)
on securities
(both realized
and unrealized) 2.52 1.73 .17 4.13 (3.72) (17.50)
-------------- -------------- -------------- -------------- -------------- --------------
Total from
Investment
Operations 2.57 1.75 .17 4.13 (3.72) (17.50)
Less
Distributions
and Other:
Dividends (from
net investment
income)* (.02) -- -- -- -- --
Distributions
(from capital
gains)* -- -- -- -- -- (4.39)
Payment from
affiliate --(2) --(2) --(2) -- -- --
-------------- -------------- -------------- -------------- -------------- --------------
Total
Distributions
and Other (.02) -- -- -- -- (4.39)
-------------- -------------- -------------- -------------- -------------- --------------
Net Asset
Value,
End of Period $ 26.99 $ 24.44 $ 22.69 $ 22.52 $ 18.39 $ 22.11
Total Return** 10.51%(3) 7.71%(3) 0.75%(3) 22.46% (16.82)% (43.42)%
Net Assets,
End of Period
(in thousands) $ 11,625,383 $ 11,142,921 $ 13,277,473 $ 17,426,458 $ 16,320,421 $ 23,513,436
Average Net
Assets for
the Period
(in thousands) $ 11,539,726 $ 12,310,464 $ 15,433,191 $ 16,206,681 $ 21,651,285 $ 34,254,548
Ratio of Gross
Expenses to
Average
Net
Assets***(4)(5) 0.91% 0.88% 0.90% 0.89% 0.85% 0.84%
Ratio of Net
Expenses to
Average Net
Assets***(4) 0.90% 0.87% 0.90% 0.89% 0.84% 0.83%
Ratio of Net
Investment
Income/(Loss)
to Average
Net Assets*** 0.38% 0.07% (0.17)% (0.17)% (0.24)% (0.16)%
Portfolio
Turnover
Rate*** 110% 78% 21% 22% 27% 51%
Janus Enterprise Fund
-------------------------------------------------------------------------------------------------------
For a share
outstanding
during the
six-month
period ended
April 30, 2006
(unaudited)
and through
each fiscal
year ended
October 31 2006 2005 2004 2003 2002 2001
- ------------------- ------------- ------------- ------------- ------------- ------------- -------------
Net Asset Value,
Beginning of
Period $ 39.48 $ 33.73 $ 30.02 $ 22.93 $ 29.67 $ 68.41
Income from
Investment
Operations:
Net investment
income/(loss) (.03) --(1) --(1) --(1) --(1) --(1)
Net gains/(losses)
on securities
(both realized
and unrealized) 5.67 5.75 3.71 7.09 (6.74) (38.74)
------------- ------------- ------------- ------------- ------------- -------------
Total from
Investment
Operations 5.64 5.75 3.71 7.09 (6.74) (38.74)
Less
Distributions:
Dividends (from
net investment
income)* -- -- -- -- -- --
Distributions
(from capital
gains)* -- -- -- -- -- --
------------- ------------- ------------- ------------- ------------- -------------
Total Distributions -- -- -- -- -- --
------------- ------------- ------------- ------------- ------------- -------------
Net Asset Value,
End of Period $ 45.12 $ 39.48 $ 33.73 $ 30.02 $ 22.93 $ 29.67
Total Return** 14.29% 17.05% 12.36% 30.92% (22.72)% (56.63)%
Net Assets,
End of
Period
(in thousands) $ 1,882,097 $ 1,703,542 $ 1,679,958 $ 1,916,706 $ 1,854,192 $ 3,071,818
Average Net Assets
for the Period
(in thousands) $ 1,842,337 $ 1,728,579 $ 1,795,534 $ 1,741,680 $ 2,518,273 $ 4,858,360
Ratio of Gross
Expenses to
Average Net
Assets***(4)(5) 0.98% 0.96% 1.04% 1.02% 0.93% 0.92%
Ratio of Net
Expenses to
Average Net
Assets***(4) 0.97% 0.95% 1.03% 1.02% 0.90% 0.90%
Ratio of Net
Investment
Income/(Loss)
to Average
Net Assets*** (0.12)% (0.30)% (0.46)% (0.46)% (0.43)% (0.55)%
Portfolio
Turnover Rate*** 44% 28% 27% 32% 64% 85%
* See Note 4 in Notes to Financial Statements.
** Total return not annualized for periods of less than one full year.
*** Annualized for periods of less than one full year.
(1)Net investment income/(loss) aggregated less than $.01 on a per share basis
for the fiscal year ended.
(2)Payment from affiliate aggregated less than $.01 on a per share basis for
the fiscal year or period ended.
(3)During the fiscal year or period ended, Janus Capital and/or Janus Services
LLC ("Janus Services") fully reimbursed the Fund for a loss on a transaction
resulting from certain trading, pricing and/or shareholder activity errors,
which otherwise would have reduced total return by less than 0.01%.
(4)See "Explanations of Charts, Tables and Financial Statements."
(5)The effect of non-recurring costs assumed by Janus Capital (Note 2) is
included in the ratio of gross expenses to average net assets and was less than
0.01%.
See Notes to Financial Statements.
80 Janus Growth Funds April 30, 2006
Janus Mercury Fund
-------------------------------------------------------------------------------------------------------
For a share
outstanding
during the
six-month
period ended
April 30, 2006
(unaudited)
and through
each fiscal
year ended
October 31 2006 2005 2004 2003 2002 2001
- ------------------------- -------------- -------------- -------------- -------------- -------------- --------------
Net Asset Value,
Beginning of Period $ 22.05 $ 19.48 $ 18.14 $ 14.92 $ 19.14 $ 40.59
Income from
Investment
Operations:
Net investment
income/(loss) .02 .09 --(1) --(1) --(1) .04
Net gains/(losses) on
securities (both
realized and unrealized) 1.88 2.51 1.34 3.22 (4.18) (17.05)
-------------- -------------- -------------- -------------- -------------- --------------
Total from Investment
Operations 1.90 2.60 1.34 3.22 (4.18) (17.01)
Less Distributions:
Dividends (from net
investment income)* (.06) (.03) -- -- (.04) (.03)
Distributions (from
capital gains)* -- -- -- -- -- (4.41)
-------------- -------------- -------------- -------------- -------------- --------------
Total Distributions (.06) (.03) -- -- (.04) (4.44)
-------------- -------------- -------------- -------------- -------------- --------------
Net Asset Value, End of
Period $ 23.89 $ 22.05 $ 19.48 $ 18.14 $ 14.92 $ 19.14
Total Return** 8.63% 13.35% 7.39% 21.58% (21.88)% (46.21)%
Net Assets, End of
Period (in thousands) $ 4,047,330 $ 4,473,431 $ 4,471,514 $ 5,282,164 $ 5,034,041 $ 7,910,482
Average Net Assets for
the Period (in thousands) $ 4,391,354 $ 4,447,616 $ 5,007,156 $ 5,088,567 $ 6,783,864 $ 11,243,108
Ratio of Gross Expenses
to Average Net
Assets***(2)(3) 0.96% 0.93% 0.97% 0.96% 0.94% 0.89%
Ratio of Net Expenses to
Average Net Assets***(2) 0.95% 0.92% 0.97% 0.95% 0.92% 0.88%
Ratio of Net Investment
Income/(Loss) to Average
Net Assets*** 0.18% 0.42% (0.26)% (0.31)% (0.07)% 0.16%
Portfolio Turnover
Rate*** 186% 38% 43% 54% 97% 83%
Janus Olympus Fund
----------------------------------------------------------------------------------------------------------
For a share
outstanding
during the
six-month
period ended
April 30, 2006
(unaudited)
and through
each fiscal
year ended
October 31 2006 2005 2004 2003 2002 2001
- ---------------------- ------------- ------------- ------------- ------------- ------------- -------------
Net Asset Value,
Beginning of Period $ 30.96 $ 26.30 $ 25.22 $ 20.60 $ 24.59 $ 50.50
Income from
Investment
Operations:
Net investment
income/(loss) -- .01 --(1) --(1) --(1) .13
Net gains/(losses)
on securities (both
realized and
unrealized) 3.13 4.65 1.08 4.62 (3.88) (25.42)
------------- ------------- ------------- ------------- ------------- -------------
Total from
Investment
Operations 3.13 4.66 1.08 4.62 (3.88) (25.29)
Less Distributions
and Other:
Dividends (from net
investment income)* (.01) -- -- -- (.11) (.23)
Distributions (from
capital gains)* -- -- -- -- -- (.39)
Payment from affiliate --(4) --(4) --(4) -- -- --
------------- ------------- ------------- ------------- ------------- -------------
Total Distributions
and Other (.01) -- -- -- (.11) (.62)
------------- ------------- ------------- ------------- ------------- -------------
Net Asset Value,
End of Period $ 34.08 $ 30.96 $ 26.30 $ 25.22 $ 20.60 $ 24.59
Total Return** 10.11%(5) 17.72%(5) 4.28%(5) 22.38% (15.89)% (50.61)%
Net Assets, End of
Period (in thousands) $ 2,418,034 $ 2,256,888 $ 2,360,466 $ 2,772,209 $ 2,136,167 $ 3,074,317
Average Net Assets
for the Period
(in thousands) $ 2,388,082 $ 2,282,832 $ 2,575,897 $ 2,378,814 $ 2,882,934 $ 4,767,090
Ratio of Gross
Expenses to
Average Net
Assets***(2)(3) 0.98% 0.97% 1.03% 0.99% 0.94% 0.91%
Ratio of Net
Expenses to
Average Net
Assets***(2) 0.97% 0.96% 1.03% 0.98% 0.91% 0.89%
Ratio of Net
Investment
Income/(Loss)
to Average
Net Assets*** 0.00% 0.03% (0.36)% (0.14)% (0.13)% 0.34%
Portfolio
Turnover Rate*** 98% 119% 76% 84% 90% 118%
*See Note 4 in Notes to Financial Statements.
**Total return not annualized for periods of less than one full year.
***Annualized for periods of less than one full year.
(1)Net investment income/(loss) aggregated less than $.01 on a per share basis
for the fiscal year ended.
(2)See "Explanations of Charts, Tables and Financial Statements."
(3)The effect of non-recurring costs assumed by Janus Capital (Note 2) is
included in the ratio of gross expenses to average net assets and was less than
0.01%.
(4)Payment from affiliate aggregated less than $.01 on a per share basis for
the fiscal year or period ended.
(5)During the fiscal year or period ended, Janus Capital and/or Janus Services
fully reimbursed the Fund for a loss on a transaction resulting from certain
trading, pricing and/or shareholder activity errors, which otherwise would have
reduced total return by less than 0.01%.
See Notes to Financial Statements.
Janus Growth Funds April 30, 2006 81
Financial Highlights(continued)
Janus Orion Fund
----------------------------------------------------------------------------------------------------
For a share
outstanding
during the
six-month
period ended
April 30, 2006
(unaudited)
and through
each fiscal
year ended
October 31 2006 2005 2004 2003 2002 2001
- ---------------------- ------------- ------------- ------------- ------------- ------------- -------------
Net Asset Value,
Beginning of Period $ 7.80 $ 6.25 $ 5.64 $ 4.33 $ 5.21 $ 8.81
Income from
Investment
Operations:
Net investment
income/(loss) .05 .03 --(1) --(1) --(1) --(1)
Net gains/(losses)
on securities (both
realized and
unrealized) 1.69 1.52 .61 1.31 (.88) (3.58)
------------- ------------- ------------- ------------- ------------- -------------
Total from
Investment
Operations 1.74 1.55 .61 1.31 (.88) (3.58)
Less Distributions
and Other:
Dividends (from net
investment income)* (.06) -- -- -- -- (.02)
Distributions (from
capital gains)* -- -- -- -- -- --
Payment from affiliate -- -- --(2) -- -- --
------------- ------------- ------------- ------------- ------------- -------------
Total Distributions
and Other (.06) -- -- -- -- (.02)
------------- ------------- ------------- ------------- ------------- -------------
Net Asset Value,
End of Period $ 9.48 $ 7.80 $ 6.25 $ 5.64 $ 4.33 $ 5.21
Total Return** 22.45% 24.80% 10.82%(3) 29.95% (16.70)% (40.69)%
Net Assets,
End of Period
(in thousands) $ 1,082,227 $ 691,401 $ 529,804 $ 513,708 $ 421,458 $ 602,303
Average Net Assets
for the Period
(in thousands) $ 899,038 $ 590,421 $ 540,305 $ 431,124 $ 562,457 $ 762,142
Ratio of Gross
Expenses
to Average Net
Assets***(4)(5) 0.98% 1.02% 1.09% 1.10% 1.09% 1.06%
Ratio of Net
Expenses to
Average Net
Assets***(4) 0.97% 1.01% 1.08% 1.08% 1.04% 1.03%
Ratio of Net
Investment
Income/(Loss) to
Average Net
Assets*** 1.27% 0.52% (0.05)% (0.43)% (0.30)% (0.06)%
Portfolio
Turnover Rate*** 54% 68% 69% 72% 161% 206%
Janus Triton Fund
-------------------------------
For a share outstanding during
the six-month period ended
April 30, 2006 (unaudited) and
through the period ended October 31 2006 2005(6)
- --------------------------------------------------------------- ------------ ------------
Net Asset Value, Beginning of Period $ 10.86 $ 10.00
Income from Investment Operations:
Net investment income/(loss) .04 --
Net gains/(losses) on securities (both realized and unrealized) 2.88 .86
------------ ------------
Total from Investment Operations 2.92 .86
Less Distributions:
Dividends from net investment income* (.03) --
Distributions from net realized gains* (.02) --
------------ ------------
Total Distributions (.05) --
------------ ------------
Net Asset Value, End of Period $ 13.73 $ 10.86
Total Return** 26.98% 8.60%
Net Assets, End of Period $ 165,371 $ 37,695
Average Net Assets for the Period $ 91,310 $ 25,904
Ratio of Gross Expenses to Average Net Assets***(4)(5) 1.08% 1.27%(7)
Ratio of Net Expenses to Average Net Assets***(4) 1.07% 1.25%
Ratio of Net Invest Income to Average Net Assets*** 0.50% (0.24)%
Portfolio Turnover Rate*** 215% 48%
*See Note 4 in Notes to Financial Statements.
**Total return not annualized for periods of less than one full year.
***Annualized for periods of less than one full year.
(1)Net investment income/(loss) aggregated less than $.01 on a per share basis
for the fiscal year ended.
(2)Payment from affiliate aggregated less than $.01 on a per share basis for
the fiscal year ended.
(3)During the fiscal year ended, Janus Capital and/or Janus Services fully
reimbursed the Fund for a loss on a transaction resulting from certain trading,
pricing and/or shareholder activity errors, which otherwise would have reduced
total return by less than 0.01%.
(4)See "Explanations of Charts, Tables and Financial Statements."
(5)The effect of non-recurring costs assumed by Janus Capital (Note 2) is
included in the ratio of gross expenses to average net assets and was less than
0.01%.
(6)Period from February 25, 2005 (inception date) through October 31, 2005.
(7)The ratio was 1.85% in 2005 before waiver of certain fees incurred by the
Fund.
See Notes to Financial Statements.
82 Janus Growth Funds April 30, 2006
Janus Twenty Fund
----------------------------------------------------------------------------------------------------------------
For a share
outstanding
during the
six-month
period ended
April 30, 2006
(unaudited) and
through each
fiscal year
ended October 31 2006 2005 2004 2003 2002 2001
- ---------------- -------------- -------------- -------------- -------------- -------------- --------------
Net Asset Value,
Beginning of
Period $ 47.63 $ 39.60 $ 34.06 $ 30.47 $ 36.31 $ 71.07
Income from
Investment
Operations:
Net investment
income/(loss) .11 .10 .03 .17 .21 .32
Net gains/
(losses)
on securities
(both realized
and unrealized) 3.44 7.94 5.68 3.63 (5.71) (33.33)
-------------- -------------- -------------- -------------- -------------- --------------
Total from
Investment
Operations 3.55 8.04 5.71 3.80 (5.50) (33.01)
Less
Distributions
and Other:
Dividends (from
net investment
income)* (.10) (.01) (.17) (.21) (.34) --
Distributions
(from capital
gains)* -- -- -- -- -- (1.75)
Payment from
affiliate --(1) --(1) --(1) -- -- --
-------------- -------------- -------------- -------------- -------------- --------------
Total
Distributions
and Other (.10) (.01) (.17) (.21) (.34) (1.75)
-------------- -------------- -------------- -------------- -------------- --------------
Net Asset
Value, End
of Period $ 51.08 $ 47.63 $ 39.60 $ 34.06 $ 30.47 $ 36.31
Total Return** 7.46%(2) 20.31%(2) 16.85%(2) 12.60% (15.35)% (47.43)%
Net Assets,
End of
Period (in
thousands) $ 9,755,464 $ 9,612,503 $ 9,023,479 $ 9,821,492 $ 10,107,243 $ 14,378,453
Average Net
Assets for
the Period
(in thousands) $ 9,820,060 $ 9,458,921 $ 9,319,532 $ 9,749,457 $ 12,572,984 $ 20,320,750
Ratio of Gross
Expenses to
Average
Net Assets***
(3)(4) 0.88% 0.86% 0.89% 0.88% 0.84% 0.84%
Ratio of Net
Expenses to
Average Net
Assets***(3) 0.87% 0.86% 0.89% 0.88% 0.83% 0.84%
Ratio of Net
Investment
Income/(Loss)
to Average
Net Assets*** 0.42% 0.21% 0.06% 0.52% 0.56% 0.63%
Portfolio
Turnover
Rate*** 31% 44% 14% 44% 53% 50%
Janus Venture Fund
--------------------------------------------------------------------------------------------------
For a share
outstanding
during the
six-month
period ended
April 30, 2006
(unaudited) and
through each
fiscal year
ended October 31 2006 2005 2004 2003 2002 2001
- --------------------- ------------- ------------- ------------- ------------- ------------- -------------
Net Asset Value,
Beginning of Period $ 56.82 $ 51.57 $ 47.77 $ 31.59 $ 36.99 $ 82.39
Income from
Investment
Operations:
Net investment
income/(loss) (.15) --(5) --(5) --(5) --(5) --(5)
Net gains/
(losses)
on securities
(both realized
and unrealized) 12.27 5.25 3.80 16.18 (5.40) (29.02)
Total from
Investment
Operations 12.12 5.25 3.80 16.18 (5.40) (29.02)
Less
Distributions:
Dividends (from
net investment
income)* -- -- -- -- -- --
Distributions
(from capital gains)* (2.93) -- -- -- -- (16.38)
------------- ------------- ------------- ------------- ------------- -------------
Total Distributions (2.93) -- -- -- -- (16.38)
------------- ------------- ------------- ------------- ------------- -------------
Net Asset Value,
End of Period $ 66.01 $ 56.82 $ 51.57 $ 47.77 $ 31.59 $ 36.99
Total Return** 22.17% 10.18% 7.95% 51.22% (14.60)% (40.67)%
Net Assets,
End of Period
(in thousands) $ 1,475,095 $ 1,293,150 $ 1,327,088 $ 1,392,358 $ 756,323 $ 1,009,278
Average Net
Assets for the
Period (in thousands) $ 1,391,021 $ 1,367,775 $ 1,355,755 $ 988,156 $ 992,760 $ 1,312,759
Ratio of Gross
Expenses to
Average Net
Assets*** (3)(4) 0.91% 0.87% 0.90% 0.94% 0.88% 0.87%
Ratio of Net
Expenses to
Average Net
Assets*** (3) 0.90% 0.87% 0.90% 0.93% 0.87% 0.86%
Ratio of Net
Investment
Income/(Loss)
to Average
Net Assets*** (0.49)% (0.64)% (0.74)% (0.67)% (0.73)% (0.36)%
Portfolio
Turnover Rate*** 56% 63% 61% 75% 90% 70%
*See Note 4 in Notes to Financial Statements.
**Total return not annualized for periods of less than one full year.
***Annualized for periods of less than one full year.
(1)Payment from affiliate aggregated less than $.01 on a per share basis for the
fiscal year or period ended.
(2)During the fiscal year or period ended, Janus Capital and/or Janus Services
fully reimbursed the Fund for a loss on a transaction resulting from certain
trading, pricing and/or shareholder activity errors, which otherwise would have
reduced total return by less than 0.01%.
(3)See "Explanations of Charts, Tables and Financial Statements."
(4)The effect of non-recurring costs assumed by Janus Capital (Note 2) is
included in the ratio of gross expenses to average net assets and was less than
0.01%.
(5)Net investment income/(loss) aggregated less than $.01 on a per share basis
for the fiscal year ended.
See Notes to Financial Statements.
Janus Growth Funds April 30, 2006 83
Financial Highlights(continued)
Janus Global Life Sciences Fund
-----------------------------------------------------------------------------------------------------
For a share
outstanding
during the
six-month
period ended
April 30, 2006
(unaudited)
and through
each fiscal
year ended
October 31 2006 2005 2004 2003 2002 2001
- --------------------- ------------- ------------- ------------- ------------- ------------- -------------
Net Asset Value,
Beginning of Period $ 19.37 $ 16.08 $ 14.61 $ 12.82 $ 16.96 $ 22.41
Income from
Investment
Operations:
Net investment
income/(loss) (.05) --(1) --(1) --(1) --(1) --(1)
Net gains/(losses)
on securities
(both realized
and unrealized) .91 3.29 1.47 1.79 (4.14) (5.43)
------------- ------------- ------------- ------------- ------------- -------------
Total from
Investment
Operations .86 3.29 1.47 1.79 (4.14) (5.43)
Less Distributions
and Other:
Dividends (from net
investment income)* -- -- -- -- -- (.02)
Distributions (from
capital gains)* -- -- -- -- -- --
Redemption fees --(2) --(2) --(2) --(2) N/A N/A
Payment from
affiliate -- -- --(3) -- -- --
------------- ------------- ------------- ------------- ------------- -------------
Total
Distributions
and Other -- -- -- -- -- (.02)
------------- ------------- ------------- ------------- ------------- -------------
Net Asset Value,
End of Period $ 20.23 $ 19.37 $ 16.08 $ 14.61 $ 12.82 $ 16.96
Total Return** 4.44% 20.46% 10.06%(4) 13.87% (24.35)% (24.26)%
Net Assets, End of
Period (in thousands) $ 1,112,469 $ 1,149,666 $ 1,183,496 $ 1,264,220 $ 1,389,723 $ 2,415,086
Average Net Assets
for the Period
(in thousands) $ 1,175,835 $ 1,181,741 $ 1,288,416 $ 1,296,095 $ 1,927,734 $ 2,957,777
Ratio of Gross
Expenses
to Average Net
Assets***(5)(6) 0.99% 0.97% 1.02% 0.99% 0.89% 0.93%
Ratio of Net
Expenses to
Average Net
Assets***(5) 0.98% 0.96% 1.01% 0.98% 0.88% 0.91%
Ratio of Net
Investment
Income/(Loss)
to Average
Net Assets*** (0.43)% (0.49)% (0.52)% (0.28)% (0.42)% (0.32)%
Portfolio
Turnover Rate*** 84% 77% 78% 135% 73% 84%
Janus Global Technology Fund
----------------------------------------------------------------------------------------------------
For a share
outstanding
during the
six-month
period ended
April 30, 2006
(unaudited)
and through
each fiscal
year ended
October 31 2006 2005 2004 2003 2002 2001
- ----------------------- ------------- ------------- ------------- ------------- ------------- -------------
Net Asset Value,
Beginning of Period $ 10.88 $ 9.70 $ 10.44 $ 7.41 $ 10.83 $ 27.44
Income from
Investment
Operations:
Net investment
income/(loss) (.03) .01 .02 --(1) (.01) .36
Net gains/(losses)
on securities
(both realized
and unrealized) 2.10 1.17 (.76) 3.03 (3.41) (16.64)
------------- ------------- ------------- ------------- ------------- -------------
Total from
Investment
Operations 2.07 1.18 (.74) 3.03 (3.42) (16.28)
Less Distributions
and Other:
Dividends (from net
investment income)* (.01) -- -- -- -- (.16)
Distributions (from
capital gains)* -- -- -- -- -- --
Tax return of capital* -- -- -- -- -- (.17)
Redemption fees --(2) --(2) --(2) --(2) N/A N/A
Payment from affiliate --(3) -- --(3) -- -- --
------------- ------------- ------------- ------------- ------------- -------------
Total Distributions
and Other (.01) -- -- -- -- (.33)
------------- ------------- ------------- ------------- ------------- -------------
Net Asset Value,
End of Period $ 12.94 $ 10.88 $ 9.70 $ 10.44 $ 7.41 $ 10.83
Total Return** 19.01%(7) 12.16% (7.09)%(4) 41.08% (31.67)% (59.95)%
Net Assets,
End of Period
(in thousands) $ 1,077,907 $ 993,663 $ 1,255,023 $ 1,655,731 $ 1,249,514 $ 2,275,691
Average Net
Assets for the
Period (in thousands) $ 1,073,047 $ 1,109,908 $ 1,480,508 $ 1,332,510 $ 1,906,518 $ 4,009,850
Ratio of Gross
Expenses to Average
Net Assets***(5)(6) 1.07% 1.04% 1.07% 1.07% 0.96% 0.92%
Ratio of Net Expenses
to Average Net
Assets***(5) 1.05% 1.03% 1.07% 1.06% 0.94% 0.90%
Ratio of Net Investment % % % %
Income/(Loss) to
Average Net Assets*** (0.50) 0.07% (0.37) (0.27) (0.14) 0.55%
Portfolio
Turnover Rate*** 110% 31% 24% 48% 66% 60%
*See Note 4 in Notes to Financial Statements.
**Total return not annualized for periods of less than one full year.
***Annualized for periods of less than one full year.
(1)Net investment income/(loss) aggregated less than $.01 on a per share basis
for the fiscal year or period ended.
(2)Redemption fees aggregated less than $.01 on a per share basis for the
fiscal year or period ended.
(3)Payment from affiliate aggregated less than $.01 on a per share basis for
the fiscal year or period ended.
(4)During the fiscal year ended, Janus Capital and/or Janus Services fully
reimbursed the Fund for a loss on a transaction resulting from certain trading,
pricing and/or shareholder activity errors, which otherwise would have reduced
total return by less than 0.01%.
(5)See "Explanations of Charts, Tables and Financial Statements."
(6)The effect of non-recurring costs assumed by Janus Capital (Note 2) is
included in the ratio of gross expenses to average net assets and was less than
0.01%.
(7)During the period ended, Janus Capital and/or Janus Service's fully
reimbursed the Fund for a loss on a transaction resulting from certain trading,
pricing and/or shareholder activity errors, which otherwise would have reduced
total return by 0.01%.
See Notes to Financial Statements.
84 Janus Growth Funds April 30, 2006
Notes to Schedules of Investments and
Securities Sold Short (unaudited)
Lipper Health/Biotechnology Funds that invest at least 65% of their equity portfolio in shares of companies engaged in
Funds healthcare, medicine, and biotechnology.
Lipper Large-Cap Growth Funds Funds that, by portfolio practice, invest at least 75% of their equity assets in companies
with market capitalizations (on a three-year weighted basis) greater than 300% of the
dollar-weighted median market capitalization of the middle 1,000 securities of the S&P
SuperComposite 1500 Index. Large-cap growth funds typically have an above-average
price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value,
compared to the S&P 500 (R) Index.
Lipper Mid-Cap Growth Funds Funds that, by portfolio practice, invest at least 75% of their equity assets in companies
with market capitalizations (on a three-year weighted basis) less than 300% of the
dollar-weighted median market capitalization of the middle 1,000 securities of the S&P
SuperComposite 1500 Index. Mid-cap growth funds typically have an above-average
price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value,
compared to the S&P MidCap 400 Index.
Lipper Multi-Cap Growth Funds Funds that, by portfolio practice, invest in a variety of market capitalization ranges without
concentrating 75% of their equity assets in any one market capitalization range over an
extended period of time. Multi-cap funds typically have between 25% to 75% of their
assets invested in companies with market capitalizations (on a three-year weighted basis)
above 300% of the dollar-weighted median market capitalization of the middle 1,000 securities
of the S&P SuperComposite 1500 Index. Multi-cap growth funds typically have an above-average
price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value,
compared to the S&P SuperComposite 1500 Index.
Lipper Science and Technology Funds that invest at least 65% of their equity portfolio in science and technology stocks.
Funds
Lipper Small-Cap Growth Funds Funds that, by portfolio practice, invest at least 75% of their equity assets in companies
with market capitalizations (on a three-year weighted basis) less than 250% of the
dollar-weighted median of the smallest 500 of the middle 1,000 securities of the S&P
SuperComposite 1500 Index. Small-cap growth funds typically have an above-average
price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value,
compared to the S&P SmallCap 600 Index.
Morgan Stanley Capital Is a capitalization weighted index that monitors the performance of information technology
International World Information stocks from around the world.
Technology Index(SM)
Morgan Stanley Capital Is a capitalization weighted index that monitors the performance of healthcare stocks from
International World Health Care developed market countries in North America, Europe, and the Asia/Pacific Region.
Index(SM)
Russell 1000(R) Growth Index Measures the performance of those Russell 1000 companies with higher price-to-book ratios and
higher forecasted growth values.
Russell 2000(R) Growth Index Measures the performance of those Russell 2000 companies with higher price-to-book ratios and
higher forecasted growth values.
Russell 2000(R) Index Measures the performance of the 2,000 smallest companies in the Russell 3000(R) Index.
Russell 2500(TM) Growth Index Measures the performance of those Russell 2500 companies with higher price-to-book ratios and
higher forecasted growth values.
Russell 3000(R) Growth Index Measures the performance of those Russell 3000(R) Index companies with higher price-to-book
ratios and higher forecasted growth values. The stocks in this index are also members of either
the Russell 1000 (R) Growth or the Russell 2000 (R) Growth Indices.
Russell Midcap(R) Growth Index Consists of stocks from the Russell Midcap(R) Index with a greater-than-average growth
orientation. The Russell Midcap(R) Index consists of the smallest 800 companies in the Russell
1000 (R) Index, as ranked by total market capitalization.
Janus Growth Funds April 30, 2006 85
Notes to Schedules of Investments and
Securities Sold Short (unaudited) (continued)
S&P 500(R) The Standard & Poor's Composite Index of 500 stocks is a widely recognized, unmanaged index of common stock prices.
Index
S&P MidCap An unmanaged group of 400 domestic stocks chosen for their market size, liquidity and industry group representation.
400 Index
144A Securities sold under Rule 144A of the Securities Act of 1933 are subject to legal and/or contractual restrictions
on resale and may not be publicly sold without registration under the 1933 Act.
ADR American Depositary Receipt
ETD Euro Time Deposit
GDR Global Depositary Receipt
PLC Public Limited Company
REIT Real Estate Investment Trust
U.S. Shares Securities of foreign companies trading on an American Stock Exchange
*Non-income-producing security.
**A portion of this holding has been segregated to cover margin or segregation
requirements on open futures contracts, forward currency contracts, short sales,
securities with extended settlement dates and/or option contracts.
(Y)Security is a defaulted security in Janus Global Technology Fund with
accrued interest in the amount of $1,268,000 that was written-off December 10,
2001. A principal payment was received by the Fund on July 13, 2005. It is
anticipated that sometime during the third quarter of 2006 a second principal
payment will be received by the Fund.
(B)Security is illiquid.
#Loaned security; a portion or all of the security is on loan as of April 30,
2006.
+The security is purchased with the cash collateral received from Securities on
Loan (Note 1).
oSecurity is a defaulted security.
(O)SCHEDULE OF FAIR VALUED SECURITIES (AS OF APRIL 30, 2006)
Value as a %
Value of Net Assets
--------------- ---------------
Janus Venture Fund
Candescent Technologies Corp. - Series E $ -- 0.0%
DrugMax, Inc. -- 0.0%
Genius Products, Inc. 5,775,525 0.4%
Genius Products, Inc. 529,245 0.0%
Infocrossing, Inc. - expires 5/10/07 2,404,853 0.2%
OneTravel Holdings, Inc. -- 0.0%
Ronco Fi-Tek, Inc. 5,100,000 0.3%
--------------- ---------------
$ 13,809,623 0.9%
Janus Global Life Sciences Fund
Cougar Technology, Inc. $ 2,904,499 0.3%
Fibrogen, Inc. 9,106,238 0.8%
--------------- ---------------
$ 12,010,737 1.1%
Janus Global Technology Fund
Candescent Technologies Corp., 8.00% convertible senior
subordinated debentures due 5/1/03 (144A) $ -- 0.0%
Securities are valued at "fair value" pursuant to procedures adopted by the
Funds' Trustees. The Schedule of Fair Valued Securities does not include
international activities fair valued pursuant to a systematic fair valuation
model.
86 Janus Growth Funds April 30, 2006
(S) SCHEDULE OF RESTRICTED AND ILLIQUID SECURITIES
Acquisition Acquisition Value as a %
Date Cost Value of Net Assets
------------------ --------------- --------------- ---------------
Janus Enterprise Fund
Morgan Stanley Co.,
convertible, (Celgene Corp.), 0% (144A) 2/21/06 $ 13,162,450 $ 15,166,903 0.8%
Janus Mercury Fund
Morgan Stanley Co.,
convertible, (Celgene Corp.), 0% (144A) 2/21/06 $ 30,050,300 $ 34,626,531 0.9%
Janus Orion Fund
Bajaj Hindusthan,
Ltd. (GDR) (144A) 1/27/06 $ 2,722,636 $ 3,854,676 0.4%
Janus Venture Fund
DrugMax, Inc.(O) 9/23/05 $ 381,250 $ -- 0.0%
Genius Products, Inc.(O) 12/5/05 6,312,750 5,775,525 0.4%
Genius Products, Inc.(O) 12/5/05 1,083,000 529,245 0.0%
OneTravel Holdings, Inc.(O) 4/15/05 -- -- 0.0%
Ronco Fi-Tek, Inc.(O) 6/24/05 6,000,000 5,100,000 0.3%
--------------- --------------- ---------------
$ 13,777,000 $ 11,404,770 0.7%
Janus Global Life Sciences Fund
Cougar Technology, Inc.(O) 3/31/06 $ 2,904,499 $ 2,904,499 0.3%
Fibrogen, Inc.(O) 12/28/04 - 11/8/05 5,786,786 9,106,238 0.8%
--------------- --------------- ---------------
$ 8,691,285 $ 12,010,737 1.1%
Janus Global Technology Fund
Candescent Technologies Corp., 8.00%
convertible senior subordinated debentures
due 5/1/03 (144A)(0) 3/6/00 - 2/23/01 $ 2,614,147 $ -- 0.0%
The Funds have registration rights for certain restricted securities held as of
April 30, 2006. The issuer incurs all registration costs.
Janus Growth Funds April 30, 2006 87
Notes to Schedules of Investments and
Securities Sold Short (unaudited) (continued)
L. The Investment Company Act of 1940 defines affiliates as those companies in
which a fund holds 5% or more of the outstanding voting securities at any time
during the period ended April 30, 2006.
Purchases Sales Realized Dividend Value
Shares Cost Shares Cost Gain/(Loss) Income at 4/30/06
------------ ------------ ------------ ------------ ------------ ------------ ------------
Janus Venture Fund
Axesstel, Inc. -- $ -- 2,128,965 $ 8,515,860 $ (6,726,042) $ -- $ --
Century Casinos,
Inc.(1) -- -- -- -- -- -- 15,449,000
DrugMax, Inc. -- -- -- -- -- -- 3,965,000
Genius Products, Inc. -- -- -- -- -- -- 5,775,525
Hythiam, Inc. 911,420 4,329,245 -- -- -- -- 13,851,413
Infocrossing, Inc. 170,270 1,248,391 -- -- -- -- 26,920,897
Intermap
Technologies, Ltd. -- -- -- -- -- -- 12,951,669
LivePerson, Inc. 1,930 12,560 -- -- -- -- 21,159,772
Omnicell, Inc. 562,280 6,162,534 -- -- -- -- 25,679,348
OneTravel
Holdings, Inc. -- -- -- -- -- -- 630,000
Ronco Fi-Tek, Inc. -- -- -- -- -- -- 5,100,000
SeraCare Life
Sciences, Inc. 92,760 923,389 935,380 11,272,767 (10,678,539) -- --
TALX Corp.(2) -- -- 394,603 7,652,913 10,326,610 96,005 31,597,520
TechTeam Global, Inc. -- -- 644,992 8,326,760 (1,574,281) -- --
TransAct
Technologies, Inc. -- -- 799,760 10,407,198 (3,037,746) -- --
Ultimate
Software Group, Inc. -- -- 125,000 1,375,000 1,868,590 -- 45,386,749
ValueVision
Media, Inc. -- -- -- -- -- -- 21,311,650
Workstream, Inc.
(U.S. Shares) -- -- -- -- -- -- 6,692,155
------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 12,676,119 $ 47,550,498 $ (9,821,408) $ 96,005 $236,470,698
(1)Includes 1 for 1 share conversion 11/14/05
(2)Adjusted for 3 for 2 stock split 1/18/06
Aggregate collateral segregated to cover margin or segregation requirements on
open futures contracts, forward currency contracts, options contracts, short
sales and/or securities with extended settlement dates as of April 30, 2006 are
noted below.
Fund Aggregate Value
- ------------------------------- ---------------
Growth
Janus Fund $ 980,397,580
Janus Mercury Fund 415,581,452
Janus Olympus Fund 162,878,399
Specialty Growth
Janus Global Life Sciences Fund 116,384,462
Janus Global Technology Fund 243,544,483
Variable rate notes are notes for which the interest rate is based on an index
or market interest rates and is subject to change. Rates in the security
description are as of April 30, 2006.
Repurchase Agreements held by a Fund are fully collateralized, and such
collateral is in the possession of the Fund's custodian or subcustodian. The
collateral is evaluated daily to ensure its market value equals or exceeds the
current market value of the repurchase agreements, including accrued interest.
In the event of default on the obligation to repurchase, the Fund has the right
to liquidate the collateral and apply the proceeds in satisfaction of the
obligation. In the event of default or bankruptcy by the other party to the
agreement, realization and/or retention of the collateral or proceeds may be
subject to legal proceedings.
88 Janus Growth Funds April 30, 2006
Notes to Financial Statements (unaudited)
The following section describes the organization and significant accounting
policies and provides more detailed information about the schedules and tables
that appear throughout this report. In addition, the Notes to Financial
Statements explain the methods used in preparing and presenting this report.
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Janus Fund, Janus Enterprise Fund, Janus Mercury Fund, Janus Olympus Fund, Janus
Orion Fund, Janus Triton Fund, Janus Twenty Fund, Janus Venture Fund, Janus
Global Life Sciences Fund and Janus Global Technology Fund (collectively the
"Funds" and individually a "Fund") are series funds. The Funds are part of Janus
Investment Fund (the "Trust"), which was 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. The Trust has
thirty-two funds. Each of the Funds in this report is classified as diversified
as defined in the 1940 Act, with the exception of Janus Orion Fund and Janus
Twenty Fund, which are classified as nondiversified. The Funds are no-load
investments.
The following accounting policies have been consistently followed by the Funds
and are in conformity with accounting principles generally accepted in the
United States of America in the investment company industry.
INVESTMENT VALUATION
Securities are valued at the last sales price or the official closing price for
securities traded on a principal securities exchange (U.S. or foreign) and on
the NASDAQ National Market. Securities traded on over-the-counter markets and
listed securities for which no sales are reported are valued at the latest bid
price (or yield equivalent thereof) obtained from one or more dealers
transacting in a market for such securities or by a pricing service approved by
the Funds' Trustees. Short-term securities with maturities of 60 days or less
may be valued at amortized cost, which approximates market value. Debt
securities with a remaining maturity of greater than 60 days are valued in
accordance with the evaluated bid price supplied by the pricing service. The
evaluated bid price supplied by the pricing service is an evaluation that
reflects such factors as security prices, yields, maturities and ratings.
Foreign securities and currencies are converted to U.S. dollars using the
applicable exchange rate in effect as of the daily close of the New York Stock
Exchange ("NYSE"). When market quotations are not readily available or deemed
unreliable, or events or circumstances that may affect the value of portfolio
securities held by the Funds are identified between the closing of their
principal markets and the time the net asset value ("NAV") is determined,
securities may be valued at fair value as determined in good faith under
procedures established by and under the supervision of the Funds' Trustees. The
Funds may use a systematic fair valuation model provided by an independent third
party to value international equity securities in order to adjust for stale
pricing, which may occur between the close of certain foreign exchanges and the
NYSE.
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 Trust is
informed of the dividend if such information is obtained subsequent to the
ex-dividend date and may be subject to withholding taxes in these 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.
EXPENSES
Each Fund bears expenses incurred specifically on its behalf as well as a
portion of general expenses, which may be allocated pro rata to each of the
funds in the Trust.
SECURITIES LENDING
Under procedures adopted by the Trustees, the Funds may lend securities to
qualified parties (typically brokers or other financial institutions) who need
to borrow securities in order to complete certain transactions such as covering
short sales, avoiding failures to deliver securities or completing arbitrage
activities. The Funds may seek to earn additional income through securities
lending. There is the risk of delay in recovering a loaned security or the risk
of loss in collateral rights if the borrower fails financially. In addition,
Janus Capital Management LLC ("Janus Capital") makes efforts to balance the
benefits and risks from granting such loans.
The Funds do not have the right to vote on securities while they are being lent;
however, the Funds may attempt to call back the loan and vote the proxy if time
permits. All loans will be continuously secured by collateral which may consist
of cash, U.S. Government securities, domestic and foreign short-term debt
instruments, letters of credit, money market mutual funds or other money market
accounts, or such other collateral permitted by the Securities and Exchange
Commission ("SEC"). Cash collateral may be invested in affiliated money market
funds or other accounts advised by Janus Capital to the extent consistent with
exemptive relief obtained from the SEC. Cash collateral may also be invested in
unaffiliated money market funds or other accounts.
State Street Bank and Trust Company (the "Lending Agent") may also invest the
cash collateral in the State Street Navigator Securities Lending Prime Portfolio
or investments in unaffiliated money market funds or accounts, mutually agreed
to by the Funds and the Lending Agent, that comply with Rule 2a-7 of the 1940
Act relating to money market funds.
Janus Growth Funds April 30, 2006 89
Notes to Financial Statements (unaudited) (continued)
As of April 30, 2006, the following Funds had on loan securities valued as
indicated:
Value at
Fund April 30, 2006
- ------------------------------- ---------------
Growth
Janus Fund $ 505,930,469
Janus Enterprise Fund 223,640,930
Janus Mercury Fund 381,881,851
Janus Olympus Fund 307,516,553
Janus Orion Fund 243,484,769
Janus Twenty Fund 347,802,617
Janus Venture Fund 355,947,289
Specialty Growth
Janus Global Life Sciences Fund 168,908,989
Janus Global Technology Fund 74,889,311
As of April 30, 2006, the following Funds received cash collateral for
securities lending activity as indicated:
Cash Collateral at
Fund April 30, 2006
- ------------------------------- ------------------
Growth
Janus Fund $ 522,862,639
Janus Enterprise Fund 229,175,404
Janus Mercury Fund 394,234,533
Janus Olympus Fund 316,899,102
Janus Orion Fund 250,086,433
Janus Twenty Fund 355,131,715
Janus Venture Fund 364,896,141
Specialty Growth
Janus Global Life Sciences Fund 174,002,620
Janus Global Technology Fund 76,982,279
As of April 30, 2006, all cash collateral received was invested in the State
Street Navigator Securities Lending Prime Portfolio, except for Janus Mercury
Fund, which also invested $5,354,957 in foreign bonds.
The value of the collateral must be at least 102% of the market value of the
loaned securities that are denominated in U.S. dollars and 105% of the market
value of the loaned securities that are not denominated in U.S. dollars. Loaned
securities and related collateral are marked-to-market each business day based
upon the market value of the respective securities at the close of business,
employing the most recent available pricing information. Collateral levels are
then adjusted based upon this mark-to-market evaluation.
The borrower pays fees at the Funds' direction to its Lending Agent. The Lending
Agent may retain a portion of the interest earned. The cash collateral invested
by the Lending Agent is disclosed in the Schedule of Investments. The lending
fees and the Funds' portion of the interest income earned on cash collateral are
included on the Statement of Operations (if applicable).
During the six-month period ended April 30, 2006, there were no securities
lending arrangements for Janus Triton Fund.
INTERFUND LENDING
Pursuant to an exemptive order received from the SEC, each of the Funds may be
party to an interfund lending agreement between the Fund and other Janus Capital
sponsored mutual funds, which permit it to borrow or lend cash at a rate
beneficial to both the borrowing and lending funds. Outstanding borrowings from
all sources totaling 10% or more of a borrowing Fund's total assets must be
collateralized at 102% of the outstanding principal value of the loan; loans of
less than 10% may be unsecured. During the six-month period ended April 30,
2006, there were no outstanding borrowing or lending arrangements for the Funds.
SHORT SALES
All Funds may engage in "short sales against the box." Short sales against the
box involve selling either a security that the Funds own, or a security
equivalent in kind and amount to the security sold short that the Funds have the
right to obtain, for delivery at a specified date in the future. The Funds may
enter into a short sale against the box in anticipation of an expected decline
in the market price of that security. If the value of the securities sold short
increases prior to the scheduled delivery date, the Funds lose the opportunity
to participate in the gain.
All Funds may also engage in "naked" short sales. Naked short sales involve a
Fund selling a security it does not own to a purchaser at a specified price. To
complete the transaction, a Fund must borrow the security to deliver it to the
purchaser and buy that same security in the market to return it to the lender.
Although the potential for gain is limited to the difference between the price
at which a Fund sold the security short and the cost of borrowing the security,
its potential for loss could be unlimited because there is no limit to the
replacement cost of the borrowed security. There is no assurance that a Fund
will be able to close out a short position at any particular time. A gain or a
loss will be recognized upon termination of a short sale. There is no limit on
the size of any loss that a Fund may recognize upon termination of a short sale.
Short sales held by the Funds are fully collateralized by other securities,
which are denoted in the accompanying Schedule of Investments (if applicable).
FORWARD CURRENCY TRANSACTIONS
The Funds may enter into forward currency contracts in order to reduce their
exposure to changes in foreign currency exchange rates on their foreign
portfolio holdings and to lock in the U.S. dollar cost of firm purchase and sale
commitments for securities denominated in or exposed to foreign currencies. A
forward currency exchange contract is a commitment to purchase or sell a foreign
currency at a future date at a negotiated rate. The gain or loss arising from
the difference between the U.S. dollar cost of the original contract and the
value of the foreign currency in U.S. dollars upon closing a contract is
included in "Net realized gain/(loss) from foreign currency transactions" on the
Statement of Operations (if applicable).
90 Janus Growth Funds April 30, 2006
Forward currency contracts held by the Funds are fully collateralized by other
securities, which are denoted in the accompanying Schedule of Investments (if
applicable). The collateral is evaluated daily to ensure its market value equals
or exceeds the current market value of the corresponding forward currency
contracts.
FOREIGN CURRENCY TRANSLATIONS
The Funds do not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held at the date of the
financial statements. Net unrealized appreciation or depreciation on investments
and foreign currency translation arise from changes in the value of assets and
liabilities, including investments in securities 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 security transactions and income.
Foreign-denominated assets and forward currency contracts may involve more risks
than domestic transactions, including currency risk, political and economic
risk, regulatory risk and market risk. Risks may arise from the potential
inability of a counterparty to meet the terms of a contract and from
unanticipated movements in the value of foreign currencies relative to the U.S.
dollar.
OPTIONS CONTRACTS
The Funds may purchase or write put and call options on futures contracts or
foreign currencies in a manner similar to that in which futures or forward
contracts on foreign currencies will be utilized, and on portfolio securities
for hedging purposes or as a substitute for an investment. The Funds generally
invest in options to hedge against adverse movements in the value of portfolio
holdings.
When an option is written, the Funds receive a premium and become obligated to
sell or purchase the underlying security at a fixed price, upon exercise of the
option. In writing an option, the Funds bear the market risk of an unfavorable
change in the price of the security underlying the written option. Exercise of
an option written by the Funds could result in the Funds buying or selling a
security at a price different from the current market value.
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 is adjusted by the amount of premium received or
paid.
Holdings designated to cover outstanding written options are noted in the
Schedule of Investments (if applicable). Options written are reported as a
liability on the Statement of Assets and Liabilities (if applicable). Gains and
losses are reported on the Statement of Operations (if applicable). Janus Global
Life Sciences Fund recognized realized gains for written options of $37,700
during the six-month period ended April 30, 2006.
The risk in writing a call option is that the Funds give up the opportunity for
profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Funds may incur a loss
if the market price of the security decreases and the option is exercised. The
risk in buying an option is that the Funds pay a premium whether or not the
option is exercised. The use of such instruments may involve certain additional
risks as a result of unanticipated movement 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 Funds' hedging
strategy unsuccessful. In addition, there can be no assurance that a liquid
secondary market will exist for any option purchased or sold. There is no limit
to the loss that the Funds may recognize due to written call options.
Written option activity for the six-month period ended April 30, 2006 was as
follows:
Number of Premiums
Put Options Options Received
- --------------------------------------- ------------ ------------
Janus Global Life Sciences Fund
Options outstanding at October 31, 2005 -- $ --
Options written 290 58,580
Options closed (290) (58,580)
Options expired -- --
Options exercised -- --
Options outstanding at April 30, 2006 -- --
WHEN-ISSUED SECURITIES
The Funds may purchase or sell securities on a when-issued or forward commitment
basis. The price of the underlying securities and date when the securities will
be delivered and paid for are fixed at the time the transaction is negotiated.
Losses may arise due to changes in the market value of the securities or from
the inability of counterparties to meet the terms of the contract. In connection
with such purchases, the Funds may hold liquid assets as collateral with the
Funds' custodian sufficient to cover the purchase price. As of April 30, 2006,
there were no Funds invested in when-issued securities.
EQUITY-LINKED STRUCTURED NOTES
The Funds may invest in equity-linked structured notes. Equity-linked structured
notes are debt securities which combine the characteristics of common stock and
the sale of an option. The return component is based upon the performance of a
single equity security, a basket of equity securities, or an equity index and
the sale of an option which is recognized as income. Equity-linked structured
notes are typically offered in limited transactions to financial institutions by
investment banks, examples of which include performance equity-linked redemption
quarterly pay securities ("PERQS"), yield-enhanced securities ("YES"), and yield
enhanced equity-linked debt securities ("YEELDS"). There is no guaranteed return
of principal with these securities. The appreciation
Janus Growth Funds April 30, 2006 91
Notes to Financial Statements (unaudited) (continued)
potential of these securities may be limited by a maximum payment or call right
and can be influenced by many unpredictable factors.
INITIAL PUBLIC OFFERINGS
The Funds may invest in initial public offerings ("IPOs"). IPOs and other
investment techniques may have a magnified performance impact on a fund with a
small asset base. The Funds may not experience similar performance as their
assets grow.
RESTRICTED SECURITY TRANSACTIONS
Restricted securities held by a Fund may not be sold except in exempt
transactions or in a public offering registered under the Securities Act of
1933. The risk of investing in such securities is generally greater than the
risk of investing in the securities of widely held, publicly traded companies.
Lack of a secondary market and resale restrictions may result in the inability
of a Fund to sell a security at a fair price and may substantially delay the
sale of the security. In addition, these securities may exhibit greater price
volatility than securities for which secondary markets exist.
DIVIDEND DISTRIBUTIONS
Each Fund generally declares and distributes dividends of net investment income
and capital gains (if any) annually. The majority of dividends and capital gains
distributions from a Fund will be automatically reinvested into additional
shares of that Fund, based on the discretion of the shareholder.
ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amount of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of income and expenses during
the reporting period. Actual results could differ from those estimates.
FEDERAL INCOME TAXES
No provision for income taxes is included in the accompanying financial
statements, as the Funds intend to distribute to shareholders all taxable
investment income and realized gains and otherwise comply with Subchapter M of
the Internal Revenue Code applicable to regulated investment companies.
2. INVESTMENT ADVISORY AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
Each Fund pays a monthly advisory fee to Janus Capital based upon average daily
net assets and calculated at the annual rate of 0.64%.
Effective February 1, 2006 for Janus Mercury Fund, the investment advisory fee
rates changed from a fixed rate to a rate that adjusts upward or downward based
upon the Fund's performance relative to a selected benchmark index. This change
does not impact the current investment advisory fee until one year after the
effective date when the performance adjustment takes effect.
Until at least March 1, 2007, provided that Janus Capital remains investment
adviser to the Funds, Janus Capital has agreed to reimburse the Janus Triton
Fund by the amount, if any, that such Fund's normal operating expenses in any
fiscal year, including the investment advisory fee, but excluding the brokerage
commissions, interest, taxes and extraordinary expenses, exceed the annual rate
of 1.25%. If applicable, amounts reimbursed to the Fund by Janus Capital are
disclosed as Excess Expense Reimbursement on the Statement of Operations.
Each of the Funds pays Janus Services LLC ("Janus Services"), a wholly-owned
subsidiary of Janus Capital, an asset-weighted average annual fee based on the
proportion of each Fund's total net assets sold directly and the proportion of
each Fund's net assets sold through financial intermediaries. The applicable fee
rates are 0.16% of net assets on the proportion of assets sold directly and
0.21% on the proportion of assets sold through intermediaries. In addition,
Janus Services receives $4.00 per open shareholder account (excluding Janus
Twenty Fund and Janus Venture Fund) for transfer agent services.
During the six-month period ended April 30, 2006, Janus Services reimbursed the
following Funds as a result of dilutions caused by incorrectly processed
shareholder activity as indicated in the table below.
Funds
- ---------------------------------------------
Growth
Janus Fund $ 47,274
Janus Olympus Fund 954
Janus Twenty Fund 16,870
Special Growth
Janus Global Technology Fund 3,607
For the six-month period ended April 30, 2006, Janus Capital assumed $14,642 of
legal, consulting and Trustee costs and fees incurred by the funds in Janus
Investment Fund, Janus Aspen Series and Janus Adviser Series (the "Portfolios")
in connection with the regulatory and civil litigation matters discussed in Note
6. These non-recurring costs were allocated to all Portfolios, based upon the
Portfolios' respective net assets as of July 31, 2004. No fees were allocated to
Janus Research Fund, Janus Triton Fund and the Janus Smart Portfolios as the
funds commenced operations after July 31, 2004. Additionally, all future
non-recurring costs will be allocated based upon the Portfolios' respective net
assets on July 31, 2004. These non-recurring costs and offsetting waivers are
shown on the Statement of Operations.
The Board of Trustees has adopted a deferred compensation plan (the "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 Funds. 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 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 credited to the account. Trustees are allowed to change
their designation of mutual funds from time to time. Amounts will be deferred
until distributed in accordance to the Plan. No deferred fees were paid to any
Trustee under the Plan during the six-month period ended April 30, 2006.
92 Janus Growth Funds April 30, 2006
Certain officers of the Funds may also be officers and/or directors of Janus
Capital. Such officers receive no compensation from the Funds, except for the
Funds' Chief Compliance Officer. Effective January 1, 2006, the Funds began
reimbursing the adviser for a portion of the compensation paid to the Chief
Compliance Officer of the Funds. $59,577 of total compensation was paid by the
funds of the Trust. The Funds' portion is reported as part of "Other Expenses"
on the Statement of Operations.
The Funds' expenses may be reduced by expense offsets from an unaffiliated
custodian and/or transfer agent. Such credits or offsets are included in Expense
and Fee Offsets on the Statement of Operations. The transfer agent fee offsets
received during the period reduce Transfer Agent Fees and Expenses. Custodian
offsets received reduce Custodian Fees. The Funds could have employed the assets
used by the custodian and/or transfer agent to produce income if they had not
entered into an expense offset arrangement.
A 2.00% redemption fee may be imposed on shares of Janus Global Life Sciences
Fund and Janus Global Technology Fund held for three months or less. This fee is
paid to the Funds rather than Janus Capital, and is designed to deter excessive
short-term trading and to offset the brokerage commissions, market impact, and
other costs associated with changes in the Funds' asset levels and cash flow due
to short-term money movements in and out of the Funds. The redemption fee is
accounted for as an addition to Paid-in Capital. Total redemption fees received
by Janus Global Life Sciences Fund and Janus Global Technology Fund were $34,817
and $53,668, respectively, for the six-month period ended April 30, 2006.
The Funds may invest in money market funds, including funds managed by Janus
Capital. During the six-month period ended April 30, 2006, the following Funds
recorded distributions from affiliated investment companies as affiliated
dividend income, and had the following affiliated purchases and sales:
Purchases Sales Dividend Value
Shares/Cost Shares/Cost Income at 4/30/06
--------------- --------------- --------------- ---------------
Janus Government Money Market Fund
Janus Mercury Fund $ 40,000,000 $ 40,000,000 $ 42,970 $ --
Janus Twenty Fund 290,000,000 90,000,000 812,816 200,000,000
--------------- --------------- --------------- ---------------
$ 330,000,000 $ 130,000,000 $ 855,786 $ 200,000,000
Janus Institutional Cash Reserves Fund
Janus Fund $ 625,000,000 $ 620,000,000 $ 2,988,404 $ 165,000,000
Janus Enterprise Fund 40,000,000 40,000,000 85,742 --
Janus Mercury Fund 285,000,000 205,000,000 197,059 80,000,000
Janus Olympus Fund 50,000,000 -- 25,932 50,000,000
Janus Orion Fund 50,000,000 50,000,000 79,918 --
Janus Twenty Fund 310,000,000 25,000,000 7,533,225 485,000,000
--------------- --------------- --------------- ---------------
$ 1,360,000,000 $ 940,000,000 $ 10,910,280 $ 780,000,000
Janus Money Market Fund
Janus Fund $ 345,000,000 $ 420,000,000 $ 845,792 $ 25,000,000
Janus Mercury Fund 200,000,000 200,000,000 489,495 --
Janus Twenty Fund 850,000,000 425,000,000 4,506,308 475,000,000
--------------- --------------- --------------- ---------------
$ 1,395,000,000 $ 1,045,000,000 $ 5,841,595 $ 500,000,000
3. PURCHASES AND SALES OF INVESTMENT SECURITIES
For the six-month period ended April 30, 2006, the aggregate cost of purchases
and proceeds from sales of investment securities (excluding short-term
securities and options) were as follows:
Purchase of Long- Proceeds from Sales
Purchase of Proceeds from Sales Term U.S. Government of Long-Term U.S.
Fund Securities of Securities Obligations Government Obligations
- ------------------------------- ---------------------- ---------------------- ---------------------- ----------------------
Growth
Janus Fund $ 6,002,248,571 $ 6,005,476,689 $ -- $ --
Janus Enterprise Fund 389,076,524 448,203,962 -- --
Janus Mercury Fund 3,926,916,069 4,764,826,802 -- --
Janus Olympus Fund 1,126,738,823 1,198,009,293 -- --
Janus Orion Fund 432,782,648 227,100,902 -- --
Janus Triton Fund 181,318,581 87,018,400 -- --
Janus Twenty Fund 1,312,845,778 2,471,691,294 -- --
Janus Venture Fund 383,839,508 482,334,685 -- --
Specialty Growth
Janus Global Life Sciences Fund 482,728,209 567,324,791 -- --
Janus Global Technology Fund 564,591,921 675,069,940 -- --
Janus Growth Funds April 30, 2006 93
Notes to Financial Statements (unaudited) (continued)
4. FEDERAL INCOME TAX
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.
The Funds have elected to treat gains and losses on forward foreign currency
contracts as capital gains and losses. Other foreign currency gains and losses
on debt instruments are treated as ordinary income for federal income tax
purposes pursuant to Section 988 of the Internal Revenue Code.
The aggregate cost of investments and the composition of unrealized appreciation
and depreciation of investment securities for federal income tax purposes as of
April 30, 2006 are also noted below.
Unrealized appreciation and unrealized depreciation in the table below exclude
appreciation/depreciation on foreign currency translations. The primary
difference between book and tax appreciation or depreciation of investments is
wash sale loss deferrals.
Net Tax
Federal Unrealized Unrealized Appreciation/
Fund Tax Cost Appreciation (Depreciation) (Depreciation)
- ------------------------------- -------------- -------------- -------------- --------------
Growth
Janus Fund $9,986,114,406 $2,266,219,618 $ (138,680,425) $2,127,539,193
Janus Enterprise Fund 1,471,902,239 677,581,263 (25,526,663) 652,054,600
Janus Mercury Fund 3,992,672,519 506,388,474 (99,083,441) 407,305,033
Janus Olympus Fund 2,195,856,693 552,099,156 (27,784,635) 524,314,521
Janus Orion Fund 1,075,813,195 279,033,045 (16,736,838) 262,296,207
Janus Triton Fund 151,608,743 17,306,762 (3,493,239) 13,813,523
Janus Twenty Fund 7,330,756,041 2,681,929,402 (18,455,513) 2,663,473,889
Janus Venture Fund 1,375,566,249 520,366,251 (53,445,333) 466,920,918
Specialty Growth
Janus Global Life Sciences Fund 1,046,239,534 257,306,772 (30,090,627) 227,216,145
Janus Global Technology Fund 916,597,277 284,030,559 (25,915,485) 258,115,074
Net capital loss carryovers as of October 31, 2005 are indicated in the table
below. These losses may be available to offset future realized capital gains and
thereby reduce future taxable gains distributions. The table below shows the
expiration dates of the carryovers.
Capital Loss Carryover Expiration Schedule
For the fiscal year ended October 31, 2005
Accumulated
Fund October 31, 2007 October 31, 2008 October 31, 2009 October 31, 2010 October 31, 2011 Capital Losses
- ------------------ ---------------- ---------------- ---------------- ---------------- ---------------- ----------------
Growth
Janus Fund(1) $ -- $ (27,832,088) $ (3,409,665,900) $ (2,692,706,418) $ (569,521,625) $ (6,699,726,031)
Janus
Enterprise
Fund(1) (2,880,396) (220,932,903) (2,924,501,200) (1,180,687,781) (35,756,979) (4,364,759,259)
Janus Mercury
Fund -- -- (3,254,153,236) (2,677,021,633) (222,598,721) (6,153,773,590)
Janus Olympus
Fund(1) -- (3,298,969) (1,147,259,588) (533,548,088) -- (1,684,106,645)
Janus Orion Fund -- -- (480,697,899) (67,772,191) -- (548,470,090)
Janus Triton
Fund -- -- -- -- -- --
Janus Twenty
Fund -- -- (2,514,552,821) (117,584,500) (643,606,306) (3,275,743,627)
Janus Venture
Fund(1) -- -- (50,323,147) (12,580,788) -- (62,903,935)
Specialty Growth
Janus Global
Life Sciences Fund -- (109,162,517) (451,314,670) (251,753,591) (103,237,607) (915,468,385)
Janus Global
Technology Fund -- (6,230,420) (1,827,246,526) (857,178,929) (83,082,507) (2,773,738,382)
(1) Capital loss carryovers subject to annual limitations.
94 Janus Growth Funds April 30, 2006
During the fiscal year ended October 31, 2005, the following capital loss
carryovers were utilized by the Funds as indicated in the table below.
Capital Carryover Loss
Fund Utilized
- ------------------------------- ----------------------
Growth
Janus Fund $ 2,439,165,545
Janus Enterprise Fund 178,030,460
Janus Mercury Fund 337,995,565
Janus Olympus Fund 299,430,515
Janus Orion Fund 65,588,058
Janus Twenty Fund 1,463,811,386
Janus Venture Fund 52,004,445
Specialty Growth
Janus Global Life Sciences Fund 170,843,244
Janus Global Technology Fund 97,986,731
5. CAPITAL SHARE TRANSACTIONS
For the six-month
period ended
April 30, 2006
(unaudited) and
the fiscal Janus Janus Janus
year ended Janus Enterprise Mercury Olympus
October 31, 2005 Fund Fund Fund Fund
(all numbers ------------------------ ------------------------ ------------------------ ------------------------
in thousands) 2006 2005 2006 2005 2006 2005 2006 2005
- ------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Transactions in
Fund Shares
Shares sold 31,817 15,753 3,442 6,111 8,253 33,707 4,050 3,301
Reinvested
distributions 300 -- -- -- 513 289 19 --
Shares repurchased (57,269) (145,132) (4,880) (12,764) (42,266) (60,613) (6,007) (20,158)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Increase/
(Decrease) in
Capital Share
Transactions (25,152) (129,379) (1,438) (6,653) (33,500) (26,617) (1,938) (16,857)
Shares Outstanding,
Beginning of Period 455,877 585,256 43,147 49,800 202,882 229,499 72,891 89,748
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Shares Outstanding,
End of Period 430,725 455,877 41,709 43,147 169,382 202,882 70,953 72,891
For the six-month
period ended
April 30, 2006
(unaudited) and
the fiscal
year or Janus Janus Janus Janus
period ended Orion Triton Twenty Venture
October 31, 2005 Fund Fund Fund Fund
(all numbers in ------------------------ ------------------------ ------------------------ ------------------------
thousands) 2006 2005 2006 2005(1) 2006 2005 2006 2005
- ------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Transactions in
Fund Shares
Shares sold 35,447 22,671 9,686 4,486 4,666 12,470 273 653
Reinvested
distributions 712 -- 18 -- 399 59 1,108 --
Shares repurchased (10,726) (18,685) (1,126) (1,015) (15,907) (38,601) (1,795) (3,628)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net Increase/
(Decrease) in
Capital Share
Transactions 25,433 3,986 8,578 3,471 (10,842) (26,072) (414) (2,975)
Shares Outstanding,
Beginning of Period 88,687 84,701 3,471 -- 201,813 227,885 22,760 25,735
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Shares Outstanding,
End of Period 114,120 88,687 12,049 3,471 190,971 201,813 22,346 22,760
Janus Janus
For the six-month period ended Global Life Sciences Global Technology
April 30, 2006 (unaudited) and the Fund Fund
fiscal year ended October 31, 2005 ---------------------- ----------------------
(all numbers in thousands) 2006 2005 2006 2005
- ----------------------------------------------------- -------- -------- -------- --------
Transactions in Fund Shares
Shares sold 2,030 2,837 3,293 4,449
Reinvested distributions -- -- 59 --
Shares repurchased (6,395) (17,065) (11,332) (42,493)
------- -------- -------- --------
Net Increase/(Decrease) in Capital Share Transactions (4,365) (14,228) (7,980) (38,044)
Shares Outstanding, Beginning of Period 59,368 73,596 91,292 129,336
------- -------- -------- --------
Shares Outstanding, End of Period 55,003 59,368 83,312 91,292
(1) Period from February 25, 2005 (inception date) through October 31, 2005.
Janus Growth Funds April 30, 2006 95
Notes to Financial Statements (unaudited) (continued)
6. PENDING LEGAL MATTERS
In the fall of 2003, the Securities and Exchange Commission ("SEC"), the Office
of the New York State Attorney General ("NYAG"), the Colorado Attorney General
("COAG"), and the Colorado Division of Securities ("CDS") announced that they
were investigating alleged frequent trading practices in the mutual fund
industry. On August 18, 2004, Janus Capital announced that it had reached final
settlements with the SEC, the NYAG, the COAG, and the CDS related to such
regulators' investigations into Janus Capital's frequent trading arrangements.
A number of civil lawsuits were brought against Janus Capital and certain of its
affiliates, the Janus funds, and related entities and individuals based on
allegations similar to those announced by the above regulators and were filed in
several state and federal jurisdictions. Such lawsuits alleged a variety of
theories for recovery including, but not limited to, the federal securities
laws, other federal statutes (including ERISA), and various common law
doctrines. The Judicial Panel on Multidistrict Litigation transferred these
actions to the U.S. District Court for the District of Maryland (the "Court")
for coordinated proceedings. On September 29, 2004, five consolidated amended
complaints were filed in that Court that generally include: (i) claims by a
putative class of investors in certain Janus funds asserting claims on behalf of
the investor class; (ii) derivative claims by investors in certain Janus funds
ostensibly on behalf of such funds; (iii) claims on behalf of participants in
the Janus 401(k) plan; (iv) claims brought on behalf of shareholders of Janus
Capital Group Inc. ("JCGI") on a derivative basis against the Board of Directors
of JCGI; and (v) claims by a putative class of shareholders of JCGI asserting
claims on behalf of the shareholders. Each of the five complaints initially
named JCGI and/or Janus Capital as a defendant. In addition, the following were
also named as defendants in one or more of the actions: Janus Investment Fund
("JIF"), Janus Aspen Series ("JAS"), Janus Adviser Series ("JAD"), Janus
Distributors LLC, Enhanced Investment Technologies, LLC ("INTECH"), Bay Isle
Financial LLC ("Bay Isle"), Perkins, Wolf, McDonnell and Company, LLC
("Perkins"), the Advisory Committee of the Janus 401(k) plan, and the current or
former directors of JCGI.
On August 25, 2005, the Court entered orders dismissing most of the claims
asserted against Janus Capital and its affiliates by fund investors (actions (i)
and (ii) described above), except certain claims under Section 10(b) of the
Securities Exchange Act of 1934 and under Section 36(b) of the Investment
Company Act of 1940. The complaint in the 401(k) plan class action (action (iii)
described above) was voluntarily dismissed, but was refiled using a new named
plaintiff and asserting claims similar to the initial complaint. As a result of
the above events, JCGI, Janus Capital, the Advisory Committee of the Janus
401(k) plan, and the current or former directors of JCGI are the remaining
defendants in one or more of the actions.
The Attorney General's Office for the State of West Virginia filed a separate
market timing related civil action against Janus Capital and several other
non-affiliated mutual fund companies, claiming violations under the West
Virginia Consumer Credit and Protection Act. The civil action requests certain
monetary penalties, among other relief. This action has been removed to federal
court and transferred to the Multidistrict Litigation case in the U.S. District
Court of Baltimore, Maryland described above. In addition, the Auditor of the
State of West Virginia, in his capacity as securities commissioner, has issued
an order indicating an intent to initiate administrative proceedings against
most of the defendants in the market timing cases (including Janus Capital) and
seeking disgorgement and other monetary relief based on similar market timing
allegations.
In addition to the "market timing" actions described above, Janus Capital is a
defendant in a consolidated lawsuit in the U.S. District Court for the District
of Colorado challenging the investment advisory fees charged by Janus Capital to
certain Janus funds. The action was filed in 2004 by fund investors asserting
breach of fiduciary duty under Section 36(b) of the Investment Company Act of
1940. The plaintiffs seek declaratory and injunctive relief and an unspecified
amount of damages.
In 2001, Janus Capital's predecessor was also named as a defendant in a class
action suit in the U.S. District Court for the Southern District of New York,
alleging that certain underwriting firms and institutional investors violated
antitrust laws in connection with initial public offerings. The U.S. District
Court dismissed the plaintiff's antitrust claims in November 2003, however, the
U.S. Court of Appeals vacated that decision and remanded it for further
proceedings.
Additional lawsuits may be filed against certain of the Janus funds, Janus
Capital, and related parties in the future. Janus Capital does not currently
believe that these pending actions will materially affect its ability to
continue providing services it has agreed to provide to the Janus funds.
96 Janus Growth Funds April 30, 2006
Additional Information (unaudited)
PROXY VOTING POLICIES AND VOTING RECORD
A description of the policies and procedures that the Funds use to determine how
to vote proxies relating to their portfolio securities is available: (i) without
charge, upon request, by calling 1-800-525-3713 (toll free); (ii) on the Funds'
website at www.janus.com; and (iii) on the SEC's website at http://www.sec.gov.
Additionally, information regarding each Fund's proxy voting record for the most
recent twelve-month period ended June 30 is also available, free of charge,
through www.janus.com and from the SEC's website at http://www.sec.gov.
QUARTERLY PORTFOLIO HOLDINGS
The Funds file their 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 Funds' 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 at 1-800-525-3713 (toll
free).
APPROVAL OF ADVISORY AGREEMENTS DURING THE PERIOD
AMENDMENTS TO ADVISORY AGREEMENTS TO CONFORM TO PREVAILING INDUSTRY PRACTICE
On September 20, 2005, the Board of Trustees, including all of the Independent
Trustees, voted unanimously to approve an amended Investment Advisory Agreement
("Amended Agreement") for each Fund and authorized the submission of each
Amended Agreement to the Fund's shareholders for approval. Shareholders approved
the Amended Agreement for their Fund at a special meeting of Shareholders held
on December 29, 2005 for Janus Fund, Janus Orion Fund, Janus Triton Fund, Janus
Twenty Fund, and Janus Venture Fund; and on January 9, 2006 for Janus Enterprise
Fund, Janus Mercury Fund, Janus Olympus Fund, Janus Global Life Sciences Fund,
and Janus Global Technology Fund.
In approving the proposed Amended Agreements, the Trustees considered the
recommendations of an independent compliance consultant engaged by Janus Capital
regarding the form of each of those agreements and concluded that the proposed
changes were consistent with industry practice and would reflect an appropriate
delegation of authority to Janus Capital clarifying its investment discretion
over the Funds it manages.
In connection with their most recent consideration of the investment advisory
agreements for all of the Funds, the Trustees received and reviewed a
substantial amount of information provided by Janus Capital and the respective
subadvisers for subadvised Funds in response to requests of the Independent
Trustees and their counsel. They also received and reviewed a considerable
amount of information and analysis provided to the Trustees by an independent
fee consultant. Throughout their consideration of the agreements, the
Independent Trustees were advised by their independent legal counsel. The
Independent Trustees met on two separate occasions with Janus Capital management
to consider the agreements, and at each of those meetings they also met
separately in executive session with their counsel.
Based on their evaluation of the information provided by Janus Capital,
subadvisers, the independent fee consultant, Lipper Inc. ("Lipper"), and other
information, the Trustees determined that the overall arrangements between the
Funds and Janus Capital were fair and reasonable in light of the nature 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. In
considering the 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
agreements are discussed separately below.
NATURE, EXTENT, AND QUALITY OF SERVICES
The Trustees reviewed the nature, extent, and quality of the services of Janus
Capital and the subadvisers to the Funds, taking into account the investment
objective and strategy of each Fund and the knowledge the Trustees gained from
their regular meetings with management on at least a quarterly basis. In
addition, the Trustees reviewed the resources and key personnel of Janus Capital
and each subadviser, especially those who provide investment 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, serving
as the Funds' administrator, monitoring adherence to the Funds' investment
restrictions, producing shareholder reports, providing support services for the
Trustees and Trustee committees, and overseeing the activities of other service
providers, including monitoring compliance with various policies and procedures
of the Funds and with applicable securities laws and regulations. The Trustees
also reviewed the enhanced compliance program of Janus Capital and the actions
taken by Janus Capital in response to various legal and regulatory proceedings
since the fall of 2003.
Janus Growth Funds April 30, 2006 97
Additional Information (unaudited) (continued)
The Trustees concluded that the nature, extent, and quality of the services
provided by Janus Capital and, if applicable, the subadviser to each Fund were
appropriate and consistent with the terms of the respective advisory agreements,
that the quality of those services had been consistent with or superior to
quality norms in the industry, and that 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 continuing ability to attract and retain well-qualified personnel.
PERFORMANCE OF THE FUNDS
The Trustees considered the short-term and longer term performance of each Fund.
They reviewed information comparing each Fund's performance with the performance
of comparable funds and peer groups identified by Lipper and with the Fund's
benchmark index. They concluded that the performance of most Funds was good to
very good. Although the performance of some Funds lagged that of their peers for
certain periods, they also concluded that Janus Capital had taken appropriate
steps to address the under-performance and that the more recent performance of
most of those Funds had been improving.
COSTS OF SERVICES PROVIDED
The Trustees examined information on the fees and expenses of each Fund in
comparison to information for other comparable funds as provided by Lipper. They
noted that the rate of management (investment advisory and administrative) fees
for each Fund, after contractual expense limitations, was below the mean
management fee rate of the respective peer group of funds selected by Lipper.
The Trustees considered the methodology used by Janus Capital in determining
compensation payable to portfolio managers, the very competitive environment for
investment management talent and the competitive market for mutual funds in
different distribution channels.
The Trustees also reviewed Janus Capital's management fees for its separate
account clients and for its subadvised funds (for which Janus Capital provides
only portfolio management services). Although in most instances subadvisory and
separate account fee rates for various investment strategies were lower than
management fees for Funds having a similar strategy, the Trustees noted that
Janus Capital performs significant additional services for the Funds that it
does not provide to those other clients, including administrative services,
oversight of the Funds' other service providers, trustee support, regulatory
compliance, and numerous other services. Moreover, they noted that the spread
between the average fees charged to the Funds and the fees that Janus Capital
charged to its separate account clients was significantly smaller than the
average spread for such fees of other advisers, based on publicly available data
and research conducted by their independent fee consultant.
The Trustees also considered the profitability to Janus Capital and its
affiliates of their relationships with each Fund and found Janus Capital's
profitability not to be unreasonable.
Finally, the Trustees considered the financial condition of Janus Capital, which
they found to be sound.
The Trustees concluded that the management fees and any other compensation
payable by each Fund to Janus Capital and its affiliates, as well as the fees
paid by Janus Capital or a Fund to the subadvisers of subadvised Funds, were
reasonable in relation to the nature and quality of the services provided,
taking into account the fees charged by other advisers for managing comparable
mutual funds with similar strategies and the fees Janus Capital charges to other
clients. The Trustees also concluded that the overall expense ratio of each Fund
was reasonable, taking into account the size of the Fund, the quality of
services provided by Janus Capital, the investment performance of the Fund, and
the expense limitations agreed to by Janus Capital.
ECONOMIES OF SCALE
The Trustees received and considered information about the potential of Janus
Capital to experience economies of scale as the assets of the Funds increase.
They noted that, although each Fund (except four Funds that have breakpoints)
pays an advisory fee at a fixed rate as a percentage of net assets, without any
breakpoints, the management fee paid by each Fund, after any applicable
contractual expense limitations, was below the mean management fee rate of the
Fund's peer group selected by Lipper. The Trustees also took note 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 many of the
Funds have declined in the past few years, the Funds have benefited from having
advisory fee rates that have remained constant rather than fees with breakpoints
and higher fee rates at lower asset levels in which the effective fee rate might
have increased as assets declined. The Trustees considered certain Amended
Agreements that included a change to the advisory fee to reflect a
performance-based structure under which the rate of fee would increase or
decrease from the current fixed rate if the Fund outperforms or underperforms
its benchmark index over a trailing period. Such a fee structure is likely to
increase or decrease Janus Capital's economies of scale, depending on whether
the effective rate of the fee is increased or decreased. The Trustees also noted
that the Funds share directly in economies of scale through lower charges of
third party
98 Janus Growth Funds April 30, 2006
service providers based on the combined scale of all of the Funds. Based on all
of the information they reviewed, the Trustees concluded that the fee structure
in each of the advisory agreements was reasonable and that the current rates of
fees reflect a sharing between Janus Capital and the Fund of economies of scale
at the current asset level of the Fund.
OTHER BENEFITS TO THE ADVISER
The Trustees also considered benefits that accrue to Janus Capital and its
affiliates from their relationship with the Funds. They recognized that
affiliates of Janus Capital separately serve the Funds as transfer agent and
distributor, respectively. The Trustees also considered Janus Capital's use of
commissions paid by most Funds on their portfolio brokerage transactions to
obtain proprietary research products and services benefiting the Funds and/or
other clients of Janus Capital, as well as Janus Capital's agreement not to use
any Fund's portfolio brokerage transactions to obtain third party research
through brokers. The Trustees concluded that Janus Capital's use of "soft"
commission dollars to obtain proprietary research products and services was
consistent with regulatory requirements and was likely to benefit the Funds. The
Trustees also concluded that, other than the services provided by Janus Capital
and its affiliates pursuant to the agreements and the fees to be paid by each
Fund therefor, the Funds and Janus Capital may potentially benefit from their
relationship with each other in other ways. They concluded that Janus Capital
benefits from the receipt of proprietary research products and services acquired
through commissions paid on portfolio transactions of the Funds and that the
Funds benefit from Janus Capital's receipt of those products and services, as
well as research products and services acquired through commissions paid by
other clients of Janus Capital. They further concluded that success of each Fund
could attract other business to Janus Capital or its other Funds and that the
success of Janus Capital could enhance Janus Capital's ability to serve the
Funds.
After full consideration of the above factors as well as other factors, the
Trustees, including all of the Independent Trustees, concluded that the current
Investment Advisory Agreement for each Fund was in the best interest of the Fund
and its shareholders. In approving the Amended Agreements, the Independent
Trustees also concluded that the Amended Agreement, as proposed, was in the best
interest of the Fund and its shareholders.
PERFORMANCE-BASED INVESTMENT ADVISORY FEE PROPOSAL -- FOR JANUS MERCURY FUND
On September 20, 2005 and October 19, 2005, the Board of Trustees, including all
of the Independent Trustees, voted unanimously to approve an Amended Investment
Advisory Agreement for the Fund ("Proposed Agreement") and authorized the
submission of the Proposed Agreement to the Fund's shareholders for approval.
The Proposed Agreement changed the advisory fee paid by the Fund from a fixed
rate to a rate that adjusts upward or downward based upon the Fund's performance
relative to a selected benchmark index. Shareholders of the Fund approved the
Proposed Agreement at a special meeting of Shareholders held on January 9, 2006.
For more than a year the Independent Trustees and their independent fee
consultant, in consultation with independent legal counsel to the Independent
Trustees, have explored the possibility of modifying the fee structure for
certain funds to provide for a performance-based adjustment to the current
investment advisory fee rate that would increase or decrease the fee based on
whether the Fund's total return performance exceeds or lags a stated relevant
benchmark index.
The Independent Trustees also worked with Janus Capital to develop a performance
structure that was acceptable to Janus Capital. In doing so, the Independent
Trustees were seeking to provide a closer alignment of the interests of Janus
Capital with those of the Funds and their shareholders. They believe that the
fee structure proposed for each Fund will achieve that objective. Included as
part of their analysis of the overall performance fee structure, the Trustees,
in consultation with their independent fee consultant, considered the
appropriate performance range for achieving the maximum and minimum advisory fee
that would result in the Performance Adjustment of up to 0.15% (positive or
negative) of a Fund's average daily net assets during the applicable performance
measurement period. The Trustees reviewed information provided by Janus Capital
and prepared by their independent fee consultant with respect to an appropriate
deviation of excess/under returns relative to a Fund's benchmark index, taking
into consideration expected tracking error of the Fund, expected returns and
potential risks and economics involved both for Janus Capital and the Fund's
shareholders. The Trustees also reviewed the structure of performance fees
applied by other mutual fund complexes. Based on this information, the Trustees
determined that a performance range that approximates one standard deviation of
excess/under returns relative to a Fund's benchmark index was appropriate for
calculating the maximum range (positive or negative) of the Performance
Adjustment.
As described above, the Performance Adjustment that will be added to or
subtracted from the "Base Fee" (as defined in the Proposed Agreement) as a
result of a Fund's performance relative to its benchmark index is a variable up
to 0.15% of average net assets during the performance measurement period.
Importantly, the performance is computed after deducting the Fund's operating
expenses (including advisory fees), which means that in order to receive any
upward adjustment from the Base Fee, Janus Capital must deliver a
Janus Growth Funds April 30, 2006 99
Additional Information(unaudited) (continued)
total return after expenses that exceeds the return of the benchmark index,
which does not incur any expenses.
The Trustees determined that the benchmark index specified in each of the
Proposed Agreements for purposes of computing the performance fee adjustments is
appropriate for the respective Fund based on a number of factors, including the
fact that the index is broad-based and is composed of securities of the types in
which the Fund may invest. The Trustees believe that divergence between the
Fund's performance and performance of the index can be attributed, in part, to
the ability of the portfolio manager in making investment decisions within the
parameters of the Fund's investment objective and investment policies and
restrictions.
The Trustees determined that the class of shares of each Fund selected for
purposes of calculating the Performance Adjustment as applied to the Fund is the
most appropriate class for use in calculating such Fund's Performance
Adjustment. In making that determination, the Trustees considered the fee
structure and expenses paid by each class of shares, any fees paid to or
retained by Janus Capital or its affiliates, as well as the distribution channel
for each class of shares.
The time periods to be used in determining any Performance Adjustment were also
judged to be of appropriate length to ensure proper correlation and to prevent
fee adjustments from being based upon random or insignificant differences
between the performance of the Fund and of the index. In that regard, the
Trustees concluded that it would be appropriate for there to be no adjustment
from the Base Fee for the first 12 months after the effective date of each
Proposed Agreement before implementation of any Performance Adjustment, and
that, once implemented, the Performance Adjustment should reflect only the
Fund's performance subsequent to that effective date. Moreover, the Trustees
believed that, upon reaching the thirty-sixth month after the effective date,
the performance measurement period would be fully implemented, and that the
Performance Adjustment should thereafter be based upon a thirty-six month
rolling performance measurement period.
In addition to considering the performance fee structure reflected in each
Proposed Agreement, in approving each of those agreements, the Trustees followed
the process and considered the factors and reached the conclusions described
above under "Amendments to Advisory Agreements to Conform to Prevailing Industry
Practice."
100 Janus Growth Funds April 30, 2006
Explanations of Charts, Tables and
Financial Statements (unaudited)
1. PERFORMANCE OVERVIEWS
Performance overview graphs compare the performance of a hypothetical $10,000
investment in each Fund with one or more widely used market indices. The
hypothetical example does not represent the returns of any particular
investment.
When comparing the performance of a Fund with an index, keep in mind that market
indices do not include brokerage commissions that would be incurred if you
purchased the individual securities in the index. They also do not include taxes
payable on dividends and interest or operating expenses incurred if you
maintained a Fund invested in the index.
Average annual total returns are also quoted for each Fund. 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 any dividends, distributions
and capital gains, 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.
2. SCHEDULES OF INVESTMENTS
Following the performance overview section is each Fund's Schedule of
Investments. This schedule reports the industry concentrations and types of
securities held in each 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.
Funds that invest in foreign securities also provide a summary of investments by
country. This summary reports the Fund's exposure to different countries by
providing the percentage of securities invested in each country. The country of
each security represents the country in which the company is incorporated.
2A. FORWARD CURRENCY CONTRACTS
A table listing forward currency contracts follows each Fund's Schedule of
Investments (if applicable). Forward currency contracts are agreements to
deliver or receive a preset amount of currency at a future date. Forward
currency contracts are used to hedge against foreign currency risk in the Fund's
long-term holdings.
The table provides the name of the foreign currency, the settlement date of the
contract, the amount of the contract, the value of the currency in U.S. dollars
and the amount of unrealized gain or loss. The amount of unrealized gain or loss
reflects the change in currency exchange rates from the time the contract was
opened to the last day of the reporting period.
2B. FUTURES
A table listing futures contracts follows each Fund's Schedule of Investments
(if applicable). Futures contracts are contracts that obligate the buyer to
receive and the seller to deliver an instrument or money at a specified price on
a specified date. Futures are used to hedge against adverse movements in
securities prices, currency risk or interest rates.
The table provides the name of the contract, number of contracts held, the
expiration date, the principal amount, value and the amount of unrealized gain
or loss. The amount of unrealized gain or loss reflects the marked-to-market
amount for the last day of the reporting period.
2C. OPTIONS
A table listing options contracts follows each Fund's Schedule of Investments
(if applicable). Option contracts are contracts that obligate a Fund to sell or
purchase an underlying security at a fixed price, upon exercise of the option.
Options are used to hedge against adverse movements in securities prices,
currency risk or interest rates.
The table provides the name of the contract, number of contracts held, the
expiration date, exercise price, value and premiums received.
3. STATEMENT OF ASSETS AND LIABILITIES
This statement is often referred to as the "balance sheet." It lists the assets
and liabilities of the Funds on the last day of the reporting period.
The Funds' assets are calculated by adding the value of the securities owned,
the receivable for securities sold but not yet settled, the receivable for
dividends declared but not yet received on stocks owned and the receivable for
Fund shares sold to investors but not yet settled. The Funds' 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
Funds' net assets. Because Funds must distribute substantially all earnings,
you'll notice that a significant portion of net assets is shareholder capital.
Janus Growth Funds April 30, 2006 101
Explanations of Charts, Tables and
Financial Statements (unaudited) (continued)
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
Funds' net assets (assets minus liabilities) by the number of shares
outstanding.
4. STATEMENT OF OPERATIONS
This statement details the Funds' income, expenses, gains and losses on
securities and currency transactions, and appreciation or depreciation of
current Fund holdings.
The first section in this statement, entitled "Investment Income," reports the
dividends earned from stocks and interest earned from interest-bearing
securities in the Funds.
The next section reports the expenses and expense offsets incurred by the Funds,
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, if any, are also shown.
The last section lists the increase or decrease in the value of securities held
in the Funds. Funds realize a gain (or loss) when they sell their position in a
particular security. An unrealized gain (or loss) refers to the change in net
appreciation or depreciation of the Funds 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.
5. STATEMENT OF CHANGES IN NET ASSETS
This statement reports the increase or decrease in the Funds' net assets during
the reporting period. Changes in the Funds' net assets are attributable to
investment operations, dividends, distributions and capital share transactions.
This is important to investors because it shows exactly what caused the Funds'
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 Funds' investment performance. The
Funds' net assets may also change as a result of dividend and capital gains
distributions to investors. If investors receive their dividends in cash, money
is taken out of the Fund to pay the distribution. If investors reinvest their
dividends, the Fund's net assets will not be affected. If you compare each
Fund's "Net Decrease from Dividends and Distributions" to the "Reinvested
dividends and distributions," you'll notice that dividend distributions had
little effect on each Fund's net assets. This is because the majority of Janus
investors reinvest their distributions.
The reinvestment of dividends is included under "Capital Share Transactions."
"Capital Shares" refers to the money investors contribute to the Funds through
purchases or withdraw via redemptions. The "Redemption Fees" refers to the fee
paid to the Funds for shares held for three months or less by a shareholder. The
Funds' net assets will increase and decrease in value as investors purchase and
redeem shares from the Funds.
6. FINANCIAL HIGHLIGHTS
This schedule provides a per-share breakdown of the components that affect the
Funds' NAV for current and past reporting periods. Not only does this table
provide you with total return, it also reports total distributions, asset size,
expense ratios and portfolio turnover rate.
The first line in the table reflects the NAV per share at the beginning of the
reporting period. The next line reports the net investment income per share,
which comprises dividends and interest income earned on securities held by the
Funds. Following is the total of gains/(losses), realized and unrealized.
Dividends and distributions are then subtracted to arrive at the NAV per share
at the end of the period.
The next line reflects the average annual total return reported the last day of
the period.
Also included are the expense ratios, or the percentage of net assets that were
used to cover operating expenses during the period. Expense ratios vary across
the Funds for a number of reasons, including the differences in management fees,
the average shareholder account size and the extent of foreign investments,
which entail greater transaction costs.
The Funds' expenses may be reduced through expense reduction arrangements. These
arrangements may include the use of balance credits or transfer agent fee
offsets. The Statement of Operations reflects total expenses before any such
offset, the amount of offset and the net expenses. The expense ratios listed in
the Financial Highlights reflect total expenses prior to any expense offsets
(gross expense ratio) and after the expense offsets (net expense ratio). Both
expense ratios reflect expenses after waivers (reimbursements), if applicable.
The ratio of net investment income/(loss) summarizes the income earned less
expenses, divided by the average net assets of a Fund during the reporting
period. Don't confuse this ratio with a Fund's yield. The net investment income
ratio is not a true measure of a Fund's yield because it doesn't take into
account the dividends distributed to the Fund's investors.
The next ratio is the portfolio turnover rate, which measures the buying and
selling activity in a Fund. Portfolio turnover is affected by market conditions,
changes in the asset size of a Fund, the nature of the Fund's investments and
the investment style of the portfolio manager. A 100% rate implies that an
amount equal to the value of the entire portfolio is turned over in a year; a
50% rate means that an amount equal to the value of half the portfolio is traded
in a year; and a 200% rate means that an amount equal to the value of the
portfolio is traded every six months.
102 Janus Growth Funds April 30, 2006
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Janus Growth Funds April 30, 2006 103
Shareholder Meeting (unaudited)
A Special Meeting of Shareholders of the Funds was held on November 22, 2005 and
adjourned and reconvened to December 29, 2005 and January 9, 2006. At the
meetings, the following matters were voted on and approved by the Shareholders.
Each vote reported represents one dollar of net asset value held on the record
date of the meeting. The results of the Special Meeting of Shareholders are
noted below.
PROPOSAL 1
Elect nine Trustees, including eight "independent" candidates.
Number of Votes
Record ----------------------------------------------
Trustees Date Votes Affirmative Withheld Total
- --------- -------------- -------------- -------------- --------------
Jerome
S. Contro 72,431,132,779 28,415,846,253 806,823,785 29,222,670,038
William
F.
McCalpin 72,431,132,779 28,431,830,093 790,839,945 29,222,670,038
John W.
McCarter,
Jr. 72,431,132,779 28,410,815,406 811,854,632 29,222,670,038
Dennis
B. Mullen 72,431,132,779 28,408,140,530 814,529,508 29,222,670,038
James T.
Rothe 72,431,132,779 28,421,678,938 800,991,100 29,222,670,038
William
D.
Stewart 72,431,132,779 28,426,971,191 795,698,847 29,222,670,038
Martin
H.
Waldinger 72,431,132,779 28,400,077,651 822,592,387 29,222,670,038
Linda S.
Wolf 72,431,132,779 28,406,316,741 816,353,297 29,222,670,038
Thomas
H. Bailey 72,431,132,779 28,395,482,070 827,141,468 29,222,623,538
Percentage of
Total Outstanding Votes Percentage of Voted
------------------------------------------------ ------------------------------------------------
Trustees Affirmative Withheld Total Affirmative Withheld Total
- --------- -------------- -------------- -------------- -------------- -------------- --------------
Jerome
S. Contro 39.23% 1.12% 40.35% 97.24% 2.76% 100.00%
William
F.
McCalpin 39.26% 1.09% 40.35% 97.29% 2.71% 100.00%
John W.
McCarter,
Jr. 39.23% 1.12% 40.35% 97.22% 2.78% 100.00%
Dennis
B. Mullen 39.22% 1.13% 40.35% 97.21% 2.79% 100.00%
James T.
Rothe 39.24% 1.11% 40.35% 97.26% 2.74% 100.00%
William
D.
Stewart 39.25% 1.10% 40.35% 97.28% 2.72% 100.00%
Martin
H.
Waldinger 39.21% 1.14% 40.35% 97.18% 2.82% 100.00%
Linda S.
Wolf 39.22% 1.13% 40.35% 97.21% 2.79% 100.00%
Thomas
H. Bailey 39.21% 1.14% 40.35% 97.17% 2.83% 100.00%
PROPOSAL 3a
To approve certain amendments to the Fund's investment advisory agreement with
Janus Capital to conform to prevailing industry practice.
Number of Votes
--------------------------------------------------------------
Record Broker Non-
Fund Date Votes Affirmative Against Abstain Votes
- ---------------- -------------- -------------- -------------- -------------- --------------
GROWTH
Janus Fund 11,815,883,814 5,141,704,247 298,128,737 253,100,803 1,597,577,073
Janus
Enterprise
Fund 1,768,581,761 655,989,507 39,765,195 30,146,258 223,066,755
Janus
Mercury
Fund 4,543,442,548 1,750,195,166 110,854,182 93,469,589 480,923,905
Janus
Olympus
Fund 2,299,460,931 871,255,022 60,570,362 45,247,870 271,664,004
Janus Orion
Fund 671,127,831 291,456,936 21,189,706 14,196,184 65,470,079
Janus
Triton Fund 34,409,032 18,943,291 1,137,454 571,245 2,189,775
Janus
Twenty
Fund 9,824,414,895 4,511,070,075 270,345,145 161,625,541 1,308,505,546
Janus
Venture
Fund 1,406,700,835 631,791,354 51,270,013 35,124,403 150,422,355
SPECIALTY GROWTH
Janus
Global Life
Sciences
Fund 1,213,179,543 502,255,257 36,813,843 25,335,504 142,457,413
Janus
Global
Technology
Fund 1,059,507,132 426,902,165 31,772,093 22,473,123 99,490,344
Percentage of Total Outstanding Votes
-----------------------------------------------------------------
Broker
Fund Affirmative Against Abstain Non-Votes
- ---------------- -------------- -------------- -------------- --------------
GROWTH
Janus Fund 43.52% 2.52% 2.14% 13.52%
Janus
Enterprise
Fund 37.09% 2.25% 1.71% 12.61%
Janus
Mercury
Fund 38.52% 2.44% 2.06% 10.59%
Janus
Olympus
Fund 37.89% 2.63% 1.97% 11.81%
Janus Orion
Fund 43.43% 3.16% 2.11% 9.76%
Janus
Triton Fund 55.05% 3.31% 1.66% 6.36%
Janus
Twenty
Fund 45.92% 2.75% 1.65% 13.32%
Janus
Venture
Fund 44.91% 3.65% 2.50% 10.69%
SPECIALTY GROWTH
Janus
Global Life
Sciences
Fund 41.40% 3.03% 2.09% 11.74%
Janus
Global
Technology
Fund 40.29% 3.00% 2.12% 9.39%
Percentage of Voted
-----------------------------------------------------------------
Broker
Fund Affirmative Against Abstain Non-Votes
- ---------------- -------------- -------------- -------------- --------------
GROWTH
Janus Fund 70.53% 4.09% 3.47% 21.91%
Janus
Enterprise
Fund 69.13% 4.19% 3.18% 23.50%
Janus
Mercury
Fund 71.86% 4.55% 3.84% 19.75%
Janus
Olympus
Fund 69.77% 4.85% 3.62% 21.76%
Janus Orion
Fund 74.29% 5.40% 3.62% 16.69%
Janus
Triton Fund 82.93% 4.98% 2.50% 9.59%
Janus
Twenty
Fund 72.16% 4.33% 2.58% 20.93%
Janus
Venture
Fund 72.74% 5.90% 4.04% 17.32%
SPECIALTY GROWTH
Janus
Global Life
Sciences
Fund 71.06% 5.21% 3.58% 20.15%
Janus
Global
Technology
Fund 73.52% 5.47% 3.87% 17.14%
PROPOSAL 3b
To approve an amended investment advisory agreement between the Fund and Janus
Capital to change the investment advisory fee rate from a fixed rate to a rate
that adjusts upward or downward based upon the Fund's performance relative to
its benchmark index.
Number of Votes
-------------------------------------------------------------------------
Record Broker
Fund Date Votes Affirmative Against Abstain Non-Votes
- -------- ------------- ------------- ------------- ------------- -------------
GROWTH
Janus
Mercury
Fund 4,543,442,548 1,660,646,635 207,789,473 86,082,829 480,923,905
Percentage of Total Outstanding Votes Percentage of Voted
----------------------------------------------------------- -----------------------------------------------------------
Broker Broker
Fund Affirmative Against Abstain Non-Votes Affirmative Against Abstain Non-Votes
- -------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
GROWTH
Janus
Mercury
Fund 36.55% 4.57% 1.90% 10.59% 68.19% 8.53% 3.53% 19.75%
104 Janus Growth Funds April 30, 2006
Janus Growth Funds April 30, 2006 105
JANUS PROVIDES ACCESS TO A WIDE RANGE OF INVESTMENT DISCIPLINES.
ASSET ALLOCATION
Janus asset allocation funds invest in several underlying mutual funds, rather
than individual securities, in an attempt to offer investors an instantly
diversified portfolio. Janus Smart Portfolios are unique in their combination of
funds that leverage the fundamental research approach of Janus with funds
supported by the risk-managed, mathematical investment process of INTECH (a
Janus subsidiary).
GROWTH
Janus growth funds focus on companies believed to be the leaders in their
respective industries, with solid management teams, expanding market share,
margins and efficiencies.
CORE
Janus core funds seek investments in more stable and predictable companies.
These funds look for a strategic combination of steady growth and for certain
funds, some degree of income.
RISK-MANAGED
Our risk-managed fund seeks to outperform its index while maintaining a risk
profile equal to or lower than the index itself. Managed by INTECH (a Janus
subsidiary), this fund uses a mathematical process in an attempt to build a more
"efficient" portfolio than the index.
VALUE
Janus value funds invest in companies they believe are poised for a turnaround
or are trading at a significant discount to fair value. The goal is to gain
unique insight into a company's true value and identify and evaluate potential
catalysts that may unlock shareholder value.
INTERNATIONAL & GLOBAL
Janus international and global funds seek to leverage Janus' research
capabilities by taking advantage of inefficiencies in foreign markets, where
accurate information and analytical insight are often at a premium.
BOND & MONEY MARKET
Janus bond funds attempt to provide less risk relative to equities while seeking
to deliver a competitive total return through high current income and
appreciation. Janus money market funds seek maximum current income consistent
with stability of capital.
For more information about our funds, go to www.janus.com.
Please consider the charges, risks, expenses and investment objectives carefully
before investing. For a prospectus containing this and other information, please
call Janus at 1-800-525-3713 or download the file from www.janus.com. Read it
carefully before you invest or send money.
An investment in a money market fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the Fund
seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the Fund.
(JANUS LOGO)
151 Detroit Street
Denver, CO 80206
1-800-525-3713
Funds distributed by Janus Distributors LLC (6/06)
C-0606-22 111-24-103 06-06
JANUS OLYMPUS FUND
PART C
OTHER INFORMATION
ITEM 15 INDEMNIFICATION
Section 6.4 of the Trust Instrument provides in effect that the Trust shall
indemnify (from the assets of the Series in question) each of its Trustees,
members of the Advisory Board (if any) and officers (including persons who serve
at the Trust's request as directors, officers or Trustees of another
organization in which the Trust has any interest as a shareholder, creditor or
otherwise (hereinafter referred to as a "Covered Person")) against all
liabilities, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative or
legislative body, in which such Covered Person may be or may have been involved
as a party or otherwise or with which such person may be or may have been
threatened, while in office or thereafter, by reason of being or having been
such a Trustee, or a member of the Advisory Board, or officer, director or
Trustee, except with respect to any matter as to which it has been determined
that such Covered Person had acted with willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of such
Covered Person's office (such conduct referred to hereafter as "Disabling
Conduct").
The Trust, its Trustees and officers, its investment adviser and persons
affiliated with them are insured under a policy of insurance maintained by the
Trust and its investment adviser, within the limits and subject to the
limitations of the policy, against certain expenses in connection with the
defense of actions, suits or proceedings, and certain liabilities that might be
imposed as a result of such actions, suits or proceedings, to which they are
parties by reason of being or having been such Trustees or officers.
ITEM 16 EXHIBITS
EXHIBIT (1)
Amended and Restated Agreement and Declaration of Trust, dated March 18,
2003, is incorporated by reference to Exhibit 1(ii) to Post-Effective Amendment
No. 109, filed on April 17, 2003 (File No. 2-34393).
Certificate of Amendment Establishing and Designating Series, dated
September 16, 2003, is incorporated by reference to Exhibit 1(jj) to
Post-Effective Amendment No. 110, filed on December 23, 2003 (File No. 2-34393).
Certificate of Amendment Establishing and Designating Series, dated
September 30, 2003, is filed herein as Exhibit 1(a).
II-1
Certificate of Amendment, Voting Powers, dated December 2, 2004, is filed
herein as Exhibit 1(b).
EXHIBIT (2)
Amended and Restated Bylaws are incorporated by reference to Exhibit 2(e)
to Post-Effective Amendment No. 112, filed on December 10, 2004 (File No. 2-
34393).
First Amendment to the Amended and Restated Bylaws is incorporated by
reference to Exhibit 2(f) to Post-Effective Amendment No. 114, filed on October
14, 2005 (File No. 2-34393).
Second Amendment to the Amended and Restated Bylaws is incorporated by
reference to Exhibit 2(g) to Post-Effective Amendment No. 114, filed on October
14, 2005 (File No. 2-34393).
EXHIBIT (3)
Not applicable.
EXHIBIT (4)
Form of Agreement and Plan of Reorganization (included as Appendix A to the
Combined Proxy Statement/Prospectus of this Registration Statement) is filed
herein as Exhibit 4.
EXHIBIT (5)
Not applicable.
EXHIBIT (6)
Investment Advisory Agreement for Janus Olympus Fund dated July 1, 2004 is
incorporated by reference to Exhibit 4(ggg) to Post-Effective Amendment No. 112,
filed on December 10, 2004 (File No. 2-34393).
Investment Advisory Agreement for Janus Olympus Fund dated July 1, 2004, as
amended February 1, 2006, is incorporated by reference to Exhibit 4(bbbb) to
Post-Effective Amendment No. 117, filed on February 27, 2006 (File No. 2-
34393).
EXHIBIT (7)
Distribution Agreement between Janus Investment Fund and Janus Distributors
LLC, dated June 18, 2002, is incorporated by reference to Exhibit 5(b) to Post-
Effective Amendment No. 105, filed on December 13, 2002 (File No. 2-34393).
II-2
EXHIBIT (8)
Not applicable.
EXHIBIT (9)
Amended and Restated Custodian Contract dated August 1, 2005, between Janus
Investment Fund and State Street Bank and Trust Company is incorporated by
reference to Exhibit 7(mm) to Post-Effective Amendment No. 114, filed on October
14, 2005 (File No. 2-34393).
EXHIBIT (10)
Not applicable.
EXHIBIT (11)
Opinion of Goodwin Proctor LLP, counsel for the Registrant, is filed herein
as Exhibit 11.
EXHIBIT (12)
Tax Opinion of Goodwin Proctor LLP, counsel for the Registrant, is filed
herein as Exhibit 12.
EXHIBIT (13)
Not applicable.
EXHIBIT (14)
Consent of PricewaterhouseCoopers LLP is filed herein as Exhibit 14.
EXHIBIT (15)
Not applicable.
EXHIBIT (16)
Powers of Attorney dated as of January 1, 2006 are incorporated by
reference to Exhibit 15(a) to Post-Effective Amendment No. 117, filed on
February 27, 2006 (File No. 2-34393).
EXHIBIT (17)
Amended Janus Ethics Rules dated July 12, 2006 are filed herein as Exhibit
17.
II-3
ITEM 17 UNDERTAKINGS
(1) The undersigned registrant agrees that prior to any public reoffering
of the securities registered through the use of a prospectus which is a part of
this registration statement by any person or party who is deemed to be an
underwriter within the meaning of Rule 145(c) of the Securities Act, the
reoffering prospectus will contain the information called for by the applicable
registration form for reofferings by persons who may be deemed underwriters, in
addition to the information called for by the other items of the applicable
form.
(2) The undersigned registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
registration statement and will not be used until the amendment is effective,
and that, in determining any liability under the 1933 Act, each post-effective
amendment shall be deemed to be a new registration statement for the securities
offered therein, and the offering of the securities at that time shall be deemed
to be the initial bona fide offering of them.
II-4
SIGNATURES
As required by the Securities Act of 1933, this Registration Statement has
been signed on behalf of the registrant, in the City of Denver, and State of
Colorado, on the 8th day of August, 2006.
By: /s/ Kelley Abbott Howes
----------------------------------
Kelley Abbott Howes, President and
Chief Executive Officer
As required by the Securities Act of 1933, this Registration Statement has
been signed below by the following persons in the capacities and on the dates
indicated.
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Kelley Abbott Howes President and Chief August 8, 2006
- ---------------------------------- Executive Officer
Kelley Abbott Howes (Principal Executive
Officer)
/s/ Jesper Nergaard Vice President, Chief August 8, 2006
- ---------------------------------- Financial Officer,
Jesper Nergaard Treasurer and Principal
Accounting Officer
(Principal Financial
Officer and Principal
Accounting Officer)
Dennis B. Mullen* Chairman and Trustee August 8, 2006
- ----------------------------------
Dennis B. Mullen
Jerome S. Contro* Trustee August 8, 2006
- ----------------------------------
Jerome S. Contro
William F. McCalpin* Trustee August 8, 2006
- ----------------------------------
William F. McCalpin
John W. McCarter, Jr.* Trustee August 8, 2006
- ----------------------------------
John W. McCarter, Jr.
James T. Rothe* Trustee August 8, 2006
- ----------------------------------
James T. Rothe
</Table>
II-5
<Table>
<Caption>
SIGNATURE TITLE DATE
--------- ----- ----
William D. Stewart* Trustee August 8, 2006
- ----------------------------------
William D. Stewart
Martin H. Waldinger* Trustee August 8, 2006
- ----------------------------------
Martin H. Waldinger
Linda S. Wolf* Trustee August 8, 2006
- ----------------------------------
Linda S. Wolf
Thomas H. Bailey* Trustee August 8, 2006
- ----------------------------------
Thomas H. Bailey
*By: /s/ Stephanie Grauerholz-Lofton
---------------------------------------
Stephanie Grauerholz-Lofton
Attorney-in-Fact
</Table>
II-6
SCHEDULE OF EXHIBITS TO FORM N-14
<Table>
<Caption>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
Exhibit 1(a) Certificate of Amendment Establishing and Designating
Series, dated September 30, 2003.
Exhibit 1(b) Certificate of Amendment, Voting Powers, dated December
2, 2004.
Exhibit 4 Form of Agreement and Plan of Reorganization (also filed
as Appendix A to the Combined Proxy Statement/Prospectus
of this Registration Statement).
Exhibit 11 Opinion of Goodwin Proctor LLP, counsel for the
Registrant.
Exhibit 12 Tax Opinion of Goodwin Proctor LLP, counsel for the
Registrant.
Exhibit 14 Consent of PricewaterhouseCoopers LLP.
Exhibit 17 Amended Janus Ethics Rules dated July 12, 2006.
</Table>