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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21371
Janus Adviser
(Exact name of registrant as specified in charter)
151 Detroit Street, Denver, Colorado 80206
(Address of principal executive offices) (Zip code)
Kelley Abbott Howes, 151 Detroit Street, Denver, Colorado 80206
(Name and address of agent for service)
Registrant's telephone number, including area code: 303-333-3863
Date of fiscal year end: 2/28
Date of reporting period: 2/28/05
Item 1 - Reports to Shareholders
- ---------------------------------
------------------
2005 Annual Report
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Janus Adviser
- --------------------------------------------------------------------------------
Focused Value Fund
International Equity Fund
[LOGO] JANUS
Table of Contents
Janus Adviser
Portfolio Managers' Commentaries and Schedules of Investments
Focused Value Fund ............................................. 2
International Equity Fund ...................................... 7
Statements of Assets and Liabilities ................................ 12
Statements of Operations ............................................ 13
Statements of Changes in Net Assets ................................. 14
Financial Highlights ................................................ 15
Notes to Schedules of Investments ................................... 19
Notes to Financial Statements ....................................... 20
Report of Independent Registered Public Accounting Firm ............. 29
Additional Information .............................................. 30
Explanations of Charts, Tables and Financial Statements ............. 31
Designation Requirements ............................................ 33
Trustees and Officers ............................................... 34
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 February 28, 2005. 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 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,
including sales charges (loads) on purchases (applicable to Class A Shares);
deferred sales charges (applicable to Class A Shares bought without an initial
sales charge and redeemed within 12 months and Class C Shares); redemption fees
applicable to Investor Shares and Class I Shares (and any related exchange
fees); and (2) ongoing costs, including management fees; distribution and
shareholder servicing (12b-1) fees; administrative services fees (applicable to
Investor Shares and Class I Shares), networking fees (applicable to Class A
Shares and Class C Shares), 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 entire period from September 1, 2004 to February 28, 2005.
Actual Expenses
The first line of the table in the 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,
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
each Fund's total operating expenses (excluding distribution and shareholder
servicing fees, administrative services fee, brokerage commissions, interest,
taxes and extraordinary expenses) to certain limits until at least September 30,
2005. Expenses in the examples reflect application of these waivers. Had the
waivers not been in effect, your expenses would have been higher. More
information regarding the waivers 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 sales
charges (loads) or 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 Adviser February 28, 2005 1
Focused Value Fund (unaudited) Sub-advised by Vontobel
Asset Management, Inc.
================================================================================
Fund Strategy
Focused Value Fund is a concentrated value fund that seeks to provide strong
absolute returns with below-market risk through complete market cycles. The Fund
invests in companies believed to be well-managed, profitable and with proven
operating histories in understandable, predictable businesses that are
attractively priced.
================================================================================
[PHOTO]
Ed Walczak
portfolio manager
Performance Overview
During the 12 months ended February 28, 2005, Focused Value Fund gained,
returning 2.36% for its Investor Shares (please see the chart on page 4 for
additional Share Class performance). This compares to a 6.98% gain for the
Fund's benchmark, the S&P 500(R) Index.
The energy and utilities sectors within the S&P 500(R) Index led the market
during the year - two areas in which the Fund typically has little to no
exposure. Virtually no commodity stock has a truly differentiated franchise that
offers the kind of favorable long-term economics we seek, and people's ability
to predict with any degree of accuracy the price of copper, oil or gold on which
the fortunes of these companies ultimately depend is quite poor. The extremely
competitive and heavily regulated utilities sector also offers few potentially
investable companies in our research universe.
Another area of weakness in the Fund was the financial sector. The Fund was
significantly overweight the Index in financials, with nearly 68% of total net
assets invested in this relatively modest performing group.
Meanwhile, our lack of exposure to information technology stocks helped the
Fund's relative performance, as this was one of the weakest areas of the market
during the period. Also contributing to our results were a number of well-chosen
stocks within the consumer staples sector.
Top 10 Equity Holdings - (% of Net Assets)
- --------------------------------------------------------------------------------
February 28, 2005 February 29, 2004
Berkshire Hathaway, Inc. - Class A 14.5% 9.2%
Freddie Mac 5.5% 6.6%
Fifth Third Bancorp 4.6% 3.2%
American International Group, Inc. 3.9% 4.4%
Fannie Mae 3.6% 6.1%
Diageo PLC (ADR) 3.5% 1.5%
Golden West Financial Corp. 3.4% 0.7%
TJX Companies, Inc. 3.4% 3.8%
Wells Fargo & Co. 3.2% 3.2%
State Street Corp. 3.2% 1.2%
Investment Strategy in This Environment
As the market weakened during the summer, through selective additions to
existing Fund holdings that had fallen in price, we became well over 90%
invested. However, as the rally ensued, we trimmed a number of stocks that rose
in price, and we ended the year with a substantial 19.6% cash position. (Readers
will recall that cash is the residual of our inability to find a sufficient
number of investable companies at what we believe are attractive prices.) We
believe our investment style, with its focus on absolute total returns,
generally permits us to participate in rising markets while usually preserving
capital better than average in declining markets. True to form, we have
underperformed rising markets for the second year in a row, but our discipline
and approach have served us well in the long run.
Portfolio Composition
As of February 28, 2005, there were 28 stocks held in the Fund, representing
80.4% of total net assets. The remaining 19.6% was held in cash, indicating the
relative scarcity of opportunities that meet our investment criteria and our
cautious market outlook. Meanwhile, the Fund's top 10 equity holdings accounted
for 48.8% of total net assets.
Weak Performers Included a Mortgage Lender, Regional Bank and Hospital Operator
Mortgage lender Fannie Mae was the largest detractor to the Fund's performance.
In late September, Fannie Mae's regulator, the Office of Federal Housing
Enterprise Oversight, made public its initial report, stating that Fannie Mae's
accounting practices did not comply with the U.S. generally accepted accounting
principles and the stock subsequently dropped. We viewed the decline
2 Janus Adviser February 28, 2005
(unaudited)
as an overreaction, believing that the long-term value of the Fannie Mae
franchise was not likely to be materially impacted by the current accounting
controversy. Consequently, at that time, we decided not to sell our holdings.
During the fourth quarter, Fannie Mae shares outperformed the market, as
investors started to look ahead to the resolution of the current issues. The
replacement of the company's top two managers, under whose watch the accounting
mistakes were made, and issuance of preferred stock to strengthen the company's
capital position further reinforced our view that Fannie Mae is on its way to
remedying the situation.
Significant Areas of Investment - Fund vs. Index (% of Net Assets)
- --------------------------------------------------------------------------------
[BAR CHART OMITTED]
Focused Value Fund S&P 500(R) Index
Reinsurance 14.5% 0.0%
Finance - Mortgage Loan Banker 9.1% 1.1%
Super-Regional Banks 7.8% 4.9%
Multi-Line Insurance 7.6% 2.9%
Medical - Hospitals 7.1% 0.3%
Fifth Third Bancorp also negatively impacted performance during the period. Late
in 2004, in an effort to reduce the company's interest rate risk, the bank
announced a major balance sheet restructuring principally involving the sale of
Mortgage-Backed Securities ("MBSs") from its available-for-sale securities
portfolio. This resulted in one-time charges that lowered 2004 and 2005 earnings
capability by about 10%. We were aware ahead of time that Fifth Third had
elected to assume a certain amount of interest rate risk by owning unhedged MBSs
in its portfolio but had hoped that any potential interest rate damage here
might be offset by growth in low-cost deposits being put to work at wider
spreads as corporate loan demand began to rise. In view of this bank's
outstanding long-term record and improving corporate loan demand, which has now
begun to rise at a healthy pace, we continue to hold a position in Fifth Third.
Another stock that hindered performance was hospital operator Universal Health
Services. Bad debt expense continues to rise in this industry as the unemployed
and workers with little or no health insurance continue to use hospital
emergency rooms to obtain doctors' care. By law, hospitals must accept these
indigent patients, even if they cannot pay their bills. Although certain secular
issues in the hospital industry also continue to concern us (such as increased
competition from physician-owned facilities and the risk of future
unsatisfactory Medicare rate reimbursements), we still believe that the bad debt
issue will subside somewhat once job growth resumes more robustly in the economy
and that the stocks are attractively priced.
Select Financial Services Stocks Contributed to Performance
One of the biggest surprises during the year was the virtually stationary rate
on the 10-year bond and the solid performance of a number of financial stocks.
Standouts included Mercury General Corp., which enjoyed considerable price
appreciation for the second year in a row before reaching our price target. We
subsequently liquidated the position above our average cost. We also took gains
on Freddie Mac, but continue to hold a modest position. Golden West Financial,
Markel, Chubb and Cincinnati Financial also contributed strongly to our results.
All of these winning financials were trimmed substantially, and this accounts
for a large part of the cash residual that sits in the Fund today. However,
long-term investors in the Fund know that we typically trim position sizes as
price targets are approached.
Investment Strategy and Outlook
Going forward, we will continue to seek stocks that are solid and cheap on an
absolute basis, not on a relative basis, as preservation of capital has always
been one of our guiding stars. Like an infinitely patient cat waiting at the
mouse hole for dinner to emerge, we need more of the mouse to show itself before
pouncing. Until such absolute value emerges we will watch, armed with our large
cash residual just waiting to be put to use.
Thank you for your continued investment and confidence.
Janus Adviser February 28, 2005 3
Focused Value Fund (unaudited)
================================================================================
Performance
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Initial investment of $10,000
[MOUNTAIN CHART OMITTED]
Focused Value Fund -
Class A Shares S&P 500(R)
(at MOP) Index
3/30/1990* $ 9,425 $10,000
3/31/1990 $ 9,425 $10,000
4/30/1990 $ 9,208 $ 9,751
5/31/1990 $10,057 $10,701
6/30/1990 $ 9,943 $10,629
7/31/1990 $ 9,576 $10,595
8/31/1990 $ 8,558 $ 9,637
9/30/1990 $ 7,776 $ 9,168
10/31/1990 $ 7,446 $ 9,129
11/30/1990 $ 8,030 $ 9,719
12/31/1990 $ 8,492 $ 9,990
1/31/1991 $ 9,268 $10,425
2/28/1991 $ 9,949 $11,171
3/31/1991 $10,351 $11,441
4/30/1991 $10,457 $11,468
5/31/1991 $11,109 $11,963
6/30/1991 $10,553 $11,415
7/31/1991 $10,946 $11,947
8/31/1991 $11,348 $12,230
9/30/1991 $11,300 $12,025
10/31/1991 $11,319 $12,187
11/30/1991 $10,524 $11,696
12/31/1991 $11,737 $13,034
1/31/1992 $11,933 $12,791
2/29/1992 $12,181 $12,956
3/31/1992 $11,985 $12,704
4/30/1992 $12,254 $13,077
5/31/1992 $12,316 $13,141
6/30/1992 $12,171 $12,946
7/31/1992 $12,576 $13,475
8/31/1992 $12,233 $13,199
9/30/1992 $12,337 $13,354
10/31/1992 $12,535 $13,400
11/30/1992 $13,221 $13,857
12/31/1992 $13,612 $14,027
1/31/1993 $13,816 $14,144
2/28/1993 $13,702 $14,337
3/31/1993 $13,952 $14,639
4/30/1993 $13,634 $14,285
5/31/1993 $13,793 $14,668
6/30/1993 $13,975 $14,711
7/31/1993 $13,941 $14,651
8/31/1993 $14,292 $15,207
9/30/1993 $14,133 $15,091
10/31/1993 $14,258 $15,403
11/30/1993 $14,156 $15,256
12/31/1993 $14,430 $15,440
1/31/1994 $14,912 $15,965
2/28/1994 $14,597 $15,532
3/31/1994 $14,043 $14,855
4/30/1994 $14,685 $15,045
5/31/1994 $15,152 $15,292
6/30/1994 $14,509 $14,917
7/31/1994 $14,723 $15,407
8/31/1994 $15,240 $16,039
9/30/1994 $14,749 $15,647
10/31/1994 $14,774 $15,998
11/30/1994 $14,282 $15,416
12/31/1994 $14,452 $15,644
1/31/1995 $15,227 $16,050
2/28/1995 $15,790 $16,676
3/31/1995 $16,029 $17,168
4/30/1995 $16,424 $17,673
5/31/1995 $17,086 $18,380
6/30/1995 $17,325 $18,806
7/31/1995 $17,621 $19,430
8/31/1995 $18,001 $19,479
9/30/1995 $18,762 $20,301
10/31/1995 $18,790 $20,228
11/30/1995 $19,847 $21,116
12/31/1995 $20,285 $21,523
1/31/1996 $21,096 $22,256
2/29/1996 $21,218 $22,462
3/31/1996 $21,234 $22,678
4/30/1996 $21,218 $23,013
5/31/1996 $21,433 $23,606
6/30/1996 $21,846 $23,696
7/31/1996 $21,280 $22,649
8/31/1996 $21,770 $23,127
9/30/1996 $22,811 $24,429
10/31/1996 $23,530 $25,103
11/30/1996 $24,678 $27,000
12/31/1996 $24,599 $26,465
1/31/1997 $25,367 $28,118
2/28/1997 $25,706 $28,339
3/31/1997 $25,385 $27,175
4/30/1997 $26,491 $28,797
5/31/1997 $27,188 $30,550
6/30/1997 $28,098 $31,919
7/31/1997 $29,419 $34,458
8/31/1997 $28,402 $32,528
9/30/1997 $29,972 $34,309
10/31/1997 $30,454 $33,163
11/30/1997 $31,740 $34,699
12/31/1997 $33,040 $35,295
1/31/1998 $33,140 $35,685
2/28/1998 $34,621 $38,259
3/31/1998 $35,281 $40,218
4/30/1998 $36,001 $40,622
5/31/1998 $35,601 $39,924
6/30/1998 $36,642 $41,546
7/31/1998 $35,741 $41,104
8/31/1998 $31,679 $35,161
9/30/1998 $32,139 $37,413
10/31/1998 $34,440 $40,457
11/30/1998 $36,811 $42,909
12/31/1998 $37,898 $45,381
1/31/1999 $36,516 $47,279
2/28/1999 $34,885 $45,809
3/31/1999 $35,157 $47,642
4/30/1999 $37,309 $49,487
5/31/1999 $37,830 $48,319
6/30/1999 $38,261 $51,000
7/31/1999 $37,853 $49,408
8/31/1999 $35,316 $49,163
9/30/1999 $32,416 $47,816
10/31/1999 $34,228 $50,841
11/30/1999 $32,817 $51,875
12/31/1999 $32,566 $54,930
1/31/2000 $31,128 $52,170
2/29/2000 $27,203 $51,183
3/31/2000 $31,105 $56,190
4/30/2000 $31,881 $54,499
5/31/2000 $32,634 $53,381
6/30/2000 $31,219 $54,697
7/31/2000 $32,223 $53,842
8/31/2000 $33,319 $57,186
9/30/2000 $36,605 $54,167
10/31/2000 $39,184 $53,938
11/30/2000 $39,709 $49,686
12/31/2000 $44,022 $49,929
1/31/2001 $41,283 $51,700
2/28/2001 $42,356 $46,986
3/31/2001 $42,082 $44,010
4/30/2001 $43,086 $47,430
5/31/2001 $44,798 $47,748
6/30/2001 $45,482 $46,585
7/31/2001 $44,889 $46,127
8/31/2001 $43,269 $43,239
9/30/2001 $43,200 $39,748
10/31/2001 $43,451 $40,505
11/30/2001 $44,113 $43,613
12/31/2001 $45,333 $43,995
1/31/2002 $45,927 $43,353
2/28/2002 $47,229 $42,516
3/31/2002 $48,098 $44,116
4/30/2002 $49,629 $41,441
5/31/2002 $48,920 $41,136
6/30/2002 $46,384 $38,206
7/31/2002 $45,516 $35,228
8/31/2002 $46,201 $35,458
9/30/2002 $42,294 $31,605
10/31/2002 $45,310 $34,387
11/30/2002 $45,334 $36,411
12/31/2002 $44,381 $34,272
1/31/2003 $43,334 $33,374
2/28/2003 $41,596 $32,873
3/31/2003 $41,953 $33,192
4/30/2003 $45,786 $35,926
5/31/2003 $48,286 $37,819
6/30/2003 $47,286 $38,302
7/31/2003 $49,358 $38,977
8/31/2003 $50,334 $39,737
9/30/2003 $50,202 $39,315
10/31/2003 $52,439 $41,539
11/30/2003 $53,718 $41,905
12/31/2003 $55,273 $44,102
1/31/2004 $56,945 $44,912
2/29/2004 $57,477 $45,536
3/31/2004 $56,768 $44,849
4/30/2004 $56,261 $44,145
5/31/2004 $56,059 $44,751
6/30/2004 $57,146 $45,621
7/31/2004 $55,797 $44,111
8/31/2004 $56,347 $44,289
9/30/2004 $55,797 $44,769
10/31/2004 $56,622 $45,453
11/30/2004 $58,109 $47,292
12/31/2004 $59,707 $48,901
1/31/2005 $58,798 $47,709
2/28/2005 $58,884 $48,713
Average Annual Total Return - for the periods ended February 28, 2005
- --------------------------------------------------------------------------------
One Five Ten Since
Year Year Year Inception*
- ---------------------------------------------------------------------------------------
Focused Value Fund - Investor Shares 2.36% 16.63% 13.85% 12.90%
- ---------------------------------------------------------------------------------------
Focused Value Fund - Class I Shares 2.17% 16.50% 13.69% 12.77%
- ---------------------------------------------------------------------------------------
Focused Value Fund - Class C Shares
NAV 1.68% 15.90% 13.05% 12.20%
MOP 0.78% 15.90% 13.05% 12.20%
- ---------------------------------------------------------------------------------------
Focused Value Fund - Class A Shares
NAV 2.45% 16.70% 14.07% 13.07%
MOP (3.43)% 15.32% 13.40% 12.62%
- ---------------------------------------------------------------------------------------
S&P 500(R) Index 6.98% (0.98)% 11.32% 11.20%
=======================================================================================
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 1-800-525-3713 or visit www.janus.com for current month end
performance.
The performance shown for Class A Shares at Maximum Offering Price ("MOP")
reflects the maximum 5.75% upfront sales charge on Class A Shares but does not
include a 1% Contingent Deferred Sales Charge ("CDSC") that may be imposed on
certain redemptions of Class A Shares purchased without an initial sales charge
and redeemed within 12 months of purchase.
The performance shown at MOP for Class C Shares includes a 1% CDSC on periods of
less than 12 months. The performance in the table at Net Asset Value ("NAV")
does not include any applicable sales loads or CDSCs. Performance would have
been lower had these charges been taken into account. All returns include
reinvested dividends and capital gains, but do not include the effect of taxes
that a shareholder would pay on fund distributions or the redemption of Fund
Shares. Effective September 30, 2004, the 1% upfront sales charge on C Shares
was eliminated.
Effective market close on March 28, 2005, the CDSC that may apply has been
waived.
* The Fund's inception date - March 30, 1990.
4 Janus Adviser February 28, 2005
(unaudited)
Fund Expenses
- --------------------------------------------------------------------------------
The examples below show you the ongoing costs (in dollars) of investing in your
fund and compare these costs with those of other mutual funds. Please refer to
page 1 for a detailed explanation of the information presented in these charts.
Beginning Ending Expenses Paid
Account Value Account Value During Period
Expense Example - Investor Shares (9/1/04) (2/28/05) (9/1/04-2/28/05)*
- ---------------------------------------------------------------------------------------------
Actual $1,000.00 $1,044.60 $6.34
- ---------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,018.60 $6.26
- ---------------------------------------------------------------------------------------------
Beginning Ending Expenses Paid
Account Value Account Value During Period
Expense Example - I Shares (9/1/04) (2/28/05) (9/1/04-2/28/05)*
- ---------------------------------------------------------------------------------------------
Actual $1,000.00 $1,043.70 $7.09
- ---------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,017.85 $7.00
- ---------------------------------------------------------------------------------------------
Beginning Ending Expenses Paid
Account Value Account Value During Period
Expense Example - C Shares (9/1/04) (2/28/05) (9/1/04-2/28/05)*
- ---------------------------------------------------------------------------------------------
Actual $1,000.00 $1,041.40 $9.62
- ---------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,015.37 $9.49
- ---------------------------------------------------------------------------------------------
Beginning Ending Expenses Paid
Account Value Account Value During Period
Expense Example - A Shares (9/1/04) (2/28/05) (9/1/04-2/28/05)*
- ---------------------------------------------------------------------------------------------
Actual $1,000.00 $1,044.50 $5.83
- ---------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,019.09 $5.76
- ---------------------------------------------------------------------------------------------
*Expenses are equal to the annualized expense ratio of 1.25% for Investor
Shares, 1.40% for I Shares, 1.90% for C Shares and 1.15% for A Shares,
multiplied by the average account value over the period, multiplied by 181/365
(to reflect the one-half year period). Expenses include the effect of
contractual waivers by Janus Capital.
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments for index definitions. See "Explanations
of Charts, Tables and Financial Statements." See Note 6 in Notes to Financial
Statements.
Subject to approval by shareholders at a Special Meeting of Shareholders to be
held May 17, 2005, Phoenix Investment Counsel, Inc. will replace Janus as the
adviser of the funds. The funds will carry the Phoenix name and Vontobel will
continue to serve as the funds' subadviser. Shareholders as of the record date
of April 1, 2005 will receive a proxy statement that provides details about the
Special Meeting of Shareholders.
Returns shown for Focused Value Fund for periods prior to October 13, 2003 are
derived from the historical performance of Class A Shares of Vontobel US Value
Fund. Returns are restated based on the Fund's fees and expenses (ignoring any
fee and expense limitations), which are equal to or higher (prior to application
of contractual expense waivers) than those of the Vontobel Fund.
This Fund is designed for long-term investors who can accept the special risks
associated with value investing. A "nondiversified" portfolio has the ability to
take larger positions in a smaller number of issuers than a "diversified"
portfolio. Nondiversified portfolios may experience greater price volatility.
The Fund 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.
There is no assurance the investment process will consistently lead to
successful investing.
Due to recent market volatility, the Fund may have an increased position in cash
for temporary defensive purposes.
Janus Capital has contractually agreed to waive the Fund's total operating
expenses to the levels indicated in the prospectus until at least September 30,
2005. Without such waivers, total returns would have been lower.
Vontobel Asset Management, Inc. is the subadviser to the Focused Value and
International Equity Funds.
Janus Adviser February 28, 2005 5
Focused Value Fund
Schedule of Investments
As of February 28, 2005
Shares or Principal Amount Value
- --------------------------------------------------------------------------------
Common Stock - 80.4%
Apparel Manufacturers - 1.3%
25,200 Liz Claiborne, Inc. ............................ $ 1,065,960
Beverages - Wine and Spirits - 3.5%
50,600 Diageo PLC (ADR) ............................... 2,897,862
Fiduciary Banks - 3.2%
61,100 State Street Corp. ............................. 2,679,235
Finance - Credit Card - 2.1%
32,600 American Express Co. ........................... 1,765,290
Finance - Mortgage Loan Banker - 9.1%
50,674 Fannie Mae ..................................... 2,962,402
74,500 Freddie Mac .................................... 4,619,000
7,581,402
Food - Diversified - 4.1%
13,500 General Mills, Inc. ............................ 706,995
38,600 Nestle S.A. (ADR) .............................. 2,678,840
3,385,835
Instruments - Controls - 0.7%
17,600 Watts Water Technologies, Inc. - Class A ....... 585,200
Medical - Hospitals - 7.1%
43,300 HCA, Inc. ...................................... 2,044,193
84,500 Health Management Associates, Inc. - Class A ... 1,940,965
40,900 Universal Health Services, Inc. - Class B ...... 1,930,480
5,915,638
Motorcycle and Motor Scooter Manufacturing - 1.8%
24,600 Harley-Davidson, Inc. .......................... 1,522,248
Multi-Line Insurance - 7.6%
48,700 American International Group, Inc. ............. 3,253,160
59,117 Cincinnati Financial Corp. ..................... 2,644,303
17,337 Old Republic International Corp. ............... 415,915
6,313,378
Property and Casualty Insurance - 3.1%
24,700 Chubb Corp. .................................... 1,954,017
1,775 Markel Corp.* .................................. 634,563
2,588,580
Radio - 2.7%
37,600 Entercom Communications Corp.* ................. 1,294,192
60,925 Saga Communications, Inc. - Class A* ........... 976,628
2,270,820
Reinsurance - 14.5%
134 Berkshire Hathaway, Inc. - Class A* ............ 12,086,799
Retail - Discount - 3.4%
115,900 TJX Companies, Inc. ............................ 2,830,278
Retail - Jewelry - 3.0%
58,400 Signet Group PLC (ADR) ......................... 1,284,800
39,200 Tiffany & Co. .................................. 1,181,880
2,466,680
Savings/Loan/Thrifts - 3.4%
46,300 Golden West Financial Corp. .................... 2,865,507
Super-Regional Banks - 7.8%
86,000 Fifth Third Bancorp ............................ 3,850,220
45,400 Wells Fargo & Co. .............................. 2,695,852
6,546,072
Textile-Home Furnishings - 2.0%
19,050 Mohawk Industries, Inc.* ....................... 1,709,547
- --------------------------------------------------------------------------------
Total Common Stock (cost $59,205,934) ............................ 67,076,331
- --------------------------------------------------------------------------------
Repurchase Agreement - 19.4%
$16,200,000 ABN Amro Bank N.V., 2.60%
dated 2/28/05, maturing 3/1/05
to be repurchased at $16,201,170
collateralized by $1,988,186
in Asset Backed Securities
0%, 6/27/16; AAA; $14,741,551
in U.S. Government Agencies
0% - 7.50%, 8/26/05 - 3/1/35
$4,375,339 in U.S. Treasury Bills/Notes
0% - 6.50%, 6/23/05 - 2/15/31;
with respective values of
$1,993,157, $10,107,244 and $4,423,600
(cost $16,200,000) ........................... $16,200,000
- --------------------------------------------------------------------------------
Total Investments (total cost $75,405,934) - 99.8% ............... 83,276,331
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 0.2% .... 142,452
- --------------------------------------------------------------------------------
Net Assets - 100% ................................................ $83,418,783
- --------------------------------------------------------------------------------
Summary of Investments by Country
Country Value % of Investment Securities
- --------------------------------------------------------------------------------
Switzerland $ 2,678,840 3.2%
United Kingdom 4,182,662 5.0%
United States++ 76,414,829 91.8%
- --------------------------------------------------------------------------------
Total $83,276,331 100.0%
++ Includes Short-Term Securities (72.3% excluding Short-Term Securities)
See Notes to Schedules of Investments and Financial Statements
6 Janus Adviser February 28, 2005
International Equity Fund (unaudited) Sub-advised by Vontobel
Asset Management, Inc.
================================================================================
Fund Strategy
International Equity Fund is a diversified fund that invests primarily in
securities located outside the U.S. The Fund invests in companies believed to be
well-managed, profitable and with proven operating histories in understandable,
predictable businesses that are attractively priced.
================================================================================
[PHOTO]
Rajiv Jain
portfolio manager
Performance Overview
During the 12 months ended February 28, 2005, International Equity Fund gained,
returning 26.08% for its Investor Shares (please see the chart on page 9 for
additional Share Class performance). This compares to a 18.68% gain for the
Fund's benchmark, the Morgan Stanley Capital International EAFE(R) Index.
From a sector standpoint, strong stock selection and an overweight position
versus the Index in consumer staples and financial services helped us outpace
the Index. The only groups that help back our relative results were energy and
materials, two sectors we chose not to invest in. We therefore missed the whole
bull market in energy, copper, steel and other real assets. Nonetheless, we seek
predictability in an unpredictable world. This means that, given our exposure to
predictable companies, we may underperform - at times significantly - when
investors get excited about economic growth prospects and chase less predictable
businesses with uncertain long-term economies.
Investment Strategy in This Environment
As always, we remain focused on our fundamental analysis of individual
businesses, rather than on market opinions of their merits or macroeconomic
conditions. We seek long-term sustainable growth. Sustainability in itself
implies high quality, as both the fundamentals of a business and the quality of
management must be exceptional in order for a business to sustain growth for
five-plus years. Additionally, high return on equity is imperative, as it
prevents the need for cash infusion (debt or equity) to sustain growth. We find
value when companies' valuations by the market do not, in our opinion, correctly
reflect the sustainability of the business.
Top 10 Equity Holdings - (% of Net Assets)
- --------------------------------------------------------------------------------
February 28, 2005 February 29, 2004
Anglo Irish Bank Corporation PLC 4.7% 4.5%
Tesco PLC 4.4% 3.4%
Northern Rock PLC 4.1% 4.2%
Enagas 3.4% 2.3%
Macquarie Bank, Ltd. 3.1% 2.7%
British American Tobacco PLC 3.0% 3.0%
Nestle S.A. 2.8% 3.4%
Red Electrica de Espana 2.8% 2.3%
ITC, Ltd. (GDR) 2.6% 1.7%
Diageo PLC 2.5% 4.0%
Portfolio Composition
As of February 28, 2005, the Fund's 47 holdings were in companies throughout 15
foreign countries, of which 4 were emerging markets, representing 18.1% of the
Fund. Of the remaining 77.7% weighting in international markets, 56.8% were
based in Europe and 19.5% in Asia/Pacific Basin. Meanwhile, the Fund's cash
position was 4.2% and its top 10 equity holdings accounted for 33.4% of total
net assets.
Earnings Growth Among Several Key Holdings and Select Australia-based Stocks
Contributed to Performance
The primary reason the Fund outperformed the Index is that some of our large
holdings were re-rated and their earnings grew in the double-digits. These
included U.K. retailer Tesco, Spanish natural gas company Enagas Sa, Spanish
electric company Red Electrica de Espana and Ireland-based Anglo Irish Bank.
Several of our Australian stocks also turned in strong performance during the
period. In particular, we continue to like the total return potential of names
like Macquarie Bank, an investment banker/broker and TABCORP, a diversified
entertainment group.
Janus Adviser February 28, 2005 7
International Equity Fund (unaudited)
Weak Performers Included a Swiss Cosmetics Company, Select Japanese Stocks and a
Netherlands-based Beverage Company
Among the Fund's largest detractors was Oriflame Cosmetics SA of Sweden.
Although Oriflame is the top direct seller of cosmetics in Russia, we were
disappointed by recent results and the risk to margin pressures from direct
competitor Avon Products and subsequently we sold our position.
Japan was not a very fruitful area of investment for us during the year. Among
the Fund's worst performers were Japanese Tokyo Gas and office equipment company
Ricoh, both of which were liquidated from the portfolio during the period. We
sold our position in Tokyo Gas due to increased risk of price cuts being passed
on to the consumer. With regard to Ricoh, we clearly underestimated the
competitive threats from Xerox and the incentives required to promote color
copying. We believe the stock remains very cheap and we may revisit Ricoh in the
future.
Significant Areas of Investment - Fund vs. Index (% of Net Assets)
- --------------------------------------------------------------------------------
[BAR CHART OMITTED]
Morgan Stanley Capital
International Equity Fund International EAFE(R) Index
Commercial Banks 16.2% 18.3%
Tobacco 10.5% 0.8%
Food - Retail 7.5% 1.4%
Food - Diversified 4.6% 2.8%
Mortgage Banks 4.1% 0.1%
Top Countries - (% of Net Assets)
- --------------------------------------------------------------------------------
[BAR CHART OMITTED]
United Kingdom 29.8%
Australia 12.8%
Spain 8.2%
Switzerland 7.7%
India 7.1%
We also sold out of Heineken due to, what we believe are, structural issues in
the U.S. and Europe, along with the strength of the euro, which has a real
impact on Heineken's margins. Having said that, Heineken is a good franchise and
will remain in our investable universe.
Investment Strategy and Outlook
Looking ahead, we believe that stock market returns will be much more muted
through the remainder of 2005. If the market returns a mid-single-digit return,
we would be thrilled. Although that may sound low after heady years, it's not
bad when bonds in general are yielding around 4% and equity valuations in most
market sectors are not as cheap as they were two years ago. Europe, we believe,
offers some room for surprise as the price to valuation gap has grown relative
to some of the Asian names, although European companies tend to have slower
growth. While investors seem to be writing off Europe, at 12 to 13 times
earnings and over a 3% yield, we believe the upside could be attractive over the
next three years. We nevertheless, have sizeable exposure to Asia.
Going forward, our goal is for the Fund to achieve high-single digit earnings
growth along with a decent dividend yield. If our earnings of the portfolio can
grow modestly, and if one adds a +2% yield with not much multiple contraction,
we think we can generate decent returns over a market cycle and remain true to
our long run objective.
Thank you for your continued investment and confidence.
8 Janus Adviser February 28, 2005
(unaudited)
================================================================================
Performance
- --------------------------------------------------------------------------------
Initial investment of $10,000
[MOUNTAIN CHART OMITTED]
International Equity Morgan Stanley Capital
Fund -Class A Shares International EAFE(R)
(at MOP) Index
7/6/1990* $ 9,425 $10,000
7/31/1990 $ 9,800 $10,141
8/31/1990 $ 8,897 $ 9,156
9/30/1990 $ 7,572 $ 7,880
10/31/1990 $ 8,537 $ 9,108
11/30/1990 $ 8,376 $ 8,570
12/31/1990 $ 8,208 $ 8,710
1/31/1991 $ 8,454 $ 8,991
2/28/1991 $ 8,969 $ 9,955
3/31/1991 $ 9,038 $ 9,357
4/30/1991 $ 9,092 $ 9,449
5/31/1991 $ 9,346 $ 9,548
6/30/1991 $ 9,015 $ 8,847
7/31/1991 $ 9,285 $ 9,281
8/31/1991 $ 9,446 $ 9,093
9/30/1991 $ 9,531 $ 9,605
10/31/1991 $ 9,615 $ 9,741
11/30/1991 $ 9,300 $ 9,286
12/31/1991 $ 9,748 $ 9,766
1/31/1992 $ 9,890 $ 9,558
2/29/1992 $10,009 $ 9,216
3/31/1992 $ 9,697 $ 8,607
4/30/1992 $ 9,854 $ 8,648
5/31/1992 $10,335 $ 9,226
6/30/1992 $ 9,983 $ 8,789
7/31/1992 $ 9,603 $ 8,564
8/31/1992 $ 9,561 $ 9,101
9/30/1992 $ 9,227 $ 8,922
10/31/1992 $ 9,232 $ 8,454
11/30/1992 $ 9,382 $ 8,533
12/31/1992 $ 9,469 $ 8,577
1/31/1993 $ 9,487 $ 8,576
2/28/1993 $ 9,753 $ 8,835
3/31/1993 $10,213 $ 9,605
4/30/1993 $10,561 $10,517
5/31/1993 $10,677 $10,739
6/30/1993 $10,475 $10,572
7/31/1993 $10,782 $10,942
8/31/1993 $11,481 $11,532
9/30/1993 $11,568 $11,273
10/31/1993 $12,245 $11,620
11/30/1993 $11,911 $10,604
12/31/1993 $13,254 $11,370
1/31/1994 $13,922 $12,331
2/28/1994 $13,473 $12,297
3/31/1994 $12,577 $11,768
4/30/1994 $12,799 $12,267
5/31/1994 $12,926 $12,196
6/30/1994 $12,508 $12,369
7/31/1994 $12,982 $12,488
8/31/1994 $13,596 $12,783
9/30/1994 $13,363 $12,381
10/31/1994 $13,420 $12,793
11/30/1994 $12,798 $12,178
12/31/1994 $12,410 $12,254
1/31/1995 $11,486 $11,784
2/28/1995 $11,521 $11,750
3/31/1995 $11,761 $12,483
4/30/1995 $12,090 $12,952
5/31/1995 $12,268 $12,798
6/30/1995 $12,175 $12,573
7/31/1995 $12,856 $13,356
8/31/1995 $12,811 $12,847
9/30/1995 $12,990 $13,098
10/31/1995 $12,927 $12,745
11/30/1995 $13,240 $13,100
12/31/1995 $13,641 $13,628
1/31/1996 $14,049 $13,684
2/29/1996 $14,073 $13,730
3/31/1996 $14,404 $14,022
4/30/1996 $14,675 $14,429
5/31/1996 $14,529 $14,164
6/30/1996 $14,890 $14,244
7/31/1996 $14,091 $13,827
8/31/1996 $14,322 $13,858
9/30/1996 $14,842 $14,226
10/31/1996 $14,906 $14,080
11/30/1996 $15,596 $14,640
12/31/1996 $15,800 $14,452
1/31/1997 $15,776 $13,946
2/28/1997 $16,090 $14,174
3/31/1997 $16,126 $14,226
4/30/1997 $16,120 $14,301
5/31/1997 $17,037 $15,232
6/30/1997 $17,622 $16,072
7/31/1997 $18,501 $16,332
8/31/1997 $16,998 $15,112
9/30/1997 $18,159 $15,959
10/31/1997 $16,813 $14,732
11/30/1997 $16,849 $14,582
12/31/1997 $17,057 $14,709
1/31/1998 $17,488 $15,382
2/28/1998 $18,815 $16,369
3/31/1998 $19,250 $16,873
4/30/1998 $19,594 $17,006
5/31/1998 $19,873 $16,924
6/30/1998 $19,918 $17,052
7/31/1998 $20,263 $17,225
8/31/1998 $17,313 $15,091
9/30/1998 $16,641 $14,628
10/31/1998 $18,003 $16,153
11/30/1998 $19,051 $16,980
12/31/1998 $19,796 $17,650
1/31/1999 $19,861 $17,598
2/28/1999 $19,160 $17,179
3/31/1999 $19,904 $17,896
4/30/1999 $20,562 $18,621
5/31/1999 $19,384 $17,662
6/30/1999 $20,496 $18,351
7/31/1999 $20,865 $18,896
8/31/1999 $21,213 $18,965
9/30/1999 $21,395 $19,156
10/31/1999 $22,722 $19,873
11/30/1999 $25,436 $20,564
12/31/1999 $28,813 $22,410
1/31/2000 $26,335 $20,986
2/29/2000 $28,356 $21,551
3/31/2000 $27,712 $22,386
4/30/2000 $25,761 $21,208
5/31/2000 $24,191 $20,690
6/30/2000 $25,063 $21,499
7/31/2000 $24,233 $20,598
8/31/2000 $25,047 $20,777
9/30/2000 $23,661 $19,765
10/31/2000 $23,098 $19,298
11/30/2000 $22,215 $18,574
12/31/2000 $23,062 $19,235
1/31/2001 $22,658 $19,225
2/28/2001 $20,257 $17,783
3/31/2001 $18,496 $16,598
4/30/2001 $19,875 $17,751
5/31/2001 $19,000 $17,125
6/30/2001 $18,102 $16,425
7/31/2001 $17,696 $16,126
8/31/2001 $17,300 $15,717
9/30/2001 $15,220 $14,125
10/31/2001 $15,774 $14,487
11/30/2001 $16,113 $15,021
12/31/2001 $16,225 $15,110
1/31/2002 $15,107 $14,307
2/28/2002 $15,197 $14,408
3/31/2002 $16,122 $15,257
4/30/2002 $16,626 $15,288
5/31/2002 $16,977 $15,481
6/30/2002 $16,642 $14,865
7/31/2002 $15,339 $13,398
8/31/2002 $15,611 $13,367
9/30/2002 $14,101 $11,932
10/31/2002 $14,777 $12,573
11/30/2002 $15,057 $13,144
12/31/2002 $14,893 $12,702
1/31/2003 $14,015 $12,171
2/28/2003 $13,904 $11,892
3/31/2003 $13,914 $11,658
4/30/2003 $15,094 $12,801
5/31/2003 $15,821 $13,577
6/30/2003 $15,959 $13,905
7/31/2003 $15,862 $14,241
8/31/2003 $16,352 $14,585
9/30/2003 $16,998 $15,035
10/31/2003 $17,772 $15,972
11/30/2003 $18,128 $16,327
12/31/2003 $19,462 $17,603
1/31/2004 $19,803 $17,852
2/29/2004 $20,287 $18,264
3/31/2004 $20,419 $18,366
4/30/2004 $20,183 $17,951
5/31/2004 $19,881 $18,011
6/30/2004 $20,386 $18,406
7/31/2004 $19,933 $17,809
8/31/2004 $20,040 $17,887
9/30/2004 $20,945 $18,355
10/31/2004 $21,585 $18,981
11/30/2004 $23,316 $20,277
12/31/2004 $24,957 $21,167
1/31/2005 $24,567 $20,778
2/28/2005 $25,589 $21,676
Average Annual Total Return - for the periods ended February 28, 2005
- --------------------------------------------------------------------------------
One Five Ten Since
Year Year Year Inception*
- -----------------------------------------------------------------------------------------------------------------
International Equity Fund - Investor Shares 26.08% (2.13)% 8.21% 6.97%
- -----------------------------------------------------------------------------------------------------------------
International Equity Fund - Class I Shares 25.87% (2.27)% 8.07% 6.84%
- -----------------------------------------------------------------------------------------------------------------
International Equity Fund - Class C Shares
NAV 25.21% (2.56)% 7.73% 6.45%
MOP 23.90% (2.56)% 7.73% 6.45%
- -----------------------------------------------------------------------------------------------------------------
International Equity Fund - Class A Shares
NAV 26.15% (2.03)% 8.31% 7.06%
MOP 18.91% (3.19)% 7.67% 6.62%
- -----------------------------------------------------------------------------------------------------------------
Morgan Stanley Capital
International EAFE(R) Index# 18.68% 0.12% 6.32% 5.42%
=================================================================================================================
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 current month end
performance.
The performance shown for Class A Shares at Maximum Offering Price ("MOP")
reflects the maximum 5.75% upfront sales charge on Class A Shares but does not
include a 1% Contingent Deferred Sales Charge ("CDSC") that may be imposed on
certain redemptions of Class A Shares purchased without an initial sales charge
and redeemed within 12 months of purchase.
The performance shown at MOP for Class C Shares includes a 1% CDSC on periods of
less than 12 months. The performance in the table at Net Asset Value ("NAV")
does not include any applicable sales loads or CDSCs. Performance would have
been lower had these charges been taken into account. All returns include
reinvested dividends and capital gains, but do not include the effect of taxes
that a shareholder would pay on fund distributions or the redemption of Fund
Shares. Effective September 30, 2004, the 1% upfront sales charge on C Shares
was eliminated.
Effective market close on March 28, 2005, the CDSC that may apply has been
waived.
# Since inception return is calculated based on historical information from
June 30, 1990 to February 28, 2005.
* The Fund's inception date - July 6, 1990.
Janus Adviser February 28, 2005 9
International Equity Fund (unaudited)
Fund Expenses
- --------------------------------------------------------------------------------
The examples below show you the ongoing costs (in dollars) of investing in your
fund and compare these costs with those of other mutual funds. Please refer to
page 1 for a detailed explanation of the information presented in these charts.
Beginning Ending Expenses Paid
Account Value Account Value During Period
Expense Example - Investor Shares (9/1/04) (2/28/05) (9/1/04-2/28/05)*
- ----------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,277.30 $7.62
- ----------------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,018.10 $6.76
- ----------------------------------------------------------------------------------------------------------
Beginning Ending Expenses Paid
Account Value Account Value During Period
Expense Example - I Shares (9/1/04) (2/28/05) (9/1/04-2/28/05)*
- ----------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,276.00 $8.46
- ----------------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,017.36 $7.50
- ----------------------------------------------------------------------------------------------------------
Beginning Ending Expenses Paid
Account Value Account Value During Period
Expense Example - C Shares (9/1/04) (2/28/05) (9/1/04-2/28/05)*
- ----------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,272.50 $11.27
- ----------------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,014.88 $9.99
- ----------------------------------------------------------------------------------------------------------
Beginning Ending Expenses Paid
Account Value Account Value During Period
Expense Example - A Shares (9/1/04) (2/28/05) (9/1/04-2/28/05)*
- ----------------------------------------------------------------------------------------------------------
Actual $1,000.00 $1,277.10 $7.06
- ----------------------------------------------------------------------------------------------------------
Hypothetical
(5% return before expenses) $1,000.00 $1,018.60 $6.26
- ----------------------------------------------------------------------------------------------------------
*Expenses are equal to the annualized expense ratio of 1.35% for Investor
Shares, 1.50% for I Shares, 2.00% for C Shares and 1.25% for A Shares,
multiplied by the average account value over the period, multiplied by 181/365
(to reflect the one-half year period). Expenses include the effect of
contractual waivers by Janus Capital.
- --------------------------------------------------------------------------------
Since inception returns reflect the returns of Vontobel International Equity
Fund from July 6, 1990, when Vontobel Asset Management, Inc. became the Fund's
investment adviser. Previous periods during which the Fund was advised by other
investment advisers are not shown. Returns stated for periods prior to October
13, 2003 are derived from the historical performance of Class A Shares of
Vontobel International Equity Fund. Returns are restated based on the Fund's
fees and expenses (ignoring any fee and expense limitations), which are equal to
or higher (prior to application of contractual expense waivers) than those of
the Vontobel Fund.
See Notes to Schedules of Investments for index definitions. See "Explanations
of Charts, Tables and Financial Statements." See Note 6 in Notes to Financial
Statements.
Subject to approval by shareholders at a Special Meeting of Shareholders to be
held May 17, 2005, Phoenix Investment Counsel, Inc. will replace Janus as the
adviser of the funds. The funds will carry the Phoenix name and Vontobel will
continue to serve as the funds' subadviser. Shareholders as of the record date
of April 1, 2005 will receive a proxy statement that provides details about the
Special Meeting of Shareholders.
For Investor Shares and Class I Shares, a 2.00% 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. Effective
market close on March 28, 2005, the 2% redemption fee that may be imposed on
shares held for three months or less has been waived for investors wishing to
redeem from the Fund pending the effective date of the new advisory and
subadvisory agreements.
The Fund 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.
This Fund may have significant exposure to emerging markets which may lead to
greater price volatility.
Returns have sustained significant gains and losses due to market volatility in
the consumer staples and financials sectors.
There is no assurance the investment process will consistently lead to
successful investing.
Janus Capital has contractually agreed to waive the Fund's total operating
expenses to the levels indicated in the prospectus until at least September 30,
2005. Without such waivers, total returns would have been lower.
Foreign investing involves special risks such as currency fluctuations and
political uncertainty.
Vontobel Asset Management, Inc. is the subadviser to the Focused Value and
International Equity Funds.
10 Janus Adviser February 28, 2005
Schedule of Investments
As of February 28, 2005
Shares or Principal Amount Value
- --------------------------------------------------------------------------------
Common Stock - 94.7%
Applications Software - 2.2%
42,400 Infosys Technologies, Ltd. .................... $ 2,172,090
Athletic Footwear - 1.3%
5,700 Puma A.G. Rudolf Dassler Sport ................ 1,336,639
Automotive - Cars and Light Trucks - 2.2%
54,700 Toyota Motor Corp. ............................ 2,129,810
Beverages - Non-Alcoholic - 1.4%
1,423 Lotte Chilsung Beverage Company, Ltd. ......... 1,400,532
Beverages - Wine and Spirits - 2.5%
174,841 Diageo PLC .................................... 2,488,409
Building - Residential and Commercial - 2.4%
181,676 Barratt Developments PLC ...................... 2,351,736
Commercial Banks - 16.2%
176,555 Anglo Irish Bank Corporation PLC .............. 4,652,153
10,033 Banco Itau Holdings Financeira S.A.* .......... 1,735,699
28,833 Banco Popular Espanol S.A. .................... 1,996,698
18,600 BNP Paribas S.A. .............................. 1,349,629
49,000 HDFC Bank, Ltd. (ADR) ......................... 2,305,450
70,891 Royal Bank of Scotland Group PLC .............. 2,429,382
17,700 UBS A.G. ...................................... 1,538,000
16,007,011
Commercial Services - 1.0%
762,200 Singapore Airport Terminal Services, Ltd. ..... 1,010,439
Cosmetics and Toiletries - 1.4%
5,848 Amorepacific Corp. ............................ 1,351,533
Distribution/Wholesale - 1.4%
192,500 Esprit Holdings, Ltd. ......................... 1,369,922
Diversified Operations - 3.4%
137,000 Remgro, Ltd. .................................. 2,132,204
38,500 Wesfarmers, Ltd.* ............................. 1,192,538
3,324,742
Electric - Transmission - 2.8%
107,200 Red Electrica de Espana ....................... 2,767,899
Finance - Investment Bankers/Brokers - 3.1%
77,500 Macquarie Bank, Ltd. .......................... 3,020,658
Finance - Mortgage Loan Banker - 1.7%
160,100 Kensington Group PLC .......................... 1,650,330
Food - Confectionary - 1.4%
1,010 Lindt & Spruengli A.G. ........................ 1,407,320
Food - Diversified - 4.6%
173,831 Cadbury Schweppes PLC ......................... 1,707,267
9,990 Nestle S.A. ................................... 2,774,522
4,481,789
Food - Retail - 7.5%
7,600 Colruyt S.A. .................................. 1,306,198
749,043 Tesco PLC ..................................... 4,394,564
140,929 Woolworths, Ltd. .............................. 1,737,180
7,437,942
Gambling-Non Hotel - 1.2%
83,948 TABCORP Holdings, Ltd. ........................ 1,151,842
Gas - Distribution - 3.4%
202,800 Enagas ........................................ 3,327,055
Investment Companies - 1.7%
651,479 Macquarie Airports ............................ 1,728,940
Mortgage Banks - 4.1%
267,358 Northern Rock PLC ............................. 4,038,956
Property and Casualty Insurance - 3.9%
301,700 Insurance Australia Group, Ltd. ............... 1,529,643
158 Millea Holdings, Inc. ......................... 2,312,637
3,842,280
Property Trust - 2.3%
170,200 Westfield Group ............................... 2,271,926
Publishing - Newspapers - 2.1%
194,500 Johnston Press PLC ............................ 2,112,134
Real Estate Management/Services - 1.1%
27,000 Daito Trust Construction Company, Ltd. ........ 1,110,686
Retail - Jewelry - 1.7%
792,655 Signet Group PLC .............................. 1,706,301
Security Services - 1.4%
34,090 S1 Corp. ...................................... 1,377,048
Soap and Cleaning Preparations - 1.6%
51,116 Reckitt Benckiser PLC ......................... 1,611,217
Television - 1.3%
43,800 M6 Metropole Television ....................... 1,255,604
Tobacco - 10.5%
163,489 British American Tobacco PLC .................. 3,000,857
73,312 Imperial Tobacco Group PLC .................... 1,955,771
85,700 ITC, Ltd. (GDR) ............................... 2,536,720
46,600 KT&G Corp ..................................... 1,469,233
103,100 Souza Cruz S.A. ............................... 1,381,958
10,344,539
Transportation - Services - 1.9%
8,639 Kuehne & Nagel International A.G. ............. 1,897,128
- --------------------------------------------------------------------------------
Total Common Stock (cost $76,748,588) ........................... 93,484,457
- --------------------------------------------------------------------------------
Preferred Stock - 1.1%
Medical - Hospitals - 1.1%
15,075 Rhoen-Klinikum A.G.
(cost $812,078) ............................. 1,033,970
- --------------------------------------------------------------------------------
Repurchase Agreement - 7.5%
7,400,000 ABN Amro Bank N.V., 2.60%
dated 2/28/05, maturing 3/1/05
to be repurchased at $7,400,534
collateralized by $908,184
in Asset Backed Securities
0%, 6/27/16; AAA; $6,733,795
in U.S. Government Agencies
0% - 7.50%, 8/26/05 - 3/1/35
$1,998,612 in U.S. Treasury Bills/Notes
0% - 6.50%, 6/23/05 - 2/15/31;
with respective values of
$910,454, $4,616,889 and $2,020,657
(cost $7,400,000) ........................... 7,400,000
- --------------------------------------------------------------------------------
Total Investments (total cost $84,960,666) - 103.3% ............. 101,918,427
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets -(3.3)% .. (3,237,510)
- --------------------------------------------------------------------------------
Net Assets - 100% ............................................... $ 98,680,917
- --------------------------------------------------------------------------------
Summary of Investments by Country
Country Value % of Investment Securities
- --------------------------------------------------------------------------------
Australia $ 12,632,728 12.4%
Belgium 1,306,198 1.3%
Bermuda 1,369,922 1.3%
Brazil 3,117,657 3.1%
France 2,605,233 2.5%
Germany 2,370,609 2.3%
India 7,014,260 6.9%
Ireland 4,652,152 4.6%
Japan 5,553,133 5.4%
Singapore 1,010,439 1.0%
South Africa 2,132,204 2.1%
South Korea 5,598,346 5.5%
Spain 8,091,652 7.9%
Switzerland 7,616,970 7.5%
United Kingdom 29,446,924 28.9%
United States++ 7,400,000 7.3%
- --------------------------------------------------------------------------------
Total $101,918,427 100.0%
++Includes Short-Term Securities (0% excluding Short-Term Securities)
See Notes to Schedules of Investments and Financial Statements
Janus Adviser February 28, 2005 11
Statements of Assets and Liabilities
As of February 28, 2005 Focused Value International
(all numbers in thousands except net asset value per share) Fund Equity Fund
- ---------------------------------------------------------------------------------------------------------------------------------
Assets:
Investments at cost(1) $ 75,406 $ 84,961
Investments at value(1) $ 83,276 $ 101,918
Cash 168 166
Receivables:
Investments sold 181 --
Portfolio shares sold 214 986
Dividends 45 206
Interest 1 1
Other Assets 2 1
- ---------------------------------------------------------------------------------------------------------------------------------
Total Assets 83,887 103,278
- ---------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Payables:
Investments purchased 311 4,264
Portfolio shares repurchased 31 213
Dividends -- --
Advisory fees 35 32
Transfer agent fees and expenses 4 1
Trustees fees and expenses 30 8
Administrative fees - Investor Shares 5 7
Administrative fees - I Shares 1 --
Distribution fees - Investor Shares 14 17
Distribution fees - I Shares 1 --
Distribution fees - C Shares 2 --
Distribution fees - A Shares 1 1
Networking fees - C Shares 1 --
Networking fees - A Shares 2 1
Foreign Tax Liability -- 31
Accrued expenses 30 22
- ---------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 468 4,597
Net Assets $ 83,419 $ 98,681
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets Consist of:
Capital (par value and paid-in-surplus)* $ 71,855 $ 87,807
Undistributed net investment income/(loss)* 62 (215)
Undistributed net realized gain/(loss) from investments and foreign currency transactions* 3,632 (5,819)
Unrealized appreciation/(depreciation) of investments and foreign currency translations 7,870 16,908(2)
- ---------------------------------------------------------------------------------------------------------------------------------
Total Net Assets $ 83,419 $ 98,681
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets - Investor Shares $ 70,842 $ 94,261
Shares Outstanding, $0.001 Par Value (unlimited shares authorized) 3,426 4,962
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share $ 20.68 $ 19.00
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets - I Shares $ 3,941 $ 1,667
Shares Outstanding, $0.001 Par Value (unlimited shares authorized) 191 88
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value Per Share $ 20.63 $ 19.00
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets - C Shares $ 3,516 $ 39
Shares Outstanding, $0.001 Par Value (unlimited shares authorized) 174 2
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value and Redemption Price Per Share(3) $ 20.23 $ 19.11
- ---------------------------------------------------------------------------------------------------------------------------------
Net Assets - A Shares $ 5,120 $ 2,714
Shares Outstanding, $0.001 Par Value (unlimited shares authorized) 247 143
- ---------------------------------------------------------------------------------------------------------------------------------
Net Asset Value and Redemption Price Per Share(3) $ 20.74 $ 19.02
Maximum Offering Price Per Share(4) $ 22.01 $ 20.18
- ---------------------------------------------------------------------------------------------------------------------------------
*See Note 4 in Notes to Financial Statements.
(1) Investments at cost and value at February 28, 2005 include repurchase
agreements of $16,200,000 for Focused Value Fund.
(2) Net of foreign taxes on investments of $31,456 for International Equity
Fund.
(3) Redemption price per share may be reduced by any applicable CDSC.
(4) Maximum offering price is computed at 100/94.25 of net asset value.
See Notes to Financial Statements.
12 Janus Adviser February 28, 2005
Statements of Operations
For the fiscal year ended February 28, 2005 Focused Value International
(all numbers in thousands) Fund Equity Fund
- -----------------------------------------------------------------------------------------------------------------
Investment Income:
Interest $ 194 $ 44
Dividends 919 1,184
Foreign tax withheld (3) (122)
- -----------------------------------------------------------------------------------------------------------------
Total Investment Income 1,110 1,106
- -----------------------------------------------------------------------------------------------------------------
Expenses:
Advisory fees 791 421
Transfer agent fees and expenses 41 31
Registration fees 82 73
Postage and mailing expenses 10 4
Custodian fees 31 43
Printing expenses 19 13
Legal fees 31 30
Professional fees 19 20
Trustees fees and expenses 236 100
Administrative Service fees - Investor Shares 70 40
Administrative Service fees - I Shares 12 3
Distribution fees - Investor Shares 176 99
Distribution fees - I Shares 12 3
Distribution fees - C Shares 25 --
Distribution fees - A Shares 12 4
Networking fees - C Shares 1 --
Networking fees - A Shares 2 1
Other expenses 20 23
- -----------------------------------------------------------------------------------------------------------------
Total Expenses 1,590 908
Expense and Fee Offset -- (1)
Net Expenses 1,590 907
Excess Expense Reimbursement (542) (333)
Net Expenses after Expense Reimbursement 1,048 574
Net Investment Income/(Loss) 62 532
- -----------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on Investments:
Net realized gain/(loss) from securities transactions 6,273 2,420
Net realized gain/(loss) from foreign currency transactions -- (556)
Change in unrealized net appreciation/(depreciation) of investments and
foreign currency translations (4,345) 9,968(1)
Payment from affiliate (Note 2) 1 1
- -----------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gain/(Loss) on Investments 1,929 11,833
Net Increase/(Decrease) in Net Assets Resulting from Operations $ 1,991 $ 12,365
- -----------------------------------------------------------------------------------------------------------------
(1) Net of foreign taxes on investments of $31,456 for International Equity
Fund.
See Notes to Financial Statements.
Janus Adviser February 28, 2005 13
Statements of Changes in Net Assets
For the fiscal year ended February 28, 2005, the two Focused Value International
month fiscal period ended February 29, 2004 and for the Fund(1) Equity(2)
fiscal year ended December 31, 2003 (all numbers in thousands) 2005 2004 2003 2005 2004 2003(3)(4)
- ------------------------------------------------------------------------------------------------------------------------------------
Operations:
Net investment income/(loss) $ 62 $ (56) $ (715) $ 532 $ 5 $ 19
Net realized gain/(loss) from investment and
foreign currency transactions 6,273 2,551 8,813 1,864 218 1,652
Change in unrealized net appreciation/(depreciation)
of investments and foreign currency translations (4,345) 498 5,996 9,968 1,005 5,279
Payment from affiliate (Note 2) 1 -- -- 1 -- 26
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets Resulting from Operations 1,991 2,993 14,094 12,365 1,228 6,976
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions to Shareholders:
Net investment income*
Investor Shares -- -- -- (492) -- (128)
Class I Shares -- -- -- (9) -- (9)
Class C Shares -- -- -- -- -- --
Class A Shares -- -- -- (20) -- (7)
Net realized gain from investment transactions*
Investor Shares (7,871) -- (3,790) (486) -- (704)
Class I Shares (539) -- (386) (20) -- (41)
Class C Shares (280) -- (75) -- -- --
Class A Shares (545) -- (190) (25) -- (42)
Return of Capital*
Investor Shares -- -- -- -- -- (91)
Class I Shares -- -- -- -- -- (6)
Class C Shares -- -- -- -- -- --
Class A Shares -- -- -- -- -- (6)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Decrease from Dividends and Distributions (9,235) -- (4,441) (1,052) -- (1,034)
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold
Investor Shares 18,186 9,707 5,379 64,149 2,590 2,591
Capital Transferred N/A N/A 53,231 N/A N/A 20,887
Class I Shares 89 44 94 382 1 37
Capital Transferred N/A N/A 5,687 N/A N/A 1,435
Class C Shares 1,653 419 843 24 -- 10
Class A Shares 2,193 113 15,803 1,109 27 13,148
Redemption fees
Investor Shares N/A N/A N/A 15 3 1
Class I Shares N/A N/A N/A -- -- --
Reinvested dividends and distributions
Investor Shares 7,716 -- 1,774 966 -- 694
Class I Shares 481 -- 153 19 -- 24
Class C Shares 267 -- 36 -- -- --
Class A Shares 520 -- 73 39 -- 36
Shares repurchased
Investor Shares (18,911) (4,195) (10,554) (9,433) (1,285) (3,755)
Class I Shares (1,990) (455) (1,208) (310) (164) (415)
Class C Shares (32) -- (18) -- -- --
Class A Shares (941) (265) (61,614) (313) (78) (18,940)
Capital Transferred N/A N/A (58,918) N/A N/A (22,322)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) from Capital Share Transactions 9,231 5,368 (49,239) 56,647 1,094 (6,569)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Net Assets 1,987 8,361 (39,586) 67,960 2,322 (627)
Net Assets:
Beginning of period 81,432 73,071 112,657 30,721 28,399 29,026
- ------------------------------------------------------------------------------------------------------------------------------------
End of period $ 83,419 $ 81,432 $ 73,071 $ 98,681 $ 30,721 $ 28,399
Undistributed net investment income/(loss)* $ 62 -- -- $ (215) $ (67) $ (7)
- ------------------------------------------------------------------------------------------------------------------------------------
*See Note 4 in Notes to Financial Statements.
(1) Vontobel US Value Fund prior to reorganization (Note 1 and Note 6).
(2) Vontobel International Equity Fund prior to reorganization (Note 1 and
Note 6).
(3) Certain prior year amounts have been reclassified to conform to current
year presentation.
(4) Commencement of operations of Class C Shares was October 13, 2003.
See Notes to Financial Statements.
14 Janus Adviser February 28, 2005
Financial Highlights - Investor Shares
For a share outstanding during the fiscal year ended
February 28, 2005, the two month fiscal period ended Focused Value Fund(1)
February 29, 2004 and through each fiscal year ended December 31 2005 2004 2003
- ------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 22.65 $ 21.78 $ 18.64
- ------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .02 --(2) --(2)
Net gains/(losses) on securities (both realized and unrealized) .47 .87 4.46
- ------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations .49 .87 4.46
- ------------------------------------------------------------------------------------------------------------------------
Less Distributions and Other:
Dividends (from net investment income)* -- -- --
Distributions (from capital gains)* (2.46) -- (1.32)
Payment from Affiliate --(3) -- --
- ------------------------------------------------------------------------------------------------------------------------
Total Distributions and Other (2.46) -- (1.32)
- ------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 20.68 $ 22.65 $ 21.78
- ------------------------------------------------------------------------------------------------------------------------
Total Return** 2.36%(4) 3.99% 24.32%
- ------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 70,842 $ 70,034 $ 61,970
Average Net Assets for the Period (in thousands) $ 70,336 $ 66,560 $ 67,077
Ratio of Gross Expenses to Average Net Assets*** 1.25%(5) 1.25%(5) 2.14%(5)
Ratio of Net Expenses to Average Net Assets*** 1.25%(5) 1.25%(5) 2.14%(5)
Ratio of Net Investment Income/(Loss) to Average Net Assets*** 0.10% (0.42)% (0.90)%
Portfolio Turnover Rate*** 40% 55% 21%
For a share outstanding during the fiscal year ended Vontobel
February 28, 2005, the two month fiscal period ended US Value Fund - A Shares
February 29, 2004 and through each fiscal year ended December 31 2002 2001 2000
- -----------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 19.86 $ 19.29 $ 14.27
- -----------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) (.09) (.12) .02
Net gains/(losses) on securities (both realized and unrealized) (.33) .71 5.00
- -----------------------------------------------------------------------------------------------------------------
Total from Investment Operations (.42) .59 5.02
- -----------------------------------------------------------------------------------------------------------------
Less Distributions and Other:
Dividends (from net investment income)* -- (.02) --
Distributions (from capital gains)* (.80) -- --
Payment from Affiliate -- -- --
- -----------------------------------------------------------------------------------------------------------------
Total Distributions and Other (.80) (.02) --
- -----------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 18.64 $ 19.86 $ 19.29
- -----------------------------------------------------------------------------------------------------------------
Total Return** (2.20)% 3.06% 35.18%
- -----------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $112,302 $ 86,157 $137,238
Average Net Assets for the Period (in thousands) N/A N/A N/A
Ratio of Gross Expenses to Average Net Assets*** 1.74%(6) 1.75%(7) 1.75%
Ratio of Net Expenses to Average Net Assets*** 1.72% 1.75%(7) 1.75%
Ratio of Net Investment Income/(Loss) to Average Net Assets*** (0.63)% (0.43)% 0.23%
Portfolio Turnover Rate*** 76% 66% 104%
For a share outstanding during the fiscal year ended International
February 28, 2005, the two month fiscal period ended Equity Fund(8)
February 29, 2004 and through each fiscal year ended December 31 2005 2004 2003
- -----------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 15.46 $ 14.83 $ 11.86
- -----------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .15 (.03) .12
Net gains/(losses) on securities (both realized and unrealized) 3.81 .66 3.38
- -----------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 3.96 .63 3.50
- -----------------------------------------------------------------------------------------------------------------------
Less Distributions and Other:
Dividends (from net investment income)* (.16) -- (.07)
Distributions (from capital gains)* (.26) -- (.43)
Tax return of capital* -- -- (.05)
Redemption fees --(9) --(9) --(9)
Payment from affiliate --(3) -- .02
- -----------------------------------------------------------------------------------------------------------------------
Total Distributions and Other (.42) -- (.53)
- -----------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 19.00 $ 15.46 $ 14.83
- -----------------------------------------------------------------------------------------------------------------------
Total Return** 26.08%(4) 4.25% 29.99%
- -----------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 94,261 $ 27,924 $ 25,506
Average Net Assets for the Period (in thousands) $ 39,511 $ 27,413 $ 23,269
Ratio of Gross Expenses to Average Net Assets*** 1.35%(5) 1.35%(5) 2.91%(5)
Ratio of Net Expenses to Average Net Assets*** 1.35%(5) 1.35%(5) 2.91%(5)
Ratio of Net Investment Income/(Loss) to Average Net Assets*** 1.24% 0.09% 0.07%
Portfolio Turnover Rate*** 32% 41% 65%
For a share outstanding during the fiscal year ended Vontobel International
February 28, 2005, the two month fiscal period ended Equity Fund - A Shares
February 29, 2004 and through each fiscal year ended December 31 2002 2001 2000
- -----------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 12.88 $ 18.86 $ 28.01
- -----------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .03 (.10) (.03)
Net gains/(losses) on securities (both realized and unrealized) (1.05) (5.41) (5.30)
- -----------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (1.02) (5.51) (5.33)
- -----------------------------------------------------------------------------------------------------------------------
Less Distributions and Other:
Dividends (from net investment income)* -- (.12) (.08)
Distributions (from capital gains)* -- (.35) (3.74)
Tax return of capital* N/A N/A N/A
Redemption fees N/A N/A N/A
Payment from affiliate -- -- --
- -----------------------------------------------------------------------------------------------------------------
Total Distributions and Other -- (.47) (3.82)
- -----------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 11.86 $ 12.88 $ 18.86
- -----------------------------------------------------------------------------------------------------------------
Total Return** (7.92)% (29.22)% (18.70)%
- -----------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 29,026 $ 44,356 $133,233
Average Net Assets for the Period (in thousands) N/A N/A N/A
Ratio of Gross Expenses to Average Net Assets*** 2.44% 1.89%(7) 1.39%
Ratio of Net Expenses to Average Net Assets*** 2.44% 1.88%(7) 1.38%
Ratio of Net Investment Income/(Loss) to Average Net Assets*** 0.18% (0.38)% (0.15)%
Portfolio Turnover Rate*** 98% 92% 69%
* 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) Vontobel US Value Fund prior to reorganization (Note 1 and Note 6).
(2) Net investment income/(loss) 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 period ended February 28, 2005.
(4) During the fiscal year ended February 28, 2005, Janus Capital and/or Janus
Services fully reimbursed the Fund for a loss on a transaction resulting
form certain trading, pricing and/or shareholder activity errors, which
otherwise would have reduced total return by less than 0.01%.
(5) See Notes 5 and 6 in Notes to Financial Statements.
(6) Expense ratio has been increased to include additional custodian fees
which were offset by custodian fee credits.
(7) Expense ratio has increased by 0.29% for Vontobel US Value Fund and 0.13%
for Vontobel International Equity Fund as a result of a change in
accounting principle related to the recording of redemption fees. Prior
year numbers have not been restated to reflect this change.
(8) Vontobel International Equity Fund prior to reorganization (Note 1 and
Note 6).
(9) Redemption fees aggregated less than $.01 on a per share basis for the
fiscal year or period ended.
See Notes to Financial Statements.
Janus Adviser February 28, 2005 15
Financial Highlights - Class I Shares
For a share outstanding during the fiscal year ended
February 28, 2005, the two month fiscal period ended Focused Value Fund(1)
February 29, 2004 and through each fiscal year ended December 31 2005 2004 2003
- ------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 22.64 $ 21.78 $ 18.64
- ------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) (.02) (.01) (.02)
Net gains/(losses) on securities (both realized and unrealized) .47 .87 4.48
- ------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations .45 .86 4.46
- ------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* -- -- --
Distributions (from capital gains)* (2.46) -- (1.32)
- ------------------------------------------------------------------------------------------------------------------------
Total Distributions (2.46) -- (1.32)
- ------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 20.63 $ 22.64 $ 21.78
- ------------------------------------------------------------------------------------------------------------------------
Total Return** 2.17% 3.95% 24.32%
- ------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 3,941 $ 5,825 $ 6,005
Average Net Assets for the Period (in thousands) $ 4,724 $ 5,915 $ 7,057
Ratio of Gross Expenses to Average Net Assets*** 1.40%(2) 1.40%(2) 2.16%(2)
Ratio of Net Expenses to Average Net Assets*** 1.40%(2) 1.40%(2) 2.16%(2)
Ratio of Net Investment Income/(Loss) to Average Net Assets*** (0.04)% (0.58)% (0.92)%
Portfolio Turnover Rate*** 40% 55% 21%
For a share outstanding during the fiscal year ended Vontobel
February 28, 2005, the two month fiscal period ended US Value Fund - A Shares
February 29, 2004 and through each fiscal year ended December 31 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 19.86 $ 19.29 $ 14.27
- --------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) (.09) (.12) .02
Net gains/(losses) on securities (both realized and unrealized) (.33) .71 5.00
- --------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (.42) .59 5.02
- --------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* -- (.02) --
Distributions (from capital gains)* (.80) -- --
- --------------------------------------------------------------------------------------------------------------------
Total Distributions (.80) (.02) --
- --------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 18.64 $ 19.86 $ 19.29
- --------------------------------------------------------------------------------------------------------------------
Total Return** (2.20)% 3.06% 35.18%
- --------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $112,302 $ 86,157 $137,238
Average Net Assets for the Period (in thousands) N/A N/A N/A
Ratio of Gross Expenses to Average Net Assets*** 1.74%(3) 1.75%(4) 1.75%
Ratio of Net Expenses to Average Net Assets*** 1.72% 1.75%(4) 1.75%
Ratio of Net Investment Income/(Loss) to Average Net Assets*** (0.63)% (0.43)% 0.23%
Portfolio Turnover Rate*** 76% 66% 104%
For a share outstanding during the fiscal year ended International
February 28, 2005, the two month fiscal period ended Equity Fund(5)
February 29, 2004 and through each fiscal year ended December 31 2005 2004 2003
- --------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 15.45 $ 14.82 $ 11.86
- --------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .16 (.03) .10
Net gains/(losses) on securities (both realized and unrealized) 3.76 .66 3.39
- --------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 3.92 .63 3.49
- --------------------------------------------------------------------------------------------------------------------------
Less Distributions and Other:
Dividends (from net investment income)* (.11) -- (.06)
Distributions (from capital gains)* (.26) -- (.43)
Tax return of capital* -- -- (.06)
Redemption fees --(6) --(6) --
Payment from affiliate --(7) -- .02
- --------------------------------------------------------------------------------------------------------------------------
Total Distributions and Other (.37) -- (.53)
- --------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 19.00 $ 15.45 $ 14.82
- --------------------------------------------------------------------------------------------------------------------------
Total Return** 25.87%(8) 4.25% 29.90%
- --------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 1,667 $ 1,303 $ 1,409
Average Net Assets for the Period (in thousands) $ 1,264 $ 1,333 $ 1,547
Ratio of Gross Expenses to Average Net Assets*** 1.50%(2) 1.50%(2) 2.87%(2)
Ratio of Net Expenses to Average Net Assets*** 1.50%(2) 1.50%(2) 2.87%(2)
Ratio of Net Investment Income/(Loss) to Average Net Assets*** 1.36% 0.17% 0.11%
Portfolio Turnover Rate*** 32% 41% 65%
For a share outstanding during the fiscal year ended Vontobel International
February 28, 2005, the two month fiscal period ended Equity Fund - A Shares
February 29, 2004 and through each fiscal year ended December 31 2002 2001 2000
- --------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 12.88 $ 18.86 $ 28.01
- --------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .03 (.10) (.03)
Net gains/(losses) on securities (both realized and unrealized) (1.05) (5.41) (5.30)
- --------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (1.02) (5.51) (5.33)
- --------------------------------------------------------------------------------------------------------------------
Less Distributions and Other:
Dividends (from net investment income)* -- (.12) (.08)
Distributions (from capital gains)* -- (.35) (3.74)
Tax return of capital* N/A N/A N/A
Redemption fees N/A N/A N/A
Payment from affiliate -- -- --
- --------------------------------------------------------------------------------------------------------------------
Total Distributions and Other -- (.47) (3.82)
- --------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 11.86 $ 12.88 $ 18.86
- --------------------------------------------------------------------------------------------------------------------
Total Return** (7.92)% (29.22)% (18.70)%
- --------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 29,026 $ 44,356 $133,233
Average Net Assets for the Period (in thousands) N/A N/A N/A
Ratio of Gross Expenses to Average Net Assets*** 2.44% 1.89%(4) 1.39%
Ratio of Net Expenses to Average Net Assets*** 2.44% 1.88%(4) 1.38%
Ratio of Net Investment Income/(Loss) to Average Net Assets*** 0.18% (0.38)% (0.15)%
Portfolio Turnover Rate*** 98% 92% 69%
* 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) Vontobel US Value Fund prior to reorganization (Note 1 and Note 6).
(2) See Notes 5 and 6 in Notes to Financial Statements.
(3) Expense ratio has been increased to include additional custodian fees
which were offset by custodian fee credits.
(4) Expense ratio has increased by 0.29% for Vontobel US Value Fund and 0.13%
for Vontobel International Equity Fund as a result of a change in
accounting principle related to the recording of redemption fees. Prior
year numbers have not been restated to reflect this change.
(5) Vontobel International Equity Fund prior to reorganization (Note 1 and
Note 6).
(6) Redemption fees aggregated less than $.01 on a per share basis for the
fiscal period ended.
(7) Payment from affiliate aggregated less than $.01 on a per share basis for
the period ended February 28, 2005.
(8) During the fiscal year ended February 28, 2005, Janus Capital and/or Janus
Services fully reimbursed the Fund for a loss on a transaction resulting
form 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.
16 Janus Adviser February 28, 2005
Financial Highlights - Class C Shares
For a share outstanding during the fiscal year ended February 28, 2005, Vontobel
the two month fiscal period ended February 29, 2004 Focused Value Fund(1) US Value Fund
and through each fiscal year ended December 31 2005 2004 2003 2002(2)
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 22.35 $ 21.52 $ 18.60 $ 17.49
- --------------------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) (.04) --(3) (.07) (.06)
Net gains/(losses) on securities (both realized and unrealized) .38 .83 4.31 1.97
- --------------------------------------------------------------------------------------------------------------------------------
Total from Investment Operations .34 .83 4.24 1.91
- --------------------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* -- -- -- --
Distributions (from capital gains)* (2.46) -- (1.32) (.80)
- --------------------------------------------------------------------------------------------------------------------------------
Total Distributions (2.46) -- (1.32) (.80)
- --------------------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 20.23 $ 22.35 $ 21.52 $ 18.60
- --------------------------------------------------------------------------------------------------------------------------------
Total Return** 1.68% 3.86% 23.18% 10.82%
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 3,516 $ 1,827 $ 1,344 $ 355
Average Net Assets for the Period (in thousands) $ 2,482 $ 1,677 $ 948 N/A
Ratio of Gross Expenses to Average Net Assets*** 1.90%(4) 1.90%(4) 3.16%(4) 2.74%
Ratio of Net Expenses to Average Net Assets*** 1.90%(4) 1.90%(4) 3.16%(4) 2.72%
Ratio of Net Investment Income/(Loss) to Average Net Assets*** (0.57)% (1.05)% (1.81)% (1.63)%
Portfolio Turnover Rate*** 40% 55% 21% 76%
For a share outstanding during the fiscal year ended February 28, 2005,
the two month fiscal period ended February 29, 2004 International Equity Fund
and through each fiscal period ended December 31, 2003 2005 2004 2003(5)
- ----------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 15.55 $ 14.95 $ 13.91
- ----------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(losses) .01 (.06) .11
Net gains/(losses) on securities (both realized and unrealized) 3.84 .66 1.34
- ----------------------------------------------------------------------------------------------------------------
Total from Investment Operations 3.85 .60 1.45
- ----------------------------------------------------------------------------------------------------------------
Less Distributions and Other:
Dividends (from net investment income)* (.03) -- --
Distributions (from capital gains)* (.26) -- (.43)
Payment from affiliate --(6) -- .02
- ----------------------------------------------------------------------------------------------------------------
Total Distributions and Other (.29) -- (.41)
- ----------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 19.11 $ 15.55 $ 14.95
- ----------------------------------------------------------------------------------------------------------------
Total Return** 25.21%(7) 4.01% 10.71%
- ----------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 39 $ 12 $ 11
Average Net Assets for the Period (in thousands) $ 14 $ 11 $ 10
Ratio of Gross Expenses to Average Net Assets*** 2.00%(4) 2.00%(4) 1.92%(4)
Ratio of Net Expenses to Average Net Assets*** 2.00%(4) 2.00%(4) 1.92%(4)
Ratio of Net Investment Income/(Loss) to Average Net Assets*** 0.76% (1.05)% (0.14)%
Portfolio Turnover Rate*** 32% 41% 65%
* 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) Vontobel US Value Fund prior to reorganization (Note 1 and Note 6).
(2) Period October 9, 2002 (inception date) to December 31, 2002.
(3) Net investment income/(loss) aggregated less than $.01 on a per share
basis for the fiscal period ended February 29, 2004.
(4) See Notes 5 and 6 in Notes to Financial Statements.
(5) Period from October 13, 2003 (inception date) to December 31, 2003.
(6) Payment from affiliate aggregated less than $.01 on a per share basis for
the period ended February 28, 2005.
(7) During the fiscal year ended February 28, 2005, Janus Capital and/or Janus
Services fully reimbursed the Fund for a loss on a transaction resulting
form 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 Adviser February 28, 2005 17
Financial Highlights - Class A Shares
For a share outstanding during the fiscal year ended
February 28, 2005, the two month fiscal period ended Focused Value Fund(1)
February 29, 2004 and through each fiscal year ended December 31 2005 2004 2003
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 22.69 $ 21.82 $ 18.64
- ----------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .03 --(2) .03
Net gains/(losses) on securities (both realized and unrealized) .48 .87 4.47
- ----------------------------------------------------------------------------------------------------------------------
Total from Investment Operations .51 .87 4.50
- ----------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* -- -- --
Distributions (from capital gains)* (2.46) -- (1.32)
- ----------------------------------------------------------------------------------------------------------------------
Total Distributions (2.46) -- (1.32)
- ----------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 20.74 $ 22.69 $ 21.82
- ----------------------------------------------------------------------------------------------------------------------
Total Return** 2.45% 3.99% 24.54%
- ----------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 5,120 $ 3,746 $ 3,752
Average Net Assets for the Period (in thousands) $ 4,873 $ 3,720 $ 3,649
Ratio of Gross Expenses to Average Net Assets*** 1.15%(3) 1.15%(3) 2.11%(3)
Ratio of Net Expenses to Average Net Assets*** 1.15%(3) 1.15%(3) 2.11%(3)
Ratio of Net Investment Income/(Loss) to Average Net Assets*** 0.18% (0.33)% (0.88)%
Portfolio Turnover Rate*** 40% 55% 21%
For a share outstanding during the fiscal year ended Vontobel
February 28, 2005, the two month fiscal period ended US Value Fund - A Shares
February 29, 2004 and through each fiscal year ended December 31 2002 2001 2000
- ------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 19.86 $ 19.29 $ 14.27
- ------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) (.09) (.12) .02
Net gains/(losses) on securities (both realized and unrealized) (.33) .71 5.00
- ------------------------------------------------------------------------------------------------------------------
Total from Investment Operations (.42) .59 5.02
- ------------------------------------------------------------------------------------------------------------------
Less Distributions:
Dividends (from net investment income)* -- (.02) --
Distributions (from capital gains)* (.80) -- --
- ------------------------------------------------------------------------------------------------------------------
Total Distributions (.80) (.02) --
- ------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 18.64 $ 19.86 $ 19.29
- ------------------------------------------------------------------------------------------------------------------
Total Return** (2.20)% 3.06% 35.18%
- ------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $112,302 $ 86,157 $137,238
Average Net Assets for the Period (in thousands) N/A N/A N/A
Ratio of Gross Expenses to Average Net Assets*** 1.74%(4) 1.75%(5) 1.75%
Ratio of Net Expenses to Average Net Assets*** 1.72% 1.75%(5) 1.75%
Ratio of Net Investment Income/(Loss) to Average Net Assets*** (0.63)% (0.43)% 0.23%
Portfolio Turnover Rate*** 76% 66% 104%
For a share outstanding during the fiscal year ended International
February 28, 2005, the two month fiscal period ended Equity Fund(6)
February 29, 2004 and through each fiscal year ended December 31 2005 2004 2003
- -----------------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 15.47 $ 14.84 $ 11.86
- -----------------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .16 (.03) .12
Net gains/(losses) on securities (both realized and unrealized) 3.81 .66 3.39
- -----------------------------------------------------------------------------------------------------------------------
Total from Investment Operations 3.97 .63 3.51
- -----------------------------------------------------------------------------------------------------------------------
Less Distributions and Other:
Dividends (from net investment income)* (.16) -- (.06)
Distributions (from capital gains)* (.26) -- (.43)
Tax return of capital* -- -- (.06)
Payment from affiliate --(7) -- .02
- -----------------------------------------------------------------------------------------------------------------------
Total Distributions and Other (.42) -- (.53)
- -----------------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 19.02 $ 15.47 $ 14.84
- -----------------------------------------------------------------------------------------------------------------------
Total Return** 26.15%(8) 4.25% 30.07%
- -----------------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 2,714 $ 1,482 $ 1,473
Average Net Assets for the Period (in thousands) $ 1,690 $ 1,470 $ 1,395
Ratio of Gross Expenses to Average Net Assets*** 1.25%(3) 1.25%(3) 2.87%(3)
Ratio of Net Expenses to Average Net Assets*** 1.25%(3) 1.25%(3) 2.87%(3)
Ratio of Net Investment Income/(Loss) to Average Net Assets*** 1.50% 0.18% 0.11%
Portfolio Turnover Rate*** 32% 41% 65%
For a share outstanding during the fiscal year ended Vontobel International
February 28, 2005, the two month fiscal period ended Equity Fund - A Shares
February 29, 2004 and through each fiscal year ended December 31 2002 2001 2000
- ----------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 12.88 $ 18.86 $ 28.01
- ----------------------------------------------------------------------------------------------------------------
Income from Investment Operations:
Net investment income/(loss) .03 (.10) (.03)
Net gains/(losses) on securities (both realized and unrealized) (1.05) (5.41) (5.30)
- ----------------------------------------------------------------------------------------------------------------
Total from Investment Operations (1.02) (5.51) (5.33)
- ----------------------------------------------------------------------------------------------------------------
Less Distributions and Other:
Dividends (from net investment income)* -- (.12) (.08)
Distributions (from capital gains)* -- (.35) (3.74)
Tax return of capital* N/A N/A N/A
Payment from affiliate -- -- --
- ----------------------------------------------------------------------------------------------------------------
Total Distributions and Other -- (.47) (3.82)
- ----------------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $ 11.86 $ 12.88 $ 18.86
- ----------------------------------------------------------------------------------------------------------------
Total Return** (7.92)% (29.22)% (18.70)%
- ----------------------------------------------------------------------------------------------------------------
Net Assets, End of Period (in thousands) $ 29,026 $ 44,356 $133,233
Average Net Assets for the Period (in thousands) N/A N/A N/A
Ratio of Gross Expenses to Average Net Assets*** 2.44% 1.89%(5) 1.39%
Ratio of Net Expenses to Average Net Assets*** 2.44% 1.88%(5) 1.38%
Ratio of Net Investment Income/(Loss) to Average Net Assets*** 0.18% (0.38)% (0.15)%
Portfolio Turnover Rate*** 98% 92% 69%
* 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) Vontobel US Value Fund prior to reorganization (Note 1 and Note 6).
(2) Net investment income/(loss) aggregated less than $.01 on a per share
basis for the fiscal period ended.
(3) See Notes 5 and 6 in Notes to Financial Statements.
(4) Expense ratio has been increased to include additional custodian fees
which were offset by custodian fee credits.
(5) Expense ratio has increased by 0.29% for Vontobel US Value Fund and 0.13%
for Vontobel International Equity Fund as a result of a change in
accounting principle related to the recording of redemption fees. Prior
year numbers have not been restated to reflect this change.
(6) Vontobel International Equity Fund prior to reorganization (Note 1 and
Note 6).
(7) Payment from affiliate aggregated less than $.01 on a per share basis for
the period ended February 28, 2005.
(8) During the fiscal year ended February 28, 2005, Janus Capital and/or Janus
Services fully reimbursed the Fund for a loss on a transaction resulting
form 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.
18 Janus Adviser February 28, 2005
Notes to Schedules of Investments
S&P 500(R) Index The Standard & Poor's Composite Index of 500
stocks, a widely recognized, unmanaged index of
common stock prices.
Morgan Stanley Capital Is a market capitalization weighted index composed
International EAFE(R) Index of companies representative of the market
structure of 21 Developed Market countries in
Europe, Australasia and the Far East.
ADR American Depositary Receipt
GDR Global Depositary Receipt
PLC Public Limited Company
*Non-income-producing security.
Repurchase Agreements held by a fund are fully collateralized, and such
collateral is in the possession of the Fund's custodian or subcustodian. The
collateral is evaluated daily to ensure its market value 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.
Janus Adviser February 28, 2005 19
Notes to Financial Statements
The following section describes 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
Effective October 13, 2003 ("Reorganization Date"), Vontobel US Value Fund and
Vontobel International Equity Fund (collectively the "Reorganizing Funds")
participated in a tax-free reorganization with Focused Value Fund (formerly US
Value Fund) and International Equity Fund, respectively (collectively the
"Funds" and individually the "Fund"). Effective July 6, 2004, US Value Fund
changed its name to Focused Value Fund. As a result of the reorganization,
existing Reorganizing Funds Class A shareholders who purchased shares directly
received the Funds' Investor Class shares, existing Reorganizing Funds Class A
Shareholders who purchased shares through a financial intermediary without sales
charge received the Funds' Class I Shares, existing Reorganizing Funds Class A
Shareholders who purchased shares with a sales charge received the Funds' Class
A Shares, and existing Reorganizing Funds Class C shareholders received Class C
Shares of the corresponding Fund. The plan of reorganization provided for, among
other items listed in the Shareholder Meeting section of this report, the
transfer of assets and liabilities of the Reorganizing Funds to the Funds. The
Funds were created to serve as "shells" for the transfer of net assets of the
Reorganizing Funds. For accounting purposes, each of the Reorganizing Funds were
considered the surviving entity, and the statement of changes and financial
highlights shown for the fiscal periods prior to December 31, 2003 are of the
Reorganizing Funds. After the reorganization, the Funds changed the fiscal year
end from December 31 to the last day of February.
Janus Capital Management LLC ("Janus Capital") invested initial seed capital in
the amount of $10,000 for International Equity Fund - Class C Shares. This class
was effective on October 13, 2003.
Focused Value Fund and International Equity Fund are series funds. The Funds are
part of Janus Adviser (the "Trust"), which was organized as a Delaware statutory
Trust on May 2, 2003, and is registered under the Investment Company Act of 1940
(the "1940 Act") as an open-end management investment company. The Trust offers
two Funds, which invest primarily in equity securities. International Equity
Fund is classified as diversified, as defined in the 1940 Act. Focused Value
Fund is classified as nondiversified.
Prior to October 13, 2003, the Reorganizing Funds were series established under
Vontobel Funds, Inc. ("VFI").
The following accounting policies have been consistently followed by the Trust
and are in conformity with accounting principles generally accepted in the
United States of America in the investment company industry.
Investment Valuation
Securities are valued at the closing price for securities traded on a principal
securities exchange (U.S. or foreign) and on the NASDAQ National Market.
Securities traded on over-the-counter markets and listed securities for which no
sales are reported are valued at the latest bid price (or yield equivalent
thereof) obtained from one or more dealers making a market for such securities
or by a pricing service approved by the Funds' Trustees. Short-term securities
maturing within 60 days are valued at 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 events
or circumstances that may affect the value of portfolio securities are
identified between the closing of their principal markets and the time the net
asset value ("NAV") is determined, securities are 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 the 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. Income, as well as gains and losses, both
unrealized and realized, are allocated daily to each class of shares based upon
the ratio of net assets represented by each class as a percentage of total net
assets.
Expenses
Expenses are allocated daily to each class of shares based upon the ratio of net
assets represented by each class as a percentage of total net assets. Expenses
directly attributable to a specific class of shares are charged against the
operations of such class. The Funds bear expenses incurred specifically on their
behalf as well as a portion of general expenses, which are allocated pro rata to
the Funds.
20 Janus Adviser February 28, 2005
Interfund Lending
Pursuant to an exemptive order received from the SEC, 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 value of the loan; loans of less than 10% may be
unsecured. During the fiscal year ended February 28, 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
sales commitments for securities denominated in or exposed to foreign
currencies. A forward currency contract is a commitment to purchase or sell a
foreign currency at a future date at a negotiated rate. The gain or loss arising
from the difference between the U.S. dollar cost of the original contract and
the value of the foreign currency in U.S. dollars upon closing of such 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.
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 sufficient
to cover the purchase price. As of February 28, 2005, the Funds were not
invested in when-issued securities.
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.
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 which each Fund seeks to sell. 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 and capital gains (if
any) annually. The majority of the dividends and capital gain distributions from
a Fund will be automatically reinvested into additional shares of the Fund.
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
Janus Adviser February 28, 2005 21
Notes to Financial Statements (continued)
and realized gains and otherwise comply with Subchapter M of the Internal
Revenue Code applicable to regulated investment companies.
Indemnifications
Under the Funds' organizational documents, its officers and trustees are
indemnified against certain liabilities arising out of the performance of their
duties to the Funds. In addition, in the normal course of business, the Funds
enter into contracts with their vendors and others that provide for general
indemnifications. The Funds' maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the Funds.
However, based on experience, the Funds expect that risk of loss to be remote.
2. INVESTMENT ADVISORY AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES
Janus Capital is the investment adviser to the Funds. Focused Value Fund is
subject to advisory fees payable to Janus Capital based upon annual rates of
0.96% of the first $100 million of average daily net assets, 0.85% of average
daily net assets over $100 million to $300 million and 0.75% of average daily
net assets in excess of $300 million. International Equity Fund is subject to
advisory fees payable to Janus Capital based upon annual rates of 0.99% of the
first $100 million of average daily net assets, 0.85% of average daily net
assets over $100 million to $300 million and 0.75% of average daily net assets
over $300 million.
Prior to October 13, 2003, Vontobel Asset Management, Inc., formerly named
Vontobel USA Inc., ("Vontobel") served as investment adviser to Vontobel US
Value Fund and Vontobel International Equity Fund, the Funds' predecessors.
Pursuant to Investment Advisory Agreements with each of the Reorganizing Funds,
Vontobel received an annual fee of 1.00% on the first $100 million of average
daily net assets and 0.75% on average daily net assets over $100 million.
Vontobel serves as subadviser to the Funds. Janus Capital pays Vontobel a
subadvisory fee from its management fee at the annual rate ranging from 0.215%
to 0.74% for Focused Value Fund and ranging from 0.215% to 0.408% for
International Equity Fund based on the value of each Fund's respective average
daily net assets.
The Trust currently offers four classes of shares: Investor Shares, Class I
Shares, Class C Shares and Class A Shares. Each class represents an interest in
the same portfolio of investments. Class I Shares have an aggregate account
balance requirement. Class A, C and Investor Shares have a minimum initial
investment requirement. Certain financial intermediaries may offer only one
class of shares. Class A Shares include a maximum 5.75% upfront sales charge of
the offering price. Prior to September 30, 2004, Class C Shares included a 1.00%
upfront sales charge of the offering price. Effective September 30, 2004, the
1.00% upfront sales charge on Class C shares was eliminated. Class C Shares
include a 1.00% Contingent Deferred Sales Charge ("CDSC") paid by the redeeming
shareholder. The CDSC applies to shares redeemed within 12 months of purchase.
The redemption price may differ from the net asset value per share. During the
fiscal year ended February 28, 2005, Focused Value Fund - Class C Shareholders
and International Equity Fund - Class C Shareholders did not pay CDSCs.
Effective at the close of trading on March 28, 2005, CDSCs will be waived for
investors wishing to redeem from the Funds pending the effective date of the new
advisory and subadvisory agreements.
Janus Services LLC ("Janus Services"), a wholly-owned subsidiary of Janus
Capital and the Trust's transfer agent, receives from the Funds a fee at an
annual rate of up to 0.10% of the average daily net assets of the Investor
Shares of each of the Funds and at an annual rate of up to 0.25% of the average
daily net assets of Class I Shares of each of the Funds, to compensate Janus
Services for providing or procuring, recordkeeping, sub-accounting, and other
administrative services.
Janus Capital has agreed to reimburse the Funds by the amount if any, that the
normal operating expenses in any fiscal year, including the investment advisory
fee but excluding the administrative services fee applicable to Investor Shares
and Class I Shares, and the distribution and shareholder servicing fee
applicable to Investor Shares, Class I Shares, Class A Shares and Class C
Shares, brokerage commissions, interest, taxes and extraordinary expenses,
exceed an annual rate of 0.90% for Focused Value Fund and 1.00% for
International Equity Fund of the average daily net assets of each of the Funds
until at least September 30, 2005. Janus Capital will be entitled to recoup such
reimbursement or fee reduction from the Funds for a three-year period commencing
with the operations of the Funds, provided that at no time during such period
shall the normal operating expenses allocated to any class of the Funds, with
the exceptions noted above, exceed the percentages stated. For the fiscal year
ended February 28, 2005, total fees and expenses absorbed by Janus Capital were
$541,492 and $332,707, for Focused Value Fund and International Equity Fund,
respectively. As of February 28, 2005, the reimbursement that may be potentially
made to Janus Capital by the Focused Value Fund and International Equity Fund is
$646,195 and $401,219, respectively. This recoup of such reimbursements will
expire October 13, 2006. Although Janus Capital is entitled to recoup such
reimbursement, Janus Capital has agreed to waive its right of reimbursement upon
termination of the current advisory agreements.
22 Janus Adviser February 28, 2005
During the fiscal year ended February 28, 2005, Janus Capital reimbursed the
International Equity Fund $310 as a result of a loss due to a corrected
portfolio holding.
During the fiscal year ended February 28, 2005, Janus Services reimbursed the
Focused Value Fund - Investor Shares $585 and International Equity Fund -
Investor Shares $1,210, as a result of dilutions caused by incorrectly processed
shareholder activity.
Effective September 30, 2004, a networking and/or omnibus account fee may be
imposed on Class A Shares and Class C Shares for fees charged by intermediaries
with respect to processing orders in Fund shares.
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.
Janus Distributors LLC, a wholly-owned subsidiary of Janus Capital, is a
distributor of the Funds. The Investor Shares, Class I Shares and Class A Shares
of each Fund have each adopted a Distribution and Shareholder Servicing Plan
(the "Plans") pursuant to Rule 12b-1 under the 1940 Act. The Plans authorize
payments by the Funds in connection with the distribution of the Investor, Class
I and Class A Shares at an annual rate, as determined from time to time by the
Board of Trustees, of up to 0.25% of the Investor, Class I and Class A Shares'
average daily net assets. The Class C Shares have adopted a Distribution and
Shareholder Servicing Plan (the "Class C Plan") pursuant to Rule 12b-1 under the
1940 Act. The Class C Plan authorizes payments by the Funds in connection with
the distribution of the Class C Shares at an annual rate of up to 1.00% average
daily net assets of Class C Shares. Up to 0.75% of this fee is for activities
which are primarily intended to result in sales of Class C Shares of each Fund.
In addition, the Class C Plan permits the payment of up to 0.25% of this fee for
shareholder servicing activities.
A 2.00% redemption fee may be imposed on Investor and Class I Shares of the
International Equity Fund held for three months or less. Effective May 1, 2004,
the redemption fee increased from 1.00% to 2.00% on shares purchased on or after
that date. The redemption fee is designed to offset transaction costs and other
expenses associated with short-term redemptions. 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. Redemption fees received by
International Equity Fund, Investor Shares and Class I Shares, during the fiscal
year ended February 28, 2005 were $15,090 and $107, respectively. Effective at
the close of trading on March 28, 2005, redemption fees will be waived for
investors wishing to redeem from the International Equity Fund pending the
effective date of the new advisory and subadvisory agreements.
DST Systems, Inc. ("DST"), an affiliate prior to June 16, 2004 of Janus Capital
Group Inc. ("JCGI"), parent to the Funds' adviser, provides a shareholder
accounting system to the Funds for a fee. As of December 1, 2003, following a
share exchange transaction in which JCGI exchanged 32.3 million shares of its
holdings of DST common stock for all of the stock of a wholly-owned subsidiary
of DST, JCGI owned approximately 9% of the outstanding common shares of DST. As
of June 16, 2004, JCGI sold its remaining shares of common stock of DST. As a
result, JCGI does not own any shares of DST. DST fees are included in Transfer
Agent Fees and Expenses in the Statement of Operations. DST fees of $7,154 and
$4,195 were paid by Focused Value Fund and International Equity Fund,
respectively, during the period March 1, 2004 through June 16, 2004.
3. PURCHASES AND SALES OF INVESTMENT SECURITIES
For the fiscal year ended February 28, 2005, the aggregate cost of purchases and
proceeds from sales of investment securities (excluding short-term securities)
were as follows:
For the fiscal year ended February 28, 2005
(all numbers in thousands)
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
- --------------------------------------------------------------------------------------------------------------------------------
Focused Value Fund $35,628,805 $27,686,339 $ -- $ --
International Equity Fund 65,615,420 13,666,450 -- --
- --------------------------------------------------------------------------------------------------------------------------------
Janus Adviser February 28, 2005 23
Notes to Financial Statements (continued)
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).
The International Equity Fund incurred "Post-October" losses during the period
from November 1, 2004 through February 28, 2005. These losses will be deferred
for tax purposes and recognized during the year ended February 28, 2006.
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.
Accumulated capital losses noted below represent net capital loss carryovers, as
of February 28, 2005, that may be available to offset future realized capital
gains and thereby reduce future taxable gains distributions.
Net Tax AP/DP
Undistributed Undistributed on Foreign Net Tax
Ordinary Long-Term Accumulated Post-October Currency AP/DP on
Fund Income Gains Capital Losses Deferral and Futures Investments
- ------------------------------------------------------------------------------------------------------------------------------------
Focused Value Fund $ 136,212 $ 3,598,072 $ -- $ -- $ -- $ 7,829,745
International Equity Fund(1) 419,691 465,479 (6,495,763) (112,883) (42,985) 16,639,830
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Capital loss carryover is subject to annual limitations.
The table below shows the expiration dates of the carryovers.
Capital Loss Carryover Expiration Schedule
For the fiscal year ended February 28, 2005
Fund February 28, 2009 February 28, 2010
- --------------------------------------------------------------------------------
International Equity Fund(1) $5,196,610 $1,299,153
- --------------------------------------------------------------------------------
(1) Capital loss carryover is subject to annual limitations.
During the year ended February 28, 2005, the following capital loss carryover
was utilized by the International Equity Fund as indicated in the table below.
Capital Loss
Fund Carryover Utilized
- --------------------------------------------------------------------------------
International Equity Fund $1,299,153
- --------------------------------------------------------------------------------
The aggregate cost of investments and the composition of unrealized appreciation
and depreciation of investments for federal income tax purposes as of February
28, 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 the tax treatment of wash sale loss deferrals and
passive foreign investment companies.
Federal Tax Unrealized Unrealized
Fund Cost Appreciation (Depreciation)
- --------------------------------------------------------------------------------
Focused Value Fund $75,446,586 $ 9,136,242 $(1,306,497)
International Equity Fund 85,247,141 17,277,306 (606,020)
- --------------------------------------------------------------------------------
24 Janus Adviser February 28, 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 February 28, 2005 Distributions
---------------------------------------------------------
From Ordinary From Long-Term Tax Return of Net Investment
Fund Income Capital Gains Capital Loss
- ------------------------------------------------------------------------------------------------------------------------------------
Focused Value Fund $ 174,934 $9,059,722 $ -- $ --
International Equity Fund 521,158 530,897 -- --
- ------------------------------------------------------------------------------------------------------------------------------------
For the two month fiscal period February 29, 2004 Distributions
---------------------------------------------------------
From Ordinary From Long-Term Tax Return of Net Investment
Fund Income Capital Gains Capital Loss
- ------------------------------------------------------------------------------------------------------------------------------------
Focused Value Fund $ -- $ -- $ -- $ --
International Equity Fund -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
For the fiscal period or year ended December 31, 2003 Distributions
---------------------------------------------------------
From Ordinary From Long-Term Tax Return of Net Investment
Fund Income Capital Gains Capital Loss
- ------------------------------------------------------------------------------------------------------------------------------------
Focused Value Fund $ -- $4,441,095 $ -- $ --
International Equity Fund 143,837 787,056 102,709 (185,610)
- ------------------------------------------------------------------------------------------------------------------------------------
5. EXPENSE RATIOS
The expense ratios listed in the Financial Highlights reflect expenses prior to
any expense offset (gross expense ratio) and after expense offsets (net expense
ratio). Both expense ratios reflect expenses after waivers (reimbursement).
Listed below are the gross expense ratios for the various Funds that would be in
effect, absent the waiver of certain fees and offsets.
For the fiscal year ended February 28, 2005,
the two month fiscal period ended February 29, 2004
and for the fiscal period or year ended December 31, 2003.
Investor Shares Class I Shares Class C Shares Class A Shares
Fund 2005 2004 2003 2005 2004 2003 2005 2004 2003 2005 2004 2003
- ------------------------------------------------------------------------------------------------------------------------------------
Focused Value Fund* 1.90% 2.07% 2.14% 2.05% 2.21% 2.16% 2.59% 2.72% 3.16% 1.85% 1.96% 2.11%
International Equity Fund* 2.13% 2.73% 3.24% 2.34% 2.87% 3.21% 2.86% 3.38% 5.85%(1) 2.10% 2.63% 3.21%
- ------------------------------------------------------------------------------------------------------------------------------------
* Annualized for periods of less than one year.
(1) Period from October 13, 2003 (inception date) to December 31, 2003.
Janus Adviser February 28, 2005 25
Notes to Financial Statements (continued)
6. FUND REORGANIZATION
Effective October 13, 2003, Vontobel US Value Fund and Vontobel International
Equity Fund participated in a tax-free reorganization with Focused Value Fund
(formerly US Value Fund) and International Equity Fund, respectively. The plan
of the reorganization provided for the transfer of assets and liabilities as
follows: Existing Vontobel US Value Fund Class A shareholders and Vontobel
International Equity Fund Class A shareholders who purchased shares directly
received Focused Value Fund - Investor Shares and International Equity Fund
- -Investor Shares, respectively. Existing Vontobel US Value Fund Class A
shareholders and Vontobel International Equity Fund Class A shareholders who
purchased shares through a financial intermediary without sales charge received
Focused Value Fund - Class I Shares and International Equity Fund - Class I
Shares, respectively. Existing Vontobel US Value Fund Class A shareholders and
Vontobel International Equity Fund Class A shareholders who purchased shares
with a sales charge received Focused Value Fund - Class A Shares and
International Equity Fund - Class A Shares, respectively. Existing Vontobel US
Value Fund Class C shareholders received Focused Value Fund - Class C Shares.
Vontobel US Value Fund - Class A Shares transferred net assets and shares
outstanding to Focused Value Fund - Investor Shares and Class I Shares as
detailed below.
Fund Net Assets Shares Transferred
- --------------------------------------------------------------------------------
Focused Value Fund - Investor Shares $63,503,746 3,003,063
Focused Value Fund - Class I Shares 6,776,017 320,433
- --------------------------------------------------------------------------------
Total $70,279,763 3,323,496
================================================================================
Vontobel US Value Fund - Class C Shares transferred net assets of $1,163,895 and
shares outstanding of 55,606 to Focused Value Fund - Class C Shares. The
remaining net assets of $3,265,888 and shares outstanding of 154,441 of Vontobel
US Value Fund - Class A Shares were transferred directly into Focused Value -
Class A Shares.
Vontobel International Equity Fund - Class A Shares transferred net assets and
shares outstanding to International Equity Fund - Investor Shares and Class I
Shares as detailed below.
Fund Net Assets Shares Transferred
- --------------------------------------------------------------------------------
International Equity Fund - Investor Shares $24,444,903 1,757,101
International Equity Fund - Class I Shares 1,674,733 120,345
- --------------------------------------------------------------------------------
Total $26,119,636 1,877,446
================================================================================
The remaining net assets of $1,288,651 and shares outstanding of 92,625 of
Vontobel International Equity Fund - Class A Shares were transferred directly
into International Equity Fund - Class A Shares.
26 Janus Adviser February 28, 2005
7. CAPITAL SHARE TRANSACTIONS
For the fiscal year ended February 28, 2005, Focused Value International
the two month fiscal period ended February 29, 2004 and Fund(1) Equity Fund(2)
for the fiscal year ended December 31, 2003
(all numbers in thousands) 2005 2004 2003 2005 2004 2003(3)
- ------------------------------------------------------------------------------------------------------------------------------------
Transactions in Fund Shares - Investor Shares:
Shares sold 855 435 249 3,678 170 182
Shares transferred N/A N/A 3,003 N/A N/A 1,757
Reinvested dividends and distributions 372 -- 83 57 -- 48
Shares repurchased (893) (188) (490) (580) (83) (267)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Fund Shares 334 247 2,845 3,155 87 1,720
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, Beginning of Period 3,092 2,845 -- 1,807 1,720 --
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 3,426 3,092 2,845 4,962 1,807 1,720
- ------------------------------------------------------------------------------------------------------------------------------------
Transactions in Fund Shares - Class I Shares:
Shares sold 4 2 5 23 -- 3
Shares transferred N/A N/A 320 N/A N/A 120
Reinvested dividends and distributions 23 -- 7 1 -- 2
Shares repurchased (93) (21) (56) (20) (11) (30)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Fund Shares (66) (19) 276 4 (11) 95
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, Beginning of Period 257 276 -- 84 95 --
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 191 257 276 88 84 95
- ------------------------------------------------------------------------------------------------------------------------------------
Transactions in Fund Shares - Class C Shares:
Shares sold 81 20 42 1 -- 1
Reinvested dividends and distributions 13 -- 2 -- -- --
Shares repurchased (2) -- (1) -- -- --
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Fund Shares 92 20 44 1 -- 1
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, Beginning of Period 82 62 19 1 1 --
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 174 82 62 2 1 1
- ------------------------------------------------------------------------------------------------------------------------------------
Transactions in Fund Shares - Class A Shares:
Shares sold 101 5 810 65 2 1,124
Reinvested dividends and distributions 25 -- 4 2 -- 3
Shares repurchased (44) (12) (3,343) (20) (5) (1,599)
Shares transferred N/A N/A (3,323) N/A N/A (1,877)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Increase/(Decrease) in Fund Shares 82 (7) (5,852) 47 (3) (2,349)
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, Beginning of Period 165 172 6,024 96 99 2,448
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Outstanding, End of Period 247 165 172 143 96 99
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Vontobel US Value Fund prior to reorganization (Note 1 and Note 6).
(2) Vontobel International Equity Fund prior to reorganization (Note 1 and
Note 6).
(3) Commencement of operations of Class C Shares was October 13, 2003.
8. SUBSEQUENT EVENT
At a meeting held on March 24, 2005, the Board of Trustees of Janus Adviser
approved Phoenix Investment Counsel, Inc. ("Phoenix") as the investment adviser
to Focused Value Fund and International Equity Fund (the "Funds") and the
continuation of Vontobel Asset Management, Inc. as the Funds' subadviser. Janus
Capital Management LLC requested this transition because it has decided to focus
on distributing its own internally managed products and those of its affiliate
rather than distributing products subadvised by non-affiliated companies. The
transition of the Funds to Phoenix is expected to take place in June 2005,
subject to the approval of the shareholders of the Funds. The advisory and
subadvisory agreements (as well as certain other proposals) are subject to
approval by shareholders at a Special Meeting of Shareholders to be held May 17,
2005. Please see a prospectus for more information.
Janus Adviser February 28, 2005 27
Notes to Financial Statements (continued)
9. PENDING LEGAL MATTERS
In September 2003, the Securities and Exchange Commission ("SEC") and the Office
of the New York State Attorney General ("NYAG") publicly announced that they
were investigating trading practices in the mutual fund industry. The
investigations were prompted by the NYAG's settlement with a hedge fund, Canary
Capital, which allegedly engaged in irregular trading practices with certain
mutual fund companies. While Janus Capital was not named as a defendant in the
NYAG complaint against the hedge fund, Janus Capital was mentioned in the
complaint as having allowed Canary Capital to "market time" certain Janus funds.
Market timing is an investment technique involving frequent short-term trading
of mutual fund shares that is designed to exploit market movements or
inefficiencies in the way mutual fund companies price their shares. The NYAG
complaint against Canary Capital alleged that this practice was in contradiction
to policies stated in prospectuses for certain Janus funds.
Subsequent to the announcements by the SEC and the NYAG, the Colorado Attorney
General ("COAG") and the Colorado Division of Securities announced that they
were each initiating investigations into Janus Capital's mutual fund trading
practices. On August 18, 2004, Janus Capital announced that it had reached final
settlements with the NYAG, the COAG, the Colorado Division of Securities and the
SEC related to such regulators' investigations into Janus Capital's frequent
trading arrangements.
A number of civil lawsuits have also been brought against Janus Capital and
certain of its affiliates, the Janus funds, and related entities and individuals
based on allegations similar to those contained in the NYAG complaint against
Canary Capital. Such lawsuits allege 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 "market timing" lawsuits were filed in a number of state and federal
jurisdictions. The Judicial Panel on Multidistrict Litigation has finally or
conditionally transferred all but one of these actions to the United States
District Court for the District of Maryland for coordinated proceedings. On
September 29, 2004, five consolidated amended complaints were filed in that
court. These complaints are the operative complaints in the coordinated
proceedings and, as a practical matter, supersede the previously filed
complaints. The five complaints 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 name JCGI and/or Janus Capital as
a defendant. In addition, the following are named as defendants in one or more
of the actions: Janus Investment Fund, Janus Aspen Series, Janus Adviser Series,
Janus Distributors LLC, INTECH, Bay Isle, Perkins Wolf, the Advisory Committee
of the Janus 401(k) plan, and the current or former directors of JCGI.
In addition to the "market timing" actions described above, two civil lawsuits
have been filed against Janus Capital challenging the investment advisory fees
charged by Janus Capital to certain Janus funds. These lawsuits are currently
pending in the U.S. District Court for the District of Colorado. On January 31,
2005, the court entered an order granting a joint motion to consolidate the
cases and the consolidated amended complaint filed with the motion. The
consolidated amended complaint is the operative complaint in the coordinated
proceedings and, as a practical matter, supersedes the previously filed
complaints. The complaint asserts claims under Section 36(b) of the Investment
Company Act of 1940.
A lawsuit has also been 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.
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 funds.
28 Janus Adviser February 28, 2005
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of Janus Adviser Trust
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Focused Value Fund, formerly US
Value Fund, and International Equity Fund, (constituting the Janus Adviser
Trust, hereafter referred to as the "Funds") at February 28, 2005, the results
of each of their operations for the year then ended, the changes in each of
their net assets for each of the periods indicated and the financial highlights
for the periods ended December 31, 2003, February 29, 2004 and February 28,
2005, 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
February 28, 2005 by correspondence with the custodian and the application of
alternative auditing procedures where securities purchased had not been
received, provide a reasonable basis for the opinion expressed above. The
Financial Highlights for each of the three years in the period ended December
31, 2002 were audited by other independent accountants whose report dated
February 14, 2003, expressed an unqualified opinion on those statements.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Denver, Colorado
April 11, 2005
Janus Adviser February 28, 2005 29
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, 2004 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 will 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 the fiscal quarter. The Funds' Form N-Q: (i) will
be 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) will be available without charge, upon request, by calling Janus at
1-800-525-3713 (toll free).
30 Janus Adviser February 28, 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 through February 28, 2005. 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 quoted for each class of the 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 dividends and
distributions, then calculating the annual compounded percentage rate that would
have produced the same result had the rate of growth been constant throughout
the period. Average annual total return does not reflect the deduction of taxes
that a shareholder would pay on Fund distributions or redemption 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 market value of each security is quoted as of the last day of the reporting
period. The values of securities denominated in foreign currencies are converted
into U.S. dollars.
A summary of investments by country is provided if the Fund invested in foreign
securities as of February 28, 2005. 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
Fund net assets. Because Funds must distribute substantially all earnings,
you'll notice that a significant portion of net assets is shareholder capital.
The last line of this statement reports the Funds' net asset value ("NAV") per
share on the last day of the reporting period for each class of the Fund. 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.
Janus Adviser February 28, 2005 31
Explanations of Charts, Tables and Financial
Statements (unaudited) (continued)
The first section in this statement, entitled "Investment Income," reports the
dividends earned from stocks and interest earned from interest-bearing
securities in the Fund.
The next section reports the expenses and expense offsets incurred by the Funds,
including the advisory fee paid to the investment adviser and transfer agent
fees.
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 withdrawal via redemptions. Each Fund's net assets will increase
and decrease in value as investors purchase and redeem shares from the Fund.
6. FINANCIAL HIGHLIGHTS
This schedule provides a per-share breakdown of the components that affect the
net asset value ("NAV") for current and past reporting periods for each class of
the Fund. 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, 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 return reported the last day of the
period.
Also included are the expense ratios, or the percentage of net assets that was
used to cover operating expenses during the period. Expense ratios vary across
the Funds for a number of reasons, including the differences in management fees,
average shareholder account size, the frequency of dividend payments and the
extent of foreign investments, which entail greater transaction costs.
The Funds' expenses may be reduced through expense-reduction arrangements. These
arrangements include the use of brokerage commissions, uninvested cash balances
earning interest, or balance credits. The Statement of Operations reflects total
expenses before any such offset, the amount of offset and the net expenses. The
expense ratios listed in the Financial Highlights reflect total expenses both
prior to any expense offset and after the offsets.
The ratio of net investment income/(loss) summarizes the income earned less
expenses divided by the average net assets of a 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 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 sold every six months.
32 Janus Adviser February 28, 2005
Designation Requirements (unaudited)
For federal income tax purposes, the Funds designated the following for the year
ended February 28, 2005:
Long-Term Capital Gains
Fund LT Gain Distribution
- --------------------------------------------------------------------------------
Focused Value Fund $9,059,722
International Equity Fund 530,897
- --------------------------------------------------------------------------------
Foreign Taxes Paid and Foreign Source Income
Fund Foreign Taxes Paid Foreign Source Income
- --------------------------------------------------------------------------------
International Equity Fund $ 122,112 $1,183,927
- --------------------------------------------------------------------------------
Dividends Received Deduction Percentage
Fund
- --------------------------------------------------------------------------------
Focused Value Fund 68%
- --------------------------------------------------------------------------------
Qualified Dividend Income
Fund
- --------------------------------------------------------------------------------
Focused Value Fund 68%
International Equity Fund 100%
- --------------------------------------------------------------------------------
Janus Adviser February 28, 2005 33
Trustees and Officers (unaudited)
The Trust's Statement of Additional Information includes additional information
about the Trustees and officers and is available, without charge, by calling
1-800-525-0020.
The following are the names of 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 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 Trust's Nominating and Governance Committee will consider nominees for the
position of Trustee recommended by shareholders. Shareholders may submit the
name of a candidate for consideration by the Committee by submitting their
recommendations to the Trust's Secretary. The Trust's officers are elected
annually by the Trustees for a one-year term. Certain Trustees and officers also
serve three other registered investment companies advised by Janus Capital:
Janus Investment Fund, Janus Aspen Series and Janus Adviser Series. As of the
date of this report, collectively, the four registered investment companies
consist of 63 series or funds.
Trustees
Number of
Principal Funds in
Name, Age as of Occupations Fund Complex
February 28, 2005 Positions Held Length of During the Past Overseen Other Directorships
and Address with Funds Time Served Five Years by Trustee Held by Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Independent Trustees
James T. Rothe Chairman 4/04-Present Professor of 63 Director, Optika, Inc.
151 Detroit Street Trustee 5/03-Present Business, University
Denver, CO 80206 of Colorado, Colorado
Age 61 Springs, CO (since
1986). Formerly,
Distinguished
Visiting Professor of
Business (2001-
2002), Thunderbird
(American Graduate
School of
International
Management), Phoenix,
AZ; and Principal
(1988-1999) of
Phillips- Smith
Retail Group,
Addison, TX (a
venture capital firm).
Samuel Boyd, Jr. Trustee 8/03-Present Manager (since 1978) 2 Director, World Funds
151 Detroit Street of Customer Service Inc., The World
Denver, CO 80206 Operations and Insurance Trust,
Age 64 Accounting Division, Vontobel Funds USA
Potomac Electric and Satuit Capital
Power Company, Management Trust.
Washington, D.C.
Arthur F. Lerner Trustee 5/03-Present Retired. Formerly, 2 Director, Sthenos Capital
151 Detroit Street Senior Vice President (United Kingdom).
Denver, CO 80206 Arnhold and S.
Age 62 Bleichroeder
(investment manager)
(12/69-1/03).
- ------------------------------------------------------------------------------------------------------------------------------------
34 Janus Adviser February 28, 2005
Trustees (cont.)
Number of
Principal Funds in
Name, Age as of Occupations Fund Complex
February 28, 2005 Positions Held Length of During the Past Overseen Other Directorships
and Address with Funds Time Served Five Years by Trustee Held by Trustee
- ------------------------------------------------------------------------------------------------------------------------------------
Independent Trustees (cont.)
Dennis B. Mullen Trustee 5/03-Present Private Investor. 63 Director, Red Robin
151 Detroit Street Gourmet Burgers, Inc.
Denver, CO 80206
Age 61
Maureen T. Upton Trustee 5/03-Present Formerly, Director of 2 N/A
151 Detroit Street Sales and Marketing
Denver, CO 80206 Intelligent Markets,
Age 38 Inc.(3/00-3/03);
Associate Equities
Division, Goldman
Sachs & Co.
(8/98-1/00).
- ------------------------------------------------------------------------------------------------------------------------------------
Interested Trustee
Thomas H. Bailey* Trustee 5/03-Present Formerly, President 63 N/A
151 Detroit Street (1978-2002)
Denver, CO 80206 and Chief Executive
Age 67 Officer (1994-
2002) of Janus
Capital or its
predecessor. Chairman
and Director (1978-2002)
of Janus Capital Corporation;
and Director
(1997-2001) of Janus
Distributors,
Inc.; President and
Director (1994-
2002) of the Janus
Foundation.
- ------------------------------------------------------------------------------------------------------------------------------------
*** 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.
Janus Adviser February 28, 2005 35
Trustees and Officers (unaudited)
Officers
Name, Age as of
February 28, 2005 Term of Office* and Principal Occupations
and Address Positions Held with Funds Length of Time Served During the Past Five Years
- ------------------------------------------------------------------------------------------------------------------------------------
Heidi W. Hardin Vice President 5/03-Present Vice President and Assistant General
151 Detroit Street Counsel to Janus Capital and Janus
Denver, CO 80206 Services LLC.
Age 37
Bonnie M. Howe Vice President 5/03-Present Vice President and Assistant General
151 Detroit Street Counsel of Janus Capital, Janus
Denver, CO 80206 Distributors LLC and Janus Services
Age 39 LLC. Formerly, Assistant Vice
President (1998-2000) of Janus
Service Corporation.
Kelley Abbott Howes General Counsel 4/04-Present Senior Vice President and General
151 Detroit Street Vice President and Secretary 5/03-Present Counsel of Janus Capital and
Denver, CO 80206 Janus Services LLC; Vice President
Age 39 and Assistant General Counsel
of Janus Distributors LLC. Formerly,
Vice President (2000-2004) and
Assistant General Counsel (2002-2004)
of Janus Services LLC; Vice President
(1999-2004) and Assistant General
Counsel (1999-2004) of Janus Capital;
and Assistant Vice President (1998-
2000) of Janus Service Corporation.
David R. Kowalski Vice President and 5/03-Present Senior Vice President and Chief
151 Detroit Street Chief Compliance Officer Compliance Officer of Janus Capital,
Denver, CO 80206 Janus Distributors LLC, and Janus
Age 47 Services LLC; Chief Compliance
Officer of Bay Isle Financial LLC and
Enhanced Investment Technologies
LLC. Formerly, Vice President of Janus
Capital (2000-2005), Janus
Distributors LLC (2000-2001) and
Janus Services LLC (2004-2005);
Assistant Vice President of Janus
Services LLC (2000-2004); and Senior
Vice President and Director of Mutual
Fund Compliance for Van Kampen
Funds (1985-2000).
Girard C. Miller President and Chief Executive Officer 10/03-Present Executive Vice President and Chief
151 Detroit Street Operating Officer of Janus Capital
Denver, CO 80206 Group Inc. and Janus Capital;
Age 53 President of Janus Distributors LLC
and Janus Capital International LLC;
Executive Vice President of Janus
Services LLC; President and Director of
Janus Management Holdings
Corporation; 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).
- ------------------------------------------------------------------------------------------------------------------------------------
* Officers are elected annually by the Trustees for a one-year term.
36 Janus Adviser February 28, 2005
Officers (cont.)
Name, Age as of
February 28, 2005 Term of Office* and Principal Occupations
and Address Positions Held with Funds Length of Time Served During the Past Five Years
- ------------------------------------------------------------------------------------------------------------------------------------
Jesper Nergaard Vice President, Treasurer and 2/05-Present Vice President of Investment
151 Detroit Street Principal Accounting Officer Accounting of Janus Capital. Formerly,
Denver, CO 80206 Director of Financial Reporting for
Age 42 OppenheimerFunds, Inc. (2004-2005);
Site Manager and First Vice President
of Mellon Global Securities Services
(2003); and Director of Fund
Accounting, Project Development and
Training of INVESCO Funds Group
(1994-2003).
Loren M. Starr Vice President and Chief Financial Officer 10/03-Present Senior Vice President and Chief
151 Detroit Street President and Chief Executive Officer 5/03-10/03 Financial Officer of Janus Capital,
Denver, CO 80206 Janus Capital Group Inc., Janus
Age 43 Distributors LLC, Janus Services LLC
and Janus Institutional Services LLC;
Senior Vice President, Chief Financial
Officer and Director of Janus
Management Holdings Corporation;
Senior Vice President, Chief Financial
Officer and Treasurer of Janus
International Limited; Director of Janus
Holdings Corporation, Capital Group
Partners, Inc. and Janus International
Holdings LLC; Working Director of
Bay Isle Financial LLC and Enhanced
Investment Technologies, LLC; and
Board member of Janus Global Funds
SPC. Formerly, Director of Janus
Capital Trust Manager Limited (2001-
2004), Janus World Principal Protected
Funds (2002-2004), Janus
International (Asia) Limited (2002-
2004) and Janus World Funds (2001-
2004); Vice President of Janus Capital
Group Inc. (2003); Vice President
(2001-2003), Chief Financial Officer
(2001-2004) and Treasurer (2001-
2003) of Janus Capital International
LLC; Vice President (2001-2004) and
Treasurer (2001-2003) of Janus
Services LLC; Vice President (2001-
2003), Treasurer (2001-2002) and
Director (2002-2003) of Janus Capital;
Vice President (2002-2005) and
Treasurer (2002) of Janus Distributors
LLC; Vice President (2001-2005) and
Director (2002-2004) of Janus
International Limited; Vice President
(2002-2005) and Treasurer (2002-
2003) of Janus Institutional Services
LLC; Vice President (2003-2005)
of Janus Management Holdings
Corporation; Senior Vice President and
Director of Capital Group Partners,
Inc. (2003-2004); Vice President,
Treasurer and Chief Financial Officer
(2001-2002) for Janus International
Holding, Inc.; and Managing Director,
Treasurer and Head of Corporate
Finance and Reporting (1998-2001)
for Putnam Investments.
- ------------------------------------------------------------------------------------------------------------------------------------
* Officers are elected annually by the Trustees for a one-year term.
Janus Adviser February 28, 2005 37
Notes
38 Janus Adviser February 28, 2005
Notes
Janus Adviser February 28, 2005 39
Notes
40 Janus Adviser February 28, 2005
Notes
Janus Adviser February 28, 2005 41
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.
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.
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.
Income
Janus income funds attempt to provide less risk relative to equities while
seeking to deliver a competitive total return through high current income and
appreciation.
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.
[LOGO] JANUS | 151 Detroit Street
| Denver, CO 80206
| 1-800-525-3713
This material must be preceded or accompanied by a prospectus.
Funds distributed by Janus Distributors LLC (4/05)
C-0305-143 119-02-101 4-05
- ---------------------------
Item 2 - Code of Ethics
As of the end of the period covered by this Form N-CSR, the Registrant has
adopted a Code of Ethics (as defined in Item 2(b) of Form N-CSR), which is
posted on the Registrant's website: www.janus.com. Registrant intends to
post any amendments to, or waivers from (as defined in Item 2 of Form
N-CSR), such code on www.janus.com within five business days following the
date of such amendment or waiver.
Item 3 - Audit Committee Financial Expert
Janus Adviser's Board of Trustees has determined that the following members
of Janus Adviser's Audit Committee are "audit committee financial experts,"
as defined in Item 3 to Form N-CSR: Dennis B. Mullen (Chairman), Samuel
Boyd, Jr. and Arthur F. Lerner who are all "independent" under the
standards set forth in Item 3 to Form N-CSR.
Item 4 - Principal Accountant Fees and Services
The following table shows the amount of fees that PricewaterhouseCoopers
LLP ("Auditor"), Janus Adviser's (the "Fund") auditor, billed to the Fund
during the Fund's last two fiscal years. For the reporting periods, the
Audit Committee approved in advance all audit services and non-audit
services that Auditor provided to the Fund; there were no non-audit
services that were subject to the pre-approval exception under Rule 2-01 of
Regulation S-X (the "pre-approval exception"). The pre-approval exception
for services provided directly to the Fund waives the pre-approval
requirement for services other than audit, review or attest services if:
(A) the aggregate amount of all such services provided constitutes no more
than 5% of the total amount of revenues paid by the Fund to Auditor during
the fiscal year in which the services are provided; (B) the Fund did not
recognize the services as non-audit services at the time of the engagement;
and (C) the services are promptly brought to the Audit Committee's
attention, and the Committee (or its delegate) approves the services before
the audit is completed.
<table>
Services that the Fund's Auditor Billed to the Fund
- ------------------------------- --------------------- --------------------- ---------------------- -------------------
Fiscal Year Ended Audit Fees Audit-Related Tax Fees All Other Fees
Billed to Fund Fees Billed to Fund Billed to Fund Billed to Fund
- ------------------------------- --------------------- --------------------- ---------------------- -------------------
- ------------------------------- --------------------- --------------------- ---------------------- -------------------
February 28, 2005 $36,923 $0 $9,173 $0
- ------------------------------- --------------------- --------------------- ---------------------- -------------------
- ------------------------------- --------------------- --------------------- ---------------------- -------------------
Percentage approved pursuant 0% 0% 0% 0%
to pre-approval exception
- ------------------------------- --------------------- --------------------- ---------------------- -------------------
- ------------------------------- --------------------- --------------------- ---------------------- -------------------
February 29, 2004*,+ $13,000 $0 $2,000 $0
- ------------------------------- --------------------- --------------------- ---------------------- -------------------
- ------------------------------- --------------------- --------------------- ---------------------- -------------------
Percentage approved pursuant 0% 0% 0% 0%
to pre-approval exception
- ------------------------------- --------------------- --------------------- ---------------------- -------------------
- ------------------------------- --------------------- --------------------- ---------------------- -------------------
December 31, 2003**,+ $28,500 $0 $0 $0
- ------------------------------- --------------------- --------------------- ---------------------- -------------------
- ------------------------------- --------------------- --------------------- ---------------------- -------------------
Percentage approved pursuant 0% 0% 0% 0%
to pre-approval exception
- ------------------------------- --------------------- --------------------- ---------------------- -------------------
</table>
* For reporting period January 1, 2004 through February 29, 2004.
** For reporting period October 13, 2003 through December 31, 2003.
+ Pursuant to a reorganization effective October 13, 2003 whereby assets of
Vontobel U.S. Value Fund and Vontobel International Equity Fund, series of
Vontobel Funds, Inc., transferred into Focused Value Fund and International
Equity Fund, respectively, the Funds' fiscal year was changed from December 31
to the last day of February.
The above "Audit Fees" were billed for amounts related to the audit of the
Fund's financial statements and services normally provided by the
accountant in connection with statutory and regulatory filings or
engagements for the reporting period. The above "Tax Fees" were billed for
amounts related to tax compliance, tax planning, and tax advice.
Services that the Fund's Auditor Billed to the Adviser
and Affiliated Fund Service Providers
The following table shows the amount of fees billed by Auditor to Janus
Capital Management LLC (the "Adviser"), and any entity controlling,
controlled by or under common control with the Adviser ("Control
Affiliate") that provides ongoing services to the Fund ("Affiliated Fund
Service Provider"), for engagements directly related to the Fund's
operations and financial reporting, during the Fund's last two fiscal
years.
The table also shows the percentage of fees, if any, subject to the
pre-approval exception. The pre-approval exception for services provided to
Adviser and any Affiliated Fund Service Provider (other than audit, review
or attest services) waives the pre-approval requirement if: (A) the
aggregate amount of all such services provided constitutes no more than 5%
of the total amount of revenues paid to Auditor by the Fund, the Adviser
and Affiliated Fund Service Providers during the fiscal year in which the
services are provided that would have to be pre-approved by the Audit
Committee; (B) the Fund did not recognize the services as non-audit at the
time of the engagement; and (C) the services are promptly brought to the
Audit Committee's attention, and the Committee (or its delegate) approves
the services before the Fund's audit is completed.
<table>
<s> <c>
- ------------------------------- --------------------- ---------------------- -------------------
Audit-Related All Other Fees
Fees Billed to Tax Fees Billed to Billed to Adviser
Adviser and Adviser and and Affiliated
Fiscal Year Ended Affiliated Fund Affiliated Fund Fund Service
Service Providers Service Providers Providers
- ------------------------------- --------------------- ---------------------- -------------------
- ------------------------------- --------------------- ---------------------- -------------------
February 28, 2005 $112,250 $14,575 $0
- ------------------------------- --------------------- ---------------------- -------------------
- ------------------------------- --------------------- ---------------------- -------------------
Percentage approved pursuant 0% 0% 0%
to pre-approval exception
- ------------------------------- --------------------- ---------------------- -------------------
- ------------------------------- --------------------- ---------------------- -------------------
February 29, 2004*,+ $0 $25,360 $0
- ------------------------------- --------------------- ---------------------- -------------------
- ------------------------------- --------------------- ---------------------- -------------------
Percentage approved pursuant 0% 0% 0%
to pre-approval exception
- ------------------------------- --------------------- ---------------------- -------------------
- ------------------------------- --------------------- ---------------------- -------------------
December 31, 2003**,+ $228,395 $23,215 $0
- ------------------------------- --------------------- ---------------------- -------------------
- ------------------------------- --------------------- ---------------------- -------------------
Percentage approved pursuant 0% 0% 0%
to pre-approval exception
- ------------------------------- --------------------- ---------------------- -------------------
</table>
* For reporting period January 1, 2004 through February 29, 2004.
** For reporting period October 13, 2003 through December 31, 2003.
+ Pursuant to a reorganization effective October 13, 2003 whereby assets of
Vontobel U.S. Value Fund and Vontobel International Equity Fund, series of
Vontobel Funds, Inc., transferred into Focused Value Fund and International
Equity Fund, respectively, the Funds' fiscal year was changed from December 31
to the last day of February.
Fees included in the above Audit-Related Fees category comprise assurance
and related services (e.g., due diligence services) that are traditionally
performed by the independent registered public accounting firm. These audit
-related services include due diligence related to accounting consultations
and audits in connection with internal control reviews, attest services
that are not required by statute or regulation and consultation concerning
financial accounting and reporting standards. The above "Tax Fees" were
billed for amounts related to tax advice related to mergers and
acquisitions and requests for ruling or technical advice from taxing
authorities.
Non-Audit Services
The following table shows the amount of fees that Auditor billed during the
Fund's last two fiscal years for non-audit services. The Audit Committee is
required to pre-approve non-audit services that Auditor provides to the
Adviser and any Affiliated Fund Service Provider, if the engagement relates
directly to the Fund's operations and financial reporting (except for those
subject to the pre-approval exception described above). The Audit Committee
requested and received information from Auditor about any non-audit
services that Auditor rendered during the Fund's last fiscal year to
the Adviser and any Affiliated Fund Service Provider. The Committee
considered this information in evaluating Auditor's independence.
<table>
<s>
- ------------------------------- --------------------- ------------------------ ----------------------- ----------------------
Total Non-Audit Fees
billed to Adviser and
Affiliated Fund Service Total Non-Audit
Providers(engagements Fees billed to
related directly to the Adviser and
Total operations and Affiliated Fund
Non-Audit Fees financial reporting of Service Providers
Fiscal Year Ended Billed to the Fund the Fund) (all other engagements) Total of (A), (B)
(A) (B) (C) and (C)1
- ------------------------------- --------------------- ------------------------ ----------------------- -----------------------
- ------------------------------- --------------------- ------------------------ ----------------------- -----------------------
February 28, 2005 $0 $84,000 $0 $84,000
- ------------------------------- --------------------- ------------------------ ----------------------- -----------------------
- ------------------------------- --------------------- ------------------------ ----------------------- -----------------------
February 29, 2004*,+ $0 $0 $0 $0
- ------------------------------- --------------------- ------------------------ ----------------------- -----------------------
- ------------------------------- --------------------- ------------------------ ----------------------- -----------------------
December 31, 2003**,+ $0 $119,000 $0 $119,000
- ------------------------------- --------------------- ------------------------ ----------------------- -----------------------
</table>
* For reporting period January 1, 2004 through February 29, 2004.
** For reporting period October 13, 2003 through December 31, 2003.
+ Pursuant to a reorganization effective October 13, 2003 whereby assets of
Vontobel U.S. Value Fund and Vontobel International Equity Fund, series of
Vontobel Funds, Inc., transferred into Focused Value Fund and International
Equity Fund, respectively, the Funds' fiscal year was changed from December 31
to the last day of February.
1. The Audit Committee also considered amounts billed by Auditor to all other
Control Affiliates in evaluating Auditor's independence.
Pre-Approval Policies
The Fund's Audit Committee Charter requires the Fund's Audit Committee to
pre-approve any engagement of Auditor (i) to provide Audit or Non-Audit
Services to the Fund or (ii) to provide non-audit services to Adviser or
any Affiliated Fund Service Provider, if the engagement relates directly to
the operations and financial reporting of the Fund, except for those
non-audit services that were subject to the pre-approval exception under
Rule 2-01 of Regulation S-X. The Chairman of the Audit Committee or, if the
Chairman is unavailable, another member of the Audit Committee who is an
independent Trustee, may grant the pre-approval. All such delegated pre-
approvals must be presented to the Audit Committee no later than the
next Audit Committee meeting.
Item 5 - Audit Committee of Listed Registrants
Not applicable.
Item 6 - Schedule of Investments
Please see Schedule of Investments contained in the Reports to
Shareholders included under Item 1 of this Form N-CSR.
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies
Not applicable.
Item 8 - Portfolio Managers of Closed-End Management Investment Companies
Not applicable.
Item 9 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers
Not applicable.
Item 10 - Submission of Matters to a Vote of Security Holders
There have been no material changes to the procedures by which
shareholders may recommend nominees to the Registrant's Board of
Directors.
Item 11 - Controls and Procedures
(a) The Registrant's Principal Executive Officer and Principal
Financial Officer have evaluated the Registrant's disclosure
controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940) within 90 days of this filing and
have concluded that the Registrant's disclosure controls and
procedures were effective, as of that date.
(b) There was no change in the Registrant's internal control over
financial reporting during Registrant's second fiscal quarter of
the period covered by this report that has materially affected,
or is reasonably likely to materially affect, the Registrant's
internal control over financial reporting.
Item 12 - Exhibits
(a)(1) Not applicable because the Registrant has posted its Code of
Ethics (as defined in Item 2(b) of Form N-CSR) on its website
pursuant to paragraph (f)(2) of Item 2 of Form N-CSR.
(a)(2) Separate certifications for the Registrant's Principal
Executive Officer and Principal Financial Officer, as required by
Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a)
under the Investment Company Act of 1940, are attached as
Ex99.CERT.
(b) A certification for the Registrant's Principal Executive Officer
and Principal Financial Officer, as required by Rule 30a-2(b)
under the Investment Company Act of 1940, is attached as
Ex99.906CERT. The certification furnished pursuant to this
paragraph is not deemed to be "filed" for purposes of Section 18
of the Securities Exchange Act of 1934, or otherwise subject to
the liability of that section. Such certification is not deemed
to be incorporated by reference into any filing under the
Securities Act of 1933 or the Securities Exchange Act of 1934,
except to the extent that the Registrant specifically
incorporates it by reference.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Janus Adviser
By: _/s/ Girard C. Miller_______
Girard C. Miller,
President and Chief Executive Officer (Principal Executive Officer)
Date: April 25, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.
By: _/s/ Girard C. Miller________
Girard C. Miller,
President and Chief Executive Officer (Principal Executive Officer)
Date: April 25, 2005
By: _/s/ Jesper Nergaard________
Jesper Nergaard,
Vice President, Chief Financial Officer, Treasurer and Principal
Accounting Officer (Principal Accounting Officer and Principal Financial
Officer)
Date: April 25, 2005