N-14/A 1 d37561a1nv14za.txt PRE-EFFECTIVE AMENDMENT NO. 1 TO FORM N-14 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 8, 2006 REGISTRATION NO. 333-135710 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-14 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X] PRE-EFFECTIVE AMENDMENT NO. 1 [ ] POST-EFFECTIVE AMENDMENT NO. (Check appropriate Box or Boxes) JANUS INVESTMENT FUND (Exact Name of Registrant as Specified in Charter) 151 DETROIT STREET, DENVER, COLORADO 80206-4805 (Address of Principal Executive Offices) 303-333-3863 (Registrant's Telephone No., including Area Code) STEPHANIE GRAUERHOLZ-LOFTON -- 151 DETROIT STREET, DENVER, COLORADO 80206-4805 (Name and Address of Agent for Service) WITH COPIES TO: CAMERON S. AVERY, ESQ. GEOFFREY R. T. KENYON, ESQ. LESTER R. WOODWARD, ESQ. BELL, BOYD & LLOYD LLC GOODWIN PROCTOR LLP DAVIS, GRAHAM & STUBBS 70 WEST MADISON STREET, SUITE 3300 EXCHANGE PLACE 1550 17TH STREET, SUITE 500 CHICAGO, IL 60602-4207 BOSTON, MA 02109 DENVER, CO 80202
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after this Registration Statement becomes effective under the Securities Act of 1933. No filing fee is required because an indefinite number of shares of beneficial interest $.01 par value, of the Registrant have previously been registered pursuant to Section 24(f) of the Investment Company Act of 1940, as amended. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a) may determine. -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- FOR SHAREHOLDERS OF JANUS OLYMPUS FUND (JANUS LOGO) [August , 2006] Dear Shareholder: The Board of Trustees for Janus Olympus Fund recently approved a proposal to merge the Fund into Janus Orion Fund. If the merger is approved by a shareholder vote, you will receive shares of Janus Orion Fund equivalent in dollar value to your shares in Janus Olympus Fund at the time of the merger. Janus Capital Management LLC's recommendation to merge these funds is based primarily on the funds' similarities. Both pursue companies demonstrating aggressive growth traits and rely on a go-anywhere approach to find them. We believe that merging them will allow you to maintain your exposure to high-growth areas of the market while also enabling you to potentially benefit from Janus Orion Fund's nondiversified investment strategy. Specifically, Portfolio Manager Ron Sachs believes this strategy is an enhanced approach to fundamental research and information analysis with regard to a particular company, which can be an important factor in balancing the risk and reward potential of each investment. The proposed merger also offers a number of other benefits to shareholders, including an equal or potentially lower expense ratio than the current expense ratio of the Fund, greater efficiency in terms of portfolio management and operations, and an impressive track record of performance. It's also noteworthy that the merger is designed to be a tax-free reorganization, so you should not realize a tax gain or loss as a direct result of the merger. Additional details about the proposed merger are described in the enclosed Q&A and Proxy Statement/Prospectus. YOUR FUND'S BOARD OF TRUSTEES BELIEVES THE PROPOSED MERGER IS IN THE BEST INTEREST OF SHAREHOLDERS AND HAS RECOMMENDED THAT SHAREHOLDERS VOTE "FOR" THE MERGER. You can vote in one of four ways: - BY MAIL with the enclosed proxy card; - BY INTERNET through the website listed in the proxy voting instructions; - BY TELEPHONE using the toll-free number listed in the proxy voting instructions; or - IN PERSON at the special shareholder meeting on October 2, 2006. Your vote is extremely important, so please read the enclosed Proxy Statement/ Prospectus carefully and submit your vote. If you have any questions about the proposal, please call our proxy solicitor, D.F. King & Co., Inc., at 1-800-628-8528. Thank you for your consideration of this important proposal. We value you as a shareholder and look forward to continuing our relationship with you. Sincerely, /s/ Gary D. black Gary D. Black Chief Executive Officer and Chief Investment Officer of Janus Capital Management LLC JANUS OLYMPUS FUND 151 DETROIT STREET DENVER, COLORADO 80206 NOTICE OF SPECIAL MEETING OF SHAREHOLDERS Notice is hereby given that the Board of Trustees of Janus Investment Fund (the "Trust"), has called a Special Meeting of Shareholders of Janus Olympus Fund ("Olympus Fund"), a series of the Trust, to be held at the JW Marriott Hotel, 150 Clayton Lane, Denver, Colorado 80206, on October 2, 2006, at 10:00 a.m. Mountain Time (together with any adjournments or postponements thereof, the "Meeting"). At the Meeting, shareholders will be asked to vote to approve an Agreement and Plan of Reorganization (the "Plan"), which provides for the merger of Olympus Fund into Janus Orion Fund ("Orion Fund") (the "Merger") and to transact such other business, if any, as may properly come before the Meeting. Any shareholder who owned shares of Olympus Fund as of the close of business on July 14, 2006 (the "Record Date") will receive notice of the Meeting and will be entitled to vote at the Meeting and at any adjournments or postponements thereof. The persons named as proxies will vote in their discretion on any other business that may properly come before the Meeting or any adjournments or postponements thereof. In the event that the necessary quorum to transact business or the vote required to approve the Plan is not obtained at the Meeting, the persons named as proxies may propose one or more adjournments to permit further solicitation of proxies. Any such adjournment will require the affirmative vote of the holders of a majority of shares of Olympus Fund entitled to vote that are present in person or by proxy at the Meeting. If a quorum is not present, the persons named as proxies will vote the proxies (including broker non-votes and abstentions), in accordance with applicable law, in favor of adjournment if they determine additional solicitation is warranted and in the interests of Olympus Fund's shareholders. SHAREHOLDERS WHO DO NOT EXPECT TO ATTEND THE MEETING ARE URGED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD(S) AND RETURN IT IN THE ENCLOSED ADDRESSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES, OR TO TAKE ADVANTAGE OF THE INTERNET OR TELEPHONIC VOTING PROCEDURES DESCRIBED ON THE ENCLOSED PROXY CARD(S). IF YOU WISH TO ATTEND THE MEETING AND VOTE YOUR SHARES IN PERSON AT THAT TIME, YOU WILL STILL BE ABLE TO DO SO. THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PLAN. By Order of the Board of Trustees, /s/ Kelley Abbott Howes Kelley Abbott Howes President and Chief Executive Officer, of Janus Investment Fund [August xx, 2006] INSTRUCTIONS FOR SIGNING PROXY CARDS The following general rules for signing proxy cards may be of assistance to you and may avoid the time and expense involved in validating your vote if you fail to sign your proxy card properly. 1. INDIVIDUAL ACCOUNT: Sign your name exactly as it appears in the registration on the proxy card. 2. JOINT ACCOUNT: Either party may sign, but the name of the party signing should conform exactly to the name shown in the registration on the proxy card. 3. ALL OTHER ACCOUNTS: The capacity of the individual signing the proxy card should be indicated unless it is reflected in the form of registration. For example:
REGISTRATION VALID SIGNATURE ------------ --------------- Corporate Account (1) ABC Corp. ABC Corp. (2) ABC Corp. John Doe, Treasurer (3) ABC Corp. c/o John Doe, Treasurer John Doe (4) ABC Corp. Profit Sharing Plan John Doe, Trustee Trust Account (1) ABC Trust Jane B. Doe, Trustee (2) Jane B. Doe, Trustee u/t/d 12/28/78 Jane B. Doe Custodial or Estate Account (1) John B. Smith, Cust. f/b/o John B. Smith John B. Smith, Jr. UGMA (2) Estate of John B. Smith John B. Smith, Jr., Executor
PROXY STATEMENT/PROSPECTUS [ , 2006] RELATING TO THE ACQUISITION OF THE ASSETS OF JANUS OLYMPUS FUND, A SERIES OF JANUS INVESTMENT FUND 151 DETROIT STREET DENVER, COLORADO 80206 1-800-525-3713 BY AND IN EXCHANGE FOR SHARES OF BENEFICIAL INTEREST OF JANUS ORION FUND, A SERIES OF JANUS INVESTMENT FUND 151 DETROIT STREET DENVER, COLORADO 80206 1-800-525-3713 INTRODUCTION This Proxy Statement/Prospectus is being furnished to shareholders of Janus Olympus Fund in connection with a special meeting of shareholders to be held at the JW Marriott Hotel, 150 Clayton Lane, Denver, Colorado 80206, on October 2, 2006, at 10:00 a.m. Mountain Time (together with any adjournments or postponements thereof, the "Meeting") to consider a proposal to approve an Agreement and Plan of Reorganization with respect to Janus Olympus Fund (the "Plan"). Pursuant to the Plan, all or substantially all of the assets of Janus Olympus Fund ("Olympus Fund") would be transferred to Janus Orion Fund ("Orion Fund," and collectively, the "Funds"), a Fund also managed by Janus Capital Management LLC ("Janus"), in exchange for shares of beneficial interest of Orion Fund and the assumption by Orion Fund of all of the liabilities of Olympus Fund, as described more fully below (the "Merger"). As a result of the proposed Merger, each shareholder of Olympus Fund will receive a number of full and fractional shares of Orion Fund equal in value to their holdings in Olympus Fund as of the closing date of the Merger. After the Merger is completed, Olympus Fund will be liquidated. The closing of the Merger (the "Closing") is contingent upon shareholder approval of the Plan. A copy of the Plan is attached as Appendix A. The Merger is expected to occur on or about October 31, 2006 (the "Closing Date"). Janus will remain the investment adviser of Orion Fund. Janus is responsible for the day-to-day management of Olympus Fund's and Orion Fund's investment portfolios and furnishes continuous advice and recommendations concerning each Fund's investments. Janus, which as of June 30, 2006, sponsored 69 mutual funds with approximately $85.4 billion in mutual fund assets under management, is one of the larger mutual fund sponsors in the United States. The proposed Merger will offer shareholders continuity in portfolio management while giving them continued access to Janus' experience and resources in managing mutual funds. The Board of Trustees that oversees the Funds is soliciting proxies from shareholders of Olympus Fund for the Meeting. This Proxy Statement/Prospectus, Notice of Special Meeting, and the proxy card(s) are first being mailed to shareholders on or about August , 2006. THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE PLAN. This Proxy Statement/Prospectus, which you should read carefully and retain for future reference, sets forth concisely the information that you should know before voting on the Plan and thereby investing in Orion Fund as of the Closing. Orion Fund and Olympus Fund are each a series of Janus Investment Fund (the "Trust"), an open-end, registered management investment company organized as a Massachusetts business trust. Olympus Fund is a diversified series of the Trust and Orion Fund is a nondiversified series, within the meaning of the Investment Company Act of 1940, as amended (the "1940 Act"). Both Funds have the same investment objective: to seek long-term growth of capital. The Prospectus of Orion Fund dated February 28, 2006, as supplemented, is enclosed and is considered part of this Proxy Statement/Prospectus. For more information about the investment objective, strategies, restrictions and risks of Orion Fund and Olympus Fund, see: (i) the Prospectus of Olympus Fund dated February 28, 2006, as supplemented; (ii) the Statement of Additional Information of Olympus Fund and Orion Fund dated February 28, 2006, as supplemented; (iii) the Annual Report of Olympus Fund and Orion Fund for the fiscal year ended October 31, 2005; and (iv) the unaudited Semiannual Report for Olympus Fund and Orion Fund for the fiscal period ended April 30, 2006. These documents have been filed with the Securities and Exchange Commission ("SEC") and are incorporated by reference. Olympus Fund's Prospectus, Annual Report, and Semiannual Report have previously been delivered to Olympus Fund shareholders. You can obtain free copies of any of the documents by calling Janus at 1-800-525-3713 or by contacting your financial intermediary. No other parts of the Prospectus, Statement of Additional Information, Annual Report, or Semiannual Report are incorporated by reference. A Statement of Additional Information dated [August xx, 2006] relating to the Merger has been filed with the SEC and is incorporated by reference in this Proxy Statement/Prospectus. You can obtain a free copy of that document by calling Janus at 1-800-525-3713 or by contacting your financial intermediary. LIKE SHARES OF OLYMPUS FUND, SHARES OF ORION FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD 2 OR ANY OTHER AGENCY, AND INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED. Each Fund is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and the 1940 Act, and files reports, proxy materials, and other information with the SEC. You may review and copy information about the Funds at the Public Reference Room of the SEC or get text only copies, after paying a duplicating fee, by sending an electronic request by e-mail to publicinfo@sec.gov or by writing to or calling the Public Reference Room, Washington, D.C. 20549-0102 (1-202-942-8090). Information on the operation of the Public Reference Room may also be obtained by calling this number. You may also obtain reports and other information about the Funds from the Electronic Data Gathering Analysis and Retrieval (EDGAR) Database on the SEC's website at http://www.sec.gov. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. 3 I. SYNOPSIS This Proxy Statement/Prospectus provides a brief overview of the key features and other matters typically of concern to shareholders considering a proposed merger between mutual funds. These responses are qualified in their entirety by the remainder of this Proxy Statement/Prospectus, which you should read carefully because it contains additional information and further details regarding the proposed Merger. The description of the Merger is qualified by reference to the full text of the Plan, which is attached as Appendix A. Q. WHAT IS BEING PROPOSED? A. The Board of Trustees of the Trust recommends that shareholders of Olympus Fund approve a Plan that authorizes the merger of Olympus Fund into Orion Fund. Each Fund is a series of the Trust and is managed by Janus. You are receiving this Proxy Statement/Prospectus because you have a right to vote on the Merger. If approved by shareholders, as of the Closing, Olympus Fund investors will receive shares of Orion Fund equivalent in dollar value to their shares in Olympus Fund at the time of the Merger. Specifically, all of the assets of Olympus Fund will be transferred to Orion Fund solely in exchange for shares of Orion Fund with a value equal to the value of Olympus Fund's assets net of liabilities, and for the assumption by Orion Fund of all liabilities of Olympus Fund. Immediately following the transfer, the shares of Orion Fund received by Olympus Fund will be distributed pro-rata to each Olympus Fund shareholder of record as of the Closing Date (on or about October 31, 2006). Olympus Fund would then be liquidated. The Merger is conditional upon receipt of an opinion of counsel that the Merger qualifies as a tax-free reorganization. Q. WHY IS THE MERGER IN THE BEST INTEREST OF FUND SHAREHOLDERS? A. The Board of Trustees concluded that the Merger is in the best interest of Olympus Fund shareholders based on the following factors, among others: - The Funds have the same investment objectives as well as strategies and risks that are comparable in many respects, and some overlap in portfolio holdings. Both pursue companies demonstrating aggressive growth traits and rely on a go-anywhere approach to find them. Merging the two Funds should therefore allow you to maintain your exposure to high-growth areas of the market while also enabling you to potentially benefit from Orion Fund's nondiversified investment strategy. Specifically, Portfolio Manager Ron Sachs believes this strategy is an enhanced approach to fundamental research and information analysis with regard to a particular company, which can be an important factor in balancing the risk and reward potential of each investment. 4 - It is anticipated that the elimination of some duplicative expenses may result in an expense ratio that is equal to or lower than the current expense ratio of either Fund. - There should be greater efficiency, in terms of portfolio management and operations, of managing a single Fund rather than two separate Funds. - The proposed Merger is designed to be a tax-free reorganization, so you should not realize a tax gain or loss as a result. Q. WHAT IS THE RECOMMENDATION OF THE BOARD OF TRUSTEES? A. At a meeting held on July 5, 2006, the Board of Trustees determined that the Merger is in the best interests of Olympus Fund and its shareholders. See "Reasons for the Merger" below for further information on the considerations taken by the Board of Trustees regarding the Merger. THE BOARD OF TRUSTEES RECOMMEND THAT SHAREHOLDERS VOTE FOR THE PLAN. Q. DO THE FUNDS HAVE THE SAME INVESTMENT OBJECTIVE? A. Yes. Both Funds have the same investment objective of seeking long-term growth of capital and each may invest in companies of any size, from larger, well-established companies to smaller, emerging growth companies. Q. WHAT ARE THE PRIMARY DIFFERENCES IN INVESTMENT STRATEGIES AND RISKS OF THE FUNDS? A. The primary differences relate to the number of holdings, exposure to small and mid-sized companies versus large capitalization companies, diversification, and foreign exposure. Orion Fund invests in a smaller number of companies than Olympus Fund, and has historically had more exposure to small to mid-sized companies and foreign markets (including emerging markets) than Olympus Fund. - Number of Holdings. Although the Funds have the same investment objective, Orion Fund pursues its objective by normally investing primarily in a core group of 20-30 stocks while Olympus Fund has historically invested in a broader range of stocks. - Capitalization. As of June 30, 2006, Olympus Fund had 44.9% of its net assets invested in large companies (companies with capitalization of over $10 billion), and 19.2% of its net assets invested in small to mid-sized companies (companies with capitalization of $1 to $5 billion); Orion Fund had 26.3% of its net assets invested in large companies and 53.7% of its net assets invested in small to mid-sized companies. Orion Fund's investments in small to mid-sized companies may be more volatile and somewhat more speculative than Olympus Fund's investments in larger or more established companies. 5 - Diversification. Olympus Fund is classified as "diversified" while Orion Fund is classified as "nondiversified." This means that Orion Fund has the ability to take larger positions in a smaller number of issuers than Olympus Fund. This gives Orion Fund more flexibility to focus its investments in the most attractive companies identified by the portfolio manager, but it may add more risk because the price movement of a single stock may have a greater impact on a Fund's net asset value. - Foreign Exposure. As of June 30, 2006, Olympus Fund had 23.7% of its assets invested in foreign stocks, of which 3.0% were in emerging markets, while Orion Fund had 37.1% of its assets invested in foreign stocks, of which 20.6% were in emerging markets. Due to its potential higher exposure to foreign markets, Orion Fund's returns and net asset value may be affected to a greater extent than Olympus Fund's economic or political events in a given country or countries. - Benchmarks. Olympus Fund benchmarks its performance against the Russell 1000(R) Growth Index, while Orion Fund benchmarks against the Russell 3000(R) Growth Index, as this index reflects greater exposure to a broader universe of companies. Further information comparing the investment objectives, strategies and restrictions is included below under "Investment Objectives, Strategies and Restrictions." Q. HOW DO THE FUNDS COMPARE IN SIZE? A. As of June 30, 2006, Orion Fund's net assets were $1.0 billion and Olympus Fund's net assets were $2.2 billion. The asset size of each Fund fluctuates on a daily basis and the asset size of Orion Fund after the Merger may be larger or smaller than the combined assets of the Funds as of June 30. Q. WILL THE PROPOSED MERGER RESULT IN HIGHER INVESTMENT ADVISORY FEES OR OTHER FUND EXPENSES? A. No. The investment advisory fee for Olympus Fund and Orion Fund are the same, 0.64% per annum of average net assets. The projected total expense ratio of Orion Fund (following completion of the Merger) is expected to be equal to or lower than the current expense ratio of Olympus Fund. Pro forma fee, expense, and financial information is included in the Proxy Statement/ Prospectus. Q. WHAT ARE THE TAX CONSEQUENCES OF THE PROPOSED MERGER? A. The Merger is expected to be a tax-free transaction for federal income tax purposes and will not take place unless counsel provides an opinion to that effect. Shareholders should not recognize any capital gain or loss as a direct result of the Merger. As a result of the Merger, however, Olympus Fund and/or Orion Fund may lose the benefit of a portion of realized capital losses 6 that might have been used to offset or defer gains on sales of portfolio securities under some circumstances. If you choose to redeem or exchange your shares before or after the Merger, you may realize a taxable gain or loss; therefore, consider consulting a tax adviser before doing so. In addition, you may receive a distribution of ordinary income or capital gains as a result of the normal operations of Olympus Fund. Q. WILL THE SHAREHOLDER SERVICES PROVIDED BY JANUS CHANGE? A. No. Janus manages Olympus Fund and Orion Fund. The custodian, transfer agent, and distributor are the same for both Funds. Purchase, exchange, and redemption privileges are the same for both Funds. Please consult your financial intermediary for information on any services provided by them to the Funds. Q. CAN I STILL ADD TO MY EXISTING OLYMPUS FUND ACCOUNT WHEN IT CLOSES TO NEW INVESTORS ON JULY 14TH? A. Yes. Olympus Fund shareholders as of July 14, 2006 may continue to make subsequent investments until at least the date of shareholder approval (anticipated on October 2, 2006). However, the Fund has been closed to new investors as of July 14, 2006. Q. WHAT HAPPENS IF THE MERGER IS NOT APPROVED? A. Any shares you held in Olympus Fund would remain Olympus Fund shares. Olympus Fund and Orion Fund would each continue to operate separately and the Board of Trustees would determine what further action, if any, to take. Q. WILL EITHER FUND PAY FOR THE PROXY SOLICITATION AND LEGAL COSTS ASSOCIATED WITH THE PROPOSED MERGER? A. No. Janus will bear those costs. Q. WHEN WILL THE MERGER TAKE PLACE? A. If approved, the Merger will occur on or about October 31, 2006, or as soon as reasonably practicable after shareholder approval is obtained. Shortly after completion of the Merger, affected shareholders will receive a confirmation statement reflecting their new Fund account number and number of shares owned. Q. WHAT IF I WANT TO EXCHANGE MY SHARES INTO ANOTHER JANUS FUND PRIOR TO THE MERGER? A. You may exchange your shares into other Janus funds before the Closing Date (on or about October 31, 2006) by calling 1-800-525-3713, visiting www.janus.com, or contacting your financial intermediary. If you choose to exchange your Olympus Fund shares for another Janus fund, your request will be treated as a normal exchange of shares and will be a taxable transaction unless your shares are held in a tax-deferred account, such as an IRA. 7 Q. HOW MANY VOTES AM I ENTITLED TO CAST? A. You are entitled to one vote for each whole or fractional dollar value of the net asset value of Olympus Fund shares held in your name on July 14, 2006 (the "Record Date"). Shareholders of record of Olympus Fund at the close of business on the Record Date will receive notice of and be asked to vote on the Merger. Q. HOW CAN I VOTE MY SHARES? A. You can vote in any one of four ways: - By mail, by sending the enclosed proxy card (signed and dated) in the enclosed envelope; - Through the Internet by going to the website listed on your proxy card; - By telephone using the toll-free number listed on your proxy card; or - In person, by attending the Special Meeting of Shareholders on October 2, 2006 (or any adjournment or postponement thereof). Whichever method you choose, please take the time to read the full text of the Proxy Statement/Prospectus before you vote. Q. IF I VOTE MY PROXY NOW AS REQUESTED, CAN I CHANGE MY VOTE LATER? A. Yes. You may revoke your proxy vote at any time before it is voted at the Meeting by (1) delivering a written revocation to the Secretary of Olympus Fund at 151 Detroit Street, Denver, Colorado 80206; (2) submitting a subsequently executed proxy vote; or (3) attending the Meeting and voting in person. Even if you plan to attend the Meeting, we ask that you return the enclosed proxy card. This will help us ensure that an adequate number of shares are present at the Meeting for consideration of the Merger. Q. WHAT IS THE REQUIRED VOTE TO APPROVE THE MERGER? A. Approval of the Merger will require the affirmative vote of a "majority of the outstanding voting securities" of Olympus Fund within the meaning of the 1940 Act. This means the lesser of (1) 67% or more of the shares present at the Meeting if the holders of more than 50% of the outstanding shares are present or represented by proxy, or (2) more than 50% of the outstanding shares. Q. WHOM SHOULD I CALL FOR ADDITIONAL INFORMATION ABOUT THIS PROXY STATEMENT/ PROSPECTUS? A. Please call D.F. King & Co., Inc., your Fund's information agent (proxy solicitor), at 1-800-628-8528. 8 INVESTMENT OBJECTIVES, STRATEGIES AND RESTRICTIONS This section will help you compare the investment objectives, main investment strategies and restrictions of Olympus Fund and Orion Fund. Please note that this is only a brief discussion. Information contained in the Proxy Statement/Prospectus is qualified by the more complete information contained in the Funds' Prospectuses, which are incorporated by reference. The Funds are each managed by Janus. The Funds have the same investment objective of long-term growth of capital. The Funds have substantially similar principal investment strategies. The primary differences in the investment strategies relate to the number of holdings, exposure to small and mid-sized companies versus large capitalization companies, foreign exposure, and diversification. There is no assurance that a Fund will achieve its stated objective. Number of Holdings. Each Fund pursues its investment objective by normally investing primarily in common stocks selected for their growth potential and each may invest in companies of any size, from larger, well-established companies to smaller, emerging growth companies. Each Fund is categorized by Lipper Inc. ("Lipper") in Lipper's Multi-Cap Growth Fund category. Each Fund limits its high-yield/high-risk bonds to 35% or less of its net assets. Orion Fund, however, normally invests primarily in a group of 20 to 30 domestic and foreign common stocks whereas Olympus Fund's strategy does not normally concentrate its number of holdings. As of June 30, 2006, Olympus Fund held stocks of 69 companies, while Orion Fund held stocks of 47 companies. Of these holdings, 16 securities were held by both Funds, comprising approximately 27.8% and 40.2% of Olympus Fund's and Orion Fund's total market value, respectively. Capitalization Exposure. As of June 30, 2006, 44.9% and 26.3% of Olympus Fund's and Orion Fund's net assets, respectively, were invested in large companies with capitalizations of greater than $10 billion. Also as of June 30, 2006, 19.2% and 53.7% of Olympus Fund's and Orion Fund's net assets, respectively, were invested in small to mid-sized companies with capitalizations between $1 to $5 billion. Foreign Exposure. Although each Fund may invest in companies anywhere in the world, including companies in emerging markets, Orion Fund has historically invested a higher percentage of its assets in foreign companies than Olympus Fund, including companies in emerging markets. As of June 30, 2006, Olympus Fund had 23.7% of its assets invested in foreign stocks, of which 3.0% were in emerging markets, while Orion Fund had 37.1% of its assets invested in foreign stocks, of which 20.6% were in emerging markets. Diversification. Olympus Fund is classified as "diversified," while Orion Fund is classified as "nondiversified." As a nondiversified fund, Orion Fund may hold larger positions in a smaller number of securities than a fund that is classified as "diversified," such as Olympus Fund. With respect to 75% of its total assets, Olympus Fund may not purchase securities of an issuer (other than the U.S. Government, its agencies, instrumentalities or authorities, or repurchase 9 agreements collateralized by U.S. Government securities, and other investment companies) if: (a) such purchase would, at the time, cause more than 5% of Olympus Fund's total assets taken at market value to be invested in the securities of such issuer or (b) such purchase would, at the time, result in more than 10% of the outstanding voting securities of such issuer being held by Olympus Fund. Orion Fund is not subject to that restriction. As of June 30, 2006, 5.15% of the net assets of Olympus Fund were invested in a single company, while 7.55% of the net assets of Orion Fund were invested in a single company. Each Fund's portfolio holdings are available on Janus' website (www.janus.com) monthly with a 30-day lag. Portfolio Turnover. During the fiscal year ended October 31, 2005 and the six-month period ended April 30, 2006, Olympus Fund had a portfolio turnover rate of 119% and 98%, respectively, while Orion Fund had a portfolio turnover rate of 68% and 54%, respectively. As a reference point, a portfolio turnover rate of 100% would mean that a portfolio had sold and purchased securities valued at 100% of its net assets within a one-year period. Variations in portfolio turnover rates may occur due to market conditions, changes in the size of a portfolio, the nature of a portfolio's investments, and the investment style and/or outlook of the investment personnel. Portfolio turnover in Orion Fund may increase for a period of time following completion of the proposed Merger as a result of any portfolio rebalancing by the portfolio manager. Fundamental and non-fundamental investment restrictions of the Funds are substantially similar. A description of each of these investment restrictions is included as Appendix B. COMPARISON OF FEES AND EXPENSES The following tables compare the fees and expenses you may bear directly or indirectly as an investor in Olympus Fund and Orion Fund, and show the projected ("pro forma") estimated fees and expenses of Orion Fund, assuming consummation of the Merger as of October 31, 2005. Fees and expenses shown for Olympus Fund and Orion Fund were determined based on each Fund's net assets as of the fiscal year ended October 31, 2005. THE FUNDS WILL NOT PAY ANY FEES IN CONNECTION WITH THE PROPOSED MERGER. Shareholder fees are those paid directly from your investment, such as sales loads and redemption fees. The Funds are no-load investments, so you will generally not pay any shareholder fees when you buy or sell shares of the Funds. Annual fund operating expenses are paid out of a Fund's assets and include fees for portfolio management, maintenance of shareholder accounts, shareholder servic- 10 ing, accounting, and other services. You do not pay these fees directly but, as the examples below show, these costs are borne indirectly by all shareholders. SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT) Sales charges........................................ None Redemption fee (as a % of amount redeemed)........... None(1)
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS)
TOTAL ANNUAL FUND MANAGEMENT OTHER OPERATING FEE EXPENSES EXPENSES ---------- -------- ------------ Janus Olympus Fund............... 0.64% 0.33% 0.97% Janus Orion Fund................. 0.64% 0.38% 1.02% Janus Orion Fund (Pro forma combined, assuming consummation of the Merger)................. 0.64% 0.33%(2) 0.97%
EXAMPLES: These examples are intended to help you compare the cost of investing in the Funds and in the combined Fund (assuming consummation of the Merger) on a pro forma basis. The examples assume that you invest $10,000 in each Fund and in Orion Fund after the Merger for the time periods indicated, you reinvest all dividends and distributions, and then redeem all of your shares at the end of those periods. The examples also assume that your investment has a 5% return each year and that each Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based upon these assumptions your costs would be as follows:
1 YEAR 3 YEARS 5 YEARS 10 YEARS ------ ------- ------- -------- Janus Olympus Fund............ $ 99 $309 $536 $1,190 Janus Orion Fund.............. $104 $325 $563 $1,248 Janus Orion Fund (Pro forma combined, assuming consummation of the Merger)..................... $ 99 $309 $536 $1,190
--------------- (1) Each Fund may charge a fee to cover the cost of sending a wire transfer for redemptions, and your bank may charge an additional fee to receive the wire. (2) Other expenses are estimated, accounting for the effect of the proposed Merger. COMPARISON OF PERFORMANCE OF OLYMPUS FUND AND ORION FUND The following information provides some indication of the risks of investing in the Funds by showing how each Fund's performance has varied over time. The bar charts depict the change in performance from year to year during the periods indicated. The tables following the charts show how the performance of each Fund compares to broad-based market indices (which, unlike the Funds, do not have any 11 fees or expenses). Olympus Fund's performance is compared to the Russell 1000(R) Growth Index. Orion Fund's performance is compared to the Russell 3000(R) Growth Index. It is expected that Orion Fund will continue to compare its performance to the Russell 3000(R) Growth Index after the proposed Merger. The S&P 500(R) Index is a secondary benchmark index for both Funds. The indices are not available for direct investment. The performance of the Funds and the indices varies over time. Of course, a Fund's past performance (before and after taxes) is not necessarily an indication of future performance. OLYMPUS FUND Annual returns for periods ended 12/31 21.73% 26.73% 56.97% 100.12% (21.63)% (32.05)% (28.19)% 31.65% 8.74% 14.21% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Best Quarter: 4th-1999 51.67% Worst Quarter: 1st-2001 (26.29)%
2006 Total Return through June 30: (2.54)% ORION FUND Annual returns for periods ended 12/31 (14.69)% (29.77)% 43.81% 14.90% 20.93% 2001 2002 2003 2004 2005 Best Quarter: 2nd-2003 23.59% Worst Quarter: 1st-2001 (22.54)%
2006 Total Return through June 30: 7.68% 12 AVERAGE ANNUAL TOTAL RETURNS (%) AS OF 12/31/05
SINCE 1 YEAR 5 YEARS 10 YEARS INCEPTION(1) ------ ------- -------- ------------ OLYMPUS FUND Return Before Taxes.............. 14.21% (4.42)% 11.72% 11.72% Return After Taxes on Distributions................. 14.21% (4.45)% 11.36% 11.35% Return After Taxes on Distributions and Sale of Fund Shares(2)..................... 9.24% (3.72)% 10.33% 10.33% Russell 1000(R) Growth Index(3).... 5.26% (3.58)% 6.73% 6.73% (reflects no deduction for expenses, fees, or taxes) S&P 500(R) Index(4)................ 4.91% 0.54% 9.07% 9.07% (reflects no deduction for expenses, fees, or taxes) ORION FUND Return Before Taxes.............. 20.93% 3.67% N/A (3.08)% Return After Taxes on Distributions................. 20.71% 3.63% N/A (3.13)% Return After Taxes on Distributions and Sale of Fund Shares(2)..................... 13.70% 3.13% N/A (2.62)% Russell 3000(R) Growth Index(5).... 5.17% (3.15)% N/A (7.91)% (reflects no deduction for expenses, fees, or taxes) S&P 500(R) Index(4)................ 4.91% 0.54% N/A (1.16)% (reflects no deduction for expenses, fees, or taxes)
--------------- (1) The inception date for Olympus Fund is 12/29/95 and for Orion Fund is 6/30/00. Index comparisons begin 12/29/95 for Olympus Fund and 6/30/00 for Orion Fund. (2) If the Fund incurs a loss, which generates a tax benefit, the Return After Taxes on Distributions and Sale of Fund Shares may exceed the Fund's other return figures. (3) The Russell 1000(R) Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. (4) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500 stocks, a widely recognized, unmanaged index of common stock prices. (5) The Russell 3000(R) Growth Index measures the performance of those Russell 3000(R) Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000(R) Growth Index or the Russell 2000(R) Growth Index. After-tax returns are calculated using the historically highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your individual tax situation and may differ from those shown in the preceding table. The after-tax return information shown above does not apply to Fund shares held through a tax-deferred account, such as a 401(k) plan or IRA. 13 Current performance may be higher or lower than the performance data shown above. For more recent performance information, visit Janus' website at www.janus.com. DISTRIBUTION AND PURCHASE PROCEDURES, EXCHANGE RIGHTS, AND REDEMPTION PROCEDURES Janus manages both Olympus Fund and Orion Fund, and Janus Distributors LLC is the distributor of each Fund. In addition, the custodian, State Street Bank and Trust Company, and transfer agent, Janus Services LLC, are the same for both Olympus Fund and Orion Fund. Olympus Fund and Orion Fund have identical purchase, exchange, and redemption procedures. These common procedures, as well as other features related to investing in the Funds, are summarized below. A more complete description can be found in the Funds' Prospectuses. It is expected that shareholders will continue to receive the same services as shareholders of Orion Fund as they currently do as shareholders of Olympus Fund. PURCHASES OF FUND SHARES Investors can purchase Fund shares directly through Janus by the following methods: - By calling Janus XpressLine at 1-888-979-7737, a 24-hour automated phone system; - By contacting a Janus representative at 1-800-525-3713 (TDD For the speech and hearing impaired, 1-800-525-0056); - By regular mail, Janus, P.O. Box 173375, Denver, Colorado 80217-3375; - By overnight mail, Janus, 720 S. Colorado Blvd., Suite 290A Denver, Colorado 80246-1929; or - Through www.janus.com. For investors who invest in the Funds through a financial intermediary or plan sponsor, contact your financial intermediary or plan sponsor, or refer to your plan documents for information on how to invest in each Fund, including additional information on minimum initial or subsequent investment requirements. MINIMUM INVESTMENT REQUIREMENTS The minimum investment is $2,500 per Fund account for non-retirement accounts. For certain tax-deferred accounts or UGMA/UTMA accounts, the minimum investment is $1,000 without an automatic investment program, or $500 with an automatic investment program of $100 per month. Investors in a defined contribution plan through a third party administrator should refer to their plan document or contact their plan administrator for additional information. In addition, accounts held through certain wrap programs may not be subject to these mini- 14 mums. Investors should refer to their intermediary for additional information. The Funds reserve the right to annually request that intermediaries close Fund accounts that are valued at less than $100. EXCHANGE RIGHTS An exchange represents the sale of shares from one fund and the purchase of shares of another fund, which may produce a taxable gain or loss in a nonretirement account. - You may generally exchange shares of a fund for shares of any fund in the Trust. - New Janus fund accounts established by exchange must be opened with $2,500 or the total account value if the value of the Janus fund account you are exchanging from is less than $2,500. - UGMA/UTMA accounts, Traditional or Roth IRAs, Simplified Employee Pension IRAs, and Coverdell Education Savings Accounts established by exchange must meet the minimum investment requirements previously described. If the value of the Janus fund account you are exchanging from is less than the stated minimum, you must exchange the entire balance. - Exchanges between existing Janus fund accounts must meet the $100 subsequent investment requirement. - For Systematic Exchanges, if no date is specified on your request, systematic exchanges will be made on the 20th of each month. You may establish this option for as little as $100 per exchange. If the balance in the Janus fund account you are exchanging from falls below the Systematic Exchange amount, all remaining shares will be exchanged and your Systematic Exchange Program will be discontinued. - The exchange privilege is not intended as a vehicle for short-term or excessive trading. You may make up to four round trips in a Fund in a 12-month period, although the Funds at all times reserve the right to reject any exchange purchase for any reason without prior notice. Generally, a "round trip" is a redemption out of a Fund (by any means) followed by a purchase back into the same Fund (by any means). Different restrictions may apply if you invest through an intermediary. The Funds will work with financial intermediaries to apply the Funds' exchange limit. However, the Funds may not always have the ability to monitor or enforce the trading activity in such accounts. For more information about the Funds' policies on excessive trading, see "Excessive Trading" in each Fund's Prospectus. - The Funds reserve the right to reject any exchange request and to modify or terminate the exchange privilege at any time. 15 - With certain limited exceptions, exchanges between Janus fund accounts will be accepted only if the registrations are identical. If you are exchanging into a closed Janus fund, you will need to meet criteria for investing in the closed fund. For more information, see "Closed Fund Policies" in each Fund's Prospectus. - If the shares you are exchanging are held in certificate form, you must return the certificate to Janus prior to making any exchanges. Shares are no longer available in certificate form. For investors who invest in the Funds through financial intermediaries or plan sponsors, contact your financial intermediary or plan sponsor, or consult your plan documents to exchange into other funds in the Trust. Be sure to read the prospectus of the fund into which you are exchanging. An exchange is generally a taxable transaction (except for certain tax-deferred accounts). REDEMPTION PROCEDURES Generally all accounts are automatically eligible for the electronic redemption option if bank information is provided. Redemption proceeds can be electronically transferred to your predesignated bank account on the next bank business day after receipt of your redemption request (wire transfer). Wire transfers will be charged a fee for each wire and your bank may charge an additional fee to receive the wire. Redemption proceeds can be electronically transferred to your predesignated bank account on or about the second bank business day after receipt of your redemption request. There is no fee associated with this type of electronic transfer. Redemption proceeds will be sent to the shareholder(s) of record at the address of record within seven days after receipt of a valid redemption request. During the 10 days following an address change, requests for redemption checks to be sent to a new address require a signature guarantee. If no date is specified on your request, systematic redemptions will be made on or about the 24th of each month. If the balance in the Fund you are selling from falls to zero, your Systematic Redemption Program will be discontinued. Please contact your financial intermediary or plan sponsor, or refer to the appropriate plan documents for details including any restrictions on redemptions, redemption charges, redemption in-kind, automatic redemption, and delays in honoring redemption requests. CALCULATION OF NET ASSET VALUE Olympus Fund and Orion Fund each calculate their respective net asset value per share (NAV) once each business day at the close of the regular trading session of the New York Stock Exchange (normally, 4:00 p.m. Eastern time). 16 PRINCIPAL RISK FACTORS OF INVESTING IN THE FUNDS Each Fund may invest in various types of securities or use certain investment techniques to achieve its investment objective of long-term growth of capital. The following is a summary of the principal risks associated with such securities and investment techniques. Additional information about these risks is included in Orion Fund's Prospectus. As with any security, an investment in either Fund involves certain risks, including loss of principal. An investment in the Funds is not a deposit of a bank and is not insured by the Federal Deposit Insurance Corporation or any other government agency. The fact that a particular risk is not identified does not indicate that a Fund does not invest its assets in, or is precluded from investing its assets in, securities that give rise to that risk. Information about additional investment techniques that the Funds may utilize and related risks are included in Appendix C. SIMILAR RISK FACTORS OF THE FUNDS Common Stock and Market Risk. Because each Fund may invest substantially all of its assets in common stocks, the main risk is that the value of the stocks they hold might decrease in response to the activities of an individual company or in response to general market and/or economic conditions. If this occurs, a Fund's share price may also decrease. The value of a Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases. The value of a Fund's portfolio could also decrease if the stock market goes down regardless of how well the individual companies perform. The market as a whole may not favor the types of investments a Fund makes and a Fund may not be able to get an attractive price for them. If the value of a Fund's portfolio decreases, a Fund's NAV will also decrease, which means if you sell your shares in a Fund you may lose money. Growth Investing Risk. Since growth stocks usually reinvest a large portion of earnings in their own businesses, they may lack the dividends associated with value stocks that might otherwise cushion their decline in a falling market. Growth companies may be expected to increase their earnings at a certain rate. Earnings disappointments in growth stocks often result in sharp price declines. Growth stocks may also be out of favor for certain periods in relation to value stocks. Foreign Investment Risk. Each Fund may invest without limit in foreign securities either indirectly (e.g., Depositary Receipts, which may be sponsored or unsponsored) or directly in foreign markets, including emerging markets. Investments in foreign securities, including those of foreign governments, may involve greater risks than investing in domestic securities because a Fund's performance may depend on factors other than the performance of a particular company. These risks include currency risk, political and economic risk, regulatory risk, foreign markets risk, transaction costs and geographic risk. Investments in unsponsored depositary receipts may include those created without the participation of the foreign issuer. Holders of these depositary receipts generally bear all the costs of the 17 depositary receipt facility, whereas foreign issuers typically bear certain costs in a sponsored depositary receipt. The bank or trust company depositary of an unsponsored depositary receipt may be under no obligation to distribute shareholder communications received from the foreign issuer or to pass through voting rights. Foreign investment risk is greater for Orion Fund given its more significant exposure to foreign markets, including emerging markets. High-Yield Investment Risk. To the extent each Fund invests in high- yield/high-risk bonds, returns and NAV may be affected by factors such as economic changes, political changes, or developments specific to the company that issued the bond. In addition, some bonds may experience sudden and sharp price swings. PRIMARY DIFFERENCES IN RISK FACTORS OF THE FUNDS Nondiversification Risk. Diversification is a way to reduce risk by investing in a broad range of stocks or other securities. Olympus Fund is classified as "diversified." Orion Fund is classified as "nondiversified." A fund classified as "nondiversified" has the ability to take larger positions in a smaller number of issuers than a fund classified as "diversified." This gives Orion Fund more flexibility to focus its investments in companies identified by the portfolio manager. Because the appreciation or depreciation of a single stock may have a greater impact on the NAV of a nondiversified fund, Orion Fund's share price can be expected to fluctuate more than Olympus Fund. Such fluctuation, if significant, may affect the performance of Orion Fund and subject Orion Fund to greater risk than Olympus Fund. Foreign and Emerging Market Risk. Orion Fund has historically invested a greater portion of its assets in foreign markets, including emerging markets, than Olympus Fund. Such countries include, but are not limited to countries included in the Morgan Stanley Capital International Emerging Markets Index(SM). As a result, its returns and NAV may be affected to a larger degree by fluctuations in currency exchange rates or political or economic conditions in a particular country. A market swing in one or more countries or regions where the Fund has invested a significant amount of its assets may have a greater effect on Orion Fund's performance than it would on a more geographically diversified portfolio. The Fund's investments in emerging market countries may involve risks greater than, or in addition to, the risks of investing in more developed countries. The securities markets of emerging market countries may be smaller, less liquid, and subject to greater price volatility than those in the United States. As of June 30, 2006, Olympus Fund had 23.7% of its net assets invested in foreign stocks, of which 3.0% were in emerging markets, while Orion Fund had 37.1% of its net assets invested in foreign stocks, of which 20.6% were in emerging markets. Small and Mid Cap Investment Risk. Many attractive investment opportunities pursued by Orion Fund have historically been in smaller and mid-sized companies. Smaller and mid-sized companies may suffer more significant losses than larger or more established issuers because they may lack depth of manage- 18 ment, be unable to generate funds necessary for growth or potential development, or be developing or marketing new products or services for which markets are not yet established and may never become established. In addition, such companies may be insignificant factors in their industries and may become subject to intense competition from larger or more established companies. Securities of smaller and mid-sized companies may have more limited trading markets than the markets for securities of larger or more established issuers, or may not be publicly traded at all, and may be subject to wide price fluctuations. Investments in such companies tend to be more volatile and somewhat more speculative. THE MERGER THE PLAN Shareholders of Olympus Fund are being asked to approve the Plan, which sets forth the terms and conditions under which the Merger will be implemented. Significant provisions of the Plan are summarized below; however, this summary is qualified in its entirety by reference to the Plan, which is attached as Appendix A to this Proxy Statement/Prospectus. The Plan contemplates: (i) Orion Fund's acquisition of all of the assets of Olympus Fund in exchange solely for shares of Orion Fund and the assumption by Orion Fund of all of Olympus Fund's liabilities, if any, as of the Closing Date; (ii) the distribution on the Closing Date of those shares to the shareholders of Olympus Fund; and (iii) the liquidation of Olympus Fund. The value of Olympus Fund's assets to be acquired and the amount of its liabilities to be assumed by Orion Fund and the NAV of a share of Olympus Fund will be determined as of the close of regular trading on the New York Stock Exchange ("NYSE") on the Closing Date, after the declaration of any dividends on the Closing Date, and will be determined in accordance with the valuation procedures described in the Trust's Amended and Restated Agreement and Declaration of Trust and the Funds' currently effective Prospectus and Statement of Additional Information. The Plan provides that Janus will bear all costs and expenses of the Merger, including the costs and expenses incurred in the preparation and mailing of this Proxy Statement/Prospectus. The Closing Date is expected to be on or about October 31, 2006. As soon as practicable after the Closing Date, Olympus Fund will distribute pro rata to its shareholders of record the shares of Orion Fund it receives in the Merger, so that each shareholder of Olympus Fund will receive a number of full and fractional shares of Orion Fund equal in value to his or her holdings in Olympus Fund, and Olympus Fund will be liquidated. Such distribution will be accomplished by opening accounts on the books of Orion Fund in the names of the corresponding Olympus Fund shareholders and by transferring thereto the shares of Orion Fund previously credited to the account of 19 Olympus Fund on those books. Each shareholder account shall be credited with the pro rata number of Orion Fund's shares due to that shareholder. Accordingly, immediately after the Merger, each former shareholder of Olympus Fund will own shares of Orion Fund that will be equal to the value of that shareholder's shares of Olympus Fund as of the Closing Date. Any special options (for example, automatic investment plans on current Olympus Fund shareholder accounts) will automatically transfer to the new Fund accounts. The implementation of the Merger is subject to a number of conditions set forth in the Plan, including approval of the shareholders of Olympus Fund. The Plan also requires receipt of a tax opinion indicating that, for federal income tax purposes, the Merger qualifies as a tax-free reorganization. The Plan may be terminated and the Merger abandoned at any time prior to the Closing Date by the Board of Trustees (the "Trustees") if they determine that the Merger would disadvantage the Funds. Please review the Plan carefully. REASONS FOR THE MERGER The Funds have the same investment objective and some overlap in portfolio holdings, as well as strategies and risks that are comparable in many respects, even considering the difference in classification of Orion Fund as a "nondiversified" fund and Olympus Fund as a "diversified" fund. Both pursue companies demonstrating aggressive growth traits and rely on a go-anywhere approach to find them. Merging the two Funds should therefore allow an Olympus Fund shareholder to maintain exposure to high-growth areas of the market while also potentially benefiting from Orion Fund's nondiversified investment strategy. Merging the Funds would also provide a larger asset base for Orion Fund that should result in an expense ratio that is equal to or lower than the current expense ratio of either Fund. Janus met with the Trustees and counsel to the Funds and independent counsel to the independent Trustees on June 14, 2006 and July 5, 2006 to discuss Janus' proposal to merge the Funds. At each meeting, the independent Trustees also discussed this proposal and the Plan with their independent counsel in executive session. During the course of these meetings, the Trustees requested and considered such information as they deemed relevant to their deliberations. At the meeting of the Trustees held on July 5, 2006, the Trustees determined that (1) the Merger is in the best interests of the shareholders of Olympus Fund and Orion Fund; and (2) the Plan should be approved by the Trustees and submitted to shareholders of Olympus Fund for approval. In making these determinations, the Trustees considered the following factors, among others: (1) the potential benefits of the Merger to shareholders of each Fund; (2) the compatibility of the Funds' investment objectives, strategies and risks; the extent of the overlap of portfolio holdings between the Funds; and the effect of the Merger on Olympus Fund shareholders who now are invested in a 20 diversified fund, but after the Merger would be invested in a nondiversified fund; (3) the relative size and investment performance of the Funds; (4) the historic and pro forma combined expense ratios and other information regarding the fees and expenses of the Funds, including the expected elimination of some expenses and a resulting expense ratio that is equal to or lower than the current expense ratio of either Fund; (5) the greater efficiency, in terms of portfolio management and operations, of managing a single Fund rather than two separate Funds; (6) whether the Merger would dilute the interests of either Fund's current shareholders; (7) the tax consequences of the Merger to the respective Funds and their shareholders, including the expected tax-free nature of the Merger; (8) the fact that, since July 1, 2006, the Funds have had the same portfolio manager; (9) the potential benefits of the Merger to Janus and its affiliates; and (10) the fact that Janus agreed to pay all costs associated with the Merger. Based on these considerations, among others, the Trustees concluded that: (1) the Merger is in the best interests of Olympus Fund and Orion Fund and their respective shareholders and (2) the interests of the existing shareholders of each Fund will not be diluted as a result of the Merger. Accordingly, the Trustees approved the Plan. THE BOARD OF TRUSTEES RECOMMENDS THAT SHAREHOLDERS VOTE FOR APPROVAL OF THE PLAN TO AUTHORIZE THE MERGER. FEDERAL INCOME TAX CONSEQUENCES As a condition to the Merger, the Trust will receive a legal opinion from Goodwin Procter LLP to the effect that, subject to customary assumptions and representations, on the basis of the existing provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the Treasury Regulations promulgated thereunder and current administrative and judicial interpretations thereof, for federal income tax purposes: - the transfer of all or substantially all of the assets of Olympus Fund solely in exchange for shares of Orion Fund and the assumption by Orion Fund of all liabilities of Olympus Fund, and the distribution of such shares to the shareholders of Olympus Fund, will constitute a "reorganization" within the meaning of Section 368(a) of the Code; Orion Fund and Olympus Fund will 21 each be a "party to a reorganization" within the meaning of Section 368(b) of the Code; - no gain or loss will be recognized by Olympus Fund on the transfer of the assets of Olympus Fund to Orion Fund in exchange for Orion Fund shares or the assumption by Orion Fund of all liabilities of Olympus Fund or upon the distribution of Orion Fund shares to Olympus Fund shareholders in exchange for their shares of Olympus Fund; - the tax basis of Olympus Fund's assets acquired by Orion Fund will be the same to Orion Fund as the tax basis of such assets to Olympus Fund immediately prior to the Merger, and the holding period of the assets of Olympus Fund in the hands of Orion Fund will include the period during which those assets were held by Olympus Fund; - no gain or loss will be recognized by Orion Fund upon the receipt of the assets of Olympus Fund solely in exchange for Orion Fund shares and the assumption by Orion Fund of all liabilities of Olympus Fund; - no gain or loss will be recognized by shareholders of Olympus Fund upon the receipt of Orion Fund shares by such shareholders, provided such shareholders receive solely Orion Fund shares (including fractional shares) in exchange for their Olympus Fund shares; and - the aggregate tax basis of Orion Fund shares, including any fractional shares, received by each shareholder of Olympus Fund pursuant to the Merger will be the same as the aggregate tax basis of Olympus Fund shares held by such shareholder immediately prior to the Merger, and the holding period of Orion Fund shares, including fractional shares, to be received by each shareholder of Olympus Fund will include the period during which Olympus Fund shares exchanged therefor were held by such shareholder (provided that Olympus Fund shares were held as a capital asset on the date of the Merger). The receipt of such an opinion is a condition to the consummation of the Merger. The Trust has not obtained an Internal Revenue Service ("IRS") private letter ruling regarding the federal income tax consequences of the Merger, and the IRS is not bound by advice of counsel. If the transfer of the assets of Olympus Fund in exchange for Orion Fund shares and the assumption by Orion Fund of all liabilities of Olympus Fund do not constitute a tax-free reorganization, each Olympus Fund shareholder generally will recognize a gain or loss equal to the difference between the value of Orion Fund shares such shareholder acquires and the tax basis of such shareholder's Olympus Fund shares. Shareholders of Olympus Fund should consult their tax advisers regarding the effect, if any, of the proposed Merger in light of their individual circumstances. Since the foregoing discussion relates only to the federal income tax consequences 22 of the Merger, shareholders of Olympus Fund should also consult tax advisers as to state and local tax consequences, if any, of the Merger. As of October 31, 2005, Olympus Fund had accumulated capital loss carryforwards of $1,684,106,645. After the Merger, these losses may be available to Orion Fund, which had accumulated capital loss carryforwards of $548,470,090, to offset its capital gains. The final amount of the accumulated capital loss carryforwards for Olympus Fund and Orion Fund is subject to change and will not be determined until the time of the Merger. After and as a result of the Merger, these accumulated capital loss carryforwards may in part be subject to limitations under applicable tax laws. As a result, Orion Fund may not be able to use some or all of these losses as quickly as each Fund may have used these losses in the absence of the Merger, and part of these losses may not be useable at all. The Board of Trustees of the Trust took this factor into account in concluding that the proposed Merger would be in the best interests of the Funds and their shareholders. CAPITALIZATION The following table shows, on an unaudited basis, the capitalization as of June 30, 2006 for Olympus Fund and Orion Fund, as well as pro forma capitalization giving effect to the proposed Merger:
NET ASSET VALUE SHARES FUND NET ASSETS PER SHARE OUTSTANDING ---- -------------- ----------- ----------- Janus Olympus Fund........ $2,217,780,821 31.86 69,603,089 Janus Orion Fund.......... 1,024,410,720 8.97 114,147,203 PRO FORMA AFTER MERGER Janus Orion Fund.......... 3,242,191,541 8.97 361,448,332
OTHER COMPARATIVE INFORMATION ABOUT THE FUNDS INVESTMENT ADVISER Janus, 151 Detroit Street, Denver, Colorado 80206-4805, is the investment adviser to both of the Funds. Janus is responsible for the day-to-day management of the Funds' investment portfolios and furnishes continuous advice and recommendations concerning the Funds' investments. Janus provides certain administrative and other services, and is responsible for the other business affairs of the Funds. Janus (together with its predecessors) has served as investment adviser to mutual funds since 1970 and currently serves as investment adviser to all of the Janus funds, acts as subadviser for a number of private-label mutual funds, and provides separate account advisory services for institutional accounts. Janus furnishes certain administrative, compliance, and accounting services for the Funds, and may be reimbursed by the Funds for its costs in providing those services. In addition, employees of Janus and/or its affiliates serve as officers of the Trust and Janus provides office space for the Funds and pays all or a portion of the 23 salaries, fees, and expenses of all Fund officers and those Trustees who are considered interested persons of Janus. From its own assets, Janus or its affiliates may make payments based on gross sales, current assets, or other measures to selected brokerage firms or other financial intermediaries that were instrumental in the acquisition or retention of shareholders for the Janus funds. The amount of these payments is determined from time to time by Janus, may be substantial, and may differ for different financial intermediaries. Eligibility requirements for such payments to institutional intermediaries are determined by Janus and/or its affiliates. Janus or its affiliates may pay fees, from their own assets, to brokerage firms, banks, financial advisers, retirement plan service providers, and other financial intermediaries for providing recordkeeping, subaccounting, transaction processing, and other shareholder or administrative services (including payments for processing transactions via National Securities Clearing Corporation ("NSCC") or other means) in connection with investments in the Janus funds. These fees are in addition to any fees that may be paid by the Janus funds for these types of or other services. In addition, Janus or its affiliates may also share certain marketing expenses with, or pay for or sponsor informational meetings, seminars, client awareness events, support for marketing materials, or business building programs for such intermediaries to raise awareness of the Funds. The receipt of (or prospect of receiving) payments described above are not intended to, but may provide a financial intermediary and its salespersons with an incentive to favor sales of Janus funds' shares over sales of other mutual funds (or non-mutual fund investments) with respect to which the financial intermediary does not receive such payments or receives them in a lower amount. These payment arrangements will not, however, change the price an investor pays for shares or the amount that a Janus fund receives to invest on behalf of the investor. You may wish to consider whether such arrangements exist when evaluating any recommendations to purchase or sell shares of the Funds. MANAGEMENT FEES Each Fund pays Janus an investment advisory fee which is calculated daily and paid monthly at the annual rate of 0.64% of average daily net assets. Each Fund's advisory agreement details the investment advisory fee and other expenses that the Funds pay. Each Fund incurs expenses not assumed by Janus, including any transfer agent and custodian fees and expenses, legal and auditing fees, printing and mailing costs of sending reports and other information to existing shareholders, and Independent Trustees' fees and expenses. The basis for the Trustees' approval of the investment advisory agreement for Orion Fund is contained in Orion Fund's unaudited Semiannual Report to shareholders dated April 30, 2006. 24 PORTFOLIO MANAGER The portfolio manager for each Fund is Ron Sachs. Mr. Sachs is Executive Vice President and Portfolio Manager of Orion Fund, which he has managed since its inception, and Executive Vice President and Portfolio Manager of Olympus Fund, which he has managed since July 1, 2006. Mr. Sachs was Portfolio Manager of Janus Triton Fund from February 2005 to January 2006. He is also Portfolio Manager of other Janus accounts. Mr. Sachs joined Janus in 1996 as a research analyst. Mr. Sachs holds a Bachelor's degree (cum laude) in Economics from Princeton and a law degree from the University of Michigan. Mr. Sachs has earned the right to use the Chartered Financial Analyst designation. Orion Fund's Statement of Additional Information dated February 28, 2006, which is incorporated by reference herein, provides information about the structure and method of Mr. Sach's compensation. TRUSTEES AND OFFICERS The following individuals comprise the Board of Trustees of the Trust of which each Fund is a series: Thomas H. Bailey, Jerome S. Contro, William F. McCalpin, John W. McCarter, Jr., Dennis B. Mullen, James T. Rothe, William D. Stewart, Martin H. Waldinger, and Linda S. Wolf. Eight of the Trustees are not "interested" persons of Janus or the Trust, as that term is defined under the 1940 Act. The officers of the Trust are disclosed in each Fund's Statement of Additional Information. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PricewaterhouseCoopers LLP, 1670 Broadway, Suite 1000, Denver, Colorado 80202, Independent Registered Public Accounting Firm for the Funds, audits the Funds' annual financial statements and reviews their tax returns. CHARTER DOCUMENTS Each Fund is a series of the Trust, a Massachusetts business trust governed by Massachusetts law. The Funds are governed by an Amended and Restated Agreement and Declaration of Trust dated March 18, 2003, as amended from time to time ("Trust Instrument"). The following is a summary of certain provisions of the Trust Instrument and is qualified in its entirety by reference to the Trust Instrument. Shares. As a shareholder, you are entitled to one vote for each whole dollar and a proportionate fractional vote for each fractional dollar of NAV of the Fund that you own. Generally, all funds and classes vote together as a single group, except where a separate vote of one or more funds or classes is required by law or where the interests of one or more funds or classes are affected differently from other funds or classes. Shares of all series of the Trust have noncumulative voting rights, which means that the holders of more than 50% of the value of shares of all series of the Trust voting for the election of Trustees can elect 100% of the Trustees if they 25 choose to do so. In such event, the holders of the remaining value of shares will not be able to elect any Trustees. All shares of a Fund participate equally in dividends and other distributions by the shares of the same class of that Fund, and in residual assets of that class of that Fund in the event of liquidation. Shares of each Fund have no preemptive, conversion, or appraisal rights. Shares of each Fund may be transferred by endorsement or stock power as is customary, but a Fund is not bound to recognize any transfer until it is recorded on its books. The Funds have the right to redeem, at the then current NAV, the shares of any shareholder whose account does not meet certain minimum requirements as described in the Fund's Prospectus. Shareholder Meetings. The Trust is not required, and does not intend, to hold annual shareholder meetings unless otherwise required by the Trust Instrument, the 1940 Act or in compliance with any regulatory order. Under the terms of a settlement reached between Janus and the SEC in August 2004, commencing in 2005 and not less than every fifth calendar year thereafter, the Trust will hold a meeting of shareholders to elect Trustees. Special meetings may be called for a specific fund or for the Trust for purposes such as election of Trustees, when required by the Trust Instrument or to comply with the 1940 Act or a regulatory order. Under the Trust Instrument, special meetings of shareholders of the Trust or of any fund shall be called upon written request of shareholders holding not less than 10% of the shares then outstanding. Shareholder Liability. Under Massachusetts law, shareholders of a Massachusetts business trust could, under certain circumstances, be held liable for the obligations of their Fund. However, the Trust Instrument disclaims shareholder liability for acts or obligations of the Funds and requires that notice of this disclaimer be given in each agreement, obligation, or instrument entered into or executed by the Funds or the Trustees. The Trust Instrument also provides for indemnification from the assets of the Funds for all losses and expenses of any Fund shareholder held liable for the obligations of their Fund. The Trustees intend to conduct the operations of the Funds to avoid, to the extent possible, liability of shareholders for liabilities of their Fund. Trustee Liability. A Trustee shall be liable for such Trustee's own willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of the office of Trustee, and for nothing else, and shall not be liable for errors of judgment or mistakes of fact or law. All persons extending credit to, contracting with or having any claim against the Trust shall look only to the assets of the Fund with which such person dealt for payment under such credit, contract, or claim. Liquidation or Dissolution. In the event of the liquidation or dissolution of the Trust, shareholders of the funds are entitled to receive, when and as declared by the Trustees, the excess of the assets belonging to their fund, or in the case of a class, belonging to that fund and allocable to that class, over the liabilities belonging 26 to that fund or class. The assets shall be distributed to shareholders in proportion to the relative NAV of the shares of that fund or class held by them and recorded on the books of the Trust. The liquidation of any particular fund or class thereof may be authorized at any time by vote of a majority of the Trustees then in office. Shareholders will receive prior notice of any liquidation effecting their fund or class. ADDITIONAL INFORMATION QUORUM AND VOTING Shareholders of Olympus Fund will vote together at the Meeting. Each holder of a whole or fractional share shall be entitled to one vote for each whole or fractional dollar value of net asset value held in such shareholder's name. If you are not the owner of record, but your shares are instead held for your benefit by a financial intermediary such as a retirement plan service provider, broker-dealer, bank trust department, insurance company, or other financial intermediary, that financial intermediary may request that you instruct it how to vote the shares you beneficially own. Your financial intermediary will provide you with additional information. Thirty percent of the outstanding shares entitled to vote at the Meeting shall be a quorum for the transaction of business at the Meeting. Any lesser number is sufficient for adjournments. In the event that the necessary quorum to transact business or the vote required to approve the Merger is not obtained at the Meeting, the persons named as proxies may propose one or more adjournments of the Meeting, in accordance with applicable law, to permit further solicitation of proxies. Any such adjournment will require the affirmative vote of the holders of a majority of the shares of Olympus Fund, present in person or by proxy at the Meeting. The persons named as proxies will vote the proxies (including broker non-votes and abstentions), in accordance with applicable law, in favor of adjournment if they determine additional solicitation is warranted and in the interests of Olympus Fund's shareholders. "Broker non-votes" are shares held by a broker or nominee for which an executed proxy is received by the Trust, but are not voted because instructions have not been received from beneficial owners or persons entitled to vote and the broker or nominee does not have discretionary voting power. Abstentions and "broker non-votes" are counted as shares eligible to vote at the Meeting in determining whether a quorum is present, but do not represent votes cast with respect to adjournment or the Merger. Accordingly, assuming the presence of a quorum, abstentions and "broker non-votes" will have the effect of a vote against the Merger. Approval of the Merger will require the affirmative vote of a "majority of the outstanding voting securities" of Olympus Fund within the meaning of the 1940 Act. This means the lesser of (1) 67% or more of the shares present at the Meeting 27 if the holders of more than 50% of the outstanding shares are present or represented by proxy, or (2) more than 50% of the outstanding shares. SHARE OWNERSHIP On the Record Date, there were 69,255,384 outstanding shares of Olympus Fund with a per share net asset value of $30.29. On the Record Date, there were 115,079,374 outstanding shares of Orion Fund with a net asset value of $8.52. Only shareholders of Olympus Fund vote on the Merger. Shareholders of Orion Fund will not vote on the Merger. As of July 14, 2006, the officers and Trustees of the Trust, as a group, beneficially owned less than 1% of the outstanding shares of Olympus Fund. Beneficial owners of 5% or more of the outstanding shares of Olympus Fund as of the Record Date are shown below. To the best knowledge of the Trust, no person beneficially owned more than 5% of the outstanding shares of Olympus Fund except as shown below, and such owners may not be the beneficial owner of all or a portion of the shares.
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF FUND ------------------------------------ ---------------- --------------- Charles Schwab & Co., Inc............. 10,592,299 15.3% For the exclusive Benefit of Customers 101 Montgomery Street San Francisco, CA 94104-4151 National Financial Services Co........ 5,620,113 8.1% For the exclusive Benefit of Customers P.O. Box 3730 Church Street Station New York, NY 10007
SOLICITATION OF PROXIES Janus will pay for all costs related to the Merger, including the costs associated with the drafting, printing, and mailing of this Proxy Statement/Prospectus, the solicitation of proxies, and the Meeting. In addition to solicitation of proxies by mail, certain officers and representatives of the Trust, certain officers and employees of Janus or its affiliates, certain financial services firms and their representatives, without extra compensation, or a solicitor, may solicit proxies personally, by telephone, U.S. Mail, facsimile, verbal, internet, or email communications. Janus has engaged D.F. King & Co., Inc. ("D.F. King"), a professional proxy solicitation firm, to assist in the solicitation of proxies, at an estimated cost of $600,000, plus any out-of-pocket expenses. Such expenses will be paid by Janus. Among other things, D.F. King will be (i) required to maintain the confidentiality of all shareholder information; (ii) prohibited from selling or otherwise disclosing shareholder information to any third party; and (iii) required to comply with applicable telemarketing laws. 28 Brokers, banks, and other fiduciaries may be required to forward soliciting material to their principals on behalf of Olympus Fund and to obtain authorization for the execution of proxies. For those services, they will be reimbursed by Janus for their expenses to the extent Janus or Olympus Fund would have directly borne those expenses. As the Meeting date approaches, certain shareholders whose votes have not been received, may receive telephone calls from a representative of D.F. King. Authorization to permit D.F. King to execute proxies may be obtained by telephonic or electronically transmitted instructions from shareholders of Olympus Fund. Proxies that are obtained telephonically will be recorded in accordance with the procedures described below. Olympus Fund believes that these procedures are reasonably designed to ensure that both the identity of the shareholder casting the vote and the voting instructions of the shareholder are accurately determined. In all cases where a telephonic proxy is solicited, the D.F. King representative is required to ask for each shareholder's full name, address, title (if the shareholder is authorized to act on behalf of an entity, such as a corporation), and to confirm that the shareholder has received the Proxy Statement/Prospectus and proxy card(s) in the mail. If the information solicited agrees with the information provided to D.F. King, then the D.F. King representative has the responsibility to explain the process, read the proposal listed on the proxy card, and ask for the shareholder's instructions on the proposal. Although the D.F. King representative is permitted to answer questions about the process, he or she is not permitted to recommend to the shareholder how to vote. The D.F. King representative may read any recommendation set forth in this Proxy Statement/Prospectus. The D.F. King representative will record the shareholder's instructions. Within 72 hours, the shareholder will be sent a confirmation of his or her vote asking the shareholder to call 1-800-628-8528 immediately if his or her instructions are not accurately reflected in the confirmation. Telephone Touch-Tone Voting. Shareholders may provide their voting instructions through telephone touch-tone voting by following the instructions on the enclosed proxy card(s). (You must have a valid social security number on file for your account in Olympus Fund in order to vote through telephone touch-tone voting.) Shareholders will have an opportunity to review their voting instructions and make any necessary changes before submitting their voting instructions and terminating their telephone call. Internet Voting. Shareholders may provide their voting instructions through Internet voting by following the instructions on the enclosed proxy card(s). (You must have a valid social security number on file for your account in Olympus Fund in order to vote through Internet voting.) Shareholders who vote via the Internet, in addition to confirming their voting instructions prior to submission and terminating their Internet link, will, upon request, receive an e-mail confirming their voting instructions. If a shareholder wishes to participate in the Meeting but does not wish to give a proxy by telephone or via the Internet, the shareholder may still submit the 29 proxy card(s) originally sent with the Proxy Statement/Prospectus in the postage paid envelope provided, or attend the Meeting in person. Shareholders requiring additional information regarding the proxy or replacement proxy card(s), may contact D.F. King at 1-800-628-8528. Any proxy given by a shareholder is revocable until voted at the Meeting. Revoking a Proxy. Any shareholder submitting a proxy has the power to revoke it at any time before it is exercised by submitting to the Secretary of the Trust at 151 Detroit Street, Denver, Colorado 80206, a written notice of revocation or a subsequently executed proxy or by attending the Meeting and voting in person. All properly executed and unrevoked proxies received in time for the Meeting will be voted as specified in the proxy, or, if no specification is made, will be voted FOR the Merger described in this Proxy Statement/Prospectus. Shares Held by Accounts of Insurance Companies. Shares of Olympus Fund may be held by certain separate accounts of insurance companies to fund benefits payable under certain variable annuity contracts and variable life insurance policies. Your insurance company may request that you provide it with voting instructions for your beneficially held shares of any such separate account. If you do not provide voting instructions to your insurance company, it may vote all of the shares held in that separate account in the same proportions as the voting actually received from other variable contract holders for that separate account. LEGAL MATTERS Information regarding material pending legal proceedings involving Janus or the Funds is attached as Appendix D to this Proxy Statement/Prospectus. SHAREHOLDER PROPOSALS FOR SUBSEQUENT MEETINGS Olympus Fund and Orion Fund are not required, and do not intend, to hold annual shareholder meetings. Shareholder meetings may be called from time to time as described in the Trust Instrument and the Trust's Amended and Restated Bylaws. Under the terms of a settlement reached between Janus and the SEC in August 2004, commencing in 2005 and not less than every fifth calendar year thereafter, the Trust will hold a meeting of shareholders to elect Trustees. Under the proxy rules of the SEC, shareholder proposals that meet certain conditions may be included in Olympus Fund's proxy statement for a particular meeting. Those rules currently require that for future meetings, the shareholder must be a record or beneficial owner of Olympus Fund shares either (i) with a value of at least $2,000 or (ii) in an amount representing at least 1% of Olympus Fund's securities to be voted, at the time the proposal is submitted and for one year prior thereto, and must continue to own such shares through the date on which the meeting is held. Another requirement relates to the timely receipt by Olympus Fund of any such proposal. Under those rules, a proposal must have been submitted within a reasonable time before Olympus Fund began to print and mail this Proxy Statement/Prospectus in order to be included in this Proxy Statement/Prospectus. A proposal submitted for 30 inclusion in Olympus Fund's proxy material for the next special meeting after the meeting to which this Proxy Statement/Prospectus relates must be received by Olympus Fund within a reasonable time before the Fund begins to print and mail the proxy materials for that meeting. Shareholders wishing to submit a proposal for inclusion in a proxy statement subsequent to the Meeting, if any, should send their written proposal to the Secretary of the Trust at 151 Detroit Street, Denver, Colorado 80206 within a reasonable time before Olympus Fund begins to print and mail the proxy materials for that meeting. Notice of shareholder proposals to be presented at the Meeting must have been received within a reasonable time before the Fund began to mail this Proxy Statement/Prospectus. The timely submission of a proposal does not guarantee its inclusion in the proxy materials. OTHER MATTERS TO COME BEFORE THE MEETING The Trustees are not aware of any matter that will be presented for action at the Meeting other than the matters described in this Proxy Statement/Prospectus. Should any other matters requiring a vote of shareholders arise, the proxy in the accompanying form will confer upon the person or persons entitled to vote the shares represented by such proxy the discretionary authority to vote the shares as to any other matters in accordance with their best judgment in the interest of the Trust and/or Fund. AVAILABLE INFORMATION INFORMATION AVAILABLE THROUGH THE SEC Olympus Fund and Orion Fund are each subject to the information requirements of the Securities Exchange Act of 1934, as amended, and the 1940 Act. In accordance therewith, each files reports and other information with the SEC. Reports, proxy statements, registration statements, and other information may be inspected without charge and copied at the Public Reference Room maintained by the SEC at: 100 F Street, NE, Room 1580, Washington, DC 20549 and at the following regional offices of the SEC: 3 World Financial Center, Room 4300, New York, NY 10281; 801 Brickell Ave., Suite 1800, Miami, FL 33131; 175 W. Jackson Boulevard, Suite 900, Chicago, IL 60604; 1801 California Street, Suite 1500 Denver, CO 80202-2656; and 5670 Wilshire Boulevard, 11th Floor, Los Angeles, CA 90036-3648. Copies of such materials also may be obtained from the Public Reference Branch, Office of Consumer Affairs and Information Services, Securities and Exchange Commission, Washington, D.C. 20549 at prescribed rates. You can get text only copies, after paying a duplicating fee, by sending an electronic request by e-mail to publicinfo@sec.gov or by writing to or calling the Public Reference Room, Washington, D.C. 20549-0102 (1-202-942-8090). Information on the operation of the Public Reference Room may also be obtained by calling this number. You may also obtain reports and other information about the Funds from the 31 Electronic Data Gathering Analysis and Retrieval (EDGAR) Database on the SEC's website at http://www.sec.gov. INFORMATION AVAILABLE THROUGH JANUS You can make inquiries and request other information, including a Statement of Additional Information, Annual Report, or Semiannual Report, free of charge, by contacting a Janus representative at 1-800-525-3713 or notifying the Funds' transfer agent, Janus Services LLC ("Janus Services"), in writing at 151 Detroit Street, Denver, Colorado 80206. The Funds' Statement of Additional Information and most recent Annual and Semiannual Reports are also available, free of charge, on www.janus.com. Additional information about the Funds' investments is available in the Funds' Annual and Semiannual Reports, including a discussion of the market conditions and investment strategies that significantly affected the Funds' performance during their last fiscal period. The Annual Report to shareholders of the Funds, including financial statements, has previously been sent to shareholders. Other information is also available from financial intermediaries that sell shares of the Funds. The Statement of Additional Information provides detailed information about the Funds and is incorporated into this Proxy Statement/Prospectus by reference. To avoid sending duplicate copies of materials to households, the Funds mail only one copy of each report to shareholders having the same last name and address on the Funds' records. The consolidation of these mailings benefits the Funds through reduced mailing expenses. If a shareholder wants to receive multiple copies of these materials or to receive only one copy in the future, the shareholder should contact the Funds' transfer agent, Janus Services, at 1-800-525-3713 or notify the Funds' transfer agent in writing at 151 Detroit Street, Denver, Colorado 80206. 32 SHAREHOLDER INQUIRIES Shareholder inquiries regarding this Proxy Statement/Prospectus may be addressed to our proxy solicitor, D.F. King & Co., Inc., by calling 1-800-628-8528. PLEASE COMPLETE, SIGN, AND RETURN THE ENCLOSED PROXY CARD(S) OR VOTE BY TELEPHONE OR INTERNET PROMPTLY. NO POSTAGE IS REQUIRED IF YOU MAIL YOUR PROXY CARD(S) IN THE UNITED STATES. By order of the Board of Trustees, /s/ Kelley Abbott Howes Kelley Abbott Howes Chief Executive Officer and President of Janus Investment Fund 33 APPENDIX A AGREEMENT AND PLAN OF REORGANIZATION THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of this day of , 2006, by and between Janus Investment Fund, a Massachusetts business trust (the "Trust"), on behalf of Janus Olympus Fund, a series of the Trust (the "Predecessor Fund"), Janus Orion Fund, a series of the Trust (the "Successor Fund"), and Janus Capital Management LLC, a Delaware limited liability company ("JCM"). All references in this Agreement to action taken by the Predecessor Fund or the Successor Fund shall be deemed to refer to action taken by the Trust on behalf of the respective portfolio series. This Agreement is intended to be and is adopted as a plan of reorganization and liquidation within the meaning of Section 368(a) of the United States Internal Revenue Code of 1986, as amended (the "Code"). The reorganization (the "Reorganization") will consist of the transfer by the Predecessor Fund of all or substantially all of its assets to the Successor Fund, in exchange solely for shares of beneficial interest in the Successor Fund ("New Shares") having a net asset value equal to the net asset value of the Predecessor Fund, the assumption by the Successor Fund of all the liabilities of the Predecessor Fund, and the distribution of the New Shares to the shareholders of the Predecessor Fund in complete liquidation of the Predecessor Fund as provided herein, all upon the terms and conditions hereinafter set forth in this Agreement. WHEREAS, the Board of Trustees of the Trust has determined that it is in the best interest of the Predecessor Fund and the Successor Fund, respectively, that the assets of the Predecessor Fund be acquired by the Successor Fund pursuant to this Agreement and in accordance with the applicable statutes of the Commonwealth of Massachusetts and that the interests of existing shareholders will not be diluted as a result of this transaction; NOW, THEREFORE, in consideration of the premises and of the covenants and agreements hereinafter set forth, the parties hereto covenant and agree as follows: 1. PLAN OF REORGANIZATION 1.1 Subject to the terms and conditions herein set forth, the Trust shall (i) transfer all or substantially all of the assets of the Predecessor Fund, as set forth in paragraph 1.2, to the Successor Fund, (ii) cause the Successor Fund to deliver to the Trust full and fractional New Shares of the Successor Fund, having a net asset value equal to the value of the net assets of the shares of the Predecessor Fund as of the close of regular session trading on the New York Stock Exchange on the Closing Date, as set forth in Article 2 and (iii) assume all liabilities of the Predecessor A-1 Fund, as set forth in paragraph 1.2. Such transactions shall take place at the closing provided for in paragraph 2.1 (the "Closing"). 1.2 The assets of the Predecessor Fund to be acquired by the Successor Fund shall consist of all property, including, without limitation, all cash, securities, commodities and futures interests, and dividends or interest receivable which are owned by the Predecessor Fund and any deferred or prepaid expenses shown as an asset on the books of the Predecessor Fund on the closing date provided in paragraph 2.1 (the "Closing Date"). The Successor Fund will assume all of the liabilities, expenses, costs, charges and reserves of the Predecessor Fund of any kind, whether absolute, accrued, contingent or otherwise in existence on the Closing Date. 1.3 The Predecessor Fund will distribute pro rata to its shareholders of record, determined as of immediately after the close of business on the Closing Date (the "Current Shareholders"), the New Shares received by the Trust pursuant to paragraph 1.1. Such distribution and liquidation will be accomplished by the transfer of the New Shares then credited to the accounts of the Predecessor Fund on the books of the Successor Fund to open accounts on the share records of the Successor Fund in the names of the Current Shareholders and representing the respective pro rata number of the New Shares due such shareholders. All issued and outstanding shares of the Predecessor Fund will simultaneously be canceled on the books of the Trust. The Successor Fund shall not issue certificates representing the New Shares in connection with such exchange. Ownership of New Shares will be shown on the books of the Trust's transfer agent. As soon as practicable after the Closing, the Trust shall take all steps necessary to effect a complete liquidation of the Predecessor Fund. 2. CLOSING AND CLOSING DATE 2.1 The Closing Date shall be October 31, 2006, or such date as the parties may agree to in writing. All acts taking place at the Closing shall be deemed to take place simultaneously as of immediately after the close of business on the Closing Date unless otherwise agreed to by the parties. The close of business on the Closing Date shall be as of 4:00 p.m. New York Time. The Closing shall be held at the offices of Janus Capital Management LLC ("Janus Capital"), 151 Detroit Street, Denver, Colorado 80206, or at such other time and/or place as the parties may agree. 2.2 The Trust shall cause Janus Services LLC (the "Transfer Agent"), transfer agent of the Predecessor Fund, to deliver at the Closing a certificate of an authorized officer stating that its records contain the names and addresses of the Current Shareholders and the number and percentage ownership of outstanding shares of the Predecessor Fund owned by each such shareholder immediately prior to the Closing. The Successor Fund shall issue and deliver a confirmation evidencing the New Shares to be credited on the Closing Date to the Secretary of the Trust or provide evidence satisfactory to the Trust that such New Shares have been credited to the accounts of the Predecessor Fund on the books of the Successor A-2 Fund. At the Closing, each party shall deliver to the other such bills of sales, checks, assignments, share certificates, if any, receipts or other documents as such other party or its counsel may reasonably request. 3. REPRESENTATIONS AND WARRANTIES 3.1 The Trust, on behalf of the Predecessor Fund, hereby represents and warrants to the Successor Fund as follows: (i) the Trust is a business trust duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts and has full corporate power and authority to conduct its business as presently conducted; (ii) the Trust has full power and authority to execute, deliver and carry out the terms of this Agreement on behalf of the Predecessor Fund; (iii) the execution and delivery of this Agreement on behalf of the Predecessor Fund and the consummation of the transactions contemplated hereby are duly authorized and no other proceedings on the part of the Trust or the shareholders of the Predecessor Fund (other than as contemplated in paragraph 4.1(vi)) are necessary to authorize this Agreement and the transactions contemplated hereby; (iv) this Agreement has been duly executed by the Trust on behalf of the Predecessor Fund and constitutes its valid and binding obligation, enforceable in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other rights affecting creditors' rights generally, and general equitable principles; (v) neither the execution and delivery of this Agreement by the Trust on behalf of the Predecessor Fund, nor the consummation by the Trust on behalf of the Predecessor Fund of the transactions contemplated hereby, will conflict with, result in a breach or violation of or constitute (or with notice, lapse of time or both) a breach of or default under, the Trust's Amended and Restated Agreement and Declaration of Trust ("Declaration of Trust") or By-Laws of the Trust, as each may be amended, or any statute, regulation, order, judgment or decree, or any instrument, contract or other agreement to which the Trust is a party or by which the Trust or any of its assets is subject or bound; and (vi) the unaudited statement of assets and liabilities of the Predecessor Fund as of the Closing Date, determined in accordance with generally accepted accounting principles consistently applied from the prior audited period, accurately reflects all liabilities of the Predecessor Fund as of the Closing Date; and (vii) no authorization, consent or approval of any governmental or other public body or authority or any other party is necessary (other than as contemplated in paragraph 4.1(vi)) for the execution and delivery of this A-3 Agreement by the Trust on behalf of the Predecessor Fund or the consummation of any transactions contemplated hereby by the Trust, other than as shall be obtained at or prior to the Closing. 3.2 The Trust, on behalf of the Successor Fund, hereby represents and warrants to the Predecessor Fund as follows: (i) the Trust is a business trust duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts and has full corporate power and authority to conduct its business as presently conducted; (ii) the Trust has full power and authority to execute, deliver and carry out the terms of this Agreement on behalf of the Successor Fund; (iii) the execution and delivery of this Agreement on behalf of the Successor Fund and the consummation of the transactions contemplated hereby are duly authorized and no other proceedings on the part of the Trust or the shareholders of the Successor Fund are necessary to authorize this Agreement and the transactions contemplated hereby; (iv) this Agreement has been duly executed by the Trust on behalf of the Successor Fund and constitutes its valid and binding obligation, enforceable in accordance with its terms, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other rights affecting creditors' rights generally, and general equitable principles; (v) neither the execution and delivery of this Agreement by the Trust on behalf of the Successor Fund, nor the consummation by the Trust on behalf of the Successor Fund of the transactions contemplated hereby, will conflict with, result in a breach or violation of or constitute (or with notice, lapse of time or both constitute) a breach of or default under, the Declaration of Trust or By-Laws of the Trust, as each may be amended, or any statute, regulation, order, judgment or decree, or any instrument, contract or other agreement to which the Trust is a party or by which the Trust or any of its assets is subject or bound; and (vi) the net asset value per share of the Successor Fund as of the close of regular session trading on the New York Stock Exchange on the Closing Date reflects all liabilities of the Successor Fund as of that time and date; and (vii) no authorization, consent or approval of any governmental or other public body or authority or any other party is necessary for the execution and delivery of this Agreement by the Trust on behalf of the Successor Fund or the consummation of any transactions contemplated hereby by the Trust, other than as shall be obtained at or prior to the Closing. A-4 4. CONDITIONS PRECEDENT 4.1 The obligations of the Trust on behalf of each of the Predecessor Fund and the Successor Fund to effectuate the Reorganization shall be subject to the satisfaction of the following conditions: (i) The Trust shall have filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form N-14 under the Securities Act of 1933, as amended (the "Securities Act") and such amendment or amendments thereto as are determined by the Board of Trustees of the Trust to be necessary and appropriate to effect the registration of the New Shares (the "Registration Statement"), and the Registration Statement shall have become effective, and no stop-order suspending the effectiveness of the Registration Statement shall have been issued, and no proceeding for that purpose shall have been initiated or threatened by the Commission (and not withdrawn or terminated); (ii) The applicable New Shares shall have been duly qualified for offering to the public in all states in which such qualification is required for consummation of the transactions contemplated hereunder; (iii) All representations and warranties of the Trust on behalf of the Predecessor Fund contained in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing, with the same force and effect as if then made, and the Trust on behalf of the Successor Fund shall have received a certificate of an officer of the Trust acting on behalf of the Predecessor Fund to that effect in form and substance reasonably satisfactory to the Trust on behalf of the Successor Fund; (iv) All representations and warranties of the Trust on behalf of the Successor Fund contained in this Agreement shall be true and correct in all material respects as of the date hereof and as of the Closing, with the same force and effect as if then made, and the Trust on behalf of the Predecessor Fund shall have received a certificate of an officer of the Trust acting on behalf of the Successor Fund to that effect in form and substance reasonably satisfactory to the Trust on behalf of the Predecessor Fund; (v) The Trust on behalf of the Predecessor Fund and the Successor Fund shall have received a favorable opinion of Goodwin Procter LLP satisfactory to counsel for the Trust, to the effect that, for federal income tax purposes: (a) The acquisition by the Successor Fund of the assets of the Predecessor Fund in exchange for the Successor Fund's assumption of the liabilities of the Predecessor Fund and issuance of the New Shares, followed by the distribution by the Predecessor Fund of such the New Shares to the shareholders of the Predecessor Fund in exchange for their shares of the Predecessor Fund, all as provided in paragraph 1 hereof, will constitute a reorganization within the meaning of Section 368(a) of the A-5 Code, and the Predecessor Fund and the Successor Fund will each be "a party to a reorganization" within the meaning of Section 368(b) of the Code; (b) No gain or loss will be recognized to the Predecessor Fund (i) upon the transfer of its assets to the Successor Fund in exchange for the New Shares or (ii) upon the distribution of the New Shares to the shareholders of the Predecessor Fund as contemplated in paragraph 1 hereof; (c) No gain or loss will be recognized to the Successor Fund upon the receipt of the assets of the Predecessor Fund in exchange for the assumption of liabilities and Obligations and issuance of the New Shares as contemplated in paragraph 1 hereof; (d) The tax basis of the assets of the Predecessor Fund acquired by the Successor Fund will be the same as the basis of those assets in the hands of the Predecessor Fund immediately prior to the transfer, and the holding period of the assets of the Predecessor Fund in the hands of the Successor Fund will include the period during which those assets were held by the Predecessor Fund; (e) The shareholders of the Predecessor Fund will recognize no gain or loss upon the exchange of all of their shares of the Predecessor Fund for the New Shares; (f) The tax basis of the New Shares to be received by each shareholder of the Predecessor Fund will be the same in the aggregate as the aggregate tax basis of the shares of the Predecessor Fund surrendered in exchange therefor; (g) The holding period of the New Shares to be received by the shareholders of the Predecessor Fund will include the period during which the shares of the Predecessor Fund surrendered in exchange therefor were held, provided such shares of the Predecessor Fund were held as a capital asset on the date of the exchange. (h) Successor Fund will succeed to and take into account the items of Predecessor Fund described in Section 381(c) of the Code, subject to the conditions and limitations specified in Sections 381, 382, 383 and 384 of the Code and the regulations thereunder. (vi) The shareholders of the Predecessor Fund shall have approved this Agreement and Plan of Reorganization at a special meeting of the shareholders of the Predecessor Fund. A-6 5. EXPENSES All of the expenses and costs of the Reorganization and the transactions contemplated thereby shall be borne by Janus Capital. 6. ENTIRE AGREEMENT The Trust agrees on behalf of each of the Predecessor Fund and the Successor Fund that this Agreement constitutes the entire agreement between the parties. 7. TERMINATION This Agreement and the transactions contemplated hereby may be terminated and abandoned by resolution of the Board of Trustees of the Trust, at any time prior to the Closing Date, if circumstances should develop that, in the opinion of the Board of Trustees, make proceeding with the Agreement inadvisable. 8. AMENDMENTS This agreement may be amended, modified or supplemented in such manner as may be mutually agreed upon in writing by the parties. 9. NOTICES Any notice, report, statement or demand required or permitted by any provisions of this Agreement shall be in writing and shall be given by prepaid telegraph, telecopy or certified mail addressed to the parties hereto at their principal place of business. 10. HEADINGS; COUNTERPARTS; GOVERNING LAW; ASSIGNMENT; LIMITATION OF LIABILITY 10.1 The Article and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 10.2 This Agreement may be executed in any number of counterparts each of which shall be deemed an original. 10.3 This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts. 10.4 This Agreement shall bind and inure to the benefit of the parties hereto and their respective successors and assigns, but no assignment or transfer hereof or of any rights or obligations hereunder shall be made by any party without the written consent of the other party. Nothing herein expressed or implied is intended or shall be construed to confer upon or give any person, firm or corporation, other than the parties hereto and their respective successors and assigns, any rights or remedies under or by reason of this Agreement. A-7 10.5 It is expressly agreed that the obligations of the Trust hereunder shall not be binding upon any of the Trustees, shareholders, nominees, officers, agents or employees of the Trust personally, but shall bind only the trust property of the Trust, as provided in the Declaration of Trust of the Trust. The execution and delivery by such officers of the Trust shall not be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the trust property of the Trust as provided in the Declaration of Trust of the Trust. The Trust is a series company with multiple series and has entered into this Agreement on behalf of the Predecessor Fund and the Successor Fund. 10.6 The sole remedy of a party hereto for a breach of any representation or warranty made in this Agreement by the other party shall be an election by the non-breaching party not to complete the transactions contemplated herein. IN WITNESS WHEREOF, the undersigned has caused this Agreement to be executed as of the date set forth above. ATTEST JANUS INVESTMENT FUND For and on behalf of Janus Olympus Fund Name: By: ------------------------- ------------------------------------ Name: Title: ATTEST JANUS INVESTMENT FUND For and on behalf of Janus Orion Fund Name: By: ------------------------- ------------------------------------ Name: Title: ATTEST JANUS CAPITAL MANAGEMENT LLC Name: By: ------------------------- ------------------------------------ Name: Title:
A-8 APPENDIX B INVESTMENT POLICIES AND RESTRICTIONS FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS: With respect to 75% of its total assets, Olympus Fund may not purchase securities of an issuer (other than the U.S. Government, its agencies, instrumentalities or authorities, or repurchase agreements collateralized by U.S. Government securities, and other investment companies) if: (a) such purchase would, at the time, cause more than 5% of the Fund's total assets taken at market value to be invested in the securities of such issuer or (b) such purchase would, at the time, result in more that 10% of the outstanding voting securities of such issuer being held by the Fund. Each Fund may not: - Invest 25% or more of the value of its total assets in any particular industry (other than US Government securities). - Invest directly in real estate or interests in real estate; however, the Funds may own debt or equity securities issued by companies engaged in those businesses. - Purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this limitation shall not prevent the Funds from purchasing or selling foreign currencies, options, futures, swaps, forward contracts, or other derivative instruments, or from investing in securities or other instruments backed by physical commodities). - Lend any security or make any other loan if, as a result, more than 33 1/3% of the Fund's total assets would be lent to other parties (but this limitation does not apply to investments in repurchase agreements, commercial paper, debt securities, or loans, including assignments and participation interests). - Act as an underwriter of securities issued by others, except to the extent that a Fund may be deemed an underwriter in connection with the disposition of its portfolio securities. - Borrow money except that the Funds may each borrow money for temporary or emergency purposes (not for leveraging or investment). Borrowings from banks will not, in any event, exceed one-third of the value of a Fund's total assets (including the amount borrowed). This policy shall not prohibit short sales transactions or futures, options, swaps, or forward transactions. The Funds may not issue "senior securities" in contravention of the 1940 Act. As a fundamental policy, each Fund may, notwithstanding any other investment policy or limitation, (whether or not fundamental), invest all of its assets in the B-1 securities of a single open-end management investment company with substantially the same fundamental investment objective, policies and limitations as such Fund. NON-FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS: Non-fundamental investment restrictions and policies of the Funds are substantially similar: - The Funds may sell securities short if they own or have the right to obtain securities equivalent in kind and amount to the securities sold short without the payment of any additional consideration therefore ("short sales against the box"). In addition, the Funds may engage in "naked" short sales, which involve selling a security that a Fund borrows and does not own. The total market value of all of a Fund's naked short sale positions will not exceed 8% of its assets. Transactions in futures, options, swaps, and forward contracts are not deemed to constitute selling securities short. - The Funds do not currently intend to purchase securities on margin, except that the Funds may obtain such short-term credits as are necessary for the clearance of transactions, and provided that margin payments and other deposits in connection with transactions in futures, options, swaps, and forward contracts shall not be deemed to constitute purchasing securities on margin. - A Fund may not mortgage or pledge any securities owned or held by such Fund in amounts that exceed, in the aggregate, 15% of that Fund's net asset value, provided that this limitation does not apply to reverse repurchase agreements, deposits of assets to margin, guarantee positions in futures, options, swaps, or forward contracts, or the segregation of assets in connection with such contracts. - The Funds do not currently intend to purchase any security or enter into a repurchase agreement if, as a result, more than 15% of their respective net assets would be invested in repurchase agreements not entitling the holder to payment of principal and interest within seven days and in securities that are illiquid by virtue of legal or contractual restrictions on resale or the absence of a readily available market. The Trustees, or the Funds' investment adviser acting pursuant to authority delegated by the Trustees, may determine that a readily available market exists for securities eligible for resale pursuant to Rule 144A under the Securities Act of 1933 ("Rule 144A Securities"), or any successor to such rule, Section 4(2) commercial paper, and municipal lease obligations. Accordingly, such securities may not be subject to the foregoing limitation. - The Funds may not invest in companies for the purpose of exercising control of management. B-2 APPENDIX C OTHER INVESTMENT TECHNIQUES AND RELATED RISKS OF THE FUNDS Unless otherwise stated within its specific investment policies, each Fund may also invest in other types of domestic and foreign securities and use other investment strategies, as described below. These securities and strategies are not principal investment strategies of the Funds. If successful, they may benefit the Funds by earning a return on the Funds' assets or reducing risk; however, they may not achieve the Funds' objective. Additional information regarding these investment techniques and risks is included in each Fund's Statement of Additional Information. These securities and strategies may include: EQUITY AND DEBT SECURITIES BANK LOANS include institutionally-traded floating and fixed-rate debt securities generally acquired as a participation interest in a loan originated by a lender or other financial institution, or as an assignment of a portion of a loan previously attributable to a different lender. BONDS are debt securities issued by a company, municipality, government, or government agency. The issuer of a bond is required to pay the holder the amount of the loan (or par value of the bond) at a specified maturity and to make scheduled interest payments. CERTIFICATES OF PARTICIPATION ("COPS") are certificates representing an interest in a pool of securities. Holders are entitled to a proportionate interest in the underlying securities. Municipal lease obligations are often sold in the form of COPs. See "Municipal lease obligations" below. COMMERCIAL PAPER is a short-term debt obligation with a maturity ranging from 1 to 270 days issued by banks, corporations, and other borrowers to investors seeking to invest idle cash. A Fund may purchase commercial paper issued in private placements under Section 4(2) of the Securities Act of 1933. CONVERTIBLE SECURITIES are preferred stocks or bonds that pay a fixed dividend or interest payment and are convertible into common stock at a specified price or conversion ratio. DEBT SECURITIES are securities representing money borrowed that must be repaid at a later date. Such securities have specific maturities and usually a specific rate of interest or an original purchase discount. DEPOSITARY RECEIPTS are receipts for shares of a foreign-based corporation that entitle the holder to dividends and capital gains on the underlying security. Receipts include those issued by domestic banks (American Depositary Receipts), foreign C-1 banks (Global or European Depositary Receipts), and broker-dealers (depositary shares). EQUITY SECURITIES generally include domestic and foreign common stocks; preferred stocks; securities convertible into common stocks or preferred stocks; warrants to purchase common or preferred stocks; and other securities with equity characteristics. EXCHANGE-TRADED FUNDS are index-based investment companies which hold substantially all of their assets in securities with equity characteristics. As a shareholder of another investment company, a Fund would bear its pro rata portion of the other investment company's expenses, including advisory fees, in addition to the expenses the Fund bears directly in connection with its own operations. FIXED-INCOME SECURITIES are securities that pay a specified rate of return. The term generally includes short- and long-term government, corporate, and municipal obligations that pay a specified rate of interest, dividends, or coupons for a specified period of time. Coupon and dividend rates may be fixed for the life of the issue or, in the case of adjustable and floating rate securities, for a shorter period. HIGH-YIELD/HIGH-RISK BONDS are bonds that are rated below investment grade by the primary rating agencies (i.e., BB+ or lower by Standard & Poor's and Fitch, and Ba or lower by Moody's). Other terms commonly used to describe such bonds include "lower rated bonds," "non-investment grade bonds," and "junk bonds." INDUSTRIAL DEVELOPMENT BONDS are revenue bonds that are issued by a public authority but which may be backed only by the credit and security of a private issuer and may involve greater credit risk. See "Municipal securities" below. MORTGAGE- AND ASSET-BACKED SECURITIES are shares in a pool of mortgages or other debt. These securities are generally pass-through securities, which means that principal and interest payments on the underlying securities (less servicing fees) are passed through to shareholders on a pro rata basis. These securities involve prepayment risk, which is the risk that the underlying mortgages or other debt may be refinanced or paid off prior to their maturities during periods of declining interest rates. In that case, a Fund may have to reinvest the proceeds from the securities at a lower rate. Potential market gains on a security subject to prepayment risk may be more limited than potential market gains on a comparable security that is not subject to prepayment risk. MUNICIPAL LEASE OBLIGATIONS are revenue bonds backed by leases or installment purchase contracts for property or equipment. Lease obligations may not be backed by the issuing municipality's credit and may involve risks not normally associated with general obligation bonds and other revenue bonds. For example, their interest may become taxable if the lease is assigned and the holders may incur losses if the issuer does not appropriate funds for the lease payments on an annual basis, which may result in termination of the lease and possible default. C-2 MUNICIPAL SECURITIES are bonds or notes issued by a U.S. state or political subdivision. A municipal security may be a general obligation backed by the full faith and credit (i.e., the borrowing and taxing power) of a municipality or a revenue obligation paid out of the revenues of a designated project, facility, or revenue source. PASS-THROUGH SECURITIES are shares or certificates of interest in a pool of debt obligations that have been repackaged by an intermediary, such as a bank or broker-dealer. PASSIVE FOREIGN INVESTMENT COMPANIES (PFICS) are any foreign corporations which generate certain amounts of passive income or hold certain amounts of assets for the production of passive income. Passive income includes dividends, interest, royalties, rents, and annuities. To avoid taxes and interest that a Fund must pay if these investments are profitable, the Fund may make various elections permitted by the tax laws. These elections could require that a Fund recognize taxable income, which in turn must be distributed, before the securities are sold and before cash is received to pay the distributions. PAY-IN-KIND BONDS are debt securities that normally give the issuer an option to pay cash at a coupon payment date or give the holder of the security a similar bond with the same coupon rate and a face value equal to the amount of the coupon payment that would have been made. PREFERRED STOCKS are equity securities that generally pay dividends at a specified rate and have preference over common stock in the payment of dividends and liquidation. Preferred stock generally does not carry voting rights. REAL ESTATE INVESTMENT TRUST (REIT) is an investment trust that operates through the pooled capital of many investors who buy its shares. Investments are in direct ownership of either income property or mortgage loans. RULE 144A SECURITIES are securities that are not registered for sale to the general public under the Securities Act of 1933, but that may be resold to certain institutional investors. STANDBY COMMITMENT is a right to sell a specified underlying security or securities within a specified period of time and at an exercise price equal to the amortized cost of the underlying security or securities plus accrued interest, if any, at the time of exercise, that may be sold, transferred, or assigned only with the underlying security or securities. A standby commitment entitles the holder to receive same day settlement, and will be considered to be from the party to whom the investment company will look for payment of the exercise price. STEP COUPON BONDS are high-quality issues with above-market interest rates and a coupon that increases over the life of the bond. They may pay monthly, semiannual, or annual interest payments. On the date of each coupon payment, the issuer decides whether to call the bond at par, or whether to extend it until the next payment date at the new coupon rate. C-3 STRIP BONDS are debt securities that are stripped of their interest (usually by a financial intermediary) after the securities are issued. The market value of these securities generally fluctuates more in response to changes in interest rates than interest-paying securities of comparable maturity. TENDER OPTION BONDS are relatively long-term bonds that are coupled with the option to tender the securities to a bank, broker-dealer, or other financial institution at periodic intervals and receive the face value of the bond. This investment structure is commonly used as a means of enhancing a security's liquidity. U.S. GOVERNMENT SECURITIES include direct obligations of the U.S. Government that are supported by its full faith and credit. Treasury bills have initial maturities of less than one year, Treasury notes have initial maturities of one to ten years, and Treasury bonds may be issued with any maturity but generally have maturities of at least ten years. U.S. Government securities also include indirect obligations of the U.S. Government that are issued by federal agencies and government sponsored entities. Unlike Treasury securities, agency securities generally are not backed by the full faith and credit of the U.S. Government. Some agency securities are supported by the right of the issuer to borrow from the Treasury, others are supported by the discretionary authority of the U.S. Government to purchase the agency's obligations, and others are supported only by the credit of the sponsoring agency. VARIABLE AND FLOATING RATE SECURITIES have variable or floating rates of interest and, under certain limited circumstances, may have varying principal amounts. Variable and floating rate securities pay interest at rates that are adjusted periodically according to a specified formula, usually with reference to some interest rate index or market interest rate (the "underlying index"). The floating rate tends to decrease the security's price sensitivity to changes in interest rates. WARRANTS are securities, typically issued with preferred stock or bonds, which give the holder the right to buy a proportionate amount of common stock at a specified price. The specified price is usually higher than the market price at the time of issuance of the warrant. The right may last for a period of years or indefinitely. ZERO COUPON BONDS are debt securities that do not pay regular interest at regular intervals, but are issued at a discount from face value. The discount approximates the total amount of interest the security will accrue from the date of issuance to maturity. The market value of these securities generally fluctuates more in response to changes in interest rates than interest-paying securities. FUTURES, OPTIONS, AND OTHER DERIVATIVES CREDIT DEFAULT SWAPS are a specific kind of counterparty agreement that allows the transfer of third party credit risk from one party to the other. One party in the swap is a lender and faces credit risk from a third party, and the counterparty in the C-4 credit default swap agrees to insure this risk in exchange of regular periodic payments. EQUITY-LINKED STRUCTURED NOTES are debt securities which combine the characteristics of common stock and the sale of an option. The return component is based on the performance of a single equity security, a basket of equity securities, or an equity index and the sale of an option which is recognized as income. Equity-linked structured notes are typically offered in limited transactions to financial institutions by investment banks. There is no guaranteed return of principal with these securities. The appreciation potential of these securities is limited by a maximum payment or call right and can be influenced by many unpredictable factors. FORWARD CONTRACTS are contracts to purchase or sell a specified amount of a financial instrument for an agreed upon price at a specified time. Forward contracts are not currently exchange-traded and are typically negotiated on an individual basis. A Fund may enter into forward currency contracts for investment purposes or to hedge against declines in the value of securities denominated in, or whose value is tied to, a currency other than the U.S. dollar or to reduce the impact of currency appreciation on purchases of such securities. It may also enter into forward contracts to purchase or sell securities or other financial indices. FUTURES CONTRACTS are contracts that obligate the buyer to receive and the seller to deliver an instrument or money at a specified price on a specified date. A Fund may buy and sell futures contracts on foreign currencies, securities, and financial indices including indices of U.S. Government, foreign government, equity, or fixed-income securities. A Fund may also buy options on futures contracts. An option on a futures contract gives the buyer the right, but not the obligation, to buy or sell a futures contract at a specified price on or before a specified date. Futures contracts and options on futures are standardized and traded on designated exchanges. INDEXED/STRUCTURED SECURITIES are typically short- to intermediate-term debt securities whose value at maturity or interest rate is linked to currencies, interest rates, equity securities, indices, commodity prices, or other financial indicators. Such securities may be positively or negatively indexed (e.g., their value may increase or decrease if the reference index or instrument appreciates). Indexed/ structured securities may have return characteristics similar to direct investments in the underlying instruments and may be more volatile than the underlying instruments. A Fund bears the market risk of an investment in the underlying instruments, as well as the credit risk of the issuer. INTEREST RATE SWAPS involve the exchange by two parties of their respective commitments to pay or receive interest (e.g., an exchange of floating rate payments for fixed rate payments). INVERSE FLOATERS are debt instruments whose interest rate bears an inverse relationship to the interest rate on another instrument or index. For example, upon reset, the interest rate payable on the inverse floater may go down when the underlying index has risen. Certain inverse floaters may have an interest rate reset C-5 mechanism that multiplies the effects of change in the underlying index. Such mechanism may increase the volatility of the security's market value. OPTIONS are the right, but not the obligation, to buy or sell a specified amount of securities or other assets on or before a fixed date at a predetermined price. A Fund may purchase and write put and call options on securities, securities indices, and foreign currencies. A Fund may purchase or write such options individually or in combination. PARTICIPATORY NOTES are derivative securities which are linked to the performance of an underlying Indian security and which allow investors to gain market exposure to Indian securities without trading directly in the local Indian market. OTHER INVESTMENTS, STRATEGIES, AND/OR TECHNIQUES REPURCHASE AGREEMENTS involve the purchase of a security by a Fund and a simultaneous agreement by the seller (generally a bank or dealer) to repurchase the security from the Fund at a specified date or upon demand. This technique offers a method of earning income on idle cash. These securities involve the risk that the seller will fail to repurchase the security, as agreed. In that case, a Fund will bear the risk of market value fluctuations until the security can be sold and may encounter delays and incur costs in liquidating the security. REVERSE REPURCHASE AGREEMENTS involve the sale of a security by a Fund to another party (generally a bank or dealer) in return for cash and an agreement by the Fund to buy the security back at a specified price and time. This technique will be used primarily to provide cash to satisfy unusually high redemption requests, or for other temporary or emergency purposes. SHORT SALES in which a Fund may engage may be of two types, short sales "against the box" or "naked" short sales. Short sales against the box involve selling either a security that a Fund owns, or a security equivalent in kind or amount to the security sold short that the Fund has the right to obtain, for delivery at a specified date in the future. Naked short sales involve selling a security that a Fund borrows and does not own. A Fund may enter into a short sale to hedge against anticipated declines in the market price of a security or to reduce portfolio volatility. If the value of a security sold short increases prior to the scheduled delivery date, the Fund loses the opportunity to participate in the gain. For naked short sales, the Fund will incur a loss if the value of a security increases during this period because it will be paying more for the security than it has received from the purchaser in the short sale. If the price declines during this period, a Fund will realize a short-term capital gain. Although a Fund's potential for gain as a result of a short sale is limited to the price at which it sold the security short less the cost of borrowing the security, its potential for loss is theoretically unlimited because there is no limit to the cost of replacing the borrowed security. WHEN-ISSUED, DELAYED DELIVERY, AND FORWARD COMMITMENT TRANSACTIONS generally involve the purchase of a security with payment and delivery at some time in the C-6 future - i.e., beyond normal settlement. A Fund does not earn interest on such securities until settlement and bears the risk of market value fluctuations in between the purchase and settlement dates. New issues of stocks and bonds, private placements, and U.S. Government securities may be sold in this manner. ILLIQUID INVESTMENTS Each Fund may invest up to 15% of its net assets in illiquid investments. An illiquid investment is a security or other position that cannot be disposed of quickly in the normal course of business. For example, some securities are not registered under U.S. securities laws and cannot be sold to the U.S. public because of SEC regulations (these are known as "restricted securities"). Under procedures adopted by the Funds' Trustees, certain restricted securities may be deemed liquid, and will not be counted toward this 15% limit. FOREIGN SECURITIES Unless otherwise stated within its specific investment policies, each Fund may invest without limit in foreign equity and debt securities. The Funds may invest directly in foreign securities denominated in a foreign currency and not publicly traded in the United States. Other ways of investing in foreign securities include depositary receipts or shares and passive foreign investment companies. SPECIAL SITUATIONS Each Fund may invest in companies that demonstrate special situations or turnarounds, meaning companies that have experienced significant business problems but are believed to have favorable prospects for recovery. For example, a special situation or turnaround may arise when, in the opinion of a Fund's investment personnel, the securities of a particular issuer will be recognized and appreciate in value due to a specific development with respect to that issuer. Special situations may include significant changes in a company's allocation of its existing capital, a restructuring of assets, or a redirection of free cash flow. For example, issuers undergoing significant capital changes may include companies involved in spin-offs, sales of divisions, mergers or acquisitions, companies emerging from bankruptcy, or companies initiating large changes in their debt to equity ratio. Developments creating a special situation might include, among others, a new product or process, a technological breakthrough, a management change or other extraordinary corporate event, or differences in market supply of and demand for the security. A Fund's performance could suffer if the anticipated development in a "special situation" investment does not occur or does not attract the expected attention. SECURITIES LENDING The Funds may seek to earn additional income through securities lending. Certain Funds may lend their portfolio securities to parties (typically brokers or C-7 other financial institutions) who need to borrow securities in order to complete certain transactions such as covering short sales, avoiding failures to deliver securities, or completing arbitrage activities. There is a risk of delay in recovering a loaned security and/or a risk of loss in collateral rights if the borrower fails financially. C-8 APPENDIX D LEGAL MATTERS In the fall of 2003, the Securities and Exchange Commission ("SEC"), the Office of the New York State Attorney General ("NYAG"), the Colorado Attorney General ("COAG"), and the Colorado Division of Securities ("CDS") announced that they were investigating alleged frequent trading practices in the mutual fund industry. On August 18, 2004, Janus Capital announced that it had reached final settlements with the SEC, the NYAG, the COAG, and the CDS related to such regulators' investigations into Janus Capital's frequent trading arrangements. A number of civil lawsuits were brought against Janus Capital and certain of its affiliates, the Janus funds, and related entities and individuals based on allegations similar to those announced by the above regulators and were filed in several state and federal jurisdictions. Such lawsuits alleged a variety of theories for recovery including, but not limited to, the federal securities laws, other federal statutes (including ERISA), and various common law doctrines. The Judicial Panel on Multidistrict Litigation transferred these actions to the U.S. District Court for the District of Maryland (the "Court") for coordinated proceedings. On September 29, 2004, five consolidated amended complaints were filed in that Court that generally include: (i) claims by a putative class of investors in certain Janus funds asserting claims on behalf of the investor class; (ii) derivative claims by investors in certain Janus funds ostensibly on behalf of such funds; (iii) claims on behalf of participants in the Janus 401(k) plan; (iv) claims brought on behalf of shareholders of Janus Capital Group Inc. ("JCGI") on a derivative basis against the Board of Directors of JCGI; and (v) claims by a putative class of shareholders of JCGI asserting claims on behalf of the shareholders. Each of the five complaints initially named JCGI and/or Janus Capital as a defendant. In addition, the following were also named as defendants in one or more of the actions: Janus Investment Fund ("JIF"), Janus Aspen Series ("JAS"), Janus Adviser Series ("JAD"), Janus Distributors LLC, Enhanced Investment Technologies, LLC ("INTECH"), Bay Isle Financial LLC ("Bay Isle"), Perkins, Wolf, McDonnell and Company, LLC ("Perkins"), the Advisory Committee of the Janus 401(k) plan, and the current or former directors of JCGI. On August 25, 2005, the Court entered orders dismissing most of the claims asserted against Janus Capital and its affiliates by fund investors (actions (i) and (ii) described above), except certain claims under Section 10(b) of the Securities Exchange Act of 1934 and under Section 36(b) of the Investment Company Act of 1940. The complaint in the 401(k) plan class action (action (iii) described above) was voluntarily dismissed, but was refiled using a new named plaintiff and asserting claims similar to the initial complaint. As a result of the above events, JCGI, Janus Capital, the Advisory Committee of the Janus 401(k) plan, and the current or D-1 former directors of JCGI are the remaining defendants in one or more of the actions. The Attorney General's Office for the State of West Virginia filed a separate market timing related civil action against Janus Capital and several other non-affiliated mutual fund companies, claiming violations under the West Virginia Consumer Credit and Protection Act. The civil action requests certain monetary penalties, among other relief. This action has been removed to federal court and transferred to the Multidistrict Litigation case in the U.S. District Court of Baltimore, Maryland described above. In addition, the Auditor of the State of West Virginia, in his capacity as securities commissioner, has issued an order indicating an intent to initiate administrative proceedings against most of the defendants in the market timing cases (including Janus Capital) and seeking disgorgement and other monetary relief based on similar market timing allegations. In addition to the "market timing" actions described above, Janus Capital is a defendant in a consolidated lawsuit in the U.S. District Court for the District of Colorado challenging the investment advisory fees charged by Janus Capital to certain Janus funds. The action was filed in 2004 by fund investors asserting breach of fiduciary duty under Section 36(b) of the Investment Company Act of 1940. The plaintiffs seek declaratory and injunctive relief and an unspecified amount of damages. In 2001, Janus Capital's predecessor was also named as a defendant in a class action suit in the U.S. District Court for the Southern District of New York, alleging that certain underwriting firms and institutional investors violated antitrust laws in connection with initial public offerings. The U.S. District Court dismissed the plaintiff's antitrust claims in November 2003, however, the U.S. Court of Appeals vacated that decision and remanded it for further proceedings. In March 2006, the defendants, including Janus Capital, filed a petition for a writ of certiorari with the United States Supreme Court to review the U.S. Court of Appeal's decision. Additional lawsuits may be filed against certain of the Janus funds, Janus Capital, and related parties in the future. Janus Capital does not currently believe that these pending actions will materially affect its ability to continue providing services it has agreed to provide to the Janus funds. D-2 STATEMENT OF ADDITIONAL INFORMATION AUGUST , 2006 ACQUISITION OF THE ASSETS OF JANUS OLYMPUS FUND BY AND IN EXCHANGE FOR SHARES OF JANUS ORION FUND This Statement of Additional Information (the "SAI") expands upon and supplements the information contained in the combined proxy statement and prospectus (the "Proxy Statement/Prospectus") dated August , 2006, describing the Agreement and Plan of Reorganization under which shareholders of Janus Olympus Fund will receive shares of Janus Orion Fund (the "Merger"). This SAI is not a Prospectus and should be read in conjunction with the Proxy Statement/Prospectus dated August , 2006, relating to the Merger. A copy of the Proxy Statement/Prospectus may be obtained without charge by contacting Janus Capital Management LLC ("Janus") at 151 Detroit Street, Denver, Colorado 80206 or by telephoning Janus toll-free at 1-800-525-3713. Each of the following documents are incorporated by reference to this SAI: (i) the Statement of Additional Information of Janus Olympus Fund and Janus Orion Fund dated February 28, 2006, as supplemented, which includes audited financial statements of Janus Olympus Fund and Janus Orion Fund for the 12-month period ended October 31, 2005; (ii) the Annual Report for Janus Olympus Fund and Janus Orion Fund for the fiscal year ended October 31, 2005; and (iii) the unaudited Semiannual Report for Janus Olympus Fund and Janus Orion Fund for the fiscal period ended April 30, 2006. FINANCIAL STATEMENTS Historical financial information regarding Janus Olympus Fund and Janus Orion Fund is included in the Annual Report of Janus Investment Fund, dated October 31, 2005 and the unaudited Semiannual Report of Janus Investment Fund, dated April 30, 2006, which are incorporated by reference herein. PRO FORMA FINANCIAL STATEMENTS The following pro forma combined financial statements are intended to show the financial condition and related results of operations resulting from the proposed merger of Olympus Fund and Orion Fund as if the merger occurred on the dates presented. Please see the accompanying notes for additional information about the pro forma financial statements. PRO FORMA SCHEDULE OF INVESTMENTS
SHARES OR PRINCIPAL AMOUNT VALUE ------------------------------------------ ------------------------------------------------ JANUS JANUS PRO FORMA JANUS JANUS PRO FORMA OLYMPUS ORION JANUS ORION OLYMPUS ORION JANUS ORION AS OF APRIL 30, 2006 FUND FUND FUND FUND FUND FUND -------------------- ------------ ------------ ------------ -------------- -------------- -------------- COMMON STOCK -- 96.5% ADVERTISING SALES -- 0.5% Lamar Advertising Co.*........... 349,435 349,435 $ 19,215,431 $ 19,215,431 AEROSPACE AND DEFENSE -- 1.0% Boeing Co. ...................... 419,960 419,960 35,045,662 35,045,662 AGRICULTURAL CHEMICALS -- 1.0% Potash Corporation of Saskatchewan, Inc. (U.S. Shares)........................ 380,045 380,045 35,982,661 35,982,661 AGRICULTURAL OPERATIONS -- 0.1% BrasilAgro -- Companhia Brasileira de Propriedades Agricolas...................... 5,300 5,300 $ 2,507,570 2,507,570 APPAREL MANUFACTURERS -- 1.2% Coach, Inc.*..................... 724,460 724,460 23,921,669 23,921,669 Quiksilver, Inc.*,#.............. 1,244,295 1,244,295 17,009,513 17,009,513 40,931,182 APPLICATIONS SOFTWARE -- 0.9% Citrix Systems, Inc.*............ 415,425 415,425 16,583,766 16,583,766 Quest Software, Inc.*,#.......... 783,515 783,515 13,484,293 13,484,293 30,068,059 AUTOMOTIVE -- CARS AND LIGHT TRUCKS -- 1.3% BMW A.G.**,#..................... 446,264 446,264 24,293,868 24,293,868 Nissan Motor Company, Ltd. ...... 1,570,600 1,570,600 20,648,911 20,648,911 44,942,779 BEVERAGES -- WINE AND SPIRITS -- 0.8% Davide Campari -- Milano S.P.A... 2,860,628 2,860,628 27,969,655 27,969,655 BROADCAST SERVICES AND PROGRAMMING -- 0.2% Liberty Global, Inc. -- Class A*............................. 259,455 259,455 5,373,313 5,373,313 BUILDING -- MOBILE HOME AND MANUFACTURED HOMES -- 0.4% Thor Industries, Inc. ........... 293,600 293,600 14,820,928 14,820,928 BUILDING -- RESIDENTIAL AND COMMERCIAL -- 1.4% Pulte Homes, Inc. ............... 577,560 577,560 21,571,866 21,571,866 Desarrolladora Homex S.A. (ADR)*,#....................... 340,620 381,940 722,560 13,052,558 14,635,940 27,688,498 Rossi Residencial S.A. .......... 98,500 98,500 1,038,333 1,038,333 50,298,697 CASINO HOTELS -- 0.7% Harrah's Entertainment, Inc. .... 295,055 295,055 24,088,290 24,088,290 CASINO SERVICES -- 0.8% Scientific Games Corp. -- Class A*,#........................... 760,705 760,705 28,975,253 28,975,253 CELLULAR TELECOMMUNICATIONS -- 1.6% China Mobile, Ltd. .............. 3,537,500 3,537,500 20,577,206 20,577,206 America Movil S.A. de C.V. -- Series L (ADR)*........ 960,000 960,000 35,433,600 35,433,600 56,010,806 CHEMICALS -- SPECIALTY -- 0.7% Cytec Industries, Inc.#.......... 420,860 420,860 25,449,404 25,449,404
SHARES OR PRINCIPAL AMOUNT VALUE ------------------------------------------ ------------------------------------------------ JANUS JANUS PRO FORMA JANUS JANUS PRO FORMA OLYMPUS ORION JANUS ORION OLYMPUS ORION JANUS ORION AS OF APRIL 30, 2006 FUND FUND FUND FUND FUND FUND -------------------- ------------ ------------ ------------ -------------- -------------- -------------- COMMERCIAL BANKS -- 2.4% Mizuho Financial Group, Inc. .... 3,998 3,998 34,093,514 34,093,514 Banco Marcro Bansud S.A. (ADR)*......................... 495,425 495,425 11,478,997 11,478,997 Banco Nossa Caixa S.A. .......... 711,000 711,000 16,046,047 16,046,047 Finansbank A.S.*................. 4,178,657 4,178,657 21,801,689 21,801,689 83,420,247 COMMERCIAL SERVICES -- 2.0% CoStar Group, Inc.*.............. 351,488 487,775 839,263 19,841,498 27,534,899 47,376,397 Park24 Company, Ltd. ............ 640,200 640,200 23,164,484 23,164,484 70,540,881 COMMERCIAL SERVICES -- FINANCE -- 0.2% Moody's Corp. ................... 134,845 134,845 8,361,738 8,361,738 COMPUTER SERVICES -- 0.5% Ceridian Corp.*.................. 727,075 727,075 17,617,027 17,617,027 COMPUTERS -- 1.2% Apple Computer, Inc.*............ 115,210 115,210 8,109,632 8,109,632 Research In Motion, Ltd. (U.S. Shares)*,#..................... 206,600 230,715 437,315 15,831,758 17,679,690 33,511,448 41,621,080 COMPUTERS -- MEMORY DEVICES -- 1.9% EMC Corp.*....................... 1,923,395 1,923,395 25,985,066 25,985,066 SanDisk Corp.*................... 659,430 659,430 42,091,417 42,091,417 68,076,483 COSMETICS AND TOILETRIES -- 0.6% Procter & Gamble Co. ............ 356,215 356,215 20,735,275 20,735,275 DATA PROCESSING AND MANAGEMENT -- 0.7% NAVTEQ Corp.*,#.................. 621,370 621,370 25,799,282 25,799,282 DIAGNOSTIC KITS -- 3.0% Dade Behring Holdings, Inc.#..... 778,776 1,871,865 2,650,641 30,372,264 73,002,734 103,374,998 DIVERSIFIED MINERALS -- 0.7% Caemi Mineracao e Metalurgica S.A. .......................... 13,670,230 13,670,230 25,152,699 25,152,699 E-COMMERCE/PRODUCTS -- 1.0% Submarino S.A. (GDR)*............ 193,300 83,000 276,300 10,352,471 4,445,190 14,797,661 Submarino S.A.*.................. 265,600 412,660 678,260 7,190,417 11,171,677 18,362,094 33,159,755 E-COMMERCE/SERVICES -- 1.7% eBay, Inc.*...................... 605,320 605,320 20,829,061 20,829,061 IAC/InterActiveCorp*,#........... 1,391,769 1,391,769 40,180,371 40,180,371 61,009,432 ELECTRONIC COMPONENTS -- SEMICONDUCTORS -- 2.3% Advanced Micro Devices, Inc.*.... 366,485 366,485 11,855,790 11,855,790 Broadcom Corp. -- Class A*,#..... 550,855 550,855 22,645,649 22,645,649 PMC-Sierra, Inc.*,#.............. 1,182,935 1,182,935 14,703,882 14,703,882 MIPS Technologies, Inc.*......... 628,150 628,150 4,654,592 4,654,592 Texas Instruments, Inc.#......... 418,055 378,085 796,140 14,510,689 13,123,330 27,634,019 81,493,932 ELECTRONIC FORMS -- 1.1% Adobe Systems, Inc.*............. 972,230 972,230 38,111,416 38,111,416
SHARES OR PRINCIPAL AMOUNT VALUE ------------------------------------------ ------------------------------------------------ JANUS JANUS PRO FORMA JANUS JANUS PRO FORMA OLYMPUS ORION JANUS ORION OLYMPUS ORION JANUS ORION AS OF APRIL 30, 2006 FUND FUND FUND FUND FUND FUND -------------------- ------------ ------------ ------------ -------------- -------------- -------------- ELECTRONIC MEASURING INSTRUMENTS -- 0.8% Trimble Navigation, Ltd.*,#...... 138,354 467,890 606,244 6,555,213 22,168,628 28,723,841 ENERGY -- ALTERNATE SOURCES -- 0.4% Suntech Power Holdings Company, Ltd. (ADR) *,#................. 380,300 380,300 13,040,487 13,040,487 ENGINEERING -- RESEARCH AND DEVELOPMENT SERVICES -- 1.0% ABB, Ltd.*,#..................... 2,460,267 2,460,267 35,112,664 35,112,664 ENTERTAINMENT SOFTWARE -- 0.3% UbiSoft Entertainment S.A.*,#.... 190,677 190,677 9,449,173 9,449,173 ENTERPRISE SOFTWARE/SERVICES -- 1.4% SAP A.G. (ADR)**,#............... 896,610 896,610 48,981,804 48,981,804 ENTERTAINMENT SOFTWARE -- 1.0% Electronic Arts, Inc.*........... 601,425 601,425 34,160,940 34,160,940 FINANCE -- CREDIT CARD -- 1.7% American Express Co. ............ 451,595 451,595 24,300,327 24,300,327 Credit Saison Company, Ltd. ..... 644,600 644,600 33,796,707 33,796,707 58,097,034 FINANCE -- INVESTMENT BANKERS/BROKERS -- 4.2% Goldman Sachs Group, Inc. ....... 137,715 137,715 22,074,337 22,074,337 Merrill Lynch & Company, Inc. ... 400,110 400,110 30,512,389 30,512,389 Mitsubishi UFJ Securities Company, Ltd. ................. 1,313,000 1,313,000 20,686,971 20,686,971 Nikko Cordial Corp. ............. 1,018,000 1,018,000 16,477,179 16,477,179 optionsXpress Holdings, Inc. .... 695,760 695,760 21,916,440 21,916,440 UBS A.G.**,#..................... 284,577 284,577 33,730,704 33,730,704 145,398,020 FINANCE -- MORTGAGE LOAN BANKER -- 0.7% Fannie Mae....................... 486,030 486,030 24,593,118 24,593,118 FINANCE -- OTHER SERVICES -- 3.0% Chicago Mercantile Exchange Holdings, Inc.#................ 41,825 62,060 103,885 19,155,850 28,423,480 47,579,330 Deutsche Boerse A.G.**,#......... 311,293 311,293 45,026,421 45,026,421 MarketAxess Holdings, Inc.*...... 1,001,720 1,001,720 11,179,195 11,179,195 103,784,946 FOOD -- RETAIL -- 2.3% Whole Foods Market, Inc. ........ 1,155,474 1,155,474 70,922,994 70,922,994 Wild Oats Markets, Inc.*,#....... 530,681 530,681 9,117,100 9,117,100 80,040,094 FOOD -- WHOLESALE/DISTRIBUTION -- 0.7% Sysco Corp.#..................... 777,745 777,745 23,246,798 23,246,798 HAZARDOUS WASTE DISPOSAL -- 0.6% Stericycle, Inc.*,#.............. 319,270 319,270 21,020,737 21,020,737 HOME FURNISHINGS -- 0.6% Tempur-Pedic International, Inc.*,#........................ 1,303,305 1,303,305 20,579,186 20,579,186 HOTELS AND MOTELS -- 1.2% Four Seasons Hotels, Inc. ....... 762,355 762,355 41,182,417 41,182,417 INSURANCE BROKERS -- 0.6% Marsh & McLennan Companies, Inc.#.......................... 732,500 732,500 22,465,775 22,465,775
SHARES OR PRINCIPAL AMOUNT VALUE ------------------------------------------ ------------------------------------------------ JANUS JANUS PRO FORMA JANUS JANUS PRO FORMA OLYMPUS ORION JANUS ORION OLYMPUS ORION JANUS ORION AS OF APRIL 30, 2006 FUND FUND FUND FUND FUND FUND -------------------- ------------ ------------ ------------ -------------- -------------- -------------- INTERNET CONTENT -- INFORMATION/NEWS -- 0.3% CNET Networks, Inc.*,#........... 835,179 835,179 9,003,230 9,003,230 INTERNET INFRASTRUCTURE SOFTWARE -- 0.3% TIBCO Software, Inc.*,#.......... 1,039,960 1,039,960 8,964,455 8,964,455 INTERNET SECURITY -- 0.5% McAfee, Inc.*,#.................. 699,225 699,225 18,242,780 18,242,780 INVESTMENT MANAGEMENT AND ADVISORY SERVICES -- 1.3% National Financial Partners Corp.#......................... 848,945 848,945 44,145,140 44,145,140 MEDICAL -- BIOMEDICAL AND GENETIC -- 5.1% Celgene Corp.*................... 2,549,272 1,228,370 3,777,642 107,477,308 51,788,078 159,265,386 Genentech, Inc.*................. 242,310 242,310 19,314,530 19,314,530 178,579,916 MEDICAL -- DRUGS -- 3.8% Cubist Pharmaceuticals, Inc.*.... 695,145 695,145 15,758,937 15,758,937 Merck & Company, Inc. ........... 1,009,100 1,009,100 34,733,222 34,733,222 Roche Holding A.G.**............. 377,310 168,756 546,066 58,017,269 25,948,854 83,966,123 134,458,282 MEDICAL -- GENERIC DRUGS -- 1.8% Teva Pharmaceutical Industries, Ltd. (ADR)#.................... 1,084,650 428,390 1,513,040 43,928,325 17,349,795 61,278,120 MEDICAL -- HMO -- 1.2% Coventry Health Care, Inc.*...... 392,985 392,985 19,519,565 19,519,565 UnitedHealth Group, Inc. ........ 460,692 460,692 22,914,820 22,914,820 42,434,385 MEDICAL INSTRUMENTS -- 2.3% Boston Scientific Corp.*,#....... 798,685 798,685 18,561,439 18,561,439 Intuitive Surgical, Inc.*........ 249,735 152,081 401,816 31,716,345 19,314,287 51,030,632 Kyphon, Inc.*,#.................. 277,025 277,025 11,510,389 11,510,389 81,102,460 MEDICAL PRODUCTS -- 1.4% Johnson & Johnson................ 244,675 244,675 14,340,402 14,340,402 Varian Medical Systems, Inc.*,#........................ 684,915 684,915 35,875,847 35,875,847 50,216,249 MULTI-LINE INSURANCE -- 0.8% Assurant, Inc. .................. 554,210 554,210 26,696,296 26,696,296 NETWORKING PRODUCTS -- 1.3% Cisco Systems, Inc.*............. 1,726,842 1,726,842 36,177,340 36,177,340 Juniper Networks, Inc. *,#....... 566,035 566,035 10,460,327 10,460,327 46,637,667 OIL COMPANIES -- EXPLORATION AND PRODUCTION -- 0.9% EOG Resources, Inc.#............. 260,860 203,950 464,810 18,320,198 14,323,409 32,643,607 OIL COMPANIES -- INTEGRATED -- 0.3% Amerada Hess Corp.#.............. 76,830 76,830 11,007,434 11,007,434 PRINTING -- COMMERCIAL -- 1.3% VistaPrint, Ltd.*,#.............. 1,383,900 1,383,900 44,257,122 44,257,122 PUBLISHING -- NEWSPAPERS -- 0.7% Dow Jones & Company, Inc.#....... 638,835 638,835 23,617,730 23,617,730
SHARES OR PRINCIPAL AMOUNT VALUE ------------------------------------------ ------------------------------------------------ JANUS JANUS PRO FORMA JANUS JANUS PRO FORMA OLYMPUS ORION JANUS ORION OLYMPUS ORION JANUS ORION AS OF APRIL 30, 2006 FUND FUND FUND FUND FUND FUND -------------------- ------------ ------------ ------------ -------------- -------------- -------------- RADIO -- 0.7% XM Satellite Radio Holdings, Inc. -- Class A *,#............ 559,165 684,455 1,243,620 11,306,316 13,839,680 25,145,996 REAL ESTATE MANAGEMENT/SERVICES -- 0.3% Mitsubishi Estate Company, Ltd. .......................... 416,000 416,000 9,097,089 9,097,089 REIT -- MORTGAGES -- 1.5% CapitalSource, Inc.#............. 2,156,342 2,156,342 50,674,037 50,674,037 RETAIL -- APPAREL AND SHOE -- 0.7% Nordstrom, Inc.#................. 640,935 640,935 24,567,039 24,567,039 RETAIL -- DISCOUNT -- 0.7% Wal-Mart Stores, Inc. ........... 552,765 552,765 24,891,008 24,891,008 RETAIL -- DRUG STORE -- 0.4% CVS Corp. ....................... 517,275 517,275 15,373,413 15,373,413 RETAIL -- RESTAURANTS -- 0.2% Chipotle Mexican Grill, Inc. -- Class A*,#............. 39,235 39,235 2,047,675 2,047,675 Tim Hortons, Inc.(U.S. Shares)*,#..................... 133,385 133,385 3,621,403 3,621,403 5,669,078 SCHOOLS -- 0.7% Apollo Group, Inc. -- Class A*,#........................... 417,795 417,795 22,828,319 22,828,319 SEMICONDUCTOR COMPONENTS/INTEGRATED CIRCUITS -- 0.4% Cypress Semiconductor Corp.*,#... 869,670 869,670 14,923,537 14,923,537 SEMICONDUCTOR EQUIPMENT -- 0.5% ASM Lithography Holding N.V. (U.S. Shares)*,**,#............ 743,460 743,460 15,724,179 15,724,179 SOAP AND CLEANING PREPARATIONS -- 0.6% Reckitt Benckiser PLC**.......... 538,650 538,650 19,635,314 19,635,314 STEEL -- PRODUCERS -- 1.1% Arcelor Brasil S.A. ............. 2,118,722 2,118,722 39,085,193 39,085,193 STEEL -- SPECIALTY -- 0.3% Companhia Siderurgica Nacional S.A. (ADR)#.................... 255,689 255,689 9,002,810 9,002,810 STORAGE AND WAREHOUSING -- 0.7% Mobile Mini, Inc.*............... 757,860 757,860 24,994,223 24,994,223 SUGAR -- 0.6% Bajaj Hindusthan, Ltd. .......... 1,459,110 1,459,110 16,779,765 16,779,765 Bajaj Hindusthan, Ltd. (GDR) (144A) sec..................... 335,300 335,300 3,854,676 3,854,676 20,634,441 TELECOMMUNICATION SERVICES -- 1.1% NeuStar, Inc. -- Class A*,#...... 907,250 907,250 31,844,475 31,844,475 Time Warner Telecom, Inc. -- Class A*,#............. 482,000 482,000 8,083,140 8,083,140 39,927,615 THERAPEUTICS -- 2.2% Neurocrine Biosciences, Inc.*.... 642,369 642,369 36,846,286 36,846,286 United Therapeutics Corp.*....... 408,925 234,460 643,385 24,351,484 13,962,093 38,313,577 75,159,863 TRANSPORTATION -- MARINE -- 0.4% Alexander & Baldwin, Inc.#....... 289,145 289,145 14,419,661 14,419,661
SHARES OR PRINCIPAL AMOUNT VALUE ------------------------------------------ ------------------------------------------------ JANUS JANUS PRO FORMA JANUS JANUS PRO FORMA OLYMPUS ORION JANUS ORION OLYMPUS ORION JANUS ORION AS OF APRIL 30, 2006 FUND FUND FUND FUND FUND FUND -------------------- ------------ ------------ ------------ -------------- -------------- -------------- TRANSPORTATION -- RAILROAD -- 0.3% All America Latina Logistica (GDR).......................... 190,500 190,500 12,049,787 12,049,787 TRANSPORTATION -- SERVICES -- 2.5% C.H. Robinson Worldwide, Inc.#... 690,155 690,155 30,608,374 30,608,374 FedEx Corp. ..................... 189,450 189,450 21,811,379 21,811,379 United Parcel Service, Inc. -- Class B................ 439,755 439,755 35,650,938 35,650,938 88,070,691 WEB HOSTING/DESIGN -- 0.5% Equinix, Inc.*................... 275,340 275,340 18,144,906 18,144,906 WEB PORTALS/INTERNET SERVICE PROVIDERS -- 2.7% Answers Corp.*................... 22,735 22,735 275,094 275,094 Yahoo!, Inc.*.................... 2,198,520 674,215 2,872,735 72,067,486 22,100,767 94,168,253 94,443,347 WIRELESS EQUIPMENT -- 2.0% Crown Castle International Corp.*,#....................... 1,008,275 196,465 1,204,740 33,928,454 6,611,047 40,539,501 QUALCOMM, Inc. .................. 574,635 574,635 29,501,761 29,501,761 70,041,262 TOTAL COMMON STOCK (COST $2,596,046,953).................. 61,123,630 51,678,817 112,802,447 2,306,895,681 1,070,922,969 3,377,818,650 MONEY MARKET -- 1.4% Janus Institutional Cash Reserves Fund, 4.83% (cost $50,000,000)................... 50,000,000 50,000,000 50,000,000 50,000,000 PREFERRED STOCK -- 0.7% ELECTRONIC COMPONENTS -- SEMICONDUCTORS -- 0.7% Samsung Electronics Company, Ltd. (cost $18,295,111)............. 48,870 48,870 26,476,431 26,476,431 OTHER SECURITIES -- 16.2% State Street Navigator Securities Lending Prime Portfolio + (cost $566,985,535).................. 316,899,102 250,086,433 566,985,535 316,899,102 250,086,433 566,985,535 TIME DEPOSIT -- 1.1% ING Financial ETD 4.86%, 5/1/06 (cost $37,000,000)............. 19,900,000 17,100,000 37,000,000 19,900,000 17,100,000 37,000,000 TOTAL INVESTMENTS (TOTAL COST $3,268,327,599) -- 115.9%........ 447,971,602 318,865,250 766,836,852 2,720,171,214 1,338,109,402 4,058,280,616 LIABILITIES, NET OF CASH, RECEIVABLES AND OTHER ASSETS -- -15.9%................. (302,136,913) (255,882,516) (558,019,429) NET ASSETS -- 100%................ 2,418,034,301 1,082,226,886 3,500,261,187
PRO FORMA SUMMARY OF INVESTMENTS BY COUNTRY, AS OF APRIL 30, 2006
PRO FORMA PRO FORMA JANUS OLYMPUS JANUS ORION JANUS ORION JANUS ORION FUND FUND FUND FUND -------------- -------------- -------------- ----------- % OF INVESTMENT COUNTRY VALUE SECURITIES ------- ------------------------------------------------ ----------- Argentina............... $ 11,478,997 $ 11,478,997 0.3% Bermuda................. 44,257,122 44,257,122 1.1% Brazil.................. $ 17,542,888 120,499,306 138,042,194 3.4% Canada.................. 96,618,239 17,679,690 114,297,929 2.8% Cayman Islands.......... 13,040,487 13,040,487 0.3% France.................. 9,449,173 9,449,173 0.2% Germany................. 118,302,093 118,302,093 2.9% Hong Kong............... 20,577,206 20,577,206 0.5% India................... 20,634,441 20,634,441 0.5% Israel.................. 43,928,325 17,349,795 61,278,120 1.5% Italy................... 27,969,655 27,969,655 0.7% Japan................... 157,964,855 157,964,855 3.9% Mexico.................. 13,052,558 50,069,540 63,122,098 1.5% Netherlands............. 15,724,179 15,724,179 0.4% South Korea............. 26,476,431 26,476,431 0.7% Switzerland............. 91,747,973 61,061,518 152,809,491 3.8% Turkey.................. 21,801,689 21,801,689 0.5% United Kingdom.......... 19,635,314 19,635,314 0.5% United States........... 2,085,560,666 935,858,476 3,021,419,142 74.5% -------------- -------------- -------------- ----- Total................... $2,720,171,214 $1,338,109,402 $4,058,280,616 100.0% ============== ============== ============== =====
PRO FORMA FORWARD CURRENCY CONTRACTS, OPEN AS OF APRIL 30, 2006
PRO FORMA JANUS OLYMPUS JANUS ORION JANUS ORION FUND FUND FUND -------------- -------------- -------------- CURRENCY UNITS CURRENCY UNITS CURRENCY UNITS CURRENCY SOLD AND SETTLEMENT DATE SOLD SOLD SOLD --------------------------------- -------------- -------------- -------------- British Pound 6/28/06........... 4,600,000 -- 4,600,000 British Pound 8/10/06........... 400,000 -- 400,000 Euro 6/28/06.................... 28,750,000 -- 28,750,000 Euro 10/19/06................... 10,500,000 -- 10,500,000 Swiss Franc 6/28/06............. 57,500,000 -- 57,500,000 Swiss Franc 8/10/06............. 4,000,000 -- 4,000,000 ---------- ---- ----------
PRO FORMA JANUS OLYMPUS JANUS ORION JANUS ORION FUND FUND FUND -------------- -------------- -------------- CURRENCY VALUE CURRENCY VALUE CURRENCY VALUE CURRENCY SOLD AND SETTLEMENT DATE IN $ U.S. IN $ U.S. IN $ U.S. --------------------------------- -------------- -------------- -------------- British Pound 6/28/06.......... $ 8,394,145 $ -- $ 8,394,145 British Pound 8/10/06.......... 730,440 -- 730,440 Euro 6/28/06................... 36,408,001 -- 36,408,001 Euro 10/19/06.................. 13,385,163 -- 13,385,163 Swiss Franc 6/28/06............ 46,680,489 -- 46,680,489 Swiss Franc 8/10/06............ 3,262,057 -- 3,262,057 ------------ ----- ------------ Total.......................... $108,860,295 $108,860,295
PRO FORMA JANUS OLYMPUS JANUS ORION JANUS ORION FUND FUND FUND ------------- -------------- -------------- UNREALIZED UNREALIZED CURRENCY SOLD AND SETTLEMENT DATE GAIN/(LOSS) GAIN/(LOSS) --------------------------------- ------------- -------------- British Pound 6/28/06.......... $ (167,735) $ -- $ (167,735) British Pound 8/10/06.......... (35,396) -- (35,396) Euro 6/28/06................... (828,151) -- (828,151) Euro 10/19/06.................. (198,160) -- (198,160) Swiss Franc 6/28/06............ (503,169) -- (503,169) Swiss Franc 8/10/06............ (163,299) -- (163,299) ----------- ----- ----------- Total.......................... $(1,895,910) $(1,895,910)
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JANUS JANUS PRO FORMA OLYMPUS ORION JANUS ORION AS OF APRIL 30, 2006 FUND FUND ADJUSTMENTS FUND -------------------- ---------- ---------- ----------- ----------- (ALL NUMBERS IN THOUSANDS EXCEPT NET ASSET VALUE PER SHARE) ASSETS: Investments at cost(1)................ $2,192,514 $1,075,813 $3,268,327 Investments at value(1)............... $2,720,171 $1,338,109 $4,058,280 Cash................................ 1,090 1,354 2,444 Cash denominated in foreign currency(2)....................... 587 -- 587 Receivables: Investments sold.................. 29,746 -- 29,746 Fund shares sold.................. 1,106 1,828 2,934 Dividends......................... 1,756 84 1,840 Interest.......................... 81 56 137 Other assets.......................... 16 5 21 Total Assets............................ 2,754,553 1,341,436 4,095,989 LIABILITIES: Payables: Collateral for securities loaned (Note 3).......................... 316,899 250,086 566,985 Investments purchased............... 14,072 6,823 20,895 Fund shares repurchased............. 1,445 476 1,921 Dividends and distributions......... -- -- -- Advisory fees....................... 1,274 550 1,824 Transfer agent fees and expenses.... 553 212 765 Non-interested Trustees' fees and expenses.......................... 2 1 3 Foreign tax liability............... 27 949 976 Accrued expenses...................... 351 112 463 Forward currency contracts............ 1,896 -- 1,896 Total Liabilities....................... 336,519 259,209 595,728 Net Assets.............................. $2,418,034 $1,082,227 $3,500,261 Net Assets Consist of: Capital (par value and paid-in-surplus).................... $3,418,918 $1,324,824 $4,743,742 Undistributed net investment income/(loss)....................... 124 2,579 2,703 Undistributed net realized gain/(loss) from investments and foreign currency transactions............... (1,526,781) (506,526) (2,033,307) Unrealized appreciation/(depreciation) of investments and foreign currency translations(3)..................... 525,773 261,350 787,123 Total Net Assets........................ $2,418,034 $1,082,227 $3,500,261 Shares Outstanding, $0.01 Par Value (unlimited shares authorized)......... 70,953 114,120 184,153(4) 369,226 Net Asset Value Per Share............... $ 34.08 $ 9.48
--------------- (1) Investments at cost and value include $307,516,553 and $243,484,769 of securities loaned for Janus Olympus Fund and Janus Orion Fund, respectively. (2) Includes cost of $574,272 for Janus Olympus Fund. (3) Net of foreign taxes on investments of $26,574 and $948,727 for Janus Olympus Fund and Janus Orion Fund, respectively. (4) Reflects new shares issued. (Calculation: Total Net Assets/Net Asset Value Per Share) PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
JANUS JANUS PRO FORMA OLYMPUS ORION JANUS ORION FOR THE 12 MONTH PERIOD ENDED APRIL 30, 2006 FUND FUND ADJUSTMENTS FUND -------------------------------------------- -------- ---------- ----------- ----------- (ALL NUMBERS IN THOUSANDS) INVESTMENT INCOME: Interest................................... $ 1,689 $ 1,305 $ 2,994 Securities lending income.................. 427 273 700 Dividends.................................. 17,362 13,361 30,723 Foreign tax withheld....................... (555) (290) (845) TOTAL INVESTMENT INCOME...................... 18,923 14,649 33,572 EXPENSES: Advisory fees.............................. 14,815 4,870 19,685 Transfer agent fees and expenses........... 6,274 2,043 (100)(1) 8,217 Registration fees.......................... 15 36 (10)(1) 41 Postage and mailing expenses............... 346 117 (46)(1) 417 Custodian fees............................. 76 84 (7)(1) 153 Professional fees.......................... 33 (91) (33)(1) (91) Non-interested Trustees' fees and expenses................................. 73 29 102 Printing Expenses.......................... 415 263 (68)(1) 610 Other expenses............................. 401 190 (40)(1) 551 TOTAL EXPENSES............................... 22,448 7,541 (304) 29,685 EXPENSE AND FEE OFFSET....................... (330) (123) (453) NET EXPENSES................................. 22,118 7,418 (304) 29,232 NET INVESTMENT INCOME/(LOSS)................. (3,195) 7,231 304 4,340 Net Realized and Unrealized Gain/(Loss) on Investments: Net realized gain/(loss) from securities transactions............................. 324,457 84,611 409,068 Net realized gain/(loss) from foreign currency transactions.................... 3,889 (87) 3,802 Change in net unrealized appreciation or depreciation of investments and foreign currency translations(2)................. 208,021 170,095 378,116 NET GAIN/(LOSS) ON INVESTMENTS............... 536,367 254,619 790,986 NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.................. $533,172 $261,850 $ 304 $795,326
--------------- (1) Reflects adjustment in expenses due to elimination of duplicative services. (2) Net of foreign taxes on investments of $26,574 and $948,727 for Janus Olympus Fund and Janus Orion Fund, respectively. The accompanying unaudited pro forma financial statements are presented to show the effect of the proposed acquisition of Janus Olympus Fund (Selling Fund) by Janus Orion Fund (Acquiring Fund) as if the acquisition had taken place as of April 30, 2006. The unaudited pro forma financial statements are presented for the information of the reader and may not necessarily be representative of what the actual combined financial statements would have been had the reorganization occurred at April 30, 2006. The unaudited pro forma schedule of investments, and statement of assets and liabilities reflect the financial position of the Acquiring Fund and Selling Fund, as well as pro forma combined of the Acquiring Fund, at April 30, 2006. The unaudited pro forma statement of operations reflects the results of operations of the Acquiring Fund and the Selling Fund for the 12 month period ended April 30, 2006. These statements have been derived from the Funds' respective books and records utilized in calculating daily net asset value at the date indicated above for both the Acquiring and Selling Fund under accounting principles generally accepted in the United States of America in the investment company industry. In accordance with U.S. generally accepted accounting principles, the historical cost of investment securities will be carried forward to the surviving entity in the event the termination is consummated and the results of operations of the Acquiring Fund for pre-combination periods will not be restated. NOTES TO PRO FORMA FINANCIAL STATEMENTS ADR............................ American Depositary Receipt GDR............................ Global Depositary Receipt 144A........................... Securities sold under Rule 144A of the Securities Act of 1933 are subject to legal and/or contractual restrictions on resale and may not be publicly sold without registration under the 1933 Act. U.S. Shares.................... Securities of foreign companies trading on an American Stock Exchange --------------- * Non-income producing security. ** A portion of this holding has been segregated to cover margin or segregation requirements on open forward currency contracts. # Loaned security, a portion or all of the security is on loan as of April 30, 2006. + The security is purchased with the cash collateral received from Securities on Loan (See Note 3 below). SEC. SCHEDULE OF RESTRICTED AND ILLIQUID SECURITIES
ACQUISITION ACQUISITION VALUE AS A % DATE COST VALUE OF NET ASSETS ----------- ----------- ---------- ------------- JANUS ORION FUND Bajaj Hindusthan, Ltd. (GDR)(144A)............... 1/27/06 $2,722,636 $3,854,676 0.4%
Aggregate collateral segregated to cover margin or segregation requirements on open forward currency contracts as of April 30, 2006 for Janus Olympus Fund is $162,878,399. Repurchase Agreements held by a Fund are fully collateralized, and such collateral is in the possession of the Fund's custodian or subcustodian. The collateral is evaluated daily to ensure its market value exceeds the current market value of the repurchase agreements, including accrued interest. In the event of default on the obligation to repurchase, the Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral or proceeds may be subject to legal proceedings. NOTE 1 -- PLAN OF REORGANIZATION On July 5, 2006, the Board of Trustees of Janus Investment Fund approved an Agreement and Plan of Reorganization (the "Plan") and authorized the submission of the Plan to Shareholders for approval. If the Plan is approved by Shareholders the Selling Fund (Janus Olympus Fund) will merge into the Acquiring Fund (Janus Orion Fund). Janus Orion Fund will acquire all of the assets of Janus Olympus Fund, subject to the liabilities of Janus Olympus Fund, in exchange for a number of shares of Janus Orion Fund equal in value to the net assets of Janus Olympus Fund at the time of the Merger. The Merger will be accounted for as a tax-free merger of investment companies. The accompanying unaudited pro forma portfolio of investments, and unaudited statement of assets and liabilities and statement of operations should be read in conjunction with the historical financial statements of each Fund, which are included in their respective annual reports dated October 31, 2005 and incorporated by reference in the Statement of Additional Information. NOTE 2 -- INVESTMENT VALUATION Both Janus Olympus Fund and Janus Orion Fund follow the following investment valuation policy. Securities are valued at the last sales price or the official closing price for securities traded on a principal securities exchange (U.S. or foreign) and on the NASDAQ National Market. Securities traded on over-the-counter markets and listed securities for which no sales are reported are valued at the latest bid price (or yield equivalent thereof) obtained from one or more dealers transacting in a market for such securities or by a pricing service approved by the Fund's Trustees. Short-term securities with maturities of 60 days or less may be valued at amortized cost, which approximates market value. Debt securities with a remaining maturity of greater than 60 days are valued in accordance with the evaluated bid price supplied by the pricing service. The evaluated bid price supplied by the pricing service is an evaluation that reflects such factors as security prices, yields, maturities and ratings. Foreign securities and currencies are converted to U.S. dollars using the applicable exchange rate in effect as of the daily close of the New York Stock Exchange ("NYSE"). When market quotations are not readily available or deemed unreliable, or events or circumstances that may affect the value of portfolio securities held by the Funds are identified between the closing of their principal markets and the time the net asset value ("NAV") is determined, securities may be valued at their fair value as determined in good faith under procedures adopted by and under the supervision of the Fund's Trustees. The Funds may use a systematic fair valuation model provided by an independent third party to value international equity securities in order to adjust for stale pricing, which may occur between the close of certain foreign exchanges and the NYSE. FORWARD CURRENCY TRANSACTIONS The Funds may enter into forward currency contracts in order to reduce their exposure to changes in foreign currency exchange rates on their foreign portfolio holdings and to lock in the U.S. dollar cost of firm purchase and sale commitments for securities denominated in or exposed to foreign currencies. A forward currency exchange contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated rate. The gain or loss arising from the difference between the U.S. dollar cost of the original contract and the value of the foreign currency in U.S. dollars upon closing a contract is included in "Net realized gain/(loss) from foreign currency transactions" on the Statement of Operations (if applicable). Forward currency contracts held by the Funds are fully collateralized by other securities, which are denoted in the accompanying Schedule of Investments (if applicable). The collateral is evaluated daily to ensure its market value equals or exceeds the current market value of the corresponding forward currency contracts. FOREIGN CURRENCY TRANSLATIONS The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held at the date of the financial statements. Net unrealized appreciation or depreciation on investments and foreign currency translation arise from changes in the value of assets and liabilities, including investments in securities held at the date of the financial statements, resulting from changes in the exchange rates and changes in market prices of securities held. Currency gains and losses are also calculated on payables and receivables that are denominated in foreign currencies. The payables and receivables are generally related to security transactions and income. Foreign-denominated assets and forward currency contracts may involve more risks than domestic transactions, including currency risk, political and economic risk, regulatory risk and market risk. Risks may arise from the potential inability of a counterparty to meet the terms of a contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. NOTE 3 -- SECURITIES LENDING Under procedures adopted by the Trustees, the Funds may lend securities to qualified parties (typically brokers or other financial institutions) who need to borrow securities in order to complete certain transactions such as covering short sales, avoiding failures to deliver securities or completing arbitrage activities. The Funds may seek to earn additional income through securities lending. There is the risk of delay in recovering a loaned security or the risk of loss in collateral rights if the borrower fails financially. In addition, Janus Capital Management LLC ("Janus Capital") makes efforts to balance the benefits and risks from granting such loans. The Funds do not have the right to vote on securities while they are being lent; however, the Funds may attempt to call back the loan and vote the proxy. All loans will be continuously secured by collateral which may consist of cash, U.S. Government securities, domestic and foreign short-term debt instruments, letters of credit, money market mutual funds or other money market accounts, or such other collateral permitted by the Securities and Exchange Commission ("SEC"). Cash collateral may be invested in affiliated money market funds or other accounts advised by Janus Capital to the extent consistent with exemptive relief obtained from the SEC or otherwise in compliance with applicable regulation. Cash collateral may also be invested in unaffiliated money market funds or other accounts. State Street Bank and Trust Company (the "Lending Agent") may also invest the cash collateral in the State Street Navigator Securities Lending Prime Portfolio or investments in unaffiliated money market funds or accounts, mutually agreed to by the Funds and the Lending Agent, that comply with Rule 2a-7 under the Investment Company Act of 1940, as amended, relating to money market funds. As of April 30, 2006, the Funds had on loan securities valued as indicated: Janus Olympus Fund $307,516,553 Janus Orion Fund $243,484,769 As of April 30, 2006, the Funds received cash collateral for securities lending activity as indicated: Janus Olympus Fund $316,899,102 Janus Orion Fund $250,086,433 As of April 30, 2006, all cash collateral received was invested in the State Street Navigator Securities Lending Prime Portfolio. The value of the collateral must be at least 102% of the market value of the loaned securities that are denominated in U.S. dollars and 105% of the market value of the loaned securities that are not denominated in U.S. dollars. Loaned securities and related collateral are marked-to-market each business day based upon the market value of the respective securities at the close of business, employing the most recent available pricing information. Collateral levels are then adjusted based upon this mark-to-market evaluation. The borrower pays fees at the Funds' direction to its Lending Agent. The Lending Agent may retain a portion of the interest earned. The cash collateral invested by the Lending Agent is disclosed in the Schedule of Investments. The lending fees and the Funds' portion of the interest income earned on cash collateral are included on the Statement of Operations. NOTE 4 -- TRANSACTIONS WITH AFFILIATES The Funds may invest in money market funds, including funds managed by Janus Capital. During the 12 month period ended April 30, 2006, the Funds recorded distributions from affiliated investment companies as affiliated dividend income, and had the following affiliated purchases and sales:
PURCHASES SALES DIVIDEND VALUE AT SHARES/COST SHARES/COST INCOME 5/31/06 ------------ ----------- -------- ----------- Janus Institutional Cash Reserves Fund Janus Olympus Fund....... $ 50,000,000 $ -- $ 25,932 $50,000,000 Janus Orion Fund......... 50,000,000 50,000,000 79,918 -- ------------ ----------- -------- ----------- $100,000,000 $50,000,000 $105,850 $50,000,000 ============ =========== ======== ===========
NOTE 5 -- CAPITAL SHARES The unaudited pro forma net asset value per share assumes additional shares of the Acquiring Fund issued in connection with the proposed acquisition of the Selling Fund as of April 30, 2006. The number of additional shares issued was calculated by dividing the value of the assets, net of liabilities, of the Selling Fund by the net asset value of the Acquiring Fund. NOTE 6 -- UNAUDITED PRO FORMA ADJUSTMENTS The accompanying unaudited pro forma financial statements reflect changes in fund shares as if the Merger had taken place on April 30, 2006. The Selling Fund's expenses were adjusted assuming the Acquiring Fund's fee and expense structure was in effect for the 12 month period ended April 30, 2006 and for estimated reductions due to the elimination of duplicate expenses. No adjustments to securities positions were required to present the pro forma financial statements. NOTE 7 -- MERGER COSTS Janus Capital Management LLC ("Janus Capital"), the investment adviser to the Funds, will bear all costs in connection with the Merger. NOTE 8 -- FEDERAL INCOME TAXES No provision for income taxes is included in the accompanying financial statements, as the Funds intend to distribute to shareholders all taxable investment income and realized gains and otherwise comply with Subchapter M of the Internal Revenue Code applicable to regulated investment companies. The Acquiring Fund intends to offset any net capital gains with any available capital loss carryforward until each carryforward has been fully utilized or expires. The amount of capital loss carryforward which may offset the Acquiring Fund's capital gains in any given year may be limited as a result of the Merger. PROXY TABULATOR EVERY SHAREHOLDER'S VOTE IS IMPORTANT P.O. BOX 859232 *** 3 EASY WAYS TO VOTE YOUR PROXIES *** BRAINTREE, MA 02185-9232 VOTE VIA THE TELEPHONE VOTE VIA THE INTERNET VOTE BY MAIL 1) Read the Proxy Statement ------------------------- 1) Read the Proxy Statement and 1) Read the Proxy Statement and have this card at hand have this card at hand 2) Check the appropriate boxes on this proxy card 2) Call toll-free at 2) Log on to WWW.2VOTEFUNDPROXY.COM 1-800-992-2416 and follow and follow the on-screen 3) Sign and date this proxy card ------------------------- the recorded instructions instructions 3) If you vote via the telephone, 3) If you vote via the Internet, 4) Mail your completed proxy card you do not need to mail this you do not need to mail this in the enclosed envelope proxy card proxy card JANUS INVESTMENT FUND JANUS OLYMPUS FUND SPECIAL MEETING OF SHAREHOLDERS TO BE HELD OCTOBER 2, 2006 THIS PROXY IS SOLICITED ON BEHALF OF THE TRUSTEES OF JANUS INVESTMENT FUND ("TRUST"). The undersigned, revoking previous proxies, hereby appoints Kelley A. Howes, Jesper Nergaard, and Stephanie Grauerholz-Lofton, or any of them, as attorneys and proxies, with full power of substitution to each, to vote the shares which the undersigned is entitled to vote at the Special Meeting of Shareholders ("Meeting") of Janus Olympus Fund to be held at the JW Marriott Hotel, 150 Clayton Lane, Denver, CO on October 2, 2006 at 10:00 a.m. Mountain Time and at any adjournment(s) or postponement(s) of such Meeting. As to any other matter that properly comes before the Meeting or any adjournment(s) or postponement(s) thereof, the persons appointed above may vote in accordance with their best judgment. The undersigned hereby acknowledges receipt of the accompanying Proxy Statement, Prospectus, and Notice of Special Meeting. NOTE: Please sign exactly as your name(s) appears on the Proxy. If you are signing this Proxy for a corporation, estate, trust or other fiduciary capacity, for example, as a trustee, please state that capacity or title along with your signature. ----------------------------- ----------------- Signature Date ----------------------------- ----------------- Signature (Joint Owners) Date WHEN THIS PROXY IS PROPERLY EXECUTED, THE SHARES REPRESENTED HEREBY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE PROPOSAL SET FORTH BELOW. PLEASE MARK A BOX BELOW IN BLUE OR BLACK INK AS FOLLOWS. EXAMPLE: [ ] FOR AGAINST ABSTAIN o APPROVAL OF AN AGREEMENT AND PLAN OF REORGANIZATION THAT MERGES JANUS OLYMPUS FUND [ ] [ ] [ ] INTO JANUS ORION FUND. PLEASE SIGN ON REVERSE SIDE JANUS
February 28, 2006 JANUS INVESTMENT FUND JANUS ORION FUND Prospectus ELIMINATE PAPER MAIL. Set up e-Delivery of prospectuses, annual reports, and statements at WWW.JANUS.COM. The Securities and Exchange Commission has not approved or disapproved of these securities or passed on the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense. This Prospectus is for those shareholders investing directly with the Fund. Janus Investment Fund Janus Olympus Fund Janus Orion Fund Supplement dated July 11, 2006 to Currently Effective Prospectuses At a special meeting held on July 5, 2006, the Board of Trustees of Janus Investment Fund approved an Agreement and Plan of Reorganization, which provides for the merger of Janus Olympus Fund into Janus Orion Fund (the "Merger"). The proposed Agreement and Plan of Reorganization (the "Plan") is subject to approval by shareholders of Janus Olympus Fund at a Special Meeting of Shareholders to be held on October 2, 2006 (or any adjournments or postponements thereof). If shareholders of Janus Olympus Fund approve the Plan, Janus Olympus Fund will transfer its assets and liabilities to Janus Orion Fund in exchange for shares of Janus Orion Fund. As of the effective date of the Merger, shareholders of Janus Olympus Fund will receive shares of Janus Orion Fund equal in value to their then current holdings in Janus Olympus Fund. The Merger is expected to be effective on or about October 20, 2006. After the Merger is complete, Janus Olympus Fund will be liquidated. Effective at the close of trading on July 14, 2006, Janus Olympus Fund will be closed to new investors pending approval of the Merger. Existing Janus Olympus Fund shareholders may continue to purchase shares in their existing accounts until at least the date of shareholder approval. Janus Olympus Fund shareholders as of July 14, 2006 will receive the Proxy Statement/Prospectus providing notice of the Special Meeting of Shareholders and details regarding the Merger. If you purchased shares of Janus Olympus Fund through a financial intermediary, your financial intermediary will generally be forwarding these materials to you and requesting your vote. The Proxy Statement/ Prospectus will also be available on the SEC's website at www.sec.gov and at janus.com or by calling Janus at 1-877-33JANUS. TABLE OF CONTENTS -------------------------------------------------------------------------------- RISK/RETURN SUMMARY Janus Orion Fund......................................... 2 FEES AND EXPENSES........................................... 5 PRINCIPAL INVESTMENT STRATEGIES AND RISKS Frequently asked questions about principal investment strategies............................................... 6 Risks.................................................... 7 Frequently asked questions about certain risks........... 8 General portfolio policies............................... 11 SHAREHOLDER'S MANUAL Doing business with Janus................................ 16 Minimum investments...................................... 17 Types of account ownership............................... 17 To open an account or buy shares......................... 20 To exchange shares....................................... 21 To sell shares........................................... 21 Excessive trading........................................ 24 Shareholder services and account policies................ 33 MANAGEMENT OF THE FUND Investment adviser....................................... 37 Management expenses...................................... 38 Investment personnel..................................... 39 OTHER INFORMATION........................................... 40 DISTRIBUTIONS AND TAXES..................................... 43 FINANCIAL HIGHLIGHTS........................................ 46 GLOSSARY OF INVESTMENT TERMS................................ 47
Table of contents 1 RISK/RETURN SUMMARY -------------------------------------------------------------------------------- JANUS ORION FUND Janus Orion Fund (the "Fund") is designed for long-term investors who primarily seek growth of capital and who can tolerate the greater risks associated with common stock investments. INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- JANUS ORION FUND seeks long-term growth of capital. The Fund's Trustees may change this objective or the Fund's principal investment strategies without a shareholder vote. If there is a material change to the Fund's objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will meet its objective. PRINCIPAL INVESTMENT STRATEGIES The Fund pursues its objective by normally investing primarily in a core group of 20-30 domestic and foreign common stocks selected for their growth potential. The Fund may invest in companies of any size, from larger, well- established companies to smaller, emerging growth companies. The portfolio manager applies a "bottom up" approach in choosing investments. In other words, the portfolio manager looks at companies one at a time to determine if a company is an attractive investment opportunity and if it is consistent with the Fund's investment policies. If the portfolio manager is unable to find such investments, the Fund's uninvested assets may be held in cash or similar investments, subject to the Fund's specific investment policies. Within the parameters of its specific investment policies, the Fund may invest without limit in foreign equity and debt securities, which may include investments in emerging markets. The Fund will limit its investment in high- yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net assets. MAIN INVESTMENT RISKS The biggest risk is that the Fund's returns may vary, and you could lose money. The Fund invests primarily in common stocks, which tend to be more volatile than many other investment choices. The value of the Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases. The value of the Fund's portfolio could also decrease if the stock market goes down regardless of how well the individual companies perform. If the value of the Fund's portfolio decreases, the Fund's net asset value ("NAV") will also decrease, which means if you sell your shares in the Fund you may lose money. 2 Janus Orion Fund prospectus The Fund is classified as nondiversified. This means it may hold larger positions in a smaller number of securities than a fund that is classified as diversified. As a result, a single security's increase or decrease in value may have a greater impact on the Fund's NAV and total return. The Fund may have significant exposure to foreign markets, including emerging markets. As a result, its returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic conditions in a particular country. A market swing in one or more countries or regions where the Fund has invested a significant amount of its assets may have a greater effect on the Fund's performance than it would in a more geographically diversified portfolio. The Fund's investments in emerging market countries may involve risks greater than, or in addition to, the risks of investing in more developed countries. As of October 31, 2005, approximately 13.7% of the Fund's investments were in emerging markets. To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV may be affected by factors such as economic changes, political changes, or developments specific to the company that issued the bond. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. PERFORMANCE INFORMATION The following information provides some indication of the risks of investing in the Fund by showing how the Fund's performance has varied over time. The bar chart depicts the change in performance from year to year during the periods indicated. The table compares the Fund's average annual returns for the periods indicated to broad-based securities market indices. The indices are not available for direct investment. Risk/return summary 3 JANUS ORION FUND Annual returns for periods ended 12/31 (14.69)% (29.77)% 43.81% 14.90% 20.93% 2001 2002 2003 2004 2005 Best Quarter: 2nd-2003 23.59% Worst Quarter: 1st-2001 (22.54)%
Average annual total return for periods ended 12/31/05 ------------------------------------------------------ Since Inception 1 year 5 years (6/30/00) Janus Orion Fund Return Before Taxes 20.93% 3.67% (3.08)% Return After Taxes on Distributions 20.71% 3.63% (3.13)% Return After Taxes on Distributions and Sale of Fund Shares(1) 13.70% 3.13% (2.62)% Russell 3000(R) Growth Index(2) 5.17% (3.15)% (7.91)% (reflects no deduction for expenses, fees, or taxes) S&P 500(R) Index(3) 4.91% 0.54% (1.16)% (reflects no deduction for expenses, fees, or taxes) --------------------------------
(1) If the Fund incurs a loss, which generates a tax benefit, the Return After Taxes on Distributions and Sale of Fund Shares may exceed the Fund's other return figures. (2) The Russell 3000(R) Growth Index measures the performance of those Russell 3000(R) Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000(R) Growth or the Russell 2000(R) Growth indices. (3) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500 stocks, a widely recognized, unmanaged index of common stock prices. After-tax returns are calculated using the historically highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your individual tax situation and may differ from those shown in the preceding table. The after-tax return information shown above does not apply to Fund shares held through a tax-deferred account, such as a 401(k) plan or IRA. The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. 4 Janus Orion Fund prospectus FEES AND EXPENSES The following table describes the shareholder fees and annual fund operating expenses that you may pay if you buy and hold shares of the Fund. All of the fees and expenses shown were determined based on net assets as of the fiscal year ended October 31, 2005. SHAREHOLDER FEES are those paid directly from your investment and may include sales loads, redemption fees, or exchange fees. The Fund is a no-load investment, so you will generally not pay any shareholder fees when you buy or sell shares of the Fund. ANNUAL FUND OPERATING EXPENSES are paid out of the Fund's assets and include fees for portfolio management, maintenance of shareholder accounts, shareholder servicing, accounting, and other services. You do not pay these fees directly but, as the example shows, these costs are borne indirectly by all shareholders. SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT) Sales charges............................................... None Redemption fee.............................................. None(1) Exchange fee................................................ None
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS) Management Other Total Annual Fund Fee(2) Expenses Operating Expenses Janus Orion Fund 0.64% 0.38% 1.02%
(1) The Fund may charge a fee to cover the cost of sending a wire transfer for redemptions, and your bank may charge an additional fee to receive the wire. For more information, please refer to the section "Payment of Redemption Proceeds" in this Prospectus. (2) The "Management Fee" is the investment advisory fee paid by the Fund to Janus Capital. EXAMPLE: This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based upon these assumptions your costs would be as follows:
1 Year 3 Years 5 Years 10 Years -------------------------------------- Janus Orion Fund $ 104 $ 325 $ 563 $ 1,248
Risk/return summary 5 PRINCIPAL INVESTMENT STRATEGIES AND RISKS -------------------------------------------------------------------------------- This section takes a closer look at the Fund's principal investment strategies and certain risks of investing in the Fund. Strategies and policies that are noted as "fundamental" cannot be changed without a shareholder vote. Other, non-fundamental strategies and policies can be changed by the Trustees without prior notice to shareholders. Please carefully review the "Risks" section of this Prospectus for a discussion of risks associated with certain investment techniques. We have also included a "Glossary of Investment Terms" with descriptions of investment terms used throughout this Prospectus. FREQUENTLY ASKED QUESTIONS ABOUT PRINCIPAL INVESTMENT STRATEGIES The following questions and answers are designed to help you better understand the Fund's principal investment strategies. 1. HOW ARE COMMON STOCKS SELECTED? Unless its investment objective or policies prescribe otherwise, the Fund may invest substantially all of its assets in common stocks if the investment personnel believe that common stocks will appreciate in value. The investment personnel generally take a "bottom up" approach to selecting companies. This means that they seek to identify individual companies with earnings growth potential that may not be recognized by the market at large. The investment personnel make this assessment by looking at companies one at a time, regardless of size, country of organization, place of principal business activity, or other similar selection criteria. The Fund may sell a holding if, among other things, the security reaches the investment personnel's price target, if the company has a deterioration of fundamentals such as failing to meet key operating benchmarks, or if the investment personnel find a better investment opportunity. The Fund may also sell a holding to meet redemptions. Realization of income is not a significant consideration when choosing investments for the Fund. Income realized on the Fund's investments may be incidental to its objective. 2. ARE THE SAME CRITERIA USED TO SELECT FOREIGN SECURITIES? Generally, yes. The investment personnel seek companies that meet their selection criteria, regardless of where a company is located. Foreign securities are generally selected on a stock-by-stock basis without regard to any defined allocation among countries or geographic regions. However, certain factors such as expected levels of inflation, government policies influencing business conditions, the outlook for currency relationships, and prospects for economic growth among countries, regions, or geographic areas may warrant greater consideration in selecting foreign securities. There are no limitations on the 6 Janus Orion Fund prospectus countries in which the Fund may invest and the Fund may at times have significant foreign exposure. 3. WHAT DOES "MARKET CAPITALIZATION" MEAN? Market capitalization is the most commonly used measure of the size and value of a company. It is computed by multiplying the current market price of a share of the company's stock by the total number of its shares outstanding. The Fund does not emphasize investments in companies of any particular size. RISKS Because the Fund may invest substantially all of its assets in common stocks, the main risk is the risk that the value of the stocks it holds might decrease in response to the activities of an individual company or in response to general market and/or economic conditions. If this occurs, the Fund's share price may also decrease. The Fund's performance may also be significantly affected, positively or negatively, by certain types of investments, such as foreign securities, derivative investments, non-investment grade bonds, initial public offerings ("IPOs"), or companies with relatively small market capitalizations. IPOs and other types of investments may have a magnified performance impact on a Fund with a small asset base. A Fund may not experience similar performance as its assets grow. Janus Capital is the adviser to the Fund and the Janus Smart Portfolios (each of which is a "fund of funds" that primarily invests in other Janus Capital mutual funds). Because Janus Capital is the adviser to the Janus Smart Portfolios and the Fund, it is subject to certain potential conflicts of interest when allocating the assets of the Janus Smart Portfolios among such funds. Purchases and redemptions of Fund shares by a Janus Smart Portfolio due to reallocations or rebalancings may result in the Fund having to sell securities or invest cash when it otherwise would not do so. Such transactions could accelerate the realization of taxable income if sales of securities resulted in gains and could also increase the Fund's transaction costs. Large redemptions by a Janus Smart Portfolio may cause the Fund's expenses to increase due to a resulting smaller asset base. In addition, the Janus Smart Portfolios' portfolio manager, who also serves the role of Director of Risk Management and Performance of Janus Capital, has regular and continuous access to the holdings of the Fund as well as knowledge of, and potential impact on, investment strategies and techniques of the Fund. Janus Capital believes these potential conflicts may be mitigated through its compliance monitoring, including that of asset allocations by the portfolio manager. In addition, Janus Capital has retained an independent consultant to provide research and consulting services with respect to asset allocation and investments for the Janus Smart Portfolios. Principal investment strategies and risks 7 The officers and Trustees of the Fund may also serve as officers and Trustees of the Janus Smart Portfolios. Conflicts may arise as the officers and Trustees seek to fulfill their fiduciary responsibilities to both the Janus Smart Portfolios and the Fund. The Trustees intend to address any such conflicts as deemed appropriate. Janus Capital manages accounts which engage in short sales. The simultaneous management of long and short portfolios creates potential conflicts of interest, including the risk that short sale activity could adversely affect the market value of long positions (and vice versa), the risk arising from sequential orders in long and short positions, and the risks associated with receiving opposing orders at the same time. FREQUENTLY ASKED QUESTIONS ABOUT CERTAIN RISKS The following questions and answers are designed to help you better understand some of the risks of investing in the Fund. 1. HOW DOES THE FUND'S NONDIVERSIFICATION CLASSIFICATION AFFECT ITS RISK PROFILE? Diversification is a way to reduce risk by investing in a broad range of stocks or other securities. A fund that is classified as "nondiversified" has the ability to take larger positions in a smaller number of issuers than a fund that is classified as "diversified." This gives a nondiversified fund more flexibility to focus its investments in the most attractive companies identified by the investment personnel. However, because the appreciation or depreciation of a single stock may have a greater impact on the NAV of a nondiversified fund, its share price can be expected to fluctuate more than a comparable diversified fund. This fluctuation, if significant, may affect the performance of the Fund. Since the Fund normally invests primarily in a core portfolio of 20-30 common stocks, this risk may be increased. 2. WHAT IS "INDUSTRY RISK?" Industry risk is the possibility that a group of related stocks will decline in price due to industry-specific developments. Companies in the same or similar industries may share common characteristics and are more likely to react similarly to industry-specific market or economic developments. The Fund's investments, if any, in multiple companies in a particular industry increase the Fund's exposure to industry risk. 3. HOW COULD THE FUND'S INVESTMENTS IN FOREIGN SECURITIES AFFECT ITS PERFORMANCE? Unless otherwise limited by its specific investment policies, the Fund may invest without limit in foreign securities either indirectly (e.g., depositary receipts) or directly in foreign markets, including emerging markets. Investments in foreign securities, including those of foreign governments, may involve greater risks than investing in domestic securities because the Fund's performance may depend on 8 Janus Orion Fund prospectus factors other than the performance of a particular company. These factors include: - CURRENCY RISK. As long as the Fund holds a foreign security, its value will be affected by the value of the local currency relative to the U.S. dollar. When the Fund sells a foreign denominated security, its value may be worth less in U.S. dollars even if the security increases in value in its home country. U.S. dollar-denominated securities of foreign issuers may also be affected by currency risk due to the overall impact of exposure to the issuer's local currency. - POLITICAL AND ECONOMIC RISK. Foreign investments may be subject to heightened political and economic risks, particularly in emerging markets which may have relatively unstable governments, immature economic structures, national policies restricting investments by foreigners, different legal systems, and economies based on only a few industries. In some countries, there is the risk that the government may take over the assets or operations of a company or that the government may impose taxes or limits on the removal of the Fund's assets from that country. - REGULATORY RISK. There may be less government supervision of foreign markets. As a result, foreign issuers may not be subject to the uniform accounting, auditing, and financial reporting standards and practices applicable to domestic issuers and there may be less publicly available information about foreign issuers. - MARKET RISK. Foreign securities markets, particularly those of emerging market countries, may be less liquid and more volatile than domestic markets. Certain markets may require payment for securities before delivery and delays may be encountered in settling securities transactions. In some foreign markets, there may not be protection against failure by other parties to complete transactions. Such factors may hinder the Fund's ability to buy and sell emerging market securities in a timely manner, affecting the Fund's investment strategies and potentially affecting the value of the Fund. - TRANSACTION COSTS. Costs of buying, selling, and holding foreign securities, including brokerage, tax, and custody costs, may be higher than those involved in domestic transactions. 4. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN SECURITIES OF COMPANIES FROM EMERGING MARKET COUNTRIES? Within the parameters of its specific investment policies, the Fund may invest an unlimited amount of its assets in a company or companies from one or more "developing countries" or "emerging markets." Such countries include, but are not limited to, countries included in the MSCI Emerging Markets Index(SM). The Principal investment strategies and risks 9 Fund has at times invested a significant portion of its assets in emerging markets and may continue to do so. To the extent that the Fund invests a significant amount of its assets in one or more countries, returns and NAV may be affected to a large degree by events and economic conditions in such countries. A summary of the Fund's investments by country is contained in the Fund's shareholder report and in the Fund's Form N-Q filed with the SEC. In many developing markets, there is less government supervision and regulation of business and industry practices, stock exchanges, brokers, and listed companies than in more developed markets. The securities markets of many of the countries in which the Fund may invest may also be smaller, less liquid, and subject to greater price volatility than those in the United States. In the event of a default on any investments in foreign debt obligations, it may be more difficult for the Fund to obtain or to enforce a judgment against the issuers of such securities. The Fund may be subject to emerging markets risk to the extent that it invests in companies which are not considered to be from emerging markets, but which have customers, products, or transactions associated with emerging markets. 5. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN HIGH-YIELD/HIGH-RISK BONDS? High-yield/high-risk bonds (or "junk" bonds) are bonds rated below investment grade by the primary rating agencies such as Standard & Poor's Ratings Service ("Standard & Poor's"), Fitch, Inc. ("Fitch"), and Moody's Investors Service, Inc. ("Moody's") (i.e., BB+ or lower by Standard & Poor's and Fitch, or Ba or lower by Moody's) or are unrated bonds of similar quality. The value of lower quality bonds generally is more dependent on credit risk and default risk than investment grade bonds. Issuers of high-yield/high-risk bonds may not be as strong financially as those issuing bonds with higher credit ratings and are more vulnerable to real or perceived economic changes, political changes, or adverse developments specific to the issuer. In addition, the junk bond market can experience sudden and sharp price swings. The secondary market on which high-yield securities are traded may be less liquid than the market for investment grade securities. The lack of a liquid secondary market may have an adverse impact on the market price of the security. When secondary markets for high-yield securities are less liquid than the market for investment grade securities, it also may be more difficult to value the securities because valuation may require more research, and elements of judgment may play a larger role in the valuation because there is less reliable, objective data available. Please refer to the "Explanation of Rating Categories" section of the Statement of Additional Information for a description of bond rating categories. 10 Janus Orion Fund prospectus 6. HOW DOES THE FUND TRY TO REDUCE RISK? The Fund may use futures, options, swap agreements, and other derivative instruments individually or in combination to "hedge" or protect its portfolio from adverse movements in securities prices and interest rates. The Fund may also use a variety of currency hedging techniques, including the use of forward currency contracts, to manage currency risk. There is no guarantee that derivative investments will benefit the Fund. The Fund's performance could be worse than if the Fund had not used such instruments. 7. THE FUND MAY INVEST IN SMALLER OR NEWER COMPANIES. DOES THIS CREATE ANY SPECIAL RISKS? Many attractive investment opportunities may be smaller, start-up companies offering emerging products or services. Smaller or newer companies may suffer more significant losses as well as realize more substantial growth than larger or more established issuers because they may lack depth of management, be unable to generate funds necessary for growth or potential development, or be developing or marketing new products or services for which markets are not yet established and may never become established. In addition, such companies may be insignificant factors in their industries and may become subject to intense competition from larger or more established companies. Securities of smaller or newer companies may have more limited trading markets than the markets for securities of larger or more established issuers, or may not be publicly traded at all, and may be subject to wide price fluctuations. Investments in such companies tend to be more volatile and somewhat more speculative. GENERAL PORTFOLIO POLICIES In investing its portfolio assets, the Fund will follow the general policies listed below. Except for the Fund's policies with respect to investments in illiquid securities and borrowing, the percentage limitations included in these policies and elsewhere in this Prospectus normally apply only at the time of purchase of a security. So, for example, if the Fund exceeds a limit as a result of market fluctuations or the sale of other securities, it will not be required to dispose of any securities. CASH POSITION The Fund may not always stay fully invested in stocks and bonds. For example, when the Fund's investment personnel believe that market conditions are unfavorable for profitable investing, or when they are otherwise unable to locate attractive investment opportunities, the Fund's cash or similar investments may increase. In other words, cash or similar investments generally are a residual - they represent the assets that remain after the Fund has committed available assets to desirable investment opportunities. When the Fund's investments in Principal investment strategies and risks 11 cash or similar investments increase, it may not participate in market advances or declines to the same extent that it would if the Fund remained more fully invested in stocks or bonds. In addition, the Fund may temporarily increase its cash position under certain unusual circumstances, such as to protect its assets or maintain liquidity in certain circumstances, for example, to meet unusually large redemptions. The Fund's cash position may also increase temporarily due to unusually large cash inflows. Under unusual circumstances such as these, the Fund may invest up to 100% of its assets in cash or similar investments. In this case, the Fund may not achieve its investment objective. OTHER TYPES OF INVESTMENTS Unless otherwise stated within its specific investment policies, the Fund may also invest in other types of domestic and foreign securities and use other investment strategies, as described in the "Glossary of Investment Terms." These securities and strategies are not principal investment strategies of the Fund. If successful, they may benefit the Fund by earning a return on the Fund's assets or reducing risk; however, they may not achieve the Fund's objective. These securities and strategies may include: - debt securities - indexed/structured securities - high-yield/high-risk bonds (35% or less of the Fund's assets) - options, futures, forwards, swap agreements, participatory notes, exchange- traded funds, and other types of derivatives individually or in combination for hedging purposes or for nonhedging purposes such as seeking to enhance return; such techniques may also be used to gain exposure to the market pending investment of cash balances or to meet liquidity needs - short sales "against the box" and "naked" short sales (no more than 8% of the Fund's assets may be invested in naked short sales) - securities purchased on a when-issued, delayed delivery, or forward commitment basis ILLIQUID INVESTMENTS The Fund may invest up to 15% of its net assets in illiquid investments. An illiquid investment is a security or other position that cannot be disposed of quickly in the normal course of business. For example, some securities are not registered under U.S. securities laws and cannot be sold to the U.S. public because of SEC regulations (these are known as "restricted securities"). Under 12 Janus Orion Fund prospectus procedures adopted by the Fund's Trustees, certain restricted securities may be deemed liquid, and will not be counted toward this 15% limit. FOREIGN SECURITIES Unless otherwise stated within its specific investment policies, the Fund may invest without limit in foreign equity and debt securities. The Fund may invest directly in foreign securities denominated in a foreign currency and not publicly traded in the United States. Other ways of investing in foreign securities include depositary receipts or shares and passive foreign investment companies. SPECIAL SITUATIONS The Fund may invest in companies that demonstrate special situations or turnarounds, meaning companies that have experienced significant business problems but are believed to have favorable prospects for recovery. For example, a special situation or turnaround may arise when, in the opinion of the Fund's investment personnel, the securities of a particular issuer will be recognized and appreciate in value due to a specific development with respect to that issuer. Special situations may include significant changes in a company's allocation of its existing capital, a restructuring of assets, or a redirection of free cash flow. For example, issuers undergoing significant capital changes may include companies involved in spin-offs, sales of divisions, mergers or acquisitions, companies emerging from bankruptcy, or companies initiating large changes in their debt to equity ratio. Developments creating a special situation might include, among others, a new product or process, a technological breakthrough, a management change or other extraordinary corporate event, or differences in market supply of and demand for the security. The Fund's performance could suffer if the anticipated development in a "special situation" investment does not occur or does not attract the expected attention. SECURITIES LENDING The Fund may seek to earn additional income through securities lending. The Funds may lend its portfolio securities to parties (typically brokers or other financial institutions) who need to borrow securities in order to complete certain transactions such as covering short sales, avoiding failures to deliver securities, or completing arbitrage activities. There is a risk of delay in recovering a loaned security and/or a risk of loss in collateral rights if the borrower fails financially. PORTFOLIO TURNOVER In general, the Fund intends to purchase securities for long-term investment, although, to a limited extent, the Fund may purchase securities in anticipation of relatively short-term price gains. Short-term transactions may also result from liquidity needs, securities having reached a price or yield objective, changes in interest rates or the credit standing of an issuer, or by reason of economic or Principal investment strategies and risks 13 other developments not foreseen at the time of the investment decision. The Fund may also sell one security and simultaneously purchase the same or a comparable security to take advantage of short-term differentials in bond yields or securities prices. Portfolio turnover is affected by market conditions, changes in the size of the Fund, the nature of the Fund's investments, and the investment style of the investment personnel. Changes are made in the Fund's portfolio whenever the investment personnel believe such changes are desirable. Portfolio turnover rates are generally not a factor in making buy and sell decisions. Increased portfolio turnover may result in higher costs for brokerage commissions, dealer mark-ups, and other transaction costs and may also result in taxable capital gains. Higher costs associated with increased portfolio turnover may offset gains in the Fund's performance. The "Financial Highlights" section of this Prospectus shows the Fund's historical turnover rates. 14 Janus Orion Fund prospectus JANUS ORION FUND Shareholder's Manual This Shareholder's Manual is for those shareholders investing directly with the Fund. This section will help you become familiar with the different types of accounts you can establish with Janus. It also explains in detail the wide array of services and features you can establish on your account, as well as describes account policies and fees that may apply to your account. Account policies (including fees), services, and features may be modified or discontinued without shareholder approval or prior notice. (JANUS LOGO) DOING BUSINESS WITH JANUS -------------------------------------------------------------------------------- ONLINE - www.janus.com - 24 HOURS A DAY, 7 DAYS A WEEK -------------------------------------------------------------------------------- ON www.janus.com* YOU CAN: - Open the following types of accounts: individual, joint, UGMA/UTMA, Traditional and Roth IRAs, Simplified Employee Pension ("SEP") IRAs, and Coverdell Education Savings Accounts - Review your account or complete portfolio - Buy, exchange, and sell Funds - View your personalized performance - Obtain Fund information and performance - Update personal information - Receive electronic daily, quarterly, and year-end statements, semiannual and annual reports, prospectuses, and tax forms * Certain account or transaction types may be restricted from being processed through www.janus.com. If you would like more information about these restrictions, please contact a Janus representative. JANUS XPRESSLINE(TM) 1-888-979-7737 - 24-HOUR AUTOMATED PHONE SYSTEM JANUS REPRESENTATIVES 1-800-525-3713 TDD For the speech and hearing impaired. 1-800-525-0056 MAILING ADDRESS Janus P.O. Box 173375 Denver, CO 80217-3375 FOR OVERNIGHT MAIL Janus 720 S. Colorado Blvd., Suite 290A Denver, CO 80246-1929 16 Janus Orion Fund prospectus MINIMUM INVESTMENTS* To open a new regular Fund account $2,500 To open a new UGMA/UTMA account, Coverdell Education Savings Account, or a retirement Fund account - without an automatic investment program $1,000 - with an automatic investment program of $100 per month $ 500 To add to any existing type of Fund account $ 100
* The Fund reserves the right to change the amount of these minimums from time to time or to waive them in whole or in part. Participants in certain retirement plans, including but not limited to, 403(b)(7) accounts, Janus prototype Money Purchase Pension and Profit Sharing plans, SEP IRAs, SAR SEP IRAs, or outside qualified retirement plans, may not be subject to the stated minimums. Employees of Janus Capital, its wholly-owned subsidiaries, and Enhanced Investment Technologies, LLC (INTECH) may open Fund accounts for $100. MINIMUM INVESTMENT REQUIREMENTS Due to the proportionately higher costs of maintaining small accounts, the Fund reserves the right to deduct an annual $25 minimum balance fee per Fund account with values below the minimums described under "Minimum Investments" or to close Fund accounts valued at less than $100. This policy may not apply to accounts that fall below the minimums solely as a result of market value fluctuations or to those accounts not subject to a minimum investment requirement. The fee or account closure will occur during the fourth quarter of each calendar year. You may receive written notice before we charge the $25 fee or close your account so that you may increase your account balance to the required minimum. Please note that you may incur a tax liability as a result of the fee being charged or the redemption. TYPES OF ACCOUNT OWNERSHIP Please refer to www.janus.com or an account application for specific requirements to open and maintain an account. INDIVIDUAL OR JOINT OWNERSHIP Individual accounts are owned by one person. Joint accounts have two or more owners. TRUST An established trust can open an account. The names of each trustee, the name of the trust, and the date of the trust agreement must be included on the application. Shareholder's manual 17 BUSINESS ACCOUNTS Corporations and partnerships may also open an account. The application must be signed by an authorized officer of the corporation or a general partner of the partnership. TAX-DEFERRED ACCOUNTS Please refer to www.janus.com or an account application for specific requirements to open and maintain an account. Certain tax-deferred accounts can only be opened and maintained via written request. Please contact a Janus representative for more information. If you are eligible, you may set up one or more tax-deferred accounts. A tax- deferred account allows you to shelter your investment income and capital gains from current income taxes. A contribution to certain of these plans may also be tax deductible. The types of tax-deferred accounts that may be opened with Janus are described below. Investors should consult their tax adviser or legal counsel before selecting a tax-deferred account. You may initiate a rollover or a transfer of assets from certain tax-deferred accounts via www.janus.com. INVESTING FOR YOUR RETIREMENT Please visit www.janus.com or call a Janus representative for more complete information regarding the different types of IRAs. Distributions from these plans may be subject to income tax and to an additional tax if withdrawn prior to age 59 1/2 or used for a nonqualifying purpose. TRADITIONAL AND ROTH IRAS Both IRAs allow most individuals with earned income to contribute up to the lesser of $4,000 or 100% of compensation for tax years 2005 and 2006. In addition, for the 2005 tax year IRA holders age 50 or older may contribute $500 more than these limits; and for the 2006 tax year IRA holders age 50 or older may contribute $1,000 more than these limits. SIMPLIFIED EMPLOYEE PENSION (SEP) IRAS This plan allows small business owners (including sole proprietors) to make tax-deductible contributions for themselves and any eligible employee(s). A SEP requires an IRA (a SEP-IRA) to be set up for each SEP participant. PROFIT SHARING OR MONEY PURCHASE PENSION PLAN These plans are open to corporations, partnerships, and small business owners (including sole proprietors) for the benefit of their employees and themselves. You may only open and maintain this type of account via written request. Please contact a Janus representative for more information. 18 Janus Orion Fund prospectus SECTION 403(b)(7) PLAN Employees of educational organizations or other qualifying tax-exempt organizations may be eligible to participate in a Section 403(b)(7) plan. You may only open and maintain this type of account via written request. Please contact a Janus representative for more information. ACCOUNTS FOR THE BENEFIT OF A CHILD CUSTODIAL ACCOUNTS (UGMA OR UTMA) An UGMA/UTMA account is a custodial account managed for the benefit of a minor. COVERDELL EDUCATION SAVINGS ACCOUNT This plan allows individuals, subject to certain income limitations, to contribute up to $2,000 annually on behalf of any child under the age of 18. Contributions are also allowed on behalf of children with special needs beyond age 18. Distributions are generally subject to income tax if not used for qualified education expenses. Please refer to the chart on the following pages for information on opening an account and conducting business with Janus. With certain limited exceptions, the Fund is available only to U.S. citizens or residents. Shareholder's manual 19 TO OPEN AN ACCOUNT OR BUY SHARES Certain tax-deferred accounts can only be opened and maintained via written request. Please contact a Janus representative for more information. ONLINE AT www.janus.com ------------------------------------------------------------------------------ - You may open a new Fund account or you may buy shares in an existing Fund account. You may elect to have Janus electronically withdraw funds from your designated bank account. You may initiate a rollover or a transfer of assets from certain tax-deferred accounts via www.janus.com. Janus.com will provide real-time confirmation of your transaction. BY TELEPHONE ------------------------------------------------------------------------------ - For an existing account, you may use Janus XpressLine(TM) to buy shares 24 hours a day, or you may call a Janus representative during normal business hours. Janus will electronically withdraw funds from your designated bank account. - You may also buy shares by wiring money from your bank account to your Fund account. For wiring instructions, call a Janus representative. BY MAIL/IN WRITING ------------------------------------------------------------------------------ - To open your Fund account, complete and sign the appropriate application. Make your check payable to Janus or elect a one-time electronic withdrawal from your bank account as noted on the appropriate application. - To buy additional shares, complete the remittance slip accompanying your confirmation statement. If you are making a purchase into a retirement account, please indicate whether the purchase is a rollover or a current or prior year contribution. Send your check and remittance slip or written instructions to the address listed on the slip. BY AUTOMATED INVESTMENTS ------------------------------------------------------------------------------ - To buy additional shares through the Automatic Investment Program, you select the frequency with which your money ($100 minimum) will be electronically transferred from your bank account to your Fund account. Certain tax-deferred accounts are not eligible for automated investments. - You may buy additional shares using Payroll Deduction if your employer can initiate this type of transaction. You may have all or a portion of your paycheck ($100 minimum) invested directly into your Fund account. ------------------------------------------------------------------------------- Note: For more information, refer to "Paying for Shares." 20 Janus Orion Fund prospectus TO EXCHANGE SHARES TO SELL SHARES -------------------------------- -------------------------------- ONLINE AT www.janus.com ONLINE AT www.janus.com -------------------------------- -------------------------------- - Exchanges may be made online - Redemptions may be made online at www.janus.com. at www.janus.com. BY TELEPHONE BY TELEPHONE -------------------------------- -------------------------------- - Generally all accounts are - Generally all accounts are automatically eligible to automatically eligible to sell exchange shares by telephone. shares by telephone. To sell To exchange all or a portion all or a portion of your of your shares into any other shares, call Janus available Janus fund, call XpressLine(TM) or a Janus Janus XpressLine(TM) or a representative. The Fund Janus representative. reserves the right to limit the dollar amount that you may redeem from your account by telephone. BY MAIL/IN WRITING BY MAIL/IN WRITING -------------------------------- -------------------------------- - To request an exchange in - To request a redemption in writing, please follow the writing, please follow the instructions in "Written instructions in "Written Instructions." Instructions." BY SYSTEMATIC EXCHANGE BY SYSTEMATIC REDEMPTION -------------------------------- -------------------------------- - You determine the amount of - This program allows you to money you would like automati- sell shares worth a specific cally exchanged from one Fund dollar amount from your Fund account to another on any day account on a regular basis. of the month. -------------------------------- -------------------------------- Note: For more information, Note: For more information, refer to "Exchanges." refer to "Payment of Redemption Proceeds."
Shareholder's manual 21 PAYING FOR SHARES Please note the following when purchasing shares: - Cash, credit cards, third party checks (with certain limited exceptions), travelers cheques, credit card checks, or money orders will not be accepted. - All purchases must be made in U.S. dollars and checks must be drawn on U.S. banks or an accepted Canadian bank. - When purchasing shares through the Automatic Investment Program, if no date or dollar amount is specified on your application, investments of $100 will be made on the 20th of each month. Your first automatic investment may take up to two weeks to establish. If the balance in the Janus fund account you are buying into falls to zero as the result of a redemption or exchange, your Automatic Investment Program will be discontinued. - We may make additional attempts to debit your predesignated bank account for automated investments that initially fail. You are liable for any costs associated with these additional attempts. If your automated investment fails, you may purchase shares of the Fund by submitting good funds via another method accepted by the Fund (e.g., by wire transfer). In this case, your purchase will be processed at the next NAV determined after we receive good funds, not at the NAV available as of the date of the original request. - The Fund reserves the right to reject any purchase order, including exchange purchases, for any reason. The Fund is not intended for excessive trading. For more information about the Fund's policy on excessive trading, see "Excessive Trading." - If all or a portion of a purchase is received for investment without a specific fund designation, for investment in one of our closed funds, or for investment in a fund that is not yet available for public sale, the undesignated amount or entire investment, as applicable, will be invested in the Janus Money Market Fund-Investor Shares ("Money Market Fund"). For investments without a specific fund designation, where you own a single Fund account with a current balance greater than zero, the investment will be applied to that Fund account. For investments without a specific fund designation, where you own two or more Fund accounts with current balances greater than zero, and for investments in closed funds, unless you later direct Janus to (i) buy shares of another Janus fund or (ii) sell shares of the Money Market Fund and return the proceeds (including any dividends earned) to you, Janus will treat your inaction as approval of the purchase of the Money Market Fund. If you hold shares of a closed fund and submit an order directly to Janus for your account in that closed fund, your account must be open and your order must clearly indicate that you are currently a shareholder of the closed fund, or your money will be invested in the Money Market Fund. If you submit an order to buy shares of a fund 22 Janus Orion Fund prospectus that is not yet available for investment (during a subscription period), your investment will be held in the Money Market Fund until the new fund's commencement of operations. At that time, your investment (including any dividends) will be automatically exchanged from the Money Market Fund to the new fund. All orders for purchase, exchange, or sale will receive the NAV as described under "Policies in Relation to Transactions." - For Fund purchases by check, if your check does not clear for any reason, your purchase will be cancelled. - If your purchase is cancelled for any reason, you will be responsible for any losses or fees imposed by your bank and may be responsible for losses that may be incurred as a result of any decline in the value of the cancelled purchase. EXCHANGES Please note the following when exchanging shares: - An exchange represents the sale of shares from one Fund and the purchase of shares of another Fund, which may produce a taxable gain or loss in a non- retirement account. - You may generally exchange shares of a Fund for shares of any fund in the Trust. - New Janus fund accounts established by exchange must be opened with $2,500 or the total account value if the value of the Janus fund account you are exchanging from is less than $2,500. - UGMA/UTMA accounts, Traditional or Roth IRAs, Simplified Employee Pension IRAs, and Coverdell Education Savings Accounts established by exchange must meet the minimum investment requirements previously described. If the value of the Janus fund account you are exchanging from is less than the stated minimum, you must exchange the entire balance. - Exchanges between existing Janus fund accounts must meet the $100 subsequent investment requirement. - For Systematic Exchanges, if no date is specified on your request, systematic exchanges will be made on the 20th of each month. You may establish this option for as little as $100 per exchange. If the balance in the Janus fund account you are exchanging from falls below the Systematic Exchange amount, all remaining shares will be exchanged and your Systematic Exchange Program will be discontinued. - The exchange privilege is not intended as a vehicle for short-term or excessive trading. You may make up to four round trips in the Fund in a 12-month Shareholder's manual 23 period, although the Fund at all times reserves the right to reject any exchange purchase for any reason without prior notice. Generally, a "round trip" is a redemption out of the Fund (by any means) followed by a purchase back into the Fund (by any means). Different restrictions may apply if you invest through an intermediary. The Fund will work with financial intermediaries to apply the Fund's exchange limit. However, the Fund may not always have the ability to monitor or enforce the trading activity in such accounts. For more information about the Fund's policy on excessive trading, see "Excessive Trading." - The Janus funds reserve the right to reject any exchange request and to modify or terminate the exchange privilege at any time. - With certain limited exceptions, exchanges between Janus fund accounts will be accepted only if the registrations are identical. If you are exchanging into a closed Janus fund, you will need to meet criteria for investing in the closed fund. For more information, see "Closed Fund Policies." - If the shares you are exchanging are held in certificate form, you must return the certificate to Janus prior to making any exchanges. Shares are no longer available in certificate form. Note: For the fastest and easiest way to exchange shares, log on to www.janus.com* 24 hours a day, 7 days a week. * Certain account types do not allow transactions via www.janus.com. For more information, access www.janus.com or refer to this Shareholder's Manual. EXCESSIVE TRADING EXCESSIVE TRADING POLICIES AND PROCEDURES The Board of Trustees has adopted policies and procedures with respect to short-term and excessive trading of Fund shares ("excessive trading"). The Fund is intended for long-term investment purposes only and the Fund will take reasonable steps to attempt to detect and deter excessive trading. Transactions placed in violation of the Fund's exchange limits or excessive trading policies may be cancelled or revoked by the Fund by the next business day following receipt by the Fund. The trading history of accounts determined to be under common ownership or control within any of the Janus funds may be considered in enforcing these policies and procedures. As described below, however, the Fund may not be able to identify all instances of excessive trading or completely eliminate the possibility of excessive trading. In particular, it may be difficult to identify excessive trading in certain omnibus accounts and other accounts traded through intermediaries. By their nature, omnibus accounts, in which purchases and sales of the Fund's shares by multiple investors are aggregated by the 24 Janus Orion Fund prospectus intermediary and presented to the Fund on a net basis, may effectively conceal the identity of individual investors and their transactions from the Fund and its agent. The Fund attempts to deter excessive trading through at least the following methods: - exchange limitations as described under "Exchanges;" - redemption fees as described under "Redemption Fee" (where applicable on certain Funds); and - fair valuation of securities as described under "Pricing of Fund Shares." The Fund monitors Fund share transactions, subject to the limitations described below. Generally, a purchase of the Fund's shares followed by the redemption of the Fund's shares within a 90-day period may result in enforcement of the Fund's excessive trading policies and procedures with respect to future purchase orders, provided that the Fund reserves the right to reject any purchase request as explained above. The Fund may suspend or permanently terminate the exchange privilege of any investor who makes more than four round trips (as defined under "Exchanges") in a Fund in a 12-month period and may bar future purchases into the Fund and any of the other Janus funds by such investor. The Fund's exchange limits and excessive trading policies generally do not apply to a money market fund, although money market funds at all times reserve the right to reject any purchase request (including exchange purchases) for any reason without prior notice; and transactions in the Janus funds by the Janus Smart Portfolios (each of which is a "fund of funds" that primarily invests in other Janus mutual funds). The Fund's Board of Trustees may approve from time to time a redemption fee to be imposed by any Janus fund, subject to 60 days' notice to shareholders of that fund. Investors who place transactions through the same financial intermediary on an omnibus basis may be deemed part of a group for the purpose of the Fund's excessive trading policies and procedures and may be rejected in whole or in part by the Fund. The Fund, however, cannot always identify or reasonably detect excessive trading that may be facilitated by financial intermediaries or made difficult to identify through the use of omnibus accounts by those intermediaries that transmit purchase, exchange, and redemption orders to the Fund, and thus the Fund may have difficulty curtailing such activity. Transactions accepted by a financial intermediary in violation of the Fund's excessive trading policies may be cancelled or revoked by the Fund by the next business day following receipt by the Fund. Shareholder's manual 25 In an attempt to detect and deter excessive trading in omnibus accounts, the Fund or its agent may require intermediaries to impose restrictions on the trading activity of accounts traded through those intermediaries. Such restrictions may include, but are not limited to, requiring that trades be placed by U.S. mail, prohibiting purchases for a designated period of time (typically 30 to 90 days) by investors who have recently redeemed Fund shares, requiring intermediaries to report information about customers who purchase and redeem large amounts, and similar restrictions. The Fund's ability to impose such restrictions with respect to accounts traded through particular intermediaries may vary depending on the systems capabilities, applicable contractual and legal restrictions, and cooperation of those intermediaries. Certain transactions in Fund shares, such as periodic rebalancing (no more frequently than quarterly) or those which are made pursuant to systematic purchase, exchange, or redemption programs generally do not raise excessive trading concerns and normally do not require application of the Fund's methods to detect and deter excessive trading. The Fund also reserves the right to reject any purchase request (including exchange purchases) by any investor or group of investors for any reason without prior notice, including, in particular, if the trading activity in the account(s) is deemed to be disruptive to the Fund. For example, the Fund may refuse a purchase order if the Fund's investment personnel believe they would be unable to invest the money effectively in accordance with the Fund's investment policies or the Fund would otherwise be adversely affected due to the size of the transaction, frequency of trading, or other factors. The Fund's policies and procedures regarding excessive trading may be modified at any time by the Fund's Board of Trustees. EXCESSIVE TRADING RISKS Excessive trading may present risks to the Fund's long-term shareholders. Excessive trading into and out of the Fund may disrupt portfolio investment strategies, may create taxable gains to remaining Fund shareholders, and may increase Fund expenses, all of which may negatively impact investment returns for all remaining shareholders, including long-term shareholders. A Fund that invests in foreign securities may be at a greater risk for excessive trading. Investors may attempt to take advantage of anticipated price movements in securities held by a Fund based on events occurring after the close of a foreign market that may not be reflected in the Fund's NAV (referred to as "price arbitrage"). Such arbitrage opportunities may also arise in a Fund which does not invest in foreign securities, for example, when trading in a security held by the Fund is halted and does not resume prior to the time the Fund calculates its 26 Janus Orion Fund prospectus NAV (referred to as "stale pricing"). Funds that hold thinly-traded securities, such as certain small-capitalization securities, may be subject to attempted use of arbitrage techniques. To the extent that a Fund's valuation of a security differs from the security's market value, short-term arbitrage traders may dilute the NAV of the Fund, which negatively impacts long-term shareholders. Although the Fund has adopted fair valuation policies and procedures intended to reduce the Fund's exposure to price arbitrage, stale pricing, and other potential pricing inefficiencies, under such circumstances there is potential for short-term arbitrage trades to dilute the value of Fund shares. Although the Fund takes steps to detect and deter excessive trading pursuant to the policies and procedures described in this Prospectus and approved by the Board of Trustees, there is no assurance that these policies and procedures will be effective in limiting excessive trading in all circumstances. For example, the Fund may be unable to completely eliminate the possibility of excessive trading in certain omnibus accounts and other accounts traded through intermediaries. Omnibus accounts may effectively conceal the identity of individual investors and their transactions from the Fund and its agent. This makes the Fund's identification of excessive trading transactions in the Fund through an omnibus account difficult and makes the elimination of excessive trading in the account impractical without the assistance of the intermediary. Although the Fund encourages intermediaries to take necessary actions to detect and deter excessive trading, some intermediaries may be unable or unwilling to do so, and accordingly, the Fund cannot eliminate completely the possibility of excessive trading. Shareholders that invest through an omnibus account should be aware that they may be subject to the policies and procedures of their financial intermediary with respect to excessive trading in the Fund. PAYMENT OF REDEMPTION PROCEEDS BY ELECTRONIC TRANSFER - Generally all accounts are automatically eligible for the electronic redemption option if bank information is provided. - NEXT DAY WIRE TRANSFER - Your redemption proceeds, less any applicable redemption fee, can be electronically transferred to your predesignated bank account on the next bank business day after receipt of your redemption request (wire transfer). Wire transfers will be charged a fee for each wire and your bank may charge an additional fee to receive the wire. - ACH (AUTOMATED CLEARING HOUSE) TRANSFER - Your redemption proceeds, less any applicable redemption fee, can be electronically transferred to your predesignated bank account on or about the second bank business day after receipt of your redemption request. There is no fee associated with this type of electronic transfer. Shareholder's manual 27 BY CHECK - Redemption proceeds, less any applicable redemption fee, will be sent to the shareholder(s) of record at the address of record within seven days after receipt of a valid redemption request. During the 10 days following an address change, requests for redemption checks to be sent to a new address require a signature guarantee. BY SYSTEMATIC REDEMPTION - If no date is specified on your request, systematic redemptions will be made on or about the 24th of each month. If the balance in the Janus fund account you are selling from falls to zero, your Systematic Redemption Program will be discontinued. GENERALLY, ORDERS TO SELL SHARES MAY BE INITIATED AT ANY TIME ON www.janus.com, BY TELEPHONE, OR IN WRITING. CERTAIN TAX-DEFERRED ACCOUNTS MAY REQUIRE A WRITTEN REQUEST. IF THE SHARES BEING SOLD WERE PURCHASED BY CHECK OR AUTOMATED INVESTMENT, THE FUND CAN DELAY THE PAYMENT OF YOUR SALE PROCEEDS FOR UP TO 15 DAYS FROM THE DAY OF PURCHASE TO ALLOW THE PURCHASE TO CLEAR. UNLESS YOU PROVIDE ALTERNATE INSTRUCTIONS, YOUR PROCEEDS WILL BE INVESTED IN THE INVESTOR SHARES CLASS OF JANUS MONEY MARKET FUND DURING THE 15-DAY HOLD PERIOD. Note: For the fastest and easiest way to redeem shares, log on to www.janus.com* 24 hours a day, 7 days a week. * Certain account types do not allow transactions via www.janus.com. For more information, access www.janus.com or refer to this Shareholder's Manual. WRITTEN INSTRUCTIONS To sell or exchange all or part of your shares in writing, your request should be sent to one of the addresses listed under "Doing Business with Janus." Please include the following information: - the name of the Janus fund(s) being sold or exchanged; - the account number(s); - the amount of money or number of shares being sold or exchanged; - the name(s) on the account; - the signature(s) of all registered account owners (see account application for signature requirements); and - your daytime telephone number. 28 Janus Orion Fund prospectus SIGNATURE GUARANTEE A SIGNATURE GUARANTEE IS REQUIRED if any of the following is applicable: - You request a redemption by check above a certain dollar amount. - You would like a check made payable to anyone other than the shareholder(s) of record. - You would like a check mailed to an address which has been changed within 10 days of the redemption request. - You would like a check mailed to an address other than the address of record. - You would like your redemption proceeds sent to a bank account other than a bank account of record. THE FUND RESERVES THE RIGHT TO REQUIRE A SIGNATURE GUARANTEE UNDER OTHER CIRCUMSTANCES OR TO REJECT OR DELAY A REDEMPTION ON CERTAIN LEGAL GROUNDS. A SIGNATURE GUARANTEE MAY BE REFUSED if any of the following is applicable: - It does not appear valid or in good form. - The transaction amount exceeds the surety bond limit of the signature guarantee. - The guarantee stamp has been reported as stolen, missing, or counterfeit. HOW TO OBTAIN A SIGNATURE GUARANTEE A signature guarantee assures that a signature is genuine. The signature guarantee protects shareholders from unauthorized account transfers. The following financial institutions may guarantee signatures: banks, savings and loan associations, trust companies, credit unions, broker-dealers, and member firms of a national securities exchange. Call your financial institution to see if they have the ability to guarantee a signature. A signature guarantee cannot be provided by a notary public. If you live outside the United States, a foreign bank properly authorized to do business in your country of residence or a U.S. consulate may be able to authenticate your signature. REDEMPTIONS IN-KIND Shares normally will be sold for cash, although the Fund retains the right to sell some or all of its shares in-kind under unusual circumstances, in order to protect the interests of remaining shareholders, or to accommodate a request by a particular shareholder that does not adversely affect the interest of the remaining shareholders, by delivery of securities selected from its assets at its Shareholder's manual 29 discretion. However, the Fund is required to redeem shares solely for cash up to the lesser of $250,000 or 1% of the NAV of the Fund during any 90-day period for any one shareholder. Should redemptions by any shareholder exceed such limitation, the Fund will have the option of redeeming the excess in cash or in-kind. In-kind payment means payment will be made in portfolio securities rather than cash. If this occurs, the redeeming shareholder might incur brokerage or other transaction costs to convert the securities to cash. PRICING OF FUND SHARES NAV DETERMINATION The per share NAV is computed by dividing the total value of the Fund's securities and other assets, less liabilities, by the total number of Fund shares outstanding. In the case of Funds with share classes, the NAV for each class is computed by dividing the total value of securities and other assets allocated to the class, less liabilities allocated to that class, by the total number of shares outstanding for the class. The Fund's NAV is calculated as of the close of the regular trading session of the New York Stock Exchange ("NYSE") (normally 4:00 p.m. New York time) each day that the NYSE is open ("business day"). However, the NAV may be calculated earlier if trading on the NYSE is restricted, or as permitted by the SEC. Because foreign securities markets may operate on days that are not business days in the United States, the value of the Fund's holdings may change on days when you will not be able to purchase or redeem the Fund's shares to the extent that Fund is invested in such markets. All purchases, exchanges, and redemptions will be duly processed at the NAV as described under "Policies in Relation to Transactions" after your request is received in good order by the Fund (or financial intermediary or plan sponsor, if applicable) or its agent. Securities held by the Fund are generally valued at market value. Certain short-term instruments maturing within 60 days or less are valued at amortized cost, which approximates market value. If a market quotation is not readily available or is deemed unreliable, or if an event that is expected to affect the value of a portfolio security occurs after the close of the principal exchange or market on which that security is traded, and before the close of the NYSE, the fair value of a security (except for short-term instruments maturing within 60 days or less) will be determined in good faith under policies and procedures established by and under the supervision of the Fund's Board of Trustees. Circumstances in which fair value pricing may be utilized include, but are not limited to: (i) when significant events occur which may affect the securities of a single issuer, such as mergers, bankruptcies, or significant issuer-specific developments; (ii) when significant events occur which may affect an entire market, such as natural disasters or significant governmental actions; and (iii) when non-significant events occur such as markets closing early or not opening, security trading halts, 30 Janus Orion Fund prospectus or pricing of nonvalued securities and restricted or nonpublic securities. The Fund may use a systematic fair valuation model provided by an independent pricing service to value foreign equity securities in order to adjust for stale pricing, which may occur between the close of certain foreign exchanges and of the NYSE. While fair value pricing may be more commonly used with foreign equity securities, it may also be used with, among other things, thinly-traded domestic securities or fixed-income securities. Due to the subjective nature of fair value pricing, the Fund's value for a particular security may be different from the last quoted market price. Fair value pricing may reduce arbitrage activity involving the frequent buying and selling of mutual fund shares by investors seeking to take advantage of a perceived lag between a change in the value of a Fund's portfolio securities and the reflection of such change in that Fund's NAV, as further described in the "Excessive Trading" section of this Prospectus. While funds that invest in foreign securities may be at a greater risk for arbitrage activity, such activity may also arise in funds which do not invest in foreign securities, for example, when trading in a security held by the Fund is halted and does not resume prior to the time the Fund calculates its NAV (referred to as "stale pricing"). Funds that hold thinly-traded securities, such as certain small-capitalization securities, may be subject to attempted use of arbitrage techniques. To the extent that the Fund's valuation of a security is different from the security's market value, short-term arbitrage traders may dilute the NAV of the Fund, which negatively impacts long-term shareholders. The Fund's fair value pricing and excessive trading policies and procedures may not completely eliminate short-term trading in certain omnibus accounts and other accounts traded through intermediaries. The value of the securities of other open-end funds held by the Fund, if any, will be calculated using the NAV of such underlying funds, and the prospectuses for such open-end funds explain the circumstances under which they use fair value pricing and the effects of using fair value pricing. POLICIES IN RELATION TO TRANSACTIONS EXCHANGES - Exchange requests between the Fund and other Janus funds (other than between Janus Money Market Fund and Janus Government Money Market Fund) must be received in good order by the Fund or its agent prior to the close of the regular trading session of the NYSE in order to receive that day's NAV. Exchange requests between Janus Money Market Fund and Janus Government Money Market Fund must be received in good order by a Fund or its agent prior to 5:00 p.m. (New York time) in order to receive that day's NAV. The money market funds reserve the right to require exchange requests prior to these times on days when the bond market or the NYSE close early. Shareholder's manual 31 OTHER TRANSACTIONS - With the exception of certain money market fund transactions (as described in the Janus Bond and Money Market Funds prospectus), all phone and written requests, including but not limited to, purchases by check or automated investment, wire transfers, and ACH transfer, must be received in good order by the Fund or its agent prior to the close of the regular trading session of the NYSE in order to receive the NAV calculated at that time. Transactions involving funds which pay dividends will generally begin to earn dividends, as applicable, on the first bank business day following the date of purchase. AVAILABILITY OF PORTFOLIO HOLDINGS INFORMATION The non-money market funds' full portfolio holdings (excluding cash equivalents, derivatives, and short positions), consisting of at least the names of the holdings, are generally available monthly, with a 30-day lag, on www.janus.com. They are posted to the website within approximately two business days after month-end. The money market funds' full portfolio holdings are generally available monthly, with no lag, on www.janus.com. They are posted to the website within approximately six business days after month-end. All of the funds' portfolio holdings remain available until the following month's information is posted. The funds' full portfolio holdings can be found on www.janus.com in Fund details under the Holdings & Details tab. In addition, the Fund's top portfolio holdings in order of position size and as a percentage of the total portfolio, are published monthly with a 30-day lag, and quarterly with a 15-day lag, on www.janus.com. The Fund discloses its top five portfolio holdings. Security breakdowns (such as industry, sector, regional, market capitalization, and asset allocation breakdowns, as applicable) for the Fund are published quarterly, with a 15-day lag, on www.janus.com. The Fund's top portfolio holdings, as well as the non-money market funds' security breakdowns, are posted to the website within approximately two business days after the end of the applicable period and remain available until the following period's information is posted. Specific portfolio level performance attribution information and statistics for the Fund will be made available to any person monthly upon request, with a 30-day lag, following the posting of the Fund's full portfolio holdings on www.janus.com. Notwithstanding the foregoing, Janus Capital may exclude from publication all or any portion of portfolio holdings or change the time periods of disclosure as deemed necessary to protect the interests of the Fund. A summary of the Fund's portfolio holdings disclosure policies and procedures, which includes a discussion of any exceptions, is contained in the Fund's Statement of Additional Information. 32 Janus Orion Fund prospectus Complete schedules of the Fund's portfolio holdings as of the end of the Fund's first and third fiscal quarters are filed with the SEC within 60 days of the end of such quarters on Form N-Q. The Fund's Form N-Q: (i) is available on the SEC's website at http://www.sec.gov; (ii) may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. (information on the Public Reference Room may be obtained by calling 1-800-SEC-0330); and (iii) is available without charge, upon request, by calling Janus at 1-800-525-3713 (toll free). Complete schedules of the Fund's portfolio holdings as of the end of the Fund's second and fourth fiscal quarters are included in the Fund's semiannual and annual reports which are filed with the SEC within 60 days of the end of such quarters. The semiannual reports are filed on Form type N-CSRS and the annual reports are filed on Form type N-CSR. Shareholder reports containing such portfolio holdings are delivered to shareholders and are also available at www.janus.com. SHAREHOLDER SERVICES AND ACCOUNT POLICIES TRANSACTIONS THROUGH PROCESSING ORGANIZATIONS You may buy or sell Fund shares through an organization that provides recordkeeping and consulting services to 401(k) plans or other employee benefit plans (a "Processing Organization"). Processing Organizations may charge you a fee for this service and may require different minimum initial and subsequent investments than the Fund. Processing Organizations may also impose other charges or restrictions different from those applicable to shareholders who invest in the Fund directly. A Processing Organization, rather than its customers, may be the shareholder of record of your shares. The Fund is not responsible for the failure of any Processing Organization to carry out its obligations to its customers. Certain Processing Organizations may receive compensation from Janus Capital or its affiliates, and certain Processing Organizations may receive compensation from the Fund for shareholder recordkeeping and similar services. TAXPAYER IDENTIFICATION NUMBER On the application or other appropriate forms, you may be asked to certify that your Social Security or employer identification number is correct and that you are not subject to backup withholding for failing to report income to the IRS. If you are subject to backup withholding, or you did not certify your taxpayer identification number, the IRS requires the Fund to withhold a certain percentage (at the currently applicable rate) of any dividends paid and redemption or exchange proceeds. In addition to this backup withholding, you may be subject to a $50 fee to reimburse the Fund for any penalty that the IRS may impose. Shareholder's manual 33 INVOLUNTARY REDEMPTIONS The Fund reserves the right to close an account if the shareholder is deemed to engage in activities which are illegal or otherwise believed to be detrimental to the Fund. This includes, but is not limited to, accounts that the Fund or its agent believe are engaged in market timing. Any time shares are redeemed in a taxable account, it is considered a taxable event. You are responsible for any tax liabilities associated with an involuntary redemption of your account. ONLINE AND TELEPHONE TRANSACTIONS You may initiate many transactions through www.janus.com or by calling Janus XpressLine(TM). You may also contact a Janus representative. Generally all new accounts automatically receive online and telephone transaction privileges including redemption privileges. If you do not want to receive these privileges, please visit www.janus.com or call a Janus representative. The Fund and its agents will not be responsible for any losses, costs, or expenses resulting from unauthorized transactions when reasonable procedures designed to verify the identity of the online user or caller are followed. Your account information should be kept private, and you should immediately review any account statements that you receive from Janus. Someone other than you could act on your account if they are able to provide the required identifying information. Contact Janus immediately about any transactions you believe to be unauthorized. Occasionally, we experience high call volumes due to unusual market activity or other events that may make it difficult for you to reach a Janus representative by telephone. If you are unable to reach a Janus representative by telephone, please consider visiting www.janus.com, calling Janus XpressLine(TM), or sending written instructions. DISTRIBUTIONS Generally, all income dividends and capital gains distributions will automatically be reinvested in your Fund account. If you wish to change your distribution option, please visit www.janus.com, call a Janus representative, or send a written request signed by the shareholder(s) of record. If you receive Fund distributions from an open non-retirement Fund account by check, and a distribution check sent to you at your address of record has been returned to Janus and you have failed to respond to follow up mailings from Janus, the distribution check will automatically be reinvested in your open Fund account at the next calculated NAV. Your non-retirement Fund account distribution checks will also be reinvested in your Fund account if you do not 34 Janus Orion Fund prospectus cash them within one year of the date they were written. No interest will accrue on amounts represented by uncashed distribution or redemption checks. TEMPORARY SUSPENSION OF SERVICES The Fund or its agents may, in case of emergency, temporarily suspend telephone transactions and other shareholder services. The Fund may postpone payment of redemption proceeds for up to seven calendar days. In addition, the Fund may suspend redemptions and/or postpone payment of redemption proceeds beyond seven calendar days when the New York Stock Exchange is closed or during emergency circumstances, as determined by the Securities and Exchange Commission. The exchange privilege may also be suspended in these circumstances. ADDRESS CHANGES For the easiest way to change the address on your account, visit www.janus.com. You may also call a Janus representative or send a written request signed by the shareholder(s) of record. Include the name of the Janus fund(s) you hold, the account number(s), the name(s) on the account, and both the old and new addresses. Certain options may be suspended for 10 days following an address change unless a signature guarantee is provided. REGISTRATION CHANGES To change the name on an account, the shares are generally transferred to a new account. In some cases, legal documentation may be required. Please visit www.janus.com or call a Janus representative for further instructions. BANK ACCOUNT CHANGES For the easiest way to change your bank account of record or add new bank account information to your account, visit www.janus.com. You may also send a written request signed by the shareholder(s) of record. Please note that you may change or add bank information online at www.janus.com for purchases only. Certain tax-deferred accounts may require a written notice and, in some instances, bank privileges may not be available. We cannot accept changes or additions to bank account redemption options online at www.janus.com or over the telephone. If the added bank account is a joint tenant/tenants in common account, at least one name on the bank account must match one name on the Fund account. Shareholder's manual 35 STATEMENTS, REPORTS, AND PROSPECTUSES We will send you quarterly confirmations of all transactions. You may elect on www.janus.com to discontinue delivery of your paper statements, and instead receive them online. In addition, on www.janus.com, the Fund will send you an immediate transaction confirmation statement after every non-systematic transaction. If you have not elected to receive online statements, your confirmation will be mailed within two days of the transaction. The Fund reserves the right to charge a fee for additional account statement requests. The Fund produces financial reports that include a complete list of the Fund's portfolio holdings semiannually, and updates its prospectus annually. You may elect to receive these reports and prospectus updates electronically on www.janus.com. Unless you instruct Janus otherwise by contacting a Janus representative, the Fund will mail only one report or prospectus to your household, even if more than one person in your household has a Fund account. This process is known as "householding," which reduces the amount of mail you receive and helps lower Fund expenses. If you decide that you no longer want the mailing of these documents to be combined with the other members of your household, please call a Janus representative or send a written request signed by the shareholder(s) of record. Individual copies will be sent within thirty (30) days after the Fund receives your instructions. 36 Janus Orion Fund prospectus MANAGEMENT OF THE FUND -------------------------------------------------------------------------------- INVESTMENT ADVISER Janus Capital Management LLC ("Janus Capital" or "Janus"), 151 Detroit Street, Denver, Colorado 80206-4805, is the investment adviser to the Fund and is responsible for the day-to-day management of the Fund's investment portfolio and furnishes continuous advice and recommendations concerning the Fund's investments. Janus Capital also provides certain administrative and other services, and is responsible for the other business affairs of the Fund. Janus Capital (together with its predecessors) has served as investment adviser to Janus Fund since 1970 and currently serves as investment adviser to all of the Janus funds, acts as subadviser for a number of private-label mutual funds, and provides separate account advisory services for institutional accounts. Janus Capital furnishes certain administrative, compliance, and accounting services for the Fund, and may be reimbursed by the Fund for its costs in providing those services. In addition, employees of Janus Capital and/or its affiliates serve as officers of the Trust and Janus Capital provides office space for the Fund and pays the salaries, fees, and expenses of all Fund officers and those Trustees who are considered interested persons of Janus Capital. From its own assets, Janus Capital or its affiliates may make payments based on gross sales, current assets, or other measures to selected brokerage firms or other financial intermediaries that were instrumental in the acquisition or retention of shareholders for the Janus funds. The amount of these payments is determined from time to time by Janus Capital, may be substantial, and may differ for different financial intermediaries. Eligibility requirements for such payments to institutional intermediaries are determined by Janus Capital and/or its affiliates. Janus Capital or its affiliates may pay fees, from their own assets, to brokerage firms, banks, financial advisers, retirement plan service providers, and other financial intermediaries for providing recordkeeping, subaccounting, transaction processing, and other shareholder or administrative services (including payments for processing transactions via National Securities Clearing Corporation ("NSCC") or other means) in connection with investments in the Janus funds. These fees are in addition to any fees that may be paid by the Janus funds for these types of or other services. In addition, Janus Capital or its affiliates may also share certain marketing expenses with, or pay for or sponsor informational meetings, seminars, client awareness events, support for marketing materials, or business building programs for such intermediaries to raise awareness of the Fund. The receipt of (or prospect of receiving) payments described above are not intended to, but may provide a financial intermediary and its salespersons with an incentive to favor sales of Janus funds' shares over sales of other mutual Management of the Fund 37 funds (or non-mutual fund investments) with respect to which the financial intermediary does not receive such payments or receives them in a lower amount. These payment arrangements will not, however, change the price an investor pays for shares or the amount that a Janus fund receives to invest on behalf of the investor. You may wish to consider whether such arrangements exist when evaluating any recommendations to purchase or sell shares of the Fund. MANAGEMENT EXPENSES The Fund pays Janus Capital an investment advisory fee which is calculated daily and paid monthly. The Fund's advisory agreement details the investment advisory fee and other expenses that the Fund must pay. The Fund incurs expenses not assumed by Janus Capital, including any transfer agent and custodian fees and expenses, legal and auditing fees, printing and mailing costs of sending reports and other information to existing shareholders, and Independent Trustees' fees and expenses. The Fund is subject to the following investment advisory fee schedule (expressed as an annual rate).
Average Daily Investment Advisory Net Assets Fee (%) Fund Name of Fund (annual rate) ------------------------------------------------------------------------------------------- Janus Orion Fund All Asset Levels 0.64 -------------------------------------------------------------------------------------------
A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory agreement is included in the Fund's Statement of Additional Information and will also be included in the annual and semiannual reports to shareholders. 38 Janus Orion Fund prospectus INVESTMENT PERSONNEL PORTFOLIO MANAGER RON SACHS -------------------------------------------------------------------------------- is Executive Vice President and Portfolio Manager of Janus Orion Fund, which he has managed since its inception. He is also Portfolio Manager of other Janus accounts. Mr. Sachs joined Janus Capital in 1996 as a research analyst. Mr. Sachs holds a Bachelor's degree (cum laude) in Economics from Princeton and a law degree from the University of Michigan. Mr. Sachs has earned the right to use the Chartered Financial Analyst designation. Information about the Fund's investment personnel's compensation structure, other accounts managed by the investment personnel, and the investment personnel's range of ownership of securities in the Fund, is included in the Fund's Statement of Additional Information. Management of the Fund 39 OTHER INFORMATION -------------------------------------------------------------------------------- CLOSED FUND POLICIES The Fund may discontinue sales of its shares to new investors if its management and the Trustees believe that continued sales may adversely affect the Fund's ability to achieve its investment objective. If sales of the Fund are discontinued to new investors, it is expected that existing shareholders invested in the Fund would be permitted to continue to purchase shares through its existing Fund accounts and to reinvest any dividends or capital gains distributions in such accounts, absent highly unusual circumstances. In addition, it is expected that existing or new participants in employer-sponsored retirement plans, including employees of Janus Capital Group Inc. ("JCGI") and any of its subsidiaries covered under the JCGI retirement plan, that currently offer the Fund as an investment option would be able to direct contributions to the Fund through their plan, regardless of whether they invested in such fund prior to its closing. In addition, in the case of certain mergers or reorganizations, retirement plans would be able to add a closed fund as an investment option and sponsors of certain wrap programs with existing accounts in the Fund would be able to continue to invest in the Fund on behalf of new customers. Such mergers, reorganizations, acquisitions, or other business combinations are those in which one or more companies involved in such transaction currently offers the Fund as an investment option, and any company that as a result of such transaction becomes affiliated with the company currently offering the Fund (as a parent company, subsidiary, sister company, or otherwise). Such companies may request to add the Fund as an investment option under its retirement plan. In addition, new accounts may be permitted in the closed Fund for certain plans and programs offered in connection with employer-sponsored retirement plans where the retirement plan has an existing account in the closed Fund. Requests will be reviewed by management on an individual basis, taking into consideration whether the addition of the Fund may negatively impact existing Fund shareholders. Janus Capital encourages its employees, particularly members of the investment team, to own shares of the Janus funds. Accordingly, upon prior approval of Janus Capital's senior management team, members of the Janus investment team may open new accounts in a closed fund. Additional information regarding general policies and exceptions can be found in the closed funds' prospectuses. PENDING LEGAL MATTERS In the fall of 2003, the Securities and Exchange Commission ("SEC"), the Office of the New York State Attorney General ("NYAG"), the Colorado Attorney General ("COAG"), and the Colorado Division of Securities ("CDS") announced that they were investigating alleged frequent trading practices in the mutual fund industry. On August 18, 2004, Janus Capital announced that it had reached final 40 Janus Orion Fund prospectus settlements with the SEC, the NYAG, the COAG, and the CDS related to such regulators' investigations into Janus Capital's frequent trading arrangements. A number of civil lawsuits were brought against Janus Capital and certain of its affiliates, the Janus funds, and related entities and individuals based on allegations similar to those announced by the above regulators and were filed in several state and federal jurisdictions. Such lawsuits alleged a variety of theories for recovery including, but not limited to, the federal securities laws, other federal statutes (including ERISA), and various common law doctrines. The Judicial Panel on Multidistrict Litigation transferred these actions to the U.S. District Court for the District of Maryland (the "Court") for coordinated proceedings. On September 29, 2004, five consolidated amended complaints were filed in that Court that generally include: (i) claims by a putative class of investors in the Janus funds asserting claims on behalf of the investor class; (ii) derivative claims by investors in the Janus funds ostensibly on behalf of the Janus funds; (iii) claims on behalf of participants in the Janus 401(k) plan; (iv) claims brought on behalf of shareholders of Janus Capital Group Inc. ("JCGI") on a derivative basis against the Board of Directors of JCGI; and (v) claims by a putative class of shareholders of JCGI asserting claims on behalf of the shareholders. Each of the five complaints initially named JCGI and/or Janus Capital as a defendant. In addition, the following were also named as defendants in one or more of the actions: Janus Investment Fund ("JIF"), Janus Aspen Series ("JAS"), Janus Adviser Series ("JAD"), Janus Distributors LLC, Enhanced Investment Technologies, LLC ("INTECH"), Bay Isle Financial LLC ("Bay Isle"), Perkins, Wolf, McDonnell and Company, LLC ("Perkins"), the Advisory Committee of the Janus 401(k) plan, and the current or former directors of JCGI. On August 25, 2005, the Court entered orders dismissing most of the claims asserted against Janus Capital and its affiliates by fund investors (actions (i) and (ii) described above), except certain claims under Section 10(b) of the Securities Exchange Act of 1934 and under Section 36(b) of the Investment Company Act of 1940. As a result, JCGI, Janus Capital, the Advisory Committee of the Janus 401(k) plan, and the current or former directors of JCGI are the remaining defendants in one or more of the actions. The complaint in the 401(k) plan class action (action (iii) described above) was voluntarily dismissed, but was refiled using a new named plaintiff and asserting claims similar to the initial complaint. The Attorney General's Office for the State of West Virginia filed a separate market timing related civil action against Janus Capital and several other non-affiliated mutual fund companies, claiming violations under the West Virginia Consumer Credit and Protection Act. The civil action requests certain monetary penalties, among other relief. This action has been removed to federal court and transferred to the Multidistrict Litigation case in the U.S. District Court of Other information 41 Baltimore, Maryland described above. In addition, the Auditor of the State of West Virginia, in his capacity as securities commissioner, has issued an order indicating an intent to initiate administrative proceedings against most of the defendants in the market timing cases (including Janus Capital) and seeking disgorgement and other monetary relief based on similar market timing allegations. In addition to the "market timing" actions described above, Janus Capital is a defendant in a consolidated lawsuit in the U.S. District Court for the District of Colorado challenging the investment advisory fees charged by Janus Capital to certain Janus funds. The action was filed in 2004 by fund investors asserting breach of fiduciary duty under Section 36(b) of the Investment Company Act of 1940. The plaintiffs seek declaratory and injunctive relief and an unspecified amount of damages. In 2001, Janus Capital's predecessor was also named as a defendant in a class action suit in the U.S. District Court for the Southern District of New York, alleging that certain underwriting firms and institutional investors violated antitrust laws in connection with initial public offerings. The U.S. District Court dismissed the plaintiff's antitrust claims in November 2003, however, the U.S. Court of Appeals vacated that decision and remanded it for further proceedings. Additional lawsuits may be filed against certain of the Janus funds, Janus Capital, and related parties in the future. Janus Capital does not currently believe that these pending actions will materially affect its ability to continue providing services it has agreed to provide to the Janus funds. DISTRIBUTION OF THE FUND The Fund is distributed by Janus Distributors LLC, which is a member of the National Association of Securities Dealers, Inc. ("NASD"). To obtain information about NASD member firms and their associated persons, you may contact NASD Regulation, Inc. at www.nasdr.com, or the Public Disclosure Hotline at 800-289-9999. An investor brochure containing information describing the Public Disclosure Program is available from NASD Regulation, Inc. 42 Janus Orion Fund prospectus DISTRIBUTIONS AND TAXES -------------------------------------------------------------------------------- DISTRIBUTIONS To avoid taxation of the Fund, the Internal Revenue Code requires the Fund to distribute all or substantially all of its net investment income and any net capital gains realized on its investments at least annually. The Fund's income from certain dividends, interest, and any net realized short-term capital gains are paid to shareholders as ordinary income dividends. Certain dividend income may be reported to shareholders as "qualified dividend income," which is generally subject to reduced rates of taxation. Net realized long-term capital gains are paid to shareholders as capital gains distributions, regardless of how long you have held shares of the Fund. Dividends and capital gains distributions are normally declared and distributed in December. If necessary, dividends and net capital gains may be distributed at other times as well. HOW DISTRIBUTIONS AFFECT THE FUND'S NAV Distributions are paid to shareholders as of the record date of a distribution of the Fund, regardless of how long the shares have been held. Undistributed dividends and net capital gains are included in the Fund's daily NAV. The share price of the Fund drops by the amount of the distribution, net of any subsequent market fluctuations. For example, assume that on December 31, the Fund declared a dividend in the amount of $0.25 per share. If the Fund's share price was $10.00 on December 30, the Fund's share price on December 31 would be $9.75, barring market fluctuations. You should be aware that distributions from a taxable mutual fund do not increase the value of your investment and may create income tax obligations. "BUYING A DIVIDEND" If you purchase shares of the Fund just before a distribution, you will pay the full price for the shares and receive a portion of the purchase price back as a taxable distribution. This is referred to as "buying a dividend." In the above example, if you bought shares on December 30, you would have paid $10.00 per share. On December 31, the Fund would pay you $0.25 per share as a dividend and your shares would now be worth $9.75 per share. Unless your account is set up as a tax-deferred account, dividends paid to you would be included in your gross income for tax purposes, even though you may not have participated in the increase in NAV of the Fund, whether or not you reinvested the dividends. Before buying shares of the Fund close to year-end, you should consult with your tax adviser as to potential tax consequences of any distributions that may be paid shortly after purchase. Distributions and taxes 43 DISTRIBUTION OPTIONS When you open an account it will automatically provide for reinvestment of all distributions. If you have a non-retirement account, you may change your distribution option at any time by logging on to www.janus.com, by calling a Janus representative, or by writing the Fund at one of the addresses listed in the Shareholder's Manual section of this Prospectus. The Fund offers the following options: REINVESTMENT OPTION. You may reinvest your income dividends and capital gains distributions in additional shares. CASH OPTION. You may receive your income dividends and capital gains distributions in cash. REINVEST AND CASH OPTION. You may receive either your income dividends or capital gains distributions in cash and reinvest the other in additional shares. REDIRECT OPTION. You may direct your dividends or capital gains to purchase shares of another Janus fund. The Fund reserves the right to reinvest into your open non-retirement account undeliverable and uncashed dividend and distribution checks that remain outstanding for one year in shares of the Fund at the NAV next computed after the check is cancelled. Subsequent distributions may also be reinvested. TAXES As with any investment, you should consider the tax consequences of investing in the Fund. Any time you sell or exchange shares of a fund in a taxable account, it is considered a taxable event. For federal income tax purposes, an exchange is treated the same as a sale. Depending on the purchase price and the sale price, you may have a gain or loss on the transaction; whether long-term or short-term depends on how long you owned the shares. Any tax liabilities generated by your transactions are your responsibility. The following discussion does not apply to qualified tax-deferred accounts or other non-taxable entities, nor is it a complete analysis of the federal income tax implications of investing in the Fund. You should consult your own tax adviser if you have any questions. Additionally, state or local taxes may apply to your investment, depending upon the laws of your state of residence. TAXES ON DISTRIBUTIONS Dividends and distributions of the Fund are subject to federal income tax, regardless of whether the distribution is made in cash or reinvested in additional shares of the Fund. When gains from the sale of a security held by the Fund are paid to shareholders, the rate at which the gain will be taxed to shareholders 44 Janus Orion Fund prospectus depends on the length of time the Fund held the security. In certain states, a portion of the dividends and distributions (depending on the sources of the Fund's income) may be exempt from state and local taxes. The Fund's dividends and capital gains are distributed to (and may be taxable to) those persons who are shareholders of the Fund at the record date of such payments. As a result, although the Fund's total net income and net realized gain are the results of its operations, the per share amount distributed or taxable to shareholders is affected by the number of Fund shares outstanding at the record date. Account tax information will be made available to shareholders on or before January 31st of each year. Information regarding dividends and distributions may also be reported to the Internal Revenue Service. The Fund may be required to withhold U.S. federal income tax on all taxable distributions and redemptions payable to shareholders who fail to provide their correct taxpayer identification number, fail to make certain required certifications, or who have been notified by the Internal Revenue Service that they are subject to backup withholding. The current backup withholding rate is applied. TAXATION OF THE FUND Dividends, interest, and some capital gains received by the Fund on foreign securities may be subject to foreign tax withholding or other foreign taxes. If the Fund is eligible, it may from year to year make the election permitted under Section 853 of the Internal Revenue Code to pass through such taxes to shareholders as a foreign tax credit. If such an election is not made, any foreign taxes paid or accrued will represent an expense to the Fund. The Fund does not expect to pay any federal income or excise taxes because it intends to meet certain requirements of the Internal Revenue Code. It is important that the Fund meet these requirements so that any earnings on your investment will not be taxed twice. Distributions and taxes 45 FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- The financial highlights table is intended to help you understand the Fund's financial performance for the past 5 years through October 31st of each fiscal year shown. Items "Net asset value, beginning of period" through "Net asset value, end of period" reflect financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, whose report, along with the Fund's financial statements, is included in the Annual Report, which is available upon request, and incorporated by reference into the Statement of Additional Information.
JANUS ORION FUND ------------------------------------------------------------------------------------------------------------- Years ended October 31 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $6.25 $5.64 $4.33 $5.21 $8.81 INCOME FROM INVESTMENT OPERATIONS: Net investment income/(loss) 0.03 --(1) --(1) --(1) --(1) Net gain/(loss) on securities (both realized and unrealized) 1.52 0.61 1.31 (0.88) (3.58) Total from investment operations 1.55 0.61 1.31 (0.88) (3.58) LESS DISTRIBUTIONS AND OTHER: Dividends (from net investment income) -- -- -- -- (0.02) Distributions (from capital gains) -- -- -- -- -- Payment from affiliate -- --(2) -- -- -- Total distributions and other -- -- -- -- (0.02) NET ASSET VALUE, END OF PERIOD $7.80 $6.25 $5.64 $4.33 $5.21 Total return 24.80% 10.82%(3) 29.95% (16.70)% (40.69)% Net assets, end of period (in millions) $691 $530 $514 $421 $602 Average net assets for the period (in millions) $590 $540 $431 $562 $762 Ratio of gross expenses to average net assets(4) 1.02% 1.09% 1.10% 1.09% 1.06% Ratio of net expenses to average net assets 1.01% 1.08% 1.08% 1.04% 1.03% Ratio of net investment income/(loss) to average net assets 0.52% (0.05)% (0.43)% (0.30)% (0.06)% Portfolio turnover rate 68% 69% 72% 161% 206% -------------------------------------------------------------------------------------------------------------
(1) Net investment income/(loss) aggregated less than $0.01 on a per share basis for the fiscal year end. (2) Payment from affiliate aggregated less than $0.01 on a per share basis for the fiscal year end. (3) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing, and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. (4) The effect of non-recurring costs assumed by Janus Capital is included in the ratio of gross expenses to average net assets and was less than 0.01%. 46 Janus Orion Fund prospectus GLOSSARY OF INVESTMENT TERMS -------------------------------------------------------------------------------- This glossary provides a more detailed description of some of the types of securities, investment strategies, and other instruments in which the Fund may invest. The Fund may invest in these instruments to the extent permitted by its investment objective and policies. The Fund is not limited by this discussion and may invest in any other types of instruments not precluded by the policies discussed elsewhere in this Prospectus. I. EQUITY AND DEBT SECURITIES BANK LOANS include institutionally-traded floating and fixed-rate debt securities generally acquired as a participation interest in a loan originated by a lender or other financial institution, or as an assignment of a portion of a loan previously attributable to a different lender. BONDS are debt securities issued by a company, municipality, government, or government agency. The issuer of a bond is required to pay the holder the amount of the loan (or par value of the bond) at a specified maturity and to make scheduled interest payments. CERTIFICATES OF PARTICIPATION ("COPS") are certificates representing an interest in a pool of securities. Holders are entitled to a proportionate interest in the underlying securities. Municipal lease obligations are often sold in the form of COPs. See "Municipal lease obligations" below. COMMERCIAL PAPER is a short-term debt obligation with a maturity ranging from 1 to 270 days issued by banks, corporations, and other borrowers to investors seeking to invest idle cash. A Fund may purchase commercial paper issued in private placements under Section 4(2) of the Securities Act of 1933. COMMON STOCKS are equity securities representing shares of ownership in a company and usually carry voting rights and earn dividends. Unlike preferred stock, dividends on common stock are not fixed but are declared at the discretion of the issuer's board of directors. CONVERTIBLE SECURITIES are preferred stocks or bonds that pay a fixed dividend or interest payment and are convertible into common stock at a specified price or conversion ratio. DEBT SECURITIES are securities representing money borrowed that must be repaid at a later date. Such securities have specific maturities and usually a specific rate of interest or an original purchase discount. DEPOSITARY RECEIPTS are receipts for shares of a foreign-based corporation that entitle the holder to dividends and capital gains on the underlying security. Receipts include those issued by domestic banks (American Depositary Receipts), foreign banks (Global or European Depositary Receipts), and broker-dealers (depositary shares). Glossary of investment terms 47 EQUITY SECURITIES generally include domestic and foreign common stocks; preferred stocks; securities convertible into common stocks or preferred stocks; warrants to purchase common or preferred stocks; and other securities with equity characteristics. EXCHANGE-TRADED FUNDS are index-based investment companies which hold substantially all of their assets in securities with equity characteristics. As a shareholder of another investment company, a Fund would bear its pro rata portion of the other investment company's expenses, including advisory fees, in addition to the expenses the Fund bears directly in connection with its own operations. FIXED-INCOME SECURITIES are securities that pay a specified rate of return. The term generally includes short- and long-term government, corporate, and municipal obligations that pay a specified rate of interest, dividends, or coupons for a specified period of time. Coupon and dividend rates may be fixed for the life of the issue or, in the case of adjustable and floating rate securities, for a shorter period. HIGH-YIELD/HIGH-RISK BONDS are bonds that are rated below investment grade by the primary rating agencies (i.e., BB+ or lower by Standard & Poor's and Fitch, and Ba or lower by Moody's). Other terms commonly used to describe such bonds include "lower rated bonds," "non-investment grade bonds," and "junk bonds." INDUSTRIAL DEVELOPMENT BONDS are revenue bonds that are issued by a public authority but which may be backed only by the credit and security of a private issuer and may involve greater credit risk. See "Municipal securities" below. MORTGAGE- AND ASSET-BACKED SECURITIES are shares in a pool of mortgages or other debt. These securities are generally pass-through securities, which means that principal and interest payments on the underlying securities (less servicing fees) are passed through to shareholders on a pro rata basis. These securities involve prepayment risk, which is the risk that the underlying mortgages or other debt may be refinanced or paid off prior to their maturities during periods of declining interest rates. In that case, a Fund may have to reinvest the proceeds from the securities at a lower rate. Potential market gains on a security subject to prepayment risk may be more limited than potential market gains on a comparable security that is not subject to prepayment risk. MORTGAGE DOLLAR ROLLS are transactions in which a Fund sells a mortgage-related security, such as a security issued by GNMA, to a dealer and simultaneously agrees to purchase a similar security (but not the same security) in the future at a pre-determined price. A "dollar roll" can be viewed as a collateralized borrowing in which a Fund pledges a mortgage-related security to a dealer to obtain cash. 48 Janus Orion Fund prospectus MUNICIPAL LEASE OBLIGATIONS are revenue bonds backed by leases or installment purchase contracts for property or equipment. Lease obligations may not be backed by the issuing municipality's credit and may involve risks not normally associated with general obligation bonds and other revenue bonds. For example, their interest may become taxable if the lease is assigned and the holders may incur losses if the issuer does not appropriate funds for the lease payments on an annual basis, which may result in termination of the lease and possible default. MUNICIPAL SECURITIES are bonds or notes issued by a U.S. state or political subdivision. A municipal security may be a general obligation backed by the full faith and credit (i.e., the borrowing and taxing power) of a municipality or a revenue obligation paid out of the revenues of a designated project, facility, or revenue source. PASS-THROUGH SECURITIES are shares or certificates of interest in a pool of debt obligations that have been repackaged by an intermediary, such as a bank or broker-dealer. PASSIVE FOREIGN INVESTMENT COMPANIES (PFICS) are any foreign corporations which generate certain amounts of passive income or hold certain amounts of assets for the production of passive income. Passive income includes dividends, interest, royalties, rents, and annuities. To avoid taxes and interest that a Fund must pay if these investments are profitable, the Fund may make various elections permitted by the tax laws. These elections could require that a Fund recognize taxable income, which in turn must be distributed, before the securities are sold and before cash is received to pay the distributions. PAY-IN-KIND BONDS are debt securities that normally give the issuer an option to pay cash at a coupon payment date or give the holder of the security a similar bond with the same coupon rate and a face value equal to the amount of the coupon payment that would have been made. PREFERRED STOCKS are equity securities that generally pay dividends at a specified rate and have preference over common stock in the payment of dividends and liquidation. Preferred stock generally does not carry voting rights. REAL ESTATE INVESTMENT TRUST (REIT) is an investment trust that operates through the pooled capital of many investors who buy its shares. Investments are in direct ownership of either income property or mortgage loans. RULE 144A SECURITIES are securities that are not registered for sale to the general public under the Securities Act of 1933, but that may be resold to certain institutional investors. STANDBY COMMITMENT is a right to sell a specified underlying security or securities within a specified period of time and at an exercise price equal to the Glossary of investment terms 49 amortized cost of the underlying security or securities plus accrued interest, if any, at the time of exercise, that may be sold, transferred, or assigned only with the underlying security or securities. A standby commitment entitles the holder to receive same day settlement, and will be considered to be from the party to whom the investment company will look for payment of the exercise price. STEP COUPON BONDS are high-quality issues with above-market interest rates and a coupon that increases over the life of the bond. They may pay monthly, semiannual, or annual interest payments. On the date of each coupon payment, the issuer decides whether to call the bond at par, or whether to extend it until the next payment date at the new coupon rate. STRIP BONDS are debt securities that are stripped of their interest (usually by a financial intermediary) after the securities are issued. The market value of these securities generally fluctuates more in response to changes in interest rates than interest-paying securities of comparable maturity. TENDER OPTION BONDS are relatively long-term bonds that are coupled with the option to tender the securities to a bank, broker-dealer, or other financial institution at periodic intervals and receive the face value of the bond. This investment structure is commonly used as a means of enhancing a security's liquidity. U.S. GOVERNMENT SECURITIES include direct obligations of the U.S. Government that are supported by its full faith and credit. Treasury bills have initial maturities of less than one year, Treasury notes have initial maturities of one to ten years, and Treasury bonds may be issued with any maturity but generally have maturities of at least ten years. U.S. Government securities also include indirect obligations of the U.S. Government that are issued by federal agencies and government sponsored entities. Unlike Treasury securities, agency securities generally are not backed by the full faith and credit of the U.S. Government. Some agency securities are supported by the right of the issuer to borrow from the Treasury, others are supported by the discretionary authority of the U.S. Government to purchase the agency's obligations, and others are supported only by the credit of the sponsoring agency. VARIABLE AND FLOATING RATE SECURITIES have variable or floating rates of interest and, under certain limited circumstances, may have varying principal amounts. Variable and floating rate securities pay interest at rates that are adjusted periodically according to a specified formula, usually with reference to some interest rate index or market interest rate (the "underlying index"). The floating rate tends to decrease the security's price sensitivity to changes in interest rates. WARRANTS are securities, typically issued with preferred stock or bonds, which give the holder the right to buy a proportionate amount of common stock at a specified price. The specified price is usually higher than the market price at the 50 Janus Orion Fund prospectus time of issuance of the warrant. The right may last for a period of years or indefinitely. ZERO COUPON BONDS are debt securities that do not pay regular interest at regular intervals, but are issued at a discount from face value. The discount approximates the total amount of interest the security will accrue from the date of issuance to maturity. The market value of these securities generally fluctuates more in response to changes in interest rates than interest-paying securities. II. FUTURES, OPTIONS, AND OTHER DERIVATIVES CREDIT DEFAULT SWAPS are a specific kind of counterparty agreement that allows the transfer of third party credit risk from one party to the other. One party in the swap is a lender and faces credit risk from a third party, and the counterparty in the credit default swap agrees to insure this risk in exchange of regular periodic payments. EQUITY-LINKED STRUCTURED NOTES are debt securities which combine the characteristics of common stock and the sale of an option. The return component is based on the performance of a single equity security, a basket of equity securities, or an equity index and the sale of an option which is recognized as income. Equity-linked structured notes are typically offered in limited transactions to financial institutions by investment banks. There is no guaranteed return of principal with these securities. The appreciation potential of these securities is limited by a maximum payment or call right and can be influenced by many unpredictable factors. FORWARD CONTRACTS are contracts to purchase or sell a specified amount of a financial instrument for an agreed upon price at a specified time. Forward contracts are not currently exchange-traded and are typically negotiated on an individual basis. A Fund may enter into forward currency contracts for investment purposes or to hedge against declines in the value of securities denominated in, or whose value is tied to, a currency other than the U.S. dollar or to reduce the impact of currency appreciation on purchases of such securities. It may also enter into forward contracts to purchase or sell securities or other financial indices. FUTURES CONTRACTS are contracts that obligate the buyer to receive and the seller to deliver an instrument or money at a specified price on a specified date. A Fund may buy and sell futures contracts on foreign currencies, securities, and financial indices including indices of U.S. Government, foreign government, equity, or fixed-income securities. A Fund may also buy options on futures contracts. An option on a futures contract gives the buyer the right, but not the obligation, to buy or sell a futures contract at a specified price on or before a specified date. Futures contracts and options on futures are standardized and traded on designated exchanges. Glossary of investment terms 51 INDEXED/STRUCTURED SECURITIES are typically short- to intermediate-term debt securities whose value at maturity or interest rate is linked to currencies, interest rates, equity securities, indices, commodity prices, or other financial indicators. Such securities may be positively or negatively indexed (e.g., their value may increase or decrease if the reference index or instrument appreciates). Indexed/ structured securities may have return characteristics similar to direct investments in the underlying instruments and may be more volatile than the underlying instruments. A Fund bears the market risk of an investment in the underlying instruments, as well as the credit risk of the issuer. INTEREST RATE SWAPS involve the exchange by two parties of their respective commitments to pay or receive interest (e.g., an exchange of floating rate payments for fixed rate payments). INVERSE FLOATERS are debt instruments whose interest rate bears an inverse relationship to the interest rate on another instrument or index. For example, upon reset, the interest rate payable on the inverse floater may go down when the underlying index has risen. Certain inverse floaters may have an interest rate reset mechanism that multiplies the effects of change in the underlying index. Such mechanism may increase the volatility of the security's market value. OPTIONS are the right, but not the obligation, to buy or sell a specified amount of securities or other assets on or before a fixed date at a predetermined price. A Fund may purchase and write put and call options on securities, securities indices, and foreign currencies. A Fund may purchase or write such options individually or in combination. PARTICIPATORY NOTES are derivative securities which are linked to the performance of an underlying Indian security and which allow investors to gain market exposure to Indian securities without trading directly in the local Indian market. III. OTHER INVESTMENTS, STRATEGIES, AND/OR TECHNIQUES REPURCHASE AGREEMENTS involve the purchase of a security by a Fund and a simultaneous agreement by the seller (generally a bank or dealer) to repurchase the security from the Fund at a specified date or upon demand. This technique offers a method of earning income on idle cash. These securities involve the risk that the seller will fail to repurchase the security, as agreed. In that case, a Fund will bear the risk of market value fluctuations until the security can be sold and may encounter delays and incur costs in liquidating the security. REVERSE REPURCHASE AGREEMENTS involve the sale of a security by a Fund to another party (generally a bank or dealer) in return for cash and an agreement by the Fund to buy the security back at a specified price and time. This technique will be used primarily to provide cash to satisfy unusually high redemption requests, or for other temporary or emergency purposes. 52 Janus Orion Fund prospectus SHORT SALES in which a Fund may engage may be of two types, short sales "against the box" or "naked" short sales. Short sales against the box involve selling either a security that a Fund owns, or a security equivalent in kind or amount to the security sold short that the Fund has the right to obtain, for delivery at a specified date in the future. Naked short sales involve selling a security that a Fund borrows and does not own. A Fund may enter into a short sale to hedge against anticipated declines in the market price of a security or to reduce portfolio volatility. If the value of a security sold short increases prior to the scheduled delivery date, the Fund loses the opportunity to participate in the gain. For naked short sales, the Fund will incur a loss if the value of a security increases during this period because it will be paying more for the security than it has received from the purchaser in the short sale. If the price declines during this period, a Fund will realize a short-term capital gain. Although a Fund's potential for gain as a result of a short sale is limited to the price at which it sold the security short less the cost of borrowing the security, its potential for loss is theoretically unlimited because there is no limit to the cost of replacing the borrowed security. WHEN-ISSUED, DELAYED DELIVERY, AND FORWARD COMMITMENT TRANSACTIONS generally involve the purchase of a security with payment and delivery at some time in the future - i.e., beyond normal settlement. A Fund does not earn interest on such securities until settlement and bears the risk of market value fluctuations in between the purchase and settlement dates. New issues of stocks and bonds, private placements, and U.S. Government securities may be sold in this manner. Glossary of investment terms 53 You can make inquiries and request other information, including a Statement of Additional Information, Annual Report, or Semiannual Report, free of charge, by contacting a Janus representative at 1-800-525-3713. The Fund's Statement of Additional Information and most recent Annual and Semiannual Reports are also available, free of charge, on www.janus.com. Additional information about the Fund's investments is available in the Fund's Annual and Semiannual Reports. In the Fund's Annual and Semiannual Reports, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal period. Other information is also available from financial intermediaries that sell shares of the Fund. The Statement of Additional Information provides detailed information about the Fund and is incorporated into this Prospectus by reference. You may review and copy information about the Fund (including the Fund's Statement of Additional Information) at the Public Reference Room of the SEC or get text only copies, after paying a duplicating fee, by sending an electronic request by e-mail to publicinfo@sec.gov or by writing to or calling the Public Reference Room, Washington, D.C. 20549-0102 (1-202-942-8090). Information on the operation of the Public Reference Room may also be obtained by calling this number. You may also obtain reports and other information about the Fund from the Electronic Data Gathering Analysis and Retrieval (EDGAR) Database on the SEC's website at http://www.sec.gov. (JANUS LOGO) www.janus.com PO Box 173375 Denver, CO 80217-3375 1-800-525-3713 The Trust's Investment Company Act File No. is 811-1879. February 28, 2006 JANUS INVESTMENT FUND JANUS ORION FUND Prospectus The Securities and Exchange Commission has not approved or disapproved of these securities or passed on the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense. This Prospectus is for those shareholders investing with the Fund through financial intermediaries. Janus Investment Fund Janus Olympus Fund Janus Orion Fund Supplement dated July 11, 2006 to Currently Effective Prospectuses At a special meeting held on July 5, 2006, the Board of Trustees of Janus Investment Fund approved an Agreement and Plan of Reorganization, which provides for the merger of Janus Olympus Fund into Janus Orion Fund (the "Merger"). The proposed Agreement and Plan of Reorganization (the "Plan") is subject to approval by shareholders of Janus Olympus Fund at a Special Meeting of Shareholders to be held on October 2, 2006 (or any adjournments or postponements thereof). If shareholders of Janus Olympus Fund approve the Plan, Janus Olympus Fund will transfer its assets and liabilities to Janus Orion Fund in exchange for shares of Janus Orion Fund. As of the effective date of the Merger, shareholders of Janus Olympus Fund will receive shares of Janus Orion Fund equal in value to their then current holdings in Janus Olympus Fund. The Merger is expected to be effective on or about October 20, 2006. After the Merger is complete, Janus Olympus Fund will be liquidated. Effective at the close of trading on July 14, 2006, Janus Olympus Fund will be closed to new investors pending approval of the Merger. Existing Janus Olympus Fund shareholders may continue to purchase shares in their existing accounts until at least the date of shareholder approval. Janus Olympus Fund shareholders as of July 14, 2006 will receive the Proxy Statement/Prospectus providing notice of the Special Meeting of Shareholders and details regarding the Merger. If you purchased shares of Janus Olympus Fund through a financial intermediary, your financial intermediary will generally be forwarding these materials to you and requesting your vote. The Proxy Statement/ Prospectus will also be available on the SEC's website at www.sec.gov and at janus.com or by calling Janus at 1-877-33JANUS. TABLE OF CONTENTS -------------------------------------------------------------------------------- RISK/RETURN SUMMARY Janus Orion Fund......................................... 2 FEES AND EXPENSES........................................... 5 PRINCIPAL INVESTMENT STRATEGIES AND RISKS Frequently asked questions about principal investment strategies............................................... 6 Risks.................................................... 7 Frequently asked questions about certain risks........... 8 General portfolio policies............................... 11 SHAREHOLDER'S GUIDE Pricing of fund shares................................... 16 Purchases................................................ 17 Tax-deferred accounts.................................... 18 Exchanges................................................ 19 Redemptions.............................................. 19 Excessive trading........................................ 21 Shareholder account policies............................. 25 MANAGEMENT OF THE FUND Investment adviser....................................... 26 Management expenses...................................... 27 Investment personnel..................................... 28 OTHER INFORMATION........................................... 29 DISTRIBUTIONS AND TAXES..................................... 32 FINANCIAL HIGHLIGHTS........................................ 35 GLOSSARY OF INVESTMENT TERMS................................ 36
Table of contents 1 RISK/RETURN SUMMARY -------------------------------------------------------------------------------- JANUS ORION FUND Janus Orion Fund (the "Fund") is designed for long-term investors who primarily seek growth of capital and who can tolerate the greater risks associated with common stock investments. INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- JANUS ORION FUND seeks long-term growth of capital. The Fund's Trustees may change this objective or the Fund's principal investment strategies without a shareholder vote. If there is a material change to the Fund's objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will meet its objective. PRINCIPAL INVESTMENT STRATEGIES The Fund pursues its objective by normally investing primarily in a core group of 20-30 domestic and foreign common stocks selected for their growth potential. The Fund may invest in companies of any size, from larger, well- established companies to smaller, emerging growth companies. The portfolio manager applies a "bottom up" approach in choosing investments. In other words, the portfolio manager looks at companies one at a time to determine if a company is an attractive investment opportunity and if it is consistent with the Fund's investment policies. If the portfolio manager is unable to find such investments, the Fund's uninvested assets may be held in cash or similar investments, subject to the Fund's specific investment policies. Within the parameters of its specific investment policies, the Fund may invest without limit in foreign equity and debt securities, which may include investments in emerging markets. The Fund will limit its investment in high- yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net assets. MAIN INVESTMENT RISKS The biggest risk is that the Fund's returns may vary, and you could lose money. The Fund invests primarily in common stocks, which tend to be more volatile than many other investment choices. The value of the Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases. The value of the Fund's portfolio could also decrease if the stock market goes down regardless of how well the individual companies perform. If the value of the Fund's portfolio decreases, the Fund's net asset value ("NAV") will also decrease, which means if you sell your shares in the Fund you may lose money. 2 Janus Orion Fund prospectus The Fund is classified as nondiversified. This means it may hold larger positions in a smaller number of securities than a fund that is classified as diversified. As a result, a single security's increase or decrease in value may have a greater impact on the Fund's NAV and total return. The Fund may have significant exposure to foreign markets, including emerging markets. As a result, its returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic conditions in a particular country. A market swing in one or more countries or regions where the Fund has invested a significant amount of its assets may have a greater effect on the Fund's performance than it would in a more geographically diversified portfolio. The Fund's investments in emerging market countries may involve risks greater than, or in addition to, the risks of investing in more developed countries. As of October 31, 2005, approximately 13.7% of the Fund's investments were in emerging markets. To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV may be affected by factors such as economic changes, political changes, or developments specific to the company that issued the bond. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. PERFORMANCE INFORMATION The following information provides some indication of the risks of investing in the Fund by showing how the Fund's performance has varied over time. The bar chart depicts the change in performance from year to year during the periods indicated. The table compares the Fund's average annual returns for the periods indicated to broad-based securities market indices. The indices are not available for direct investment. Risk/return summary 3 JANUS ORION FUND Annual returns for periods ended 12/31 (14.69)% (29.77)% 43.81% 14.90% 20.93% 2001 2002 2003 2004 2005 Best Quarter: 2nd-2003 23.59% Worst Quarter: 1st-2001 (22.54)%
Average annual total return for periods ended 12/31/05 ------------------------------------------------------ Since Inception 1 year 5 years (6/30/00) Janus Orion Fund Return Before Taxes 20.93% 3.67% (3.08)% Return After Taxes on Distributions 20.71% 3.63% (3.13)% Return After Taxes on Distributions and Sale of Fund Shares(1) 13.70% 3.13% (2.62)% Russell 3000(R) Growth Index(2) 5.17% (3.15)% (7.91)% (reflects no deduction for expenses, fees, or taxes) S&P 500(R) Index(3) 4.91% 0.54% (1.16)% (reflects no deduction for expenses, fees, or taxes) --------------------------------
(1) If the Fund incurs a loss, which generates a tax benefit, the Return After Taxes on Distributions and Sale of Fund Shares may exceed the Fund's other return figures. (2) The Russell 3000(R) Growth Index measures the performance of those Russell 3000(R) Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000(R) Growth or the Russell 2000(R) Growth indices. (3) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500 stocks, a widely recognized, unmanaged index of common stock prices. After-tax returns are calculated using the historically highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your individual tax situation and may differ from those shown in the preceding table. The after-tax return information shown above does not apply to Fund shares held through a tax-deferred account, such as a 401(k) plan or IRA. The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. 4 Janus Orion Fund prospectus FEES AND EXPENSES The following table describes the shareholder fees and annual fund operating expenses that you may pay if you buy and hold shares of the Fund. All of the fees and expenses shown were determined based on net assets as of the fiscal year ended October 31, 2005. SHAREHOLDER FEES are those paid directly from your investment and may include sales loads, redemption fees, or exchange fees. The Fund is a no-load investment, so you will generally not pay any shareholder fees when you buy or sell shares of the Fund. ANNUAL FUND OPERATING EXPENSES are paid out of the Fund's assets and include fees for portfolio management, maintenance of shareholder accounts, shareholder servicing, accounting, and other services. You do not pay these fees directly but, as the example shows, these costs are borne indirectly by all shareholders.
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS) Management Other Total Annual Fund Fee(1) Expenses Operating Expenses Janus Orion Fund 0.64% 0.38% 1.02%
(1) The "Management Fee" is the investment advisory fee paid by the Fund to Janus Capital. EXAMPLE: This example is intended to help you compare the cost of investing in the Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the Fund's operating expenses remain the same. Although your actual costs may be higher or lower, based upon these assumptions your costs would be as follows:
1 Year 3 Years 5 Years 10 Years -------------------------------------- Janus Orion Fund $ 104 $ 325 $ 563 $ 1,248
Risk/return summary 5 PRINCIPAL INVESTMENT STRATEGIES AND RISKS -------------------------------------------------------------------------------- This section takes a closer look at the Fund's principal investment strategies and certain risks of investing in the Fund. Strategies and policies that are noted as "fundamental" cannot be changed without a shareholder vote. Other, non-fundamental strategies and policies can be changed by the Trustees without prior notice to shareholders. Please carefully review the "Risks" section of this Prospectus for a discussion of risks associated with certain investment techniques. We have also included a "Glossary of Investment Terms" with descriptions of investment terms used throughout this Prospectus. FREQUENTLY ASKED QUESTIONS ABOUT PRINCIPAL INVESTMENT STRATEGIES The following questions and answers are designed to help you better understand the Fund's principal investment strategies. 1. HOW ARE COMMON STOCKS SELECTED? Unless its investment objective or policies prescribe otherwise, the Fund may invest substantially all of its assets in common stocks if the investment personnel believe that common stocks will appreciate in value. The investment personnel generally take a "bottom up" approach to selecting companies. This means that they seek to identify individual companies with earnings growth potential that may not be recognized by the market at large. The investment personnel make this assessment by looking at companies one at a time, regardless of size, country of organization, place of principal business activity, or other similar selection criteria. The Fund may sell a holding if, among other things, the security reaches the investment personnel's price target, if the company has a deterioration of fundamentals such as failing to meet key operating benchmarks, or if the investment personnel find a better investment opportunity. The Fund may also sell a holding to meet redemptions. Realization of income is not a significant consideration when choosing investments for the Fund. Income realized on the Fund's investments may be incidental to its objective. 2. ARE THE SAME CRITERIA USED TO SELECT FOREIGN SECURITIES? Generally, yes. The investment personnel seek companies that meet their selection criteria, regardless of where a company is located. Foreign securities are generally selected on a stock-by-stock basis without regard to any defined allocation among countries or geographic regions. However, certain factors such as expected levels of inflation, government policies influencing business conditions, the outlook for currency relationships, and prospects for economic growth among countries, regions, or geographic areas may warrant greater consideration in selecting foreign securities. There are no limitations on the 6 Janus Orion Fund prospectus countries in which the Fund may invest and the Fund may at times have significant foreign exposure. 3. WHAT DOES "MARKET CAPITALIZATION" MEAN? Market capitalization is the most commonly used measure of the size and value of a company. It is computed by multiplying the current market price of a share of the company's stock by the total number of its shares outstanding. The Fund does not emphasize investments in companies of any particular size. RISKS Because the Fund may invest substantially all of its assets in common stocks, the main risk is the risk that the value of the stocks it holds might decrease in response to the activities of an individual company or in response to general market and/or economic conditions. If this occurs, the Fund's share price may also decrease. The Fund's performance may also be significantly affected, positively or negatively, by certain types of investments, such as foreign securities, derivative investments, non-investment grade bonds, initial public offerings ("IPOs"), or companies with relatively small market capitalizations. IPOs and other types of investments may have a magnified performance impact on a Fund with a small asset base. A Fund may not experience similar performance as its assets grow. Janus Capital is the adviser to the Fund and the Janus Smart Portfolios (each of which is a "fund of funds" that primarily invests in other Janus Capital mutual funds). Because Janus Capital is the adviser to the Janus Smart Portfolios and the funds, it is subject to certain potential conflicts of interest when allocating the assets of the Janus Smart Portfolios among such funds. Purchases and redemptions of Fund shares by a Janus Smart Portfolio due to reallocations or rebalancings may result in the Fund having to sell securities or invest cash when it otherwise would not do so. Such transactions could accelerate the realization of taxable income if sales of securities resulted in gains and could also increase the Fund's transaction costs. Large redemptions by a Janus Smart Portfolio may cause the Fund's expenses to increase due to a resulting smaller asset base. In addition, the Janus Smart Portfolios' portfolio manager, who also serves the role of Director of Risk Management and Performance of Janus Capital, has regular and continuous access to the holdings of the Fund as well as knowledge of, and potential impact on, investment strategies and techniques of the Fund. Janus Capital believes these potential conflicts may be mitigated through its compliance monitoring, including that of asset allocations by the portfolio manager. In addition, Janus Capital has retained an independent consultant to provide research and consulting services with respect to asset allocation and investments for the Janus Smart Portfolios. Principal investment strategies and risks 7 The officers and Trustees of the Fund may also serve as officers and Trustees of the Janus Smart Portfolios. Conflicts may arise as the officers and Trustees seek to fulfill their fiduciary responsibilities to both the Janus Smart Portfolios and the Fund. The Trustees intend to address any such conflicts as deemed appropriate. Janus Capital manages accounts which engage in short sales. The simultaneous management of long and short portfolios creates potential conflicts of interest, including the risk that short sale activity could adversely affect the market value of long positions (and vice versa), the risk arising from sequential orders in long and short positions, and the risks associated with receiving opposing orders at the same time. FREQUENTLY ASKED QUESTIONS ABOUT CERTAIN RISKS The following questions and answers are designed to help you better understand some of the risks of investing in the Fund. 1. HOW DOES THE FUND'S NONDIVERSIFICATION CLASSIFICATION AFFECT ITS RISK PROFILE? Diversification is a way to reduce risk by investing in a broad range of stocks or other securities. A fund that is classified as "nondiversified" has the ability to take larger positions in a smaller number of issuers than a fund that is classified as "diversified." This gives a nondiversified fund more flexibility to focus its investments in the most attractive companies identified by the investment personnel. However, because the appreciation or depreciation of a single stock may have a greater impact on the NAV of a nondiversified fund, its share price can be expected to fluctuate more than a comparable diversified fund. This fluctuation, if significant, may affect the performance of the Fund. Since the Fund normally invests primarily in a core portfolio of 20-30 common stocks, this risk may be increased. 2. WHAT IS "INDUSTRY RISK?" Industry risk is the possibility that a group of related stocks will decline in price due to industry-specific developments. Companies in the same or similar industries may share common characteristics and are more likely to react similarly to industry-specific market or economic developments. The Fund's investments, if any, in multiple companies in a particular industry increase the Fund's exposure to industry risk. 3. HOW COULD THE FUND'S INVESTMENTS IN FOREIGN SECURITIES AFFECT ITS PERFORMANCE? Unless otherwise limited by its specific investment policies, the Fund may invest without limit in foreign securities either indirectly (e.g., depositary receipts) or directly in foreign markets, including emerging markets. Investments in foreign securities, including those of foreign governments, may involve greater risks than investing in domestic securities because the Fund's performance may depend on 8 Janus Orion Fund prospectus factors other than the performance of a particular company. These factors include: - CURRENCY RISK. As long as the Fund holds a foreign security, its value will be affected by the value of the local currency relative to the U.S. dollar. When the Fund sells a foreign denominated security, its value may be worth less in U.S. dollars even if the security increases in value in its home country. U.S. dollar-denominated securities of foreign issuers may also be affected by currency risk due to the overall impact of exposure to the issuer's local currency. - POLITICAL AND ECONOMIC RISK. Foreign investments may be subject to heightened political and economic risks, particularly in emerging markets which may have relatively unstable governments, immature economic structures, national policies restricting investments by foreigners, different legal systems, and economies based on only a few industries. In some countries, there is the risk that the government may take over the assets or operations of a company or that the government may impose taxes or limits on the removal of the Fund's assets from that country. - REGULATORY RISK. There may be less government supervision of foreign markets. As a result, foreign issuers may not be subject to the uniform accounting, auditing, and financial reporting standards and practices applicable to domestic issuers and there may be less publicly available information about foreign issuers. - MARKET RISK. Foreign securities markets, particularly those of emerging market countries, may be less liquid and more volatile than domestic markets. Certain markets may require payment for securities before delivery and delays may be encountered in settling securities transactions. In some foreign markets, there may not be protection against failure by other parties to complete transactions. Such factors may hinder the Fund's ability to buy and sell emerging market securities in a timely manner, affecting the Fund's investment strategies and potentially affecting the value of the Fund. - TRANSACTION COSTS. Costs of buying, selling, and holding foreign securities, including brokerage, tax, and custody costs, may be higher than those involved in domestic transactions. 4. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN SECURITIES OF COMPANIES FROM EMERGING MARKET COUNTRIES? Within the parameters of its specific investment policies, the Fund may invest an unlimited amount of its assets in a company or companies from one or more "developing countries" or "emerging markets." Such countries include, but are not limited to, countries included in the MSCI Emerging Markets Index(SM). The Principal investment strategies and risks 9 Fund has at times invested a significant portion of its assets in emerging markets and may continue to do so. To the extent that the Fund invests a significant amount of its assets in one or more countries, returns and NAV may be affected to a large degree by events and economic conditions in such countries. A summary of the Fund's investments by country is contained in the Fund's shareholder report and in the Fund's Form N-Q filed with the SEC. In many developing markets, there is less government supervision and regulation of business and industry practices, stock exchanges, brokers, and listed companies than in more developed markets. The securities markets of many of the countries in which the Fund may invest may also be smaller, less liquid, and subject to greater price volatility than those in the United States. In the event of a default on any investments in foreign debt obligations, it may be more difficult for the Fund to obtain or to enforce a judgment against the issuers of such securities. The Fund may be subject to emerging markets risk to the extent that it invests in companies which are not considered to be from emerging markets, but which have customers, products, or transactions associated with emerging markets. 5. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN HIGH-YIELD/HIGH-RISK BONDS? High-yield/high-risk bonds (or "junk" bonds) are bonds rated below investment grade by the primary rating agencies such as Standard & Poor's Ratings Service ("Standard & Poor's"), Fitch, Inc. ("Fitch"), and Moody's Investors Service, Inc. ("Moody's") (i.e., BB+ or lower by Standard & Poor's and Fitch, or Ba or lower by Moody's) or are unrated bonds of similar quality. The value of lower quality bonds generally is more dependent on credit risk and default risk than investment grade bonds. Issuers of high-yield/high-risk bonds may not be as strong financially as those issuing bonds with higher credit ratings and are more vulnerable to real or perceived economic changes, political changes, or adverse developments specific to the issuer. In addition, the junk bond market can experience sudden and sharp price swings. The secondary market on which high-yield securities are traded may be less liquid than the market for investment grade securities. The lack of a liquid secondary market may have an adverse impact on the market price of the security. When secondary markets for high-yield securities are less liquid than the market for investment grade securities, it also may be more difficult to value the securities because valuation may require more research, and elements of judgment may play a larger role in the valuation because there is less reliable, objective data available. Please refer to the "Explanation of Rating Categories" section of the Statement of Additional Information for a description of bond rating categories. 10 Janus Orion Fund prospectus 6. HOW DOES THE FUND TRY TO REDUCE RISK? The Fund may use futures, options, swap agreements, and other derivative instruments individually or in combination to "hedge" or protect its portfolio from adverse movements in securities prices and interest rates. The Fund may also use a variety of currency hedging techniques, including the use of forward currency contracts, to manage currency risk. There is no guarantee that derivative investments will benefit the Fund. The Fund's performance could be worse than if the Fund had not used such instruments. 7. THE FUND MAY INVEST IN SMALLER OR NEWER COMPANIES. DOES THIS CREATE ANY SPECIAL RISKS? Many attractive investment opportunities may be smaller, start-up companies offering emerging products or services. Smaller or newer companies may suffer more significant losses as well as realize more substantial growth than larger or more established issuers because they may lack depth of management, be unable to generate funds necessary for growth or potential development, or be developing or marketing new products or services for which markets are not yet established and may never become established. In addition, such companies may be insignificant factors in their industries and may become subject to intense competition from larger or more established companies. Securities of smaller or newer companies may have more limited trading markets than the markets for securities of larger or more established issuers, or may not be publicly traded at all, and may be subject to wide price fluctuations. Investments in such companies tend to be more volatile and somewhat more speculative. GENERAL PORTFOLIO POLICIES In investing its portfolio assets, the Fund will follow the general policies listed below. Except for the Fund's policies with respect to investments in illiquid securities and borrowing, the percentage limitations included in these policies and elsewhere in this Prospectus normally apply only at the time of purchase of a security. So, for example, if the Fund exceeds a limit as a result of market fluctuations or the sale of other securities, it will not be required to dispose of any securities. CASH POSITION The Fund may not always stay fully invested in stocks and bonds. For example, when the Fund's investment personnel believe that market conditions are unfavorable for profitable investing, or when they are otherwise unable to locate attractive investment opportunities, the Fund's cash or similar investments may increase. In other words, cash or similar investments generally are a residual - they represent the assets that remain after the Fund has committed available assets to desirable investment opportunities. When the Fund's investments in Principal investment strategies and risks 11 cash or similar investments increase, it may not participate in market advances or declines to the same extent that it would if the Fund remained more fully invested in stocks or bonds. In addition, the Fund may temporarily increase its cash position under certain unusual circumstances, such as to protect its assets or maintain liquidity in certain circumstances, for example, to meet unusually large redemptions. The Fund's cash position may also increase temporarily due to unusually large cash inflows. Under unusual circumstances such as these, the Fund may invest up to 100% of its assets in cash or similar investments. In this case, the Fund may not achieve its investment objective. OTHER TYPES OF INVESTMENTS Unless otherwise stated within its specific investment policies, the Fund may also invest in other types of domestic and foreign securities and use other investment strategies, as described in the "Glossary of Investment Terms." These securities and strategies are not principal investment strategies of the Fund. If successful, they may benefit the Fund by earning a return on the Fund's assets or reducing risk; however, they may not achieve the Fund's objective. These securities and strategies may include: - debt securities - indexed/structured securities - high-yield/high-risk bonds (35% or less of the Fund's assets) - options, futures, forwards, swap agreements, participatory notes, exchange- traded funds, and other types of derivatives individually or in combination for hedging purposes or for nonhedging purposes such as seeking to enhance return; such techniques may also be used to gain exposure to the market pending investment of cash balances or to meet liquidity needs - short sales "against the box" and "naked" short sales (no more than 8% of the Fund's assets may be invested in naked short sales) - securities purchased on a when-issued, delayed delivery, or forward commitment basis ILLIQUID INVESTMENTS The Fund may invest up to 15% of its net assets in illiquid investments. An illiquid investment is a security or other position that cannot be disposed of quickly in the normal course of business. For example, some securities are not registered under U.S. securities laws and cannot be sold to the U.S. public because of SEC regulations (these are known as "restricted securities"). Under 12 Janus Orion Fund prospectus procedures adopted by the Fund's Trustees, certain restricted securities may be deemed liquid, and will not be counted toward this 15% limit. FOREIGN SECURITIES Unless otherwise stated within its specific investment policies, the Fund may invest without limit in foreign equity and debt securities. The Fund may invest directly in foreign securities denominated in a foreign currency and not publicly traded in the United States. Other ways of investing in foreign securities include depositary receipts or shares and passive foreign investment companies. SPECIAL SITUATIONS The Fund may invest in companies that demonstrate special situations or turnarounds, meaning companies that have experienced significant business problems but are believed to have favorable prospects for recovery. For example, a special situation or turnaround may arise when, in the opinion of the Fund's investment personnel, the securities of a particular issuer will be recognized and appreciate in value due to a specific development with respect to that issuer. Special situations may include significant changes in a company's allocation of its existing capital, a restructuring of assets, or a redirection of free cash flow. For example, issuers undergoing significant capital changes may include companies involved in spin-offs, sales of divisions, mergers or acquisitions, companies emerging from bankruptcy, or companies initiating large changes in their debt to equity ratio. Developments creating a special situation might include, among others, a new product or process, a technological breakthrough, a management change or other extraordinary corporate event, or differences in market supply of and demand for the security. The Fund's performance could suffer if the anticipated development in a "special situation" investment does not occur or does not attract the expected attention. SECURITIES LENDING The Fund may seek to earn additional income through securities lending. Certain Funds may lend their portfolio securities to parties (typically brokers or other financial institutions) who need to borrow securities in order to complete certain transactions such as covering short sales, avoiding failures to deliver securities, or completing arbitrage activities. There is a risk of delay in recovering a loaned security and/or a risk of loss in collateral rights if the borrower fails financially. PORTFOLIO TURNOVER In general, the Fund intends to purchase securities for long-term investment, although, to a limited extent, the Fund may purchase securities in anticipation of relatively short-term price gains. Short-term transactions may also result from liquidity needs, securities having reached a price or yield objective, changes in Principal investment strategies and risks 13 interest rates or the credit standing of an issuer, or by reason of economic or other developments not foreseen at the time of the investment decision. The Fund may also sell one security and simultaneously purchase the same or a comparable security to take advantage of short-term differentials in bond yields or securities prices. Portfolio turnover is affected by market conditions, changes in the size of the Fund, the nature of the Fund's investments, and the investment style of the investment personnel. Changes are made in the Fund's portfolio whenever the investment personnel believe such changes are desirable. Portfolio turnover rates are generally not a factor in making buy and sell decisions. Increased portfolio turnover may result in higher costs for brokerage commissions, dealer mark-ups, and other transaction costs and may also result in taxable capital gains. Higher costs associated with increased portfolio turnover may offset gains in the Fund's performance. The "Financial Highlights" section of this Prospectus shows the Fund's historical turnover rates. 14 Janus Orion Fund prospectus JANUS ORION FUND Shareholder's Guide This Shareholder's Guide is for those shareholders investing with the Fund through financial intermediaries. This section will help you become familiar with the different types of accounts you can establish with the Fund. It also explains how to purchase, exchange, and redeem shares, as well as describes account policies and fees that may apply to your account. Account policies (including fees), services, and features may be modified or discontinued without shareholder approval or prior notice. (JANUS LOGO) CONTACT YOUR FINANCIAL INTERMEDIARY OR PLAN SPONSOR, OR REFER TO YOUR PLAN DOCUMENTS FOR INSTRUCTIONS ON HOW TO PURCHASE, EXCHANGE, OR REDEEM SHARES. With certain limited exceptions, the Fund is available only to U.S. citizens or residents. PRICING OF FUND SHARES NAV DETERMINATION The per share NAV is computed by dividing the total value of the Fund's securities and other assets, less liabilities, by the total number of Fund shares outstanding. In the case of Funds with share classes, the NAV for each class is computed by dividing the total value of securities and other assets allocated to the class, less liabilities allocated to that class, by the total number of shares outstanding for the class. The Fund's NAV is calculated as of the close of the regular trading session of the New York Stock Exchange ("NYSE") (normally 4:00 p.m. New York time) each day that the NYSE is open ("business day"). However, the NAV may be calculated earlier if trading on the NYSE is restricted, or as permitted by the SEC. Because foreign securities markets may operate on days that are not business days in the United States, the value of the Fund's holdings may change on days when you will not be able to purchase or redeem the Fund's shares to the extent that Fund is invested in such markets. All purchases, exchanges, and redemptions will be duly processed at the NAV as described under "Purchases," "Exchanges," and "Redemptions" after your request is received in good order by the Fund (or financial intermediary or plan sponsor, if applicable) or its agent. Securities held by the Fund are generally valued at market value. Certain short-term instruments maturing within 60 days or less are valued at amortized cost, which approximates market value. If a market quotation is not readily available or is deemed unreliable, or if an event that is expected to affect the value of a portfolio security occurs after the close of the principal exchange or market on which that security is traded, and before the close of the NYSE, the fair value of a security (except for short-term instruments maturing within 60 days or less) will be determined in good faith under policies and procedures established by and under the supervision of the Fund's Board of Trustees. Circumstances in which fair value pricing may be utilized include, but are not limited to: (i) when significant events occur which may affect the securities of a single issuer, such as mergers, bankruptcies, or significant issuer-specific developments; (ii) when significant events occur which may affect an entire market, such as natural disasters or significant governmental actions; and (iii) when non-significant events occur such as markets closing early or not opening, security trading halts, or pricing of nonvalued securities and restricted or nonpublic securities. The Fund may use a systematic fair valuation model provided by an independent 16 Janus Orion Fund prospectus pricing service to value foreign equity securities in order to adjust for stale pricing, which may occur between the close of certain foreign exchanges and of the NYSE. While fair value pricing may be more commonly used with foreign equity securities, it may also be used with, among other things, thinly-traded domestic securities or fixed-income securities. Due to the subjective nature of fair value pricing, the Fund's value for a particular security may be different from the last quoted market price. Fair value pricing may reduce arbitrage activity involving the frequent buying and selling of mutual fund shares by investors seeking to take advantage of a perceived lag between a change in the value of a Fund's portfolio securities and the reflection of such change in that Fund's NAV, as further described in the "Excessive Trading" section of this Prospectus. While funds that invest in foreign securities may be at a greater risk for arbitrage activity, such activity may also arise in funds which do not invest in foreign securities, for example, when trading in a security held by the Fund is halted and does not resume prior to the time the Fund calculates its NAV (referred to as "stale pricing"). Funds that hold thinly-traded securities, such as certain small-capitalization securities, may be subject to attempted use of arbitrage techniques. To the extent that the Fund's valuation of a security is different from the security's market value, short-term arbitrage traders may dilute the NAV of the Fund, which negatively impacts long-term shareholders. The Fund's fair value pricing and excessive trading policies and procedures may not completely eliminate short-term trading in certain omnibus accounts and other accounts traded through intermediaries. The value of the securities of other open-end funds held by the Fund, if any, will be calculated using the NAV of such underlying funds, and the prospectuses for such open-end funds explain the circumstances under which they use fair value pricing and the effects of using fair value pricing. If you hold a Fund account through a financial intermediary or plan sponsor, all purchases, exchanges, redemptions, or other account activity must be processed through your financial intermediary or plan sponsor. Your financial intermediary or plan sponsor is responsible for promptly transmitting purchase, redemption, and other requests to the Fund under the arrangements made between your financial intermediary or plan sponsor and its customers. The Fund is not responsible for the failure of any financial intermediary or plan sponsor to carry out its obligations to its customers. PURCHASES Contact your financial intermediary or plan sponsor, or refer to your plan documents for information on how to invest in the Fund, including additional information on minimum initial or subsequent investment requirements. Shareholder's guide 17 Purchase requests must be received in good order by the Fund (financial intermediary or plan sponsor, if applicable) or its agent prior to the close of the regular trading session of the NYSE in order to receive that day's NAV. The Fund reserves the right to require purchase requests and payments from the financial intermediary or plan sponsor prior to these times on days when the NYSE closes early. The Fund reserves the right to reject any purchase order, including exchange purchases, for any reason. The Fund is not intended for excessive trading. For more information about the Fund's policy on excessive trading, see "Excessive Trading." MINIMUM INVESTMENT REQUIREMENTS The minimum investment is $2,500 per Fund account for non-retirement accounts and $500 per Fund account for certain tax-deferred accounts or UGMA/UTMA accounts. Investors in a defined contribution plan through a third party administrator should refer to their plan document or contact their plan administrator for additional information. In addition, accounts held through certain wrap programs may not be subject to these minimums. Investors should refer to their intermediary for additional information. The Fund reserves the right to annually request that intermediaries close Fund accounts that are valued at less than $100, other than as a result solely of depreciation in share value. Certain accounts held through intermediaries may not be subject to closure due to the policies of the intermediaries. You may receive written notice from your intermediary to increase your account balance to the required minimum to avoid having your account closed. Please note that you may incur a tax liability as a result of a redemption. The Fund reserves the right to change the amount of these minimums from time to time or to waive them in whole or in part. SYSTEMATIC PURCHASE PLAN You may arrange for periodic purchases by authorizing your financial intermediary to withdraw the amount of your investment from your bank account on a day or days you specify. Not all financial intermediaries offer this plan. Contact your financial intermediary for details. TAX-DEFERRED ACCOUNTS If you are eligible and your financial intermediary or plan sponsor provides this option, you may set up one or more tax-deferred accounts. A tax-deferred account allows you to shelter your investment income and capital gains from current income taxes. A contribution to certain of these plans may also be tax 18 Janus Orion Fund prospectus deductible. Investors should consult their tax adviser or legal counsel before selecting a tax-deferred account. EXCHANGES Contact your financial intermediary or plan sponsor, or consult your plan documents to exchange into other funds in the Trust. Be sure to read the prospectus of the fund into which you are exchanging. An exchange is generally a taxable transaction (except for certain tax-deferred accounts). - Exchange requests between the Fund and other Janus funds (other than between Janus Money Market Fund and Janus Government Money Market Fund) must be received in good order by the Fund or its agent prior to the close of the regular trading session of the NYSE in order to receive that day's NAV. Exchange requests between Janus Money Market Fund and Janus Government Money Market Fund must be received in good order by a fund or its agent prior to 5:00 p.m. (New York time) in order to receive that day's NAV. The money market funds reserve the right to require exchange requests prior to these times on days when the bond market or the NYSE close early. - You may generally exchange shares of the Fund for shares of another fund in the Trust only if that fund is offered through your financial intermediary or plan sponsor. - You must meet the minimum investment amount for each fund. - If you are exchanging into a closed fund, you will need to meet criteria for investing in the closed fund. For more information, see "Closed Fund Policies." - The Janus funds reserve the right to reject any exchange request and to modify or terminate the exchange privilege at any time. - The exchange privilege is not intended as a vehicle for short-term or excessive trading. You may make up to four round trips in the Fund in a 12-month period, although the Fund at all times reserves the right to reject any exchange purchase for any reason without prior notice. Generally, a "round trip" is a redemption out of the Fund (by any means) followed by a purchase back into the Fund (by any means). The Fund will work with financial intermediaries to apply the Fund's exchange limit. However, the Fund may not always have the ability to monitor or enforce the trading activity in such accounts. For more information about the Fund's policy on excessive trading, see "Excessive Trading." REDEMPTIONS Please contact your financial intermediary or plan sponsor, or refer to the appropriate plan documents for details including any restrictions on redemp- Shareholder's guide 19 tions, redemption charges, redemption in-kind, automatic redemption, and delays in honoring redemption requests. Shares of the Fund may be redeemed on any business day on which the Fund's NAV is calculated. Redemptions are duly processed at the NAV next calculated after your redemption order is received in good order by the Fund or its agent. Redemption proceeds, less any applicable redemption fee, will normally be sent the business day following receipt of the redemption order, but in no event later than seven days after receipt of such order. The Fund reserves the right to annually request that intermediaries close Fund accounts that are valued at less than $100, other than as a result solely of depreciation in share value. Certain accounts held through intermediaries may not be subject to closure due to the policies of the intermediaries. You may receive written notice from your intermediary to increase your account balance to the required minimum to avoid having your account closed. Please note that you may incur a tax liability as a result of a redemption. REDEMPTIONS IN-KIND Shares normally will be sold for cash, although the Fund retains the right to sell some or all of its shares in-kind under unusual circumstances, in order to protect the interests of remaining shareholders, or to accommodate a request by a particular shareholder that does not adversely affect the interest of the remaining shareholders, by delivery of securities selected from its assets at its discretion. However, the Fund is required to redeem shares solely for cash up to the lesser of $250,000 or 1% of the NAV of the Fund during any 90-day period for any one shareholder. Should redemptions by any shareholder exceed such limitation, the Fund will have the option of redeeming the excess in cash or in-kind. In-kind payment means payment will be made in portfolio securities rather than cash. If this occurs, the redeeming shareholder might incur brokerage or other transaction costs to convert the securities to cash. SYSTEMATIC WITHDRAWAL PLAN You may arrange for periodic redemptions by authorizing your financial intermediary to redeem a specified amount from your account on a day or days you specify. Not all financial intermediaries offer this plan. Contact your financial intermediary for details. 20 Janus Orion Fund prospectus EXCESSIVE TRADING EXCESSIVE TRADING POLICIES AND PROCEDURES The Board of Trustees has adopted policies and procedures with respect to short-term and excessive trading of Fund shares ("excessive trading"). The Fund is intended for long-term investment purposes only and the Fund will take reasonable steps to attempt to detect and deter excessive trading. Transactions placed in violation of the Fund's exchange limits or excessive trading policies may be cancelled or revoked by the Fund by the next business day following receipt by the Fund. The trading history of accounts determined to be under common ownership or control within any of the Janus funds may be considered in enforcing these policies and procedures. As described below, however, the Fund may not be able to identify all instances of excessive trading or completely eliminate the possibility of excessive trading. In particular, it may be difficult to identify excessive trading in certain omnibus accounts and other accounts traded through intermediaries. By their nature, omnibus accounts, in which purchases and sales of the Fund's shares by multiple investors are aggregated by the intermediary and presented to the Fund on a net basis, may effectively conceal the identity of individual investors and their transactions from the Fund and its agent. The Fund attempts to deter excessive trading through at least the following methods: - exchange limitations as described under "Exchanges;" - redemption fees as described under "Redemption Fee" (where applicable on certain Funds); and - fair valuation of securities as described under "Pricing of Fund Shares." The Fund monitors Fund share transactions, subject to the limitations described below. Generally, a purchase of the Fund's shares followed by the redemption of the Fund's shares within a 90-day period may result in enforcement of the Fund's excessive trading policies and procedures with respect to future purchase orders, provided that the Fund reserves the right to reject any purchase request as explained above. The Fund may suspend or permanently terminate the exchange privilege of any investor who makes more than four round trips (as defined under "Exchanges") in a Fund in a 12-month period and may bar future purchases into the Fund and any of the other Janus funds by such investor. The Fund's exchange limits and excessive trading policies generally do not apply to a money market fund, although money market funds at all times reserve the right to reject any purchase request (including exchange purchases) for any reason without prior Shareholder's guide 21 notice; and transactions in the Janus funds by the Janus Smart Portfolios (each of which is a "fund of funds" that primarily invests in other Janus mutual funds). The Fund's Board of Trustees may approve from time to time a redemption fee to be imposed by any Janus fund, subject to 60 days' notice to shareholders of that fund. Investors who place transactions through the same financial intermediary on an omnibus basis may be deemed part of a group for the purpose of the Fund's excessive trading policies and procedures and may be rejected in whole or in part by the Fund. The Fund, however, cannot always identify or reasonably detect excessive trading that may be facilitated by financial intermediaries or made difficult to identify through the use of omnibus accounts by those intermediaries that transmit purchase, exchange, and redemption orders to the Fund, and thus the Fund may have difficulty curtailing such activity. Transactions accepted by a financial intermediary in violation of the Fund's excessive trading policies may be cancelled or revoked by the Fund by the next business day following receipt by the Fund. In an attempt to detect and deter excessive trading in omnibus accounts, the Fund or its agent may require intermediaries to impose restrictions on the trading activity of accounts traded through those intermediaries. Such restrictions may include, but are not limited to, requiring that trades be placed by U.S. mail, prohibiting purchases for a designated period of time (typically 30 to 90 days) by investors who have recently redeemed Fund shares, requiring intermediaries to report information about customers who purchase and redeem large amounts, and similar restrictions. The Fund's ability to impose such restrictions with respect to accounts traded through particular intermediaries may vary depending on the systems capabilities, applicable contractual and legal restrictions, and cooperation of those intermediaries. Certain transactions in Fund shares, such as periodic rebalancing (no more frequently than quarterly) or those which are made pursuant to systematic purchase, exchange, or redemption programs generally do not raise excessive trading concerns and normally do not require application of the Fund's methods to detect and deter excessive trading. The Fund also reserves the right to reject any purchase request (including exchange purchases) by any investor or group of investors for any reason without prior notice, including, in particular, if the trading activity in the account(s) is deemed to be disruptive to the Fund. For example, the Fund may refuse a purchase order if the Fund's investment personnel believe they would be unable to invest the money effectively in accordance with the Fund's investment policies or the Fund would otherwise be adversely affected due to the size of the transaction, frequency of trading, or other factors. 22 Janus Orion Fund prospectus The Fund's policies and procedures regarding excessive trading may be modified at any time by the Fund's Board of Trustees. EXCESSIVE TRADING RISKS Excessive trading may present risks to the Fund's long-term shareholders. Excessive trading into and out of the Fund may disrupt portfolio investment strategies, may create taxable gains to remaining Fund shareholders, and may increase Fund expenses, all of which may negatively impact investment returns for all remaining shareholders, including long-term shareholders. A Fund that invests in foreign securities may be at a greater risk for excessive trading. Investors may attempt to take advantage of anticipated price movements in securities held by a Fund based on events occurring after the close of a foreign market that may not be reflected in the Fund's NAV (referred to as "price arbitrage"). Such arbitrage opportunities may also arise in a Fund which does not invest in foreign securities, for example, when trading in a security held by the Fund is halted and does not resume prior to the time the Fund calculates its NAV (referred to as "stale pricing"). Funds that hold thinly-traded securities, such as certain small-capitalization securities, may be subject to attempted use of arbitrage techniques. To the extent that a Fund's valuation of a security differs from the security's market value, short-term arbitrage traders may dilute the NAV of the Fund, which negatively impacts long-term shareholders. Although the Fund has adopted fair valuation policies and procedures intended to reduce the Fund's exposure to price arbitrage, stale pricing, and other potential pricing inefficiencies, under such circumstances there is potential for short-term arbitrage trades to dilute the value of Fund shares. Although the Fund takes steps to detect and deter excessive trading pursuant to the policies and procedures described in this Prospectus and approved by the Board of Trustees, there is no assurance that these policies and procedures will be effective in limiting excessive trading in all circumstances. For example, the Fund may be unable to completely eliminate the possibility of excessive trading in certain omnibus accounts and other accounts traded through intermediaries. Omnibus accounts may effectively conceal the identity of individual investors and their transactions from the Fund and its agent. This makes the Fund's identification of excessive trading transactions in the Fund through an omnibus account difficult and makes the elimination of excessive trading in the account impractical without the assistance of the intermediary. Although the Fund encourages intermediaries to take necessary actions to detect and deter excessive trading, some intermediaries may be unable or unwilling to do so, and accordingly, the Fund cannot eliminate completely the possibility of excessive trading. Shareholder's guide 23 Shareholders that invest through an omnibus account should be aware that they may be subject to the policies and procedures of their financial intermediary with respect to excessive trading in the Fund. AVAILABILITY OF PORTFOLIO HOLDINGS INFORMATION The non-money market funds' full portfolio holdings (excluding cash equivalents, derivatives, and short positions), consisting of at least the names of the holdings, are generally available monthly, with a 30-day lag, on www.janus.com. They are posted to the website within approximately two business days after month-end. The money market funds' full portfolio holdings are generally available monthly, with no lag, on www.janus.com. They are posted to the website within approximately six business days after month-end. All of the funds' portfolio holdings remain available until the following month's information is posted. The funds' full portfolio holdings can be found on www.janus.com in Fund details under the Holdings & Details tab. In addition, the Fund's top portfolio holdings in order of position size and as a percentage of the total portfolio, are published monthly with a 30-day lag, and quarterly with a 15-day lag, on www.janus.com. The Fund discloses its top five portfolio holdings. Security breakdowns (such as industry, sector, regional, market capitalization, and asset allocation breakdowns, as applicable) for the Fund are published quarterly, with a 15-day lag, on www.janus.com. The Fund's top portfolio holdings, as well as the non-money market funds' security breakdowns, are posted to the website within approximately two business days after the end of the applicable period and remain available until the following period's information is posted. Specific portfolio level performance attribution information and statistics for the Fund will be made available to any person monthly upon request, with a 30-day lag, following the posting of the Fund's full portfolio holdings on www.janus.com. Notwithstanding the foregoing, Janus Capital may exclude from publication all or any portion of portfolio holdings or change the time periods of disclosure as deemed necessary to protect the interests of the Fund. A summary of the Fund's portfolio holdings disclosure policies and procedures, which includes a discussion of any exceptions, is contained in the Fund's Statement of Additional Information. Complete schedules of the Fund's portfolio holdings as of the end of the Fund's first and third fiscal quarters are filed with the SEC within 60 days of the end of such quarters on Form N-Q. The Fund's Form N-Q: (i) is available on the SEC's website at http://www.sec.gov; (ii) may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. (information on the Public Reference Room may be obtained by calling 1-800-SEC-0330); and (iii) is 24 Janus Orion Fund prospectus available without charge, upon request, by calling Janus at 1-800-525-0020 (toll free). Complete schedules of the Fund's portfolio holdings as of the end of the Fund's second and fourth fiscal quarters are included in the Fund's semiannual and annual reports which are filed with the SEC within 60 days of the end of such quarters. The semiannual reports are filed on Form type N-CSRS and the annual reports are filed on Form type N-CSR. Shareholder reports containing such portfolio holdings are available to shareholders through their financial intermediary or plan sponsor and are also available at www.janus.com. SHAREHOLDER ACCOUNT POLICIES TRANSACTIONS THROUGH FINANCIAL INTERMEDIARIES Fund shares purchased or sold through a financial intermediary or plan sponsor may be subject to a fee and may require different minimum initial and subsequent investments than Fund shares purchased directly from Janus Capital. Financial intermediaries or plan sponsors may also impose other charges or restrictions different from those applicable to shareholders who invest in the Fund directly. A financial intermediary or plan sponsor, rather than its customers, may be the shareholder of record of your shares. The Fund is not responsible for the failure of any financial intermediary or plan sponsor to carry out its obligations to its customers. Certain financial intermediaries and plan sponsors may receive compensation from Janus Capital or its affiliates, and certain financial intermediaries and plan sponsors may receive compensation from the Fund for shareholder recordkeeping and similar services. STATEMENTS AND REPORTS Your financial intermediary or plan sponsor is responsible for sending you periodic statements of all transactions, as required by applicable law. Your financial intermediary or plan sponsor is responsible for providing annual and semiannual reports, including the financial statements of the Fund that you have authorized for investment. These reports show the Fund's investments and the market value of such investments, as well as other information about the Fund and its operations. Please contact your financial intermediary or plan sponsor to obtain these reports. The Trust's fiscal year ends October 31. Shareholder's guide 25 MANAGEMENT OF THE FUND -------------------------------------------------------------------------------- INVESTMENT ADVISER Janus Capital Management LLC ("Janus Capital" or "Janus"), 151 Detroit Street, Denver, Colorado 80206-4805, is the investment adviser to the Fund and is responsible for the day-to-day management of the Fund's investment portfolio and furnishes continuous advice and recommendations concerning the Fund's investments. Janus Capital also provides certain administrative and other services, and is responsible for the other business affairs of the Fund. Janus Capital (together with its predecessors) has served as investment adviser to Janus Fund since 1970 and currently serves as investment adviser to all of the Janus funds, acts as subadviser for a number of private-label mutual funds, and provides separate account advisory services for institutional accounts. Janus Capital furnishes certain administrative, compliance, and accounting services for the Fund, and may be reimbursed by the Fund for its costs in providing those services. In addition, employees of Janus Capital and/or its affiliates serve as officers of the Trust and Janus Capital provides office space for the Fund and pays the salaries, fees, and expenses of all Fund officers and those Trustees who are considered interested persons of Janus Capital. From its own assets, Janus Capital or its affiliates may make payments based on gross sales, current assets, or other measures to selected brokerage firms or other financial intermediaries that were instrumental in the acquisition or retention of shareholders for the Janus funds. The amount of these payments is determined from time to time by Janus Capital, may be substantial, and may differ for different financial intermediaries. Eligibility requirements for such payments to institutional intermediaries are determined by Janus Capital and/or its affiliates. Janus Capital or its affiliates may pay fees, from their own assets, to brokerage firms, banks, financial advisers, retirement plan service providers, and other financial intermediaries for providing recordkeeping, subaccounting, transaction processing, and other shareholder or administrative services (including payments for processing transactions via National Securities Clearing Corporation ("NSCC") or other means) in connection with investments in the Janus funds. These fees are in addition to any fees that may be paid by the Janus funds for these types of or other services. In addition, Janus Capital or its affiliates may also share certain marketing expenses with, or pay for or sponsor informational meetings, seminars, client awareness events, support for marketing materials, or business building programs for such intermediaries to raise awareness of the Fund. The receipt of (or prospect of receiving) payments described above are not intended to, but may provide a financial intermediary and its salespersons with an incentive to favor sales of Janus funds' shares over sales of other mutual 26 Janus Orion Fund prospectus funds (or non-mutual fund investments) with respect to which the financial intermediary does not receive such payments or receives them in a lower amount. These payment arrangements will not, however, change the price an investor pays for shares or the amount that a Janus fund receives to invest on behalf of the investor. You may wish to consider whether such arrangements exist when evaluating any recommendations to purchase or sell shares of the Fund. MANAGEMENT EXPENSES The Fund pays Janus Capital an investment advisory fee which is calculated daily and paid monthly. The Fund's advisory agreement details the investment advisory fee and other expenses that the Fund must pay. The Fund incurs expenses not assumed by Janus Capital, including any transfer agent and custodian fees and expenses, legal and auditing fees, printing and mailing costs of sending reports and other information to existing shareholders, and Independent Trustees' fees and expenses. The Fund is subject to the following investment advisory fee schedule (expressed as an annual rate).
Average Daily Investment Advisory Net Assets Fee (%) Fund Name of Fund (annual rate) ------------------------------------------------------------------------------------------- Janus Orion Fund All Asset Levels 0.64 -------------------------------------------------------------------------------------------
A discussion regarding the basis for the Board of Trustees' approval of the Fund's investment advisory agreement is included in the Fund's Statement of Additional Information and will also be included in the annual and semiannual reports to shareholders. Management of the Fund 27 INVESTMENT PERSONNEL PORTFOLIO MANAGER RON SACHS -------------------------------------------------------------------------------- is Executive Vice President and Portfolio Manager of Janus Orion Fund, which he has managed since its inception. He is also Portfolio Manager of other Janus accounts. Mr. Sachs joined Janus Capital in 1996 as a research analyst. Mr. Sachs holds a Bachelor's degree (cum laude) in Economics from Princeton and a law degree from the University of Michigan. Mr. Sachs has earned the right to use the Chartered Financial Analyst designation. Information about the Fund's investment personnel's compensation structure, other accounts managed by the investment personnel, and the investment personnel's range of ownership of securities in the Fund, is included in the Fund's Statement of Additional Information. 28 Janus Orion Fund prospectus OTHER INFORMATION -------------------------------------------------------------------------------- CLOSED FUND POLICIES The Fund may discontinue sales of its shares to new investors if its management and the Trustees believe that continued sales may adversely affect the Fund's ability to achieve its investment objective. If sales of the Fund are discontinued to new investors, it is expected that existing shareholders invested in the Fund would be permitted to continue to purchase shares through its existing Fund accounts and to reinvest any dividends or capital gains distributions in such accounts, absent highly unusual circumstances. In addition, it is expected that existing or new participants in employer-sponsored retirement plans, including employees of Janus Capital Group Inc. ("JCGI") and any of its subsidiaries covered under the JCGI retirement plan, that currently offer the Fund as an investment option would be able to direct contributions to the Fund through their plan, regardless of whether they invested in such fund prior to its closing. In addition, in the case of certain mergers or reorganizations, retirement plans would be able to add a closed fund as an investment option and sponsors of certain wrap programs with existing accounts in the Fund would be able to continue to invest in the Fund on behalf of new customers. Such mergers, reorganizations, acquisitions, or other business combinations are those in which one or more companies involved in such transaction currently offers the Fund as an investment option, and any company that as a result of such transaction becomes affiliated with the company currently offering the Fund (as a parent company, subsidiary, sister company, or otherwise). Such companies may request to add the Fund as an investment option under its retirement plan. In addition, new accounts may be permitted in the closed Fund for certain plans and programs offered in connection with employer-sponsored retirement plans where the retirement plan has an existing account in the closed Fund. Requests will be reviewed by management on an individual basis, taking into consideration whether the addition of the Fund may negatively impact existing Fund shareholders. Janus Capital encourages its employees, particularly members of the investment team, to own shares of the Janus funds. Accordingly, upon prior approval of Janus Capital's senior management team, members of the Janus investment team may open new accounts in a closed fund. Additional information regarding general policies and exceptions can be found in the closed funds' prospectuses. PENDING LEGAL MATTERS In the fall of 2003, the Securities and Exchange Commission ("SEC"), the Office of the New York State Attorney General ("NYAG"), the Colorado Attorney General ("COAG"), and the Colorado Division of Securities ("CDS") announced that they were investigating alleged frequent trading practices in the mutual fund industry. On August 18, 2004, Janus Capital announced that it had reached final Other information 29 settlements with the SEC, the NYAG, the COAG, and the CDS related to such regulators' investigations into Janus Capital's frequent trading arrangements. A number of civil lawsuits were brought against Janus Capital and certain of its affiliates, the Janus funds, and related entities and individuals based on allegations similar to those announced by the above regulators and were filed in several state and federal jurisdictions. Such lawsuits alleged a variety of theories for recovery including, but not limited to, the federal securities laws, other federal statutes (including ERISA), and various common law doctrines. The Judicial Panel on Multidistrict Litigation transferred these actions to the U.S. District Court for the District of Maryland (the "Court") for coordinated proceedings. On September 29, 2004, five consolidated amended complaints were filed in that Court that generally include: (i) claims by a putative class of investors in the Janus funds asserting claims on behalf of the investor class; (ii) derivative claims by investors in the Janus funds ostensibly on behalf of the Janus funds; (iii) claims on behalf of participants in the Janus 401(k) plan; (iv) claims brought on behalf of shareholders of Janus Capital Group Inc. ("JCGI") on a derivative basis against the Board of Directors of JCGI; and (v) claims by a putative class of shareholders of JCGI asserting claims on behalf of the shareholders. Each of the five complaints initially named JCGI and/or Janus Capital as a defendant. In addition, the following were also named as defendants in one or more of the actions: Janus Investment Fund ("JIF"), Janus Aspen Series ("JAS"), Janus Adviser Series ("JAD"), Janus Distributors LLC, Enhanced Investment Technologies, LLC ("INTECH"), Bay Isle Financial LLC ("Bay Isle"), Perkins, Wolf, McDonnell and Company, LLC ("Perkins"), the Advisory Committee of the Janus 401(k) plan, and the current or former directors of JCGI. On August 25, 2005, the Court entered orders dismissing most of the claims asserted against Janus Capital and its affiliates by fund investors (actions (i) and (ii) described above), except certain claims under Section 10(b) of the Securities Exchange Act of 1934 and under Section 36(b) of the Investment Company Act of 1940. As a result, JCGI, Janus Capital, the Advisory Committee of the Janus 401(k) plan, and the current or former directors of JCGI are the remaining defendants in one or more of the actions. The complaint in the 401(k) plan class action (action (iii) described above) was voluntarily dismissed, but was refiled using a new named plaintiff and asserting claims similar to the initial complaint. The Attorney General's Office for the State of West Virginia filed a separate market timing related civil action against Janus Capital and several other non-affiliated mutual fund companies, claiming violations under the West Virginia Consumer Credit and Protection Act. The civil action requests certain monetary penalties, among other relief. This action has been removed to federal court and transferred to the Multidistrict Litigation case in the U.S. District Court of 30 Janus Orion Fund prospectus Baltimore, Maryland described above. In addition, the Auditor of the State of West Virginia, in his capacity as securities commissioner, has issued an order indicating an intent to initiate administrative proceedings against most of the defendants in the market timing cases (including Janus Capital) and seeking disgorgement and other monetary relief based on similar market timing allegations. In addition to the "market timing" actions described above, Janus Capital is a defendant in a consolidated lawsuit in the U.S. District Court for the District of Colorado challenging the investment advisory fees charged by Janus Capital to certain Janus funds. The action was filed in 2004 by fund investors asserting breach of fiduciary duty under Section 36(b) of the Investment Company Act of 1940. The plaintiffs seek declaratory and injunctive relief and an unspecified amount of damages. In 2001, Janus Capital's predecessor was also named as a defendant in a class action suit in the U.S. District Court for the Southern District of New York, alleging that certain underwriting firms and institutional investors violated antitrust laws in connection with initial public offerings. The U.S. District Court dismissed the plaintiff's antitrust claims in November 2003, however, the U.S. Court of Appeals vacated that decision and remanded it for further proceedings. Additional lawsuits may be filed against certain of the Janus funds, Janus Capital, and related parties in the future. Janus Capital does not currently believe that these pending actions will materially affect its ability to continue providing services it has agreed to provide to the Janus funds. DISTRIBUTION OF THE FUND The Fund is distributed by Janus Distributors LLC, which is a member of the National Association of Securities Dealers, Inc. ("NASD"). To obtain information about NASD member firms and their associated persons, you may contact NASD Regulation, Inc. at www.nasdr.com, or the Public Disclosure Hotline at 800-289-9999. An investor brochure containing information describing the Public Disclosure Program is available from NASD Regulation, Inc. Other information 31 DISTRIBUTIONS AND TAXES -------------------------------------------------------------------------------- DISTRIBUTIONS To avoid taxation of the Fund, the Internal Revenue Code requires the Fund to distribute all or substantially all of its net investment income and any net capital gains realized on its investments at least annually. The Fund's income from certain dividends, interest, and any net realized short-term capital gains are paid to shareholders as ordinary income dividends. Certain dividend income may be reported to shareholders as "qualified dividend income," which is generally subject to reduced rates of taxation. Net realized long-term capital gains are paid to shareholders as capital gains distributions, regardless of how long you have held shares of the Fund. Dividends and capital gains distributions are normally declared and distributed in December. If necessary, dividends and net capital gains may be distributed at other times as well. HOW DISTRIBUTIONS AFFECT THE FUND'S NAV Distributions are paid to shareholders as of the record date of a distribution of the Fund, regardless of how long the shares have been held. Undistributed dividends and net capital gains are included in the Fund's daily NAV. The share price of the Fund drops by the amount of the distribution, net of any subsequent market fluctuations. For example, assume that on December 31, the Fund declared a dividend in the amount of $0.25 per share. If the Fund's share price was $10.00 on December 30, the Fund's share price on December 31 would be $9.75, barring market fluctuations. You should be aware that distributions from a taxable mutual fund do not increase the value of your investment and may create income tax obligations. "BUYING A DIVIDEND" If you purchase shares of the Fund just before a distribution, you will pay the full price for the shares and receive a portion of the purchase price back as a taxable distribution. This is referred to as "buying a dividend." In the above example, if you bought shares on December 30, you would have paid $10.00 per share. On December 31, the Fund would pay you $0.25 per share as a dividend and your shares would now be worth $9.75 per share. Unless your account is set up as a tax-deferred account, dividends paid to you would be included in your gross income for tax purposes, even though you may not have participated in the increase in NAV of the Fund, whether or not you reinvested the dividends. Before buying shares of the Fund close to year-end, you should consult with your tax adviser as to potential tax consequences of any distributions that may be paid shortly after purchase. 32 Janus Orion Fund prospectus TAXES As with any investment, you should consider the tax consequences of investing in the Fund. Any time you sell or exchange shares of a fund in a taxable account, it is considered a taxable event. For federal income tax purposes, an exchange is treated the same as a sale. Depending on the purchase price and the sale price, you may have a gain or loss on the transaction; whether long-term or short-term depends on how long you owned the shares. Any tax liabilities generated by your transactions are your responsibility. The following discussion does not apply to qualified tax-deferred accounts or other non-taxable entities, nor is it a complete analysis of the federal income tax implications of investing in the Fund. You should consult your own tax adviser if you have any questions. Additionally, state or local taxes may apply to your investment, depending upon the laws of your state of residence. TAXES ON DISTRIBUTIONS Dividends and distributions of the Fund are subject to federal income tax, regardless of whether the distribution is made in cash or reinvested in additional shares of the Fund. When gains from the sale of a security held by the Fund are paid to shareholders, the rate at which the gain will be taxed to shareholders depends on the length of time the Fund held the security. In certain states, a portion of the dividends and distributions (depending on the sources of the Fund's income) may be exempt from state and local taxes. The Fund's dividends and capital gains are distributed to (and may be taxable to) those persons who are shareholders of the Fund at the record date of such payments. As a result, although the Fund's total net income and net realized gain are the results of its operations, the per share amount distributed or taxable to shareholders is affected by the number of Fund shares outstanding at the record date. Account tax information will be made available to shareholders on or before January 31st of each year. Information regarding dividends and distributions may also be reported to the Internal Revenue Service. The Fund may be required to withhold U.S. federal income tax on all taxable distributions and redemptions payable to shareholders who fail to provide their correct taxpayer identification number, fail to make certain required certifications, or who have been notified by the Internal Revenue Service that they are subject to backup withholding. The current backup withholding rate is applied. TAXATION OF THE FUND Dividends, interest, and some capital gains received by the Fund on foreign securities may be subject to foreign tax withholding or other foreign taxes. If the Fund is eligible, it may from year to year make the election permitted under Distributions and taxes 33 Section 853 of the Internal Revenue Code to pass through such taxes to shareholders as a foreign tax credit. If such an election is not made, any foreign taxes paid or accrued will represent an expense to the Fund. The Fund does not expect to pay any federal income or excise taxes because it intends to meet certain requirements of the Internal Revenue Code. It is important that the Fund meet these requirements so that any earnings on your investment will not be taxed twice. 34 Janus Orion Fund prospectus FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- The financial highlights table is intended to help you understand the Fund's financial performance for the past 5 years through October 31st of each fiscal year shown. Items "Net asset value, beginning of period" through "Net asset value, end of period" reflect financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in the Fund (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, whose report, along with the Fund's financial statements, is included in the Annual Report, which is available upon request, and incorporated by reference into the Statement of Additional Information.
JANUS ORION FUND ------------------------------------------------------------------------------------------------------------- Years ended October 31 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $6.25 $5.64 $4.33 $5.21 $8.81 INCOME FROM INVESTMENT OPERATIONS: Net investment income/(loss) 0.03 --(1) --(1) --(1) --(1) Net gain/(loss) on securities (both realized and unrealized) 1.52 0.61 1.31 (0.88) (3.58) Total from investment operations 1.55 0.61 1.31 (0.88) (3.58) LESS DISTRIBUTIONS AND OTHER: Dividends (from net investment income) -- -- -- -- (0.02) Distributions (from capital gains) -- -- -- -- -- Payment from affiliate -- --(2) -- -- -- Total distributions and other -- -- -- -- (0.02) NET ASSET VALUE, END OF PERIOD $7.80 $6.25 $5.64 $4.33 $5.21 Total return 24.80% 10.82%(3) 29.95% (16.70)% (40.69)% Net assets, end of period (in millions) $691 $530 $514 $421 $602 Average net assets for the period (in millions) $590 $540 $431 $562 $762 Ratio of gross expenses to average net assets(4) 1.02% 1.09% 1.10% 1.09% 1.06% Ratio of net expenses to average net assets 1.01% 1.08% 1.08% 1.04% 1.03% Ratio of net investment income/(loss) to average net assets 0.52% (0.05)% (0.43)% (0.30)% (0.06)% Portfolio turnover rate 68% 69% 72% 161% 206% -------------------------------------------------------------------------------------------------------------
(1) Net investment income/(loss) aggregated less than $0.01 on a per share basis for the fiscal year end. (2) Payment from affiliate aggregated less than $0.01 on a per share basis for the fiscal year end. (3) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing, and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. (4) The effect of non-recurring costs assumed by Janus Capital is included in the ratio of gross expenses to average net assets and was less than 0.01%. Financial highlights 35 GLOSSARY OF INVESTMENT TERMS -------------------------------------------------------------------------------- This glossary provides a more detailed description of some of the types of securities, investment strategies, and other instruments in which the Fund may invest. The Fund may invest in these instruments to the extent permitted by its investment objective and policies. The Fund is not limited by this discussion and may invest in any other types of instruments not precluded by the policies discussed elsewhere in this Prospectus. I. EQUITY AND DEBT SECURITIES BANK LOANS include institutionally-traded floating and fixed-rate debt securities generally acquired as a participation interest in a loan originated by a lender or other financial institution, or as an assignment of a portion of a loan previously attributable to a different lender. BONDS are debt securities issued by a company, municipality, government, or government agency. The issuer of a bond is required to pay the holder the amount of the loan (or par value of the bond) at a specified maturity and to make scheduled interest payments. CERTIFICATES OF PARTICIPATION ("COPS") are certificates representing an interest in a pool of securities. Holders are entitled to a proportionate interest in the underlying securities. Municipal lease obligations are often sold in the form of COPs. See "Municipal lease obligations" below. COMMERCIAL PAPER is a short-term debt obligation with a maturity ranging from 1 to 270 days issued by banks, corporations, and other borrowers to investors seeking to invest idle cash. A Fund may purchase commercial paper issued in private placements under Section 4(2) of the Securities Act of 1933. COMMON STOCKS are equity securities representing shares of ownership in a company and usually carry voting rights and earn dividends. Unlike preferred stock, dividends on common stock are not fixed but are declared at the discretion of the issuer's board of directors. CONVERTIBLE SECURITIES are preferred stocks or bonds that pay a fixed dividend or interest payment and are convertible into common stock at a specified price or conversion ratio. DEBT SECURITIES are securities representing money borrowed that must be repaid at a later date. Such securities have specific maturities and usually a specific rate of interest or an original purchase discount. DEPOSITARY RECEIPTS are receipts for shares of a foreign-based corporation that entitle the holder to dividends and capital gains on the underlying security. Receipts include those issued by domestic banks (American Depositary Receipts), foreign banks (Global or European Depositary Receipts), and broker-dealers (depositary shares). 36 Janus Orion Fund prospectus EQUITY SECURITIES generally include domestic and foreign common stocks; preferred stocks; securities convertible into common stocks or preferred stocks; warrants to purchase common or preferred stocks; and other securities with equity characteristics. EXCHANGE-TRADED FUNDS are index-based investment companies which hold substantially all of their assets in securities with equity characteristics. As a shareholder of another investment company, a Fund would bear its pro rata portion of the other investment company's expenses, including advisory fees, in addition to the expenses the Fund bears directly in connection with its own operations. FIXED-INCOME SECURITIES are securities that pay a specified rate of return. The term generally includes short- and long-term government, corporate, and municipal obligations that pay a specified rate of interest, dividends, or coupons for a specified period of time. Coupon and dividend rates may be fixed for the life of the issue or, in the case of adjustable and floating rate securities, for a shorter period. HIGH-YIELD/HIGH-RISK BONDS are bonds that are rated below investment grade by the primary rating agencies (i.e., BB+ or lower by Standard & Poor's and Fitch, and Ba or lower by Moody's). Other terms commonly used to describe such bonds include "lower rated bonds," "non-investment grade bonds," and "junk bonds." INDUSTRIAL DEVELOPMENT BONDS are revenue bonds that are issued by a public authority but which may be backed only by the credit and security of a private issuer and may involve greater credit risk. See "Municipal securities" below. MORTGAGE- AND ASSET-BACKED SECURITIES are shares in a pool of mortgages or other debt. These securities are generally pass-through securities, which means that principal and interest payments on the underlying securities (less servicing fees) are passed through to shareholders on a pro rata basis. These securities involve prepayment risk, which is the risk that the underlying mortgages or other debt may be refinanced or paid off prior to their maturities during periods of declining interest rates. In that case, a Fund may have to reinvest the proceeds from the securities at a lower rate. Potential market gains on a security subject to prepayment risk may be more limited than potential market gains on a comparable security that is not subject to prepayment risk. MORTGAGE DOLLAR ROLLS are transactions in which a Fund sells a mortgage-related security, such as a security issued by GNMA, to a dealer and simultaneously agrees to purchase a similar security (but not the same security) in the future at a pre-determined price. A "dollar roll" can be viewed as a collateralized borrowing in which a Fund pledges a mortgage-related security to a dealer to obtain cash. Glossary of investment terms 37 MUNICIPAL LEASE OBLIGATIONS are revenue bonds backed by leases or installment purchase contracts for property or equipment. Lease obligations may not be backed by the issuing municipality's credit and may involve risks not normally associated with general obligation bonds and other revenue bonds. For example, their interest may become taxable if the lease is assigned and the holders may incur losses if the issuer does not appropriate funds for the lease payments on an annual basis, which may result in termination of the lease and possible default. MUNICIPAL SECURITIES are bonds or notes issued by a U.S. state or political subdivision. A municipal security may be a general obligation backed by the full faith and credit (i.e., the borrowing and taxing power) of a municipality or a revenue obligation paid out of the revenues of a designated project, facility, or revenue source. PASS-THROUGH SECURITIES are shares or certificates of interest in a pool of debt obligations that have been repackaged by an intermediary, such as a bank or broker-dealer. PASSIVE FOREIGN INVESTMENT COMPANIES (PFICS) are any foreign corporations which generate certain amounts of passive income or hold certain amounts of assets for the production of passive income. Passive income includes dividends, interest, royalties, rents, and annuities. To avoid taxes and interest that a Fund must pay if these investments are profitable, the Fund may make various elections permitted by the tax laws. These elections could require that a Fund recognize taxable income, which in turn must be distributed, before the securities are sold and before cash is received to pay the distributions. PAY-IN-KIND BONDS are debt securities that normally give the issuer an option to pay cash at a coupon payment date or give the holder of the security a similar bond with the same coupon rate and a face value equal to the amount of the coupon payment that would have been made. PREFERRED STOCKS are equity securities that generally pay dividends at a specified rate and have preference over common stock in the payment of dividends and liquidation. Preferred stock generally does not carry voting rights. REAL ESTATE INVESTMENT TRUST (REIT) is an investment trust that operates through the pooled capital of many investors who buy its shares. Investments are in direct ownership of either income property or mortgage loans. RULE 144A SECURITIES are securities that are not registered for sale to the general public under the Securities Act of 1933, but that may be resold to certain institutional investors. STANDBY COMMITMENT is a right to sell a specified underlying security or securities within a specified period of time and at an exercise price equal to the 38 Janus Orion Fund prospectus amortized cost of the underlying security or securities plus accrued interest, if any, at the time of exercise, that may be sold, transferred, or assigned only with the underlying security or securities. A standby commitment entitles the holder to receive same day settlement, and will be considered to be from the party to whom the investment company will look for payment of the exercise price. STEP COUPON BONDS are high-quality issues with above-market interest rates and a coupon that increases over the life of the bond. They may pay monthly, semiannual, or annual interest payments. On the date of each coupon payment, the issuer decides whether to call the bond at par, or whether to extend it until the next payment date at the new coupon rate. STRIP BONDS are debt securities that are stripped of their interest (usually by a financial intermediary) after the securities are issued. The market value of these securities generally fluctuates more in response to changes in interest rates than interest-paying securities of comparable maturity. TENDER OPTION BONDS are relatively long-term bonds that are coupled with the option to tender the securities to a bank, broker-dealer, or other financial institution at periodic intervals and receive the face value of the bond. This investment structure is commonly used as a means of enhancing a security's liquidity. U.S. GOVERNMENT SECURITIES include direct obligations of the U.S. Government that are supported by its full faith and credit. Treasury bills have initial maturities of less than one year, Treasury notes have initial maturities of one to ten years, and Treasury bonds may be issued with any maturity but generally have maturities of at least ten years. U.S. Government securities also include indirect obligations of the U.S. Government that are issued by federal agencies and government sponsored entities. Unlike Treasury securities, agency securities generally are not backed by the full faith and credit of the U.S. Government. Some agency securities are supported by the right of the issuer to borrow from the Treasury, others are supported by the discretionary authority of the U.S. Government to purchase the agency's obligations, and others are supported only by the credit of the sponsoring agency. VARIABLE AND FLOATING RATE SECURITIES have variable or floating rates of interest and, under certain limited circumstances, may have varying principal amounts. Variable and floating rate securities pay interest at rates that are adjusted periodically according to a specified formula, usually with reference to some interest rate index or market interest rate (the "underlying index"). The floating rate tends to decrease the security's price sensitivity to changes in interest rates. WARRANTS are securities, typically issued with preferred stock or bonds, which give the holder the right to buy a proportionate amount of common stock at a specified price. The specified price is usually higher than the market price at the Glossary of investment terms 39 time of issuance of the warrant. The right may last for a period of years or indefinitely. ZERO COUPON BONDS are debt securities that do not pay regular interest at regular intervals, but are issued at a discount from face value. The discount approximates the total amount of interest the security will accrue from the date of issuance to maturity. The market value of these securities generally fluctuates more in response to changes in interest rates than interest-paying securities. II. FUTURES, OPTIONS, AND OTHER DERIVATIVES CREDIT DEFAULT SWAPS are a specific kind of counterparty agreement that allows the transfer of third party credit risk from one party to the other. One party in the swap is a lender and faces credit risk from a third party, and the counterparty in the credit default swap agrees to insure this risk in exchange of regular periodic payments. EQUITY-LINKED STRUCTURED NOTES are debt securities which combine the characteristics of common stock and the sale of an option. The return component is based on the performance of a single equity security, a basket of equity securities, or an equity index and the sale of an option which is recognized as income. Equity-linked structured notes are typically offered in limited transactions to financial institutions by investment banks. There is no guaranteed return of principal with these securities. The appreciation potential of these securities is limited by a maximum payment or call right and can be influenced by many unpredictable factors. FORWARD CONTRACTS are contracts to purchase or sell a specified amount of a financial instrument for an agreed upon price at a specified time. Forward contracts are not currently exchange-traded and are typically negotiated on an individual basis. A Fund may enter into forward currency contracts for investment purposes or to hedge against declines in the value of securities denominated in, or whose value is tied to, a currency other than the U.S. dollar or to reduce the impact of currency appreciation on purchases of such securities. It may also enter into forward contracts to purchase or sell securities or other financial indices. FUTURES CONTRACTS are contracts that obligate the buyer to receive and the seller to deliver an instrument or money at a specified price on a specified date. A Fund may buy and sell futures contracts on foreign currencies, securities, and financial indices including indices of U.S. Government, foreign government, equity, or fixed-income securities. A Fund may also buy options on futures contracts. An option on a futures contract gives the buyer the right, but not the obligation, to buy or sell a futures contract at a specified price on or before a specified date. Futures contracts and options on futures are standardized and traded on designated exchanges. 40 Janus Orion Fund prospectus INDEXED/STRUCTURED SECURITIES are typically short- to intermediate-term debt securities whose value at maturity or interest rate is linked to currencies, interest rates, equity securities, indices, commodity prices, or other financial indicators. Such securities may be positively or negatively indexed (e.g., their value may increase or decrease if the reference index or instrument appreciates). Indexed/ structured securities may have return characteristics similar to direct investments in the underlying instruments and may be more volatile than the underlying instruments. A Fund bears the market risk of an investment in the underlying instruments, as well as the credit risk of the issuer. INTEREST RATE SWAPS involve the exchange by two parties of their respective commitments to pay or receive interest (e.g., an exchange of floating rate payments for fixed rate payments). INVERSE FLOATERS are debt instruments whose interest rate bears an inverse relationship to the interest rate on another instrument or index. For example, upon reset, the interest rate payable on the inverse floater may go down when the underlying index has risen. Certain inverse floaters may have an interest rate reset mechanism that multiplies the effects of change in the underlying index. Such mechanism may increase the volatility of the security's market value. OPTIONS are the right, but not the obligation, to buy or sell a specified amount of securities or other assets on or before a fixed date at a predetermined price. A Fund may purchase and write put and call options on securities, securities indices, and foreign currencies. A Fund may purchase or write such options individually or in combination. PARTICIPATORY NOTES are derivative securities which are linked to the performance of an underlying Indian security and which allow investors to gain market exposure to Indian securities without trading directly in the local Indian market. III. OTHER INVESTMENTS, STRATEGIES, AND/OR TECHNIQUES REPURCHASE AGREEMENTS involve the purchase of a security by a Fund and a simultaneous agreement by the seller (generally a bank or dealer) to repurchase the security from the Fund at a specified date or upon demand. This technique offers a method of earning income on idle cash. These securities involve the risk that the seller will fail to repurchase the security, as agreed. In that case, a Fund will bear the risk of market value fluctuations until the security can be sold and may encounter delays and incur costs in liquidating the security. REVERSE REPURCHASE AGREEMENTS involve the sale of a security by a Fund to another party (generally a bank or dealer) in return for cash and an agreement by the Fund to buy the security back at a specified price and time. This technique will be used primarily to provide cash to satisfy unusually high redemption requests, or for other temporary or emergency purposes. Glossary of investment terms 41 SHORT SALES in which a Fund may engage may be of two types, short sales "against the box" or "naked" short sales. Short sales against the box involve selling either a security that a Fund owns, or a security equivalent in kind or amount to the security sold short that the Fund has the right to obtain, for delivery at a specified date in the future. Naked short sales involve selling a security that a Fund borrows and does not own. A Fund may enter into a short sale to hedge against anticipated declines in the market price of a security or to reduce portfolio volatility. If the value of a security sold short increases prior to the scheduled delivery date, the Fund loses the opportunity to participate in the gain. For naked short sales, the Fund will incur a loss if the value of a security increases during this period because it will be paying more for the security than it has received from the purchaser in the short sale. If the price declines during this period, a Fund will realize a short-term capital gain. Although a Fund's potential for gain as a result of a short sale is limited to the price at which it sold the security short less the cost of borrowing the security, its potential for loss is theoretically unlimited because there is no limit to the cost of replacing the borrowed security. WHEN-ISSUED, DELAYED DELIVERY, AND FORWARD COMMITMENT TRANSACTIONS generally involve the purchase of a security with payment and delivery at some time in the future - i.e., beyond normal settlement. A Fund does not earn interest on such securities until settlement and bears the risk of market value fluctuations in between the purchase and settlement dates. New issues of stocks and bonds, private placements, and U.S. Government securities may be sold in this manner. 42 Janus Orion Fund prospectus This page intentionally left blank. 43 This page intentionally left blank. 44 This page intentionally left blank. You can make inquiries and request other information, including a Statement of Additional Information, Annual Report, or Semiannual Report, free of charge, by contacting your financial intermediary or plan sponsor, or by contacting a Janus representative at 1-800-525-0020. The Fund's Statement of Additional Information and most recent Annual and Semiannual Reports are also available, free of charge, on www.janus.com. Additional information about the Fund's investments is available in the Fund's Annual and Semiannual Reports. In the Fund's Annual and Semiannual Reports, you will find a discussion of the market conditions and investment strategies that significantly affected the Fund's performance during its last fiscal period. Other information is also available from financial intermediaries that sell shares of the Fund. The Statement of Additional Information provides detailed information about the Fund and is incorporated into this Prospectus by reference. You may review and copy information about the Fund (including the Fund's Statement of Additional Information) at the Public Reference Room of the SEC or get text only copies, after paying a duplicating fee, by sending an electronic request by e-mail to publicinfo@sec.gov or by writing to or calling the Public Reference Room, Washington, D.C. 20549-0102 (1-202-942-8090). Information on the operation of the Public Reference Room may also be obtained by calling this number. You may also obtain reports and other information about the Fund from the Electronic Data Gathering Analysis and Retrieval (EDGAR) Database on the SEC's website at http://www.sec.gov. (JANUS LOGO) www.janus.com 151 Detroit Street Denver, CO 80206-4805 1-800-525-0020 The Trust's Investment Company Act File No. is 811-1879. February 28, 2006 GROWTH Janus Fund Janus Enterprise Fund Janus Mercury Fund Janus Olympus Fund Janus Orion Fund Janus Triton Fund SPECIALTY GROWTH Janus Global Life Sciences Fund Janus Global Technology Fund CORE Janus Balanced Fund Janus Contrarian Fund Janus Core Equity Fund Janus Growth and Income Fund Janus Research Fund RISK-MANAGED INTECH Risk-Managed Stock Fund (formerly named Janus Risk-Managed Stock Fund) VALUE Janus Mid Cap Value Fund - Investor Shares INTERNATIONAL & GLOBAL Janus Global Opportunities Fund Janus Overseas Fund Janus Worldwide Fund JANUS EQUITY FUNDS Prospectus ELIMINATE PAPER MAIL. Set up e-Delivery of prospectuses, annual reports, and statements at WWW.JANUS.COM. The Securities and Exchange Commission has not approved or disapproved of these securities or passed on the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offense. This Prospectus is for those shareholders investing directly with the Funds. (JANUS LOGO) This Prospectus describes eighteen portfolios (each, a "Fund" and collectively, the "Funds") of Janus Investment Fund (the "Trust"). Janus Capital Management LLC ("Janus Capital" or "Janus") serves as investment adviser to each Fund. INTECH Risk-Managed Stock Fund is subadvised by Enhanced Investment Technologies, LLC ("INTECH"). Janus Mid Cap Value Fund is subadvised by Perkins, Wolf, McDonnell and Company, LLC ("Perkins"). None of the Funds in this Prospectus, except Janus Mid Cap Value Fund, have any class designations. Janus Mid Cap Value Fund currently offers two classes of shares, with the Investor Shares being offered by this Prospectus. TABLE OF CONTENTS -------------------------------------------------------------------------------- RISK/RETURN SUMMARY Janus Fund............................................... 2 Janus Enterprise Fund.................................... 5 Janus Mercury Fund....................................... 8 Janus Olympus Fund....................................... 11 Janus Orion Fund......................................... 14 Janus Triton Fund........................................ 17 Janus Global Life Sciences Fund.......................... 19 Janus Global Technology Fund............................. 23 Janus Balanced Fund...................................... 27 Janus Contrarian Fund.................................... 30 Janus Core Equity Fund................................... 33 Janus Growth and Income Fund............................. 36 Janus Research Fund...................................... 39 INTECH Risk-Managed Stock Fund........................... 42 Janus Mid Cap Value Fund - Investor Shares............... 45 Janus Global Opportunities Fund.......................... 49 Janus Overseas Fund...................................... 53 Janus Worldwide Fund..................................... 57 FEES AND EXPENSES........................................... 60 PRINCIPAL INVESTMENT STRATEGIES AND RISKS Frequently asked questions about principal investment strategies............................................... 63 Risks.................................................... 68 Frequently asked questions about certain risks........... 69 General portfolio policies............................... 74 SHAREHOLDER'S MANUAL Doing business with Janus................................ 80 Minimum investments...................................... 81 Types of account ownership............................... 81 To open an account or buy shares......................... 84 To exchange shares....................................... 85 To sell shares........................................... 85 Excessive trading........................................ 88 Redemption fee........................................... 92 Shareholder services and account policies................ 98 MANAGEMENT OF THE FUNDS Investment adviser....................................... 102 Management expenses...................................... 104 Subadvisers.............................................. 105 Investment personnel..................................... 106 OTHER INFORMATION........................................... 117 DISTRIBUTIONS AND TAXES..................................... 121 FINANCIAL HIGHLIGHTS........................................ 124 GLOSSARY OF INVESTMENT TERMS................................ 143
Table of contents 1 RISK/RETURN SUMMARY -------------------------------------------------------------------------------- JANUS FUND Janus Fund (the "Fund") is designed for long-term investors who primarily seek growth of capital and who can tolerate the greater risks associated with common stock investments. INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- JANUS FUND seeks long-term growth of capital in a manner consistent with the preservation of capital. The Fund's Trustees may change this objective or the Fund's principal investment strategies without a shareholder vote. If there is a material change to the Fund's objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will meet its objective. PRINCIPAL INVESTMENT STRATEGIES The Fund pursues its objective by investing primarily in common stocks selected for their growth potential. Although the Fund may invest in companies of any size, it generally invests in larger, more established companies. As of December 31, 2005, the Fund's weighted average market capitalization was $60.9 billion. The portfolio manager applies a "bottom up" approach in choosing investments. In other words, the portfolio manager looks at companies one at a time to determine if a company is an attractive investment opportunity and if it is consistent with the Fund's investment policies. If the portfolio manager is unable to find such investments, the Fund's uninvested assets may be held in cash or similar investments, subject to the Fund's specific investment policies. Within the parameters of its specific investment policies, the Fund may invest without limit in foreign equity and debt securities, which may include investments in emerging markets. The Fund will limit its investment in high- yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net assets. MAIN INVESTMENT RISKS The biggest risk is that the Fund's returns may vary, and you could lose money. The Fund is designed for long-term investors interested in an equity portfolio, including common stocks. Common stocks tend to be more volatile than many other investment choices. The value of the Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases. The value of the Fund's portfolio could also decrease if the stock market goes down regardless of 2 Janus Equity Funds prospectus how well the individual companies perform. If the value of the Fund's portfolio decreases, the Fund's net asset value ("NAV") will also decrease, which means if you sell your shares in the Fund you may lose money. To the extent the Fund invests in foreign securities, returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic changes in a particular country. To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV may be affected by factors such as economic changes, political changes, or developments specific to the company that issued the bond. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. PERFORMANCE INFORMATION The following information provides some indication of the risks of investing in the Fund by showing how the Fund's performance has varied over time. The bar chart depicts the change in performance from year to year during the periods indicated. The table compares the Fund's average annual returns for the periods indicated to broad-based securities market indices. The indices are not available for direct investment. Risk/return summary 3 JANUS FUND Annual returns for periods ended 12/31 19.61% 22.72% 38.89% 47.13% (14.91)% (26.10)% (27.56)% 31.71% 4.69% 3.98% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Best Quarter: 4th-1998 28.44% Worst Quarter: 3rd-2001 (25.82)%
Average annual total return for periods ended 12/31/05 ------------------------------------------------------ Since Inception 1 year 5 years 10 years (2/5/70) Janus Fund Return Before Taxes 3.98% (5.16)% 6.95% 13.82% Return After Taxes on Distributions 3.97% (5.16)% 5.47% 10.82% Return After Taxes on Distributions and Sale of Fund Shares(1) 2.60% (4.31)% 5.50% 10.68% Russell 1000(R) Growth Index(2) 5.26% (3.58)% 6.73% N/A (reflects no deduction for expenses, fees, or taxes) S&P 500(R) Index(3) 4.91% 0.54% 9.07% 11.35% (reflects no deduction for expenses, fees, or taxes) -----------------------------------------
(1) If the Fund incurs a loss, which generates a tax benefit, the Return After Taxes on Distributions and Sale of Fund Shares may exceed the Fund's other return figures. (2) The Russell 1000(R) Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. (3) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500 stocks, a widely recognized, unmanaged index of common stock prices. After-tax returns are calculated using the historically highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your individual tax situation and may differ from those shown in the preceding table. The after-tax return information shown above does not apply to Fund shares held through a tax-deferred account, such as a 401(k) plan or IRA. The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. 4 Janus Equity Funds prospectus JANUS ENTERPRISE FUND Janus Enterprise Fund (the "Fund") is designed for long-term investors who primarily seek growth of capital and who can tolerate the greater risks associated with common stock investments. INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- JANUS ENTERPRISE FUND seeks long-term growth of capital. The Fund's Trustees may change this objective or the Fund's principal investment strategies without a shareholder vote. If there is a material change to the Fund's objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will meet its objective. PRINCIPAL INVESTMENT STRATEGIES The Fund pursues its objective by investing primarily in common stocks selected for their growth potential, and normally invests at least 50% of its equity assets in medium-sized companies. Medium-sized companies are those whose market capitalization falls within the range of companies in the Russell Midcap(R) Growth Index. Market capitalization is a commonly used measure of the size and value of a company. The market capitalizations within the Index will vary, but as of December 31, 2005, they ranged from approximately $978 million to $17.9 billion. The portfolio manager applies a "bottom up" approach in choosing investments. In other words, the portfolio manager looks at companies one at a time to determine if a company is an attractive investment opportunity and if it is consistent with the Fund's investment policies. If the portfolio manager is unable to find such investments, the Fund's uninvested assets may be held in cash or similar investments, subject to the Fund's specific investment policies. Within the parameters of its specific investment policies, the Fund may invest without limit in foreign equity and debt securities, which may include investments in emerging markets. The Fund will limit its investment in high- yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net assets. MAIN INVESTMENT RISKS The biggest risk is that the Fund's returns may vary, and you could lose money. The Fund is designed for long-term investors interested in an equity portfolio, including common stocks. Common stocks tend to be more volatile than many other investment choices. Risk/return summary 5 The value of the Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases. The value of the Fund's portfolio could also decrease if the stock market goes down regardless of how well the individual companies perform. If the value of the Fund's portfolio decreases, the Fund's net asset value ("NAV") will also decrease, which means if you sell your shares in the Fund you may lose money. The Fund normally invests at least 50% of its equity assets in securities issued by medium-sized companies. The Fund may also invest in securities issued by small-sized companies. Medium-sized and small-sized companies tend to be more volatile than securities issued by larger or more established companies. As a result, the Fund's returns may be more volatile than those of a fund holding securities of larger, more established companies. To the extent the Fund invests in foreign securities, returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic changes in a particular country. To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV may be affected by factors such as economic changes, political changes, or developments specific to the company that issued the bond. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. PERFORMANCE INFORMATION The following information provides some indication of the risks of investing in the Fund by showing how the Fund's performance has varied over time. The bar chart depicts the change in performance from year to year during the periods indicated. The table compares the Fund's average annual returns for the periods indicated to broad-based securities market indices. The indices are not available for direct investment. 6 Janus Equity Funds prospectus JANUS ENTERPRISE FUND Annual returns for periods ended 12/31 11.65% 10.82% 33.75% 121.90% (30.52)% (39.93)% (28.28)% 35.82% 20.69% 11.40% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Best Quarter: 4th-1999 57.93% Worst Quarter: 1st-2001 (32.66)%
Average annual total return for periods ended 12/31/05 ------------------------------------------------------ Since Inception 1 year 5 years 10 years (9/1/92) Janus Enterprise Fund Return Before Taxes 11.40% (4.68)% 7.22% 11.31% Return After Taxes on Distributions 11.40% (4.68)% 6.54% 10.39% Return After Taxes on Distributions and Sale of Fund Shares(1) 7.41% (3.92)% 6.05% 9.72% Russell Midcap(R) Growth Index(2) 12.10% 1.38% 9.27% 11.03% (reflects no deduction for expenses, fees, or taxes) S&P MidCap 400 Index(3) 12.56% 8.60% 14.36% 14.71% (reflects no deduction for expenses, fees, or taxes) ------------------------------------------
(1) If the Fund incurs a loss, which generates a tax benefit, the Return After Taxes on Distributions and Sale of Fund Shares may exceed the Fund's other return figures. (2) The Russell Midcap(R) Growth Index measures the performance of those Russell Midcap companies with higher price-to-book ratios and higher forecasted growth values. The stocks are also members of the Russell 1000(R) Growth Index. (3) The S&P MidCap 400 Index is an unmanaged group of 400 domestic stocks chosen for their market size, liquidity, and industry group representation. After-tax returns are calculated using the historically highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your individual tax situation and may differ from those shown in the preceding table. The after-tax return information shown above does not apply to Fund shares held through a tax-deferred account, such as a 401(k) plan or IRA. The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. Risk/return summary 7 JANUS MERCURY FUND Janus Mercury Fund (the "Fund") is designed for long-term investors who primarily seek growth of capital and who can tolerate the greater risks associated with common stock investments. INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- JANUS MERCURY FUND seeks long-term growth of capital. The Fund's Trustees may change this objective or the Fund's principal investment strategies without a shareholder vote. If there is a material change to the Fund's objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will meet its objective. PRINCIPAL INVESTMENT STRATEGIES The Fund pursues its objective by investing primarily in common stocks selected for their growth potential. The Fund may invest in companies of any size, from larger, well-established companies to smaller, emerging growth companies. Janus Capital's equity research analysts (the "Research Team") select investments for the Fund. The Research Team, comprised of sector specialists, conducts fundamental analysis with a focus on "bottom-up" research, quantitative modeling, and valuation analysis. Using this research process, analysts rate their stocks based upon attractiveness. Analysts bring their high conviction ideas to their respective sector teams. Sector teams compare the appreciation potential of each of the team's high-conviction ideas and construct a sector portfolio that is intended to maximize the best risk-reward opportunities. Although the Research Team may find high-conviction investment ideas anywhere in the world, the Research Team may emphasize investments in securities of U.S. based issuers. Positions may be sold when, among other things, there is no longer high conviction in the return potential of the investment or if the risk characteristics have caused a re-evaluation of the opportunity. This may occur if the stock has appreciated and reflects the anticipated value, if another company represents a better risk/reward opportunity or if the investment's fundamental characteristics deteriorate. Securities may also be sold from the portfolio to rebalance sector weightings. Janus Capital's Director of Research oversees the investment process and is responsible for day-to-day operations of the Fund. It is expected that the Fund will be broadly diversified among a variety of industry sectors. The Fund intends to be fully invested under normal circumstances, but may at times hold cash or cash equivalents. 8 Janus Equity Funds prospectus Within the parameters of its specific investment policies, the Fund may invest without limit in foreign equity and debt securities, which may include investments in emerging markets. The Fund will limit its investment in high- yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net assets. MAIN INVESTMENT RISKS The biggest risk is that the Fund's returns may vary, and you could lose money. The Fund is designed for long-term investors interested in an equity portfolio, including common stocks. Common stocks tend to be more volatile than many other investment choices. The value of the Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases. The value of the Fund's portfolio could also decrease if the stock market goes down regardless of how well the individual companies perform. If the value of the Fund's portfolio decreases, the Fund's net asset value ("NAV") will also decrease, which means if you sell your shares in the Fund you may lose money. To the extent the Fund invests in foreign securities, returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic changes in a particular country. To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV may be affected by factors such as economic changes, political changes, or developments specific to the company that issued the bond. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. PERFORMANCE INFORMATION The following information provides some indication of the risks of investing in the Fund by showing how the Fund's performance has varied over time. The bar chart depicts the change in performance from year to year during the periods indicated. The table compares the Fund's average annual returns for the periods indicated to broad-based securities market indices. The indices are not available for direct investment. Risk/return summary 9 JANUS MERCURY FUND Annual returns for periods ended 12/31 17.67% 11.88% 58.41% 96.23% (22.75)% (29.78)% (29.00)% 32.11% 10.77% 6.82% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Best Quarter: 4th-1999 42.72% Worst Quarter: 1st-2001 (24.30)%
Average annual total return for periods ended 12/31/05 ------------------------------------------------------ Since Inception 1 year 5 years 10 years (5/3/93) Janus Mercury Fund Return Before Taxes 6.82% (4.86)% 9.43% 12.71% Return After Taxes on Distributions 6.78% (4.90)% 7.67% 10.82% Return After Taxes on Distributions and Sale of Fund Shares(1) 4.49% (4.08)% 7.39% 10.37% Russell 1000(R) Growth Index(2) 5.26% (3.58)% 6.73% 8.75% (reflects no deduction for expenses, fees, or taxes) S&P 500(R) Index(3) 4.91% 0.54% 9.07% 10.58% (reflects no deduction for expenses, fees, or taxes) ------------------------------------------
(1) If the Fund incurs a loss, which generates a tax benefit, the Return After Taxes on Distributions and Sale of Fund Shares may exceed the Fund's other return figures. (2) The Russell 1000(R) Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. (3) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500 stocks, a widely recognized, unmanaged index of common stock prices. After-tax returns are calculated using the historically highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your individual tax situation and may differ from those shown in the preceding table. The after-tax return information shown above does not apply to Fund shares held through a tax-deferred account, such as a 401(k) plan or IRA. The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. 10 Janus Equity Funds prospectus JANUS OLYMPUS FUND Janus Olympus Fund (the "Fund") is designed for long-term investors who primarily seek growth of capital and who can tolerate the greater risks associated with common stock investments. INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- JANUS OLYMPUS FUND seeks long-term growth of capital. The Fund's Trustees may change this objective or the Fund's principal investment strategies without a shareholder vote. If there is a material change to the Fund's objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will meet its objective. PRINCIPAL INVESTMENT STRATEGIES The Fund pursues its objective by investing primarily in common stocks selected for their growth potential. The Fund may invest in companies of any size, from larger, well-established companies to smaller, emerging growth companies. The portfolio manager applies a "bottom up" approach in choosing investments. In other words, the portfolio manager looks at companies one at a time to determine if a company is an attractive investment opportunity and if it is consistent with the Fund's investment policies. If the portfolio manager is unable to find such investments, the Fund's uninvested assets may be held in cash or similar investments, subject to the Fund's specific investment policies. Within the parameters of its specific investment policies, the Fund may invest without limit in foreign equity and debt securities, which may include investments in emerging markets. The Fund will limit its investment in high- yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net assets. MAIN INVESTMENT RISKS The biggest risk is that the Fund's returns may vary, and you could lose money. The Fund is designed for long-term investors interested in an equity portfolio, including common stocks. Common stocks tend to be more volatile than many other investment choices. The value of the Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases. The value of the Fund's portfolio could also decrease if the stock market goes down regardless of how well the individual companies perform. If the value of the Fund's portfolio decreases, the Fund's net asset value ("NAV") will also decrease, which means if you sell your shares in the Fund you may lose money. Risk/return summary 11 To the extent the Fund invests in foreign securities, returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic changes in a particular country. To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV may be affected by factors such as economic changes, political changes, or developments specific to the company that issued the bond. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. PERFORMANCE INFORMATION The following information provides some indication of the risks of investing in the Fund by showing how the Fund's performance has varied over time. The bar chart depicts the change in performance from year to year during the periods indicated. The table compares the Fund's average annual returns for the periods indicated to broad-based securities market indices. The indices are not available for direct investment. 12 Janus Equity Funds prospectus JANUS OLYMPUS FUND Annual returns for periods ended 12/31 21.73% 26.73% 56.97% 100.12% (21.63)% (32.05)% (28.19)% 31.65% 8.74% 14.21% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Best Quarter: 4th-1999 51.67% Worst Quarter: 1st-2001 (26.29)%
Average annual total return for periods ended 12/31/05 ------------------------------------------------------ Since Inception 1 year 5 years 10 years (12/29/95) Janus Olympus Fund Return Before Taxes 14.21% (4.42)% 11.72% 11.72% Return After Taxes on Distributions 14.21% (4.45)% 11.36% 11.35% Return After Taxes on Distributions and Sale of Fund Shares(1) 9.24% (3.72)% 10.33% 10.33% Russell 1000(R) Growth Index(2) 5.26% (3.58)% 6.73% 6.73% (reflects no deduction for expenses, fees, or taxes) S&P 500(R) Index(3) 4.91% 0.54% 9.07% 9.07% (reflects no deduction for expenses, fees, or taxes) ------------------------------------------
(1) If the Fund incurs a loss, which generates a tax benefit, the Return After Taxes on Distributions and Sale of Fund Shares may exceed the Fund's other return figures. (2) The Russell 1000(R) Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. (3) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500 stocks, a widely recognized, unmanaged index of common stock prices. After-tax returns are calculated using the historically highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your individual tax situation and may differ from those shown in the preceding table. The after-tax return information shown above does not apply to Fund shares held through a tax-deferred account, such as a 401(k) plan or IRA. The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. Risk/return summary 13 JANUS ORION FUND Janus Orion Fund (the "Fund") is designed for long-term investors who primarily seek growth of capital and who can tolerate the greater risks associated with common stock investments. INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- JANUS ORION FUND seeks long-term growth of capital. The Fund's Trustees may change this objective or the Fund's principal investment strategies without a shareholder vote. If there is a material change to the Fund's objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will meet its objective. PRINCIPAL INVESTMENT STRATEGIES The Fund pursues its objective by normally investing primarily in a core group of 20-30 domestic and foreign common stocks selected for their growth potential. The Fund may invest in companies of any size, from larger, well- established companies to smaller, emerging growth companies. The portfolio manager applies a "bottom up" approach in choosing investments. In other words, the portfolio manager looks at companies one at a time to determine if a company is an attractive investment opportunity and if it is consistent with the Fund's investment policies. If the portfolio manager is unable to find such investments, the Fund's uninvested assets may be held in cash or similar investments, subject to the Fund's specific investment policies. Within the parameters of its specific investment policies, the Fund may invest without limit in foreign equity and debt securities, which may include investments in emerging markets. The Fund will limit its investment in high- yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net assets. MAIN INVESTMENT RISKS The biggest risk is that the Fund's returns may vary, and you could lose money. The Fund invests primarily in common stocks, which tend to be more volatile than many other investment choices. The value of the Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases. The value of the Fund's portfolio could also decrease if the stock market goes down regardless of how well the individual companies perform. If the value of the Fund's portfolio decreases, the Fund's net asset value ("NAV") will also decrease, which means if you sell your shares in the Fund you may lose money. 14 Janus Equity Funds prospectus The Fund is classified as nondiversified. This means it may hold larger positions in a smaller number of securities than a fund that is classified as diversified. As a result, a single security's increase or decrease in value may have a greater impact on the Fund's NAV and total return. The Fund may have significant exposure to foreign markets, including emerging markets. As a result, its returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic conditions in a particular country. A market swing in one or more countries or regions where the Fund has invested a significant amount of its assets may have a greater effect on the Fund's performance than it would in a more geographically diversified portfolio. The Fund's investments in emerging market countries may involve risks greater than, or in addition to, the risks of investing in more developed countries. As of October 31, 2005, approximately 13.7% of the Fund's investments were in emerging markets. To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV may be affected by factors such as economic changes, political changes, or developments specific to the company that issued the bond. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. PERFORMANCE INFORMATION The following information provides some indication of the risks of investing in the Fund by showing how the Fund's performance has varied over time. The bar chart depicts the change in performance from year to year during the periods indicated. The table compares the Fund's average annual returns for the periods indicated to broad-based securities market indices. The indices are not available for direct investment. Risk/return summary 15 JANUS ORION FUND Annual returns for periods ended 12/31 (14.69)% (29.77)% 43.81% 14.90% 20.93% 2001 2002 2003 2004 2005 Best Quarter: 2nd-2003 23.59% Worst Quarter: 1st-2001 (22.54)%
Average annual total return for periods ended 12/31/05 ------------------------------------------------------ Since Inception 1 year 5 years (6/30/00) Janus Orion Fund Return Before Taxes 20.93% 3.67% (3.08)% Return After Taxes on Distributions 20.71% 3.63% (3.13)% Return After Taxes on Distributions and Sale of Fund Shares(1) 13.70% 3.13% (2.62)% Russell 3000(R) Growth Index(2) 5.17% (3.15)% (7.91)% (reflects no deduction for expenses, fees, or taxes) S&P 500(R) Index(3) 4.91% 0.54% (1.16)% (reflects no deduction for expenses, fees, or taxes) --------------------------------
(1) If the Fund incurs a loss, which generates a tax benefit, the Return After Taxes on Distributions and Sale of Fund Shares may exceed the Fund's other return figures. (2) The Russell 3000(R) Growth Index measures the performance of those Russell 3000(R) Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000(R) Growth or the Russell 2000(R) Growth indices. (3) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500 stocks, a widely recognized, unmanaged index of common stock prices. After-tax returns are calculated using the historically highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your individual tax situation and may differ from those shown in the preceding table. The after-tax return information shown above does not apply to Fund shares held through a tax-deferred account, such as a 401(k) plan or IRA. The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. 16 Janus Equity Funds prospectus JANUS TRITON FUND Janus Triton Fund (the "Fund") is designed for long-term investors who primarily seek growth of capital and who can tolerate the greater risks associated with common stock investments. INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- JANUS TRITON FUND seeks long-term growth of capital. The Fund's Trustees may change this objective or the Fund's principal investment strategies without a shareholder vote. If there is a material change to the Fund's objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will meet its objective. PRINCIPAL INVESTMENT STRATEGIES The Fund pursues its objective by investing primarily in common stocks selected for their growth potential. In pursuing that objective, the Fund invests in equity securities of small- and medium-sized companies. Generally, small- and medium-sized companies have a market capitalization of less than $10 billion. Market capitalization is a commonly used measure of the size and value of a company. The portfolio manager applies a "bottom up" approach in choosing investments. In other words, the portfolio manager looks at companies one at a time to determine if a company is an attractive investment opportunity and if it is consistent with the Fund's investment policies. If the portfolio manager is unable to find such investments, the Fund's uninvested assets may be held in cash or similar investments, subject to the Fund's specific investment policies. Within the parameters of its specific investment policies, the Fund may invest without limit in foreign equity and debt securities, which may include investments in emerging markets. The Fund will limit its investment in high- yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net assets. MAIN INVESTMENT RISKS The biggest risk is that the Fund's returns may vary, and you could lose money. The Fund is designed for long-term investors interested in an equity portfolio, including common stocks. Common stocks tend to be more volatile than many other investment choices. The value of the Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases. The value of the Fund's portfolio could also decrease if the stock market goes down regardless of how well the individual companies perform. If the value of the Fund's portfolio Risk/return summary 17 decreases, the Fund's net asset value ("NAV") will also decrease, which means if you sell your shares in the Fund you may lose money. The Fund invests its equity assets in securities issued by small- and medium- sized companies. Due to inherent risks such as limited product lines and/or operating history, competitive threats, limited financial resources, and the potential lack of management depth, small- and medium-sized companies tend to be more volatile than securities issued by larger or more established companies. As a result, these holdings could have a significant impact or negative effect on the Fund's returns. The Fund may have significant exposure to foreign markets, including emerging markets. As a result, its returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic conditions in a particular country. A market swing in one or more countries or regions where the Fund has invested a significant amount of its assets may have a greater effect on the Fund's performance than it would in a more geographically diversified portfolio. The Fund's investments in emerging market countries may involve risks greater than, or in addition to, the risks of investing in more developed countries. As of October 31, 2005, approximately 6.5% of the Fund's investments were in emerging markets. To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV may be affected by factors such as economic changes, political changes, or developments specific to the company that issued the bond. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. PERFORMANCE INFORMATION Since the Fund did not commence operations until February 25, 2005, it does not have a full calendar year of operations. Performance information for certain periods is included in the Fund's semiannual and annual reports. The performance of this Fund is compared to the Russell 2500(TM) Growth Index, which is the Fund's benchmark index. The Russell 2500(TM) Growth Index measures the performance of those Russell 2500 companies with higher price- to-book ratios and higher forecasted growth values. 18 Janus Equity Funds prospectus JANUS GLOBAL LIFE SCIENCES FUND Janus Global Life Sciences Fund (the "Fund") is designed for long-term investors who primarily seek growth of capital and who can tolerate the greater risks associated with common stock investments. INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- JANUS GLOBAL LIFE SCIENCES FUND seeks long-term growth of capital. The Fund's Trustees may change this objective or the Fund's principal investment strategies without a shareholder vote. The Fund has a policy of investing at least 80% of its net assets in the type of securities suggested by its name. The Fund will notify you in writing at least 60 days before making any changes to this policy. If there is a material change to the Fund's objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will meet its objective. Strategies and policies that are noted as "fundamental" cannot be changed without a shareholder vote. PRINCIPAL INVESTMENT STRATEGIES The Fund invests, under normal circumstances, at least 80% of its net assets plus the amount of any borrowings for investment purposes, in securities of companies that the portfolio manager believes have a life science orientation. Generally speaking, the "life sciences" relate to maintaining or improving quality of life. So, for example, companies with a "life science orientation" include companies engaged in research, development, production, or distribution of products or services related to health and personal care, medicine, or pharmaceuticals. The Fund implements this policy by investing primarily in equity securities of U.S. and foreign companies selected for their growth potential. The Fund normally invests in issuers from several different countries, which may include the United States. The Fund may, under unusual circumstances, invest in a single country. As a fundamental policy, the Fund normally invests at least 25% of its total assets in the "life sciences" sector, which may include companies in the following industries: health care; pharmaceuticals; agriculture; cosmetics/personal care; and biotechnology. The Fund may have significant exposure to emerging markets. For the Fund's 80% investment policy, assets are measured at the time of purchase. Risk/return summary 19 The portfolio manager applies a "bottom up" approach in choosing investments. In other words, the portfolio manager looks at companies one at a time to determine if a company is an attractive investment opportunity and if it is consistent with the Fund's investment policies. If the portfolio manager is unable to find such investments, the Fund's uninvested assets may be held in cash or similar investments, subject to the Fund's specific investment policies. Within the parameters of its specific investment policies, the Fund may invest without limit in foreign equity and debt securities, which may include investments in emerging markets. The Fund will limit its investment in high- yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net assets. MAIN INVESTMENT RISKS The biggest risk is that the Fund's returns may vary, and you could lose money. The Fund is designed for long-term investors interested in an equity portfolio, including common stocks. Common stocks tend to be more volatile than many other investment choices. The value of the Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases. The value of the Fund's portfolio could also decrease if the stock market goes down regardless of how well the individual companies perform. If the value of the Fund's portfolio decreases, the Fund's net asset value ("NAV") will also decrease, which means if you sell your shares in the Fund you may lose money. The Fund may have significant exposure to foreign markets, including emerging markets. As a result, its returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic conditions in a particular country. A market swing in one or more countries or regions where the Fund has invested a significant amount of its assets may have a greater effect on the Fund's performance than it would in a more geographically diversified portfolio. The Fund's investments in emerging market countries may involve risks greater than, or in addition to, the risks of investing in more developed countries. The Fund concentrates its investments in related industry groups. Because of this, companies in its portfolio may share common characteristics and react similarly to market developments. For example, many companies with a life science orientation are highly regulated and may be dependent upon certain types of technology. As a result, changes in government funding or subsidies, new or anticipated legislative changes, or technological advances could affect the value of such companies and, therefore, the Fund's NAV. The Fund's returns may be more volatile than those of a less concentrated portfolio. 20 Janus Equity Funds prospectus To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV may be affected by factors such as economic changes, political changes, or developments specific to the company that issued the bond. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. PERFORMANCE INFORMATION The following information provides some indication of the risks of investing in the Fund by showing how the Fund's performance has varied over time. The bar chart depicts the change in performance from year to year during the periods indicated. The table compares the Fund's average annual returns for the periods indicated to broad-based securities market indices. The indices are not available for direct investment. Risk/return summary 21 JANUS GLOBAL LIFE SCIENCES FUND Annual returns for periods ended 12/31 61.00% 33.34% (18.09)% (30.11)% 27.44% 14.95% 11.45% 1999 2000 2001 2002 2003 2004 2005 Best Quarter: 4th-1999 31.32% Worst Quarter: 1st-2001 (26.25)%
Average annual total return for periods ended 12/31/05 ------------------------------------------------------ Since Inception 1 year 5 years (12/31/98) Janus Global Life Sciences Fund Return Before Taxes 11.45% (1.34)% 10.46% Return After Taxes on Distributions 11.45% (1.34)% 10.46% Return After Taxes on Distributions and Sale of Fund Shares(1) 7.44% (1.14)% 9.23% S&P 500(R) Index(2) 4.91% 0.54% 1.77% (reflects no deduction for expenses, fees, or taxes) Morgan Stanley Capital International World Health Care Index(3) 9.00% (0.35)% 1.58% (reflects no deduction for expenses, fees, or taxes) ----------------------------------
(1) If the Fund incurs a loss, which generates a tax benefit, the Return After Taxes on Distributions and Sale of Fund Shares may exceed the Fund's other return figures. (2) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500 stocks, a widely recognized, unmanaged index of common stock prices. (3) The Morgan Stanley Capital International World Health Care Index is a capitalization weighted index that monitors the performance of health care stocks from developed market countries in North America, Europe, and the Asia/Pacific Region. After-tax returns are calculated using the historically highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your individual tax situation and may differ from those shown in the preceding table. The after-tax return information shown above does not apply to Fund shares held through a tax-deferred account, such as a 401(k) plan or IRA. The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. 22 Janus Equity Funds prospectus JANUS GLOBAL TECHNOLOGY FUND Janus Global Technology Fund (the "Fund") is designed for long-term investors who primarily seek growth of capital and who can tolerate the greater risks associated with common stock investments. INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- JANUS GLOBAL TECHNOLOGY FUND seeks long-term growth of capital. The Fund's Trustees may change this objective or the Fund's principal investment strategies without a shareholder vote. The Fund has a policy of investing at least 80% of its net assets in the type of securities suggested by its name. The Fund will notify you in writing at least 60 days before making any changes to this policy. If there is a material change to the Fund's objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will meet its objective. PRINCIPAL INVESTMENT STRATEGIES A team of technology analysts (the "Technology Team") selects investments for the Fund. The Fund invests, under normal circumstances, at least 80% of its net assets plus the amount of any borrowings for investment purposes, in securities of companies that the Technology Team believes will benefit significantly from advances or improvements in technology. These companies generally fall into two categories: a. companies that the Technology Team believes have or will develop products, processes, or services that will provide significant technological advancements or improvements; and b. companies that the Technology Team believes rely extensively on technology in connection with their operations or services. The Fund implements this policy by investing primarily in equity securities of U.S. and foreign companies selected for their growth potential. The Fund normally invests in issuers from several different countries, which may include the United States. The Fund may, under unusual circumstances, invest in a single country. The Fund may have significant exposure to emerging markets. For the Fund's 80% investment policy, assets are measured at the time of purchase. The Technology Team applies a "bottom up" approach in choosing investments. In other words, the Technology Team looks at companies one at a time to determine if a company is an attractive investment opportunity and if it is Risk/return summary 23 consistent with the Fund's investment policies. If the Technology Team is unable to find such investments, the Fund's uninvested assets may be held in cash or similar investments, subject to the Fund's specific investment policies. Within the parameters of its specific investment policies, the Fund may invest without limit in foreign equity and debt securities, which may include investments in emerging markets. The Fund will limit its investment in high- yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net assets. MAIN INVESTMENT RISKS The biggest risk is that the Fund's returns may vary, and you could lose money. The Fund is designed for long-term investors interested in an equity portfolio, including common stocks. Common stocks tend to be more volatile than many other investment choices. The value of the Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases. The value of the Fund's portfolio could also decrease if the stock market goes down regardless of how well the individual companies perform. If the value of the Fund's portfolio decreases, the Fund's net asset value ("NAV") will also decrease, which means if you sell your shares in the Fund you may lose money. The Fund may have significant exposure to foreign markets, including emerging markets. As a result, its returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic conditions in a particular country. A market swing in one or more countries or regions where the Fund has invested a significant amount of its assets may have a greater effect on the Fund's performance than it would in a more geographically diversified portfolio. The Fund's investments in emerging market countries may involve risks greater than, or in addition to, the risks of investing in more developed countries. As of October 31, 2005, approximately 10.9% of the Fund's investments were in emerging markets. Although the Fund does not concentrate its investments in specific industries, it may invest in companies related in such a way that they react similarly to certain market pressures. For example, competition among technology companies may result in increasingly aggressive pricing of their products and services, which may affect the profitability of companies in the Fund's portfolio. In addition, because of the rapid pace of technological development, products or services developed by companies in the Fund's portfolio may become rapidly obsolete or have relatively short product cycles. As a result, the Fund's returns may be considerably more volatile than the returns of a fund that does not invest in similarly related companies. 24 Janus Equity Funds prospectus To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV may be affected by factors such as economic changes, political changes, or developments specific to the company that issued the bond. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. PERFORMANCE INFORMATION The following information provides some indication of the risks of investing in the Fund by showing how the Fund's performance has varied over time. The bar chart depicts the change in performance from year to year during the periods indicated. The table compares the Fund's average annual returns for the periods indicated to broad-based securities market indices. The indices are not available for direct investment. Risk/return summary 25 JANUS GLOBAL TECHNOLOGY FUND Annual returns for periods ended 12/31 211.55% (33.67)% (39.96)% (40.94)% 47.14% 1.23% 11.50% 1999 2000 2001 2002 2003 2004 2005 Best Quarter: 4th-1999 73.95% Worst Quarter: 3rd-2001 (36.20)%
Average annual total return for periods ended 12/31/05 ------------------------------------------------------ Since Inception 1 year 5 years (12/31/98) Janus Global Technology Fund Return Before Taxes 11.50% (10.05)% 2.85% Return After Taxes on Distributions 11.49% (10.05)% 2.72% Return After Taxes on Distributions and Sale of Fund Shares(1) 7.49% (8.24)% 2.40% S&P 500(R) Index(2) 4.91% 0.54% 1.77% (reflects no deduction for expenses, fees, or taxes) Morgan Stanley Capital International World Information Technology Index(3) 4.81% (7.19)% (3.09)% (reflects no deduction for expenses, fees, or taxes) ----------------------------------
(1) If the Fund incurs a loss, which generates a tax benefit, the Return After Taxes on Distributions and Sale of Fund Shares may exceed the Fund's other return figures. (2) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500 stocks, a widely recognized, unmanaged index of common stock prices. (3) The Morgan Stanley Capital International World Information Technology Index is a capitalization weighted index that monitors the performance of information technology stocks from developed market countries in North America, Europe, and the Asia/Pacific Region. After-tax returns are calculated using the historically highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your individual tax situation and may differ from those shown in the preceding table. The after-tax return information shown above does not apply to Fund shares held through a tax-deferred account, such as a 401(k) plan or IRA. The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. 26 Janus Equity Funds prospectus JANUS BALANCED FUND Janus Balanced Fund (the "Fund") is designed for long-term investors who primarily seek growth of capital and who can tolerate the greater risks associated with common stock investments. Although the Fund may also emphasize some degree of income, it is not designed for investors who desire a certain level of income. INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- JANUS BALANCED FUND seeks long-term capital growth, consistent with preservation of capital and balanced by current income. The Fund's Trustees may change this objective or the Fund's principal investment strategies without a shareholder vote. If there is a material change to the Fund's objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will meet its objective. PRINCIPAL INVESTMENT STRATEGIES The Fund pursues its objective by normally investing 50-60% of its assets in equity securities selected primarily for their growth potential and 40-50% of its assets in securities selected primarily for their income potential. The Fund normally invests at least 25% of its assets in fixed-income senior securities. The portfolio managers apply a "bottom up" approach in choosing investments. In other words, the portfolio managers look at companies one at a time to determine if a company is an attractive investment opportunity and if it is consistent with the Fund's investment policies. If the portfolio managers are unable to find such investments, the Fund's uninvested assets may be held in cash or similar investments, subject to the Fund's specific investment policies. Within the parameters of its specific investment policies, the Fund may invest without limit in foreign equity and debt securities, which may include investments in emerging markets. The Fund will limit its investment in high- yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net assets. MAIN INVESTMENT RISKS The biggest risk is that the Fund's returns may vary, and you could lose money. The Fund is designed for long-term investors interested in a balanced portfolio, including common stocks and bonds. Common stocks tend to be more volatile than many other investment choices. The value of the Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases. The value of the Risk/return summary 27 Fund's portfolio could also decrease if the stock market goes down regardless of how well the individual companies perform. If the value of the Fund's portfolio decreases, the Fund's net asset value ("NAV") will also decrease, which means if you sell your shares in the Fund you may lose money. The income component of the Fund's holdings may include fixed-income securities. A fundamental risk of fixed-income securities is that their value will generally fall if interest rates rise. Since the value of a fixed-income portfolio will generally decrease when interest rates rise, the Fund's NAV may likewise decrease. Another fundamental risk associated with fixed-income securities is credit risk, which is the risk that an issuer of a bond will be unable to make principal and interest payments when due. To the extent the Fund invests in foreign securities, returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic changes in a particular country. To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV may be affected by factors such as economic changes, political changes, or developments specific to the company that issued the bond. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. PERFORMANCE INFORMATION The following information provides some indication of the risks of investing in the Fund by showing how the Fund's performance has varied over time. The bar chart depicts the change in performance from year to year during the periods indicated. The table compares the Fund's average annual returns for the periods indicated to broad-based securities market indices. The indices are not available for direct investment. 28 Janus Equity Funds prospectus JANUS BALANCED FUND Annual returns for periods ended 12/31 15.30% 21.81% 31.20% 23.51% (2.16)% (5.04)% (6.56)% 13.74% 8.71% 7.75% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Best Quarter: 4th-1998 18.75% Worst Quarter: 3rd-2001 (5.94)%
Average annual total return for periods ended 12/31/05 ------------------------------------------------------ Since Inception 1 year 5 years 10 years (9/1/92) Janus Balanced Fund Return Before Taxes 7.75% 3.40% 10.16% 11.31% Return After Taxes on Distributions 7.19% 2.63% 8.44% 9.54% Return After Taxes on Distributions and Sale of Fund Shares(1) 5.15% 2.45% 7.88% 8.96% S&P 500(R) Index(2) 4.91% 0.54% 9.07% 10.68% (reflects no deduction for expenses, fees or taxes) Lehman Brothers Government/Credit Index(3) 2.37% 6.11% 6.17% 6.63% (reflects no deduction for expenses, fees, or taxes) Balanced Index(4) 3.86% 3.39% 8.13% 9.13% (reflects no deduction for expenses, fees, or taxes) -----------------------------------------
(1) If the Fund incurs a loss, which generates a tax benefit, the Return After Taxes on Distributions and Sale of Fund Shares may exceed the Fund's other return figures. (2) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500 stocks, a widely recognized, unmanaged index of common stock prices. (3) The Lehman Brothers Government/Credit Index is composed of all bonds that are of investment grade with at least one year until maturity. (4) The Balanced Index is a hypothetical combination of unmanaged indices. This internally calculated index combines the total returns from the S&P 500(R) Index (55%) and the Lehman Brothers Government/Credit Index (45%). After-tax returns are calculated using the historically highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your individual tax situation and may differ from those shown in the preceding table. The after-tax return information shown above does not apply to Fund shares held through a tax-deferred account, such as a 401(k) plan or IRA. The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. Risk/return summary 29 JANUS CONTRARIAN FUND Janus Contrarian Fund (the "Fund") is designed for long-term investors who primarily seek growth of capital and who can tolerate the greater risks associated with common stock investments. INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- JANUS CONTRARIAN FUND seeks long-term growth of capital. The Fund's Trustees may change this objective or the Fund's principal investment strategies without a shareholder vote. If there is a material change to the Fund's objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will meet its objective. PRINCIPAL INVESTMENT STRATEGIES The Fund pursues its objective by investing, under normal circumstances, at least 80% of its net assets plus the amount of any borrowings for investment purposes, in equity securities with the potential for long-term growth of capital. The portfolio manager emphasizes investments in companies with attractive price/free cash flow, which is the relationship between the price of a stock and the company's available cash from operations, minus capital expenditures. The portfolio manager will typically seek attractively valued companies that are improving their free cash flow and returns on invested capital. These companies may also include special situations companies that are experiencing management changes and/or are currently out of favor. The portfolio manager applies a "bottom up" approach in choosing investments. In other words, the portfolio manager looks at companies one at a time to determine if a company is an attractive investment opportunity and if it is consistent with the Fund's investment policies. If the portfolio manager is unable to find such investments, the Fund's uninvested assets may be held in cash or similar investments, subject to the Fund's specific investment policies. Within the parameters of its specific investment policies, the Fund may invest without limit in foreign equity and debt securities, which may include investments in emerging markets. The Fund will limit its investment in high- yield/high-risk bonds (also called "junk" bonds) to 20% or less of its net assets. MAIN INVESTMENT RISKS The biggest risk is that the Fund's returns may vary, and you could lose money. The Fund is designed for long-term investors interested in an equity portfolio, including common stocks. Common stocks tend to be more volatile than many other investment choices. "Value" stocks may perform differently from the market 30 Janus Equity Funds prospectus as a whole and other types of stocks and can continue to be undervalued by the market for long periods of time. The value of the Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases or if the portfolio manager's belief about a company's intrinsic worth is incorrect. The value of the Fund's portfolio could also decrease if the stock market goes down regardless of how well the individual companies perform. If the value of the Fund's portfolio decreases, the Fund's net asset value ("NAV") will also decrease, which means if you sell your shares in the Fund you may lose money. The Fund is classified as nondiversified. This means it may hold larger positions in a smaller number of securities than a fund that is classified as diversified. As a result, a single security's increase or decrease in value may have a greater impact on the Fund's NAV and total return. The Fund may have significant exposure to foreign markets, including emerging markets. As a result, its returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic conditions in a particular country. A market swing in one or more countries or regions where the Fund has invested a significant amount of its assets may have a greater effect on the Fund's performance than it would in a more geographically diversified portfolio. The Fund's investments in emerging market countries may involve risks greater than, or in addition to, the risks of investing in more developed countries. As of October 31, 2005, approximately 22.2% of the Fund's investments were in emerging markets. To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV may be affected by factors such as economic changes, political changes, or developments specific to the company that issued the bond. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. PERFORMANCE INFORMATION The following information provides some indication of the risks of investing in the Fund by showing how the Fund's performance has varied over time. The bar chart depicts the change in performance from year to year during the periods indicated. The table compares the Fund's average annual returns for the periods indicated to a broad-based securities market index. The index is not available for direct investment. Risk/return summary 31 JANUS CONTRARIAN FUND Annual returns for periods ended 12/31 (11.74)% (23.70)% 53.26% 22.61% 16.02% 2001 2002 2003 2004 2005 Best Quarter: 2nd-2003 24.67% Worst Quarter: 3rd-2001 (22.31)%
Average annual total return for periods ended 12/31/05 ------------------------------------------------------ Since Inception 1 year 5 years (2/29/00) Janus Contrarian Fund Return Before Taxes 16.02% 7.98% 8.17% Return After Taxes on Distributions 15.77% 7.89% 7.92% Return After Taxes on Distributions and Sale of Fund Shares(1) 10.74% 6.90% 6.97% S&P 500(R) Index(2) 4.91% 0.54% 0.04% (reflects no deduction for expenses, fees, or taxes) ------------------------------
(1) If the Fund incurs a loss, which generates a tax benefit, the Return After Taxes on Distributions and Sale of Fund Shares may exceed the Fund's other return figures. (2) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500 stocks, a widely recognized, unmanaged index of common stock prices. After-tax returns are calculated using the historically highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your individual tax situation and may differ from those shown in the preceding table. The after-tax return information shown above does not apply to Fund shares held through a tax-deferred account, such as a 401(k) plan or IRA. The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. 32 Janus Equity Funds prospectus JANUS CORE EQUITY FUND Janus Core Equity Fund (the "Fund") is designed for long-term investors who primarily seek growth of capital and who can tolerate the greater risks associated with common stock investments. INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- JANUS CORE EQUITY FUND seeks long-term growth of capital. The Fund's Trustees may change this objective or the Fund's principal investment strategies without a shareholder vote. The Fund has a policy of investing at least 80% of its net assets in the type of securities suggested by its name. The Fund will notify you in writing at least 60 days before making any changes to this policy. If there is a material change to the Fund's objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will meet its objective. PRINCIPAL INVESTMENT STRATEGIES The Fund pursues its objective by investing, under normal circumstances, at least 80% of its net assets plus the amount of any borrowings for investment purposes, in equity securities selected for their growth potential. Eligible equity securities in which the fund may invest include: - domestic and foreign common stocks; - preferred stocks; - securities convertible into common stocks or preferred stocks, such as convertible preferred stocks, bonds, and debentures; and - other securities with equity characteristics. The Fund may invest in companies of any size. For the Fund's 80% investment policy, assets are measured at the time of purchase. The portfolio manager applies a "bottom up" approach in choosing investments. In other words, the portfolio manager looks at companies one at a time to determine if a company is an attractive investment opportunity and if it is consistent with the Fund's investment policies. If the portfolio manager is unable to find such investments, the Fund's uninvested assets may be held in cash or similar investments, subject to the Fund's specific investment policies. Risk/return summary 33 Within the parameters of its specific investment policies, the Fund may invest without limit in foreign equity and debt securities, which may include investments in emerging markets. The Fund will limit its investment in high- yield/high-risk bonds (also called "junk" bonds) to 20% or less of its net assets. MAIN INVESTMENT RISKS The biggest risk is that the Fund's returns may vary, and you could lose money. The Fund is designed for long-term investors interested in an equity portfolio, including common stocks. Common stocks tend to be more volatile than many other investment choices. The value of the Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases. The value of the Fund's portfolio could also decrease if the stock market goes down regardless of how well the individual companies perform. If the value of the Fund's portfolio decreases, the Fund's net asset value ("NAV") will also decrease, which means if you sell your shares in the Fund you may lose money. To the extent the Fund invests in foreign securities, returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic changes in a particular country. To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV may be affected by factors such as economic changes, political changes, or developments specific to the company that issued the bond. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. PERFORMANCE INFORMATION The following information provides some indication of the risks of investing in the Fund by showing how the Fund's performance has varied over time. The bar chart depicts the change in performance from year to year during the periods indicated. The table compares the Fund's average annual returns for the periods indicated to a broad-based securities market index. The index is not available for direct investment. 34 Janus Equity Funds prospectus JANUS CORE EQUITY FUND Annual returns for periods ended 12/31 31.08% 40.05% 38.50% (7.15)% (12.11)% (18.02)% 23.27% 13.77% 16.36% 1997 1998 1999 2000 2001 2002 2003 2004 2005 Best Quarter: 4th-1998 26.34% Worst Quarter: 3rd-2002 (15.25)%
Average annual total return for periods ended 12/31/05 ------------------------------------------------------ Since Inception 1 year 5 years (6/28/96) Janus Core Equity Fund Return Before Taxes 16.36% 3.29% 13.04% Return After Taxes on Distributions 16.31% 3.12% 11.93% Return After Taxes on Distributions and Sale of Fund Shares(1) 10.71% 2.72% 11.00% S&P 500(R) Index(2) 4.91% 0.54% 8.46% (reflects no deduction for expenses, fees, or taxes) ---------------------------------
(1) If the Fund incurs a loss, which generates a tax benefit, the Return After Taxes on Distributions and Sale of Fund Shares may exceed the Fund's other return figures. (2) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500 stocks, a widely recognized, unmanaged index of common stock prices. After-tax returns are calculated using the historically highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your individual tax situation and may differ from those shown in the preceding table. The after-tax return information shown above does not apply to Fund shares held through a tax-deferred account, such as a 401(k) plan or IRA. The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. Risk/return summary 35 JANUS GROWTH AND INCOME FUND Janus Growth and Income Fund (the "Fund") is designed for long-term investors who primarily seek growth of capital and who can tolerate the greater risks associated with common stock investments. Although the Fund may also emphasize some degree of income, it is not designed for investors who desire a certain level of income. INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- JANUS GROWTH AND INCOME FUND seeks long-term capital growth and current income. The Fund's Trustees may change this objective or the Fund's principal investment strategies without a shareholder vote. If there is a material change to the Fund's objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will meet its objective. PRINCIPAL INVESTMENT STRATEGIES The Fund pursues its objective by normally emphasizing investments in common stocks. It will normally invest up to 75% of its assets in equity securities selected primarily for their growth potential, and at least 25% of its assets in securities the portfolio manager believes have income potential. Equity securities may make up part or all of this income component if they currently pay dividends or the portfolio manager believes they have potential for increasing or commencing dividend payments. Because of this investment strategy, the Fund is not designed for investors who need consistent income. The portfolio manager applies a "bottom up" approach in choosing investments. In other words, the portfolio manager looks at companies one at a time to determine if a company is an attractive investment opportunity and if it is consistent with the Fund's investment policies. If the portfolio manager is unable to find such investments, the Fund's uninvested assets may be held in cash or similar investments, subject to the Fund's specific investment policies. Within the parameters of its specific investment policies, the Fund may invest without limit in foreign equity and debt securities, which may include investments in emerging markets. The Fund will limit its investment in high- yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net assets. 36 Janus Equity Funds prospectus MAIN INVESTMENT RISKS The biggest risk is that the Fund's returns may vary, and you could lose money. The Fund is designed for long-term investors interested in an equity portfolio, including common stocks. Common stocks tend to be more volatile than many other investment choices. The value of the Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases. The value of the Fund's portfolio could also decrease if the stock market goes down regardless of how well the individual companies perform. If the value of the Fund's portfolio decreases, the Fund's net asset value ("NAV") will also decrease, which means if you sell your shares in the Fund you may lose money. The income component of the Fund's holdings may include fixed-income securities. A fundamental risk of fixed-income securities is that their value will generally fall if interest rates rise. Since the value of a fixed-income portfolio will generally decrease when interest rates rise, the Fund's NAV may likewise decrease. Another fundamental risk associated with fixed-income securities is credit risk, which is the risk that an issuer of a bond will be unable to make principal and interest payments when due. To the extent the Fund invests in foreign securities, returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic changes in a particular country. To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV may be affected by factors such as economic changes, political changes, or developments specific to the company that issued the bond. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. PERFORMANCE INFORMATION The following information provides some indication of the risks of investing in the Fund by showing how the Fund's performance has varied over time. The bar chart depicts the change in performance from year to year during the periods indicated. The table compares the Fund's average annual returns for the periods indicated to broad-based securities market indices. The indices are not available for direct investment. Risk/return summary 37 JANUS GROWTH AND INCOME FUND Annual returns for periods ended 12/31 26.03% 34.66% 34.87% 51.18% (11.41)% (14.36)% (21.51)% 24.65% 11.89% 12.48% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Best Quarter: 4th-1999 29.20% Worst Quarter: 3rd-2002 (16.37)%
Average annual total return for periods ended 12/31/05 ------------------------------------------------------ Since Inception 1 year 5 years 10 years (5/15/91) Janus Growth and Income Fund Return Before Taxes 12.48% 1.07% 12.45% 13.60% Return After Taxes on Distributions 12.39% 0.86% 11.24% 12.31% Return After Taxes on Distributions and Sale of Fund Shares(1) 8.22% 0.79% 10.45% 11.62% S&P 500(R) Index(2) 4.91% 0.54% 9.07% 10.90% (reflects no deduction for expenses, fees, or taxes) Russell 1000(R) Growth Index(3) 5.26% (3.58)% 6.73% 9.04% (reflects no deduction for expenses, fees, or taxes) -----------------------------------------
(1) If the Fund incurs a loss, which generates a tax benefit, the Return After Taxes on Distributions and Sale of Fund Shares may exceed the Fund's other return figures. (2) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500 stocks, a widely recognized, unmanaged index of common stock prices. (3) The Russell 1000(R) Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. After-tax returns are calculated using the historically highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your individual tax situation and may differ from those shown in the preceding table. The after-tax return information shown above does not apply to Fund shares held through a tax-deferred account, such as a 401(k) plan or IRA. The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. 38 Janus Equity Funds prospectus JANUS RESEARCH FUND Janus Research Fund (the "Fund") is designed for long-term investors who primarily seek growth of capital and who can tolerate the greater risks associated with common stock investments. INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- JANUS RESEARCH FUND seeks long-term growth of capital. The Fund's Trustees may change this objective or the Fund's principal investment strategies without a shareholder vote. If there is a material change to the Fund's objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will meet its objective. PRINCIPAL INVESTMENT STRATEGIES The Fund pursues its objective by investing primarily in common stocks selected for their growth potential. The Fund may invest in companies of any size and located anywhere in the world, from larger, well-established companies to smaller, emerging growth companies. Janus Capital's equity research analysts (the "Research Team") select investments for the Fund which represent their high conviction investment ideas in all market capitalizations, styles and geographies. The Research Team, comprised of sector specialists, conducts fundamental analysis with a focus on "bottom-up" research, quantitative modeling, and valuation analysis. Using this research process, analysts rate their stocks based upon attractiveness. Analysts bring their high conviction ideas to their respective sector teams. Sector teams compare the appreciation potential of each of the team's high-conviction ideas and construct a sector portfolio that is intended to maximize the best risk-reward opportunities. Positions may be sold when, among other things, there is no longer high conviction in the return potential of the investment or if the risk characteristics have caused a re-evaluation of the opportunity. This may occur if the stock has appreciated and reflects the anticipated value, if another company represents a better risk/reward opportunity or if the investment's fundamental characteristics deteriorate. Securities may also be sold from the portfolio to rebalance sector weightings. Janus Capital's Director of Research oversees the investment process and is responsible for the day-to-day management of the Fund. It is expected that the Fund will be broadly diversified among a variety of industry sectors. The Fund intends to be fully invested under normal circumstances. However, if the Risk/return summary 39 Research Team does not have high conviction in enough investment opportunities, the Fund's uninvested assets may be held in cash or similar instruments. Within the parameters of its specific investment policies, the Fund may invest without limit in foreign equity and debt securities, which may include investments in emerging markets. The Fund will limit its investment in high- yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net assets. MAIN INVESTMENT RISKS The biggest risk is that the Fund's returns may vary, and you could lose money. The Fund is designed for long-term investors interested in an equity portfolio, including common stocks. Common stocks tend to be more volatile than many other investment choices. The value of the Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases. The value of the Fund's portfolio could also decrease if the stock market goes down regardless of how well the individual companies perform. If the value of the Fund's portfolio decreases, the Fund's net asset value ("NAV") will also decrease, which means if you sell your shares in the Fund you may lose money. The Fund may have significant exposure to foreign markets, including emerging markets. As a result, its returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic conditions in a particular country. A market swing in one or more countries or regions where the Fund has invested a significant amount of its assets may have a greater effect on the Fund's performance than it would in a more geographically diversified portfolio. The Fund's investments in emerging market countries may involve risks greater than, or in addition to, the risks of investing in more developed countries. As of October 31, 2005, approximately 8.3% of the Fund's investments were in emerging markets. To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV may be affected by factors such as economic changes, political changes, or developments specific to the company that issued the bond. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 40 Janus Equity Funds prospectus PERFORMANCE INFORMATION Since the Fund did not commence operations until February 25, 2005, it does not have a full calendar year of operations. Performance information for certain periods is included in the Fund's semiannual and annual reports. The performance of this Fund is compared to the Russell 1000(R) Index. The Russell 1000(R) Index measures the performance of the 1,000 largest companies in the Russell 3000(R) Index. The Russell 3000(R) Index will be the Fund's secondary benchmark index. Risk/return summary 41 INTECH RISK-MANAGED STOCK FUND INTECH Risk-Managed Stock Fund (the "Fund") is designed for long-term investors who primarily seek growth of capital and who can tolerate the greater risks associated with common stock investments. INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- INTECH RISK-MANAGED STOCK FUND seeks long-term growth of capital. The Fund's Trustees may change this objective or the Fund's principal investment strategies without a shareholder vote. The Fund has a policy of investing at least 80% of its net assets in the type of securities suggested by its name. The Fund will notify you in writing at least 60 days before making any changes to this policy. If there is a material change to the Fund's objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will meet its objective. PRINCIPAL INVESTMENT STRATEGIES The Fund invests, under normal circumstances, at least 80% of its net assets plus the amount of any borrowings for investment purposes, in common stocks from the universe of the Fund's benchmark, which is the S&P 500(R) Index. Stocks are selected for their potential contribution to the long-term growth of capital, utilizing INTECH's mathematical process. The primary aim of the strategy is to outperform the Fund's benchmark index. The Fund pursues its objective by applying a mathematical process to construct an investment portfolio from the universe of common stocks within its benchmark index. The goal of this process is to build a portfolio of stocks in a more efficient combination than the benchmark index. The process seeks to capitalize on the natural volatility of the market by searching for stocks within the index that have high relative volatility (providing the potential for excess returns) but that essentially move in opposite directions or have low correlation to each other (providing the potential for lower relative risk). By constructing the portfolio in this manner and continually rebalancing the portfolio to maintain "efficient" weightings, INTECH's mathematical process seeks to create a portfolio that produces returns in excess of its benchmark with an equal or lesser amount of risk. For the Fund's 80% investment policy, assets are measured at the time of purchase. 42 Janus Equity Funds prospectus Within the parameters of its specific investment policies, the Fund may invest without limit in foreign equity and debt securities, which may include investments in emerging markets. MAIN INVESTMENT RISKS The biggest risk is that the Fund's returns may vary, and you could lose money. The Fund is designed for long-term investors interested in an equity portfolio, including common stocks. Common stocks tend to be more volatile than many other investment choices. The value of the Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases. The value of the Fund's portfolio could also decrease if the stock market goes down regardless of how well the individual companies perform. If the value of the Fund's portfolio decreases, the Fund's net asset value ("NAV") will also decrease, which means if you sell your shares in the Fund you may lose money. The proprietary mathematical process used by INTECH may not achieve the desired results. Additionally, the rebalancing techniques used by INTECH may result in a higher portfolio turnover rate and related expenses compared to a "buy and hold" fund strategy. A higher portfolio turnover rate increases the likelihood of higher net taxable gains or losses for you as an investor. There is a risk that if INTECH's method of identifying stocks with higher volatility than the benchmark or its method of identifying stocks that tend to move in the same or opposite direction relative to each other (correlation) does not result in selecting stocks with continuing volatility or the expected correlation, the Fund may not outperform the benchmark index. To the extent the Fund invests in foreign securities, returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic changes in a particular country. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. PERFORMANCE INFORMATION The following information provides some indication of the risks of investing in the Fund by showing how the Fund's performance has varied over time. The bar chart depicts the change in performance from year to year during the periods indicated. For certain periods, the Fund's performance reflects the effect of expense waivers. Without the effect of these expense waivers, the performance shown would have been lower. The table compares the Fund's average annual returns for the periods indicated to a broad-based securities market index. The index is not available for direct investment. Risk/return summary 43 INTECH RISK-MANAGED STOCK FUND(1) Annual returns for calendar years ended 12/31 17.68% 11.06% 2004 2005 Best Quarter: 4th-2004 9.51% Worst Quarter: 3rd-2004 0.00%
Average annual total return for periods ended 12/31/05 ------------------------------------------------------ Since Inception 1 year (2/28/03) INTECH Risk-Managed Stock Fund(1) Return Before Taxes 11.06% 21.08% Return After Taxes on Distributions 9.96% 19.93% Return After Taxes on Distributions and Sale of Fund Shares(2) 8.28% 17.94% S&P 500(R) Index(3) 4.91% 16.98% (reflects no deduction for expenses, fees, or taxes) ----------------------
(1) Formerly named Janus Risk-Managed Stock Fund. (2) If the Fund incurs a loss, which generates a tax benefit, the Return After Taxes on Distributions and Sale of Fund Shares may exceed the Fund's other return figures. (3) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500 stocks, a widely recognized, unmanaged index of common stock prices. After-tax returns are calculated using the historically highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your individual tax situation and may differ from those shown in the preceding table. The after-tax return information shown above does not apply to Fund shares held through a tax-deferred account, such as a 401(k) plan or IRA. The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. 44 Janus Equity Funds prospectus JANUS MID CAP VALUE FUND - INVESTOR SHARES Janus Mid Cap Value Fund (the "Fund") is designed for long-term investors who primarily seek capital appreciation and who can tolerate the greater risks associated with common stock investments. INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- JANUS MID CAP VALUE FUND seeks capital appreciation. The Fund's Trustees may change this objective or the Fund's principal investment strategies without a shareholder vote. The Fund has a policy of investing at least 80% of its net assets in the type of securities suggested by its name. The Fund will notify you in writing at least 60 days before making any changes to this policy. If there is a material change to the Fund's objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will meet its objective. PRINCIPAL INVESTMENT STRATEGIES The Fund pursues its objective by investing primarily in common stocks selected for their capital appreciation potential. The Fund primarily invests in the common stocks of mid-sized companies whose stock prices the portfolio managers believe to be undervalued. The Fund invests, under normal circumstances, at least 80% of its assets plus the amount of any borrowings for investment purposes, in equity securities of companies whose market capitalization falls, at the time of purchase, within the 12-month average of the capitalization range of the Russell Midcap(R) Value Index. This average is updated monthly. The market capitalizations within the index will vary, but as of December 31, 2005, they ranged from approximately $56.3 million to $18.1 billion. For the Fund's 80% investment policy, assets are measured at the time of purchase. The Fund focuses on companies that have fallen out of favor with the market or that appear to be temporarily misunderstood by the investment community. To a lesser degree, the Fund also invests in companies that demonstrate special situations or turnarounds, meaning companies that have experienced significant business problems but are believed to have favorable prospects for recovery. The Fund's portfolio managers generally look for companies with: - a low price relative to their assets, earnings, cash flow, or business franchise Risk/return summary 45 - products and services that give them a competitive advantage - quality balance sheets and strong management Within the parameters of its specific investment policies, the Fund may invest without limit in foreign equity and debt securities, which may include investments in emerging markets. The Fund will limit its investment in high- yield/high-risk bonds (also called "junk" bonds) to 20% or less of its net assets. MAIN INVESTMENT RISKS The biggest risk is that the Fund's returns may vary, and you could lose money. The Fund is designed for long-term investors interested in an equity portfolio, including common stocks. Common stocks tend to be more volatile than many other investment choices. "Value" stocks may perform differently from the market as a whole and other types of stocks and can continue to be undervalued by the market for long periods of time. The value of the Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases or if the portfolio managers' belief about a company's intrinsic worth is incorrect. The value of the Fund's portfolio could also decrease if the stock market goes down regardless of how well the individual companies perform. If the value of the Fund's portfolio decreases, the Fund's net asset value ("NAV") will also decrease, which means if you sell your shares in the Fund you may lose money. The Fund's share price may fluctuate more than that of funds primarily invested in large companies. Mid-sized companies may pose greater market, liquidity, and information risks because of narrow product lines, limited financial resources, less depth in management, or a limited trading market for their stocks. The Fund's investments may often be focused in a small number of business sectors, which may pose greater market and liquidity risks. To the extent the Fund invests in foreign securities, returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic changes in a particular country. To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV may be affected by factors such as economic changes, political changes, or developments specific to the company that issued the bond. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 46 Janus Equity Funds prospectus PERFORMANCE INFORMATION The following information provides some indication of the risks of investing in the Fund by showing how the Fund's performance has varied over time. Pursuant to a tax-free reorganization on April 21, 2003, all of the assets of Berger Mid Cap Value Fund - Investor Shares were transferred to Janus Mid Cap Value Fund - Investor Shares. The performance information provided for periods prior to April 21, 2003 is for Berger Mid Cap Value Fund - Investor Shares, the predecessor to Janus Mid Cap Value Fund - Investor Shares. The bar chart depicts the change in performance from year to year during the periods indicated. The table compares the Fund's average annual returns for the periods indicated to a broad-based securities market index. The index is not available for direct investment. JANUS MID CAP VALUE FUND - INVESTOR SHARES Annual returns for periods ended 12/31 21.56% 27.34% 20.52% (13.09)% 39.33% 18.36% 10.36% 1999 2000 2001 2002 2003 2004 2005 Best Quarter: 4th-2001 21.28% Worst Quarter: 3rd-2002 (17.66)%
Average annual total return for periods ended 12/31/05 ------------------------------------------------------ Since Inception 1 year 5 years (8/12/98) Janus Mid Cap Value Fund - Investor Shares Return Before Taxes 10.36% 13.77% 17.90% Return After Taxes on Distributions 8.31% 12.74% 16.14% Return After Taxes on Distributions and Sale of Fund Shares(1) 7.96% 11.67% 15.02% Russell Midcap(R) Value Index(2) 12.65% 12.21% 11.55% (reflects no deduction for expenses, fees, or taxes) -------------------------------
(1) If the Fund incurs a loss, which generates a tax benefit, the Return After Taxes on Distributions and Sale of Fund Shares may exceed the Fund's other return figures. (2) The Russell Midcap(R) Value Index measures the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values. The stocks are also members of the Russell 1000(R) Value Index. Risk/return summary 47 After-tax returns are calculated using distributions for Janus Mid Cap Value Fund - Investor Shares for the period April 21, 2003 to December 31, 2005 and for Berger Mid Cap Value Fund - Investor Shares for the periods prior to April 21, 2003. If Janus Mid Cap Value Fund - Investor Shares had been available during those earlier periods, distributions may have been different and thus, after-tax returns may have been different from those shown. After-tax returns are calculated using the historically highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your individual tax situation and may differ from those shown in the preceding table. The after-tax return information shown above does not apply to Fund shares held through a tax-deferred account, such as a 401(k) plan or IRA. The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. 48 Janus Equity Funds prospectus JANUS GLOBAL OPPORTUNITIES FUND Janus Global Opportunities Fund (the "Fund") is designed for long-term investors who primarily seek growth of capital and who can tolerate the greater risks associated with common stock investments. INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- JANUS GLOBAL OPPORTUNITIES FUND seeks long-term growth of capital. The Fund's Trustees may change this objective or the Fund's principal investment strategies without a shareholder vote. If there is a material change to the Fund's objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will meet its objective. PRINCIPAL INVESTMENT STRATEGIES The Fund pursues its objective by investing primarily in common stocks of companies of any size located throughout the world with the potential for long-term growth of capital. The Fund normally invests in issuers from several different countries, which may include the United States. The Fund may, under unusual circumstances, invest in a single country. The portfolio managers emphasize investments in companies with attractive price/free cash flow, which is the relationship between the price of a stock and the company's available cash from operations, minus capital expenditures. The portfolio managers will typically seek attractively valued companies that are improving their free cash flow and returns on invested capital. These companies may also include special situations companies that are experiencing management changes and/or are temporarily out of favor. The Fund may have significant exposure to emerging markets. The portfolio managers apply a "bottom up" approach in choosing investments. In other words, the portfolio managers look at companies one at a time to determine if a company is an attractive investment opportunity and if it is consistent with the Fund's investment policies. If the portfolio managers are unable to find such investments, the Fund's uninvested assets may be held in cash or similar investments, subject to the Fund's specific investment policies. Within the parameters of its specific investment policies, the Fund may invest without limit in foreign equity and debt securities, which may include investments in emerging markets. The Fund will limit its investment in high- yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net assets. Risk/return summary 49 MAIN INVESTMENT RISKS The biggest risk is that the Fund's returns may vary, and you could lose money. The Fund is designed for long-term investors interested in an equity portfolio, including common stocks. Common stocks tend to be more volatile than many other investment choices. "Value" stocks may perform differently from the market as a whole and other types of stocks and can continue to be undervalued by the market for long periods of time. The value of the Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases or if the portfolio managers' belief about a company's intrinsic worth is incorrect. The value of the Fund's portfolio could also decrease if the stock market goes down regardless of how well the individual companies perform. If the value of the Fund's portfolio decreases, the Fund's net asset value ("NAV") will also decrease, which means if you sell your shares in the Fund you may lose money. The Fund is classified as nondiversified. This means it may hold larger positions in a smaller number of securities than a fund that is classified as diversified. As a result, a single security's increase or decrease in value may have a greater impact on the Fund's NAV and total return. The Fund may have significant exposure to foreign markets, including emerging markets. As a result, its returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic conditions in a particular country. A market swing in one or more countries or regions where the Fund has invested a significant amount of its assets may have a greater effect on the Fund's performance than it would in a more geographically diversified portfolio. The Fund's investments in emerging market countries may involve risks greater than, or in addition to, the risks of investing in more developed countries. To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV may be affected by factors such as economic changes, political changes, or developments specific to the company that issued the bond. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. 50 Janus Equity Funds prospectus PERFORMANCE INFORMATION The following information provides some indication of the risks of investing in the Fund by showing how the Fund's performance has varied over time. The bar chart depicts the change in performance from year to year during the periods indicated. The table compares the Fund's average annual returns for the periods indicated to a broad-based securities market index. The index is not available for direct investment. JANUS GLOBAL OPPORTUNITIES FUND Annual returns for periods ended 12/31 (15.91)% 38.41% 15.33% 4.07% 2002 2003 2004 2005 Best Quarter: 2nd-2003 22.21% Worst Quarter: 3rd-2002 (21.31)%
Average annual total return for periods ended 12/31/05 ------------------------------------------------------ Since Inception 1 year (6/29/01) Janus Global Opportunities Fund Return Before Taxes 4.07% 9.39% Return After Taxes on Distributions 3.95% 9.35% Return After Taxes on Distributions and Sale of Fund Shares(1) 2.80% 8.18% Morgan Stanley Capital International World Index(SM)(2) 9.49% 4.99% (reflects no deduction for expenses, fees, or taxes) ----------------------
(1) If the Fund incurs a loss, which generates a tax benefit, the Return After Taxes on Distributions and Sale of Fund Shares may exceed the Fund's other return figures. (2) The Morgan Stanley Capital International World Index(SM) is a market capitalization weighted index composed of companies representative of the market structure of developed market countries in North America, Europe, and the Asia/Pacific Region. Risk/return summary 51 After-tax returns are calculated using the historically highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your individual tax situation and may differ from those shown in the preceding table. The after-tax return information shown above does not apply to Fund shares held through a tax-deferred account, such as a 401(k) plan or IRA. The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. 52 Janus Equity Funds prospectus JANUS OVERSEAS FUND Janus Overseas Fund (the "Fund") is designed for long-term investors who primarily seek growth of capital and who can tolerate the greater risks associated with common stock investments. INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- JANUS OVERSEAS FUND seeks long-term growth of capital. The Fund's Trustees may change this objective or the Fund's principal investment strategies without a shareholder vote. The Fund has a policy of investing at least 80% of its net assets in the type of securities suggested by its name. The Fund will notify you in writing at least 60 days before making any changes to this policy. If there is a material change to the Fund's objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will meet its objective. PRINCIPAL INVESTMENT STRATEGIES The Fund invests, under normal circumstances, at least 80% of its net assets plus the amount of any borrowings for investment purposes, in securities of issuers from countries outside of the United States. The Fund normally invests in securities of issuers from several different countries, excluding the United States. Although the Fund intends to invest substantially all of its assets in issuers located outside the United States, it may at times invest in U.S. issuers, and it may, under unusual circumstances, invest all of its assets in a single country. The Fund may have significant exposure to emerging markets. For the Fund's 80% investment policy, assets are measured at the time of purchase. The portfolio manager applies a "bottom up" approach in choosing investments. In other words, the portfolio manager looks at companies one at a time to determine if a company is an attractive investment opportunity and if it is consistent with the Fund's investment policies. If the portfolio manager is unable to find such investments, the Fund's uninvested assets may be held in cash or similar investments, subject to the Fund's specific investment policies. Within the parameters of its specific investment policies, the Fund may invest without limit in foreign equity and debt securities, which may include investments in emerging markets. The Fund will limit its investment in high- yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net assets. Risk/return summary 53 MAIN INVESTMENT RISKS The biggest risk is that the Fund's returns may vary, and you could lose money. The Fund is designed for long-term investors interested in an equity portfolio, including common stocks. Common stocks tend to be more volatile than many other investment choices. The value of the Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases. The value of the Fund's portfolio could also decrease if the stock market goes down regardless of how well the individual companies perform. If the value of the Fund's portfolio decreases, the Fund's net asset value ("NAV") will also decrease, which means if you sell your shares in the Fund you may lose money. The Fund may have significant exposure to foreign markets, including emerging markets. As a result, its returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic conditions in a particular country. A market swing in one or more countries or regions where the Fund has invested a significant amount of its assets may have a greater effect on the Fund's performance than it would in a more geographically diversified portfolio. The Fund's investments in emerging market countries may involve risks greater than, or in addition to, the risks of investing in more developed countries. As of October 31, 2005, approximately 37.5% of the Fund's investments were in emerging markets. To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV may be affected by factors such as economic changes, political changes, or developments specific to the company that issued the bond. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. PERFORMANCE INFORMATION The following information provides some indication of the risks of investing in the Fund by showing how the Fund's performance has varied over time. The bar chart depicts the change in performance from year to year during the periods indicated. The table compares the Fund's average annual returns for the periods indicated to broad-based securities market indices. The indices are not available for direct investment. 54 Janus Equity Funds prospectus JANUS OVERSEAS FUND Annual returns for periods ended 12/31 28.83% 18.25% 16.03% 86.06% (18.57)% (23.11)% (23.89)% 36.79% 18.58% 32.39% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Best Quarter: 4th-1999 60.63% Worst Quarter: 3rd-2001 (20.82)%
Average annual total return for periods ended 12/31/05 ------------------------------------------------------ Since Inception 1 year 5 years 10 years (5/2/94) Janus Overseas Fund Return Before Taxes 32.39% 4.67% 12.90% 12.92% Return After Taxes on Distributions 32.21% 4.56% 12.27% 12.31% Return After Taxes on Distributions and Sale of Fund Shares(1) 21.28% 4.01% 11.29% 11.39% Morgan Stanley Capital International EAFE(R) Index(2) 13.54% 4.55% 5.84% 5.93% (reflects no deduction for expenses, fees, or taxes) Morgan Stanley Capital International EAFE(R) Growth Index(3) 13.28% 1.92% 3.33% 3.70%(4) (reflects no deduction for expenses, fees, or taxes) -----------------------------------------
(1) If the Fund incurs a loss, which generates a tax benefit, the Return After Taxes on Distributions and Sale of Fund Shares may exceed the Fund's other return figures. (2) The Morgan Stanley Capital International ("MSCI") EAFE(R) Index is a market capitalization weighted index composed of companies representative of the market structure of developed market countries in Europe, Australasia, and the Far East. (3) The MSCI EAFE(R) Growth Index is a subset of the MSCI EAFE(R) Index and contains constituents of the MSCI EAFE(R) Index which are categorized as growth securities. The MSCI EAFE(R) Index (Europe, Australasia, Far East) is an unmanaged free float-adjusted market capitalization index that is designed to measure developed market equity performance. (4) The average annual total return was calculated based on historical information from April 30, 1994 to December 31, 2005 for the MSCI EAFE(R) Growth Index. Risk/return summary 55 After-tax returns are calculated using the historically highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your individual tax situation and may differ from those shown in the preceding table. The after-tax return information shown above does not apply to Fund shares held through a tax-deferred account, such as a 401(k) plan or IRA. The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. 56 Janus Equity Funds prospectus JANUS WORLDWIDE FUND Janus Worldwide Fund (the "Fund") is designed for long-term investors who primarily seek growth of capital and who can tolerate the greater risks associated with common stock investments. INVESTMENT OBJECTIVE -------------------------------------------------------------------------------- JANUS WORLDWIDE FUND seeks long-term growth of capital in a manner consistent with the preservation of capital. The Fund's Trustees may change this objective or the Fund's principal investment strategies without a shareholder vote. If there is a material change to the Fund's objective or principal investment strategies, you should consider whether the Fund remains an appropriate investment for you. There is no guarantee that the Fund will meet its objective. PRINCIPAL INVESTMENT STRATEGIES The Fund pursues its objective by investing primarily in common stocks of companies of any size located throughout the world. The Fund normally invests in issuers from several different countries, including the United States. The Fund may, under unusual circumstances, invest in a single country. The Fund may have significant exposure to emerging markets. The portfolio manager applies a "bottom up" approach in choosing investments. In other words, the portfolio manager looks at companies one at a time to determine if a company is an attractive investment opportunity and if it is consistent with the Fund's investment policies. If the portfolio manager is unable to find such investments, the Fund's uninvested assets may be held in cash or similar investments, subject to the Fund's specific investment policies. Within the parameters of its specific investment policies, the Fund may invest without limit in foreign equity and debt securities, which may include investments in emerging markets. The Fund will limit its investment in high- yield/high-risk bonds (also called "junk" bonds) to 35% or less of its net assets. MAIN INVESTMENT RISKS The biggest risk is that the Fund's returns may vary, and you could lose money. The Fund is designed for long-term investors interested in an equity portfolio, including common stocks. Common stocks tend to be more volatile than many other investment choices. The value of the Fund's portfolio may decrease if the value of an individual company or multiple companies in the portfolio decreases. The value of the Fund's portfolio could also decrease if the stock market goes down regardless of Risk/return summary 57 how well the individual companies perform. If the value of the Fund's portfolio decreases, the Fund's net asset value ("NAV") will also decrease, which means if you sell your shares in the Fund you may lose money. The Fund may have significant exposure to foreign markets, including emerging markets. As a result, its returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic conditions in a particular country. A market swing in one or more countries or regions where the Fund has invested a significant amount of its assets may have a greater effect on the Fund's performance than it would in a more geographically diversified portfolio. The Fund's investments in emerging market countries may involve risks greater than, or in addition to, the risks of investing in more developed countries. As of October 31, 2005, approximately 6% of the Fund's investments were in emerging markets. To the extent the Fund invests in high-yield/high-risk bonds, returns and NAV may be affected by factors such as economic changes, political changes, or developments specific to the company that issued the bond. An investment in the Fund is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. PERFORMANCE INFORMATION The following information provides some indication of the risks of investing in the Fund by showing how the Fund's performance has varied over time. The bar chart depicts the change in performance from year to year during the periods indicated. The table compares the Fund's average annual returns for the periods indicated to a broad-based securities market index. The index is not available for direct investment. 58 Janus Equity Funds prospectus JANUS WORLDWIDE FUND Annual returns for periods ended 12/31 26.40% 20.48% 25.87% 64.37% (16.87)% (22.88)% (26.01)% 24.23% 5.54% 5.84% 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Best Quarter: 4th-1999 42.11% Worst Quarter: 3rd-2001 (20.80)%
Average annual total return for periods ended 12/31/05 ------------------------------------------------------ Since Inception 1 year 5 years 10 years (5/15/91) Janus Worldwide Fund Return Before Taxes 5.84% (4.56)% 7.57% 10.91% Return After Taxes on Distributions 5.65% (4.63)% 6.77% 9.99% Return After Taxes on Distributions and Sale of Fund Shares(1) 4.02% (3.79)% 6.36% 9.43% Morgan Stanley Capital International World Index(SM)(2) 9.49% 2.18% 7.04% 8.07% (reflects no deduction for expenses, fees, or taxes) -----------------------------------------
(1) If the Fund incurs a loss, which generates a tax benefit, the Return After Taxes on Distributions and Sale of Fund Shares may exceed the Fund's other return figures. (2) The Morgan Stanley Capital International World Index(SM) is a market capitalization weighted index composed of companies representative of the market structure of developed market countries in North America, Europe, and the Asia/Pacific Region. After-tax returns are calculated using the historically highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on your individual tax situation and may differ from those shown in the preceding table. The after-tax return information shown above does not apply to Fund shares held through a tax-deferred account, such as a 401(k) plan or IRA. The Fund's past performance (before and after taxes) does not necessarily indicate how it will perform in the future. Risk/return summary 59 FEES AND EXPENSES The following table describes the shareholder fees and annual fund operating expenses that you may pay if you buy and hold shares of the Funds. All of the fees and expenses shown were determined based on net assets as of the fiscal year or period ended October 31, 2005. Contractual waivers agreed to by Janus Capital, where applicable, are included under "Net Annual Fund Operating Expenses." SHAREHOLDER FEES are those paid directly from your investment and may include sales loads, redemption fees, or exchange fees. The Funds are no-load investments, so you will generally not pay any shareholder fees when you buy or sell shares of the Funds. However, if you sell shares of Janus Global Life Sciences Fund, Janus Global Technology Fund, INTECH Risk-Managed Stock Fund, Janus Global Opportunities Fund, Janus Overseas Fund, or Janus Worldwide Fund that you have held for three months or less, you may pay a redemption fee. ANNUAL FUND OPERATING EXPENSES are paid out of a Fund's assets and include fees for portfolio management, maintenance of shareholder accounts, shareholder servicing, accounting, and other services. You do not pay these fees directly but, as the examples show, these costs are borne indirectly by all shareholders. 60 Janus Equity Funds prospectus SHAREHOLDER FEES (PAID DIRECTLY FROM YOUR INVESTMENT) Sales charges............................................... None Redemption fee on shares of Janus Global Life Sciences Fund, Janus Global Technology Fund, INTECH Risk-Managed Stock Fund, Janus Global Opportunities Fund, Janus Overseas Fund, and Janus Worldwide Fund held for three months or less (as a % of amount redeemed).................................... 2.00%(1)(2)(3) Exchange fee................................................ None(3)
ANNUAL FUND OPERATING EXPENSES (DEDUCTED FROM FUND ASSETS) Total Net Management Other Annual Fund Expense Annual Fund Fee(4) Expenses Operating Expenses Waivers Operating Expenses GROWTH Janus Fund 0.64% 0.24% 0.88% N/A 0.88% Janus Enterprise Fund 0.64% 0.32% 0.96% N/A 0.96% Janus Mercury Fund(5) 0.64% 0.29% 0.93% N/A 0.93% Janus Olympus Fund 0.64% 0.33% 0.97% N/A 0.97% Janus Orion Fund 0.64% 0.38% 1.02% N/A 1.02% Janus Triton Fund 0.64% 1.21% 1.85%(6) 0.58% 1.27%(6) SPECIALTY GROWTH Janus Global Life Sciences Fund 0.64% 0.33% 0.97% N/A 0.97% Janus Global Technology Fund 0.64% 0.40% 1.04% N/A 1.04% CORE Janus Balanced Fund 0.55% 0.25% 0.80% N/A 0.80% Janus Contrarian Fund(5) 0.64% 0.29% 0.93% N/A 0.93% Janus Core Equity Fund 0.60% 0.30% 0.90% N/A 0.90% Janus Growth and Income Fund 0.62% 0.26% 0.88% N/A 0.88% Janus Research Fund(5) 0.64% 0.97% 1.61%(6) 0.34% 1.27%(6) RISK-MANAGED INTECH Risk-Managed Stock Fund(5)(7) 0.50% 0.39%(8) 0.89% N/A 0.89% VALUE Janus Mid Cap Value Fund - Investor Shares(5) 0.64% 0.29%(8) 0.93% N/A 0.93% INTERNATIONAL & GLOBAL Janus Global Opportunities Fund 0.64% 0.39% 1.03% N/A 1.03% Janus Overseas Fund 0.64% 0.26% 0.90% N/A 0.90% Janus Worldwide Fund(5) 0.60% 0.25% 0.85% N/A 0.85%
(1) Each Fund may charge a fee to cover the cost of sending a wire transfer for redemptions, and your bank may charge an additional fee to receive the wire. For more information, please refer to the section "Payment of Redemption Proceeds" in this Prospectus. (2) The redemption fee may be waived in certain circumstances, as described in the Shareholder's Manual. (3) An exchange of Janus Global Life Sciences Fund, Janus Global Technology Fund, INTECH Risk-Managed Stock Fund, Janus Global Opportunities Fund, Janus Overseas Fund, or Janus Worldwide Fund shares held for three months or less may be subject to the Funds' 2.00% redemption fee. (4) The "Management Fee" is the investment advisory fee paid by the Funds to Janus Capital. (5) Effective January 1, 2006 for Janus Research Fund and INTECH Risk-Managed Stock Fund and effective February 1, 2006 for Janus Mercury Fund, Janus Contrarian Fund, Janus Mid Cap Value Fund, and Janus Worldwide Fund, the Fund's investment advisory fee rate changed from a fixed rate to a rate that adjusts upward or downward based upon the Fund's performance relative to its benchmark index. This change will not impact the investment advisory fee shown until one year after the effective date when the performance adjustment takes effect. Details discussing the change are included in the Statement of Additional Information. (6) Annual Fund Operating Expenses are stated both with and without a contractual expense waiver by Janus Capital. Janus Capital has contractually agreed to waive the Fund's total operating expenses (excluding brokerage commissions, interest, taxes, and extraordinary expenses) to a certain limit until at least March 1, 2007. The expense waiver shown reflects the application of such limit. The expense waiver is detailed in the Statement of Additional Information. (7) Formerly named Janus Risk-Managed Stock Fund. (8) Included in Other Expenses is an administrative services fee of 0.05% of the average daily net assets of the Fund to compensate Janus Capital for providing certain administrative services including, but not limited to, recordkeeping and registration functions. Risk/return summary 61 EXAMPLES: THE FOLLOWING EXAMPLES ARE BASED ON EXPENSES WITHOUT WAIVERS. These examples are intended to help you compare the cost of investing in the Funds with the cost of investing in other mutual funds. The examples assume that you invest $10,000 in each Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The examples also assume that your investment has a 5% return each year and that the Funds' operating expenses without waivers remain the same. Although your actual costs may be higher or lower, based upon these assumptions your costs would be as follows:
1 Year 3 Years 5 Years 10 Years -------------------------------------- GROWTH Janus Fund $ 90 $ 281 $ 488 $ 1,084 Janus Enterprise Fund $ 98 $ 306 $ 531 $ 1,178 Janus Mercury Fund $ 95 $ 296 $ 515 $ 1,143 Janus Olympus Fund $ 99 $ 309 $ 536 $ 1,190 Janus Orion Fund $ 104 $ 325 $ 563 $ 1,248 Janus Triton Fund $ 188 $ 582 $ 1,001 $ 2,169 SPECIALTY GROWTH Janus Global Life Sciences Fund $ 99 $ 309 $ 536 $ 1,190 Janus Global Technology Fund $ 106 $ 331 $ 574 $ 1,271 CORE Janus Balanced Fund $ 82 $ 255 $ 444 $ 990 Janus Contrarian Fund $ 95 $ 296 $ 515 $ 1,143 Janus Core Equity Fund $ 92 $ 287 $ 498 $ 1,108 Janus Growth and Income Fund $ 90 $ 281 $ 488 $ 1,084 Janus Research Fund $ 164 $ 508 $ 876 $ 1,911 RISK-MANAGED INTECH Risk-Managed Stock Fund(1) $ 91 $ 284 $ 493 $ 1,096 VALUE Janus Mid Cap Value Fund - Investor Shares $ 95 $ 296 $ 515 $ 1,143 INTERNATIONAL & GLOBAL Janus Global Opportunities Fund $ 105 $ 328 $ 569 $ 1,259 Janus Overseas Fund $ 92 $ 287 $ 498 $ 1,108 Janus Worldwide Fund $ 87 $ 271 $ 471 $ 1,049
(1) Formerly named Janus Risk-Managed Stock Fund. 62 Janus Equity Funds prospectus PRINCIPAL INVESTMENT STRATEGIES AND RISKS -------------------------------------------------------------------------------- This section takes a closer look at the Funds' principal investment strategies and certain risks of investing in the Funds. Strategies and policies that are noted as "fundamental" cannot be changed without a shareholder vote. Other, non-fundamental strategies and policies can be changed by the Trustees without prior notice to shareholders. Please carefully review the "Risks" section of this Prospectus for a discussion of risks associated with certain investment techniques. We have also included a "Glossary of Investment Terms" with descriptions of investment terms used throughout this Prospectus. FREQUENTLY ASKED QUESTIONS ABOUT PRINCIPAL INVESTMENT STRATEGIES The following questions and answers are designed to help you better understand the Funds' principal investment strategies. 1. HOW ARE COMMON STOCKS SELECTED FOR THE FUNDS MANAGED BY JANUS? Unless its investment objective or policies prescribe otherwise, each of the Funds may invest substantially all of its assets in common stocks if its investment personnel believe that common stocks will appreciate in value. The investment personnel generally take a "bottom up" approach to selecting companies. This means that they seek to identify individual companies with earnings growth potential that may not be recognized by the market at large. The investment personnel make this assessment by looking at companies one at a time, regardless of size, country of organization, place of principal business activity, or other similar selection criteria. The Funds may sell a holding if, among other things, the security reaches the investment personnel's price target, if the company has a deterioration of fundamentals such as failing to meet key operating benchmarks, or if the investment personnel find a better investment opportunity. The Funds may also sell a holding to meet redemptions. Janus Balanced Fund and Janus Growth and Income Fund may each emphasize varying degrees of income. Realization of income is not a significant consideration when choosing investments for the other Funds. Income realized on the Funds' investments may be incidental to their objectives. In the case of Janus Balanced Fund and Janus Growth and Income Fund, the investment personnel may consider dividend-paying characteristics to a greater degree in selecting common stocks. Janus Contrarian Fund and Janus Global Opportunities Fund emphasize investments in companies with attractive prices compared to their free cash flow. The investment personnel will typically seek attractively valued companies that are improving their free cash flow and improving their returns on invested capital. These companies may also include special situations companies that are experiencing management changes and/or are temporarily out of favor. Principal investment strategies and risks 63 2. HOW ARE COMMON STOCKS SELECTED BY INTECH FOR INTECH RISK-MANAGED STOCK FUND? INTECH applies a mathematical portfolio management process to construct an investment portfolio for the Fund. INTECH developed the formulas underlying this mathematical process. The mathematical process is designed to take advantage of market volatility (variation in stock prices), rather than using fundamental research or market/ economic trends to predict the future returns of stocks. The process seeks to generate a return in excess of the Fund's benchmark over the long term, while controlling the risk relative to the benchmark. The mathematical process involves: - selecting stocks primarily from stocks within the Fund's benchmark; - periodically determining a target weighting of these stocks and rebalancing to the target weighting; and - monitoring the total risk and volatility of the Fund's holdings with respect to its benchmark index. INTECH seeks to outperform the Fund's benchmark index through its mathematical process. INTECH seeks to identify stocks for the Fund in a manner that does not increase the overall portfolio volatility above that of the benchmark index. More volatile stocks may tend to reside on the smaller cap end of the benchmark index. INTECH employs risk controls designed to minimize the risk of significant underperformance relative to the benchmark index. However, the proprietary mathematical process used by INTECH may not achieve the desired results. The Fund may use exchange-traded funds, as well as futures, options, and other derivatives, to gain exposure to the stock market pending investment of cash balances or to meet liquidity needs. 3. HOW ARE COMMON STOCKS SELECTED BY PERKINS FOR JANUS MID CAP VALUE FUND? Janus Mid Cap Value Fund's investment personnel focus on companies that have fallen out of favor with the market or appear to be temporarily misunderstood by the investment community. The investment personnel of the Fund look for companies with strong fundamentals and competent management. They generally look for companies with products and services that give them a competitive advantage. 4. ARE THE SAME CRITERIA USED BY JANUS AND PERKINS TO SELECT FOREIGN SECURITIES? Generally, yes. The investment personnel seek companies that meet their selection criteria, regardless of where a company is located. Foreign securities are generally selected on a stock-by-stock basis without regard to any defined 64 Janus Equity Funds prospectus allocation among countries or geographic regions. However, certain factors such as expected levels of inflation, government policies influencing business conditions, the outlook for currency relationships, and prospects for economic growth among countries, regions, or geographic areas may warrant greater consideration in selecting foreign securities. There are no limitations on the countries in which the Funds may invest and the Funds may at times have significant foreign exposure. 5. ARE THE SAME CRITERIA USED BY INTECH TO SELECT FOREIGN SECURITIES? Generally, yes. To the extent that foreign securities may be included in the Fund's benchmark index, INTECH's mathematical portfolio process may select foreign securities from within the benchmark index, regardless of where a company is located. There are no limitations on the countries in which the Fund may invest. 6. WHAT IS A "SPECIAL SITUATION"? Each Fund may invest in special situations or turnarounds. A special situation arises when the investment personnel believe that the securities of an issuer will be recognized and appreciate in value due to a specific development with respect to that issuer. Special situations may include significant changes in a company's allocation of its existing capital, a restructuring of assets, or a redirection of free cash flow. For example, issuers undergoing significant capital changes may include companies involved in spin-offs, sales of divisions, mergers or acquisitions, companies emerging from bankruptcy, or companies initiating large changes in their debt to equity ratio. Companies that are redirecting cash flows may be reducing debt, repurchasing shares, or paying dividends. Special situations may also result from: (i) significant changes in industry structure through regulatory developments or shifts in competition; (ii) a new or improved product, service, operation, or technological advance; (iii) changes in senior management; or (iv) significant changes in cost structure. A Fund's performance could suffer if the anticipated development in a "special situation" investment does not occur or does not attract the expected attention. 7. WHAT DOES "MARKET CAPITALIZATION" MEAN? Market capitalization is the most commonly used measure of the size and value of a company. It is computed by multiplying the current market price of a share of the company's stock by the total number of its shares outstanding. As noted previously, market capitalization is an important investment criterion for Janus Enterprise Fund, Janus Triton Fund, and Janus Mid Cap Value Fund. Although the other Funds offered by this Prospectus do not emphasize investments in companies of any particular size, Funds with a larger asset base (e.g., Janus Fund and Janus Worldwide Fund) are more likely to invest in larger, more established issuers. Principal investment strategies and risks 65 8. WHAT DOES "LIFE SCIENCE ORIENTATION" MEAN IN RELATION TO JANUS GLOBAL LIFE SCIENCES FUND? Generally speaking, the "life sciences" relate to maintaining or improving quality of life. So, for example, companies with a "life science orientation" include companies engaged in research, development, production, or distribution of products or services related to health and personal care, medicine, or pharmaceuticals. Life science oriented companies also include companies that the investment personnel believe have growth potential primarily as a result of particular products, technology, patents, or other market advantages in the life sciences. Life sciences encompass a variety of industries, including health care, nutrition, agriculture, medical diagnostics, nuclear and biochemical research and development, and health care facilities ownership and operation. 9. WHAT IS JANUS GLOBAL TECHNOLOGY FUND'S INDUSTRY POLICY? Janus Global Technology Fund will not concentrate its investments in any particular industry or group of related industries. As a result, its investment personnel may have more flexibility to find companies that they believe will benefit from advances or improvements in technology in a number of industries. Nevertheless, the Fund may hold a significant portion of its assets in industries such as: aerospace/defense; biotechnology; computers; office/business equipment; semiconductors; software; telecommunications; and telecommunications equipment. 10. HOW DO THE INVESTMENT PERSONNEL FOR JANUS CONTRARIAN FUND, JANUS MID CAP VALUE FUND, AND JANUS GLOBAL OPPORTUNITIES FUND DETERMINE THAT A COMPANY MAY BE UNDERVALUED? A company may be undervalued when, in the opinion of the Funds' investment personnel, the company is selling for a price that is below its intrinsic worth. A company may be undervalued due to market or economic conditions, temporary earnings declines, unfavorable developments affecting the company, or other factors. Such factors may provide buying opportunities at attractive prices compared to historical or market price-earnings ratios, price/free cash flow, book value, or return on equity. The investment personnel believe that buying these securities at a price that is below their intrinsic worth may generate greater returns for the Funds than those obtained by paying premium prices for companies currently in favor in the market. 11. HOW DO JANUS BALANCED FUND AND JANUS GROWTH AND INCOME FUND DIFFER FROM EACH OTHER? Janus Balanced Fund places a greater emphasis on the income component of its portfolio and will normally invest 40-50% of its net assets in securities selected primarily for their income potential. Growth and Income Fund will normally 66 Janus Equity Funds prospectus invest at least 25% of its net assets in securities the investment personnel believe have income potential. As a result, Janus Balanced Fund is expected to be less volatile than Janus Growth and Income Fund. Janus Growth and Income Fund places a greater emphasis on growth stocks and may derive a greater portion of its income from dividend-paying common stocks. Because of these factors, its NAV can be expected to fluctuate more than Janus Balanced Fund. 12. HOW ARE ASSETS ALLOCATED BETWEEN THE GROWTH AND INCOME COMPONENTS OF JANUS BALANCED FUND'S AND JANUS GROWTH AND INCOME FUND'S PORTFOLIOS? Janus Balanced Fund and Janus Growth and Income Fund shift assets to varying degrees between the growth and income components of their portfolio holdings based on the investment personnel's analyses of relevant market, financial, and economic conditions. If the investment personnel believe that growth securities will provide better returns than the yields then available or expected on income-producing securities, that Fund will place a greater emphasis on the growth component. Janus Balanced Fund's growth component will normally be 50-60% of its net assets. Janus Growth and Income Fund's growth component will normally be up to 75% of its net assets. In addition, the Funds' income component may consist of dividend-paying stocks which exhibit growth characteristics. 13. WHAT TYPES OF SECURITIES MAKE UP THE GROWTH COMPONENT OF JANUS BALANCED FUND'S AND JANUS GROWTH AND INCOME FUND'S PORTFOLIOS? The growth component of these Funds' portfolios is expected to consist primarily of common stocks, but may also include preferred stocks, convertible securities, or other securities selected primarily for their growth potential. 14. WHAT TYPES OF SECURITIES MAKE UP THE INCOME COMPONENT OF JANUS BALANCED FUND'S AND JANUS GROWTH AND INCOME FUND'S PORTFOLIOS? The income component of Janus Balanced Fund's holdings will consist primarily of fixed-income securities while Janus Growth and Income Fund's income component will consist largely of equities and other securities that the investment personnel believe have income potential. Such securities may include equity securities, convertible securities, equity derivatives (including equity-linked structured notes, such as PERCs, PERQs, YESs, and YEELDs), and all types of debt securities. Equity securities may be included in the income component of a Fund if they currently pay dividends or the investment personnel believe they have the potential for either increasing their dividends or commencing dividends, if none are currently paid. Accordingly, Janus Growth and Income Fund's income component may also exhibit growth characteristics. Principal investment strategies and risks 67 15. HOW COULD INTEREST RATES AFFECT THE VALUE OF MY JANUS BALANCED FUND OR JANUS GROWTH AND INCOME FUND INVESTMENT? Generally, a fixed-income security will increase in value when interest rates fall and decrease in value when interest rates rise. Longer-term securities are generally more sensitive to interest rate changes than shorter-term securities, but they generally offer higher yields to compensate investors for the associated risks. High-yield bond prices are generally less directly responsive to interest rate changes than investment grade issues and may not always follow this pattern. The income component of Janus Balanced Fund's and Janus Growth and Income Fund's holdings may include fixed-income securities. 16. WHAT ARE U.S. GOVERNMENT SECURITIES? The Funds, particularly Janus Balanced Fund, may invest in U.S. Government securities. U.S. Government securities include those issued directly by the U.S. Treasury and those issued or guaranteed by various U.S. Government agencies and instrumentalities. Some government securities are backed by the "full faith and credit" of the United States. Other government securities are backed only by the rights of the issuer to borrow from the U.S. Treasury. Others are supported by the discretionary authority of the U.S. Government to purchase the obligations. Certain other government securities are supported only by the credit of the issuer. For securities not backed by the full faith and credit of the United States, a Fund must look principally to the agency or instrumentality issuing or guaranteeing the securities for repayment and may not be able to assert a claim against the United States if the agency or instrumentality does not meet its commitment. Although they are high-quality, such securities may involve increased risk of loss of principal and interest compared to government debt securities that are backed by the full faith and credit of the United States. RISKS Because the Funds may invest substantially all of their assets in common stocks, the main risk is the risk that the value of the stocks they hold might decrease in response to the activities of an individual company or in response to general market and/or economic conditions. If this occurs, a Fund's share price may also decrease. A Fund's performance may also be significantly affected, positively or negatively, by certain types of investments, such as foreign securities, derivative investments, non-investment grade bonds, initial public offerings ("IPOs"), or companies with relatively small market capitalizations. IPOs and other types of investments may have a magnified performance impact on a Fund with a small asset base. A Fund may not experience similar performance as its assets grow. Janus Global Life Sciences Fund's and Janus Global Technology Fund's performance may also be affected by industry risk to a greater extent than the other Funds. 68 Janus Equity Funds prospectus Janus Capital is the adviser to the Funds and the Janus Smart Portfolios (each of which is a "fund of funds" that primarily invests in other Janus Capital mutual funds). Because Janus Capital is the adviser to the Janus Smart Portfolios and the Funds, it is subject to certain potential conflicts of interest when allocating the assets of the Janus Smart Portfolios among such Funds. Purchases and redemptions of Fund shares by a Janus Smart Portfolio due to reallocations or rebalancings may result in a Fund having to sell securities or invest cash when it otherwise would not do so. Such transactions could accelerate the realization of taxable income if sales of securities resulted in gains and could also increase a Fund's transaction costs. Large redemptions by a Janus Smart Portfolio may cause a Fund's expenses to increase due to a resulting smaller asset base. In addition, the Janus Smart Portfolios' portfolio manager, who also serves the role of Director of Risk Management and Performance of Janus Capital, has regular and continuous access to the holdings of the Funds as well as knowledge of, and potential impact on, investment strategies and techniques of the Funds. Janus Capital believes these potential conflicts may be mitigated through its compliance monitoring, including that of asset allocations by the portfolio manager. In addition, Janus Capital has retained an independent consultant to provide research and consulting services with respect to asset allocation and investments for the Janus Smart Portfolios. The officers and Trustees of the Funds may also serve as officers and Trustees of the Janus Smart Portfolios. Conflicts may arise as the officers and Trustees seek to fulfill their fiduciary responsibilities to both the Janus Smart Portfolios and the Funds. The Trustees intend to address any such conflicts as deemed appropriate. Janus Capital manages accounts which engage in short sales. The simultaneous management of long and short portfolios creates potential conflicts of interest, including the risk that short sale activity could adversely affect the market value of long positions (and vice versa), the risk arising from sequential orders in long and short positions, and the risks associated with receiving opposing orders at the same time. FREQUENTLY ASKED QUESTIONS ABOUT CERTAIN RISKS The following questions and answers are designed to help you better understand some of the risks of investing in the Funds. 1. HOW DOES THE NONDIVERSIFICATION CLASSIFICATION OF JANUS ORION FUND, JANUS CONTRARIAN FUND, AND JANUS GLOBAL OPPORTUNITIES FUND AFFECT THEIR RISK PROFILE? Diversification is a way to reduce risk by investing in a broad range of stocks or other securities. A fund that is classified as "nondiversified" has the ability to take larger positions in a smaller number of issuers than a fund that is classified as "diversified." This gives a nondiversified fund more flexibility to focus its investments in the most attractive companies identified by the investment Principal investment strategies and risks 69 personnel. However, because the appreciation or depreciation of a single stock may have a greater impact on the NAV of a nondiversified fund, its share price can be expected to fluctuate more than a comparable diversified fund. This fluctuation, if significant, may affect the performance of a Fund. Since Janus Orion Fund normally invests primarily in a core portfolio of 20-30 common stocks, this risk may be increased. 2. WHAT IS "INDUSTRY RISK"? Industry risk is the possibility that a group of related stocks will decline in price due to industry-specific developments. Companies in the same or similar industries may share common characteristics and are more likely to react similarly to industry-specific market or economic developments. Each Fund's investments, if any, in multiple companies in a particular industry increase that Fund's exposure to industry risk. In the life sciences, for example, many companies are subject to government regulation and approval of their products and services, which may affect their price or availability. In addition, the products and services offered by these companies may quickly become obsolete in the face of scientific or technological developments. The economic outlook of such companies may fluctuate dramatically due to changes in regulatory or competitive environments. Similarly, in technology-related industries, competitive pressures may have a significant effect on the performance of companies in which a Fund may invest. In addition, technology and technology-related companies often progress at an accelerated rate, and these companies may be subject to short product cycles and aggressive pricing, which may increase their volatility. Janus Global Life Sciences Fund invests in a concentrated portfolio, which may result in greater exposure to related industries. As a result, this Fund may be more volatile than a less concentrated portfolio. 3. WHAT ARE THE RISKS ASSOCIATED WITH VALUE INVESTING? If the investment personnel's perception of a company's worth is not realized in the time frame they expect, the overall performance of Janus Contrarian Fund, Janus Mid Cap Value Fund, and Janus Global Opportunities Fund may suffer. In general, the investment personnel believe this risk is mitigated by investing in companies that are undervalued in the market in relation to earnings, cash flow, dividends, and/or assets. 4. HOW COULD THE FUNDS' INVESTMENTS IN FOREIGN SECURITIES AFFECT THEIR PERFORMANCE? Unless otherwise limited by its specific investment policies, each Fund may invest without limit in foreign securities either indirectly (e.g., depositary receipts) or directly in foreign markets, including emerging markets. Investments in foreign securities, including those of foreign governments, may involve greater 70 Janus Equity Funds prospectus risks than investing in domestic securities because a Fund's performance may depend on factors other than the performance of a particular company. These factors include: - CURRENCY RISK. As long as a Fund holds a foreign security, its value will be affected by the value of the local currency relative to the U.S. dollar. When a Fund sells a foreign denominated security, its value may be worth less in U.S. dollars even if the security increases in value in its home country. U.S. dollar-denominated securities of foreign issuers may also be affected by currency risk due to the overall impact of exposure to the issuer's local currency. - POLITICAL AND ECONOMIC RISK. Foreign investments may be subject to heightened political and economic risks, particularly in emerging markets which may have relatively unstable governments, immature economic structures, national policies restricting investments by foreigners, different legal systems, and economies based on only a few industries. In some countries, there is the risk that the government may take over the assets or operations of a company or that the government may impose taxes or limits on the removal of a Fund's assets from that country. - REGULATORY RISK. There may be less government supervision of foreign markets. As a result, foreign issuers may not be subject to the uniform accounting, auditing, and financial reporting standards and practices applicable to domestic issuers and there may be less publicly available information about foreign issuers. - MARKET RISK. Foreign securities markets, particularly those of emerging market countries, may be less liquid and more volatile than domestic markets. Certain markets may require payment for securities before delivery and delays may be encountered in settling securities transactions. In some foreign markets, there may not be protection against failure by other parties to complete transactions. Such factors may hinder a Fund's ability to buy and sell emerging market securities in a timely manner, affecting the Fund's investment strategies and potentially affecting the value of the Fund. - TRANSACTION COSTS. Costs of buying, selling, and holding foreign securities, including brokerage, tax, and custody costs, may be higher than those involved in domestic transactions. 5. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN SECURITIES OF COMPANIES FROM EMERGING MARKET COUNTRIES? Within the parameters of their specific investment policies, the Funds, particularly Janus Global Life Sciences Fund, Janus Global Technology Fund, Janus Global Opportunities Fund, Janus Overseas Fund, and Janus Worldwide Principal investment strategies and risks 71 Fund, may invest an unlimited amount of their assets in a company or companies from one or more "developing countries" or "emerging markets." Such countries include, but are not limited to, countries included in the MSCI Emerging Markets Index(SM). Janus Orion Fund, Janus Triton Fund, Janus Contrarian Fund, and Janus Research Fund have at times invested a significant portion of their assets in emerging markets and may continue to do so. To the extent that a Fund invests a significant amount of its assets in one or more countries, returns and NAV may be affected to a large degree by events and economic conditions in such countries. A summary of each Fund's investments by country is contained in the Funds' shareholder reports and in the Funds' Form N-Q filed with the SEC. In many developing markets, there is less government supervision and regulation of business and industry practices, stock exchanges, brokers, and listed companies than in more developed markets. The securities markets of many of the countries in which the Funds may invest may also be smaller, less liquid, and subject to greater price volatility than those in the United States. In the event of a default on any investments in foreign debt obligations, it may be more difficult for the Funds to obtain or to enforce a judgment against the issuers of such securities. The Funds may be subject to emerging markets risk to the extent that they invest in companies which are not considered to be from emerging markets, but which have customers, products, or transactions associated with emerging markets. 6. ARE THERE SPECIAL RISKS ASSOCIATED WITH INVESTMENTS IN HIGH-YIELD/HIGH-RISK BONDS? High-yield/high-risk bonds (or "junk" bonds) are bonds rated below investment grade by the primary rating agencies such as Standard & Poor's Ratings Service ("Standard & Poor's"), Fitch, Inc. ("Fitch"), and Moody's Investors Service, Inc. ("Moody's") (i.e., BB+ or lower by Standard & Poor's and Fitch, or Ba or lower by Moody's) or are unrated bonds of similar quality. The value of lower quality bonds generally is more dependent on credit risk and default risk than investment grade bonds. Issuers of high-yield/high-risk bonds may not be as strong financially as those issuing bonds with higher credit ratings and are more vulnerable to real or perceived economic changes, political changes, or adverse developments specific to the issuer. In addition, the junk bond market can experience sudden and sharp price swings. The secondary market on which high-yield securities are traded may be less liquid than the market for investment grade securities. The lack of a liquid secondary market may have an adverse impact on the market price of the security. When secondary markets for high-yield securities are less liquid than the market for investment grade securities, it also may be more difficult to value the securities because valuation may require more research, and elements of 72 Janus Equity Funds prospectus judgment may play a larger role in the valuation because there is less reliable, objective data available. Please refer to the "Explanation of Rating Categories" section of the Statement of Additional Information for a description of bond rating categories. 7. HOW DO THE FUNDS TRY TO REDUCE RISK? The Funds may use futures, options, swap agreements, and other derivative instruments individually or in combination to "hedge" or protect their portfolios from adverse movements in securities prices and interest rates. The Funds may also use a variety of currency hedging techniques, including the use of forward currency contracts, to manage currency risk. There is no guarantee that derivative investments will benefit the Funds. A Fund's performance could be worse than if the Fund had not used such instruments. INTECH Risk-Managed Stock Fund's subadviser, INTECH, approaches risk management from a perspective that evaluates risk relative to a direct investment in the benchmark index. Risk controls are designed to minimize the risk of significant underperformance relative to the benchmark index. INTECH Risk-Managed Stock Fund normally remains as fully invested as possible and does not seek to lessen the effects of a declining market through hedging or temporary defensive positions. However, they may use futures and options and may invest in exchange-traded funds to gain exposure to the stock market pending investment of cash balances or to meet liquidity needs. There is no guarantee that these types of derivative investments will work and their use could cause lower returns or even losses to the Fund. 8. CERTAIN FUNDS MAY INVEST IN SMALLER OR NEWER COMPANIES. DOES THIS CREATE ANY SPECIAL RISKS? Many attractive investment opportunities may be smaller, start-up companies offering emerging products or services. Smaller or newer companies may suffer more significant losses as well as realize more substantial growth than larger or more established issuers because they may lack depth of management, be unable to generate funds necessary for growth or potential development, or be developing or marketing new products or services for which markets are not yet established and may never become established. In addition, such companies may be insignificant factors in their industries and may become subject to intense competition from larger or more established companies. Securities of smaller or newer companies may have more limited trading markets than the markets for securities of larger or more established issuers, or may not be publicly traded at all, and may be subject to wide price fluctuations. Investments in such companies tend to be more volatile and somewhat more speculative. Principal investment strategies and risks 73 GENERAL PORTFOLIO POLICIES Unless otherwise stated, each of the following general policies apply to all of the Funds. Except for the Funds' policies with respect to investments in illiquid securities and borrowing, the percentage limitations included in these policies and elsewhere in this Prospectus normally apply only at the time of purchase of a security. So, for example, if a Fund exceeds a limit as a result of market fluctuations or the sale of other securities, it will not be required to dispose of any securities. WAITING PERIOD Janus Mercury Fund and Janus Research Fund may be subject to a waiting period prior to purchases or sales of securities in order to attempt to provide equitable dissemination of the Research Team's ideas to other Janus fund investment personnel. A waiting period may not be applicable where the idea is already disseminated among other Janus fund investment personnel. Any waiting period may adversely affect the purchase or sale price of a security, due to the time delay. This may, in turn, affect the return on your investment in the Funds. CASH POSITION INTECH Risk-Managed Stock Fund, subadvised by INTECH, normally remains as fully invested as possible and does not seek to lessen the effects of a declining market through hedging or temporary defensive positions. INTECH Risk-Managed Stock Fund may use exchange-traded funds as well as futures, options, and other derivatives to gain exposure to the stock market pending investment of cash balances or to meet liquidity needs. There is no guarantee that these types of derivative investments will work and their use could cause lower returns or even losses to the Fund. Except as described above for INTECH Risk-Managed Stock Fund, the Funds may not always stay fully invested in stocks and bonds. For example, when a Fund's investment personnel believe that market conditions are unfavorable for profitable investing, or when they are otherwise unable to locate attractive investment opportunities, a Fund's cash or similar investments may increase. In other words, cash or similar investments generally are a residual - they represent the assets that remain after a Fund has committed available assets to desirable investment opportunities. Partly because the Funds' investment personnel act independently of each other, the cash positions of the Funds may vary significantly. When a Fund's investments in cash or similar investments increase, it may not participate in market advances or declines to the same extent that it would if the Fund remained more fully invested in stocks or bonds. In addition, a Fund may temporarily increase its cash position under certain unusual circumstances, such as to protect its assets or maintain liquidity in 74 Janus Equity Funds prospectus certain circumstances, for example, to meet unusually large redemptions. A Fund's cash position may also increase temporarily due to unusually large cash inflows. Under unusual circumstances such as these, a Fund may invest up to 100% of its assets in cash or similar investments. In this case, the Fund may not achieve its investment objective. OTHER TYPES OF INVESTMENTS Unless otherwise stated within its specific investment policies, each Fund may also invest in other types of domestic and foreign securities and use other investment strategies, as described in the "Glossary of Investment Terms." These securities and strategies are not principal investment strategies of the Funds. If successful, they may benefit the Funds by earning a return on the Funds' assets or reducing risk; however, they may not achieve the Funds' objectives. These securities and strategies may include: - debt securities - indexed/structured securities - high-yield/high-risk bonds (20% or less of Janus Contrarian Fund's, Janus Core Equity Fund's, and Janus Mid Cap Value Fund's assets and 35% or less of each of the other Fund's assets, with the exception of INTECH Risk-Managed Stock Fund, which does not intend to invest in high-yield/high-risk bonds) - options, futures, forwards, swap agreements, participatory notes, exchange- traded funds, and other types of derivatives individually or in combination for hedging purposes or for nonhedging purposes such as seeking to enhance return; such techniques may also be used to gain exposure to the market pending investment of cash balances or to meet liquidity needs - short sales "against the box" and "naked" short sales, with the exception of INTECH Risk-Managed Stock Fund, which does not intend to invest in short sales (no more than 8% of a Fund's assets may be invested in naked short sales) - securities purchased on a when-issued, delayed delivery, or forward commitment basis - bank loans, which may be acquired through loan participations and assignments (for Janus Balanced Fund only; no more than 5% of the Fund's total assets) ILLIQUID INVESTMENTS Each Fund may invest up to 15% of its net assets in illiquid investments. An illiquid investment is a security or other position that cannot be disposed of quickly in the normal course of business. For example, some securities are not Principal investment strategies and risks 75 registered under U.S. securities laws and cannot be sold to the U.S. public because of SEC regulations (these are known as "restricted securities"). Under procedures adopted by the Funds' Trustees, certain restricted securities may be deemed liquid, and will not be counted toward this 15% limit. INTECH Risk-Managed Stock Fund does not intend to invest in illiquid investments. FOREIGN SECURITIES Unless otherwise stated within its specific investment policies, each Fund may invest without limit in foreign equity and debt securities. The Funds may invest directly in foreign securities denominated in a foreign currency and not publicly traded in the United States. Other ways of investing in foreign securities include depositary receipts or shares and passive foreign investment companies. INTECH Risk-Managed Stock Fund's investments in foreign securities are limited to the extent those securities are included in its benchmark index. SPECIAL SITUATIONS Each Fund may invest in companies that demonstrate special situations or turnarounds, meaning companies that have experienced significant business problems but are believed to have favorable prospects for recovery. For example, a special situation or turnaround may arise when, in the opinion of a Fund's investment personnel, the securities of a particular issuer will be recognized and appreciate in value due to a specific development with respect to that issuer. Special situations may include significant changes in a company's allocation of its existing capital, a restructuring of assets, or a redirection of free cash flow. For example, issuers undergoing significant capital changes may include companies involved in spin-offs, sales of divisions, mergers or acquisitions, companies emerging from bankruptcy, or companies initiating large changes in their debt to equity ratio. Developments creating a special situation might include, among others, a new product or process, a technological breakthrough, a management change or other extraordinary corporate event, or differences in market supply of and demand for the security. A Fund's performance could suffer if the anticipated development in a "special situation" investment does not occur or does not attract the expected attention. SECURITIES LENDING The Funds may seek to earn additional income through securities lending. Certain Funds may lend their portfolio securities to parties (typically brokers or other financial institutions) who need to borrow securities in order to complete certain transactions such as covering short sales, avoiding failures to deliver securities, or completing arbitrage activities. There is a risk of delay in recovering a loaned security and/or a risk of loss in collateral rights if the borrower fails financially. 76 Janus Equity Funds prospectus PORTFOLIO TURNOVER In general, the Funds intend to purchase securities for long-term investment, although, to a limited extent, each Fund may purchase securities in anticipation of relatively short-term price gains. Short-term transactions may also result from liquidity needs, securities having reached a price or yield objective, changes in interest rates or the credit standing of an issuer, or by reason of economic or other developments not foreseen at the time of the investment decision. A Fund may also sell one security and simultaneously purchase the same or a comparable security to take advantage of short-term differentials in bond yields or securities prices. Portfolio turnover is affected by market conditions, changes in the size of a Fund, the nature of a Fund's investments, and the investment style of the investment personnel. Changes are made in a Fund's portfolio whenever its investment personnel believe such changes are desirable. Portfolio turnover rates are generally not a factor in making buy and sell decisions. In general, INTECH Risk-Managed Stock Fund intends to purchase securities for long-term investment, although, to a limited extent, portfolio securities may be held for relatively shorter periods. Short-term transactions may also result from liquidity needs, securities having reached a price objective, changes in the credit standing of an issuer, or by reason of economic or other developments not foreseen at the time of the investment. As a result of INTECH's investment process, the Fund may sell one security and simultaneously purchase the same or a comparable security. Portfolio turnover may also be affected by market conditions, changes in the size of the Fund, and the nature of the Fund's investments. Portfolio turnover rates are not a factor in making buy and sell decisions. The rebalancing techniques used by INTECH Risk-Managed Stock Fund may result in a higher portfolio turnover compared to a "buy and hold" fund strategy. INTECH periodically rebalances the stocks in the portfolio to their target weighting versus the Fund's benchmark index, as determined by INTECH's mathematical process. Increased portfolio turnover may result in higher costs for brokerage commissions, dealer mark-ups, and other transaction costs and may also result in taxable capital gains. Higher costs associated with increased portfolio turnover may offset gains in a Fund's performance. The "Financial Highlights" section of this Prospectus shows the Funds' historical turnover rates. Principal investment strategies and risks 77 -------------------------------------------------------------------------------- JANUS EQUITY FUNDS Shareholder's Manual This Shareholder's Manual is for those shareholders investing directly with the Funds. This section will help you become familiar with the different types of accounts you can establish with Janus. It also explains in detail the wide array of services and features you can establish on your account, as well as describes account policies and fees that may apply to your account. Account policies (including fees), services, and features may be modified or discontinued without shareholder approval or prior notice. (JANUS LOGO) DOING BUSINESS WITH JANUS -------------------------------------------------------------------------------- ONLINE - www.janus.com - 24 HOURS A DAY, 7 DAYS A WEEK -------------------------------------------------------------------------------- ON www.janus.com* YOU CAN: - Open the following types of accounts: individual, joint, UGMA/UTMA, Traditional and Roth IRAs, Simplified Employee Pension ("SEP") IRAs, and Coverdell Education Savings Accounts - Review your account or complete portfolio - Buy, exchange, and sell Funds - View your personalized performance - Obtain Fund information and performance - Update personal information - Receive electronic daily, quarterly, and year-end statements, semiannual and annual reports, prospectuses, and tax forms * Certain account or transaction types may be restricted from being processed through www.janus.com. If you would like more information about these restrictions, please contact a Janus representative. JANUS XPRESSLINE(TM) 1-888-979-7737 - 24-HOUR AUTOMATED PHONE SYSTEM JANUS REPRESENTATIVES 1-800-525-3713 TDD For the speech and hearing impaired. 1-800-525-0056 MAILING ADDRESS Janus P.O. Box 173375 Denver, CO 80217-3375 FOR OVERNIGHT MAIL Janus 720 S. Colorado Blvd., Suite 290A Denver, CO 80246-1929 80 Janus Equity Funds prospectus MINIMUM INVESTMENTS* To open a new regular Fund account $2,500 To open a new UGMA/UTMA account, Coverdell Education Savings Account, or a retirement Fund account - without an automatic investment program $1,000 - with an automatic investment program of $100 per month $ 500 To add to any existing type of Fund account $ 100
* The Funds reserve the right to change the amount of these minimums from time to time or to waive them in whole or in part. Participants in certain retirement plans, including but not limited to, 403(b)(7) accounts, Janus prototype Money Purchase Pension and Profit Sharing plans, SEP IRAs, SAR SEP IRAs, or outside qualified retirement plans, may not be subject to the stated minimums. Employees of Janus Capital, its wholly-owned subsidiaries, and INTECH may open Fund accounts for $100. MINIMUM INVESTMENT REQUIREMENTS Due to the proportionately higher costs of maintaining small accounts, the Funds reserve the right to deduct an annual $25 minimum balance fee per Fund account with values below the minimums described under "Minimum Investments" or to close Fund accounts valued at less than $100. This policy may not apply to accounts that fall below the minimums solely as a result of market value fluctuations or to those accounts not subject to a minimum investment requirement. The fee or account closure will occur during the fourth quarter of each calendar year. You may receive written notice before we charge the $25 fee or close your account so that you may increase your account balance to the required minimum. Please note that you may incur a tax liability as a result of the fee being charged or the redemption. TYPES OF ACCOUNT OWNERSHIP Please refer to www.janus.com or an account application for specific requirements to open and maintain an account. INDIVIDUAL OR JOINT OWNERSHIP Individual accounts are owned by one person. Joint accounts have two or more owners. TRUST An established trust can open an account. The names of each trustee, the name of the trust, and the date of the trust agreement must be included on the application. Shareholder's manual 81 BUSINESS ACCOUNTS Corporations and partnerships may also open an account. The application must be signed by an authorized officer of the corporation or a general partner of the partnership. TAX-DEFERRED ACCOUNTS Please refer to www.janus.com or an account application for specific requirements to open and maintain an account. Certain tax-deferred accounts can only be opened and maintained via written request. Please contact a Janus representative for more information. If you are eligible, you may set up one or more tax-deferred accounts. A tax- deferred account allows you to shelter your investment income and capital gains from current income taxes. A contribution to certain of these plans may also be tax deductible. The types of tax-deferred accounts that may be opened with Janus are described below. Investors should consult their tax adviser or legal counsel before selecting a tax-deferred account. You may initiate a rollover or a transfer of assets from certain tax-deferred accounts via www.janus.com. INVESTING FOR YOUR RETIREMENT Please visit www.janus.com or call a Janus representative for more complete information regarding the different types of IRAs. Distributions from these plans may be subject to income tax and to an additional tax if withdrawn prior to age 59 1/2 or used for a nonqualifying purpose. TRADITIONAL AND ROTH IRAS Both IRAs allow most individuals with earned income to contribute up to the lesser of $4,000 or 100% of compensation for tax years 2005 and 2006. In addition, for the 2005 tax year IRA holders age 50 or older may contribute $500 more than these limits; and for the 2006 tax year IRA holders age 50 or older may contribute $1,000 more than these limits. SIMPLIFIED EMPLOYEE PENSION (SEP) IRAS This plan allows small business owners (including sole proprietors) to make tax-deductible contributions for themselves and any eligible employee(s). A SEP requires an IRA (a SEP-IRA) to be set up for each SEP participant. PROFIT SHARING OR MONEY PURCHASE PENSION PLAN These plans are open to corporations, partnerships, and small business owners (including sole proprietors) for the benefit of their employees and themselves. You may only open and maintain this type of account via written request. Please contact a Janus representative for more information. 82 Janus Equity Funds prospectus SECTION 403(b)(7) PLAN Employees of educational organizations or other qualifying tax-exempt organizations may be eligible to participate in a Section 403(b)(7) plan. You may only open and maintain this type of account via written request. Please contact a Janus representative for more information. ACCOUNTS FOR THE BENEFIT OF A CHILD CUSTODIAL ACCOUNTS (UGMA OR UTMA) An UGMA/UTMA account is a custodial account managed for the benefit of a minor. COVERDELL EDUCATION SAVINGS ACCOUNT This plan allows individuals, subject to certain income limitations, to contribute up to $2,000 annually on behalf of any child under the age of 18. Contributions are also allowed on behalf of children with special needs beyond age 18. Distributions are generally subject to income tax if not used for qualified education expenses. Please refer to the chart on the following pages for information on opening an account and conducting business with Janus. With certain limited exceptions, the Funds are available only to U.S. citizens or residents. Shareholder's manual 83 TO OPEN AN ACCOUNT OR BUY SHARES Certain tax-deferred accounts can only be opened and maintained via written request. Please contact a Janus representative for more information. ONLINE AT www.janus.com ------------------------------------------------------------------------------ - You may open a new Fund account or you may buy shares in an existing Fund account. You may elect to have Janus electronically withdraw funds from your designated bank account. You may initiate a rollover or a transfer of assets from certain tax-deferred accounts via www.janus.com. Janus.com will provide real-time confirmation of your transaction. BY TELEPHONE ------------------------------------------------------------------------------ - For an existing account, you may use Janus XpressLine(TM) to buy shares 24 hours a day, or you may call a Janus representative during normal business hours. Janus will electronically withdraw funds from your designated bank account. - You may also buy shares by wiring money from your bank account to your Fund account. For wiring instructions, call a Janus representative. BY MAIL/IN WRITING ------------------------------------------------------------------------------ - To open your Fund account, complete and sign the appropriate application. Make your check payable to Janus or elect a one-time electronic withdrawal from your bank account as noted on the appropriate application. - To buy additional shares, complete the remittance slip accompanying your confirmation statement. If you are making a purchase into a retirement account, please indicate whether the purchase is a rollover or a current or prior year contribution. Send your check and remittance slip or written instructions to the address listed on the slip. BY AUTOMATED INVESTMENTS ------------------------------------------------------------------------------ - To buy additional shares through the Automatic Investment Program, you select the frequency with which your money ($100 minimum) will be electronically transferred from your bank account to your Fund account. Certain tax-deferred accounts are not eligible for automated investments. - You may buy additional shares using Payroll Deduction if your employer can initiate this type of transaction. You may have all or a portion of your paycheck ($100 minimum) invested directly into your Fund account. ----------------------------------------------------------------------------- Note: For more information, refer to "Paying for Shares." 84 Janus Equity Funds prospectus TO EXCHANGE SHARES TO SELL SHARES ONLINE AT www.janus.com ONLINE AT www.janus.com -------------------------------- -------------------------------- - Exchanges may be made online - Redemptions may be made online at www.janus.com. at www.janus.com. BY TELEPHONE BY TELEPHONE -------------------------------- -------------------------------- - Generally all accounts are - Generally all accounts are automatically eligible to automatically eligible to sell exchange shares by telephone. shares by telephone. To sell To exchange all or a portion all or a portion of your of your shares into any other shares, call Janus available Janus fund, call XpressLine(TM) or a Janus Janus XpressLine(TM) or a representative. The Funds Janus representative. reserve the right to limit the dollar amount that you may redeem from your account by telephone. BY MAIL/IN WRITING BY MAIL/IN WRITING -------------------------------- -------------------------------- - To request an exchange in - To request a redemption in writing, please follow the writing, please follow the instructions in "Written instructions in "Written Instructions." Instructions." BY SYSTEMATIC EXCHANGE BY SYSTEMATIC REDEMPTION -------------------------------- -------------------------------- - You determine the amount of - This program allows you to money you would like automati- sell shares worth a specific cally exchanged from one Fund dollar amount from your Fund account to another on any day account on a regular basis. of the month. -------------------------------- -------------------------------- Note: For more information, Note: For more information, refer to "Exchanges." refer to "Payment of Redemption Proceeds."
Shareholder's manual 85 PAYING FOR SHARES Please note the following when purchasing shares: - Cash, credit cards, third party checks (with certain limited exceptions), travelers cheques, credit card checks, or money orders will not be accepted. - All purchases must be made in U.S. dollars and checks must be drawn on U.S. banks or an accepted Canadian bank. - When purchasing shares through the Automatic Investment Program, if no date or dollar amount is specified on your application, investments of $100 will be made on the 20th of each month. Your first automatic investment may take up to two weeks to establish. If the balance in the Janus fund account you are buying into falls to zero as the result of a redemption or exchange, your Automatic Investment Program will be discontinued. - We may make additional attempts to debit your predesignated bank account for automated investments that initially fail. You are liable for any costs associated with these additional attempts. If your automated investment fails, you may purchase shares of the Funds by submitting good funds via another method accepted by the Funds (e.g., by wire transfer). In this case, your purchase will be processed at the next NAV determined after we receive good funds, not at the NAV available as of the date of the original request. - Each Fund reserves the right to reject any purchase order, including exchange purchases, for any reason. The Funds are not intended for excessive trading. For more information about the Funds' policy on excessive trading, see "Excessive Trading." - If all or a portion of a purchase is received for investment without a specific fund designation, for investment in one of our closed funds, or for investment in a fund that is not yet available for public sale, the undesignated amount or entire investment, as applicable, will be invested in the Janus Money Market Fund-Investor Shares ("Money Market Fund"). For investments without a specific fund designation, where you own a single Fund account with a current balance greater than zero, the investment will be applied to that Fund account. For investments without a specific fund designation, where you own two or more Fund accounts with current balances greater than zero, and for investments in closed funds, unless you later direct Janus to (i) buy shares of another Janus fund or (ii) sell shares of the Money Market Fund and return the proceeds (including any dividends earned) to you, Janus will treat your inaction as approval of the purchase of the Money Market Fund. If you hold shares of a closed fund and submit an order directly to Janus for your account in that closed fund, your account must be open and your order must clearly indicate that you are currently a shareholder of the closed fund, or your money will be invested in the Money Market Fund. If you submit an order to buy shares of a fund 86 Janus Equity Funds prospectus that is not yet available for investment (during a subscription period), your investment will be held in the Money Market Fund until the new fund's commencement of operations. At that time, your investment (including any dividends) will be automatically exchanged from the Money Market Fund to the new fund. All orders for purchase, exchange, or sale will receive the NAV as described under "Policies in Relation to Transactions." - For Fund purchases by check, if your check does not clear for any reason, your purchase will be cancelled. - If your purchase is cancelled for any reason, you will be responsible for any losses or fees imposed by your bank and may be responsible for losses that may be incurred as a result of any decline in the value of the cancelled purchase. EXCHANGES Please note the following when exchanging shares: - An exchange represents the sale of shares from one Fund and the purchase of shares of another Fund, which may produce a taxable gain or loss in a non- retirement account. - You may generally exchange shares of a Fund for shares of any fund in the Trust. - New Janus fund accounts established by exchange must be opened with $2,500 or the total account value if the value of the Janus fund account you are exchanging from is less than $2,500. - UGMA/UTMA accounts, Traditional or Roth IRAs, Simplified Employee Pension IRAs, and Coverdell Education Savings Accounts established by exchange must meet the minimum investment requirements previously described. If the value of the Janus fund account you are exchanging from is less than the stated minimum, you must exchange the entire balance. - Exchanges between existing Janus fund accounts must meet the $100 subsequent investment requirement. - For Systematic Exchanges, if no date is specified on your request, systematic exchanges will be made on the 20th of each month. You may establish this option for as little as $100 per exchange. If the balance in the Janus fund account you are exchanging from falls below the Systematic Exchange amount, all remaining shares will be exchanged and your Systematic Exchange Program will be discontinued. - The exchange privilege is not intended as a vehicle for short-term or excessive trading. You may make up to four round trips in a Fund in a 12-month period, although the Funds at all times reserve the right to reject any exchange Shareholder's manual 87 purchase for any reason without prior notice. Generally, a "round trip" is a redemption out of a Fund (by any means) followed by a purchase back into the same Fund (by any means). Different restrictions may apply if you invest through an intermediary. The Funds will work with financial intermediaries to apply the Funds' exchange limit. However, the Funds may not always have the ability to monitor or enforce the trading activity in such accounts. For more information about the Funds' policy on excessive trading, see "Excessive Trading." - The Janus funds reserve the right to reject any exchange request and to modify or terminate the exchange privilege at any time. - An exchange from JANUS GLOBAL LIFE SCIENCES FUND, JANUS GLOBAL TECHNOLOGY FUND, INTECH RISK-MANAGED STOCK FUND, JANUS GLOBAL OPPORTUNITIES FUND, JANUS OVERSEAS FUND, or JANUS WORLDWIDE FUND of shares held for three months or less may be subject to the Funds' redemption fee. For more information on redemption fees, including a discussion of the circumstances in which the redemption fee may not apply, see "Redemption Fee." - With certain limited exceptions, exchanges between Janus fund accounts will be accepted only if the registrations are identical. If you are exchanging into a closed Janus fund, you will need to meet criteria for investing in the closed fund. For more information, see "Closed Fund Policies." - If the shares you are exchanging are held in certificate form, you must return the certificate to Janus prior to making any exchanges. Shares are no longer available in certificate form. Note: For the fastest and easiest way to exchange shares, log on to www.janus.com* 24 hours a day, 7 days a week. * Certain account types do not allow transactions via www.janus.com. For more information, access www.janus.com or refer to this Shareholder's Manual. EXCESSIVE TRADING EXCESSIVE TRADING POLICIES AND PROCEDURES The Board of Trustees has adopted policies and procedures with respect to short-term and excessive trading of Fund shares ("excessive trading"). The Funds are intended for long-term investment purposes only and the Funds will take reasonable steps to attempt to detect and deter excessive trading. Transactions placed in violation of the Funds' exchange limits or excessive trading policies may be cancelled or revoked by the Fund by the next business day following receipt by the Fund. The trading history of accounts determined to be under common ownership or control within any of the Janus funds may be considered 88 Janus Equity Funds prospectus in enforcing these policies and procedures. As described below, however, the Funds may not be able to identify all instances of excessive trading or completely eliminate the possibility of excessive trading. In particular, it may be difficult to identify excessive trading in certain omnibus accounts and other accounts traded through intermediaries. By their nature, omnibus accounts, in which purchases and sales of the Funds' shares by multiple investors are aggregated by the intermediary and presented to the Funds on a net basis, may effectively conceal the identity of individual investors and their transactions from the Funds and their agents. The Funds attempt to deter excessive trading through at least the following methods: - exchange limitations as described under "Exchanges;" - redemption fees as described under "Redemption Fee" (where applicable on certain Funds); and - fair valuation of securities as described under "Pricing of Fund Shares." The Funds monitor Fund share transactions, subject to the limitations described below. Generally, a purchase of a Fund's shares followed by the redemption of the Fund's shares within a 90-day period may result in enforcement of a Fund's excessive trading policies and procedures with respect to future purchase orders, provided that the Funds reserve the right to reject any purchase request as explained above. The Funds may suspend or permanently terminate the exchange privilege of any investor who makes more than four round trips (as defined under "Exchanges") in a Fund in a 12-month period and may bar future purchases into the Fund and any of the other Janus funds by such investor. The Funds' exchange limits and excessive trading policies generally do not apply to a money market fund, although money market funds at all times reserve the right to reject any purchase request (including exchange purchases) for any reason without prior notice; and transactions in the Janus funds by the Janus Smart Portfolios (each of which is a "fund of funds" that primarily invests in other Janus mutual funds). The Funds' Board of Trustees may approve from time to time a redemption fee to be imposed by any Janus fund, subject to 60 days' notice to shareholders of that fund. Investors who place transactions through the same financial intermediary on an omnibus basis may be deemed part of a group for the purpose of the Funds' excessive trading policies and procedures and may be rejected in whole or in part by a Fund. The Funds, however, cannot always identify or reasonably detect excessive trading that may be facilitated by financial intermediaries or made difficult to identify through the use of omnibus accounts by those intermediaries Shareholder's manual 89 that transmit purchase, exchange, and redemption orders to the Funds, and thus the Funds may have difficulty curtailing such activity. Transactions accepted by a financial intermediary in violation of the Funds' excessive trading policies may be cancelled or revoked by a Fund by the next business day following receipt by that Fund. In an attempt to detect and deter excessive trading in omnibus accounts, the Funds or their agents may require intermediaries to impose restrictions on the trading activity of accounts traded through those intermediaries. Such restrictions may include, but are not limited to, requiring that trades be placed by U.S. mail, prohibiting purchases for a designated period of time (typically 30 to 90 days) by investors who have recently redeemed Fund shares, requiring intermediaries to report information about customers who purchase and redeem large amounts, and similar restrictions. The Funds' ability to impose such restrictions with respect to accounts traded through particular intermediaries may vary depending on the systems capabilities, applicable contractual and legal restrictions, and cooperation of those intermediaries. Certain transactions in Fund shares, such as periodic rebalancing (no more frequently than quarterly) or those which are made pursuant to systematic purchase, exchange, or redemption programs generally do not raise excessive trading concerns and normally do not require application of the Funds' methods to detect and deter excessive trading. Each Fund also reserves the right to reject any purchase request (including exchange purchases) by any investor or group of investors for any reason without prior notice, including, in particular, if the trading activity in the account(s) is deemed to be disruptive to a Fund. For example, a Fund may refuse a purchase order if the Fund's investment personnel believe they would be unable to invest the money effectively in accordance with the Fund's investment policies or the Fund would otherwise be adversely affected due to the size of the transaction, frequency of trading, or other factors. The Funds' policies and procedures regarding excessive trading may be modified at any time by the Funds' Board of Trustees. EXCESSIVE TRADING RISKS Excessive trading may present risks to a Fund's long-term shareholders. Excessive trading into and out of a Fund may disrupt portfolio investment strategies, may create taxable gains to remaining Fund shareholders, and may increase Fund expenses, all of which may negatively impact investment returns for all remaining shareholders, including long-term shareholders. Funds that invest in foreign securities may be at a greater risk for excessive trading. Investors may attempt to take advantage of anticipated price movements 90 Janus Equity Funds prospectus in securities held by a Fund based on events occurring after the close of a foreign market that may not be reflected in the Fund's NAV (referred to as "price arbitrage"). Such arbitrage opportunities may also arise in Funds which do not invest in foreign securities, for example, when trading in a security held by a Fund is halted and does not resume prior to the time the Fund calculates its NAV (referred to as "stale pricing"). Funds that hold thinly-traded securities, such as certain small-capitalization securities, may be subject to attempted use of arbitrage techniques. To the extent that a Fund's valuation of a security differs from the security's market value, short-term arbitrage traders may dilute the NAV of a Fund, which negatively impacts long-term shareholders. Although the Funds have adopted fair valuation policies and procedures intended to reduce the Funds' exposure to price arbitrage, stale pricing, and other potential pricing inefficiencies, under such circumstances there is potential for short-term arbitrage trades to dilute the value of Fund shares. Although the Funds take steps to detect and deter excessive trading pursuant to the policies and procedures described in this Prospectus and approved by the Board of Trustees, there is no assurance that these policies and procedures will be effective in limiting excessive trading in all circumstances. For example, the Funds may be unable to completely eliminate the possibility of excessive trading in certain omnibus accounts and other accounts traded through intermediaries. Omnibus accounts may effectively conceal the identity of individual investors and their transactions from the Funds and their agents. This makes the Funds' identification of excessive trading transactions in the Funds through an omnibus account difficult and makes the elimination of excessive trading in the account impractical without the assistance of the intermediary. Although the Funds encourage intermediaries to take necessary actions to detect and deter excessive trading, some intermediaries may be unable or unwilling to do so, and accordingly, the Funds cannot eliminate completely the possibility of excessive trading. Shareholders that invest through an omnibus account should be aware that they may be subject to the policies and procedures of their financial intermediary with respect to excessive trading in the Funds. PAYMENT OF REDEMPTION PROCEEDS BY ELECTRONIC TRANSFER - Generally all accounts are automatically eligible for the electronic redemption option if bank information is provided. - NEXT DAY WIRE TRANSFER - Your redemption proceeds, less any applicable redemption fee, can be electronically transferred to your predesignated bank account on the next bank business day after receipt of your redemption request (wire transfer). Wire transfers will be charged a fee for each wire and your bank may charge an additional fee to receive the wire. Shareholder's manual 91 - ACH (AUTOMATED CLEARING HOUSE) TRANSFER - Your redemption proceeds, less any applicable redemption fee, can be electronically transferred to your predesignated bank account on or about the second bank business day after receipt of your redemption request. There is no fee associated with this type of electronic transfer. BY CHECK - Redemption proceeds, less any applicable redemption fee, will be sent to the shareholder(s) of record at the address of record within seven days after receipt of a valid redemption request. During the 10 days following an address change, requests for redemption checks to be sent to a new address require a signature guarantee. BY SYSTEMATIC REDEMPTION - If no date is specified on your request, systematic redemptions will be made on or about the 24th of each month. If the balance in the Janus fund account you are selling from falls to zero, your Systematic Redemption Program will be discontinued. GENERALLY, ORDERS TO SELL SHARES MAY BE INITIATED AT ANY TIME ON www.janus.com, BY TELEPHONE, OR IN WRITING. CERTAIN TAX-DEFERRED ACCOUNTS MAY REQUIRE A WRITTEN REQUEST. IF THE SHARES BEING SOLD WERE PURCHASED BY CHECK OR AUTOMATED INVESTMENT, THE FUNDS CAN DELAY THE PAYMENT OF YOUR SALE PROCEEDS FOR UP TO 15 DAYS FROM THE DAY OF PURCHASE TO ALLOW THE PURCHASE TO CLEAR. UNLESS YOU PROVIDE ALTERNATE INSTRUCTIONS, YOUR PROCEEDS WILL BE INVESTED IN THE INVESTOR SHARES CLASS OF JANUS MONEY MARKET FUND DURING THE 15-DAY HOLD PERIOD. Note: For the fastest and easiest way to redeem shares, log on to www.janus.com* 24 hours a day, 7 days a week. * Certain account types do not allow transactions via www.janus.com. For more information, access www.janus.com or refer to this Shareholder's Manual. REDEMPTION FEE Redemptions (and exchanges) of shares from JANUS GLOBAL LIFE SCIENCES FUND, JANUS GLOBAL TECHNOLOGY FUND, INTECH RISK-MANAGED STOCK FUND, JANUS GLOBAL OPPORTUNITIES FUND, JANUS OVERSEAS FUND, or JANUS WORLDWIDE FUND held for three months or less may be subject to the Funds' redemption fee. The redemption fee is 2.00% of a shareholder's redemption proceeds. This fee is paid to the Funds rather than Janus Capital, and is designed to deter excessive short-term trading and to offset the brokerage commissions, market impact, and other costs associated with changes in the Funds' asset level and cash flow due to short-term money movements in and out of the Funds. Certain intermediaries have agreed to charge the Funds' redemption fee on their customers' accounts. In this case, the amount of the fee and the holding period 92 Janus Equity Funds prospectus will generally be consistent with the Funds'. However, due to operational requirements, the intermediaries' methods for tracking and calculating the fee may differ in some respects from the Funds'. The redemption fee does not apply to certain types of accounts held through intermediaries, including: (i) certain employer-sponsored retirement plans; (ii) certain broker wrap fee and other fee-based programs; (iii) certain omnibus accounts where the omnibus account holder does not have the operational capability to impose a redemption fee on its underlying customers' accounts; and (iv) certain intermediaries that do not have or report to the Funds sufficient information to impose a redemption fee on their customers' accounts. In addition, the redemption fee does not apply to: (i) premature distributions from retirement accounts that are exempt from IRS penalty due to the disability of or medical expenses incurred by the shareholder; (ii) required minimum distributions from retirement accounts; (iii) return of excess contributions in retirement accounts; (iv) redemptions resulting in the settlement of an estate due to the death of the shareholder; (v) involuntary redemptions imposed by Janus Capital; and (vi) reinvested distributions (dividends and capital gains). If you purchase Fund shares through a financial intermediary, you should contact your financial intermediary or refer to your plan documents for more information on whether the redemption fee will be applied to redemptions of your shares. When cooperation from a financial intermediary is necessary to impose a redemption fee on its customers' accounts, different or additional exemptions may be applied by the financial intermediary. Redemption fees may be waived under certain circumstances involving involuntary redemptions imposed by intermediaries. In addition to the circumstances previously noted, each Fund reserves the right to waive the redemption fee at its discretion where it believes such waiver is in the best interests of the Fund, including but not limited to when it determines that imposition of the redemption fee is not necessary to protect the Fund from the effects of short-term trading. In addition, each Fund reserves the right to modify or eliminate the redemption fee or waivers at any time. If there is a material change to the Funds' redemption fee, the Funds will notify you at least 60 days prior to the effective date of the change. WRITTEN INSTRUCTIONS To sell or exchange all or part of your shares in writing, your request should be sent to one of the addresses listed under "Doing Business with Janus." Please include the following information: - the name of the Janus fund(s) being sold or exchanged; - the account number(s); Shareholder's manual 93 - the amount of money or number of shares being sold or exchanged; - the name(s) on the account; - the signature(s) of all registered account owners (see account application for signature requirements); and - your daytime telephone number. SIGNATURE GUARANTEE A SIGNATURE GUARANTEE IS REQUIRED if any of the following is applicable: - You request a redemption by check above a certain dollar amount. - You would like a check made payable to anyone other than the shareholder(s) of record. - You would like a check mailed to an address which has been changed within 10 days of the redemption request. - You would like a check mailed to an address other than the address of record. - You would like your redemption proceeds sent to a bank account other than a bank account of record. THE FUNDS RESERVE THE RIGHT TO REQUIRE A SIGNATURE GUARANTEE UNDER OTHER CIRCUMSTANCES OR TO REJECT OR DELAY A REDEMPTION ON CERTAIN LEGAL GROUNDS. A SIGNATURE GUARANTEE MAY BE REFUSED if any of the following is applicable: - It does not appear valid or in good form. - The transaction amount exceeds the surety bond limit of the signature guarantee. - The guarantee stamp has been reported as stolen, missing, or counterfeit. HOW TO OBTAIN A SIGNATURE GUARANTEE A signature guarantee assures that a signature is genuine. The signature guarantee protects shareholders from unauthorized account transfers. The following financial institutions may guarantee signatures: banks, savings and loan associations, trust companies, credit unions, broker-dealers, and member firms of a national securities exchange. Call your financial institution to see if they have the ability to guarantee a signature. A signature guarantee cannot be provided by a notary public. If you live outside the United States, a foreign bank properly authorized to do business in your country of residence or a U.S. consulate may be able to authenticate your signature. 94 Janus Equity Funds prospectus REDEMPTIONS IN-KIND Shares normally will be sold for cash, although each Fund retains the right to sell some or all of its shares in-kind under unusual circumstances, in order to protect the interests of remaining shareholders, or to accommodate a request by a particular shareholder that does not adversely affect the interest of the remaining shareholders, by delivery of securities selected from its assets at its discretion. However, each Fund is required to redeem shares solely for cash up to the lesser of $250,000 or 1% of the NAV of that Fund during any 90-day period for any one shareholder. Should redemptions by any shareholder exceed such limitation, a Fund will have the option of redeeming the excess in cash or in-kind. In-kind payment means payment will be made in portfolio securities rather than cash. If this occurs, the redeeming shareholder might incur brokerage or other transaction costs to convert the securities to cash. PRICING OF FUND SHARES NAV DETERMINATION The per share NAV is computed by dividing the total value of a Fund's securities and other assets, less liabilities, by the total number of Fund shares outstanding. In the case of Funds with share classes, the NAV for each class is computed by dividing the total value of securities and other assets allocated to the class, less liabilities allocated to that class, by the total number of shares outstanding for the class. A Fund's NAV is calculated as of the close of the regular trading session of the New York Stock Exchange ("NYSE") (normally 4:00 p.m. New York time) each day that the NYSE is open ("business day"). However, the NAV may be calculated earlier if trading on the NYSE is restricted, or as permitted by the SEC. Because foreign securities markets may operate on days that are not business days in the United States, the value of a Fund's holdings may change on days when you will not be able to purchase or redeem a Fund's shares to the extent that Fund is invested in such markets. All purchases, exchanges, and redemptions will be duly processed at the NAV as described under "Policies in Relation to Transactions" after your request is received in good order by a Fund (or financial intermediary or plan sponsor, if applicable) or its agent. Securities held by the Funds are generally valued at market value. Certain short-term instruments maturing within 60 days or less are valued at amortized cost, which approximates market value. If a market quotation is not readily available or is deemed unreliable, or if an event that is expected to affect the value of a portfolio security occurs after the close of the principal exchange or market on which that security is traded, and before the close of the NYSE, the fair value of a security (except for short-term instruments maturing within 60 days or less) will be determined in good faith under policies and procedures established by and under the supervision of the Funds' Board of Trustees. Circumstances in Shareholder's manual 95 which fair value pricing may be utilized include, but are not limited to: (i) when significant events occur which may affect the securities of a single issuer, such as mergers, bankruptcies, or significant issuer-specific developments; (ii) when significant events occur which may affect an entire market, such as natural disasters or significant governmental actions; and (iii) when non-significant events occur such as markets closing early or not opening, security trading halts, or pricing of nonvalued securities and restricted or nonpublic securities. The Funds may use a systematic fair valuation model provided by an independent pricing service to value foreign equity securities in order to adjust for stale pricing, which may occur between the close of certain foreign exchanges and of the NYSE. While fair value pricing may be more commonly used with foreign equity securities, it may also be used with, among other things, thinly-traded domestic securities or fixed-income securities. Due to the subjective nature of fair value pricing, a Fund's value for a particular security may be different from the last quoted market price. Fair value pricing may reduce arbitrage activity involving the frequent buying and selling of mutual fund shares by investors seeking to take advantage of a perceived lag between a change in the value of a Fund's portfolio securities and the reflection of such change in that Fund's NAV, as further described in the "Excessive Trading" section of this Prospectus. While funds that invest in foreign securities may be at a greater risk for arbitrage activity, such activity may also arise in funds which do not invest in foreign securities, for example, when trading in a security held by a Fund is halted and does not resume prior to the time the Fund calculates its NAV (referred to as "stale pricing"). Funds that hold thinly-traded securities, such as certain small-capitalization securities, may be subject to attempted use of arbitrage techniques. To the extent that a Fund's valuation of a security is different from the security's market value, short-term arbitrage traders may dilute the NAV of a Fund, which negatively impacts long-term shareholders. The Funds' fair value pricing and excessive trading policies and procedures may not completely eliminate short-term trading in certain omnibus accounts and other accounts traded through intermediaries. The value of the securities of other open-end funds held by a Fund, if any, will be calculated using the NAV of such underlying funds, and the prospectuses for such open-end funds explain the circumstances under which they use fair value pricing and the effects of using fair value pricing. POLICIES IN RELATION TO TRANSACTIONS EXCHANGES - Exchange requests between Funds (other than between Janus Money Market Fund and Janus Government Money Market Fund) must be received in good order by a Fund or its agent prior to the close of the regular trading session of the NYSE in order to receive that day's NAV. Exchange 96 Janus Equity Funds prospectus requests between Janus Money Market Fund and Janus Government Money Market Fund must be received in good order by a Fund or its agent prior to 5:00 p.m. (New York time) in order to receive that day's NAV. The money market funds reserve the right to require exchange requests prior to these times on days when the bond market or the NYSE close early. OTHER TRANSACTIONS - With the exception of certain money market fund transactions (as described in the Janus Bond and Money Market Funds prospectus), all phone and written requests, including but not limited to, purchases by check or automated investment, wire transfers, and ACH transfer, must be received in good order by the Fund or its agent prior to the close of the regular trading session of the NYSE in order to receive the NAV calculated at that time. Transactions involving funds which pay dividends will generally begin to earn dividends, as applicable, on the first bank business day following the date of purchase. AVAILABILITY OF PORTFOLIO HOLDINGS INFORMATION The non-money market funds' full portfolio holdings (excluding cash equivalents, derivatives, and short positions), consisting of at least the names of the holdings, are generally available monthly, with a 30-day lag, on www.janus.com. They are posted to the website within approximately two business days after month-end. The money market funds' full portfolio holdings are generally available monthly, with no lag, on www.janus.com. They are posted to the website within approximately six business days after month-end. All of the funds' portfolio holdings remain available until the following month's information is posted. The funds' full portfolio holdings can be found on www.janus.com in Fund details under the Holdings & Details tab. In addition, the funds' top portfolio holdings in order of position size and as a percentage of the total portfolio, are published monthly with a 30-day lag, and quarterly with a 15-day lag, on www.janus.com. Most funds disclose their top ten portfolio holdings. However, certain funds disclose only their top five portfolio holdings. Security breakdowns (such as industry, sector, regional, market capitalization, and asset allocation breakdowns, as applicable) for the non-money market funds are published quarterly, with a 15-day lag, on www.janus.com. The funds' top portfolio holdings, as well as the non-money market funds' security breakdowns, are posted to the website within approximately two business days after the end of the applicable period and remain available until the following period's information is posted. Specific portfolio level performance attribution information and statistics for the funds will be made available to any person monthly upon request, with a 30-day lag, following the posting of the funds' full portfolio holdings on www.janus.com. Shareholder's manual 97 Notwithstanding the foregoing, Janus Capital may exclude from publication all or any portion of portfolio holdings or change the time periods of disclosure as deemed necessary to protect the interests of the Funds. A summary of the Funds' portfolio holdings disclosure policies and procedures, which includes a discussion of any exceptions, is contained in the Funds' Statement of Additional Information. Complete schedules of the Funds' portfolio holdings as of the end of the Funds' first and third fiscal quarters are filed with the SEC within 60 days of the end of such quarters on Form N-Q. The Funds' Form N-Q: (i) is available on the SEC's website at http://www.sec.gov; (ii) may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. (information on the Public Reference Room may be obtained by calling 1-800-SEC-0330); and (iii) is available without charge, upon request, by calling Janus at 1-800-525-3713 (toll free). Complete schedules of the Funds' portfolio holdings as of the end of the Funds' second and fourth fiscal quarters are included in the Funds' semiannual and annual reports which are filed with the SEC within 60 days of the end of such quarters. The semiannual reports are filed on Form type N-CSRS and the annual reports are filed on Form type N-CSR. Shareholder reports containing such portfolio holdings are delivered to shareholders and are also available at www.janus.com. SHAREHOLDER SERVICES AND ACCOUNT POLICIES TRANSACTIONS THROUGH PROCESSING ORGANIZATIONS You may buy or sell Fund shares through an organization that provides recordkeeping and consulting services to 401(k) plans or other employee benefit plans (a "Processing Organization"). Processing Organizations may charge you a fee for this service and may require different minimum initial and subsequent investments than the Funds. Processing Organizations may also impose other charges or restrictions different from those applicable to shareholders who invest in the Funds directly. A Processing Organization, rather than its customers, may be the shareholder of record of your shares. The Funds are not responsible for the failure of any Processing Organization to carry out its obligations to its customers. Certain Processing Organizations may receive compensation from Janus Capital or its affiliates, and certain Processing Organizations may receive compensation from the Funds for shareholder recordkeeping and similar services. TAXPAYER IDENTIFICATION NUMBER On the application or other appropriate forms, you may be asked to certify that your Social Security or employer identification number is correct and that you are not subject to backup withholding for failing to report income to the IRS. If 98 Janus Equity Funds prospectus you are subject to backup withholding, or you did not certify your taxpayer identification number, the IRS requires the Funds to withhold a certain percentage (at the currently applicable rate) of any dividends paid and redemption or exchange proceeds. In addition to this backup withholding, you may be subject to a $50 fee to reimburse the Funds for any penalty that the IRS may impose. INVOLUNTARY REDEMPTIONS The Funds reserve the right to close an account if the shareholder is deemed to engage in activities which are illegal or otherwise believed to be detrimental to the Funds. This includes, but is not limited to, accounts that a Fund or its agent believe are engaged in market timing. Any time shares are redeemed in a taxable account, it is considered a taxable event. You are responsible for any tax liabilities associated with an involuntary redemption of your account. ONLINE AND TELEPHONE TRANSACTIONS You may initiate many transactions through www.janus.com or by calling Janus XpressLine(TM). You may also contact a Janus representative. Generally all new accounts automatically receive online and telephone transaction privileges including redemption privileges. If you do not want to receive these privileges, please visit www.janus.com or call a Janus representative. The Funds and their agents will not be responsible for any losses, costs, or expenses resulting from unauthorized transactions when reasonable procedures designed to verify the identity of the online user or caller are followed. Your account information should be kept private, and you should immediately review any account statements that you receive from Janus. Someone other than you could act on your account if they are able to provide the required identifying information. Contact Janus immediately about any transactions you believe to be unauthorized. Occasionally, we experience high call volumes due to unusual market activity or other events that may make it difficult for you to reach a Janus representative by telephone. If you are unable to reach a Janus representative by telephone, please consider visiting www.janus.com, calling Janus XpressLine(TM), or sending written instructions. DISTRIBUTIONS Generally, all income dividends and capital gains distributions will automatically be reinvested in your Fund account. If you wish to change your distribution option, please visit www.janus.com, call a Janus representative, or send a written request signed by the shareholder(s) of record. Shareholder's manual 99 If you receive Fund distributions from an open non-retirement Fund account by check, and a distribution check sent to you at your address of record has been returned to Janus and you have failed to respond to follow up mailings from Janus, the distribution check will automatically be reinvested in your open Fund account at the next calculated NAV. Your non-retirement Fund account distribution checks will also be reinvested in your Fund account if you do not cash them within one year of the date they were written. No interest will accrue on amounts represented by uncashed distribution or redemption checks. TEMPORARY SUSPENSION OF SERVICES The Funds or their agents may, in case of emergency, temporarily suspend telephone transactions and other shareholder services. The Funds may postpone payment of redemption proceeds for up to seven calendar days. In addition, the Funds may suspend redemptions and/or postpone payment of redemption proceeds beyond seven calendar days when the New York Stock Exchange is closed or during emergency circumstances, as determined by the Securities and Exchange Commission. The exchange privilege may also be suspended in these circumstances. ADDRESS CHANGES For the easiest way to change the address on your account, visit www.janus.com. You may also call a Janus representative or send a written request signed by the shareholder(s) of record. Include the name of the Janus fund(s) you hold, the account number(s), the name(s) on the account, and both the old and new addresses. Certain options may be suspended for 10 days following an address change unless a signature guarantee is provided. REGISTRATION CHANGES To change the name on an account, the shares are generally transferred to a new account. In some cases, legal documentation may be required. Please visit www.janus.com or call a Janus representative for further instructions. BANK ACCOUNT CHANGES For the easiest way to change your bank account of record or add new bank account information to your account, visit www.janus.com. You may also send a written request signed by the shareholder(s) of record. Please note that you may change or add bank information online at www.janus.com for purchases only. Certain tax-deferred accounts may require a written notice and, in some instances, bank privileges may not be available. We cannot accept changes or additions to bank account redemption options online at www.janus.com or over the telephone. If the added bank account is a joint tenant/tenants in common 100 Janus Equity Funds prospectus account, at least one name on the bank account must match one name on the Fund account. STATEMENTS, REPORTS, AND PROSPECTUSES We will send you quarterly confirmations of all transactions. You may elect on www.janus.com to discontinue delivery of your paper statements, and instead receive them online. In addition, on www.janus.com, the Funds will send you an immediate transaction confirmation statement after every non-systematic transaction. If you have not elected to receive online statements, your confirmation will be mailed within two days of the transaction. The Funds reserve the right to charge a fee for additional account statement requests. The Funds produce financial reports that include a complete list of each of the Funds' portfolio holdings semiannually, and update their prospectus annually. You may elect to receive these reports and prospectus updates electronically on www.janus.com. Unless you instruct Janus otherwise by contacting a Janus representative, the Funds will mail only one report or prospectus to your household, even if more than one person in your household has a Fund account. This process is known as "householding," which reduces the amount of mail you receive and helps lower Fund expenses. If you decide that you no longer want the mailing of these documents to be combined with the other members of your household, please call a Janus representative or send a written request signed by the shareholder(s) of record. Individual copies will be sent within thirty (30) days after the Funds receive your instructions. Shareholder's manual 101 MANAGEMENT OF THE FUNDS -------------------------------------------------------------------------------- INVESTMENT ADVISER Janus Capital Management LLC, 151 Detroit Street, Denver, Colorado 80206-4805, is the investment adviser to each of the Funds. Janus Capital is responsible for the day-to-day management of the Funds' investment portfolios and furnishes continuous advice and recommendations concerning the Funds' investments for all the Funds except INTECH Risk-Managed Stock Fund and Janus Mid Cap Value Fund. INTECH is responsible for the day-to-day management of the investment portfolio of INTECH Risk-Managed Stock Fund. Perkins is responsible for the day-to-day management of the investment portfolio of Janus Mid Cap Value Fund. Janus Capital provides certain administrative and other services, and is responsible for the other business affairs of all the Funds. Janus Capital (together with its predecessors) has served as investment adviser to Janus Fund since 1970 and currently serves as investment adviser to all of the Janus funds, acts as subadviser for a number of private-label mutual funds, and provides separate account advisory services for institutional accounts. Janus Capital furnishes certain administrative, compliance, and accounting services for the Funds, and may be reimbursed by the Funds for its costs in providing those services. In addition, employees of Janus Capital and/or its affiliates serve as officers of the Trust and Janus Capital provides office space for the Funds and pays the salaries, fees, and expenses of all Fund officers and those Trustees who are considered interested persons of Janus Capital. From its own assets, Janus Capital or its affiliates may make payments based on gross sales, current assets, or other measures to selected brokerage firms or other financial intermediaries that were instrumental in the acquisition or retention of shareholders for the Janus funds. The amount of these payments is determined from time to time by Janus Capital, may be substantial, and may differ for different financial intermediaries. Eligibility requirements for such payments to institutional intermediaries are determined by Janus Capital and/or its affiliates. Janus Capital or its affiliates may pay fees, from their own assets, to brokerage firms, banks, financial advisers, retirement plan service providers, and other financial intermediaries for providing recordkeeping, subaccounting, transaction processing, and other shareholder or administrative services (including payments for processing transactions via National Securities Clearing Corporation ("NSCC") or other means) in connection with investments in the Janus funds. These fees are in addition to any fees that may be paid by the Janus funds for these types of or other services. In addition, Janus Capital or its affiliates may also share certain marketing expenses with, or pay for or sponsor informational meetings, seminars, client awareness events, support for marketing materials, or business building programs for such intermediaries to raise awareness of the Funds. 102 Janus Equity Funds prospectus The receipt of (or prospect of receiving) payments described above are not intended to, but may provide a financial intermediary and its salespersons with an incentive to favor sales of Janus funds' shares over sales of other mutual funds (or non-mutual fund investments) with respect to which the financial intermediary does not receive such payments or receives them in a lower amount. These payment arrangements will not, however, change the price an investor pays for shares or the amount that a Janus fund receives to invest on behalf of the investor. You may wish to consider whether such arrangements exist when evaluating any recommendations to purchase or sell shares of the Funds. Management of the Funds 103 MANAGEMENT EXPENSES Each Fund pays Janus Capital an investment advisory fee which is calculated daily and paid monthly. Each Fund's advisory agreement details the investment advisory fee and other expenses that the Funds must pay. Janus Capital pays INTECH a subadvisory fee from its investment advisory fee for managing INTECH Risk-Managed Stock Fund. Janus Mid Cap Value Fund pays Perkins a subadvisory fee directly. Each Fund incurs expenses not assumed by Janus Capital, including any transfer agent and custodian fees and expenses, legal and auditing fees, printing and mailing costs of sending reports and other information to existing shareholders, and Independent Trustees' fees and expenses. Each of the Funds is subject to the following investment advisory fee schedule (expressed as an annual rate).
Average Daily Investment Advisory Net Assets Fees (%) Fund Name of Fund (annual rate) --------------------------------------------------------------------------------------------------- GROWTH Janus Fund All Asset Levels 0.64 Janus Enterprise Fund All Asset Levels 0.64 Janus Mercury Fund(1) All Asset Levels 0.64 Janus Olympus Fund All Asset Levels 0.64 Janus Orion Fund All Asset Levels 0.64 Janus Triton Fund All Asset Levels 0.64(2) SPECIALTY GROWTH Janus Global Life Sciences Fund All Asset Levels 0.64 Janus Global Technology Fund All Asset Levels 0.64 CORE Janus Balanced Fund All Asset Levels 0.55 Janus Contrarian Fund(1) All Asset Levels 0.64 Janus Core Equity Fund All Asset Levels 0.60 Janus Growth and Income Fund All Asset Levels 0.62 Janus Research Fund(1) All Asset Levels 0.64(2) RISK-MANAGED INTECH Risk-Managed Stock Fund(1)(3) All Asset Levels 0.50 VALUE Janus Mid Cap Value Fund(1) All Asset Levels 0.64 INTERNATIONAL & GLOBAL Janus Global Opportunities Fund All Asset Levels 0.64 Janus Overseas Fund All Asset Levels 0.64 Janus Worldwide Fund(1) All Asset Levels 0.60 ---------------------------------------------------------------------------------------------------
(1) Effective January 1, 2006 for Janus Research Fund and INTECH Risk-Managed Stock Fund and effective February 1, 2006 for Janus Mercury Fund, Janus Contrarian Fund, Janus Mid Cap Value Fund, and Janus Worldwide Fund, the Fund's investment advisory fee rate changed from a fixed rate to a rate that adjusts upward or downward based upon the Fund's performance relative to its benchmark index. This change will not impact the investment advisory fee shown until one year after the effective date when the performance adjustment takes effect. Details discussing the change are included in the Statement of Additional Information. 104 Janus Equity Funds prospectus (2) Janus Capital has agreed to limit the Fund's total operating expenses (excluding brokerage commissions, interest, taxes, and extraordinary expenses) to a certain level until March 1, 2007. Application of the expense waiver and its effect on annual fund operating expenses is reflected in the Annual Fund Operating Expenses table in the "Fees and Expenses" section of this Prospectus, and additional information is included in the Statement of Additional Information. The waiver is not reflected in the fee rate shown above. (3) Formerly named Janus Risk-Managed Stock Fund. For the fiscal year ended October 31, 2005, Janus Triton Fund and Janus Research Fund paid Janus Capital investment advisory fees (net of any fee waivers or reductions) of 0.06% and 0.30% respectively, based upon each Fund's average net assets. A discussion regarding the basis for the Board of Trustees' approval of the Funds' investment advisory agreements and subadvisory agreements (as applicable) is included in the Funds' Statement of Additional Information and will also be included in the annual and semiannual reports to shareholders. ADMINISTRATIVE SERVICES FEE Janus Capital receives an administrative services fee at an annual rate of up to 0.05% of the average daily net assets of INTECH Risk-Managed Stock Fund and Janus Mid Cap Value Fund for providing certain administrative services including, but not limited to, recordkeeping and registration functions. SUBADVISERS ENHANCED INVESTMENT TECHNOLOGIES, LLC serves as subadviser to INTECH Risk-Managed Stock Fund. INTECH, 2401 PGA Boulevard, Suite 100, Palm Beach Gardens, Florida 33410, also serves as investment adviser or subadviser to other U.S. registered and unregistered investment companies, offshore investment funds, and other institutional accounts and registered investment companies. As subadviser, INTECH provides day-to-day management of the investment operations of the Fund. Janus Capital indirectly owns approximately 82.5% of the outstanding voting shares of INTECH. PERKINS, WOLF, MCDONNELL AND COMPANY, LLC serves as subadviser to Janus Mid Cap Value Fund, and has served in such capacity since that Fund's inception in 1998. Perkins, 311 S. Wacker Drive, Suite 6000, Chicago, Illinois 60606, has been in the investment management business since 1984 and provides day-to-day management of the Fund's portfolio operations, as well as other mutual funds and separate accounts. Janus Capital has a 30% ownership stake in Perkins. Management of the Funds 105 INVESTMENT PERSONNEL Unless otherwise noted, the Portfolio Manager has primary responsibility for the day-to-day management of the Fund described. JANUS PORTFOLIO MANAGERS JONATHAN D. COLEMAN -------------------------------------------------------------------------------- is Executive Vice President and Portfolio Manager of Janus Enterprise Fund, which he has managed since February 2002. He is also Portfolio Manager of other Janus accounts. He joined Janus Capital in 1994 as a research analyst. Mr. Coleman holds a Bachelor's degree in Political Economy and Spanish from Williams College, where he was a member of Phi Beta Kappa. As a Fulbright Fellow, he conducted research on economic integration in Central America. Mr. Coleman has earned the right to use the Chartered Financial Analyst designation. DAVID J. CORKINS -------------------------------------------------------------------------------- is Executive Vice President and Portfolio Manager of Janus Fund, which he has managed since February 2006. Mr. Corkins was Portfolio Manager of Janus Mercury Fund from February 2003 to January 2006 and Portfolio Manager of Janus Growth and Income Fund from August 1997 to December 2003. Mr. Corkins is also Portfolio Manager of other Janus accounts. He joined Janus Capital in 1995 as a research analyst. Mr. Corkins holds a Bachelor of Arts degree in English and Russian from Dartmouth and he received his Master's degree in Business Administration from Columbia University. DAVID C. DECKER -------------------------------------------------------------------------------- is Executive Vice President and Portfolio Manager of Janus Contrarian Fund, which he has managed since its inception. Mr. Decker is also Portfolio Manager of other Janus accounts. He joined Janus Capital in 1992 as a research analyst. Mr. Decker holds a Master of Business Administration degree with an emphasis in Finance from The Fuqua School of Business at Duke University and a Bachelor of Arts degree in Economics and Political Science from Tufts University. Mr. Decker has earned the right to use the Chartered Financial Analyst designation. 106 Janus Equity Funds prospectus GREGORY R. KOLB -------------------------------------------------------------------------------- is Co-Portfolio Manager of Janus Global Opportunities Fund, which he has co-managed since May 2005. He joined Janus Capital in 2001 as an equity research analyst. Prior to joining Janus Capital, Mr. Kolb was an associate director in UBS Warburg's Financial Institutions Investment Banking Group from 2000 to 2001. He holds a Bachelor's degree in Business Administration from Miami University (of Ohio) where he graduated magna cum laude with honors. Mr. Kolb and Jason Yee are jointly and primarily responsible for the day-to-day management of Janus Global Opportunities Fund. He has earned the right to use the Chartered Financial Analyst designation. BRENT A. LYNN -------------------------------------------------------------------------------- is Executive Vice President and Portfolio Manager of Janus Overseas Fund, which he has co-managed or managed since January 2001. Mr. Lynn is also Portfolio Manager of other Janus accounts. He joined Janus Capital in 1991 as a research analyst. Mr. Lynn holds a Bachelor of Arts degree in Economics and a Master's degree in Economics and Industrial Engineering from Stanford University. Mr. Lynn has earned the right to use the Chartered Financial Analyst designation. THOMAS R. MALLEY -------------------------------------------------------------------------------- is Executive Vice President and Portfolio Manager of Janus Global Life Sciences Fund, which he has managed since inception. Mr. Malley is also Portfolio Manager of other Janus accounts. He joined Janus Capital in 1991 as a research analyst. Mr. Malley holds a Bachelor of Science degree in Biology from Stanford University. Mr. Malley has earned the right to use the Chartered Financial Analyst designation. MARC PINTO -------------------------------------------------------------------------------- is Executive Vice President and Co-Portfolio Manager of Janus Balanced Fund, which he has co-managed since May 2005. Mr. Pinto is also Portfolio Manager of other Janus accounts. He joined Janus Capital in 1994 as an analyst. He holds a Bachelor's degree in History from Yale University and a Master's degree in Business Administration from Harvard University. Mr. Pinto and Gibson Smith are jointly responsible for the day-to-day management of Janus Balanced Fund. Mr. Pinto focuses on the equity portion of the Fund. He has earned the right to use the Chartered Financial Analyst designation. Management of the Funds 107 BLAINE P. ROLLINS -------------------------------------------------------------------------------- is Executive Vice President and Portfolio Manager of Janus Triton Fund, which he has managed since February 2006. Mr. Rollins was Portfolio Manager of Janus Fund from January 2000 to January 2006. Mr. Rollins is also Portfolio Manager of other Janus accounts. Mr. Rollins joined Janus Capital in 1990. He holds a Bachelor of Science degree in Finance from the University of Colorado. Mr. Rollins has earned the right to use the Chartered Financial Analyst designation. RON SACHS -------------------------------------------------------------------------------- is Executive Vice President and Portfolio Manager of Janus Orion Fund, which he has managed since its inception. Mr. Sachs was Portfolio Manager of Janus Triton Fund from February 2005 to January 2006. He is also Portfolio Manager of other Janus accounts. Mr. Sachs joined Janus Capital in 1996 as a research analyst. Mr. Sachs holds a Bachelor's degree (cum laude) in Economics from Princeton and a law degree from the University of Michigan. Mr. Sachs has earned the right to use the Chartered Financial Analyst designation. GIBSON SMITH -------------------------------------------------------------------------------- is Executive Vice President and Co-Portfolio Manager of Janus Balanced Fund, which he has co-managed since May 2005. Mr. Smith is also Portfolio Manager of other Janus accounts. He joined Janus Capital in 2001 as a fixed-income analyst. Prior to joining Janus Capital, Mr. Smith worked in the fixed-income division at Morgan Stanley from 1991 to 2001. He holds a Bachelor's degree in Economics from the University of Colorado. Mr. Smith and Marc Pinto are jointly responsible for the day-to-day management of Janus Balanced Fund. Mr. Smith focuses on the fixed-income portion of the Fund. MINYOUNG SOHN -------------------------------------------------------------------------------- is Executive Vice President and Portfolio Manager of Janus Core Equity Fund and Janus Growth and Income Fund, which he has managed since May 2005 and January 2004, respectively. Mr. Sohn is also Portfolio Manager of other Janus accounts. He joined Janus Capital in 1998 as a research analyst. Mr. Sohn holds a Bachelor of Arts degree (cum laude) in Government and Economics from Dartmouth College. Mr. Sohn has earned the right to use the Chartered Financial Analyst designation. 108 Janus Equity Funds prospectus JASON P. YEE -------------------------------------------------------------------------------- is Executive Vice President and Co-Portfolio Manager of Janus Global Opportunities Fund and Portfolio Manager of Janus Worldwide Fund, which he has co-managed or managed since its inception and July 2004, respectively. Mr. Yee is also Portfolio Manager of other Janus accounts. He joined Janus Capital in 1992, working as a research analyst until 1996. He re-joined Janus Capital in 2000 as a research analyst. He holds a Bachelor of Science in Mechanical Engineering from Stanford University. Mr. Yee and Gregory Kolb are jointly and primarily responsible for the day-to-day management of Janus Global Opportunities Fund. Mr. Yee has earned the right to use the Chartered Financial Analyst designation. CLAIRE YOUNG -------------------------------------------------------------------------------- is Executive Vice President and Portfolio Manager of Janus Olympus Fund, which she has managed since August 1997. She is also Portfolio Manager of other Janus accounts. Ms. Young joined Janus Capital in 1992. She holds a Bachelor of Science degree in Electrical Engineering from Yale University. Ms. Young has earned the right to use the Chartered Financial Analyst designation. Management of the Funds 109 JANUS INVESTMENT TEAMS RESEARCH TEAM -------------------------------------------------------------------------------- The Research Team selects investments for Janus Mercury Fund and Janus Research Fund, and has done so since February 2006 and inception, respectively. Janus Capital's Director of Research, James P. Goff, leads the team and is responsible for the day-to-day operations of Janus Mercury Fund and Janus Research Fund. He was Portfolio Manager of Janus Enterprise Fund from its inception in September 1992 through January 2002. Mr. Goff joined Janus Capital in 1988. He holds a Bachelor of Arts degree (magna cum laude) in Economics from Yale University. Mr. Goff has earned the right to use the Chartered Financial Analyst designation. TECHNOLOGY TEAM -------------------------------------------------------------------------------- A team of technology analysts selects investments for Janus Global Technology Fund, and has done so since February 2006. J. Brad Slingerlend and Burton H. Wilson, Janus Capital research analysts, co-head the team and are jointly and primarily responsible for the day-to-day management of Janus Global Technology Fund. Neither Mr. Slingerlend nor Mr. Wilson has any limitations on his role. Mr. Slingerlend is an equity research analyst and leader of the technology research team. He joined Janus Capital in 2000. Mr. Slingerlend has a Bachelor's degree in Economics and Astrophysics from Williams College. He has earned the right to use the Chartered Financial Analyst designation. Mr. Wilson is an equity research analyst focused primarily on technology companies. He joined Janus Capital in 2005. Prior to joining Janus Capital, Mr. Wilson was a research analyst at Lincoln Equity Management from 2000 to 2004. He holds a Bachelor of Arts degree in Mathematics from the University of Virginia, a Law degree from the University of Virginia School of Law, and a Master's degree in Business Administration from the University of California at Berkeley's Haas School of Business. 110 Janus Equity Funds prospectus JANUS ASSISTANT PORTFOLIO MANAGERS ANDREW ACKER -------------------------------------------------------------------------------- is Assistant Portfolio Manager of Janus Global Life Sciences Fund. He joined Janus Capital in 1999 as a securities analyst. Mr. Acker holds a Bachelor of Science degree (magna cum laude) in Biochemical Sciences from Harvard College, where he was a member of Phi Beta Kappa. He also holds a Master's degree in Business Administration with honors from Harvard Business School. Mr. Acker has earned the right to use the Chartered Financial Analyst designation. MATTHEW ANKRUM -------------------------------------------------------------------------------- is Assistant Portfolio Manager of Janus Contrarian Fund. He joined Janus Capital in 1996 as a research analyst. Mr. Ankrum holds a Bachelor's degree in Finance with honors from the University of Wisconsin and received a Master's degree in Business Administration with honors from the University of Chicago. He has earned the right to use the Chartered Financial Analyst designation. BRIAN DEMAIN -------------------------------------------------------------------------------- is Assistant Portfolio Manager of Janus Enterprise Fund. He served as Assistant Portfolio Manager of Janus Olympus Fund from October 2003 to August 2004. Mr. Demain joined Janus Capital in 1999 as a securities analyst. He holds a Bachelor's degree in Economics from Princeton University, where he graduated summa cum laude and was a recipient of the Daniel L. Rubinfeld '67 Prize in Empirical Economics for his senior thesis. Mr. Demain has earned the right to use the Chartered Financial Analyst designation. DOUGLAS A. KIRKPATRICK -------------------------------------------------------------------------------- is Assistant Portfolio Manager of Janus Worldwide Fund. He joined Janus Capital in 2001 as an equity research analyst. Prior to joining Janus Capital, Mr. Kirkpatrick worked as an analyst for Artisan Partners LP from 1997 to 2001. Mr. Kirkpatrick holds Bachelor's degrees in Mechanical Engineering and Political Science from Rice University, a Master's degree in Environmental Engineering from the University of Houston, and a Master of Business Administration degree from the University of California at Berkeley. He has earned the right to use the Chartered Financial Analyst designation. Management of the Funds 111 GREGORY R. KOLB -------------------------------------------------------------------------------- is Assistant Portfolio Manager of Janus Worldwide Fund. He joined Janus Capital in 2001 as an equity research analyst. Prior to joining Janus Capital, Mr. Kolb was an associate director in UBS Warburg's Financial Institutions Investment Banking Group from 2000 to 2001. Mr. Kolb holds a Bachelor's degree in Business Administration from Miami University (of Ohio) where he graduated magna cum laude with honors. He has earned the right to use the Chartered Financial Analyst designation. GARTH YETTICK -------------------------------------------------------------------------------- is Assistant Portfolio Manager of Janus Overseas Fund. He joined Janus Capital in 1997. Mr. Yettick holds a Bachelor's degree (magna cum laude) in Computer Science and Mathematics from Harvard College, where he was elected to Phi Beta Kappa. He has earned the right to use the Chartered Financial Analyst designation. 112 Janus Equity Funds prospectus INTECH INVESTMENT TEAM No one person of the investment team is primarily responsible for implementing the investment strategies of INTECH Risk-Managed Stock Fund. A team of investment professionals consisting of Dr. Robert Fernholz, David E. Hurley, Dr. Cary Maguire, and Joseph Runnels works together to implement the mathematical portfolio management process. E. Robert Fernholz is Chief Investment Officer ("CIO") of INTECH. Dr. Fernholz joined INTECH in June of 1987. He received his A.B. in Mathematics from Princeton University and his Ph.D. in Mathematics from Columbia University. As CIO, Dr. Fernholz sets policy for the investment strategy, reviews proposed changes, and assures adherence to policy. Dr. Fernholz implements and supervises the optimization process. He has 21 years of investment experience. David E. Hurley is Executive Vice President and Chief Operating Officer of INTECH. Mr. Hurley joined INTECH in January 1988. He received his B.S. in Engineering from the United States Military Academy. Mr. Hurley is responsible for daily oversight of all aspects of the investment process from a portfolio management perspective. Mr. Hurley has oversight, supervisory, and support responsibility for the day-to-day implementation of the portfolio management and trading process. Mr. Hurley has earned the right to use the Chartered Financial Analyst designation. Cary Maguire is Senior Investment Officer of INTECH. Dr. Maguire joined INTECH in November 1991. He received his Ph.D. in Physics from Princeton University. He holds an M.B.A. from Southern Methodist University. Dr. Maguire is a Phi Beta Kappa graduate of Stanford with degrees in Chemistry and Music. Dr. Maguire implements the optimization process and supervises implementation of the portfolio management and trading process. He conducts mathematical research on the investment process and reviews and recommends improvements to the CIO. Joseph W. Runnels is Vice President of Portfolio Management at INTECH. Mr. Runnels joined INTECH in June 1998. Mr. Runnels holds a B.S. in Business Administration from Murray State University. Mr. Runnels implements the day-to-day portfolio management and trading process for client portfolios. He also handles brokerage relationships and supervises the daily execution of trading for client accounts. Mr. Runnels has earned the right to use the Chartered Financial Analyst designation. Management of the Funds 113 PERKINS PORTFOLIO MANAGERS JEFFREY R. KAUTZ -------------------------------------------------------------------------------- is Co-Manager of Janus Mid Cap Value Fund, and he managed the Fund's predecessor since February 2002. He is also Portfolio Manager of other Janus accounts. Mr. Kautz has served as a research analyst for the value products of Perkins since October 1997. He holds a Bachelor of Science degree in Mechanical Engineering from the University of Illinois, and a Master of Business Administration in Finance from the University of Chicago. Mr. Kautz is jointly and primarily responsible for the day-to-day management of the Fund and has full investment discretion over the Fund. Mr. Kautz has earned the right to use the Chartered Financial Analyst designation. ROBERT H. PERKINS -------------------------------------------------------------------------------- is Co-Manager of Janus Mid Cap Value Fund, and he managed the Fund's predecessor since 1998. He is also Portfolio Manager of other Janus accounts. Mr. Perkins has been a portfolio manager since 1970 and serves as President and a director of Perkins. Mr. Perkins holds a Bachelor of Science degree in Business from Miami University. Mr. Perkins is jointly and primarily responsible for the day-to-day management of the Fund and has full investment discretion over the Fund. THOMAS M. PERKINS -------------------------------------------------------------------------------- is the lead Manager of Janus Mid Cap Value Fund and was the lead Manager of the Fund's predecessor since 1998. He is also Portfolio Manager of other Janus accounts. Mr. Perkins has been a portfolio manager since 1974 and joined Perkins as a portfolio manager in 1998. Previously, he was a portfolio manager of valuation sensitive growth portfolios for Alliance Capital from 1984 to June 1998. Mr. Perkins holds a Bachelor of Arts degree in History from Harvard University. Mr. Perkins is jointly and primarily responsible for the day-to-day management of the Fund, has full investment discretion over the Fund, and as lead co-manager, has ultimate decision-making authority for the Fund's daily investment decisions. Information about the Funds' investment personnel's compensation structure, other accounts managed by the investment personnel, and the investment personnel's range of ownership of securities in the Funds, is included in the Funds' Statement of Additional Information. 114 Janus Equity Funds prospectus PERFORMANCE OF COMPARABLE ACCOUNTS MANAGED BY INTECH INTECH RISK-MANAGED STOCK FUND COMPARABLE ACCOUNTS PERFORMANCE OF INTECH LARGE CAP CORE COMPOSITE AND INTECH ENHANCED PLUS COMPOSITE The following chart shows the historical performance of the INTECH Large Cap Core Composite (formerly named INTECH Large Cap Core Aggressive Composite) and the INTECH Enhanced Plus Composite (formerly named INTECH Large Cap Core Composite). The accounts in the Composites are managed by INTECH and have investment objectives, policies, and strategies that are substantially similar to those of INTECH Risk-Managed Stock Fund. Both Composites and the Fund are managed using INTECH's Large Cap Core Strategy and use the S&P 500(R) Index as their benchmark index. Both Composites and the Fund seek to outperform the benchmark index while managing downside risk. The Large Cap Core version of the strategy and the Fund seek this goal in a more aggressive manner and are expected to have portfolio characteristics (e.g., beta and weightings) that differ from the index to a greater degree than the Enhanced Plus Composite. Accordingly, their performance is expected to be more volatile relative to the benchmark index. As of December 31, 2005, the INTECH Large Cap Core Composite consisted of 5 advisory accounts, including 3 mutual fund portfolios. As of this date, the total assets of the INTECH Large Cap Core Composite were approximately $3.2 billion. The Janus mutual funds for which INTECH acts as subadviser are included in the INTECH Large Cap Core Composite. As of December 31, 2005, the INTECH Enhanced Plus Composite consisted of 40 advisory accounts. As of this date, the total assets of the INTECH Enhanced Plus Composite were approximately $6.3 billion. All accounts that have investment objectives, policies, and strategies that are substantially similar to the Fund's are included in these Composites. The performance shows the historical track record of INTECH and should not be relied upon as an indication of the future performance of the Fund. Total returns represent the performance of the Composites and not the Fund. Composite performance shown reflects the deduction of advisory fees and transaction costs charged to accounts in each Composite. INTECH Risk-Managed Stock Fund's fees and expenses are generally expected to be higher than those reflected in the Composites. In addition, except for the mutual fund accounts in the Composites, the fees and expenses of the Composites do not include custody fees or other expenses normally paid by mutual funds, including INTECH Risk-Managed Stock Fund. Therefore, if the Composites were subject to the fees and expenses payable by the Fund, then the performance of the Composites for the periods shown would be lower. Management of the Funds 115 Except for the mutual fund accounts, the accounts in the Composites were not subject to investment limitations, diversification requirements, or other restrictions of the Investment Company Act of 1940 or Subchapter M of the Internal Revenue Code. If these restrictions had been imposed, the performance of the Composites for the periods shown may have been lower.
Average annual total returns for periods ended 12/31/05 ------------------------------------------------------- Since Inception 1 Year 5 Years 10 Years Inception Date(1) INTECH Large Cap Core Composite(2) 11.19% N/A N/A 6.40% 07/31/2001 S&P 500(R) Index(3) 4.91% N/A N/A 2.44% 07/31/2001 INTECH Enhanced Plus Composite(4) 8.80% 3.94% 11.09% 11.88% 06/30/1987 S&P 500(R) Index(3) 4.91% 0.54% 9.07% 10.47% 06/30/1987
(1) Total returns and expenses are not annualized for the first year of operations. (2) Formerly named INTECH Large Cap Core Aggressive Composite. (3) The S&P 500(R) Index is the Standard & Poor's Composite Index of 500 stocks, a widely recognized, unmanaged index of common stock prices. (4) Formerly named INTECH Large Cap Core Composite. 116 Janus Equity Funds prospectus OTHER INFORMATION -------------------------------------------------------------------------------- CLASSES OF SHARES Janus Mid Cap Value Fund currently offers two classes of shares. This Prospectus only describes the Investor Shares of Janus Mid Cap Value Fund, which are available to the general public. Institutional Shares of Janus Mid Cap Value Fund are closed to new investors, although current investors of Institutional Shares may continue to invest in the Fund, as outlined in the Shareholder's Guide to the Fund's Institutional Shares prospectus. The Institutional Shares of the Fund are designed for pension and profit-sharing plans, employee benefit trusts, endowments, foundations and corporations, as well as high net worth individuals and financial intermediaries who are willing to maintain a minimum account balance of $250,000. Because the expenses of each class may differ, the performance of each class is expected to differ. Certain financial intermediaries may offer only one class of shares. If you would like additional information about Institutional Shares, please call 1-800-525-0020. CLOSED FUND POLICIES The Funds may discontinue sales of their shares to new investors if their management and the Trustees believe that continued sales may adversely affect a Fund's ability to achieve its investment objective. If sales of a Fund are discontinued to new investors, it is expected that existing shareholders invested in that Fund would be permitted to continue to purchase shares through their existing Fund accounts and to reinvest any dividends or capital gains distributions in such accounts, absent highly unusual circumstances. In addition, it is expected that existing or new participants in employer-sponsored retirement plans, including employees of Janus Capital Group Inc. ("JCGI") and any of its subsidiaries covered under the JCGI retirement plan, that currently offer one or more funds as an investment option would be able to direct contributions to that fund through their plan, regardless of whether they invested in such fund prior to its closing. In addition, in the case of certain mergers or reorganizations, retirement plans would be able to add a closed fund as an investment option and, for certain Funds, sponsors of certain wrap programs with existing accounts in that Fund would be able to continue to invest in the Fund on behalf of new customers. Such mergers, reorganizations, acquisitions, or other business combinations are those in which one or more companies involved in such transaction currently offers the Fund as an investment option, and any company that as a result of such transaction becomes affiliated with the company currently offering the Fund (as a parent company, subsidiary, sister company, or otherwise). Such companies may request to add the Fund as an investment option under its retirement plan. In addition, new accounts may be permitted in a closed Fund for certain plans and programs offered in connection with employer-sponsored retirement plans where the retirement plan has an existing account in the closed Fund. Requests will be reviewed by management on an Other information 117 individual basis, taking into consideration whether the addition of the Fund may negatively impact existing Fund shareholders. Janus Capital encourages its employees, particularly members of the investment team, to own shares of the Janus funds. Accordingly, upon prior approval of Janus Capital's senior management team, members of the Janus investment team may open new accounts in a closed fund. Additional information regarding general policies and exceptions can be found in the closed funds' prospectuses. PENDING LEGAL MATTERS In the fall of 2003, the Securities and Exchange Commission ("SEC"), the Office of the New York State Attorney General ("NYAG"), the Colorado Attorney General ("COAG"), and the Colorado Division of Securities ("CDS") announced that they were investigating alleged frequent trading practices in the mutual fund industry. On August 18, 2004, Janus Capital announced that it had reached final settlements with the SEC, the NYAG, the COAG, and the CDS related to such regulators' investigations into Janus Capital's frequent trading arrangements. A number of civil lawsuits were brought against Janus Capital and certain of its affiliates, the Janus funds, and related entities and individuals based on allegations similar to those announced by the above regulators and were filed in several state and federal jurisdictions. Such lawsuits alleged a variety of theories for recovery including, but not limited to, the federal securities laws, other federal statutes (including ERISA), and various common law doctrines. The Judicial Panel on Multidistrict Litigation transferred these actions to the U.S. District Court for the District of Maryland (the "Court") for coordinated proceedings. On September 29, 2004, five consolidated amended complaints were filed in that Court that generally include: (i) claims by a putative class of investors in the Janus funds asserting claims on behalf of the investor class; (ii) derivative claims by investors in the Janus funds ostensibly on behalf of the Janus funds; (iii) claims on behalf of participants in the Janus 401(k) plan; (iv) claims brought on behalf of shareholders of Janus Capital Group Inc. ("JCGI") on a derivative basis against the Board of Directors of JCGI; and (v) claims by a putative class of shareholders of JCGI asserting claims on behalf of the shareholders. Each of the five complaints initially named JCGI and/or Janus Capital as a defendant. In addition, the following were also named as defendants in one or more of the actions: Janus Investment Fund ("JIF"), Janus Aspen Series ("JAS"), Janus Adviser Series ("JAD"), Janus Distributors LLC, Enhanced Investment Technologies, LLC ("INTECH"), Bay Isle Financial LLC ("Bay Isle"), Perkins, Wolf, McDonnell and Company, LLC ("Perkins"), the Advisory Committee of the Janus 401(k) plan, and the current or former directors of JCGI. 118 Janus Equity Funds prospectus On August 25, 2005, the Court entered orders dismissing most of the claims asserted against Janus Capital and its affiliates by fund investors (actions (i) and (ii) described above), except certain claims under Section 10(b) of the Securities Exchange Act of 1934 and under Section 36(b) of the Investment Company Act of 1940. As a result, JCGI, Janus Capital, the Advisory Committee of the Janus 401(k) plan, and the current or former directors of JCGI are the remaining defendants in one or more of the actions. The complaint in the 401(k) plan class action (action (iii) described above) was voluntarily dismissed, but was refiled using a new named plaintiff and asserting claims similar to the initial complaint. The Attorney General's Office for the State of West Virginia filed a separate market timing related civil action against Janus Capital and several other non-affiliated mutual fund companies, claiming violations under the West Virginia Consumer Credit and Protection Act. The civil action requests certain monetary penalties, among other relief. This action has been removed to federal court and transferred to the Multidistrict Litigation case in the U.S. District Court of Baltimore, Maryland described above. In addition, the Auditor of the State of West Virginia, in his capacity as securities commissioner, has issued an order indicating an intent to initiate administrative proceedings against most of the defendants in the market timing cases (including Janus Capital) and seeking disgorgement and other monetary relief based on similar market timing allegations. In addition to the "market timing" actions described above, Janus Capital is a defendant in a consolidated lawsuit in the U.S. District Court for the District of Colorado challenging the investment advisory fees charged by Janus Capital to certain Janus funds. The action was filed in 2004 by fund investors asserting breach of fiduciary duty under Section 36(b) of the Investment Company Act of 1940. The plaintiffs seek declaratory and injunctive relief and an unspecified amount of damages. In 2001, Janus Capital's predecessor was also named as a defendant in a class action suit in the U.S. District Court for the Southern District of New York, alleging that certain underwriting firms and institutional investors violated antitrust laws in connection with initial public offerings. The U.S. District Court dismissed the plaintiff's antitrust claims in November 2003, however, the U.S. Court of Appeals vacated that decision and remanded it for further proceedings. Additional lawsuits may be filed against certain of the Janus funds, Janus Capital, and related parties in the future. Janus Capital does not currently believe that these pending actions will materially affect its ability to continue providing services it has agreed to provide to the Janus funds. Other information 119 DISTRIBUTION OF THE FUNDS The Funds are distributed by Janus Distributors LLC, which is a member of the National Association of Securities Dealers, Inc. ("NASD"). To obtain information about NASD member firms and their associated persons, you may contact NASD Regulation, Inc. at www.nasdr.com, or the Public Disclosure Hotline at 800-289-9999. An investor brochure containing information describing the Public Disclosure Program is available from NASD Regulation, Inc. 120 Janus Equity Funds prospectus DISTRIBUTIONS AND TAXES -------------------------------------------------------------------------------- DISTRIBUTIONS To avoid taxation of the Funds, the Internal Revenue Code requires each Fund to distribute all or substantially all of its net investment income and any net capital gains realized on its investments at least annually. A Fund's income from certain dividends, interest, and any net realized short-term capital gains are paid to shareholders as ordinary income dividends. Certain dividend income may be reported to shareholders as "qualified dividend income," which is generally subject to reduced rates of taxation. Net realized long-term capital gains are paid to shareholders as capital gains distributions, regardless of how long you have held shares of the Fund. DISTRIBUTION SCHEDULE
Dividends Capital Gains Janus Balanced Fund and Normally declared and Normally declared and Janus Growth and Income Fund distributed in March, June, distributed in December September, and December -------------------------------------------------------------------------------------- All other Equity Funds Normally declared and Normally declared and distributed in December distributed in December
If necessary, dividends and net capital gains may be distributed at other times as well. HOW DISTRIBUTIONS AFFECT A FUND'S NAV Distributions are paid to shareholders as of the record date of a distribution of a Fund, regardless of how long the shares have been held. Undistributed dividends and net capital gains are included in each Fund's daily NAV. The share price of a Fund drops by the amount of the distribution, net of any subsequent market fluctuations. For example, assume that on December 31, a Fund declared a dividend in the amount of $0.25 per share. If the Fund's share price was $10.00 on December 30, the Fund's share price on December 31 would be $9.75, barring market fluctuations. You should be aware that distributions from a taxable mutual fund do not increase the value of your investment and may create income tax obligations. "BUYING A DIVIDEND" If you purchase shares of a Fund just before a distribution, you will pay the full price for the shares and receive a portion of the purchase price back as a taxable distribution. This is referred to as "buying a dividend." In the above example, if you bought shares on December 30, you would have paid $10.00 per share. On December 31, the Fund would pay you $0.25 per share as a dividend and your shares would now be worth $9.75 per share. Unless your account is set up as a tax-deferred account, dividends paid to you would be included in your gross Distributions and taxes 121 income for tax purposes, even though you may not have participated in the increase in NAV of the Fund, whether or not you reinvested the dividends. Before buying shares of a Fund close to year-end, you should consult with your tax adviser as to potential tax consequences of any distributions that may be paid shortly after purchase. DISTRIBUTION OPTIONS When you open an account, it will automatically provide for reinvestment of all distributions. If you have a non-retirement account, you may change your distribution option at any time by logging on to www.janus.com, by calling a Janus representative, or by writing the Funds at one of the addresses listed in the Shareholder's Manual section of this Prospectus. The Funds offer the following options: REINVESTMENT OPTION. You may reinvest your income dividends and capital gains distributions in additional shares. CASH OPTION. You may receive your income dividends and capital gains distributions in cash. REINVEST AND CASH OPTION. You may receive either your income dividends or capital gains distributions in cash and reinvest the other in additional shares. REDIRECT OPTION. You may direct your dividends or capital gains to purchase shares of another Janus fund. The Funds reserve the right to reinvest into your open non-retirement account undeliverable and uncashed dividend and distribution checks that remain outstanding for one year in shares of the applicable Fund at the NAV next computed after the check is cancelled. Subsequent distributions may also be reinvested. TAXES As with any investment, you should consider the tax consequences of investing in the Funds. Any time you sell or exchange shares of a fund in a taxable account, it is considered a taxable event. For federal income tax purposes, an exchange is treated the same as a sale. Depending on the purchase price and the sale price, you may have a gain or loss on the transaction; whether long-term or short-term depends on how long you owned the shares. Any tax liabilities generated by your transactions are your responsibility. The following discussion does not apply to qualified tax-deferred accounts or other non-taxable entities, nor is it a complete analysis of the federal income tax implications of investing in the Funds. You should consult your own tax adviser if you have any questions. Additionally, state or local taxes may apply to your investment, depending upon the laws of your state of residence. 122 Janus Equity Funds prospectus TAXES ON DISTRIBUTIONS Dividends and distributions of the Funds are subject to federal income tax, regardless of whether the distribution is made in cash or reinvested in additional shares of a Fund. When gains from the sale of a security held by a Fund are paid to shareholders, the rate at which the gain will be taxed to shareholders depends on the length of time the Fund held the security. In certain states, a portion of the dividends and distributions (depending on the sources of a Fund's income) may be exempt from state and local taxes. A Fund's dividends and capital gains are distributed to (and may be taxable to) those persons who are shareholders of the Fund at the record date of such payments. As a result, although a Fund's total net income and net realized gain are the results of its operations, the per share amount distributed or taxable to shareholders is affected by the number of Fund shares outstanding at the record date. Account tax information will be made available to shareholders on or before January 31st of each year. Information regarding dividends and distributions may also be reported to the Internal Revenue Service. The Funds may be required to withhold U.S. federal income tax on all taxable distributions and redemptions payable to shareholders who fail to provide their correct taxpayer identification number, fail to make certain required certifications, or who have been notified by the Internal Revenue Service that they are subject to backup withholding. The current backup withholding rate is applied. TAXATION OF THE FUNDS Dividends, interest, and some capital gains received by the Funds on foreign securities may be subject to foreign tax withholding or other foreign taxes. If a Fund is eligible, it may from year to year make the election permitted under Section 853 of the Internal Revenue Code to pass through such taxes to shareholders as a foreign tax credit. If such an election is not made, any foreign taxes paid or accrued will represent an expense to the Funds. The Funds do not expect to pay any federal income or excise taxes because they intend to meet certain requirements of the Internal Revenue Code. It is important that the Funds meet these requirements so that any earnings on your investment will not be taxed twice. Distributions and taxes 123 FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- The financial highlights tables are intended to help you understand the Funds' financial performance for the past 5 years through October 31st of each fiscal year shown (or for Funds with a performance history shorter than 5 years, through October 31st of each fiscal period shown). Items "Net asset value, beginning of period" through "Net asset value, end of period" reflect financial results for a single Fund share. The total returns in the tables represent the rate that an investor would have earned (or lost) on an investment in each of the Funds (assuming reinvestment of all dividends and distributions). This information has been audited by PricewaterhouseCoopers LLP, whose report, along with the Funds' financial statements, is included in the Annual Report, which is available upon request, and incorporated by reference into the Statement of Additional Information. The information for Janus Mid Cap Value Fund has been derived from the financial statements of Berger Mid Cap Value Fund, which was reorganized into the Fund on April 21, 2003. Berger Mid Cap Value Fund had a fiscal year end of September 30. Following the reorganization, Janus Mid Cap Value Fund changed its fiscal year end to October 31. 124 Janus Equity Funds prospectus
JANUS FUND ------------------------------------------------------------------------------------------------------------- Years ended October 31 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $22.69 $22.52 $18.39 $22.11 $44.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income/(loss) 0.02 --(1) --(1) --(1) --(1) Net gain/(loss) on securities (both realized and unrealized) 1.73 0.17 4.13 (3.72) (17.50) Total from investment operations 1.75 0.17 4.13 (3.72) (17.50) LESS DISTRIBUTIONS AND OTHER: Dividends (from net investment income) -- -- -- -- -- Distributions (from capital gains) -- -- -- -- (4.39) Payment from affiliate --(2) --(2) -- -- -- Total distributions and other -- -- -- -- (4.39) NET ASSET VALUE, END OF PERIOD $24.44 $22.69 $22.52 $18.39 $22.11 Total return 7.71%(3) 0.75%(3) 22.46% (16.82)% (43.42)% Net assets, end of period (in millions) $11,143 $13,277 $17,426 $16,320 $23,513 Average net assets for the period (in millions) $12,310 $15,433 $16,207 $21,651 $34,255 Ratio of gross expenses to average net assets(4) 0.88% 0.90% 0.89% 0.85% 0.84% Ratio of net expenses to average net assets 0.87% 0.90% 0.89% 0.84% 0.83% Ratio of net investment income/(loss) to average net assets 0.07% (0.17)% (0.17)% (0.24)% (0.16)% Portfolio turnover rate 78% 21% 22% 27% 51% -------------------------------------------------------------------------------------------------------------
(1) Net investment income/(loss) aggregated less than $0.01 on a per share basis for the fiscal year end. (2) Payment from affiliate aggregated less than $0.01 on a per share basis for the fiscal year end. (3) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing, and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. (4) The effect of non-recurring costs assumed by Janus Capital is included in the ratio of gross expenses to average net assets and was less than 0.01%. Financial highlights 125
JANUS ENTERPRISE FUND -------------------------------------------------------------------------------------------------------------- Years ended October 31 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $33.73 $30.02 $22.93 $29.67 $68.41 INCOME FROM INVESTMENT OPERATIONS: Net investment income/(loss) --(1) --(1) --(1) --(1) --(1) Net gain/(loss) on securities (both realized and unrealized) 5.75 3.71 7.09 (6.74) (38.74) Total from investment operations 5.75 3.71 7.09 (6.74) (38.74) LESS DISTRIBUTIONS: Dividends (from net investment income) -- -- -- -- -- Distributions (from capital gains) -- -- -- -- -- Total distributions -- -- -- -- -- NET ASSET VALUE, END OF PERIOD $39.48 $33.73 $30.02 $22.93 $29.67 Total return 17.05% 12.36% 30.92% (22.72)% (56.63)% Net assets, end of period (in millions) $1,704 $1,680 $1,917 $1,854 $3,072 Average net assets for the period (in millions) $1,729 $1,796 $1,742 $2,518 $4,858 Ratio of gross expenses to average net assets(2) 0.96% 1.04% 1.02% 0.93% 0.92% Ratio of net expenses to average net assets 0.95% 1.03% 1.02% 0.90% 0.90% Ratio of net investment income/(loss) to average net assets (0.30)% (0.46)% (0.46)% (0.43)% (0.55)% Portfolio turnover rate 28% 27% 32% 64% 85% --------------------------------------------------------------------------------------------------------------
(1) Net investment income/(loss) aggregated less than $0.01 on a per share basis for the fiscal year end. (2) The effect of non-recurring costs assumed by Janus Capital is included in the ratio of gross expenses to average net assets and was less than 0.01%. 126 Janus Equity Funds prospectus
JANUS MERCURY FUND ------------------------------------------------------------------------------------------------------------- Years ended October 31 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $19.48 $18.14 $14.92 $19.14 $40.59 INCOME FROM INVESTMENT OPERATIONS: Net investment income/(loss) 0.09 --(1) --(1) --(1) 0.04 Net gain/(loss) on securities (both realized and unrealized) 2.51 1.34 3.22 (4.18) (17.05) Total from investment operations 2.60 1.34 3.22 (4.18) (17.01) LESS DISTRIBUTIONS: Dividends (from net investment income) (0.03) -- -- (0.04) (0.03) Distributions (from capital gains) -- -- -- -- (4.41) Total distributions (0.03) -- -- (0.04) (4.44) NET ASSET VALUE, END OF PERIOD $22.05 $19.48 $18.14 $14.92 $19.14 Total return 13.35% 7.39% 21.58% (21.88)% (46.21)% Net assets, end of period (in millions) $4,473 $4,472 $5,282 $5,034 $7,910 Average net assets for the period (in millions) $4,448 $5,007 $5,089 $6,784 $11,243 Ratio of gross expenses to average net assets(2) 0.93% 0.97% 0.96% 0.94% 0.89% Ratio of net expenses to average net assets 0.92% 0.97% 0.95% 0.92% 0.88% Ratio of net investment income/(loss) to average net assets 0.42% (0.26)% (0.31)% (0.07)% 0.16% Portfolio turnover rate 38% 43% 54% 97% 83% -------------------------------------------------------------------------------------------------------------
(1) Net investment income/(loss) aggregated less than $0.01 on a per share basis for the fiscal year end. (2) The effect of non-recurring costs assumed by Janus Capital is included in the ratio of gross expenses to average net assets and was less than 0.01%. Financial highlights 127
JANUS OLYMPUS FUND ------------------------------------------------------------------------------------------------------------- Years ended October 31 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $26.30 $25.22 $20.60 $24.59 $50.50 INCOME FROM INVESTMENT OPERATIONS: Net investment income/(loss) 0.01 --(1) --(1) --(1) 0.13 Net gain/(loss) on securities (both realized and unrealized) 4.65 1.08 4.62 (3.88) (25.42) Total from investment operations 4.66 1.08 4.62 (3.88) (25.29) LESS DISTRIBUTIONS AND OTHER: Dividends (from net investment income) -- -- -- (0.11) (0.23) Distributions (from capital gains) -- -- -- -- (0.39) Payment from affiliate --(2) --(2) -- -- -- Total distributions and other -- -- -- (0.11) (0.62) NET ASSET VALUE, END OF PERIOD $30.96 $26.30 $25.22 $20.60 $24.59 Total return 17.72%(3) 4.28%(3) 22.38% (15.89)% (50.61)% Net assets, end of period (in millions) $2,257 $2,360 $2,772 $2,136 $3,074 Average net assets for the period (in millions) $2,283 $2,576 $2,379 $2,883 $4,767 Ratio of gross expenses to average net assets(4) 0.97% 1.03% 0.99% 0.94% 0.91% Ratio of net expenses to average net assets 0.96% 1.03% 0.98% 0.91% 0.89% Ratio of net investment income/(loss) to average net assets 0.03% (0.36)% (0.14)% (0.13)% 0.34% Portfolio turnover rate 119% 76% 84% 90% 118% -------------------------------------------------------------------------------------------------------------
(1) Net investment income/(loss) aggregated less than $0.01 on a per share basis for the fiscal year end. (2) Payment from affiliate aggregated less than $0.01 on a per share basis for the fiscal year end. (3) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing, and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. (4) The effect of non-recurring costs assumed by Janus Capital is included in the ratio of gross expenses to average net assets and was less than 0.01%. 128 Janus Equity Funds prospectus
JANUS ORION FUND ------------------------------------------------------------------------------------------------------------- Years ended October 31 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $6.25 $5.64 $4.33 $5.21 $8.81 INCOME FROM INVESTMENT OPERATIONS: Net investment income/(loss) 0.03 --(1) --(1) --(1) --(1) Net gain/(loss) on securities (both realized and unrealized) 1.52 0.61 1.31 (0.88) (3.58) Total from investment operations 1.55 0.61 1.31 (0.88) (3.58) LESS DISTRIBUTIONS AND OTHER: Dividends (from net investment income) -- -- -- -- (0.02) Distributions (from capital gains) -- -- -- -- -- Payment from affiliate -- --(2) -- -- -- Total distributions and other -- -- -- -- (0.02) NET ASSET VALUE, END OF PERIOD $7.80 $6.25 $5.64 $4.33 $5.21 Total return 24.80% 10.82%(3) 29.95% (16.70)% (40.69)% Net assets, end of period (in millions) $691 $530 $514 $421 $602 Average net assets for the period (in millions) $590 $540 $431 $562 $762 Ratio of gross expenses to average net assets(4) 1.02% 1.09% 1.10% 1.09% 1.06% Ratio of net expenses to average net assets 1.01% 1.08% 1.08% 1.04% 1.03% Ratio of net investment income/(loss) to average net assets 0.52% (0.05)% (0.43)% (0.30)% (0.06)% Portfolio turnover rate 68% 69% 72% 161% 206% -------------------------------------------------------------------------------------------------------------
(1) Net investment income/(loss) aggregated less than $0.01 on a per share basis for the fiscal year end. (2) Payment from affiliate aggregated less than $0.01 on a per share basis for the fiscal year end. (3) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing, and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. (4) The effect of non-recurring costs assumed by Janus Capital is included in the ratio of gross expenses to average net assets and was less than 0.01%. Financial highlights 129
JANUS TRITON FUND -------------------------------------------------------------------------- Period ended October 31 2005(1) NET ASSET VALUE, BEGINNING OF PERIOD $10.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income/(loss) -- Net gain/(loss) on securities (both realized and unrealized) 0.86 Total from investment operations 0.86 LESS DISTRIBUTIONS: Dividends (from net investment income) -- Distributions (from capital gains) -- Total distributions -- NET ASSET VALUE, END OF PERIOD $10.86 Total return(2) 8.60% Net assets, end of period (in millions) $38 Average net assets for the period (in millions) $26 Ratio of gross expenses to average net assets(3)(4) 1.27%(5) Ratio of net expenses to average net assets(3) 1.25% Ratio of net investment income/(loss) to average net assets(3) (0.24)% Portfolio turnover rate(3) 48% --------------------------------------------------------------------------
(1) Fiscal period from February 25, 2005 (inception) through October 31, 2005. (2) Total return is not annualized for periods of less than one full year. (3) Annualized for periods of less than one full year. (4) The effect of non-recurring costs assumed by Janus Capital is included in the ratio of gross expenses to average net assets and was less than 0.01%. (5) The ratio was 1.85% in 2005 before waiver of certain fees incurred by the Fund. 130 Janus Equity Funds prospectus
JANUS GLOBAL LIFE SCIENCES FUND -------------------------------------------------------------------------------------------------------------- Years ended October 31 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $16.08 $14.61 $12.82 $16.96 $22.41 INCOME FROM INVESTMENT OPERATIONS: Net investment income/(loss) --(1) --(1) --(1) --(1) --(1) Net gain/(loss) on securities (both realized and unrealized) 3.29 1.47 1.79 (4.14) (5.43) Total from investment operations 3.29 1.47 1.79 (4.14) (5.43) LESS DISTRIBUTIONS AND OTHER: Dividends (from net investment income) -- -- -- -- (0.02) Distributions (from capital gains) -- -- -- -- -- Redemption fees --(2) --(2) --(2) N/A N/A Payment from affiliate -- --(3) -- -- -- Total distributions and other -- -- -- -- (0.02) NET ASSET VALUE, END OF PERIOD $19.37 $16.08 $14.61 $12.82 $16.96 Total return 20.46% 10.06%(4) 13.87% (24.35)% (24.26)% Net assets, end of period (in millions) $1,150 $1,183 $1,264 $1,390 $2,415 Average net assets for the period (in millions) $1,182 $1,288 $1,296 $1,928 $2,958 Ratio of gross expenses to average net assets(5) 0.97% 1.02% 0.99% 0.89% 0.93% Ratio of net expenses to average net assets 0.96% 1.01% 0.98% 0.88% 0.91% Ratio of net investment income/(loss) to average net assets (0.49)% (0.52)% (0.28)% (0.42)% (0.32)% Portfolio turnover rate 77% 78% 135% 73% 84% --------------------------------------------------------------------------------------------------------------
(1) Net investment income/(loss) aggregated less than $0.01 on a per share basis for the fiscal year end. (2) Redemption fees aggregated less than $0.01 on a per share basis for the fiscal year end. (3) Payment from affiliate aggregated less than $0.01 on a per share basis for the fiscal year end. (4) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss on a transaction resulting from certain trading errors, which otherwise would have reduced total return by less than 0.01%. (5) The effect of non-recurring costs assumed by Janus Capital is included in the ratio of gross expenses to average net assets and was less than 0.01%. Financial highlights 131
JANUS GLOBAL TECHNOLOGY FUND ------------------------------------------------------------------------------------------------------------- Years ended October 31 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $9.70 $10.44 $7.41 $10.83 $27.44 INCOME FROM INVESTMENT OPERATIONS: Net investment income/(loss) 0.01 0.02 --(1) (0.01) 0.36 Net gain/(loss) on securities (both realized and unrealized) 1.17 (0.76) 3.03 (3.41) (16.64) Total from investment operations 1.18 (0.74) 3.03 (3.42) (16.28) LESS DISTRIBUTIONS AND OTHER: Dividends (from net investment income) -- -- -- -- (0.16) Distributions (from capital gains) -- -- -- -- -- Tax return of capital -- -- -- -- (0.17) Redemption fees --(2) --(2) --(2) N/A N/A Payment from affiliate -- --(3) -- -- -- Total distributions and other -- -- -- -- (0.33) NET ASSET VALUE, END OF PERIOD $10.88 $9.70 $10.44 $7.41 $10.83 Total return 12.16% (7.09)%(4) 41.08% (31.67)% (59.95)% Net assets, end of period (in millions) $994 $1,255 $1,656 $1,250 $2,276 Average net assets for the period (in millions) $1,110 $1,481 $1,333 $1,907 $4,010 Ratio of gross expenses to average net assets(5) 1.04% 1.07% 1.07% 0.96% 0.92% Ratio of net expenses to average net assets 1.03% 1.07% 1.06% 0.94% 0.90% Ratio of net investment income/(loss) to average net assets 0.07% (0.37)% (0.27)% (0.14)% 0.55% Portfolio turnover rate 31% 24% 48% 66% 60% -------------------------------------------------------------------------------------------------------------
(1) Net investment income/(loss) aggregated less than $0.01 on a per share basis for the fiscal year end. (2) Redemption fees aggregated less than $0.01 on a per share basis for the fiscal year end. (3) Payment from affiliate aggregated less than $0.01 on a per share basis for the fiscal year end. (4) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss on a transaction resulting from certain trading errors, which otherwise would have reduced total return by less than 0.01%. (5) The effect of non-recurring costs assumed by Janus Capital is included in the ratio of gross expenses to average net assets and was less than 0.01%. 132 Janus Equity Funds prospectus
JANUS BALANCED FUND ------------------------------------------------------------------------------------------------------------- Years ended October 31 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $20.33 $19.34 $18.08 $19.27 $22.83 INCOME FROM INVESTMENT OPERATIONS: Net investment income/(loss) 0.42 0.38 0.38 0.47 0.56 Net gain/(loss) on securities (both realized and unrealized) 1.28 0.99 1.28 (1.20) (2.48) Total from investment operations 1.70 1.37 1.66 (0.73) (1.92) LESS DISTRIBUTIONS AND OTHER: Dividends (from net investment income) (0.41) (0.38) (0.40) (0.46) (0.61) Distributions (from capital gains) -- -- -- -- (1.03) Payment from affiliate --(1) --(1) -- -- -- Total distributions and other (0.41) (0.38) (0.40) (0.46) (1.64) NET ASSET VALUE, END OF PERIOD $21.62 $20.33 $19.34 $18.08 $19.27 Total return 8.43%(2) 7.11%(2) 9.34% (3.85)% (8.83)% Net assets, end of period (in millions) $2,507 $2,849 $3,929 $3,936 $4,410 Average net assets for the period (in millions) $2,721 $3,235 $4,004 $4,278 $4,663 Ratio of gross expenses to average net assets(3) 0.80% 0.87% 0.89% 0.86% 0.85% Ratio of net expenses to average net assets 0.79% 0.87% 0.88% 0.84% 0.83% Ratio of net investment income/(loss) to average net assets 1.93% 1.82% 2.00% 2.44% 2.79% Portfolio turnover rate 47% 45% 73% 88% 117% -------------------------------------------------------------------------------------------------------------
(1) Payment from affiliate aggregated less than $0.01 on a per share basis for the fiscal year end. (2) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing, and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. (3) The effect of non-recurring costs assumed by Janus Capital is included in the ratio of gross expenses to average net assets and was less than 0.01%. Financial highlights 133
JANUS CONTRARIAN FUND ------------------------------------------------------------------------------------------------------------ Years ended October 31 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $11.74 $9.97 $6.95 $8.42 $11.29 INCOME FROM INVESTMENT OPERATIONS: Net investment income/(loss) 0.05 0.01 --(1) --(1) 0.03 Net gain/(loss) on securities (both realized and unrealized) 2.44 1.76 3.03 (1.45) (2.65) Total from investment operations 2.49 1.77 3.03 (1.45) (2.62) LESS DISTRIBUTIONS AND OTHER: Dividends (from net investment income) (0.03) -- (0.01)(2) (0.02) (0.02) Distributions (from capital gains) -- -- -- -- (0.23) Payment from affiliate --(3) --(3) -- -- -- Total distributions and other (0.03) -- (0.01) (0.02) (0.25) NET ASSET VALUE, END OF PERIOD $14.20 $11.74 $9.97 $6.95 $8.42 Total return 21.19%(4) 17.75%(4) 43.57% (17.23)% (23.61)% Net assets, end of period (in millions) $2,906 $2,384 $2,499 $1,287 $1,955 Average net assets for the period (in millions) $2,716 $2,497 $1,863 $1,808 $2,666 Ratio of gross expenses to average net assets(5) 0.93% 0.98% 1.02% 1.01% 0.92% Ratio of net expenses to average net assets 0.93% 0.98% 1.01% 0.98% 0.91% Ratio of net investment income to average net assets 0.45% 0.07% (0.17)% 0.03% 0.29% Portfolio turnover rate 42% 30% 44% 60% 77% ------------------------------------------------------------------------------------------------------------
(1) Net investment income/(loss) aggregated less than $0.01 on a per share basis for the fiscal year end. (2) Dividends (from net investment income) includes tax return of capital, less than $0.01 per share. (3) Payment from affiliate aggregated less than $0.01 on a per share basis for the fiscal year end. (4) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing, and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. (5) The effect of non-recurring costs assumed by Janus Capital is included in the ratio of gross expenses to average net assets and was less than 0.01%. 134 Janus Equity Funds prospectus
JANUS CORE EQUITY FUND ----------------------------------------------------------------------------------------------------------- Years ended October 31 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $18.78 $17.04 $14.99 $16.78 $24.25 INCOME FROM INVESTMENT OPERATIONS: Net investment income/(loss) 0.11 0.05 0.07 0.11 0.17 Net gain/(loss) on securities (both realized and unrealized) 3.34 1.75 2.09 (1.81) (4.98) Total from investment operations 3.45 1.80 2.16 (1.70) (4.81) LESS DISTRIBUTIONS AND OTHER: Dividends (from net investment income) (0.08) (0.06) (0.11) (0.09) (0.13) Distributions (from capital gains) -- -- -- -- (2.53) Payment from affiliate --(1) -- -- -- -- Total distributions and other (0.08) (0.06) (0.11) (0.09) (2.66) NET ASSET VALUE, END OF PERIOD $22.15 $18.78 $17.04 $14.99 $16.78 Total return 18.44%(2) 10.61% 14.54% (10.26)% (21.70)% Net assets, end of period (in millions) $721 $613 $708 $707 $733 Average net assets for the period (in millions) $653 $654 $708 $802 $876 Ratio of gross expenses to average net assets(3) 0.90% 0.97% 0.97% 0.92% 0.95% Ratio of net expenses to average net assets 0.89% 0.97% 0.96% 0.89% 0.93% Ratio of net investment income/(loss) to average net assets 0.50% 0.24% 0.40% 0.66% 0.85% Portfolio turnover rate 74% 58% 77% 98% 115% -----------------------------------------------------------------------------------------------------------
(1) Payment from affiliate aggregated less than $0.01 on a per share basis for the fiscal year end. (2) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing, and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. (3) The effect of non-recurring costs assumed by Janus Capital is included in the ratio of gross expenses to average net assets and was less than 0.01%. Financial highlights 135
JANUS GROWTH AND INCOME FUND ------------------------------------------------------------------------------------------------------------- Years ended October 31 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $29.29 $27.12 $23.70 $27.99 $40.88 INCOME FROM INVESTMENT OPERATIONS: Net investment income/(loss) 0.24 0.07 0.17 0.20 0.32 Net gain/(loss) on securities (both realized and unrealized) 4.66 2.17 3.43 (4.28) (11.24) Total from investment operations 4.90 2.24 3.60 (4.08) (10.92) LESS DISTRIBUTIONS AND OTHER: Dividends (from net investment income) (0.22) (0.07) (0.18) (0.21) (0.35) Distributions (from capital gains) -- -- -- -- (1.62) Payment from affiliate --(1) --(1) -- -- -- Total distributions and other (0.22) (0.07) (0.18) (0.21) (1.97) NET ASSET VALUE, END OF PERIOD $33.97 $29.29 $27.12 $23.70 $27.99 Total return 16.79%(2) 8.28%(2) 15.20% (14.62)% (27.66)% Net assets, end of period (in millions) $5,735 $5,177 $6,003 $5,328 $6,575 Average net assets for the period (in millions) $5,455 $5,568 $5,715 $6,480 $7,758 Ratio of gross expenses to average net assets(3) 0.88% 0.92% 0.91% 0.90% 0.87% Ratio of net expenses to average net assets 0.87% 0.92% 0.91% 0.88% 0.86% Ratio of net investment income/(loss) to average net assets 0.68% 0.24% 0.67% 0.73% 0.96% Portfolio turnover rate 38% 41% 50% 49% 59% -------------------------------------------------------------------------------------------------------------
(1) Payment from affiliate aggregated less than $0.01 on a per share basis for the fiscal year end. (2) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing, and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. (3) The effect of non-recurring costs assumed by Janus Capital is included in the ratio of gross expenses to average net assets and was less than 0.01%. 136 Janus Equity Funds prospectus
JANUS RESEARCH FUND -------------------------------------------------------------------------- Period ended October 31 2005(1) NET ASSET VALUE, BEGINNING OF PERIOD $10.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income/(loss) (0.01) Net gain/(loss) on securities (both realized and unrealized) 1.12 Total from investment operations 1.11 LESS DISTRIBUTIONS AND OTHER: Dividends (from net investment income) -- Distributions (from capital gains) -- Payment from affiliate --(2) Total distributions and other -- NET ASSET VALUE, END OF PERIOD $11.11 Total return(3) 11.10%(4) Net assets, end of period (in millions) $47 Average net assets for the period (in millions) $30 Ratio of gross expenses to average net assets(5)(6) 1.27%(7) Ratio of net expenses to average net assets(5) 1.25% Ratio of net investment income/(loss) to average net assets(5) (0.24)% Portfolio turnover rate(5) 86% --------------------------------------------------------------------------
(1) Fiscal period from February 25, 2005 (inception) through October 31, 2005. (2) Payment from affiliate aggregated less than $0.01 on a per share basis for the fiscal period end. (3) Total return is not annualized for periods of less than one full year. (4) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing, and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. (5) Annualized for periods of less than one full year. (6) The effect of non-recurring costs assumed by Janus Capital is included in the ratio of gross expenses to average net assets and was less than 0.01%. (7) The ratio was 1.61% before waiver of certain fees incurred by the Fund. Financial highlights 137
INTECH RISK-MANAGED STOCK FUND(1) --------------------------------------------------------------------------------------------- Years or Period ended October 31 2005 2004 2003(2) NET ASSET VALUE, BEGINNING OF PERIOD $13.98 $12.44 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income/(loss) 0.12 0.08 0.01 Net gain/(loss) on securities (both realized and unrealized) 1.89 1.75 2.43 Total from investment operations 2.01 1.83 2.44 LESS DISTRIBUTIONS AND OTHER: Dividends (from net investment income) (0.08) (0.03) -- Distributions (from capital gains) (0.63) (0.26) -- Redemption fees --(3) --(3) --(3) Total distributions and other (0.71) (0.29) -- NET ASSET VALUE, END OF PERIOD $15.28 $13.98 $12.44 Total return(4) 14.79% 15.06% 24.40% Net assets, end of period (in millions) $379 $182 $89 Average net assets for the period (in millions) $308 $130 $51 Ratio of gross expenses to average net assets(5)(6) 0.89% 0.69%(7) 1.13%(7) Ratio of net expenses to average net assets(5) 0.88% 0.69% 1.13% Ratio of net investment income/(loss) to average net assets(5) 0.92% 0.72% 0.24% Portfolio turnover rate(5) 81% 71% 39% ---------------------------------------------------------------------------------------------
(1) Formerly named Janus Risk-Managed Stock Fund. (2) Fiscal period from February 28, 2003 (inception) through October 31, 2003. (3) Redemption fees aggregated less than $0.01 on a per share basis for the period or year end. (4) Total return is not annualized for periods of less than one full year. (5) Annualized for periods of less than one full year. (6) The effect of non-recurring costs assumed by Janus Capital is included in the ratio of gross expenses to average net assets and was less than 0.01%. (7) The ratio was 1.07% in 2004 and 1.78% in 2003 before waiver of certain fees incurred by the Fund. 138 Janus Equity Funds prospectus
JANUS MID CAP VALUE FUND - INVESTOR SHARES(1) ---------------------------------------------------------------------------------------------------------------- Years or Periods Years ended ended October 31 September 30 2005 2004 2003(2) 2003(3) 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $22.22 $18.94 $15.15 $13.71 $14.30 $14.43 INCOME FROM INVESTMENT OPERATIONS: Net investment income/(loss) 0.14 0.10 0.03 0.03 0.02 0.06 Net gain/(loss) on securities (both realized and unrealized) 2.89 3.28 3.76 1.44 (0.23) 1.27 Total from investment operations 3.03 3.38 3.79 1.47 (0.21) 1.33 LESS DISTRIBUTIONS AND OTHER: Dividends (from net investment income) (0.08) (0.10) -- (0.03) (0.03) (0.10) Distributions (from capital gains) (1.93) -- -- -- (0.35) (1.36) Payment from affiliate --(4) --(4) -- -- -- -- Total distributions and other (2.01) (0.10) -- (0.03) (0.38) (1.46) NET ASSET VALUE, END OF PERIOD $23.24 $22.22 $18.94 $15.15 $13.71 $14.30 Total return(5) 14.26%(6) 17.92%(7) 25.02% 10.73% (1.96)% 9.70% Net assets, end of period (in millions) $4,188 $2,979 $1,494 $1,034 $782 $149 Average net assets for the period (in millions) $3,797 $2,245 $1,262 $962 N/A N/A Ratio of gross expenses to average net assets(8)(9)(10) 0.93% 0.94% 1.08% 1.14%(11) 1.17% 1.22% Ratio of net expenses to average net assets(8)(9) 0.92% 0.94% 1.08% 1.14% N/A N/A Ratio of net investment income/(loss) to average net assets(9) 0.67% 0.56% 0.45% 0.44% 0.28% 0.78% Portfolio turnover rate(9) 86% 91% 97% 94% 65% 116% ----------------------------------------------------------------------------------------------------------------
(1) Berger Mid Cap Value Fund prior to reorganization. (2) Fiscal period May 1, 2003 through October 31, 2003. (3) Fiscal period October 1, 2002 through April 30, 2003. (4) Payment from affiliate aggregated less than $0.01 on a per share basis for the fiscal year end. (5) Total return is not annualized for periods of less than one full year. (6) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing, and/or shareholder activity errors, which otherwise would have reduced total return by 0.01%. (7) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing, and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. (8) Certain prior year amounts have been reclassified to conform to current year presentation. (9) Annualized for periods of less than one full year. (10) The effect of non-recurring costs assumed by Janus Capital is included in the ratio of gross expenses to average net assets and was less than 0.01%. (11) The ratio was 1.17% in 2003 before waiver of certain fees incurred by the Fund. Financial highlights 139
JANUS GLOBAL OPPORTUNITIES FUND ------------------------------------------------------------------------------------------------------- Years or Period ended October 31 2005 2004 2003 2002 2001(1) NET ASSET VALUE, BEGINNING OF PERIOD $12.93 $11.66 $8.64 $9.68 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income/(loss) 0.10 0.03 0.03 0.03 0.02 Net gain/(loss) on securities (both realized and unrealized) 0.91 1.27 3.02 (1.04) (0.34) Total from investment operations 1.01 1.30 3.05 (1.01) (0.32) LESS DISTRIBUTIONS AND OTHER: Dividends (from net investment income) (0.03) (0.03) (0.04) (0.02) -- Distributions (from capital gains) -- -- -- (0.01) -- Redemption fees --(2) --(2) 0.01 N/A N/A Payment from affiliate --(3) -- -- -- -- Total distributions and other (0.03) (0.03) (0.03) (0.03) -- NET ASSET VALUE, END OF PERIOD $13.91 $12.93 $11.66 $8.64 $9.68 Total return(4) 7.78%(5) 11.18% 35.51% (10.59)% (3.10)% Net assets, end of period (in millions) $178 $207 $144 $149 $63 Average net assets for the period (in millions) $219 $175 $133 $155 $55 Ratio of gross expenses to average net assets(6)(7) 1.03% 1.09% 1.17% 1.19% 1.52% Ratio of net expenses to average net assets(6) 1.02% 1.09% 1.16% 1.16% 1.50% Ratio of net investment income/(loss) to average net assets(6) 0.62% 0.24% 0.27% 0.40% 0.64% Portfolio turnover rate(6) 36% 37% 31% 84% 0% -------------------------------------------------------------------------------------------------------
(1) Fiscal period from June 29, 2001 (inception) through October 31, 2001. (2) Redemption fees aggregated less than $0.01 on a per share basis for the fiscal year end. (3) Payment from affiliate aggregated less than $0.01 on a per share basis for the fiscal year end. (4) Total return is not annualized for periods of less than one full year. (5) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing, and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. (6) Annualized for periods of less than one full year. (7) The effect of non-recurring costs assumed by Janus Capital is included in the ratio of gross expenses to average net assets and was less than 0.01%. 140 Janus Equity Funds prospectus
JANUS OVERSEAS FUND ----------------------------------------------------------------------------------------------------------- Years ended October 31 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $21.62 $19.50 $15.44 $18.44 $33.44 INCOME FROM INVESTMENT OPERATIONS: Net investment income/(loss) 0.21 0.18 0.24 0.15 0.28 Net gain/(loss) on securities (both realized and unrealized) 6.82 2.18 3.98 (3.05) (11.42) Total from investment operations 7.03 2.36 4.22 (2.90) (11.14) LESS DISTRIBUTIONS AND OTHER: Dividends (from net investment income) (0.23) (0.24) (0.16) (0.10) (0.20) Distributions (from capital gains) -- -- -- -- (3.66) Redemption fees --(1) --(1) --(1) N/A N/A Payment from affiliate --(2) --(2) -- -- -- Total distributions and other (0.23) (0.24) (0.16) (0.10) (3.86) NET ASSET VALUE, END OF PERIOD $28.42 $21.62 $19.50 $15.44 $18.44 Total return 32.74%(3) 12.24%(3) 27.62% (15.78)% (37.09)% Net assets, end of period (in millions) $2,555 $2,090 $2,811 $3,243 $4,989 Average net assets for the period (in millions) $2,272 $2,497 $2,898 $4,446 $6,946 Ratio of gross expenses to average net assets(4) 0.90% 0.93% 0.94% 0.91% 0.87% Ratio of net expenses to average net assets 0.89% 0.93% 0.94% 0.89% 0.85% Ratio of net investment income/(loss) to average net assets 0.88% 0.72% 1.21% 0.69% 0.77% Portfolio turnover rate 57% 58% 104% 63% 65% -----------------------------------------------------------------------------------------------------------
(1) Redemption fees aggregated less than $0.01 on a per share basis for the fiscal year end. (2) Payment from affiliate aggregated less than $0.01 on a per share basis for the fiscal year end. (3) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing, and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. (4) The effect of non-recurring costs assumed by Janus Capital is included in the ratio of gross expenses to average net assets and was less than 0.01%. Financial highlights 141
JANUS WORLDWIDE FUND ------------------------------------------------------------------------------------------------------------- Years ended October 31 2005 2004 2003 2002 2001 NET ASSET VALUE, BEGINNING OF PERIOD $38.12 $37.34 $32.87 $40.17 $70.74 INCOME FROM INVESTMENT OPERATIONS: Net investment income/(loss) 0.46 0.30 0.37 0.27 0.39 Net gain/(loss) on securities (both realized and unrealized) 3.14 0.84 4.41 (7.56) (24.04) Total from investment operations 3.60 1.14 4.78 (7.29) (23.65) LESS DISTRIBUTIONS AND OTHER: Dividends (from net investment income) (0.31) (0.36) (0.31) (0.01) (0.41) Distributions (from capital gains) -- -- -- -- (6.51) Redemption fees --(1) --(1) --(1) N/A N/A Payment from affiliate --(2) --(2) -- -- -- Total distributions and other (0.31) (0.36) (0.31) (0.01) (6.92) NET ASSET VALUE, END OF PERIOD $41.41 $38.12 $37.34 $32.87 $40.17 Total return 9.47%(3) 3.06%(3) 14.65% (18.15)% (36.56)% Net assets, end of period (in millions) $4,958 $7,074 $11,341 $13,465 $20,331 Average net assets for the period (in millions) $5,984 $9,278 $12,124 $18,185 $27,993 Ratio of gross expenses to average net assets(4) 0.85% 0.92% 0.93% 0.87% 0.87% Ratio of net expenses to average net assets 0.85% 0.92% 0.92% 0.86% 0.85% Ratio of net investment income/(loss) to average net assets 0.90% 0.61% 0.99% 0.62% 0.53% Portfolio turnover rate 33% 120% 108% 73% 78% -------------------------------------------------------------------------------------------------------------
(1) Redemption fees aggregated less than $0.01 on a per share basis for the fiscal year end. (2) Payment from affiliate aggregated less than $0.01 on a per share basis for the fiscal year end. (3) Janus Capital and/or Janus Services LLC fully reimbursed the Fund for a loss on a transaction resulting from certain trading and/or pricing errors, which otherwise would have reduced total return by less than 0.01%. (4) The effect of non-recurring costs assumed by Janus Capital is included in the ratio of gross expenses to average net assets and was less than 0.01%. 142 Janus Equity Funds prospectus GLOSSARY OF INVESTMENT TERMS -------------------------------------------------------------------------------- This glossary provides a more detailed description of some of the types of securities, investment strategies, and other instruments in which the Funds may invest. The Funds may invest in these instruments to the extent permitted by their investment objectives and policies. The Funds are not limited by this discussion and may invest in any other types of instruments not precluded by the policies discussed elsewhere in this Prospectus. I. EQUITY AND DEBT SECURITIES BANK LOANS include institutionally-traded floating and fixed-rate debt securities generally acquired as a participation interest in a loan originated by a lender or other financial institution, or as an assignment of a portion of a loan previously attributable to a different lender. BONDS are debt securities issued by a company, municipality, government, or government agency. The issuer of a bond is required to pay the holder the amount of the loan (or par value of the bond) at a specified maturity and to make scheduled interest payments. CERTIFICATES OF PARTICIPATION ("COPS") are certificates representing an interest in a pool of securities. Holders are entitled to a proportionate interest in the underlying securities. Municipal lease obligations are often sold in the form of COPs. See "Municipal lease obligations" below. COMMERCIAL PAPER is a short-term debt obligation with a maturity ranging from 1 to 270 days issued by banks, corporations, and other borrowers to investors seeking to invest idle cash. A Fund may purchase commercial paper issued in private placements under Section 4(2) of the Securities Act of 1933. COMMON STOCKS are equity securities representing shares of ownership in a company and usually carry voting rights and earn dividends. Unlike preferred stock, dividends on common stock are not fixed but are declared at the discretion of the issuer's board of directors. CONVERTIBLE SECURITIES are preferred stocks or bonds that pay a fixed dividend or interest payment and are convertible into common stock at a specified price or conversion ratio. DEBT SECURITIES are securities representing money borrowed that must be repaid at a later date. Such securities have specific maturities and usually a specific rate of interest or an original purchase discount. DEPOSITARY RECEIPTS are receipts for shares of a foreign-based corporation that entitle the holder to dividends and capital gains on the underlying security. Receipts include those issued by domestic banks (American Depositary Receipts), foreign banks (Global or European Depositary Receipts), and broker-dealers (depositary shares). Glossary of investment terms 143 EQUITY SECURITIES generally include domestic and foreign common stocks; preferred stocks; securities convertible into common stocks or preferred stocks; warrants to purchase common or preferred stocks; and other securities with equity characteristics. EXCHANGE-TRADED FUNDS are index-based investment companies which hold substantially all of their assets in securities with equity characteristics. As a shareholder of another investment company, a Fund would bear its pro rata portion of the other investment company's expenses, including advisory fees, in addition to the expenses the Fund bears directly in connection with its own operations. FIXED-INCOME SECURITIES are securities that pay a specified rate of return. The term generally includes short- and long-term government, corporate, and municipal obligations that pay a specified rate of interest, dividends, or coupons for a specified period of time. Coupon and dividend rates may be fixed for the life of the issue or, in the case of adjustable and floating rate securities, for a shorter period. HIGH-YIELD/HIGH-RISK BONDS are bonds that are rated below investment grade by the primary rating agencies (i.e., BB+ or lower by Standard & Poor's and Fitch, and Ba or lower by Moody's). Other terms commonly used to describe such bonds include "lower rated bonds," "non-investment grade bonds," and "junk bonds." INDUSTRIAL DEVELOPMENT BONDS are revenue bonds that are issued by a public authority but which may be backed only by the credit and security of a private issuer and may involve greater credit risk. See "Municipal securities" below. MORTGAGE- AND ASSET-BACKED SECURITIES are shares in a pool of mortgages or other debt. These securities are generally pass-through securities, which means that principal and interest payments on the underlying securities (less servicing fees) are passed through to shareholders on a pro rata basis. These securities involve prepayment risk, which is the risk that the underlying mortgages or other debt may be refinanced or paid off prior to their maturities during periods of declining interest rates. In that case, a Fund may have to reinvest the proceeds from the securities at a lower rate. Potential market gains on a security subject to prepayment risk may be more limited than potential market gains on a comparable security that is not subject to prepayment risk. MORTGAGE DOLLAR ROLLS are transactions in which a Fund sells a mortgage-related security, such as a security issued by GNMA, to a dealer and simultaneously agrees to purchase a similar security (but not the same security) in the future at a pre-determined price. A "dollar roll" can be viewed as a collateralized borrowing in which a Fund pledges a mortgage-related security to a dealer to obtain cash. 144 Janus Equity Funds prospectus MUNICIPAL LEASE OBLIGATIONS are revenue bonds backed by leases or installment purchase contracts for property or equipment. Lease obligations may not be backed by the issuing municipality's credit and may involve risks not normally associated with general obligation bonds and other revenue bonds. For example, their interest may become taxable if the lease is assigned and the holders may incur losses if the issuer does not appropriate funds for the lease payments on an annual basis, which may result in termination of the lease and possible default. MUNICIPAL SECURITIES are bonds or notes issued by a U.S. state or political subdivision. A municipal security may be a general obligation backed by the full faith and credit (i.e., the borrowing and taxing power) of a municipality or a revenue obligation paid out of the revenues of a designated project, facility, or revenue source. PASS-THROUGH SECURITIES are shares or certificates of interest in a pool of debt obligations that have been repackaged by an intermediary, such as a bank or broker-dealer. PASSIVE FOREIGN INVESTMENT COMPANIES (PFICS) are any foreign corporations which generate certain amounts of passive income or hold certain amounts of assets for the production of passive income. Passive income includes dividends, interest, royalties, rents, and annuities. To avoid taxes and interest that a Fund must pay if these investments are profitable, the Fund may make various elections permitted by the tax laws. These elections could require that a Fund recognize taxable income, which in turn must be distributed, before the securities are sold and before cash is received to pay the distributions. PAY-IN-KIND BONDS are debt securities that normally give the issuer an option to pay cash at a coupon payment date or give the holder of the security a similar bond with the same coupon rate and a face value equal to the amount of the coupon payment that would have been made. PREFERRED STOCKS are equity securities that generally pay dividends at a specified rate and have preference over common stock in the payment of dividends and liquidation. Preferred stock generally does not carry voting rights. REAL ESTATE INVESTMENT TRUST (REIT) is an investment trust that operates through the pooled capital of many investors who buy its shares. Investments are in direct ownership of either income property or mortgage loans. RULE 144A SECURITIES are securities that are not registered for sale to the general public under the Securities Act of 1933, but that may be resold to certain institutional investors. STANDBY COMMITMENT is a right to sell a specified underlying security or securities within a specified period of time and at an exercise price equal to the Glossary of investment terms 145 amortized cost of the underlying security or securities plus accrued interest, if any, at the time of exercise, that may be sold, transferred, or assigned only with the underlying security or securities. A standby commitment entitles the holder to receive same day settlement, and will be considered to be from the party to whom the investment company will look for payment of the exercise price. STEP COUPON BONDS are high-quality issues with above-market interest rates and a coupon that increases over the life of the bond. They may pay monthly, semiannual, or annual interest payments. On the date of each coupon payment, the issuer decides whether to call the bond at par, or whether to extend it until the next payment date at the new coupon rate. STRIP BONDS are debt securities that are stripped of their interest (usually by a financial intermediary) after the securities are issued. The market value of these securities generally fluctuates more in response to changes in interest rates than interest-paying securities of comparable maturity. TENDER OPTION BONDS are relatively long-term bonds that are coupled with the option to tender the securities to a bank, broker-dealer, or other financial institution at periodic intervals and receive the face value of the bond. This investment structure is commonly used as a means of enhancing a security's liquidity. U.S. GOVERNMENT SECURITIES include direct obligations of the U.S. Government that are supported by its full faith and credit. Treasury bills have initial maturities of less than one year, Treasury notes have initial maturities of one to ten years, and Treasury bonds may be issued with any maturity but generally have maturities of at least ten years. U.S. Government securities also include indirect obligations of the U.S. Government that are issued by federal agencies and government sponsored entities. Unlike Treasury securities, agency securities generally are not backed by the full faith and credit of the U.S. Government. Some agency securities are supported by the right of the issuer to borrow from the Treasury, others are supported by the discretionary authority of the U.S. Government to purchase the agency's obligations, and others are supported only by the credit of the sponsoring agency. VARIABLE AND FLOATING RATE SECURITIES have variable or floating rates of interest and, under certain limited circumstances, may have varying principal amounts. Variable and floating rate securities pay interest at rates that are adjusted periodically according to a specified formula, usually with reference to some interest rate index or market interest rate (the "underlying index"). The floating rate tends to decrease the security's price sensitivity to changes in interest rates. WARRANTS are securities, typically issued with preferred stock or bonds, which give the holder the right to buy a proportionate amount of common stock at a specified price. The specified price is usually higher than the market price at the 146 Janus Equity Funds prospectus time of issuance of the warrant. The right may last for a period of years or indefinitely. ZERO COUPON BONDS are debt securities that do not pay regular interest at regular intervals, but are issued at a discount from face value. The discount approximates the total amount of interest the security will accrue from the date of issuance to maturity. The market value of these securities generally fluctuates more in response to changes in interest rates than interest-paying securities. II. FUTURES, OPTIONS, AND OTHER DERIVATIVES CREDIT DEFAULT SWAPS are a specific kind of counterparty agreement that allows the transfer of third party credit risk from one party to the other. One party in the swap is a lender and faces credit risk from a third party, and the counterparty in the credit default swap agrees to insure this risk in exchange of regular periodic payments. EQUITY-LINKED STRUCTURED NOTES are debt securities which combine the characteristics of common stock and the sale of an option. The return component is based on the performance of a single equity security, a basket of equity securities, or an equity index and the sale of an option which is recognized as income. Equity-linked structured notes are typically offered in limited transactions to financial institutions by investment banks. There is no guaranteed return of principal with these securities. The appreciation potential of these securities is limited by a maximum payment or call right and can be influenced by many unpredictable factors. FORWARD CONTRACTS are contracts to purchase or sell a specified amount of a financial instrument for an agreed upon price at a specified time. Forward contracts are not currently exchange-traded and are typically negotiated on an individual basis. A Fund may enter into forward currency contracts for investment purposes or to hedge against declines in the value of securities denominated in, or whose value is tied to, a currency other than the U.S. dollar or to reduce the impact of currency appreciation on purchases of such securities. It may also enter into forward contracts to purchase or sell securities or other financial indices. FUTURES CONTRACTS are contracts that obligate the buyer to receive and the seller to deliver an instrument or money at a specified price on a specified date. A Fund may buy and sell futures contracts on foreign currencies, securities, and financial indices including indices of U.S. Government, foreign government, equity, or fixed-income securities. A Fund may also buy options on futures contracts. An option on a futures contract gives the buyer the right, but not the obligation, to buy or sell a futures contract at a specified price on or before a specified date. Futures contracts and options on futures are standardized and traded on designated exchanges. Glossary of investment terms 147 INDEXED/STRUCTURED SECURITIES are typically short- to intermediate-term debt securities whose value at maturity or interest rate is linked to currencies, interest rates, equity securities, indices, commodity prices, or other financial indicators. Such securities may be positively or negatively indexed (e.g., their value may increase or decrease if the reference index or instrument appreciates). Indexed/ structured securities may have return characteristics similar to direct investments in the underlying instruments and may be more volatile than the underlying instruments. A Fund bears the market risk of an investment in the underlying instruments, as well as the credit risk of the issuer. INTEREST RATE SWAPS involve the exchange by two parties of their respective commitments to pay or receive interest (e.g., an exchange of floating rate payments for fixed rate payments). INVERSE FLOATERS are debt instruments whose interest rate bears an inverse relationship to the interest rate on another instrument or index. For example, upon reset, the interest rate payable on the inverse floater may go down when the underlying index has risen. Certain inverse floaters may have an interest rate reset mechanism that multiplies the effects of change in the underlying index. Such mechanism may increase the volatility of the security's market value. OPTIONS are the right, but not the obligation, to buy or sell a specified amount of securities or other assets on or before a fixed date at a predetermined price. A Fund may purchase and write put and call options on securities, securities indices, and foreign currencies. A Fund may purchase or write such options individually or in combination. PARTICIPATORY NOTES are derivative securities which are linked to the performance of an underlying Indian security and which allow investors to gain market exposure to Indian securities without trading directly in the local Indian market. III. OTHER INVESTMENTS, STRATEGIES, AND/OR TECHNIQUES REPURCHASE AGREEMENTS involve the purchase of a security by a Fund and a simultaneous agreement by the seller (generally a bank or dealer) to repurchase the security from the Fund at a specified date or upon demand. This technique offers a method of earning income on idle cash. These securities involve the risk that the seller will fail to repurchase the security, as agreed. In that case, a Fund will bear the risk of market value fluctuations until the security can be sold and may encounter delays and incur costs in liquidating the security. REVERSE REPURCHASE AGREEMENTS involve the sale of a security by a Fund to another party (generally a bank or dealer) in return for cash and an agreement by the Fund to buy the security back at a specified price and time. This technique will be used primarily to provide cash to satisfy unusually high redemption requests, or for other temporary or emergency purposes. 148 Janus Equity Funds prospectus SHORT SALES in which a Fund may engage may be of two types, short sales "against the box" or "naked" short sales. Short sales against the box involve selling either a security that a Fund owns, or a security equivalent in kind or amount to the security sold short that the Fund has the right to obtain, for delivery at a specified date in the future. Naked short sales involve selling a security that a Fund borrows and does not own. A Fund may enter into a short sale to hedge against anticipated declines in the market price of a security or to reduce portfolio volatility. If the value of a security sold short increases prior to the scheduled delivery date, the Fund loses the opportunity to participate in the gain. For naked short sales, the Fund will incur a loss if the value of a security increases during this period because it will be paying more for the security than it has received from the purchaser in the short sale. If the price declines during this period, a Fund will realize a short-term capital gain. Although a Fund's potential for gain as a result of a short sale is limited to the price at which it sold the security short less the cost of borrowing the security, its potential for loss is theoretically unlimited because there is no limit to the cost of replacing the borrowed security. WHEN-ISSUED, DELAYED DELIVERY, AND FORWARD COMMITMENT TRANSACTIONS generally involve the purchase of a security with payment and delivery at some time in the future - i.e., beyond normal settlement. A Fund does not earn interest on such securities until settlement and bears the risk of market value fluctuations in between the purchase and settlement dates. New issues of stocks and bonds, private placements, and U.S. Government securities may be sold in this manner. Glossary of investment terms 149 You can make inquiries and request other information, including a Statement of Additional Information, Annual Report, or Semiannual Report, free of charge, by contacting a Janus representative at 1-800-525-3713. The Funds' Statement of Additional Information and most recent Annual and Semiannual Reports are also available, free of charge, on www.janus.com. Additional information about the Funds' investments is available in the Funds' Annual and Semiannual Reports. In the Funds' Annual and Semiannual Reports, you will find a discussion of the market conditions and investment strategies that significantly affected the Funds' performance during their last fiscal period. Other information is also available from financial intermediaries that sell shares of the Funds. The Statement of Additional Information provides detailed information about the Funds and is incorporated into this Prospectus by reference. You may review and copy information about the Funds (including the Funds' Statement of Additional Information) at the Public Reference Room of the SEC or get text only copies, after paying a duplicating fee, by sending an electronic request by e-mail to publicinfo@sec.gov or by writing to or calling the Public Reference Room, Washington, D.C. 20549-0102 (1-202-942-8090). Information on the operation of the Public Reference Room may also be obtained by calling this number. You may also obtain reports and other information about the Funds from the Electronic Data Gathering Analysis and Retrieval (EDGAR) Database on the SEC's website at http://www.sec.gov. (JANUS LOGO) www.janus.com PO Box 173375 Denver, CO 80217-3375 1-800-525-3713 The Trust's Investment Company Act File No. is 811-1879. February 28, 2006 GROWTH Janus Fund Janus Enterprise Fund Janus Mercury Fund Janus Olympus Fund Janus Orion Fund Janus Triton Fund Janus Twenty Fund* Janus Venture Fund* SPECIALTY GROWTH Janus Global Life Sciences Fund Janus Global Technology Fund CORE Janus Balanced Fund Janus Contrarian Fund Janus Core Equity Fund Janus Growth and Income Fund Janus Research Fund RISK-MANAGED INTECH Risk-Managed Stock Fund (formerly named Janus Risk-Managed Stock Fund) VALUE Janus Mid Cap Value Fund - Investor Shares Janus Mid Cap Value Fund - Institutional Shares* Janus Small Cap Value Fund - Investor Shares* Janus Small Cap Value Fund - Institutional Shares* INTERNATIONAL & GLOBAL Janus Global Opportunities Fund Janus Overseas Fund Janus Worldwide Fund BOND Janus Flexible Bond Fund Janus High-Yield Fund Janus Short-Term Bond Fund Janus Federal Tax-Exempt Fund JANUS EQUITY AND BOND FUNDS Statement of Additional Information This Statement of Additional Information ("SAI") expands upon and supplements the information contained in the current Prospectuses for the Funds listed above, each of which is a separate series of Janus Investment Fund, a Massachusetts business trust (the "Trust"). Janus Capital Management LLC ("Janus Capital") is the investment adviser of each Fund. In addition, subadvisers are responsible for the day-to-day operations of certain Funds. This SAI is not a Prospectus and should be read in conjunction with the Funds' Prospectuses dated February 28, 2006, and any supplements thereto, which are incorporated by reference into this SAI and may be obtained from the Trust on www.janus.com, by calling 1-800-525-3713, or by writing the Funds at the address shown on the back of this SAI. This SAI contains additional and more detailed information about the Funds' operations and activities than the Prospectuses. The Annual and Semiannual Reports, which contain important financial information about the Funds, are incorporated by reference into this SAI and are also available, without charge, on www.janus.com, by calling 1-800-525-3713, or by writing the Funds at the address shown on the back cover of this SAI. * These Funds/Classes are closed to new investors. However, current investors may continue to invest in the Funds and/or may open new Fund accounts. The Funds may resume sales of their shares to new investors at some future date, but they have no present intention to do so. If you are a current Fund shareholder and close an existing Fund account, you will not be able to make additional investments in the Fund unless you meet one of the specified criteria. You may be required to demonstrate eligibility to purchase shares of the Fund before your investment is accepted. See the "Shareholder's Manual" or "Shareholder's Guide" section of the Funds' Prospectuses for more details. -------------------------------------------------------------------------------- TABLE OF CONTENTS -------------------------------------------------------------------------------- Classification, Portfolio Turnover, Investment Policies and Restrictions, and Investment Strategies and Risks................................................. 2 Investment Adviser and Subadvisers....................... 44 Custodian, Transfer Agent, and Certain Affiliations...... 76 Portfolio Transactions and Brokerage..................... 78 Trustees and Officers.................................... 86 Purchase of Shares....................................... 110 Net Asset Value Determination......................... 110 Reinvestment of Dividends and Distributions........... 111 Redemption of Shares..................................... 113 Shareholder Accounts..................................... 114 Online and Telephone Transactions..................... 114 Systematic Redemptions................................ 114 Tax-Deferred Accounts.................................... 115 Income Dividends, Capital Gains Distributions, and Tax Status................................................ 116 Principal Shareholders................................... 118 Miscellaneous Information................................ 122 Shares of the Trust................................... 122 Shareholder Meetings.................................. 123 Voting Rights......................................... 123 Master/Feeder Option.................................. 124 Independent Registered Public Accounting Firm......... 124 Registration Statement................................ 124 Financial Statements..................................... 125 Appendix A............................................... 126 Explanation of Rating Categories...................... 126
1 CLASSIFICATION, PORTFOLIO TURNOVER, INVESTMENT POLICIES AND RESTRICTIONS, AND INVESTMENT STRATEGIES AND RISKS -------------------------------------------------------------------------------- JANUS INVESTMENT FUND This Statement of Additional Information includes information about 25 series of the Trust. Each Fund is a series of Janus Investment Fund (the "Trust"), an open-end, management investment company. EQUITY FUNDS. Janus Fund, Janus Enterprise Fund, Janus Mercury Fund, Janus Olympus Fund, Janus Orion Fund, Janus Triton Fund, Janus Twenty Fund, Janus Venture Fund, Janus Global Life Sciences Fund, Janus Global Technology Fund, Janus Balanced Fund, Janus Contrarian Fund, Janus Core Equity Fund, Janus Growth and Income Fund, Janus Research Fund, INTECH Risk-Managed Stock Fund, Janus Mid Cap Value Fund, Janus Small Cap Value Fund, Janus Global Opportunities Fund, Janus Overseas Fund, and Janus Worldwide Fund are referred to collectively in this SAI as the "Equity Funds." BOND FUNDS. Janus Flexible Bond Fund, Janus High-Yield Fund, Janus Short- Term Bond Fund, and Janus Federal Tax-Exempt Fund are referred to collectively in this SAI as the "Bond Funds." CLASSIFICATION The Investment Company Act of 1940 ("1940 Act") classifies mutual funds as either diversified or nondiversified. Janus Orion Fund, Janus Twenty Fund, Janus Contrarian Fund, and Janus Global Opportunities Fund are classified as nondiversified. Janus Fund, Janus Enterprise Fund, Janus Mercury Fund, Janus Olympus Fund, Janus Triton Fund, Janus Venture Fund, Janus Global Life Sciences Fund, Janus Global Technology Fund, Janus Balanced Fund, Janus Core Equity Fund, Janus Growth and Income Fund, Janus Research Fund, INTECH Risk-Managed Stock Fund, Janus Mid Cap Value Fund, Janus Small Cap Value Fund, Janus Overseas Fund, Janus Worldwide Fund, Janus Flexible Bond Fund, Janus High-Yield Fund, Janus Short-Term Bond Fund, and Janus Federal Tax- Exempt Fund are classified as diversified. SUBADVISERS FUND SUBADVISED BY INTECH. Enhanced Investment Technologies, LLC ("INTECH") is the investment subadviser for INTECH Risk-Managed Stock Fund. FUNDS SUBADVISED BY PERKINS. Perkins, Wolf, McDonnell and Company, LLC ("Perkins") is the investment subadviser for Janus Mid Cap Value Fund and Janus Small Cap Value Fund. 2 PORTFOLIO TURNOVER The portfolio turnover rate for Janus Fund for the fiscal year ended October 31, 2005 was 78% compared to 21% for the fiscal year ended October 31, 2004. The increase in the Fund's portfolio turnover rate was primarily due to an increase in the number of fund holdings.The portfolio turnover rate for Janus Worldwide Fund for the fiscal year ended October 31, 2005 was 33% compared to 120% for the fiscal year ended October 31, 2004. The decline in the Fund's portfolio turnover rate was primarily due to a restructuring of the Fund's portfolio as a result of a change in portfolio management. The portfolio turnover rate for Janus Federal Tax-Exempt Fund for the fiscal year ended October 31, 2005 was 149% compared to 52% for the fiscal year ended October 31, 2004. The increase in the Fund's portfolio turnover rate was primarily due to a restructuring of the Fund's portfolio as a result of a change in the Fund's portfolio management. INVESTMENT POLICIES AND RESTRICTIONS APPLICABLE TO ALL FUNDS The Funds are subject to certain fundamental policies and restrictions that may not be changed without shareholder approval. Shareholder approval means approval by the lesser of: (i) more than 50% of the outstanding voting securities of the Trust (or a particular Fund or particular class of shares if a matter affects just that Fund or that class of shares) or (ii) 67% or more of the voting securities present at a meeting if the holders of more than 50% of the outstanding voting securities of the Trust (or a particular Fund or class of shares) are present or represented by proxy. The following policies are fundamental policies of the Funds. Each of these policies applies to all of the Funds, except policies (1) and (2), which apply only to the Funds specifically listed in those policies. As used in the policies and restrictions set forth below and as used elsewhere in this SAI, the term "U.S. Government securities" shall have the meaning set forth in the Investment Company Act of 1940, as amended (the "1940 Act"). The 1940 Act defines U.S. Government securities as securities issued or guaranteed by the United States Government, its agencies, or instrumentalities. U.S. Government securities may also include repurchase agreements collateralized and municipal securities escrowed with or refunded with escrowed U.S. Government securities. (1) With respect to 75% of its total assets, Janus Fund, Janus Enterprise Fund, Janus Mercury Fund, Janus Olympus Fund, Janus Triton Fund, Janus Venture Fund, Janus Global Life Sciences Fund, Janus Global Technology Fund, Janus Balanced Fund, Janus Core Equity Fund, Janus Growth and Income Fund, Janus 3 Research Fund, INTECH Risk-Managed Stock Fund, Janus Mid Cap Value Fund, Janus Small Cap Value Fund, Janus Overseas Fund, Janus Worldwide Fund, Janus Flexible Bond Fund, Janus High-Yield Fund, Janus Short-Term Bond Fund, and Janus Federal Tax-Exempt Fund may not purchase securities of an issuer (other than the U.S. Government, its agencies, instrumentalities or authorities, or repurchase agreements collateralized by U.S. Government securities, and other investment companies) if: (a) such purchase would, at the time, cause more than 5% of the Fund's total assets taken at market value to be invested in the securities of such issuer or (b) such purchase would, at the time, result in more than 10% of the outstanding voting securities of such issuer being held by the Fund. Each Fund may not: (2) Invest 25% or more of the value of its total assets in any particular industry (other than U.S. Government securities). This policy does not apply to Janus Global Life Sciences Fund. This policy does not apply to Janus Federal Tax-Exempt Fund regarding municipal obligations only. For the purposes of this limitation only, industrial development bonds issued by nongovernmental users shall not be deemed to be municipal obligations. Industrial development bonds shall be classified according to the industry of the entity that has the ultimate responsibility for the payment of principal and interest on the obligation. (3) Invest directly in real estate or interests in real estate; however, the Funds may own debt or equity securities issued by companies engaged in those businesses. (4) Purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments (but this limitation shall not prevent the Funds from purchasing or selling foreign currencies, options, futures, swaps, forward contracts, or other derivative instruments, or from investing in securities or other instruments backed by physical commodities). (5) Lend any security or make any other loan if, as a result, more than 33 1/3% of the Fund's total assets would be lent to other parties (but this limitation does not apply to investments in repurchase agreements, commercial paper, debt securities, or loans, including assignments and participation interests). (6) Act as an underwriter of securities issued by others, except to the extent that the Fund may be deemed an underwriter in connection with the disposition of portfolio securities of the Fund. (7) Borrow money except that the Fund may borrow money for temporary or emergency purposes (not for leveraging or investment). Borrowings from banks 4 will not, in any event, exceed one-third of the value of a Fund's total assets (including the amount borrowed). This policy shall not prohibit short sales transactions or futures, options, swaps, or forward transactions. The Funds may not issue "senior securities" in contravention of the 1940 Act. As a fundamental policy, each Fund may, notwithstanding any other investment policy or limitation (whether or not fundamental), invest all of its assets in the securities of a single open-end management investment company with substantially the same fundamental investment objectives, policies, and limitations as such Fund. The Trustees have adopted additional investment restrictions for the Funds. These restrictions are operating policies of the Funds and may be changed by the Trustees without shareholder approval. The additional restrictions adopted by the Trustees to date include the following: (a) If a Fund is an approved underlying fund in a Janus fund of funds, the Fund may not acquire the securities of other investment companies or registered unit investment trusts in excess of the limits of Section 12(d)(1) of the 1940 Act in reliance on subparagraph (F) or subparagraph (G) of Section 12(d)(1). (b) The Funds may sell securities short if they own or have the right to obtain securities equivalent in kind and amount to the securities sold short without the payment of any additional consideration therefore ("short sales against the box"). In addition, the Equity Funds may engage in "naked" short sales, which involve selling a security that a Fund borrows and does not own. The total market value of all of a Fund's naked short sale positions will not exceed 8% of its assets. Transactions in futures, options, swaps, and forward contracts are not deemed to constitute selling securities short. (c) The Funds do not currently intend to purchase securities on margin, except that the Funds may obtain such short-term credits as are necessary for the clearance of transactions, and provided that margin payments and other deposits in connection with transactions in futures, options, swaps, and forward contracts shall not be deemed to constitute purchasing securities on margin. (d) A Fund may not mortgage or pledge any securities owned or held by such Fund in amounts that exceed, in the aggregate, 15% of that Fund's net asset value ("NAV"), provided that this limitation does not apply to reverse repurchase agreements, deposits of assets to margin, guarantee positions in futures, options, swaps, or forward contracts, or the segregation of assets in connection with such contracts. 5 (e) The Funds do not currently intend to purchase any security or enter into a repurchase agreement if, as a result, more than 15% of their respective net assets would be invested in repurchase agreements not entitling the holder to payment of principal and interest within seven days and in securities that are illiquid by virtue of legal or contractual restrictions on resale or the absence of a readily available market. The Trustees, or the Funds' investment adviser acting pursuant to authority delegated by the Trustees, may determine that a readily available market exists for securities eligible for resale pursuant to Rule 144A under the Securities Act of 1933 ("Rule 144A Securities"), or any successor to such rule, Section 4(2) commercial paper, and municipal lease obligations. Accordingly, such securities may not be subject to the foregoing limitation. (f) The Funds may not invest in companies for the purpose of exercising control of management. Under the terms of an exemptive order received from the Securities and Exchange Commission ("SEC"), each of the Funds may borrow money from or lend money to other funds that permit such transactions and for which Janus Capital or one of its affiliates serves as investment adviser. All such borrowing and lending will be subject to the above limits and to the limits and other conditions in such exemptive order. A Fund will borrow money through the program only when the costs are equal to or lower than the cost of bank loans. Interfund loans and borrowings normally extend overnight, but can have a maximum duration of seven days. A Fund will lend through the program only when the returns are higher than those available from other short-term instruments (such as repurchase agreements). A Fund may have to borrow from a bank at a higher interest rate if an interfund loan is called or not renewed. Any delay in repayment to a lending Fund could result in a lost investment opportunity or additional borrowing costs. For the purposes of these investment restrictions, the identification of the issuer of a municipal obligation depends on the terms and conditions of the security. When assets and revenues of a political subdivision are separate from those of the government that created the subdivision and the security is backed only by the assets and revenues of the subdivision, the subdivision is deemed to be the sole issuer. Similarly, in the case of an industrial development bond, if the bond is backed only by assets and revenues of a nongovernmental user, then the nongovernmental user would be deemed to be the sole issuer. If, however, in either case, the creating government or some other entity guarantees the security, the guarantee would be considered a separate security that would be treated as an issue of the guaranteeing entity. 6 For purposes of each Fund's policies on investing in particular industries, the Funds will rely primarily on industry or industry group classifications as published by Bloomberg L.P. To the extent that Bloomberg L.P. industry classifications are so broad that the primary economic characteristics in a single class are materially different, the Funds may further classify issuers in accordance with industry classifications as published by the SEC. INVESTMENT POLICIES APPLICABLE TO CERTAIN FUNDS JANUS GLOBAL LIFE SCIENCES FUND. As a fundamental policy, Janus Global Life Sciences Fund will normally invest at least 25% of its total assets, in the aggregate, in the following industry groups: health care, pharmaceuticals, agriculture, cosmetics/personal care, and biotechnology. Janus Global Life Sciences Fund does not have a policy to concentrate in any industry other than those listed above. JANUS BALANCED FUND. As an operational policy, at least 25% of the assets of Janus Balanced Fund will normally be invested in fixed-income senior securities. JANUS SHORT-TERM BOND FUND. As an operational policy, under normal circumstances, Janus Short-Term Bond Fund expects to maintain an average weighted effective maturity of three years or less. The investment personnel may consider estimated prepayment dates or call dates of certain securities in computing the portfolio's effective maturity. JANUS FEDERAL TAX-EXEMPT FUND. As a fundamental policy, Janus Federal Tax- Exempt Fund will normally invest at least 80% of its net assets in securities whose income is not subject to federal income taxes, including the alternative minimum tax. INVESTMENT STRATEGIES AND RISKS Cash Position As discussed in the Prospectuses, a Fund's cash position may temporarily increase under various circumstances. Securities that the Funds may invest in as a means of receiving a return on idle cash include domestic or foreign denominated commercial paper, certificates of deposit, repurchase agreements, or other short-term debt obligations. These securities may include U.S. and foreign short-term cash instruments. Each Fund may also invest in money market funds, including funds managed by Janus Capital. (See "Investment Company Securities.") INTECH Risk-Managed Stock Fund normally remains as fully invested as possible and does not seek to lessen the effects of a declining market through 7 hedging or temporary defensive positions. The Fund may use exchange-traded funds as well as futures, options, and other derivatives to gain exposure to the stock market pending investment of cash balances or to meet liquidity needs. The Fund may invest in U.S. Government securities and other short-term, interest-bearing securities without regard to the Fund's otherwise applicable percentage limits, policies, or its normal investment emphasis, when INTECH believes market, economic, or political conditions warrant a temporary defensive position. Illiquid Investments Each Fund may invest up to 15% of its net assets in illiquid investments (i.e., securities that are not readily marketable). The Trustees have authorized Janus Capital to make liquidity determinations with respect to certain securities, including Rule 144A Securities, commercial paper, and municipal lease obligations purchased by the Funds. Under the guidelines established by the Trustees, Janus Capital will consider the following factors: (i) the frequency of trades and quoted prices for the security; (ii) the number of dealers willing to purchase or sell the security and the number of other potential purchasers; (iii) the willingness of dealers to undertake to make a market in the security; and (iv) the nature of the security and the nature of the marketplace trades, including the time needed to dispose of the security, the method of soliciting offers, and the mechanics of the transfer. In the case of commercial paper, Janus Capital will also consider whether the paper is traded flat or in default as to principal and interest and any ratings of the paper by a nationally recognized statistical rating organization ("NRSRO"). Certain securities previously deemed liquid may become illiquid in any subsequent assessment of the foregoing factors or other changes. Foreign securities that may be freely traded on or through the facilities of an offshore exchange or other established offshore securities market are not restricted under the Funds' liquidity procedures if traded in that market. Such securities will be treated as "restricted" if traded in the United States because foreign securities are not registered for sale under the U.S. Securities Act of 1933. If illiquid securities exceed 15% of a Fund's net assets after the time of purchase, the Fund will take steps to reduce in an orderly fashion its holdings of illiquid securities. Because illiquid securities may not be readily marketable, the investment personnel may not be able to dispose of them in a timely manner. As a result, the Fund may be forced to hold illiquid securities while their price depreciates. Depreciation in the price of illiquid securities may cause the NAV of a Fund to decline. 8 Each Fund may invest up to 5% of its total assets in venture capital investments, although no more than 0.5% of its total assets will be invested in any one venture capital company. Venture capital investments are investments in new and early stage companies whose securities are not publicly traded. These investments may present significant opportunities for capital appreciation but involve a high degree of risk that can result in substantial losses. The Funds may not be able to sell such investments when the investment personnel deem it appropriate to do so due to restrictions on their sale. In addition, the Funds may be forced to sell their venture capital investments at less than fair market value. Where venture capital investments must be registered prior to their sale, the Funds may be obligated to pay all or part of the registration expenses. Any of these situations may result in a decrease in a Fund's NAV. Securities Lending Under procedures adopted by the Trustees, the Funds may lend securities to qualified parties (typically brokers or other financial institutions) who need to borrow securities in order to complete certain transactions such as covering short sales, avoiding failures to deliver securities, or completing arbitrage activities. The Funds may seek to earn additional income through securities lending. There is the risk of delay in recovering a loaned security or the risk of loss in collateral rights if the borrower fails financially. In addition, Janus Capital makes efforts to balance the benefits and risks from granting such loans. The Funds do not have the right to vote on securities while they are being lent; however, the Funds may attempt to call back the loan and vote the proxy if time permits. All loans will be continuously secured by collateral which may consist of cash, U.S. Government securities, domestic and foreign short-term debt instruments, letters of credit, money market mutual funds or other money market accounts, or such other collateral as permitted by the SEC. Cash collateral may be invested in affiliated money market funds or other accounts advised by Janus Capital to the extent consistent with exemptive relief obtained from the SEC. Cash collateral may also be invested in unaffiliated money market funds or other accounts. Foreign Securities Unless otherwise limited by its specific investment policies, each Fund may invest without limit in foreign securities either indirectly (e.g., depositary receipts) or directly in foreign markets, including emerging markets. Investments in foreign securities, including those of foreign governments, may involve greater risks than investing in domestic securities because a Fund's performance may 9 depend on factors other than the performance of a particular company. These factors include: CURRENCY RISK. As long as a Fund holds a foreign security, its value will be affected by the value of the local currency relative to the U.S. dollar. When a Fund sells a foreign denominated security, its value may be worth less in U.S. dollars even if the security increases in value in its home country. U.S. dollar-denominated securities of foreign issuers may also be affected by currency risk due to the overall impact of exposure to the issuer's local currency. POLITICAL AND ECONOMIC RISK. Foreign investments may be subject to heightened political and economic risks, particularly in emerging markets which may have relatively unstable governments, immature economic structures, national policies restricting investments by foreigners, different legal systems, and economies based on only a few industries. In some countries, there is the risk that the government may take over the assets or operations of a company or that the government may impose taxes or limits on the removal of a Fund's assets from that country. REGULATORY RISK. There may be less government supervision of foreign markets. As a result, foreign issuers may not be subject to the uniform accounting, auditing, and financial reporting standards and practices applicable to domestic issuers and there may be less publicly available information about foreign issuers. MARKET RISK. Foreign securities markets, particularly those of emerging market countries, may be less liquid and more volatile than domestic markets. Certain markets may require payment for securities before delivery and delays may be encountered in settling securities transactions. In some foreign markets, there may not be protection against failure by other parties to complete transactions. Such factors may hinder a Fund's ability to buy and sell emerging market securities in a timely manner, affecting the Fund's investment strategies and potentially affecting the value of the Fund. TRANSACTION COSTS. Costs of buying, selling, and holding foreign securities, including brokerage, tax, and custody costs, may be higher than those involved in domestic transactions. EMERGING MARKETS. Within the parameters of their specific investment policies, the Funds, particularly Janus Global Life Sciences Fund, Janus Global Technology Fund, Janus Global Opportunities Fund, Janus Overseas Fund, and Janus Worldwide Fund, may invest an unlimited amount of their assets in a company or companies from one or more "developing countries" or "emerging markets." Such countries include, but are not limited to, countries included in 10 the Morgan Stanley Capital International ("MSCI") Emerging Markets Index(SM). Janus Orion Fund, Janus Triton Fund, Janus Contrarian Fund, and Janus Research Fund have at times invested a significant portion of their assets in emerging markets and may continue to do so. Investing in emerging markets involves certain risks not typically associated with investing in the United States, and imposes risks greater than, or in addition to, risks of investing in more developed foreign countries. In many developing markets, there is less government supervision and regulation of business and industry practices, stock exchanges, brokers, and listed companies than in more developed markets. There is a risk in developing countries that a future economic or political crisis could lead to price controls, forced mergers of companies, expropriation or confiscatory taxation, seizure, nationalization, or creation of government monopolies, any of which may have a detrimental effect on a Fund's investments. Many emerging market countries have experienced substantial, and in some periods extremely high, rates of inflation or deflation for many years, and future inflation may adversely affect the economies and securities markets of such countries. The securities markets of many of the countries in which the Funds may invest may also be smaller, less liquid, and subject to greater price volatility than those in the United States. In the event of a default on any investments in foreign debt obligations, it may be more difficult for the Funds to obtain or to enforce a judgment against the issuers of such securities. In addition, there may be little financial or accounting information available with respect to issuers of emerging market securities, and it may be difficult as a result to assess the value of an investment in such securities. The Funds may be subject to emerging markets risk to the extent that they invest in companies which are not considered to be from emerging markets, but which have customers, products, or transactions associated with emerging markets. A summary of each Fund's investments by country is contained in the Funds' shareholder reports and the Funds' Form N-Q, which are filed with the SEC. Short Sales Each Fund may engage in "short sales against the box." This technique involves selling either a security that a Fund owns, or a security equivalent in kind and amount to the security sold short that the Fund has the right to obtain, for delivery at a specified date in the future. A Fund may enter into a short sale against the box to hedge against anticipated declines in the market price of portfolio securities. If the value of the securities sold short increases prior to the scheduled delivery date, a Fund loses the opportunity to participate in the gain. The Equity Funds may also engage in "naked" short sales (no more than 8% of a Fund's assets may be invested in naked short sales). In a naked short sale 11 transaction, a Fund sells a security it does not own to a purchaser at a specified price. To complete a naked short sale, a Fund must: (i) borrow the security to deliver it to the purchaser and (ii) buy that same security in the market to return it to the lender. A Fund may sell securities short only on a fully collateralized basis, as permitted by SEC interpretations. At the time of a short sale, a Fund will establish and maintain a segregated account consisting of liquid assets equal in value to the purchase price due on the settlement date under the short sale period. The value of the liquid assets will be marked-to-market daily. A Fund will engage in naked short sales when its investment personnel anticipate that the security's market purchase price will be less than its borrowing price. Naked short sales involve the same fundamental risk as short sales against the box, as described in the previous paragraph. In addition, naked short sales carry risks of loss if the value of a security sold short increases prior to the scheduled delivery date and a Fund must pay more for the security than it has received from the purchaser in the short sale. The total market value of all of a Fund's naked short sale positions will not exceed 8% of its assets. If a naked short sale is not successful, the Funds' losses are potentially unlimited in cases where the Fund is unable to close out its short position. Zero Coupon, Step Coupon, and Pay-In-Kind Securities Within the parameters of its specific investment policies, each Fund may invest up to 10% (without limit for Janus Flexible Bond Fund and Janus High-Yield Fund) of its assets in zero coupon, pay-in-kind, and step coupon securities. Zero coupon bonds are issued and traded at a discount from their face value. They do not entitle the holder to any periodic payment of interest prior to maturity. Step coupon bonds are high-quality issues with above-market interest rates and a coupon that increases over the life of the bond. They may pay monthly, semiannual, or annual interest payments. On the date of each coupon payment, the issuer decides whether to call the bond at par or whether to extend it until the next payment date at the new coupon rate. Pay-in-kind bonds normally give the issuer an option to pay cash at a coupon payment date or give the holder of the security a similar bond with the same coupon rate and a face value equal to the amount of the coupon payment that would have been made. For the purposes of any Fund's restriction on investing in income-producing securities, income-producing securities include securities that make periodic interest payments as well as those that make interest payments on a deferred basis or pay interest only at maturity (e.g., Treasury bills or zero coupon bonds). Current federal income tax law requires holders of zero coupon securities and step coupon securities to report the portion of the original issue discount on such securities that accrues during a given year as interest income, even though 12 the holders receive no cash payments of interest during the year. In order to qualify as a "regulated investment company" under Subchapter M of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the "Code"), a Fund must distribute its investment company taxable income, including the original issue discount accrued on zero coupon or step coupon bonds. Because a Fund will not receive cash payments on a current basis with respect to accrued original-issue discount on zero coupon bonds or step coupon bonds during the period before interest payments begin, in some years that Fund may have to distribute cash obtained from other sources in order to satisfy the distribution requirements under the Code. A Fund might obtain such cash from selling other portfolio holdings which might cause that Fund to incur capital gains or losses on the sale. Additionally, these actions are likely to reduce the assets to which Fund expenses could be allocated and to reduce the rate of return for that Fund. In some circumstances, such sales might be necessary in order to satisfy cash distribution requirements even though investment considerations might otherwise make it undesirable for a Fund to sell the securities at the time. Generally, the market prices of zero coupon, step coupon, and pay-in-kind securities are more volatile than the prices of securities that pay interest periodically and in cash and are likely to respond to changes in interest rates to a greater degree than other types of debt securities having similar maturities and credit quality. Pass-Through Securities The Funds may invest in various types of pass-through securities, such as mortgage-backed securities, asset-backed securities, credit-linked trust certificates, traded custody receipts, and participation interests. A pass-through security is a share or certificate of interest in a pool of debt obligations that have been repackaged by an intermediary, such as a bank or broker-dealer. The purchaser of a pass-through security receives an undivided interest in the underlying pool of securities. The issuers of the underlying securities make interest and principal payments to the intermediary which are passed through to purchasers, such as the Funds. The most common type of pass-through securities are mortgage-backed securities. Ginnie Mae Certificates are mortgage-backed securities that evidence an undivided interest in a pool of mortgage loans. Ginnie Mae Certificates differ from bonds in that principal is paid back monthly by the borrowers over the term of the loan rather than returned in a lump sum at maturity. A Fund will generally purchase "modified pass-through" Ginnie Mae Certificates, which entitle the holder to receive a share of all interest and principal payments paid and owned on the mortgage pool, net of fees paid to 13 the "issuer" and Ginnie Mae, regardless of whether or not the mortgagor actually makes the payment. Ginnie Mae Certificates are backed as to the timely payment of principal and interest by the full faith and credit of the U.S. Government. Freddie Mac issues two types of mortgage pass-through securities: mortgage participation certificates ("PCs") and guaranteed mortgage certificates ("GMCs"). PCs resemble Ginnie Mae Certificates in that each PC represents a pro rata share of all interest and principal payments made and owned on the underlying pool. Freddie Mac guarantees timely payments of interest on PCs and the full return of principal. GMCs also represent a pro rata interest in a pool of mortgages. However, these instruments pay interest semiannually and return principal once a year in guaranteed minimum payments. This type of security is guaranteed by Freddie Mac as to timely payment of principal and interest but it is not guaranteed by the full faith and credit of the U.S. Government. Fannie Mae issues guaranteed mortgage pass-through certificates ("Fannie Mae Certificates"). Fannie Mae Certificates resemble Ginnie Mae Certificates in that each Fannie Mae Certificate represents a pro rata share of all interest and principal payments made and owned on the underlying pool. This type of security is guaranteed by Fannie Mae as to timely payment of principal and interest but it is not guaranteed by the full faith and credit of the U.S. Government. Except for GMCs, each of the mortgage-backed securities described above is characterized by monthly payments to the holder, reflecting the monthly payments made by the borrowers who received the underlying mortgage loans. The payments to the security holders (such as the Funds), like the payments on the underlying loans, represent both principal and interest. Although the underlying mortgage loans are for specified periods of time, such as 20 or 30 years, the borrowers can, and typically do, pay them off sooner. Thus, the security holders frequently receive prepayments of principal in addition to the principal that is part of the regular monthly payments. The investment personnel will consider estimated prepayment rates in calculating the average-weighted maturity of a Fund. A borrower is more likely to prepay a mortgage that bears a relatively high rate of interest. This means that in times of declining interest rates, higher yielding mortgage-backed securities held by a Fund might be converted to cash and that Fund will be forced to accept lower interest rates when that cash is used to purchase additional securities in the mortgage-backed securities sector or in other investment sectors. Additionally, prepayments during such periods will limit a Fund's ability to participate in as large a market gain as may be experienced with a comparable security not subject to prepayment. 14 Asset-backed securities represent interests in pools of consumer loans and are backed by paper or accounts receivables originated by banks, credit card companies, or other providers of credit. Generally, the originating bank or credit provider is neither the obligor nor the guarantor of the security, and interest and principal payments ultimately depend upon payment of the underlying loans by individuals. Tax-exempt asset-backed securities include units of beneficial interests in pools of purchase contracts, financing leases, and sales agreements that may be created when a municipality enters into an installment purchase contract or lease with a vendor. Such securities may be secured by the assets purchased or leased by the municipality; however, if the municipality stops making payments, there generally will be no recourse against the vendor. The market for tax-exempt, asset-backed securities is still relatively new. These obligations are likely to involve unscheduled prepayments of principal. The Funds also may invest in pass-through securities, which are interests evidencing direct ownership of a pool of debt securities. Holders of the interests are entitled to receive distributions of interest, principal, and other payments on each of the underlying debt securities (less expenses), and in some cases distributions of the underlying debt securities. The underlying debt securities have a specified maturity but are subject to prepayment risk because if an issuer prepays the principal, a Fund may have additional cash to invest at a time when prevailing interest rates have declined and reinvestment of such additional funds is made at a lower rate. The value of the underlying debt securities may change due to changes in market interest rates. If interest rates rise, the value of the underlying debt securities, and therefore the value of the pass-through security, may decline. If the underlying debt securities are high-yield securities, the risks associated with high-yield/high-risk securities discussed in this SAI and in the Funds' Prospectuses may apply. Investment Company Securities From time to time, the Funds may invest in securities of other investment companies, subject to the provisions of Section 12(d)(1) of the 1940 Act and any applicable SEC exemptive orders. Section 12(d)(1) prohibits a Fund from acquiring: (i) more than 3% of another investment company's voting stock; (ii) securities of another investment company with a value in excess of 5% of a Fund's total assets; or (iii) securities of such other investment company and all other investment companies owned by a Fund having a value in excess of 10% of the Fund's total assets. In addition, Section 12(d)(1) prohibits another investment company from selling its shares to a Fund if, after the sale: (i) the Fund owns more than 3% of the other investment company's voting stock or (ii) the Fund and other investment companies, and companies controlled by 15 them, own more than 10% of the voting stock of such other investment company. If a Fund is an approved underlying fund in a Janus fund of funds, the Fund may not acquire the securities of other investment companies or registered unit investment trusts in excess of the limits of Section 12(d)(1) of the 1940 Act in reliance on subparagraph (F) or subparagraph (G) of Section 12(d)(1). The Funds may invest in securities of money market funds managed by Janus Capital in excess of the limitations of Section 12(d)(1) under the terms of an SEC exemptive order obtained by Janus Capital and the Janus funds. Cash collateral may also be invested in unaffiliated money market funds or other accounts in excess of limitations of Section 12(d)(1), subject to an appropriate SEC exemptive order. Investment companies may include index-based investments such as exchange- traded funds ("ETFs"), which hold substantially all of their assets in securities representing their specific index. Accordingly, the main risk of investing in index-based investments is the same as investing in a portfolio of equity securities comprising the index. As a shareholder of another investment company, a Fund would bear its pro rata portion of the other investment company's expenses, including advisory fees, in addition to the expenses the Fund bears directly in connection with its own operation. The market prices of index-based investments will fluctuate in accordance with both changes in the market value of their underlying portfolio securities and due to supply and demand for the instruments on the exchanges on which they are traded (which may result in their trading at a discount or premium to their NAVs). Index-based investments may not replicate exactly the performance of their specific index because of transaction costs and because of the temporary unavailability of certain component securities of the index. Depositary Receipts The Funds may invest in sponsored and unsponsored American Depositary Receipts ("ADRs"), which are receipts issued by an American bank or trust company evidencing ownership of underlying securities issued by a foreign issuer. ADRs, in registered form, are designed for use in U.S. securities markets. Unsponsored ADRs may be created without the participation of the foreign issuer. Holders of these ADRs generally bear all the costs of the ADR facility, whereas foreign issuers typically bear certain costs in a sponsored ADR. The bank or trust company depositary of an unsponsored ADR may be under no obligation to distribute shareholder communications received from the foreign issuer or to pass through voting rights. The Funds may also invest in European Depositary Receipts ("EDRs"), Global Depositary Receipts ("GDRs"), and in other similar instruments representing securities of foreign companies. EDRs and GDRs 16 are securities that are typically issued by foreign banks or foreign trust companies, although U.S. banks or U.S. trust companies may issue them. EDRs and GDRs are structured similarly to the arrangements of ADRs. EDRs, in bearer form, are designed for use in European securities markets. Depositary Receipts are generally subject to the same sort of risks as direct investments in a foreign country, such as currency risk, political and economic risk, and market risk, because their values depend on the performance of a foreign security denominated in its home currency. The risks of foreign investing are addressed in some detail in the Funds' Prospectuses. U.S. Government Securities To the extent permitted by its investment objective and policies, each Fund, particularly Janus Balanced Fund, Janus Flexible Bond Fund, and Janus Short- Term Bond Fund, may invest in U.S. Government securities. The 1940 Act defines U.S. Government securities to include securities issued or guaranteed by the U.S. Government, its agencies, and instrumentalities. U.S. Government securities may also include repurchase agreements collateralized by and municipal securities escrowed with or refunded with U.S. Government securities. U.S. Government securities in which a Fund may invest include U.S. Treasury securities and obligations issued or guaranteed by U.S. Government agencies and instrumentalities that are backed by the full faith and credit of the U.S. Government, such as those issued or guaranteed by the Small Business Administration, Maritime Administration, Export-Import Bank of the United States, Farmers Home Administration, Federal Housing Administration, and Ginnie Mae. In addition, U.S. Government securities in which a Fund may invest include securities backed only by the rights of the issuers to borrow from the U.S. Treasury, such as those issued by the Federal Farm Credit Bank, Federal Intermediate Credit Banks, Tennessee Valley Authority, and Freddie Mac. Securities issued by Fannie Mae, the Federal Home Loan Banks, and the Student Loan Marketing Association ("Sallie Mae") are supported by the discretionary authority of the U.S. Government to purchase the obligations. There is no guarantee that the U.S. Government will support securities not backed by its full faith and credit. Accordingly, although these securities have historically involved little risk of loss of principal if held to maturity, they may involve more risk than securities backed by the full faith and credit of the U.S. Government because the Funds must look principally to the agency or instrumentality issuing or guaranteeing the securities for repayment and may not be able to assert a claim against the United States if the agency or instrumentality does not meet its commitment. 17 Municipal Obligations The Funds may invest in municipal obligations issued by states, territories, and possessions of the United States and the District of Columbia. Janus Federal Tax-Exempt Fund may, at times, invest more than 25% of the value of its assets in industrial development bonds, a type of revenue bond which, although issued by a public authority, may be backed only by the credit and security of a private issuer, thus presenting a greater credit risk. The value of municipal obligations can be affected by changes in their actual or perceived credit quality. The credit quality of municipal obligations can be affected by, among other things, the financial condition of the issuer or guarantor, the issuer's future borrowing plans and sources of revenue, the economic feasibility of the revenue bond project or general borrowing purpose, political or economic developments in the region where the security is issued, and the liquidity of the security. Because municipal securities are generally traded over-the-counter, the liquidity of a particular issue often depends on the willingness of dealers to make a market in the security. The liquidity of some municipal obligations may be enhanced by demand features, which would enable a Fund to demand payment on short notice from the issuer or a financial intermediary. Other Income-Producing Securities Other types of income-producing securities that the Funds may purchase include, but are not limited to, the following types of securities: VARIABLE AND FLOATING RATE OBLIGATIONS. These types of securities have variable or floating rates of interest and, under certain limited circumstances, may have varying principal amounts. Variable and floating rate securities pay interest at rates that are adjusted periodically according to a specified formula, usually with reference to some interest rate index or market interest rate (the "underlying index"). The floating rate tends to decrease the security's price sensitivity to changes in interest rates. These types of securities are relatively long-term instruments that often carry demand features permitting the holder to demand payment of principal at any time or at specified intervals prior to maturity. In order to most effectively use these investments, the investment personnel must correctly assess probable movements in interest rates. This involves different skills than those used to select most portfolio securities. If the investment personnel incorrectly forecast such movements, a Fund could be adversely affected by the use of variable or floating rate obligations. 18 STANDBY COMMITMENTS. These instruments, which are similar to a put, give a Fund the option to obligate a broker-dealer or bank to repurchase a security held by that Fund at a specified price. TENDER OPTION BONDS. Tender option bonds are relatively long-term bonds that are coupled with the option to tender the securities to a bank, broker-dealer, or other financial institution at periodic intervals and receive the face value of the bond. This investment structure is commonly used as a means of enhancing a security's liquidity. INVERSE FLOATERS. Inverse floaters are debt instruments whose interest bears an inverse relationship to the interest rate on another security. No Fund will invest more than 5% of its assets in inverse floaters. Similar to variable and floating rate obligations, effective use of inverse floaters requires skills different from those needed to select most portfolio securities. If movements in interest rates are incorrectly anticipated, a Fund could lose money or its NAV could decline by the use of inverse floaters. STRIP BONDS. Strip bonds are debt securities that are stripped of their interest (usually by a financial intermediary) after the securities are issued. The market value of these securities generally fluctuates more in response to changes in interest rates than interest-paying securities of comparable maturity. The Funds will purchase standby commitments, tender option bonds, and instruments with demand features primarily for the purpose of increasing the liquidity of their portfolio holdings. Repurchase and Reverse Repurchase Agreements In a repurchase agreement, a Fund purchases a security and simultaneously commits to resell that security to the seller at an agreed upon price on an agreed upon date within a number of days (usually not more than seven) from the date of purchase. The resale price consists of the purchase price plus an agreed upon incremental amount that is unrelated to the coupon rate or maturity of the purchased security. A repurchase agreement involves the obligation of the seller to pay the agreed upon price, which obligation is in effect secured by the value (at least equal to the amount of the agreed upon resale price and marked-to-market daily) of the underlying security or "collateral." A risk associated with repurchase agreements is the failure of the seller to repurchase the securities as agreed, which may cause a Fund to suffer a loss if the market value of such securities declines before they can be liquidated on the open market. In the event of bankruptcy or insolvency of the seller, a Fund may encounter delays and incur costs in liquidating the underlying security. Repurchase agreements that mature in more than seven days are subject to the 15% limit on illiquid 19 investments. While it is not possible to eliminate all risks from these transactions, it is the policy of the Funds to limit repurchase agreements to those parties whose creditworthiness has been reviewed and found satisfactory by Janus Capital. A Fund may use reverse repurchase agreements to obtain cash to satisfy unusually heavy redemption requests or for other temporary or emergency purposes without the necessity of selling portfolio securities, or to earn additional income on portfolio securities, such as Treasury bills or notes. In a reverse repurchase agreement, a Fund sells a portfolio security to another party, such as a bank or broker-dealer, in return for cash and agrees to repurchase the instrument at a particular price and time. While a reverse repurchase agreement is outstanding, a Fund will maintain cash and appropriate liquid assets in a segregated custodial account to cover its obligation under the agreement. A Fund will enter into reverse repurchase agreements only with parties that Janus Capital deems creditworthy. Using reverse repurchase agreements to earn additional income involves the risk that the interest earned on the invested proceeds is less than the expense of the reverse repurchase agreement transaction. This technique may also have a leveraging effect on a Fund's portfolio, although the Fund's intent to segregate assets in the amount of the reverse repurchase agreement minimizes this effect. Mortgage Dollar Rolls The Bond Funds also may enter into "mortgage dollar rolls," which are similar to reverse repurchase agreements in certain respects. In a "mortgage dollar roll" transaction, a Fund sells a mortgage-related security (such as a GNMA security) to a dealer and simultaneously agrees to repurchase a similar security (but not the same security) in the future at a pre-determined price. A "dollar roll" can be viewed, like a reverse repurchase agreement, as a collateralized borrowing in which a Fund pledges a mortgage-related security to a dealer to obtain cash. Unlike in the case of reverse repurchase agreements, the dealer with which a Fund enters into a dollar roll transaction is not obligated to return the same securities as those originally sold by the Fund, but only securities which are "substantially identical." To be considered "substantially identical," the securities returned to a Fund generally must: (i) be collateralized by the same types of underlying mortgages; (ii) be issued by the same agency and be part of the same program; (iii) have a similar original stated maturity; (iv) have identical net coupon rates; (v) have similar market yields (and, therefore, price); and (vi) satisfy "good delivery" requirements, meaning that the aggregate principal amounts of the securities delivered and received back must be within 2.5% of the initial amount delivered. 20 A Fund's obligations under a dollar roll agreement must be covered by cash, U.S. Government securities, or other liquid high grade debt obligations equal in value to the securities subject to repurchase by a Fund, maintained in a segregated account. To the extent that the Fund collateralizes its obligations under a dollar roll agreement, the asset coverage requirements of the 1940 Act will not apply to such transactions. Furthermore, under certain circumstances, an underlying mortgage-backed security that is part of a dollar roll transaction may be considered illiquid. During the roll period, a Fund foregoes principal and interest paid on the mortgage-backed security. A Fund is compensated by the difference between the current sales price and the lower forward price purchase price, often referred to as the "drop," as well as the interest earned on the cash proceeds of the initial sales. Successful use of mortgage dollar rolls depends on a Fund's ability to predict interest rates and mortgage payments. Dollar roll transactions involve the risk that the market value of the securities a Fund is required to purchase may decline below the agreed upon repurchase price. Bank Loans Janus Balanced Fund and the Bond Funds may invest in bank loans (no more than 5% of a Fund's total assets), which include institutionally traded floating rate securities generally acquired as an assignment or participation interest in loans originated by a lender or financial institution. Assignments and participations involve credit risk and liquidity risk. Interest rates on floating rate securities adjust with general interest rate changes and/or issuer credit quality. The interest rates paid on a floating rate security in which a Fund invests generally are readjusted every 45-60 days, on average, to an increment over a designated benchmark rate, such as the one-month, three-month, six-month, or one-year London Interbank Offered Rate ("LIBOR"). When a Fund purchases an assignment, it typically acquires direct rights against the borrower in the loan. However, the rights and obligations acquired by a Fund as the purchaser of an assignment may differ from, and be more limited than, those held by the assigning lender. A Fund may be required generally to rely upon the assigning bank to demand payment and enforce its rights against the borrower, but may otherwise be entitled to all of such bank's rights in the loan. Additional risks are involved in purchasing assignments. For example, if a loan is foreclosed, a Fund may become part owner of any collateral securing the loan, and may bear the costs and liabilities associated with owning and disposing of any collateral. Legal theories of lender liability could conceivably be applied against a Fund. In addition, there is no assurance that the liquidation of any 21 collateral from a secured loan would satisfy a borrower's obligations or that any collateral could be liquidated. When a Fund purchases a participation interest, it typically will have a contractual relationship with the lender and not with the borrower. As a result, a Fund may have the right to receive payments of principal, interest, and any fees to which it is entitled only from the lender and only upon receipt by the lender of the payments from the borrower. A Fund generally will have no right to enforce compliance by the borrower with the terms of the underlying loan agreement, nor any rights with respect to set-off against the borrower and the Fund may not directly benefit from any collateral supporting the underlying loan. As a result, a Fund may assume the credit risk of both the borrower and the lender. The failure by a Fund to receive scheduled interest or principal payments may adversely affect the income of the Fund and may likely reduce the value of its assets, which would be reflected in a reduction in the Fund's NAV. The borrower of a loan in which a Fund holds a participation interest may, either at its own election or pursuant to the terms of the loan documentation, prepay amounts of the loan from time to time. There is no assurance that a Fund will be able to reinvest the proceeds of any loan prepayment at the same interest rate or on the same terms as those of the original loan participation. A Fund may have difficulty trading assignments and participations to third parties. There may be restrictions on transfer and only limited opportunities may exist to sell such securities in secondary markets. As a result, a Fund may be unable to sell assignments or participations at the desired time or only at a price less than fair market value. Notwithstanding its intention generally not to receive material, nonpublic information with respect to its management of investments in floating rate loans, Janus Capital may from time to time come into possession of material, nonpublic information about the issuers of loans that may be held in a Fund's holdings. Possession of such information may in some instances occur despite Janus Capital's efforts to avoid such possession, but in other instances Janus Capital may choose to receive such information (for example, in connection with participation in a creditor's committee with respect to a financially distressed issuer). As, and to the extent, required by applicable law, Janus Capital's ability to trade in these loans for the account of a Fund could potentially be limited by its possession of such information. Such limitations on Janus Capital's ability to trade could have an adverse effect on a Fund by, for example, preventing the Fund from selling a loan that is experiencing a material decline in value. In 22 some instances, these trading restrictions could continue in effect for a substantial period of time. High-Yield/High-Risk Bonds Janus High-Yield Fund may invest without limit in bonds that are rated below investment grade (i.e., bonds rated BB+ or lower by Standard & Poor's Ratings Service and Fitch, Inc., or Ba or lower by Moody's Investors Service, Inc.). Within the parameters of its specific investment policies, no other Fund intends to invest more than 35% of its net assets in such bonds, and Janus Contrarian Fund, Janus Core Equity Fund, Janus Mid Cap Value Fund, and Janus Small Cap Value Fund will, under normal circumstances, limit their investments in such bonds to 20% or less of their net assets. INTECH Risk-Managed Stock Fund does not intend to invest in high-yield/high-risk bonds. Lower rated bonds involve a higher degree of credit risk, which is the risk that the issuer will not make interest or principal payments when due. In the event of an unanticipated default, a Fund would experience a reduction in its income, and could expect a decline in the market value of the bonds so affected. Any Fund may also invest in unrated bonds of foreign and domestic issuers. For the Funds subject to such limit, unrated bonds will be included in each Fund's limit on investments in bonds rated below investment grade unless its investment personnel deem such securities to be the equivalent of investment grade bonds. Unrated bonds, while not necessarily of lower quality than rated bonds, may not have as broad a market. Because of the size and perceived demand of the issue, among other factors, certain municipalities may not incur the costs of obtaining a rating. A Fund's investment personnel will analyze the creditworthiness of the issuer, as well as any financial institution or other party responsible for payments on the bond, in determining whether to purchase unrated municipal bonds. The secondary market on which high-yield securities are traded may be less liquid than the market for investment grade securities. The lack of a liquid secondary market may have an adverse impact on the market price of the security. When secondary markets for high-yield securities are less liquid than the market for investment grade securities, it also may be more difficult to value the securities because valuation may require more research, and elements of judgment may play a larger role in the valuation because there is less reliable, objective data available. Please refer to the "Explanation of Rating Categories" section of this SAI for a description of bond rating categories. 23 Defaulted Securities A Fund may hold defaulted securities if its investment personnel believe, based upon their analysis of the financial condition, results of operations and economic outlook of an issuer, that there is potential for resumption of income payments and that the securities offer an unusual opportunity for capital appreciation. For the Funds subject to such limit, defaulted securities will be included in each Fund's limit on investments in bonds rated below investment grade. Notwithstanding the investment personnel's belief about the resumption of income, however, the purchase of any security on which payment of interest or dividends is suspended involves a high degree of risk. Such risk includes, among other things, the following: FINANCIAL AND MARKET RISKS. Investments in securities that are in default involve a high degree of financial and market risks that can result in substantial or, at times, even total losses. Issuers of defaulted securities may have substantial capital needs and may become involved in bankruptcy or reorganization proceedings. Among the problems involved in investments in such issuers is the fact that it may be difficult to obtain information about the condition of such issuers. The market prices of such securities also are subject to abrupt and erratic movements and above average price volatility, and the spread between the bid and asked prices of such securities may be greater than normally expected. DISPOSITION OF PORTFOLIO SECURITIES. Although these Funds generally will purchase securities for which their investment personnel expect an active market to be maintained, defaulted securities may be less actively traded than other securities and it may be difficult to dispose of substantial holdings of such securities at prevailing market prices. The Funds will limit holdings of any such securities to amounts that the investment personnel believe could be readily sold, and holdings of such securities would, in any event, be limited so as not to limit the Funds' ability to readily dispose of securities to meet redemptions. OTHER. Defaulted securities require active monitoring and may, at times, require participation in bankruptcy or receivership proceedings on behalf of the Funds. Futures, Options, and Other Derivative Instruments FUTURES CONTRACTS. The Funds may enter into contracts for the purchase or sale for future delivery of equity securities, fixed-income securities, foreign currencies, or contracts based on financial indices, including indices of U.S. Government securities, foreign government securities, equity or fixed-income securities. U.S. futures contracts are traded on exchanges which have been designated "contract markets" by the Commodity Futures Trading Commission ("CFTC") and must be executed through a futures commission merchant ("FCM"), or brokerage firm, 24 which is a member of the relevant contract market. Through their clearing corporations, the exchanges guarantee performance of the contracts as between the clearing members of the exchange. The buyer or seller of a futures contract is not required to deliver or pay for the underlying instrument unless the contract is held until the delivery date. However, both the buyer and seller are required to deposit "initial margin" for the benefit of the FCM when the contract is entered into. Initial margin deposits are equal to a percentage of the contract's value, as set by the exchange on which the contract is traded, and currently may be maintained in cash or certain other liquid assets by the Funds' custodian or subcustodian for the benefit of the FCM. Initial margin payments are similar to good faith deposits or performance bonds. Unlike margin extended by a securities broker, initial margin payments do not constitute purchasing securities on margin for purposes of a Fund's investment limitations. If the value of either party's position declines, that party will be required to make additional "variation margin" payments for the benefit of the FCM to settle the change in value on a daily basis. The party that has a gain may be entitled to receive all or a portion of this amount. In the event of the bankruptcy of the FCM that holds margin on behalf of a Fund, that Fund may be entitled to return of margin owed to such Fund only in proportion to the amount received by the FCM's other customers. Janus Capital or the subadviser will attempt to minimize the risk by careful monitoring of the creditworthiness of the FCMs with which the Funds do business and by depositing margin payments in a segregated account with the Funds' custodian or with the FCM. Effective February 13, 2006, the FCM may no longer maintain margin assets with the Funds' custodian or subcustodian and may be required to hold such accounts directly with the FCM prior to the above referenced effective date. The Funds may enter into futures contracts and related options as permitted under CFTC Rule 4.5. The Funds have claimed exclusion from the definition of the term "commodity pool operator" adopted by the CFTC and the National Futures Association, which regulate trading in the futures markets. Therefore, the Funds are not subject to commodity pool operator registration and regulation under the Commodity Exchange Act. Although a Fund will segregate cash and liquid assets in an amount sufficient to cover its open futures obligations, the segregated assets would be available to that Fund immediately upon closing out the futures position; however, closing out open futures positions through customary settlement procedures could take several days. Because a Fund's cash that may otherwise be invested would be held uninvested or invested in other liquid assets so long as the futures position 25 remains open, such Fund's return could be diminished due to the opportunity losses of foregoing other potential investments. The Funds may enter into futures contracts to gain exposure to the stock market pending investment of cash balances or to meet liquidity needs. A Fund may also enter into futures contracts to protect that Fund from fluctuations in the value of individual securities or the securities markets generally, or interest rates without actually buying or selling the underlying debt or equity security. For example, if the Fund anticipates an increase in the price of stocks, and it intends to purchase stocks at a later time, that Fund could enter into a futures contract to purchase a stock index as a temporary substitute for stock purchases. If an increase in the market occurs that influences the stock index as anticipated, the value of the futures contracts will increase, thereby serving as a hedge against that Fund not participating in a market advance. This technique is sometimes known as an anticipatory hedge. A Fund may also use this technique with respect to an individual company's stock. To the extent a Fund enters into futures contracts for this purpose, the segregated assets maintained to cover such Fund's obligations with respect to the futures contracts will consist of liquid assets from its portfolio in an amount equal to the difference between the contract price and the aggregate value of the initial and variation margin payments made by that Fund with respect to the futures contracts. Conversely, if a Fund holds stocks and seeks to protect itself from a decrease in stock prices, the Fund might sell stock index futures contracts, thereby hoping to offset the potential decline in the value of its portfolio securities by a corresponding increase in the value of the futures contract position. Similarly, if a Fund holds an individual company's stock and expects the price of that stock to decline, the Fund may sell a futures contract on that stock in hopes of offsetting the potential decline in the company's stock price. A Fund could protect against a decline in stock prices by selling portfolio securities and investing in money market instruments, but the use of futures contracts enables it to maintain a defensive position without having to sell portfolio securities. If a Fund owns bonds and the investment personnel expect interest rates to increase, that Fund may take a short position in interest rate futures contracts. Taking such a position would have much the same effect as that Fund selling bonds in its portfolio. If interest rates increase as anticipated, the value of the bonds would decline, but the value of that Fund's interest rate futures contract will increase, thereby keeping the NAV of that Fund from declining as much as it may have otherwise. If, on the other hand, the investment personnel expect interest rates to decline, that Fund may take a long position in interest rate futures contracts in anticipation of later closing out the futures position and purchasing the bonds. Although a Fund can accomplish similar results by buying 26 securities with long maturities and selling securities with short maturities, given the greater liquidity of the futures market than the cash market, it may be possible to accomplish the same result more easily and more quickly by using futures contracts as an investment tool to reduce risk. The ordinary spreads between prices in the cash and futures markets, due to differences in the nature of those markets, are subject to distortions. First, all participants in the futures market are subject to initial margin and variation margin requirements. Rather than meeting additional variation margin requirements, investors may close out futures contracts through offsetting transactions which could distort the normal price relationship between the cash and futures markets. Second, the liquidity of the futures market depends on participants entering into offsetting transactions rather than making or taking delivery of the instrument underlying a futures contract. To the extent participants decide to make or take delivery, liquidity in the futures market could be reduced and prices in the futures market distorted. Third, from the point of view of speculators, the margin deposit requirements in the futures market are less onerous than margin requirements in the securities market. Therefore, increased participation by speculators in the futures market may cause temporary price distortions. Due to the possibility of the foregoing distortions, a correct forecast of general price trends by the investment personnel still may not result in a successful use of futures. Futures contracts entail risks. There is no guarantee that derivative investments will benefit the Funds. A Fund's performance could be worse than if the Fund had not used such instruments. For example, if a Fund has hedged against the effects of a possible decrease in prices of securities held in its portfolio and prices increase instead, that Fund will lose part or all of the benefit of the increased value of these securities because of offsetting losses in its futures positions. This risk may be magnified for single stock futures transactions, as the Fund's investment personnel must predict the direction of the price of an individual stock, as opposed to securities prices generally. In addition, if a Fund has insufficient cash, it may have to sell securities from its portfolio to meet daily variation margin requirements. Those sales may be, but will not necessarily be, at increased prices which reflect the rising market and may occur at a time when the sales are disadvantageous to such Fund. The prices of futures contracts depend primarily on the value of their underlying instruments. Because there are a limited number of types of futures contracts, it is possible that the standardized futures contracts available to a Fund will not match exactly such Fund's current or potential investments. A Fund may buy and sell futures contracts based on underlying instruments with different 27 characteristics from the securities in which it typically invests - for example, by hedging investments in portfolio securities with a futures contract based on a broad index of securities - which involves a risk that the futures position will not correlate precisely with the performance of such Fund's investments. Futures prices can also diverge from the prices of their underlying instruments, even if the underlying instruments closely correlate with a Fund's investments, such as with a single stock futures contract. Futures prices are affected by factors such as current and anticipated short-term interest rates, changes in volatility of the underlying instruments, and the time remaining until expiration of the contract. Those factors may affect securities prices differently from futures prices. Imperfect correlations between a Fund's investments and its futures positions also may result from differing levels of demand in the futures markets and the securities markets, from structural differences in how futures and securities are traded, and from imposition of daily price fluctuation limits for futures contracts. A Fund may buy or sell futures contracts with a greater or lesser value than the securities it wishes to hedge or is considering purchasing in order to attempt to compensate for differences in historical volatility between the futures contract and the securities, although this may not be successful in all cases. If price changes in a Fund's futures positions are poorly correlated with its other investments, its futures positions may fail to produce desired gains or result in losses that are not offset by the gains in that Fund's other investments. Because futures contracts are generally settled within a day from the date they are closed out, compared with a settlement period of three days for some types of securities, the futures markets can provide superior liquidity to the securities markets. Nevertheless, there is no assurance that a liquid secondary market will exist for any particular futures contract at any particular time. In addition, futures exchanges may establish daily price fluctuation limits for futures contracts and may halt trading if a contract's price moves upward or downward more than the limit in a given day. On volatile trading days when the price fluctuation limit is reached, it may be impossible for a Fund to enter into new positions or close out existing positions. If the secondary market for a futures contract is not liquid because of price fluctuation limits or otherwise, a Fund may not be able to promptly liquidate unfavorable futures positions and potentially could be required to continue to hold a futures position until the delivery date, regardless of changes in its value. As a result, such Fund's access to other assets held to cover its futures positions also could be impaired. 28 OPTIONS ON FUTURES CONTRACTS. The Funds may buy and write put and call options on futures contracts. An option on a future gives a Fund the right (but not the obligation) to buy or sell a futures contract at a specified price on or before a specified date. The purchase of a call option on a futures contract is similar in some respects to the purchase of a call option on an individual security. As with other option transactions, securities will be segregated to cover applicable margin or segregation requirements on open futures contracts. Depending on the pricing of the option compared to either the price of the futures contract upon which it is based or the price of the underlying instrument, ownership of the option may or may not be less risky than ownership of the futures contract or the underlying instrument. As with the purchase of futures contracts, when a Fund is not fully invested it may buy a call option on a futures contract to hedge against a market advance. The writing of a call option on a futures contract constitutes a partial hedge against declining prices of the security or foreign currency which is deliverable under, or of the index comprising, the futures contract. If the futures price at the expiration of the option is below the exercise price, a Fund will retain the full amount of the option premium which provides a partial hedge against any decline that may have occurred in that Fund's portfolio holdings. The writing of a put option on a futures contract constitutes a partial hedge against increasing prices of the security or foreign currency which is deliverable under, or of the index comprising, the futures contract. If the futures price at expiration of the option is higher than the exercise price, a Fund will retain the full amount of the option premium which provides a partial hedge against any increase in the price of securities which that Fund is considering buying. If a call or put option a Fund has written is exercised, such Fund will incur a loss which will be reduced by the amount of the premium it received. Depending on the degree of correlation between the change in the value of its portfolio securities and changes in the value of the futures positions, a Fund's losses from existing options on futures may to some extent be reduced or increased by changes in the value of portfolio securities. The purchase of a put option on a futures contract is similar in some respects to the purchase of protective put options on portfolio securities. For example, a Fund may buy a put option on a futures contract to hedge its portfolio against the risk of falling prices or rising interest rates. The amount of risk a Fund assumes when it buys an option on a futures contract is the premium paid for the option plus related transaction costs. In addition to the correlation risks discussed above, the purchase of an option also 29 entails the risk that changes in the value of the underlying futures contract will not be fully reflected in the value of the options bought. FORWARD CONTRACTS. A forward contract is an agreement between two parties in which one party is obligated to deliver a stated amount of a stated asset at a specified time in the future and the other party is obligated to pay a specified amount for the assets at the time of delivery. The Funds may enter into forward contracts to purchase and sell government securities, equity or income securities, foreign currencies, or other financial instruments. Currently, the Funds do not intend to invest in forward contracts other than forward currency contracts. Forward contracts generally are traded in an interbank market conducted directly between traders (usually large commercial banks) and their customers. Unlike futures contracts, which are standardized contracts, forward contracts can be specifically drawn to meet the needs of the parties that enter into them. The parties to a forward contract may agree to offset or terminate the contract before its maturity, or may hold the contract to maturity and complete the contemplated exchange. The following discussion summarizes the Funds' principal uses of forward foreign currency exchange contracts ("forward currency contracts"). A Fund may enter into forward currency contracts with stated contract values of up to the value of that Fund's assets. A forward currency contract is an obligation to buy or sell an amount of a specified currency for an agreed price (which may be in U.S. dollars or a foreign currency). A Fund may invest for nonhedging purposes such as seeking to enhance return. A Fund will exchange foreign currencies for U.S. dollars and for other foreign currencies in the normal course of business and may buy and sell currencies through forward currency contracts in order to fix a price for securities it has agreed to buy or sell ("transaction hedge"). A Fund also may hedge some or all of its investments denominated in a foreign currency or exposed to foreign currency fluctuations against a decline in the value of that currency relative to the U.S. dollar by entering into forward currency contracts to sell an amount of that currency (or a proxy currency whose performance is expected to replicate or exceed the performance of that currency relative to the U.S. dollar) approximating the value of some or all of its portfolio securities denominated in or exposed to that currency ("position hedge") or by participating in options or futures contracts with respect to the currency. A Fund also may enter into a forward currency contract with respect to a currency where the Fund is considering the purchase or sale of investments denominated in that currency but has not yet selected the specific investments ("anticipatory hedge"). In any of these circumstances a Fund may, alternatively, enter into a forward currency contract to purchase or sell one foreign currency for a second currency that is expected to perform more favorably relative to the 30 U.S. dollar if the investment personnel believe there is a reasonable degree of correlation between movements in the two currencies ("cross-hedge"). These types of hedging minimize the effect of currency appreciation as well as depreciation, but do not eliminate fluctuations in the underlying U.S. dollar equivalent value of the proceeds of or rates of return on a Fund's foreign currency denominated portfolio securities. The matching of the increase in value of a forward contract and the decline in the U.S. dollar equivalent value of the foreign currency denominated asset that is the subject of the hedge generally will not be precise. Shifting a Fund's currency exposure from one foreign currency to another removes that Fund's opportunity to profit from increases in the value of the original currency and involves a risk of increased losses to such Fund if its investment personnel's projection of future exchange rates is inaccurate. Proxy hedges and cross-hedges may result in losses if the currency used to hedge does not perform similarly to the currency in which hedged securities are denominated. Unforeseen changes in currency prices may result in poorer overall performance for a Fund than if it had not entered into such contracts. In general, the Funds cover outstanding forward currency contracts by maintaining liquid portfolio securities denominated in or whose value is tied to the currency underlying the forward contract or the currency being hedged. To the extent that a Fund is not able to cover its forward currency positions with underlying portfolio securities, the Funds' custodian segregates cash or other liquid assets having a value equal to the aggregate amount of such Fund's commitments under forward contracts entered into with respect to position hedges, cross-hedges, and anticipatory hedges. If the value of the securities used to cover a position or the value of segregated assets declines, a Fund will find alternative cover or segregate additional cash or other liquid assets on a daily basis so that the value of the covered and segregated assets will be equal to the amount of such Fund's commitments with respect to such contracts. As an alternative to segregating assets, a Fund may buy call options permitting such Fund to buy the amount of foreign currency being hedged by a forward sale contract or a Fund may buy put options permitting it to sell the amount of foreign currency subject to a forward buy contract. While forward contracts are not currently regulated by the CFTC, the CFTC may in the future assert authority to regulate forward contracts. In such event, the Funds' ability to utilize forward contracts may be restricted. In addition, a Fund may not always be able to enter into forward contracts at attractive prices and may be limited in its ability to use these contracts to hedge Fund assets. 31 OPTIONS ON FOREIGN CURRENCIES. The Funds may buy and write options on foreign currencies in a manner similar to that in which futures or forward contracts on foreign currencies will be utilized. For example, a decline in the U.S. dollar value of a foreign currency in which portfolio securities are denominated will reduce the U.S. dollar value of such securities, even if their value in the foreign currency remains constant. In order to protect against such diminutions in the value of portfolio securities, a Fund may buy put options on the foreign currency. If the value of the currency declines, such Fund will have the right to sell such currency for a fixed amount in U.S. dollars, thereby offsetting, in whole or in part, the adverse effect on its portfolio. Conversely, when a rise in the U.S. dollar value of a currency in which securities to be acquired are denominated is projected, thereby increasing the cost of such securities, a Fund may buy call options on the foreign currency. The purchase of such options could offset, at least partially, the effects of the adverse movements in exchange rates. As in the case of other types of options, however, the benefit to a Fund from purchases of foreign currency options will be reduced by the amount of the premium and related transaction costs. In addition, if currency exchange rates do not move in the direction or to the extent projected, a Fund could sustain losses on transactions in foreign currency options that would require such Fund to forego a portion or all of the benefits of advantageous changes in those rates. The Funds may also write options on foreign currencies. For example, to hedge against a potential decline in the U.S. dollar value of foreign currency denominated securities due to adverse fluctuations in exchange rates, a Fund could, instead of purchasing a put option, write a call option on the relevant currency. If the expected decline occurs, the option will most likely not be exercised and the decline in value of portfolio securities will be offset by the amount of the premium received. Similarly, instead of purchasing a call option to hedge against a potential increase in the U.S. dollar cost of securities to be acquired, a Fund could write a put option on the relevant currency which, if rates move in the manner projected, should expire unexercised and allow that Fund to hedge the increased cost up to the amount of the premium. As in the case of other types of options, however, the writing of a foreign currency option will constitute only a partial hedge up to the amount of the premium. If exchange rates do not move in the expected direction, the option may be exercised and a Fund would be required to buy or sell the underlying currency at a loss which may not be offset by the amount of the premium. Through the writing of options on foreign currencies, a Fund also may lose all or a portion of the benefits which might otherwise have been obtained from favorable movements in exchange rates. 32 The Funds may write covered call options on foreign currencies. A call option written on a foreign currency by a Fund is "covered" if that Fund owns the foreign currency underlying the call or has an absolute and immediate right to acquire that foreign currency without additional cash consideration (or for additional cash consideration held in a segregated account by its custodian) upon conversion or exchange of other foreign currencies held in its portfolio. A call option is also covered if a Fund has a call on the same foreign currency in the same principal amount as the call written if the exercise price of the call held: (i) is equal to or less than the exercise price of the call written or (ii) is greater than the exercise price of the call written, if the difference is maintained by such Fund in cash or other liquid assets in a segregated account with the Funds' custodian. The Funds also may write call options on foreign currencies for cross-hedging purposes. A call option on a foreign currency is for cross-hedging purposes if it is designed to provide a hedge against a decline due to an adverse change in the exchange rate in the U.S. dollar value of a security which a Fund owns or has the right to acquire and which is denominated in the currency underlying the option. Call options on foreign currencies which are entered into for cross-hedging purposes are not covered. However, in such circumstances, a Fund will collateralize the option by segregating cash or other liquid assets in an amount not less than the value of the underlying foreign currency in U.S. dollars marked-to-market daily. OPTIONS ON SECURITIES. In an effort to increase current income and to reduce fluctuations in NAV, the Funds may write covered put and call options and buy put and call options on securities that are traded on United States and foreign securities exchanges and over-the-counter. The Funds may write and buy options on the same types of securities that the Funds may purchase directly. A put option written by a Fund is "covered" if that Fund: (i) segregates cash not available for investment or other liquid assets with a value equal to the exercise price of the put with the Funds' custodian or (ii) holds a put on the same security and in the same principal amount as the put written, and the exercise price of the put held is equal to or greater than the exercise price of the put written. The premium paid by the buyer of an option will reflect, among other things, the relationship of the exercise price to the market price and the volatility of the underlying security, the remaining term of the option, supply and demand, and interest rates. A call option written by a Fund is "covered" if that Fund owns the underlying security covered by the call or has an absolute and immediate right to acquire that security without additional cash consideration (or for additional cash 33 consideration held in a segregated account by the Funds' custodian) upon conversion or exchange of other securities held in its portfolio. A call option is also deemed to be covered if a Fund holds a call on the same security and in the same principal amount as the call written and the exercise price of the call held: (i) is equal to or less than the exercise price of the call written or (ii) is greater than the exercise price of the call written if the difference is maintained by that Fund in cash and other liquid assets in a segregated account with its custodian. The Funds also may write call options that are not covered for cross-hedging purposes. A Fund collateralizes its obligation under a written call option for cross-hedging purposes by segregating cash or other liquid assets in an amount not less than the market value of the underlying security, marked-to-market daily. A Fund would write a call option for cross-hedging purposes, instead of writing a covered call option, when the premium to be received from the cross-hedge transaction would exceed that which would be received from writing a covered call option and its investment personnel believe that writing the option would achieve the desired hedge. The writer of an option may have no control over when the underlying securities must be sold, in the case of a call option, or bought, in the case of a put option, since with regard to certain options, the writer may be assigned an exercise notice at any time prior to the termination of the obligation. Whether or not an option expires unexercised, the writer retains the amount of the premium. This amount, of course, may, in the case of a covered call option, be offset by a decline in the market value of the underlying security during the option period. If a call option is exercised, the writer experiences a profit or loss from the sale of the underlying security. If a put option is exercised, the writer must fulfill the obligation to buy the underlying security at the exercise price, which will usually exceed the then market value of the underlying security. The writer of an option that wishes to terminate its obligation may effect a "closing purchase transaction." This is accomplished by buying an option of the same series as the option previously written. The effect of the purchase is that the writer's position will be canceled by the clearing corporation. However, a writer may not effect a closing purchase transaction after being notified of the exercise of an option. Likewise, an investor who is the holder of an option may liquidate its position by effecting a "closing sale transaction." This is accomplished by selling an option of the same series as the option previously bought. There is no guarantee that either a closing purchase or a closing sale transaction can be effected. 34 In the case of a written call option, effecting a closing transaction will permit a Fund to write another call option on the underlying security with either a different exercise price or expiration date or both. In the case of a written put option, such transaction will permit a Fund to write another put option to the extent that the exercise price is secured by deposited liquid assets. Effecting a closing transaction also will permit a Fund to use the cash or proceeds from the concurrent sale of any securities subject to the option for other investments. If a Fund desires to sell a particular security from its portfolio on which it has written a call option, such Fund will effect a closing transaction prior to or concurrent with the sale of the security. A Fund will realize a profit from a closing transaction if the price of the purchase transaction is less than the premium received from writing the option or the price received from a sale transaction is more than the premium paid to buy the option. A Fund will realize a loss from a closing transaction if the price of the purchase transaction is more than the premium received from writing the option or the price received from a sale transaction is less than the premium paid to buy the option. Because increases in the market price of a call option generally will reflect increases in the market price of the underlying security, any loss resulting from the repurchase of a call option is likely to be offset in whole or in part by appreciation of the underlying security owned by a Fund. An option position may be closed out only where a secondary market for an option of the same series exists. If a secondary market does not exist, the Fund may not be able to effect closing transactions in particular options and the Fund would have to exercise the options in order to realize any profit. If a Fund is unable to effect a closing purchase transaction in a secondary market, it will not be able to sell the underlying security until the option expires or it delivers the underlying security upon exercise. The absence of a liquid secondary market may be due to the following: (i) insufficient trading interest in certain options; (ii) restrictions imposed by a national securities exchange ("Exchange") on which the option is traded on opening or closing transactions or both; (iii) trading halts, suspensions, or other restrictions imposed with respect to particular classes or series of options or underlying securities; (iv) unusual or unforeseen circumstances that interrupt normal operations on an Exchange; (v) the facilities of an Exchange or of the Options Clearing Corporation ("OCC") may not at all times be adequate to handle current trading volume; or (vi) one or more Exchanges could, for economic or other reasons, decide or be compelled at some future date to discontinue the trading of options (or a particular class or series of options), in which event the secondary market on that Exchange (or in that class or series of options) would cease to exist, although outstanding options on that 35 Exchange that had been issued by the OCC as a result of trades on that Exchange would continue to be exercisable in accordance with their terms. A Fund may write options in connection with buy-and-write transactions. In other words, a Fund may buy a security and then write a call option against that security. The exercise price of such call will depend upon the expected price movement of the underlying security. The exercise price of a call option may be below ("in-the-money"), equal to ("at-the-money") or above ("out-of-the-money") the current value of the underlying security at the time the option is written. Buy-and-write transactions using in-the-money call options may be used when it is expected that the price of the underlying security will remain flat or decline moderately during the option period. Buy-and-write transactions using at-the-money call options may be used when it is expected that the price of the underlying security will remain fixed or advance moderately during the option period. Buy-and-write transactions using out-of-the-money call options may be used when it is expected that the premiums received from writing the call option plus the appreciation in the market price of the underlying security up to the exercise price will be greater than the appreciation in the price of the underlying security alone. If the call options are exercised in such transactions, a Fund's maximum gain will be the premium received by it for writing the option, adjusted upwards or downwards by the difference between that Fund's purchase price of the security and the exercise price. If the options are not exercised and the price of the underlying security declines, the amount of such decline will be offset by the amount of premium received. The writing of covered put options is similar in terms of risk and return characteristics to buy-and-write transactions. If the market price of the underlying security rises or otherwise is above the exercise price, the put option will expire worthless and a Fund's gain will be limited to the premium received. If the market price of the underlying security declines or otherwise is below the exercise price, a Fund may elect to close the position or take delivery of the security at the exercise price and that Fund's return will be the premium received from the put options minus the amount by which the market price of the security is below the exercise price. A Fund may buy put options to hedge against a decline in the value of its portfolio. By using put options in this way, a Fund will reduce any profit it might otherwise have realized in the underlying security by the amount of the premium paid for the put option and by transaction costs. A Fund may buy call options to hedge against an increase in the price of securities that it may buy in the future. The premium paid for the call option plus any transaction costs will reduce the benefit, if any, realized by such Fund 36 upon exercise of the option, and, unless the price of the underlying security rises sufficiently, the option may expire worthless to that Fund. A Fund may write straddles (combinations of put and call options on the same underlying security), which are generally a nonhedging technique used for purposes such as seeking to enhance return. Because combined options positions involve multiple trades, they result in higher transaction costs and may be more difficult to open and close out than individual options contracts. The straddle rules of the Internal Revenue Code require deferral of certain losses realized on positions of a straddle to the extent that a Fund has unrealized gains in offsetting positions at year end. The holding period of the securities comprising the straddle will be suspended until the straddle is terminated. EURODOLLAR INSTRUMENTS. A Fund may make investments in Eurodollar instruments. Eurodollar instruments are U.S. dollar-denominated futures contracts or options thereon which are linked to the London Interbank Offered Rate ("LIBOR"), although foreign currency denominated instruments are available from time to time. Eurodollar futures contracts enable purchasers to obtain a fixed rate for the lending of funds and sellers to obtain a fixed rate for borrowings. A Fund might use Eurodollar futures contracts and options thereon to hedge against changes in LIBOR, to which many interest rate swaps and fixed-income instruments are linked. SWAPS AND SWAP-RELATED PRODUCTS. A Fund may enter into interest rate swaps, caps, and floors on either an asset-based or liability-based basis, depending upon whether it is hedging its assets or its liabilities, and will usually enter into interest rate swaps on a net basis (i.e., the two payment streams are netted out, with a Fund receiving or paying, as the case may be, only the net amount of the two payments). The net amount of the excess, if any, of a Fund's obligations over its entitlement with respect to each interest rate swap will be calculated on a daily basis and an amount of cash or other liquid assets having an aggregate NAV at least equal to the accrued excess will be maintained in a segregated account by the Funds' custodian. If a Fund enters into an interest rate swap on other than a net basis, it would maintain a segregated account in the full amount accrued on a daily basis of its obligations with respect to the swap. A Fund will not enter into any interest rate swap, cap, or floor transaction unless the unsecured senior debt or the claims-paying ability of the other party thereto is rated in one of the three highest rating categories of at least one NRSRO at the time of entering into such transaction. Janus Capital or the subadviser will monitor the creditworthiness of all counterparties on an ongoing basis. If there is a default by the other party to such a transaction, a Fund will have contractual remedies pursuant to the agreements related to the transaction. 37 The swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. Janus Capital has determined that, as a result, the swap market has become relatively liquid. Caps and floors are more recent innovations for which standardized documentation has not yet been developed and, accordingly, they are less liquid than swaps. To the extent a Fund sells (i.e., writes) caps and floors, it will segregate cash or other liquid assets having an aggregate NAV at least equal to the full amount, accrued on a daily basis, of its obligations with respect to any caps or floors. There is no limit on the amount of interest rate swap transactions that may be entered into by a Fund. These transactions may in some instances involve the delivery of securities or other underlying assets by a Fund or its counterparty to collateralize obligations under the swap. Under the documentation currently used in those markets, the risk of loss with respect to interest rate swaps is limited to the net amount of the payments that a Fund is contractually obligated to make. If the other party to an interest rate swap that is not collateralized defaults, a Fund would risk the loss of the net amount of the payments that it contractually is entitled to receive. A Fund may buy and sell (i.e., write) caps and floors without limitation, subject to the segregation requirement described above. A Bond Fund may enter into credit default swap agreements (with values not to exceed 10% of the net asset value of such Fund) for investment purposes and to add leverage to its portfolio. As the seller in a credit default swap contract, a Fund would be required to pay the par (or other agreed-upon) value of a referenced debt obligation to the counterparty in the event of a default by a third party, such as a U.S. or foreign corporate issuer, on the debt obligation. In return, a Fund would receive from the counterparty a periodic stream of payments over the term of the contract provided that no event of default has occurred. If no default occurs, a Fund would keep the stream of payments and would have no payment obligations. As the seller, a Fund would effectively add leverage to its portfolio because, in addition to its total net assets, that Fund would be subject to investment exposure on the notional amount of the swap. A Bond Fund may also purchase credit default swap contracts in order to hedge against the risk of default of debt securities held in its portfolio, in which case that Fund would function as the counterparty referenced in the preceding paragraph. This would involve the risk that the investment may expire worthless and would only generate income in the event of an actual default by the issuer of the underlying obligation (as opposed to a credit downgrade or other indication of financial instability). It would also involve credit risk - that the 38 seller may fail to satisfy its payment obligations to a Fund in the event of a default. ADDITIONAL RISKS OF OPTIONS ON FOREIGN CURRENCIES, FORWARD CONTRACTS, AND FOREIGN INSTRUMENTS. Unlike transactions entered into by the Funds in futures contracts, options on foreign currencies and forward contracts are not traded on contract markets regulated by the CFTC or (with the exception of certain foreign currency options) by the SEC. To the contrary, such instruments are traded through financial institutions acting as market-makers, although foreign currency options are also traded on certain Exchanges, such as the Philadelphia Stock Exchange and the Chicago Board Options Exchange, subject to SEC regulation. Similarly, options on currencies may be traded over-the-counter. In an over-the-counter trading environment, many of the protections afforded to Exchange participants will not be available. For example, there are no daily price fluctuation limits, and adverse market movements could therefore continue to an unlimited extent over a period of time. Although the buyer of an option cannot lose more than the amount of the premium plus related transaction costs, this entire amount could be lost. Moreover, an option writer and a buyer or seller of futures or forward contracts could lose amounts substantially in excess of any premium received or initial margin or collateral posted due to the potential additional margin and collateral requirements associated with such positions. Options on foreign currencies traded on Exchanges are within the jurisdiction of the SEC, as are other securities traded on Exchanges. As a result, many of the protections provided to traders on organized Exchanges will be available with respect to such transactions. In particular, all foreign currency option positions entered into on an Exchange are cleared and guaranteed by the OCC, thereby reducing the risk of counterparty default. Further, a liquid secondary market in options traded on an Exchange may be more readily available than in the over-the-counter market, potentially permitting a Fund to liquidate open positions at a profit prior to exercise or expiration, or to limit losses in the event of adverse market movements. The purchase and sale of exchange-traded foreign currency options, however, is subject to the risks of the availability of a liquid secondary market described above, as well as the risks regarding adverse market movements, margining of options written, the nature of the foreign currency market, possible intervention by governmental authorities, and the effects of other political and economic events. In addition, exchange-traded options on foreign currencies involve certain risks not presented by the over-the-counter market. For example, exercise and settlement of such options must be made exclusively through the OCC, which has established banking relationships in applicable foreign countries for this 39 purpose. As a result, the OCC may, if it determines that foreign governmental restrictions or taxes would prevent the orderly settlement of foreign currency option exercises, or would result in undue burdens on the OCC or its clearing member, impose special procedures on exercise and settlement, such as technical changes in the mechanics of delivery of currency, the fixing of dollar settlement prices, or prohibitions on exercise. In addition, options on U.S. Government securities, futures contracts, options on futures contracts, forward contracts, and options on foreign currencies may be traded on foreign exchanges and over-the-counter in foreign countries. Such transactions are subject to the risk of governmental actions affecting trading in or the prices of foreign currencies or securities. The value of such positions also could be adversely affected by: (i) other complex foreign political and economic factors; (ii) lesser availability than in the United States of data on which to make trading decisions; (iii) delays in a Fund's ability to act upon economic events occurring in foreign markets during nonbusiness hours in the United States; (iv) the imposition of different exercise and settlement terms and procedures and margin requirements than in the United States; and (v) low trading volume. A Fund may from time to time participate on committees formed by creditors to negotiate with the management of financially troubled issuers of securities held by that Fund. Such participation may subject a Fund to expenses such as legal fees and may make that Fund an "insider" of the issuer for purposes of the federal securities laws, and therefore may restrict that Fund's ability to trade in or acquire additional positions in a particular security or other securities of the issuer when it might otherwise desire to do so. Participation by a Fund on such committees also may expose that Fund to potential liabilities under the federal bankruptcy laws or other laws governing the rights of creditors and debtors. A Fund would participate on such committees only when Janus Capital believes that such participation is necessary or desirable to enforce that Fund's rights as a creditor or to protect the value of securities held by that Fund. PORTFOLIO HOLDINGS DISCLOSURE POLICIES AND PROCEDURES The Mutual Fund Holdings Disclosure Policies and Procedures adopted by Janus Capital and the Funds, including all funds managed within the Janus fund complex, are designed to be in the best interests of the Funds and to protect the confidentiality of the Funds' portfolio holdings. The following describes those policies and procedures. The non-money market funds' full portfolio holdings (excluding cash equivalents, derivatives, and short positions), consisting of at least the names of the holdings, are generally available monthly, with a 30-day lag, on 40 www.janus.com. They are posted to the website within approximately two business days after month-end. The money market funds' full portfolio holdings are generally available monthly, with no lag, on www.janus.com. They are posted to the website within approximately six business days after month-end. All of the Janus funds' portfolio holdings remain available until a Form N-CSR or Form N-Q is filed with the SEC for the period that includes the date as of which the website information is current. The top ten portfolio holdings for each fund (except that certain funds publish the top five portfolio holdings) are published monthly with a 30-day lag, and quarterly with a 15-day lag, on www.janus.com approximately two business days after the end of the applicable period. Security breakdowns (such as industry, sector, regional, market capitalization, and asset allocation breakdowns, as applicable) for certain funds are published monthly with a 30-day lag, and quarterly, with a 15-day lag, on www.janus.com. Specific portfolio level performance attribution information and statistics for the funds will be made available to any person monthly upon request, with a 30-day lag, following the posting of the funds' full portfolio holdings on www.janus.com. Janus Capital may exclude from publication all or any portion of portfolio holdings or change the time periods of disclosure as deemed necessary to protect the interests of the funds. The funds' Trustees, officers, and primary service providers, including investment advisers, distributors, administrators, transfer agents, custodians, and their respective personnel, may receive or have access to nonpublic portfolio holdings information. In addition, third parties, including but not limited to those that provide services to the Janus funds, Janus Capital, and its affiliates, such as trade execution measurement systems providers, independent pricing services, proxy voting service providers, the funds' insurers, computer systems service providers, lenders, counsel, accountants/auditors, and rating and ranking organizations may also receive or have access to nonpublic portfolio holdings information. Other recipients of nonpublic portfolio holdings information may include, but may not be limited to, third parties such as consultants, data aggregators, and asset allocation services which calculate information derived from holdings for use by Janus Capital, and which supply their analyses (but not the holdings themselves) to their clients. Such parties, either by agreement or by virtue of their duties, are required to maintain confidentiality with respect to such nonpublic portfolio holdings. Nonpublic portfolio holdings information may be disclosed to certain third parties upon a good faith determination made by Janus Capital's Chief Compliance Officer or senior management team that a fund has a legitimate 41 business purpose for such disclosure and the recipient agrees to maintain confidentiality. Preapproval by the Chief Compliance Officer or senior management team is not required for certain routine service providers and in response to regulatory, administrative, and judicial requirements. The Chief Compliance Officer reports to the Janus funds' Trustees regarding material compliance matters with respect to the portfolio holdings disclosure policies and procedures. As of the date of this SAI, the following non-affiliated third parties, which consist of service providers and consultants as described above, receive or may have access to nonpublic portfolio holdings information, which may include the full holdings of a Fund. Certain of the arrangements below reflect relationships of an affiliated subadviser, INTECH, and its products.
NAME FREQUENCY LAG TIME ---- --------- -------- Brockhouse & Cooper Inc. Quarterly Current Callan Associates Inc. Quarterly Current Cambridge Associates LLC Quarterly Current Charles River Systems, Inc. As needed Current CheckFree Investment Services Quarterly Current Citibank, N.A. Daily Current CMS BondEdge As needed Current CRA RogersCasey Quarterly Current Deloitte & Touche LLP As needed Current Deloitte Tax LLP As needed Current eVestment Alliance, LLC Quarterly Current Eagle Investment Systems Corp. As needed Current Ernst & Young LLP As needed Current FactSet Research Systems, Inc. As needed Current Financial Models Company, Inc. As needed Current FT Interactive Data Corporation Daily Current Informa Investment Solutions, Inc. Quarterly Current Institutional Shareholder Services, Inc. Daily Current International Data Corporation Daily Current Investment Manager Selection Ltd. Quarterly 30 days Investment Technology Group, Inc. Daily Current Investor Force, Inc. Quarterly Current Lehman Brothers Inc. Daily Current Marco Consulting Group, Inc. Monthly Current Markit Loans, Inc. Daily Current
42
NAME FREQUENCY LAG TIME ---- --------- -------- Mercer Investment Consulting, Inc. Quarterly Current Money Manager Review Quarterly Current Moody's Investors Service Inc. Weekly 7 days or more Morningstar Inc. Quarterly Current New England Pension Consultants Quarterly Current Nomura Funds Research and Technologies Co., Ltd. Monthly Current Nomura Securities Co., Ltd. As needed Current PricewaterhouseCoopers LLP As needed Current Reuters America Inc. Daily Current Russell/Mellon Analytical Services, LLC Monthly Current Sapient Corporation As needed Current Schroder Investment Management Limited Quarterly 30 days Standard & Poor's Daily Current Standard & Poor's Financial Services Weekly 2 days or more Standard & Poor's Securities Evaluation Daily Current State Street Bank and Trust Company Daily Current Summit Strategies Group Monthly; Quarterly Current The Macgregor Group, Inc. As needed Current Thomson Financial Quarterly Current Wall Street On Demand, Inc. Monthly; Quarterly 30 days; 15 days Wilshire Associates Incorporated As needed Current Yanni Partners, Inc. Quarterly Current Zephyr Associates, Inc. Quarterly Current
In addition to the categories of persons and names of persons described above who may receive nonpublic portfolio holdings information, brokers executing portfolio trades on behalf of the funds may receive nonpublic portfolio holdings information. Janus Capital manages accounts other than registered investment companies, such as separate accounts. Janus Capital also manages products sponsored by companies other than Janus Capital, including registered investment companies and separate accounts. These other products may be managed in a similar fashion to certain Janus funds and thus may have similar portfolio holdings. 43 INVESTMENT ADVISER AND SUBADVISERS -------------------------------------------------------------------------------- INVESTMENT ADVISER - JANUS CAPITAL MANAGEMENT LLC As stated in the Prospectuses, each Fund has an Investment Advisory Agreement with Janus Capital Management LLC, 151 Detroit Street, Denver, Colorado 80206-4805. Janus Capital is a direct subsidiary of Janus Capital Group Inc. ("JCGI"), a publicly traded company with principal operations in financial asset management businesses. JCGI owns approximately 95% of Janus Capital, with the remaining 5% held by Janus Management Holdings Corporation. Each Advisory Agreement provides that Janus Capital will furnish continuous advice and recommendations concerning the Funds' investments, provide office space for the Funds, and pay the salaries, fees, and expenses of all Fund officers and of those Trustees who are considered to be interested persons of Janus Capital. Janus Capital is also authorized to perform the management and administrative services necessary for the operation of the Funds. As discussed below, Janus Capital has delegated certain of these duties to INTECH and Perkins pursuant to subadvisory agreements ("Sub-Advisory Agreements") between Janus Capital and each Subadviser. Janus Capital and its affiliates may make payments out of their own assets to selected broker-dealer firms or institutions that are or are expected to be instrumental in the acquisition or retention of shareholders for the Funds or other Janus funds or that perform recordkeeping or other services with respect to shareholder accounts. The amount of these payments is determined from time to time by Janus Capital, may be substantial, and may differ for different financial intermediaries. Eligibility requirements for such payments to institutional intermediaries are determined by Janus Capital and/or its affiliates. In addition, from their own assets, Janus Capital, Janus Distributors LLC ("Janus Distributors"), or their affiliates may pay brokerage firms, banks, financial advisers, retirement plan service providers, and other financial intermediaries fees for providing recordkeeping, subaccounting, transaction processing, and other shareholder or administrative services in connection with investments in the Janus funds. These fees are in addition to any fees that may be paid by the Janus funds for these types of or other services. You may wish to consider whether such arrangements exist when evaluating any recommendations to purchase or sell shares of the Funds. Janus Capital or its affiliates may also share certain marketing expenses with, or pay for or sponsor informational meetings, seminars, client awareness events, support for marketing materials, or business building programs for such intermediaries to raise awareness of the Funds. 44 The Funds pay custodian and transfer agent fees and expenses, brokerage commissions and dealer spreads, and other expenses in connection with the execution of portfolio transactions, legal and accounting expenses, interest and taxes, a portion of trade or other investment company dues and expenses, registration fees, expenses of shareholders' meetings and reports to shareholders, fees and expenses of Fund Trustees who are not interested persons of Janus Capital, and other costs of complying with applicable laws regulating the sale of Fund shares. Pursuant to the Advisory Agreements, Janus Capital furnishes certain other services, including NAV determination, portfolio accounting, recordkeeping, and blue sky registration and monitoring services, for which the Funds may reimburse Janus Capital for its costs. 45 The Funds pay a monthly investment advisory fee to Janus Capital for its services. The fee is based on the average daily net assets of each Fund and calculated at the annual rate as shown below for each Fund. The following table reflects the Funds' investment advisory fee rates effective during the most recent fiscal year.
Investment Advisory Average Daily Net Fees (%) Fund Name Assets of Fund (annual rate) ------------------------------------------------------------------------ GROWTH Janus Fund All Asset Levels 0.64 Janus Enterprise Fund All Asset Levels 0.64 Janus Mercury Fund All Asset Levels 0.64 Janus Olympus Fund All Asset Levels 0.64 Janus Orion Fund All Asset Levels 0.64 Janus Triton Fund All Asset Levels 0.64 Janus Twenty Fund All Asset Levels 0.64 Janus Venture Fund All Asset Levels 0.64 SPECIALTY GROWTH Janus Global Life Sciences Fund All Asset Levels 0.64 Janus Global Technology Fund All Asset Levels 0.64 CORE Janus Balanced Fund All Asset Levels 0.55 Janus Contrarian Fund All Asset Levels 0.64 Janus Core Equity Fund All Asset Levels 0.60 Janus Growth and Income Fund All Asset Levels 0.62 Janus Research Fund All Asset Levels 0.64 RISK-MANAGED INTECH Risk-Managed Stock Fund(1) All Asset Levels 0.50 VALUE Janus Mid Cap Value Fund(2) All Asset Levels 0.64 Janus Small Cap Value Fund(2) All Asset Levels 0.72 INTERNATIONAL & GLOBAL Janus Global Opportunities Fund All Asset Levels 0.64 Janus Overseas Fund All Asset Levels 0.64 Janus Worldwide Fund All Asset Levels 0.60 BOND Janus Flexible Bond Fund First $300 Million 0.58 Over $300 Million 0.48 Janus High-Yield Fund First $300 Million 0.65 Over $300 Million 0.55 Janus Short-Term Bond Fund First $300 Million 0.64 Over $300 Million 0.54 Janus Federal Tax-Exempt Fund First $300 Million 0.50 Over $300 Million 0.45
(1) Formerly named Janus Risk-Managed Stock Fund. (2) 50% of the investment advisory fee (less any fee waivers or expense reimbursements) is payable directly by the Fund to Perkins, the Fund's subadviser. 46 PERFORMANCE-BASED INVESTMENT ADVISORY FEE APPLIES TO JANUS MERCURY FUND, JANUS CONTRARIAN FUND, JANUS RESEARCH FUND, INTECH RISK-MANAGED STOCK FUND, JANUS MID CAP VALUE FUND, AND JANUS WORLDWIDE FUND ONLY Effective January 1, 2006 for Janus Research Fund and INTECH Risk-Managed Stock Fund and effective February 1, 2006 for Janus Mercury Fund, Janus Contrarian Fund, Janus Mid Cap Value Fund, and Janus Worldwide Fund, each such Fund implemented a revised investment advisory agreement that includes a change in the investment advisory fee rate from a fixed rate to a rate that adjusts upward or downward based upon each Fund's performance relative to its respective benchmark index. This change will not impact the investment advisory fee shown in the table above until one year after the effective date when the performance adjustment takes effect. The following discussion provides additional details regarding these changes. Shareholders of Janus Mercury Fund, Janus Contrarian Fund, Janus Research Fund, INTECH Risk-Managed Stock Fund, Janus Mid Cap Value Fund, and Janus Worldwide Fund, voting separately, approved an amended investment advisory agreement between the Trust, on behalf of their Fund, and Janus Capital ("Amendment"). The Amendment introduced a performance incentive investment advisory fee structure for each Fund whereby each Fund's investment advisory fee rate adjusts upward or downward based upon the Fund's performance relative to its benchmark index. Under the Amendment, the investment advisory fee paid to Janus Capital by each Fund consists of two components: (i) a base fee calculated by applying the current specified fixed-rate of the advisory fee to the Fund's average daily net assets during the previous month ("Base Fee"), plus or minus (ii) a performance-fee adjustment ("Performance Adjustment") calculated by applying a variable rate of up to 0.15% (positive or negative) to the Fund's average daily net assets during the applicable performance measurement period. The performance measurement period generally will be the previous 36 months, although no Performance Adjustment will be made until the Amendment has been in effect for at least 12 months and, accordingly, only the Fund's Base Fee rate will apply for the initial 12 months. When the Amendment has been in effect for at least 12 months, but less than 36 months, the performance measurement period will be equal to the time that has elapsed since the Amendment took effect. The amended fee schedule for each Fund became effective on January 1, 2006 or February 1, 2006, as noted above. 47 For each Fund, the fixed rate used in computing the Base Fee is the same as that used in computing the fee paid to Janus Capital by the Fund under its investment advisory agreement effective during the most recent fiscal year. The Performance Adjustment may result in an increase or decrease in the investment advisory fee paid by a Fund, depending upon the investment performance of the Fund relative to its benchmark index over the performance measurement period. No Performance Adjustment is applied unless the difference between the Fund's investment performance and the investment record of the Fund's benchmark index is 0.50% or greater (positive or negative) during the applicable performance measurement period. Because the Performance Adjustment is tied to a Fund's relative performance to its benchmark index (and not its absolute performance), the Performance Adjustment could increase Janus Capital's fee even if the Fund's shares lose value during the performance measurement period and could decrease Janus Capital's fee even if the Fund's shares increase in value during the performance measurement period. For purposes of computing the Base Fee and the Performance Adjustment, net assets are averaged over different periods (average daily net assets during the previous month for the Base Fee, versus average daily net assets during the performance measurement period for the Performance Adjustment). Performance of a Fund is calculated net of expenses whereas a Fund's benchmark index does not have any fees or expenses. Reinvestment of dividends and distributions are included in calculating both the performance of a Fund and the Fund's benchmark index. The investment performance of Janus Mid Cap Value Fund's Investor Shares ("Investor Shares") is used for purposes of calculating Janus Mid Cap Value Fund's Performance Adjustment. For the Funds other than Janus Mid Cap Value Fund, should the Trustees subsequently decide to divide shares of a Fund into two or more separate classes, the oldest class of shares will be used for purposes of determining the Performance Adjustment. After Janus Capital determines whether a particular Fund's performance was above or below its benchmark index by comparing the investment performance of the Investor Shares for Janus Mid Cap Value Fund or the oldest class of shares for the other Funds against the investment record of that Fund's benchmark index, Janus Capital will apply the same Performance Adjustment (positive or negative) across each other class of shares of the Fund. The Trustees may determine that a class of shares of a Fund other than Investor Shares for Janus Mid Cap Value Fund or the oldest class of shares for the other Funds is the most appropriate for use in calculating the Performance Adjustment. If a different class of shares is substituted in calculating the Performance Adjustment, the use of that successor class of shares may apply to the entire performance measurement period so long as the successor class was 48 outstanding at the beginning of such period. If the successor class of shares was not outstanding for all or a portion of the performance measurement period, it may only be used in calculating that portion of the Performance Adjustment attributable to the period during which the successor class was outstanding and any prior portion of the performance measurement period would be calculated using the class of shares previously designated. Any change to the class of shares used to calculate the Performance Adjustment is subject to applicable law. It is currently the position of the staff of the SEC (the "Staff") that any changes to a class of shares selected for purposes of calculating the Performance Adjustment will require shareholder approval. If there is a change in the Staff's position, the Trustees will notify the shareholders of such change in position at such time as the Trustees may determine that a change in such selected class is appropriate. Each Fund's benchmark index is identified below. The Trustees may from time to time determine that another securities index is a more appropriate benchmark index for purposes of evaluating the performance of that Fund. In that event, the Trustees will approve the substitution of a successor index for the Fund's benchmark index. However, the calculation of the Performance Adjustment for any portion of the performance measurement period prior to the adoption of the successor index will still be based upon the Fund's performance compared to its former benchmark index. Any change to a particular Fund's benchmark index for purposes of calculating the Performance Adjustment is subject to applicable law. It is currently the position of the Staff that any changes to a Fund's benchmark index will require shareholder approval. If there is a change in the Staff's position, the Trustees will notify the shareholders of such change in position at such time as the Trustees may determine that a change in a Fund's benchmark index is appropriate. The Base Fee for each Fund (which is the same as the annual investment advisory fee rate paid by the Fund during the most recent fiscal year) and the Fund's benchmark index used for purposes of calculating the Performance Adjustment are shown in the following table:
Base Fee(%) Fund Name Benchmark Index (annual rate) --------------------------------------------------------------------------------------------- Janus Mercury Fund Russell 1000(R) Growth Index(1) 0.64 Janus Contrarian Fund S&P 500(R) Index(2) 0.64 Janus Research Fund Russell 1000(R) Index(3) 0.64 INTECH Risk-Managed Stock Fund(4) S&P 500(R) Index(2) 0.50(5) Janus Mid Cap Value Fund Russell Midcap(R) Value 0.64(7) Index(6) Janus Worldwide Fund MSCI World(SM) Index(8) 0.60
49 (1) The Russell 1000(R) Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth rates. (2) The S&P 500(R) Index is Standard & Poor's composite index of 500 stocks, a widely recognized, unmanaged index of common stock prices. (3) The Russell 1000(R) Index measures the performance of the largest 1000 companies in the Russell 3000(R) Index. (4) Formerly named Janus Risk-Managed Stock Fund. (5) Janus Capital, and not INTECH Risk-Managed Stock Fund, pays INTECH, the Fund's subadviser, a fee for its services provided pursuant to a Sub-Advisory Agreement between Janus Capital, on behalf of the Fund, and INTECH. For the fiscal year ended October 31, 2005, that fee was calculated at an annual rate of 0.26% of the Fund's average daily net assets. (6) The Russell Midcap(R) Value Index measures the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth rates. (7) This amount is reduced by the amount payable by Janus Mid Cap Value Fund to Perkins, the subadviser to Janus Mid Cap Value Fund, pursuant to a Sub-Advisory Agreement between Janus Capital and Perkins. Under this Sub-Advisory Agreement, Janus Mid Cap Value Fund pays Perkins a fee equal to 50% of the advisory fee otherwise payable by the Fund to Janus Capital (net of any reimbursements of expenses incurred or fees waived by Janus Capital). For the fiscal year ended October 31, 2005, Janus Mid Cap Value Fund paid Perkins a subadvisory fee at the annual rate of 0.32% of the Fund's average daily net assets. (8) The MSCI World(SM) Index is a market capitalization weighted index composed of companies representative of the market structure of developed market countries in North America, Europe, and the Asia/Pacific Region. Janus Capital agreed by contract to waive the advisory fee payable by certain Funds in an amount equal to the amount, if any, that such Fund's normal operating expenses in any fiscal year, including the investment advisory fee, but excluding brokerage commissions, interest, taxes, and extraordinary expenses, exceed the annual rate shown below. For information about how these expense limits affect the total expenses of the Funds, see the table in the "Fees and Expenses" section of each Fund's Prospectus. Janus Capital has agreed to continue such waivers until at least March 1, 2007.
Expense Limit Fund Name Percentage (%) ----------------------------------------------- GROWTH Janus Triton Fund 1.25 CORE Janus Research Fund 1.25 BOND Janus Flexible Bond Fund 0.93 Janus High-Yield Fund 0.90 Janus Short-Term Bond Fund 0.64 Janus Federal Tax-Exempt Fund 0.55
50 The following table summarizes the advisory fees paid by the Funds and any advisory fee waivers for the last three fiscal years or periods ended October 31. The information presented in the table below reflects the investment advisory fees in effect during each of the fiscal years or periods shown.
2005 2004 2003 ----------------------------- -------------------------- -------------------------------- Fund Name Advisory Fees Waivers Advisory Fees Waivers Advisory Fees Waivers ------------------------------------------------------------------------------------------------------------------------------ GROWTH Janus Fund $78,753,161 -- $99,852,014 -- $105,343,428 -- Janus Enterprise Fund $11,062,904 -- $11,614,927 -- $ 11,320,918 -- Janus Mercury Fund $28,459,376 -- $32,392,574 -- $ 33,066,871 -- Janus Olympus Fund $14,610,128 -- $16,663,966 -- $ 15,461,581 -- Janus Orion Fund $ 3,778,695 -- $ 3,494,094 -- $ 2,802,306 -- Janus Triton Fund $ 113,098(1) $102,399 $ -- -- $ -- -- Janus Twenty Fund $60,430,919 -- $60,268,045 -- $ 63,331,924 -- Janus Venture Fund $ 8,753,760 -- $ 8,770,064 -- $ 6,423,011 -- SPECIALTY GROWTH Janus Global Life Sciences Fund $ 7,563,145 -- $ 8,332,957 -- $ 8,424,615 -- Janus Global Technology Fund $ 7,103,412 -- $ 9,581,054 -- $ 8,661,205 -- CORE Janus Balanced Fund $14,963,890 -- $20,059,059 -- $ 26,024,299 -- Janus Contrarian Fund $17,384,508 -- $16,155,221 -- $ 12,107,699 -- Janus Core Equity Fund $ 3,917,480 -- $ 4,146,417 -- $ 4,602,152 -- Janus Growth and Income Fund $33,818,943 -- $35,671,875 -- $ 37,147,147 -- Janus Research Fund $ 130,634(1) $ 70,326 $ -- -- $ -- -- RISK-MANAGED INTECH Risk-Managed Stock Fund(2) $ 1,542,157 -- $ 763,771 $ 488,229 $ 223,037(3) $ 223,037(3) VALUE Janus Mid Cap Value Fund $27,930,032 -- $16,992,386 $ 500,763 $ 9,406,097(4) -- Janus Small Cap Value Fund $19,771,643 -- $22,982,646 $2,659,228 $ 23,728,560(5) -- INTERNATIONAL & GLOBAL Janus Global Opportunities Fund $ 1,400,774 -- $ 1,131,557 -- $ 864,076 -- Janus Overseas Fund $14,542,082 -- $16,156,904 -- $ 18,835,257 -- Janus Worldwide Fund $35,836,772 -- $58,977,220 -- $ 78,796,638 --
51
2005 2004 2003 ----------------------------- -------------------------- -------------------------------- Fund Name Advisory Fees Waivers Advisory Fees Waivers Advisory Fees Waivers ------------------------------------------------------------------------------------------------------------------------------ BOND Janus Flexible Bond Fund $ 5,279,211 -- $ 7,113,293 -- $ 9,825,976 -- Janus High-Yield Fund $ 3,319,464 -- $ 3,912,620 -- $ 5,774,135 -- Janus Short-Term Bond Fund $ 1,494,629 $744,392 $ 1,926,252 $1,061,867 $ 2,811,827 $1,192,047 Janus Federal Tax-Exempt Fund $ 605,134 $376,646 $ 863,282 $ 553,328 $ 1,372,560 $ 576,408
(1) February 25, 2005 (inception) to October 31, 2005. (2) Formerly named Janus Risk-Managed Stock Fund. (3) February 28, 2003 (inception) to October 31, 2003. (4) $4,224,022 of the Advisory Fees for Janus Mid Cap Value Fund were paid to Berger Financial Group LLC, the Fund's former adviser, for the period October 1, 2002 to April 20, 2003, with the remaining $5,182,075 being paid to Janus Capital for the period April 21, 2003 to October 31, 2003. (5) $11,538,890 of the Advisory Fees for Janus Small Cap Value Fund were paid to Berger Financial Group LLC, the Fund's former adviser, for the period October 1, 2002 to April 20, 2003, with the remaining $12,189,670 being paid to Janus Capital for the period April 21, 2003 to October 31, 2003. Janus Services LLC ("Janus Services") receives an administrative services fee at an annual rate of up to 0.05% of the average daily net assets of INTECH Risk-Managed Stock Fund, Janus Mid Cap Value Fund, and Janus Small Cap Value Fund for providing or procuring recordkeeping, subaccounting, and other administrative services to investors of the Fund. Janus Services expects to use a significant portion of this fee to compensate retirement plan service providers, brokers, bank trust departments, financial advisers, and other financial intermediaries for providing these services (at an annual rate of up to 0.05% of the average daily net assets of the shares attributable to their customers). Services provided by these financial intermediaries may include but are not limited to recordkeeping, processing and aggregating purchase and redemption transactions, providing periodic statements, forwarding prospectuses, shareholder reports, and other materials to existing customers, and other administrative services. 52 The following table summarizes the administration fees paid by certain Funds for the fiscal years ended October 31.
2005 2004 Fund Name Administration Fees Administration Fees ------------------------------------------------------------------------------ RISK-MANAGED INTECH Risk-Managed Stock Fund(1) $ 154,216 $ 64,759 VALUE Janus Mid Cap Value Fund $2,197,481 $1,319,999 Janus Small Cap Value Fund $1,381,716 $1,558,406
(1) Formerly named Janus Risk-Managed Stock Fund. Janus Small Cap Value Fund's Advisory Agreement is dated July 1, 2004. INTECH Risk-Managed Stock Fund's Advisory Agreement is dated July 1, 2004, as amended January 1, 2006. Janus Research Fund's Advisory Agreement is dated December 2, 2004, as amended January 1, 2006. Janus Triton Fund's Advisory Agreement is dated December 2, 2004, as amended February 1, 2006. Each of the remaining Fund's Advisory Agreement is dated July 1, 2004, as amended February 1, 2006. Each Fund's Advisory Agreement is in effect for an initial one-year period and thereafter from year to year so long as such continuance is approved annually by a majority of the Funds' Trustees who are not parties to the Advisory Agreements or "interested persons" (as defined by the 1940 Act) of any such party (the "Independent Trustees"), and by either a majority of the outstanding voting shares of each Fund or the Trustees of the Funds. Each Advisory Agreement: (i) may be terminated without the payment of any penalty by a Fund or Janus Capital on 60 days' written notice; (ii) terminates automatically in the event of its assignment; and (iii) generally, may not be amended without the approval by vote of a majority of the Trustees of the affected Fund, including a majority of the Independent Trustees and, to the extent required by the 1940 Act, the vote of a majority of the outstanding voting securities of that Fund. SUBADVISERS Janus Capital has entered into Sub-Advisory Agreements on behalf of INTECH Risk-Managed Stock Fund, Janus Mid Cap Value Fund, and Janus Small Cap Value Fund. ENHANCED INVESTMENT TECHNOLOGIES, LLC Janus Capital has entered into a Sub-Advisory Agreement with Enhanced Investment Technologies, LLC, 2401 PGA Boulevard, Suite 100, Palm Beach Gardens, Florida 33410, on behalf of INTECH Risk-Managed Stock Fund. 53 INTECH has been in the investment advisory business since 1987. INTECH also serves as investment adviser or subadviser to other U.S. registered and unregistered investment companies, offshore investment funds, and other institutional accounts. Janus Capital owns approximately 82.5% of the outstanding voting shares of INTECH. Under the Sub-Advisory Agreement between Janus Capital and INTECH, INTECH is responsible for the day-to-day investment operations of INTECH Risk-Managed Stock Fund. Investments will be acquired, held, disposed of, or loaned, consistent with the investment objectives, policies, and restrictions established by the Trustees and set forth in the Trust's registration statement. INTECH is also obligated to: (i) place all orders for the purchase and sale of investments for the Fund with brokers or dealers selected by INTECH; (ii) perform certain limited related administrative functions; (iii) provide the Trustees with oral or written reports regarding the investment portfolio of the Fund; and (iv) maintain all books and records required under federal securities law relating to day-to-day portfolio management of the Funds. The Sub-Advisory Agreement provides that INTECH shall not be liable for any error of judgment or mistake of law or for any loss arising out of any investment or for any act or omission taken with respect to the Fund, except for willful misfeasance, bad faith or gross negligence in the performance of its duties, or by reason of reckless disregard of its obligations and duties under the Sub-Advisory Agreement and except to the extent otherwise provided by law. The Sub-Advisory Agreement is dated July 1, 2004, as amended January 1, 2006, and will continue in effect until January 1, 2007, and thereafter from year to year if such continuation is specifically approved at least annually by the Trustees or by vote of a majority of the outstanding shares of the Fund and in either case by vote of a majority of the Independent Trustees of the Fund. The Sub-Advisory Agreement is subject to termination by the Fund or the subadviser on 60 days' written notice and terminates automatically in the event of its assignment and in the event of termination of the Investment Advisory Agreement. PERKINS, WOLF, MCDONNELL AND COMPANY, LLC Janus Capital has entered into Sub-Advisory Agreements on behalf of Janus Mid Cap Value Fund and Janus Small Cap Value Fund with Perkins, Wolf, McDonnell and Company, LLC, 311 S. Wacker Drive, Suite 6000, Chicago, Illinois 60606. Perkins: (i) manages the investment operations of the Funds; (ii) keeps Janus Capital fully informed as to the valuation of assets of the Funds, their condition, investment decisions and conditions; (iii) maintains all books and records 54 required under federal securities law relating to day-to-day portfolio management of the Funds; (iv) performs certain limited related administrative functions; and (v) provides the Trustees and Janus Capital with economic, operational, and investment data and reports. Perkins and its predecessor have been in the investment advisory business since 1984. Perkins also serves as investment adviser or subadviser to separately managed accounts and other registered investment companies. Janus Capital has a 30% ownership stake in Perkins. Under the Sub-Advisory Agreements between Janus Capital and Perkins, investments will be acquired, held, disposed of or loaned, consistent with the investment objectives, policies and restrictions established by the Trustees and set forth in the Trust's registration statement. The Sub-Advisory Agreements provide that Perkins shall not be liable for any error of judgment or mistake of law or for any loss arising out of any investment or for any act or omission taken with respect to the Funds, except for willful malfeasance, bad faith or gross negligence in the performance of its duties, or by reason of reckless disregard of its obligations and duties under the Sub-Advisory Agreements and except to the extent otherwise provided by law. Under the Sub-Advisory Agreements, Janus Mid Cap Value Fund and Janus Small Cap Value Fund each pay Perkins a fee equal to 50% of the advisory fee Janus Capital receives from each Fund (calculated after any fee waivers and expense reimbursements). As a result of the reduction of the advisory fees paid by Janus Mid Cap Value Fund and Janus Small Cap Value Fund to Janus Capital in connection with the Assurance of Discontinuance entered into with the New York Attorney General in August 2004, Janus Capital has agreed to pay Perkins a fee equivalent to approximately one-half of the reduction with respect to each Fund. The agreement with respect to Janus Mid Cap Value Fund will terminate effective February 1, 2007. The Sub-Advisory Agreements with Perkins will continue in effect until February 1, 2007 for Janus Mid Cap Value Fund and July 1, 2006 for Janus Small Cap Value Fund, and thereafter from year to year if such continuation is specifically approved at least annually by the Trustees or by vote of a majority of the outstanding shares of the Funds and in either case by vote of a majority of the Independent Trustees of the Funds. The Sub-Advisory Agreements are subject to termination without cause by Janus Capital or the Trust on 60 days' written notice, or material breach of Janus Capital's or Perkins' duties if that breach is not cured within a 20-day period after notice of breach, or if Perkins is unable to discharge its duties and obligations, and terminates automatically in the event of the assignment or termination of each Fund's respective Investment 55 Advisory Agreement. Perkins may terminate the Sub-Advisory Agreements upon three years' notice. Janus Capital and Perkins have also entered into a Relationship Agreement, which sets forth a framework of mutual cooperation between the parties with respect to the developing, marketing, and servicing of products. Among other things, Janus Capital agrees that it will not terminate or recommend to the Trustees that they terminate the Sub-Advisory Agreements with Perkins, except for cause, as long as the Relationship Agreement is in effect. Among other things, Perkins agrees to provide Janus Capital with exclusive rights to certain value investment products and limit its ability to terminate the Sub-Advisory Agreement without cause. Accordingly, both Janus Capital and Perkins have financial incentives to maintain the relationship between the parties. Under each Sub-Advisory Agreement, the respective subadviser was compensated according to the following schedule for the fiscal year ended October 31, 2005.
Fund Name Subadviser Annual Rate(%) ----------------------------------------------------------------------------------------- INTECH Risk-Managed Stock Fund(1) INTECH 0.26 Janus Mid Cap Value Fund Perkins 0.32 Janus Small Cap Value Fund Perkins 0.36
(1) Formerly named Janus Risk-Managed Stock Fund. INTECH Risk-Managed Stock Fund pays no fees directly to INTECH. Janus Capital pays these subadvisory fees out of its advisory fees. During the fiscal year ended October 31, 2005, Janus Mid Cap Value Fund and Janus Small Cap Value Fund paid subadvisory fees to Perkins in the amount of $13,965,016 and $9,885,822, respectively. PERFORMANCE-BASED SUB-ADVISORY FEE APPLIES TO INTECH RISK-MANAGED STOCK FUND Effective January 1, 2006, the subadvisory fee rate for INTECH Risk-Managed Stock Fund changed from a fixed rate to a rate that adjusts upward or downward based upon the Fund's performance relative to its benchmark index. This change will not impact the subadvisory fee shown for INTECH Risk- Managed Stock Fund in the table above until January 1, 2007. Janus Capital, and not INTECH Risk-Managed Stock Fund, pays this fee. The following discussion provides additional details regarding this change. On December 29, 2005, shareholders of INTECH Risk-Managed Stock Fund approved an amended subadvisory agreement between Janus Capital, on behalf of the Fund, and INTECH that introduces a performance incentive subadvisory 56 fee structure. The subadvisory fee rate payable by Janus Capital to INTECH changed from a fixed rate to a rate that adjusts upward or downward based upon the performance of the Fund relative to its benchmark index, the S&P 500(R) Index. Under the Amended Sub-Advisory Agreement, the subadvisory fee rate paid by Janus Capital to INTECH consists of two components: (i) a base advisory fee calculated and accrued daily and payable monthly equal to 0.26% of the Fund's average daily net assets during the previous month ("Base Fee"), plus or minus (ii) half of any performance fee adjustment paid to Janus Capital by the Fund ("Performance Adjustment") pursuant to the investment advisory agreement between Janus Capital and the Trust, on behalf of the Fund as approved by shareholders on December 29, 2005. No Performance Adjustment is paid to INTECH until the amended subadvisory agreement has been in effect for at least 12 months (which is January 1, 2007). The Base Fee rate is the same as the current annual fixed-rate fee paid by Janus Capital to INTECH under its Sub-Advisory Agreement. The Performance Adjustment is calculated monthly and may result in an increase or decrease in the subadvisory fee rate paid by Janus Capital to INTECH, depending upon the investment performance of the Fund relative to the S&P 500(R) Index over the performance measurement period. For purposes of computing the Base Fee and the Performance Adjustment, net assets are averaged over different periods (average daily net assets during the previous month for the Base Fee versus average daily net assets over the performance measurement period for the Performance Adjustment). The amended subadvisory agreement and the new fee schedule became effective on January 1, 2006. For the first 12 months after the effective date, only the Base Fee rate applies. When the amended subadvisory agreement has been in effect for at least 12 months, but less than 36 months, the performance measurement period equals the time that has elapsed since the amended subadvisory agreement took effect and the Performance Adjustment will be calculated for that performance measurement period. Once the Fund has 36 months of performance history from the effective date, the Performance Adjustment is calculated using a rolling 36 month period. APPLIES TO JANUS MID CAP VALUE FUND As a result of shareholder approval of Janus Mid Cap Value Fund's amended investment advisory agreement between Janus Capital and the Trust, on behalf of the Fund, effective February 1, 2006, the subadvisory fee paid to Perkins changed from a fixed-rate fee to a fee that adjusts upward or downward based upon the performance of the Fund relative to the Russell Midcap(R) Value Index, the Fund's benchmark index. In accordance with the Sub-Advisory Agreement, 57 Perkins receives a fee from the Fund equal to 50% of the advisory fee payable to Janus Capital from the Fund before reduction of the Janus fee by the amount of the fee payable to Perkins (net of any reimbursement of expenses incurred or fees waived by Janus Capital). APPROVAL OF INVESTMENT ADVISORY AGREEMENTS A discussion regarding the basis for the Board of Trustees' approval of continuation of Janus Small Cap Value Fund's investment advisory agreement is included in the Fund's annual report to shareholders. AMENDMENTS TO ADVISORY AGREEMENTS TO CONFORM TO PREVAILING INDUSTRY PRACTICE APPLIES TO ALL FUNDS EXCEPT INTECH RISK-MANAGED STOCK FUND, JANUS MID CAP VALUE FUND, AND JANUS SMALL CAP VALUE FUND On September 20, 2005, the Board of Trustees, including all of the Independent Trustees, voted unanimously to approve an amended Investment Advisory Agreement ("Amended Agreement") for each applicable Fund and authorized the submission of each Amended Agreement to the Fund's shareholders for approval. Shareholders approved the Amended Agreement for their Fund at a special meeting of Shareholders held on December 29, 2005 for Janus Fund, Janus Orion Fund, Janus Triton Fund, Janus Twenty Fund, Janus Venture Fund, Janus Research Fund, Janus Short-Term Bond Fund, and Janus Federal Tax-Exempt Fund; and on January 9, 2006 for Janus Enterprise Fund, Janus Mercury Fund, Janus Olympus Fund, Janus Global Life Sciences Fund, Janus Global Technology Fund, Janus Balanced Fund, Janus Contrarian Fund, Janus Core Equity Fund, Janus Growth and Income Fund, Janus Global Opportunities Fund, Janus Overseas Fund, Janus Worldwide Fund, Janus Flexible Bond Fund, and Janus High-Yield Fund. In approving the proposed Amended Agreements, the Trustees considered the recommendations of an independent compliance consultant engaged by Janus Capital regarding the form of each of those agreements and concluded that the proposed changes were consistent with industry practice and would reflect an appropriate delegation of authority to Janus Capital clarifying its investment discretion over the Funds it manages. In connection with their most recent consideration of the investment advisory agreements for all of the Funds, the Trustees received and reviewed a substantial amount of information provided by Janus Capital and the respective subadvisers for subadvised Funds in response to requests of the Independent Trustees and their counsel. They also received and reviewed a considerable amount of 58 information and analysis provided to the Trustees by an independent fee consultant. Throughout their consideration of the agreements, the Independent Trustees were advised by their independent legal counsel. The Independent Trustees met on two separate occasions with Janus Capital management to consider the agreements, and at each of those meetings they also met separately in executive session with their counsel. Based on their evaluation of the information provided by Janus Capital, subadvisers, the independent fee consultant, Lipper Inc. ("Lipper"), and other information, the Trustees determined that the overall arrangements between the Funds and Janus Capital were fair and reasonable in light of the nature and quality of the services provided by Janus Capital, its affiliates and the subadvisers, the fees charged for those services, and other matters that the Trustees considered relevant in the exercise of their business judgment. In considering the agreements, the Trustees reviewed and analyzed various factors that they determined were relevant, including the factors described below, none of which by itself was considered dispositive. However, the material factors and conclusions that formed the basis for the Trustees' determination to approve the agreements are discussed separately below. NATURE, EXTENT, AND QUALITY OF SERVICES The Trustees reviewed the nature, extent, and quality of the services of Janus Capital and the subadvisers to the Funds, taking into account the investment objective and strategy of each Fund and the knowledge the Trustees gained from their regular meetings with management on at least a quarterly basis. In addition, the Trustees reviewed the resources and key personnel of Janus Capital and each subadviser, especially those who provide investment management services to the Funds. The Trustees also considered other services provided to the Funds by Janus Capital or the subadvisers, such as managing the execution of portfolio transactions and the selection of broker-dealers for those transactions, serving as the Funds' administrator, monitoring adherence to the Funds' investment restrictions, producing shareholder reports, providing support services for the Trustees and Trustee committees, and overseeing the activities of other service providers, including monitoring compliance with various policies and procedures of the Funds and with applicable securities laws and regulations. The Trustees also reviewed the enhanced compliance program of Janus Capital and the actions taken by Janus Capital in response to various legal and regulatory proceedings since the fall of 2003. The Trustees concluded that the nature, extent, and quality of the services provided by Janus Capital and, if applicable, the subadviser to each Fund were 59 appropriate and consistent with the terms of the respective advisory agreements, that the quality of those services had been consistent with or superior to quality norms in the industry, and that the Funds were likely to benefit from the continued provision of those services. They also concluded that Janus Capital and each subadviser had sufficient personnel, with the appropriate education and experience, to serve the Funds effectively and had demonstrated its continuing ability to attract and retain well-qualified personnel. PERFORMANCE OF THE FUNDS The Trustees considered the short-term and longer term performance of each Fund. They reviewed information comparing each Fund's performance with the performance of comparable funds and peer groups identified by Lipper and with the Fund's benchmark index. They concluded that the performance of most Funds was good to very good. Although the performance of some Funds lagged that of their peers for certain periods, they also concluded that Janus Capital had taken appropriate steps to address the under-performance and that the more recent performance of most of those Funds had been improving. COSTS OF SERVICES PROVIDED The Trustees examined information on the fees and expenses of each Fund in comparison to information for other comparable funds as provided by Lipper. They noted that the rate of management (investment advisory and administrative) fees for each Fund, after contractual expense limitations, was below the mean management fee rate of the respective peer group of funds selected by Lipper. The Trustees considered the methodology used by Janus Capital in determining compensation payable to portfolio managers, the very competitive environment for investment management talent and the competitive market for mutual funds in different distribution channels. The Trustees also reviewed Janus Capital's management fees for its separate account clients and for its subadvised funds (for which Janus Capital provides only portfolio management services). Although in most instances subadvisory and separate account fee rates for various investment strategies were lower than management fees for Funds having a similar strategy, the Trustees noted that Janus Capital performs significant additional services for the Funds that it does not provide to those other clients, including administrative services, oversight of the Funds' other service providers, trustee support, regulatory compliance, and numerous other services. Moreover, they noted that the spread between the average fees charged to the Funds and the fees that Janus Capital charged to its separate account clients was significantly smaller than the average spread for 60 such fees of other advisers, based on publicly available data and research conducted by their independent fee consultant. The Trustees also considered the profitability to Janus Capital and its affiliates of their relationships with each Fund and found Janus Capital's profitability not to be unreasonable. Finally, the Trustees considered the financial condition of Janus Capital, which they found to be sound. The Trustees concluded that the management fees and any other compensation payable by each Fund to Janus Capital and its affiliates, as well as the fees paid by Janus Capital or a Fund to the subadvisers of subadvised Funds, were reasonable in relation to the nature and quality of the services provided, taking into account the fees charged by other advisers for managing comparable mutual funds with similar strategies and the fees Janus Capital charges to other clients. The Trustees also concluded that the overall expense ratio of each Fund was reasonable, taking into account the size of the Fund, the quality of services provided by Janus Capital, the investment performance of the Fund, and the expense limitations agreed to by Janus Capital. ECONOMIES OF SCALE The Trustees received and considered information about the potential of Janus Capital to experience economies of scale as the assets of the Funds increase. They noted that, although each Fund (except four Funds that have breakpoints) pays an advisory fee at a fixed rate as a percentage of net assets, without any breakpoints, the management fee paid by each Fund, after any applicable contractual expense limitations, was below the mean management fee rate of the Fund's peer group selected by Lipper. The Trustees also took note that, for those Funds whose expenses are being reduced by the contractual expense limitations of Janus Capital, Janus Capital is subsidizing the Funds because they have not reached adequate scale. Moreover, as the assets of many of the Funds have declined in the past few years, the Funds have benefited from having advisory fee rates that have remained constant rather than fees with breakpoints and higher fee rates at lower asset levels in which the effective fee rate might have increased as assets declined. The Trustees considered certain Amended Agreements that included a change to the advisory fee to reflect a performance-based structure under which the rate of fee would increase or decrease from the current fixed rate if the Fund outperforms or underperforms its benchmark index over a trailing period. Such a fee structure is likely to increase or decrease Janus Capital's economies of scale, depending on whether the effective rate of the fee is increased or decreased. The Trustees also noted that the Funds share 61 directly in economies of scale through lower charges of third-party service providers based on the combined scale of all of the Funds. Based on all of the information they reviewed, the Trustees concluded that the fee structure in each of the advisory agreements was reasonable and that the current rates of fees reflect a sharing between Janus Capital and the Fund of economies of scale at the current asset level of the Fund. OTHER BENEFITS TO THE ADVISER The Trustees also considered benefits that accrue to Janus Capital and its affiliates from their relationship with the Funds. They recognized that affiliates of Janus Capital separately serve the Funds as transfer agent and distributor, respectively. The Trustees also considered Janus Capital's use of commissions paid by most Funds on their portfolio brokerage transactions to obtain proprietary research products and services benefiting the Funds and/or other clients of Janus Capital, as well as Janus Capital's agreement not to use any Fund's portfolio brokerage transactions to obtain third party research through brokers. The Trustees concluded that Janus Capital's use of "soft" commission dollars to obtain proprietary research products and services was consistent with regulatory requirements and was likely to benefit the Funds. The Trustees also concluded that, other than the services provided by Janus Capital and its affiliates pursuant to the agreements and the fees to be paid by each Fund therefore, the Funds and Janus Capital may potentially benefit from their relationship with each other in other ways. They concluded that Janus Capital benefits from the receipt of proprietary research products and services acquired through commissions paid on portfolio transactions of the Funds and that the Funds benefit from Janus Capital's receipt of those products and services, as well as research products and services acquired through commissions paid by other clients of Janus Capital. They further concluded that success of each Fund could attract other business to Janus Capital or its other Funds and that the success of Janus Capital could enhance Janus Capital's ability to serve the Funds. After full consideration of the above factors as well as other factors, the Trustees, including all of the Independent Trustees, concluded that the current Investment Advisory Agreement for each Fund was in the best interest of the Fund and its shareholders. In approving the Amended Agreements, the Independent Trustees also concluded that the Amended Agreement, as proposed, was in the best interest of the Fund and its shareholders. 62 PERFORMANCE-BASED INVESTMENT ADVISORY FEE PROPOSAL APPLIES TO JANUS MERCURY FUND, JANUS CONTRARIAN FUND, JANUS RESEARCH FUND, INTECH RISK-MANAGED STOCK FUND, JANUS MID CAP VALUE FUND, AND JANUS WORLDWIDE FUND On September 20, 2005 and October 19, 2005, the Board of Trustees, including all of the Independent Trustees, voted unanimously to approve an Amended Investment Advisory Agreement for the Fund ("Proposed Agreement") and authorized the submission of the Proposed Agreement to the Fund's shareholders for approval. The Proposed Agreement changed the advisory fee paid by the Fund from a fixed rate to a rate that adjusts upward or downward based upon the Fund's performance relative to a selected benchmark index. Shareholders of the Fund approved the Proposed Agreement at a special meeting of Shareholders held on December 29, 2005 for Janus Research Fund and INTECH Risk-Managed Stock Fund; and on January 9, 2006 for Janus Mercury Fund, Janus Contrarian Fund, Janus Mid Cap Value Fund, and Janus Worldwide Fund. For more than a year the Independent Trustees and their independent fee consultant, in consultation with independent legal counsel to the Independent Trustees, have explored the possibility of modifying the fee structure for certain funds to provide for a performance-based adjustment to the current investment advisory fee rate that would increase or decrease the fee based on whether the Fund's total return performance exceeds or lags a stated relevant benchmark index. The Independent Trustees also worked with Janus Capital to develop a performance structure that was acceptable to Janus Capital. In doing so, the Independent Trustees were seeking to provide a closer alignment of the interests of Janus Capital with those of the Funds and their shareholders. They believe that the fee structure proposed for each Fund will achieve that objective. Included as part of their analysis of the overall performance fee structure, the Trustees, in consultation with their independent fee consultant, considered the appropriate performance range for achieving the maximum and minimum advisory fee that would result in the Performance Adjustment of up to 0.15% (positive or negative) of a Fund's average daily net assets during the applicable performance measurement period. The Trustees reviewed information provided by Janus Capital and prepared by their independent fee consultant with respect to an appropriate deviation of excess/under returns relative to a Fund's benchmark index, taking into consideration expected tracking error of the Fund, expected returns and potential risks and economics involved both for Janus Capital and the Fund's shareholders. The Trustees also reviewed the structure of performance fees applied by other mutual fund complexes. Based on this 63 information, the Trustees determined that a performance range that approximates one standard deviation of excess/under returns relative to a Fund's benchmark index was appropriate for calculating the maximum range (positive or negative) of the Performance Adjustment. As described above, the Performance Adjustment that will be added to or subtracted from the "Base Fee" (as defined in the Proposed Agreement) as a result of a Fund's performance relative to its benchmark index is a variable up to 0.15% of average net assets during the performance measurement period. Importantly, the performance is computed after deducting the Fund's operating expenses (including advisory fees), which means that in order to receive any upward adjustment from the Base Fee, Janus Capital must deliver a total return after expenses that exceeds the return of the benchmark index, which does not incur any expenses. The Trustees determined that the benchmark index specified in each of the Proposed Agreements for purposes of computing the performance fee adjustments is appropriate for the respective Fund based on a number of factors, including the fact that the index is broad-based and is composed of securities of the types in which the Fund may invest. The Trustees believe that divergence between the Fund's performance and performance of the index can be attributed, in part, to the ability of the portfolio manager in making investment decisions within the parameters of the Fund's investment objective and investment policies and restrictions. The Trustees determined that the class of shares of each Fund selected for purposes of calculating the Performance Adjustment as applied to the Fund is the most appropriate class for use in calculating such Fund's Performance Adjustment. In making that determination, the Trustees considered the fee structure and expenses paid by each class of shares, any fees paid to or retained by Janus Capital or its affiliates, as well as the distribution channel for each class of shares. The time periods to be used in determining any Performance Adjustment were also judged to be of appropriate length to ensure proper correlation and to prevent fee adjustments from being based upon random or insignificant differences between the performance of the Fund and of the index. In that regard the Trustees concluded that it would be appropriate for there to be no adjustment from the Base Fee for the first 12 months after the effective date of each Proposed Agreement before implementation of any Performance Adjustment, and that, once implemented, the Performance Adjustment should reflect only the Fund's performance subsequent to that effective date. Moreover, the Trustees believed that, upon reaching the thirty sixth month after the effective 64 date, the performance measurement period would be fully implemented, and that the Performance Adjustment should thereafter be based upon a thirty-six month rolling performance measurement period. In addition to considering the performance fee structure reflected in each Proposed Agreement, in approving each of those agreements, the Trustees followed the process and considered the factors and reached the conclusions described above under "Amendments to Advisory Agreements to Conform to Prevailing Industry Practice." PERFORMANCE-BASED SUB-ADVISORY FEE PROPOSAL APPLIES TO INTECH RISK-MANAGED STOCK FUND On September 20, 2005, the Board of Trustees, including all of the Independent Trustees, voted unanimously to approve amendments to the current Sub-Advisory Agreement ("Proposed Amended Sub-Advisory Agreement") for INTECH Risk-Managed Stock Fund and authorized the submission of the Proposed Amended Sub-Advisory Agreement to the Fund's shareholders for approval. Shareholders of the Fund approved the Proposed Amended Sub-Advisory Agreement at a Special Meeting of Shareholders held on December 29, 2005. The Trustees determined that, if the fees paid by the Fund to Janus Capital are to be performance-based, the fees paid by Janus Capital to INTECH should be determined under a corresponding performance-based fee structure. In approving the proposed performance fee structure for the Proposed Amended Sub-Advisory Agreement, the Trustees considered the factors and reached the conclusions described above under "Performance-Based Advisory Fee Proposal." In addition, in approving the Proposed Amended Sub-Advisory Agreement, the Trustees followed the process and considered the factors and reached the conclusions described above under "Amendments to Advisory Agreements to Conform to Prevailing Industry Practice." ADDITIONAL INFORMATION ABOUT JANUS CAPITAL AND THE SUBADVISERS Janus Capital acts as subadviser for a number of private-label mutual funds and provides separate account advisory services for institutional accounts. Janus Capital may also manage its own proprietary accounts. Investment decisions for each account managed by Janus Capital, including the Funds, are made independently from those for any other account that is or may in the future become managed by Janus Capital or its affiliates. If, however, a number of accounts managed by Janus Capital are contemporaneously engaged in the purchase or sale of the same security, the orders may be aggregated and/or the 65 transactions may be averaged as to price and allocated to each account in accordance with allocation procedures adopted by Janus Capital. Partial fills for the accounts of two or more investment personnel will be allocated pro rata under procedures adopted by Janus Capital. Circumstances may arise under which Janus Capital may determine that, although it may be desirable and/or suitable that a particular security or other investment be purchased or sold for more than one account, there exists a limited supply or demand for the security or other investment. Janus Capital seeks to allocate the opportunity to purchase or sell that security or other investment among accounts on an equitable basis by taking into consideration factors including, but not limited to, size of the portfolio, concentration of holdings, investment objectives and guidelines, purchase costs, and cash availability. Janus Capital, however, cannot assure equality of allocations among all its accounts, nor can it assure that the opportunity to purchase or sell a security or other investment will be proportionally allocated among accounts according to any particular or predetermined standards or criteria. In some cases, these allocation procedures may adversely affect the price paid or received by an account or the size of the position obtained or liquidated for an account. In others, however, the accounts' ability to participate in volume transactions may produce better executions and prices for the accounts. With respect to allocations of initial public offerings ("IPOs"), under IPO allocation procedures adopted by Janus Capital, Janus Capital accounts and Perkins accounts will participate in an IPO if the investment personnel believe the IPO is an appropriate investment based on the account's investment restrictions, risk profile, asset composition, and/or cash levels. These IPO allocation procedures require that each account be assigned to a pre-defined group ("IPO Group"), based on objective criteria set forth in the procedures. Generally, an account may not participate in an IPO unless it is assigned to an IPO Group that correlates with the pre-offering market capitalization ("IPO Classification") of the company. If, however, the investment personnel intend to build a long-term position in the company and purchase securities in both the initial offering and in the immediate aftermarket, then all accounts participating in that IPO will receive IPO shares and any immediate aftermarket shares purchased at a blended price equal to the average price paid for all IPO and immediate aftermarket shares. If there is no immediate aftermarket activity, all shares purchased will be allocated pro rata to the participating accounts, subject to a de minimis exception standard. These IPO allocation procedures may result in certain accounts, particularly larger accounts, receiving fewer IPOs than other accounts, which may impact performance. 66 Janus Capital is permitted to adjust its allocation procedures to eliminate fractional shares or odd lots, and has the discretion to deviate from its allocation procedures in certain circumstances. For example, additional securities may be allocated to the investment personnel who are instrumental in originating or developing an investment opportunity or to comply with the investment personnel's request to ensure that their accounts receive sufficient securities to satisfy specialized investment objectives. Janus Capital manages long and short portfolios. The simultaneous management of long and short portfolios creates potential conflicts of interest including the risk that short sale activity could adversely affect the market value of long positions (and vice versa), the risk arising from sequential orders in long and short positions, and the risks associated with receiving opposing orders at the same time. Janus Capital has adopted procedures that it believes are reasonably designed to mitigate these conflicts. INTECH has adopted its own allocation procedures, which apply to INTECH Risk-Managed Stock Fund. INTECH, the subadviser for INTECH Risk-Managed Stock Fund, generates regular daily trades for all of its clients, including INTECH Risk-Managed Stock Fund, using proprietary trade system software. Before submission for execution, trades are reviewed by the trader for errors or discrepancies. Trades are submitted to designated brokers in a single electronic file at one time during the day, pre-allocated to individual clients. If an order is not completely filled, executed shares are allocated to client accounts in proportion to the order. Perkins, the subadviser for Janus Mid Cap Value Fund and Janus Small Cap Value Fund, may buy and sell securities, or engage in other investments, on behalf of multiple clients, including Janus Mid Cap Value Fund and Janus Small Cap Value Fund. Perkins seeks to allocate trades among its clients on an equitable basis, taking into consideration such factors as the size of the client's portfolio, concentration of holdings, investment objectives and guidelines, purchase costs, and cash availability. Pursuant to an exemptive order granted by the SEC, the Funds and other funds advised by Janus Capital or its affiliates may also transfer daily uninvested cash balances into one or more joint trading accounts. Assets in the joint trading accounts are invested in money market instruments and the proceeds are allocated to the participating funds on a pro rata basis. Each account managed by Janus Capital or the subadvisers has its own investment objective and policies and is managed accordingly by the respective investment personnel. As a result, from time to time, two or more different 67 managed accounts may pursue divergent investment strategies with respect to investments or categories of investments. Janus Capital, INTECH, and Janus Distributors currently have in place Ethics Rules, which are comprised of the Personal Trading Code of Ethics, Gift Policy, Portfolio Holdings Disclosure Policy, and Outside Employment Policy. The Ethics Rules are designed to ensure Janus Capital, INTECH, and Janus Distributors personnel: (i) observe applicable legal (including compliance with applicable federal securities laws) and ethical standards in the performance of their duties; (ii) at all times place the interests of the Fund shareholders first; (iii) disclose all actual or potential conflicts; (iv) adhere to the highest standards of loyalty, candor, and care in all matters relating to the Fund shareholders; (v) conduct all personal trading, including transactions in the Funds and other securities, consistent with the Ethics Rules and in such a manner as to avoid any actual or potential conflict of interest or any abuse of their position of trust and responsibility; and (vi) not use any material nonpublic information in securities trading. The Ethics Rules are on file with and available from the SEC through the SEC website at http://www.sec.gov. Under the Personal Trading Code of Ethics (the "Code of Ethics"), all Janus Capital, INTECH, and Janus Distributors personnel, as well as the Trustees and Officers of the Funds, are required to conduct their personal investment activities in a manner that Janus Capital believes is not detrimental to the Funds. In addition, Janus Capital, INTECH, and Janus Distributors personnel are not permitted to transact in securities held by the Funds for their personal accounts except under circumstances specified in the Code of Ethics. All personnel of Janus Capital, INTECH, Janus Distributors, and the Funds, as well as certain other designated employees deemed to have access to current trading information, are required to pre-clear all transactions in securities not otherwise exempt. Requests for trading authorization will be denied when, among other reasons, the proposed personal transaction would be contrary to the provisions of the Code of Ethics. In addition to the pre-clearance requirement described above, the Code of Ethics subjects such personnel to various trading restrictions and reporting obligations. All reportable transactions are reviewed for compliance with the Code of Ethics and under certain circumstances Janus Capital, INTECH, and Janus Distributors personnel may be required to forfeit their profits made from personal trading. Perkins has adopted its own Code of Ethics, (the "Code"), which Perkins has certified complies with Rule 17j-1 under the 1940 Act. The Code establishes policies and procedures that govern certain types of personal securities transactions by employees of Perkins. Subject to the requirements and 68 restrictions of the Code, individuals are permitted to make personal securities transactions, including transactions in securities that may be purchased or held by the Funds. The Code has provisions that require the employees of Perkins to conduct their personal securities transactions in a manner that does not operate adversely to the interests of the Funds and to avoid serving their own personal interests ahead of the Funds and their shareholders. PROXY VOTING POLICIES AND PROCEDURES Each Fund's Board of Trustees has delegated to Janus Capital or the Fund's subadviser, as applicable, the authority to vote all proxies relating to such Fund's portfolio securities in accordance with Janus Capital's or the applicable subadviser's own policies and procedures. Summaries of Janus Capital's or the applicable subadviser's policies and procedures are available: (i) without charge, upon request, by calling 1-800-525-3713; (ii) on the Funds' website at www.janus.com; and (iii) on the SEC's website at http://www.sec.gov. Each Fund's proxy voting record for the one-year period ending each June 30th is available, free of charge, through www.janus.com and from the SEC through the SEC website at http://www.sec.gov. Janus Capital Management LLC Proxy Voting Summary for Mutual Funds Janus Capital votes proxies in the best interest of its shareholders and without regard to any other Janus Capital relationship (business or otherwise). Janus Capital will not accept direction as to how to vote individual proxies for which it has voting responsibility from any other person or organization (other than the research and information provided by the Proxy Voting Service). PROXY VOTING PROCEDURES Janus Capital has developed proxy voting guidelines (the "Janus Guidelines") that influence how Janus Capital's portfolio managers vote proxies on securities held by the portfolios Janus Capital manages. The Janus Guidelines, which include recommendations on most major corporate issues, have been developed by the Janus Proxy Voting Committee (the "Proxy Voting Committee") in consultation with Janus Capital's portfolio managers and Janus Capital's Chief Investment Officer. In creating proxy voting recommendations, the Proxy Voting Committee analyzes proxy proposals from the prior year and evaluates whether those proposals would adversely affect shareholders' interests. Once the Proxy Voting Committee establishes its recommendations, they are distributed to Janus Capital's portfolio managers and Janus Capital's Chief Investment Officer for input. Once agreed upon, the recommendations are implemented as the Janus 69 Guidelines. Janus Capital's portfolio managers are responsible for proxy votes on securities they own in the portfolios they manage. Most portfolio managers vote consistently with the Janus Guidelines; however, a portfolio manager may choose to vote differently than the Janus Guidelines. Janus Capital has engaged an independent Proxy Voting Service to assist in the voting of proxies. The Proxy Voting Service also provides research and recommendations on proxy issues. The role of the Proxy Voting Committee is to work with Janus Capital's portfolio management and Janus Capital's Chief Investment Officer to develop the Janus Guidelines. The Proxy Voting Committee also serves as a resource to portfolio management with respect to proxy voting and oversees the proxy voting process. The Proxy Voting Committee's oversight responsibilities include monitoring for and resolving material conflicts of interest with respect to proxy voting. Janus Capital believes that application of the Janus Guidelines to vote mutual fund proxies should, in most cases, adequately address any possible conflicts of interest since the Janus Guidelines are pre-determined. However, for proxy votes that are inconsistent with the Janus Guidelines, the Proxy Voting Committee will review the proxy votes in order to determine whether a portfolio manager's voting rationale appears reasonable. If the Proxy Voting Committee does not agree that a portfolio manager's rationale is reasonable, the Proxy Voting Committee will refer the matter to Janus Capital's Chief Investment Officer (or Director of Research). PROXY VOTING POLICIES As discussed above, the Proxy Voting Committee has developed the Janus Guidelines for use in voting proxies. Below is a summary of some of the more significant Janus Guidelines. BOARD OF DIRECTORS ISSUES Janus Capital will generally vote in favor of slates of director candidates that are comprised of a majority of independent directors. Janus Capital will generally vote in favor of proposals to increase the minimum number of independent directors. Janus Capital will generally oppose non-independent directors who serve on the audit, compensation, and/or nominating committees of the board. AUDITOR ISSUES Janus Capital will generally oppose proposals asking for approval of auditors that have a substantial nonaudit relationship with a company. 70 EXECUTIVE COMPENSATION ISSUES Janus Capital reviews executive compensation plans on a case-by-case basis using research provided by the Proxy Voting Service. Janus Capital will generally oppose proposed equity-based compensation plans which contain stock option plans that are excessively dilutive. In addition, Janus Capital will generally oppose proposals regarding the issuance of options with an exercise price below market price and the issuance of reload options (stock option that is automatically granted if an outstanding stock option is exercised during a window period). Janus Capital will also generally oppose proposals regarding the repricing of underwater options. GENERAL CORPORATE ISSUES Janus Capital will generally oppose proposals regarding supermajority voting rights. Janus Capital will generally oppose proposals for different classes of stock with different voting rights. Janus Capital will generally oppose proposals seeking to implement measures designed to prevent or obstruct corporate takeovers. Janus Capital will review proposals relating to mergers, acquisitions, tender offers, and other similar actions on a case-by-case basis. SHAREHOLDER PROPOSALS If a shareholder proposal is specifically addressed by the Janus Guidelines, Janus Capital will generally vote pursuant to that Janus Guideline. Janus Capital will generally abstain from voting shareholder proposals that are moral or ethical in nature or place arbitrary constraints on the board or management of a company. Janus Capital will solicit additional research from its Proxy Voting Service for proposals outside the scope of the Janus Guidelines. A complete copy of Janus Capital's proxy voting policies and procedures, including specific guidelines, is available on www.janus.com. Enhanced Investment Technologies, LLC Proxy Voting Procedures The following are the procedures for INTECH with respect to the voting of proxies on behalf of all clients for which INTECH has been delegated the responsibility for voting proxies and the keeping of records relating to proxy voting. GENERAL POLICY. INTECH's investment process involves buy and sell decisions that are determined solely by a mathematical formula that selects target holdings and weightings without any consideration of the fundamentals of individual companies or other company-specific factors. As such, extensive corporate research analysis is not performed. Accordingly, INTECH has engaged Institu- 71 tional Shareholder Services ("ISS") to vote all proxies on behalf of client accounts in accordance, at the client's discretion, with the ISS or PVS Proxy Voting Guidelines (individually and collectively referred to as "ISS Recommendations"). Concurrent with the adoption of these procedures, INTECH will not accept direction in the voting of proxies for which it has voting responsibility from any person or organization other than the ISS Recommendations. INTECH will only accept direction from a client to vote proxies for the client's account pursuant to the ISS or PVS Proxy Voting Guidelines. DELEGATION OF PROXY VOTING ADMINISTRATION. INTECH has engaged the services of the Investment Accounting Operations Group of Janus Capital to provide the administration for its proxy voting. JANUS INVESTMENT ACCOUNTING OPERATIONS GROUP. The Janus Investment Accounting Operations Group works with the ISS and is responsible to INTECH for ensuring that all proxies are voted consistent with the ISS or PVS Proxy Voting Guidelines. VOTING AND USE OF PROXY VOTING SERVICE. Pursuant to its relationship with Janus Capital, INTECH has engaged ISS, an independent Proxy Voting Service, to assist in the voting of proxies. ISS is responsible for coordinating with the clients' custodians to ensure that all proxy materials received by the custodians relating to the clients' portfolio securities are processed in a timely fashion. ISS is responsible for working with the Janus Investment Accounting Operations Group to coordinate the actual votes cast. In addition, ISS is responsible for maintaining copies of all proxy statements received by issuers and to promptly provide such materials to INTECH or Janus Capital upon request. ISS will process all proxy votes in accordance with the ISS or PVS Proxy Voting Guidelines. Janus Capital has instructed ISS to vote all Janus mutual fund proxies, for which INTECH has voting authority, in accordance with the ISS Guidelines. In absence of specific client direction, INTECH will direct ISS to vote proxies in accordance with PVS Guidelines. CONFLICTS OF INTEREST. INTECH has adopted the following procedures and controls to avoid conflicts of interest that may arise in connection with proxy voting: - ISS shall vote all proxies on INTECH's behalf in accordance with the ISS or PVS Proxy Voting Guidelines. In its capacity as administrator, Janus Capital shall conduct periodic reviews of proxy voting records on a sample basis to ensure that all votes are actually cast in accordance with this policy. - The Janus Investment Accounting Operations Group is not authorized to override any recommendation except upon the receipt of express written 72 authorization from the client directing INTECH to vote in a specified manner. All overrides, other than client overrides, shall be approved by the INTECH Chief Compliance Officer. The Janus Investment Accounting Operations Group shall maintain records of all overrides, including all required authorizations. - Without limiting the foregoing, the Janus Investment Accounting Operations Group shall not give any consideration to the manner in which votes are being cast on behalf of Janus Capital or its affiliates with respect to a particular matter. - Any attempts to influence the proxy voting process shall be reported immediately to the INTECH Chief Compliance Officer. - All client accounts are prohibited from investing in securities of Janus Capital or securities of its publicly traded affiliates. INTECH maintains a Restricted List of securities that may not be purchased on behalf of the individual accounts which includes, among other things, affiliates of such accounts. The trading system is designed to prohibit transactions in all securities on the Restricted List. In light of the foregoing policies, it is not expected that any conflicts will arise in the proxy voting process. In the unusual circumstance that ISS seeks direction on any matter or INTECH is otherwise in a position of evaluating a proposal on a case-by-case basis, the matter shall be referred to the INTECH Chief Compliance Officer to determine whether a material conflict exists. To the extent that a conflict of interest is identified, INTECH will vote the proxy according to the ISS recommendation. REPORTING AND RECORD RETENTION. Upon request, on a quarterly basis, INTECH will provide its clients with the proxy voting record for that client's account. Janus Capital, on INTECH's behalf, retains proxy statements received regarding client securities, records of votes cast on behalf of clients, and records of client requests for proxy voting information. In addition, INTECH will retain copies of its Proxy Voting Procedures and the ISS and PVS Guidelines. Proxy statements received from issuers are either available on the SEC's EDGAR database or are kept by a third party voting service and are available on request. All proxy voting materials and supporting documentation are retained for a minimum of 6 years. REVIEW OF POLICY. INTECH shall periodically review this policy and the services provided by ISS to determine whether the continued use of ISS and the ISS Recommendations is in the best interest of clients. 73 Perkins, Wolf, McDonnell and Company, LLC Proxy Voting Summary for Mutual Funds Perkins votes proxies in the best interest of its shareholders and without regard to any other Perkins relationship (business or otherwise). Perkins will not accept direction as to how to vote individual proxies for which it has voting responsibility from any other person or organization (other than the research and information provided by the Proxy Voting Service). PROXY VOTING PROCEDURES Perkins has developed proxy voting guidelines (the "Perkins Wolf Guidelines") that influence how Perkins portfolio managers vote proxies on securities held by the portfolios Perkins manages. The Perkins Wolf Guidelines, which include recommendations on most major corporate issues, have been developed by the Perkins Wolf Proxy Voting Committee (the "Proxy Voting Committee"). Perkins portfolio managers are responsible for proxy votes on securities they own in the portfolios they manage. Most portfolio managers vote consistently with the Perkins Wolf Guidelines, however, a portfolio manager may choose to vote differently than the Perkins Wolf Guidelines. Perkins has delegated the administration of its proxy voting to Janus Capital. Janus Capital, on Perkins' behalf, has engaged an independent Proxy Voting Service to assist in the voting of proxies. The Proxy Voting Service also provides research and recommendations on proxy issues. The role of the Proxy Voting Committee is to develop the Perkins Wolf Guidelines. The Proxy Voting Committee also serves as a resource to portfolio management with respect to proxy voting and oversees the proxy voting process. The Proxy Voting Committee's oversight responsibilities include monitoring for and resolving material conflicts of interest with respect to proxy voting. Perkins believes that application of the Perkins Wolf Guidelines to vote mutual fund proxies should, in most cases, adequately address any possible conflicts of interest since the Perkins Wolf Guidelines are pre-determined. However, for proxy votes that are inconsistent with the Perkins Wolf Guidelines, the Proxy Voting Committee will review the proxy votes in order to determine whether the portfolio manager's voting rationale appears reasonable. If the Proxy Voting Committee does not agree that the portfolio manager's rationale is reasonable, the Proxy Voting Committee will refer the matter to the Chief Investment Officer (or the Director of Research). 74 PROXY VOTING POLICIES As discussed above, the Proxy Voting Committee has developed the Perkins Wolf Guidelines for use in voting proxies. Below is a summary of some of the more significant Perkins Wolf Guidelines. BOARD OF DIRECTORS ISSUES Perkins will generally vote in favor of slates of director candidates that are comprised of a majority of independent directors. Perkins will generally vote in favor of proposals to increase the minimum number of independent directors. Perkins will generally oppose non-independent directors who serve on the audit, compensation, and/or nominating committees of the board. AUDITOR ISSUES Perkins will generally oppose proposals asking for approval of auditors that have a substantial nonaudit relationship with a company. EXECUTIVE COMPENSATION ISSUES Perkins reviews executive compensation plans on a case-by-case basis using research provided by the Proxy Voting Service. Perkins will generally oppose proposed equity-based compensation plans which contain stock option plans that are excessively dilutive. In addition, Perkins will generally oppose proposals regarding the issuance of options with an exercise price below market price and the issuance of reload options (stock option that is automatically granted if an outstanding stock option is exercised during a window period). GENERAL CORPORATE ISSUES Perkins will generally oppose proposals regarding supermajority voting rights. Perkins will generally oppose proposals for different classes of stock with different voting rights. Perkins will generally oppose proposals seeking to implement measures designed to prevent or obstruct corporate takeovers. Perkins will review proposals relating to mergers, acquisitions, tender offers, and other similar actions on a case-by-case basis. SHAREHOLDER PROPOSALS If a shareholder proposal is specifically addressed by the Perkins Wolf Guidelines, Perkins will generally vote pursuant to that Perkins Wolf Guideline. Perkins will generally abstain from voting shareholder proposals that are moral or ethical in nature or place arbitrary constraints on the board or management of a company. Perkins Wolf will solicit additional research from its Proxy Voting Service for proposals outside the scope of the Perkins Wolf Guidelines. 75 CUSTODIAN, TRANSFER AGENT, AND CERTAIN AFFILIATIONS -------------------------------------------------------------------------------- State Street Bank and Trust Company, P.O. Box 0351, Boston, Massachusetts 02117-0351 is the custodian of the domestic securities and cash of the Funds. State Street is the designated Foreign Custody Manager (as the term is defined in Rule 17f-5 under the 1940 Act) of the Funds' securities and cash held outside the United States. The Funds' Trustees have delegated to State Street certain responsibilities for such assets, as permitted by Rule 17f-5. State Street and the foreign subcustodians selected by it hold the Funds' assets in safekeeping and collect and remit the income thereon, subject to the instructions of each Fund. Janus Services LLC ("Janus Services"), P.O. Box 173375, Denver, Colorado 80217-3375, a wholly-owned subsidiary of Janus Capital, is the Funds' transfer agent. In addition, Janus Services provides certain other administrative, recordkeeping, and shareholder relations services for the Funds. For transfer agency and other services, Janus Services receives an asset-weighted average annual fee based on the proportion of each Fund's total net assets sold directly and the proportion of each Fund's net assets sold through financial intermediaries. The applicable fee rates are 0.16% of net assets on the proportion of assets sold directly and 0.21% on the proportion of assets sold through intermediaries. Janus Services also receives $4 per open shareholder account in each Fund, except Janus Twenty Fund, Janus Venture Fund, Janus Mid Cap Value Fund-Institutional Shares, and Janus Small Cap Value Fund. In addition, the Funds pay DST Systems, Inc. ("DST") license fees at the annual rate of $3.06 per shareholder account for the Equity Funds and $3.98 per shareholder account for the Bond Funds for the use of DST's shareholder accounting system. The Funds also pay DST at an annual rate of $1.10 per closed shareholder account, as well as postage and forms costs that a DST affiliate incurs in mailing Fund shareholder transaction confirmations. For Janus Mid Cap Value Fund and Janus Small Cap Value Fund, due to the differences in the shareholder bases of Investor Shares and Institutional Shares, the transfer agency fee structure is expected to result in different overall transfer agency expenses incurred by each class. By written agreement, Janus Services has agreed until March 1, 2007, to waive the transfer agency fees payable by the Institutional Shares of Janus Mid Cap Value Fund and Janus Small Cap Value Fund so that the total expenses of the Institutional Shares do not exceed the total expenses of the Institutional Shares of Berger Mid Cap Value Fund and Berger Small Cap Value Fund. 76 Transfer Agency fees paid on behalf of Janus Mid Cap Value Fund - Institutional Shares and Janus Small Cap Value Fund - Institutional Shares for the fiscal year ended October 31, 2005, are summarized below.
Fund Name Transfer Agency Fees Transfer Agency Waivers ----------------------------------------------------------------------------------------------- VALUE Janus Mid Cap Value Fund - Institutional $ 956,395 $ 649,551 Shares Janus Small Cap Value Fund - Institutional $2,207,159 $2,207,159(1) Shares
(1) The waiver exceeded the transfer agency fees. Janus Distributors LLC, 151 Detroit Street, Denver, Colorado 80206-4805, a wholly-owned subsidiary of Janus Capital, is the principal underwriter for the Funds. Janus Distributors is registered as a broker-dealer under the Securities Exchange Act of 1934 and is a member of the National Association of Securities Dealers, Inc. Janus Distributors acts as the agent of the Funds in connection with the sale of their shares in all states in which such shares are registered and in which Janus Distributors is qualified as a broker-dealer. Under the Distribution Agreement, Janus Distributors continuously offers each Fund's shares and accepts orders at NAV. No sales charges are paid by investors. Promotional expenses in connection with offers and sales of shares are paid by Janus Capital. The cash-compensation rate at which Janus Distributors pays its registered representatives for sales of institutional products may differ based on a type of fund or a specific trust. The receipt of (or prospect of receiving) compensation described above may provide an incentive for a registered representative to favor sales of funds for which they receive a higher compensation rate. You may wish to consider these arrangements when evaluating any recommendations of registered representatives. Janus Capital periodically monitors sales compensation paid to its registered representatives in order to attempt to identify potential conflicts of interest. 77 PORTFOLIO TRANSACTIONS AND BROKERAGE -------------------------------------------------------------------------------- Janus Capital places all portfolio transactions of the Funds, except for INTECH Risk-Managed Stock Fund. With respect to INTECH Risk-Managed Stock Fund, INTECH places portfolio transactions using its proprietary trade system software. With respect to Janus Mid Cap Value Fund and Janus Small Cap Value Fund, Janus Capital places all portfolio transactions solely upon Perkins' direction. Janus Capital and Perkins have a policy of seeking to obtain the "best execution" of all portfolio transactions (the best net prices under the circumstances based upon a number of factors including and subject to the factors discussed below) provided that Janus Capital and Perkins may occasionally pay higher commissions for research services as described below. The Funds may trade foreign securities in foreign countries because the best available market for these securities is often on foreign exchanges. In transactions on foreign stock exchanges, brokers' commissions are frequently fixed and are often higher than in the United States, where commissions are negotiated. Janus Capital considers a number of factors in seeking best execution in selecting brokers and dealers and in negotiating commissions on agency transactions. In seeking best execution on trades for funds subadvised by Perkins, Janus Capital acts on behalf of and in consultation with Perkins. Those factors include, but are not limited to: Janus Capital's and Perkins' knowledge of currently available negotiated commission rates or prices of securities currently available and other current transaction costs; the nature of the security being traded; the size and type of the transaction; the nature and character of the markets for the security to be purchased or sold; the desired timing of the trade; the activity existing and expected in the market for the particular security; confidentiality, including trade anonymity; liquidity; the quality of the execution, clearance, and settlement services; financial stability of the broker or dealer; the existence of actual or apparent operational problems of any broker or dealer; rebates of commissions by a broker to a Fund or to a third party service provider to the Fund to pay Fund expenses; and the value of research products or services provided by brokers. In recognition of the value of the foregoing factors, Janus Capital may place portfolio transactions with a broker or dealer with whom it has negotiated a commission that is in excess of the commission another broker or dealer would have charged for effecting that transaction if Janus Capital (or Janus Capital acting on behalf of and in consultation with Perkins) determines in good faith that such amount of commission was reasonable in relation to the value of the brokerage, research, and other services provided by such broker or dealer viewed in terms of either that particular transaction or of the overall responsibilities of Janus Capital or Perkins, as applicable. Research may include furnishing advice, either directly or through publications or writings, as to the value of securities, the advisability of purchasing or selling specific securities, 78 and the availability of securities or purchasers or sellers of securities; furnishing seminars, information, analyses, and reports concerning issuers, industries, securities, trading markets and methods, legislative developments, changes in accounting practices, economic factors and trends, and portfolio strategy; access to research analysts, corporate management personnel, industry experts, economists, and government officials; and other research products and services that assist Janus Capital or Perkins, as applicable, in carrying out their responsibilities. Research received from brokers or dealers is supplemental to Janus Capital's and Perkins' own research efforts. Because Janus Capital and Perkins receive a benefit from research they receive from broker-dealers, Janus Capital and Perkins may have an incentive to continue to use those broker-dealers to effect transactions. Janus Capital and Perkins do not consider a broker-dealer's sale of Fund shares when choosing a broker-dealer to effect transactions. For the fiscal year ended October 31, 2005, the total brokerage commissions paid by the Funds to brokers and dealers in transactions identified for execution primarily on the basis of research and other services provided to the Funds are summarized below.
Fund Name Commissions Transactions ------------------------------------------------------------------------------------------- GROWTH Janus Fund $1,555,900 $1,443,632,343 Janus Enterprise Fund $ 36,444 $ 23,985,732 Janus Mercury Fund $ 328,850 $ 226,519,262 Janus Olympus Fund $ 212,458 $ 143,628,979 Janus Orion Fund $ 7,000 $ 3,801,381 Janus Twenty Fund $ 276,478 $ 403,457,239 Janus Venture Fund $ 13,568 $ 4,566,906 SPECIALTY GROWTH Janus Global Life Sciences Fund $ 90,650 $ 88,072,680 Janus Global Technology Fund $ 19,393 $ 8,645,426 CORE Janus Balanced Fund $ 135,630 $ 117,287,301 Janus Contrarian Fund $ 100,629 $ 76,684,650 Janus Core Equity Fund $ 5,510 $ 3,581,674 Janus Growth and Income Fund $ 321,952 $ 285,263,435 VALUE Janus Mid Cap Value Fund $ 593,145 $ 329,063,087 Janus Small Cap Value Fund $ 461,713 $ 165,209,931 INTERNATIONAL & GLOBAL Janus Global Opportunities Fund $ 162 $ 146,814 Janus Overseas Fund $ 16,269 $ 18,579,549 Janus Worldwide Fund $ 256,803 $ 227,127,412
Note: Funds that are not included in the table did not pay any commissions related to research for the stated period. 79 Janus Capital and Perkins do not guarantee any broker the placement of a pre- determined amount of securities transactions in return for the research or brokerage services it provides. Janus Capital and Perkins do, however, have internal procedures for allocating transactions in a manner consistent with their execution policies to brokers that they have identified as providing research, research-related products or services, or execution-related services of a particular benefit to their clients. Brokerage and research products and services furnished by brokers may be used in servicing any or all of the clients of Janus Capital or Perkins and such research may not necessarily be used by Janus Capital or Perkins in connection with the accounts which paid commissions to the broker providing such brokerage and research products and services. Similarly, research and brokerage services earned from equity trades may be used for fixed-income or other clients that normally do not pay brokerage commissions. Perkins may make its own separate arrangements with and maintain internal allocation procedures for allocating transactions to brokers who provide research products and services to encourage them to provide services expected to be useful to Perkins' clients, including Janus Mid Cap Value Fund and Janus Small Cap Value Fund. Janus Capital and Perkins may also use step-out transactions in order to receive research products and related services. In a step-out transaction, Janus Capital or Perkins directs trades to a broker-dealer with the instruction that the broker-dealer execute the transaction, but "step-out" all or a portion of the transaction or commission in favor of another broker-dealer that provides such products and/or services. The second broker-dealer may clear and settle and receive commissions for the stepped-out portion. In a new issue designation, Janus Capital or Perkins directs purchase orders to a broker-dealer that is a selling group member or underwriter of an equity or fixed-income new issue offering. Janus Capital or Perkins directs that broker-dealer to designate a portion of the broker-dealer's commission on the new issue purchase to a second broker- dealer(s) that provides such products and/or services. Given Janus Capital's and Perkins' receipt of such products and services in connection with step-out transactions and new issue designations, Janus Capital and Perkins have an incentive to continue to engage in such transactions; however, Janus Capital and Perkins only intend to utilize step-out transactions and new issue designations when they believe that doing so would help achieve best execution. INTECH has a policy of seeking to obtain best execution (obtaining the most favorable price and efficient execution). INTECH seeks to effect each transaction at a price and commission, if any, that provides the most favorable total cost or proceeds reasonably attainable in the circumstances. INTECH may, however, pay a higher commission than would otherwise be necessary for a particular 80 transaction when, in INTECH's opinion, to do so will further the goal of obtaining the best available execution. Commissions are negotiated with the broker on the basis of the quality and quantity of execution services that the broker provides, in light of generally prevailing commission rates with respect to any securities transactions involving a commission payment. Periodically, reviews are conducted of the allocation among brokers of orders for equity securities and the commissions that were paid. INTECH does not consider research services in selecting brokers. For INTECH Risk-Managed Stock Fund, regular daily trades are generated by INTECH using proprietary trade system software. Before submission for execution, trades are reviewed by the trader for errors or discrepancies. Trades are submitted to designated brokers at one time during the day, to the extent possible, pre-allocated to individual clients. In the event that an order is not completely filled, executed shares are allocated to client accounts in proportion to the order. When the Funds purchase or sell a security in the over-the-counter market, the transaction takes place directly with a principal market-maker, without the use of a broker, except in those circumstances where in the opinion of Janus Capital or the subadviser better prices and executions will be achieved through the use of a broker. 81 The following table lists the total amount of brokerage commissions paid by each Fund for the fiscal years or periods ending on October 31st of each year shown.
Fund Name 2005 2004 2003 --------------------------------------------------------------------------------------------- GROWTH Janus Fund $19,080,866 $10,899,367 $11,107,484 Janus Enterprise Fund $ 1,054,497 $ 1,349,388 $ 1,713,305 Janus Mercury Fund $ 4,024,464 $ 6,141,944 $ 8,890,662 Janus Olympus Fund $ 5,277,667 $ 5,165,131 $ 4,666,433 Janus Orion Fund $ 1,028,489 $ 982,716 $ 976,633 Janus Triton Fund $ 50,283(1) $ -- $ -- Janus Twenty Fund $ 5,483,852 $ 3,518,479 $ 8,737,644 Janus Venture Fund $ 2,243,832 $ 2,460,168 $ 2,691,820 SPECIALTY GROWTH Janus Global Life Sciences Fund $ 1,846,934 $ 2,414,542 $ 4,491,853 Janus Global Technology Fund $ 1,487,767 $ 1,616,996 $ 2,166,710 CORE Janus Balanced Fund $ 1,432,847 $ 2,913,667 $ 4,042,300 Janus Contrarian Fund $ 2,902,293 $ 3,242,196 $ 3,836,124 Janus Core Equity Fund $ 887,329 $ 890,152 $ 1,324,629 Janus Growth and Income Fund $ 4,005,977 $ 6,087,632 $ 6,078,554 Janus Research Fund $ 66,080(1) $ -- $ -- RISK-MANAGED INTECH Risk-Managed Stock Fund(2) $ 274,228 $ 125,130 $ 57,905(3) VALUE Janus Mid Cap Value Fund $ 9,052,306 $ 8,517,971 $ 3,484,851 Janus Small Cap Value Fund $ 4,553,152 $ 6,808,976 $ 5,517,841 INTERNATIONAL & GLOBAL Janus Global Opportunities Fund $ 239,905 $ 205,663 $ 200,420 Janus Overseas Fund $ 4,969,340 $ 5,768,783 $12,190,106 Janus Worldwide Fund $ 7,943,862 $37,095,464 $41,907,461 BOND Janus Flexible Bond Fund $ 5,738 $ 4,166 $ 9,408 Janus High-Yield Fund $ 7,836 $ 42,935 $ 14,578 Janus Short-Term Bond Fund $ -- $ -- $ -- Janus Federal Tax-Exempt Fund $ -- $ -- $ 2,504
(1) February 25, 2005 (inception) to October 31, 2005. (2) Formerly named Janus Risk-Managed Stock Fund. (3) February 28, 2003 (inception) to October 31, 2003. Brokerage commissions paid by a Fund may vary significantly from year to year because of portfolio turnover rates, shareholder purchase/redemption activity, varying market conditions, changes to investment strategies or processes, and other factors. 82 Included in such brokerage commissions are the following amounts paid to DST Securities, Inc. ("DSTS"), a wholly-owned broker-dealer subsidiary of DST. DST was an affiliate of JCGI prior to June 16, 2004. The following amounts served to reduce each Fund's out-of-pocket expenses through the use of credits against the charges of DST and its affiliates. Information is not shown for the fiscal year ended October 31, 2005 because DST was not considered an "affiliate" of the Funds during this period.
Commission Paid Commission Paid through DSTS for Reduction through DSTS for Reduction the Period Ended of the Period Ended of Fund Name October 31, 2004 Expenses(1) October 31, 2003 Expenses(1) ---------------------------------------------------------------------------------------------------------------- GROWTH Janus Fund $ -- $ -- $ 56,202 $ 42,162 Janus Enterprise Fund $ -- $ -- $ 3,844 $ 2,884 Janus Mercury Fund $ 22,505 $ 16,883 $145,246 $108,962 Janus Olympus Fund $ 9,169 $ 6,878 $ 18,453 $ 13,843 Janus Orion Fund $ -- $ -- $ 6,000 $ 4,501 Janus Twenty Fund $ -- $ -- $ 19,206 $ 14,408 SPECIALTY GROWTH Janus Global Life Sciences Fund $ -- $ -- $ 40,200 $ 30,158 Janus Global Technology Fund $ 6,266 $ 4,701 $ 4,215 $ 3,162 CORE Janus Balanced Fund $ 6,000 $ 4,501 $ 64,655 $ 48,503 Janus Contrarian Fund $ 5,800 $ 4,351 $ 26,526 $ 19,899 Janus Core Equity Fund $ -- $ -- $ 13,394 $ 10,048 Janus Growth and Income Fund $ 12,000 $ 9,002 $108,981 $ 81,756 INTERNATIONAL & GLOBAL Janus Global Opportunities Fund $ -- $ -- $ 464 $ 348 Janus Overseas Fund $ -- $ -- $ 13,600 $ 10,203 Janus Worldwide Fund $ 33,215 $ 24,917 $143,086 $107,341
(1) The difference between commissions paid through DSTS and expenses reduced constitute commissions paid to an unaffiliated clearing broker. Note: Funds that did not execute trades with DSTS during the periods indicated are not included in the table. 83 As of October 31, 2005, certain Funds owned securities of their regular broker-dealers (or parents), as shown below.
Name of Value of Fund Name Broker-Dealer Securities Owned ---------------------------------------------------------------------------------------- GROWTH Janus Fund Citigroup Global Markets, Inc. $108,200,000 Merrill Lynch & Company, Inc. 77,973,827 Morgan Stanley Co. 39,079,438 UBS A.G. 51,155,270 Janus Enterprise Fund Bear Stearns & Company, Inc. $ 24,100,000 Janus Mercury Fund Citigroup, Inc. $ 33,419,308 Goldman Sachs Group, Inc. 50,581,488 JP Morgan Chase & Co. 146,445,027 Janus Olympus Fund Citigroup, Inc. $ 27,885,971 UBS A.G. 19,214,963 Janus Orion Fund Bear Stearns & Company, Inc. $ 6,300,000 Janus Triton Fund Bear Stearns & Company, Inc. $ 3,600,000 Janus Twenty Fund Goldman Sachs Group, Inc. $209,191,003 Citigroup Global Markets, Inc. 41,100,000 SPECIALTY GROWTH Janus Global Life Sciences Fund Bear Stearns & Company, Inc. $ 4,400,000 Janus Global Technology Fund Bear Stearns & Company, Inc. 13,400,000 CORE Janus Balanced Fund Bank of America Corp. $ 18,553,415 Citigroup, Inc. 3,423,978 Citigroup, Inc. 10,322,685 Credit Suisse First Boston USA, Inc. 9,100,059 JP Morgan Chase & Co. 53,409,538 JP Morgan Chase & Co. 7,314,865 Merrill Lynch & Company, Inc. 76,182,147 Janus Contrarian Fund Bear Stearns & Company, Inc. $ 6,800,000 JP Morgan Chase & Co. 69,343,632 Janus Core Equity Fund Bear Stearns & Company, Inc. $ 23,400,000 Citigroup, Inc. 18,234,403 JP Morgan Chase & Co. 20,282,903 Merrill Lynch & Company, Inc. 25,861,040 Janus Growth and Income Fund Citigroup, Inc. $150,158,858 Goldman Sachs Group, Inc. 127,175,544 JP Morgan Chase & Co. 107,708,575 Lehman Brothers Holdings, Inc. 46,345,370 Merrill Lynch & Company, Inc. 73,252,260 Morgan Stanley Co. 70,075,183
84
Name of Value of Fund Name Broker-Dealer Securities Owned ---------------------------------------------------------------------------------------- Janus Research Fund Bear Stearns & Company, Inc. $ 700,000 Citigroup, Inc. 653,281 JP Morgan Chase & Co. 671,793 Merrill Lynch & Company, Inc. 645,458 UBS A.G. 657,841 RISK-MANAGED INTECH Risk-Managed Stock Fund(1) Bank of America Corp. $ 3,797,770 Bear Stearns & Company, Inc. 14,800,000 Bear Stearns Companies, Inc. 190,440 Citigroup, Inc. 2,485,854 Goldman Sachs Group, Inc. 2,325,208 Lehman Brothers Holdings, Inc. 2,584,872 Merrill Lynch & Company, Inc. 420,810 Morgan Stanley Co. 516,895 VALUE Janus Small Cap Value Fund Bear Stearns & Company, Inc. $ 55,000,000 INTERNATIONAL & GLOBAL Janus Global Opportunities Fund Bear Stearns & Company, Inc. $ 1,900,000 JP Morgan Chase & Co. 9,249,113 Janus Worldwide Fund Citigroup, Inc. $ 76,421,012 JP Morgan Chase & Co. 223,396,208 UBS A.G. 69,792,779 BOND Janus Flexible Bond Fund Bear Stearns & Company, Inc. $ 12,900,000 Goldman Sachs Group, Inc. 1,853,125 Janus High-Yield Fund Bear Stearns & Company, Inc. $ 28,900,000 Janus Short-Term Bond Fund Citigroup, Inc. $ 4,495,824 Lehman Brothers Holdings, Inc. 1,317,017 Morgan Stanley Co. 2,156,010
(1) Formerly named Janus Risk-Managed Stock Fund. 85 TRUSTEES AND OFFICERS -------------------------------------------------------------------------------- The following are the Trustees and officers of the Trust, together with a brief description of their principal occupations during the last five years (principal occupations for certain Trustees may include periods over five years). Each Trustee has served in that capacity since he or she was originally elected or appointed. The Trustees do not serve a specified term of office. Each Trustee will hold office until the termination of the Trust or his or her earlier death, resignation, retirement, incapacity, or removal. The retirement age for Trustees is 72. The Funds' Nominating and Governance Committee will consider nominees for the position of Trustee recommended by shareholders. Shareholders may submit the name of a candidate for consideration by the Committee by submitting their recommendations to the Trust's Secretary. Each Trustee is currently a Trustee of two other registered investment companies advised by Janus Capital: Janus Aspen Series and Janus Adviser Series. As of the date of this SAI, collectively, the three registered investment companies consist of 69 series or funds. In April 2003, the Trustees established an Advisory Board to provide the Trustees with advice regarding certain Janus funds that, in connection with the reorganization of the Berger family of funds into the Janus funds, received assets from the Berger funds. The Advisory Board was designated by a majority vote of the Trustees and served a two-year term, which ended March 2005. The Trust's officers are elected annually by the Trustees for a one-year term. Each portfolio manager also manages other Janus Capital accounts. Certain officers also serve as officers of Janus Aspen Series and Janus Adviser Series. 86
------------------------------------------------------------------------------------------------------------------------ TRUSTEES ------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS/ FUNDS IN FUND NAME, AGE AS OF COMPLEX OTHER DECEMBER 31, 2005, POSITIONS HELD LENGTH OF TIME PRINCIPAL OCCUPATIONS DURING OVERSEEN BY DIRECTORSHIPS AND ADDRESS WITH FUNDS SERVED THE PAST FIVE YEARS TRUSTEE HELD BY TRUSTEE ------------------------------------------------------------------------------------------------------------------------ INDEPENDENT TRUSTEES* ------------------------------------------------------------------------------------------------------------------------ Dennis B. Mullen Chairman 3/04-Present Chief Executive Officer of Red 69** Chairman of the 151 Detroit Street Robin Gourmet Burgers, Inc. Board (since Denver, CO 80206 Trustee 2/71-Present (since 2005). Formerly, 2005) and Age 62 private investor. Director of Red Robin Gourmet Burgers, Inc.; and Director of Janus World Funds Plc (Dublin-based, non-U.S. funds). ------------------------------------------------------------------------------------------------------------------------ Jerome S. Contro Trustee 11/05-Present Partner of Tango Group, a 69 Trustee and 151 Detroit Street private investment firm (since Chairman of RS Denver, CO 80206 1999). Investment Age 49 Trust (since 2001); Director of IZZE Beverages and MyFamily.com, Inc. (genealogical research website). ------------------------------------------------------------------------------------------------------------------------ William F. McCalpin Trustee 6/02-Present Executive Vice President and 69 Trustee of 151 Detroit Street Chief Operating Officer of The Asian Cultural Denver, CO 80206 Rockefeller Brothers Fund (a Council. Age 48 private family foundation); and Vice President of Asian Cultural Council. ------------------------------------------------------------------------------------------------------------------------
* All current Trustees of the Trust (Messrs. Mullen, McCalpin, McCarter, Rothe, Stewart, Waldinger, and Bailey) were elected as Trustees of the Trust at a Special Meeting of Shareholders on November 22, 2005. In addition, at this Special Meeting, shareholders elected two new Trustees, Mr. Contro and Ms. Wolf. ** Mr. Mullen also serves as director of Janus World Funds Plc ("JWF"), consisting of 21 funds. Including JWF and the 69 funds comprising the Janus Funds, Mr. Mullen oversees 90 funds. 87
------------------------------------------------------------------------------------------------------------------------ TRUSTEES ------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS/ FUNDS IN FUND NAME, AGE AS OF COMPLEX OTHER DECEMBER 31, 2005, POSITIONS HELD LENGTH OF TIME PRINCIPAL OCCUPATIONS DURING OVERSEEN BY DIRECTORSHIPS AND ADDRESS WITH FUNDS SERVED THE PAST FIVE YEARS TRUSTEE HELD BY TRUSTEE ------------------------------------------------------------------------------------------------------------------------ INDEPENDENT TRUSTEES* (CONT'D.) ------------------------------------------------------------------------------------------------------------------------ John W. McCarter, Trustee 6/02-Present President and Chief Executive 69 Chairman of the Jr. Officer of The Field Museum of Board and 151 Detroit Street Natural History (Chicago, IL). Director of Denver, CO 80206 Divergence Inc. Age 67 (biotechnology firm); Director of W.W. Grainger, Inc. (industrial distributor); and Trustee of Harris Insight Funds Trust (19 portfolios), WTTW (Chicago public television station) and the University of Chicago. ------------------------------------------------------------------------------------------------------------------------ James T. Rothe Trustee 1/97-Present Co-founder and Managing 69 Director of Red 151 Detroit Street Director of Roaring Fork Robin Gourmet Denver, CO 80206 Capital Management, LLC Burgers, Inc. Age 62 (private investment in public equity firm); and Professor Emeritus of Business of the University of Colorado, Colorado Springs, CO (since 2004). Formerly, Professor of Business of the University of Colorado (2002-2004); and Distinguished Visiting Professor of Business (2001- 2002) of Thunderbird (American Graduate School of International Management), Glendale, AZ. ------------------------------------------------------------------------------------------------------------------------ William D. Stewart Trustee 6/84-Present Corporate Vice President and 69 N/A 151 Detroit Street General Manager of MKS Denver, CO 80206 Instruments - HPS Products, Age 61 Boulder, CO (a manufacturer of vacuum fittings and valves). ------------------------------------------------------------------------------------------------------------------------
* All current Trustees of the Trust (Messrs. Mullen, McCalpin, McCarter, Rothe, Stewart, Waldinger, and Bailey) were elected as Trustees of the Trust at a Special Meeting of Shareholders on November 22, 2005. In addition, at this Special Meeting, shareholders elected two new Trustees, Mr. Contro and Ms. Wolf. 88
------------------------------------------------------------------------------------------------------------------------ TRUSTEES ------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS/ FUNDS IN FUND NAME, AGE AS OF COMPLEX OTHER DECEMBER 31, 2005, POSITIONS HELD LENGTH OF TIME PRINCIPAL OCCUPATIONS DURING OVERSEEN BY DIRECTORSHIPS AND ADDRESS WITH FUNDS SERVED THE PAST FIVE YEARS TRUSTEE HELD BY TRUSTEE ------------------------------------------------------------------------------------------------------------------------ INDEPENDENT TRUSTEES* (CONT'D.) ------------------------------------------------------------------------------------------------------------------------ Martin H. Waldinger Trustee 8/69-Present Private Investor and 69 N/A 151 Detroit Street Consultant to California Denver, CO 80206 Planned Unit Developments. Age 67 Formerly, CEO and President of Marwal, Inc. (homeowner association management company). ------------------------------------------------------------------------------------------------------------------------ Linda S. Wolf Trustee 11/05-Present Retired. Formerly, Chairman 69 Director of 151 Detroit Street and Chief Executive Officer of Wal-Mart, The Denver, CO 80206 Leo Burnett (Worldwide) Field Museum of Age 58 (advertising agency) (2001- Natural History 2005); and President of Leo (Chicago, IL), Burnett (USA) (advertising Children's agency) (1996-2000). Memorial Hospital (Chicago, IL), Chicago Council on Foreign Relations, and Economic Club of Chicago. ------------------------------------------------------------------------------------------------------------------------ INTERESTED TRUSTEE* ------------------------------------------------------------------------------------------------------------------------ Thomas H. Bailey** Trustee 6/69-Present Retired. Formerly, President 69 N/A 151 Detroit Street (1978-2002) and Chief Denver, CO 80206 Executive Officer (1994- 2002) Age 68 of Janus Capital or Janus Capital Corporation; Chairman and Director (1978-2002) of Janus Capital Corporation; President and Director (1994-2002) of The Janus Foundation; and Director (1997-2001) of Janus Distributors, Inc. ------------------------------------------------------------------------------------------------------------------------
* All current Trustees of the Trust (Messrs. Mullen, McCalpin, McCarter, Rothe, Stewart, Waldinger, and Bailey) were elected as Trustees of the Trust at a Special Meeting of Shareholders on November 22, 2005. In addition, at this Special Meeting, shareholders elected two new Trustees, Mr. Contro and Ms. Wolf. ** The Funds are treating Mr. Bailey as an "interested person" of the Trust by virtue of his past positions and continuing relationships with Janus Capital and ownership of shares of Janus Capital's parent company. 89
---------------------------------------------------------------------------------------------------------------- OFFICERS ---------------------------------------------------------------------------------------------------------------- TERM OF NAME, AGE AS OF OFFICE* AND DECEMBER 31, 2005, POSITIONS HELD WITH LENGTH OF PRINCIPAL OCCUPATIONS DURING THE PAST FIVE AND ADDRESS FUNDS TIME SERVED YEARS ---------------------------------------------------------------------------------------------------------------- William Bales Executive Vice President 2/97-Present Vice President of Janus Capital and 151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus accounts. Denver, CO 80206 Janus Venture Fund Age 37 ---------------------------------------------------------------------------------------------------------------- Jonathan D. Coleman Executive Vice President 2/02-Present Vice President of Janus Capital and 151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus accounts. Denver, CO 80206 Janus Enterprise Fund Formerly, Analyst (1994-1997 and 2000-2002) Age 34 for Janus Capital Corporation. ---------------------------------------------------------------------------------------------------------------- David J. Corkins Executive Vice President 2/06-Present Vice President of Janus Capital and 151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus accounts. Denver, CO 80206 Janus Fund Formerly, Portfolio Manager (2003-2006) for Age 39 Janus Mercury Fund, and Portfolio Manager (1997-2003) for Janus Growth and Income Fund. ---------------------------------------------------------------------------------------------------------------- David C. Decker Executive Vice President 9/96-Present Vice President of Janus Capital and 151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus accounts. Denver, CO 80206 Janus Contrarian Fund Age 39 ---------------------------------------------------------------------------------------------------------------- James P. Goff Executive Vice President 2/06-Present Vice President and Director of Research of 151 Detroit Street Janus Mercury Fund 2/05-Present Janus Capital. Formerly, Portfolio Manager Denver, CO 80206 Janus Research Fund (1992-2002) for Janus Enterprise Fund. Age 41 ---------------------------------------------------------------------------------------------------------------- Gregory R. Kolb Executive Vice President 5/05-Present Vice President of Janus Capital and 151 Detroit Street and Co-Portfolio Manager Assistant Portfolio Manager for other Janus Denver, CO 80206 Janus Global accounts. Formerly, Analyst (2001-2005) for Age 29 Opportunities Fund Janus Capital Corporation. ---------------------------------------------------------------------------------------------------------------- Brent A. Lynn Executive Vice President 1/01-Present Vice President of Janus Capital and 151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus accounts. Denver, CO 80206 Janus Overseas Fund Formerly, Analyst (1991-2001) for Janus Age 41 Capital Corporation. ---------------------------------------------------------------------------------------------------------------- Thomas R. Malley Executive Vice President 11/98-Present Vice President of Janus Capital and 151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus accounts. Denver, CO 80206 Janus Global Life Age 37 Sciences Fund ---------------------------------------------------------------------------------------------------------------- Douglas E. Nelson Executive Vice President 2/05-Present Vice President of Janus Capital. Formerly, 151 Detroit Street and Portfolio Manager Vice President of Public Finance Denver, CO 80206 Janus Federal Tax-Exempt (2003-2005) for George K. Baum & Co.; and Age 46 Fund Credit Analyst and Assistant Vice President (1996-2003) for Delaware Management. ---------------------------------------------------------------------------------------------------------------- Marc Pinto Executive Vice President 5/05-Present Vice President of Janus Capital and 151 Detroit Street and Co-Portfolio Manager Portfolio Manager for other Janus accounts. Denver, CO 80206 Janus Balanced Fund Age 44 ----------------------------------------------------------------------------------------------------------------
* Officers are elected annually by the Trustees for a one-year term and may also be elected from time to time by the Trustees for an interim period. 90 -------------------------------------------------------------------------------------------------------------- OFFICERS -------------------------------------------------------------------------------------------------------------- TERM OF NAME, AGE AS OF OFFICE* AND DECEMBER 31, 2005, LENGTH OF PRINCIPAL OCCUPATIONS DURING THE PAST AND ADDRESS POSITIONS HELD WITH FUNDS TIME SERVED FIVE YEARS -------------------------------------------------------------------------------------------------------------- Blaine P. Rollins Executive Vice President 2/06-Present Vice President of Janus Capital and 151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus Denver, CO 80206 Janus Triton Fund accounts. Formerly, Portfolio Manager Age 38 (2000-2006) for Janus Fund. -------------------------------------------------------------------------------------------------------------- Ron Sachs Executive Vice President 4/00-Present Vice President of Janus Capital and 151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus Denver, CO 80206 Janus Orion Fund accounts. Formerly, Portfolio Manager Age 38 (2005-2006) for Janus Triton Fund. -------------------------------------------------------------------------------------------------------------- Scott W. Schoelzel Executive Vice President 8/97-Present Vice President of Janus Capital and 151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus Denver, CO 80206 Janus Twenty Fund accounts. Age 47 -------------------------------------------------------------------------------------------------------------- Gibson Smith Executive Vice President 7/03-Present Vice President of Janus Capital and 151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus Denver, CO 80206 Janus High-Yield Fund and accounts. Formerly, Analyst (2001-2003) Age 37 Janus Short-Term Bond for Janus Capital Corporation; and Fund worked in the fixed-income division (1991-2001) for Morgan Stanley. Executive Vice President 5/05-Present and Co-Portfolio Manager Janus Balanced Fund -------------------------------------------------------------------------------------------------------------- Minyoung Sohn Executive Vice President 5/05-Present Vice President of Janus Capital and 151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus Denver, CO 80206 Janus Core Equity Fund accounts. Formerly, Analyst (1998-2003) Age 30 for Janus Capital Corporation. Executive Vice President 1/04-Present and Portfolio Manager Janus Growth and Income Fund -------------------------------------------------------------------------------------------------------------- Ronald V. Speaker Executive Vice President 7/92-Present Vice President of Janus Capital and 151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus Denver, CO 80206 Janus Flexible Bond Fund accounts. Age 41 -------------------------------------------------------------------------------------------------------------- Jason P. Yee Executive Vice President 7/04-Present Vice President of Janus Capital and 151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus Denver, CO 80206 Janus Worldwide Fund accounts. Formerly, Analyst (2000-2001) Age 36 for Janus Capital Corporation. Executive Vice President 3/01-Present and Co-Portfolio Manager Janus Global Opportunities Fund -------------------------------------------------------------------------------------------------------------- Claire Young Executive Vice President 8/97-Present Vice President of Janus Capital and 151 Detroit Street and Portfolio Manager Portfolio Manager for other Janus Denver, CO 80206 Janus Olympus Fund accounts. Age 40 --------------------------------------------------------------------------------------------------------------
* Officers are elected annually by the Trustees for a one-year term and may also be elected from time to time by the Trustees for an interim period. 91
------------------------------------------------------------------------------------------------------------- OFFICERS ------------------------------------------------------------------------------------------------------------- TERM OF NAME, AGE AS OF OFFICE* AND DECEMBER 31, 2005, LENGTH OF PRINCIPAL OCCUPATIONS DURING THE PAST FIVE AND ADDRESS POSITIONS HELD WITH FUNDS TIME SERVED YEARS ------------------------------------------------------------------------------------------------------------- Stephanie Chief Legal Counsel and 1/06-Present Associate Counsel of Janus Capital. Grauerholz-Lofton Secretary Formerly, Associate of Vedder, Price, 151 Detroit Street Kaufman & Kammholz, P.C. (1999-2003). Denver, CO 80206 Age 35 ------------------------------------------------------------------------------------------------------------- Kelley Abbott Howes President and Chief 1/06-Present Senior Vice President and General Counsel 151 Detroit Street Executive Officer of Janus Capital and Janus Services LLC; Denver, CO 80206 and Senior Vice President and Assistant Age 40 General Counsel of Janus Distributors LLC. Formerly, Vice President (1999-2005) of Janus Distributors LLC; Vice President (2000-2004) and Assistant General Counsel (2002-2004) of Janus Services LLC; and Vice President and Assistant General Counsel (1999-2004) of Janus Capital. ------------------------------------------------------------------------------------------------------------- David R. Kowalski Vice President and Chief 6/02-Present Senior Vice President and Chief Compliance 151 Detroit Street Compliance Officer Officer of Janus Capital, Janus Denver, CO 80206 Distributors LLC, and Janus Services LLC; Age 48 Chief Compliance Officer of Bay Isle Financial LLC; and Vice President of Enhanced Investment Technologies, LLC. Formerly, Chief Compliance Officer of Enhanced Investment Technologies, LLC (2003-2005); Vice President of Janus Capital (2000-2005), Janus Distributors LLC (2000-2001), and Janus Services LLC (2004-2005); and Assistant Vice President of Janus Services LLC (2000-2004). ------------------------------------------------------------------------------------------------------------- Jesper Nergaard Chief Financial Officer 3/05-Present Vice President of Janus Capital. Formerly, 151 Detroit Street Director of Financial Reporting for Denver, CO 80206 Vice President, 2/05-Present OppenheimerFunds, Inc. (2004-2005); Site Age 43 Treasurer, and Principal Manager and First Vice President of Mellon Accounting Officer Global Securities Services (2003); and Director of Fund Accounting, Project Development, and Training of INVESCO Funds Group (1994-2003). -------------------------------------------------------------------------------------------------------------
* Officers are elected annually by the Trustees for a one-year term and may also be elected from time to time by the Trustees for an interim period. 92 The Trustees are responsible for major decisions relating to the establishment or change of each Fund's objective(s), policies, and techniques. The Trustees also supervise the operation of the Funds by their officers and review the investment decisions of the officers, although the Trustees do not actively participate on a regular basis in making such decisions. The Board of Trustees has seven standing committees that each perform specialized functions: an Audit Committee, Brokerage Committee, Investment Oversight Committee, Legal and Regulatory Committee, Money Market Committee, Nominating and Governance Committee, and Pricing Committee. Each committee is comprised entirely of Independent Trustees. Information about each committee's functions is provided in the following table.
-------------------------------------------------------------------------------------------- NUMBER OF MEETINGS HELD MEMBERS DURING LAST FUNCTIONS (INDEPENDENT TRUSTEES) FISCAL YEAR -------------------------------------------------------------------------------------------- AUDIT Reviews the financial reporting John W. McCarter, Jr. 4 COMMITTEE process, the system of internal (Chairman) controls over financial reporting, Dennis B. Mullen disclosure controls and procedures, William D. Stewart Form N-CSR filings, and the audit process. The Committee's review of the audit process includes, among other things, the appointment, compensation, and oversight of the auditors and pre-approval of all audit and nonaudit services. -------------------------------------------------------------------------------------------- BROKERAGE Reviews and makes recommendations James T. Rothe 5 COMMITTEE regarding matters related to the (Chairman) Trust's use of brokerage commissions William F. McCalpin and placement of portfolio Dennis B. Mullen transactions. -------------------------------------------------------------------------------------------- INVESTMENT Oversees the investment activities of Dennis B. Mullen 6 OVERSIGHT the Trust's non-money market Funds. (Chairman) COMMITTEE Jerome S. Contro(1) William F. McCalpin John W. McCarter, Jr. James T. Rothe William D. Stewart Martin H. Waldinger Linda S. Wolf (1) -------------------------------------------------------------------------------------------- LEGAL AND Oversees compliance with various William F. McCalpin 4 REGULATORY procedures adopted by the Trust, (Chairman) COMMITTEE reviews registration statements on William D. Stewart Form N-1A, oversees the implementation Martin H. Waldinger and administration of the Trust's Proxy Voting Guidelines. --------------------------------------------------------------------------------------------
93
-------------------------------------------------------------------------------------------- NUMBER OF MEETINGS HELD MEMBERS DURING LAST FUNCTIONS (INDEPENDENT TRUSTEES) FISCAL YEAR -------------------------------------------------------------------------------------------- MONEY Reviews various matters related to the Martin H. Waldinger 4 MARKET operations of the Janus Money Market (Chairman) COMMITTEE Funds, including compliance with their William F. McCalpin Money Market Fund Procedures. James T. Rothe -------------------------------------------------------------------------------------------- NOMINATING Identifies and recommends individuals Dennis B. Mullen 5 AND for election as Trustee, consults with (Chairman) GOVERNANCE Management in planning Trustee John W. McCarter, Jr. COMMITTEE meetings, and oversees the William D. Stewart administration of, and ensures compliance with, the Trust's Governance Procedures and Guidelines. -------------------------------------------------------------------------------------------- PRICING Determines a fair value of securities William D. Stewart 15 COMMITTEE for which market quotations are not (Chairman) readily available or are deemed not to James T. Rothe be reliable, pursuant to procedures Martin H. Waldinger adopted by the Trustees. --------------------------------------------------------------------------------------------
(1) Mr. Contro and Ms. Wolf became members of the Investment Oversight Committee on November 22, 2005, when they were elected Trustees of the Trust. 94 Under the Trust's Governance Procedures and Guidelines, the Trustees are expected to invest in one or more (but not necessarily all) funds of the Trust for which they serve as Trustees (which, effective January 1, 2006, shall include amounts held under a deferred fee agreement that are valued based on "shadow investments" in such funds), to the extent they are directly eligible to do so. Such investments, including the amount and which funds, are dictated by each Trustee's individual financial circumstances and investment goals. The table below gives the dollar range of shares of the Funds that the Trustees own and which are described in this SAI, as well as the aggregate dollar range of shares of all funds advised by Janus Capital and overseen by the Trustees (collectively, the "Janus Funds"), owned by each Trustee as of December 31, 2005.
------------------------------------------------------------------------------------------------------- AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES IN ALL REGISTERED INVESTMENT COMPANIES OVERSEEN BY TRUSTEE IN NAME OF TRUSTEE DOLLAR RANGE OF EQUITY SECURITIES IN THE FUNDS JANUS FUNDS ------------------------------------------------------------------------------------------------------- INDEPENDENT TRUSTEES ------------------------------------------------------------------------------------------------------- DENNIS B. MULLEN Janus Enterprise Fund over $100,000 over $100,000 Janus Mercury Fund over $100,000 Janus Olympus Fund over $100,000 Janus Triton Fund over $100,000 Janus Global Life Sciences Fund over $100,000 Janus Global Technology Fund over $100,000 Janus Research Fund over $100,000 Janus Contrarian Fund over $100,000 Janus Global Opportunities Fund over $100,000 Janus Overseas Fund $50,001 - $100,000 ------------------------------------------------------------------------------------------------------- JEROME S. CONTRO Janus Core Equity Fund $50,001 - $100,000 over $100,000 Janus Mid Cap Value Fund $50,001 - $100,000 ------------------------------------------------------------------------------------------------------- WILLIAM F. MCCALPIN Janus Enterprise Fund $10,001 - $50,000 over $100,000 Janus Global Life Sciences Fund $1 - $10,000 Janus Global Technology Fund $1 - $10,000 Janus Balanced Fund $10,001 - $50,000 Janus Contrarian Fund $10,001 - $50,000 Janus Research Fund $1 - $10,000 INTECH Risk-Managed Stock Fund $10,001 - $50,000 Janus Worldwide Fund $10,001 - $50,000 Janus Short-Term Bond Fund $10,001 - $50,000 ------------------------------------------------------------------------------------------------------- JOHN W. MCCARTER, JR. Janus Enterprise Fund $10,001 - $50,000 over $100,000 Janus Mercury Fund $10,001 - $50,000 Janus Olympus Fund $10,001 - $50,000 Janus Orion Fund $10,001 - $50,000 Janus Global Life Sciences Fund $10,001 - $50,000 Janus Contrarian Fund $10,001 - $50,000 Janus Core Equity Fund $50,001 - $100,000 Janus Growth and Income Fund $50,001 - $100,000 INTECH Risk-Managed Stock Fund $10,001 - $50,000 Janus Overseas Fund $10,001 - $50,000 -------------------------------------------------------------------------------------------------------
95
------------------------------------------------------------------------------------------------------- AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES IN ALL REGISTERED INVESTMENT COMPANIES OVERSEEN BY TRUSTEE IN NAME OF TRUSTEE DOLLAR RANGE OF EQUITY SECURITIES IN THE FUNDS JANUS FUNDS ------------------------------------------------------------------------------------------------------- INDEPENDENT TRUSTEES ------------------------------------------------------------------------------------------------------- JAMES T. ROTHE Janus Enterprise Fund $50,001 - $100,000 over $100,000 Janus Triton Fund $10,001 - $50,000 Janus Global Life Sciences Fund $50,001 - $100,000 Janus Contrarian Fund $50,001 - $100,000 Janus Research Fund $50,001 - $100,000 INTECH Risk-Managed Stock Fund $50,001 - $100,000 Janus Small Cap $10,001 - $50,000 Value - Investor Shares ------------------------------------------------------------------------------------------------------- WILLIAM D. STEWART Janus Research Fund over $100,000 over $100,000 INTECH Risk-Managed Stock Fund over $100,000 Janus Global Opportunities Fund over $100,000 Janus Flexible Bond Fund $1 - $10,000 ------------------------------------------------------------------------------------------------------- MARTIN H. WALDINGER Janus Core Equity Fund over $100,000 over $100,000 INTECH Risk-Managed Stock Fund over $100,000 ------------------------------------------------------------------------------------------------------- LINDA S. WOLF Janus Growth and Income Fund over $100,000 over $100,000 Janus Overseas Fund over $100,000 ------------------------------------------------------------------------------------------------------- INTERESTED TRUSTEE ------------------------------------------------------------------------------------------------------- THOMAS H. BAILEY Janus Fund over $100,000 over $100,000 Janus Enterprise Fund over $100,000 Janus Mercury Fund over $100,000 Janus Olympus Fund over $100,000 Janus Orion Fund over $100,000 Janus Triton Fund $10,001 - $50,000 Janus Twenty Fund $50,001 - $100,000 Janus Venture Fund $50,001 - $100,000 Janus Global Life Sciences Fund over $100,000 Janus Global Technology Fund over $100,000 Janus Balanced Fund $50,001 - $100,000 Janus Contrarian Fund over $100,000 Janus Core Equity Fund over $100,000 Janus Research Fund $10,001 - $50,000 Janus Growth and Income Fund over $100,000 Janus Global Opportunities Fund over $100,000 Janus Overseas Fund $10,001 - $50,000 Janus Worldwide Fund over $100,000 Janus Flexible Bond Fund over $100,000 Janus High-Yield Fund over $100,000 -------------------------------------------------------------------------------------------------------
96 The Trust pays each Independent Trustee an annual retainer plus a fee for each regular in-person meeting of the Trustees attended, a fee for in-person meetings of committees attended if convened on a date other than that of a regularly scheduled meeting, and a fee for telephone meetings of the Trustees and committees. In addition, committee chairs and the Chairman of the Board of Trustees receive an additional supplemental retainer. Each current Independent Trustee also receives fees from other Janus funds for serving as Trustee of those funds. Janus Capital pays persons who are directors, officers, or employees of Janus Capital or any affiliate thereof, or any Trustee considered an "interested" Trustee for their services as Trustees or officers. The following table shows the aggregate compensation paid to each Independent Trustee by the Funds described in this SAI and all Janus Funds for the periods indicated. None of the Trustees receives any pension or retirement benefits from the Funds or the Janus Funds. Effective January 1, 2006, the Trustees established a deferred compensation plan under which the Trustees may elect to defer receipt of all, or a portion, of the compensation they earn for their services to the Funds, in lieu of receiving current payments of such compensation. Any deferred amount is treated as though an equivalent dollar amount has been invested in shares of one or more funds advised by Janus Capital ("shadow investments"). Given that the deferred compensation plan was effective January 1, 2006 (after the periods indicated in the table below), any deferred amounts are not included in the table.
Aggregate Compensation Total Compensation from the Funds for from the Janus Funds for fiscal year ended calendar year ended Name of Person, Position October 31, 2005 December 31, 2005(1)(2) ----------------------------------------------------------------------------------------------------- INDEPENDENT TRUSTEES Dennis B. Mullen, Chairman and Trustee(3) $240,000 $441,130 Jerome S. Contro, Trustee(4) $ 0 $ 71,444 William F. McCalpin, Trustee $165,685 $265,000 John W. McCarter, Jr., Trustee $171,191 $267,167 James T. Rothe, Trustee $165,685 $303,500 William D. Stewart, Trustee $174,640 $272,000 Martin H. Waldinger, Trustee $165,686 $262,000 Linda S. Wolf, Trustee(4) $ 36,129 $146,444
(1) For Mr. Mullen, includes compensation for service on the boards of five Janus trusts comprised of 92 portfolios (21 portfolios of which are for service on the board of Janus World Funds Plc, an offshore product). For Messrs. McCalpin, McCarter, Stewart, and Waldinger, includes compensation for service on the boards of three Janus trusts comprised of 69 portfolios. For Mr. Rothe, includes compensation for service on the boards of four Janus trusts comprised of 71 portfolios. (2) Total compensation received from the Janus Funds includes the following additional compensation for preparation and participation in depositions related to excessive fee litigation: Dennis B. Mullen 97 $36,000; William F. McCalpin $21,000; John W. McCarter, Jr. $27,000; James T. Rothe $27,000; William D. Stewart $27,000; and Martin H. Waldinger $18,000. (3) Aggregate compensation received from the Funds includes additional compensation paid for service as Independent Chairman of the Board of Trustees. Total compensation received from the Janus Funds includes additional compensation paid for service as Independent Chairman of the boards of three Janus trusts, including the Trust, and compensation for service as a director of Janus World Funds Plc. (4) At a Special Meeting of Shareholders on November 22, 2005, shareholders of the Trust elected two new Trustees, Jerome S. Contro and Linda S. Wolf. Prior to such election, Mr. Contro and Ms. Wolf were consultants to the Trustees and were paid by the Trust in this capacity. As of the fiscal year ended October 31, 2005, Ms. Wolf received aggregate compensation of $41,910 from the Trust for serving as a consultant to the Trustees. Mr. Contro did not receive any compensation from the Trust as of the fiscal year ended October 31, 2005. The following table shows the aggregate compensation paid to each member of the former Advisory Board by Janus Enterprise Fund, Janus Olympus Fund, Janus Venture Fund, Janus Global Technology Fund, Janus Balanced Fund, Janus Growth and Income Fund, Janus Mid Cap Value Fund, Janus Small Cap Value Fund, Janus Overseas Fund, and all Janus Funds for the periods indicated. None of the Advisory Board members received pension or retirement benefits from such Funds or the Janus Funds. The Advisory Board's two-year term ended March 2005.
Aggregate Compensation Total Compensation from the Funds for from the Janus Funds for fiscal year ended calendar year ended Name of Person, Position October 31, 2005 December 31, 2005 ------------------------------------------------------------------------------------------------------ Katherine A. Cattanach, Advisory Board Chairperson $ 9,943 $ 5,000 Harry T. Lewis, Jr., Advisory Board Member $ 9,943 $ 5,000 Michael Owen, Advisory Board Member $ 9,943 $ 5,000 Albert C. Yates, Advisory Board Member $ 9,943 $ 5,000
98 JANUS INVESTMENT PERSONNEL OTHER ACCOUNTS MANAGED The following table provides information relating to other accounts managed by the portfolio managers as of October 31, 2005. No accounts included in the totals listed below have a performance-based advisory fee.
Other Registered Other Pooled Investment Investment Companies Vehicles Other Accounts -------------------------------------------------------------------------------------------------------------- William H. Bales Number of Other Accounts Managed 2 None None Assets in Other Accounts Managed $ 101,353,781 None None Jonathan D. Coleman Number of Other Accounts Managed 2 1 3 Assets in Other Accounts Managed $ 857,639,237 $ 37,281,746 $ 11,424,389 David J. Corkins Number of Other Accounts Managed 2 None None Assets in Other Accounts Managed $ 1,536,009,688 None None David C. Decker Number of Other Accounts Managed 2 None 3 Assets in Other Accounts Managed $ 2,981,851,032 None $ 16,126,269 James P. Goff Number of Other Accounts Managed None None 2 Assets in Other Accounts Managed None None $ 9,594,513 Gregory R. Kolb Number of Other Accounts Managed None None None Assets in Other Accounts Managed None None None Brent A. Lynn Number of Other Accounts Managed 2 1 None Assets in Other Accounts Managed $ 1,461,318,631 $ 75,745,122 None Thomas R. Malley Number of Other Accounts Managed 3 None None Assets in Other Accounts Managed $ 515,534,857 None None Douglas E. Nelson Number of Other Accounts Managed None None None Assets in Other Accounts Managed None None None Marc Pinto Number of Other Accounts Managed 9 2 28 Assets in Other Accounts Managed $ 4,523,215,336 $ 83,568,319 $ 444,844,473 Blaine P. Rollins Number of Other Accounts Managed 3 None 1 Assets in Other Accounts Managed $ 1,621,998,885 None $ 34,679,264 Ron Sachs Number of Other Accounts Managed 3 None None Assets in Other Accounts Managed $ 126,414,686 None None Scott W. Schoelzel Number of Other Accounts Managed 13 1 11 Assets in Other Accounts Managed $ 4,735,886,371 $ 33,181,186 $ 137,678,554 J. Bradley Slingerlend(1) Number of Other Accounts Managed None None None Assets in Other Accounts Managed None None None Gibson Smith Number of Other Accounts Managed 6 None 2 Assets in Other Accounts Managed $ 4,326,452,345 None $ 234,921,237 Minyoung Sohn Number of Other Accounts Managed 6 None 1 Assets in Other Accounts Managed $ 634,543,036 None $ 6,669,463 Ronald V. Speaker Number of Other Accounts Managed 3 None 6 Assets in Other Accounts Managed $ 1,316,628,610 None $ 896,949,925 Burton H. Wilson(1) Number of Other Accounts Managed None None None Assets in Other Accounts Managed None None None
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Other Registered Other Pooled Investment Investment Companies Vehicles Other Accounts -------------------------------------------------------------------------------------------------------------- Jason P. Yee Number of Other Accounts Managed 5 None 3 Assets in Other Accounts Managed $ 2,091,243,303 None $ 60,525,580 Claire Young Number of Other Accounts Managed 3 None 3 Assets in Other Accounts Managed $ 882,029,697 None $ 6,612,938
(1) Effective February 1, 2006, J. Bradley Slingerlend and Burton H. Wilson became jointly and primarily responsible for the day-to-day management of Janus Global Technology Fund. MATERIAL CONFLICTS As shown in the table above, certain Funds' portfolio managers may manage other accounts with investment strategies similar to the Funds, including other Janus funds, private-label mutual funds for which Janus Capital serves as subadviser, and separately managed accounts. Fees earned by Janus Capital may vary among these accounts and the portfolio managers may personally invest in some but not all of these accounts. These factors could create conflicts of interest because a portfolio manager may have incentives to favor certain accounts over others, resulting in other accounts outperforming a Fund. A conflict may also exist if a portfolio manager identified a limited investment opportunity that may be appropriate for more than one account, but a Fund is not able to take full advantage of that opportunity due to the need to allocate that opportunity among multiple accounts. In addition, the portfolio manager may execute transactions for another account that may adversely impact the value of securities held by the Fund. However, Janus Capital believes that these risks are mitigated by the fact that accounts with like investment strategies managed by a particular portfolio manager are generally managed in a similar fashion, subject to exceptions to account for particular investment restrictions or policies applicable only to certain accounts, certain portfolio holdings that may be transferred in-kind when an account is opened, differences in cash flows and account sizes, and similar factors. In addition, Janus Capital has adopted trade allocation procedures that require equitable allocation of trade orders for a particular security among participating accounts. These procedures are described in further detail under "Additional Information About Janus Capital." COMPENSATION The following describes the structure and method of calculating a portfolio manager's compensation as of October 31, 2005. A portfolio manager is compensated for managing a Fund and any other funds, portfolios, or accounts managed by the portfolio manager (collectively, the 100 "Managed Funds") through two components: fixed compensation and variable compensation. FIXED COMPENSATION: Fixed compensation is paid in cash and is comprised of an annual base salary and an additional amount calculated based on factors such as the complexity of managing funds and other accounts, scope of responsibility (including assets under management), tenure, and long-term performance as a portfolio manager. VARIABLE COMPENSATION: Variable compensation is paid in the form of cash and long-term incentive awards (consisting of Janus Capital Group Inc. ("JCGI") restricted stock, stock options, and a cash deferred award that is credited with income, gains, and losses based on the performance of Janus mutual fund investments selected by the portfolio manager). Variable compensation is structured to pay the portfolio manager primarily on individual performance (and leadership criteria, as applicable), with additional compensation available for team performance and a lesser component based on net asset flows in the Managed Funds. Variable compensation is based on pre-tax performance of the Managed Funds. A portfolio manager's individual performance compensation is determined by applying a multiplier against the portfolio manager's fixed compensation. The multiplier is tied to the Managed Funds' aggregate asset-weighted Lipper peer group performance ranking for one- and three-year performance periods, if applicable, with a greater emphasis on three-year results. The portfolio manager is also eligible to receive additional individual performance compensation if the Managed Funds achieve a certain rank in their Lipper peer performance groups in each of three, four, or five consecutive years (performance periods may be from commencement of a portfolio manager's tenure managing a Fund). Equity portfolio manager compensation is also subject to reduction in the event that the Managed Funds incur material negative absolute performance. Portfolio managers are not eligible to earn any individual performance compensation if the Managed Funds' performance does not meet or exceed a certain ranking in their Lipper peer performance group. Equity and fixed-income portfolio managers are also eligible to participate in team performance compensation pools. Equity portfolio managers participate in a designated equity team compensation pool and fixed-income portfolio managers participate in a designated fixed-income team compensation pool. The compensation pools generally are each derived from a formula tied to the team's aggregate asset-weighted Lipper peer group performance ranking for the one-year performance period. Compensation from each pool is then allocated among the eligible respective participants in each pool at the discretion of Janus Capital. No 101 team performance compensation is paid to any portfolio manager if the aggregate asset-weighted team performance for the one-year period for their respective pool does not meet or exceed a certain ranking in the relevant Lipper peer group. Portfolio managers may elect to defer payment of a designated percentage of their fixed compensation and/or up to all of their variable compensation in accordance with JCGI's Executive Income Deferral Program. COMPENSATION The following describes the structure and method of calculating James Goff's, the Director of Research, compensation as of October 31, 2005. Mr. Goff is compensated for his role as Director of Research and for managing a Fund and any other funds, portfolios, or accounts managed by Mr. Goff (collectively, the "Managed Funds") through two components: fixed compensation and variable compensation. FIXED COMPENSATION: Fixed compensation is paid in cash and is comprised of an annual base salary and an additional amount calculated based on factors such as his scope of responsibility, tenure, and his performance as the Director of Research and for managing funds. VARIABLE COMPENSATION: Variable compensation is paid in the form of cash and long-term incentive awards (consisting of a mixture of Janus Capital Group Inc. ("JCGI") restricted stock, stock options, and a cash deferred award that is credited with income, gains, and losses based on the performance of Janus mutual fund investments selected by Mr. Goff). Variable compensation is structured to pay Mr. Goff primarily on team performance, with additional compensation available for individual performance (which includes a subjective component based on leadership, contributions to Janus Capital and the development of analysts), with a lesser component based on net asset flows in the Managed Funds. Variable compensation is based on pre-tax performance of the Managed Funds. Mr. Goff's individual performance compensation is based on fixed amounts tied and interpolated to the Managed Funds' aggregate asset-weighted Lipper peer group performance ranking for a rolling three-year performance period, or since inception date if shorter. Mr. Goff is not eligible to earn any individual performance compensation if the Managed Funds' performance does not meet or exceed a certain ranking in their Lipper peer performance group. Mr. Goff is also eligible to participate in a team performance compensation component derived from a formula tied to the team's aggregate asset-weighted 102 Lipper peer group performance ranking for one and three-year performance periods, with equal weighting. No team performance compensation is paid to Mr. Goff if the aggregate asset-weighted team performance for the one and three-year periods does not meet or exceed a certain ranking in the relevant Lipper peer group. Mr. Goff may elect to defer payment of a designated percentage of their fixed compensation and/or up to all of their variable compensation in accordance with JCGI's Executive Income Deferral Program. COMPENSATION The following describes the structure and method of calculating J. Bradley Slingerlend's and Burton H. Wilson's (the "Investment Personnel") compensation as of February 1, 2006: The Investment Personnel are compensated for their responsibilities as analysts and for their management and leadership roles with respect to the Portfolio and any other funds, portfolios, or accounts for which they have responsibilities through two components: fixed compensation and variable compensation. FIXED COMPENSATION: Fixed compensation is paid in cash and is comprised of an annual base salary and an additional amount calculated based on factors such as scope of responsibility, tenure, and long-term performance. VARIABLE COMPENSATION: Variable compensation is paid in the form of cash and long-term incentive awards (consisting of a mixture of JCGI restricted stock, stock options, and a cash-deferred award that is credited with income, gains, and losses based on the performance of Janus mutual fund investments selected by the Investment Personnel). Variable compensation is based on pre-tax performance of the Janus mutual funds. The Investment Personnel are eligible for variable compensation through participation in two compensation pools: an analyst-managed fund performance pool and a team performance pool. Aggregate compensation available in each pool is derived from a formula tied to the aggregate asset-weighted Lipper peer group performance ranking of certain Janus mutual funds for one- and three-year periods, subject to a reduction in the event of absolute negative performance. Aggregate compensation in each pool is allocated among the eligible respective participants at the discretion of Janus Capital based on factors which may include performance of investment recommendations, team contributions, scope of coverage, and subjective criteria. In the case of the analyst-managed fund performance pool, no performance compensation is paid to any team member if the team's aggregate asset-weighted performance for the one- or three-year periods does not meet or exceed a certain ranking. 103 Each Fund's Lipper peer group for compensation purposes is shown in the following table.
Fund Lipper Peer Group ---------------------------------------------------------------------------------------- GROWTH Janus Fund Multi-Cap Growth Funds Janus Enterprise Fund Mid-Cap Growth Funds Janus Mercury Fund Large-Cap Growth Funds Janus Olympus Fund Multi-Cap Growth Funds Janus Orion Fund Multi-Cap Growth Funds Janus Triton Fund Small-Cap Growth Funds Janus Twenty Fund Large-Cap Growth Funds Janus Venture Fund Small-Cap Growth Funds SPECIALTY GROWTH Janus Global Life Sciences Fund Health/Biotechnology Funds Janus Global Technology Fund Science & Technology Funds CORE Janus Balanced Fund Balanced Funds Janus Contrarian Fund Multi-Cap Core Funds Janus Core Equity Fund Large-Cap Core Funds Janus Growth and Income Fund Large-Cap Core Funds Janus Research Fund Multi-Cap Growth Funds INTERNATIONAL & GLOBAL Janus Global Opportunities Fund Global Funds Janus Overseas Fund International Funds Janus Worldwide Fund Global Funds BOND Janus Flexible Bond Fund Intermediate Investment Grade Debt Funds Janus High-Yield Fund High Current Yield Funds Janus Short-Term Bond Fund Short Investment Grade Debt Funds Janus Federal Tax-Exempt Fund General Municipal Debt Funds
104 INTECH INVESTMENT PERSONNEL OTHER ACCOUNTS MANAGED The following table provides information relating to other accounts managed by the investment personnel as of October 31, 2005. To the extent that any of the accounts pay advisory fees based on account performance, information on those accounts is separately listed.
Other Registered Other Pooled Investment Investment Companies Vehicles Other Accounts(1) ---------------------------------------------------------------------------------------------------------------- Robert Fernholz Number of Other Accounts Managed 9 5 290 Assets in Other Accounts Managed $ 3,174,362,421 $ 3,485,947,487 $ 31,637,659,503 David E. Hurley Number of Other Accounts Managed 9 5 290 Assets in Other Accounts Managed $ 3,174,362,421 $ 3,485,947,487 $ 31,637,659,503 Cary Maguire Number of Other Accounts Managed 9 5 290 Assets in Other Accounts Managed $ 3,174,362,421 $ 3,485,947,487 $ 31,637,659,503 Joseph Runnels Number of Other Accounts Managed 9 5 290 Assets in Other Accounts Managed $ 3,174,362,421 $ 3,485,947,487 $ 31,637,659,503
(1) 35 of the accounts included in the totals, consisting of $5,831,357,139 of the total assets in the category, have performance-based advisory fees. MATERIAL CONFLICTS As shown in the table above, INTECH Risk-Managed Stock Fund's investment personnel may manage other accounts with investment strategies similar to the Fund. Fees earned by the adviser may vary among these accounts and the investment personnel may personally invest in some but not all of these accounts. These factors could create conflicts of interest because the investment personnel may have incentives to favor certain accounts over others, resulting in other accounts outperforming the Fund. A conflict may also exist if the investment personnel identified a limited investment opportunity that may be appropriate for more than one account, but the Fund is not able to take full advantage of that opportunity due to the need to allocate that opportunity among multiple accounts. In addition, the investment personnel may execute transactions for another account that may adversely impact the value of securities held by the Fund. However, INTECH believes that these risks are mitigated by the fact that accounts with like investment strategies managed by the investment personnel are generally managed in a similar fashion, subject to exceptions to account for particular investment restrictions or policies applicable only to certain accounts, portfolio holdings that may be transferred in-kind when an account is opened, differences in cash flows and account sizes, and similar 105 factors. In addition, INTECH generates regular daily trades for all of its clients using proprietary trade system software. Trades are submitted to designated brokers in a single electronic file at one time during the day, pre-allocated to individual clients. If an order is not completely filled, executed shares are allocated to client accounts in proportion to the order. These procedures are described in further detail under "Additional Information About Janus Capital and the Subadvisers." COMPENSATION As described under "Investment Adviser and Subadvisers," Janus Capital has entered into Sub-Advisory Agreements on behalf of INTECH Risk-Managed Stock Fund. The compensation structure of the investment personnel is determined by INTECH and is summarized by INTECH below. The following describes the structure and method of calculating the investment personnel's compensation as of October 31, 2005. For managing the Fund and all other accounts, the investment personnel receive base pay in the form of a fixed annual salary paid by INTECH, and which is not directly based on performance or assets of the Fund or other accounts. The investment personnel are also eligible for a cash bonus as determined by INTECH, and which is not directly based on performance or assets of the Fund or other accounts. The investment personnel, as part owners of INTECH, also receive compensation by virtue of their ownership interest in INTECH. The investment personnel may elect to defer payment of a designated percentage of their fixed compensation and/or up to all of their variable compensation in accordance with JCGI's Executive Income Deferral Program. 106 PERKINS INVESTMENT PERSONNEL OTHER ACCOUNTS MANAGED The following table provides information relating to other accounts managed by the portfolio managers as of October 31, 2005. No accounts included in the totals listed below have a performance-based advisory fee.
Other Registered Other Pooled Investment Investment Companies Vehicles Other Accounts ------------------------------------------------------------------------------------------------------------- Jeffrey Kautz Number of Other Accounts Managed 4 None 124 Assets in Other Accounts Managed $ 477,839,455 None $ 660,645,882 Robert Perkins Number of Other Accounts Managed 6 None 127 Assets in Other Accounts Managed $ 745,848,325 None $ 1,599,219,679 Thomas Perkins Number of Other Accounts Managed 2 None 115 Assets in Other Accounts Managed $ 268,008,870 None $ 1,120,912,274 Todd H. Perkins Number of Other Accounts Managed 6 None 127 Assets in Other Accounts Managed $ 745,848,325 None $ 1,599,219,679
MATERIAL CONFLICTS As shown in the table above, Janus Mid Cap Value Fund's and Janus Small Cap Value Fund's portfolio managers may manage other funds and accounts with investment strategies similar to the Funds. Fees earned by the adviser may vary among these accounts and the portfolio managers may personally invest in some but not all of these accounts. These factors could create conflicts of interest because a portfolio manager may have incentives to favor certain accounts over others, resulting in other accounts or funds outperforming the Funds. A conflict may also exist if a portfolio manager identified a limited investment opportunity that may be appropriate for more than one account, but the Funds are not able to take full advantage of that opportunity due to the need to allocate that opportunity among multiple accounts. In addition, the portfolio managers may execute transactions for another account that may adversely impact the value of securities held by the Funds. However, Perkins believes that these risks are mitigated by the fact that accounts with like investment strategies managed by the portfolio managers are generally managed in a similar fashion, subject to exceptions to account for particular investment restrictions or policies applicable only to certain accounts, portfolio holdings that may be transferred in-kind when an account is opened, differences in cash flows and account sizes and similar factors. Information regarding Perkins' trade allocation procedures is described under "Additional Information About Janus Capital and the Subadvisers." 107 COMPENSATION As described under "Investment Adviser and Subadvisers," Janus Capital has entered into a Sub-Advisory Agreement on behalf of Janus Mid Cap Value Fund and Janus Small Cap Value Fund. The compensation structure of the portfolio managers is determined by Perkins and is summarized by Perkins below. For managing the Funds, the portfolio managers receive base pay in the form of a fixed annual salary paid by Perkins, Wolf, McDonnell and Company, LLC. The portfolio managers, as part owners of Perkins, also receive compensation by virtue of their ownership interests in Perkins. Portfolio managers are also entitled to participate in such life insurance, medical, profit sharing and other programs as may be made generally available from time to time by Perkins for the benefit of its employees generally. OWNERSHIP OF SECURITIES As of the fiscal year ended October 31, 2005, the portfolio managers of the Funds described in this SAI beneficially owned securities of the Fund(s) they manage in the dollar range shown in the following table. The last column of the table also reflects each portfolio manger's aggregate beneficial ownership of all funds advised by Janus Capital within the Janus family of funds (collectively, the "Janus Funds").
Aggregate Dollar Range of Equity Securities in Portfolio Manager Dollar Range of Equity Securities in the Fund(s) Managed(1) Janus Funds(1) -------------------------------------------------------------------------------------------------------------------- JANUS CAPITAL William H. Bales Janus Venture Fund $500,001-$1,000,000 Over $1,000,000 Jonathan Coleman Janus Enterprise Fund Over $1,000,000 Over $1,000,000 David J. Corkins Janus Mercury Fund $100,001-$500,000 Over $1,000,000 David C. Decker Janus Contrarian Fund Over $1,000,000 Over $1,000,000 James P. Goff Janus Research Fund Over $1,000,000 Over $1,000,000 Gregory R. Kolb Janus Global Opportunities Fund $100,001-$500,000 $500,001-$1,000,000 C. Mike Lu Janus Global Technology Fund Over $1,000,000 Over $1,000,000 Brent A. Lynn Janus Overseas Fund Over $1,000,000 Over $1,000,000 Thomas R. Malley Janus Global Life Sciences Fund $100,001-$500,000 $500,001-$1,000,000 Douglas E. Nelson Janus Federal Tax-Exempt Fund $1-$10,000 $100,001-$500,000 Marc Pinto Janus Balanced Fund $500,001-$1,000,000 Over $1,000,000 Blaine P. Rollins Janus Fund Over $1,000,000 Over $1,000,000 Ron Sachs Janus Orion Fund Over $1,000,000 Over $1,000,000 Janus Triton Fund Over $1,000,000
108
Aggregate Dollar Range of Equity Securities in Portfolio Manager Dollar Range of Equity Securities in the Fund(s) Managed(1) Janus Funds(1) -------------------------------------------------------------------------------------------------------------------- Scott W. Schoelzel Janus Twenty Fund Over $1,000,000 Over $1,000,000 Gibson Smith Janus Balanced Fund $10,001-$50,000 Over $1,000,000 Janus High-Yield Fund $100,001-$500,000 Janus Short-Term Bond Fund $10,001-$50,000 Minyoung Sohn Janus Core Equity Fund $100,001-$500,000 Over $1,000,000 Janus Growth and Income Fund $500,001-$1,000,000 Ronald V. Speaker Janus Flexible Bond Fund Over $1,000,000 Over $1,000,000 Jason P. Yee Janus Global Opportunities Fund $100,001-$500,000 Over $1,000,000 Janus Worldwide Fund $100,001-$500,000 Claire Young Janus Olympus Fund Over $1,000,000 Over $1,000,000 INTECH Robert Fernholz INTECH Risk-Managed Stock Fund(2) $500,001-$1,000,000 $500,001-$1,000,000 David E. Hurley INTECH Risk-Managed Stock Fund(2) None $1-$10,000 Cary Maquire INTECH Risk-Managed Stock Fund(2) None $100,001-$500,000 Joseph Runnels INTECH Risk-Managed Stock Fund(2) $1-$10,000 $10,001-$50,000 PERKINS Jeffrey Kautz Janus Mid Cap Value Fund $100,001-$500,000 $100,001-$500,000 Robert Perkins Janus Mid Cap Value Fund Over $1,000,000 Over $1,000,000 Janus Small Cap Value Fund Over $1,000,000 Thomas Perkins Janus Mid Cap Value Fund Over $1,000,000 Over $1,000,000 Janus Small Cap Value Fund $100,001-$500,000 Todd H. Perkins Janus Small Cap Value Fund $100,001-$500,000 $500,001-$1,000,000
(1) Ownership shown may include amounts held under a deferred fee agreement or similar plan that are valued based on "shadow investments" in one or more Funds at the election of the investment personnel. (2) Formerly named Janus Risk-Managed Stock Fund. 109 PURCHASE OF SHARES -------------------------------------------------------------------------------- Although Janus Twenty Fund, Janus Venture Fund, Janus Mid Cap Value Fund - Institutional Shares and Janus Small Cap Value Fund are closed, certain investors may continue to invest in the Funds and/or open new Fund accounts. Once an account is closed, additional investments will not be accepted unless you meet one of the specified criteria. You may be required to demonstrate your eligibility to purchase shares of a Fund before your investment is accepted. Shares of the Funds are sold at the NAV per share as determined as of the close of the regular trading session of the New York Stock Exchange (the "NYSE") next occurring after a purchase order is received in good order by a Fund. The "Shareholder's Manual" or "Shareholder's Guide" section of the Funds' Prospectuses contains detailed information about the purchase of shares. NET ASSET VALUE DETERMINATION As stated in the Funds' Prospectuses, the net asset value ("NAV") of the shares of each Fund is determined once each day the NYSE is open, as of the close of its regular trading session (normally 4:00 p.m., New York time, Monday through Friday). The per share NAV of each Fund is determined by dividing the total value of a Fund's securities and other assets, less liabilities, attributable to the Fund, by the total number of shares outstanding. In the case of Funds with share classes, the NAV for each class is computed by dividing the total value of securities and other assets allocated to the class, less liabilities allocated to that class, by the total number of shares outstanding for the class. In determining NAV, securities listed on an Exchange, the Nasdaq National Market, and foreign markets are generally valued at the closing prices on such markets, or if such price is lacking for the trading period immediately preceding the time of determination, such securities are valued at their current bid price. Municipal securities held by the Funds are traded primarily in the over-the-counter market. Valuations of such securities are furnished by one or more pricing services employed by the Funds and approved by the Trustees and are based upon a computerized matrix system or appraisals obtained by a pricing service, in each case in reliance upon information concerning market transactions and quotations from recognized municipal securities dealers. Other securities that are traded on the over-the-counter market are generally valued at their closing bid prices. Foreign securities and currencies are converted to U.S. dollars using the applicable exchange rate in effect at the close of the NYSE. Each Fund will determine the market value of individual securities held by it by using prices provided by one or more professional pricing services which may provide market prices to other funds, or, as needed, by obtaining market quotations from independent broker-dealers. Short-term securities maturing within 60 days or less are valued on an amortized cost basis. Debt securities with a remaining maturity of greater than 60 days are valued in accordance with the evaluated bid 110 price supplied by the pricing service. The evaluated bid price supplied by the pricing service is an evaluation that reflects such factors as security prices, yields, maturities, and ratings. Securities for which market quotations are not readily available or are deemed unreliable are valued at fair value determined in good faith under procedures established by and under the supervision of the Trustees (the "Valuation Procedures"). Circumstances in which fair value pricing may be utilized include, but are not limited to: (i) when significant events occur which may affect the securities of a single issuer, such as mergers, bankruptcies, or significant issuer specific developments; (ii) when significant events occur which may affect an entire market, such as natural disasters or significant governmental actions; and (iii) when non-significant events occur such as markets closing early or not opening, security trading halts, or pricing of nonvalued securities and restricted or nonpublic securities. The Funds may use a systematic fair valuation model provided by an independent third party to value international equity securities in order to adjust for stale pricing, which may occur between the close of certain foreign exchanges and the NYSE. Trading in securities on European and Far Eastern securities exchanges and over-the-counter markets is normally completed well before the close of business on each business day in New York (i.e., a day on which the NYSE is open). In addition, European or Far Eastern securities trading generally or in a particular country or countries may not take place on all business days in New York. Furthermore, trading takes place in Japanese markets on certain Saturdays and in various foreign markets on days which are not business days in New York and on which a Fund's NAV is not calculated. A Fund calculates its NAV per share, and therefore effects sales, redemptions, and repurchases of its shares, as of the close of the NYSE once on each day on which the NYSE is open. Such calculation may not take place contemporaneously with the determination of the prices of the foreign portfolio securities used in such calculation. If an event that is expected to affect the value of a portfolio security occurs after the close of the principal exchange or market on which that security is traded, and before the close of the NYSE, then that security may be valued in good faith under the Valuation Procedures. REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS If investors do not elect online at www.janus.com, in writing, or by phone to receive their dividends and distributions in cash, all income dividends and capital gains distributions, if any, on a Fund's shares are reinvested automatically in additional shares of that Fund at the NAV determined on the payment date. Checks for cash dividends and distributions and confirmations of reinvestments are usually sent to shareholders within ten days after the record date. Any 111 election of the manner in which a shareholder wishes to receive dividends and distributions (which may be made online at www.janus.com or by phone) will apply to dividends and distributions the record dates of which fall on or after the date that a Fund receives such notice. Changes to distribution options must be received at least three days prior to the record date to be effective for such date. Investors receiving cash distributions and dividends may elect online at www.janus.com, in writing, or by phone to change back to automatic reinvestment at any time. 112 REDEMPTION OF SHARES -------------------------------------------------------------------------------- Procedures for redeeming shares are set forth in the "Shareholder's Manual" or "Shareholder's Guide" section of the Funds' Prospectuses. Shares normally will be redeemed for cash, although each Fund retains the right to redeem some or all of its shares in-kind under unusual circumstances, in order to protect the interests of remaining shareholders, or to accommodate a request by a particular shareholder that does not adversely affect the interest of the remaining shareholders, by delivery of securities selected from its assets at its discretion. However, the Funds are governed by Rule 18f-1 under the 1940 Act, which requires each Fund to redeem shares solely for cash up to the lesser of $250,000 or 1% of the NAV of that Fund during any 90-day period for any one shareholder. Should redemptions by any shareholder exceed such limitation, a Fund will have the option of redeeming the excess in cash or in-kind. If shares are redeemed in-kind, the redeeming shareholder may incur brokerage costs in converting the assets to cash. The method of valuing securities used to make redemptions in-kind will be the same as the method of valuing portfolio securities described under "Purchase of Shares - Net Asset Value Determination" and such valuation will be made as of the same time the redemption price is determined. The right to require the Funds to redeem their shares may be suspended, or the date of payment may be postponed, whenever: (i) trading on the NYSE is restricted, as determined by the SEC, or the NYSE is closed (except for holidays and weekends); (ii) the SEC permits such suspension and so orders; or (iii) an emergency exists as determined by the SEC so that disposal of securities or determination of NAV is not reasonably practicable. 113 SHAREHOLDER ACCOUNTS -------------------------------------------------------------------------------- Detailed information about the general procedures for shareholder accounts and specific types of accounts is set forth in the Funds' Prospectuses and at www.janus.com. Applications for specific types of accounts may be obtained by visiting www.janus.com, calling a Janus representative, or writing to the Funds at P.O. Box 173375, Denver, Colorado 80217-3375. ONLINE AND TELEPHONE TRANSACTIONS As stated in the Prospectuses, shareholders may initiate a number of transactions at www.janus.com and by telephone. The Funds, their transfer agent, and their distributor disclaim responsibility for the authenticity of instructions received at www.janus.com and by telephone. Such entities will employ reasonable procedures to confirm that instructions communicated online and by telephone are genuine. Such procedures may include, among others, requiring personal identification prior to acting upon online and telephone instructions, providing written confirmation of online and telephone transactions, and tape recording telephone conversations. Your account information should be kept private, and you should immediately review any account statements that you receive from Janus Capital. Someone other than you could act on your account if they are able to provide the required identifying information. Contact Janus Capital immediately about any transactions you believe to be unauthorized. SYSTEMATIC REDEMPTIONS As stated in the "Shareholder's Manual" or "Shareholder's Guide" section of the Funds' Prospectuses, if you have a regular account or are eligible for distributions from a retirement plan, you may establish a systematic redemption option. The payments will be made from the proceeds of periodic redemptions of shares in the account at the NAV. Depending on the size or frequency of the disbursements requested, and the fluctuation in value of a Fund's portfolio holdings, redemptions for the purpose of making such disbursements may reduce or even exhaust the shareholder's account. Information about requirements to establish a systematic redemption option may be obtained by visiting www.janus.com, calling a Janus representative, or writing the Funds. 114 TAX-DEFERRED ACCOUNTS -------------------------------------------------------------------------------- The Funds offer several different types of tax-deferred accounts that an investor may establish to invest in Fund shares, depending on rules prescribed by the Internal Revenue Code. Traditional and Roth Individual Retirement Accounts ("IRAs") may be used by most individuals who have taxable compensation. Simplified Employee Pensions ("SEPs") and Defined Contribution Plans (Profit Sharing or Money Purchase Pension Plans) may be used by most employers, including corporations, partnerships, and small business owners (including sole proprietors), for the benefit of business owners and their employees. In addition, the Funds offer a Section 403(b)(7) Plan for employees of educational organizations and other qualifying tax-exempt organizations. Investors should consult their tax adviser or legal counsel before selecting a tax-deferred account. Contributions under Traditional and Roth IRAs, SEPs, Defined Contribution Plans, and Section 403(b)(7) Plans are subject to specific contribution limitations. Generally, such contributions may be invested at the direction of the participant. Distributions from tax-deferred retirement accounts may be subject to ordinary income tax and may be subject to an additional 10% tax if withdrawn prior to age 59 1/2 or used for a nonqualifying purpose. Additionally, shareholders generally must start withdrawing retirement plan assets no later than April 1 of the year after they reach age 70 1/2. Several exceptions to these general rules may apply and several methods exist to determine the amount and timing of the minimum annual distribution (if any). Shareholders should consult with their tax adviser or legal counsel prior to receiving any distribution from any tax-deferred account, in order to determine the income tax impact of any such distribution. Coverdell Education Savings Accounts (formerly Education IRAs) allow individuals, subject to certain income limitations, to contribute up to $2,000 annually on behalf of any child under the age of 18. Contributions are also allowed on behalf of children with special needs beyond age 18. Distributions are generally subject to income tax if not used for qualified education expenses. To receive additional information about Traditional and Roth IRAs, SEPs, Defined Contribution Plans, Section 403(b)(7) Plans, and Coverdell Education Savings Accounts along with the necessary materials to establish an account, please visit www.janus.com, call a Janus representative, or write to the Funds at P.O. Box 173375, Denver, Colorado 80217-3375. No contribution to a Traditional or Roth IRA, SEP, Defined Contribution Plan, Section 403(b)(7) Plan, or Coverdell Education Savings Account can be made until the appropriate forms to establish any such plan have been completed. 115 INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS, AND TAX STATUS -------------------------------------------------------------------------------- The following is intended to be a general summary of certain U.S. federal income tax consequences of investing in the Funds. It is not intended to be a complete discussion of all such federal income tax consequences, nor does it purport to deal with all categories of investors. This discussion reflects applicable tax laws of the United States as of the date of this SAI. However, tax laws may change or be subject to new interpretation by the courts or the IRS, possibly with retroactive effect. Investors are therefore advised to consult with their own tax advisers before making an investment in the Funds. It is a policy of the Funds to make distributions of substantially all of their investment income and any net realized capital gains. Any capital gains realized during each fiscal year ended October 31, as defined by the Internal Revenue Code, are normally declared and payable to shareholders in December but, if necessary, may be distributed at other times as well. Janus Fund, Janus Enterprise Fund, Janus Mercury Fund, Janus Olympus, Janus Orion Fund, Janus Triton Fund, Janus Twenty Fund, Janus Venture Fund, Janus Global Life Sciences Fund, Janus Global Technology Fund, Janus Contrarian Fund, Janus Core Equity Fund, Janus Research Fund, INTECH Risk-Managed Stock Fund, Janus Mid Cap Value Fund, Janus Small Cap Value Fund, Janus Global Opportunities Fund, Janus Overseas Fund, and Janus Worldwide Fund declare and make annual distributions of income (if any); Janus Balanced Fund and Janus Growth and Income Fund declare and make quarterly distributions of income; and Janus Flexible Bond Fund, Janus High-Yield Fund, Janus Short-Term Bond Fund, and Janus Federal Tax-Exempt Fund declare dividends daily and make monthly distributions of income. If a month begins on a Saturday, Sunday, or holiday, dividends for daily dividend Funds for those days are declared at the end of the preceding month. Janus Federal Tax-Exempt Fund will use the "average annual method" to determine the designated percentage of each distribution that is tax-exempt. Under this method, the percentage of income designated as tax-exempt is based on the percentage of tax-exempt income earned for each annual period, and may be substantially different from the Fund's income that was tax-exempt during any monthly period. The Funds intend to qualify as regulated investment companies by satisfying certain requirements prescribed by Subchapter M of the Internal Revenue Code. If a Fund failed to qualify as a regulated investment company in any taxable year, the Fund may be subject to tax on its taxable income at corporate rates. In addition, all distributions from earnings and profits, including any distributions of net tax-exempt income and net long-term capital gains, would generally be taxable to shareholders as ordinary income but may, at least in part, qualify for the dividends received deduction applicable to corporations or the reduced rate of taxation applicable to noncorporate holders for "qualified dividend income." 116 In addition, the Funds could be required to recognize unrealized gains, pay taxes and interest, and make distributions before requalifying as regulated investment companies that are accorded special tax treatment. The Funds may purchase securities of certain foreign corporations considered to be passive foreign investment companies by the Internal Revenue Code. In order to avoid taxes and interest that must be paid by the Funds, the Funds may make various elections permitted by the tax laws. However, these elections could require that the Funds recognize taxable income, which in turn must be distributed even though the Funds may not have received any income upon such an event. Some foreign securities purchased by the Funds may be subject to foreign taxes which could reduce the yield on such securities. If the amount of foreign taxes is significant in a particular year, the Funds that qualify under Section 853 of the Internal Revenue Code may elect to pass through such taxes to shareholders, who will each decide whether to deduct such taxes or claim a foreign tax credit. If such election is not made by a Fund, any foreign taxes paid or accrued will represent an expense to the Fund, which will reduce its investment company taxable income. 117 PRINCIPAL SHAREHOLDERS -------------------------------------------------------------------------------- As of January 31, 2006, the officers and Trustees as a group owned 2.17% of Janus Triton Fund, 5.65% of Janus Research Fund, 1.02% of Janus Global Opportunities Fund, and less than 1% of the outstanding shares of each of the other Funds in this SAI. As of January 31, 2006, Charles Schwab & Co., Inc. ("Schwab"), 101 Montgomery Street, San Francisco, CA 94104-4122, and National Financial Services Co. ("National Financial"), P.O. Box 3908, Church Street Station, New York, NY 10008-3908, owned of record 5% or more of the outstanding shares of the Funds for the exclusive benefit of their customers, as shown below:
Fund Name Held by Schwab ---------------------------------------------------------------------------- Janus Fund 11.2% Janus Enterprise Fund 10.7% Janus Mercury Fund 12.2% Janus Olympus Fund 14.7% Janus Orion Fund 9.5% Janus Triton Fund 32.7%(1) Janus Twenty Fund 8.8% Janus Venture Fund 9.6% Janus Global Life Sciences Fund 14.1% Janus Global Technology Fund 12.4% Janus Balanced Fund 17.3% Janus Contrarian Fund 13.1% Janus Core Equity Fund 19.7% Janus Growth and Income Fund 28.6% Janus Research Fund 19.7% INTECH Risk-Managed Stock Fund(2) 8.9% Janus Mid Cap Value Fund - Investor Shares 25.7% Janus Mid Cap Value Fund - Institutional Shares 19.1% Janus Small Cap Value Fund - Investor Shares 8.0% Janus Small Cap Value Fund - Institutional Shares 7.6% Janus Global Opportunities Fund 17.0% Janus Overseas Fund 22.3% Janus Worldwide Fund 19.5% Janus Flexible Bond Fund 19.6% Janus High-Yield Fund 24.2% Janus Short-Term Bond Fund 11.8% Janus Federal Tax-Exempt Fund 5.9%
(1) 5% or more of the outstanding shares of the Fund may be held for the exclusive benefit of an individual shareholder. (2) Formerly named Janus Risk-Managed Stock Fund 118
Held by National Fund Name Financial ---------------------------------------------------------------------------- Janus Fund 6.2% Janus Enterprise Fund 13.7% Janus Mercury Fund 21.9% Janus Olympus Fund 7.7% Janus Orion Fund 9.7% Janus Triton Fund 8.5% Janus Twenty Fund 7.5% Janus Global Life Sciences Fund 10.1% Janus Global Technology Fund 7.7% Janus Balanced Fund 14.9% Janus Contrarian Fund 8.2% Janus Core Equity Fund 12.3% Janus Growth and Income Fund 8.7% INTECH Risk-Managed Stock Fund(1) 5.3% Janus Mid Cap Value Fund - Investor Shares 24.5% Janus Small Cap Value Fund - Investor Shares 19.0% Janus Small Cap Value Fund - Institutional Shares 11.1% Janus Overseas Fund 16.5% Janus Worldwide Fund 16.3% Janus Flexible Bond Fund 11.5% Janus High-Yield Fund 16.2% Janus Short-Term Bond Fund 5.1%
(1) Formerly named Janus Risk-Managed Stock Fund According to the information provided by Schwab and National Financial, this ownership is by nominee only and does not represent beneficial ownership of such shares, because they have no investment discretion or voting power with respect to such shares. 119 As of January 31, 2006, the following shareholders owned 5% or more of the shares of the following Funds:
Percentage Fund Name Shareholder and Address of Record Ownership ------------------------------------------------------------------------------------------------ Janus Enterprise Fund Merrill Lynch Pierce Fenner & Smith Inc. 5.9% For the sole Benefit of Customers 4800 Deer Lake Drive East Jacksonville, FL 32246 Janus Balanced Fund The Guardian Insurance & Annuity Company Inc. 5.5% 1560 Valley Center Parkway, Suite 100 Bethlehem, PA 18017-2275 Janus Small Cap Value Fund Northern Trust Company 11.7% - Investor Shares FBO Triad Hospitals Inc. P.O. Box 92994 Chicago, IL 60675-2994 Merrill Lynch Pierce Fenner & Smith Inc. 7.8% For the sole Benefit of Customers 4800 Deer Lake Drive East Jacksonville, FL 32246 Janus Small Cap Value Fund JP Morgan Chase Bank 15.4% - Institutional Shares Plan for EE of Participating AMR CO Subsidiaries 4 New York Plaza, 2nd Floor New York, NY 10004-2413 Vanguard Fiduciary Trust Company 11.6% P.O. Box 2600 Valley Forge, PA 19482-2600 Mitra & Company 8.3% 1000 N. Water Street Milwaukee, WI 53202-6648 Janus High-Yield Fund Citigroup Global Markets Inc. 8.7% 388 Greenwich Street New York, NY 10013-2375
120 As of January 31, 2006, the following shareholder owned more than 25% of the shares of the following Fund:
Percentage Fund Name Shareholder and Address of Record Ownership ------------------------------------------------------------------------------------------------ Janus Mid Cap Value Fund Prudential Investment Management Service(1) 73.2% - Institutional Shares FBO Mutual Fund Clients 100 Mullberry Street 3 Gateway Center, 11th Floor Newark, NJ 07102-4000
(1) This entity could be deemed to be a "control person" and may have the power to control any of the Shares of the Fund. To the knowledge of the Funds, no other shareholder owned 5% or more of the outstanding shares of any Fund included in this SAI as of January 31, 2006. 121 MISCELLANEOUS INFORMATION -------------------------------------------------------------------------------- Each Fund is a series of the Trust, an open-end management investment company registered under the 1940 Act and organized as a Massachusetts business trust on February 11, 1986. As of the date of this SAI, the Trust offers 32 separate series, two of which currently offer two classes of shares and three of which currently offer three classes of shares. Additional series and/or classes may be created from time to time. Janus Capital reserves the right to the name "Janus." In the event that Janus Capital does not continue to provide investment advice to the Funds, the Funds must cease to use the name "Janus" as soon as reasonably practicable. Under Massachusetts law, shareholders of the Funds could, under certain circumstances, be held liable for the obligations of their Fund. However, the Amended and Restated Agreement and Declaration of Trust disclaims shareholder liability for acts or obligations of the Funds and requires that notice of this disclaimer be given in each agreement, obligation, or instrument entered into or executed by the Funds or the Trustees. The Amended and Restated Agreement and Declaration of Trust also provides for indemnification from the assets of the Funds for all losses and expenses of any Fund shareholder held liable for the obligations of their Fund. Thus, the risk of a shareholder incurring a financial loss on account of its liability as a shareholder of one of the Funds is limited to circumstances in which their Fund would be unable to meet its obligations. The possibility that these circumstances would occur is remote. The Trustees intend to conduct the operations of the Funds to avoid, to the extent possible, liability of shareholders for liabilities of their Fund. SHARES OF THE TRUST The Trust is authorized to issue an unlimited number of shares of beneficial interest with a par value of one cent per share for each series of the Trust. Shares of each Fund are fully paid and nonassessable when issued. All shares of a Fund participate equally in dividends and other distributions by the shares of the same class of that Fund, and in residual assets of that class of that Fund in the event of liquidation. Shares of each Fund have no preemptive, conversion, or subscription rights. Shares of each Fund may be transferred by endorsement or stock power as is customary, but a Fund is not bound to recognize any transfer until it is recorded on its books. Of the Funds discussed in this SAI, two Funds offer two classes of shares. The Shares discussed in this SAI are generally offered directly to investors or through financial intermediaries. See the Funds' Prospectuses for further detail. 122 SHAREHOLDER MEETINGS The Trust does not intend to hold annual or regular shareholder meetings unless otherwise required by the Amended and Restated Agreement and Declaration of Trust or the 1940 Act. Special meetings may be called for a specific Fund or for the Trust as a whole for purposes such as changing fundamental policies, electing or removing Trustees, making any changes to the Amended and Restated Agreement and Declaration of Trust that would materially adversely affect shareholders' rights, determining whether to bring certain derivative actions, or for any other purpose requiring a shareholder vote under applicable law or the Trust's governing documents, or as the Trustees consider necessary or desirable. Under the Amended and Restated Agreement and Declaration of Trust, special meetings of shareholders of the Trust or of any Fund shall be called subject to certain conditions, upon written request of shareholders owning Shares representing at least 10% of the Shares then outstanding. The Funds will assist these shareholders in communicating with other shareholders in connection with such a meeting similar to that referred to in Section 16(c) of the 1940 Act. The Trustees of the Trust (including Mr. Contro and Ms. Wolf, new Trustees), were elected at a Special Meeting of Shareholders on November 22, 2005. Under the Amended and Restated Agreement and Declaration of Trust, each Trustee will continue in office until the termination of the Trust or his or her earlier death, retirement, resignation, incapacity, or removal. Vacancies will be filled by appointment by a majority of the remaining Trustees, subject to the 1940 Act. Commencing in 2005 and not less than every fifth calendar year thereafter, a meeting of shareholders shall be held to elect Trustees. VOTING RIGHTS As a shareholder, you are entitled to one vote for each whole dollar and a proportionate fractional vote for each fractional dollar of NAV of the Fund that you own. Generally, all Funds and classes vote together as a single group, except where a separate vote of one or more Funds or classes is required by law or where the interests of one or more Funds or classes are affected differently from other Funds or classes. Shares of all series of the Trust have noncumulative voting rights, which means that the holders of more than 50% of the value of shares of all series of the Trust voting for the election of Trustees can elect 100% of the Trustees if they choose to do so. In such event, the holders of the remaining value of shares will not be able to elect any Trustees. 123 MASTER/FEEDER OPTION The Trust may in the future seek to achieve a Fund's objective by investing all of that Fund's assets in another investment company having the same investment objective and substantially the same investment policies and restrictions as those applicable to that Fund. Unless otherwise required by law, this policy may be implemented by the Trustees without shareholder approval. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PricewaterhouseCoopers LLP, 1670 Broadway, Suite 1000, Denver, Colorado 80202, Independent Registered Public Accounting Firm for the Funds, audits the Funds' annual financial statements and reviews their tax returns. REGISTRATION STATEMENT The Trust has filed with the SEC, Washington, D.C., a Registration Statement under the Securities Act of 1933, as amended, with respect to the securities to which this SAI relates. If further information is desired with respect to the Funds or such securities, reference is made to the Registration Statement and the exhibits filed as a part thereof. 124 FINANCIAL STATEMENTS -------------------------------------------------------------------------------- The following audited financial statements are hereby incorporated into this SAI by reference to the following annual reports: DOCUMENTS INCORPORATED BY REFERENCE TO THE ANNUAL REPORTS DATED OCTOBER 31, 2005 Schedules of Investments as of October 31, 2005 Statements of Operations for the period ended October 31, 2005 Statements of Assets and Liabilities as of October 31, 2005 Statements of Changes in Net Assets for each of the periods indicated Financial Highlights for each of the periods indicated Notes to Financial Statements Report of Independent Registered Public Accounting Firm The portions of such Annual Report that are not specifically listed above are not incorporated by reference into this SAI and are not part of the Registration Statement. 125 APPENDIX A -------------------------------------------------------------------------------- EXPLANATION OF RATING CATEGORIES The following is a description of credit ratings issued by three of the major credit rating agencies. Credit ratings evaluate only the safety of principal and interest payments, not the market value risk of lower quality securities. Credit rating agencies may fail to change credit ratings to reflect subsequent events on a timely basis. Although Janus Capital and Perkins consider security ratings when making investment decisions, they also perform their own investment analysis and do not rely solely on the ratings assigned by credit agencies. STANDARD & POOR'S RATINGS SERVICE BOND RATING EXPLANATION ----------------------------------------------------------------------------- Investment Grade AAA...................... Highest rating; extremely strong capacity to pay principal and interest. AA....................... High quality; very strong capacity to pay principal and interest. A........................ Strong capacity to pay principal and interest; somewhat more susceptible to the adverse effects of changing circumstances and economic conditions. BBB-..................... Adequate capacity to pay principal and interest; normally exhibit adequate protection parameters, but adverse economic conditions or changing circumstances more likely to lead to a weakened capacity to pay principal and interest than for higher rated bonds. Non-Investment Grade BB+, B, CCC, CC, C....... Predominantly speculative with respect to the issuer's capacity to meet required interest and principal payments. BB - lowest degree of speculation; C - the highest degree of speculation. Quality and protective characteristics outweighed by large uncertainties or major risk exposure to adverse conditions. D........................ In default.
126 FITCH, INC. LONG-TERM BOND RATING EXPLANATION ----------------------------------------------------------------------------- Investment Grade AAA...................... Highest rating; extremely strong capacity to pay principal and interest. AA....................... High quality; very strong capacity to pay principal and interest. A........................ Strong capacity to pay principal and interest; somewhat more susceptible to the adverse effects of changing circumstances and economic conditions. BBB-..................... Adequate capacity to pay principal and interest; normally exhibit adequate protection parameters, but adverse economic conditions or changing circumstances more likely to lead to a weakened capacity to pay principal and interest than for higher rated bonds. Non-Investment Grade BB+, B, CCC, CC, C....... Predominantly speculative with respect to the issuer's capacity to meet required interest and principal payments. BB - lowest degree of speculation; C - the highest degree of speculation. Quality and protective characteristics outweighed by large uncertainties or major risk exposure to adverse conditions. D........................ In default.
127 MOODY'S INVESTORS SERVICE, INC. BOND RATING EXPLANATION ----------------------------------------------------------------------------- Investment Grade Aaa...................... Highest quality, smallest degree of investment risk. Aa....................... High quality; together with Aaa bonds, they compose the high-grade bond group. A........................ Upper to medium-grade obligations; many favorable investment attributes. Baa...................... Medium-grade obligations; neither highly protected nor poorly secured. Interest and principal appear adequate for the present but certain protective elements may be lacking or may be unreliable over any great length of time. Non-Investment Grade Ba....................... More uncertain, with speculative elements. Protection of interest and principal payments not well safeguarded during good and bad times. B........................ Lack characteristics of desirable investment; potentially low assurance of timely interest and principal payments or maintenance of other contract terms over time. Caa...................... Poor standing, may be in default; elements of danger with respect to principal or interest payments. Ca....................... Speculative in a high degree; could be in default or have other marked shortcomings. C........................ Lowest rated; extremely poor prospects of ever attaining investment standing.
Unrated securities will be treated as non-investment grade securities unless the investment personnel determine that such securities are the equivalent of investment grade securities. When calculating the quality assigned to securities that receive different ratings from two or more agencies ("split rated securities"), the security will receive: (i) the middle rating from the three reporting agencies if three agencies provide a rating for the security; (ii) the lowest rating if only two agencies provide a rating for the security; or (iii) the rating assigned if only one agency rates the security. 128 This page intentionally left blank. 129 This page intentionally left blank. 130 This page intentionally left blank. 131 This page intentionally left blank. 132 This page intentionally left blank. (JANUS LOGO) www.janus.com PO Box 173375 Denver, CO 80217-3375 1-800-525-3713 2005 Annual Report Janus Growth Funds Growth Janus Fund Janus Enterprise Fund Janus Mercury Fund Janus Olympus Fund Janus Orion Fund Janus Triton Fund Janus Twenty Fund Janus Venture Fund Specialty Growth Janus Global Life Sciences Fund Janus Global Technology Fund (JANUS LOGO) Table of Contents JANUS GROWTH FUNDS President and CIO Letter to Shareholders 1 Portfolio Managers' Commentaries and Schedules of Investments Janus Fund 6 Janus Enterprise Fund 12 Janus Mercury Fund 18 Janus Olympus Fund 23 Janus Orion Fund 28 Janus Triton Fund 33 Janus Twenty Fund 38 Janus Venture Fund 42 Janus Global Life Sciences Fund 48 Janus Global Technology Fund 53 Statements of Assets and Liabilities 58 Statements of Operations 60 Statements of Changes in Net Assets 62 Financial Highlights 66 Notes to Schedules of Investments 72 Notes to Financial Statements 75 Report of Independent Registered Public Accounting Firm 84 Additional Information 85 Explanations of Charts, Tables and Financial Statements 89 Designation Requirements 91 Trustees and Officers 92
Please consider the charges, risks, expenses and investment objectives carefully before investing. For a prospectus containing this and other information, please call Janus at 1-800-525-3713 or download the file from www.janus.com. Read it carefully before you invest or send money. DEAR SHAREHOLDER, I am pleased to provide you with an update on Janus and the performance of your investments. We have positive news to share with you on a number of fronts, including improved performance, research team enhancements, and new product launches, all of which position us well as we look into 2006. PERFORMANCE UPDATE Starting with the most important metric, overall relative performance continued to improve over the period. As of October 31, 2005, 75% of the Janus managed equity funds were outperforming their Lipper peers. In particular, our growth/blend disciplines posted very strong performance over the past 12-months and bear special mention. For example, Janus Twenty*, Janus Orion, Janus Core Equity, Janus Growth and Income, Janus Contrarian and Janus Overseas Funds, were ranked in the top 2% of their respective Lipper categories for the one-year period ended October 31, 2005. While recent performance is important, I am even prouder of the solid performance we delivered over the three-year period, with 69% of our funds ranked in the top two Lipper quartiles. MARKET RECAP From the constant drum beat of Federal Reserve rate hikes to the recent spike in energy prices caused by dramatic hurricanes, it has been an active twelve months for the U.S. economy and equity markets. Despite ongoing worries about inflation and interest rates, the equity markets were able to battle through the lows of last fall and notch decent mid- to high-single digit returns over the past 12-months.(1) The sectors that made the largest positive contribution to the overall gains of the market, specifically the S&P 500(R) Index, during this time were healthcare and energy. Not coincidentally, given that Janus' research focuses on seeking to identify the most compelling investment candidates in the market, the healthcare and energy sectors made the largest contribution to our firm-wide performance. For example, UnitedHealth Group was the number one contributor to firm-wide performance, and rose almost 60% during the time period. A combination of rising enrollment trends, tight cost control and innovative new products and services has enabled UnitedHealth to outpace its competition over the last few years and become the gold standard in the HMO industry. On the biotechnology side, advances in cancer research and new drug approvals have powered Janus holdings like Genentech, Roche and Celgene, all of which I believe are very well positioned to address the enormous unmet medical needs of cancer patients worldwide through potential blockbuster drugs like Avastin and Remodulin. Our search for the global top energy investments took us from the natural gas fields of West Texas to deep water drilling platforms off the coast of India to Canadian oil sands fields. Investments in EOG Resources, Reliance Industries and Suncor Energy all generated handsome gains for some of our Funds, many of which were overweight the sector during the year. INVESTMENT TEAM UPDATE The improvement in firm-wide performance can be traced to the research enhancements that have been implemented over the last few years. The senior analysts that have been added to the research team made meaningful contributions to the Funds from day one. The research associate group expanded its reach with each passing quarter and continued to undertake critical work in uncovering emerging trends in the marketplace. The Risk Committee, headed by Dan Scherman, worked closely with portfolio managers to identify and assess the appropriate risk profile for each Fund. Each of these initiatives represented key goals we articulated to fund holders last year, and I'm pleased to report that not only have we fulfilled each goal, but also that the initiatives had a positive impact on several of the Funds. UPDATE ON NEW FUNDS I'd be remiss if I didn't highlight the solid performance posted by our two newest Fund offerings -- Janus Triton Fund and Janus Research Fund. While still in its early days, Janus Triton Fund populated its portfolio with a compelling collection of small and mid-cap investment ideas and handsomely outperformed its benchmark, the Russell 2500(TM) Growth Index. (GARY BLACK PHOTO) Gary Black President and Chief Investment Officer Janus Growth Funds October 31, 2005 1 CONTINUED Janus Research Fund represents a truly differentiated portfolio offered by Janus, in that it is an analyst-driven portfolio populated with the highest conviction ideas of each analyst. As such, the portfolio is style-agnostic and offers exposure to all market capitalizations, sectors and geographies of the global market. We are very pleased with the initial performance of both these Funds. We are also expanding our fund lineup. As of December 30, 2005, investors will be able to take advantage of three new investment options called Janus Smart Portfolios. These portfolios are offered in three risk profiles: Growth, Moderate and Conservative, and they invest in the underlying Janus stock and bond Funds to deliver a simple, diversified strategy for investors. GROWTH VERSUS VALUE In past letters we have been rather vocal in sharing our opinion that growth is poised to return to favor in the market place. After five consecutive years of outperformance by the value style, we are most encouraged by early signs that the market is indeed beginning to rotate back into the growth style. For example, the Russell 1000(R) Growth Index has outperformed the Russell 1000(R) Value Index for two straight quarters. This outperformance (growth beating value for two consecutive quarters) has not occurred since the first half of the year 2000. Encouragingly, this trend continued in the first month of the fourth quarter as well. Because a sizeable portion of Janus' assets are growth oriented, this rotation should represent a growing breeze at our backs as we transition into 2006. MARKET OUTLOOK Given the twin headwinds of inflation and rate hikes, there has been a growing debate in the market about the potential for an economic slowdown as we enter 2006. In addition to the interest rate and inflation outlook, flattening home prices, rising consumer debt and potentially slowing corporate earnings all point to clouds on the horizon. Additionally, we are watching the tightening spread between short- and long-term bonds for any discernable signs that a recession may be looming on the horizon. While in aggregate these issues are worrisome, based on the economic data available today, we do not believe the economy will slow down dramatically in 2006. While interest rate hikes and rising inflation make for good newspaper headlines, it is important to note that the underlying fundamentals supporting further economic expansion remain intact and should enable the economy to navigate through these economic cross-currents. The economy's resilience has often been underestimated, and there is an expectation that this dynamic will be demonstrated once again as we transition into the New Year. Regardless of the macro-economic climate, we remain focused on leveraging our fundamental, grass-roots research to identify the most promising risk/reward investments we can locate on a global basis. CEO SUCCESSION As many of you know, on October 26, 2005 the board of directors of Janus Capital Group announced that I would succeed Steve Scheid as chief executive officer on January 3, 2006. Steve will remain chairman of the board. I want to end this letter by thanking Steve Scheid for his contribution to Janus over the last 18 months as chief executive officer. He has worked tirelessly to rebuild trust in the Janus brand and restructure our organization for success. I hope you'll join me in congratulating Steve on his accomplishments. Thank you for your investment in Janus. Sincerely, /s/ Gary Black Gary Black The information in the Janus Smart Portfolio prospectus is not complete and may be changed. The securities may not be sold until the registration statement filed with the Securities Exchange Commission is effective. The prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer is not permitted. *Closed to new investors. (1) Based on 1-year returns for the Russell 1000(R) Growth Index and S&P 500(R) Index which returned 8.81% and 8.72% for the period ended October 31, 2005. 2 Janus Growth Funds October 31, 2005 CONTINUED See complete Lipper rankings on page 4. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. The Fund's portfolios may differ significantly from the securities held in the indices. The indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual portfolio. The S&P 500(R) Index is the Standard & Poor's composite index of 500 stocks, a widely recognized, unmanaged index of common stock prices. The Russell 2500(TM) Growth Index measures the performance of those Russell 2500 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000(R) Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000(R) Value Index measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. As of October 31, 2005, EOG Resources, Inc. was 1.1% of Janus Core Equity Fund, 1.6% of Janus Research Fund, 0.7% of Janus Growth and Income Fund and 0.6% of Janus Risk-Managed Stock Fund. As of October 31, 2005, Reliance Industries, Ltd. was 4.4% of Janus Contrarian Fund, 1.6% of Janus Research Fund, 1.9% of Janus Worldwide Fund and 6.5% of Janus Overseas Fund. As of October 31, 2005, Suncor Energy, Inc. was 2.3% of Janus Core Equity Fund, 1.6% of Janus Research Fund, 0.9% of Janus Balanced Fund, 3.4% of Janus Growth and Income Fund, 1.6% of Janus Overseas Fund and 2.1% of Janus Contrarian Fund. As of October 31, 2005, UnitedHealth Group, Inc. was 1.3% of Janus Research Fund, 0.4% of Janus Balanced Fund, 3.8% of Janus Growth and Income Fund, 0.7% of Janus Risk-Managed Stock Fund and 3.0% of Janus Worldwide Fund. As of October 31, 2005, Roche Holding A.G. was 3.2% of Janus Core Equity Fund, 3.3% of Janus Orion Fund, 2.7% of Janus Balanced Fund, 2.7% of Janus Growth and Income Fund, 0.9% of Janus Worldwide Fund and 2.5% of Janus Overseas Fund. As of October 31, 2005, Celgene Corp. was 1.9% of Janus Core Equity Fund, 1.3% of Janus Research Fund and 1.2% of Janus Balanced Fund. There is no guarantee that any Fund included in this report holds these securities. Please see the back of the report for individual holding percentages as of October 31, 2005. There is no assurance that any Janus fund currently holds any of these securities. Positive performance of holdings does not indicate positive portfolio returns. Growth and value investing each have their own unique risks and potential for rewards, and may not be suitable for all investors. A growth investing strategy typically carries a higher risk of loss and a higher potential for reward than a value investing strategy. A growth investing strategy emphasizes capital appreciation; a value investing strategy emphasizes investments in companies believed to be undervalued. A fund's performance for very short time periods may not be indicative of future performance. Janus Growth Funds October 31, 2005 3 Lipper Rankings (unaudited)
LIPPER RANKINGS - BASED ON TOTAL RETURN AS OF 10/31/05 ---------------------------------------------------------------------- ONE YEAR THREE YEAR FIVE YEAR ---------------------- ---------------------- ---------------------- RANK/ RANK/ RANK/ PERCENTILE TOTAL PERCENTILE TOTAL PERCENTILE TOTAL LIPPER CATEGORY RANK (%) FUNDS RANK (%) FUNDS RANK (%) FUNDS -------------------------------- ---------- ---------- ---------- ---------- ---------- ---------- JANUS INVESTMENT FUNDS (Inception Date) Janus Fund (2/70) Large-Cap Growth Funds 69 467/679 54 311/581 71 325/457 Janus Enterprise Fund(1) (9/92) Mid-Cap Growth Funds 25 135/542 13 54/445 88 286/325 Janus Mercury Fund(1) (5/93) Large-Cap Growth Funds 21 141/679 8 44/581 74 335/457 Janus Olympus Fund(1) (12/95) Multi-Cap Growth Funds 18 74/414 54 194/359 73 189/261 Janus Orion Fund (6/00) Multi-Cap Growth Funds 2 5/414 8 27/359 23 60/261 Janus Twenty Fund* (4/85) Large-Cap Growth Funds 1 5/679 4 18/581 47 212/457 Janus Venture Fund* (4/85) Small-Cap Growth Funds 63 325/515 15 63/435 53 168/322 Janus Balanced Fund(1) (9/92) Balanced Funds 23 142/634 73 338/466 44 163/374 Janus Core Equity Fund(1) (6/96) Large-Cap Core Funds 1 6/877 7 52/763 10 57/606 Janus Growth and Income Fund(1) (5/91) Large-Cap Core Funds 2 16/877 12 8/763 40 241/606 Janus Risk-Managed Stock Fund (2/03) Multi-Cap Core Funds 12 87/761 -- -- -- -- Janus Contrarian Fund(2) (2/00) Multi-Cap Core Funds 2 15/761 1 5/270 17 68/403 Janus Federal Tax-Exempt Fund (5/93) General Municipal Debt 78 207/267 84 212/252 81 178/221 Janus Flexible Bond Fund(1)(3) (7/87) Intermediate Inv Grade Debt Funds 61 279/461 36 144/403 35 102/294 Janus High-Yield Fund (12/95) High Current Yield Funds 58 244/426 94 340/363 51 151/300 Janus Short-Term Bond Fund(1) (9/92) Short Investment Grade Debt 65 142/218 20 32/166 49 57/116 Janus Global Life Sciences Fund (12/98) Health/Biotechnology Funds 19 33/178 30 48/161 71 73/102 Janus Global Opportunities Fund(1) (6/01) Global Funds 94 308/328 37 102/282 -- -- Janus Global Technology Fund (12/98) Science and Technology Funds 25 71/287 72 190/263 55 117/212 Janus Overseas Fund(1) (5/94) International Funds 1 4/880 13 97/749 68 368/548 Janus Worldwide Fund(1) (5/91) Global Funds 87 286/328 97 273/282 96 197/206 Janus Mid Cap Value Fund - Inv(1)(4) (8/98) Mid-Cap Value Funds 56 139/248 29 58/201 11 11/102 Janus Small Cap Value Fund - Inv*(4) (10/87) Small-Cap Core Funds 71 426/604 71 346/492 24 82/345 LIPPER RANKINGS - BASED ON TOTAL RETURN AS OF 10/31/05 ---------------------------------------------- TEN YEAR SINCE INCEPTION ---------------------- ---------------------- RANK/ RANK/ PERCENTILE TOTAL PERCENTILE TOTAL RANK (%) FUNDS RANK (%) FUNDS ---------- ---------- ---------- ---------- JANUS INVESTMENT FUNDS (Inception Date) Janus Fund (2/70) 43 65/151 5 1/20 Janus Enterprise Fund(1) (9/92) 60 73/121 35 18/51 Janus Mercury Fund(1) (5/93) 6 8/151 2 1/84 Janus Olympus Fund(1) (12/95) -- -- 14 12/88 Janus Orion Fund (6/00) -- -- 37 86/237 Janus Twenty Fund* (4/85) 2 2/151 5 2/40 Janus Venture Fund* (4/85) 43 41/96 10 1/9 Janus Balanced Fund(1) (9/92) 7 11/175 5 3/72 Janus Core Equity Fund(1) (6/96) -- -- 2 4/263 Janus Growth and Income Fund(1) (5/91) 3 5/223 5 5/102 Janus Risk-Managed Stock Fund (2/03) -- -- 19 113/605 Janus Contrarian Fund(2) (2/00) -- N/A 16 53/340 Janus Federal Tax-Exempt Fund (5/93) 72 103/144 83 66/79 Janus Flexible Bond Fund(1)(3) (7/87) 11 15/139 16 4/24 Janus High-Yield Fund (12/95) -- -- 3 3/104 Janus Short-Term Bond Fund(1) (9/92) 18 11/62 43 11/25 Janus Global Life Sciences Fund (12/98) -- -- 33 16/48 Janus Global Opportunities Fund(1) (6/01) -- -- 15 34/230 Janus Global Technology Fund (12/98) -- -- 22 17/78 Janus Overseas Fund(1) (5/94) 5 8/196 2 2/122 Janus Worldwide Fund(1) (5/91) 47 35/74 28 5/17 Janus Mid Cap Value Fund - Inv(1)(4) (8/98) -- -- 4 3/79 Janus Small Cap Value Fund - Inv*(4) (10/87) N/A N/A N/A N/A
(1)The date of the Lipper ranking is slightly different from when the Fund began operations since Lipper provides fund rankings as of the last day of the month or the first Thursday after fund inception. (2)Janus Contrarian Fund buys stock in overlooked or underappreciated companies of any size, in any sector. Overlooked and underappreciated stocks present special risks. (3)Effective February 28, 2005, Janus Flexible Income Fund changed its name to Janus Flexible Bond Fund and added to its investment policy to state that at least 80% of its net assets (plus borrowings for investment purposes) will be invested in bonds. (4)Rating is for the Investor share class only; other classes may have different performance characteristics. *Closed to new investors. Data presented represents past performance, which is no guarantee of future results. Janus Contrarian Fund, Janus Overseas Fund, Janus Global Technology Fund and Janus Orion Fund may have significant exposure to emerging markets which may lead to greater price volatility. A fund's performance may be affected by risks that include those associated with non-diversification, investments in foreign securities, non-investment grade debt securities, undervalued companies or companies with a relatively small market capitalization. Please see a Janus prospectus for more detailed information. There is no assurance that the investment process will consistently lead to successful investing. Growth and value investing each have their own unique risks and potential for rewards, and may not be suitable for all investors. A growth investing strategy typically carries a higher risk of loss and a higher potential for reward than a value investing strategy. A growth investing strategy emphasizes capital appreciation; a value investing strategy emphasizes investments in companies believed to be undervalued. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. 4 Janus Growth Funds October 31, 2005 Useful Information About Your Fund Report PORTFOLIO MANAGER COMMENTARIES The portfolio manager commentaries in this report include valuable insight from the portfolio managers as well as statistical information to help you understand how your Fund's performance and characteristics stack up against those of comparable indices. Please keep in mind that the opinions expressed by the portfolio managers in their commentaries are just that: opinions. The commentary is a reflection of the portfolio manager's best judgment at the time this report was compiled, which was October 31, 2005. As the investing environment changes, so could the portfolio managers' opinions. These views are unique to each manager and aren't necessarily shared by their fellow employees or by Janus in general. FUND EXPENSES We believe it's important for our shareholders to have a clear understanding of Fund expenses and the impact they have on investment return. THE FOLLOWING IS IMPORTANT INFORMATION REGARDING EACH FUND'S EXPENSE EXAMPLE, WHICH APPEARS IN EACH FUND'S PORTFOLIO MANAGER COMMENTARY WITHIN THIS ANNUAL REPORT. PLEASE REFER TO THIS INFORMATION WHEN REVIEWING THE EXPENSE EXAMPLE FOR EACH FUND. Example As a shareholder of a Fund, you incur two types of costs: (1) transaction costs such as redemption fees (where applicable) (and any related exchange fees) and (2) ongoing costs, including management fees and other Fund expenses. The example is intended to help you understand your ongoing costs (in dollars) of investing in a Fund and to compare these costs with the ongoing costs of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the six-month period from May 1, 2005 to October 31, 2005. Actual Expenses The first line of the table in each example provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During the Period" to estimate the expenses you paid on your account during the period. Hypothetical Example for Comparison Purposes The second line of the table in each example provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses. This is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Janus Capital Management LLC ("Janus Capital") has contractually agreed to waive Janus Triton Fund's total operating expenses, excluding brokerage commissions, interest, taxes and extraordinary expenses to certain limits until at least March 1, 2007. Expenses in the example reflect the application of this waiver. Had the waiver not been in effect, your expenses would have been higher. More information regarding the waiver is available in the Funds' Prospectuses. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as redemption fees (where applicable). These fees are fully described in the prospectus. Therefore, the second line of each table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Janus Growth Funds October 31, 2005 5 Janus Fund (unaudited) FUND SNAPSHOT For more than 30 years, this traditional growth fund has exemplified Janus' research and stock-picking abilities. PERFORMANCE OVERVIEW During the 12 months ended October 31, 2005, large-capitalization growth companies re-emerged as a viable choice for many investors, ending a lengthy dry spell. As the transition proved gradual, returns followed in modest fashion, contributing to a 7.71% gain by Janus Fund. In comparison, its primary benchmark, the Russell 1000(R) Growth Index, posted an 8.81% return and its secondary benchmark, the S&P 500(R) Index returned 8.72% for the same period. Healthcare related investments enhanced the Fund's returns, particularly those in the food and drug retailing and the diversified healthcare equipment and services groups. While posting solid returns and offering strong growth prospects, stocks tied to the drug business -- not including the beleaguered large pharmaceuticals -- and health maintenance organization (HMO) operators provided the largest lift. The Fund's semiconductor holdings slumped amid a mid-period downturn within the cyclical chip industry, while its media positions lagged as part of a general disenchantment with future growth outlooks. STRATEGY IN THIS ENVIRONMENT Persistent worries over oil prices and the Federal Reserve's ongoing campaign to raise interest rates undermined the equity markets for much of the period. The devastation caused by Hurricanes Katrina and Rita, along with the resulting disruption in the energy and raw materials markets, compounded investors' malaise. As the near-term impact on the economy, inflationary factors and consumer confidence all proved tough to gauge, investors adopted a more defensive mindset. By the period's end, this translated into what appeared to be a growing preference for large-cap growth stocks, which featured valuations at the low end of historical ranges and increased protection against more cyclical alternatives. Against this backdrop, we relied heavily on the expertise of the Janus research team, as more than 80% of the Fund's holdings are rated either "buy" or "strong buy" by our internal analysts. We've also flattened the Fund's profile, diversifying its holdings across a larger group of industries to gain exposure to what we believe are pockets of strength throughout the market. FUND COMPOSITION As of October 31, 2005, equities accounted for 92.9% of the Fund, including 16.8% in foreign holdings. Of total net assets, the Fund's top 10 equity holdings represented 27.6% and cash comprised 7.1%. DRUG-RELATED STOCKS AND GLOBAL MATERIALS PRODUCER KEYED PERFORMANCE Avoiding large pharmaceutical companies, which faced safety issues and looming patent expirations, we focused the Fund's life sciences investments on companies such as Alcon, a large-cap pharmaceutical company known for its eye-care products. The company rose due to its excellent pipeline of lens and drug products as well as its disciplined business practices, and maintained a bright outlook due to the aging of the baby boomer population, which has spurred demand in recent years. Two other leading gainers that offered a different spin on the healthcare industry were drugstore giant Walgreen and prescription benefit management company Caremark Rx. Both companies generated steady returns and, in our opinion, stand to benefit from the new Medicare prescription benefit scheduled to take effect on January 1. Another advancer was Companhia Vale do Rio Doce, a Brazilian mining company that exports iron ore and other key raw materials. During the period, prices for these materials increased on the back of extensive growth in the Chinese and Indian markets, as well as supply shortages in the U.S. resulting from Hurricanes Katrina and Rita. (BLAINE ROLLINS PHOTO) Blaine Rollins portfolio manager Top 10 Equity Holdings -- (% of Net Assets)
OCTOBER 31, 2005 OCTOBER 31, 2004 ---------------- ---------------- Boeing Co. 4.0% 1.3% Cisco Systems, Inc. 3.9% 4.8% Comcast Corp. - Special Class A 3.4% 7.2% Procter & Gamble Co. 3.2% 1.3% Yahoo!, Inc. 2.7% 0.6% UnitedHealth Group, Inc. 2.6% 0.4% Alcon, Inc. (U.S. Shares) 2.1% 1.3% Caremark Rx, Inc. 2.1% 0.8% Microsoft Corp. 1.8% -- United Parcel Service, Inc. - Class B 1.8% 3.1%
6 Janus Growth Funds October 31, 2005 (unaudited) SEMICONDUCTOR AND NETWORK INFRASTRUCTURE COMPANIES HINDERED RETURNS The semiconductor chip industry can offer numerous challenges -- something we've experienced firsthand as longtime owners of Maxim Integrated Products, the developer of analog chips for use in products ranging from cellular handsets to automobiles. Although we trimmed the Fund's legacy position in the stock, its poor performance during the period still hampered our results. The stock was hurt in part by dissatisfaction with the company's efforts to shore up its balance sheet. However, it did recover somewhat in the closing months of the period, as orders picked up and its valuation proved appealing. We exhibited similar patience with Cisco, the world's leading developer of networking equipment. Although the company did not suffer any fundamental disappointments -- indeed, it generated strong cash flows which it used in part to fund a steady stock buyback effort -- its top-line growth proved unsatisfactory to some. Enterprise spending, which affects approximately two-thirds of Cisco's business, has picked up, but not as briskly as many had hoped. Nevertheless, we're seeing favorable trends for Cisco, such as an effort to push broadband services through wireless networks. Elsewhere, Univision Communications, a Spanish-language media company serving the U.S. Hispanic population, struggled to recover from a volatile 2004. Our patience with Univision wore thin, so we decided to exit our position and redeploy our assets in what we feel are other, more attractive growth opportunities. INVESTMENT STRATEGY AND OUTLOOK In the coming months, we will be watching the consumer closely. It's possible that interest rates will dictate the consumer's mood. For example, if rates keep climbing, concern over credit card bills and adjustable rate mortgage loans could grow. On the other hand, the Gulf Coast rebuilding effort may provide some stimulus to the job market, which in turn could bolster consumer confidence. We also plan to keep an eye on international opportunities. We continue to seek stocks that we believe are positioned to benefit from exponential growth in emerging markets such as China and India, most notably in the commercial aerospace arena. In addition, we've seen a resurgence in Japanese consumerism after nearly 15 down years. Given this development, we are exploring high-end retailers that cater to the Japanese market. Domestically, we are excited about the individualization of media content, which allows each distinct consumer to tailor entertainment offerings to personal tastes and preferences. In a sector that's struggling to find its way, we believe this trend offers some solid upside potential. As always, we will continue to use bottom-up research and careful analysis to make all investment choices. Thank you for your investment in Janus Fund. SIGNIFICANT AREAS OF INVESTMENT -- Fund vs. Index (% of Net Assets) (BAR CHART)
RUSSELL 1000(R) GROWTH INDEX JANUS FUND --------------- ---------- Aerospace and Defense 1.4% 6.5% Networking Products 2.0% 4.9% Medical - HMO 2.3% 3.7% Web Portals/Internet Service Providers 1.7% 3.7% Cable Television 0.8% 3.4%
Janus Growth Funds October 31, 2005 7 Janus Fund (unaudited) Performance Average Annual Total Return -- for the periods ended October 31, 2005
One Five Ten Since Year Year Year Inception* ------------ ------------ ------------ ------------ Janus Fund 7.71% (8.96)% 6.90% 13.74% Russell 1000(R) Growth Index 8.81% (7.93)% 6.78% 11.91%** S&P 500(R) Index 8.72% (1.74)% 9.34% 11.29% Lipper Ranking - based on total returns for Large-Cap Growth Funds 467/679 325/457 65/151 1/20
(PERFORMANCE GRAPH)
S&P 500(R) RUSSELL 1000(R) JANUS FUND INDEX GROWTH INDEX ------------ -------------- --------------- 2/5/1970* $ 10,000 $ 10,000 10/31/1970 $ 10,192 $ 9,975 10/31/1977 $ 22,205 $ 14,396 12/31/1978** $ 27,921 $ 15,945 $ 10,000 10/31/1984 $ 101,317 $ 37,167 $ 21,122 10/31/1991 $ 325,172 $ 112,638 $ 65,638 10/31/1998 $ 879,727 $ 373,915 $ 210,834 10/31/2005 $ 996,933 $ 456,725 $ 204,700
Data presented represents past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 1-800-525-3713 or visit www.janus.com for performance current to the most recent month-end. See Notes to Schedules of Investments for index definitions. Total return includes reinvestment of dividends, distributions and capital gains. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. *The Fund's inception date -- February 5, 1970 **The Russell 1000(R) Growth Index's since inception returns calculated from December 31, 1978 FUND EXPENSES The example below shows you the ongoing costs (in dollars) of investing in your Fund and allows you to compare these costs with those of other mutual funds. Please refer to page 5 for a detailed explanation of the information presented in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD EXPENSE EXAMPLE (5/1/05) (10/31/05) (5/1/05-10/31/05)* --------------- ----------------------- -------------------- --------------------------- Actual $ 1,000.00 $ 1,060.80 $ 4.52 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.82 $ 4.43
*Expenses are equal to the annualized expense ratio of 0.87%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). See "Explanations of Charts, Tables and Financial Statements." The Fund's portfolio may differ significantly from the securities held in the indices. The indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual portfolio. There is no assurance that the investment process will consistently lead to successful investing. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. Effective February 25, 2005, Janus Fund changed its primary benchmark from the S&P 500(R) Index to the Russell 1000(R) Growth Index. The new primary benchmark will provide a more appropriate comparison to the Fund's investment style. The Russell 1000(R) Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Fund will retain the S&P 500(R) Index as a secondary benchmark index. 8 Janus Growth Funds October 31, 2005 Janus Fund Schedule of Investments As of October 31, 2005
Shares or Principal Amount Value --------------------------------------------------- -------------- Common Stock - 92.9% Aerospace and Defense - 6.5% 5,401,628 BAE Systems PLC** $ 31,598,811 6,818,235 Boeing Co. 440,730,710 377,880 General Dynamics Corp.# 43,947,444 2,892,145 Lockheed Martin Corp.# 175,148,301 555,575 Northrop Grumman Corp.# 29,806,599 -------------- 721,231,865 Agricultural Chemicals - 0.2% 1,932,280 CF Industries Holdings, Inc.*,# 26,704,110 Agricultural Operations - 0.8% 1,488,285 Monsanto Co.# 93,776,838 Airlines - 0.5% 1,240,825 AMR Corp.# 16,763,546 2,256,160 Southwest Airlines Co. 36,121,121 -------------- 52,884,667 Apparel Manufacturers - 0.6% 5,848,713 Burberry Group PLC**,# 39,700,894 939,860 Coach, Inc.*,# 30,244,695 -------------- 69,945,589 Applications Software - 2.1% 870,995 Citrix Systems, Inc.*,# 24,013,332 8,020,820 Microsoft Corp. 206,135,074 -------------- 230,148,406 Athletic Footwear - 1.1% 1,398,670 NIKE, Inc. - Class B# 117,558,214 Automotive - Cars and Light Trucks - 0.2% 515,083 BMW A.G.**,# 22,401,891 Beverages - Non-Alcoholic - 0.8% 1,549,975 PepsiCo, Inc.# 91,572,523 Beverages - Wine and Spirits - 0.5% 1,024,200 Diageo PLC (ADR)**,# 60,868,206 Building - Residential and Commercial - 1.2% 1,157,393 D.R. Horton, Inc.# 35,520,391 51,855 NVR, Inc.*,# 35,546,603 1,710,060 Pulte Homes, Inc.# 64,623,167 -------------- 135,690,161 Building Products - Cement and Aggregate - 0.3% 698,520 Cemex S.A. de C.V. (ADR)# 36,371,936 Cable Television - 3.4% 13,820,741 Comcast Corp. - Special Class A* 378,826,511 Casino Hotels - 0.6% 1,070,870 Harrah's Entertainment, Inc. 64,766,218 Chemicals - Diversified - 0.4% 1,499,000 Lyondell Chemical Co.# 40,173,200 Chemicals - Specialty - 0.3% 360,399 Syngenta A.G.* 38,629,652 Commercial Banks - 0.7% 4,356 Mizuho Financial Group, Inc. 28,887,828 597,120 UBS A.G. (ADR)# 51,155,270 -------------- 80,043,098 Commercial Services - 0.2% 653,225 Iron Mountain, Inc.*,# 25,475,775
Shares or Principal Amount Value --------------------------------------------------- -------------- Commercial Services - Finance - 1.5% 933,260 Moody's Corp.# $ 49,705,428 2,922,772 Paychex, Inc.# 113,286,642 -------------- 162,992,070 Computers - 2.8% 2,043,980 Dell, Inc.*,# 65,162,082 3,447,075 Hewlett-Packard Co.# 96,655,983 2,450,745 Research In Motion, Ltd. (U.S. Shares)*,# 150,696,311 -------------- 312,514,376 Computers - Memory Devices - 0.9% 7,217,115 EMC Corp.* 100,750,925 Containers - Metal and Glass - 0.5% 1,373,160 Ball Corp.# 54,061,309 Cosmetics and Toiletries - 3.2% 6,362,690 Procter & Gamble Co. 356,247,013 Cruise Lines - 0.1% 117,445 Carnival Corp. (U.S. Shares)# 5,833,493 Data Processing and Management - 0.8% 1,367,505 First Data Corp. 55,315,577 833,505 NAVTEQ Corp.*,# 32,606,716 -------------- 87,922,293 Dental Supplies and Equipment - 0.8% 2,217,997 Patterson Companies, Inc.*,# 91,780,716 Distribution/Wholesale - 0.5% 7,139,500 Esprit Holdings, Ltd. 50,331,352 Diversified Financial Services - 0.4% 718,240 Morgan Stanley Co.* 39,079,438 Diversified Minerals - 1.7% 4,683,275 Companhia Vale do Rio Doce (ADR) 193,559,756 Diversified Operations - 1.3% 2,377,470 General Electric Co. 80,620,008 1,884,570 Honeywell International, Inc. 64,452,294 -------------- 145,072,302 E-Commerce/Services - 1.6% 4,377,034 eBay, Inc.* 173,330,546 Electric - Generation - 0.3% 1,961,425 AES Corp.*,# 31,167,043 Electric Products - Miscellaneous - 0.5% 870,785 Emerson Electric Co. 60,563,097 Electronic Components - Miscellaneous - 0.6% 2,516,415 Koninklijke (Royal) Philips Electronics N.V. (U.S. Shares)**,# 65,829,416 Electronic Components - Semiconductors - 0.7% 2,565,950 Texas Instruments, Inc.# 73,257,873 Electronic Forms - 0.7% 2,413,820 Adobe Systems, Inc.# 77,845,695 Enterprise Software/Services - 1.6% 5,055,205 Oracle Corp.*,# 64,099,999 2,752,660 SAP A.G. (ADR)**,# 118,199,221 -------------- 182,299,220 Entertainment Software - 0.5% 889,615 Electronic Arts, Inc.* 50,601,301 Finance - Credit Card - 0.4% 994,700 Credit Saison Co., Ltd. 44,860,192
See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds October 31, 2005 9 Janus Fund Schedule of Investments As of October 31, 2005
Shares or Principal Amount Value --------------------------------------------------- -------------- Finance - Investment Bankers/Brokers - 0.7% 1,204,415 Merrill Lynch & Company, Inc.# $ 77,973,827 Finance - Other Services - 0.3% 86,365 Chicago Mercantile Exchange Holdings, Inc.# 31,536,180 Financial Guarantee Insurance - 0.5% 938,835 MBIA, Inc.*,# 54,677,750 Food - Confectionary - 0.5% 728,845 Wm. Wrigley Jr. Co.# 50,654,728 Food - Retail - 1.2% 913,375 Whole Foods Market, Inc.# 131,644,739 Food - Wholesale/Distribution - 0.4% 1,393,290 Sysco Corp.# 44,459,884 Investment Management and Advisory Services - 0.2% 370,080 T. Rowe Price Group, Inc.# 24,247,642 Medical - Biomedical and Genetic - 2.8% 1,609,790 Amgen, Inc.*,# 121,957,690 1,229,500 Celgene Corp.* 68,974,950 1,191,780 Genentech, Inc.* 107,975,268 269,710 Invitrogen Corp.*,# 17,150,859 -------------- 316,058,767 Medical - Drugs - 2.9% 1,088,485 Abbott Laboratories 46,859,279 3,642,855 Eli Lilly and Co.# 181,377,751 308,496 Roche Holding A.G. 46,082,390 715,420 Sanofi-Aventis (ADR)** 28,702,650 528,300 Wyeth 23,541,048 -------------- 326,563,118 Medical - Generic Drugs - 1.7% 4,890,145 Teva Pharmaceutical Industries, Ltd. (ADR)# 186,412,327 Medical - HMO - 3.7% 2,268,945 Coventry Health Care, Inc.* 122,500,341 5,011,460 UnitedHealth Group, Inc.# 290,113,418 -------------- 412,613,759 Medical Instruments - 1.2% 415,575 Intuitive Surgical, Inc.*,# 36,873,970 1,775,465 Medtronic, Inc. 100,597,847 -------------- 137,471,817 Medical Products - 1.0% 860,665 Johnson & Johnson 53,894,842 1,347,460 Varian Medical Systems, Inc.*,# 61,390,278 -------------- 115,285,120 Metal - Diversified - 0.5% 1,516,510 Inco, Ltd. (U.S. Shares)# 60,994,032 Metal Processors and Fabricators - 1.0% 2,367,960 Precision Castparts Corp.# 112,146,586 Motorcycle and Motor Scooter Manufacturing - 0.9% 1,952,040 Harley-Davidson, Inc.# 96,684,541 Multi-Line Insurance - 0.1% 299,465 HCC Insurance Holdings, Inc.# 8,983,950 Networking Products - 4.9% 24,935,210 Cisco Systems, Inc.*,# 435,119,414 4,908,595 Juniper Networks, Inc.*,# 114,517,521 -------------- 549,636,935
Shares or Principal Amount Value --------------------------------------------------- -------------- Oil - Field Services - 1.7% 1,761,760 Halliburton Co.# $ 104,120,016 Schlumberger, Ltd. (U.S. 891,690 Shares)**,# 80,938,701 -------------- 185,058,717 Oil Companies - Exploration and Production - 0.6% 508,630 Apache Corp. 32,465,853 557,520 EOG Resources, Inc.# 37,788,706 -------------- 70,254,559 Oil Companies - Integrated - 1.4% 2,608,520 Exxon Mobil Corp. 146,442,313 Suncor Energy, Inc. (U.S. 255,725 Shares) 13,714,532 -------------- 160,156,845 Optical Supplies - 2.1% 1,763,530 Alcon, Inc. (U.S. Shares)# 234,373,137 Pharmacy Services - 2.1% 4,463,260 Caremark Rx, Inc.*,# 233,874,824 Property and Casualty Insurance - 1.0% 436,690 Chubb Corp. 40,599,069 1,650,695 W. R. Berkley Corp. 72,135,372 -------------- 112,734,441 Reinsurance - 0.2% Montpelier Re Holdings, Ltd. 1,346,215 (U.S. Shares) # 27,058,922 Retail - Apparel and Shoe - 0.7% Industria de Diseno Textil 978,491 S.A.** 28,953,324 1,343,305 Nordstrom, Inc. 46,545,518 -------------- 75,498,842 Retail - Building Products - 0.7% 1,307,570 Lowe's Companies, Inc. 79,461,029 Retail - Consumer Electronics - 0.5% 1,225,162 Best Buy Company, Inc.# 54,225,670 Retail - Discount - 1.0% 551,574 Costco Wholesale Corp. 26,674,119 1,469,045 Target Corp.# 81,811,116 -------------- 108,485,235 Retail - Drug Store - 0.9% 2,264,480 Walgreen Co.# 102,875,326 Retail - Office Supplies - 0.6% 3,008,497 Staples, Inc. 68,383,137 Semiconductor Components/Integrated Circuits - 1.6% 2,717,725 Linear Technology Corp.# 90,255,647 2,499,160 Maxim Integrated Products, Inc.#,L. 86,670,869 -------------- 176,926,516 Semiconductor Equipment - 0.5% 3,221,225 Applied Materials, Inc. 52,763,666 Soap and Cleaning Preparations - 0.6% 2,137,086 Reckitt Benckiser PLC** 64,569,903 Telecommunication Equipment - Fiber Optics - 0.9% 4,999,845 Corning, Inc.*,# 100,446,886 Television - 0.2% 2,639,741 British Sky Broadcasting Group PLC**,# 23,829,016 Textile-Home Furnishings - 0.3% 367,565 Mohawk Industries, Inc.* 28,688,448 Therapeutics - 0.9% 2,226,405 Gilead Sciences, Inc.*,# 105,197,636
See Notes to Schedules of Investments and Financial Statements. 10 Janus Growth Funds October 31, 2005 Schedule of Investments As of October 31, 2005
Shares or Principal Amount Value --------------------------------------------------- -------------- Transportation - Services - 1.8% 2,755,475 United Parcel Service, Inc. - Class B# $ 200,984,347 Transportation - Truck - 0.1% 805,480 J.B. Hunt Transport Services, Inc.# 15,634,367 Web Portals/Internet Service Providers - 3.7% 297,335 Google, Inc. - Class A*,# 110,650,247 8,104,240 Yahoo!, Inc.* 299,613,752 -------------- 410,263,999 Wireless Equipment - 2.5% 1,893,905 Crown Castle International Corp.*,# 46,438,551 8,428,275 Nokia Oyj (ADR)** 141,763,586 2,142,190 QUALCOMM, Inc. 85,173,474 -------------- 273,375,611 --------------------------------------------------- -------------- Total Common Stock (cost $8,321,971,602) 10,350,135,067 Money Markets - 2.3% Janus Institutional Cash Reserves Fund 160,000,000 3.87% 160,000,000 Janus Money Market Fund 100,000,000 3.86% 100,000,000 --------------------------------------------------- -------------- Total Money Markets (cost $260,000,000) 260,000,000 Other Securities - 6.0% State Street Navigator Securities Lending 671,968,719 Prime Portfolio+ (cost $671,968,719) 671,968,719 Repurchase Agreements - 1.3% Cantor Fitzgerald & Co., 4.05% dated 10/31/05, maturing 11/1/05 to be repurchased at $11,201,260 collateralized by $21,388,881 in U.S. Government Agencies 0% - 7.50%, 12/15/12 - 5/15/35 $ 11,200,000 with a value of $11,424,360 11,200,000 Citigroup Global Markets Inc., 4.05% dated 10/31/05, maturing 11/1/05 to be repurchased at $108,212,173 collateralized by $133,766,879 in U.S. Government Agencies 0% - 5.00%, 3/1/34 - 8/1/35 108,200,000 with a value of $110,364,000 108,200,000 Fortis Bank N.V., 4.06% dated 10/31/05, maturing 11/1/05 to be repurchased at $26,302,966 collateralized by $31,660,372 in U.S. Government Agencies 4.05% - 5.50%, 2/1/10 - 10/25/35 26,300,000 with a value of $26,826,000 26,300,000 --------------------------------------------------- -------------- Total Repurchase Agreements (cost $145,700,000) 145,700,000 Time Deposit - 0.7% Societe Generale, ETD 75,000,000 4.0625%, 11/1/05 (cost $75,000,000) 75,000,000 --------------------------------------------------- -------------- Total Investments (total cost 11,502,803,786 $9,474,640,321) -- 103.2% Liabilities, net of Cash, Receivables and Other Assets -- (3.2)% (359,883,207) --------------------------------------------------- -------------- Net Assets -- 100% $11,142,920,579
Summary of Investments by Country
% of Investment Country Value Securities ------------ ---------------- ---------------- Bermuda $ 77,390,274 0.7% Brazil 193,559,756 1.7% Canada 225,404,875 2.0% Finland 141,763,586 1.2% France 28,702,650 0.2% Germany 140,601,112 1.2% Israel 186,412,327 1.6% Japan 73,748,020 0.6% Mexico 36,371,936 0.3% Netherlands 146,768,117 1.3% Panama 5,833,493 0.1% Spain 28,953,324 0.3% Switzerland 370,240,449 3.2% United Kingdom 220,566,830 1.9% United States++ 9,626,487,037 83.7% ---------------- ---------------- Total $ 11,502,803,786 100.0%
++Includes Short-Term Securities and Other Securities (73.7% excluding Short-Term Securities and Other Securities) Forward Currency Contracts, Open
Currency Sold and Currency Currency Unrealized Settlement Date Units Sold Value in $ U.S. Gain/(Loss) ------------------------- ------------ --------------- ------------ British Pound 12/2/05 38,700,000 $ 68,466,734 $ 2,183,986 British Pound 1/27/06 4,900,000 8,666,339 (35,969) British Pound 2/23/06 18,900,000 33,430,356 684,144 Euro 1/27/06 128,900,000 155,223,931 2,906,249 Euro 2/9/06 8,500,000 10,243,591 487,064 ------------ ------------ Total $276,030,951 $ 6,225,474
See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds October 31, 2005 11 Janus Enterprise Fund (unaudited) FUND SNAPSHOT This growth fund pursues companies that have grown large enough to be well established but are small enough to still have room to grow. Dear Enterprise Shareholder, "My goal isn't to be brilliant or flashy in individual races, just to be consistent over the long run." -- Four time America's Cup winner Dennis Connor In managing your Fund, I believe consistency of process is the best way to generate good investment performance over the long-run. While consistency of process may not lead to flashy performance in the near-term, I am hopeful it leads to long-term success. In my opinion, winning the long-term race in the investment world requires balancing risk and reward -- seeking the reward by growing your investment when the market is favorable and being cognizant of the risk by attempting to limit losses of capital when the environment is less favorable. I continue to look for the best balance of risk/reward in companies with exciting growth opportunities, but that also possess predictable revenue streams, expanding profit margins and a balance sheet appropriate to the business model. I also remain committed to finding growth stocks in a wide variety of industries rather than just focusing on a few, as well as constructing a Fund that is not overly concentrated in a few large holdings. Janus' strong team of analysts is an invaluable resource in these endeavors and I am greatly indebted to their hard work and subject expertise. In my letter to you last year, I wrote about the virtues of patience as exhibited by low turnover, or frequency of trading, for the Fund. This strategy seeks to result in lower trading costs to you as a shareholder and also in a lower tax burden over time. I am happy to report that your turnover rate remained consistent, and I believe below average relative to other mid-cap growth funds. For the fiscal year 2004, the turnover rate in your Fund was 27%, and for the most recent fiscal year the turnover rate was 28%. PERFORMANCE OVERVIEW During the 12 months ended October 31, 2005, Janus Enterprise Fund gained 17.05%. By comparison, the Fund's primary benchmark, the Russell Midcap(R) Growth Index and its secondary benchmark, the S&P MidCap 400 Index, returned 15.91% and 17.65%, respectively. Mid-cap stocks, following a multi-year trend, continued to outperform large-cap stocks. While this will not continue indefinitely, mid-cap stocks continue to have many attributes which made them attractive, most notably their ability to grow earnings at attractive rates. Strong corporate earnings growth overpowered numerous concerns which buffeted the market during this period. Rising raw materials prices, increasing interest rates and declining consumer confidence are potential negatives which will bear watching in the coming months. I'd now like to discuss the Fund's performance over the last 12 months in some greater detail, giving you some specific examples of stock picks that both helped and hurt performance. Effective stock selection within the otherwise flat technology hardware and equipment sector contributed significantly to the Fund's outperformance, as did select holdings from the retailing group. The Fund was underweight relative to the benchmark in both areas. Modestly overweight positions in the transportation and energy sectors added to the Fund's returns as well. Setbacks among stocks in the consumer durables and materials groups diminished returns. (JONATHAN COLEMAN PHOTO) Jonathan Coleman portfolio manager Top 10 Equity Holdings -- (% of Net Assets)
OCTOBER 31, 2005 OCTOBER 31, 2004 ---------------- ---------------- EOG Resources, Inc. 3.2% 2.1% Celgene Corp. 3.0% 1.6% Nextel Partners, Inc. - Class A 2.9% 1.0% Lamar Advertising Co. 2.8% 2.9% Kinder Morgan, Inc. 2.4% 2.8% T. Rowe Price Group, Inc. 2.2% 2.0% Ball Corp. 2.0% 2.8% Dean Foods Co. 1.9% 1.2% Paychex, Inc. 1.9% 1.6% Advanced Micro Devices, Inc. 1.8% 1.4%
12 Janus Growth Funds October 31, 2005 (unaudited) LEADERS INCLUDED LONGTIME ENERGY HOLDING EOG Resources, one of the Fund's longtime energy holdings, benefited from the extended rise in natural gas prices. The company has an impressive track record of extracting gas from the fields it owns, while also effectively replacing the gas it extracts with newfound reserves elsewhere on land it controls. Such "reserve replacement" helps provide long-term visibility as to the future stream of cash the company can generate. While high natural gas prices could continue to help EOG, the company is exploring a new gas field that could yield promising results in 2006. As the stock appreciated this year I used the opportunity to trim the position, although it remained among the top holdings in the Fund. Biotechnology concern Celgene was an exceptionally strong performer, as an advisory review panel gave a positive vote to the company's Revlimid treatment for the blood cancer myelodysplastic syndromes (MDS). This is a vital step toward ultimate approval from the Food and Drug Administration, which we are hopeful will come in early 2006. Janus' surveys of physicians indicate that market response to Revlimid could be decidedly positive if it's approved. A number of specialists indicated that the drug would be heavily utilized in the appropriate patient population. We have owned Celgene for several years, attracted to its significant development pipeline of new drugs such as Revlimid, its existing drug Thalomid, which generates profits for the company today, and its cash-rich balance sheet, which funds future drug development. SELECT BIOTECHNOLOGY AND SEMICONDUCTOR HOLDINGS WORKED AGAINST US As it inevitably occurs, I also make mistakes in selecting stocks for the Fund, and this year was no exception. Two of the biggest laggards during the period came from the biotechnology and semiconductor space, where rewards can be high, but so can risks. Biotechnology firm Pharmion was a disappointment as it reported slower than expected growth in its Vidaza treatment for MDS. Our surveys of physicians showed that the increasing percentage of new patients taking Vidaza was adequate to meet the company's financial projections. What we missed is that existing patients were dropping off treatment faster than expected due to a poor marketing effort from Pharmion. With continuing concerns about the company's ability to effectively market Vidaza, we decided to sell the stock. We've learned a valuable lesson and will incorporate such analysis in our future surveys. Another significant disappointment was semiconductor company International Rectifier, which declined after posting disappointing revenue and earnings growth in two consecutive quarters. We believe the company is transitioning from a commodity, low-margin supplier to a more value-added, higher-margin model. The transition has clearly not been without its challenges, but we believe there are still a number of attractive elements to the company. First, it has expertise in fast-growing areas such as semiconductors used to control various functions in hybrid automobiles. Additionally, the company has over $900 million in cash on its balance sheet, a portion of which it has elected to return to shareholders via a stock repurchase. While I am disappointed in the short-term performance, I believe the long-term investment thesis is largely unchanged and I have only reduced the position modestly. SUMMARY As I did last year, I would like to close by reiterating to you that I am an investor alongside you in Janus Enterprise Fund. I still contribute a portion of every paycheck I receive to the Fund. As of October 31, 2005, my aggregate holdings of the Fund placed me as the largest investor in the Fund. Since becoming manager of the Fund in February 2002, I have not sold a single share of the Fund. I take the obligation of trust very seriously and work every day to support the trust you have placed in me and in Janus. Thank you for your investment in Janus Enterprise Fund. SIGNIFICANT AREAS OF INVESTMENT -- Fund vs. Index (% of Net Assets) (BAR CHART)
Janus Enterprise Russell Midcap(R) Fund Growth Index ---------------- ----------------- Oil Companies -- Exploration and Production 4.1% 4.0% Medical -- Biomedical and Genetic 3.9% 2.5% Commercial Services -- Finance 3.7% 2.3% Electronic Components -- Semiconductors 3.2% 4.1% Therapeutics 2.9% 0.1%
Janus Growth Funds October 31, 2005 13 Janus Enterprise Fund (unaudited) Performance Average Annual Total Return -- for the periods ended October 31, 2005
ONE FIVE TEN SINCE YEAR YEAR YEAR INCEPTION* ---- ---- ---- ---------- Janus Enterprise Fund 17.05% (10.41)% 7.37% 10.96% Russell Midcap(R) Growth Index 15.91% (3.71)% 9.05% 10.64% S&P MidCap 400 Index 17.65% 7.32% 14.19% 14.44% Lipper Ranking - based on total returns for Mid-Cap Growth Funds 135/542 286/325 73/121 18/51
(PERFORMANCE GRAPH)
JANUS ENTERPRISE RUSSELL MIDCAP(R) S&P MIDCAP FUND GROWTH INDEX 400 INDEX ---------------- ----------------- ---------- 9/1/1992* $10,000 $10,000 $10,000 10/31/1993 $14,594 $12,484 $12,619 10/31/1996 $23,634 $18,760 $18,375 10/31/1999 $55,706 $32,964 $31,495 10/31/2002 $22,834 $21,549 $34,567 10/31/2005 $39,315 $37,842 $59,034
Data presented represents past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 1-800-525-3713 or visit www.janus.com for performance current to the most recent month-end. See Notes to Schedules of Investments for index definitions. Total return includes reinvestment of dividends, distributions and capital gains. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The date of the Lipper ranking is slightly different from when the Fund began operations since Lipper provides fund rankings as of the last day of the month or the first Thursday after fund inception. * The Fund's inception date -- September 1, 1992 FUND EXPENSES The example below shows you the ongoing costs (in dollars) of investing in your Fund and allows you to compare these costs with those of other mutual funds. Please refer to page 5 for a detailed explanation of the information presented in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD EXPENSE EXAMPLE (5/1/05) (10/31/05) (5/1/05-10/31/05)* --------------- ----------------------- -------------------- --------------------------- Actual $1,000.00 $1,130.60 $4.94 Hypothetical (5% return before expenses) $1,000.00 $1,020.57 $4.69
*Expenses are equal to the annualized expense ratio of 0.92%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). See "Explanations of Charts, Tables and Financial Statements." The Fund's portfolio may differ significantly from the securities held in the indices. The indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual portfolio. There is no assurance that the investment process will consistently lead to successful investing. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. Funds that emphasize investments in small-sized companies may experience greater price volatility. 14 Janus Growth Funds October 31, 2005 Janus Enterprise Fund Schedule of Investments As of October 31, 2005
Shares or Principal Amount Value --------------------------------------------------- -------------- Common Stock - 98.0% Advertising Sales - 2.8% 1,057,650 Lamar Advertising Co.*,# $ 47,192,343 Airlines - 1.1% 372,978 Ryanair Holdings PLC (ADR)*,# 18,488,519 Apparel Manufacturers - 0.6% 347,875 Coach, Inc.* 11,194,618 Applications Software - 0.5% 314,705 Citrix Systems, Inc.*,# 8,676,417 Audio and Video Products - 1.6% 267,680 Harman International Industries, Inc. 26,730,525 Batteries and Battery Systems - 0.4% 139,195 Energizer Holdings, Inc.*,# 7,027,956 Broadcast Services and Programming - 0.4% 545,665 CKX, Inc.*,# 6,842,639 Building - Mobile Home and Manufactured Homes - 1.3% 686,580 Thor Industries, Inc.# 22,403,105 Building - Residential and Commercial - 1.1% 28,025 NVR, Inc.*,# 19,211,138 Casino Services - 0.5% 285,290 Scientific Games Corp. - Class A*,# 8,547,288 Cellular Telecommunications - 2.9% 1,937,478 Nextel Partners, Inc. - Class A*,# 48,727,572 Commercial Services - 1.0% 420,962 Iron Mountain, Inc.*,# 16,417,518 Commercial Services - Finance - 3.7% 522,455 Jackson Hewitt Tax Service, Inc.# 12,915,088 337,111 Moody's Corp.# 17,954,532 828,716 Paychex, Inc. 32,121,032 -------------- 62,990,652 Computer Services - 0.4% 321,070 Ceridian Corp.* 7,034,644 Computers - 0.9% 257,287 Apple Computer, Inc.* 14,817,158 Computers - Integrated Systems - 0.7% 407,170 NCR Corp.*,# 12,304,677 Containers - Metal and Glass - 2.8% 888,855 Ball Corp. 34,994,221 701,200 Owens-Illinois, Inc.* 13,350,848 -------------- 48,345,069 Cruise Lines - 0.7% 292,080 Royal Caribbean Cruises, Ltd. (U.S. Shares)# 12,103,795 Data Processing and Management - 1.3% 553,975 NAVTEQ Corp.*,# 21,671,502 Dental Supplies and Equipment - 1.0% 429,475 Patterson Companies, Inc.*,# 17,771,676 Diagnostic Kits - 0.4% 184,570 Dade Behring Holdings, Inc. 6,646,366 E-Commerce/Services - 0.3% 199,920 IAC/InterActiveCorp* 5,117,952 Electric Products - Miscellaneous - 1.6% 684,250 AMETEK, Inc.# 27,869,503
Shares or Principal Amount Value --------------------------------------------------- -------------- Electronic Components - Semiconductors - 3.2% 1,346,395 Advanced Micro Devices, Inc.*,# $ 31,263,292 665,380 ATI Technologies, Inc. (U.S. Shares)*,# 9,614,741 459,165 International Rectifier Corp.*,# 13,586,692 -------------- 54,464,725 Electronic Measuring Instruments - 0.2% 130,815 Trimble Navigation, Ltd.* 3,776,629 Entertainment Software - 1.3% 707,901 Activision, Inc.*,# 11,163,599 181,835 Electronic Arts, Inc.* 10,342,775 -------------- 21,506,374 Fiduciary Banks - 1.4% 253,462 Investors Financial Services Corp.# 9,677,179 280,590 Northern Trust Corp. 15,039,624 -------------- 24,716,803 Finance - Commercial - 0.5% 392,985 CapitalSource, Inc.*,# 8,645,670 Finance - Other Services - 1.4% 64,560 Chicago Mercantile Exchange Holdings, Inc.# 23,574,084 Food - Canned - 0.9% 582,729 TreeHouse Foods, Inc.* 15,057,717 Food - Dairy Products - 1.9% 895,202 Dean Foods Co.* 32,361,552 Hotels and Motels - 1.3% 387,975 Starwood Hotels & Resorts Worldwide, Inc. 22,669,379 Human Resources - 2.0% 540,525 Manpower, Inc. 24,474,972 271,105 Robert Half International, Inc. 9,998,352 -------------- 34,473,324 Independent Power Producer - 1.1% 1,506,835 Reliant Energy, Inc.*,# 19,136,805 Industrial Automation and Robotics - 0.5% 164,585 Rockwell Automation, Inc. 8,747,693 Instruments - Scientific - 1.1% 349,962 Fisher Scientific International, Inc.* 19,772,853 Insurance Brokers - 0.5% 220,520 Willis Group Holdings, Ltd. 8,190,113 Internet Infrastructure Software - 1.3% 289,990 F5 Networks, Inc.*,# 15,088,180 929,120 TIBCO Software, Inc.*,# 7,052,021 -------------- 22,140,201 Internet Security - 0.7% Check Point Software Technologies, Ltd. 511,180 (U.S. Shares)* 11,429,985 Investment Management and Advisory Services - 2.7% 178,065 National Financial Partners Corp.# 8,053,880 566,865 T. Rowe Price Group, Inc. 37,140,995 -------------- 45,194,875 Leisure and Recreation Products - 0.6% 268,405 Brunswick Corp.# 10,234,283 Machinery - Construction and Mining - 1.6% 498,710 Terex Corp.*,# 27,414,089 Machinery - Pumps - 0.6% 302,820 Graco, Inc.# 10,377,641
See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds October 31, 2005 15 Janus Enterprise Fund Schedule of Investments As of October 31, 2005
Shares or Principal Amount Value ------------------------------------------ -------------- Medical - Biomedical and Genetic - 3.9% 900,230 Celgene Corp.* $ 50,502,903 248,160 Invitrogen Corp.*,# 15,780,494 -------------- 66,283,397 Medical - Drugs - 0.9% 135,435 Forest Laboratories, Inc.* 5,134,341 119,655 Merck KGaA 9,891,782 -------------- 15,026,123 Medical - HMO - 1.6% 500,118 Coventry Health Care, Inc.* 27,001,371 Medical - Nursing Homes - 0.8% 373,885 Manor Care, Inc.# 13,927,216 Medical Instruments - 1.8% 113,810 Foxhollow Technologies, Inc.*,# 5,156,731 69,435 Intuitive Surgical, Inc.*,# 6,160,968 407,665 St. Jude Medical, Inc.* 19,596,456 -------------- 30,914,155 Medical Products - 1.4% 89,000 Synthes, Inc. 9,422,189 298,385 Varian Medical Systems, Inc.*,# 13,594,421 -------------- 23,016,610 Miscellaneous Manufacturing - 0.7% 6,378,270 FKI PLC 11,515,364 Motion Pictures and Services - 0.7% Lions Gate Entertainment Corp. 1,208,450 (U.S. Shares)*,# 11,601,120 Multi-Line Insurance - 1.2% 556,875 Assurant, Inc.# 21,272,625 Oil Companies - Exploration and Production - 4.1% 798,985 EOG Resources, Inc. 54,155,203 340,345 Murphy Oil Corp.# 15,945,163 -------------- 70,100,366 Optical Supplies - 0.9% 115,250 Alcon, Inc. (U.S. Shares)# 15,316,725 Pipelines - 2.4% 457,606 Kinder Morgan, Inc.# 41,596,385 Printing - Commercial - 0.6% 300,165 R.R. Donnelley & Sons Co.# 10,511,778 Property and Casualty Insurance - 0.9% 348,785 W. R. Berkley Corp. 15,241,905 Recreational Vehicles - 0.6% 227,975 Polaris Industries, Inc.# 10,279,393 Reinsurance - 2.1% 10,527 Berkshire Hathaway, Inc. - Class B* 29,633,505 272,435 Montpelier Re Holdings, Ltd. (U.S. Shares)# 5,475,944 -------------- 35,109,449 Respiratory Products - 0.8% 402,590 Respironics, Inc.*,# 14,440,903 Retail - Auto Parts - 0.7% 297,309 Advance Auto Parts, Inc.*,# 11,149,088 Retail - Office Supplies - 2.0% 299,625 Office Depot, Inc.* 8,248,676 1,118,815 Staples, Inc. 25,430,665 -------------- 33,679,341
Shares or Principal Amount Value ------------------------------------------ -------------- Retail - Restaurants - 0.8% 261,791 Yum! Brands, Inc. $ 13,317,308 Schools - 1.4% 237,369 Apollo Group, Inc. - Class A*,# 14,958,994 90,535 Strayer Education, Inc.# 8,103,788 -------------- 23,062,782 Semiconductor Components/Integrated Circuits - 2.4% 352,845 Linear Technology Corp.# 11,717,982 617,665 Marvell Technology Group, Ltd.*,# 28,665,833 -------------- 40,383,815 Semiconductor Equipment - 1.3% 258,550 KLA-Tencor Corp. 11,968,280 433,920 Novellus Systems, Inc.*,# 9,485,491 -------------- 21,453,771 Telecommunication Equipment - 0.7% 403,340 Adtran, Inc. 12,201,035 Telecommunication Services - 0.9% 611,140 Amdocs, Ltd. (U.S. Shares)* 16,176,876 Television - 0.9% 571,573 Univision Communications, Inc. - Class A*,# 14,940,918 Textile-Home Furnishings - 0.9% 200,485 Mohawk Industries, Inc.*,# 15,647,854 Therapeutics - 2.9% 366,228 Gilead Sciences, Inc.* 17,304,273 486,527 Neurocrine Biosciences, Inc.* 25,698,356 91,860 United Therapeutics Corp.* 6,784,780 -------------- 49,787,409 Toys - 1.1% 1,044,122 Marvel Entertainment, Inc.* 18,376,547 Transportation - Marine - 0.6% 219,495 Alexander & Baldwin, Inc.# 10,742,085 Transportation - Railroad - 0.8% 183,385 Canadian National Railway Co. (U.S. Shares) 13,291,745 Transportation - Services - 0.8% 226,860 Expeditors International of Washington, Inc.# 13,763,596 Transportation - Truck - 0.4% 326,940 J.B. Hunt Transport Services, Inc.# 6,345,905 Wireless Equipment - 1.2% 830,135 Crown Castle International Corp.* 20,354,910 ------------------------------------------ -------------- Total Common Stock (cost $1,126,308,283) 1,669,847,297 Other Securities - 19.1% 325,512,940 State Street Navigator Securities Lending Prime Portfolio+ (cost $325,512,940) 325,512,940 Repurchase Agreement - 1.4% Bear Stearns & Company, Inc., 4.1125% dated 10/31/05, maturing 11/1/05 to be repurchased at $24,102,753 collateralized by $32,629,472 in U.S. Government Agencies 0%, 10/1/35; with a value of $24,582,189 $ 24,100,000 (cost $24,100,000) 24,100,000 ------------------------------------------ -------------- Total Investments (total cost $1,475,921,223) -- 118.5% 2,019,460,237 Liabilities, net of Cash, Receivables and Other Assets -- (18.5)% (315,918,660) ------------------------------------------ -------------- Net Assets -- 100% $1,703,541,577
See Notes to Schedules of Investments and Financial Statements. 16 Janus Growth Funds October 31, 2005 Schedule of Investments As of October 31, 2005 Summary of Investments by Country
% of Investment Country Value Securities ------- -------------- --------------- Bermuda $ 42,331,890 2.1% Canada 34,507,606 1.7% Germany 9,891,782 0.5% Ireland 18,488,519 0.9% Israel 11,429,985 0.6% Liberia 12,103,795 0.6% Switzerland 15,316,725 0.7% United Kingdom 27,692,240 1.4% United States++ 1,847,697,695 91.5% -------------- Total $2,019,460,237 100.0%
++Includes Short-Term Securities and Other Securities (74.2% excluding Short-Term Securities and Other Securities) See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds October 31, 2005 17 Janus Mercury Fund (unaudited) FUND SNAPSHOT This diversified growth fund typically pursues larger companies believed to be well-positioned for future growth. PERFORMANCE OVERVIEW Despite skyrocketing oil prices and steadily rising interest rates, the economy continued to grow during the 12-month period ended October 31, 2005. Company profits remained solid, giving a boost to stock prices. Even so, optimism faltered in the wake of Hurricane Katrina. Against this backdrop, the Fund posted a 13.35% gain, topping the 8.81% return of its primary benchmark, the Russell 1000(R) Growth Index as well as its secondary benchmark, the S&P 500(R) Index, which returned 8.72%. The Fund's outperformance versus its benchmark can be attributed to our approach of seeking opportunities across many different sectors of the market -- and then carefully constructing the Fund one company at a time. However, sector weightings can and often do have an impact on performance. For instance, during the period, the Fund's exposure to healthcare stocks materially contributed to its strong relative performance, due primarily to our strong stock selection in this group. Several well-chosen stocks in the technology hardware and equipment sector also helped boost our results. Meanwhile, areas of weakness for the Fund included the banking, diversified financials and capital goods sectors, where select holdings experienced setbacks. STRATEGY IN THIS ENVIRONMENT Although I am mindful of the economic factors that could impact the Fund's results, my focus -- first and foremost -- is on individual company fundamentals. I believe our research is best focused on analyzing companies one by one, understanding what truly drives free cash flow, and whether those companies will outperform. I place less emphasis on aggressive allocations amongst various sectors and short-term considerations. Instead, I favor holdings with the most attractive risk/reward characteristics for the long-term. FUND COMPOSITION As of October 31, 2005, equities comprised 98.1% of the Fund, which included 19.7% in foreign holdings. The Fund's 10 largest holdings by weight represented 30.5% of its total net assets and cash accounted for 1.9% of total net assets. LEADERS INCLUDED PHARMACEUTICAL, TRANSPORTATION AND HEALTHCARE STOCKS Reviewing our list of top contributors, it's worth noting that pharmaceuticals and transportation have proven to be among the Fund's best-performing sectors for two years running -- a rare occurrence, to be sure. In fact, this is the first time in my 10 years managing investments at Janus that I can recall the same two industry groups emerging as repeat winners. Standing out in the pharmaceutical category was Swiss concern Roche. Although the company boasts a solid diagnostics business, its double-digit annual gain was largely thanks to its majority stake in biotechnology firm Genentech and its growing portfolio of cancer therapies, including Avastin, Rituxan and Tarceva. The drug maker also is restructuring its balance sheet, exiting unrelated businesses to focus solely on pharmaceuticals and diagnostics. As we see it, Roche's tremendous revenue growth and improving fundamentals, both in top-line sales and operating margins, add up to a very attractive business and a potentially profitable long-term investment. In transportation, Canadian National Railway moved ahead. The railroad, which operates passenger- and product-hauling lines in Canada and the U.S., easily outdistanced earnings estimates for the past year. Although I expect the railroad's fast-paced earnings growth to slow somewhat in the future, our research indicates that its margins and cash flow generation should remain strong as Canadian National benefits from projected rising customer demand driven by surging Asian imports and expanding domestic markets. (DAVID CORKINS PHOTO) David Corkins portfolio manager Top 10 Equity Holdings -- (% of Net Assets)
OCTOBER 31, 2005 OCTOBER 31, 2004 ---------------- ---------------- Roche Holding A.G. 3.8% 3.7% UnitedHealth Group, Inc. 3.5% 3.0% Yahoo!, Inc. 3.4% 3.2% General Electric Co. 3.3% -- JP Morgan Chase & Co. 3.3% 2.9% Microsoft Corp. 2.9% 3.1% Berkshire Hathaway, Inc. - Class B 2.8% 3.8% Procter & Gamble Co. 2.7% -- Canadian National Railway Co. (U.S. Shares) 2.5% 3.2% Texas Instruments, Inc. 2.3% 2.4%
18 Janus Growth Funds October 31, 2005 (unaudited) The market for managed healthcare has continued to expand as well, which has aided our position in UnitedHealth Group, one of the nation's largest health insurers. Indeed, in reporting its third-quarter results in mid-October, the company announced that it served 11.4 million people, an increase of nearly a half-million this year alone. This robust growth helped drive profits up 21% for the period. Overall growth and earnings in 2005 have been exceptionally strong, and the forecast for 2006 -- following the introduction of UnitedHealth's new prescription drug plan and close of its acquisition of PacifiCare Health Systems -- looks equally impressive. Given the intense focus on soaring oil and gas prices during the year, our discussion of winners would not be complete without mentioning one of our best performers in the energy group, BJ Services. The oilfield services provider benefited as crude oil prices hit record highs of over $70 a barrel after Hurricane Katrina hit the Gulf Coast in August. BJ Services also got a lift after reporting fiscal third-quarter earnings that beat analysts' expectations. The company's announcement that it will raise prices on domestic pressure pumping services gave BJ Services an added boost. MANUFACTURING AND FINANCIAL SERVICES HOLDINGS WORKED AGAINST US My longtime investors know that I prefer to invest in a diverse and eclectic group of equities representing a broad spectrum of the market's offerings. Roughly three-quarters of the Fund's holdings are what I consider "classic" growth stocks. The remaining one-quarter consists of what I refer to as "turnaround" names. This makes for what I believe to be a well-balanced portfolio of holdings that may outperform in strong markets as well as weaker economic environments. Unfortunately, our investment in industrial conglomerate Tyco International suffered as turnaround efforts at the firm stalled. The company -- whose myriad businesses include security and fire protection systems, electronics, healthcare, engineering products and plastics and adhesives -- reduced its earnings outlook for the fiscal year on weak growth in its plastics unit, tepid revenue and working capital issues. Although we believe the stock still has upside potential, and management is focused on further restructuring efforts, we decided to reduce our position in the stock as the balance of risk and reward has become less favorable. Another of the Fund's "turnaround" names, Fannie Mae turned down rather than up during the reporting period and disappointed us. The leading U.S. mortgage lender already was pressured from investigations into alleged accounting irregularities that led it to restate earnings for the past several years when it fell further after charges of additional violations surfaced in September. As we see it, the stock's risk/reward tradeoff still may be attractive and we are continuing to hold the position as we monitor its progress. INVESTMENT STRATEGY AND OUTLOOK Looking ahead, a flattening yield curve suggests that the economy soon may be facing a headwind amid persistent worries about plunging consumer confidence and lackluster spending. Still, I feel confident about the strength of corporate balance sheets and profits. Bond credit spreads have widened, as well, which supports a belief that risk is being priced more effectively in the market. Regardless of what direction the economy takes, I will continue to focus on companies that should benefit from a focus on free cash flow generation and return on capital. As always, the goal of our rigorous efforts is to enhance the value of your investment with us. It has been almost 3 years since I took over the management of the Mercury Fund at the end of February 2003. Since that time the Fund has returned 17.72% on an annualized, absolute basis and outperformed 87% of its peers in the Lipper Large-Cap Growth Universe. The entire investment team at Janus has worked diligently to generate these results and it wouldn't have been possible without the combined efforts of the analysts, associates and portfolio managers. To paraphrase Will Rogers, to be successful you have to know, love and believe in what you are doing. Our group continues to work hard to grow your investment and appreciates your confidence. Thank you for your investment in Janus Mercury Fund. SIGNIFICANT AREAS OF INVESTMENT -- Fund vs. Index (% of Net Assets) (BAR CHART)
JANUS MERCURY RUSSELL 1000(R) FUND GROWTH INDEX ------------- ----------------- Diversified Operations 6.4% 6.4% Medical -- Drugs 6.1% 3.8% Medical -- HMO 6.0% 2.3% Finance -- Investment Bankers/Brokers 5.2% 0.7% Web Portals/Internet Service Providers 4.4% 1.7%
Janus Growth Funds October 31, 2005 19 Janus Mercury Fund (unaudited) Performance Average Annual Total Return -- for the periods ended October 31, 2005
ONE FIVE TEN SINCE YEAR YEAR YEAR INCEPTION* ---- ---- ---- ---------- Janus Mercury Fund 13.35% (9.06)% 9.40% 12.49% Russell 1000(R) Growth Index 8.81% (7.93)% 6.78% 8.53% S&P 500(R) Index 8.72% (1.74)% 9.34% 10.39% Lipper Ranking - based on total returns for Large-Cap Growth Funds 141/679 335/457 8/151 1/84
(PERFORMANCE GRAPH)
JANUS MERCURY S&P RUSSELL 1000(R) FUND 500(R) INDEX GROWTH INDEX ------------- ------------ ----------------- 5/3/1993* $10,000 $10,000 $10,000 10/31/1995 $17,724 $14,084 $14,435 10/31/1997 $24,523 $23,090 $22,987 10/31/1999 $56,907 $35,398 $38,464 10/31/2001 $37,644 $28,201 $25,255 10/31/2003 $35,754 $28,921 $24,729 10/31/2005 $43,521 $34,405 $27,818
Data presented represents past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 1-800-525-3713 or visit www.janus.com for performance current to the most recent month-end. See Notes to Schedules of Investments for index definitions. Total return includes reinvestment of dividends, distributions and capital gains. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The date of the Lipper ranking is slightly different from when the Fund began operations since Lipper provides fund rankings as of the last day of the month or the first Thursday after fund inception. * The Fund's inception date -- May 3, 1993 FUND EXPENSES The example below shows you the ongoing costs (in dollars) of investing in your Fund and allows you to compare these costs with those of other mutual funds. Please refer to page 5 for a detailed explanation of the information presented in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD EXPENSE EXAMPLE (5/1/05) (10/31/05) (5/1/05-10/31/05)* ----------------------- -------------------- --------------------------- ------------------ Actual $1,000.00 $1,095.40 $4.81 Hypothetical (5% return before expenses) $1,000.00 $1,020.62 $4.63
*Expenses are equal to the annualized expense ratio of 0.91%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). See "Explanations of Charts, Tables and Financial Statements." The Fund's portfolio may differ significantly from the securities held in the indices. The indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual portfolio. There is no assurance that the investment process will consistently lead to successful investing. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. Effective February 25, 2005, Janus Mercury Fund changed its primary benchmark from the S&P 500(R) Index to the Russell 1000(R) Growth Index. The new primary benchmark will provide a more appropriate comparison to the Fund's investment style. The Fund will retain the S&P 500(R) Index as a secondary benchmark index. 20 Janus Growth Funds October 31, 2005 Janus Mercury Fund Schedule of Investments As of October 31, 2005
Shares or Principal Amount Value -------------------------- -------------- Common Stock - 97.7% Advertising Sales - 0.7% 732,410 Lamar Advertising Co.*,# $ 32,680,134 Aerospace and Defense - 1.2% 856,930 Lockheed Martin Corp.# 51,895,681 Agricultural Operations - 0.4% 645,870 Delta and Pine Land Co.# 16,114,457 Applications Software - 2.9% 4,988,505 Microsoft Corp. 128,204,579 Athletic Footwear - 1.6% 867,800 NIKE, Inc. - Class B# 72,938,590 Audio and Video Products - 0.8% 346,365 Harman International Industries, Inc.# 34,588,009 Automotive - Cars and Light Trucks - 1.0% 1,012,369 BMW A.G.**,# 44,029,759 Broadcast Services and Programming - 2.5% 1,186,050 Liberty Global, Inc. - Class A*,# 29,378,459 1,186,050 Liberty Global, Inc. - Class C*,# 28,133,106 6,649,443 Liberty Media Corp. - Class A*,# 52,996,060 -------------- 110,507,625 Cable Television - 1.0% 1,577,285 Comcast Corp. - Special Class A* 43,233,382 Cellular Telecommunications - 0.7% 1,223,240 Nextel Partners, Inc. - Class A*,# 30,764,486 Chemicals - Specialty - 1.8% 75,454 Givaudan S.A.** 48,630,919 351,670 Syngenta A.G. (ADR)*,**,# 7,557,388 244,497 Syngenta A.G.*,** 26,206,604 -------------- 82,394,911 Computers - 2.3% 1,376,405 Dell, Inc.*,# 43,879,791 2,074,260 Hewlett-Packard Co.# 58,162,251 -------------- 102,042,042 Cosmetics and Toiletries - 2.7% 2,176,090 Procter & Gamble Co. 121,839,279 Data Processing and Management - 0.8% 770,940 Automatic Data Processing, Inc.# 35,972,060 Diversified Operations - 6.4% 4,323,900 General Electric Co. 146,623,448 857,522 Louis Vuitton Moet Hennessy S.A.**,# 69,421,041 3,306,125 Smiths Group PLC 53,398,217 674,540 Tyco International, Ltd. (U.S. Shares) 17,801,111 -------------- 287,243,817 E-Commerce/Products - 0.3% 329,460 Amazon.com, Inc.* 13,138,865 E-Commerce/Services - 0.8% 609,340 eBay, Inc.* 24,129,864 428,320 IAC/InterActiveCorp* 10,964,992 -------------- 35,094,856 Electronic Components - Semiconductors - 4.4% 1,066,785 Advanced Micro Devices, Inc.* 24,770,748 127,236 Samsung Electronics Company, Ltd.** 67,274,207 3,601,315 Texas Instruments, Inc.# 102,817,542 -------------- 194,862,497
Shares or Principal Amount Value -------------------------- -------------- Electronic Forms - 0.7% 966,780 Adobe Systems, Inc.# $ 31,178,655 Enterprise Software/Services - 0.6% 2,192,182 Oracle Corp.*,# 27,796,868 Entertainment Software - 1.5% 1,212,130 Electronic Arts, Inc.* 68,945,954 Finance - Investment Bankers/Brokers - 5.2% 729,998 Citigroup, Inc.# 33,419,308 400,265 Goldman Sachs Group, Inc.# 50,581,488 3,999,045 JP Morgan Chase & Co. 146,445,027 -------------- 230,445,823 Finance - Mortgage Loan Banker - 0.5% 460,460 Fannie Mae 21,881,059 Finance - Other Services - 0.3% 33,405 Chicago Mercantile Exchange Holdings, Inc. 12,197,836 Food - Dairy Products - 0.7% 841,960 Dean Foods Co.*,# 30,436,854 Food - Retail - 1.1% 340,675 Whole Foods Market, Inc.# 49,101,488 Hotels and Motels - 2.1% 1,603,520 Starwood Hotels & Resorts Worldwide, Inc.# 93,693,674 Independent Power Producer - 0.5% 1,814,535 Reliant Energy, Inc.*,# 23,044,595 Internet Security - 0.5% Check Point Software Technologies, Ltd. 902,545 (U.S. Shares)*,# 20,180,906 Medical - Biomedical and Genetic - 1.2% 963,115 Celgene Corp.* 54,030,752 Medical - Drugs - 6.1% 1,131,955 Eli Lilly and Co.# 56,360,039 1,138,109 Roche Holding A.G.** 170,007,983 607,481 Sanofi-Aventis**,# 48,632,843 -------------- 275,000,865 Medical - HMO - 6.0% 523,590 Aetna, Inc. 46,369,130 1,190,087 Coventry Health Care, Inc.* 64,252,797 2,721,925 UnitedHealth Group, Inc. 157,572,238 -------------- 268,194,165 Medical - Hospitals - 0.4% 414,579 LifePoint Hospitals, Inc.*,# 16,210,039 Medical - Nursing Homes - 0.8% 975,075 Manor Care, Inc.# 36,321,544 Motion Pictures and Services - 0.3% 1,464,750 Lions Gate Entertainment Corp. (U.S. Shares)*,# 14,061,600 Motorcycle and Motor Scooter Manufacturing - 0.6% 573,575 Harley-Davidson, Inc.# 28,409,170 Multi-Line Insurance - 0.8% 569,620 American International Group, Inc.# 36,911,376 Multimedia - 0.6% 1,018,610 Walt Disney Co.# 24,823,526 Networking Products - 1.9% 4,876,775 Cisco Systems, Inc.*,# 85,099,724 Oil - Field Services - 1.3% 1,725,660 BJ Services Co. 59,966,685
See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds October 31, 2005 21 Janus Mercury Fund Schedule of Investments As of October 31, 2005
Shares or Principal Amount Value --------------------------------------------------- -------------- Oil and Gas Drilling - 0.5% 490,535 Global Santa Fe Corp.# $ 21,853,334 Oil Companies - Exploration and Production - 1.3% 492,765 Apache Corp. 31,453,190 722,895 EnCana Corp. (U.S. Shares) 33,151,965 -------------- 64,605,155 Oil Companies - Integrated - 3.8% 224,655 Amerada Hess Corp.# 28,104,341 1,347,810 BP PLC (ADR)# 89,494,584 970,780 Exxon Mobil Corp. 54,499,589 -------------- 172,098,514 Pharmacy Services - 2.2% 1,872,525 Caremark Rx, Inc.*,# 98,120,310 Printing - Commercial - 0.5% 591,700 R.R. Donnelley & Sons Co.# 20,721,334 Reinsurance - 2.8% 45,381 Berkshire Hathaway, Inc. - Class B*,# 127,747,515 Retail - Building Products - 1.0% 743,265 Lowe's Companies, Inc. 45,168,214 Retail - Consumer Electronics - 0.9% 951,422 Best Buy Company, Inc. 42,109,938 Retail - Office Supplies - 1.6% 3,056,847 Staples, Inc. 69,482,132 Retail - Pet Food and Supplies - 0.4% 749,830 PETsMART, Inc.# 17,621,005 Savings/Loan/Thrifts - 0.7% 2,153,826 NewAlliance Bancshares, Inc.# 31,058,171 Semiconductor Components/Integrated Circuits - 1.5% 1,872,110 Maxim Integrated Products, Inc.# 64,924,775 Steel - Producers - 0.8% 179,775 POSCO** 36,419,935 Telecommunication Equipment - Fiber Optics - 0.8% 1,780,950 Corning, Inc.*,# 35,779,286 Television - 0.5% 796,950 Univision Communications, Inc. - Class A*,# 20,832,273 Therapeutics - 0.4% 360,835 Neurocrine Biosciences, Inc.* 19,059,305 Toys - 0.5% 1,246,427 Marvel Entertainment, Inc.*,# 21,937,115 Transportation - Railroad - 3.4% 1,545,900 Canadian National Railway Co. (U.S. Shares) 112,046,832 586,187 Union Pacific Corp.# 40,552,417 -------------- 152,599,249 Transportation - Services - 2.7% 1,689,980 C.H. Robinson Worldwide, Inc.# 59,588,695 677,875 FedEx Corp.# 62,317,049 -------------- 121,905,744 Web Portals/Internet Service Providers - 4.4% 117,110 Google, Inc. - Class A* 43,581,315 4,120,365 Yahoo!, Inc.*,# 152,329,894 -------------- 195,911,209 Wireless Equipment - 1.0% 1,921,500 Motorola, Inc.# 42,580,440 --------------------------------------------------- -------------- Total Common Stock (cost $3,278,936,926) 4,368,013,140
Shares or Principal Amount Value --------------------------------------------------- -------------- Preferred Stock - 0.4% U.S. Government Agency - 0.4% 286,800 Fannie Mae, 7.00% (cost $14,340,000) $ 15,702,300 Other Securities - 5.9% 264,912,132 State Street Navigator Securities Lending Prime Portfolio+ (cost $264,912,132) 264,912,132 Time Deposit - 1.9% Societe Generale, ETD $ 87,100,000 4.00%, 11/1/05 (cost $87,100,000) 87,100,000 --------------------------------------------------- -------------- Total Investments (total cost $3,645,289,058) -- 105.9% 4,735,727,572 Liabilities, net of Cash, Receivables and Other Assets -- (5.9)% (262,297,061) --------------------------------------------------- -------------- Net Assets -- 100% $4,473,430,511
Summary of Investments by Country
% of Investment Country Value Securities --------------------- --------------- --------------- Bermuda $ 17,801,111 0.4% Canada 159,260,397 3.4% Cayman Islands 21,853,334 0.5% France 118,053,884 2.5% Germany 44,029,759 0.9% Israel 20,180,906 0.4% South Korea 103,694,142 2.2% Switzerland 252,402,894 5.3% United Kingdom 142,892,801 3.0% United States++ 3,855,558,344 81.4% --------------- ----------- Total $ 4,735,727,572 100.0%
++Includes Short-Term Securities and Other Securities (74.0% excluding Short-Term Securities and Other Securities) Forward Currency Contracts, Open
Currency Sold and Currency Currency Unrealized Settlement Date Units Sold Value in $ U.S. Gain/(Loss) ----------------- -------------- --------------- ---------- Euro 12/2/05 4,500,000 $ 5,401,686 $ 64,104 Euro 1/27/06 17,100,000 20,592,158 384,412 Euro 2/9/06 6,080,000 7,327,181 348,394 Euro 2/23/06 15,300,000 18,453,525 639,804 South Korean Won 11/30/05 6,800,000,000 6,521,531 128,836 South Korean Won 5/11/06 29,350,000,000 28,292,762 (71,609) Swiss Franc 1/27/06 56,100,000 43,891,425 597,631 Swiss Franc 2/23/06 42,900,000 33,649,947 1,086,895 -------------- ------------ ---------- Total $164,130,215 $3,178,467
See Notes to Schedules of Investments and Financial Statements. 22 Janus Growth Funds October 31, 2005 Janus Olympus Fund (unaudited) FUND SNAPSHOT This growth fund invests in what we believe are the #1 or #2 market leaders in their respective industries. PERFORMANCE OVERVIEW Janus Olympus Fund gained 17.72% for the year ended October 31, 2005, versus its primary benchmark, the Russell 1000(R) Growth Index, which returned 8.81% and its secondary benchmark, the S&P 500(R) Index, which gained 8.72%. FUND STRATEGY IN A FLATTISH MARKET To review the past 12 months, the market appreciated toward the end of 2004 but has since remained essentially flat. In this flat market, there have been few identifiable secular trends other than the increased demand for oil and tight supply conditions. Such a flat, trendless market is sometimes called a "stock-picker's market." Indeed, while the annual gain of the Dow Jones Industrial Average, S&P 500(R) and Russell 1000(R) Growth indices were all less than 9%, several individual stocks far surpassed the market gains. Our strategy during the past year was to focus on identifying investments that each had their own catalyst for value creation and share price appreciation regardless of economic or interest rate climate. We feel that this strategy helped generate the healthy returns of the past year. DIFFERENTIATED RESEARCH IDENTIFIED STRONG PERFORMERS In reviewing the top performers of the past year, I am struck that 7 of the top 10 are healthcare-related, where our analysts' outstanding research revealed unique potential in several companies. Outside of healthcare, the research team again utilized in-depth analysis to identify underappreciated value in a variety of industries. The Fund's largest position and strongest performance contributor was Celgene, a biotechnology company focused on hematological disease. Celgene has created a new formulation of its multiple myeloma drug, Thalomid, with fewer side effects and greater efficacy. Specifically, the new drug, Revlimid, has shown the ability to slow disease progression and enable patients to remain transfusion independent for over two years. We believe the drug will be approved by the Food and Drug Administration in the coming year, which should boost sales and profits significantly. Another pharmaceutical company, eye-care giant Alcon, also provided outstanding returns. The demand for Alcon's products has grown with the aging population, new product introductions, better geographic penetration and firm pricing. The company has taken market share in interocular lenses for cataract surgery after introducing Restor, a multi-focal lens that eliminates the need for reading glasses for some patients. On the health services side, UnitedHealth Group continued to have a positive impact on the Fund. The company benefits from increasing utilization of healthcare and corporate America's desire to share more healthcare costs with its employees. Also, UnitedHealth's pending merger with PacifiCare will enable the company to re-enter California, cut overlapping expenses and consolidate the company's lead among seniors, which is a focus as Medicare Part D rolls out next year. Outside of healthcare, retail and energy stocks were also top contributors. Whole Foods Market, the leading organic and natural foods retailer, continued to be one of the most exciting and best-performing investments in the Fund. The company is refining its store model to a larger, higher return-on-investment format with unique prepared food offerings that generate excitement and intense loyalty among its customers. With only 3% market share of total U.S. grocery sales, I believe Whole Foods has tremendous growth potential over the next several years as the company penetrates new markets. (CLAIRE YOUNG PHOTO) Claire Young portfolio manager Top 10 Equity Holdings -- (% of Net Assets)
OCTOBER 31, 2005 OCTOBER 31, 2004 ---------------- ---------------- Celgene Corp. 3.7% 1.6% Yahoo!, Inc. 3.4% 3.6% Roche Holding A.G 3.2% 2.0% Whole Foods Market, Inc. 3.0% 1.6% UnitedHealth Group, Inc. 2.4% 2.1% Alcon, Inc. (U.S. Shares) 2.3% 1.2% Teva Pharmaceutical Industries, Ltd. (ADR) 2.1% -- Four Seasons Hotels, Inc. 2.0% 2.4% Varian Medical Systems, Inc. 2.0% 1.9% Research In Motion, Ltd. (U.S. Shares) 1.8% --
Janus Growth Funds October 31, 2005 23 Janus Olympus Fund (unaudited) In the energy sector, EOG Resources, a North American natural gas producer, also rallied as higher natural gas prices and better than expected reserves in the Barnett Shale region supported the asset value of the company. STOCK-SPECIFIC ISSUES WEIGHED DOWN FUND RESULTS While our research identified exceptional values, there were some unforeseen events which produced the biggest detriments to Fund performance. The largest performance detractor was Elan of Ireland, which faltered early in the year after its multiple sclerosis drug Tysabri was quickly withdrawn from the market after it allegedly contributed to the deaths of two patients in an experimental trial when used in combination with another drug, Avonex. We elected to liquidate the position as the investment thesis for Elan disappeared with its potential revenue stream. Another weak performer was McAfee, an anti-virus and security software vendor, which suffered when Microsoft announced a series of acquisitions and new product introductions aimed at the company's offerings. I opted to exit the position as these fears continue to proliferate. Unfortunately, two of our top positions disappointed us with their performance during the year. Research In Motion, the designer, manufacturer and marketer of Blackberry wireless systems, was plagued by uncertainties due to its legal wrangling with NTP on push email patents. As we believe the long-term adoption of wireless email systems is still in nascent stages, we have elected to maintain our position in the company. Meanwhile, Four Seasons, the leading luxury hotel management company, suffered from a series of earnings disappointments stemming from several one-time issues such as inconsistent bonus accrual accounting and lumpy condominium selling fee income. The environment for high-end hotel properties, however, remains strong as limited new supply is added and both occupancy and room rates continue to rise, so we are eagerly awaiting a potential rebound in the stock. INVESTMENT STRATEGY AND OUTLOOK Looking ahead, in my opinion the economy has remained surprisingly robust despite many headwinds -- devastation from Hurricane Katrina, high budget deficits that at some point will impact monetary policy, moderating consumer demand due to high oil prices and slowing house price appreciation, and corporate profit squeezes from rising raw material prices and weak end-user pricing ability. In this environment, I expect to see the market to continue to favor companies that provide strong earnings growth despite these impediments, so the Fund remains invested predominantly in stocks that we believe can grow organically and have specific catalysts to improve shareholder value. Thanks for your confidence and investment in Janus Olympus Fund. SIGNIFICANT AREAS OF INVESTMENT -- Fund vs. Index (% of Net Assets) (BAR CHART)
JANUS OLYMPUS FUND RUSSELL 1000(R) GROWTH INDEX ------------------ -------------------------- Medical - Biomedical and Genetic 6.7% 3.2% Computers 4.5% 4.0% Web Portals/Internet Service Providers 4.5% 1.7% Medical - Drugs 4.0% 3.8% Medical - HMO 3.9% 2.3%
24 Janus Growth Funds October 31, 2005 (unaudited) Performance Average Annual Total Return -- for the periods ended October 31, 2005
ONE FIVE SINCE YEAR YEAR INCEPTION* ------------ ------------ ------------ Janus Olympus Fund 17.72% (8.99)% 11.30% Russell 1000(R) Growth Index 8.81% (7.93)% 6.42% S&P 500(R) Index 8.72% (1.74)% 8.82% Lipper Ranking - based on total returns for Multi-Cap Growth Funds 74/414 189/261 12/88
(PERFORMANCE GRAPH)
JANUS OLYMPUS FUND S & P 500(R) INDEX RUSSELL 1000(R) GROWTH INDEX ------------------ ------------------ ---------------------------- 12/29/1995* $ 10,000 $ 10,000 $ 10,000 10/31/1997 $ 15,477 $ 15,408 $ 15,241 10/31/1999 $ 35,884 $ 23,622 $ 25,502 10/31/2001 $ 22,694 $ 18,819 $ 16,744 10/31/2003 $ 23,359 $ 19,300 $ 16,396 10/31/2005 $ 28,686 $ 22,960 $ 18,444
Data presented represents past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 1-800-525-3713 or visit www.janus.com for performance current to the most recent month-end. See Notes to Schedules of Investments for index definitions. Total return includes reinvestment of dividends, distributions and capital gains. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The date of the Lipper ranking is slightly different from when the Fund began operations since Lipper provides fund rankings as of the last day of the month or the first Thursday after fund inception. * The Fund's inception date -- December 29, 1995 FUND EXPENSES The example below shows you the ongoing costs (in dollars) of investing in your Fund and allows you to compare these costs with those of other mutual funds. Please refer to page 5 for a detailed explanation of the information presented in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD EXPENSE EXAMPLE (5/1/05) (10/31/05) (5/1/05-10/31/05)* --------------------------- ----------------------- -------------------- --------------------------- Actual $ 1,000.00 $ 1,148.40 $ 5.20 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.37 $ 4.89
*Expenses are equal to the annualized expense ratio of 0.96%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). See "Explanations of Charts, Tables and Financial Statements." The Fund's portfolio may differ significantly from the securities held in the indices. The indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual portfolio. There is no assurance that the investment process will consistently lead to successful investing. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. Effective February 25, 2005, Janus Olympus Fund changed its primary benchmark from the S&P 500(R) Index to the Russell 1000(R) Growth Index. The new primary benchmark will provide a more appropriate comparison to the Fund's investment style. The Fund will retain the S&P 500(R) Index as a secondary benchmark index. Janus Growth Funds October 31, 2005 25 Janus Olympus Fund Schedule of Investments As of October 31, 2005
Shares or Principal Amount Value ------------------------------------------------ -------------- Common Stock - 95.4% Aerospace and Defense - 1.3% 454,310 Boeing Co. $ 29,366,598 Apparel Manufacturers - 0.6% 1,220,850 Quiksilver, Inc.*,# 14,076,401 Applications Software - 2.3% 492,235 Citrix Systems, Inc.* 13,570,919 106,933 Infosys Technologies, Ltd. 5,988,201 376,275 Mercury Interactive Corp.* 13,090,607 707,950 Microsoft Corp. 18,194,315 -------------- 50,844,042 Athletic Footwear - 1.3% 357,020 NIKE, Inc. - Class B 30,007,531 Audio and Video Products - 0.6% 129,650 Harman International Industries, Inc.# 12,946,849 Automotive - Truck Parts and Equipment - Original - 0.3% 179,010 Autoliv, Inc. 7,690,270 Building - Mobile Home and Manufactured Homes - 0.8% 524,615 Thor Industries, Inc.# 17,118,187 Casino Services - 0.5% 412,070 Scientific Games Corp. - Class A*,# 12,345,617 Cellular Telecommunications - 0.9% 4,145,500 China Mobile, Ltd. 18,449,162 70,210 China Mobile, Ltd. (ADR)# 1,576,215 -------------- 20,025,377 Commercial Banks - 1.8% 3,175 Mizuho Financial Group, Inc. 21,055,752 226,254 UBS A.G.** 19,214,963 -------------- 40,270,715 Commercial Services - 0.7% 351,488 CoStar Group, Inc.* 16,853,850 Computer Services - 0.5% 444,400 Park24 Company, Ltd. 10,460,064 Computers - 4.5% 282,325 Apple Computer, Inc.* 16,259,097 217,025 Dell, Inc.* 6,918,757 829,225 Hewlett-Packard Co. 23,251,468 30,190,000 Lenovo Group, Ltd. 14,798,829 660,720 Research In Motion, Ltd. (U.S. Shares)*,# 40,627,672 -------------- 101,855,823 Computers - Memory Devices - 1.4% 1,754,610 EMC Corp.* 24,494,355 107,695 SanDisk Corp.* 6,342,159 -------------- 30,836,514 Containers - Metal and Glass - 0.7% 407,220 Ball Corp. 16,032,251 Cosmetics and Toiletries - 1.2% 476,360 Procter & Gamble Co. 26,671,396 Data Processing and Management - 1.6% 95,370 First Data Corp. 3,857,717 796,695 NAVTEQ Corp.*,# 31,166,708 -------------- 35,024,425 Dental Supplies and Equipment - 1.2% 667,940 Patterson Companies, Inc.*,# 27,639,357
Shares or Principal Amount Value ----------------------------------------------- -------------- Diagnostic Kits - 0.6% 373,175 Dade Behring Holdings, Inc. $ 13,438,032 Distribution/Wholesale - 0.6% 2,069,500 Esprit Holdings, Ltd. 14,589,360 Diversified Operations - 0.1% 2,164,000 Melco International Development, Ltd. 2,079,669 E-Commerce/Services - 1.1% 622,180 eBay, Inc.* 24,638,328 Electric - Generation - 0.2% 329,975 AES Corp.* 5,243,303 Electronic Forms - 1.8% 1,258,525 Adobe Systems, Inc. 40,587,431 Enterprise Software/Services - 2.6% 1,719,915 Oracle Corp.* 21,808,522 855,055 SAP A.G. (ADR)**,# 36,716,062 -------------- 58,524,584 Entertainment Software - 1.2% 460,630 Electronic Arts, Inc.* 26,200,634 Finance - Credit Card - 1.0% 511,500 Credit Saison Co., Ltd. 23,068,250 Finance - Investment Bankers/Brokers - 1.8% 609,130 Citigroup, Inc. 27,885,971 1,089,000 Mitsubishi UFJ Securities Company, Ltd. 12,357,779 -------------- 40,243,750 Finance - Mortgage Loan Banker - 1.1% 499,570 Fannie Mae# 23,739,566 Finance - Other Services - 1.7% 42,990 Chicago Mercantile Exchange Holdings, Inc. 15,697,799 243,263 Deutsche Boerse A.G.**,# 22,879,975 -------------- 38,577,774 Financial Guarantee Insurance - 1.1% 441,480 MBIA, Inc.* 25,711,795 Food - Retail - 3.0% 466,817 Whole Foods Market, Inc.# 67,282,334 Food - Wholesale/Distribution - 0.8% 538,125 Sysco Corp. 17,171,569 Hazardous Waste Disposal - 0.9% 364,930 Stericycle, Inc.*,# 21,005,371 Hotels and Motels - 2.0% 861,745 Four Seasons Hotels, Inc. 46,215,384 Medical - Biomedical and Genetic - 6.7% 179,945 Alexion Pharmaceuticals, Inc.# 4,928,694 1,503,536 Celgene Corp.* 84,348,369 398,005 Genentech, Inc.* 36,059,252 389,900 Invitrogen Corp.*,# 24,793,741 -------------- 150,130,056 Medical - Drugs - 4.0% 481,122 Roche Holding A.G.** 71,868,846 243,055 Sanofi-Aventis**,# 19,458,149 -------------- 91,326,995 Medical - Generic Drugs - 2.1% 1,271,440 Teva Pharmaceutical Industries, Ltd. (ADR) # 48,467,293
See Notes to Schedules of Investments and Financial Statements. 26 Janus Growth Funds October 31, 2005 Schedule of Investments As of October 31, 2005
Shares or Principal Amount Value ----------------------------------------------- -------------- Medical - HMO - 3.9% 633,660 Coventry Health Care, Inc.* $ 34,211,303 935,452 UnitedHealth Group, Inc. 54,153,317 -------------- 88,364,620 Medical - Hospitals - 0.5% 268,730 Triad Hospitals, Inc.* 11,052,865 Medical - Nursing Homes - 0.6% 373,700 Manor Care, Inc. 13,920,325 Medical Information Systems - 0.2% 48,950 Cerner Corp.*,# 4,133,828 Medical Instruments - 2.6% 339,065 Intuitive Surgical, Inc.*,# 30,085,237 24,095 Kyphon, Inc.*,# 965,969 499,005 Medtronic, Inc. 28,273,623 -------------- 59,324,829 Medical Products - 2.7% 245,810 Cooper Companies, Inc.# 16,921,560 972,555 Varian Medical Systems, Inc.*,# 44,309,606 -------------- 61,231,166 Motorcycle and Motor Scooter Manufacturing - 1.0% 474,605 Harley-Davidson, Inc.# 23,507,186 Multi-Line Insurance - 0.8% 283,680 American International Group, Inc. 18,382,464 Networking Products - 2.5% 2,185,602 Cisco Systems, Inc.* 38,138,755 759,090 Juniper Networks, Inc.*,# 17,709,570 -------------- 55,848,325 Oil - Field Services - 0.6% 215,440 Halliburton Co. 12,732,504 Oil and Gas Drilling - 0.6% 251,655 Transocean, Inc.* 14,467,646 Oil Companies - Exploration and Production - 1.7% 287,005 Apache Corp. 18,319,529 286,605 EOG Resources, Inc.# 19,426,087 -------------- 37,745,616 Oil Companies - Integrated - 1.8% 306,525 BP PLC (ADR)** 20,353,260 351,880 Exxon Mobil Corp. 19,754,543 -------------- 40,107,803 Optical Supplies - 2.3% 382,835 Alcon, Inc. (U.S. Shares)** 50,878,772 Pharmacy Services - 1.2% 518,190 Caremark Rx, Inc.* 27,153,156 Retail - Apparel and Shoe - 1.0% 658,790 Nordstrom, Inc. 22,827,074 Retail - Jewelry - 1.3% 727,190 Tiffany & Co. 28,651,286 Semiconductor Components/Integrated Circuits - 0.3% 574,225 Cypress Semiconductor Corp.*,# 7,809,460 Semiconductor Equipment - 0.9% 425,140 KLA-Tencor Corp.# 19,679,731 Soap and Cleaning Preparations - 0.7% 544,906 Reckitt Benckiser PLC** 16,463,786 Telecommunication Services - 0.9% 733,755 Amdocs, Ltd. (U.S. Shares)*,** 19,422,495 Therapeutics - 2.6% 753,094 Neurocrine Biosciences, Inc.* 39,778,425 265,702 United Therapeutics Corp.*,# 19,624,750 -------------- 59,403,175
Shares or Principal Amount Value -------------------------------------------------- --------------- Transportation - Services - 2.6% 709,380 C.H. Robinson Worldwide, Inc.# $ 25,012,739 United Parcel Service, Inc. - 452,000 Class B 32,968,880 --------------- 57,981,619 Web Portals/Internet Service Providers - 4.5% 66,705 Google, Inc. - Class A* 24,823,599 2,072,190 Yahoo!, Inc.* 76,608,864 --------------- 101,432,463 Wireless Equipment - 1.0% Crown Castle International 902,220 Corp.*,# 22,122,434 -------------------------------------------------- --------------- Total Common Stock (cost $1,694,013,638) 2,152,951,373 Preferred Stock - 1.1% Electronic Components - Semiconductors - 1.1% Samsung Electronics Company, Ltd. 59,410 (cost $22,309,175) 24,185,105 Other Securities - 8.6% State Street Navigator Securities Lending Prime Portfolio+ (cost 195,028,151 $195,028,151) 195,028,151 Time Deposit - 1.0% Societe Generale, ETD $ 22,900,000 4.00%, 11/1/05 (cost $22,900,000) 22,900,000 -------------------------------------------------- --------------- Total Investments (total cost $1,934,250,964) -- 106.1% 2,395,064,629 Liabilities, net of Cash, Receivables and Other Assets -- (6.1)% (138,176,343) -------------------------------------------------- --------------- Net Assets -- 100% $ 2,256,888,286
% of Investment Country Value Securities -------------------------------------------------- --------------------- ----------------- Bermuda $ 14,589,360 0.6% Canada 86,843,056 3.6% Cayman Islands 14,467,646 0.6% France 19,458,149 0.8% Germany 59,596,037 2.5% Hong Kong 36,903,875 1.5% India 5,988,201 0.3% Israel 48,467,293 2.0% Japan 66,941,845 2.8% South Korea 24,185,105 1.0% Switzerland 141,962,581 5.9% United Kingdom 56,239,541 2.4% United States++ 1,819,421,940 76.0% -------------------------------------------------- --------------------- ----------------- Total $ 2,395,064,629 100.0%
++Includes Short-Term Securities and Other Securities (66.9% excluding Short-Term Securities and Other Securities) Forward Currency Contracts, Open
Currency Sold and Currency Currency Unrealized Settlement Date Units Sold Value in $ U.S. Gain/(Loss) ------------------------ ----------- --------------- ------------- British Pound 12/2/05 4,150,000 $ 7,342,040 $ 234,200 British Pound 1/27/06 4,600,000 8,135,747 (33,767) British Pound 2/23/06 2,150,000 3,802,924 77,826 Euro 12/2/05 2,000,000 2,400,749 28,492 Euro 1/27/06 28,750,000 34,621,319 440,351 Swiss Franc 1/27/06 49,000,000 38,336,538 458,370 Swiss Franc 2/23/06 4,000,000 3,137,524 101,342 -------------- ------------ Total $ 97,776,841 $ 1,306,814
See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds October 31, 2005 27 Janus Orion Fund (unaudited) FUND SNAPSHOT This focused growth fund invests in a small number of well-researched companies, hand-picked for their upside potential. PERFORMANCE OVERVIEW The stock market managed modest gains over the year ended October 31, 2005, despite the headwinds of the Federal Reserve raising interest rates repeatedly, higher energy and commodity prices. These factors, as well as a resurgent dollar in 2005, all threaten to negatively impact corporate earnings across many sectors. With all of these threats, companies capable of delivering strong earnings growth should be richly rewarded by the market. Many of the companies we own in Janus Orion Fund delivered on, and sometimes exceeded expectations. I am pleased to report that the Fund outperformed both its primary and secondary benchmarks, the Russell 3000(R) Growth Index and the S&P 500(R) Index, during the 12 month period, gaining 24.80% compared to the 8.99% and 8.72% returns of the Indices, respectively. Janus Orion Fund's strategy of owning what we believe are good businesses that can perform in any market environment continued to deliver. CONTRIBUTORS INCLUDED A DIVERSIFIED FINANCIAL COMPANY AND A TECHNOLOGY HARDWARE AND EQUIPMENT FIRM Chicago Mercantile Exchange led the list of strong performers in the Fund during the period. This leading futures exchange's position as the most cost-efficient pool of liquidity for offloading a variety of risks creates a strong barrier to competition. A competitive advantage is an important characteristic I look for when considering investments for the Fund. The stock weakened on short-term pricing concerns driven by a mix shift in trading volumes that resulted in lower average revenues per trade. This year, the company exercised some of its pricing power, and the mix of trades improved. I believe the Chicago Mercantile Exchange continues to have tremendous growth opportunities in businesses that leverage its already-dominant position in interest rate and stock index futures. Another important contributor during the period was Corning, the leading materials sciences company in fiber optics and flat panel displays. The strength of Corning's businesses is best understood by looking at both the strong margins generated and the near-exclusive nature of many of its customer relationships. For many purposes, I believe Corning's capabilities are unmatched. I established a position in the company in early 2005 because I believed the market was missing both the near-term strength in many of Corning's businesses and the long-term franchise value. Janus' fundamental checks with customers and competitors in Asia gave us confidence that both near-term trends and long-term competitive positioning were solid. The stock was up significantly during the period, making the risk/reward tradeoff for owning it less attractive, so we sold our position entirely. Finally, Caemi, one of the only pure-play opportunities to invest in iron ore demand was a strong contributor. Our research into companies in the steel and iron ore sector identified iron ore suppliers as an industry with the potential for extraordinary long-term pricing power. We invested in Caemi as our analysis indicated that investors misunderstood the medium-term cash generation potential and longer-term competitive positioning of the company. SELECT CONSUMER DURABLES AND INTERNET RETAILERS HELD BACK PERFORMANCE Tempur-Pedic, the leading branded memory-foam mattress and pillow manufacturer and marketer, was a significant underperformer. The company announced two consecutive disappointing quarters. The primary culprits were a slowdown in (RON SACHS PHOTO) Ron Sachs portfolio manager Top 10 Equity Holdings -- (% of Net Assets)
OCTOBER 31, 2005 OCTOBER 31, 2004 ---------------- ---------------- Dade Behring Holdings, Inc. 6.8% 8.6% CapitalSource, Inc. 4.6% 3.9% Celgene Corp. 4.5% 1.2% National Financial Partners Corp. 4.4% 1.7% Chicago Mercantile Exchange Holdings, Inc. 3.9% 4.7% EOG Resources, Inc. 3.6% 2.2% CoStar Group, Inc. 3.4% -- Cisco Systems, Inc. 3.3% -- Roche Holding A.G. 3.3% 4.0% Companhia Siderurgica de Tubarao 3.2% 3.2%
28 Janus Growth Funds October 31, 2005 (unaudited) consumer spending and higher raw material prices. Tempur-Pedic doesn't seem to have a good handle on the causes of a slowdown in same-store sales of its mattresses, and other investors abandoned the stock. I still believe Tempur-Pedic is a differentiated brand capable of strong growth and industry-leading profit margins. In our opinion, the stock price doesn't reflect the company's prospects, so we continue to hold the position, albeit with limited tolerance for continued excuses from management. Another underperformer during the period was Expedia, a recent spin-out of the travel-related businesses from IAC/InterActiveCorp. We believe Expedia is an important aggregator and distributor of travel services and has strong market positions in most of its businesses that can assure reasonable margins. While the competitive moat may not be easily understood, we feel the stock price indicates few other investors believe that there is any moat at all. A recent bounce in the share price after Expedia's financial results exceeded most skeptics' expectations still leaves the valuation compelling, in our opinion, and our thesis remains intact. We consequently continue to hold the position. STRATEGY IN THE MONTHS AHEAD Going forward, I will continue to work to deliver strong risk-adjusted returns to the Fund's shareholders. Despite strong performance for the Fund over the last 12 months, I believe this market continues to present opportunities to buy great businesses at attractive prices. Thank you for your investment. SIGNIFICANT AREAS OF INVESTMENT -- Fund vs. Index (% of Net Assets) (BAR CHART)
JANUS ORION FUND RUSSELL 3000(R) GROWTH INDEX ---------------- -------------------------- Diagnostic Kits 6.8% 0.1% Finance - Other Services 5.6% 0.2% Finance - Commercials 4.6% 0.0% Medical - Biomedical and Genetic 4.5% 3.2% Investment Management and Advisory Services 4.4% 0.7%
Janus Growth Funds October 31, 2005 29 Janus Orion Fund (unaudited) Performance Average Annual Total Return -- for the periods ended October 31, 2005
ONE FIVE SINCE YEAR YEAR INCEPTION* ------------ ------------ ------------ Janus Orion Fund 24.80% (2.35)% (4.50)% Russell 3000(R) Growth Index 8.99% (7.48)% (8.84)% S&P 500(R) Index 8.72% (1.74)% (1.88)% Lipper Ranking - based on total returns for Multi-Cap Growth Funds 5/414 60/261 86/237
(PERFORMANCE GRAPH)
JANUS ORION FUND S & P 500(R) INDEX RUSSELL 3000(R) GROWTH INDEX ---------------- ------------------ ---------------------------- 6/30/2000* $10,000 $10,000 $10,000 10/31/2000 $ 8,810 $ 9,861 $ 9,001 10/31/2001 $ 5,225 $ 7,405 $ 5,460 10/31/2002 $ 4,353 $ 6,287 $ 4,383 10/31/2003 $ 5,657 $ 7,594 $ 5,407 10/31/2004 $ 6,268 $ 8,310 $ 5,598 10/31/2005 $ 7,823 $ 9,035 $ 6,102
Data presented represents past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 1-800-525-3713 or visit www.janus.com for performance current to the most recent month-end. See Notes to Schedules of Investments for index definitions. Total return includes reinvestment of dividends, distributions and capital gains. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. *The Fund's inception date -- June 30, 2000 FUND EXPENSES The example below shows you the ongoing costs (in dollars) of investing in your Fund and allows you to compare these costs with those of other mutual funds. Please refer to page 5 for a detailed explanation of the information presented in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD EXPENSE EXAMPLE (5/1/05) (10/31/05) (5/1/05-10/31/05)* ----------------------- -------------------- --------------------------- Actual $ 1,000.00 $ 1,153.80 $ 5.48 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.11 $ 5.14
*Expenses are equal to the annualized expense ratio of 1.01%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). See "Explanations of Charts, Tables and Financial Statements." The Fund's portfolio may differ significantly from the securities held in the indices. The indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual portfolio. The Fund is classified as "nondiversified," meaning it has the ability to take larger positions in a smaller number of issuers than a fund that is classified as "diversified." Nondiversified funds may experience greater price volatility. Concentration may lead to greater price volatility. There is no assurance that the investment process will consistently lead to successful investing. This Fund may have significant exposure to emerging markets which may lead to greater price volatility. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. Effective February 25, 2005, Janus Orion Fund changed its primary benchmark from the S&P 500(R) Index to the Russell 3000(R) Growth Index. The new primary benchmark will provide a more appropriate comparison to the Fund's investment style. The Russell 3000(R) Growth Index measures the performance of those Russell 3000(R) Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000(R) Growth or the Russell 2000(R) Growth indices. The Fund will retain the S&P 500(R) Index as a secondary benchmark index. 30 Janus Growth Funds October 31, 2005 Janus Orion Fund Schedule of Investments As of October 31, 2005
Shares or Principal Amount Value ------------------------------------------------ -------------- Common Stock - 100.7% Beverages - Wine and Spirits - 2.5% 2,585,584 Davide Campari - Milano S.P.A. $ 17,538,627 Broadcast Services and Programming - 1.6% 234,510 Liberty Global, Inc. - Class A*,# 5,808,813 234,510 Liberty Global, Inc. - Class C*,# 5,562,577 -------------- 11,371,390 Building - Residential and Commercial - 2.6% 345,215 Desarrolladora Homex S.A. (ADR)*,# 10,318,476 112,730 KB Home# 7,366,906 -------------- 17,685,382 Cable Television - 1.6% 13,928 Jupiter Telecommunications Company, Ltd.* 11,162,979 Commercial Banks - 3.2% 643,000 Banco Nossa Caixa S.A.* 10,622,435 3,776,887 Finansbank A.S.* 11,457,815 -------------- 22,080,250 Commercial Services - 3.4% 487,180 CoStar Group, Inc.* 23,360,281 Computers - 1.8% 208,530 Research In Motion, Ltd. (U.S. Shares)* 12,822,510 Cosmetics and Toiletries - 1.4% 226,197 Alberto-Culver Co.# 9,819,212 Data Processing and Management - 1.7% 306,395 NAVTEQ Corp.* 11,986,172 Diagnostic Kits - 6.8% 1,308,720 Dade Behring Holdings, Inc. 47,127,006 Diversified Minerals - 2.8% 12,356,230 Caemi Mineracao e Metalurgica S.A. 19,644,419 Diversified Operations - 2.1% 181,909 Louis Vuitton Moet Hennessy S.A.# 14,726,517 E-Commerce/Products - 0.7% 215,900 Submarino S.A.* 2,953,069 69,230 Submarino S.A. (GDR)* 1,893,468 -------------- 4,846,537 E-Commerce/Services - 4.0% 618,499 Expedia, Inc.* 11,621,596 618,499 IAC/InterActiveCorp*,# 15,833,575 -------------- 27,455,171 Electronic Components - Semiconductors - 1.9% 567,755 MIPS Technologies, Inc.* 3,185,106 341,735 Texas Instruments, Inc. 9,756,534 -------------- 12,941,640 Electronic Measuring Instruments - 1.8% 422,905 Trimble Navigation, Ltd.*,# 12,209,267 Entertainment Software - 1.1% 172,344 UbiSoft Entertainment S.A.*,# 7,947,888 Finance - Commercial - 4.6% 1,444,050 CapitalSource, Inc.*,# 31,769,100 Finance - Other Services - 5.6% 74,795 Chicago Mercantile Exchange Holdings, Inc.# 27,311,394 905,405 MarketAxess Holdings, Inc.*,# 11,172,698 -------------- 38,484,092 Home Furnishings - 1.9% Tempur-Pedic International, 1,177,995 Inc.*,# 13,028,625
Shares or Principal Amount Value --------------------------------------------------- -------------- Investment Management and Advisory Services - 4.4% 671,140 National Financial Partners Corp.# $ 30,355,662 Life and Health Insurance - 1.0% 444,150 Universal American Financial Corp.*,# 6,573,420 Medical - Biomedical and Genetic - 4.5% 555,130 Celgene Corp.* 31,142,793 Medical - Drugs - 3.3% 152,530 Roche Holding A.G. 22,784,564 Medical - Generic Drugs - 3.3% 369,805 Taro Pharmaceutical Industries, Ltd.*,# 8,135,710 387,200 Teva Pharmaceutical Industries, Ltd. (ADR)# 14,760,064 -------------- 22,895,774 Medical - HMO - 1.9% 158,685 PacifiCare Health Systems, Inc.*,# 13,069,297 Medical Instruments - 1.9% 150,435 Intuitive Surgical, Inc.*,# 13,348,098 Multi-Line Insurance - 2.8% 500,925 Assurant, Inc.# 19,135,335 Networking Products - 3.3% 1,305,955 Cisco Systems, Inc.* 22,788,915 Oil Companies - Exploration and Production - 3.6% 368,685 EOG Resources, Inc. 24,989,469 Oil Companies - Integrated - 2.5% 138,890 Amerada Hess Corp. 17,375,139 Steel - Producers - 3.9% 356,960 Companhia Siderurgica de Tubarao 21,876,044 255,689 Companhia Siderurgica Nacional S.A. (ADR)*,# 4,909,229 -------------- 26,785,273 Telecommunication Equipment - 1.6% 362,420 Adtran, Inc.# 10,963,205 Therapeutics - 2.3% 211,915 United Therapeutics Corp.*,# 15,652,042 Transportation - Marine - 1.8% 261,345 Alexander & Baldwin, Inc.# 12,790,224 Transportation - Railroad - 1.0% 172,200 All America Latina Logistica 6,652,313 Transportation - Services - 2.3% 171,235 FedEx Corp. 15,741,634 Web Portals/Internet Service Providers - 2.2% 408,835 Yahoo!, Inc.* 15,114,630 --------------------------------------------------- -------------- Total Common Stock (cost $563,944,198) 696,164,852 Other Securities - 17.1% 1,671,255 Foreign Bonds+ 1,671,255 State Street Navigator Securities Lending 116,474,462 Prime Portfolio+ 116,474,462 --------------------------------------------------- -------------- Total Other Securities (cost $118,145,717) 118,145,717 Repurchase Agreement - 0.9% Bear Stearns & Company, Inc., 4.1125% dated 10/31/05, maturing 11/1/05 to be repurchased at $6,300,720 collateralized by $8,529,696 in U.S. Government Agencies 0%, 10/1/35; with a value of $6,426,050 $ 6,300,000 (cost $6,300,000) 6,300,000 --------------------------------------------------- -------------- Total Investments (total cost $688,389,915) -- 118.7% 820,610,569 Liabilities, net of Cash, Receivables and Other Assets -- (18.7)% (129,210,042) --------------------------------------------------- -------------- Net Assets -- 100% $ 691,400,527
See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds October 31, 2005 31 Janus Orion Fund Schedule of Investments As of October 31, 2005 Summary of Investments by Country
% of Investment Country Value Securities --------------------------------- ----------------- --------------- Brazil $ 68,550,977 8.3% Canada 12,822,510 1.6% France 22,674,405 2.8% Israel 22,895,774 2.8% Italy 17,538,627 2.1% Japan 11,162,979 1.4% Mexico 10,318,476 1.2% Switzerland 22,784,564 2.8% Turkey 11,457,815 1.4% United States++ 620,404,442 75.6% ----------------- ----------- Total $ 820,610,569 100.0%
++Includes Short-Term Securities and Other Securities (60.4% excluding Short-Term Securities and Other Securities) See Notes to Schedules of Investments and Financial Statements. 32 Janus Growth Funds October 31, 2005 Janus Triton Fund (unaudited) FUND SNAPSHOT A unique growth fund that focuses on small- and mid-sized companies believed to have solid growth potential. PERFORMANCE OVERVIEW I'm pleased to see that the hard work we did preparing for Janus Triton Fund's launch has paid off. Janus' small- and mid-capitalization research team delivered great investment ideas, and the rest of the research analysts and portfolio managers at Janus continued to identify smaller-capitalization investments appropriate for the Fund. I have been able to leverage their work to build a portfolio of companies that I believe will deliver strong results in any market environment. The early results give me confidence that our strategy of taking advantage of Janus' in-depth research capabilities to identify and invest in what I feel are good businesses with good growth opportunities at highly attractive valuations while exercising prudent risk controls can potentially yield attractive risk-adjusted returns in any market environment. While I believe eight months of performance is far too short a time period to get a true indication of what a fund is capable of, I am happy to report that your Fund has outperformed its benchmark, the Russell 2500(TM) Growth Index since inception. During this period, Janus Triton Fund gained 8.60% compared to 2.94% for the Index. STANDOUTS INCLUDED A MEDICAL DEVICE MANUFACTURER, ONLINE RETAILER AND DATA SERVICE COMPANY Strong performers included Intuitive Surgical, the maker of minimally invasive robotic surgery tools known as the da Vinci Surgical System. Intuitive Surgical's strong stock performance was driven by accelerating placements of the da Vinci System. Placements are a critical driver of future growth as the number of surgeries in a hospital increase over time and as operating rooms outfitted with the da Vinci System enable surgeons to improve their comfort with the technology. Submarino, a leading online retailer of books, music and electronics in Brazil was another strong contributor. Brazil is an ideal market for online retail because high real interest rates make it prohibitively expensive for bricks-and-mortar retailers to stock a deep inventory. Moreover, the high concentration of disposable income in a tight geography drive attractive shipping economics and speed. We spent a great deal of time over the past few years understanding the positive dynamics in many of Brazil's major export industries and companies in iron, steel, soybeans and pulp. As a result of our research, we believe this export strength provides a great Brazilian economic environment for Submarino's smartly-executed online retail strategy to yield good results. Visiting Submarino's lean, yet efficient, offices and distribution facilities, and comparing its product offering and strategy with that of online and offline competitors, gave us a good understanding of the company's strong competitive positioning. We are impressed with the company's management and like the fact that Submarino has chosen to have its shares traded on the Brazilian Stock Exchange's Novo Mercado, which ensures a higher standard of corporate governance than those that opt not to trade on the Novo Mercado. Despite its impressive share performance in the period, we continue to believe the stock offers a compelling risk/reward profile. CoStar Group, the leading data service for commercial real estate professionals, was another important positive contributor to performance. CoStar essentially provides every piece of data that a commercial real estate agent, tenant or investor needs to understand the rental market, pricing of available properties and the potential value of an individual building or a portfolio of properties. CoStar's business is a natural monopoly -- once the company establishes itself as the best source of this information, local real estate companies have shut down their own database building operations and begun contributing their data to CoStar. (RON SACHS PHOTO) Ron Sachs portfolio manager Top 10 Equity Holdings -- (% of Net Assets)
OCTOBER 31, 2005 ---------------- National Financial Partners Corp. 4.3% CoStar Group, Inc. 3.6% Intuitive Surgical, Inc. 3.2% Trimble Navigation, Ltd. 3.1% Dade Behring Holdings, Inc. 3.0% CapitalSource, Inc. 3.0% MarketAxess Holdings, Inc. 2.8% Landstar System, Inc. 2.6% Tempur-Pedic International, Inc. 2.5% VistaPrint, Ltd. 2.4%
Janus Growth Funds October 31, 2005 33 Janus Triton Fund (unaudited) This additional data improves CoStar's product and its value to customers. I believe CoStar is still in its early stages of growth. Our research suggests that customers love and need CoStar's product -- important qualities to look for in a business. DETRACTORS INCLUDED CONSUMER DURABLES AND CONSUMER PRODUCTS COMPANIES Tempur-Pedic, the leading branded memory-foam mattress and pillow manufacturer and marketer was a significant underperformer. The company announced two consecutive disappointing quarters. The primary culprits were a slowdown in consumer spending and higher raw material prices. Tempur-Pedic doesn't seem to have a good handle on the causes of a slowdown in same-store sales of its mattresses and other investors abandoned the stock. I still believe Tempur-Pedic is a differentiated brand capable of strong growth and industry-leading profit margins. Furthermore, our research has convinced us that its new, lower-priced mattress offering will significantly expand the potential market for its products and weaken the possibility of knock-off memory foam mattresses. In our opinion, the stock price doesn't reflect the company's prospects, so we continue to hold the position, albeit with limited tolerance for continued shortfalls. Another underperformer during the period was Spectrum Brands, a diversified consumer products company with significant presence in the battery and specialty pet supplies businesses. The stock declined as some recent acquisitions failed to deliver on expectations and raw materials costs compressed margins. I am disappointed by management's failure to accurately forecast these events and am concerned that the competitive environment in its key battery and pet supplies businesses has become structurally less attractive. While we hold only a small position in the stock, we will continue to closely monitor developments at the company and will size our position accordingly. GOING FORWARD Despite the prognostication of many market observers, small- and mid-capitalization stocks continued to outperform their larger-capitalization counterparts. We are seeking many compelling investment opportunities in smaller-capitalization companies and look forward to reporting results. Thank you for your investment in Janus Triton Fund. SIGNIFICANT AREAS OF INVESTMENT -- Fund vs. Index (% of Net Assets) (BAR CHART)
JANUS TRITON FUND RUSSELL 2500(TM) GROWTH INDEX ----------------- ----------------------------- Therapeutics 6.6% 1.9% Investment Management and Advisory Services 4.3% 1.2% E-Commerce/Products 4.2% 0.2% Transportation - Marine 3.7% 0.1% Commercial Services 3.6% 1.3%
34 Janus Growth Funds October 31, 2005 (unaudited) Performance Cumulative Total Return -- for the period ended October 31, 2005
SINCE INCEPTION* ---------- Janus Triton Fund 8.60% Russell 2500(TM) Growth Index 2.94%
(PERFORMANCE GRAPH)
JANUS TRITON FUND RUSSELL 2500(TM) GROWTH INDEX ----------------- -------------------------------- 2/25/2005* $ 10,000 $ 10,000 2/28/2005 $ 10,010 $ 9,942 4/30/2005 $ 9,600 $ 9,145 10/31/2005 $ 10,860 $ 10,294
Data presented represents past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 1-800-525-3713 or visit www.janus.com for performance current to the most recent month-end. See Notes to Schedules of Investments for index definitions. Total return includes reinvestment of dividends, distributions and capital gains. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. *The Fund's inception date -- February 25, 2005 FUND EXPENSES The example below shows you the ongoing costs (in dollars) of investing in your Fund and allows you to compare these costs with those of other mutual funds. Please refer to page 5 for a detailed explanation of the information presented in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD EXPENSE EXAMPLE (5/1/05) (10/31/05) (5/1/05-10/31/05)* ----------------------------- ----------------------- -------------------- -------------------------- Actual $ 1,000.00 $ 1,131.30 $ 6.82 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,018.80 $ 6.46
*Expenses are equal to the annualized expense ratio of 1.27%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). Expenses may include the effect of contractual waivers by Janus Capital. See "Explanations of Charts, Tables and Financial Statements." The Fund's portfolio may differ significantly from the securities held in the index. The index is not available for direct investment; therefore its performance does not reflect the expenses associated with the active management of an actual portfolio. Janus Capital Management LLC has contractually agreed to waive the Fund's total operating expenses to levels indicated in the Statement of Additional Information until at least March 1, 2007. Without such waivers, yields and total return would have been lower. There is no assurance that the investment process will consistently lead to successful investing. Funds that emphasize investments in smaller companies may experience greater price volatility. Janus Growth Funds October 31, 2005 35 Janus Triton Fund Schedule of Investments As of October 31, 2005
Shares or Principal Amount Value --------------------------------------------------- -------------- Common Stock - 90.2% Advertising Sales - 2.2% 31,715 Focus Media Holding, Ltd. (ADR)* $ 832,836 Advertising Services - 1.0% 6,335 R.H. Donnelley Corp.* 391,060 Auction House - Art Dealer - 2.2% 19,930 Ritchie Bros. Autioneers, Inc. (U.S. Shares) 817,529 Beverages - Wine and Spirits - 0.7% 36,493 Davide Campari - Milano S.P.A. 247,541 Broadcast Services and Programming - 0.2% 6,505 CKX, Inc.* 81,573 Building - Mobile Home and Manufactured Homes - 1.5% 16,875 Thor Industries, Inc. 550,631 Commercial Services - 3.6% 28,560 CoStar Group, Inc.* 1,369,452 Consumer Products - Miscellaneous - 0.9% 16,295 Spectrum Brands, Inc.* 337,307 Cosmetics and Toiletries - 1.5% 13,410 Alberto-Culver Co. 582,128 Data Processing and Management - 1.5% 14,435 NAVTEQ Corp.* 564,697 Diagnostic Equipment - 1.6% 24,070 Cytyc Corp.* 610,175 Diagnostic Kits - 3.0% 31,525 Dade Behring Holdings, Inc. 1,135,215 E-Commerce/Products - 4.2% 14,645 Blue Nile, Inc.* 525,316 12,130 Submarino S.A. (GDR)* 331,760 53,600 Submarino S.A.* 733,138 -------------- 1,590,214 Electronic Components - Semiconductors - 2.6% 366,467 ARM Holdings PLC 705,405 49,785 MIPS Technologies, Inc.* 279,294 -------------- 984,699 Electronic Measuring Instruments - 3.1% 40,895 Trimble Navigation, Ltd.* 1,180,639 Entertainment Software - 3.5% 48,886 Activision, Inc.* 770,932 11,837 UbiSoft Entertainment S.A.* 545,880 -------------- 1,316,812 Finance - Commercial - 3.0% 51,240 CapitalSource, Inc.* 1,127,280 Finance - Other Services - 3.5% 10,945 International Securities Exchange, Inc.* 269,356 84,935 MarketAxess Holdings, Inc.* 1,048,098 -------------- 1,317,454 Home Furnishings - 2.5% 84,745 Tempur-Pedic International, Inc.* 937,280 Internet Infrastructure Software - 2.3% 16,655 F5 Networks, Inc.* 866,560 Investment Management and Advisory Services - 4.3% 36,120 National Financial Partners Corp. 1,633,707 Life and Health Insurance - 1.5% 37,665 Universal American Financial Corp.* 557,442
Shares or Principal Amount Value --------------------------------------------------- -------------- Machinery - Construction and Mining - 1.6% 10,860 Terex Corp.* $ 596,974 Medical - Biomedical and Genetic - 2.1% 14,025 Celgene Corp.* 786,803 Medical - Drugs - 2.3% 99,340 Ligand Pharmaceuticals, Inc. - Class B* 859,291 Medical - Generic Drugs - 1.4% 24,300 Taro Pharmaceutical Industries, Ltd.* 534,600 Medical - HMO - 1.9% 8,650 PacifiCare Health Systems, Inc.* 712,414 Medical Instruments - 3.2% 13,440 Intuitive Surgical, Inc.* 1,192,531 Metal Processors and Fabricators - 0.8% 37,125 Earle M. Jorgensen Co.* 314,820 Oil Companies - Exploration and Production - 1.7% 29,035 Western Oil Sands, Inc. - Class A* 624,409 Printing - Commercial - 2.4% 52,525 VistaPrint, Ltd.* 889,248 REIT - Mortgages - 2.8% 20,200 Newcastle Investment Corp. 531,058 11,135 Redwood Trust, Inc. 518,334 -------------- 1,049,392 Retail - Computer Equipment - 0.7% 7,873 GameStop Corp. - Class A* 279,334 Telecommunication Equipment - 1.4% 17,225 Adtran, Inc. 521,056 Telecommunication Services - 0.6% 7,940 NeuStar, Inc. - Class A* 242,964 Therapeutics - 6.6% 143,145 Cypress Bioscience, Inc.* 724,314 16,645 Neurocrine Biosciences, Inc.* 879,188 11,450 United Therapeutics Corp.* 845,697 -------------- 2,449,199 Transportation - Marine - 3.7% 12,100 Alexander & Baldwin, Inc. 592,174 71,680 Horizon Lines, Inc. - Class A* 812,134 -------------- 1,404,308 Transportation - Railroad - 2.2% 21,910 All America Latina Logistica 846,412 Transportation - Truck - 2.6% 25,710 Landstar System, Inc.* 990,349 Wireless Equipment - 1.8% 28,395 American Tower Corp. - Class A 677,221 --------------------------------------------------- -------------- Total Common Stock (cost $31,837,225) 34,003,556 Repurchase Agreement - 9.6% Bear Stearns & Company, Inc., 4.1125% dated 10/31/05, maturing 11/1/05 to be repurchased at $3,600,411 collateralized by $4,874,112 in U.S. Government Agencies 0%, 10/1/35; with a value of $3,672,028 $ 3,600,000 (cost $3,600,000) 3,600,000 --------------------------------------------------- -------------- Total Investments (total cost $35,437,225) -- 99.8% 37,603,556 Cash, Receivables and Other Assets, net of Liabilities -- 0.2% 91,058 --------------------------------------------------- -------------- Net Assets -- 100% $ 37,694,614
See Notes to Schedules of Investments and Financial Statements. 36 Janus Growth Funds October 31, 2005 Schedule of Investments As of October 31, 2005 Summary of Investments by Country
% of Investment Country Value Securities --------------------------- ---------------- --------------- Bermuda $ 889,248 2.4% Brazil 1,911,310 5.1% Canada 1,441,938 3.8% Cayman Islands 832,836 2.2% France 545,880 1.5% Israel 534,600 1.4% Italy 247,541 0.7% United Kingdom 705,405 1.9% United States++ 30,494,798 81.0% ---------------- -------------- Total $ 37,603,556 100.0%
++Includes Short-Term Securities (71.5% excluding Short-Term Securities) See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds October 31, 2005 37 Janus Twenty Fund (unaudited)(closed to new investors) FUND SNAPSHOT This focused growth fund invests in a concentrated portfolio of 20-30 companies, including well-known market leaders whose products and services consumers may use more of every day. PERFORMANCE OVERVIEW Vince Lombardi, the famous football coach of the Green Bay Packers, once said, "It's not whether you get knocked down, it's whether you get back up." I think this quote is especially appropriate at this point in Janus Twenty Funds' history. After delivering outsized returns for our investors in the late 1990s, we performed poorly in the first few years of this decade. Since that time however, we have learned from our bear market experiences, refined our research process and over the past three years have delivered the type of performance we expect of ourselves for our investors. Specifically, for the one-year period ended October 31, 2005, Janus Twenty Fund returned 20.31%. For the same period, the Russell 1000(R) Growth Index returned 8.81% while the S&P 500(R) Index returned 8.72%. These results placed the Fund back in the top 1% of all Large-Cap Growth Funds over the past year, according to Lipper Analytical Services. Janus Twenty Fund's trailing three-year performance is just as strong. For the three-year period ended October 31, 2005, the Fund had an annualized return of 16.54%, placing it back in the top 4% of all Lipper Large Cap Growth Funds. Even the Fund's five-year performance is now on the mend. For the trailing five-year period ended October 31, 2005, which includes the entire brunt of the bear market, Janus Twenty Fund's performance is back in the top half of its Lipper Large-Cap Growth competitors.
ONE THREE FIVE TEN YEAR YEARS YEARS YEARS ------------- -------------- --------------- ------------- Lipper Quartile 1st 1st 2nd 1st (Rank as of 10/31/05, based on total returns) (5 out of 679) (18 out of 581) (212 out of 457) (2 out of 151)
Data presented reflects past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call Janus at 800.525.3713 or visit www.janus.com for performance current to the most recent month-end. STEWARDSHIP Throughout this entire time, our commitment to good stewardship has never wavered. Continuing a long established trend, Janus Twenty Fund's operating expenses this year were 0.86% versus a peer group average of 1.46%, and its turnover rate was just 44% versus a peer group average of 97%. The Fund remains closed to new investors and as has been the case for many years, in addition to being the Fund's manager, I am also one of its single largest investors. WHAT WENT RIGHT As for specific investments, some of the Fund's largest and longest-held securities contributed to the performance. UnitedHealth, Roche Holdings, Genentech and Electronic Arts all made meaningfully positive contributions again this year. A couple of newer holdings, such as Celegene, also contributed. Our investment in ConocoPhillips, which was part of a broader investment in the "oil complex," was one of the Fund's single biggest contributors. ConocoPhillips is a vertically integrated international oil company with a number of business segments including exploration and production, refining, marketing and retail sales. We were initially struck by the company's low price-to-earnings ratio and its seemingly low market value of $63 billion dollars versus Exxon's nearly $350 billion dollar market value. We also (SCOTT SCHOELZEL PHOTO) Scott Schoelzel portfolio manager Top 10 Equity Holdings -- (% of Net Assets)
OCTOBER 31, 2005 OCTOBER 31, 2004 ---------------- ---------------- UnitedHealth Group, Inc. 9.8% 12.5% Genentech, Inc. 7.0% 6.0% ConocoPhillips 6.3% -- Roche Holding A.G. 6.0% 7.2% Electronic Arts, Inc. 4.9% 5.5% NIKE, Inc. - Class B 4.1% 6.0% eBay, Inc. 4.1% 17.3% Wells Fargo & Co. 3.8% 3.6% Apache Corp. 3.5% -- Occidental Petroleum Corp. 3.4% --
38 Janus Growth Funds October 31, 2005 (unaudited) believed that the diversity of Conoco's businesses would help mitigate the increasingly wild swings in the price of the commodity. Finally, we were impressed by Conoco's sheer earnings power. In addition to reinvesting in its various businesses for growth, ConocoPhillips has had ample funds to meaningfully raise its dividend and opportunistically buy its own shares in the open market. As we articulated in our last correspondence, we are not believers in "$100 oil," but do believe there is still a fair amount of tightness in the world's oil complex as worldwide demand continues to grow and replacement reserves become more difficult to secure. Another outsized contributor to the Fund's performance was Celgene. Celgene is a biotechnology company that focuses on the discovery, development and sales of drugs used in the treatment of various blood borne cancers and inflammatory diseases. Celgene's newest drug, Revlimid, recently received a 90-day review extension by the Food and Drug Administration. During this time we expect the few lingering regulatory issues will be ironed out, which will allow Celgene to begin marketing Revlimid for the treatment of myelodysplastic syndrome (MDS). MDS, in plain English, is a "pre-leukemia" blood disorder. Early next year, we also expect that Revlimid will be approved for the treatment of multiple myeloma, another "leukemia like" blood disorder. Additionally, early data seems to indicate that Revlimid has significant promise in at least two other types of cancer -- chronic lymphocytic leukemia and cutaneous T-cell Lymphoma. The total addressable market for Revlimid continues to grow and I believe Celgene is well positioned to capitalize on its discoveries. Finally, Celgene has a robust pipeline of drugs in the earlier stages development which are of keen interest to us as well. WHAT WENT WRONG Of course, not everything went our way this year. In analyzing the Fund's performance, I am pleased to report that the few losses we sustained over the course of the year were, with one exception, quite small. By far the biggest detractor to the Fund's performance was our position in eBay, which occurred in the first half of the year. Since that time eBay has rebounded quite nicely, and we believe the position is appropriately sized in the Fund. We were very disciplined about cutting losses quickly and, no doubt, this discipline has positively contributed to the Fund's performance. FUND OUTLOOK Going forward, I am increasingly optimistic about the future of the financial markets. I expect that the two primary headwinds we have been navigating these past 18 months, namely higher interest rates and higher oil prices, will begin to abate. Specifically, sometime in the calendar year 2006, I expect the Federal Reserve, under its new leadership, to move toward a more neutral position on interest rates. I also expect that the year-over-year increases in the price of oil will begin to moderate, leading to a much more favorable environment for stocks, particularly growth stocks. Janus Twenty Fund's improved results over the period have been increasingly gratifying and I appreciate every single investor's continued commitment to the Fund. There is certainly more work to be done, but we are proud of the progress we have made these past few years. The Fund's improved performance, its efficient operating metrics, the stewardship of the Fund, as well as the depth, breadth and experience of our research analysts are once again a cut above our peers. While no one knows what the future will hold, I am confident in our team, our experience and in our commitment to our investors. Thank you for your investment and continued confidence in Janus. SIGNIFICANT AREAS OF INVESTMENT -- Fund vs. Index (% of Net Assets) (BAR CHART)
JANUS TWENTY FUND RUSSELL 1000(R) GROWTH INDEX ----------------- -------------------------- Oil Companies - Integrated 16.3% 0.0% Medical - HMO 10.6% 2.3% Medical - Biomedical and Genetic 9.6% 3.2% Oil Companies - Exploration and Production 6.8% 1.1% Medical - Drugs 6.0% 3.8%
Janus Growth Funds October 31, 2005 39 Janus Twenty Fund (unaudited) Performance Average Annual Total Return -- for the periods ended October 31, 2005
ONE FIVE TEN SINCE YEAR YEAR YEAR INCEPTION* ------- ------- ------- ----------- Janus Twenty Fund 20.31% (6.77)% 11.32% 13.43% Russell 1000(R) Growth Index 8.81% (7.93)% 6.78% 11.25% S&P 500(R) Index 8.72% (1.74)% 9.34% 12.46% Lipper Ranking - based on total returns for Large-Cap Growth Funds 5/679 212/457 2/151 2/40
(PERFORMANCE GRAPH)
JANUS TWENTY FUND S & P 500(R) INDEX RUSSELL 1000(R) GROWTH INDEX ---------------- ------------------------------- --------------------------------- 4/30/1985* $ 10,000 $ 10,000 $ 10,000 10/31/1990 $ 18,574 $ 20,507 $ 20,325 10/31/1995 $ 45,344 $ 45,440 $ 46,176 10/31/2000 $ 188,040 $ 121,164 $ 134,519 10/31/2005 $ 132,459 $ 111,006 $ 88,984
Data presented represents past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 1-800-525-3713 or visit www.janus.com for performance current to the most recent month-end. See Notes to Schedules of Investments for index definitions. Total return includes reinvestment of dividends, distributions and capital gains. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. *The Fund's inception date -- April 30, 1985 FUND EXPENSES The example below shows you the ongoing costs (in dollars) of investing in your Fund and allows you to compare these costs with those of other mutual funds. Please refer to page 5 for a detailed explanation of the information presented in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD EXPENSE EXAMPLE (5/1/05) (10/31/05) (5/1/05-10/31/05)* ---------------------------- ----------------------- -------------------- --------------------------- Actual $ 1,000.00 $ 1,155.80 $ 4.67 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.87 $ 4.38
*Expenses are equal to the annualized expense ratio of 0.86%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). See "Explanations of Charts, Tables and Financial Statements." The Fund's portfolio may differ significantly from the securities held in the indices. The indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual portfolio. The Fund is classified as "nondiversified," meaning it has the ability to take larger positions in a smaller number of issuers than a fund that is classified as "diversified." Nondiversified funds may experience greater price volatility. Concentration may lead to greater price volatility. There is no assurance that the investment process will consistently lead to successful investing. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. Closed to new investors. Effective February 25, 2005, Janus Twenty Fund changed its primary benchmark from the S&P 500(R) Index to the Russell 1000(R) Growth Index. The new primary benchmark will provide a more appropriate comparison to the Fund's investment style. The Fund will retain the S&P 500(R) Index as a secondary benchmark index. 40 Janus Growth Funds October 31, 2005 Janus Twenty Fund Schedule of Investments As of October 31, 2005
Shares or Principal Amount Value --------------------------------------------------- ----------------------- Common Stock - 92.2% Athletic Footwear - 4.1% 4,730,930 NIKE, Inc. - Class B# $ 397,634,667 Casino Hotels - 2.0% 3,221,810 Harrah's Entertainment, Inc. 194,855,069 Chemicals - Specialty - 1.4% 1,291,840 Syngenta A.G.* 138,466,893 Coal - 1.5% 1,800,000 Peabody Energy Corp.# 140,688,000 Computers - 2.4% 1,250,000 Apple Computer, Inc.* 71,987,500 Research In Motion, Ltd. (U.S. 2,645,620 Shares)*,# 162,679,174 ----------------------- 234,666,674 Cosmetics and Toiletries - 3.3% 5,694,740 Procter & Gamble Co. 318,848,493 E-Commerce/Services - 4.1% 9,969,878 eBay, Inc.*,# 394,807,169 Entertainment Software - 4.9% 8,280,630 Electronic Arts, Inc.* 471,002,234 Finance - Consumer Loans - 1.1% 1,828,090 SLM Corp.# 101,513,838 Finance - Investment Bankers/Brokers - 2.2% 1,655,385 Goldman Sachs Group, Inc.# 209,191,003 Medical - Biomedical and Genetic - 9.6% 4,490,190 Celgene Corp.* 251,899,659 7,440,195 Genentech, Inc.*,# 674,081,666 ----------------------- 925,981,325 Medical - Drugs - 6.0% 3,847,005 Roche Holding A.G. 574,656,349 Medical - HMO - 10.6% 898,715 Aetna, Inc. 79,590,200 16,225,220 UnitedHealth Group, Inc.# 939,277,985 ----------------------- 1,018,868,185 Oil Companies - Exploration and Production - 6.8% 5,268,280 Apache Corp. 336,274,312 2,509,355 EnCana Corp. (U.S. Shares) 115,079,020 3,052,487 EOG Resources, Inc.# 206,897,569 ----------------------- 658,250,901 Oil Companies - Integrated - 16.3% 1,290,765 Amerada Hess Corp.# 161,474,702 4,764,910 BP PLC (ADR)# 316,390,024 9,273,605 ConocoPhillips# 606,308,294 2,568,710 Exxon Mobil Corp. 144,207,379 4,188,610 Occidental Petroleum Corp.# 330,397,557 ----------------------- 1,558,777,956 Oil Refining and Marketing - 1.5% 1,359,590 Valero Energy Corp. 143,083,252 Optical Supplies - 3.2% 2,280,710 Alcon, Inc. (U.S. Shares)# 303,106,359 Retail - Consumer Electronics - 0.8% 1,750,000 Best Buy Company, Inc.# 77,455,000 Retail - Restaurants - 0.5% 1,815,090 Starbucks Corp.*,# 51,330,745 Super-Regional Banks - 3.8% 6,048,780 Wells Fargo & Co. 364,136,556
Shares or Principal Amount Value ------------------------------------------------------ ------------------------- Web Portals/Internet Service Providers - 5.0% 781,150 Google, Inc. - Class A*,# $ 290,697,161 5,230,650 Yahoo!, Inc.* 193,377,131 ------------------------- 484,074,292 Wireless Equipment - 1.1% 2,713,880 QUALCOMM, Inc. 107,903,869 ------------------------------------------------------ ------------------------- Total Common Stock (cost $5,799,984,277) 8,869,298,829 Money Market -- 2.6% 200,000,000 Janus Institutional Cash Reserves Fund 3.87 % 200,000,000 50,000,000 Janus Money Market Fund 3.86 % 50,000,000 ------------------------------------------------------ ------------------------- Total Money Market (cost $250,000,000) 250,000,000 Other Securities - 2.5% State Street Navigator Securities Lending Prime Portfolio+ (cost 237,785,188 $237,785,188) 237,785,188 Repurchase Agreements - 0.4% Cantor Fitzgerald and Co., 4.05% dated 10/31/05, maturing 11/1/05 to be repurchased at $200,023 collateralized by $381,944 in U.S. Government Agencies 0% - 7.50%, 12/15/12 - 5/15/35 $ 200,000 with a value of 204,006 200,000 Citigroup Global Markets, Inc., 4.05% dated 10/31/05, maturing 11/1/05 to be repurchased at $41,104,624 collateralized by $50,811,633 in U.S. Government Agencies 0% - 5.00%,3/1/34 - 8/1/35 41,100,000 with a value of 41,922,000 41,100,000 ------------------------------------------------------ ------------------------- Total Repurchase Agreements (cost $41,300,000) 41,300,000 Short-Term U.S. Government Agencies - 0.3% Federal Home Loan Bank System 25,000,000 3.85%, 2/3/06 (cost $24,748,680) 24,718,750 Time Deposits - 3.8% Societe Generale, ETD 68,400,000 4.00%, 11/1/05 68,400,000 UBS Finance (DE), Inc. 297,800,000 3.98%, 11/1/05 297,800,000 ------------------------------------------------------ ------------------------- Total Time Deposits (cost $366,200,000) 366,200,000 ------------------------------------------------------ ------------------------- Total Investments (total cost $6,720,018,145) -- 101.8% 9,789,302,767 Liabilities, net of Cash, Receivables and Other Assets -- (1.8)% (176,800,147) ------------------------------------------------------ ------------------------- Net Assets -- 100% $ 9,612,502,620
Summary of Investments by Country % of Investment Country Value Securities -------------------------------- ---------------- --------------- Canada $ 277,758,194 2.9% Switzerland 1,016,229,601 10.4% United Kingdom 316,390,024 3.2% United States++ 8,178,924,948 83.5% --------------------- ---------------- --------------- Total $ 9,789,302,767 100.0%
++Includes Short-Term Securities and Other Securities (74.2% excluding Short-Term Securities and Other Securities) See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds October 31, 2005 41 Janus Venture Fund (unaudited) (closed to new investors) FUND SNAPSHOT This growth fund focuses on small companies, where there's less Wall Street coverage and more opportunity for a research edge. PERFORMANCE OVERVIEW Against a volatile backdrop of soaring energy costs and rising interest rates, small-capitalization stocks closed out our fiscal year ended October 31, 2005, in positive territory, surpassing their large-cap peers. To be sure, although the brisk tailwind small caps enjoyed at the end of last year moderated somewhat in 2005, small-caps had a good showing as the economy picked up strength, and corporate profits grew. In this environment, the Fund gained 10.18%, underperforming the 10.91% return of its primary benchmark, the Russell 2000(R) Growth Index, as well as its secondary benchmark, the broader Russell 2000(R) Index, which advanced 12.08%. The Fund's performance compared to its benchmark is attributable to our emphasis on under-covered small-cap companies that we believe offer the greatest opportunity for growth if they execute as we expect. Specifically, our performance can be linked to strong stock selection within the real estate sector and the commercial services and supplies sector. Our gains were held in check, however, by the weak results posted by select holdings in the software and services sector. STRATEGY IN THIS ENVIRONMENT My approach to stock selection in this investment environment -- which has been characterized by solid economic growth that has provided a springboard for corporate profits and, in turn, stock prices -- essentially is unchanged. Although uncertain economic conditions may prompt me to make adjustments on the margins, my goal is to uncover companies not widely followed by Wall Street that boast strong fundamentals and have plenty of room to grow. FUND COMPOSITION As of October 31, 2005, the Fund was 100% invested in equities, with foreign stocks accounting for 12.3% of the Fund. The Fund's 10 largest holdings by weight represented 24.9% of its total net assets. TOP CONTRIBUTORS INCLUDE REAL ESTATE, ENERGY AND COMMERCIAL SERVICES HOLDINGS Commercial real estate services firm CB Richard Ellis continued its winning streak, amply rewarding us during the reporting period. Our research showing that all the stock's key drivers -- including rental rates and property values -- were headed in the right direction was confirmed when the company announced that third-quarter profits jumped more than fourfold as compared to the same quarter a year ago. Fueling these higher results were favorable investment markets and leasing trends in both the U.S. and Europe. As CB Richard Ellis closed in on the upper end of the Fund's market-capitalization range, we elected to trim the position. In energy, Western Oil Sands supported our performance. The company owns a 20% stake in the Athabasca Oil Sands Project, where crude oil is extracted from sands mined from a tar pit in northern Alberta. It is a costly process indeed, and one that is not practical from a business standpoint unless the price of oil remains high. However, as long as that price hovers in the $60 per barrel range -- a reasonable assumption considering China and India are propping up worldwide demand levels -- we believe Western Oil Sands should continue operating profitably. "Operating profitably" certainly describes TALX, our top contributor. The company provides automated employment and income verification, as well as other outsourced employee self-service applications. Not only did the stock post an extraordinary (WILL BALES PHOTO) Will Bales portfolio manager Top 10 Equity Holdings -- (% of Net Assets)
OCTOBER 31, 2005 OCTOBER 31, 2004 ---------------- ---------------- TALX Corp. 3.7% 2.2% Euronet Worldwide, Inc. 2.9% 4.0% CB Richard Ellis Group, Inc. 2.6% 2.6% Ultimate Software Group, Inc. 2.5% 1.8% Western Oil Sands, Inc. - Class A 2.3% 1.2% CoStar Group, Inc. 2.3% 0.2% Carter's, Inc. 2.2% 1.1% World Fuel Services Corp. 2.2% 0.5% Lions Gate Entertainment Corp. (U.S. Shares) 2.1% 1.4% Jarden Corp. 2.1% 1.4%
42 Janus Growth Funds October 31, 2005 (unaudited) triple-digit return for the 12-month period, but management also reported fiscal second-quarter profits that rose 77% on strong revenue gains. Additionally, we were gratified by TALX's announcement guiding up revenues for the full year 2006. Turning to the retail sector, Carter's is a well-known name to most Americans. Founded in 1865, the popular baby clothier did not go public until 2003. We scrutinized the firm from top to bottom prior to the IPO, and liking what we saw, stepped up and bought its stock in the secondary market. Our confidence has paid off in the form of robust sales and profit growth. Driving the company's success has been its strategy of getting its products in the doors of every department store in the U.S. Building on that success, in July Carter's acquired Oshkosh B'Gosh, a deal that combines two respected children's brands with complementary products and distribution channels. SOFTWARE AND SERVICES STOCKS LEAD OUR LIST OF LAGGARDS On the downside, online recruitment-software and services provider and relatively new holding Workstream sold off sharply during the 12-month period and undercut our performance. Despite its stumble, what we find so compelling about Workstream is the scalability of its on-demand workforce management software. Problems started to arise, however, when brisk sales turned into a mounting backlog of unfilled orders. Nevertheless, extensive conversations with Workstream's new chief financial officer, Steve Lerch, convinced me that his plan to put more structure and accountability in place at the fast-growing company eventually would reap benefits. Consequently, we chose to continue to hold Workstream. Another holding in the online area, Greenfield Online, also worked against us. The company is a leading independent provider of online consumer-panel surveys to the global marketing research industry. Although it reported second-quarter revenues that surged 157% over the same period last year, the stock plunged on investor concerns that the firm overpaid for its recent acquisition of Ciao, which the company purchased in an effort to boost its share of the European online-survey market. We tend to agree with this theory and therefore liquidated our position in Greenfield Online. INVESTMENT STRATEGY AND OUTLOOK Given persistent fears that higher oil and gas prices could curb economic growth, the market likely will remain in a narrow trading range. Amid this climate of uncertainty, however, my confidence is not diminished. On the contrary, still-low interest rates and an improving labor market should continue to spur the economy. Moreover, in times such as these, I believe small-cap investors have an edge. Because our focus is on finding "under the radar" companies, we feel we can gain an advantage by investing early in these undiscovered gems whose compelling fundamentals and exciting growth prospects could maximize the Fund's potential for positive returns. Thank you for your investment in Janus Venture Fund. SIGNIFICANT AREAS OF INVESTMENT -- Fund vs. Index (% of Net Assets) (BAR CHART)
JANUS VENTURE FUND RUSSELL 2000(R) GROWTH INDEX ------------------ ---------------------------- Commercial Services - Finance 5.0% 0.8% Oil Companies - Exploration and Production 3.8% 2.3% Enterprise Software/Services 3.8% 1.0% Computers - Voice Recognition 3.7% 0.2% Apparel Manufacturers 3.6% 0.6%
Janus Growth Funds October 31, 2005 43 Janus Venture Fund (unaudited) Performance Average Annual Total Return -- for the periods ended October 31, 2005
ONE FIVE TEN SINCE YEAR YEAR YEAR INCEPTION* --------- --------- --------- ---------- Janus Venture Fund 10.18% (1.84)% 8.70% 13.13% Russell 2000(R) Growth Index 10.91% (1.62)% 4.81% 7.67% Russell 2000(R) Index 12.08% 6.75% 9.53% 10.62% Lipper Ranking - based on total returns for Small-Cap Growth Funds 325/515 168/322 41/96 1/9
(PERFORMANCE GRAPH)
JANUS VENTURE FUND RUSSELL 2000(R) INDEX RUSSELL 2000(R) GROWTH INDEX ------------------ ------------------------- ---------------------------- 4/30/1985* $ 10,000 $ 10,000 $ 10,000 10/31/1990 $ 22,329 $ 11,744 $ 11,230 10/31/1995 $ 54,465 $ 31,853 $ 28,432 10/31/2000 $137,615 $ 57,112 $ 49,333 10/31/2005 $125,408 $ 79,158 $ 45,463
Data presented represents past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 1-800-525-3713 or visit www.janus.com for performance current to the most recent month-end. See Notes to Schedules of Investments for index definitions. Total return includes reinvestment of dividends, distributions and capital gains. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. *The Fund's inception date -- April 30, 1985 FUND EXPENSES The example below shows you the ongoing costs (in dollars) of investing in your Fund and allows you to compare these costs with those of other mutual funds. Please refer to page 5 for a detailed explanation of the information presented in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD EXPENSE EXAMPLE (5/1/05) (10/31/05) (5/1/05-10/31/05)* ---------------------------- ----------------------- -------------------- --------------------------- Actual $ 1,000.00 $ 1,085.20 $ 4.57 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.82 $ 4.43
*Expenses are equal to the annualized expense ratio of 0.87%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). See "Explanations of Charts, Tables and Financial Statements." The Fund's portfolio may differ significantly from the securities held in the indices. The indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual portfolio. Funds that emphasize investments in smaller companies may experience greater price volatility. The Fund has been significantly impacted, either positively or negatively, by investing in initial public offerings ("IPOs"). There is no assurance that the investment process will consistently lead to successful investing. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. Effective February 25, 2005, Janus Venture Fund changed its primary benchmark from the Russell 2000(R) Index to the Russell 2000(R) Growth Index. The new primary benchmark will provide a more appropriate comparison to the Fund's investment style. The Fund will retain the Russell 2000(R) Index as a secondary benchmark index. 44 Janus Growth Funds October 31, 2005 Janus Venture Fund Schedule of Investments As of October 31, 2005
Shares or Principal Amount Value --------------------------------------------------- ----------------------- Common Stock - 100.2% Advanced Materials/Products - 0.5% 147,416 Ceradyne, Inc.*,# $ 5,778,707 Aerospace and Defense - Equipment - 0.6% 524,500 K&F Industries Holdings, Inc.*,# 8,203,180 Airlines - 0.2 341,535 WestJet Airlines, Ltd.*,(B),(O) 3,036,252 Apparel Manufacturers - 3.6% 448,270 Carter's, Inc.*,# 28,308,250 810,655 Quiksilver, Inc.* 9,346,851 286,244 Volcom, Inc.*,# 8,753,342 ----------------------- 46,408,443 Applications Software - 1.6% 687,310 American Reprographics Co.*,# 11,581,173 610,060 Quest Software, Inc.*,# 8,485,935 ----------------------- 20,067,108 Athletic Equipment - 0.1% 307,105 Orange 21, Inc.*,L. 1,099,436 Building - Residential and Commercial - 0.4% 190,580 WCI Communities, Inc.*,# 4,768,312 Casino Services - 1.4% 533,335 Mikohn Gaming Corp.*,# 5,594,684 482,140 Shuffle Master, Inc.*,# 12,227,071 ----------------------- 17,821,755 Cellular Telecommunications - 0.8% 1,199,485 UbiquiTel, Inc.* 10,363,550 Commercial Services - 3.0% 610,295 CoStar Group, Inc.* 29,263,646 2,346,939 Intermap Technologies,Ltd.*,L. 9,995,007 ----------------------- 39,258,653 Commercial Services - Finance - 5.0% Euronet Worldwide, 1,351,376 Inc.*,#,L. 37,973,665 544,620 Heartland Payment Systems, Inc.* 13,190,696 332,980 iPayment Holdings, Inc.# 11,973,961 91,715 Wright Express Corp.*,# 1,979,210 ----------------------- 65,117,532 Communications Software - 0.7% 596,132 InPhonic, Inc.*,# 8,620,069 Computer Services - 2.7% 335,665 Anteon International Corp. 15,172,058 3,078,095 LivePerson, Inc.*,L. 13,666,742 644,992 TechTeam Global, Inc.*,L. 6,011,325 ----------------------- 34,850,125 Computer Software - 0.9% 813,544 Blackbaud, Inc.# 11,715,034 Computers - Peripheral Equipment - 0.5% 799,760 TransAct Technologies,Inc.*,L. 5,822,253 Computers - Voice Recognition - 3.7% 1,204,484 TALX Corp.L. 47,613,252 Consulting Services - 2.9% 478,300 Advisory Board Co.* 23,077,975 88,755 Huron Consulting Group, Inc.*,# 2,356,445 20,250 LECG Corp.*,# 447,323 546,125 Navigant Consulting, Inc.*,# 11,452,241 ----------------------- 37,333,984
Shares or Principal Amount Value --------------------------------------------------- ----------------------- Consumer Products - Miscellaneous - 2.7% 808,765 Jarden Corp.*,# $ 27,328,170 640,125 Prestige Brands Holdings, Inc.*,# 7,713,506 ----------------------- 35,041,676 Data Processing and Management - 1.1% 1,988,583 Infocrossing, Inc.*,L. 13,741,109 Decision Support Software - 0.7% 717,386 Wind River Systems, Inc.*,# 9,397,757 Direct Marketing - 1.4% 1,704,932 ValueVision Media, Inc.(O),(S),L. 15,347,787 211,690 ValueVision Media, Inc. - Class A*,# 2,078,796 ----------------------- 17,426,583 Distribution/Wholesale - 1.4% 481,880 Beacon Roofing Supply, Inc.*,# 13,136,049 249,889 MWI Veterinary Supply, Inc.*,# 5,602,511 ----------------------- 18,738,560 Diversified Minerals - 0.1% 277,245 Birch Mountain Resources, Ltd. (U.S. Shares)* 1,364,045 Drug Delivery Systems - 1.0% 134,605 Conor Medsystems, Inc.*,# 3,020,536 867,370 I-Flow Corp.*,# 10,469,156 ----------------------- 13,489,692 E-Commerce/Products - 1.4% 116,005 Baby Universe, Inc. 957,041 159,360 Submarino S.A. (GDR)* 4,358,560 912,530 Submarino S.A.* 12,481,537 ----------------------- 17,797,138 E-Commerce/Services - 0.6% 4,957,152 Workstream, Inc. (U.S. Shares)*,L. 7,534,871 E-Marketing/Information - 1.3% 995,685 ValueClick, Inc.*,# 17,424,488 E-Services/Consulting - 1.0% 804,165 GSI Commerce, Inc.*,# 12,850,557 Educational Software - 0.3% 158,565 Blackboard, Inc.*,# 4,455,677 Electronic Components - Semiconductors - 0.4% 1,011,147 MIPS Technologies, Inc.* 5,672,535 Electronic Measuring Instruments - 0.6% 250,000 Trimble Navigation, Ltd.* 7,217,500 Enterprise Software/Services - 3.8% 183,440 Emageon, Inc.*,# 2,404,898 1,365,599 Omnicell, Inc.*,#,L. 14,475,349 1,900,000 Ultimate Software Group, Inc.*,L. 32,281,000 ----------------------- 49,161,247 Finance - Commercial - 0.8% 476,675 CapitalSource, Inc.*,# 10,486,850 Finance - Other Services - 1.2% 624,060 International Securities Exchange, Inc.*,# 15,358,117 Food - Canned - 0.9% 468,575 TreeHouse Foods, Inc.* 12,107,978 Gambling-Non Hotel - 0.9% 492,250 Century Casinos, Inc.*,# 3,701,720 1,035,841 Century Casinos, Inc.*,L. 7,373,948 ----------------------- 11,075,668
See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds October 31, 2005 45 Janus Venture Fund Schedule of Investments As of October 31, 2005
Shares or Principal Amount Value --------------------------------------------------- ----------------------- Hotels and Motels - 2.0% 174,740 Four Seasons Hotels, Inc. $ 9,371,306 569,445 Orient-Express Hotel, Ltd. - Class A # 16,058,349 ----------------------- 25,429,655 Human Resources - 0.7% 324,950 Barrett Business Services, Inc. 8,676,165 Identification Systems and Devices - 0.7% 359,430 Cogent, Inc.*,# 9,542,867 Industrial Audio and Video Products - 1.2% 794,468 Sonic Solutions*,# 15,206,118 Internet Applications Software - 0.4% 376,490 eResearch Technology, Inc.*,# 5,395,102 Internet Content - Info/News - 0.7% 2,308,435 Harris Interactive, Inc.* 9,626,174 Internet Infrastructure Software - 1.1% 273,845 F5 Networks, Inc.*,# 14,248,155 Investment Companies - 0.2% 230,960 UTEK Corp.(O),(S) 2,795,771 Investment Management and Advisory Services - 0.8% 444,630 Calamos Asset Management, Inc. - Class A# 10,800,063 Life and Health Insurance - 0.4% 397,880 American Equity Investment Life Holding Co.# 4,631,323 Marine Services - 0.4% 1,748,955 Odyssey Marine Exploration, Inc.*,# 5,544,187 Medical - Biomedical and Genetic - 0.5% 139,240 Coley Pharmaceutical Group*,# 2,062,144 290,470 Illumina, Inc.*,# 4,522,618 ----------------------- 6,584,762 Medical - Drugs - 0.5% 176,305 Adams Respiratory Therapeutics, Inc.* ,# 6,593,807 Medical - HMO - 1.5% 973,779 Centene Corp.* 19,621,647 Medical - Hospitals - 1.8% 642,502 United Surgical Partners International, Inc.*,# 23,033,697 Medical - Outpatient and Home Medical Care - 1.7% 637,955 Hythiam, Inc.*,# 3,572,548 602,940 LHC Group LLC*,# 9,767,628 293,609 Radiation Therapy Services, Inc.*,# 8,820,014 ----------------------- 22,160,190 Medical - Wholesale Drug Distributors - 0.7% 6,100,000 DrugMax, Inc.(O),(S),L. 8,784,000 Medical Instruments - 2.0% 280,165 AtriCure, Inc.* 3,401,203 272,600 CryoCor, Inc.* 1,673,764 464,590 ev3, Inc.*,# 6,964,204 182,085 Foxhollow Technologies, Inc.*,# 8,250,272 111,945 Symmetry Medical, Inc.*,# 2,478,462 92,970 Ventana Medical Systems, Inc.*,# 3,563,540 ----------------------- 26,331,445 Medical Products - 3.4% 939,425 PSS World Medical, Inc.*,# 13,086,190 842,620 SeraCare Life Sciences, Inc.*,L. 17,153,636 764,729 ThermoGenesis Corp.*,# 3,808,350 523,480 Wright Medical Group, Inc.*,# 9,741,963 ----------------------- 43,790,139
Shares or Principal Amount Value --------------------------------------------------- ---------------------- Metal - Diversified - 0.4% 711,503 Aur Resources, Inc. $ 5,512,025 Motion Pictures and Services - 2.1% 2,880,100 Lions Gate Entertainment Corp.(U.S. Shares)*,# 27,648,960 Networking Products - 0.6% 580,175 Ixia*,# 7,321,809 Non-Hazardous Waste Disposal - 0.5% 1,857,255 Waste Services, Inc.*,# 6,946,134 Office Furnishings - Original - 0.7% 545,040 Knoll, Inc.# 8,682,487 Oil - Field Services - 0.7% 644,820 Key Energy Services, Inc.*,# 8,705,070 Oil Companies - Exploration and Production - 3.8% 179,270 Bill Barrett Corp.*,# 5,706,164 277,860 Carrizo Oil & Gas, Inc.*,# 7,207,688 1,157,115 Gasco Energy, Inc.* 7,035,259 1,368,891 Western Oil Sands, Inc. - Class A* 29,438,516 ----------------------- 49,387,627 Optical Recognition Equipment - 1.3% 903,050 Optimal Robotics Corp. - Class A (U.S. Shares)*,# 16,859,944 Pharmacy Services - 1.2% 446,875 HealthExtras, Inc.*,# 9,406,719 1,591,512 Ronco Fi-Tek, Inc.(O),(S),L. 6,000,000 ----------------------- 15,406,719 Printing - Commercial - 0.1% 185,255 Cenveo, Inc.*,# 1,830,319 Real Estate Management/Services - 2.6% 688,375 CB Richard Ellis Group, Inc.* 33,627,119 Research and Development - 0.9% 461,905 PRA International*,# 12,268,197 Retail - Computer Equipment - 0.6% 394,085 Insight Enterprises, Inc.* 8,086,624 Retail - Petroleum Products - 2.2% 885,290 World Fuel Services Corp.# 28,240,751 Schools - 0.5% 532,440 Educate, Inc.*,# 6,272,143 Semiconductor Components/Integrated Circuits - 0.4% 249,227 Hittite Microwave Corp.*,# 5,757,144 Semiconductor Equipment - 0.8% 101,615 FormFactor, Inc.*,# 2,501,761 619,005 Rudolph Technologies, Inc.*,# 7,539,481 ----------------------- 10,041,242 Telecommunication Equipment - 0.5% 2,128,965 Axesstel, Inc.*,L. 5,961,102 Therapeutics - 3.2% 718,850 MGI Pharma, Inc.*,# 13,485,625 246,796 Neurocrine Biosciences, Inc.* 13,035,765 156,365 United Therapeutics Corp.* 11,549,119 543,405 ViaCell, Inc.*,# 2,744,195 ----------------------- 40,814,704 Toys - 1.5% 1,078,010 Marvel Entertainment, Inc.*,# 18,972,976 Transactional Software - 1.4% 848,125 Open Solutions, Inc.*,# 18,158,356
See Notes to Schedules of Investments and Financial Statements. 46 Janus Growth Funds October 31, 2005 Schedule of Investments As of October 31, 2005
Shares or Principal Amount Value --------------------------------------------------- ----------------------- Transportation - Railroad - 1.2% 397,700 All America Latina Logistica $ 15,363,675 Transportation - Services - 1.4% 683,125 Pacer International, Inc.*,# 17,658,781 Travel Services - 0.2% 1,145,454 OneTravel Holdings, Inc.(S)L. 2,141,999 Web Hosting/Design - 0.5% 176,535 Equinix, Inc.*,# 6,512,376 148,540 Terremark Worldwide, Inc.*,# 414,427 ----------------------- 6,926,803 --------------------------------------------------- ----------------------- Total Common Stock (cost $992,115,387) 1,295,607,670 Preferred Stock - 0% Computers - Peripheral Equipment - 0% Candescent Technologies Corp. 665,000 - Series E(B),o,(O)(cost $3,657,500) 0 Warrants - 0.1% Data Processing and Management - 0% 521,660 Infocrossing, Inc. - expires 5/10/07(B),(O) 0 Medical - Wholesale Drug Distributors - 0.1% 3,050,000 DrugMax, Inc.(O),(S) 1,399,950 Travel Services - 0% 458,181 OneTravel Holdings, Inc.(O),(S) 0 --------------------------------------------------- ----------------------- Total Warrants (cost $381,250) 1,399,950 Other Securities - 19.8% State Street Navigator Securities Lending 255,798,830 Prime Portfolio+ 255,798,830 3,859 U.S. Treasury Bonds+ 3,859 --------------------------------------------------- ----------------------- Total Other Securities (cost $255,802,689) 255,802,689 --------------------------------------------------- ----------------------- Total Investments (total cost 1,552,810,309 $1,251,956,826) -- 120.1% Liabilities, net of Cash, Receivables and Other Assets -- (20.1)% (259,660,042) --------------------------------------------------- ----------------------- Net Assets -- 100% $1,293,150,267
Summary of Investments by Country
% of Investment Country Value Securities --------------- -------------- --------------- Bermuda $ 16,058,349 1.0% Brazil 32,203,772 2.1% Canada 110,760,926 7.1% United States++ 1,393,787,262 89.8% -------------- --------------- Total $1,552,810,309 100.0%
++Includes Other Securities (73.3% excluding Other Securities) See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds October 31, 2005 47 Janus Global Life Sciences Fund (unaudited) FUND SNAPSHOT This fund seeks companies around the world that are dedicated to improving the quality of life for a growing and aging world. PERFORMANCE OVERVIEW During the 12 months ended October 31, 2005, Janus Global Life Sciences Fund posted a 20.46% gain. By comparison, the Fund's primary benchmark, the S&P 500(R) Index returned 8.72%, while its secondary benchmark, the Morgan Stanley Capital International (MSCI) World Health Care Index(SM), advanced 13.14%. The Fund's sizeable outperformance to the more comparable MSCI World Health Care Index(SM) stemmed in part from overweight stakes relative to the Index in the biotechnology and managed healthcare groups. While the biotechnology sector is more prone to volatility, which we indeed experienced during the past 12 months, well-run managed health systems provided steady growth, backed by expanding revenues and improved cost controls. The Fund's sole investment in the life and health insurance space proved disappointing and represented the largest detractor, on a sector basis, from performance. Also weighing negatively on performance was our slightly underweight stake in healthcare distributors as compared to the MSCI World Health Care Index(SM). This sector ranked among the best performers in the life sciences arena. STRATEGY IN THIS ENVIRONMENT As spiking oil prices and rising interest rates cast an air of uncertainty over the broader equity market for much of the period, many investors turned to proven steady growth names to bolster returns. Health maintenance organization (HMO) operators generally performed well as a result. Through the latter months of the period, anticipation built for the January startup of the new Medicare prescription drug benefit and an expansion of the government health plan's HMO offerings. Groups that rallied in response included drugmakers, biotech concerns and drug distributors, as well as HMO operators that cater to Medicare beneficiaries. While maintaining a steady presence in the HMO space, where fundamentals supported the large gains, we found the biotechnology space intriguing. Filled with names that are dependent on one or two novel treatments, the sector holds high risks, but can offer significant rewards. Other areas that we believed were well positioned to profit from current and future conditions included pharmaceuticals and services and supplies, which include drug distributors. FUND COMPOSITION As of October 31, 2005, the Fund was 98.2% invested in equities, including a 17.4% share in foreign stocks. Meanwhile, the Fund's top 10 equity holdings accounted for 33.6% of its total net assets and cash holdings represented 1.8% of total net assets. BIOTECHNOLOGY INNOVATORS JOINED HMOS AND PHARMACY BENEFIT MANAGERS ATOP FUND From within the high-risk/reward realm of small biotechnology outfits, two firms contributed significantly to the Fund's performance during the period. Celgene surged as it offered an encouraging outlook for its Thalomid drug, which is currently approved for treating leprosy but demonstrated effectiveness in a clinical trial at halting multiple myeloma, a blood-borne cancer. Meanwhile, its Revlimid drug for myelodysplastic syndromes (MDS), a bone marrow disease that can cause cancer, was granted priority review status by the Food and Drug Administration (FDA). Elsewhere, United Therapeutics, a stock that was added to the Fund during the period, posted better-than-expected sales results for its Remodulin treatment for pulmonary hypertension. The company is also developing an inhaled version of Remodulin that has the potential to add significantly to sales and profits while leveraging the company's existing marketing base. (THOMAS MALLEY PHOTO) Thomas Malley portfolio manager Top 10 Equity Holdings -- (% of Net Assets)
OCTOBER 31, 2005 OCTOBER 31, 2004 ---------------- ---------------- Celgene Corp. 4.3% 2.1% Roche Holding A.G. 3.8% 3.4% Coventry Health Care, Inc. 3.5% 0.7% Aetna, Inc. 3.5% 3.3% United Therapeutics Corp. 3.5% -- UnitedHealth Group, Inc. 3.5% 3.2% Gilead Sciences, Inc. 3.4% 3.0% Teva Pharmaceutical Industries, Ltd. (ADR) 2.9% 1.0% Genzyme Corp. 2.7% 3.0% Caremark Rx, Inc. 2.5% 2.7%
48 Janus Growth Funds October 31, 2005 (unaudited) Medicare-related optimism lifted Caremark Rx, a pharmacy benefit manager. As the government plan gains momentum, the company should enjoy expanded volumes, which would enhance its already-solid profits and cash flow. Strong results across the HMO space were reinforced by decent enrollment growth, better pricing and good margins. Share repurchase plans added to confidence in company fundamentals, as well as growing anticipation that increased Medicare spending will translate into a larger Medicare HMO market. Fund holdings that performed well against this backdrop were Aetna and Pacificare Health Systems, both of which are actively targeting smaller, non-public firms for acquisition as a way to improve leverage with expanded networks and specialized technology. After United Healthcare announced their intent to acquire Pacificare, we sold the stock at a large profit. DRUG, BIOTECHNOLOGY AND MEDICAID HMO COMPANIES HINDERED RETURNS The largest detractor from performance, Elan of Ireland, faltered early in the year after its multiple sclerosis drug Tysabri was quickly withdrawn from the market after it allegedly contributed to the death of two patients in an experimental trial when used in combination with another drug, Avonex. Albeit not as dramatically, biotechnology firm Pharmion also administered a downside surprise by reporting unsatisfactory sales growth of its Vidaza treatment for MDS. We liquidated our holdings in both companies. Additionally, MGI Pharma dropped as it raised concerns over near-term revenue levels. Nonetheless, our research leads us to believe that its Aloxi treatment for chemotherapy-related nausea and vomiting could help the company make a comeback, along with Dacogen, an MDS treatment that's awaiting FDA approval. As a result, when the stock declined, we viewed it as a buying opportunity and added to our position. Elsewhere, we believe the government's healthplan for needy individuals -- Medicaid -- holds strong growth prospects, but it can prove challenging. Offering managed care services to aid recipients in 10 states, Centene lagged as two of its competitors, Amerigroup and Molina, struggled with operational controls and posted disappointing earnings. More adept at reserving and managing costs, winning price increases and creating the right benefits design for its Medicaid HMO offerings, we believe Centene is in a better position than its peers so we increased our position. INVESTMENT STRATEGY AND OUTLOOK Medicare considerations will likely drive the life science sector for the next 12-18 months, as the new spending programs drive volume growth rates higher for a number of companies. Yet it's important to remember that government programs don't always result in positive long-term impacts on business, and it remains to be seen what kind of prices are negotiated on the massive new volumes expected to pass through the system. Separately, a slowing of the economy could stimulate further interest in drug and HMO stocks due to their defensive nature in the coming months. Of course, if the economy swings too far and the gross domestic product growth rate is negative, companies may start cutting back on healthcare spending, which will hurt the sector. On the regulatory front, the lasting impact of recent turmoil at the FDA, in which commissioner Lester Crawford resigned and his temporary replacement Andrew von Eschenbach took a leave of absence from his position as director of the National Cancer Institute, is an unknown but one we'll watch carefully. While remaining cognizant of the broader trends surrounding the life sciences arena, we'll continue to strive for an optimal blend of investments to attempt to maximize the Fund's returns. Thank you for your investment in Janus Global Life Sciences Fund. SIGNIFICANT AREAS OF INVESTMENT -- Fund vs. Index (% of Net Assets) (BAR CHART)
JANUS GLOBAL LIFE SCIENCES FUND S&P 500(R) INDEX ------------------------------- ---------------- Medical - Drugs 26.3% 4.6% Medical - Biomedical and Genetic 15.5% 1.3% Medical - HMO 12.2% 1.5% Therapeutics 11.6% 0.2% Medical - Hospitals 4.1% 0.3%
Janus Growth Funds October 31, 2005 49 Janus Global Life Sciences Fund (unaudited) Performance Average Annual Total Return -- for the periods ended October 31, 2005
ONE FIVE SINCE YEAR YEAR INCEPTION* --------- --------- ---------- Janus Global Life Sciences Fund 20.46% (2.87)% 10.16% S&P 500(R) Index 8.72% (1.74)% 1.25% Morgan Stanley Capital International World Health Care Index(SM) 13.14% 0.31% 1.10% Lipper Ranking - based on total returns for Health/Biotechnology Funds 33/178 73/102 16/48
(PERFORMANCE GRAPH)
MORGAN STANLEY CAPITAL INTERNATIONAL JANUS GLOBAL LIFE SCIENCES FUND S & P 500(R) INDEX WORLD HEALTH CARE INDEX (SM) ------------------------------- ------------------- ------------------------------------ 12/31/1998* $ 10,000 $ 10,000 $ 10,000 10/31/1999 $ 11,970 $ 11,203 $ 9,671 10/31/2001 $ 16,974 $ 8,926 $ 9,845 10/31/2003 $ 14,622 $ 9,153 $ 8,885 10/31/2005 $ 19,376 $ 10,889 $ 10,774
Data presented represents past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 1-800-525-3713 or visit www.janus.com for performance current to the most recent month-end. See Notes to Schedules of Investments for index definitions. Total return includes reinvestment of dividends, distributions and capital gains. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. * The Fund's inception date -- December 31, 1998 FUND EXPENSES The example below shows you the ongoing costs (in dollars) of investing in your Fund and allows you to compare these costs with those of other mutual funds. Please refer to page 5 for a detailed explanation of the information presented in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD EXPENSE EXAMPLE (5/1/05) (10/31/05) (5/1/05-10/31/05)* ---------------------------- ----------------------- -------------------- --------------------------- Actual $ 1,000.00 $ 1,108.80 $ 5.16 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.32 $ 4.94
*Expenses are equal to the annualized expense ratio of 0.97%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). See "Explanations of Charts, Tables and Financial Statements." The Fund's portfolio may differ significantly from the securities held in the indices. The indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual portfolio. The Fund emphasizes investments in certain industry groups, which may react similarly to market developments (resulting in greater price volatility), and may have significant exposure to foreign markets (which include risks such as currency fluctuation and political uncertainty). There is no assurance that the investment process will consistently lead to successful investing. A 2% redemption fee may be imposed on shares held for 3 months or less. Performance shown does not reflect this redemption fee and, if reflected, performance would have been lower. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. Effective February 25, 2005, Janus Global Life Sciences Fund added the Morgan Stanley Capital International World Health Care Index(SM) as a secondary benchmark index. The Morgan Stanley Capital International World Health Care Index(SM) is a capitalization weighted index that monitors the performance of healthcare stocks from developed market countries in North America, Europe and the Asia/Pacific Region. Returns have sustained significant gains due to market volatility in the healthcare sector. 50 Janus Growth Funds October 31, 2005 Janus Global Life Sciences Fund Schedule of Investments As of October 31, 2005
Shares or Principal Amount Value --------------------------------------------------- ----------------------- Common Stock - 98.2% Chemicals - Specialty - 1.5% 164,375 Syngenta A.G.*,** $ 17,618,664 Dental Supplies and Equipment - 1.5% 410,810 Patterson Companies, Inc.*,# 16,999,318 Diagnostic Equipment - 1.1% 489,623 Cytyc Corp.*,# 12,411,943 Diagnostic Kits - 1.0% 328,696 Dade Behring Holdings, Inc. 11,836,343 Drug Delivery Systems - 0.3% 142,439 Conor Medsystems, Inc.* 3,196,331 Food - Canned - 1.0% 452,631 TreeHouse Foods, Inc.* 11,695,985 Food - Dairy Products - 1.2% 375,445 Dean Foods Co.* 13,572,337 Instruments - Scientific - 2.2% Fisher Scientific 448,245 International, Inc.*,# 25,325,843 Life and Health Insurance - 1.0% Universal American Financial 783,210 Corp.*,# 11,591,508 Medical - Biomedical and Genetic - 15.5% 435,320 Alexion Pharmaceuticals, Inc.# 11,923,415 170,685 Amgen, Inc.* 12,931,096 872,270 Celgene Corp.* 48,934,346 1,070,066 Fibrogen, Inc.*,(O),Section 4,868,800 278,290 Genentech, Inc.* 25,213,074 428,895 Genzyme Corp.* 31,009,109 328,000 ICOS Corp.*,# 8,849,440 399,460 Invitrogen Corp.*,# 25,401,661 637,547 Nektar Therapeutics*,# 9,601,458 ----------------------- 178,732,399 Medical - Drugs - 26.3% 347,870 Abbott Laboratories 14,975,804 1,183,599 Adolor Corp.*,# 12,546,149 304,090 AstraZeneca Group PLC (ADR)**,# 13,653,641 1,191,810 Cubist Pharmaceuticals, Inc.*,# 24,086,480 294,030 Eli Lilly and Co. 14,639,754 491,080 Endo Pharmaceuticals Holdings, Inc.* 13,219,874 329,330 Forest Laboratories, Inc.* 12,484,900 411,090 Idenix Pharmaceuticals, Inc.* 8,554,783 859,775 K-V Pharmaceutical Co. - Class A*,# 14,727,946 1,415,280 Ligand Pharmaceuticals, Inc. - Class B*,# 12,242,172 225,346 Merck KGaA** 18,629,172 274,420 Novartis A.G.** 14,760,171 288,589 Roche Holding A.G** 43,108,730 282,607 Sanofi-Aventis**,# 22,624,546 619,825 Schering-Plough Corp. 12,607,241 229,515 Sepracor, Inc.*,# 12,910,219 Shire Pharmaceuticals Group PLC 549,210 (ADR)** ,# 19,683,686 391,020 Wyeth 17,423,851 ----------------------- 302,879,119 Medical - Generic Drugs - 2.9% 858,870 Teva Pharmaceutical Industries, Ltd. (ADR)# 32,740,124 Medical - HMO - 12.2% 459,380 Aetna, Inc. 40,682,693 931,350 Centene Corp.* 18,766,703 755,252 Coventry Health Care, Inc.* 40,776,055 697,860 UnitedHealth Group, Inc. 40,399,115 ----------------------- 140,624,566
Shares or Principal Amount Value --------------------------------------------------- ---------------------- Medical - Hospitals - 4.1% 683,560 LifePoint Hospitals, Inc.*,# $ 26,727,196 209,740 Triad Hospitals, Inc.* 8,626,606 United Surgical Partners International, 311,874 Inc.*,# 11,180,683 ---------------------- 46,534,485 Medical - Nursing Homes - 1.5% 452,655 Manor Care, Inc.# 16,861,399 Medical - Wholesale Drug Distributors - 1.6% 290,300 Cardinal Health, Inc. 18,146,653 Medical Instruments - 3.0% 214,255 Medtronic, Inc. 12,139,688 461,715 St. Jude Medical, Inc.* 22,194,640 ---------------------- 34,334,328 Medical Products - 3.5% 304,035 Baxter International, Inc. 11,623,258 169,025 Cooper Companies, Inc.# 11,635,681 271,085 Johnson & Johnson 16,975,343 ---------------------- 40,234,282 Optical Supplies - 1.5% 130,510 Alcon, Inc. (U.S. Shares)** 17,344,779 Pharmacy Services - 3.7% 541,400 Caremark Rx, Inc.* 28,369,360 261,685 Medco Health Solutions, Inc.* 14,785,203 ---------------------- 43,154,563 Therapeutics - 11.6% 836,760 Gilead Sciences, Inc.* 39,536,910 1,142,720 MGI Pharma, Inc.*,# 21,437,427 872,955 Nabi Biopharmaceuticals*,# 11,217,472 381,005 Neurocrine Biosciences, Inc.* 20,124,684 550,544 United Therapeutics Corp.* 40,663,180 ---------------------- 132,979,673 --------------------------------------------------- ---------------------- Total Common Stock (cost $846,412,891) 1,128,814,642 Other Securities - 15.9% State Street Navigator Securities Lending 183,652,404 Prime Portfolio+ (cost $183,652,404) 183,652,404 Repurchase Agreement - 0.4% Bear Stearns & Company, Inc., 4.1125% dated 10/31/05, maturing 11/1/05 to be repurchased at $4,400,503 collateralized by $5,957,248 Bin U.S. Government Agencies $ 4,400,000 0%, 10/1/35; with a value of $4,488,035 (cost $4,400,000) 4,400,000 --------------------------------------------------- ---------------------- Total Investments (total cost 1,316,867,046 $1,034,465,295) -- 114.5% Liabilities, net of Cash, Receivables and Other Assets -- (14.5)% (167,200,728) --------------------------------------------------- ---------------------- Net Assets -- 100% $1,149,666,318
See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds October 31, 2005 51 Janus Global Life Sciences Fund Schedule of Investments As of October 31, 2005 Summary of Investments by Country
% of Investment Country Value Securities --------------- -------------- --------------- France $ 22,624,546 1.7% Germany 18,629,172 1.4% Israel 32,740,124 2.5% Switzerland 92,832,344 7.1% United Kingdom 33,337,327 2.5% United States++ 1,116,703,533 84.8% -------------- --------------- Total $1,316,867,046 100.0%
++Includes Short-Term and Other Securities (70.5% excluding Short-Term and Other Securities) Forward Currency Contracts, Open
Currency Sold and Currency Currency Unrealized Settlement Date Units Sold Value in $ U.S. Gain/(Loss) ------------------------------ ------------- --------------- ------------ British Pound 12/2/05 2,800,000 $ 4,953,666 $ 158,014 British Pound 2/23/06 6,700,000 11,850,973 242,527 Euro 1/27/06 16,800,000 20,230,892 377,668 Swiss Franc 1/27/06 26,500,000 20,733,026 297,023 Swiss Franc 2/23/06 22,200,000 17,413,259 562,449 ------------- --------------- ------------ Total $ 75,181,816 $ 1,637,681
See Notes to Schedules of Investments and Financial Statements. 52 Janus Growth Funds October 31, 2005 Janus Global Technology Fund (unaudited) FUND SNAPSHOT This fund pursues forward-thinking companies around the globe that are advancing the frontiers of technology in profitable ways. PERFORMANCE OVERVIEW During the 12 months ended October 31, 2005, Janus Global Technology Fund advanced 12.16%. By comparison, the Fund's primary benchmark, the S&P 500 (R) Index, returned 8.72%, while its secondary benchmark, the Morgan Stanley Capital International (MSCI) World Information Technology Index SM , gained 5.73%. Selective, end-demand driven stock-picking contributed to the Fund's significant outperformance, especially within the communications equipment, semiconductors and electronic manufacturing services (EMS) sectors. Diminishing gains were underperforming investments in the Internet software and services sector and in the computer hardware group. STRATEGY IN THIS ENVIRONMENT Investors grappled with fears of rising inflation, higher interest rates and lackluster growth throughout the period. Additionally, those invested in the information technology (IT) sector contended with shifting perceptions on sub-sector outlook as well as volatile global currency fluctuations. However, the major end-user segments saw relatively healthy fundamental demand growth across most sectors of IT. While demand generally proved steady, few compelling, broad-based IT trends emerged during the period. In such an environment, our style of bottom-up analysis of individual stocks took on greater importance as we needed to maintain higher levels of conviction in our top holdings. We had to dig deeper to ferret out potential gaps between market perception and actual fundamentals. Also, as part of our disciplined approach, we trimmed positions whenever we felt valuations fairly reflected near-term or medium-term fundamentals or market expectations. This strategy allowed for gains, especially as the market aggressively bid up companies that beat Wall Street's expectations and severely punished those that merely met expectations. FUND COMPOSITION As of October 31, 2005, the Fund was 97.6% invested in equities, including a 44.6% share in foreign stocks. Meanwhile, the Fund's 10 largest holdings accounted for 30.8% of its total net assets and cash holdings represented 2.4% of total net assets. GLASS PRODUCER AND ELECTRONIC MANUFACTURERS RANKED AMONG FUND'S LEADERS This past year proved to be a challenging period for many LCD display vendors and component suppliers, as severe price competition, initiated by plasma TV vendors, significantly squeezed profitability -- resulting in profitless prosperity for most in the supply chain. The Fund, however, profited from its stake in glassmaker Corning, one of two companies worldwide capable of producing large, high-quality sheets of motherglass required to manufacture large-sized LCD televisions. Its advanced development and production capabilities give Corning considerable pricing power, thus enabling it to capture the benefits of rising unit volumes without forfeiting profitability. Another long-term holding, contract manufacturer Hon Hai Precision, similarly rewarded our conviction in an otherwise challenged sector. While the rest of the EMS industry struggles to achieve top-line and earnings growth, Hon Hai consistently posts double-digit growth in revenues and earnings. Through a combination of extreme cost control, strategic customer (MIKE LU PHOTO) Mike Lu portfolio manager Top 10 Equity Holdings -- (% of Net Assets)
OCTOBER 31, 2005 OCTOBER 31, 2004 ---------------- ---------------- Yahoo!, Inc. 4.3% 3.6% Nokia Oyj (ADR) 4.2% 3.8% Samsung Electronics Company, Ltd. 3.1% 2.4% Hon Hai Precision Industry Company, Ltd. 3.0% 2.8% Marvell Technology Group, Ltd. 2.9% 2.4% Cisco Systems, Inc. 2.8% 2.1% Texas Instruments, Inc. 2.8% 3.5% EMC Corp. 2.6% 1.5% Corning, Inc. 2.6% 2.0% Logitech International S.A 2.5% 1.6%
Janus Growth Funds October 31, 2005 53 Janus Global Technology Fund (unaudited) relationships, superior mechanical design and manufacturing capabilities and emerging design expertise, Hon Hai continues to gain market share at key PC, consumer electronics and enterprise IT accounts. Also boosting returns was semiconductor chip manufacturer Texas Instruments. While known primarily for its advanced digital and analog chipsets for high feature-content mobile handsets, Texas Instruments was able to extend its high-end design expertise and volume advantage into the low-end by creating cost-effective integrated chipset solutions -- all the while maintaining robust margins. Given that much of the recent strength in the wireless handset space came from new subscriber growth in emerging markets -- in particular China, India and Latin America -- the company's strong offerings in low-end handset chipsets enabled it to garner disproportionate market share. TELECOMMUNICATION EQUIPMENT CONCERN AND E-COMMERCE LEADER DETRACTED Our investment in UTStarcom, a developer of wireless communications network equipment, worked against us. Having built a significant business in China, where its PAS service allowed for low-cost, limited range wireless calls, UTStarcom struggled as competitive GSM service pricing declined and China started to plan for 3G services. Although the PAS subscriber base is still growing, and the company is working on advanced IP data infrastructure products, we are much less confident about its fundamental growth potential and competitive positioning -- thus we exited our position during the period. Our stake in online marketplace builder eBay diminished returns. As has happened many times in the Internet space, investor sentiment swung from extreme pessimism to extreme optimism and back again, sending stock prices on a volatile ride. We were fortunate to have abided by our valuation discipline and trimmed our holdings significantly prior to the sharp decline in January, which resulted from a reduced short-term earnings outlook driven largely by unanticipated need to increase spending in research and development. Given eBay's track record of software and business process innovations, we believe that such expenditures will enhance its longer-term competitive positioning in the still-developing e-commerce space. Additionally, we believe the company's business model continues to be viable and that its present-day investments will pave the way for more robust future growth. INVESTMENT STRATEGY AND OUTLOOK Looking forward, we are encouraged by the reasonable valuations and expectations we're finding in many sub-sectors of technology, although we remain cautious about macroeconomic influences on consumer IT spending. While occasional bouts of volatility suggest that some degree of speculative fervor has returned to the market, we haven't seen it appear broadly across the IT space. In fact, there are still a number of areas where investor sentiments appear to be overly conservative given the corresponding growth potential. As usual, our efforts are focused on identifying segments and firms that are benefiting from strong end-user demand -- particularly in areas that may not be well-recognized. The increasing market volatility places a greater premium on individual, bottom-up stock selection -- exactly our approach. Thank you for your investment in Janus Global Technology Fund. SIGNIFICANT AREAS OF INVESTMENT -- Fund vs. Index (% of Net Assets) (BAR CHART)
JANUS GLOBAL TECHNOLOGY FUND S&P 500(R) INDEX ---------------------------- ---------------------------- Electronic Components - Semiconductors 13.4% 2.4% Wireless Equipment 8.0% 1.1% Semiconductor Components/Integrated Circuits 7.0% 0.3% Applications Software 5.6% 2.4% Web Portals/Internet Service Providers 4.9% 0.4%
54 Janus Growth Funds October 31, 2005 (unaudited) Performance Average Annual Total Return -for the periods ended October 31, 2005
ONE FIVE SINCE YEAR YEAR INCEPTION* ---------- ---------- ---------- Janus Global Technology Fund 12.16% (16.65)% 1.57% S&P 500(R) Index 8.72% (1.74)% 1.25% Morgan Stanley % % Capital International World Information Technology Index (SM) 5.73% (13.43) (4.13) Lipper Ranking - based on total returns for Science and Technology Funds 71/287 117/212 17/78
(PERFORMANCE GRAPH)
MORGAN STANLEY CAPITAL INTERNATIONAL JANUS GLOBAL TECHNOLOGY FUND S & P 500(R) INDEX WORLD INFORMATION TECHNOLOGY INDEX(SM) ---------------------------- ------------------ -------------------------------------- 12/31/1998* $ 10,000 $ 10,000 $ 10,000 10/31/1999 $ 20,940 $ 11,203 $ 14,235 10/31/2001 $ 11,069 $ 8,926 $ 7,203 10/31/2003 $ 10,670 $ 9,153 $ 7,248 10/31/2005 $ 11,120 $ 10,889 $ 7,497
Data presented represents past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 1-800-525-3713 or visit www.janus.com for performance current to the most recent month-end. See Notes to Schedules of Investments for index definitions. Total return includes reinvestment of dividends, distributions and capital gains. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. *The Fund's inception date -- December 31, 1998 FUND EXPENSES The example below shows you the ongoing costs (in dollars) of investing in your Fund and allows you to compare these costs with those of other mutual funds. Please refer to page 5 for a detailed explanation of the information presented in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD EXPENSE EXAMPLE (5/1/05) (10/31/05) (5/1/05-10/31/05)* --------------------------- --------------------------- --------------------------- --------------------------- Actual $ 1,000.00 $ 1,131.00 $ 5.21 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.32 $ 4.94
*Expenses are equal to the annualized expense ratio of 0.97%, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). See "Explanations of Charts, Tables and Financial Statements." The Fund's portfolio may differ significantly from the securities held in the indices. The indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual portfolio. There is no assurance that the investment process will consistently lead to successful investing. A 2% redemption fee may be imposed on shares held for 3 months or less. Performance shown does not reflect this redemption fee and, if reflected, performance would have been lower. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. This Fund may at times have significant exposure to certain industry groups, which may react similarly to market developments (resulting in greater price volatility). The Fund also may have significant exposure to foreign markets (which include risks such as currency fluctuation and political uncertainty). This Fund has been significantly impacted, either positively or negatively, by investing in initial public offerings (IPOs). This Fund may have significant exposure to emerging markets which may lead to greater price volatility. Returns have sustained significant gains due to market volatility in the information technology sector. Janus Growth Funds October 31, 2005 55 Janus Global Technology Fund Schedule of Investments As of October 31, 2005
Shares or Principal Amount Value ----------------------------------------------- -------------- Common Stock - 96.7% Applications Software - 5.6% 696,075 Citrix Systems, Inc.* $ 19,190,788 204,931 Infosys Technologies, Ltd. 11,476,045 39,765 Mercury Interactive Corp.* 1,383,424 843,295 Microsoft Corp. 21,672,682 159,420 Quest Software, Inc.*,# 2,217,532 -------------- 55,940,471 Audio and Video Products - 1.0% 214,800 Sony Corp.** 6,937,960 148,448 Thomson**,# 2,798,489 -------------- 9,736,449 Chemicals - Diversified - 0.4% 79,600 Shin-Etsu Chemical Company, Ltd.** 3,788,197 Commercial Services - Finance - 1.3% 323,780 Paychex, Inc. 12,549,713 Computer Aided Design - 1.5% 292,493 Dassault Systemes S.A.**,# 15,101,207 Computer Services - 2.6% 275,867 Atos Origin S.A.*,**,# 18,944,139 2,877,706 LogicaCMG PLC** 7,232,849 -------------- 26,176,988 Computers - 4.8% 2,596,880 Acer, Inc.** 5,255,448 717,745 Dell, Inc.* 22,881,710 207,255 Hewlett-Packard Co. 5,811,430 215,530 Research In Motion, Ltd. (U.S. Shares)* 13,252,940 -------------- 47,201,528 Computers - Integrated Systems - 0.2% 123,200 3D Systems Corp.*,# 2,224,992 Computers - Memory Devices - 2.6% 1,883,905 EMC Corp.* 26,299,314 Computers - Peripheral Equipment - 2.5% 663,998 Logitech International S.A.* 25,157,096 Data Processing and Management - 0.5% 131,085 NAVTEQ Corp.* 5,128,045 Diversified Operations - 0.7% 775,000 Hutchison Whampoa, Ltd. 7,338,012 E-Commerce/Products - 2.0% 359,513 Amazon.com, Inc.* 14,337,378 220,700 Submarino S.A.* 3,018,723 77,965 Submarino S.A. (GDR)* 2,132,374 -------------- 19,488,475 E-Commerce/Services - 1.3% 315,505 eBay, Inc.* 12,493,998 Electric Products - Miscellaneous - 1.1% 2,389,000 Toshiba Corp.** 10,999,948 Electronic Components - Miscellaneous - 4.2% 6,986,026 Hon Hai Precision Industry Company, Ltd.** 30,191,609 438,972 Koninklijke (Royal) Philips Electronics N.V.** 11,468,690 -------------- 41,660,299 Electronic Components - Semiconductors - 13.2% 914,555 Advanced Micro Devices, Inc.*,# 21,235,967 9,656,733 ARM Holdings PLC** 18,588,061 569,482 ATI Technologies, Inc. (U.S. Shares)*,# 8,229,015
Shares or Principal Amount Value ----------------------------------------------- -------------- Electronic Components - Semiconductors - (continued) 363,750 Broadcom Corp. - Class A* $ 15,444,825 141,470 Fairchild Semiconductor International, Inc.* 2,178,638 218,141 Infineon Technologies A.G.*,** 2,041,779 81,680 International Rectifier Corp.*,# 2,416,911 228,575 MEMC Electronic Materials, Inc.* 4,100,636 57,640 Samsung Electronics Company, Ltd.** 30,476,323 944,800 Texas Instruments, Inc. 26,974,041 -------------- 131,686,196 Electronic Forms - 1.0% 295,460 Adobe Systems, Inc. 9,528,585 Electronic Measuring Instruments - 1.1% 152,800 Advantest Corp.** 10,973,353 Enterprise Software/Services - 4.4% 1,549,025 Oracle Corp.* 19,641,637 140,044 SAP A.G.** 23,972,010 -------------- 43,613,647 Entertainment Software - 3.4% 607,200 Activision, Inc.* 9,575,544 421,900 Electronic Arts, Inc.* 23,997,672 -------------- 33,573,216 Industrial Automation and Robotics - 0.2% 78,365 Cognex Corp. 2,239,672 Internet Connectivity Services - 1.0% 275,190 NDS Group PLC*,** 10,071,954 Internet Infrastructure Software - 0.8% 149,905 F5 Networks, Inc.*,# 7,799,557 Internet Security - 1.9% Check Point Software Technologies, Ltd. 562,875 (U.S. Shares)* 12,585,885 195,210 McAfee, Inc.* 5,862,156 -------------- 18,448,041 Miscellaneous Manufacturing - 0.3% 143,409 Applied Films Corp.*,# 2,785,003 Networking Products - 4.2% 1,597,934 Cisco Systems, Inc.* 27,883,949 2,065,000 D-Link Corp.** 2,234,162 505,845 Juniper Networks, Inc.* 11,801,364 -------------- 41,919,475 Retail - Consumer Electronics - 0.4% 1,004,611 Carphone Warehouse PLC** 3,485,207 Semiconductor Components/Integrated Circuits - 7.0% 262,362 CSR PLC*,** 3,341,230 558,070 Cypress Semiconductor Corp.*,# 7,589,752 625,000 Marvell Technology Group, Ltd.* 29,006,249 450,570 Maxim Integrated Products, Inc. 15,625,768 5,814,000 Powerchip Semiconductor Corp.** 2,755,245 Taiwan Semiconductor Manufacturing 7,514,646 Company, Ltd.** 11,646,621 -------------- 69,964,865 Semiconductor Equipment - 3.7% 315,090 Applied Materials, Inc. 5,161,174 ASM Lithography Holding N.V. 379,645 (U.S. Shares)*,**,# 6,446,372 382,830 KLA-Tencor Corp.# 17,721,201 212,720 Lam Research Corp.* 7,177,173
See Notes to Schedules of Investments and Financial Statements. 56 Janus Growth Funds October 31, 2005 Schedule of Investments As of October 31, 2005
Shares or Principal Amount Value ----------------------------------------------- -------------- 36,505,920 Telecommunication Equipment - 3.9% 423,345 Adtran, Inc. $ 12,806,186 683,455 Alcatel S.A. (ADR)**,# 8,023,762 434,935 Harris Corp.# 17,875,828 -------------- 38,705,776 Telecommunication Equipment - Fiber Optics - 2.6% 1,271,105 Corning, Inc.* 25,536,499 Telecommunication Services - 1.1% 407,830 Amdocs, Ltd. (U.S. Shares)*,** 10,795,260 Television - 1.4% 1,562,734 British Sky Broadcasting Group PLC** 14,106,843 Web Hosting/Design - 0.5% 109,435 Macromedia, Inc.* 4,806,385 Web Portals/Internet Service Providers - 4.9% 3,092 Yahoo Japan Corp.** 3,267,039 3,092 Yahoo Japan Corp.*,** 3,320,162 1,142,468 Yahoo!, Inc.* 42,237,041 -------------- 48,824,242 Wireless Equipment - 7.4% 886,075 Motorola, Inc. 19,635,422 2,485,285 Nokia Oyj (ADR)** 41,802,495 146,040 QUALCOMM, Inc. 5,806,550 228,655 Telefonaktiebolaget LM Ericsson (ADR)# 7,502,171 -------------- 74,746,638 ----------------------------------------------- -------------- Total Common Stock (cost $677,774,258) 961,401,066 Corporate Bonds - 0% Computers - Peripheral Equipment - 0% Candescent Technologies Corp., 8.00%, convertible senior subordinated debentures, due 5/1/03 (144A)++,(Y),(O),(S). $ 31,700,000 (cost $4,368,283) 0 Preferred Stock - 0.8% Electronic Components - Semiconductors - 0.2% 6,000 Samsung Electronics Company, Ltd.** 2,442,529 Wireless Equipment - 0.6% Crown Castle International Corp., 102,750 convertible, 6.25% 5,265,937 ----------------------------------------------- -------------- Total Preferred Stock (cost $7,340,956) 7,708,466 Rights - 0.1% Computer Services - 0.1% 1,438,853 LogicaCMG PLC** (cost $0) 865,904 Other Securities - 6.5% State Street Navigator Securities Lending 64,340,213 Prime Portfolio+ (cost $64,340,213) 64,340,213 Repurchase Agreement - 1.3% Bear Stearns & Company, Inc., 4.1125% dated 10/31/05, maturing 11/1/05 to be repurchased at $13,401,531 collateralized by $18,142,528 in U.S. Government Agencies 0%, 10/1/35; with a value of $13,668,105 $ 13,400,000 (cost $13,400,000) 13,400,000 ----------------------------------------------- -------------- Total Investments (total cost $767,223,710) 1,047,715,649 - 105.4% Liabilities, net of Cash, Receivables and Other Assets - (5.4)% (54,053,020) ----------------------------------------------- -------------- Net Assets - 100% $ 993,662,629
Summary of Investments by Country
% of Investment Country Value Securities --------------- -------------- -------------- Bermuda $ 29,006,249 2.8% Brazil 5,151,097 0.5% Canada 21,481,955 2.1% Finland 41,802,495 4.0% France 44,867,597 4.3% Germany 26,013,789 2.5% Hong Kong 7,338,012 0.7% India 11,476,045 1.1% Israel 12,585,885 1.2% Japan 39,286,659 3.7% Netherlands 17,915,062 1.7% South Korea 32,918,852 3.1% Sweden 7,502,171 0.7% Switzerland 25,157,096 2.4% Taiwan 52,083,085 5.0% United Kingdom 68,487,308 6.5% United States++ 604,642,292 57.7% -------------- -------------- Total $1,047,715,649 100.0%
++Includes Short-Term Securities and Other Securities (50.3% excluding Short-Term Securities and Other Securities) Forward Currency Contracts, Open
Currency Sold and Currency Currency Unrealized Settlement Date Units Sold Value in $ U.S. Gain/(Loss) ---------------------- --------------- --------------- --------------- British Pound 12/2/05 935,000 $ 1,654,170 $ 52,539 British Pound 2/23/06 10,050,000 17,776,459 363,791 Euro 12/2/05 9,900,000 11,883,710 (6,680) Euro 1/27/06 28,500,000 34,320,264 640,686 Japanese Yen 1/27/06 740,000,000 6,425,325 281,088 Japanese Yen 2/23/06 1,105,000,000 9,626,658 681,177 South Korean Won 11/30/05 10,825,000,000 10,381,701 213,121 South Korean Won 5/11/06 5,300,000,000 5,109,085 (12,931) Taiwan Dollar 11/30/05 410,000,000 12,290,536 707,875 Taiwan Dollar 5/11/06 440,000,000 13,345,668 (33,513) --------------- --------------- Total $ 122,813,576 $ 2,887,153
See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds October 31, 2005 57 Statements of Assets and Liabilities
For the fiscal year ended October 31, 2005 Janus Janus Janus Janus (all numbers in thousands except net Janus Enterprise Mercury Olympus Orion asset value per share) Fund Fund Fund Fund Fund --------------------------------------- --------------- ---------------- -------------- --------------------- ---------------- Assets: Investments at cost(1) $ 9,474,640 $ 1,475,921 $ 3,645,289 $ 1,934,251 $ 688,390 Investments at value(1) $ 11,502,804 $ 2,019,460 $ 4,735,728 $ 2,395,065 $ 820,611 Cash -- 1,542 1,181 1,079 1,085 Cash denominated in foreign currency (2) 8 -- 11 30 255 Receivables: Investments sold 542,311 18,960 23,721 113,505 3,995 Fund shares sold 1,733 1,667 1,839 766 2,885 Dividends 6,836 687 2,387 377 32 Interest 619 37 42 36 19 Other assets 305 30 75 53 15 Forward currency contracts 6,261 -- 3,250 1,341 -- --------------- ---------------- -------------- --------------------- ---------------- Total Assets 12,060,877 2,042,383 4,768,234 2,512,252 828,897 Liabilities: Payables: Due to custodian 3,724 -- -- -- -- Securities loaned (Note 1) 671,969 325,513 264,912 195,028 118,146 Investments purchased 220,860 9,673 22,071 56,679 17,025 Fund shares repurchased 12,473 2,106 3,851 1,539 1,430 Advisory fees 6,058 918 2,404 1,205 365 Transfer agent fees and expenses 2,138 436 1,059 571 166 Non-interested Trustees' fees and expenses 33 7 10 5 6 Foreign tax liability -- -- -- 19 195 Accrued expenses 665 188 424 284 163 Forward currency contracts 36 -- 72 34 -- --------------- ---------------- -------------- --------------------- ---------------- Total Liabilities 917,956 338,841 294,803 255,364 137,496 --------------- ---------------- -------------- --------------------- ---------------- Net Assets $ 11,142,921 $ 1,703,542 $ 4,473,431 $ 2,256,888 $ 691,401 Net Assets Consist of: Capital (par value and paid in surplus)* $ 15,821,953 $ 5,524,920 $ 9,543,780 $ 3,483,159 $ 1,104,988 Undistributed net investment income/(loss)* 8,030 -- 12,423 705 2,980 Undistributed net realized gain/(loss) from investments and foreign currency transactions* (6,721,485 (4,364,917 (6,176,390 (1,689,147) (548,508) Unrealized appreciation/(depreciation) of investments and foreign currency translations 2,034,423 543,539 1,093,618 462,171(3) 131,941(3) --------------- ---------------- -------------- --------------------- ---------------- Total Net Assets $ 11,142,921 $ 1,703,542 $ 4,473,431 $ 2,256,888 $ 691,401 Shares Outstanding, $0.01 Par Value (unlimited shares authorized) 455,877 43,147 202,882 72,891 88,687 Net Asset Value Per Share $ 24.44 $ 39.48 $ 22.05 $ 30.96 $ 7.80
*See Note 4 in Notes to Financial Statements (1) Investments at cost and value include $655,388,835, $318,210,960, $256,286,119, $190,305,807, $115,018,097, $232,876,291, $248,886,903, $178,742,923 and $62,525,079 of securities loaned for Janus Fund, Janus Enterprise Fund, Janus Mercury Fund, Janus Olympus Fund, Janus Orion Fund, Janus Twenty Fund, Janus Venture Fund, Janus Global Life Sciences Fund and Janus Global Technology Fund, respectively (Note 1). (2) Includes cost of $7,779, $11,479, $9,381, $71,032, $137,421 and $1,311,529 for Janus Fund, Janus Mercury Fund, Janus Triton Fund, Janus Venture Fund, Janus Global Life Sciences Fund and Janus Global Technology Fund, respectively. (3) Net of foreign taxes on investments of $18,496, $194,649, $6,002, $105,812 and $11,382 for Janus Olympus Fund, Janus Orion Fund, Janus Triton Fund, Janus Venture Fund, and Janus Global Technology Fund, respectively. See Notes to Financial Statements. 58 Janus Growth Funds October 31, 2005
For the fiscal year ended October 31, Janus Janus 2005 Janus Janus Janus Global Life Global (all numbers in thousands except net Triton Twenty Venture Sciences Technology asset value per share) Fund Fund Fund Fund Fund -------------------------------------- ------------ ----------- ------------- -------------- --------------- Assets: Investments at cost(1) $ 35,437 $ 6,720,018 $1,251,957 $ 1,034,465 $ 767,224 Investments at value (1) $ 37,604 $ 9,789,303 $1,552,810 $ 1,316,867 $ 1,047,716 Cash 161 1,767 10,048 1,516 1,505 Cash denominated in foreign currency (2) 9 -- 71 -- 1,313 Receivables: Investments sold -- 102,018 895 20,720 13,770 Fund shares sold 156 4,006 113 232 183 Dividends -- 7,038 14 135 405 Interest -- 462 -- 17 14 Other assets 1 250 129 21 24 Forward currency contracts -- -- -- 1,638 2,941 ------------ ----------- ------------- -------------- --------------- Total Assets 37,931 9,904,844 1,564,080 1,341,146 1,067,871 Liabilities: Payables: Due to custodian -- -- -- -- -- Securities loaned (Note 1) -- 237,785 255,803 183,652 64,340 Investments purchased 109 39,684 13,313 5,959 7,650 Fund shares repurchased 28 7,649 674 752 1,129 Advisory fees 14 5,101 702 626 545 Transfer agent fees and expenses 16 1,705 238 288 292 Non-interested Trustees' fees and expenses 1 26 1 1 2 Foreign tax liability 6 -- 106 -- 11 Accrued expenses 62 391 93 202 185 Forward currency contracts -- -- -- -- 54 ------------ ----------- ------------- -------------- --------------- Total Liabilities 236 292,341 270,930 191,480 74,208 ------------ ----------- ------------- -------------- --------------- Net Assets $ 37,695 $ 9,612,503 $1,293,150 $ 1,149,666 $ 993,663 Net Assets Consist of: Capital (par value and paid in surplus)* $ 35,617 $ 9,814,463 $ 990,249 $ 1,791,386 $ 3,490,337 Undistributed net investment income/(loss)* -- 20,284 75 -- 725 Undistributed net realized gain/(loss) from investments and foreign currency transactions* (82) (3,291,550 2,003 (925,757) (2,780,770) Unrealized appreciation/(depreciation) of investments and foreign currency translations 2,160(3) 3,069,306 300,823(3) 284,037 283,371(3) ------------ ----------- ------------- -------------- --------------- Total Net Assets $ 37,695 $ 9,612,503 $1,293,150 $ 1,149,666 $ 993,663 Shares Outstanding, $0.01 Par Value (unlimited shares authorized) 3,471 201,813 22,760 59,368 91,292 Net Asset Value Per Share $ 10.86 $ 47.63 $ 56.82 $ 19.37 $ 10.88
Janus Growth Funds October 31, 2005 59 Statements of Operations
Janus Janus Janus Janus For the fiscal year ended October 31, 2005 Janus Enterprise Mercury Olympus Orion (all numbers in thousands) Fund Fund Fund Fund Fund -------------------------------------------------------- ----------- ----------- ----------- ----------- ----------- Investment Income: Interest $ 5,343 $ 628 $ 2,031 $ 1,381 $ 397 Securities lending income 958 180 503 363 171 Dividends 105,364 10,631 58,770 21,361 8,932 Dividends from affiliates 6,576 -- 194 -- -- Foreign tax withheld (2,700) (70) (1,563) (396) (467) ----------- ----------- ----------- ----------- ----------- Total Income 115,541 11,369 59,935 22,709 9,033 Expenses: Advisory fees 78,753 11,063 28,459 14,610 3,779 Transfer agent fees and expenses 26,758 4,716 11,227 6,255 1,689 Registration fees 12 19 65 12 33 Postage and mailing expenses 743 311 647 469 140 Custodian fees 132 28 98 54 58 Professional fees 58 33 38 31 22 Non-interested Trustees' fees and expenses 250 43 94 62 26 Printing expenses 964 329 671 575 223 System fees 21 20 21 21 19 Other expenses 459 85 173 95 39 Non-recurring costs (Note 2) 4 -- 1 1 -- Costs assumed by Janus Capital Management LLC (Note 2) (4) -- (1) (1) -- ----------- ----------- ----------- ----------- ----------- Total Expenses 108,150 16,647 41,493 22,184 6,028 Expense and Fee Offset (672) (175) (359) (237) (86) ----------- ----------- ----------- ----------- ----------- Net Expenses 107,478 16,472 41,134 21,947 5,942 Less: Excess Expense Reimbursement N/A N/A N/A N/A N/A ----------- ----------- ----------- ----------- ----------- Net Expenses after Expense Reimbursement 107,478 16,472 41,134 21,947 5,942 Net Investment Income/(Loss) 8,063 (5,103) 18,801 762 3,091 Net Realized and Unrealized Gain/(Loss) on Investments: Net realized gain/(loss) from securities transactions 2,411,657 178,555 415,416 297,819 67,401 Net realized gain/(loss) from foreign currency transactions 4,561 (25) (3,527) 4,233 (111) Change in net unrealized appreciation or depreciation of investments and foreign currency translations (1,439,602) 97,620 146,894 72,243(2) 56,341(2) Payment from affiliate (Note 2) 1 -- -- 1 -- ----------- ----------- ----------- ----------- ----------- Net Gain/(Loss) on Investments 976,617 276,150 558,783 374,296 123,631 ----------- ----------- ----------- ----------- ----------- Net Increase/(Decrease) in Net Assets Resulting from Operations $ 984,680 $ 271,047 $ 577,584 $ 375,058 $ 126,722
(1) Period from February 25, 2005 (inception date) through October 31, 2005. (2) Net of foreign taxes on investments of $18,496, $194,649, $6,002, $105,812 and $11,382 for Janus Olympus Fund, Janus Orion Fund, Janus Triton Fund, Janus Venture Fund and Janus Global Technology Fund, respectively. See Notes to Financial Statements. 60 Janus Growth Funds October 31, 2005
Janus Janus Janus Janus Janus Global Life Global For the fiscal year ended October 31, 2005 Triton Twenty Venture Sciences Technology (all numbers in thousands) Fund (1) Fund Fund Fund Fund ----------------------------------------------------- ----------- ----------- ----------- ----------- ----------- Investment Income: Interest $ 92 $ 7,355 $ 52 $ 438 $ 835 Securities lending income -- 221 702 209 322 Dividends 87 91,833 2,157 5,189 11,889 Dividends from affiliates -- 3,049 250 -- -- Foreign tax withheld (1) (1,344) (25) (326) (892) ----------- ----------- ----------- ----------- ----------- Total Income 178 101,114 3,136 5,510 12,154 Expenses: Advisory fees 113 60,431 8,754 7,563 7,103 Transfer agent fees and expenses 71 18,849 2,639 3,174 3,446 Registration fees 43 14 15 33 34 Postage and mailing expenses 10 715 144 193 308 Custodian fees 9 125 41 39 109 Professional fees 21 39 34 33 49 Non-interested Trustees' fees and expenses 4 204 42 31 31 Printing expenses 36 778 194 260 408 System fees 15 20 21 21 20 Other expenses 5 296 65 70 62 Non-recurring costs (Note 2) N/A 2 -- -- -- Costs assumed by Janus Capital Management LLC (Note 2) N/A (2) -- -- -- ----------- ----------- ----------- ----------- ----------- Total Expenses 327 81,471 11,949 11,417 11,570 Expense and Fee Offset (4) (420) (77) (125) (174) ----------- ----------- ----------- ----------- ----------- Net Expenses 323 81,051 11,872 11,292 11,396 Less: Excess Expense Reimbursement (102) N/A N/A N/A N/A ----------- ----------- ----------- ----------- ----------- Net Expenses after Expense Reimbursement 221 81,051 11,872 11,292 11,396 Net Investment Income/(Loss) (43) 20,063 (8,736) (5,782) 758 Net Realized and Unrealized Gain/(Loss) on Investments: Net realized gain/(loss) from securities transactions (47) 1,468,818 118,503 170,328 100,964 Net realized gain/(loss) from foreign currency transactions 7 221 (741) 4,678 (1,293) Change in net unrealized appreciation or depreciation of investments and foreign currency translations 2,161(2) 254,049 25,372(2) 51,675 33,644(2) Payment from affiliate (Note 2) -- 7 -- -- -- ----------- ----------- ----------- ----------- ----------- Net Gain/(Loss) on Investments 2,121 1,723,095 143,134 226,681 133,315 ----------- ----------- ----------- ----------- ----------- Net Increase/(Decrease) in Net Assets Resulting from Operations $ 2,078 $ 1,743,158 $ 134,398 $ 220,899 $ 134,073
Janus Growth Funds October 31, 2005 61 Statements of Changes in Net Assets
For the fiscal year ended October 31 Janus Janus Janus (all numbers in thousands) Fund Enterprise Fund Mercury Fund --------------------------- --------------------------- --------------------------- 2005 2004 2005 2004 2005 2004 ------------ ------------ ------------ ------------ ------------ ------------ Operations: Net investment income/(loss) $ 8,063 $ (26,012) $ (5,103) $ (8,346) $ 18,801 $ (12,867) Net realized gain/(loss) from investment transactions 2,416,218 1,188,041 178,530 161,121 411,889 525,432 Change in unrealized net appreciation/ (depreciation) of investments and foreign currency translations (1,439,602) (979,530) 97,620 58,551 146,894 (133,875) Payment from affiliate (Note 2) 1 1 -- -- -- -- ------------ ------------ ------------ ------------ ------------ ------------ Net Increase/(Decrease) in Net Assets Resulting from Operations 984,680 182,500 271,047 211,326 577,584 378,690 Dividends and Distributions to Shareholders: Net investment income* -- -- -- -- (6,427) -- Net realized gain/(loss) from investment transactions* -- -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ ------------ Net Decrease from Dividends and Distributions -- -- -- -- (6,427) -- Capital Share Transactions: Shares sold 378,642 806,462 228,604 206,603 703,654 334,794 Reinvested dividends and distributions -- -- -- -- 6,103 -- Shares repurchased (3,497,874) (5,137,947) (476,067) (654,677) (1,278,997) (1,524,134) ------------ ------------ ------------ ------------ ------------ ------------ Net Increase/(Decrease) from Capital Share Transactions (3,119,232) (4,331,485) (247,463) (448,074) (569,240) (1,189,340) Net Increase/(Decrease) in Net Assets (2,134,552) (4,148,985) 23,584 (236,748) 1,917 (810,650) Net Assets: Beginning of period 13,277,473 17,426,458 1,679,958 1,916,706 4,471,514 5,282,164 End of period $ 11,142,921 $ 13,277,473 $ 1,703,542 $ 1,679,958 $ 4,473,431 $ 4,471,514 ------------ ------------ ------------ ------------ ------------ ------------ Undistributed net investment income/(loss)* $ 8,030 $ 4 $ -- $ -- $ 12,423 $ -- For the fiscal year ended October 31 Janus Janus (all numbers in thousands) Olympus Fund Orion Fund --------------------------- --------------------------- 2005 2004 2005 2004 ------------ ------------ ------------ ------------ Operations: Net investment income/(loss) $ 762 $ (9,322) $ 3,091 $ (279) Net realized gain/(loss) from investment transactions 302,052 195,651 67,290 79,274 Change in unrealized net appreciation/ (depreciation) of investments and foreign currency translations 72,243 (72,028) 56,341 (25,291) Payment from affiliate (Note 2) 1 -- -- -- ------------ ------------ ------------ ------------ Net Increase/(Decrease) in Net Assets Resulting from Operations 375,058 114,301 126,722 53,704 Dividends and Distributions to Shareholders: Net investment income* -- -- -- -- Net realized gain/(loss) from investment transactions* -- -- -- -- ------------ ------------ ------------ ------------ Net Decrease from Dividends and Distributions -- -- -- -- Capital Share Transactions: Shares sold 94,217 159,960 167,198 114,957 Reinvested dividends and distributions -- -- -- -- Shares repurchased (572,853) (686,004) (132,323) (152,565) ------------ ------------ ------------ ------------ Net Increase/(Decrease) from Capital Share Transactions (478,636) (526,044) 34,875 (37,608) Net Increase/(Decrease) in Net Assets (103,578) (411,743) 161,597 16,096 Net Assets: Beginning of period 2,360,466 2,772,209 529,804 513,708 End of period $ 2,256,888 $ 2,360,466 $ 691,401 $ 529,804 ------------ ------------ ------------ ------------ Undistributed net investment income/(loss)* $ 705 $ 4 $ 2,980 $ --
*See Note 4 in Notes to Financial Statements. See Notes to Financial Statements. 62 Janus Growth Funds October 31, 2005 Janus Growth Funds October 31, 2005 63 Statements of Changes in Net Assets (continued)
For the fiscal year ended Janus Janus Janus Janus October 31 Triton Twenty Venture Global Life (all numbers in thousands) Fund Fund Fund Sciences Fund ----------- ------------------------- ------------------------- ------------------------- 2005(1) 2005 2004 2005 2004 2005 2004 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Operations: Net investment income/(loss) $ (43) $ 20,063 $ 5,468 $ (8,736) $ (10,045) $ (5,782) $ (6,667) Net realized gain/(loss) from investment transactions (40) 1,469,039 27,978 117,762 188,709 175,006 150,113 Change in unrealized net appreciation/(depreciation) of investments and foreign currency translations 2,161 254,049 1,443,157 25,372 (75,305) 51,675 (22,597) Payment from affiliate (Note 2) -- 7 3 -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net Increase/(Decrease) in Net Assets Resulting from Operations 2,078 1,743,158 1,476,606 134,398 103,359 220,899 120,849 Dividends and Distributions to Shareholders: Net investment income* -- (2,651) (47,904) -- -- -- -- Net realized gain/(loss) from investment transactions* -- -- -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net Decrease from Dividends and Distributions -- (2,651) (47,904) -- -- -- -- Capital Share Transactions: Shares sold 45,861 542,721 495,152 36,715 56,264 51,664 132,205 Redemption fees N/A N/A N/A N/A N/A 35 112 Reinvested dividends and distributions -- 2,597 46,952 -- -- -- -- Shares repurchased (10,244) (1,696,801) (2,768,819) (205,051) (224,893) (306,428) (333,890) ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net Increase/(Decrease) from Capital Share Transactions 35,617 (1,151,483) (2,226,715) (168,336) (168,629) (254,729) (201,573) ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net Increase/(Decrease) in Net Assets 37,695 589,024 (798,013) (33,938) (65,270) (33,830) (80,724) Net Assets: Beginning of period -- 9,023,479 9,821,492 1,327,088 1,392,358 1,183,496 1,264,220 End of Period $ 37,695 $ 9,612,503 $ 9,023,479 $ 1,293,150 $ 1,327,088 $ 1,149,666 $ 1,183,496 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Undistributed net investment income/(loss)* $ -- $ 20,284 $ 2,651 $ 75 $ 7 $ -- $ -- For the fiscal year ended Janus October 31 Global Technology (all numbers in thousands) Fund ------------------------- 2005 2004 ----------- ----------- Operations: Net investment income/(loss) $ 758 $ (5,454) Net realized gain/(loss) from investment transactions 99,671 67,393 Change in unrealized net appreciation/(depreciation) of investments and foreign currency translations 33,644 (173,129) Payment from affiliate (Note 2) -- 4 ----------- ----------- Net Increase/(Decrease) in Net Assets Resulting from Operations 134,073 (111,186) Dividends and Distributions to Shareholders: Net investment income* -- -- Net realized gain/(loss) from investment transactions* -- -- ----------- ----------- Net Decrease from Dividends and Distributions -- -- Capital Share Transactions: Shares sold 46,171 163,947 Redemption fees 80 167 Reinvested dividends and distributions -- -- Shares repurchased (441,684) (453,636) ----------- ----------- Net Increase/(Decrease) from Capital Share Transactions (395,433) (289,522) ----------- ----------- Net Increase/(Decrease) in Net Assets (261,360) (400,708) Net Assets: Beginning of period 1,255,023 1,655,731 End of Period $ 993,663 $ 1,255,023 ----------- ----------- Undistributed net investment income/(loss)* $ 725 $ --
*See Note 4 in Notes to Financial Statements. (1)Period from February 25, 2005 (inception date) through October 31, 2005. See Notes to Financial Statements. 64 Janus Growth Funds October 31, 2005 Janus Growth Funds October 31, 2005 65 Financial Highlights
Janus Fund -------------------------------------------------------- For a share outstanding during each fiscal year ended October 31 2005 2004 2003 ------------------------------------------------- -------------- -------------- -------------- Net Asset Value, Beginning of Period $ 22.69 $ 22.52 $ 18.39 Income from Investment Operations: Net investment income/(loss) .02 --(1) --(1) Net gains/(losses) on securities (both realized and unrealized) 1.73 .17 4.13 -------------- -------------- -------------- Total from Investment Operations 1.75 .17 4.13 Less Distributions and Other: Dividends (from net investment income)* -- -- -- Distributions (from capital gains)* -- -- -- Payment from affiliate --(2) --(2) -- Total Distributions and Other -- -- -- -------------- -------------- -------------- Net Asset Value, End of Period $ 24.44 $ 22.69 $ 22.52 Total Return 7.71%(3) 0.75%(3) 22.46% Net Assets, End of Period (in thousands) $ 11,142,921 $ 13,277,473 $ 17,426,458 Average Net Assets for the Period (in thousands) $ 12,310,464 $ 15,433,191 $ 16,206,681 Ratio of Gross Expenses to Average Net Assets (4)(5) 0.88% 0.90% 0.89% Ratio of Net Expenses to Average Net Assets (4) 0.87% 0.90% 0.89% Ratio of Net Investment Income/(Loss) to Average Net Assets 0.07% (0.17)% (0.17)% Portfolio Turnover Rate 78% 21% 22% Janus Fund -------------------------------- For a share outstanding during each fiscal year ended October 31 2002 2001 ------------------------------------------------ -------------- -------------- Net Asset Value, Beginning of Period $ 22.11 $ 44.00 Income from Investment Operations: Net investment income/(loss) --(1) --(1) Net gains/(losses) on securities (both realized and unrealized) (3.72) (17.50) -------------- -------------- Total from Investment Operations (3.72) (17.50) Less Distributions and Other: Dividends (from net investment income)* -- -- Distributions (from capital gains)* -- (4.39) Payment from affiliate -- -- Total Distributions and Other -- (4.39) -------------- -------------- Net Asset Value, End of Period $ 18.39 $ 22.11 Total Return (16.82)% (43.42)% Net Assets, End of Period (in thousands) $ 16,320,421 $ 23,513,436 Average Net Assets for the Period (in thousands) $ 21,651,285 $ 34,254,548 Ratio of Gross Expenses to Average Net Assets(4)(5) 0.85% 0.84% Ratio of Net Expenses to Average Net Assets(4) 0.84% 0.83% Ratio of Net Investment Income/(Loss) to Average Net Assets (0.24)% (0.16)% Portfolio Turnover Rate 27% 51%
Janus Enterprise Fund -------------------------------------------------------- For a share outstanding during each fiscal year ended October 31 2005 2004 2003 ----------------------------------------------- -------------- -------------- -------------- Net Asset Value, Beginning of Period $ 33.73 $ 30.02 $ 22.93 Income from Investment Operations: Net investment income/(loss) --(1) --(1) --(1) Net gains/(losses) on securities (both realized and unrealized) 5.75 3.71 7.09 -------------- -------------- -------------- Total from Investment Operations 5.75 3.71 7.09 Less Distributions: Dividends (from net investment income)* -- -- -- Distributions (from capital gains)* -- -- -- -------------- -------------- -------------- Total Distributions -- -- -- -------------- -------------- -------------- Net Asset Value, End of Period $ 39.48 $ 33.73 $ 30.02 Total Return 17.05% 12.36% 30.92% Net Assets, End of Period (in thousands) $ 1,703,542 $ 1,679,958 $ 1,916,706 Average Net Assets for the Period (in thousands) $ 1,728,579 $ 1,795,534 $ 1,741,680 Ratio of Gross Expenses to Average Net Assets(4)(5) 0.96% 1.04% 1.02% Ratio of Net Expenses to Average Net Assets(4) 0.95% 1.03% 1.02% Ratio of Net Investment Income/(Loss) to Average Net Assets (0.30)% (0.46)% (0.46)% Portfolio Turnover Rate 28% 27% 32% Janus Enterprise Fund -------------------------------- For a share outstanding during each fiscal year ended October 31 2002 2001 ----------------------------------------------- -------------- -------------- Net Asset Value, Beginning of Period $ 29.67 $ 68.41 Income from Investment Operations: Net investment income/(loss) --(1) --(1) Net gains/(losses) on securities (both realized and unrealized) (6.74) (38.74) -------------- -------------- Total from Investment Operations (6.74) (38.74) Less Distributions: Dividends (from net investment income)* -- -- Distributions (from capital gains)* -- -- -------------- -------------- Total Distributions -- -- -------------- -------------- Net Asset Value, End of Period $ 22.93 $ 29.67 Total Return (22.72)% (56.63)% Net Assets, End of Period (in thousands) $ 1,854,192 $ 3,071,818 Average Net Assets for the Period (in thousands) $ 2,518,273 $ 4,858,360 Ratio of Gross Expenses to Average Net Assets (4)(5) 0.93% 0.92% Ratio of Net Expenses to Average Net Assets (4) 0.90% 0.90% Ratio of Net Investment Income/(Loss) to Average Net Assets (0.43)% (0.55)% Portfolio Turnover Rate 64% 85%
*See Note 4 in Notes to Financial Statements. (1)Net investment income/(loss) aggregated less than $.01 on a per share basis for the fiscal year ended. (2)Payment from affiliate aggregated less than $.01 on a per share basis for the fiscal year ended. (3)During the year ended October 31, 2005 and the fiscal year ended October 31, 2004, Janus Capital and/or Janus Services LLC ("Janus Services") fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. (4)See "Explanations of Charts, Tables and Financial Statements." (5)The effect of non-recurring costs assumed by Janus Capital (Note 2) is included in the ratio of gross expenses to average net assets and was less than 0.01%. See Notes to Financial Statements. 66 Janus Growth Funds October 31, 2005
Janus Mercury Fund -------------------------------------------------------- For a share outstanding during each fiscal year ended October 31 2005 2004 2003 ----------------------------------------------- -------------- -------------- -------------- Net Asset Value, Beginning of Period $ 19.48 $ 18.14 $ 14.92 Income from Investment Operations: Net investment income/(loss) .09 --(1) --(1) Net gains/(losses) on securities (both realized and unrealized) 2.51 1.34 3.22 -------------- -------------- -------------- Total from Investment Operations 2.60 1.34 3.22 Less Distributions: Dividends (from net investment income)* (.03) -- -- Distributions (from capital gains)* -- -- -- -------------- -------------- -------------- Total Distributions (.03) -- -- -------------- -------------- -------------- Net Asset Value, End of Period $ 22.05 $ 19.48 $ 18.14 Total Return 13.35% 7.39% 21.58% Net Assets, End of Period (in thousands) $ 4,473,431 $ 4,471,514 $ 5,282,164 Average Net Assets for the Period (in thousands) $ 4,447,616 $ 5,007,156 $ 5,088,567 Ratio of Gross Expenses to Average Net Assets(2)(3) 0.93% 0.97% 0.96% Ratio of Net Expenses to Average Net Assets(2) 0.92% 0.97% 0.95% Ratio of Net Investment Income/(Loss) to Average % Net Assets 0.42% (0.26) (0.31) Portfolio Turnover Rate 38% 43% 54% Janus Mercury Fund -------------------------------- For a share outstanding during each fiscal year ended October 31 2002 2001 ----------------------------------------------- -------------- -------------- Net Asset Value, Beginning of Period $ 19.14 $ 40.59 Income from Investment Operations: Net investment income/(loss) --(1) .04 Net gains/(losses) on securities (both realized and unrealized) (4.18) (17.05) -------------- -------------- Total from Investment Operations (4.18) (17.01) Less Distributions: Dividends (from net investment income)* (.04) (.03) Distributions (from capital gains)* -- (4.41) -------------- -------------- Total Distributions (.04) (4.44) -------------- -------------- Net Asset Value, End of Period $ 14.92 $ 19.14 Total Return (21.88)% (46.21)% Net Assets, End of Period (in thousands) $ 5,034,041 $ 7,910,482 Average Net Assets for the Period (in thousands) $ 6,783,864 $ 11,243,108 Ratio of Gross Expenses to Average Net Assets(2)(3) 0.94% 0.89% Ratio of Net Expenses to Average Net Assets(2) 0.92% 0.88% Ratio of Net Investment Income/(Loss) to Average Net Assets (0.07)% 0.16% Portfolio Turnover Rate 97% 83%
Janus Olympus Fund -------------------------------------------------------- For a share outstanding during each fiscal year ended October 31 2005 2004 2003 ----------------------------------------------- -------------- -------------- -------------- Net Asset Value, Beginning of Period $ 26.30 $ 25.22 $ 20.60 Income from Investment Operations: Net investment income/(loss) .01 --(1) --(1) Net gains/(losses) on securities (both realized and unrealized) 4.65 1.08 4.62 -------------- -------------- -------------- Total from Investment Operations 4.66 1.08 4.62 Less Distributions and Other: Dividends (from net investment income)* -- -- -- Distributions (from capital gains)* -- -- -- Payment from affiliate --(4) --(4) -- -------------- -------------- -------------- Total Distributions and Other -- -- -- -------------- -------------- -------------- Net Asset Value, End of Period $ 30.96 $ 26.30 $ 25.22 Total Return 17.72%(5) 4.28%(5) 22.38% Net Assets, End of Period (in thousands) $ 2,256,888 $ 2,360,466 $ 2,772,209 Average Net Assets for the Period (in thousands) $ 2,282,832 $ 2,575,897 $ 2,378,814 Ratio of Gross Expenses to Average Net Assets(2)(3) 0.97% 1.03% 0.99% Ratio of Net Expenses to Average Net Assets(2) 0.96% 1.03% 0.98% Ratio of Net Investment Income/(Loss) to Average Net Assets 0.03% (0.36)% (0.14)% Portfolio Turnover Rate 119% 76% 84% Janus Olympus Fund -------------------------------- For a share outstanding during each fiscal year ended October 31 2002 2001 ----------------------------------------------- -------------- -------------- Net Asset Value, Beginning of Period $ 24.59 $ 50.50 Income from Investment Operations: Net investment income/(loss) --(1) .13 Net gains/(losses) on securities (both realized and unrealized) (3.88) (25.42) -------------- -------------- Total from Investment Operations (3.88) (25.29) Less Distributions and Other: Dividends (from net investment income)* (.11) (.23) Distributions (from capital gains)* -- (.39) Payment from affiliate -- -- -------------- -------------- Total Distributions and Other (.11) (.62) -------------- -------------- Net Asset Value, End of Period $ 20.60 $ 24.59 Total Return (15.89)% (50.61)% Net Assets, End of Period (in thousands) $ 2,136,167 $ 3,074,317 Average Net Assets for the Period (in thousands) $ 2,882,934 $ 4,767,090 Ratio of Gross Expenses to Average Net Assets(2)(3) 0.94% 0.91% Ratio of Net Expenses to Average Net Assets(2) 0.91% 0.89% Ratio of Net Investment Income/(Loss) to Average Net Assets (0.13)% 0.34% Portfolio Turnover Rate 90% 118%
*See Note 4 in Notes to Financial Statements. (1)Net investment income/(loss) aggregated less than $.01 on a per share basis for the fiscal year ended. (2)See "Explanations of Charts, Tables and Financial Statements." (3)The effect of non-recurring costs assumed by Janus Capital (Note 2) is included in the ratio of gross expenses to average net assets and was less than 0.01%. (4)Payment from affiliate aggregated less than $.01 on a per share basis for the fiscal year ended. (5)During the fiscal year ended October 31, 2005 and the fiscal year ended October 31, 2004, Janus Capital and/or Janus Services fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. See Notes to Financial Statements. Janus Growth Funds October 31, 2005 67 Financial Highlights (continued)
Janus Orion Fund ------------------------------------------------------------------------------------- For a share outstanding during each fiscal year ended October 31 2005 2004 2003 2002 2001 --------------------------------------- -------------- ---------------- --------------- ---------------- ---------------- Net Asset Value, Beginning of Period $ 6.25 $ 5.64 $ 4.33 $ 5.21 $ 8.81 Income from Investment Operations: Net investment income/(loss) .03 --(1) --(1) --(1) --(1) Net gains/(losses) on securities (both realized and unrealized) 1.52 .61 1.31 (.88) (3.58) -------------- ---------------- --------------- ---------------- ---------------- Total from Investment Operations 1.55 .61 1.31 (.88) (3.58) Less Distributions and Other: Dividends (from net investment income)* -- -- -- -- (.02) Distributions (from capital gains)* -- -- -- -- -- Payment from affiliate -- --(2) -- -- -- -------------- ---------------- --------------- ---------------- ---------------- Total Distributions and Other -- -- -- -- (.02) -------------- ---------------- --------------- ---------------- ---------------- Net Asset Value, End of Period $ 7.80 $ 6.25 $ 5.64 $ 4.33 $ 5.21 Total Return 24.80% 10.82%(3) 29.95% (16.70)% (40.69)% Net Assets, End of Period (in thousands) $ 691,401 $ 529,804 $ 513,708 $ 421,458 $ 602,303 Average Net Assets for the Period (in thousands) $ 590,421 $ 540,305 $ 431,124 $ 562,457 $ 762,142 Ratio of Gross Expenses to Average Net Assets(4)(5) 1.02% 1.09% 1.10% 1.09% 1.06% Ratio of Net Expenses to Average Net Assets(4) 1.01% 1.08% 1.08% 1.04% 1.03% Ratio of Net Investment Income/(Loss) to Average Net Assets 0.52% (0.05) (0.43) (0.30) (0.06) Portfolio Turnover Rate 68% 69% 72% 161% 206%
Janus Triton Fund -------------------- For a share outstanding during the period ended October 31 2005(6) ------------------------------------------------------------------ -------------------- Net Asset Value, Beginning of Period $ 10.00 Income from Investment Operations: Net investment income/(loss) -- Net gains/(losses) on securities (both realized and unrealized) .86 -------------------- Total from Investment Operations .86 Less Distributions: Dividends from net investment income* -- Distributions from net realized gains* -- -------------------- Total Distributions -- -------------------- Net Asset Value, End of Period $ 10.86 Total Return** 8.60% Net Assets, End of Period $ 37,695 Average Net Assets for the Period $ 25,904 Ratio of Gross Expenses to Average Net Assets***(4)(5) 1.27%(7) Ratio of Net Expenses to Average Net Assets***(4) 1.25% Ratio of Net Invest Income to Average Net Assets*** (0.24)% Portfolio Turnover Rate*** 48%
*See Note 4 in Notes to Financial Statements. **Total return not annualized for periods of less than one full year. ***Annualized for periods of less than one full year. (1)Net investment income/(loss) aggregated less than $.01 on a per share basis for the fiscal year ended. (2)Payment from affiliate aggregated less than $.01 on a per share basis for the fiscal year ended. (3)During the fiscal year ended October 31, 2004, Janus Capital and/or Janus Services fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. (4)See "Explanations of Charts, Tables and Financial Statements." (5)The effect of non-recurring costs assumed by Janus Capital (Note 2) is included in the ratio of gross expenses to average net assets and was less than 0.01%. (6)Period from February 25, 2005 (inception date) through October 31, 2005. (7)The ratio was 1.85% in 2005 before waiver of certain fees incurred by the Fund. See Notes to Financial Statements. 68 Janus Growth Funds October 31, 2005
Janus Twenty Fund ------------------------------------------------------------------------------------ For a share outstanding during each fiscal year ended October 31 2005 2004 2003 2002 2001 ------------------------------------ ---------------- ---------------- ------------- --------------- ---------------- Net Asset Value, Beginning of Period $ 39.60 $ 34.06 $ 30.47 $ 36.31 $ 71.07 Income from Investment Operations: Net investment income/(loss) .10 .03 .17 .21 .32 Net gains/(losses) on securities (both realized and unrealized) 7.94 5.68 3.63 (5.71) (33.33) ---------------- ---------------- ------------- --------------- ---------------- Total from Investment Operations 8.04 5.71 3.80 (5.50) (33.01) Less Distributions and Other: Dividends (from net investment income)* (.01) (.17) (.21) (.34) -- Distributions (from capital gains)* -- -- -- -- (1.75) Payment from affiliate --(1) --(1) -- -- -- ---------------- ---------------- ------------- --------------- ---------------- Total Distributions and Other (.01) (.17) (.21) (.34) (1.75) ---------------- ---------------- ------------- --------------- ---------------- Net Asset Value, End of Period $ 47.63 $ 39.60 $ 34.06 $ 30.47 $ 36.31 Total Return 20.31%(2) 16.85%(2) 12.60% (15.35)% (47.43)% Net Assets, End of Period (in thousands) $ 9,612,503 $ 9,023,479 $ 9,821,492 $ 10,107,243 $ 14,378,453 Average Net Assets for the Period (in thousands) $ 9,458,921 $ 9,319,532 $ 9,749,457 $ 12,572,984 $ 20,320,750 Ratio of Gross Expenses to Average Net Assets(3)(4) 0.86% 0.89% 0.88% 0.84% 0.84% Ratio of Net Expenses to Average Net Assets(3) 0.86% 0.89% 0.88% 0.83% 0.84% Ratio of Net Investment Income/(Loss) to Average Net Assets 0.21% 0.06% 0.52% 0.56% 0.63% Portfolio Turnover Rate 44% 14% 44% 53% 50%
Janus Venture Fund --------------------------------------------------------------------------------------- For a share outstanding during each fiscal year ended October 31 2005 2004 2003 2002 2001 ------------------------------------ ---------------- ----------------- ----------------- -------------- --------------- Net Asset Value, Beginning of Period $ 51.57 $ 47.77 $ 31.59 $ 36.99 $ 82.39 Income from Investment Operations: Net investment income/(loss) --(5) --(5) --(5) --(5) --(5) Net gains/(losses) on securities (both realized and unrealized) 5.25 3.80 16.18 (5.40) (29.02) ---------------- ----------------- ----------------- -------------- --------------- Total from Investment Operations 5.25 3.80 16.18 (5.40) (29.02) Less Distributions: Dividends (from net investment income)* -- -- -- -- -- Distributions (from capital gains)* -- -- -- -- (16.38) ---------------- ----------------- ----------------- -------------- --------------- Total Distributions -- -- -- -- (16.38) ---------------- ----------------- ----------------- -------------- --------------- Net Asset Value, End of Period $ 56.82 $ 51.57 $ 47.77 $ 31.59 $ 36.99 Total Return 10.18% 7.95% 51.22% (14.60)% (40.67)% Net Assets, End of Period (in thousands) $ 1,293,150 $ 1,327,088 $ 1,392,358 $ 756,323 $ 1,009,278 Average Net Assets for the Period (in thousands) $ 1,367,775 $ 1,355,755 $ 988,156 $ 992,760 $ 1,312,759 Ratio of Gross Expenses to Average Net Assets(3)(4) 0.87% 0.90% 0.94% 0.88% 0.87% Ratio of Net Expenses to Average Net Assets(3) 0.87% 0.90% 0.93% 0.87% 0.86% Ratio of Net Investment Income/(Loss) to Average Net Assets (0.64) (0.74) (0.67) (0.73) (0.36) Portfolio Turnover Rate 63% 61% 75% 90% 70%
*See Note 4 in Notes to Financial Statements. (1)Payment from affiliate aggregated less than $.01 on a per share basis for the fiscal year ended. (2)During the fiscal year ended October 31, 2005 and the fiscal year ended October 31, 2004, Janus Capital and/or Janus Services fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. (3)See "Explanations of Charts, Tables and Financial Statements." (4)The effect of non-recurring costs assumed by Janus Capital (Note 2) is included in the ratio of gross expenses to average net assets and was less than 0.01%. (5)Net investment income/(loss) aggregated less than $.01 on a per share basis for the fiscal year ended. See Notes to Financial Statements. Janus Growth Funds October 31, 2005 69 Financial Highlights (continued)
Janus Global Life Sciences Fund ----------------------------------------------------------------------------------------- For a share outstanding during each fiscal year ended October 31 2005 2004 2003 2002 2001 --------------------------------------- ----------------- ------------------ --------------- ---------------- --------------- Net Asset Value, Beginning of Period $ 16.08 $ 14.61 $ 12.82 $ 16.96 $ 22.41 Income from Investment Operations: Net investment income/(loss) --(1) --(1) --(1) --(1) --(1) Net gains/(losses) on securities (both realized and unrealized) 3.29 1.47 1.79 (4.14) (5.43) ----------------- ------------------ --------------- ---------------- --------------- Total from Investment Operations 3.29 1.47 1.79 (4.14) (5.43) Less Distributions and Other: Dividends (from net investment income)* -- -- -- -- (.02) Distributions (from capital gains)* -- -- -- -- -- Redemption fees --(2) --(2) --(2) N/A N/A Payment from affiliate -- --(3) -- -- -- ----------------- ------------------ --------------- ---------------- --------------- Total Distributions and Other -- -- -- -- (.02) ----------------- ------------------ --------------- ---------------- --------------- Net Asset Value, End of Period $ 19.37 $ 16.08 $ 14.61 $ 12.82 $ 16.96 Total Return 20.46% 10.06%(4) 13.87% (24.35)% (24.26)% Net Assets, End of Period (in thousands) $ 1,149,666 $ 1,183,496 $ 1,264,220 $ 1,389,723 $ 2,415,086 Average Net Assets for the Period (in thousands) $ 1,181,741 $ 1,288,416 $ 1,296,095 $ 1,927,734 $ 2,957,777 Ratio of Gross Expenses to Average Net Assets(5)(6) 0.97% 1.02% 0.99% 0.89% 0.93% Ratio of Net Expenses to Average Net Assets(5) 0.96% 1.01% 0.98% 0.88% 0.91% Ratio of Net Investment Income/(Loss) to Average Net Assets (0.49)% (0.52)% (0.28)% (0.42)% (0.32)% Portfolio Turnover Rate 77% 78% 135% 73% 84%
Janus Global Technology Fund ----------------------------------------------------------------------------------------- For a share outstanding during each fiscal year ended October 31 2005 2004 2003 2002 2001 --------------------------------------- ----------------- ------------------ --------------- ---------------- --------------- Net Asset Value, Beginning of Period $ 9.70 $ 10.44 $ 7.41 $ 10.83 $ 27.44 Income from Investment Operations: Net investment income/(loss) .01 .02 --(1) (.01) .36 Net gains/(losses) on securities (both realized and unrealized) 1.17 (.76) 3.03 (3.41) (16.64) ----------------- ------------------ --------------- ---------------- --------------- Total from Investment Operations 1.18 (.74) 3.03 (3.42) (16.28) Less Distributions and Other: Dividends (from net investment income)* -- -- -- -- (.16) Distributions (from capital gains)* -- -- -- -- -- Tax return of capital* -- -- -- (.17) Redemption fees --(2) --(2) --(2) N/A N/A Payment from affiliate -- --(3) -- -- -- ----------------- ------------------ --------------- ---------------- --------------- Total Distributions and Other -- -- -- -- (.33) ----------------- ------------------ --------------- ---------------- --------------- Net Asset Value, End of Period $ 10.88 $ 9.70 $ 10.44 $ 7.41 $ 10.83 Total Return 12.16% (7.09)%(4) 41.08% (31.67)% (59.95)% Net Assets, End of Period (in thousands) $ 993,663 $ 1,255,023 $ 1,655,731 $ 1,249,514 $ 2,275,691 Average Net Assets for the Period (in thousands) $ 1,109,908 $ 1,480,508 $ 1,332,510 $ 1,906,518 $ 4,009,850 Ratio of Gross Expenses to Average Net Assets(5)(6) 1.04% 1.07% 1.07% 0.96% 0.92% Ratio of Net Expenses to Average Net Assets(5) 1.03% 1.07% 1.06% 0.94% 0.90% Ratio of Net Investment Income/(Loss) to Average Net Assets 0.07% (0.37)% (0.27)% (0.14)% 0.55% Portfolio Turnover Rate 31% 24% 48% 66% 60%
*See Note 4 in Notes to Financial Statements. (1)Net investment income/(loss) aggregated less than $.01 on a per share basis for the fiscal year ended. (2)Redemption fees aggregated less than $.01 on a per share basis for the fiscal year ended. (3)Payment from affiliate aggregated less than $.01 on a per share basis for the fiscal year ended. (4)During the fiscal year ended October 31, 2004, Janus Capital and/or Janus Services fully reimbursed the Fund for a loss on a transaction resulting from a certain trading, which otherwise would have reduced total return by less than 0.01%. (5)See "Explanations of Charts, Tables and Financial Statements." (6)The effect of non-recurring costs assumed by Janus Capital (Note 2) is included in the ratio of gross expenses to average net assets and was less than 0.01%. See Notes to Financial Statements. 70 Janus Growth Funds October 31, 2005 Notes to Schedules of Investments Lipper Health/Biotechnology Funds Funds that invest at least 65% of their equity portfolio in shares of companies engaged in healthcare, medicine, and biotechnology. Lipper Large-Cap Growth Funds Funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) greater than 300% of the dollar-weighted median market capitalization of the middle 1,000 securities of the S&P SuperComposite 1500 Index. Large-cap growth funds-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, typically have an above-average price compared to the S&P 500(R) Index. Lipper Mid-Cap Growth Funds Funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) less than 300% of the dollar-weighted median market capitalization of the middle 1,000 securities of the S&P SuperComposite 1500 Index. Mid-cap growth funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P MidCap 400 Index. Lipper Multi-Cap Growth Funds Funds that, by portfolio practice, invest in a variety of market capitalization ranges without concentrating 75% of their equity assets in any one market capitalization range over an extended period of time. Multi-cap funds typically have between 25% to 75% of their assets invested in companies with market capitalizations (on a three-year weighted basis) above 300% of the dollar-weighted median market capitalization of the middle 1,000 securities of the S&P SuperComposite 1500 Index. Multi-cap growth funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P SuperComposite 1500 Index. Lipper Science and Technology Funds Funds that invest at least 65% of their equity portfolio in science and technology stocks. Lipper Small-Cap Growth Funds Funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) less than 250% of the dollar-weighted median of the smallest 500 of the middle 1,000 securities of the S&P SuperComposite 1500 Index. Small-cap growth funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P SmallCap 600 Index. Morgan Stanley Capital Is a capitalization weighted index that monitors the performance of information International World Information technology stocks from around the world. Technology Index(SM) The Morgan Stanley Capital Is a capitalization weighted index that monitors the performance of healthcare stocks International World Health Care from developed market countries in North America, Europe, and the Asia/Pacific Region. Index Russell 1000(R) Growth Index Measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. Russell 1000(R) Value Index Measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values. Russell 2000(R)Growth Index Measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. Russell 2000(R) Index Measures the performance of the 2,000 smallest companies in the Russell 3000(R)Index. Russell 2500(TM) Growth Index Measures the performance of those Russell 2500 companies with higher price-to-book ratios and higher forecasted growth values. Russell 3000(R) Growth Index Measures the performance of those Russell 3000(R) Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000(R) Growth or the Russell 2000(R) Growth indices. Russell Midcap(R) Growth Index Consists of stocks from the Russell Midcap(R) Index with a greater-than-average growth orientation. The Russell Midcap (R) Index consists of the smallest 800 companies in the Russell 1000(R) Index, as ranked by total market capitalization.
Janus Growth Funds October 31, 2005 71 Notes to Schedules of Investments (continued) S&P 500(R) Index The Standard & Poor's Composite Index of 500 stocks is a widely recognized, unmanaged index of common stock prices. S&P MidCap 400 Index An unmanaged group of 400 domestic stocks chosen for their market size, liquidity and industry group representation. 144A Securities sold under Rule 144A of the Securities Act of 1933 are subject to legal and/or contractual restrictions on resale and may not be publicly sold without registration under the 1933 Act. ADR American Depositary Receipt ETD Euro Time Deposit GDR Global Depositary Receipt PLC Public Limited Company REIT Real Estate Investment Trust U.S. Shares Securities of foreign companies trading on an American Stock Exchange
*Non-income-producing security. **A portion of this security has been segregated by the custodian to cover margin or segregation requirements on open futures contracts and/or forward currency contracts. ++Rate is subject to change. Rate shown reflects current rate. (Y)Security is a defaulted security in Janus Global Technology Fund with accrued interest in the amount of $1,268,000 that was written-off December 10, 2001. (B)Security is illiquid. #Loaned security, a portion or all of the security is on loan as of October 31, 2005. +The security is purchased with the cash collateral received from Securities on Loan (Note 1). oSecurity is a defaulted security. (O)SCHEDULE OF FAIR VALUED SECURITIES (AS OF OCTOBER 31, 2005)
Value as a % Value of Net Assets ----- ------------- Janus Venture Fund Candescent Technologies Corp. - Series E $ -- 0.0% DrugMax, Inc. 8,784,000 0.7% DrugMax, Inc. 1,399,950 0.1% Infocrossing, Inc. - expires 5/10/07 -- 0.0% OneTravel Holdings, Inc. -- 0.0% Ronco Fi-Tek, Inc. 6,000,000 0.5% UTEK Corp. 2,795,771 0.2% ValueVision Media, Inc. 15,347,787 1.2% WestJet Airlines, Ltd. 3,036,252 0.2% ------------ --- $ 37,363,760 2.9% Janus Global Life Sciences Fund Fibrogen, Inc. $ 4,868,800 0.4% ------------ --- Janus Global Technology Fund Candescent Technologies Corp., 8.00% convertible senior subordinated debentures due 5/1/03 (144A) $ -- 0.0%
Securities are valued at "fair value" pursuant to procedures adopted by the Fund's Trustees. The Schedule of Fair Valued Securities does not include international activities fair valued pursuant to a systematic fair valuation model. 72 Janus Growth Funds October 31, 2005 (S)SECTION SCHEDULE OF RESTRICTED AND ILLIQUID SECURITIES
Acquisition Acquisition Value as a % Date Cost Value of Net Assets ----------- ----------- ----- ------------- Janus Venture Fund DrugMax, Inc.(O) 9/23/05 $ 6,649,000 $ 8,784,000 0.7% DrugMax, Inc.(O) 9/23/05 381,250 1,399,950 0.1% OneTravel Holdings, Inc.(O) 4/14/05 -- -- 0.0% OneTravel Holdings, Inc. 4/14/05 6,300,000 2,141,999 0.2% Ronco Fi-Tek, Inc.(O) 6/24/05 6,000,000 6,000,000 0.5% UTEK Corp.(O) 8/12/05 2,575,204 2,795,771 0.2% ValueVision Media, Inc.(O) 10/3/05 - 10/5/05 2,349,839 15,347,787 1.2% ------------- ----------- --- $ 24,255,293 $36,469,507 2.9% Janus Global Life Sciences Fund Fibrogen, Inc.(O) 12/28/04 $ 4,868,800 $ 4,868,800 0.4% Janus Global Technology Fund Candescent Technologies Corp., 8.00% convertible senior subordinated debentures due 5/1/03 (144A)(O) 3/6/00 - 2/23/01 $ 2,614,147 $ -- 0.0%
The Funds have registration rights for certain restricted securities held as of October 31, 2005. The issuer incurs all registration costs. Janus Growth Funds October 31, 2005 73 Notes to Schedules of Investments (continued) L. The Investment Company Act of 1940 defines affiliates as those companies in which a fund holds 5% or more of the outstanding voting securities at any time during the period ended October 31, 2005.
Purchases Sales Realized Dividend Value Shares Cost Shares Cost Gain/(Loss) Income at 10/31/05 ------ ---- ------ ---- ----------- ------ ----------- Janus Fund Maxim Integrated Products, Inc. -- $ -- 17,687,550 $ 291,557,103 $ 394,015,244 $ 5,456,717 $ 86,670,869 Janus Venture Fund 1-800-FLOWERS.COM Inc. - Class A 100,000 $ 751,660 1,625,100 $ 15,458,460 $ (3,635,673) $ -- $ -- Authentidate Holding Corp. -- -- 1,310,000 18,012,500 (14,352,405) -- -- Axesstel, Inc. 2,128,965 8,515,860 -- -- -- -- 5,961,102 Century Casinos, Inc. 1,035,841 7,180,103 -- -- -- -- 7,373,948 DrugMax, Inc. 6,100,000 6,649,000 -- -- -- -- 8,784,000 Euronet Worldwide, Inc. -- -- 958,617 15,266,195 11,658,867 -- 37,973,665 Infocrossing, Inc. 100,000 1,722,595 1,875 32,675 (2,855) -- 13,741,109 Intermap Technologies, Ltd. 2,346,939 9,812,288 -- -- -- -- 9,995,007 LivePerson, Inc. 109,815 216,336 -- -- -- -- 13,666,742 Omnicell, Inc. 43,645 489,605 100,000 1,494,780 (828,594) -- 14,475,349 OneTravel Holdings, Inc. 1,145,454 6,300,000 -- -- -- -- 2,141,999 Orange 21, Inc. 402,120 3,486,304 95,015 968,203 (618,098) -- 1,099,436 Restoration Hardware, Inc. -- -- 2,133,107 13,511,633 1,327,513 -- -- Ronco Fi-Tek, Inc. 1,591,512 6,000,000 -- -- -- -- 6,000,000 SeraCare Life Sciences, Inc. 842,620 10,349,379 -- -- -- -- 17,153,636 TALX Corp.(1) 510,912 -- 328,251 6,366,070 5,582,185 249,941 47,613,252 TechTeam Global, Inc. 644,992 8,326,760 -- -- -- -- 6,011,325 Tier Technologies, Inc. - Class B -- -- 1,551,485 20,798,442 (8,520,136) -- -- TransAct Technologies, Inc. 226,210 2,919,480 231,800 4,323,258 (1,976,498) -- 5,822,253 Transcommunity Financial Corp. 213,715 1,709,720 213,715 1,709,720 23,996 -- -- Ultimate Software Group, Inc. -- -- -- -- -- -- 32,281,000 ValueVision Media, Inc. 1,704,932 18,754,252 -- -- -- -- 15,347,787 Workstream, Inc. (U.S. Shares) 4,957,152 19,278,821 -- -- -- -- 7,534,871 --------- ------------- --------- ---------- ------------ ------------- ------------- $ 112,462,163 97,941,937 $(11,341,698) $ 249,941 $ 252,976,481
(1)Adjusted for 3 for 2 stock split 2/18/05 Aggregate collateral segregated to cover margin, segregation requirements on open futures contracts, forward currency contracts and/or mortgage backed securities (with extended settlement dates) as of October 31, 2005 are noted below.
Fund Aggregate Value ---- --------------- Growth Janus Fund $ 552,201,365 Janus Mercury Fund 415,160,547 Janus Olympus Fund 255,906,114 Specialty Growth Janus Global Life Sciences Fund 134,428,717 Janus Global Technology Fund 300,410,918
Variable rate notes are notes for which the interest rate is based on an index or market interest rates and is subject to change. Rates in the security description are as of October 31, 2005. Repurchase Agreements held by a Fund are fully collateralized, and such collateral is in the possession of a Fund's custodian or subcustodian. The collateral is evaluated daily to ensure its market value equals or exceeds the current market value of the repurchase agreements, including accrued interest. In the event of default on the obligation to repurchase, the Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral or proceeds may be subject to legal proceedings. 74 Janus Growth Funds October 31, 2005 Notes to Financial Statements The following section describes the organization and significant accounting policies and provides more detailed information about the schedules and tables that appear throughout this report. In addition, the Notes to Financial Statements explain the methods used in preparing and presenting this report. 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Janus Fund, Janus Enterprise Fund, Janus Mercury Fund, Janus Olympus Fund, Janus Orion Fund, Janus Triton Fund, Janus Twenty Fund, Janus Venture Fund, Janus Global Life Sciences Fund and Janus Global Technology Fund (collectively the "Funds" and individually a "Fund") are series funds. The Funds are part of Janus Investment Fund (the "Trust"), which was organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act") as an open-end management investment company. The Trust has twenty-nine funds. Each of the Funds in this report is classified as diversified as defined in the 1940 Act, with the exception of Janus Orion Fund, Janus Twenty Fund and Janus Global Technology Fund, which are classified as nondiversified. The Funds are no-load investments. Janus Capital Management LLC ("Janus Capital") invested $5,000,000 of initial seed capital in Janus Triton Fund on February 25, 2005. Janus Capital redeemed the initial seed capital of $5,000,000 on March 28, 2005. The following accounting policies have been consistently followed by the Funds and are in conformity with accounting principles generally accepted in the United States of America in the investment company industry. INVESTMENT VALUATION Securities are valued at the closing price for securities traded on a principal securities exchange (U.S. or foreign) and on the NASDAQ National Market. Securities traded on over-the-counter markets and listed securities for which no sales are reported are valued at the latest bid price (or yield equivalent thereof) obtained from one or more dealers transacting in a market for such securities or by a pricing service approved by the Funds' Trustees. Short-term securities maturing within 60 days or less for which market quotations are not readily available are valued on the basis of amortized cost, which approximates market value. Foreign securities and currencies are converted to U.S. dollars using the applicable exchange rate in effect as of the daily close of the New York Stock Exchange ("NYSE"). When market quotations are not readily available or deemed unreliable, or events or circumstances that may affect the value of portfolio securities held by the Funds are identified between the closing of their principal markets and the time the net asset value ("NAV") is determined, securities may be valued at fair value as determined in good faith under procedures established by and under the supervision of the Funds' Trustees. The Funds may use a systematic fair valuation model provided by an independent third party to value international equity securities in order to adjust for stale pricing, which may occur between the close of certain foreign exchanges and the NYSE. INVESTMENT TRANSACTIONS AND INVESTMENT INCOME Investment transactions are accounted for as of the date purchased or sold (trade date). Dividend income is recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded as soon as the Trust is informed of the dividend if such information is obtained subsequent to the ex-dividend date. Interest income is recorded on the accrual basis and includes amortization of premiums and accretion of discounts. Gains and losses are determined on the identified cost basis, which is the same basis used for federal income tax purposes. EXPENSES Each Fund bears expenses incurred specifically on its behalf as well as a portion of general expenses, which may be allocated pro rata to each of the Funds. SECURITIES LENDING Under procedures adopted by the Trustees, the Funds may lend securities to qualified parties (typically brokers or other financial institutions) who need to borrow securities in order to complete certain transactions such as covering short sales, avoiding failures to deliver securities or completing arbitrage activities. The Funds may seek to earn additional income through securities lending. There is the risk of delay in recovering a loaned security or the risk of loss in collateral rights if the borrower fails financially. In addition, Janus Capital makes efforts to balance the benefits and risks from granting such loans. The Funds will not have the right to vote on securities while they are being lent; however, the Funds may attempt to call back the loan and vote the proxy. All loans will be continuously secured by collateral which may consist of cash, U.S. Government securities, domestic and foreign short-term debt instruments, letters of credit or such other collateral permitted by the Securities and Exchange Commission ("SEC"). State Street Bank and Trust Company (the "Lending Agent") may also invest the cash collateral in the State Street Navigator Securities Lending Prime Portfolio or investments in unaffiliated money market funds or accounts, mutually agreed to by the Funds and the Lending Agent that complies with Rule 2a-7 of the 1940 Act relating to money market funds. Janus Growth Funds October 31, 2005 75 Notes to Financial Statements (unaudited)(continued) As of October 31, 2005, the Funds had on loan securities valued as indicated:
Value at Fund October 31, 2005 ---- ---------------- Growth Janus Fund $ 655,388,835 Janus Enterprise Fund 318,210,960 Janus Mercury Fund 256,286,119 Janus Olympus Fund 190,305,807 Janus Orion Fund 115,018,097 Janus Twenty Fund 232,876,291 Janus Venture Fund 248,886,903 Specialty Growth Janus Global Life Sciences Fund 178,742,923 Janus Global Technology Fund 62,525,079
As of October 31, 2005, the Funds received cash collateral for securities lending activity as indicated:
Cash Collateral at Fund October 31, 2005 ---- ------------------ Growth Janus Fund $ 671,968,719 Janus Enterprise Fund 325,512,940 Janus Mercury Fund 264,912,132 Janus Olympus Fund 195,028,151 Janus Orion Fund 118,145,717 Janus Twenty Fund 237,785,188 Janus Venture Fund 255,802,689 Specialty Growth Janus Global Life Sciences Fund 183,652,404 Janus Global Technology Fund 64,340,213
As of October 31, 2005, all cash collateral received was invested in the State Street Navigator Securities Lending Prime Portfolio, except for Janus Orion Fund, which also invested $1,671,255 in foreign bonds and Janus Venture Fund, which also invested $3,859 in U.S treasury bonds. The value of the collateral must be at least 102% of the market value of the loaned securities that are denominated in U.S. dollars and 105% of the market value of the loaned securities which are not denominated in U.S. dollars. Loaned securities and related collateral are marked-to-market each business day based upon the market value of the respective securities at the close of business, employing the most recent available pricing information. Collateral levels are then adjusted based on this mark-to-market evaluation. The borrower pays fees at the Funds' direction to its Lending Agent. The Lending Agent may retain a portion of the interest earned. The cash collateral invested by the Lending Agent is disclosed in the Schedule of Investments. The lending fees and the Funds' portion of the interest income earned on cash collateral is included on the Statement of Operations (if applicable). During the fiscal year ended October 31, 2005, there were no securities lending arrangements for Janus Triton Fund. INTERFUND LENDING Pursuant to an exemptive order received from the SEC, each of the Funds may be party to an interfund lending agreement between the Funds and other Janus Capital sponsored mutual funds, which permit it to borrow or lend cash at a rate beneficial to both the borrowing and lending funds. Outstanding borrowings from all sources totaling 10% or more of a borrowing Fund's total assets must be collateralized at 102% of the outstanding principal value of the loan; loans of less than 10% may be unsecured. During the fiscal year ended October 31, 2005, there were no outstanding borrowing or lending arrangements for the Funds. FORWARD CURRENCY TRANSACTIONS The Funds may enter into forward currency contracts in order to reduce their exposure to changes in foreign currency exchange rates on their foreign portfolio holdings and to lock in the U.S. dollar cost of firm purchase and sale commitments for securities denominated in or exposed to foreign currencies. A forward currency exchange contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated rate. The gain or loss arising from the difference between the U.S. dollar cost of the original contract and the value of the foreign currency in U.S. dollars upon closing a contract is included in net realized gain or loss from foreign currency transactions on the Statement of Operations (if applicable). Forward currency contracts held by the Funds are fully collateralized by other securities, which are denoted in the accompanying Schedule of Investments (if applicable). The collateral is evaluated daily to ensure its market value equals or exceeds the current market value of the corresponding forward currency contracts. FOREIGN CURRENCY TRANSLATIONS The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held at the date of the financial statements. Net unrealized appreciation or depreciation on investments and foreign currency translation arise from changes in the value of assets and liabilities, including investments in securities held at the date of the financial statements, resulting from changes in the exchange rates and changes in market prices of securities held. Currency gains and losses are also calculated on payables and receivables that are denominated in foreign currencies. The payables and receivables are generally related to security transactions and income. Foreign-denominated assets and forward currency contracts may involve more risks than domestic transactions, including currency risk, political and economic risk, regulatory risk and 76 Janus Growth Funds October 31, 2005 market risk. Risks may arise from the potential inability of a counterparty to meet the terms of a contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. WHEN-ISSUED SECURITIES The Funds may purchase or sell securities on a when-issued or forward commitment basis. The price of the underlying securities and date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. Losses may arise due to changes in the market value of the securities or from the inability of counterparties to meet the terms of the contract. In connection with such purchases, the Funds may hold liquid assets as collateral with the Funds' custodian sufficient to cover the purchase price. As of October 31, 2005, there were no Funds invested in when-issued securities. INITIAL PUBLIC OFFERINGS The Funds may invest in initial public offerings ("IPOs"). IPOs and other investment techniques may have a magnified performance impact on a fund with a small asset base. The Funds may not experience similar performance as their assets grow. RESTRICTED SECURITY TRANSACTIONS Restricted securities held by a Fund may not be sold except in exempt transactions or in a public offering registered under the Securities Act of 1933. The risk of investing in such securities is generally greater than the risk of investing in the securities of widely held, publicly traded companies. Lack of a secondary market and resale restrictions may result in the inability of a Fund to sell a security at a fair price and may substantially delay the sale of the security. In addition, these securities may exhibit greater price volatility than securities for which secondary markets exist. DIVIDEND DISTRIBUTIONS Each Fund generally declares and distributes dividends of net investment income and capital gains (if any) annually. The majority of dividends and capital gains distributions from a Fund will be automatically reinvested into additional shares of that Fund, based on the discretion of the shareholder. ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. FEDERAL INCOME TAXES No provision for income taxes is included in the accompanying financial statements, as the Funds intend to distribute to shareholders all taxable investment income and realized gains and otherwise comply with Subchapter M of the Internal Revenue Code applicable to regulated investment companies. 2. INVESTMENT ADVISORY AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES Each Fund pays a monthly advisory fee to Janus Capital based upon average daily net assets and calculated at the annual rate of 0.64%. Until at least March 1, 2007, provided that Janus Capital remains investment adviser to the Funds, Janus Capital has agreed to reimburse the Janus Triton Fund by the amount, if any, that such Fund's normal operating expenses in any fiscal year, including the investment advisory fee, but excluding the brokerage commissions, interest, taxes and extraordinary expenses, exceed the annual rate of 1.25%. If applicable, amounts reimbursed to the Fund by Janus Capital are disclosed as Excess Expense Reimbursement on the Statement of Operations. Each of the Funds pays Janus Services LLC ("Janus Services"), a wholly-owned subsidiary of Janus Capital, an asset-weighted average annual fee based on the proportion of each of the Fund's total net assets sold directly and the proportion of each Fund's net assets sold through financial intermediaries. The applicable fee rates are 0.16% of net assets on the proportion of assets sold directly and 0.21% on the proportion of assets sold through intermediaries. In addition, Janus Services receives $4.00 per open shareholder account (excluding Janus Twenty Fund and Janus Venture Fund) for transfer agent services plus reimbursement of certain out-of-pocket expenses (primarily postage and telephone charges). During the fiscal year ended October 31, 2005, Janus Services reimbursed the following Funds as a result of dilutions caused by incorrectly processed shareholder activity as indicated in the table below.
Funds ----- Growth Janus Fund $ 947 Janus Olympus Fund 1,143 Janus Twenty Fund 6,605
For the fiscal year ended October 31, 2005, Janus Capital assumed $23,556 of legal, consulting and Trustee costs and fees incurred by the funds in Janus Investment Fund, Janus Aspen Series and Janus Adviser Series ("Portfolios") in connection with the regulatory and civil litigation matters discussed in Note 6. These non-recurring costs were allocated to all Portfolios, except Janus Research Fund and Janus Triton Fund, based on the Portfolios' respective net assets at July 31, 2004. Additionally, all future non-recurring costs will be allocated to all Portfolios based on the Portfolios' respective net assets at July 31, 2004. These non-recurring costs and Janus Growth Funds October 31, 2005 77 Notes to Financial Statements (continued) offsetting waivers are shown on the Statement of Operations. The effect of non-recurring costs was de minimis. Certain officers and Trustees of the Funds may also be officers and/or directors of Janus Capital; however, such officers and Trustees receive no compensation from the Funds. The Funds' expenses may be reduced by expense offsets from an unaffiliated custodian. Such credits or offsets are included in Expense and Fee Offsets on the Statement of Operations. Custody credits received reduce Custodian Fees. The Funds could have employed the assets used by the custodian to produce income if it had not entered into an expense offset arrangement. A 2.00% redemption fee may be imposed on shares of Janus Global Life Sciences Fund and Janus Global Technology Fund held for three months or less. This fee is paid to the Funds rather than Janus Capital, and is designed to deter excessive short-term trading and to offset the brokerage commissions, market impact, and other costs associated with changes in the Funds' asset level and cash flow due to short-term money movements in and out of the Funds. The redemption fee is accounted for as an addition to Paid-in Capital. Total redemption fees received by Janus Global Life Sciences Fund and Janus Global Technology Fund were $35,415 and $80,384, respectively, for the fiscal year ended October 31, 2005. The Funds may invest in money market funds, including funds managed by Janus Capital. During the fiscal year ended October 31, 2005, the following Funds recorded distributions from affiliated investment companies as affiliated dividend income, and had the following affiliated purchases and sales:
Purchases Sales Dividend Value Shares/Cost Shares/Cost Income at 10/31/05 -------------- -------------- -------------- -------------- Janus Institutional Cash Reserves Fund Janus Fund $ 310,000,000 $ 200,000,000 $ 986,248 $ 160,000,000 Janus Mercury Fund 60,000,000 60,000,000 194,715 -- Janus Twenty Fund 1,090,000,000 890,000,000 2,426,621 200,000,000 -------------- -------------- -------------- -------------- $1,460,000,000 $1,150,000,000 $ 3,607,584 $ 360,000,000 Janus Government Money Market Fund Janus Twenty Fund $ 150,000,000 $ 150,000,000 $ 596,020 $-- Janus Money Market Fund Janus Fund $ 100,000,000 $-- $ 133,233 $ 100,000,000 Janus Twenty Fund 50,000,000 -- 25,863 50,000,000 -------------- -------------- -------------- -------------- $ 150,000,000 $-- $ 159,096 $ 150,000,000
3. PURCHASES AND SALES OF INVESTMENT SECURITIES For the fiscal year ended October 31, 2005, the aggregate cost of purchases and proceeds from sales of investment securities (excluding short-term securities) were as follows:
Purchase of Long- Proceeds from Sales Term U.S. of Long-Term U.S. Purchase of Proceeds from Sales Government Government Fund Securities of Securities Obligations Obligations ---- ---------- ------------------- ----------------- ------------------- Growth Janus Fund $ 9,406,967,675 $12,971,729,303 $ -- $ -- Janus Enterprise Fund 478,766,539 742,033,476 -- -- Janus Mercury Fund 1,644,423,762 2,278,706,041 -- -- Janus Olympus Fund 2,653,484,751 3,041,361,597 -- -- Janus Orion Fund 459,877,736 396,305,081 -- -- Janus Triton Fund(1) 38,960,374 7,076,607 -- -- Janus Twenty Fund 3,990,464,774 5,744,479,845 -- -- Janus Venture Fund 854,255,331 1,033,344,391 3,585,000 3,824,909 Specialty Growth Janus Global Life Sciences Fund 892,797,076 1,168,604,715 -- -- Janus Global Technology Fund 341,443,778 719,423,354 -- --
(1)Period from February 25, 2005 (inception date) through October 31, 2005. 78 Janus Growth Funds October 31, 2005 4. FEDERAL INCOME TAX The tax components of capital shown in the table below represent: (1) distribution requirements the Funds must satisfy under the income tax regulations, (2) losses or deductions the Funds may be able to offset against income and gains realized in future years, and (3) unrealized appreciation or depreciation of investments for federal income tax purposes (reduced by foreign tax liability). Other book to tax differences in the current year primarily consist of foreign currency contract adjustments. The Funds have elected to treat gains and losses on forward foreign currency contracts as capital gains and losses. Other foreign currency gains and losses on debt instruments are treated as ordinary income for federal income tax purposes pursuant to Section 988 of the Internal Revenue Code.
Undistributed Undistributed Other Book Net Tax Ordinary Long-Term Accumulated to Tax Appreciation/ Fund Income Gains Capital Losses Differences (Depreciation) ---------------- ------------- ------------- -------------- ------------ -------------- Growth Janus Fund(1) $ 7,997,326 $ -- $(6,699,726,031) $ 66,893 $ 2,012,629,912 Janus Enterprise Fund(1) -- -- (4,364,759,259) -- 543,380,822 Janus Mercury Fund 12,422,837 -- (6,153,773,590) 1,512,941 1,069,488,574 Janus Olympus Fund(1) 636,996 -- (1,684,106,645) 137,224 457,061,778 Janus Orion Fund 3,064,672 -- (548,470,090) (170,054) 131,988,459 Janus Triton Fund(2) -- 53,233 -- (90) 2,024,821 Janus Twenty Fund 20,136,432 -- $(3,275,743,627) 169,261 3,053,477,786 Janus Venture Fund(1) -- 65,399,672 (62,903,935) 150,398 300,255,418 Specialty Growth Janus Global Life Sciences Fund -- -- (915,468,385) (1,899) 273,750,987 Janus Global Technology Fund 719,402 -- (2,773,738,382) 2,247,082 274,097,627
(1)Capital loss carryovers subject to annual limitations. (2)Period from February 25, 2005 (inception date) through October 31, 2005. Accumulated capital losses noted below represent net capital loss carryovers, as of October 31, 2005, that may be available to offset future realized capital gains and thereby reduce future taxable gains distributions. The table below shows the expiration dates of the carryovers. Capital Loss Carryover Expiration Schedule For the year ended October 31, 2005
October 31, October 31, October 31, October 31, October 31, Accumulated Fund 2007 2008 2009 2010 2011 Capital Losses ---- ----------- ----------- ----------- ----------- ----------- -------------- Growth Janus Fund(1) $ -- $ (27,832,088) $(3,409,665,900) $(2,692,706,41) $ (569,521,625) $(6,699,726,031) Janus Enterprise Fund(1) (2,880,396) (220,932,903) (2,924,501,200) (1,180,687,781) (35,756,979) (4,364,759,259) Janus Mercury Fund -- -- (3,254,153,236) (2,677,021,633) (222,598,721) (6,153,773,590) Janus Olympus Fund(1) -- (3,298,969) (1,147,259,588) (533,548,088) -- (1,684,106,645) Janus Orion Fund -- -- (480,697,899) (67,772,191) -- (548,470,090) Janus Triton Fund(2) -- -- -- -- -- -- Janus Twenty Fund -- -- (2,514,552,821) (117,584,500) (643,606,306) (3,275,743,627) Janus Venture Fund(1) -- -- (50,323,147) (12,580,788) -- (62,903,935) Specialty Growth Janus Global Life Sciences Fund -- (109,162,517) (451,314,670) (251,753,591) (103,237,607) (915,468,385) Janus Global Technology Fund -- (6,230,420) (1,827,246,526) (857,178,929) (83,082,507) (2,773,738,382)
(1)Capital loss carryovers subject to annual limitations. (2)Period from February 25, 2005 (inception date) through October 31, 2005. Janus Growth Funds October 31, 2005 79 Notes to Financial Statements (continued) During the year ended October 31, 2005, the following capital loss carryovers were utilized by the Funds as indicated in the table below.
Fund Capital Carryover Loss Utilized ---- ------------------------------- Growth Janus Fund $ 2,439,165,545 Janus Enterprise Fund 178,030,460 Janus Mercury Fund 337,995,565 Janus Olympus Fund 299,430,515 Janus Orion Fund 65,588,058 Janus Twenty Fund 1,463,811,386 Janus Venture Fund 52,004,445 Specialty Growth Janus Global Life Sciences Fund 170,843,244 Janus Global Technology Fund 97,986,731
The aggregate cost of investments and the composition of unrealized appreciation and depreciation of investment securities for federal income tax purposes as of October 31, 2005 are noted below. Unrealized appreciation and unrealized depreciation in the table below exclude appreciation/depreciation on foreign currency translations. The primary difference between book and tax appreciation or depreciation of investments is wash sale loss deferrals.
Federal Tax Unrealized Unrealized Fund Cost Appreciation (Depreciation) ---- ----------- ------------ -------------- Growth Janus Fund $ 9,490,173,874 $ 2,211,777,463 $ (199,147,551) Janus Enterprise Fund 1,476,079,415 579,947,055 (36,566,233) Janus Mercury Fund 3,666,238,998 1,146,874,095 (77,385,521) Janus Olympus Fund 1,937,984,355 478,854,067 (21,773,793) Janus Orion Fund 688,427,461 156,560,507 (24,377,399) Janus Triton Fund(1) 35,572,733 4,266,139 (2,235,316) Janus Twenty Fund 6,735,824,981 3,131,026,971 (77,549,185) Janus Venture Fund 1,252,449,079 381,523,108 (81,161,878) Specialty Growth Janus Global Life Sciences Fund 1,043,116,059 309,902,792 (36,151,805) Janus Global Technology Fund 773,606,640 305,668,068 (31,559,059)
(1)Period from February 25, 2005 (inception date) through October 31, 2005. Income and capital gains distributions are determined in accordance with income tax regulations that may differ from accounting principles generally accepted in the United States of America. These differences are due to differing treatments for items such as net short-term gains, deferral of wash sale losses, foreign currency transactions, net investment losses and capital loss carryovers. Certain permanent differences such as tax returns of capital and net investment losses noted below have been reclassified to paid-in capital.
For the fiscal year ended October 31, 2005 Distributions ---------------------- --------------------------------------------------- From Ordinary From Long-Term Tax Return of Net Investment Fund Income Capital Gains Capital Loss ---- ------------- -------------- ------------- -------------- Growth Janus Fund $ -- $ -- $ -- $ -- Janus Enterprise Fund -- -- -- (5,127,872) Janus Mercury Fund 6,427,322 -- -- -- Janus Olympus Fund -- -- -- -- Janus Orion Fund -- -- -- -- Janus Triton Fund(1) -- -- -- -- Janus Twenty Fund 2,651,260 -- -- -- Janus Venture Fund -- -- -- (8,870,191) Specialty Growth Janus Global Life Sciences Fund -- -- -- (5,796,869) Janus Global Technology Fund -- -- -- --
(1)Period from February 25, 2005 (inception date) through October 31, 2005. 80 Janus Growth Funds October 31, 2005
For the fiscal year ended October 31, 2004 Distributions ---------------------- ------------------------------------------------- From Ordinary From Long-Term Tax Return of Net Investment Fund Income Capital Gains Capital Loss ---- ------------- -------------- ------------- -------------- Growth Janus Fund $ -- $ -- $ -- $(25,568,519) Janus Enterprise Fund -- -- -- (8,348,708) Janus Mercury Fund -- -- -- (13,151,657) Janus Olympus Fund -- -- -- (9,357,108) Janus Orion Fund -- -- -- (351,902) Janus Twenty Fund 47,904,085 -- -- -- Janus Venture Fund -- -- -- (10,052,626) Specialty Growth Janus Global Life Sciences Fund -- -- -- (7,055,029) Janus Global Technology Fund -- -- -- (5,547,781)
5. CAPITAL SHARE TRANSACTIONS
Janus Janus Janus For the fiscal year Janus Enterprise Mercury Olympus ended Fund Fund Fund Fund October 31 (all --------------------- --------------------- --------------------- --------------------- numbers in thousands) 2005 2004 2005 2004 2005 2004 2005 2004 --------------------- -------- -------- -------- -------- -------- -------- -------- -------- Transactions in Fund Shares Shares sold 15,753 34,887 6,111 6,421 33,707 17,149 3,301 6,107 Reinvested distributions -- -- -- -- 289 -- -- -- Shares repurchased (145,132) (223,406) (12,764) (20,472) (60,613) (78,824) (20,158) (26,302) -------- -------- -------- -------- -------- -------- -------- -------- Net Increase/(Decrease) in Capital Share Transactions (129,379) (188,519) (6,653) (14,051) (26,617) (61,675) (16,857) (20,195) Shares Outstanding, Beginning of Period 585,256 773,775 49,800 63,851 229,499 291,174 89,748 109,943 -------- -------- -------- -------- -------- -------- -------- -------- Shares Outstanding, End of Period 455,877 585,256 43,147 49,800 202,882 229,499 72,891 89,748
Janus Janus Janus Janus Orion Triton Twenty Venture For the fiscal year ended Fund Fund Fund Fund October 31 (all numbers in --------------------- -------- --------------------- --------------------- thousands) 2005 2004 2005(1) 2005 2004 2005 2004 -------------------------- -------- -------- -------- -------- -------- -------- -------- Transactions in Fund Shares Shares sold 22,671 18,664 4,486 12,470 13,158 653 1,126 Reinvested distributions -- -- -- 59 1,362 -- -- Shares repurchased (18,685) (24,998) (1,015) (38,601) (75,000) (3,628) (4,539) -------- -------- -------- -------- -------- -------- -------- Net Increase/(Decrease) in Capital Share Transactions 3,986 (6,334) 3,471 (26,072) (60,480) (2,975) (3,413) Shares Outstanding, Beginning of Period 84,701 91,035 0 227,885 288,365 25,735 29,148 -------- -------- -------- -------- -------- -------- -------- Shares Outstanding, End of Period 88,687 84,701 3,471 201,813 227,885 22,760 25,735
Janus Janus Global Life Sciences Global Technology Fund Fund For the fiscal year ended ----------------------- ----------------------- October 31(all numbers in thousands) 2005 2004 2005 2004 ------------------------------------ -------- -------- -------- -------- Transactions in Fund Shares Shares sold 2,837 7,843 4,449 15,459 Reinvested distributions -- -- -- -- Shares repurchased (17,065) (20,764) (42,493) (44,697) -------- -------- -------- -------- Net Increase/(Decrease) in Capital Share Transactions (14,228) (12,921) (38,044) (29,238) Shares Outstanding, Beginning of Period 73,596 86,517 129,336 158,574 -------- -------- -------- -------- Shares Outstanding, End of Period 59,368 73,596 91,292 129,336
(1)Period from February 25, 2005 (inception date) through October 31, 2005. Janus Growth Funds October 31, 2005 81 Notes to Financial Statements (continued) 6. LEGAL MATTERS In the fall of 2003, the Securities and Exchange Commission ("SEC"), the Office of the New York State Attorney General ("NYAG"), the Colorado Attorney General ("COAG") and the Colorado Division of Securities ("CDS") announced that they were investigating alleged frequent trading practices in the mutual fund industry. On August 18, 2004, Janus Capital announced that it had reached final settlements with the SEC, the NYAG, the COAG, and the CDS related to such regulators' investigations into Janus Capital's frequent trading arrangements. A number of civil lawsuits were brought against Janus Capital and certain of its affiliates, the Janus funds, and related entities and individuals based on allegations similar to those announced by the above regulators and were filed in several state and federal jurisdictions. Such lawsuits alleged a variety of theories for recovery including, but not limited to, the federal securities laws, other federal statutes (including ERISA), and various common law doctrines. The Judicial Panel on Multidistrict Litigation transferred these actions to the U.S. District Court for the District of Maryland (the "Court") for coordinated proceedings. On September 29, 2004, five consolidated amended complaints were filed in that Court that generally include: (i) claims by a putative class of investors in the Janus funds asserting claims on behalf of the investor class; (ii) derivative claims by investors in the Janus funds ostensibly on behalf of the Janus funds; (iii) claims on behalf of participants in the Janus 401(k) plan; (iv) claims brought on behalf of shareholders of Janus Capital Group Inc. ("JCGI") on a derivative basis against the Board of Directors of JCGI; and (v) claims by a putative class of shareholders of JCGI asserting claims on behalf of the shareholders. Each of the five complaints initially named JCGI and/or Janus Capital as a defendant. In addition, the following were also named as defendants in one or more of the actions: Janus Investment Fund ("JIF"), Janus Aspen Series ("JAS"), Janus Adviser Series ("JAD"), Janus Distributors LLC, Enhanced Investment Technologies, LLC ("INTECH"), Bay Isle Financial LLC ("Bay Isle"), Perkins, Wolf, McDonnell and Company, LLC ("Perkins"), the Advisory Committee of the Janus 401(k) plan, and the current or former directors of JCGI. On August 25, 2005, the Court entered orders dismissing most of the claims asserted against Janus Capital and its affiliates by fund investors (actions (i) and (ii) described above), except certain claims under Section 10(b) of the Securities Exchange Act of 1934 and under Section 36(b) of the Investment Company Act of 1940. As a result, JCGI, Janus Capital, the Advisory Committee of the Janus 401(k) plan, and the current or former directors of JCGI are the remaining defendants in one or more of the actions. The complaint in the 401(k) plan class action (action (iii) described above) was voluntarily dismissed, but was recently refiled using a new named plaintiff and asserting claims similar to the initial complaint. The Attorney General's Office for the State of West Virginia filed a separate market timing related civil action against Janus Capital and several other non-affiliated mutual fund companies, claiming violations under the West Virginia Consumer Credit and Protection Act. The civil action requests certain monetary penalties, among other relief. A request to transfer this action to the Multidistrict Litigation case in the U.S. District Court of Baltimore, Maryland, described above is pending. In addition, the Auditor of the State of West Virginia, in his capacity as securities commissioner, has issued an order indicating an intent to initiate administrative proceedings against most of the defendants in the market timing cases (including Janus Capital) and seeking disgorgement and other monetary relief based on similar market timing allegations. In addition to the "market timing" actions described above, Janus Capital is a defendant in a consolidated lawsuit in the U.S. District Court for the District of Colorado challenging the investment advisory fees charged by Janus Capital to certain Janus funds. The action was filed by fund investors asserting breach of fiduciary duty under Section 36(b) of the Investment Company Act of 1940. A lawsuit was also filed against Janus Capital and certain affiliates in the U.S. District Court for the District of Colorado alleging that Janus Capital failed to ensure that certain Janus funds participated in securities class action settlements for which the funds were eligible. The complaint asserts claims under Sections 36(a), 36(b), and 47(b) of the Investment Company Act, breach of fiduciary duty and negligence. In 2001, Janus Capital's predecessor was also named as a defendant in a class action suit in the U.S. District Court for the Southern District of New York, alleging that certain underwriting firms and institutional investors violated antitrust laws in connection with initial public offerings. The U.S. District Court dismissed the plaintiff's antitrust claims in November 2003, however, the U.S. Court of Appeals recently vacated that decision and remanded it for further proceedings. Additional lawsuits may be filed against certain of the Janus funds, Janus Capital, and related parties in the future. Janus Capital does not currently believe that these pending actions will materially affect its ability to continue providing services it has agreed to provide to the Janus funds. 82 Janus Growth Funds October 31, 2005 7. SUBSEQUENT EVENTS Several proposals regarding the Funds were presented to shareholders at a Special Meeting of Shareholders on November 22, 2005 and potentially any adjournments thereof to be held during 2005. A Proxy Statement that describes each of the proposals has been mailed to shareholders of record as of September 9, 2005. PROPOSAL 1. Elect nine Trustees, including eight "independent" candidates (seven of which currently serve as Trustees of the Trust). PROPOSAL 2. Approve elimination of Janus Flexible Bond Fund's fundamental policy regarding investments in income-producing securities. PROPOSAL 3.a. For shareholders of each Fund (except Janus Mid Cap Value Fund, Janus Risk-Managed Stock Fund, and Janus Small Cap Value Fund), to approve conforming amendments to the Fund's investment advisory agreement with Janus Capital. PROPOSAL 3.b. To approve a proposed amendment to the investment advisory agreement between Janus Capital and the following Funds that would introduce a performance incentive investment advisory fee structure: Janus Contrarian Fund, Janus Mercury Fund, Janus Mid Cap Value Fund, Janus Research Fund, Janus Risk-Managed Stock Fund, and Janus Worldwide Fund. PROPOSAL 4. To approve an amended subadvisory agreement between Janus Capital, on behalf of Janus Risk-Managed Stock Fund and INTECH that would introduce a performance incentive subadvisory fee structure. Further information about each of these proposals is provided in the Proxy Statement filed with the SEC that is available electronically on www.janus.com during the period of the proxy solicitation. Janus Growth Funds October 31, 2005 83 Report of Independent Registered Public Accounting Firm To the Trustees and Shareholders of Janus Investment Fund In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Janus Fund, Janus Enterprise Fund, Janus Mercury Fund, Janus Olympus Fund, Janus Orion Fund, Janus Triton Fund, Janus Twenty Fund, Janus Venture Fund, Janus Global Life Sciences Fund and Janus Global Technology Fund (ten of the portfolios constituting the Janus Investment Fund, hereafter referred to as the "Funds") at October 31, 2005, the results of each of their operations for the year then ended, the changes in each of their net assets and the financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Funds' management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at October 31, 2005 by correspondence with the custodian, transfer agent and brokers, and the application of alternative procedures where securities purchased had not been received, provide a reasonable basis for our opinion. /s/ PRICEWATERHOUSECOOPERS, LLP PricewaterhouseCoopers LLP Denver, Colorado December 9, 2005 84 Janus Growth Funds October 31, 2005 Additional Information(unaudited) PROXY VOTING POLICIES AND VOTING RECORD A description of the policies and procedures that the Funds use to determine how to vote proxies relating to their portfolio securities is available: (i) without charge, upon request, by calling 1-800-525-3713 (toll free); (ii) on the Fund's website at www.janus.com; and (iii) on the SEC's website at http://www.sec.gov. Additionally, information regarding each Fund's proxy voting record for the most recent twelve month period ended June 30 is also available, free of charge, through www.janus.com and from the SEC's website at http://www.sec.gov. QUARTERLY PORTFOLIO HOLDINGS The Funds file their complete portfolio holdings (schedule of investments) with the SEC for the first and third quarters of each fiscal year on Form N-Q within 60 days of the end of such fiscal quarter. The Funds' Form N-Q: (i) is available on the SEC's website at http://www.sec.gov; (ii) may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. (information on the Public Reference Room may be obtained by calling 1-800-SEC-0330); and (iii) is available without charge, upon request, by calling Janus at 1-800-525-3713 (toll free). APPROVAL OF ADVISORY AGREEMENTS DURING THE PERIOD APPROVAL OF ADVISORY AGREEMENT FOR JANUS TRITON FUND The Trustees of Janus Investment Fund, more than eighty-five percent of whom have never been affiliated with Janus Triton Fund's (the "New Fund") adviser ("Independent Trustees"), considered the proposed investment advisory agreement for the New Fund. In the course of their consideration of the agreement the Independent Trustees met in executive session and were advised by their independent legal counsel. The Independent Trustees received and reviewed a substantial amount of information provided by Janus Capital Management LLC (the "Adviser") in response to requests of the Trustees and their counsel. They also received and reviewed a considerable amount of information provided to the Trustees by their independent fee consultant. Based on their evaluation of that information and other information, the Trustees, including all of the Independent Trustees, at a meeting held on December 2, 2004, approved the investment advisory agreement for the New Fund for a period through July 1, 2006. In considering the agreements and reaching their conclusions, the Trustees reviewed and analyzed various factors that they determined were relevant, including the factors described as follows. 1. NATURE, EXTENT AND QUALITY OF SERVICES The Trustees' analysis of the nature, extent and quality of the Adviser's services to the New Fund took into account the investment objective and strategy of the New Fund and the knowledge of the Trustees gained from the Trustees' regular meetings with management throughout the prior year. In addition, the Trustees reviewed the Adviser's resources and key personnel, especially those who would be providing investment management services to the New Fund. The Trustees also considered other services to be provided to the New Fund by the Adviser, such as selecting broker-dealers for executing portfolio transactions, serving as the New Fund's administrator, monitoring adherence to the New Fund's investment restrictions, producing shareholder reports, providing support services for the Trustees and Trustee committees and overseeing the activities of other service providers, including monitoring compliance with various Fund policies and procedures and with applicable securities laws and regulations. The Trustees concluded that the nature, extent and quality of the services to be provided by the Adviser to the New Fund were appropriate and consistent with the terms of the respective proposed advisory agreements and that the New Fund was likely to benefit from services provided under its agreement with the Adviser. They also concluded that the quality of the Adviser's services to the other Janus funds had been consistent with or superior to quality norms in the industry and that the Adviser had sufficient personnel, with the appropriate education and experience, to serve the New Fund effectively and had demonstrated its continuing ability to attract and retain well qualified personnel. The Trustees also reviewed the response of the Adviser to various legal and regulatory proceedings since the fall of 2003. 2. COSTS OF SERVICES PROVIDED The Trustees examined the fee information and expense for the New Fund in comparison to information for other comparable funds as provided by Lipper Inc. They noted that both the rate of investment advisory fee and the estimated expense ratio for the New Fund were below both the median and the mean advisory fees and the expense ratios, respectively, for the respective groups of comparable funds. The Trustees considered the methodology used by the Adviser in determining compensation payable to portfolio managers and the competition for investment management Janus Growth Funds October 31, 2005 85 talent, and they also considered the competitive market for mutual funds in different distribution channels. The Trustees had also reviewed the Adviser's management fees for its institutional separate accounts and for its subadvised funds (funds for which the Adviser provides portfolio management services only). In most instances sub-advisory and institutional separate account fees are lower than the New Fund's management fee. However, the Trustees noted that the Adviser performs significant additional services for the New Fund that it does not provide to those other clients, including administrative services, oversight of the New Fund's other service providers, trustee support, regulatory compliance and numerous other services. The Trustees had also considered the profitability to the Adviser and its affiliates of their relationships with the other Janus Funds in connection with their consideration of the advisory agreements for those funds and had found the profitability not to be unreasonable. Finally, the Trustees considered the financial condition of the Adviser, which they found to be sound. The Trustees concluded that the management fees and other compensation to be paid by the New Fund to the Adviser and its affiliates were reasonable in relation to the nature and quality of the services to be provided, taking into account the fees charged by other advisers for managing comparable mutual funds with similar strategies and the fees the Adviser charges to other clients, and that the estimated overall expense ratio of the New Fund, taking into account the expense limitations agreed to by the Adviser, was comparable to or more favorable than the mean or median expense ratio of its peers. 3. BENEFITS DERIVED FROM THE RELATIONSHIP WITH THE NEW FUND The Trustees also considered benefits that would accrue to the Adviser and its affiliates from their relationship with the New Fund. The Trustees recognized that two affiliates of the Adviser would serve the New Fund as transfer agent and distributor and that the transfer agent would receive compensation from the New Fund for its services to the New Fund. The Trustees also considered the Adviser's use of commissions to be paid by the New Fund on their portfolio brokerage transactions to obtain proprietary research products and services benefiting the New Fund and/or other clients of the Adviser and the Adviser's agreement not to use the New Fund's portfolio brokerage transactions to obtain third party research through brokers. The Trustees concluded that the Adviser's use of "soft" commission dollars to obtain proprietary research products and services was consistent with regulatory requirements and would benefit the New Fund. The Trustees concluded that, other than the services to be provided by the Adviser and its affiliates pursuant to the proposed agreements and the fees to be paid by the New Fund therefor, the New Fund and the Adviser may potentially benefit from their relationship with each other in other ways. They concluded that the Adviser would benefit from the receipt of proprietary research products and services to be acquired through commissions paid on portfolio transactions of the New Fund and that the New Fund would benefit from the Adviser's receipt of those products and services as well as research products and services acquired through commissions paid by other clients of the Adviser. They also concluded that success of the New Fund could attract other business to the Adviser or its other funds and that the success of the Adviser could enhance the Adviser's ability to serve the New Fund. After full consideration of the above factors as well as other factors, the Trustees, including all of the Independent Trustees, concluded that approval of the New Fund's agreement was in the best interest of the New Fund and its shareholders. APPROVAL OF ADVISORY AGREEMENT FOR JANUS FUND, JANUS ENTERPRISE FUND, JANUS MERCURY FUND, JANUS OLYMPUS FUND, JANUS ORION FUND, JANUS TWENTY FUND, JANUS VENTURE FUND, JANUS GLOBAL LIFE SCIENCES FUND AND JANUS GLOBAL TECHNOLOGY FUND The Trustees of Janus Investment Fund, more than eighty-five percent of whom have never been affiliated with the Funds' adviser ("Independent Trustees"), oversee the management of each of the Funds and, as required by law, determine annually whether to continue the investment advisory agreements for each of the Funds and the sub-advisory agreements for the three Funds that utilize sub-advisers. In connection with their most recent consideration of those agreements for all of the Funds, the Trustees received and reviewed a substantial amount of information provided by Janus Capital (the "Adviser") and the respective sub-advisers in response to requests of the Independent Trustees and their counsel. They also received and reviewed a considerable amount of information and analysis provided to the Trustees by their independent fee consultant. Throughout their consideration of the agreements the Independent Trustees were advised by their independent legal counsel. The Independent Trustees met on two separate occasions with 86 Janus Growth Funds October 31, 2005 management to consider the agreements, and at each of those meetings they also met separately in executive session with their counsel. At a meeting held on June 14, 2005, based on their evaluation of the information provided by the Adviser, sub-advisers and the independent fee consultant and other information, the Trustees determined that the overall arrangements between the Funds and the Adviser were fair and reasonable in light of the nature and quality of the services provided by the Adviser, its affiliates and the sub-advisers, the fees charged for those services, and other matters that the Trustees considered relevant in the exercise of their business judgment. At that meeting the Trustees, including all of the Independent Trustees, unanimously approved the continuation of the investment advisory agreement for each Fund, and of the sub-advisory agreement for each sub-advised Fund, for an additional one-year period, subject to earlier termination as provided in each agreement. In considering the continuation of the agreements, the Trustees reviewed and analyzed various factors that they determined were relevant, including the factors described below, none of which by itself was considered dispositive. However, the material factors and conclusions that formed the basis for the Trustees' determination to approve the continuation of the agreements are discussed separately below. NATURE, EXTENT AND QUALITY OF SERVICES The Trustees reviewed the nature, extent and quality of the services of the Adviser and the sub-advisers to the Funds, taking into account the investment objective and strategy of each Fund and the knowledge the Trustees gained from their regular meetings with management on at least a quarterly basis. In addition, the Trustees reviewed the resources and key personnel of the Adviser and sub-advisers, especially those who provide investment management services to the Funds. The Trustees also considered other services provided to the Funds by the Adviser or sub-advisers, such as managing the execution of portfolio transactions and the selection of broker-dealers for those transactions, serving as the Funds' administrator, monitoring adherence to the Funds' investment restrictions, producing shareholder reports, providing support services for the Trustees and Trustee committees and overseeing the activities of other service providers, including monitoring compliance with various policies and procedures of the Funds and with applicable securities laws and regulations. The Trustees also reviewed the enhanced compliance program of the Adviser and the actions taken by the Adviser in response to various legal and regulatory proceedings since the fall of 2003. The Trustees concluded that the nature, extent and quality of the services provided by the Adviser or sub-adviser to each Fund were appropriate and consistent with the terms of the respective advisory agreements, that the quality of those services had been consistent with or superior to quality norms in the industry and that the Funds were likely to benefit from the continued provision of those services. They also concluded that the Adviser and each sub-adviser had sufficient personnel, with the appropriate education and experience, to serve the Funds effectively and had demonstrated its continuing ability to attract and retain well-qualified personnel. PERFORMANCE OF THE FUNDS The Trustees considered the short-term and longer term performance of each Fund. They reviewed information comparing each Fund's performance with the performance of comparable funds and peer groups identified by Lipper Inc. and with the Fund's benchmark. They concluded that the performance of most Funds was good to very good. Although the performance of some Funds lagged that of their peers for certain periods, they also concluded that the Adviser had taken appropriate steps to address the under-performance and that the more recent performance of most of those Funds had been improving. COSTS OF SERVICES PROVIDED The Trustees examined information on the fees and expenses of each Fund in comparison to information for other comparable funds as provided by Lipper. They noted that the rate of management fees for each Fund, after contractual expense limitations, was below the mean management fee rate of the respective peer group of funds selected by Lipper and for more than two-thirds of the Funds was in the lowest cost quartile. The Trustees considered the methodology used by the Adviser in determining compensation payable to portfolio managers, the very competitive environment for investment management talent and the competitive market for mutual funds in different distribution channels. The Trustees also reviewed the Adviser's management fees for its separate account clients and for its sub-advised funds (for which the Adviser provides only portfolio management services). Although in most instances sub-advisory and separate account fee rates for various investment strategies were lower than management fees for Funds having a similar strategy, the Trustees noted that the Adviser performs Janus Growth Funds October 31, 2005 87 Additional Information (unaudited) (continued) significant additional services for the Funds that it does not provide to those other clients, including administrative services, oversight of the Funds' other service providers, trustee support, regulatory compliance and numerous other services. Moreover, they noted that the spread between the average fees charged to the Funds and the fees that the Adviser charged to its separate account clients was significantly smaller than the average spread for such fees of other advisers, based on publicly available data and research conducted by their independent fee consultant. The Trustees also considered the profitability to the Adviser and its affiliates of their relationships with each Fund and found the Adviser's profitability not to be unreasonable. Finally, the Trustees considered the financial condition of the Adviser, which they found to be sound. The Trustees concluded that the management fees and other compensation payable by each Fund to the Adviser and its affiliates, as well as the fees paid by the Adviser to the sub-advisers of sub-advised Funds, were reasonable in relation to the nature and quality of the services provided, taking into account the fees charged by other advisers for managing comparable mutual funds with similar strategies and the fees the Adviser charges to other clients. The Trustees also concluded that the overall expense ratio of each Fund was reasonable, taking into account the size of the Fund, the quality of services provided by the Adviser, the investment performance of the Fund and the expense limitations agreed to by the Adviser. ECONOMIES OF SCALE The Trustees received and considered information about the potential of the Adviser to experience economies of scale as the assets of the Funds increase. They noted that, although each Fund pays an advisory fee at a fixed rate as a percentage of net assets, without any breakpoints, the management fee paid by each Fund after contractual expense limitations was below the mean management fee rate of the Fund's peer group selected by Lipper; and, for those Funds whose expenses are being reduced by the contractual expense limitations of the Adviser, the Adviser is subsidizing the Funds because they have not reached adequate scale. Moreover, as the assets of many of the Funds have declined in the past few years the Funds have benefited from having advisory fee rates that have remained constant rather than increasing as assets decline. The Trustees also noted that the Funds share directly in economies of scale through lower charges of third-party service providers based on the combined scale of all of the Funds. Based on all of the information they reviewed, the Trustees concluded that the current fee structure of each Fund was reasonable and that the current rates of fees do reflect a sharing between the Adviser and the Fund of economies of scale at the current asset level of the Fund. OTHER BENEFITS TO THE ADVISER The Trustees also considered benefits that accrue to the Adviser and its affiliates from their relationship with the Funds. They recognized that affiliates of the Adviser separately serve the Funds as transfer agent and distributor, respectively. The Trustees also considered the Adviser's use of commissions paid by most Funds on their portfolio brokerage transactions to obtain proprietary research products and services benefiting the Funds and/or other clients of the Adviser, as well as the Adviser's agreement not to use any Fund's portfolio brokerage transactions to obtain third party research through brokers. The Trustees concluded that the Adviser's use of "soft" commission dollars to obtain proprietary research products and services was consistent with regulatory requirements and was likely to benefit the Funds. The Trustees also concluded that, other than the services provided by the Adviser and its affiliates pursuant to the agreements and the fees to be paid by each Fund therefor, the Funds and the Adviser may potentially benefit from their relationship with each other in other ways. They concluded that the Adviser benefits from the receipt of proprietary research products and services acquired through commissions paid on portfolio transactions of the Funds and that the Funds benefit from the Adviser's receipt of those products and services, as well as research products and services acquired through commissions paid by other clients of the Adviser. They further concluded that success of each Fund could attract other business to the Adviser or its other Funds and that the success of the Adviser could enhance the Adviser's ability to serve the Funds. After full consideration of the above factors as well as other factors, the Trustees, including all of the Independent Trustees, concluded that the continuation of the investment advisory agreement for each Fund was in the best interest of the Fund and its shareholders. 88 Janus Growth Funds October 31, 2005 Explanations of Charts, Tables and Financial Statements (unaudited) 1. PERFORMANCE OVERVIEWS Performance overview graphs compare the performance of a hypothetical $10,000 investment in each Fund (from inception) with one or more widely used market indices. The hypothetical example does not represent the returns of any particular investment. When comparing the performance of a Fund with an index, keep in mind that market indices do not include brokerage commissions that would be incurred if you purchased the individual securities in the index. They also do not include taxes payable on dividends and interest or operating expenses incurred if you maintained a Fund invested in the index. Average annual total returns are also quoted for each Fund. Average annual total return is calculated by taking the growth or decline in value of an investment over a period of time, including reinvestment of any dividends, distributions and capital gains, then calculating the annual compounded percentage rate that would have produced the same result had the rate of growth been constant throughout the period. Average annual total return does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemptions of Fund shares. 2. SCHEDULES OF INVESTMENTS Following the performance overview section is each Fund's Schedule of Investments. This schedule reports the industry concentrations and types of securities held in each Fund on the last day of the reporting period. Securities are usually listed by type (common stock, corporate bonds, U.S. Government obligations, etc.) and by industry classification (banking, communications, insurance, etc.). Holdings are subject to change without notice. The value of each security is quoted as of the last day of the reporting period. The value of securities denominated in foreign currencies is converted into U.S. dollars. Certain short-term investments maturing within 60 days are valued at amortized cost, which approximates market value. Funds that invest in foreign securities also provide a summary of investments by country. This summary reports the Fund's exposure to different countries by providing the percentage of securities invested in each country. The country of each security represents the country in which the company is incorporated. 2A. FORWARD CURRENCY CONTRACTS A table listing forward currency contracts follows each Fund's Schedule of Investments (if applicable). Forward currency contracts are agreements to deliver or receive a preset amount of currency at a future date. Forward currency contracts are used to hedge against foreign currency risk in the Fund's long-term holdings. The table provides the name of the foreign currency, the settlement date of the contract, the amount of the contract, the value of the currency in U.S. dollars and the amount of unrealized gain or loss. The amount of unrealized gain or loss reflects the change in currency exchange rates from the time the contract was opened to the last day of the reporting period. 2B. FUTURES A table listing futures contracts follows each Fund's Schedule of Investments (if applicable). Futures contracts are contracts that obligate the buyer to receive and the seller to deliver an instrument or money at a specified price on a specified date. Futures are used to hedge against adverse movements in securities prices, currency risk or interest rates. The table provides the name of the contract, number of contracts held, the expiration date, the principal amount, value and the amount of unrealized gain or loss. The amount of unrealized gain or loss reflects the marked-to-market amount for the last day of the reporting period. 3. STATEMENT OF ASSETS AND LIABILITIES This statement is often referred to as the "balance sheet." It lists the assets and liabilities of the Funds on the last day of the reporting period. The Funds' assets are calculated by adding the value of the securities owned, the receivable for securities sold but not yet settled, the receivable for dividends declared but not yet received on stocks owned and the receivable for Fund shares sold to investors but not yet settled. The Funds' liabilities include payables for securities purchased but not yet settled, Fund shares redeemed but not yet paid and expenses owed but not yet paid. Additionally, there may be other assets and liabilities such as unrealized gain or loss on forward currency contracts. The section entitled "Net Assets Consist of" breaks down the components of the Funds' net assets. Because Funds must distribute substantially all earnings, you'll notice that a significant portion of net assets is shareholder capital. The last section of this statement reports the net asset value ("NAV") per share on the last day of the reporting period. The NAV is calculated by dividing the Funds' net assets (assets minus liabilities) by the number of shares outstanding. Janus Growth Funds October 31, 2005 89 Explanations of Charts, Tables and Financial Statements (unaudited) (continued) 4. STATEMENT OF OPERATIONS This statement details the Funds' income, expenses, gains and losses on securities and currency transactions, and appreciation or depreciation of current Fund holdings. The first section in this statement, entitled "Investment Income," reports the dividends earned from stocks and interest earned from interest-bearing securities in the Funds. The next section reports the expenses incurred by the Funds, including the advisory fee paid to the investment adviser, transfer agent fees and expenses, and printing and postage for mailing statements, financial reports and prospectuses. Expense offsets, if any, are also shown. The last section lists the increase or decrease in the value of securities held in the Funds. Funds realize a gain (or loss) when they sell their position in a particular security. An unrealized gain (or loss) refers to the change in net appreciation or depreciation of the Funds during the period. "Net Realized and Unrealized Gain/(Loss) on Investments" is affected both by changes in the market value of Fund holdings and by gains (or losses) realized during the reporting period. 5. STATEMENT OF CHANGES IN NET ASSETS This statement reports the increase or decrease in the Funds' net assets during the reporting period. Changes in the Funds' net assets are attributable to investment operations, dividends, distributions and capital share transactions. This is important to investors because it shows exactly what caused the Funds' net asset size to change during the period. The first section summarizes the information from the Statement of Operations regarding changes in net assets due to the Funds' investment performance. The Funds' net assets may also change as a result of dividend and capital gains distributions to investors. If investors receive their dividends in cash, money is taken out of the Fund to pay the distribution. If investors reinvest their dividends, the Funds' net assets will not be affected. If you compare each Fund's "Net Decrease from Dividends and Distributions" to the "Reinvested dividends and distributions," you'll notice that dividend distributions had little effect on each Fund's net assets. This is because the majority of Janus investors reinvest their distributions. The reinvestment of dividends is included under "Capital Share Transactions." "Capital Shares" refers to the money investors contribute to the Funds through purchases or withdrawals via redemptions. The "Redemption Fees" refers to the fee paid to the Funds for shares held for three months or less by a shareholder. The Funds' net assets will increase and decrease in value as investors purchase and redeem shares from the Funds. 6. FINANCIAL HIGHLIGHTS This schedule provides a per-share breakdown of the components that affect the Funds' NAV for current and past reporting periods. Not only does this table provide you with total return, it also reports total distributions, asset size, expense ratios and portfolio turnover rate. The first line in the table reflects the NAV per share at the beginning of the reporting period. The next line reports the net investment income per share, which comprises dividends and interest income earned on securities held by the Funds. Following is the total of gains/(losses), realized and unrealized. Dividends and distributions are then subtracted to arrive at the NAV per share at the end of the period. The next line reflects the average annual total return reported the last day of the period. Also included are the expense ratios, or the percentage of net assets that were used to cover operating expenses during the period. Expense ratios vary across the Funds for a number of reasons, including the differences in management fees, the average shareholder account size, the frequency of dividend payments and the extent of foreign investments, which entail greater transaction costs. The Funds' expenses may be reduced through expense reduction arrangements. These arrangements may include the use of uninvested cash balances earning interest, or balance credits. The Statement of Operations reflects total expenses before any such offset, the amount of offset and the net expenses. The expense ratios listed in the Financial Highlights reflect total expenses prior to any expense offsets (gross expense ratio) and after the expense offsets (net expense ratio). Both expense ratios reflect expenses after waivers (reimbursements), if applicable. The ratio of net investment income/(loss) summarizes the income earned less expenses divided by the average net assets of a Fund during the reporting period. Don't confuse this ratio with a Fund's yield. The net investment income ratio is not a true measure of a Fund's yield because it doesn't take into account the dividends distributed to the Fund's investors. The next ratio is the portfolio turnover rate, which measures the buying and selling activity in a Fund. Portfolio turnover is affected by market conditions, changes in the asset size of a Fund, the nature of the Fund's investments and the investment style of the portfolio manager. A 100% rate implies that an amount equal to the value of the entire portfolio is turned over in a year; a 50% rate means that an amount equal to the value of half the portfolio is traded in a year; and a 200% rate means that an amount equal to the value of the portfolio is traded every six months. 90 Janus Growth Funds October 31, 2005 Designation Requirements (unaudited) For federal income tax purposes, the Funds designated the following for the year ended October 31, 2005: DIVIDENDS RECEIVED DEDUCTION PERCENTAGE
Fund ---- Growth Janus Fund 100% Janus Mercury Fund 100% Janus Olympus Fund 100% Janus Orion Fund 36% Janus Triton Fund 53% Janus Twenty Fund 100% Specialty Growth Janus Global Technology Fund 100%
QUALIFIED DIVIDEND INCOME PERCENTAGE
Fund ---- Janus Fund 100% Janus Mercury Fund 100% Janus Olympus Fund 100% Janus Orion Fund 100% Janus Triton Fund 68% Janus Twenty Fund 100% Specialty Growth Janus Global Technology Fund 100%
Due to the uncertainty regarding procedures for identifying qualified foreign corporations, the qualified dividend income percentages reported on the 2005 Form 1099-DIV may be substantially lower than the percentages reported above. Janus Growth Funds October 31, 2005 91 Trustees and Officers (unaudited) The Funds' Statement of Additional Information includes additional information about the Trustees and officers and is available, without charge, by calling 1-800-525-3713. The following are the Trustees and officers of the Trust, together with a brief description of their principal occupations during the last five years. Each Trustee has served in that capacity since he was originally elected or appointed. The Trustees do not serve a specified term of office. Each Trustee will hold office until the termination of the Trust or his earlier death, resignation, retirement, incapacity, or removal. The retirement age for Trustees is 72. The Funds' Nominating and Governance Committee will consider nominees for the position of Trustee recommended by shareholders. Shareholders may submit the name of a candidate for consideration by the Committee by submitting their recommendations to the Trust's Secretary. Each Trustee is currently a Trustee of two other registered investment companies advised by Janus Capital: Janus Aspen Series and Janus Adviser Series. Collectively, the three registered investment companies consist of 65 series or funds. In April 2003, the Trustees established an Advisory Board to provide the Trustees advice regarding Janus Balanced Fund, Janus Growth and Income Fund, Janus Mid Cap Value Fund, Janus Small Cap Value Fund and certain other Janus funds that, in connection with the reorganization of the Berger family of funds into the Janus funds, received assets from the Berger funds. The Advisory Board was designated by a majority vote of the Trustees and served a two-year term, which ended effective March 2005. The Trust's officers are elected annually by the Trustees for a one-year term. Each portfolio manager also manages other Janus Capital accounts. Certain Trustees and officers also serve as officers of Janus Aspen Series and Janus Aspen Series. TRUSTEES
Number of Funds in Fund Positions Complex Name, Age and Held Length of Principal Occupations Overseen Other Directorships Address with Funds Time Served During the Past Five Years by Trustee Held by Trustee ------------- ---------- ----------- -------------------------- ---------- ------------------- Independent Trustees Dennis B. Mullen Chairman 3/04-Present Chief Executive Officer of Red Robin 65* Chairman of the Board (since 151 Detroit Trustee 2/71-Present Gourmet Burgers, Inc. (since 2005). 2005) and Director of Red Robin Street Formerly, private investor. Gourmet Burgers, Inc.; and Denver, CO Director of Janus World Funds 80206 Plc (Dublin-based, non-U.S. Age 62 funds). William F. Trustee 6/02-Present Executive Vice President and Chief 65 Trustee of Asian Cultural McCalpin Operating Officer of the Rockefeller Council. 151 Detroit Brothers Fund (a private family Street Foundation); and Vice President of Denver, CO Asian Cultural Council. 80206 Age 48 John W. Trustee 6/02-Present President and Chief Executive 65 Chairman of the Board and McCarter, Jr. Officer of The Field Museum of Director of Divergence Inc. 151 Detroit Natural History (Chicago, IL). (biotechnology firm); Director Street of A.M. Castle & Co. (metals Denver, CO distributor) and W.W. Grainger, 80206 Inc. (industrial distributor); Age 67 and Trustee of Harris Insight Funds Trust (19 portfolios), WTTW (Chicago public television station), the University of Chicago, and Chicago Public Education Fund.
*Mr. Mullen also serves as director of Janus World Funds Plc ("JWF"), consisting of 21 funds. Including JWF and the 65 funds comprising the Janus Funds, Mr. Mullen oversees 86 funds. 92 Janus Growth Funds October 31, 2005 TRUSTEES (CONT.)
Number of Funds in Fund Positions Complex Name, Age and Held Length of Principal Occupations Overseen Other Directorships Address with Funds Time Served During the Past Five Years by Trustee Held by Trustee ------------- ---------- ----------- -------------------------- ---------- ------------------- Independent Trustees (cont.) James T. Rothe Trustee 1/97-Present Co-founder and Managing Director of 65 Director of Red Robin Gourmet 151 Detroit Roaring Fork Capital Partners Burgers, Inc. Street (private equity firm); and Professor Denver, CO Emeritus of Business of the 80206 University of Colorado, Colorado Age 61 Springs, CO (since 2004). Formerly, Professor of Business of the University of Colorado (2002-2004); and Distinguished Visiting Professor of Business (2001-2002) of Thunderbird University (American Graduate School of International Management), Phoenix, AZ. William D. Trustee 6/84-Present Corporate Vice President and General 65 N/A Stewart Manager of MKS Instruments -- HPS 151 Detroit Products, Boulder, CO (a Street manufacturer of vacuum fittings and Denver, CO valves). 80206 Age 61 Martin H. Trustee 8/69-Present Private Investor and Consultant to 65 N/A Waldinger California Planned Unit 151 Detroit Developments. Formerly, CEO and Street President of Marwal, Inc. (homeowner Denver, CO association management company). 80206 Age 67 Interested Trustee Thomas H. Trustee 6/69-Present Retired. Formerly, President 65 N/A Bailey** (1978-2002) and Chief Executive 151 Detroit Officer (1994-2002) of Janus Capital Street or Janus Capital Corporation; Denver, CO Chairman and Director (1978-2002) of 80206 Janus Capital Corporation; President Age 68 and Director (1994-2002) of the Janus Foundation; and Director (1997-2001) of Janus Distributors, Inc.
**The Funds are treating Mr. Bailey as an "interested person" of the Trust by virtue of his past positions with Janus Capital and ownership of shares of Janus Capital's parent company. Janus Growth Funds October 31, 2005 93 Trustees and Officers (unaudited) (continued) OFFICERS
Term of Name, Office* and Age and Positions Held Length of Principal Occupations Address with Funds Time Served During the Past Five Years ------- -------------- ----------- -------------------------- William Bales Executive Vice 2/97-Present Vice President of Janus Capital and Portfolio 151 Detroit Street President and Manager for other Janus accounts. Denver, CO 80206 Portfolio Manager Age 36 Janus Venture Fund Jonathan D. Coleman Executive Vice 2/02-Present Vice President of Janus Capital and Portfolio Manager 151 Detroit Street President and for other Janus accounts. Formerly, Analyst Denver, CO 80206 Portfolio Manager (1994-1997 and 2000-2002) Janus Capital Corporation Age 34 Janus Enterprise Fund David J. Corkins Executive Vice 2/03-Present Vice President of Janus Capital Corporation and 151 Detroit Street President and Portfolio Manager for other Janus accounts. Formerly, Denver, CO 80206 Portfolio Manager Portfolio Manager (1997-2003)for Janus Growth and Age 39 Janus Mercury Fund Income Fund. C. Mike Lu Executive Vice 11/98-Present Vice President of Janus Capital and Portfolio Manager 151 Detroit Street President and for other Janus accounts. Denver, CO 80206 Portfolio Manager Age 36 Janus Global Technology Fund Thomas R. Malley Executive Vice 11/98-Present Vice President of Janus Capital and Portfolio Manager 151 Detroit Street President and for other Janus accounts. Denver, CO 80206 Portfolio Manager Age 37 Janus Global Life Sciences Fund Blaine P. Rollins Executive Vice President 1/00-Present Vice President of Janus Capital and Portfolio Manager 151 Detroit and Portfolio Manager for other Janus accounts. Denver, CO 80206 Janus Fund Age 38 Ron Sachs Executive Vice 4/00-Present Vice President of Janus Capital and Portfolio Manager 151 Detroit Street President and for other Janus accounts. Denver, CO 80206 Portfolio Manager Age 38 Janus Orion Fund Executive Vice 2/05-Present President and Portfolio Manager Janus Triton Fund Scott W. Schoelzel Executive Vice 8/97-Present Vice President of Janus Capital and Portfolio Manager 151 Detroit Street President and for other Janus accounts. Denver, CO 80206 Portfolio Manager Age 47 Janus Twenty Fund Claire Young Executive Vice 8/97-Present Vice President of Janus Capital and Portfolio Manager 151 Detroit Street President and for other Janus accounts. Denver, CO 80206 Portfolio Manager Age 40 Janus Olympus Fund Bonnie M. Howe Vice President 2/99-Present Vice President and Assistant General Counsel of Janus 151 Detroit Street Capital, Janus Distributors LLC, and Janus Services Denver, CO 80206 LLC. Age 40
*Officers are elected annually by the Trustees for a one-year term. 94 Janus Growth Funds October 31, 2005 OFFICERS (CONT.)
Term of Name, Office* and Age and Positions Held Length of Principal Occupations Address with Funds Time Served During the Past Five Years ------- -------------- ----------- -------------------------- Kelley Abbott Howes General Counsel 4/04-Present Senior Vice President and General Counsel of Janus Capital 151 Detroit Street Vice President and 12/99-Present and Janus Services LLC; and Senior Vice President and Denver, CO 80206 Secretary Assistant General Counsel of Distributors LLC. Formerly, Age 40 Vice President (1999-2005) of Janus Distributors LLC; Vice Janus President (2000-2004) and Assistant General Counsel (2002-2004) of Janus Services LLC; and Vice President and Assistant General Counsel (1999-2004) of Janus Capital. David R. Kowalski Vice President and 6/02-Present Senior Vice President and Chief Compliance Officer of Janus 151 Detroit Street Chief Compliance Capital, Janus Distributors LLC, and Janus Services LLC; Denver, CO 80206 Officer Chief Compliance Officer of Bay Isle Financial LLC; and Age 48 Vice President and Chief Compliance Officer of Enhanced Investment Technologies, LLC. Formerly, Vice President of Janus Capital (2000-2005), Janus Distributors LLC (2000-2001), and Janus Services LLC (2004-2005); and Assistant Vice President of Janus Services LLC (2002-2004). Girard C. Miller** President and Chief 1/03-Present Executive Vice President and Chief Operating Officer of 151 Detroit Street Executive Officer Janus Capital Group Inc.and Janus Capital; President of Denver, CO 80206 Janus Distributors LLC and Janus Capital International LLC; Age 54 Executive Vice President of Janus Services LLC; President and Director of Janus Management Holdings Corporation; and Chief Operating Officer and President of Capital Group Partners, Inc. Formerly, Director of Capital Group Partners, Inc. (2003-2004); and President and Chief Executive Officer of ICMA Retirement Corporation (1993-2003). Jesper Nergaard Chief Financial Officer 3/05-Present Vice President of Janus Capital. Formerly, Director of 151 Detroit Street Financial Reporting for OppenheimerFunds, Inc. (2004-2005); Denver, CO 80206 Vice President, Site Manager and First Vice President of Mellon Global Age 43 Treasurer, and 2/05-Present Securities Services (2003); and Director of Fund Principal Accounting, Project Development, and Training of INVESCO Accounting Officer Funds Group (1994-2003).
*Officers are elected annually by the Trustees for a one-year term. **Mr. Miller intends to resign his positions with Janus Capital Group Inc. and its subsidiaries effective January 3, 2006. A successor to his positions with the Trust will be appointed by the Trustees prior to this date. Janus Growth Funds October 31, 2005 95 Notes 96 Janus Growth Funds October 31, 2005 Notes Janus Growth Funds October 31, 2005 97 JANUS PROVIDES ACCESS TO A WIDE RANGE OF INVESTMENT DISCIPLINES. GROWTH Janus growth funds focus on companies believed to be the leaders in their respective industries, with solid management teams, expanding market share, margins and efficiencies. CORE Janus core funds seek investments in more stable and predictable companies. These funds look for a strategic combination of steady growth and for certain funds, some degree of income. RISK-MANAGED Janus risk-managed funds seek to outperform their respective indices while maintaining a risk profile equal to or lower than the index itself. Managed by INTECH, these funds use a mathematical process in an attempt to build a more "efficient" portfolio than the index. VALUE Janus value funds invest in companies they believe are poised for a turnaround or are trading at a significant discount to fair value. The goal is to gain unique insight into a company's true value and identify and evaluate potential catalysts that may unlock shareholder value. INTERNATIONAL & GLOBAL Janus international and global funds seek to leverage Janus' research capabilities by taking advantage of inefficiencies in foreign markets, where accurate information and analytical insight are often at a premium. BOND & MONEY MARKET Janus bond funds attempt to provide less risk relative to equities while seeking to deliver a competitive total return through high current income and appreciation. Janus money market funds seek maximum current income consistent with stability of capital. For more information about our funds, go to www.janus.com. Please consider the charges, risks, expenses and investment objectives carefully before investing. For a prospectus containing this and other information, please call Janus at 1-800-525-3713 or download the file from www.janus.com. Read it carefully before you invest or send money. An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. (JANUS LOGO) 151 Detroit Street Denver, CO 80206 1-800-525-3713 Funds distributed by Janus Distributors LLC (12/05) C-1205-10 111-02-105 12-05 2006 Semiannual Report Janus Growth Funds Growth Janus Fund Janus Enterprise Fund Janus Mercury Fund Janus Olympus Fund Janus Orion Fund Janus Triton Fund Janus Twenty Fund Janus Venture Fund Specialty Growth Janus Global Life Sciences Fund Janus Global Technology Fund Look Inside. . . o Portfolio manager perspective o Investment strategy behind your fund o Fund performance, characteristics and holdings (JANUS LOGO) Table of Contents JANUS GROWTH FUNDS President and CEO Letter to Shareholders 1 Portfolio Managers' Commentaries and Schedules of Investments Janus Fund 6 Janus Enterprise Fund 14 Janus Mercury Fund 21 Janus Olympus Fund 28 Janus Orion Fund 35 Janus Triton Fund 41 Janus Twenty Fund 47 Janus Venture Fund 52 Janus Global Life Sciences Fund 59 Janus Global Technology Fund 65 Statements of Assets and Liabilities 72 Statements of Operations 74 Statements of Changes in Net Assets 76 Financial Highlights 80 Notes to Schedules of Investments and Securities Sold Short 85 Notes to Financial Statements 89 Additional Information 97 Explanations of Charts, Tables and Financial Statements 101 Shareholder Meeting 104 Please consider the charges, risks, expenses and investment objectives carefully before investing. For a prospectus containing this and other information, please call Janus at 1-800-525-3713 or download the file from www.janus.com. Read it carefully before you invest or send money. CEO'S LETTER (GARY BLACK PHOTO) Gary Black President and Chief Executive Officer DEAR SHAREHOLDERS, Before offering my perspective on the economy, the markets and the progress we've made at Janus during the six months ended April 30, 2006, I'd like to thank you for your continued confidence and investment in Janus' funds. Your unwavering support is the driving force behind our desire to deliver the strong, consistent fund performance that you've come to expect from Janus. As you'll read on the following pages, our fund managers continued to deliver excellent performance -- for the one-year period ended April 30, 2006, 68% of Janus' retail funds ranked within Lipper's top two quartiles based on total returns. For the five years ended April 30, 2006, 57% of our retail funds earned first- or second-quartile Lipper rankings -- up from 30% a year ago. Over the past three years, Janus' U.S. equity funds have gained an average of 21% annually, versus a 12% gain for the Russell 1000(R) Growth Index and a 15% gain for the S&P 500(R) Index. (See performance and complete ranking figures on pages 3-4). STAYING FOCUSED ON CONSISTENT PERFORMANCE While we're pleased to report solid performance across different time periods, our goal is to ensure consistency in our investment returns across different market cycles as well. We employ several tools to help us meet this goal, beginning with detailed research processes that help us single out what we feel are the best investments for our funds. The very talented and experienced individuals at the heart of these processes -- our research analysts and portfolio managers -- are what distinguish Janus from its asset management peers. Additionally, our robust risk management tools and disciplined buy/sell strategies help in our efforts to deliver consistent performance over full market cycles. ...OUR GOAL IS TO ENSURE CONSISTENCY IN OUR INVESTMENT RETURNS ACROSS DIFFERENT MARKET CYCLES... We recently appointed Chief Investment Officers to oversee our various investment disciplines. Jonathan Coleman and David Decker oversee our U.S. Growth and Core funds, Jason Yee is responsible for our Global and International funds, and Gibson Smith has oversight of our Fixed-Income and Money Market funds. In their respective roles, these individuals serve as player-coaches with the portfolio managers and analysts who work with them and focus on driving performance of the products they oversee. Combined, we believe these elements of our research process will help us as we strive to deliver strong fund performance in all market environments. CORPORATE PROFITS REMAINED STRONG On that note, I'd like to summarize the environment we -- and other investors -- operated in during the past six months. Stronger-than-expected economic data and growing anticipation of a possible conclusion to monetary tightening by the Federal Reserve drove U.S. equity markets higher during the period. Notwithstanding a sharp spike in energy prices in early 2006 and clear signs of a slowdown in the U.S. housing market, corporate profits continued to grow at a healthy clip and consumer spending remained robust. Financial markets observed a smooth transition in leadership at the Federal Reserve Board after Chairman Alan Greenspan's long tenure, and investors appeared to conclude that incoming Chairman Ben Bernanke would pursue a similar course to that of his predecessor, namely, to contain inflation and promote long-term economic growth. Perhaps the biggest risk, in our opinion, is that the Federal Reserve could increase short-term rates too aggressively to curb potential inflation, which could cause longer-term growth to stall. Areas of particular strength in the market included economically sensitive sectors such as financial services, industrials and energy, all of which benefited from continued evidence of strong U.S. economic growth. Overseas markets also delivered healthy returns, with Japan's economic recovery reawakening domestic Japanese investors to the Japanese equity market, and rapid industrialization and growing consumer wealth driving significant gains in emerging equity markets like Brazil, China and India. GREATER DIVERSIFICATION SOUGHT BY INVESTORS It was encouraging to see equity markets worldwide climb higher during the period. And yet, if there's one thing that all investors can consistently count on, it's that there is no consistency in the markets. This year's gains could be next year's losses. With this in mind, more and more investors seem to be making a concerted effort to maintain a Janus Growth Funds April 30, 2006 1 CONTINUED diversified portfolio. In recognition of this, we launched Janus Smart Portfolios in late December 2005. These Portfolios are geared toward investors who may not have the time to allocate their assets according to their specific goals and risk tolerance. Janus Smart Portfolios invest in a combination of funds that leverage the fundamental research approach of Janus with funds supported by the risk-managed, mathematical investment process of INTECH (a Janus subsidiary). We believe the unique combination of these two different investment styles, assembled with the view of providing long-term diversification and market opportunity, will be of great benefit to shareholders as they invest toward their goals. And with three different portfolios to choose from -- Growth, Moderate and Conservative -- investors can choose the level of risk they are willing to take in pursuit of their goals. A COMPELLING CASE FOR GROWTH In summary, the economic outlook appears positive to us, and we find valuations for U.S. equities attractive. The combination of those two factors continues to make a solid case for growth investing. Although future interest rate increases are becoming less likely, we will continue to closely monitor the actions of the Federal Reserve. Regardless of the macroeconomic climate ahead, we remain dedicated to rewarding your trust and confidence in Janus with strong, consistent fund performance. Sincerely, /s/ GARY BLACK Gary Black Chief Executive Officer and Chief Investment Officer 2 Janus Growth Funds April 30, 2006 Lipper Rankings
LIPPER RANKINGS - BASED ON TOTAL RETURN AS OF 4/30/06 ------------------------ ONE YEAR ------------------------ LIPPER PERCENTILE RANK/ CATEGORY RANK (%) TOTAL FUNDS -------------------------------------------- ----------- ----------- JANUS INVESTMENT FUNDS (Inception Date) Janus Fund (2/70) Large-Cap Growth Funds 43 296/698 Janus Enterprise Fund(1) (9/92) Mid-Cap Growth Funds 58 324/563 Janus Mercury Fund(1) (5/93) Large-Cap Growth Funds 31 210/698 Janus Olympus Fund(1) (12/95) Multi-Cap Growth Funds 44 186/423 Janus Orion Fund (6/00) Multi-Cap Growth Funds 3 11/423 Janus Triton Fund (2/05) Small-Cap Growth Funds 12 59/533 Janus Twenty Fund* (4/85) Large-Cap Growth Funds 6 36/698 Janus Venture Fund* (4/85) Small-Cap Growth Funds 59 311/533 Janus Global Life Sciences Fund (12/98) Health/Biotechnology Funds 33 57/176 Janus Global Technology Fund (12/98) Science & Technology Funds 33 94/292 Janus Balanced Fund(1) (9/92) Mixed-Asset Target Allocation Moderate Funds 13 49/395 Janus Contrarian Fund (2/00) Multi-Cap Core Funds 1 3/834 Janus Core Equity Fund(1) (6/96) Large-Cap Core Funds 2 9/864 Janus Growth and Income Fund(1) (5/91) Large-Cap Core Funds 5 35/864 Janus Research Fund (2/05) Multi-Cap Growth Funds 8 31/423 INTECH Risk-Managed Stock Fund (2/03) Multi-Cap Core Funds 58 483/834 Janus Mid Cap Value Fund - Inv(1)(2) (8/98) Mid-Cap Value Funds 75 201/267 Janus Small Cap Value Fund - Inv*(2) (10/87) Small-Cap Core Funds 97 612/633 Janus Federal Tax-Exempt Fund (5/93) General Municipal Debt Funds 60 155/260 Janus Flexible Bond Fund(1) (7/87) Intermediate Investment Grade Debt Funds 37 172/473 Janus High-Yield Fund (12/95) High Current Yield Funds 38 164/439 Janus Short-Term Bond Fund(1) (9/92) Short Investment Grade Debt Funds 30 68/228 Janus Global Opportunities Fund(1) (6/01) Global Funds 100 360/362 Janus Overseas Fund (1) (5/94) International Funds 1 2/910 Janus Worldwide Fund (1) (5/91) Global Funds 94 339/362 LIPPER RANKINGS - BASED ON TOTAL RETURN AS OF 4/30/06 ---------------------------------------------------------------------------- THREE YEAR FIVE YEAR TEN YEAR ------------------------ ------------------------ ------------------------ PERCENTILE RANK/ PERCENTILE RANK/ PERCENTILE RANK/ RANK (%) TOTAL FUNDS RANK (%) TOTAL FUNDS RANK (%) TOTAL FUNDS ----------- ----------- ----------- ----------- ----------- ----------- JANUS INVESTMENT FUNDS (Inception Date) Janus Fund (2/70) 48 280/590 79 374/474 44 72/165 Janus Enterprise Fund(1) (9/92) 30 134/461 72 257/357 69 88/128 Janus Mercury Fund(1) (5/93) 9 53/590 65 306/474 11 18/165 Janus Olympus Fund(1) (12/95) 53 190/359 66 188/288 27 25/95 Janus Orion Fund (6/00) 1 3/359 3 8/288 N/A N/A Janus Triton Fund (2/05) N/A N/A N/A N/A N/A N/A Janus Twenty Fund* (4/85) 2 6/590 12 56/474 2 2/165 Janus Venture Fund* (4/85) 10 45/453 20 70/363 38 44/117 Janus Global Life Sciences Fund (12/98) 25 39/161 43 55/127 N/A N/A Janus Global Technology Fund (12/98) 43 113/265 58 132/230 N/A N/A Janus Balanced Fund(1) (9/92) 52 140/271 39 81/210 3 2/81 Janus Contrarian Fund (2/00) 1 3/588 3 11/421 N/A N/A Janus Core Equity Fund(1) (6/96) 3 20/746 3 16/618 N/A N/A Janus Growth and Income Fund(1) (5/91) 9 65/746 15 90/618 3 5/240 Janus Research Fund (2/05) N/A N/A N/A N/A N/A N/A INTECH Risk-Managed Stock Fund (2/03) 22 129/588 N/A N/A N/A N/A Janus Mid Cap Value Fund - Inv(1)(2) (8/98) 53 114/216 35 51/146 N/A N/A Janus Small Cap Value Fund - Inv*(2) (10/87) 91 456/504 65 243/373 N/A N/A Janus Federal Tax-Exempt Fund (5/93) 89 221/249 71 156/221 86 122/142 Janus Flexible Bond Fund(1) (7/87) 36 146/406 24 74/320 24 35/147 Janus High-Yield Fund (12/95) 72 276/385 55 169/311 9 10/111 Janus Short-Term Bond Fund(1) (9/92) 21 38/181 49 63/129 20 13/66 Janus Global Opportunities Fund(1) (6/01) 54 154/286 N/A N/A N/A N/A Janus Overseas Fund(1) (5/94) 1 2/770 19 114/599 4 8/230 Janus Worldwide Fund(1) (5/91) 98 279/286 99 217/220 68 56/82 LIPPER RANKINGS - BASED ON TOTAL RETURN AS OF 4/30/06 ------------------------ SINCE INCEPTION ------------------------ PERCENTILE RANK/ RANK (%) TOTAL FUNDS ----------- ----------- JANUS INVESTMENT FUNDS (Inception Date) Janus Fund (2/70) 5 1/19 Janus Enterprise Fund(1) (9/92) 40 20/49 Janus Mercury Fund(1) (5/93) 2 1/84 Janus Olympus Fund(1) (12/95) 15 13/88 Janus Orion Fund (6/00) 27 61/230 Janus Triton Fund (2/05) 3 14/520 Janus Twenty Fund* (4/85) 3 1/40 Janus Venture Fund* (4/85) 10 1/10 Janus Global Life Sciences Fund (12/98) 31 15/48 Janus Global Technology Fund (12/98) 23 17/76 Janus Balanced Fund(1) (9/92) 4 1/27 Janus Contrarian Fund (2/00) 9 29/332 Janus Core Equity Fund(1) (6/96) 2 3/248 Janus Growth and Income Fund(1) (5/91) 6 5/96 Janus Research Fund (2/05) 7 26/410 INTECH Risk-Managed Stock Fund (2/03) 26 150/586 Janus Mid Cap Value Fund - Inv(1)(2) (8/98) 5 4/81 Janus Small Cap Value Fund - Inv*(2) (10/87) N/A N/A Janus Federal Tax-Exempt Fund (5/93) 83 64/77 Janus Flexible Bond Fund(1) (7/87) 24 6/25 Janus High-Yield Fund (12/95) 3 3/104 Janus Short-Term Bond Fund(1) (9/92) 43 11/25 Janus Global Opportunities Fund(1) (6/01) 23 50/224 Janus Overseas Fund(1) (5/94) 2 2/120 Janus Worldwide Fund(1) (5/91) 28 5/17
(1)The date of the Lipper ranking is slightly different from when the Fund began operations since Lipper provides fund rankings as of the last day of the month or the first Thursday after fund inception. (2)Rating is for the Investor share class only; other classes may have different performance characteristics. *Closed to new investors. Data presented represents past performance, which is no guarantee of future results. There is no assurance that the investment process will consistently lead to successful investing. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. Janus Growth Funds April 30, 2006 3 Performance
AVERAGE ANNUAL TOTAL RETURN FOR THE PERIODS ENDED 4/30/06 --------------------------------------------------------------- SINCE ONE YEAR THREE YEAR FIVE YEAR 10 YEAR INCEPTION ---------- ---------- ---------- ---------- ---------- FUND/INDEX (Inception Date) Janus Fund(2/70) 17.28% 11.85% (2.62)% 6.67% 13.86% Janus Contrarian Fund(1)(2)(3)(2/00) 38.81% 31.63% 10.68% N/A 9.63% Janus Core Equity Fund(3)(6/96) 31.00% 19.14% 5.74% N/A 13.43% Janus Enterprise Fund(9/92) 29.21% 22.74% 1.87% 6.69% 11.63% Janus Growth and Income Fund(5/91) 25.82% 16.82% 3.44% 12.02% 13.80% Janus Mercury Fund(5/93) 19.00% 15.42% (1.74)% 8.56% 12.70% Janus Mid Cap Value Fund - Investor Shares(3)(4)(8/98) 20.64% 23.27% 12.45% N/A 17.97% Janus Olympus Fund(12/95) 26.44% 16.83% 0.45% 9.78% 11.77% Janus Orion Fund(1)(5)(6)(7)(6/00) 41.50% 27.95% 10.72% N/A (0.73)% Janus Small Cap Value Fund - Investor Shares*(10/87) 20.30% 20.76% 10.80% 15.60% N/A Janus Twenty Fund*(4)(6)(4/85) 24.20% 19.02% 2.05% 10.70% 13.48% Janus Venture Fund*(8)(4/85) 32.58% 27.53% 9.14% 9.29% 13.88% INTECH Risk-Managed Stock Fund(3)(2/03) 17.81% 19.16% N/A N/A 20.50% S&P 500(R) Index 15.42% 14.68% 2.70% 8.94% N/A Russell 1000(R) Growth Index 15.18% 12.05% (0.76)% 6.21% N/A
Data presented reflects past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 800.525.3713 or visit www.janus.com for performance current to the most recent month-end. The average performance of Janus' U.S. equity funds over the past three years was calculated using the three-year total returns of the 13 funds contained in the performance chart above. The 13 funds reflected in the performance chart above are those which Janus categorizes as U.S. equity funds and which have performance histories of three or more years. *Closed to new investors (1)This Fund may have significant exposure to emerging markets. In general, emerging market investments have historically been subject to significant gains and/or losses. As such, the Fund's returns and NAV may be subject to such volatility. (2)The Fund has experienced significant gains due, in part, to its investments in India. While holdings are subject to change without notice, the Fund's returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic conditions in India. (3)The Fund will invest at least 80% of its net assets in the type of securities described by its name. (4)Due to certain investment strategies, the Fund may have an increased position in cash. (5)The Fund has experienced significant gains due, in part, to its investments in Brazil. While holdings are subject to change without notice, the Fund's returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic conditions in Brazil. (6)Returns have sustained significant gains due to market volatility in the healthcare sector. (7)Returns have sustained significant gains due to market volatility in the financials sector. (8)This Fund has been significantly impacted, either positively or negatively, by investing in initial public offerings (IPOs). Total return includes reinvestment of dividends, distributions and capital gains. A fund's performance may be affected by risks that include those associated with non-diversification, investments in foreign securities and emerging markets, non-investment grade debt securities, undervalued or overlooked companies, companies with relatively small market capitalizations and investments in specific industries or countries. Please see a Janus prospectus or janus.com for more information about fund holdings and details. The proprietary mathematical process used by Enhanced Investment Technologies LLC ("INTECH") may not achieve the desired results. Since the portfolio is regularly balanced, this may result in a higher portfolio turnover rate, higher expenses and potentially higher net taxable gains or losses compared to a "buy and hold" or index fund strategy. There is no assurance that the investment process will consistently lead to successful investing. Returns shown for Janus Mid Cap Value Fund prior to 4/21/03 are those of Berger Mid Cap Value Fund. Returns shown for Janus Small Cap Value Fund prior to 4/21/03 are those of Berger Small Cap Value Fund. Effective 2/1/06, Blaine Rollins is no longer the portfolio manager of Janus Fund, and David Corkins is now the Fund manager. Effective 2/1/06, David Corkins is no longer the portfolio manager of Janus Mercury Fund. A research team now selects the investments for Janus Mercury Fund led by the Director of Research, Jim Goff. Effective 2/28/06, Janus Risk-Managed Stock Fund changed its name to INTECH Risk-Managed Stock Fund. Janus Capital Group Inc. has a 30% ownership stake in the investment advisory business of Perkins, Wolf, McDonnell and Company, LLC. INTECH is a subsidiary of Janus Capital Group Inc. A Fund's portfolio may differ significantly from the securities held in the indices. The indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual portfolio. The S&P 500(R) Index is the Standard & Poor's composite index of 500 stocks, a widely recognized, unmanaged index of common stock prices. The Russell 1000(R) Growth Index measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. 4 Janus Growth Funds April 30, 2006 Useful Information About Your Fund Report PORTFOLIO MANAGER COMMENTARIES The portfolio manager commentaries in this report include valuable insight from the portfolio managers as well as statistical information to help you understand how your Fund's performance and characteristics stack up against those of comparable indices. Please keep in mind that the opinions expressed by the portfolio managers in their commentaries are just that: opinions. They are a reflection of their best judgment at the time this report was compiled, which was April 30, 2006. As the investing environment changes, so could their opinions. These views are unique to each manager and aren't necessarily shared by their fellow employees or by Janus in general. FUND EXPENSES We believe it's important for our shareholders to have a clear understanding of Fund expenses and the impact they have on investment return. THE FOLLOWING IS IMPORTANT INFORMATION REGARDING EACH FUND'S EXPENSE EXAMPLE, WHICH APPEARS IN EACH FUND'S PORTFOLIO MANAGER COMMENTARY WITHIN THIS SEMIANNUAL REPORT. PLEASE REFER TO THIS INFORMATION WHEN REVIEWING THE EXPENSE EXAMPLE FOR EACH FUND. Example As a shareholder of a Fund, you incur two types of costs: (1) transaction costs, including redemption fees (where applicable) (and any related exchange fees) and (2) ongoing costs, including management fees and other Fund expenses. The example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the six-month period from November 1, 2005 to April 30, 2006. Actual Expenses The first line of the table in each example provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During the Period" to estimate the expenses you paid on your account during the period. Hypothetical Example for Comparison Purposes The second line of the table in each example provides information about hypothetical account values and hypothetical expenses based upon the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Janus Capital Management LLC ("Janus Capital") has contractually agreed to waive Janus Triton Fund's total operating expenses, excluding brokerage commissions, interest, taxes and extraordinary expenses, to certain limits until at least March 1, 2007. Expenses in the example reflect the application of this waiver. Had the waiver not been in effect, your expenses would have been higher. More information regarding the waiver is available in the Funds' prospectuses. Please note that the expenses shown in the tables are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as redemption fees (where applicable). These fees are fully described in the prospectus. Therefore, the second line of each table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher. Janus Growth Funds April 30, 2006 5 Janus Fund (unaudited) TICKER: JANSX FUND SNAPSHOT For more than 35 years, this traditional growth fund has exemplified Janus' research and stock-picking abilities. (DAVID CORKINS PHOTO) David Corkins portfolio manager PERFORMANCE OVERVIEW I very much appreciate the opportunity to speak directly with you for the first time since taking over management of Janus Fund effective February 1, 2006. My hope with this letter is to review the Fund's performance over the last 6 months, further explain our investment process so that all shareholders understand what we do, and finally, share our outlook for the Fund going forward. PERFORMANCE REVIEW Our goal with the Fund is superior long-term returns for shareholders. What does that mean in practice? These potential long-term returns start with positive absolute performance and follow with consistent execution in up and down markets. For the six months ending April 30, 2006, Janus Fund returned 10.51%. By comparison, our primary benchmark the Russell 1000(R) Growth Index returned 7.06% and our secondary benchmark the S&P 500(R) Index returned 9.64%. OUR INVESTMENT PROCESS Some of the best advice I ever received about managing investments was succinct: "Know your companies." We believe that understanding the leverage points in a company's business model allows you to properly assess risk as well as calculate the free cash flow and returns on invested capital that drive value creation. Knowing your companies also allows you to potentially take advantage of the inherent volatility in the market. You are more likely to be able to buy when others are fearful and sell when others are greedy. Most importantly, knowing my companies helps me invest with conviction (more concentrated and with lower turnover) and hold on for the long-run. Likewise, I believe it is imperative that investors in Janus Fund understand our investment process and strategy. I believe in the classic Janus investment style that I learned from previous portfolio managers, the most influential being Tom Bailey, Jim Craig, Tom Marsico and Helen Young Hayes. For me, this style means fundamental, grass-roots growth investing which is a combination of qualitative and quantitative analysis. The quantitative aspect means in-depth, detailed, financial modeling of a company to understand the leverage points in the business, the free cash flow, and the returns on capital. This model allows me to move onto the qualitative focus, which is using the financial information to speak with management, competitors and suppliers to gain a more complete understanding of the company. The next piece of the investment mosaic is to understand the valuation, risk and reward for this investment given the current price of the security and the macro-economic factors impacting it. Finally, the last part of the puzzle is to consider overall portfolio construction, risk and return in addition to the sum of each of the individual securities. What I've learned over the last 10 years managing money is that this investment method must be iterative -- it's a never-ending process of building a deeper and deeper knowledge base about a company. The better your model, the more information you can extract; the more information you get the better your model. Like most businesses, at the end of the day, the harder you work, the better your results. I also believe it is imperative to think like a partner -- I would like my fellow investors to have a good appreciation for their manager's investment in the Fund, as well as how I am compensated for managing the Fund. In that vein, I have made a 7-figure investment in the Fund because I believe in the team and our investment process. I am eating our cooking. In terms of compensation, I am strongly incented with pay for performance: my incentive pay is primarily based on how well the Fund performs relative to its peers over a three-year basis, as well as whether the return is positive on an absolute basis. WHAT WENT RIGHT? An eclectic group of securities performed quite strongly, and the Fund performed well within the pharmaceutical, semiconductor, financial and capital goods sectors. Since our primary focus is on individual company selection, rather than large sector trading bets, one measure of health for the Fund is whether the winners were from diverse areas of the economy. The largest single contributor to the Fund's results was Boeing. Boeing is an excellent example of what we look for in a stock: strong competitive positioning, attractive industry dynamics, improving free cash flow and returns on invested capital and management focused on shareholder value. As the leading American aerospace manufacturer, Boeing has benefited from a 6 Janus Growth Funds April 30, 2006 (unaudited) continued expansion of the aerospace cycle as demand from emerging markets, like China, India and the Middle East, accelerates for fuel-efficient planes given high commodity input costs. Low-cost carriers have also started to spend on next generation planes given the change in domestic networks from hub-and-spoke to point-to-point. Legacy carriers such as United are emerging from bankruptcy and we believe will likely extend the cycle towards 2010 as they pull in orders to remain competitive with the lower-cost carriers. At the same time, a major competitor Airbus has stumbled in next generation product design with a poorly received A350. Finally, we believe a new CEO at Boeing will likely bring a much needed focus on costs, production and return on capital. We have done extensive research on Boeing and the aerospace industry. We've met with management at various levels of the company as well as interviewed numerous competitors and suppliers, both domestically and overseas. Primary analyst Jeremiah Buckley and the rest of the team continue to build our financial model of the company and gain a deeper knowledge base of the industry. One area of caution remains the defense business, which we believe is seeing a possible slowdown in orders as the U.S. defense cycle wanes from previous years' strength. Other contributors to the Fund's strong performance were financial companies such as JP Morgan Chase, which is beginning to show the fruits of its waste-cutting and renewed focus on revenue growth and returns. Analyst Gabe Bodhi has done excellent work on this company, which holds a particular interest for me since I worked at its predecessor for seven years before I joined Janus. We hope new leadership at the company will drive returns on capital and free cash flow on a sustainable basis. I believe our healthcare team does exceptional fundamental research under the aegis of Tom Malley. Analyst Tony Yao helped lead the effort on Celgene which gained over 50% for shareholders due to strong clinical trials for Revlimid. Final product launch for the drug implies long-term success in multiple myeloma (a bone marrow-based cancer) and myelodysplastic syndromes (MDS -- a blood-borne cancer) indications, as well as possible success in chronic lymphocytic leukemia (CLL), another blood cancer. Celgene also has a deep pipeline behind current products in the areas of sickle-cell and inflammatory disease. WHAT WENT WRONG? It's usually more productive to focus on what went wrong rather than over-emphasizing those areas and stocks that performed well. Learning from one's mistakes is a key to longevity in this business. Two sectors in particular caused relative weakness in the Fund's performance: healthcare services and media. The biggest underperformers in these areas were UnitedHealth Group and Comcast. We have cut our position in UnitedHealth Group meaningfully and sold our position in Comcast. UnitedHealth Group has been a long-time holding in the Fund. The company is the leading HMO and specialty healthcare services provider in the United States. Operational tenets run deep within the company, pricing and margins remain attractive, demographics continue to drive demand and free cash flow generation is strong. Emerging specialty businesses diversify the business mix from more cyclical commercial underwriting trends. So with all those competitive strengths, what caused us to meaningfully reduce our position in the name? First, the company's outperformance caused its valuation to rise close to our fair value and meaningfully shifted the risk/reward profile; second, industry dynamics have resulted in an excess of capital and nascent signs of price competition; and third, serious questions have arisen regarding options grant timing. We realized profits in the name and reinvested the proceeds in other stocks with more attractive risk/reward prospects. Comcast was eliminated completely. Another long-time holding of the Fund, Comcast was sold as the company's business model continues to become more capital intensive and competitive threats from phone and satellite providers rise. Although cable systems offer an excellent gateway into the home, we believe the transition of the media business towards digital and Internet protocols (IP) threatens the primacy of the cable network model and implies lower returns in the future. We are looking diligently in the media sector for attractive businesses as many of these leading franchises have been sold by disappointed investors looking for growth. Although valuations are becoming much more attractive, many of the high-margin business models are under assault from the move from analog to digital distribution as well as the emergence of the Internet as a media delivery vehicle. We have yet to make significant new investments in the sector. We also remain cautious on the consumer discretionary areas of the economy in the short-run as a combination of rising energy prices, increased debt payments driven by interest rate increases, and higher healthcare costs squeezes the U.S. consumer. In the longer-term, we believe these areas are ripe for investment as the cyclical pressures ease. Janus Growth Funds April 30, 2006 7 Janus Fund (unaudited) LOOKING FORWARD Our outlook remains cautious. Markets have performed strongly year-to-date due to a combination of very strong economic data as well as the anticipation of a conclusion to Federal Reserve monetary tightening. Small-cap stocks and emerging markets have led the way with strong performance coming in just a few months. Yet clearly the market is in transition after three years of strong outperformance. This transition is driven by higher interest rates and a weaker U.S. dollar. We're cautiously watching several signs to better understand how this transition plays out. One area of focus is monetary liquidity and the U.S. dollar. Money supply growth has been slowing sequentially, Fed Repos have slowed dramatically, yet money flow into equities is quite strong and foreigners have been the driving force. Foreigners were huge beneficiaries of the dollar index, which rallied strongly throughout 2005. In 2006, however, the dollar index is beginning to roll over and the question remains how much of a rate increase or non-inflationary growth is necessary to keep foreigners in our currency and equity market. Within Janus Fund, our response in general has been to transition from business models that are dependent on an economic tailwind to stronger franchises that have more control over their own sales and margins regardless of macro-economic conditions. In addition, we are cautiously watching the yield curve and U.S. dollar in anticipation of further transition as the economy continues to move forward. In sum, I am honored with the opportunity to manage Janus Fund. My investment and incentives are aligned with yours. As a former English major, I can't finish this letter without a favorite quote from an old media hand like Samuel Goldwyn: "The harder I work, the luckier I get." It gives me comfort to know the entire investment team at Janus is working very hard every day to find attractive opportunities to grow our principal. Thank you for your investment in Janus Fund. JANUS FUND AT A GLANCE 5 LARGEST CONTRIBUTORS TO PERFORMANCE -- HOLDINGS
CONTRIBUTION ------------ Boeing Co. Commercial jet aircraft company - U.S. 0.93% JP Morgan Chase & Co. Financial products and services provider - U.S. 0.46% Nokia Oyj (ADR) Telecommunications company - Finland 0.44% Companhia Vale do Rio Doce (ADR) Iron ore producer/seller - Brazil 0.44% Schlumberger, Ltd. (U.S. Shares) Oil services company - U.S. 0.42%
5 LARGEST DETRACTORS FROM PERFORMANCE -- HOLDINGS
CONTRIBUTION ------------ UnitedHealth Group, Inc. Organized health systems company - U.S. (0.42%) Yahoo!, Inc. Global Internet media company - U.S. (0.37%) Alcon, Inc. (U.S. Shares) Eye care company - U.S. (0.32%) Juniper Networks, Inc. Internet infrastructure solutions provider - U.S. (0.26%) Caremark Rx, Inc. Pharmaceutical services provider - U.S. (0.23%)
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING ----------------- ----------------- --------------------------- Capital Goods 1.97% 9.84% 11.43% Diversified Financials 1.52% 6.47% 3.65% Materials 1.33% 5.42% 2.06% Energy 1.28% 5.69% 3.69% Technology Hardware and Equipment 1.20% 8.81% 10.64%
5 LOWEST CONTRIBUTORS/DETRACTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING ------------------ ----------------- --------------------------- Healthcare Equipment & Services (1.33%) 10.91% 9.05% Food & Staples Retailing (0.19%) 2.07% 3.47% Media (0.10%) 0.94% 3.03% Food, Beverage & Tobacco (0.01%) 1.65% 4.48% Commercial Services & Supplies 0.00% 0.00% 1.03%
8 Janus Growth Funds April 30, 2006 (unaudited) 5 LARGEST EQUITY HOLDINGS --(% of Net Assets) AS OF APRIL 30, 2006 Boeing Co. Aerospace and Defense 3.3% Procter & Gamble Co. Cosmetics and Toiletries 3.1% JP Morgan Chase & Co. Finance - Investment Bankers/Brokers 2.8% Yahoo!, Inc. Web Portals/Internet Service Providers 2.7% General Electric Co. Diversified Operations 2.5% ----- 14.4%
ASSET ALLOCATION --(% of Net Assets) AS OF APRIL 30, 2006 (PIE CHART) COMMON STOCK 98.0% CASH AND CASH EQUIVALENTS 2.0% Emerging markets comprised 3.7% of total net assets. 5 LARGEST COUNTRY ALLOCATIONS --(% of Investment Securities) (BAR CHARTS)
AS OF APRIL 30, 2006 AS OF OCTOBER 31, 2005 --------------------------- -------------------------- United States 78.9% United States 83.7% Switzerland 5.6% Switzerland 3.2% Japan 2.7% Canada 2.0% Canada 2.1% United Kingdom 1.9% Germany 2.0% Brazil 1.7%
Janus Growth Funds April 30, 2006 9 Janus Fund (unaudited) PERFORMANCE (PERFORMANCE GRAPH)
Initial investment of $10,000 JANUS FUND RUSSELL 1000(R) GROWTH INDEX S & P 500(R) INDEX ---------- ---------------------------- ------------------ 4/30/1996 10,000 10,000 10,000 4/30/1998 15,873 17,344 17,652 4/30/2000 28,906 27,996 23,682 4/30/2002 16,209 15,154 18,008 4/30/2004 16,111 15,789 19,183 4/30/2006 19,068 18,259 23,544
Average Annual Total Return -- for the periods ended April 30, 2006
FISCAL ONE FIVE TEN SINCE YEAR-TO-DATE YEAR YEAR YEAR INCEPTION* ------------ ------------ ------------ ------------ ------------ Janus Fund 10.51% 17.28% (2.62)% 6.67% 13.86% Russell 1000(R) Growth Index 7.06% 15.18% (0.76)% 6.21% 11.96%** S&P 500(R) Index 9.64% 15.42% 2.70% 8.94% 11.41% Lipper Quartile N/A 2nd 4th 2nd 1st Lipper Ranking - based on total return for Large-Cap Growth Funds N/A*** 296/698 374/474 72/165 1/19
Visit janus.com to view up to date performance and characteristic information Data presented represents past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 800.525.3713 or visit www.janus.com for performance current to the most recent month-end. See Notes to Schedules of Investments for index definitions. Total return includes reinvestment of dividends, distributions and capital gains. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. *The Fund's inception date -- February 5, 1970 **The Russell 1000(R) Growth Index's since inception returns calculated from December 31, 1978 ***The Fund's fiscal year-to-date Lipper ranking is not available. See "Explanations of Charts, Tables and Financial Statements." The Fund's portfolio may differ significantly from the securities held in the indices. The indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual portfolio. There is no assurance that the investment process will consistently lead to successful investing. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. Effective 2/1/06, Blaine Rollins is no longer the portfolio manager of Janus Fund, and David Corkins is now the Fund manager. FUND EXPENSES The example below shows you the ongoing costs (in dollars) of investing in your Fund and allows you to compare these costs with those of other mutual funds. Please refer to page 5 for a detailed explanation of the information presented in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD EXPENSE EXAMPLE (11/1/05) (4/30/06) (11/1/05-4/30/06)* ---------------------------------- --------------------------- -------------------------- ---------------------------------- Actual $ 1,000.00 $ 1,105.10 $ 4.75 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.28 $ 4.56
*Expenses are equal to the annualized expense ratio of 0.91%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 10 Janus Growth Funds April 30, 2006 Janus Fund Schedule of Investments (unaudited) As of April 30, 2006
Shares or Principal Amount Value --------------------------------------------- -------------- Common Stock - 98.0% Aerospace and Defense - 4.7% 5,401,628 BAE Systems PLC** $ 41,124,397 4,658,990 Boeing Co. 388,792,715 1,494,360 Lockheed Martin Corp. 113,421,924 -------------- 543,339,036 Agricultural Chemicals - 1.8% 1,386,690 Monsanto Co. 115,649,946 648,568 Syngenta A.G.* 90,471,105 -------------- 206,121,051 Apparel Manufacturers - 0.5% 1,617,560 Coach, Inc.* 53,411,831 Applications Software - 1.9% 9,041,305 Microsoft Corp. 218,347,516 Automotive - Cars and Light Trucks - 1.5% 2,375,506 BMW A.G.**,# 129,318,586 3,368,400 Nissan Motor Company, Ltd.** 44,284,853 -------------- 173,603,439 Automotive - Truck Parts and Equipment - Original - 0.1% 694,895 Lear Corp.# 16,385,624 Beverages - Non-Alcoholic - 0.8% 1,549,975 PepsiCo, Inc. 90,270,544 Broadcast Services and Programming - 0.5% 7,548,271 Liberty Media Corp. - Class A* 63,028,063 Building - Residential and Commercial - 0.3% 51,365 NVR, Inc.*,# 38,780,575 Building and Construction Products - Miscellaneous - 0.3% 1,172,145 Masco Corp. 37,391,426 Building Products - Cement and Aggregate - 0.6% 1,093,265 Cemex S.A. de C.V. (ADR)# 73,817,253 Casino Hotels - 0.7% 1,053,425 Harrah's Entertainment, Inc. 86,001,617 Cellular Telecommunications - 0.7% 2,077,100 America Movil S.A. de C.V. - Series L (ADR) 76,665,761 Chemicals - Diversified - 0.5% 1,068,600 Shin-Etsu Chemical Company, Ltd.** 61,751,969 Commercial Banks - 0.6% 8,504 Mizuho Financial Group, Inc.** 72,519,071 Commercial Services - Finance - 1.3% 893,515 Moody's Corp. 55,406,865 2,408,627 Paychex, Inc. 97,284,445 -------------- 152,691,310 Computers - 2.1% 2,061,165 Apple Computer, Inc.* 145,085,405 1,309,440 Research In Motion, Ltd. (U.S. Shares)* 100,342,387 -------------- 245,427,792 Computers - Memory Devices - 2.1% 13,063,415 EMC Corp.* 176,486,737 1,016,710 SanDisk Corp.* 64,896,599 -------------- 241,383,336 Containers - Metal and Glass - 0.6% 1,596,965 Ball Corp. 63,846,661
Shares or Principal Amount Value -------------------------------------------- --------------- Cosmetics and Toiletries - 3.1% 6,249,985 Procter & Gamble Co. $ 363,811,627 Dental Supplies and Equipment - 0.5% 1,886,277 Patterson Companies, Inc.*,# 61,454,905 Distribution/Wholesale - 0.5% 7,139,500 Esprit Holdings, Ltd. 56,999,607 Diversified Minerals - 1.0% 2,258,405 Companhia Vale do Rio Doce (ADR) 116,353,026 Diversified Operations - 2.5% 8,492,190 General Electric Co. 293,744,852 E-Commerce/Services - 1.5% 2,214,603 eBay, Inc.* 76,204,489 3,356,212 IAC/InterActiveCorp* 96,893,841 -------------- 173,098,330 Electric - Generation - 0.5% 3,510,260 AES Corp.* 59,569,112 Electric Products - Miscellaneous - 0.6% 766,410 Emerson Electric Co. 65,106,530 Electronic Components - Semiconductors - 3.8% 6,626,115 Advanced Micro Devices, Inc.* 214,354,820 6,601,680 Texas Instruments, Inc. 229,144,312 -------------- 443,499,132 Electronic Forms - 0.8% 2,421,850 Adobe Systems, Inc.* 94,936,520 Enterprise Software/Services - 2.3% 2,238,595 CA, Inc. 56,770,769 6,886,240 Oracle Corp.* 100,470,242 2,069,110 SAP A.G. (ADR)** 113,035,479 -------------- 270,276,490 Entertainment Software - 1.6% 3,255,821 Electronic Arts, Inc.* 184,930,633 Finance - Credit Card - 1.6% 2,210,720 American Express Co. 118,958,844 1,167,700 Credit Saison Company, Ltd.** 61,223,106 -------------- 180,181,950 Finance - Investment Bankers/Brokers - 6.2% 7,197,950 JP Morgan Chase & Co. 326,642,971 1,759,205 Merrill Lynch & Company, Inc. 134,156,973 2,449,000 Mitsubishi UFJ Securities Company, Ltd.** 38,585,219 1,060,786 UBS A.G.# 125,734,190 823,125 UBS A.G. (ADR) 96,182,156 -------------- 721,301,509 Finance - Mortgage Loan Banker - 1.1% 2,474,885 Fannie Mae 125,229,181 Finance - Other Services - 0.5% 137,307 Chicago Mercantile Exchange Holdings, Inc.# 62,886,606 Food - Dairy Products - 0.7% 2,051,140 Dean Foods Co.* 81,245,655 Food - Retail - 1.0% 1,843,510 Whole Foods Market, Inc. 113,154,644 Food - Wholesale/Distribution - 0.5% 2,048,465 Sysco Corp. 61,228,619 Independent Power Producer - 0.5% 1,312,855 NRG Energy, Inc.* 62,478,769
See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds April 30, 2006 11 Janus Fund Schedule of Investments (unaudited) As of April 30, 2006
Shares or Principal Amount Value -------------------------------------------- -------------- Insurance Brokers - 0.5% 1,928,360 Marsh & McLennan Companies, Inc. $ 59,142,801 Internet Infrastructure Software - 0.4% 1,429,260 Akamai Technologies, Inc.*,# 48,151,769 Machinery - Construction and Mining - 0.3% 434,950 Joy Global, Inc. 28,571,866 Medical - Biomedical and Genetic - 2.3% 1,463,595 Amgen, Inc.* 99,085,382 2,783,120 Celgene Corp.* 117,336,339 646,288 Genentech, Inc.* 51,515,616 -------------- 267,937,337 Medical - Drugs - 5.0% 2,834,040 Abbott Laboratories 121,126,870 5,398,875 Merck & Company, Inc. 185,829,277 1,786,843 Roche Holding A.G.# 274,754,845 -------------- 581,710,992 Medical - Generic Drugs - 1.1% 3,143,006 Teva Pharmaceutical Industries, Ltd. (ADR)# 127,291,743 Medical - HMO - 2.8% 638,063 Aetna, Inc. 24,565,426 3,616,950 Coventry Health Care, Inc.* 179,653,906 2,424,730 UnitedHealth Group, Inc. 120,606,070 -------------- 324,825,402 Medical - Wholesale Drug Distributors - 1.0% 1,732,795 Cardinal Health, Inc. 116,703,743 Medical Instruments - 1.2% 3,732,975 Boston Scientific Corp.* 86,754,339 425,575 Intuitive Surgical, Inc.* 54,048,025 -------------- 140,802,364 Medical Products - 0.5% 1,031,070 Varian Medical Systems, Inc.*,# 54,007,447 Metal Processors and Fabricators - 1.2% 2,269,510 Precision Castparts Corp. 142,933,740 Networking Products - 0.8% 4,616,155 Cisco Systems, Inc.* 96,708,447 Oil - Field Services - 2.5% 2,093,520 Halliburton Co. 163,608,588 1,783,380 Schlumberger, Ltd. (U.S. Shares)**,# 123,302,893 -------------- 286,911,481 Oil Companies - Exploration and Production - 1.9% 943,615 Apache Corp. 67,034,410 1,452,895 EnCana Corp. (U.S. Shares)# 72,717,395 1,128,900 EOG Resources, Inc.# 79,282,646 -------------- 219,034,451 Oil Companies - Integrated - 2.5% 407,740 Amerada Hess Corp. 58,416,910 3,761,455 Exxon Mobil Corp. 237,272,581 -------------- 295,689,491 Oil Refining and Marketing - 0.3% 451,895 Valero Energy Corp. 29,255,682 Optical Supplies - 0.8% 854,800 Alcon, Inc. (U.S. Shares) 86,941,708 Pharmacy Services - 1.1% 2,683,925 Caremark Rx, Inc. 122,252,784
Shares or Principal Amount Value --------------------------------------------- -------------- Real Estate Management/Services - 0.4% 2,020,000 Mitsubishi Estate Company, Ltd.** $ 44,173,363 Reinsurance - 0.7% 27,981 Berkshire Hathaway, Inc. - Class B* 82,599,912 Retail - Apparel and Shoe - 1.2% 2,171,841 Industria de Diseno Textil S.A.** 88,365,301 1,302,815 Nordstrom, Inc. 49,936,899 -------------- 138,302,200 Retail - Building Products - 0.7% 1,302,775 Lowe's Companies, Inc. 82,139,964 Retail - Office Supplies - 1.3% 5,628,642 Staples, Inc. 148,652,435 Savings/Loan/Thrifts - 0.3% 2,111,534 NewAlliance Bancshares, Inc.# 30,490,551 Semiconductor Components/Integrated Circuits - 0.5% 967,845 Marvell Technology Group, Ltd.* 55,254,271 Soap and Cleaning Preparations - 0.9% 2,837,113 Reckitt Benckiser PLC** 103,420,783 Steel - Producers - 0.3% 2,509,858 Tata Steel, Ltd. 35,448,251 Telecommunication Services - 0.4% 1,432,795 NeuStar, Inc. - Class A* 50,291,105 Telephone - Integrated - 0.4% 8,382,820 Level 3 Communications, Inc.*,# 45,267,228 Television - 0.2% 751,618 Univision Communications, Inc. - Class A*,# 26,825,246 Therapeutics - 1.7% 1,603,410 Amylin Pharmaceuticals, Inc.*,# 69,828,506 2,287,100 Gilead Sciences, Inc.* 131,508,250 -------------- 201,336,756 Transportation - Railroad - 1.3% 1,923,680 Canadian National Railway Co. (U.S. Shares) 86,392,468 667,665 Union Pacific Corp. 60,897,725 -------------- 147,290,193 Transportation - Services - 2.1% 2,532,595 C.H. Robinson Worldwide, Inc. 112,320,588 1,559,300 United Parcel Service, Inc. - Class B 126,412,451 -------------- 238,733,039 Web Portals/Internet Service Providers - 3.7% 303,565 Google, Inc. - Class A* 126,871,956 9,409,395 Yahoo!, Inc.* 308,439,968 -------------- 435,311,924 Wireless Equipment - 3.3% 2,381,030 Crown Castle International Corp.* 80,121,660 6,938,865 Nokia Oyj (ADR)** 157,234,680 2,938,305 QUALCOMM, Inc. 150,852,579 -------------- 388,208,919 -------------- Total Common Stock (cost $9,245,435,979) 11,388,890,960 Money Markets - 1.6% Janus Institutional Cash Reserves Fund 165,000,000 4.83% 165,000,000 Janus Money Market Fund 25,000,000 4.77% 25,000,000 -------------- Total Money Markets (cost $190,000,000) 190,000,000
See Notes to Schedules of Investments and Financial Statements. 12 Janus Growth Funds April 30, 2006 Schedule of Investments (unaudited) As of April 30, 2006
Shares or Principal Amount Value --------------------------------------- ---------------- Other Securities - 4.5% State Street Navigator Securities Lending 522,862,639 Prime Portfolio+ (cost $522,862,639) $ 522,862,639 Time Deposit - 0.1% ING Financial, ETD $ 11,900,000 4.86%, 5/1/06 (cost $11,900,000) 11,900,000 --------------- Total Investments (total cost 12,113,653,599 $9,970,198,618) -- 104.2% Liabilities, net of Cash, Receivables and (488,270,828) Other Assets -- (4.2)% --------------- Net Assets -- 100% $11,625,382,771
Summary of Investments by Country
% of Investment Country Value Securities --------------- ---------------- ---------------- Bermuda $ 112,253,878 0.9% Brazil 116,353,026 1.0% Canada 259,452,250 2.1% Finland 157,234,680 1.3% Germany 242,354,065 2.0% India 35,448,251 0.3% Israel 127,291,743 1.1% Japan 322,537,581 2.7% Mexico 150,483,014 1.2% Netherlands 123,302,893 1.0% Spain 88,365,301 0.7% Switzerland 674,084,004 5.6% United Kingdom 144,545,180 1.2% United States++ 9,559,947,733 78.9% ---------------- ---------------- Total $ 12,113,653,599 100.0%
++Includes Short-Term Securities and Other Securities (72.9% excluding Short-Term Securities and Other Securities) Forward Currency Contracts, Open
Currency Sold and Currency Currency Unrealized Settlement Date Units Sold Value in $ U.S. Gain/(Loss) ---------------------- ---------------- ---------------- ---------------- British Pound 10/19/06 20,700,000 $ 37,843,245 $ (787,968) Euro 6/28/06 88,900,000 112,579,871 (2,560,788) Euro 8/24/06 8,500,000 10,800,699 (495,299) Japanese Yen 8/24/06 9,000,000,000 80,376,886 (2,372,173) ---------------- ---------------- Total $ 241,600,701 $ (6,216,228)
See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds April 30, 2006 13 Janus Enterprise Fund (unaudited) TICKER: JAENX FUND SNAPSHOT This growth fund pursues companies that have grown large enough to be well established but are small enough to still have room to grow. (JONATHAN COLEMAN PHOTO) Jonathan Coleman portfolio manager PERFORMANCE OVERVIEW During the six months ended April 30, 2006, as mid-cap stocks continued to outpace large-cap stocks, Janus Enterprise Fund advanced 14.29%. Meanwhile, the Fund's primary benchmark, the Russell Midcap(R) Growth Index returned 15.18%. The Fund's secondary benchmark, the S&P MidCap 400 Index, returned 15.27% for the same time period. While this short-term underperformance is disappointing, rest assured that we will not change our investment philosophy to chase momentary hot trends. In short, we look for companies with strong competitive barriers to entry, diverse and predictable revenue streams, an ability to expand profit margins over time, a strong stewardship of investors' capital, and appropriate valuations which we believe provide a reasonable risk and reward tradeoff. As the performance of the market would suggest, the prior six months have been a strong period, particularly for small- and mid-sized companies. While deciphering the exact reasons for market strength (or weakness) in any period can be perilous, let me offer a few suggestions. First, the six-month period captures a significant rebound from the hurricane-related malaise that plagued the market last October. Consumer confidence, and therefore consumer spending, accelerated after a brief slowdown. As a result, GDP and corporate earnings have grown faster than expected. Additionally, the market has anticipated that the Federal Reserve may be close to ending the series of rate hikes it began in mid-2004. Finally, while energy prices remain elevated, the economy has so far proved to be much more resilient than in the 1970s, the last such period of sustained high energy prices. Market strength has also been relatively concentrated, with certain groups experiencing very significant price moves in short periods of time. Of particular strength were the capital goods, materials, and telecommunications services industries. These industries are experiencing accelerating demand for their products and services, driven in large part by a surge in capital spending after several years of retrenchment. Given my long-standing investment philosophy that we should have exposure to a broad array of industries rather than a highly concentrated portfolio, there are inevitably periods when our breadth of holdings works against us. This certainly occurred during the last six months. Nevertheless, I do believe that over an entire cycle of up and down markets the approach has considerable merit. INVESTMENT STRATEGY As always, there were certain sectors which were positive and negative contributors to performance. I am pleased to report that given the strong market performance, we had positive absolute returns in every sector except for utilities, where we sustained a small loss. Contributing to the Fund's underperformance versus its benchmark were holdings in the materials, healthcare equipment and services, and energy sectors. While we made money in these sectors on an absolute basis, we were either underweight in a strong group or did a poor job of stock selection within the group during the six-month period. We did a better job with our picks in the automobiles and components, media, and pharmaceuticals and biotechnology sectors. Of particular strength was long time holding Celgene, which I have written about in past letters. The company received Federal Drug Administration approval for its cancer-fighting agent Revlimid and the early market uptake appears positive. HEAVY EQUIPMENT AND RV MANUFACTURER BOOSTED PERFORMANCE I'd like to discuss a couple of stocks that worked well for us during the period and give you some context on how they fit into our investment philosophy. Industrial heavy equipment manufacturer Terex produced very strong results during the period, aided by increasing demand for its mining, crane and aerial lift businesses. We became interested in Terex after meeting with the company in early 2005 and spending time understanding the company's strategic priorities. Several years ago Terex undertook a strategic review of the business, deciding to de-emphasize acquisitions and instead focus on driving returns on invested capital higher. The company has been able to do this by improving operating margins and reducing its working capital such as inventories and accounts receivable, which unnecessarily tie up cash. Our investment philosophy has consistently been predicated on investing in companies which are growing revenues and earnings while also increasing returns on invested capital. Terex has done just that, showing impressive operating leverage in recent quarters. To be more specific, revenue increased 27% in 2005 versus 2004, while operating profit increased 75% when compared to the prior year. Importantly, returns on invested capital have also increased more than five percentage points over the prior year. These factors led to very strong share price performance. As Terex has become more fairly valued by the market, we have used the opportunity to trim back our holdings. Towable recreational vehicle (RV) manufacturer Thor Industries is perhaps best known for its iconic Airstream trailer brand. Thor is run by CEO Wade Thompson, who purchased a loss-making Airstream from conglomerate Beatrice International Holdings in 1980. Mr. Thompson is a manager who thinks like an owner, because he in fact owns 30% of the company. As a result, he allocates capital with the care that we value in our core holdings and rewards his managers who expand market share and do so profitably. The proof is in the numbers. Thor has been profitable every year since going public in 1987 and boasts returns on invested capital of greater than 30% in an industry when many competitors struggle with profitability. We believe that Thor can capitalize on a demographic tailwind as baby boomers enter their retirement years. The propensity to purchase an RV increases dramatically after the age of 50 and we believe Thor has the product breadth to serve the demand. Thor's business has held up very well in spite of the increases in gasoline prices, in part because the majority of its sales are in towable RVs, as opposed to larger more expensive motorized RVs. Consumers have traded down to the cheaper product, which has benefited Thor at the expense of some competitors. While we admire Thor and its management tremendously, we have used the strength in the stock to lighten our position. HEALTHCARE INDUSTRY HOLDINGS DETRACTED FROM PERFORMANCE I'd also like to discuss some of our losers in the period, explain our investment rationale, and tell you what we have done in response to the disappointments. Several of our most significant losses in the 14 Janus Growth Funds April 30, 2006 (unaudited) period came in the healthcare industry. Implantable cardiac device manufacturer St. Jude Medical has been a holding in the Fund for over 4 years and has delivered good returns over that period. St. Jude has proven very adept at developing new products with large addressable end markets. This product innovation has driven compounded annual growth in sales of greater than 20% over the last 4 years. Nevertheless, the company has recently experienced a slowing growth rate for its products as the potential patient population for its devices has become more fully penetrated by St. Jude and its competitors. While we believe St. Jude has an enviable franchise, we have become increasingly concerned that the market slowdown could last for an extended period of time. As a result, we have trimmed the position considerably. We continue to monitor market trends closely and, for now, hold our remaining St. Jude shares given their reasonable current valuation. We also experienced disappointing performance from a more recent purchase, Patterson Companies. Established in 1877, Patterson is a dental and veterinary supply distributor that has an enviable long-term track record of earnings growth, most recently having compounded earnings growth of 21% over the last 9 years. Additionally, the company boasts very high returns on its capital, with returns on equity of 16% or higher each of the last 5 years. As the numbers suggest, this is not the proverbial flash in the pan. I have long admired the company, but I had not owned the stock in the past. In the last 4 quarters the company's growth rate has slowed, causing the stock to underperform sharply. We believe this slowing growth rate is a temporary phenomenon and we initiated a position. In retrospect, we started purchasing too soon, as the stock has continued to perform poorly relative to the market since our purchase. Over the long-term we like the opportunity for Patterson to continue to gain share in the very fragmented dental and veterinary markets. We are impressed with the company's 12% operating margins, which are quite strong for a distributor. We have modestly added to our position, as our research suggests signs of better financial results in future periods. SUMMARY As I always do in this space, I would like to reiterate to you that I am an investor alongside you in Janus Enterprise Fund. I invest a portion of every paycheck in the Fund and I have never sold a share of the Fund as long as I have managed it. I take the obligation of trust very seriously and work every day to support the trust you have placed in me and in Janus. Thank you for your investment in Janus Enterprise Fund. JANUS ENTERPRISE FUND AT A GLANCE 5 LARGEST CONTRIBUTORS TO PERFORMANCE -- HOLDINGS
CONTRIBUTION ------------ Celgene Corp. 1.44% Biopharmaceutical company - U.S. Terex Corp. Diversified global manufacturer - U.S. 0.87% Thor Industries, Inc. Recreation vehicle producer/seller - U.S. 0.81% Advanced Micro Devices, Inc. Integrated circuits provider - U.S. 0.79% Lamar Advertising Co. Outdoor advertising company - U.S. 0.74%
5 LARGEST DETRACTORS FROM PERFORMANCE -- HOLDINGS
CONTRIBUTION ------------ Reliant Energy, Inc. (0.28%) Electricity and energy services provider - U.S. St. Jude Medical, Inc. Cardiovascular medical devices servicer - U.S. (0.25%) Patterson Companies, Inc. Dental, veterinary and rehabilitation supplies distributor - U.S. (0.24%) Alcon, Inc. (U.S. Shares) Eye care company - U.S. (0.22%) Coventry Health Care, Inc. Managed company - U.S. (0.14%)
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING --------------------------- --------------------------- --------------------------- Semiconductor & Semiconductor Equipment 1.79% 7.67% 7.46% Pharmaceuticals & Biotechnology 1.78% 8.35% 5.58% Capital Goods 1.61% 4.27% 7.58% Diversified Financials 1.51% 6.82% 4.80% Media 1.02% 5.17% 3.82%
5 LOWEST CONTRIBUTORS/DETRACTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING --------------------------- --------------------------- --------------------------- Utilities (0.28%) 0.01% 0.91% Banks 0.00% 0.19% 1.65% Food & Staples Retailing 0.00% 0.00% 0.52% Household & Personal Products 0.00% 0.40% 0.61% Materials 0.01% 3.77% 2.98%
Janus Growth Funds April 30, 2006 15 Janus Enterprise Fund (unaudited) 5 LARGEST EQUITY HOLDINGS --(% of Net Assets) AS OF APRIL 30, 2006 Lamar Advertising Co. Advertising Sales 3.4% Celgene Corp. Medical - Biomedical and Genetic 3.4% EOG Resources, Inc. Oil Companies - Exploration and Production 3.0% T. Rowe Price Group, Inc. Investment Management and Advisory Services 2.5% Nextel Partners, Inc. - Class A Cellular Telecommunications 2.4% ---- 14.7%
ASSET ALLOCATION --(% of Net Assets) AS OF APRIL 30, 2006 (PIE CHART) COMMON STOCK 97.6% CASH AND CASH EQUIVALENTS 1.6% EQUITY-LINKED STRUCTURED NOTES 0.8%
Emerging markets comprised 0.4% of total net assets. 5 LARGEST COUNTRY ALLOCATIONS --(% of Investment Securities) (BAR CHARTS)
AS OF APRIL 30, 2006 AS OF OCTOBER 31, 2005 ------------------------------- -------------------------------- United States 91.8% United States 91.5% Canada 3.0% Bermuda 2.1% Bermuda 2.3% Canada 1.7% United Kingdom 1.1% United Kingdom 1.4% Ireland 0.8% Ireland 0.9%
16 Janus Growth Funds April 30, 2006 (unaudited) PERFORMANCE (PERFORMANCE GRAPH)
Initial investment of $10,000 JANUS ENTERPRISE FUND RUSSELL MIDCAP(R) GROWTH INDEX S & P MIDCAP 400 INDEX ---------------------------------- ---------------------------------- ---------------------------------- 4/30/1996 10,000 10,000 10,000 4/30/1998 12,269 14,636 16,290 4/30/2000 31,642 25,159 21,415 4/30/2002 12,049 15,081 24,431 4/30/2004 13,748 17,109 27,096 4/30/2006 19,110 23,494 38,155
Average Annual Total Return --for the periods ended April 30, 2006
FISCAL ONE FIVE TEN SINCE YEAR-TO-DATE YEAR YEAR YEAR INCEPTION* ------------ ------------ ------------ ------------ ------------ Janus Enterprise Fund 14.29% 29.21% 1.87% 6.69% 11.63% Russell Midcap(R) Growth Index 15.18% 28.27% 5.77% 8.92% 11.38% S&P MidCap 400 Index 15.27% 28.32% 10.73% 14.33% 15.07% Lipper Quartile N/A 3rd 3rd 3rd 2nd Lipper Ranking - based on total return for Mid-Cap Growth Funds N/A** 324/563 257/357 88/128 20/49
Visit janus.com to view up to date performance and characteristic information Data presented represents past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 800.525.3713 or visit www.janus.com for performance current to the most recent month-end. See Notes to Schedules of Investments for index definitions. Total return includes reinvestment of dividends, distributions and capital gains. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The date of the Lipper ranking is slightly different from when the Fund began operations since Lipper provides fund rankings as of the last day of the month or the first Thursday after fund inception. *The Fund's inception date -- September 1, 1992 **The Fund's fiscal year-to-date Lipper ranking is not available. See "Explanations of Charts, Tables and Financial Statements." The Fund's portfolio may differ significantly from the securities held in the indices. The indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual portfolio. There is no assurance that the investment process will consistently lead to successful investing. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. Funds that emphasize investments in small-sized companies may experience greater price volatility. FUND EXPENSES The example below shows you the ongoing costs (in dollars) of investing in your Fund and allows you to compare these costs with those of other mutual funds. Please refer to page 5 for a detailed explanation of the information presented in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD EXPENSE EXAMPLE (11/1/05) (4/30/06) (11/1/05-4/30/06)* --------------------------- ------------------------- ------------------------- -------------------------- Actual $ 1,000.00 $ 1,142.90 $ 5.21 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.93 $ 4.91
*Expenses are equal to the annualized expense ratio of 0.98%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Janus Growth Funds April 30, 2006 17 Janus Enterprise Fund Schedule of Investments (unaudited) As of April 30, 2006
Shares or Principal Amount Value -------------------------------------------- -------------- Common Stock - 97.6% Advertising Sales - 3.4% 1,167,170 Lamar Advertising Co.* $ 64,182,677 Agricultural Chemicals - 1.3% Potash Corporation of Saskatchewan, Inc. 268,530 (U.S. Shares) 25,424,420 Airlines - 0.9% 372,978 Ryanair Holdings PLC (ADR)*,# 17,559,804 Apparel Manufacturers - 0.8% 445,600 Coach, Inc.* 14,713,712 Applications Software - 0.5% 221,060 Citrix Systems, Inc.* 8,824,715 Batteries and Battery Systems - 0.4% 139,195 Energizer Holdings, Inc.*,# 7,119,824 Broadcast Services and Programming - 0.4% 545,665 CKX, Inc.*,# 7,699,333 Building - Mobile Home and Manufactured Homes - 1.2% 433,475 Thor Industries, Inc. 21,881,818 Building - Residential and Commercial - 1.0% 25,410 NVR, Inc.*,# 19,184,550 Casino Services - 0.8% 391,190 Scientific Games Corp. - Class A*,# 14,900,427 Cellular Telecommunications - 2.4% 1,609,163 Nextel Partners, Inc. - Class A*,# 45,603,679 Coal - 0.5% 401,000 Alpha Natural Resources, Inc.*,# 10,069,110 Commercial Banks - 0.5% 183,970 SVB Financial Group*,# 9,340,157 Commercial Services - 0.9% 420,962 Iron Mountain, Inc.*,# 16,459,614 Commercial Services - Finance - 3.4% 456,910 Jackson Hewitt Tax Service, Inc.# 13,652,471 337,111 Moody's Corp. 20,904,253 716,691 Paychex, Inc. 28,947,149 -------------- 63,503,873 Computer Services - 1.6% 689,225 Ceridian Corp.* 16,699,921 457,655 IHS, Inc. - Class A*,# 12,960,790 -------------- 29,660,711 Computers - 1.0% 257,287 Apple Computer, Inc.* 18,110,432 Computers - Memory Devices - 0.3% 98,490 SanDisk Corp.* 6,286,617 Containers - Metal and Glass - 3.0% 888,855 Ball Corp. 35,536,423 1,180,980 Owens-Illinois, Inc.* 21,588,314 -------------- 57,124,737 Data Processing and Management - 0.7% 307,850 NAVTEQ Corp.*,# 12,781,932 Dental Supplies and Equipment - 0.8% 481,330 Patterson Companies, Inc.*,# 15,681,731 Diagnostic Kits - 1.5% 721,650 Dade Behring Holdings, Inc. 28,144,350
Shares or Principal Amount Value -------------------------------------------- -------------- Distribution/Wholesale - 0.7% 886,500 Esprit Holdings, Ltd. $ 7,077,548 2,278,000 Li & Fung, Ltd. 5,406,111 -------------- 12,483,659 E-Commerce/Products - 0.4% 151,000 Submarino S.A. (GDR)* 8,087,032 E-Commerce/Services - 1.1% 708,220 IAC/InterActiveCorp* 20,446,311 Electric Products - Miscellaneous - 1.2% 478,365 AMETEK, Inc.# 23,569,044 Electronic Components - Semiconductors - 3.2% 893,135 Advanced Micro Devices, Inc.* 28,892,917 665,380 ATI Technologies, Inc. (U.S. Shares)*,# 10,326,698 445,695 International Rectifier Corp.*,# 20,145,414 -------------- 59,365,029 Electronic Measuring Instruments - 0.8% 303,582 Trimble Navigation, Ltd.* 14,383,715 Entertainment Software - 1.6% 1,333,031 Activision, Inc.* 18,915,710 181,835 Electronic Arts, Inc.* 10,328,228 -------------- 29,243,938 Fiduciary Banks - 0.9% 280,590 Northern Trust Corp. 16,523,945 Finance - Investment Bankers/Brokers - 0.5% 280,435 optionsXpress Holdings, Inc. 8,833,703 Finance - Other Services - 1.5% 61,875 Chicago Mercantile Exchange Holdings, Inc. 28,338,750 Food - Canned - 0.8% 582,729 TreeHouse Foods, Inc.* 15,267,500 Food - Dairy Products - 2.4% 1,125,537 Dean Foods Co.* 44,582,521 Hotels and Motels - 0.6% 32,680 Four Seasons Hotels, Inc. 1,765,374 160,935 Starwood Hotels & Resorts Worldwide, Inc. 9,234,450 -------------- 10,999,824 Human Resources - 1.2% 335,405 Manpower, Inc. 21,851,636 Industrial Automation and Robotics - 0.6% 164,585 Rockwell Automation, Inc. 11,925,829 Instruments - Controls - 0.4% 117,590 Mettler-Toledo International, Inc.* 7,619,832 Instruments - Scientific - 1.2% 317,887 Fisher Scientific International, Inc.* 22,426,928 Insurance Brokers - 0.4% 220,520 Willis Group Holdings, Ltd. 7,751,278 Internet Content - Information/News - 0.3% 543,715 CNET Networks, Inc.*,# 5,861,248 Investment Management and Advisory Services - 3.0% 178,065 National Financial Partners Corp.# 9,259,380 566,865 T. Rowe Price Group, Inc.# 47,724,364 -------------- 56,983,744 Leisure and Recreation Products - 0.5% 236,295 Brunswick Corp.# 9,267,490
See Notes to Schedules of Investments and Financial Statements. 18 Janus Growth Funds April 30, 2006 Schedule of Investments (unaudited) As of April 30, 2006
Shares or Principal Amount Value -------------------------------------------- -------------- Machinery - Construction and Mining - 0.8% 168,455 Terex Corp.* $ 14,579,780 Machinery - Pumps - 0.6% 252,575 Graco, Inc.# 11,807,881 Medical - Biomedical and Genetic - 4.2% 1,496,490 Celgene Corp.* 63,092,017 248,160 Invitrogen Corp.*,# 16,381,042 -------------- 79,473,059 Medical - Drugs - 0.4% 179,370 Forest Laboratories, Inc.* 7,242,961 Medical - HMO - 1.3% 500,118 Coventry Health Care, Inc.* 24,840,861 Medical - Nursing Homes - 0.9% 373,885 Manor Care, Inc.# 16,394,857 Medical Instruments - 2.0% 100,200 Intuitive Surgical, Inc.* 12,725,400 344,460 Kyphon, Inc.*,# 14,312,313 274,160 St. Jude Medical, Inc.* 10,823,837 -------------- 37,861,550 Medical Labs and Testing Services - 0.4% 131,200 Covance, Inc.*,# 7,655,520 Medical Products - 0.8% 298,385 Varian Medical Systems, Inc.* 15,629,406 Motion Pictures and Services - 0.5% Lions Gate Entertainment 1,040,940 Corp. (U.S. Shares)* 10,169,984 Multi-Line Insurance - 1.1% 425,345 Assurant, Inc. 20,488,869 Networking Products - 0.4% 401,950 Juniper Networks, Inc.* 7,428,036 Oil Companies - Exploration and Production - 4.2% 256,350 Chesapeake Energy Corp.# 8,121,168 133,030 Complete Production Services, Inc.* 3,515,983 798,985 EOG Resources, Inc. 56,112,716 210,155 Forest Oil Corp.*,# 7,685,368 170,078 Mariner Energy, Inc.* 3,308,017 -------------- 78,743,252 Optical Supplies - 0.6% 115,250 Alcon, Inc. (U.S. Shares) 11,722,078 Pipelines - 2.1% 457,606 Kinder Morgan, Inc.# 40,278,480 Property and Casualty Insurance - 1.0% 523,177 W. R. Berkley Corp. 19,577,283 Radio - 0.6% 531,670 XM Satellite Radio Holdings, Inc. - Class A*,# 10,750,367 Recreational Vehicles - 0.8% 332,030 Polaris Industries, Inc.# 15,904,237 Reinsurance - 1.7% 10,527 Berkshire Hathaway, Inc. - Class B* 31,075,704 REIT - Mortgages - 1.0% 812,335 CapitalSource, Inc.# 19,089,873 Respiratory Products - 0.9% 437,975 Respironics, Inc.* 16,038,645
Shares or Principal Amount Value -------------------------------------------- -------------- Retail - Apparel and Shoe - 0.3% 138,620 Nordstrom, Inc. $ 5,313,305 Retail - Auto Parts - 0.6% 297,309 Advance Auto Parts, Inc. 11,957,768 Retail - Office Supplies - 2.2% 299,625 Office Depot, Inc.*,# 12,158,783 1,118,815 Staples, Inc.# 29,547,904 -------------- 41,706,687 Schools - 0.6% 211,359 Apollo Group, Inc. - Class A*,# 11,548,656 Semiconductor Components/Integrated Circuits - 3.2% 1,019,410 Cypress Semiconductor Corp.*,# 17,493,076 352,845 Linear Technology Corp.# 12,525,998 519,155 Marvell Technology Group, Ltd.* 29,638,558 -------------- 59,657,632 Semiconductor Equipment - 0.7% 258,550 KLA-Tencor Corp. 12,451,768 Telecommunication Services - 1.6% 611,140 Amdocs, Ltd. (U.S. Shares)* 22,734,408 393,515 Time Warner Telecom, Inc. - Class A*,# 6,599,247 -------------- 29,333,655 Telephone - Integrated - 0.2% 820,150 Level 3 Communications, Inc.*,# 4,428,810 Television - 0.9% 464,738 Univision Communications, Inc. - Class A*,# 16,586,499 Therapeutics - 2.9% 366,228 Gilead Sciences, Inc.* 21,058,110 486,527 Neurocrine Biosciences, Inc.* 27,907,189 91,860 United Therapeutics Corp.* 5,470,263 -------------- 54,435,562 Toys - 1.1% 1,044,122 Marvel Entertainment, Inc.*,# 20,370,820 Transportation - Equipment and Leasing - 0.2% 98,440 GATX Corp.# 4,606,992 Transportation - Marine - 0.6% 219,495 Alexander & Baldwin, Inc. 10,946,216 Transportation - Railroad - 0.9% Canadian National Railway 366,770 Co. (U.S. Shares) 16,471,641 Transportation - Services - 1.0% 226,860 Expeditors International of Washington, Inc.# 19,421,485 Transportation - Truck - 1.4% 229,565 Con-Way, Inc.# 12,791,362 327,920 Landstar System, Inc.# 13,933,321 -------------- 26,724,683 Web Hosting/Design - 0.8% 222,981 Equinix, Inc.* 14,694,448 Wireless Equipment - 1.5% 830,135 Crown Castle International Corp.*,# 27,934,043 -------------- Total Common Stock (cost $1,185,206,182) 1,835,414,532
See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds April 30, 2006 19 Janus Enterprise Fund Schedule of Investments(unaudited) As of April 30, 2006
Shares or Principal Amount Value --------------------------------------------- -------------- Equity-Linked Structured Notes - 0.8% Finance - Investment Bankers/Brokers - 0.8% Morgan Stanley Co., convertible (Celgene Corp.), 0% (144A)(S) 376,070 (cost $13,162,450) $ 15,166,903 Other Securities - 12.2% State Street Navigator Securities Lending 229,175,404 Prime Portfolio+ (cost $229,175,404) 229,175,404 Time Deposit - 2.3% ING Financial, ETD $ 44,200,000 4.86%, 5/1/06 (cost $44,200,000) 44,200,000 -------------- Total Investments (total cost $1,471,744,036) 2,123,956,839 -- 112.9% Liabilities, net of Cash, Receivables and Other Assets -- (12.9)% (241,860,248) -------------- Net Assets -- 100% $1,882,096,591
Summary of Investments by Country
% of Investment Country Value Securities --------------- --------------- --------------- Bermuda $ 49,873,495 2.3% Brazil 8,087,032 0.4% Canada 64,158,117 3.0% Ireland 17,559,804 0.8% Switzerland 11,722,078 0.6% United Kingdom 22,734,408 1.1% United States++ 1,949,821,905 91.8% --------------- --------------- Total $ 2,123,956,839 100.0%
++Includes Short-Term Securities and Other Securities (78.9% excluding Short-Term Securities and Other Securities) See Notes to Schedules of Investments and Financial Statements. 20 Janus Growth Funds April 30, 2006 Janus Mercury Fund(unaudited) TICKER: JAMRX FUND SNAPSHOT This diversified growth fund typically pursues larger companies believed to be well-positioned for future growth. TEAM BASED APPROACH LED BY JIM GOFF DIRECTOR OF RESEARCH PERFORMANCE OVERVIEW Preoccupation with rising interest rates and historically high oil prices failed to deter the enthusiasm of U.S. investors during the six-month period ended April 30, 2006. As a result, the major domestic indexes settled near five-year highs. During the period, Janus Mercury Fund gained 8.63%, topping its primary benchmark, the Russell 1000(R) Growth Index, which returned 7.06%. The Fund's results slightly underperformed those of its secondary benchmark, the S&P 500(R) Index, which returned 9.64% during the period. OUR INVESTMENT PROCESS The Fund spent a portion of the period in transition as portfolio manager David Corkins stepped down after three successful years at the helm so that he could take over as manager of Janus Fund, effective February 1. We consequently moved the management of this Fund to a team-based model, where ideas for investments come from Janus' entire research team. Janus' eight sector teams each manage a portion of the Fund in-line with the representation of its sector in the Russell 1000(R) Growth Index. Each sector sleeve is composed of the highest conviction "buy-rated" stock ideas from Janus' sector specialists. As Janus expects to cover 1,200 companies in 2006, I feel confident that there will be no shortage of good ideas from our experienced Janus research team. By focusing on what we believe are the best prospects for the long haul, we hope to deliver Index-beating returns in a moderate risk fashion. CONTRIBUTORS TO FUND PERFORMANCE The top-performing individual stock during the period was Canadian National Railway, which extended a rally that ran through the latter part of 2005 and into 2006. The North American freight train system operator delivered robust earnings growth, supported by solid gains in its coal, intermodal and grain transporting segments. Biotechnology company Celgene also contributed significantly to gains. The stock started 2006 on a roll after the Food and Drug Administration approved its Revlimid treatment for myelodysplastic syndromes, a blood-borne cancer, in the final days of December. Less than two months later, it received another boost when regulators granted priority status to Celgene's application to approve Revlimid for the treatment of multiple myeloma, a bone marrow-based cancer. The accelerated decision is expected by the end of June, and we anticipate the drug will be well received by the medical community for both indications. A newer holding, Tata Steel of India, outperformed as it posted double-digit gains in finished steel production -- benefiting from sustained high global demand for the metal. Janus research analyst Laurent Saltiel believes this Indian steel producer is well exposed to the fastest-growing region of the world. Based on a recent study on 23 world class steel makers, Tata Steel has been ranked the best steel company in the world by World Steel Dynamics, a leading steel industry consultant. Tata Steel owes its competitiveness to high productivity, low labor costs, integration into coal and iron ore production and high manufacturing quality standards. We expect Tata to continue to have strong positive sales growth and returns of capital. Financial services giant JP Morgan Chase advanced as it announced highly regarded industry executive James Dimon would ascend to the role of chief executive officer six months ahead of schedule. The market is beginning to realize the increased returns and profit that may result from the merger of the legacy Bank One and JP Morgan Chase businesses. Meanwhile, we believe the company's earnings growth remains healthy, supported by increasing margins from merger savings and broad returns across its consumer and wholesale banking franchises. While we remain upbeat on the bank's outlook, we took some profits to keep our position size within our range of comfort. DETRACTORS FROM FUND PERFORMANCE The period's worst performer was health insurer Aetna, which slipped as costs crept up. Disheartened by the increasing emphasis on membership numbers -- and not cash flow performance -- we trimmed the Fund's exposure. Also weighing significantly on returns was Internet services provider Yahoo!. Frequently compared to Web search giant Google (another Fund holding), Yahoo! has taken longer to effectively grow search advertising revenues, which has disappointed some investors. We see the momentum building, but because it has occurred at a slower pace than anticipated, Janus Growth Funds April 30, 2006 21 Janus Mercury Fund (unaudited) we're closely monitoring the situation and have scaled back our position. That said, we believe the company's valuation is not much higher than the broader market, it has good fundamentals and its growth prospects are solid, so we remain invested. Higher energy and raw material prices hurt returns at glass container and packaging concern Owens-Illinois, a newer position. The company is making progress on an ambitious long-term cost-cutting plan that will boost returns, but investors reacted strongly to disappointing near-term earnings. We expected that this company would require some patience when we purchased it, and we still see upside potential. LOOKING FORWARD Of course, we know that even the best-researched ideas can falter. But by leveraging the top picks from Janus' exceptional analyst team and taking a methodical approach to building and maintaining this Fund, we believe we are offering exposure to market leaders from a broad cross-section of the stock universe. At the same time, by keeping the Fund well-diversified, we're diminishing the potential risk factors that result from outsized investments in a small group of companies or industries. Thank you for your continued investment in Janus Mercury Fund. JANUS MERCURY FUND AT A GLANCE 5 LARGEST CONTRIBUTORS TO PERFORMANCE -- HOLDINGS
CONTRIBUTION ------------ Canadian National Railway Co. (U.S. Shares) Railroad track operator - Canada 0.65% Samsung Electronics Company, Ltd. Diversified electronics company - Korea 0.58% Celgene Corp. Global biopharmaceutical company - U.S. 0.57% Tata Steel, Ltd. Steel company - India 0.55% JP Morgan Chase & Co. Financial products and services provider - U.S. 0.49%
5 LARGEST DETRACTORS FROM PERFORMANCE -- HOLDINGS
CONTRIBUTION ------------ Aetna, Inc. Healthcare and related benefits provider - U.S. (0.34%) Yahoo!, Inc. Global Internet media company - U.S. (0.26%) Coventry Health Care, Inc. Managed company - U.S. (0.20%) Whole Foods Market, Inc. Natural food supermarkets owner/operator - U.S. (0.19%) Owens-Illinois, Inc. Plastic and glass packaging manufacturer - U.S. (0.17%)
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING --------------------------- --------------------------- --------------------------- Transportation 1.41% 4.90% 1.84% Semiconductors & Semiconductor Equipment 1.10% 7.13% 3.15% Pharmaceuticals & Biotechnology 1.05% 9.33% 7.88% Energy 0.84% 6.78% 9.65% Materials 0.81% 3.32% 3.01%
5 LOWEST CONTRIBUTORS/DETRACTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING --------------------------- --------------------------- --------------------------- Healthcare Equipment & Services (0.43%) 9.02% 5.17% Food & Staples Retailing (0.19%) 1.95% 2.38% Utilities (0.10%) 0.69% 3.30% Commercial Services & Supplies (0.05%) 0.35% 0.73% Consumer Durables & Apparel 0.01% 4.86% 1.31%
22 Janus Growth Funds April 30, 2006 (unaudited) 5 LARGEST EQUITY HOLDINGS --(% of Net Assets) AS OF APRIL 30, 2006 General Electric Co. Diversified Operations 2.4% United Parcel Service, Inc. - Class B Transportation - Services 2.3% Roche Holding A.G Medical - Drugs 1.9% Dean Foods Co. Food - Dairy Products 1.9% Procter & Gamble Co. Cosmetics and Toiletries 1.8% ---- 10.3%
ASSET ALLOCATION --(% of Net Assets) AS OF APRIL 30, 2006 (PIE CHART) COMMON STOCK 95.8% CASH AND CASH EQUIVALENTS 3.3% EQUITY-LINKED STRUCTURED NOTES 0.9%
Emerging markets comprised 5.0% of total net assets. 5 LARGEST COUNTRY ALLOCATIONS --(% of Investment Securities) (BAR CHARTS)
AS OF APRIL 30, 2006 AS OF OCTOBER 31, 2005 ------------------------------- -------------------------------- United States 81.0% United States 81.4% Switzerland 2.5% Switzerland 5.3% United Kingdom 2.5% Canada 3.4% India 2.3% United Kingdom 3.0% Bermuda 2.2% France 2.5%
Janus Growth Funds April 30, 2006 23 Janus Mercury Fund (unaudited) PERFORMANCE (PERFORMANCE GRAPH)
Initial investment of $10,000 JANUS MERCURY FUND S & P 500(R) INDEX RUSSELL 1000(R) GROWTH INDEX -------------------------------- -------------------------------- -------------------------------- 4/30/1996 10,000 10,000 10,000 4/30/1998 14,427 17,652 17,344 4/30/2000 37,396 23,682 27,996 4/30/2002 17,125 18,008 15,154 4/30/2004 18,424 19,183 15,789 4/30/2006 22,746 23,544 18,259
Average Annual Total Return -- for the periods ended April 30, 2006
FISCAL ONE FIVE TEN SINCE YEAR-TO-DATE YEAR YEAR YEAR INCEPTION* ------------ ------------ ------------ ------------ ------------ Janus Mercury Fund 8.63% 19.00% (1.74)% 8.56% 12.70% Russell 1000(R) Growth Index 7.06% 15.18% (0.76)% 6.21% 8.76% S&P 500(R) Index 9.64% 15.42% 2.70% 8.94% 10.76% Lipper Quartile N/A 2nd 3rd 1st 1st Lipper Ranking - based on total return for Large-Cap Growth Funds N/A** 210/698 306/474 18/165 1/84
Visit janus.com to view up to date performance and characteristic information Data presented represents past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 800.525.3713 or visit www.janus.com for performance current to the most recent month-end. See Notes to Schedules of Investments for index definitions. Total return includes reinvestment of dividends, distributions and capital gains. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The date of the Lipper ranking is slightly different from when the Fund began operations since Lipper provides fund rankings as of the last day of the month or the first Thursday after fund inception. *The Fund's inception date -- May 3, 1993 **The Fund's fiscal year-to-date Lipper ranking is not available. See "Explanations of Charts, Tables and Financial Statements." The Fund's portfolio may differ significantly from the securities held in the indices. The indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual portfolio. There is no assurance that the investment process will consistently lead to successful investing. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. Effective 2/1/06, David Corkins is no longer the portfolio manager of Janus Mercury Fund. A research team now selects the investments for Janus Mercury Fund led by the Director of Research, Jim Goff. FUND EXPENSES The example below shows you the ongoing costs (in dollars) of investing in your Fund and allows you to compare these costs with those of other mutual funds. Please refer to page 5 for a detailed explanation of the information presented in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD EXPENSE EXAMPLE (11/1/05) (4/30/06) (11/1/05-4/30/06)* --------------------------- --------------------------- --------------------------- --------------------------- Actual $ 1,000.00 $ 1,086.30 $ 4.97 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.03 $ 4.81
*Expenses are equal to the annualized expense ratio of 0.96%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 24 Janus Growth Funds April 30, 2006 Janus Mercury Fund Schedule of Investments (unaudited) As of April 30, 2006
Shares or Principal Amount Value -------------------------------------------- -------------- Common Stock - 95.8% Advertising Sales - 0.4% 314,250 Lamar Advertising Co.* $ 17,280,608 Aerospace and Defense - 1.9% 1,734,500 BAE Systems PLC** 13,205,328 780,380 Boeing Co. 65,122,711 -------------- 78,328,039 Agricultural Chemicals - 1.0% Potash Corporation of Saskatchewan, Inc. 260,540 (U.S. Shares)** 24,667,927 121,803 Syngenta A.G.*,** 16,990,743 -------------- 41,658,670 Agricultural Operations - 0.5% 370,675 Bunge, Ltd. 19,775,511 Apparel Manufacturers - 1.1% 987,660 Coach, Inc.* 32,612,534 955,690 Quiksilver, Inc.*,# 13,064,282 -------------- 45,676,816 Applications Software - 1.0% 1,712,650 Microsoft Corp. 41,360,498 Athletic Footwear - 0.8% 375,650 NIKE, Inc. - Class B 30,743,196 Automotive - Cars and Light Trucks - 1.7% 782,508 BMW A.G.**,# 42,598,431 132,220 Hyundai Motor Company, Ltd.** 11,621,117 983,600 Nissan Motor Company, Ltd.**,# 12,931,535 -------------- 67,151,083 Beverages - Wine and Spirits - 0.6% 124,010 Pernod Ricard S.A.**,# 24,046,650 Broadcast Services and Programming - 0.4% 818,295 Liberty Global, Inc. - Class A* 16,946,889 Building - Mobile Home and Manufactured Homes - 0.2% 195,030 Thor Industries, Inc. 9,845,114 Building - Residential and Commercial - 2.0% 51,535 NVR, Inc.*,# 38,908,925 1,081,995 Pulte Homes, Inc.# 40,412,513 -------------- 79,321,438 Casino Hotels - 0.4% 209,920 Harrah's Entertainment, Inc.# 17,137,869 Cellular Telecommunications - 0.8% 4,289,500 China Mobile, Ltd.# 24,951,498 142,600 Hikari Tsushin, Inc.**,# 8,816,616 -------------- 33,768,114 Commercial Banks - 0.9% 575,585 Commerce Bancorp, Inc.# 23,219,099 223,590 SVB Financial Group*,# 11,351,664 -------------- 34,570,763 Commercial Services - Finance - 0.8% 769,745 Paychex, Inc. 31,090,001 Computer Services - 0.7% 1,132,480 Ceridian Corp.* 27,439,990 Computers - 0.7% 423,050 Apple Computer, Inc.* 29,778,490
Shares or Principal Amount Value -------------------------------------------- -------------- Computers - Memory Devices - 2.3% 3,230,985 EMC Corp.* $ 43,650,607 784,745 SanDisk Corp.*,# 50,090,274 -------------- 93,740,881 Containers - Metal and Glass - 1.9% 624,080 Ball Corp. 24,950,718 2,903,845 Owens-Illinois, Inc.* 53,082,287 -------------- 78,033,005 Cosmetics and Toiletries - 2.9% 747,840 Colgate-Palmolive Co. 44,212,301 1,250,695 Procter & Gamble Co. 72,802,956 -------------- 117,015,257 Data Processing and Management - 0.4% 373,455 NAVTEQ Corp.*,# 15,505,852 Dental Supplies and Equipment - 0.8% 941,720 Patterson Companies, Inc.*,# 30,681,238 Diagnostic Kits - 0.7% 753,555 Dade Behring Holdings, Inc. 29,388,645 Distribution/Wholesale - 0.6% 3,190,000 Esprit Holdings, Ltd.# 25,467,994 Diversified Operations - 3.5% 2,806,400 General Electric Co. 97,073,375 1,640,615 Tyco International, Ltd. (U.S. Shares) 43,230,205 -------------- 140,303,580 E-Commerce/Products - 0.3% 380,000 Submarino S.A.* 10,287,494 E-Commerce/Services - 0.8% 1,071,755 IAC/InterActiveCorp* 30,941,567 Electric - Generation - 0.7% 1,732,360 AES Corp.* 29,398,149 Electronic Components - Semiconductors - 4.9% 1,635,690 Advanced Micro Devices, Inc.* 52,914,571 6,888,374 ARM Holdings PLC** 17,083,389 952,430 Microsemi Corp.*,# 26,020,388 41,822 Samsung Electronics Company, Ltd.** 28,555,309 791,220 SiRF Technology Holdings, Inc.*,# 27,020,163 1,493,570 Texas Instruments, Inc. 51,841,814 -------------- 203,435,634 Electronic Forms - 1.0% 991,785 Adobe Systems, Inc.* 38,877,972 Energy - Alternate Sources - 0.7% Suntech Power Holdings Company, Ltd. 780,575 (ADR)* ,# 26,765,917 Enterprise Software/Services - 1.3% 3,697,617 Oracle Corp.* 53,948,232 Entertainment Software - 1.2% 1,129,675 Activision, Inc.* 16,030,088 559,884 Electronic Arts, Inc.* 31,801,411 -------------- 47,831,499 Finance - Credit Card - 1.1% 826,755 American Express Co. 44,487,687
See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds April 30, 2006 25 Janus Mercury Fund Schedule of Investments(unaudited) As of April 30, 2006
Shares or Principal Amount Value -------------------------- ----- Finance - Investment Bankers/Brokers - 2.8% 886,220 JP Morgan Chase & Co. $ 40,216,664 473,485 Merrill Lynch & Company, Inc. 36,107,966 689,170 optionsXpress Holdings, Inc. 21,708,855 138,400 UBS A.G. (ADR)** 16,172,040 -------------- 114,205,525 Finance - Mortgage Loan Banker - 0.9% 700,445 Fannie Mae 35,442,517 Food - Dairy Products - 1.9% 1,928,045 Dean Foods Co.* 76,369,862 Food - Retail - 1.6% 417,575 Metro A.G.**,# 23,632,941 686,245 Whole Foods Market, Inc. 42,121,718 -------------- 65,754,659 Food - Wholesale/Distribution - 1.0% 1,367,600 Sysco Corp. 40,877,564 Hotels and Motels - 0.3% 198,100 Four Seasons Hotels, Inc.** 10,701,362 Independent Power Producer - 0.8% 665,460 NRG Energy, Inc.* 31,669,241 Insurance Brokers - 0.7% 632,305 Marsh & McLennan Companies, Inc.# 19,392,794 247,605 Willis Group Holdings, Ltd. 8,703,316 -------------- 28,096,110 Internet Infrastructure Software - 0.4% 513,150 Akamai Technologies, Inc.*,# 17,288,024 Internet Security - 0.4% Check Point Software Technologies, Ltd. 790,255 (U.S. Shares)* ,# 15,291,434 Investment Management and Advisory Services - 0.4% 350,185 National Financial Partners Corp.# 18,209,620 Medical - Biomedical and Genetic - 3.2% 516,685 Amgen, Inc.* 34,979,575 1,399,770 Celgene Corp.* 59,014,302 422,862 Genentech, Inc.* 33,706,330 -------------- 127,700,207 Medical - Drugs - 4.1% 819,725 Abbott Laboratories 35,035,047 716,153 Cubist Pharmaceuticals, Inc.* 16,235,189 1,158,555 Merck & Company, Inc. 39,877,462 497,108 Roche Holding A.G.** 76,438,070 -------------- 167,585,768 Medical - Generic Drugs - 0.9% 881,809 Teva Pharmaceutical Industries, Ltd. (ADR)# 35,713,265 Medical - HMO - 3.0% 525,470 Aetna, Inc. 20,230,595 1,375,602 Coventry Health Care, Inc.* 68,326,151 673,665 UnitedHealth Group, Inc. 33,508,097 -------------- 122,064,843 Medical - Nursing Homes - 1.1% 980,640 Manor Care, Inc.# 43,001,064 Medical Instruments - 1.0% 306,870 Intuitive Surgical, Inc.* 38,972,490
Shares or Principal Amount Value -------------------------- ----- Medical Products - 0.8% 621,590 Varian Medical Systems, Inc.*,# $ 32,558,884 Networking Products - 1.2% 2,573,795 Juniper Networks, Inc.*,# 47,563,732 Oil - Field Services - 0.8% 424,620 Halliburton Co.# 33,184,053 Oil Companies - Exploration and Production - 2.2% 459,760 Apache Corp. 32,661,351 266,729 EnCana Corp.** 13,331,082 276,505 EnCana Corp. (U.S. Shares)** 13,839,075 434,725 EOG Resources, Inc. 30,530,737 -------------- 90,362,245 Oil Companies - Integrated - 0.7% 210,070 Amerada Hess Corp. 30,096,729 Oil Refining and Marketing - 1.7% 1,547,602 Reliance Industries, Ltd. 34,774,514 524,330 Valero Energy Corp. 33,945,124 -------------- 68,719,638 Real Estate Operating/Development - 0.9% 8,536,000 Capitaland, Ltd.# 26,457,335 159,665 St. Joe Co.# 8,966,786 -------------- 35,424,121 Recreational Vehicles - 0.4% 320,950 Polaris Industries, Inc.# 15,373,505 Reinsurance - 0.9% 11,905 Berkshire Hathaway, Inc. - Class B* 35,143,560 Retail - Apparel and Shoe - 1.4% 616,369 Industria de Diseno Textil S.A.**,# 25,078,094 775,245 Nordstrom, Inc.# 29,715,141 -------------- 54,793,235 Retail - Auto Parts - 0.2% 196,005 Advance Auto Parts, Inc. 7,883,321 Retail - Computer Equipment - 0.4% 331,845 GameStop Corp. - Class A*,# 15,663,084 Retail - Office Supplies - 0.9% 1,396,182 Staples, Inc. 36,873,167 Retail - Regional Department Stores - 0.9% 462,700 Federated Department Stores, Inc. 36,021,195 Schools - 0.5% 365,065 Apollo Group, Inc. - Class A* 19,947,152 Semiconductor Components/Integrated Circuits - 2.2% 2,803,760 Cypress Semiconductor Corp.*,# 48,112,522 1,172,900 Maxim Integrated Products, Inc. 41,356,454 -------------- 89,468,976 Semiconductor Equipment - 0.7% ASM Lithography Holding N.V. 1,367,775 (U.S. Shares)*,**,# 28,928,441 Soap and Cleaning Preparations - 0.6% 630,416 Reckitt Benckiser PLC** 22,980,444 Steel - Producers - 1.4% 3,934,530 Tata Steel, Ltd. 55,569,759 Sugar - 0.3% 1,029,334 Bajaj Hindusthan, Ltd. 11,837,341
See Notes to Schedules of Investments and Financial Statements. 26 Janus Growth Funds April 30, 2006 Schedule of Investments (unaudited) As of April 30, 2006
Shares or Principal Amount Value -------------------------- ----- Telecommunication Services - 0.8% 922,665 Amdocs, Ltd. (U.S. Shares)*,** $ 34,323,138 Television - 0.5% 2,244,737 British Sky Broadcasting Group PLC**,# 21,510,801 Therapeutics - 1.7% 307,245 Gilead Sciences, Inc.* 17,666,588 330,785 Neurocrine Biosciences, Inc.* 18,973,828 532,528 United Therapeutics Corp.* 31,712,042 -------------- 68,352,458 Tobacco - 0.5% 268,995 Altria Group, Inc. 19,679,674 Toys - 0.5% 1,121,082 Marvel Entertainment, Inc.*,# 21,872,310 Transportation - Railroad - 0.3% Canadian National Railway Co. 264,370 (U.S. Shares)** 11,872,857 Transportation - Services - 2.3% 1,141,050 United Parcel Service, Inc. - Class B 92,504,924 Transportation - Truck - 0.4% 417,970 Landstar System, Inc. 17,759,545 Web Hosting/Design - 0.4% 270,699 Equinix, Inc.* 17,839,064 Web Portals/Internet Service Providers - 2.1% 80,415 Google, Inc. - Class A* 33,608,645 1,551,860 Yahoo!, Inc.*,# 50,869,971 -------------- 84,478,616 Wireless Equipment - 1.7% 570,765 Crown Castle International Corp.* 19,206,242 953,455 QUALCOMM, Inc. 48,950,380 -------------- 68,156,622 -------------- Total Common Stock (cost $3,464,684,973) 3,877,716,488 Equity-Linked Structured Notes - 0.9% Finance - Investment Bankers/Brokers - 0.9% Morgan Stanley Co., convertible (Celgene Corp.), 0% (144A)(S) 858,580 (cost $30,050,300) 34,626,531 Money Market - 2.0% Janus Institutional Cash Reserves Fund 80,000,000 4.83% (cost $80,000,000) 80,000,000 Other Securities - 9.7% 5,354,957 Foreign Bonds+ 5,354,957 State Street Navigator Securities Lending 388,879,576 Prime Portfolio+ 388,879,576 -------------- Total Other Securities (cost $394,234,533) 394,234,533
Shares or Principal Amount Value -------------------------- ----- Time Deposit - 0.3% ING Financial, ETD $ 13,400,000 4.86%, 5/1/06 (cost $13,400,000) $ 13,400,000 -------------- Total Investments (total cost $3,982,369,806) -- 108.7% 4,399,977,552 Liabilities, net of Cash, Receivables and Other Assets -- (8.7)% (352,647,579) -------------- Net Assets -- 100% $4,047,329,973
Summary of Investments by Country
% of Investment Country Value Securities ------- ----- --------------- Bermuda $ 97,177,026 2.2% Brazil 10,287,494 0.2% Canada 74,412,303 1.7% Cayman Islands 26,765,917 0.6% France 24,046,650 0.5% Germany 66,231,372 1.4% Hong Kong 24,951,498 0.6% India 102,181,614 2.3% Israel 51,004,699 1.2% Japan 21,748,151 0.5% Netherlands 28,928,441 0.7% Singapore 26,457,335 0.6% South Korea 40,176,426 0.9% Spain 25,078,094 0.6% Switzerland 109,600,853 2.5% United Kingdom 109,103,100 2.5% United States++ 3,561,826,579 81.0% -------------- ----- Total $4,399,977,552 100.0%
++ Includes Short-Term Securities and Other Securities (69.9% excluding Short-Term Securities and Other Securities) Forward Currency Contracts, Open
Currency Sold and Currency Currency Unrealized Settlement Date Units Sold Value in $ U.S. Gain/(Loss) ----------------- ---------- --------------- ----------- British Pound 6/28/06 7,000,000 $ 12,773,699 $ (334,699) British Pound 10/19/06 13,000,000 23,766,289 (494,859) Canadian Dollar 6/28/06 7,500,000 6,721,193 (150,891) Euro 6/28/06 8,100,000 10,257,559 (233,323) Euro 8/24/06 41,080,000 52,199,141 (1,823,249) Euro 10/19/06 4,500,000 5,736,498 (84,926) Japanese Yen 8/24/06 950,000,000 8,484,227 (84,803) South Korean Won 10/19/06 17,750,000,000 18,937,778 (99,889) Swiss Franc 6/28/06 57,800,000 46,924,040 (530,026) --------------- ----------- Total $ 185,800,424 $ (3,836,665)
See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds April 30, 2006 27 Janus Olympus Fund (unaudited) TICKER: JAOLX FUND SNAPSHOT This growth fund invests in what we believe are the market leaders in their respective industries. (CLAIRE YOUNG PHOTO) Claire Young portfolio manager PERFORMANCE OVERVIEW Equity markets were volatile in the fourth quarter of 2005, as investors confronted uneven economic growth and rising interest rates. Consumer confidence continued to recover from its post-hurricane lows, despite relatively lackluster retail spending during the holiday season. New hiring was restrained and there were signs that higher interest rates were starting to temper the strength in home buying. In the first quarter of 2006, however, equity markets posted solid gains, supported by healthy earnings reports, retreating energy prices and resilient economic growth. Indeed, the performance of the economy remained impressive, especially this late into a Federal Reserve (Fed) credit tightening cycle. Consumer spending and housing market activity continued at a healthy, albeit more moderate pace, and corporations projected increases in capital investment. Meanwhile, inflation remained relatively benign by historic standards, despite spikes in fuel prices both at the end of last year and in the first three months of this year. As the Fed continued to step up overnight lending rates, investors began to hope for a near-term end to credit tightening. Against this backdrop, Janus Olympus Fund advanced 10.11%, outpacing both its primary and secondary benchmarks, the Russell 1000(R) Growth Index and the S&P 500(R) Index, which returned 7.06% and 9.64%, respectively. CONTRIBUTORS TO FUND PERFORMANCE Biotechnology company Celgene was the Fund's strongest contributor, reflecting the expanding market opportunities tied to its cancer drug, Revlimid. Originally formulated as a drug for blood-borne cancers, Revlimid has shown potential in the treatment of leukemia and non-Hodgkin's lymphoma. Specifically, Revlimid has shown the ability to slow disease progression and enable patients to remain transfusion independent for over two years. We believe the drug will be approved for these additional uses by the Food and Drug Administration in the coming year, which should boost sales and profits significantly. Another standout was Deutsche Boerse, owner of the Frankfurt Stock Exchange. The German company continues to capitalize on growth in the European financial derivatives market, and recently reported an 80% surge in quarterly earnings. Deutsche Boerse has also benefited from consolidation in the European exchange market, and we believe its hybrid floor-and-electronic trading operation may prove to be the model for other exchanges around the world. We are impressed with the company's business prospects, positioning and valuation, as well as its commitment to returning cash to shareholders in the form of stock repurchase and dividends. The Fund remains significantly overweight in the healthcare arena, where one of our strongest performers was Intuitive Surgical, maker of the innovative Da Vinci automated surgical system. With this system surgeons use computer-guided robotic arms to pinpoint their procedures, allowing for smaller incisions, shorter hospital stays and speedier recoveries. We particularly like this company because it not only makes money on the initial sale of the system, but also from consumables that must be replaced after every few procedures. Among our technology holdings, we benefited from our stake in Germany's SAP, the world's largest seller of business applications software. SAP continues to project double-digit growth in licensing revenues and earnings, and recently captured investor attention with its plans to enter the fast-growing market for on-demand, subscription-based business applications software. Such online software has become a popular alternative with end-users, given the minimal upfront investment and quick turnaround time. We also benefited from a rebound in shares of Research in Motion, maker of the BlackBerry wireless email system. The company was able to settle a patent infringement suit brought by rival NTP, avoiding an injunction on sales of its popular BlackBerry device. We anticipate investor subscriber growth to rebound now that uncertainty over the future of the BlackBerry service has lifted. DETRACTORS FROM FUND PERFORMANCE On the downside, high-end grocery chain Whole Foods Market stumbled as recent operating performance was stunted by costs associated with the rollout if its new higher-volume, higher-margin stores. The company is refining its store model to a larger, "higher return-on-investment" format with unique prepared food offerings that attempt to generate excitement and intense loyalty among its customers. We expect these new venues to bolster the company's profitability going forward. 28 Janus Growth Funds April 30, 2006 (unaudited) With only 3% market share of total U.S. grocery sales, we believe Whole Foods has tremendous growth potential over the next several years as the company penetrates new markets. Also detracting from performance was Internet search and media company Yahoo!, which lost favor with investors after reporting fourth-quarter financial results that only met expectations. However, Yahoo! has benefited from the ongoing migration of advertising dollars from traditional media into the growing Internet space, which allows advertisers to better target and track media spending. We remain confident in the underlying fundamentals supporting Yahoo!, and we will continue to closely monitor their valuations. LOOKING AHEAD In my opinion the economy has remained surprisingly robust despite many headwinds -- devastation from Hurricane Katrina, high budget deficits that at some point will impact monetary policy, moderating consumer demand due to high oil prices and slowing house price appreciation, and corporate profit squeezes from rising raw material prices and weak end-user pricing ability. We remain cautiously optimistic on the economic and market outlook and believe that the economy will continue to grow, albeit at a slower pace. Moreover, we believe that the Federal Reserve may be close to ending this round of credit tightening, which could help alleviate some market uncertainty. In this environment, we expect to see the market continue to favor companies that provide strong earnings growth despite these impediments, so the Fund remains invested predominantly in stocks that we believe can grow organically and have specific catalysts to improve shareholder value. Thank you for your continued investment in Janus Olympus Fund. JANUS OLYMPUS FUND AT A GLANCE 5 LARGEST CONTRIBUTORS TO PERFORMANCE -- HOLDINGS
CONTRIBUTION ------------ Celgene Corp. Biopharmaceutical company - U.S. 1.84% Deutsche Boerse A.G. Marketplace organizer for the trading of shares & securities - Germany 0.72% Intuitive Surgical, Inc. Medical equipment manufacturer - U.S. 0.71% Research In Motion, Ltd. (U.S. Shares) Wireless solutions provider for mobile communications - U.S. 0.54% SAP A.G. (ADR) Software company - Germany 0.49%
5 LARGEST DETRACTORS FROM PERFORMANCE -- HOLDINGS
CONTRIBUTION ------------ Whole Foods Market, Inc. Natural food supermarkets owner/operator - U.S. (0.36%) Yahoo!, Inc. Global Internet media company - U.S. (0.36%) Alcon, Inc. (U.S. Shares) Eye care company - U.S. (0.31%) UnitedHealth Group, Inc. Organized health systems company - U.S. (0.29%) United Therapeutics Corp. Pharmaceutical developer - U.S. (0.22%)
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING ----------------- ----------------- --------------------------- Pharmaceuticals & Biotechnology 2.12% 16.74% 7.88% Diversified Financials 2.06% 8.35% 8.08% Technology Hardware & Equipment 1.18% 8.76% 7.04% Software & Services 1.04% 14.94% 5.44% Automobiles & Components 0.83% 2.36% 0.56%
5 LOWEST CONTRIBUTORS/DETRACTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING ----------------- ----------------- --------------------------- Food & Staples Retailing (0.55%) 4.26% 2.38% Retailing (0.02%) 2.25% 3.59% Media 0.00% 1.26% 3.32% Utilities 0.00% 0.10% 3.30% Other* 0.00% 0.00% 0.00%
* Industry not classified by Global Industry Classification Standard. Janus Growth Funds April 30, 2006 29 Janus Olympus Fund (unaudited) 5 LARGEST EQUITY HOLDINGS --(% of Net Assets) AS OF APRIL 30, 2006 Celgene Corp. Medical - Biomedical and Genetic 4.5% Yahoo!, Inc. Web Portal/Internet Service Providers 3.0% Whole Foods Market, Inc. Food - Retail 2.9% Roche Holding A.G. Medical - Drugs 2.4% SAP A.G. (ADR) Enterprise Software/Services 2.0% ---- 14.8%
ASSET ALLOCATION --(% of Net Assets) AS OF APRIL 30, 2006 (PIE CHART) Common Stock 95.4% Cash and Cash Equivalents 3.5% Preferred Stock 1.1%
Emerging markets comprised 4.2% of total net assets. 5 LARGEST COUNTRY ALLOCATIONS --(% of Investment Securities) (BAR CHART)
AS OF APRIL 30, 2006 -------------------- United States 76.7% Japan 5.8% Germany 4.3% Canada 3.6% Switzerland 3.4%
AS OF OCTOBER 31, 2005 ---------------------- United States 76.0% Switzerland 5.9% Canada 3.6% Japan 2.8% Germany 2.5%
30 Janus Growth Funds April 30, 2006 (unaudited) PERFORMANCE Average Annual Total Return -- for the periods ended April 30, 2006
FISCAL ONE FIVE TEN SINCE YEAR-TO-DATE YEAR YEAR YEAR INCEPTION* ------------ ---- ---- ---- ---------- Janus Olympus Fund 10.11% 26.44% 0.45% 9.78% 11.77% Russell 1000(R) Growth Index 7.06% 15.18% (0.76)% 6.21% 6.81% S&P 500(R) Index 9.64% 15.42% 2.70% 8.94% 9.34% Lipper Quartile N/A 2nd 3rd 2nd 1st Lipper Ranking - based on total return for Multi-Cap Growth Funds N/A** 186/423 188/288 25/95 13/88
(PERFORMANCE GRAPH)
Initial Investment of $10,000 JANUS OLYMPUS FUND S & P 500(R) INDEX RUSSELL 1000(R) GROWTH INDEX ------------------ -------------------- -------------------------------- 4/30/1996 10,000 10,000 10,000 4/30/1998 14,866 17,652 17,344 4/30/2000 39,537 23,682 27,996 4/30/2002 19,613 18,008 15,154 4/30/2004 19,299 19,183 15,789 4/30/2006 25,421 23,544 18,259
Visit janus.com to view up to date performance and characteristic information Data presented represents past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 800.525.3713 or visit www.janus.com for performance current to the most recent month-end. See Notes to Schedules of Investments for index definitions. Total return includes reinvestment of dividends, distributions and capital gains. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. The date of the Lipper ranking is slightly different from when the Fund began operations since Lipper provides fund rankings as of the last day of the month or the first Thursday after fund inception. *The Fund's inception date -- December 29, 1995 **The Fund's fiscal year-to-date Lipper ranking is not available. See "Explanations of Charts, Tables and Financial Statements." The Fund's portfolio may differ significantly from the securities held in the indices. The indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual portfolio. There is no assurance that the investment process will consistently lead to successful investing. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. FUND EXPENSES The example below shows you the ongoing costs (in dollars) of investing in your Fund and allows you to compare these costs with those of other mutual funds. Please refer to page 5 for a detailed explanation of the information presented in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD EXPENSE EXAMPLE (11/1/05) (4/30/06) (11/1/05-4/30/06)* --------------- ----------------------- -------------------- --------------------------- Actual $ 1,000.00 $ 1,101.10 $ 5.11 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.93 $ 4.91
*Expenses are equal to the annualized expense ratio of 0.98%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Janus Growth Funds April 30, 2006 31 Janus Olympus Fund Schedule of Investments(unaudited) As of April 30, 2006
Shares or Principal Amount Value -------------------------------------------- -------------- Common Stock - 95.4% Advertising Sales - 0.8% 349,435 Lamar Advertising Co.* $ 19,215,431 Aerospace and Defense - 1.4% 419,960 Boeing Co. 35,045,662 Agricultural Chemicals - 1.5% Potash Corporation of Saskatchewan, Inc. 380,045 (U.S. Shares) 35,982,661 Apparel Manufacturers - 1.7% 724,460 Coach, Inc.* 23,921,669 1,244,295 Quiksilver, Inc.*,# 17,009,513 -------------- 40,931,182 Applications Software - 1.2% 415,425 Citrix Systems, Inc.* 16,583,766 783,515 Quest Software, Inc.*,# 13,484,293 -------------- 30,068,059 Automotive - Cars and Light Trucks - 1.9% 446,264 BMW A.G.**,# 24,293,868 1,570,600 Nissan Motor Company, Ltd. 20,648,911 -------------- 44,942,779 Building - Mobile Home and Manufactured Homes - 0.6% 293,600 Thor Industries, Inc. 14,820,928 Building - Residential and Commercial - 1.4% 340,620 Desarrolladora Homex S.A. (ADR)*,# 13,052,558 577,560 Pulte Homes, Inc. 21,571,866 -------------- 34,624,424 Casino Hotels - 1.0% 295,055 Harrah's Entertainment, Inc. 24,088,290 Casino Services - 1.2% 760,705 Scientific Games Corp. - Class A*,# 28,975,253 Cellular Telecommunications - 0.9% 3,537,500 China Mobile, Ltd. 20,577,206 Commercial Banks - 1.4% 3,998 Mizuho Financial Group, Inc. 34,093,514 Commercial Services - 1.8% 351,488 CoStar Group, Inc.* 19,841,498 640,200 Park24 Company, Ltd. 23,164,484 -------------- 43,005,982 Commercial Services - Finance - 0.3% 134,845 Moody's Corp. 8,361,738 Computer Services - 0.7% 727,075 Ceridian Corp.* 17,617,027 Computers - 1.0% 115,210 Apple Computer, Inc.* 8,109,632 206,600 Research In Motion, Ltd. (U.S. Shares)*,# 15,831,758 -------------- 23,941,390 Computers - Memory Devices - 2.8% 1,923,395 EMC Corp.* 25,985,066 659,430 SanDisk Corp.* 42,091,417 -------------- 68,076,483 Cosmetics and Toiletries - 0.9% 356,215 Procter & Gamble Co. 20,735,275
Shares or Principal Amount Value -------------------------------------------- -------------- Data Processing and Management - 1.1% 621,370 NAVTEQ Corp.*,# $ 25,799,282 Diagnostic Kits - 1.3% 778,776 Dade Behring Holdings, Inc.# 30,372,264 E-Commerce/Products - 0.7% 265,600 Submarino S.A.* 7,190,417 193,300 Submarino S.A. (GDR)* 10,352,471 -------------- 17,542,888 E-Commerce/Services - 0.9% 605,320 eBay, Inc.* 20,829,061 Electronic Components - Semiconductors - 2.6% 366,485 Advanced Micro Devices, Inc.* 11,855,790 550,855 Broadcom Corp. - Class A*,# 22,645,649 1,182,935 PMC-Sierra, Inc.*,# 14,703,882 418,055 Texas Instruments, Inc. 14,510,689 -------------- 63,716,010 Electronic Forms - 1.6% 972,230 Adobe Systems, Inc.* 38,111,416 Electronic Measuring Instruments - 0.3% 138,354 Trimble Navigation, Ltd.*,# 6,555,213 Energy - Alternate Sources - 0.5% Suntech Power Holdings 380,300 Company, Ltd. (ADR)*,# 13,040,487 Enterprise Software/Services - 2.0% 896,610 SAP A.G. (ADR)**,# 48,981,804 Entertainment Software - 1.4% 601,425 Electronic Arts, Inc.* 34,160,940 Finance - Credit Card - 2.4% 451,595 American Express Co. 24,300,327 644,600 Credit Saison Company, Ltd. 33,796,707 -------------- 58,097,034 Finance - Investment Bankers/Brokers - 6.0% 137,715 Goldman Sachs Group, Inc. 22,074,337 400,110 Merrill Lynch & Company, Inc. 30,512,389 1,313,000 Mitsubishi UFJ Securities Company, Ltd. 20,686,971 1,018,000 Nikko Cordial Corp. 16,477,179 695,760 optionsXpress Holdings, Inc. 21,916,440 284,577 UBS A.G.**,# 33,730,704 -------------- 145,398,020 Finance - Mortgage Loan Banker - 1.0% 486,030 Fannie Mae 24,593,118 Finance - Other Services - 2.7% 41,825 Chicago Mercantile Exchange Holdings, Inc.# 19,155,850 311,293 Deutsche Boerse A.G.**,# 45,026,421 -------------- 64,182,271 Food - Retail - 3.3% 1,155,474 Whole Foods Market, Inc. 70,922,994 530,681 Wild Oats Markets, Inc.*,# 9,117,100 -------------- 80,040,094 Food - Wholesale/Distribution - 1.0% 777,745 Sysco Corp.# 23,246,798 Hazardous Waste Disposal - 0.9% 319,270 Stericycle, Inc.*,# 21,020,737
See Notes to Schedules of Investments and Financial Statements. 32 Janus Growth Funds April 30, 2006 Schedule of Investments(unaudited) As of April 30, 2006
Shares or Principal Amount Value -------------------------- -------------- Hotels and Motels - 1.7% 762,355 Four Seasons Hotels, Inc. $ 41,182,417 Insurance Brokers - 0.9% 732,500 Marsh & McLennan Companies, Inc.# 22,465,775 Internet Infrastructure Software - 0.4% 1,039,960 TIBCO Software, Inc.*,# 8,964,455 Internet Security - 0.8% 699,225 McAfee, Inc.*,# 18,242,780 Medical - Biomedical and Genetic - 5.2% 2,549,272 Celgene Corp.* 107,477,308 242,310 Genentech, Inc.* 19,314,530 -------------- 126,791,838 Medical - Drugs - 4.5% 695,145 Cubist Pharmaceuticals, Inc.* 15,758,937 1,009,100 Merck & Company, Inc. 34,733,222 377,310 Roche Holding A.G.** 58,017,269 -------------- 108,509,428 Medical - Generic Drugs - 1.8% 1,084,650 Teva Pharmaceutical Industries, Ltd. (ADR)# 43,928,325 Medical - HMO - 1.8% 392,985 Coventry Health Care, Inc.* 19,519,565 460,692 UnitedHealth Group, Inc. 22,914,820 -------------- 42,434,385 Medical Instruments - 2.6% 798,685 Boston Scientific Corp.*,# 18,561,439 249,735 Intuitive Surgical, Inc.* 31,716,345 277,025 Kyphon, Inc.*,# 11,510,389 -------------- 61,788,173 Medical Products - 2.1% 244,675 Johnson & Johnson 14,340,402 684,915 Varian Medical Systems, Inc.*,# 35,875,847 -------------- 50,216,249 Networking Products - 1.9% 1,726,842 Cisco Systems, Inc.* 36,177,340 566,035 Juniper Networks, Inc.*,# 10,460,327 -------------- 46,637,667 Oil Companies - Exploration and Production - 0.8% 260,860 EOG Resources, Inc.# 18,320,198 Publishing - Newspapers - 1.0% 638,835 Dow Jones & Company, Inc.# 23,617,730 Radio - 0.5% 559,165 XM Satellite Radio Holdings, Inc.- Class A*,# 11,306,316 Real Estate Management/Services - 0.4% 416,000 Mitsubishi Estate Company, Ltd. 9,097,089 Retail - Apparel and Shoe - 1.0% 640,935 Nordstrom, Inc.# 24,567,039 Retail - Discount - 1.0% 552,765 Wal-Mart Stores, Inc. 24,891,008
Shares or Principal Amount Value -------------------------- -------------- Retail - Drug Store - 0.6% 517,275 CVS Corp. $ 15,373,413 Retail - Restaurants - 0.1% 133,385 Tim Hortons, Inc. (U.S. Shares)*,# 3,621,403 Schools - 0.9% 417,795 Apollo Group, Inc. - Class A*,# 22,828,319 Semiconductor Components/Integrated Circuits - 0.6% 869,670 Cypress Semiconductor Corp.*,# 14,923,537 Semiconductor Equipment - 0.7% ASM Lithography Holding N.V. 743,460 (U.S. Shares)* , ** ,# 15,724,179 Soap and Cleaning Preparations - 0.8% 538,650 Reckitt Benckiser PLC** 19,635,314 Telecommunication Services - 0.3% 482,000 Time Warner Telecom, Inc. - Class A*,# 8,083,140 Therapeutics - 2.5% 642,369 Neurocrine Biosciences, Inc.* 36,846,286 408,925 United Therapeutics Corp.* 24,351,484 -------------- 61,197,770 Transportation - Services - 2.7% 690,155 C.H. Robinson Worldwide, Inc.# 30,608,374 439,755 United Parcel Service, Inc. - Class B 35,650,938 -------------- 66,259,312 Web Portals/Internet Service Providers - 3.0% 2,198,520 Yahoo!, Inc.* 72,067,486 Wireless Equipment - 2.6% 1,008,275 Crown Castle International Corp.*,# 33,928,454 574,635 QUALCOMM, Inc. 29,501,761 -------------- 63,430,215 -------------- Total Common Stock (cost $1,787,420,204) 2,306,895,681 Preferred Stock - 1.1% Electronic Components - Semiconductors - 1.1% Samsung Electronics Company, Ltd. 48,870 (cost $18,295,111) 26,476,431 Money Market - 2.1% Janus Institutional Cash Reserves Fund 50,000,000 4.83% (cost $50,000,000) 50,000,000 Other Securities - 13.1% State Street Navigator Securities Lending 316,899,102 Prime Portfolio+ (cost $316,899,102) 316,899,102 Time Deposit - 0.8% ING Financial, ETD $ 19,900,000 4.86%, 5/1/06 (cost $19,900,000) 19,900,000 -------------- Total Investments (total cost $2,192,514,417) -- 112.5% 2,720,171,214 Liabilities, net of Cash, Receivables and Other Assets -- (12.5)% (302,136,913) -------------- Net Assets -- 100% $2,418,034,301
See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds April 30, 2006 33 Janus Olympus Fund Schedule of Investments (unaudited) As of April 30, 2006 Summary of Investments by Country
% of Investment Country Value Securities ------- ----- --------------- Brazil $ 17,542,888 0.6% Canada 96,618,239 3.6% Cayman Islands 13,040,487 0.5% Germany 118,302,093 4.3% Hong Kong 20,577,206 0.7% Israel 43,928,325 1.6% Japan 157,964,855 5.8% Mexico 13,052,558 0.5% Netherlands 15,724,179 0.6% South Korea 26,476,431 1.0% Switzerland 91,747,973 3.4% United Kingdom 19,635,314 0.7% United States++ 2,085,560,666 76.7% -------------- ----- Total $2,720,171,214 100.0%
++ Includes Short-Term Securities and Other Securities (62.5% excluding Short-Term Securities and Other Securities) Forward Currency Contracts, Open
Currency Sold and Currency Currency Unrealized Settlement Date Units Sold Value in $ U.S. Gain/(Loss) ----------------- ---------- --------------- ----------- British Pound 6/28/06 4,600,000 $ 8,394,145 $ (167,735) British Pound 8/10/06 400,000 730,440 (35,396) Euro 6/28/06 28,750,000 36,408,001 (828,151) Euro 10/19/06 10,500,000 13,385,163 (198,160) Swiss Franc 6/28/06 57,500,000 46,680,489 (503,169) Swiss Franc 8/10/06 4,000,000 3,262,057 (163,299) -------------- ------------ Total $ 108,860,295 $ (1,895,910)
See Notes to Schedules of Investments and Financial Statements. 34 Janus Growth Funds April 30, 2006 Janus Orion Fund (unaudited) TICKER: JORNX FUND SNAPSHOT This focused growth fund invests in a small number of well-researched companies, hand-picked for their upside potential. (RON SACHS PHOTO) Ron Sachs portfolio manager PERFORMANCE OVERVIEW Equity markets roared out of the gate in early 2006, and I am happy to report that the stocks we held in Janus Orion Fund performed well. The Fund was up 22.45% during the six-month period ended April 30, 2006, versus a return of 8.19% for the Fund's primary benchmark, the Russell 3000(R) Growth Index, and a return of 9.64% for the S&P 500(R) Index, the Fund's secondary benchmark. More importantly, longer-term performance has also been strong. Janus Orion Fund was up 10.72%, annualized for the five-year period ended April 30, 2006, versus a loss of 0.22% for the Russell 3000(R) Growth Index and a return of 2.70% for the S&P 500(R) Index. INVESTMENT STRATEGY I believe it's important to invest with a longer time horizon in mind and have therefore been working to focus on the long term for each stock we analyze and own in the Fund. Few investors focus on the long-term because it is very difficult to do. I must admit that ignoring the short-term noise is challenging when almost every waking hour is spent thinking about companies, stocks and the market. Even the academic literature on investment psychology demonstrates that a short-term focus is wired into our "investment-DNA." The more I understand how this myopia colors investment decision making, the more I believe that taking advantage of the mistakes caused by short-term thinking may lead to good results. That said, it is difficult to ignore some short-term data points on companies in the Fund that I believe are material to stock price movements. Don't expect me to completely disregard the short-term, but do expect me to endeavor to focus more of my analysis on the long-term. I believe thinking about the long-term competitive positioning of the businesses we own is my strength and the strength of the entire Janus research team. Products of this thinking can be seen in our investments. We own some fast-growing companies with very wide competitive moats that have protected their businesses. Examples and important contributors to the Fund include VistaPrint, Intuitive Surgical and Celgene. I realize that the short-term thinking of the market can lead to short-term volatility in these positions because the stocks appear expensive relative to near-term earnings expectations, but I truly believe that the best strategy is to establish positions in these great businesses for the long-term., I adjust position sizes in an attempt to take advantage of opportunities the market may give us and to reflect the risk of near-term volatility. At the same time, I try not to let the fear of short-term volatility cause me to miss the best long-term opportunities where our valuation models indicate the potential for a significant increase in valuation. For a variety of reasons, most professional investment managers are especially sensitive to short-term volatility in individual holdings -- I take advantage of the investment opportunities that their individual position myopia present to us. You will notice that the number of holdings in the Fund has increased. I am troubled by this. I believe the best investment strategy is to build a concentrated portfolio where our best ideas are meaningful positions that can make a significant impact on the Fund. Position size should increase with our level of conviction that the risk/reward tradeoff for owning the stock is heavily skewed in our favor. You and I both want the best ideas to be big enough positions to impact positive Fund returns. Another way of explaining my view on portfolio concentration is that I believe our 100th best idea should be sold to increase position sizes in our 99 better ideas, if we have conviction in those ideas. As of April 30, 2006, the Fund is less concentrated than I would like primarily because strong performance has changed the risk/reward tradeoff in many holdings. Also, a number of interesting new ideas were small positions in the Fund during the period. I intend to either develop the conviction to make these positions bigger or to determine through further analysis that the stocks aren't the best risk/reward tradeoffs available and sell them, which may lead to a more concentrated portfolio. CELGENE, ABB AND TRIMBLE NAVIGATION WERE IMPORTANT CONTRIBUTORS Celgene, a leading developer of cancer compounds, was a big contributor to the Fund. Celgene's progress in demonstrating the opportunity for its existing and new compounds for the treatment of a variety of cancers has been rewarded by the market. In my opinion, the market continues to underestimate the size of the opportunity for Celgene's compounds and the profitability of its business model. That said, I believe the risk/reward tradeoff in the stock has changed as its shares have rapidly appreciated. As a result, I may look for opportunities to take profits and reinvest the proceeds in more compelling ideas. ABB, a leading supplier of electricity transmission and distribution systems based in Zurich, Switzerland, was a standout performer. The company has had continued success in improving margins, as it rationalizes its production facilities and takes advantage of a sustained environment of strong demand to drive improved pricing. ABB's leading market position and technological leadership enable the company to earn attractive returns. I believe the global demand for electricity should continue to grow at multiples of the rate of Janus Growth Funds April 30, 2006 35 Janus Orion Fund (unaudited) economic growth, providing a tailwind to the operational improvements the company is working to deliver. Trimble Navigation was another strong performer. Trimble is a leader in GPS systems for industrial, farming, mining and construction industries. I believe the complexity of these systems and the distribution relationships Trimble has established with heavy equipment suppliers to these industries will create a long-term barrier to competition. Use of GPS gives Trimble customers a high return on investment because Trimble systems drive cost savings in terms of fewer hours of labor and fewer mistakes that need to be corrected. GPS system penetration in these markets remains very low, despite the great results these systems have delivered. That low penetration gives me confidence that Trimble should continue to demonstrate strong growth. YAHOO! DETRACTED FROM PERFORMANCE Yahoo!, a leading search engine and online media provider, was the largest detractor from performance for the period. I believe Yahoo!'s large base of regular and registered users is a long-term competitive advantage. The company will soon restructure its paid-search algorithm with the goals of driving more relevant search results and higher revenues from each search. We expect to see these improvements later in 2006 and 2007, and the stock market may wait for clear evidence that the improved revenue generation strategies are working before rewarding Yahoo! shareholders. We don't believe the company's stock price reflects either the short-term opportunity to dramatically improve revenues from paid search or the longer-term opportunity to drive more traditional display advertising. We waited for a pullback in the shares for our buying opportunity, but were clearly premature. LOOKING FORWARD I remain optimistic that we can continue to identify great businesses at reasonable prices in our attempt to deliver strong results in varying economic environments. I look forward to continuing to update you on the Fund's performance. Thank you for your investment in Janus Orion Fund. JANUS ORION FUND AT A GLANCE 5 LARGEST CONTRIBUTORS TO PERFORMANCE -- HOLDINGS
CONTRIBUTION ------------ Celgene Corp. Biopharmaceutical company - U.S. 2.25% ABB, Ltd. Holding company - U.S. 1.61% Arcelor Brasil S.A. Steel producer - Brazil 1.60% Finansbank A.S. International banking network - Turkey 1.19% Trimble Navigation, Ltd. Developer of advanced positioning product (GPS) solutions - U.S. 1.12%
5 LARGEST DETRACTORS FROM PERFORMANCE -- HOLDINGS
CONTRIBUTION ------------ Yahoo!, Inc. Global Internet media company - U.S. (0.49%) XM Satellite Radio Holdings, Inc. - Class A Audio entertainment provider - U.S. (0.47%) United Therapeutics Corp. Pharmaceutical developer - U.S. (0.42%) Taro Pharmaceutical Industries, Ltd. Pharmaceutical company - U.S. (0.39%) CNET Networks, Inc. Global web information provider - U.S. (0.27%)
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING ----------------- ----------------- --------------------------- Materials 3.02% 7.07% 3.01% Retailing 2.46% 8.13% 3.59% Banks 1.82% 3.90% 7.48% Pharmaceuticals & Biotechnology 1.72% 12.04% 7.88% Food, Beverage & Tobacco 1.67% 3.29% 4.61%
5 LOWEST CONTRIBUTORS/DETRACTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING ----------------- ----------------- --------------------------- Media (0.87%) 2.23% 3.32% Software & Services (0.25%) 4.26% 5.44% Automobiles & Components 0.00% 0.00% 0.56% Utilities 0.00% 0.00% 3.30% Household & Personal Products 0.02% 0.66% 2.44%
36 Janus Growth Funds April 30, 2006 (unaudited) 5 LARGEST EQUITY HOLDINGS --(% of Net Assets) AS OF APRIL 30, 2006
Dade Behring Holdings, Inc. Diagnostic Kits 6.7% Celgene Corp. Medical - Biomedical and Genetic 4.8% CapitalSource, Inc. REIT - Mortgages 4.7% VistaPrint, Ltd. Printing - Commercial 4.1% National Financial Partners Corp. Investment Management and Advisory Services 4.1% ---- 24.4%
ASSET ALLOCATION --(% of Net Assets) AS OF APRIL 30, 2006 (PIE CHART) Common Stock 98.9% Cash and Cash Equivalents 1.1%
Emerging markets comprised 22.3% of total net assets. 5 LARGEST COUNTRY ALLOCATIONS --(% of Investment Securities) (BAR CHARTS)
AS OF APRIL 30, 2006 -------------------- United States 69.9% Brazil 9.0% Switzerland 4.6% Mexico 3.7% Bermuda 3.3%
AS OF OCTOBER 31, 2005 ---------------------- United States 75.6% Brazil 8.3% Israel 2.8% Switzerland 2.8% France 2.8%
Janus Growth Funds April 30, 2006 37 Janus Orion Fund (unaudited) PERFORMANCE (PERFORMANCE GRAPH)
Initial investment of $10,000 JANUS ORION FUND S & P 500(R) INDEX RUSSELL 3000(R) GROWTH INDEX ---------------- ------------------------ -------------------------------- 6/30/2000 $ 10,000 $ 10,000 $ 10,000 4/30/2002 $ 5,556 $ 7,576 $ 5,389 4/30/2004 $ 6,158 $ 8,071 $ 5,630 4/30/2006 $ 9,579 $ 9,905 $ 6,602
Average Annual Total Return -- for the periods ended April 30, 2006
FISCAL YEAR- ONE FIVE SINCE TO-DATE YEAR YEAR INCEPTION* ------------ ---- ---- ---------- Janus Orion Fund 22.45% 41.50% 10.72% (0.73)% Russell 3000(R) Growth Index 8.19% 16.90% (0.22)% (6.87)% S&P 500(R) Index 9.64% 15.42% 2.70% (0.16)% Lipper Quartile N/A 1st 1st 2nd Lipper Ranking - based on total return for Multi-Cap Growth Funds N/A** 11/423 8/288 61/230
Visit janus.com to view up to date performance and characteristic information Data presented represents past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 800.525.3713 or visit www.janus.com for performance current to the most recent month-end. See Notes to Schedules of Investments for index definitions. Total return includes reinvestment of dividends, distributions and capital gains. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. *The Fund's inception date -- June 30, 2000 **The Fund's fiscal year-to-date Lipper ranking is not available. See "Explanations of Charts, Tables and Financial Statements." The Fund's portfolio may differ significantly from the securities held in the indices. The indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual portfolio. The Fund is classified as "nondiversified," meaning it has the ability to take larger positions in a smaller number of issuers than a fund that is classified as "diversified." Nondiversified funds may experience greater price volatility. Concentration may lead to greater price volatility. There is no assurance that the investment process will consistently lead to successful investing. The Fund may have significant exposure to emerging markets. In general, emerging market investments have historically been subject to significant gains and/or losses. As such, the Fund's returns and NAV may be subject to such volatility. The Fund has experienced significant gains due, in part, to its investments in Brazil. While holdings are subject to change without notice, the Fund's returns and NAV may be affected to a large degree by fluctuations in currency exchange rates or political or economic conditions in Brazil. This Fund may have significant exposure to emerging markets which may lead to greater price volatility. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. Returns have sustained significant gains due to market volatility in the financials and healthcare sectors. FUND EXPENSES The example below shows you the ongoing costs (in dollars) of investing in your Fund and allows you to compare these costs with those of other mutual funds. Please refer to page 5 for a detailed explanation of the information presented in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD EXPENSE EXAMPLE (11/1/05) (4/30/06) (11/1/05-4/30/06)* --------------- ----------------------- -------------------- --------------------------- Actual $ 1,000.00 $ 1,224.50 $ 5.41 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.93 $ 4.91
*Expenses are equal to the annualized expense ratio of 0.98%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 38 Janus Growth Funds April 30, 2006 Janus Orion Fund Schedule of Investments(unaudited) As of April 30, 2006
Shares or Principal Amount Value -------------------------- ----- Common Stock - 98.9% Agricultural Operations - 0.2% BrasilAgro - Companhia Brasileira de 5,300 Propriedades Agricolas $ 2,507,570 Beverages - Wine and Spirits - 2.6% 2,860,628 Davide Campari - Milano S.P.A. 27,969,655 Broadcast Services and Programming - 0.5% 259,455 Liberty Global, Inc. - Class A* 5,373,313 Building - Residential and Commercial - 1.5% 381,940 Desarrolladora Homex S.A. (ADR)*,# 14,635,940 98,500 Rossi Residencial S.A. 1,038,333 -------------- 15,674,273 Cellular Telecommunications - 3.3% 960,000 America Movil S.A. de C.V. - Series L (ADR)# 35,433,600 Chemicals - Specialty - 2.4% 420,860 Cytec Industries, Inc.# 25,449,404 Commercial Banks - 4.6% 495,425 Banco Marcro Bansud S.A. (ADR)* 11,478,997 711,000 Banco Nossa Caixa S.A. 16,046,047 4,178,657 Finansbank A.S.* 21,801,689 -------------- 49,326,733 Commercial Services - 2.5% 487,775 CoStar Group, Inc.* 27,534,899 Computers - 1.6% 230,715 Research In Motion, Ltd. (U.S. Shares)* 17,679,690 Diagnostic Kits - 6.7% 1,871,865 Dade Behring Holdings, Inc.# 73,002,734 Diversified Minerals - 2.3% 13,670,230 Caemi Mineracao e Metalurgica S.A. 25,152,699 E-Commerce/Products - 1.4% 412,660 Submarino S.A.* 11,171,677 83,000 Submarino S.A. (GDR)* 4,445,190 -------------- 15,616,867 E-Commerce/Services - 3.7% 1,391,769 IAC/InterActiveCorp* 40,180,371 Electronic Components - Semiconductors - 1.6% 628,150 MIPS Technologies, Inc.* 4,654,592 378,085 Texas Instruments, Inc.# 13,123,330 -------------- 17,777,922 Electronic Measuring Instruments - 2.1% 467,890 Trimble Navigation, Ltd.* 22,168,628 Engineering - Research and Development Services - 3.2% 2,460,267 ABB, Ltd.*,# 35,112,664 Entertainment Software - 0.9% 190,677 UbiSoft Entertainment S.A.*,# 9,449,173 Finance - Other Services - 3.7% 62,060 Chicago Mercantile Exchange Holdings, Inc.# 28,423,480 1,001,720 MarketAxess Holdings, Inc.* 11,179,195 -------------- 39,602,675 Home Furnishings - 1.9% 1,303,305 Tempur-Pedic International, Inc.*,# 20,579,186 Internet Content - Information/News - 0.8% 835,179 CNET Networks, Inc.*,# 9,003,230
Shares or Principal Amount Value -------------------------- ----- Investment Management and Advisory Services - 4.1% 848,945 National Financial Partners Corp.# $ 44,145,140 Medical - Biomedical and Genetic - 4.8% 1,228,370 Celgene Corp.* 51,788,078 Medical - Drugs - 2.4% 168,756 Roche Holding A.G. 25,948,854 Medical - Generic Drugs - 1.6% 428,390 Teva Pharmaceutical Industries, Ltd. (ADR)# 17,349,795 Medical Instruments - 1.8% 152,081 Intuitive Surgical, Inc.* 19,314,287 Multi-Line Insurance - 2.5% 554,210 Assurant, Inc. 26,696,296 Oil Companies - Exploration and Production - 1.3% 203,950 EOG Resources, Inc. 14,323,409 Oil Companies - Integrated - 1.0% 76,830 Amerada Hess Corp.# 11,007,434 Printing - Commercial - 4.1% 1,383,900 VistaPrint, Ltd.*,# 44,257,122 Radio - 1.3% 684,455 XM Satellite Radio Holdings, Inc. - Class A*,# 13,839,680 REIT - Mortgages - 4.7% 2,156,342 CapitalSource, Inc.# 50,674,037 Retail - Restaurants - 0.2% 39,235 Chipotle Mexican Grill, Inc. - Class A*,# 2,047,675 Steel - Producers - 3.6% 2,118,722 Arcelor Brasil S.A. 39,085,193 Steel - Specialty - 0.8% 255,689 Companhia Siderurgica Nacional S.A. (ADR)# 9,002,810 Storage and Warehousing - 2.3% 757,860 Mobile Mini, Inc.* 24,994,223 Sugar - 1.9% 1,459,110 Bajaj Hindusthan, Ltd. 16,779,765 335,300 Bajaj Hindusthan, Ltd. (GDR) (144A)Section 3,854,676 -------------- 20,634,441 Telecommunication Services - 2.9% 907,250 NeuStar, Inc. - Class A*,# 31,844,475 Therapeutics - 1.3% 234,460 United Therapeutics Corp.* 13,962,093 Transportation - Marine - 1.3% 289,145 Alexander & Baldwin, Inc.# 14,419,661 Transportation - Railroad - 1.1% 190,500 All America Latina Logistica (GDR) 12,049,787 Transportation - Services - 2.0% 189,450 FedEx Corp. 21,811,379 Web Hosting/Design - 1.7% 275,340 Equinix, Inc.* 18,144,906 Web Portals/Internet Service Providers - 2.1% 22,735 Answers Corp.* 275,094 674,215 Yahoo!, Inc.* 22,100,767 -------------- 22,375,861 Wireless Equipment - 0.6% 196,465 Crown Castle International Corp.*# 6,611,047 -------------- Total Common Stock (cost $808,626,749) 1,070,922,969
See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds April 30, 2006 39 Janus Orion Fund Schedule of Investments(unaudited) As of April 30, 2006
Shares or Principal Amount Value -------------------------- ----- Other Securities - 23.1% State Street Navigator Securities Lending 250,086,433 Prime Portfolio+ (cost $250,086,433) $ 250,086,433 Time Deposit - 1.6% ING Financial, ETD $ 17,100,000 4.86%, 5/1/06 (cost $17,100,000) 17,100,000 --------------- Total Investments (total cost $1,075,813,182) -- 123.6% 1,338,109,402 Liabilities, net of Cash, Receivables and Other Assets -- (23.6)% (255,882,516) --------------- Net Assets -- 100% $1,082,226,886
Summary of Investments by Country
% of Investment Country Value Securities ------- ----- --------------- Argentina $ 11,478,997 0.9% Bermuda 44,257,122 3.3% Brazil 120,499,306 9.0% Canada 17,679,690 1.3% France 9,449,173 0.7% India 20,634,441 1.6% Israel 17,349,795 1.3% Italy 27,969,655 2.1% Mexico 50,069,540 3.7% Switzerland 61,061,518 4.6% Turkey 21,801,689 1.6% United States++ 935,858,476 69.9% -------------- ------ Total $1,338,109,402 100.0%
++Includes Short-Term Securities and Other Securities (50.0% excluding Short-Term Securities and Other Securities) See Notes to Schedules of Investments and Financial Statements. 40 Janus Growth Funds April 30, 2006 Janus Triton Fund (unaudited) TICKER: JATTX FUND SNAPSHOT A growth fund that focuses on small- and mid-sized companies believed to have solid growth potential. (BLAINE ROLLINS PHOTO) Blaine Rollins portfolio manager PERFORMANCE OVERVIEW Janus Triton Fund finished the six months ended April 2006, on a strong note, with small- and medium-sized companies (areas in which Janus Triton Fund primarily invests) as the star performers. This may have taken some investors by surprise, as many market forecasters had predicted that smaller stocks -- after leading the way in 2005 -- might take a backseat in 2006. Instead, small- and mid-caps continued to surge, seemingly unaffected by market uncertainty over interest rates, which has been the most significant macroeconomic issue in recent months. Early in 2006, the new Federal Reserve Board (Fed) Chairman, Ben Bernanke, expressed his intention to stay focused on containing inflation -- a message some investors interpreted as a sign that the Fed's tightening campaign may last longer than expected. This news may have mitigated gains in some areas, but didn't keep the small- and mid-cap markets from enjoying a bullish quarter. For the six-month period, the Fund returned 26.98% significantly outperforming its benchmark, the Russell 2500(TM) Growth Index, which gave back 19.11%. Since taking over management of the Fund on February 1, I have continued in the same vein as Ron Sachs, the Fund's previous manager, employing a disciplined, bottom-up investment process, leveraging Janus' in-depth research and focusing on what I believe are solid growth companies with top-line revenue growth and strong management teams. Going forward, I expect to increase the breadth of the Fund by adding more positions and diversifying across more geographies. CONTRIBUTORS INCLUDED ADVERTISING, PRINTING AND AGRIBUSINESS STOCKS Although we do not specifically target geographical locations -- and typically have more stringent growth requirements for companies in emerging markets -- our careful selection process, which entails researching potential investments on a name-by-name basis, has yielded many opportunities abroad. Indeed, the leading performer in the period was Focus Media, a Chinese advertising firm that uses liquid crystal display (LCD) panels to target consumers in 44 major Chinese cities. Another international standout was VistaPrint, a family-run company that operates its business online. This innovative company uses technology to bring long-run print economics to small businesses. It runs all of its business through a Web site where consumers and businesses can purchase business cards, stationery, and other customized printed products that VistaPrint then ships from two centralized locations in North America and Europe. VistaPrint's cost advantage has allowed the company to deliver superior print quality to customers at a significant savings and has generated fantastic margins and returns on capital. The stock has been strong as the company has continued to deliver rapid revenue and earnings growth. We believe VistaPrint should be a long-term share gainer in a huge market for small business and consumer printing. Due to the company's success in marketing a basic "bricks and mortar" idea using the World Wide Web, it has established one of the top brand name presences for small businesses in the world. The Fund's third-best performer was another foreign stock, Cosan, a Brazilian company that refines sugar and ethanol from sugar cane. There is a sugar shortage occurring in the world as populations in developing countries are becoming wealthier and changing their diets to include more sugar. On the supply side, the removal of global tariffs (especially in Europe) is causing a decline in the most uneconomical production. A further wrench into the supply/demand balance has been rising energy costs, which has put upward pressure on alternative fuels, ethanol among them. The easiest way to produce ethanol is from sugar cane and the most efficient producers can make it today for $1 per gallon, thus putting the breakeven of ethanol production at about $23 per barrel of crude oil. Our attraction to this company is based on commodity conditions rather than "emerging market" themes. DETRACTORS INCLUDED INTERNET, TELECOMMUNICATIONS AND HEALTHCARE STOCKS Elsewhere, hurting our performance was March Networks, a provider of Internet protocol (IP) based digital video surveillance solutions. We found a great business, in our opinion, but our purchase was ill-timed. We bought the stock after an exceptional quarter and just before Cisco's acquired entry into the business, and therefore suffered a loss during the period. Nonetheless, we believe the business is extremely high quality. Validation of the company's technology came from Wal-Mart, which last year signed a contract to roll out the product to most of the U.S. store base for video recording Janus Growth Funds April 30, 2006 41 Janus Triton Fund (unaudited) all cash register checkouts. We therefore maintained a position in March Networks. Another laggard was Hikari Tsushin, a Japanese company whose core business is the provision of financial call center outsourcing services for insurance companies. We saw Hikari's stock fall in sympathy with other Japanese companies spooked by the Livedoor scandal (Livedoor is not a Fund holding). Livedoor, a provider of services such as concert ticket sales through the Internet, was recently accused of doctoring its financial reports. We remain confident in Hikari, and continue to own the stock for its growing financial call center business, which we believe supports the valuation of the entire enterprise. Taro Pharmaceuticals was another disappointment during the period. This company focuses on generic ointments and creams, a business that has some very attractive characteristics because of the limited number of competitors that typically enter each product category. It also has superior product line breadth. Unfortunately, Taro's recent results show that the competitive dynamics in its businesses are similar to the cutthroat competition in the pill-based generics industry. Taro's lackluster results indicate that distributors have greater leverage over Taro than our industry analysis leads us to believe. That said, we have subsequently liquidated the holding. LOOKING FORWARD The small- and mid-cap markets are always rife with opportunity, and we are looking forward to continuing our search for companies poised for growth. Our strategy of buying great businesses at attractive prices remains unchanged. We also expect to maintain a significant cash level in the Fund. Given the high quality of our research, we believe that having funds on hand to facilitate quick action when necessary may be a boon to our shareholders over time. Thank you for your investment in Janus Triton Fund. JANUS TRITON FUND AT A GLANCE 5 LARGEST CONTRIBUTORS TO PERFORMANCE -- HOLDINGS
CONTRIBUTION ------------ Focus Media Holding, Ltd. (ADR) Out-of-home advertising network operator - China 2.72% VistaPrint, Ltd. Online graphic design supplier - U.S. 2.51% Cosan S.A. Industria e Comercio Food and beverage producer and distributor - Brazil 1.96% Submarino S.A. Internet retailer - Brazil 1.83% Trimble Navigation, Ltd. Developer of advanced positioning product (GPS) solutions - U.S. 1.74%
5 LARGEST DETRACTORS FROM PERFORMANCE -- HOLDINGS
CONTRIBUTION ------------ March Networks Corp. Internet protocol-based digital video surveillance producer - Canada (0.95%) Hikari Tsushin, Inc. Communications and technology distributor - Japan (0.60%) Taro Pharmaceuticals, Inc. - Class B Pharmaceutical company - U.S. (0.49%) United Therapeutics Corp. Biotechnology company - U.S. (0.43%) China GrenTech Corporation, Ltd. (ADR) Wireless communications products and services provider - China (0.34%)
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING ----------------- ----------------- --------------------------- Retailing 4.65% 11.01% 6.39% Technology Hardware & Equipment 2.96% 5.04% 7.42% Food, Beverage & Tobacco 2.96% 3.31% 0.38% Media 2.76% 3.13% 2.30% Pharmaceuticals & Biotechnology 2.58% 10.62% 6.41%
5 LOWEST CONTRIBUTORS/DETRACTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING ----------------- ----------------- --------------------------- Household & Personal Products (0.20%) 0.84% 0.79% Food & Staples Retailing (0.16%) 0.37% 0.33% Utilities 0.00% 0.00% 0.37% Materials 0.03% 1.31% 3.47% Banks 0.04% 0.42% 3.21%
42 Janus Growth Funds April 30, 2006 (unaudited) 5 LARGEST EQUITY HOLDINGS -- (% of Net Assets) AS OF APRIL 30, 2006
VistaPrint, Ltd. Printing - Commercial 3.5% W-H Energy Services, Inc. Oil - Field Services 2.8% Bankrate, Inc. Commercial Services - Finance 2.4% Kenexa Corp. Human Resources 2.1% Cosan S.A. Industria e Comercio Sugar 2.0% ---- 12.8%
ASSET ALLOCATION -- (% of Net Assets) AS OF APRIL 30, 2006 (PIE CHART) Common Stock 88.7% Cash and Cash Equivalents 11.3%
Emerging markets comprised 12.3% of total net assets. 5 LARGEST COUNTRY ALLOCATIONS -- (% of Investment Securities) (BAR CHARTS)
AS OF APRIL 30, 2006 -------------------- United States 72.2% Brazil 6.2% Cayman Islands 3.9% Bermuda 3.5% Japan 2.4%
AS OF OCTOBER 31, 2005 ---------------------- United States 81.0% Brazil 5.1% Canada 3.8% Bermuda 2.4% Cayman Islands 2.2%
Janus Growth Funds April 30, 2006 43 Janus Triton Fund (unaudited) PERFORMANCE (PERFORMANCE GRAPH)
Initial investment of $10,000 JANUS TRITON FUND RUSSELL 2500(TM) GROWTH INDEX ----------------- -------------------------------- 2/25/2005* $ 10,000 $ 10,000 4/30/2005 $ 9,600 $ 9,145 10/31/2005 $ 10,860 $ 10,294 4/30/2006 $ 13,780 $ 12,261
Average Annual Total Return --for the periods ended April 30, 2006
FISCAL YEAR- ONE SINCE TO-DATE YEAR INCEPTION* ------------ ---- ---------- Janus Triton Fund 26.98% 43.55% 31.37% Russell 2500(TM) Growth Index 19.11% 34.07% 18.93% Lipper Quartile N/A 1st 1st Lipper Ranking - based on total return for Small-Cap Growth Funds N/A** 59/533 14/520
Visit janus.com to view up to date performance and characteristic information Data presented represents past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 800.525.3713 or visit www.janus.com for performance current to the most recent month-end. See Notes to Schedules of Investments for index definitions. Total return includes reinvestment of dividends, distributions and capital gains. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. *The Fund's inception date -- February 25, 2005 **The Fund's fiscal year-to-date Lipper ranking is not available. See "Explanations of Charts, Tables and Financial Statements." The Fund's portfolio may differ significantly from the securities held in the index. The index is not available for direct investment; therefore its performance does not reflect the expenses associated with the active management of an actual portfolio. Janus Capital Management LLC has contractually agreed to waive the Fund's total operating expenses to levels indicated in the prospectus until at least March 1, 2007. Without such waivers, total return would have been lower. There is no assurance that the investment process will consistently lead to successful investing. Funds that emphasize investments in smaller companies may experience greater price volatility. The Fund may have significant exposure to emerging markets. In general, emerging market investments have historically been subject to significant gains and/or losses. As such, the Fund's returns and NAV may be subject to such volatility. Due to certain investment strategies, the Fund may have an increased position in cash for temporary defensive purposes. FUND EXPENSES The example below shows you the ongoing costs (in dollars) of investing in your Fund and allows you to compare these costs with those of other mutual funds. Please refer to page 5 for a detailed explanation of the information presented in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD EXPENSE EXAMPLE (11/1/05) (4/30/06) (11/1/05-4/30/06)* --------------- ----------------------- -------------------- --------------------------- Actual $ 1,000.00 $ 1,269.80 $ 6.08 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.44 $ 5.41
*Expenses are equal to the annualized expense ratio of 1.08%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Expenses may include the effect of contractual waivers by Janus Capital. 44 Janus Growth Funds April 30, 2006 Janus Triton Fund Schedule of Investments (unaudited) As of April 30, 2006
Shares or Principal Amount Value -------------------------- ----- Common Stock - 88.7% Advertising Sales - 1.3% 35,325 Focus Media Holding, Ltd. (ADR)* $ 2,133,277 Aerospace and Defense - 0.6% 38,130 TransDigm Group, Inc.* 942,955 Apparel Manufacturers - 1.8% 55,735 Quiksilver, Inc.* 761,897 62,705 Volcom, Inc.* 2,236,688 -------------- 2,998,585 Applications Software - 0.9% 87,335 Quest Software, Inc.* 1,503,035 Auction House - Art Dealer - 1.6% 13,500 Ritchie Bros. Auctioneers, Inc. (U.S. Shares) 727,650 66,665 Sotheby's Holdings, Inc. - Class A* 1,999,283 -------------- 2,726,933 Beverages - Wine and Spirits - 0.4% 61,855 Davide Campari - Milano S.P.A. 604,784 Building - Residential and Commercial - 0.9% 39,730 Desarrolladora Homex S.A. (ADR)* 1,522,454 Building and Construction Products - Miscellaneous - 0.9% 23,065 NCI Building Systems, Inc.* 1,498,994 Business to Business/E-Commerce - 1.3% 231,110 webMethods, Inc.* 2,211,723 Cellular Telecommunications - 0.8% 21,100 Hikari Tsushin, Inc. 1,304,562 Chemicals - Specialty - 0.8% 21,090 Cytec Industries, Inc. 1,275,312 Commercial Banks - 0.7% 23,450 SVB Financial Group* 1,190,557 Commercial Services - 1.3% 38,580 CoStar Group, Inc.* 2,177,841 Commercial Services - Finance - 2.4% 83,710 Bankrate, Inc.* 4,040,682 Computers - Memory Devices - 0.5% 13,785 SanDisk Corp.* 879,897 Diagnostic Equipment - 0.5% 22,860 Neurometrix, Inc.* 862,279 Dialysis Centers - 0.6% 84,415 Dialysis Corporation of America* 1,065,317 Diversified Operations - 0.8% 542,562 Triveni Engineering & Industries, Ltd. 1,258,526 E-Commerce/Products - 1.9% 114,960 Submarino S.A.* 3,112,238 Electric - Distribution - 0.4% 79,500 Equatorial Energia S.A.* 590,441 Electronic Components - Semiconductors - 5.7% 439,123 ARM Holdings PLC 1,089,039 70,225 LSI Logic Corp.* 747,896 28,665 Microsemi Corp.* 783,128 74,475 MIPS Technologies, Inc.* 551,860 41,150 Netlogic Microsystems, Inc.* 1,657,111 109,165 PMC-Sierra, Inc.* 1,356,921 66,454 Silicon-On-Insulator Technologies (SOITEC)* 2,168,910 29,675 SiRF Technology Holdings, Inc.* 1,013,401 -------------- 9,368,266
Shares or Principal Amount Value -------------------------- ----- Electronic Measuring Instruments - 0.7% 23,855 Trimble Navigation, Ltd.* $ 1,130,250 E-Marketing/Information - 0.8% 127,455 24/7 Real Media, Inc.* 1,289,845 Enterprise Software/Services - 1.7% 12,300 Nomura Research Institute, Ltd. 1,527,440 92,205 Omnicell, Inc.* 1,228,171 -------------- 2,755,611 E-Services/Consulting - 1.0% 87,545 RightNow Technologies, Inc.* 1,620,458 Fiduciary Banks - 0.8% 21,660 Northern Trust Corp. 1,275,557 Finance - Investment Bankers/Brokers - 2.4% 70,000 Mitsubishi UFJ Securities Company, Ltd. 1,102,885 93,550 optionsXpress Holdings, Inc. 2,946,825 -------------- 4,049,710 Finance - Other Services - 0.6% 86,070 MarketAxess Holdings, Inc.* 960,541 Food - Retail - 1.1% 15,340 Whole Foods Market, Inc. 941,569 48,920 Wild Oats Markets, Inc.* 840,446 -------------- 1,782,015 Human Resources - 4.9% 183,000 104Corp. 1,646,117 118,200 51job, Inc. (ADR)* 2,976,276 104,410 Kenexa Corp.* 3,469,544 -------------- 8,091,937 Internet Applications Software - 1.3% 95,818 March Networks Corp.* 2,218,799 Internet Connectivity Services - 1.6% 115,410 Redback Networks, Inc.* 2,585,184 Investment Management and Advisory Services - 0.5% 15,665 National Financial Partners Corp. 814,580 Leisure and Recreation Products - 0.6% 32,335 WMS Industries, Inc.* 1,010,469 Machinery - Electrical - 0.6% 28,550 Baldor Electric Co. 947,860 Machinery - Material Handling - 1.0% 64,560 Columbus McKinnon Corp.* 1,728,271 Medical - Drugs - 0.7% 50,510 Cubist Pharmaceuticals, Inc.* 1,145,062 Medical Instruments - 3.5% 115,655 Abaxis, Inc.* 3,020,909 418,610 Cambridge Heart, Inc.* 1,218,155 12,650 Intuitive Surgical, Inc.* 1,606,550 -------------- 5,845,614 Medical Laser Systems - 0.7% 105,900 IRIDEX Corp.* 1,209,378 Metal Processors and Fabricators - 0.9% 24,675 Precision Castparts Corp. 1,554,032 MRI and Medical Diagnostic Imaging Center - 0.8% 51,210 Nighthawk Radiology Holdings, Inc.* 1,240,818 Multimedia - 0.7% 4,836,000 Tom Group, Ltd.* 1,085,298
See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds April 30, 2006 45 Janus Triton Fund Schedule of Investments(unaudited) As of April 30, 2006
Shares or Principal Amount Value ------------------------------------------------ --------------------- Office Furnishings - Original - 1.0% 73,340 Knoll, Inc. $ 1,595,145 Oil - Field Services - 2.8% 92,005 W-H Energy Services, Inc.* 4,623,251 Oil Companies - Exploration and Production - 0.2% 11,130 Complete Production Services, Inc.* 294,166 Printing - Commercial - 3.5% 180,595 VistaPrint, Ltd.* 5,775,428 Public Thoroughfares - 0.5% 68,400 Obrascon Huarte Lain Brasil S.A.* 835,417 Real Estate Operating/Development - 0.2% 26,060 Gafisa S.A.* 265,969 Recreational Vehicles - 0.5% 16,165 Polaris Industries, Inc. 774,304 REIT - Mortgages - 1.3% 93,124 CapitalSource, Inc. 2,188,414 Research and Development - 1.5% 691,240 Qinetiq PLC* 2,539,933 Respiratory Products - 0.6% 28,320 Respironics, Inc.* 1,037,078 Retail - Apparel and Shoe - 2.5% 83,485 American Eagle Outfitters, Inc. 2,704,914 78,540 Bebe Stores, Inc. 1,388,587 --------------------- 4,093,501 Retail - Computer Equipment - 1.8% 43,883 GameStop Corp. - Class A* 2,071,277 21,665 GameStop Corp. - Class B* 920,113 --------------------- 2,991,390 Semiconductor Components/Integrated Circuits - 1.8% 22,245 Actions Semiconductor Company, Ltd. (ADR)* 221,115 Advanced Semiconductor 2,152,000 Manufacturing Corp.* 535,689 129,440 Cypress Semiconductor Corp.* 2,221,191 --------------------- 2,977,995 Sugar - 3.6% 233,309 Bajaj Hindusthan, Ltd. 2,683,054 42,800 Cosan S.A. Industria e Comercio* 3,293,569 --------------------- 5,976,623 Telecommunication Services - 2.5% 68,740 NeuStar, Inc. - Class A* 2,412,774 99,430 Time Warner Telecom, Inc. - Class A* 1,667,441 --------------------- 4,080,215 Therapeutics - 1.7% 14,970 Neurocrine Biosciences, Inc.* 858,679 58,165 Nuvelo, Inc.* 952,161 17,920 United Therapeutics Corp.* 1,067,136 --------------------- 2,877,976 Transportation - Equipment and Leasing - 0.8% 28,535 GATX Corp. 1,335,438 Transportation - Marine - 1.0% 126,320 Horizon Lines, Inc. - Class A 1,729,321 Transportation - Railroad - 1.3% 34,210 All America Latina Logistica (GDR) 2,163,901
Shares or Principal Amount Value ------------------------------------------------ ---------------------- Transportation - Truck - 1.9% 29,620 Landstar System, Inc. $ 1,258,554 64,010 Swift Transportation Company, Inc.* 1,917,099 ---------------------- 3,175,653 Water Treatment Services - 1.5% 81,190 Woongjin Coway Company, Ltd. 2,410,221 Web Hosting/Design - 1.6% 40,285 Equinix, Inc.* 2,654,782 Wireless Equipment - 1.6% 24,685 EFJ, Inc.* 252,281 94,105 SBA Communications Corp. - Class A* 2,363,917 ---------------------- 2,616,198 ---------------------- Total Common Stock (cost $132,671,100) 146,622,266 Repurchase Agreement - 6.5% Bear Stearns & Company, Inc., 4.830% dated 4/28/06, maturing 5/1/06 to be repurchased at $10,804,347 collateralized by $11,767,217 in U.S. Government Agencies 4.50% - 5.00%, 8/25/25 - 10/15/32 with a value of $11,016,044 $ 10,800,000 (cost $10,800,000) 10,800,000 Time Deposit - 4.8% Dexia CLF Finance Co., ETD 8,000,000 4.85%, 5/1/06 (cost $8,000,000) 8,000,000 ---------------------- Total Investments (total cost $151,471,100) -- 100% 165,422,266 Liabilities, net of Cash, Receivables and Other Assets -- 0% (51,376) ---------------------- Net Assets -- 100% $ 165,370,890 ----------------------
Summary of Investments by Country
% of Investments Country Value Securities --------------------------- ------------ ---------------- Bermuda $ 5,775,428 3.5% Brazil 10,261,535 6.2% Canada 2,946,449 1.8% Cayman Islands 6,415,966 3.9% China 535,689 0.3% France 2,168,909 1.3% India 3,941,580 2.4% Italy 604,784 0.4% Japan 3,934,887 2.4% Mexico 1,522,454 0.9% South Korea 2,410,221 1.5% Taiwan 1,646,117 1.0% United Kingdom 3,628,972 2.2% United States++ 119,629,275 72.2% ------------ ---------------- Total $165,422,266 100.0%
++Includes Short-Term Securities (61.0% excluding Short-Term Securities) See Notes to Schedules of Investments and Financial Statements. 46 Janus Growth Funds April 30, 2006 Janus Twenty Fund (unaudited) (closed to new investors) TICKER: JAVLX FUND SNAPSHOT This focused growth fund invests in a concentrated portfolio of 20-30 companies, including many market leaders whose products and services are being used more often every day. [SCOTT SCHOELSEL PHOTO] Scott Schoelzel portfolio manager PERFORMANCE OVERVIEW For the six months ended April 30, 2006, Janus Twenty Fund returned 7.46%. This compares to a 7.06% return for our primary benchmark, the Russell 1000(R) Growth Index, and a 9.64% return for our secondary benchmark, the S&P 500(R) Index. In addition to the Fund's performance, the operating metrics of the Fund remained stellar. Turnover remained a modest 31%, and the Fund's expenses remained among the most competitive in the industry at 0.87%. These total results, when added to the peer-beating returns we have delivered over the past few years, add to our conviction that we continue to head in the right direction. Janus Twenty Fund remains in the top quartile of all Lipper Large Cap Growth Funds for the 1-, 3-, 5- and 10-year periods.
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS ------------ ------------ ------------- ------------ Lipper Quartile 1st 1st 1st 1st (Rank as of 4/30/06, based on total return for Lipper Large-Cap Growth Funds) (36 out of 698) (6 out of 590) (56 out of 474) (2 out of 165)
I am particularly pleased with our performance during this period, as we had to navigate the reduction of two of our largest and longest-held positions, UnitedHealth Group and Genentech. One of the criticisms leveled at Janus over the years has been that we lacked a "sell discipline." Needless to say, I would argue otherwise, and I think these large, timely sales are illustrative of our selling prowess. TWO OF OUR LARGEST AND LONGEST HELD POSITIONS WERE REDUCED Our position in UnitedHealth was established many years ago, and we have watched it nearly triple in value as it grew to become one of the largest positions in the portfolio, cresting at just over 15% of the Fund's assets at its peak. We have begun to meaningfully reduce the position, with the bulk of the sales occurring during this six-month period. More specifically, we sold nearly 65% of the entire position (over 10 million shares) during the past six months at prices within 15% of UnitedHealth's all-time high, and before the controversy surrounding the timing of the pricing of the company's stock options for its senior executives became front-page news. In fairness, we had no idea UnitedHealth would become entangled in an option pricing investigation, but this occurred after the stock had begun to fall. Meanwhile, our proactive sales were based on the belief that there was some underappreciated maturation of the company's insured business, and our market surveys began to detect an increasingly competitive pricing environment. During the period we also sold just over 50% of our position in biotechnology company, Genentech. Like UnitedHealth, Genentech was one of our largest and longest-held positions. Genentech had more than quadrupled in value since the stock was acquired, and there were certainly many opportunities to sell the stock along the way. Nevertheless, after nearly seven years we felt that much of what we had anticipated for the company in terms of new indications for their cancer-fighting lineup of bio-engineered drugs was more fully reflected in the price, and we began to cut the position size in half, with all of the sales occurring within 20% of the stock's all-time high. To be fair, the reduction in these two positions was far from perfect. We didn't (nor was it our intention to) sell the positions to zero. We believe both investments still have merits, and while both detracted from Janus Twenty Fund's positive performance during the period, I am confident that the net result of our sales did indeed benefit the Fund's investors. HOLDINGS ON THE POSITIVE SIDE OF THE LEDGER Celgene, an emerging powerhouse in the biotechnology field, and ConocoPhillips, the vertically integrated international oil company contributed to Fund performance. I wrote about both of these companies in my last letter to you and, once again, they were among the Fund's strongest performers. In October, Celgene had just received approval for the sale of its cancer-fighting drug, Revlimid. Since that time, Revlimid sales have gotten off to a fast start and we are pleased with the company's progress. Of possibly greater interest, we anticipate that Celgene will receive additional approvals for use of Revlimid, which we believe should expand the company's market opportunities. Our investment in ConocoPhillips continues to progress and is emblematic of the Funds' overweighted investment in the "oil complex." As we have said from the beginning, we are not believers in "$100 oil," but we do continue to believe there is Janus Growth Funds April 30, 2006 47 Janus Twenty Fund (unaudited) an ongoing tightness in the oil complex globally, and we have purchased the stocks we think are best positioned to capitalize on this ongoing opportunity. There is a lot of skepticism about the sustainability of the imbalances currently present in the oil markets, as evidenced by Conoco's very low price/earnings multiple* of 6. We continue to closely monitor supply increases, refining capacity and above all, global demand. While we expect continued volatility in these markets, we believe the natural decline curve of the world's reservoirs to be understated and the world's demand to be stronger than largely recognized, particularly in the Middle East. FUND OUTLOOK On the macro front, six months ago I thought we would start to see interest rates begin to crest and the year-over-year change in the price of oil begin to moderate, thereby laying the foundation for an improving equities market. At the time of this writing, neither has happened as quickly as I anticipated. Though oil has shown some signs of moderating (albeit at an overall higher level), the continued rise in interest rates has been of some concern. The Federal Reserve now has raised rates 14 consecutive times, yet gross domestic product growth continues to be stronger than expected with corresponding strength in the commodities markets, especially copper and gold. This, together with a continued weakness in the U.S. dollar, has the markets on edge. I do think that oil, commodities and interest rates will moderate, but the soft slowdown I was anticipating could end up being more abrupt. Despite these continued macroeconomic headwinds, we believe there are still companies that will continue to thrive in this environment, and I am confident that our analysts will continue to do masterful work in uncovering those opportunities for our investors. Finally, as has been the case for many years, not only am I the portfolio manager of Janus Twenty Fund, but I am also one of the Fund's largest investors; side by side with each of you. Thank you for your continued confidence and investment in Janus Twenty Fund. *Price earnings multiple is a valuation ratio of a company's current share price compared to its per-share earnings. JANUS TWENTY FUND AT A GLANCE 5 LARGEST CONTRIBUTORS TO PERFORMANCE -- HOLDINGS
CONTRIBUTION ------------ Celgene Corp. Biopharmaceutical company - U.S. 1.65% Occidental Petroleum Corp. Crude oil and natural gas company - U.S. 1.23% Peabody Energy Corp. Coal company - U.S. 1.15% Harrah's Entertainment, Inc. Casino operator - U.S. 0.94% Goldman Sachs Group, Inc. Investment banking and securities firm - U.S. 0.73%
5 LARGEST DETRACTORS FROM PERFORMANCE -- HOLDINGS
CONTRIBUTION ------------ Alcon, Inc. (U.S. Shares) Eye care company - U.S. (0.89%) Genentech, Inc. Biotechnology company - U.S. (0.80%) UnitedHealth Group, Inc Organized health systems company - U.S. (0.79%) eBay, Inc. Online marketplace - U.S. (0.44%) Yahoo!, Inc. Global Internet media company - U.S. (0.28%)
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING GROUP FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING ----------------------------------- ----------------- ----------------- --------------------------- Energy 4.40% 29.04% 9.65% Technology Hardware & Equipment 1.18% 5.52% 7.04% Consumer Services 1.13% 3.66% 1.65% Pharmaceuticals & Biotechnology 0.96% 16.81% 7.88% Banks 0.73% 4.47% 7.48%
5 LARGEST DETRACTORS FROM PERFORMANCE -- SECTORS
FUND WEIGHTING GROUP FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING ----------------------------------- ----------------- ----------------- --------------------------- Healthcare Equipment & Services (1.90%) 11.86% 5.17% Software & Services (0.15%) 12.70% 5.44% Consumer Durables & Apparel (0.11%) 3.45% 1.31% Food Beverage & Tobacco (0.05%) 0.04% 4.61% Food & Staples Retailing (0.01%) 0.08% 2.38%
48 Janus Growth Funds April 30, 2006 (unaudited) 5 LARGEST EQUITY HOLDINGS -- (% of Net Assets) AS OF APRIL 30, 2006 ConocoPhillips Oil Companies - Integrated 6.4% Wells Fargo & Co. Super-Regional Banks 4.5% Occidental Petroleum Corp. Oil Companies - Integrated 4.4% Celgene Corp. Medical - Biomedical and Genetic 4.1% Roche Holding A.G. Medical - Drugs 4.0% ------ 23.4%
ASSET ALLOCATION -- (% of Net Assets) AS OF APRIL 30, 2006 (PIE CHART) Common Stock 85.5% Cash and Cash Equivalents 14.5%
5 LARGEST COUNTRY ALLOCATIONS -- (% of Investment Securities) (BAR CHARTS)
AS OF APRIL 30, 2006 ------------------------------ United States 81.4% Switzerland 9.2% Canada 4.3% United Kingdom 3.5% Bermuda 1.0%
AS OF OCTOBER 31, 2005 ------------------------------ United States 83.5% Switzerland 10.4% United Kingdom 3.2% Canada 2.9%
Janus Growth Funds April 30, 2006 49 Janus Twenty Fund (unaudited) PERFORMANCE (PERFORMANCE GRAPH}
Initial investment of $10,000 JANUS TWENTY FUND S & P 500(R) INDEX RUSSELL 1000(R) GROWTH INDEX ----------------- ------------------- -------------------------------- 4/30/1996 10,000 10,000 10,000 4/30/1998 18,772 17,652 17,344 4/30/2000 41,155 23,682 27,996 4/30/2002 17,863 18,008 15,154 4/30/2004 20,584 19,183 15,789 4/30/2006 27,645 23,544 18,259
Average Annual Total Return -- for the periods ended April 30, 2006
FISCAL ONE FIVE TEN SINCE YEAR-TO-DATE YEAR YEAR YEAR INCEPTION* ------------- ------------ ------------ ------------- ---------- Janus Twenty Fund 7.46% 24.20% 2.05% 10.70% 13.48% Russell 1000(R) Growth Index 7.06% 15.18% (0.76)% 6.21% 11.33% S&P 500(R) Index 9.64% 15.42% 2.70% 8.94% 12.64% Lipper Quartile N/A 1st 1st 1st 1st Lipper Ranking - based on total return for Large-Cap Growth Funds N/A** 36/698 56/474 2/165 1/40
Visit janus.com to view up to date performance and characteristic information Data presented represents past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 800.525.3713 or visit www.janus.com for performance current to the most recent month-end. See Notes to Schedules of Investments for index definitions. Total return includes reinvestment of dividends, distributions and capital gains. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. *The Fund's inception date -- April 30, 1985 **The Fund's fiscal year-to-date Lipper ranking is not available. See "Explanations of Charts, Tables and Financial Statements." The Fund's portfolio may differ significantly from the securities held in the indices. The indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual portfolio. The Fund is classified as "nondiversified," meaning it has the ability to take larger positions in a smaller number of issuers than a fund that is classified as "diversified." Nondiversified funds may experience greater price volatility. Concentration may lead to greater price volatility. Due to certain investment strategies, the Fund may have an increased position in cash for temporary defensive purposes. There is no assurance that the investment process will consistently lead to successful investing. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. Closed to new investors. Returns have sustained significant gains due to market volatility in the healthcare sector. FUND EXPENSES The example below shows you the ongoing costs (in dollars) of investing in your Fund and allows you to compare these costs with those of other mutual funds. Please refer to page 5 for a detailed explanation of the information presented in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD EXPENSE EXAMPLE (11/1/05) (4/30/06) (11/1/05-4/30/06)* ---------------------- ----------------------- -------------------- --------------------------- Actual $ 1,000.00 $ 1,074.60 $ 4.53 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.43 $ 4.41
*Expenses are equal to the annualized expense ratio of 0.88%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 50 Janus Growth Funds April 30, 2006 Janus Twenty Fund Schedule of Investments (unaudited) As of April 30, 2006
Shares or Principal Amount Value ----------------------------------------------- ---------------------- Common Stock - 85.5% Agricultural Chemicals - 5.3% Potash Corporation of Saskatchewan, Inc. 2,448,265 (U.S. Shares) $ 231,801,730 2,064,226 Syngenta A.G.* 287,946,378 ---------------------- 519,748,108 Agricultural Operations - 1.0% 1,877,315 Bunge, Ltd.# 100,154,755 Athletic Footwear - 2.0% 2,365,465 NIKE, Inc. - Class B# 193,589,656 Casino Hotels - 3.8% 4,535,340 Harrah's Entertainment, Inc.# 370,265,158 Coal - 2.5% 3,867,870 Peabody Energy Corp.# 247,002,178 Computers - 4.2% 2,893,185 Apple Computer, Inc.* 203,651,292 2,645,620 Research In Motion, Ltd. (U.S. Shares)*,# 202,733,861 ---------------------- 406,385,153 Computers - Memory Devices - 0.8% 6,032,545 EMC Corp.* 81,499,683 Cosmetics and Toiletries - 3.4% 5,694,740 Procter & Gamble Co. 331,490,815 E-Commerce/Services - 1.0% 2,825,268 eBay, Inc.*.# 97,217,472 Entertainment Software - 3.8% 6,540,970 Electronic Arts, Inc.* 371,527,096 Finance - Consumer Loans - 0.4% 812,550 SLM Corp. 42,967,644 Finance - Investment Bankers/Brokers - 3.3% 2,012,435 Goldman Sachs Group, Inc. 322,573,206 Food - Retail - 0.3% 527,555 Whole Foods Market, Inc.# 32,381,326 Machinery - Farm - 1.0% 1,147,550 Deere & Co. 100,731,939 Medical - Biomedical and Genetic - 7.2% 9,580,736 Celgene Corp.* 403,923,830 3,703,431 Genentech, Inc.*,# 295,200,485 ---------------------- 699,124,315 Medical - Drugs - 4.0% 2,574,542 Roche Holding A.G. 395,875,794 Medical - HMO - 3.0% 5,923,260 UnitedHealth Group, Inc. 294,622,952 Oil Companies - Exploration and Production - 6.0% 5,268,280 Apache Corp. 374,258,611 3,052,487 EOG Resources, Inc.# 214,376,162 ---------------------- 588,634,773 Oil Companies - Integrated - 16.4% 1,348,515 Amerada Hess Corp.# 193,201,744 4,764,910 BP PLC (ADR)# 351,269,165 9,273,605 ConocoPhillips 620,404,176 4,188,610 Occidental Petroleum Corp. 430,337,791 ---------------------- 1,595,212,876 Oil Refining and Marketing - 2.2% 3,333,975 Valero Energy Corp. 215,841,542 Optical Supplies - 2.4% 2,280,710 Alcon, Inc. (U.S. Shares)# 231,971,014 Retail - Apparel and Shoe - 0.6% 1,467,404 Industria de Diseno Textil S.A. 59,704,000 Retail - Restaurants - 0.7% 1,883,830 Starbucks Corp.*,# 70,210,344
Shares or Principal Amount Value ------------------------------------------------ ---------------------- Super-Regional Banks - 4.5% 6,354,825 Wells Fargo & Co. $ 436,512,929 Therapeutics - 1.0% 2,000,000 Amylin Pharmaceuticals, Inc.*,# 87,100,000 Web Portals/Internet Service Providers - 2.7% 626,395 Google, Inc. - Class A*,# 261,795,526 Wireless Equipment - 2.0% 3,701,505 QUALCOMM, Inc. 190,035,267 ---------------------- Total Common Stock (cost $5,664,599,433) 8,344,175,521 Money Market - 11.9% 200,000,000 Janus Government Money Market Fund 4.76% 200,000,000 485,000,000 Janus Institutional Cash Reserves Fund 4.83% 485,000,000 475,000,000 Janus Money Market Fund, 4.77% 475,000,000 ---------------------- Total Money Market (cost $1,160,000,000) 1,160,000,000 Other Securities - 3.6% State Street Navigator Securities Lending 355,131,715 Prime Portfolio+ (cost $355,131,715) 355,131,715 Repurchase Agreements - 0.9% $41,600,000 Bear Stearns & Company, Inc., 4.830% dated 4/28/06, maturing 5/1/06 to be repurchased at $41,616,744 collateralized by $45,325,577 in U.S. Government Agencies 4.50% - 5.00%, 8/25/25 - 10/15/32 with a value of $42,432,170 (cost $41,600,000) 41,600,000 48,700,000 Fortis Bank N.V., 4.850% dated 4/28/06, maturing 5/1/06 to be repurchased at $48,719,683 collateralized by $60,754,512 in U.S. Government Agencies 5.048% - 7.125%, 2/15/23 - 10/25/35 with a value of $49,674,057 (cost $48,700,000) 48,700,000 ---------------------- Total Repurchase Agreements (cost $90,300,000) 90,300,000 Short-Term Corporate Note - 0.3% Wells Fargo & Co., 4.84%, 5/24/06 25,000,000 (amortized cost $24,922,694) 24,922,694 Time Deposit - 0.2% Dexia CLF Finance Co., ETD 19,700,000 4.85%, 5/1/06 (cost $19,700,000) 19,700,000 ---------------------- Total Investments (total cost $7,314,653,842) -- 102.4% 9,994,229,930 Liabilities, net of Cash, Receivables and Other Assets -- (2.4)% (238,766,149) ---------------------- Net Assets -- 100% $9,755,463,781
Summary of Investments by Country
% of Investment Country Value Securities --------------- --------------- --------------- Bermuda $ 100,154,755 1.0% Canada 434,535,591 4.3% Spain 59,704,000 0.6% Switzerland 915,793,186 9.2% United Kingdom 351,269,165 3.5% United States++ 8,132,773,233 81.4% --------------- --------------- Total $ 9,994,229,930 100.0%
++ Includes Short-Term Securities and Other Securities (64.9% excluding Short-Term Securities and Other Securities) See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds April 30, 2006 51 Janus Venture Fund (unaudited) (closed to new investors) TICKER: JAVTX FUND SNAPSHOT This growth fund focuses on small companies, where there's less Wall Street coverage and more opportunity for a research edge. (WILL BALES PHOTO) Will Bales portfolio manager PERFORMANCE OVERVIEW Volatile energy markets and the Federal Reserve's unwavering campaign to raise short-term interest rates dimmed investor enthusiasm at the end of 2005. Overshadowing solid corporate profit growth and healthy gross domestic product reports, the malaise weighed on consumers, who responded with a relatively lackluster holiday shopping season. In the first three months of 2006, however, there was a strong rally across several major equity indices, with the S&P 500(R) Index posting its best first-quarter performance in six years. Despite a strong earnings season and healthy financial indicators, enthusiasm was somewhat dampened by fears of consumer spending slowing as oil prices exceeded $70 per barrel, and the expectation that the Federal Reserve would continue its steady inching up of interest rates. In this environment, Janus Venture Fund returned 22.17%, outperforming both its primary and secondary benchmarks, the Russell 2000(R) Growth Index and the Russell 2000(R) Index, which returned 20.31% and 18.91%, respectively. HOLDINGS THAT CONTRIBUTED TO FUND PERFORMANCE The strongest contributor to the Fund's performance over the six-month period from November 2005 to April 30, 2006 was Ultimate Software, a provider of web-based payroll and employee management software geared toward helping mid-sized companies more efficiently manage employee communications, benefits, payroll and staffing functions. Ultimate Software's method of charging per employee per month is achieving scale in terms of both the number of customers overall and the number of large customers in particular, which has enabled the company to raise its prices. With its recurring revenue-type model and current pricing power, Ultimate appears to be solidifying its position in the industry. Also posting positive returns was documentation company American Reprographics, which advanced as the market increasingly recognized the viability of its business plan. By digitizing the blueprint and document development process for the architectural and construction industries, among others, American Reprographics is streamlining a traditionally time- and labor-intensive process. Within the financial sector, the International Securities Exchange (ISE), an electronic exchange for options trading located in New York, continued to show significant year-over-year growth. As a result it contributed significantly to our performance. Created by former E*TRADE and New York Stock Exchange executives, ISE was demutualized in 2002, and has since become the world's largest equity options exchange based on volume. Consolidation discussions among exchanges worldwide have generated a great deal of interest in recent years, and more consolidations are anticipated. The exchanges have very good business models due to their incremental margins, which is attractive to investors seeking potential gains in unpredictable markets. HOLDINGS THAT DETRACTED FROM FUND PERFORMANCE On the downside, SeraCare Life Sciences, a manufacturer of diagnostic tests for various diseases, was the Fund's poorest performer during the period. At the end of 2005, a recently hired audit firm had expressed concerns over the company's revenue recognition practices. We discussed the matter with management and found that due to differing client requirements, there are a myriad of ways the customers accepted products from the company. We were convinced that SeraCare's fundamentals were sound and felt that the company's problems would prove to be short-lived, and padded our stake as a result. However, in March, the company's internal audit committee recommended restating the financial statements for up to three quarters. Shortly thereafter, as there was no way to value the company without the restatements, SeraCare was delisted by NASDAQ and the Securities and Exchange Commission, and we sold our entire position. Another disappointment came from medical device firm FoxHollow Technologies. The company developed a catheter device -- the Silver Hawk -- that treats peripheral artery disease, which affects blood flow through the legs. While conducting ongoing studies into the effectiveness of its device, FoxHollow continued aggressive marketing efforts, which resulted in near-term pressure on earnings. In turn, the CEO, Robert Thomas, stepped aside. We continue to believe in the firm and decided to increase our stake on the weakness at the end of 2005, though we are watching new developments closely. Optimal Group, an online payment processing company, lagged on uncertainty regarding Internet gaming. A large 52 Janus Growth Funds April 30, 2006 (unaudited) portion of Optimal's business is credit card processing for international online gambling. The entire industry is currently down because of uncertainty regarding whether Congress will legalize or prohibit Internet gaming. LOOKING AHEAD Although it looks as if the Fed may be close to ending its rate-hike campaign, the behavior of long-term rates, which moved little through 2005, continues to lurk as an unknown in 2006. Any sharp moves could further dampen consumer attitudes, as could the worsening turmoil in the energy markets. In addition, the direction of the housing market is uncertain and there are whispers of a global slowdown. These headwinds will not change our long-term focus on investing in small-cap companies with promising growth potential. Thank you for your continued investment with Janus. JANUS VENTURE FUND AT A GLANCE 5 LARGEST CONTRIBUTORS TO PERFORMANCE -- HOLDINGS
CONTRIBUTION ------------ Ultimate Software Group, Inc. Web-based payroll software solutions provider - U.S. 1.36% Submarino S.A. Internet retailer - Brazil 1.32% Equinix, Inc. Internet exchange services producer - U.S. 1.18% American Reprographics Co. Reprographic technology and services provider - U.S. 1.06% International Securities Exchange, Inc. Fully electronic equity trading platform provider - U.S. 1.00%
5 LARGEST DETRACTORS FROM PERFORMANCE -- HOLDINGS
CONTRIBUTION ------------ SeraCare Life Sciences, Inc. Plasma-based diagnostic products producer - U.S. (0.61%) Axesstel, Inc. Developer of broadband data products for telecommunications markets - U.S. (0.33%) FoxHollow Technologies, Inc. Medical devices producer - U.S. (0.32%) Optimal Robotics Corp. - Class A (U.S. Shares) Payments and services company - U.S. (0.25%) Idenix Pharmaceuticals, Inc. Biopharmaceutical company - U.S. (0.25%)
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING GROUP FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING -------------------------------- ----------------- ----------------- --------------------------- Software & Services 6.57% 22.76% 7.58% Commercial Services & Supplies 3.11% 10.45% 3.46% Diversified Financials 2.17% 4.23% 2.06% Healthcare Equipment & Services 2.08% 15.95% 6.87% Energy 2.07% 6.60% 6.44%
5 LOWEST CONTRIBUTORS/DETRACTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING GROUP FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING -------------------------------- ----------------- ----------------- --------------------------- Pharmaceuticals & Biotechnology (0.23%) 5.42% 5.57% Telecommunication Services (0.04%) 0.99% 1.42% Utilities 0.00% 0.00% 2.38% Household & Personal Products 0.00% 0.00% 0.53% Food & Staples Retailing 0.00% 0.00% 0.80%
Janus Growth Funds April 30, 2006 53 Janus Venture Fund (unaudited) 5 LARGEST EQUITY HOLDINGS -- (% of Net Assets) AS OF APRIL 30, 2006
Ultimate Software Group, Inc. Enterprise Software/Services 3.1% Jarden Corp. Consumer Products - Miscellaneous 2.4% CoStar Group, Inc. Commercial Services 2.3% Submarino S.A. E-Commerce/Products 2.3% TALX Corp. Computers - Voice Recognition 2.1% --------------------- 12.2%
ASSET ALLOCATION -- (% of Net Assets) AS OF APRIL 30, 2006 (PIE CHART) Common Stock 99.8% Warrants 0.2%
Emerging markets comprised 5.0% of total net assets. *Includes cash and cash equivalents of (0.2)%. 5 LARGEST COUNTRY ALLOCATIONS -- (% of Investment Securities) (BAR CHARTS)
AS OF APRIL 30, 2006 ---------------------- United States 88.7% Canada 6.0% Brazil 3.5% Bermuda 1.3% India 0.5%
AS OF OCTOBER 31, 2005 ---------------------- United States 89.8% Canada 7.1% Brazil 2.1% Bermuda 1.0%
54 Janus Growth Funds April 30, 2006 (unaudited) PERFORMANCE Average Annual Total Return --for the periods ended April 30, 2006
FISCAL ONE FIVE TEN SINCE YEAR-TO-DATE YEAR YEAR YEAR INCEPTION* ------------ ------------ ------------ ------------ ------------ Janus Venture Fund 22.17% 32.58% 9.14% 9.29% 13.88% Russell 2000(R) Growth Index 20.31% 36.13% 6.05% 4.70% 8.43% Russell 2000(R) Index 18.91% 33.47% 10.90% 9.58% 11.27% Lipper Quartile N/A 3rd 1st 2nd 1st Lipper Ranking - based on total return for Small-Cap Growth Funds N/A** 311/533 70/363 44/117 1/10
(PERFORMANCE GRAPH)
Initial Investment of $10,000 JANUS VENTURE RUSSELL 2000(R) INDEX RUSSELL 2000(R) GROWTH INDEX ------------- ------------------------- -------------------------------- 4/30/1996 10,000 10,000 10,000 4/30/1998 12,062 14,248 12,424 4/30/2000 24,712 15,311 15,707 4/30/2002 15,363 15,866 10,797 4/30/2004 17,546 17,854 11,694 4/30/2006 24,321 24,953 15,831
Visit janus.com to view up to date performance and characteristic information Data presented represents past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 800.525.3713 or visit www.janus.com for performance current to the most recent month-end. See Notes to Schedules of Investments for index definitions. Total return includes reinvestment of dividends, distributions and capital gains. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. *The Fund's inception date -- April 30, 1985 **The Fund's fiscal year-to-date Lipper ranking is not available. See "Explanations of Charts, Tables and Financial Statements." The Fund's portfolio may differ significantly from the securities held in the indices. The indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual portfolio. Funds that emphasize investments in smaller companies may experience greater price volatility. The Fund has been significantly impacted, either positively or negatively, by investing in initial public offerings ("IPOs"). There is no assurance that the investment process will consistently lead to successful investing. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. Closed to new investors. FUND EXPENSES The example below shows you the ongoing costs (in dollars) of investing in your Fund and allows you to compare these costs with those of other mutual funds. Please refer to page 5 for a detailed explanation of the information presented in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD EXPENSE EXAMPLE (11/1/05) (4/30/06) (11/1/05-4/30/06)* ---------------------------------------- ----------------------- -------------------- --------------------------- Actual $ 1,000.00 $ 1,221.70 $ 5.01 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,020.28 $ 4.56
*Expenses are equal to the annualized expense ratio of 0.91%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Janus Growth Funds April 30, 2006 55 Janus Venture Fund Schedule of Investments (unaudited) As of April 30, 2006
Shares or Principal Amount Value ----------------------------------------------- --------------------- Common Stock - 100.0% Advanced Materials/Products - 0.8% 215,851 Ceradyne, Inc.*'# $ 11,440,103 Aerospace and Defense - 0.5% 301,305 TransDigm Group, Inc.* 7,451,273 Apparel Manufacturers - 3.8% 391,625 Carter's, Inc.*'# 26,379,859 810,655 Quiksilver, Inc.*'# 11,081,654 514,154 Volcom, Inc.*'# 18,339,873 --------------------- 55,801,386 Applications Software - 2.4% 687,310 American Reprographics Co.*'# 24,378,885 610,060 Quest Software, Inc.*'# 10,499,133 --------------------- 34,878,018 Auction House - Art Dealer - 1.0% 462,760 Sotheby's Holdings, Inc. - Class A*'# 13,878,172 Building - Residential and Commercial - 0.4% 148,000 Rossi Residencial S.A. 1,560,134 190,580 WCI Communities, Inc.*'# 4,884,566 --------------------- 6,444,700 Commercial Banks - 0.1% 23,190 SVB Financial Group*,# 1,177,356 Commercial Services - 3.6% 610,295 CoStar Group, Inc.* 34,451,152 2,346,939 Intermap Technologies, Ltd.*,L. 12,951,669 115,690 Providence Service Corp.*'# 3,623,411 346,800 Traffic.com, Inc.*'# 2,174,436 --------------------- 53,200,668 Commercial Services - Finance - 3.3% 193,212 Bankrate, Inc.*'# 9,326,343 615,431 Euronet Worldwide, Inc.*'# 21,995,503 544,620 Heartland Payment Systems, Inc.*'# 14,290,829 91,715 Wright Express Corp.*'# 2,823,905 --------------------- 48,436,580 Computer Services - 1.4% 3,080,025 LivePerson, Inc.*,L. 21,159,772 Computer Software - 1.2% 813,544 Blackbaud, Inc. 17,092,559 Computers - Voice Recognition - 2.1% 1,214,822 TALX Corp.#,L. 31,597,520 Consulting Services - 4.0% 478,300 Advisory Board Co.*'# 26,842,195 643,125 Huron Consulting Group, Inc.*'# 22,863,094 446,125 Navigant Consulting, Inc.*'# 9,404,315 --------------------- 59,109,604 Consumer Products - Miscellaneous - 2.4% 1,044,990 Jarden Corp.*'# 35,529,660 Data Processing and Management - 1.8% 2,158,853 Infocrossing, Inc.*'#,L. 26,920,897 Dialysis Centers - 0% 13,350 Dialysis Corporation of America* 168,477
Shares or Principal Amount Value ------------------------------------------------ --------------------- Direct Marketing - 1.6% 1,704,932 ValueVision Media, Inc.*,L. $ 21,311,650 211,690 ValueVision Media, Inc. - Class A* 2,646,125 --------------------- 23,957,775 Distribution/Wholesale - 1.8% 481,880 Beacon Roofing Supply, Inc.*'# 17,829,560 249,889 MWI Veterinary Supply, Inc.*'# 8,883,554 --------------------- 26,713,114 Drug Delivery Systems - 0.8% 904,930 I-Flow Corp.*'# 12,379,442 E-Commerce/Products - 2.4% 29,670 Baby Universe, Inc.*'# 265,843 46,420 Blue Nile, Inc.*'# 1,615,416 1,235,550 Submarino S.A.* 33,449,246 --------------------- 35,330,505 E-Commerce/Services - 0.5% 4,957,152 Workstream, Inc. (U.S. Shares)*,L. 6,692,155 E-Marketing/Information - 1.2% 232,475 Liquidity Services, Inc.* 3,136,088 896,380 ValueClick, Inc.*,# 15,104,003 --------------------- 18,240,091 E-Services/Consulting - 1.0% 804,165 GSI Commerce, Inc.* 14,064,846 Electronic Components - Semiconductors - 0.7% 1,011,147 MIPS Technologies, Inc.* 7,492,600 92,675 SiRF Technology Holdings, Inc.* 3,164,851 --------------------- 10,657,451 Electronic Measuring Instruments - 1.0% 296,781 Trimble Navigation, Ltd.*'# 14,061,484 Enterprise Software/Services - 5.0% 183,440 Emageon, Inc.*'# 3,256,060 1,927,879 Omnicell, Inc.*,L. 25,679,348 1,775,000 Ultimate Software Group, Inc.*,L. 45,386,749 --------------------- 74,322,157 Entertainment Software - 0.3% 1,943,905 Excapsa Software, Inc.* 3,987,916 Finance - Investment Bankers/Brokers - 0.9% 417,485 optionsXpress Holdings, Inc. 13,150,778 Finance - Other Services - 2.0% 624,060 International Securities Exchange, Inc.# 27,427,437 185,015 MarketAxess Holdings, Inc.* 2,064,767 --------------------- 29,492,204 Food - Canned - 0.8% 468,575 TreeHouse Foods, Inc.* 12,276,665 Footwear and Related Apparel - 0.3% 160,845 Crocs, Inc.*,# 4,809,266 Gambling - Non-Hotel - 1.1% 1,528,091 Century Casinos, Inc.*,L. 15,449,000 Hotels and Motels - 2.2% 174,740 Four Seasons Hotels, Inc. 9,439,455 569,445 Orient-Express Hotel, Ltd. - Class A 23,347,245 --------------------- 32,786,700
See Notes to Schedules of Investments and Financial Statements. 56 Janus Growth Funds April 30, 2006 Schedule of Investments (unaudited) As of April 30, 2006
Shares or Principal Amount Value ------------------------------------------------ --------------------- Human Resources - 1.9% 347,695 Barrett Business Services, Inc.* $ 9,186,102 334,420 Kenexa Corp.*'# 11,112,777 298,770 Resources Connection, Inc.*'# 8,036,913 --------------------- 28,335,792 Industrial Audio and Video Products - 1.0% 794,468 Sonic Solutions*'# 14,077,973 Internet Applications Software - 0.8% 354,835 DealerTrack Holdings, Inc.*'# 7,912,820 229,610 Vocus, Inc.*'# 3,503,849 --------------------- 11,416,669 Internet Content - Entertainment - 0.8% 2,308,435 Harris Interactive, Inc.*'# 11,149,741 Investment Companies - 0.3% 230,960 UTEK Corp.* 3,736,933 Investment Management and Advisory Services - 0.8% 302,505 Calamos Asset Management, Inc. - Class A# 11,725,094 Leisure and Recreation Products - 0.2% 94,050 WMS Industries, Inc.*'# 2,939,063 Marine Services - 0.4% 1,748,955 Odyssey Marine Exploration, Inc.*'# 6,173,811 Medical - Biomedical and Genetic - 0.2% 139,240 Coley Pharmaceutical Group*'# 2,226,448 Medical - Drugs - 0.7% 176,305 Adams Respiratory Therapeutics, Inc.*'# 7,561,721 50,000 Cubist Pharmaceuticals, Inc.* 1,133,500 196,264 Idenix Pharmaceuticals, Inc.*'# 1,970,491 --------------------- 10,665,712 Medical - HMO - 2.6% 973,779 Centene Corp.* 25,016,383 325,130 WellCare Health Plans, Inc.*'# 13,616,444 --------------------- 38,632,827 Medical - Hospitals - 1.4% United Surgical Partners 642,502 International, Inc.*'# 21,208,991 Medical - Outpatient and Home Medical Care - 3.1% 1,549,375 Hythiam, Inc.*'#,L. 13,851,413 602,940 LHC Group LLC*'# 10,491,156 852,209 Radiation Therapy Services, Inc.*'# 21,773,939 --------------------- 46,116,508 Medical - Wholesale Drug Distributors - 0.3% 6,100,000 DrugMax, Inc.*,L. 3,965,000 590,098 DrugMax, Inc.* 383,564 --------------------- 4,348,564 Medical Instruments - 2.7% 41,974 CONMED Corp. 915,453 259,605 Dexcom, Inc.*'# 6,531,662 464,590 ev3, Inc.*'# 7,289,417 298,150 FoxHollow Technologies, Inc.*'# 9,287,373 92,485 Intuitive Surgical, Inc.* 11,745,594 92,970 Ventana Medical Systems, Inc.*'# 4,527,639 --------------------- 40,297,138 Medical Labs and Testing Services - 0.2% 142,544 Bio-Reference Laboratories, Inc.*'# 2,722,590
Shares or Principal Amount Value ------------------------------------------------ --------------------- Medical Products - 1.3% 939,425 PSS World Medical, Inc.*'# $ 16,947,227 665,834 ThermoGenesis Corp.*'# 2,749,894 --------------------- 19,697,121 Miscellaneous Manufacturing - 1.2% 505,410 American Railcar Industries, Inc. 18,043,137 Motion Pictures and Services - 1.9% Lions Gate Entertainment Corp. 2,880,100 (U.S. Shares)* 28,138,577 Music - 0.5% 3,562,500 Genius Products, Inc.*,(O),(S),L. 5,775,525 1,187,500 Genius Products, Inc.* 2,291,875 --------------------- 8,067,400 Office Furnishings - Original - 0.8% 545,040 Knoll, Inc.# 11,854,620 Oil - Field Services - 1.9% 229,860 Basic Energy Services, Inc.*'# 7,661,234 168,592 Flint Energy Services, Ltd.* 9,575,235 644,820 Key Energy Services, Inc.*'# 11,019,974 --------------------- 28,256,443 Oil Companies - Exploration and Production - 2.3% 277,860 Carrizo Oil & Gas, Inc.*'# 8,163,527 103,235 Complete Production Services, Inc.* 2,728,501 1,157,115 Gasco Energy, Inc.*'# 6,479,844 518,645 Western Oil Sands, Inc. - Class A* 15,683,903 --------------------- 33,055,775 Optical Recognition Equipment - 1.0% Optimal Robotics Corp. - Class A 951,750 (U.S. Shares)*'# 14,647,433 Pharmacy Services - 1.2% 446,875 HealthExtras, Inc.*'# 12,986,188 1,591,512 Ronco Fi-Tek, Inc.*,(O),(S),L. 5,100,000 --------------------- 18,086,188 Quarrying - 0.2% Birch Mountain Resources, Ltd. 277,245 (U.S. Shares)*'# 2,059,930 Real Estate Operating/Development - 0.3% 454,470 Gafisa S.A.* 4,638,338 REIT - Mortgages - 0.8% 503,349 CapitalSource, Inc.# 11,828,702 Research and Development - 0.3% 185,350 PRA International*'# 4,311,241 Resorts and Theme Parks - 0.6% 236,755 Intrawest Corp. (U.S. Shares) 8,499,505 Retail - Apparel and Shoe - 0.2% 185,355 Bebe Stores, Inc. 3,277,076 Retail - Computer Equipment - 0.5% 394,085 Insight Enterprises, Inc.*'# 7,791,060 Retail - Petroleum Products - 2.1% 763,405 World Fuel Services Corp.# 30,566,736 Semiconductor Components/Integrated Circuits - 0.5% 202,857 Hittite Microwave Corp.*'# 7,893,166 Sugar - 0.6% 2,077,918 Balrampur Chini Mills, Ltd. 8,705,042
See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds April 30, 2006 57 Janus Venture Fund Schedule of Investments (unaudited) As of April 30, 2006
Shares or Principal Amount Value ------------------------------------------------ ---------------------- Telecommunication Services - 1.0% 422,685 NeuStar, Inc. - Class A*'# $ 14,836,244 Therapeutics - 2.9% 718,850 MGI Pharma, Inc.*'# 13,428,118 246,796 Neurocrine Biosciences, Inc.* 14,156,219 202,080 United Therapeutics Corp.* 12,033,864 543,405 ViaCell, Inc.*'# 3,146,315 ---------------------- 42,764,516 Toys - 1.4% 1,078,010 Marvel Entertainment, Inc.*'# 21,031,975 Transactional Software - 1.7% 893,710 Open Solutions, Inc.*'# 24,326,786 Transportation - Railroad - 1.7% 397,700 All America Latina Logistica (GDR) 25,155,907 Transportation - Services - 1.1% 491,425 Pacer International, Inc.# 16,850,963 Travel Services - 0.1% 1,145,454 OneTravel Holdings, Inc.*,L. 630,000 Web Hosting/Design - 2.1% 473,610 Equinix, Inc.* 31,210,899 ------------------------------------------------ ---------------------- Total Common Stock (cost $1,005,548,027) 1,474,656,928
Shares or Principal Amount Value ------------------------------------------------ ---------------------- Preferred Stock - 0% Computers - Peripheral Equipment - 0% Candescent Technologies Corp. - 665,000 Series E(B),o,(O) (cost $3,657,500) $ 0 Warrants - 0.2% Data Processing and Management - 0.2% Infocrossing, Inc. - expires 521,660 10/16/08(B),(O) 2,404,853 Medical - Wholesale Drug Distributors - 0% DrugMax, Inc. - expires 3,050,000 9/29/10(O),(S) 0 Music - 0% Genius Products, Inc. - expires 1,425,000 12/5/10(O),(S) 529,245 Travel Services - 0% OneTravel Holdings, Inc. - 458,181 expires 4/14/10(O),(S) 0 ------------------------------------------------ ---------------------- Total Warrants (cost $1,464,250) 2,934,098 Other Securities - 24.7% State Street Navigator Securities Lending 364,896,141 Prime Portfolio+ (cost $364,896,141) 364,896,141 ------------------------------------------------ ---------------------- Total Investments (total cost $1,375,565,918) -- 124.9% $1,842,487,167 Liabilities, net of Cash, Receivables and Other Assets -- (24.9)% (367,391,779) ------------------------------------------------ ---------------------- Net Assets -- 100% $1,475,095,388
Summary of Investments by Country
% of Investment Country Value Securities --------------- -------------- --------------- Bermuda $ 23,347,245 1.3% Brazil 64,803,625 3.5% Canada 111,675,778 6.0% India 8,705,042 0.5% United States++ 1,633,955,477 88.7% -------------- --------------- Total $1,842,487,167 100.0%
++Includes Other Securities (68.9% excluding Other Securities) See Notes to Schedules of Investments and Financial Statements. 58 Janus Growth Funds April 30, 2006 Janus Global Life Sciences Fund (unaudited) TICKER: JAGLX FUND SNAPSHOT This fund seeks companies around the world that are dedicated to improving the quality of life for a growing and aging world. (THOMAS MALLEY PHOTO) Thomas Malley portfolio manager PERFORMANCE OVERVIEW Although the outlook for long-term interest rates remained murky and the Federal Reserve kept pushing up short-term yields, small capitalization stocks sparkled during the six-month period ended April 30, 2006, posting double-digit gains that topped the otherwise solid returns posted by mid-cap and large-cap equities. In the life sciences sector, investors soured on biotechnology and managed healthcare companies late in the period, resulting in a sizeable pullback in both groups, which had previously been standouts. While valuation concerns arose in the biotechnology space, especially in relation to more speculative names, rising medical costs weighed on managed healthcare companies. As a result, the two groups closed out the period ranked among the poorest performing sectors in the industry. Elsewhere, government reimbursement uncertainties proved increasingly worrisome to medical device companies. Interestingly, large pharmaceutical companies, which have contended with such concerns for much longer, tended to fair better during the period. Holding significant exposure to biotechnology companies and health insurers, the Fund generated a 4.44% return during the period, trailing its benchmarks, the S&P 500(R) Index and the Morgan Stanley Capital International World Health Care Index(SM), which advanced 9.64% and 6.63%, respectively. Our exposure to the biotechnology group focused heavily on small capitalization companies, which tend to be tied to drug-related developments. During much of the period, we also sensed an urgency among larger pharmaceutical concerns to acquire cutting edge compounds. We have found that once a small company announces measurable success in a Phase III trial, the market immediately figures the company has added leverage, in terms of a possible licensing deal or potential acquisition, and generally pushes the stock upward. As the price climbs, however, risk factors increase as well, and we regularly assess our reasons for investing. DETRACTORS FROM FUND PERFORMANCE The largest detractor from performance, United Therapeutics, rose sharply during the first 8 months of 2005 on good earnings growth. However, it fell during the period as the company suffered from inventory destocking and higher market costs. United Therapeutics was one of the names that perhaps got ahead of itself before falling in the wake of a disappointing earnings report. The company's Remodulin treatment for high blood pressure has enjoyed increased sales and it is developing an inhaled version of the drug that we believe holds further promise. In addition, United Therapeutics recently expanded its sales force and has an ovarian cancer antibody, Ovarex, in Phase III trials. Given the potential catalysts for future growth, we continue to hold the stock. We upped our exposure to another biotechnology laggard, Idenix Pharmaceuticals. The company's stock dropped overmisperceptions that experiential trials on the hepatitis C drug it's developing with Novartis of Switzerland were scrapped. Instead, side effects from the treatment prompted researchers to cut the dosage level, and Novartis responded by reiterating its support for the drug development effort. Conversely, the outlook for LifePoint Hospitals worsened, prompting us to exit the stock. The aftereffects of Hurricane Katrina lingered longer than anticipated for this owner and operator of 53 rural hospitals, including five in Louisiana. Issues with Medicare reimbursement policies and the integration of Province Healthcare, which was acquired in 2005, added to the company's woes, which convinced us to move on. CONTRIBUTORS TO FUND PERFORMANCE While investing in small biotechnology companies can indeed be precarious, the Fund also enjoyed some stellar returns from the group, including top performer Adolor, which surged as it released preliminary trial data that showed its Entereg treatment was effective at helping patients recover more quickly from opiod-induced constipation after surgery. On track for a 2007 approval from the Food and Drug Administration (FDA), the drug significantly reduced post-operative intestinal distress among trial subjects. It's also being studied for relief of bowel dysfunction from chronic opiod use. Another innovative company, Alexion Pharmaceuticals, reported positive developments in Phase III trials for its Soliris treatment for paroxysmal nocturnal hemoglobinuria (PNH). The disease, in which a body's immune system attacks red blood cells, affects about 10,000 people in North America and Europe. If approved, Soliris will significantly reduce the number of required blood transfusions for PNH sufferers, which represents a large quality of life benefit. Pleased with the stock's rally, we took the opportunity to book some profits. Gilead Sciences continued to see success in the uptake of its once-a-day HIV medication, Truvada, which has steadily taken market share from GlaxoSmithKline's Combivir. Looking ahead, the company has filed for FDA approval of another once-daily combination pill which will mix Truvada and the popular Sustiva treatment from Bristol-Myers Squibb. Given the developments and rise in the stock price, we pared our exposure during the period. Adding to 2006 gains was Celgene, a biotechnology concern that initiated a fresh rally in the closing days of December when the FDA approved its Revlimid drug for Janus Growth Funds April 30, 2006 59 Janus Global Life Sciences Fund (unaudited) treating myelodysplastic syndromes (MDS), a blood-borne cancer. Weeks later, the FDA announced that it had granted a priority review of the company's application for Revlimid to treat multiple myeloma, a bone marrow-based cancer, and a decision was expected by the end of June. Meanwhile, our surveys of physicians suggest Revlimid will enjoy high adoption rates for both indications, so our outlook for the company remains bright. We have moved our position into a six month structured note with Goldman Sachs to reduce volatility to the Fund during the launch period of Revlimid. Our investment position remains the same and at the end of the note, we will receive our old shares back. Moving beyond healthcare, we actively look for stocks that improve the quality of life in other areas of the market as well. One such industry is agribusiness, an area of the economy that is gaining increased attention as consumer wealth rises across the globe. A new position that meets this criteria and lifted returns immediately was Brazilian agribusiness Cosan, the world's largest processor of sugar cane. Along with Syngenta, another Top 10 performer in the Fund, Cosan has benefited from increases in core food prices around the world, due in part to greater demand from fast-growing Asian countries. Another new name included Stada Arzneimittel of Germany, a leader in the growing European generic drug market. LOOKING AHEAD Increasingly, concerns over future Medicare reimbursement levels are dominating discussions within the domestic life sciences sector. From the government plan's massive drug spend to decisions on medical devices and HMO services, fears over healthcare companies' future abilities to effectively raise prices are widespread. Interestingly, in Japan and Europe, price cuts are part of the fundamental equation and are now built into stock prices. While acknowledging that the U.S. reimbursement debate will likely add to market volatility, we feel good about the long-term potential in the life sciences sector. We believe many of our companies are improving the practices of healthcare and improving the treatment of disease and we're excited about the potential for strong positive developments. Of course, to attempt to mitigate dramatic swings within any individual sector, we will continue to run what we believe to be a balanced, well-diversified portfolio of holdings. Thank you for your continued investment in Janus Global Life Sciences Fund. JANUS GLOBAL LIFE SCIENCES FUND AT A GLANCE 5 LARGEST CONTRIBUTORS TO PERFORMANCE -- HOLDINGS
CONTRIBUTION ------------ Adolor Corp. Therapeutic-based biopharmaceutical company - U.S. 1.54% Celgene Corp. Global biopharmaceutical company - U.S. 1.06% Cosan S.A. Industria e Comercio Food and beverage producer and distributor - Brazil 0.88% Alexion Pharmaceuticals, Inc. Biopharmaceutical company - U.S. 0.86% Gilead Sciences, Inc. Biopharmaceutical company - U.S. 0.76%
5 LARGEST DETRACTORS FROM PERFORMANCE -- HOLDINGS
CONTRIBUTION ------------ United Therapeutics Corp. Vascular pharmaceutical developer - U.S. (0.73%) Nabi Biopharmaceuticals Biopharmaceutical company - U.S. (0.72%) Idenix Pharmaceuticals, Inc. Biopharmaceutical company - U.S. (0.68%) Aetna, Inc. Healthcare and related benefits provider - U.S. (0.66%) LifePoint Hospitals, Inc. Health care services provider - U.S. (0.51%)
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING ----------------- ---------------- --------------------------- Pharmaceuticals & Biotechnology 5.90% 58.24% 7.88% Food, Beverage & Tobacco 0.74% 2.13% 4.61% Materials 0.64% 2.51% 3.01% Insurance 0.03% 0.31% 4.75% Commercial Services & Supplies 0.00% 0.00% 0.73%
5 LOWEST CONTRIBUTORS/DETRACTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING ----------------- ---------------- --------------------------- Healthcare Equipment & Services (2.90%) 36.82% 5.17% Utilities 0.00% 0.00% 3.30% Transportation 0.00% 0.00% 1.84% Telecommunication Services 0.00% 0.00% 3.15% Technology Hardware & Equipment 0.00% 0.00% 7.04%
60 Janus Growth Funds April 30, 2006 (unaudited) 5 LARGEST HOLDINGS -- (% of Net Assets) AS OF APRIL 30, 2006 Goldman Sachs Group, Inc., convertible, (Celgene Corp.), 0% Finance - Investment Bankers/Brokers 5.2% Roche Holding A.G. Medical - Drugs 4.2% Coventry Health Care, Inc. Medical - HMO 3.5% Aetna, Inc. Medical - HMO 3.5% United Therapeutics Corp. Therapeutics 3.1% -------------- 19.5%
ASSET ALLOCATION -- (% of Net Assets) AS OF APRIL 30, 2006 (PIE CHART) Common Stock 93.4%* Equity Linked Structured Notes 5.2% Cash and Cash Equivalents 1.1% Preferred Stock 0.3%
Emerging markets comprised 4.4% of total net assets. *Includes short sale of (0.8%). 5 LARGEST COUNTRY ALLOCATIONS -- (% of Investment Securities) (BAR CHARTS)
AS OF APRIL 30, 2006 ---------------------- United States 83.5% Switzerland 8.6% Brazil 2.1% United Kingdom 1.9% Israel 1.8%
AS OF OCTOBER 31, 2005 ---------------------- United States 84.8% Switzerland 7.1% United Kingdom 2.5% Israel 2.5% France 1.7%
Janus Growth Funds April 30, 2006 61 Janus Global Life Sciences Fund (unaudited) PERFORMANCE (PERFORMANCE GRAPH)
Initial investment of $10,000 MORGAN STANLEY CAPITAL INTERNATIONAL WORLD JANUS GLOBAL LIFE SCIENCES FUND S&P INDEX HEALTH CARE INDEX(SM) ------------------------------- ------------------------ -------------------------- 12/31/1998* $ 10,000 $ 10,000 $ 10,000 4/30/2000 $ 17,220 $ 12,009 $ 9,447 4/30/2002 $ 15,873 $ 9,132 $ 9,440 4/30/2004 $ 17,474 $ 9,728 $ 9,908 4/30/2006 $ 20,236 $ 11,939 $ 11,487
Average Annual Total Return --for the periods ended April 30, 2006
FISCAL SINCE YEAR-TO-DATE ONE YEAR FIVE YEAR INCEPTION* ------------ --------- ------------ ------------ Janus Global Life Sciences 4.44% 15.74% 3.59% 10.10% Fund S&P 500(R) Index 9.64% 15.42% 2.70% 2.45% Morgan Stanley Capital International World Health Care Index(SM) 6.63% 8.46% 2.84% 1.91% Lipper Quartile N/A 2nd 2nd 2nd Lipper Ranking - based on total return for Health/Biotechnology Funds N/A** 57/176 55/127 15/48
Visit janus.com to view up to date performance and characteristic information Data presented represents past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 800.525.3713 or visit www.janus.com for performance current to the most recent month-end. See Notes to Schedules of Investments for index definitions. Total return includes reinvestment of dividends, distributions and capital gains. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. *The Fund's inception date -- December 31, 1998 **The Fund's fiscal year-to-date Lipper ranking is not available. See "Explanations of Charts, Tables and Financial Statements." The Fund's portfolio may differ significantly from the securities held in the indices. The indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual portfolio. The Fund emphasizes investments in certain industry groups, which may react similarly to market developments (resulting in greater price volatility), and may have significant exposure to foreign markets (which include risks such as currency fluctuation and political uncertainty). There is no assurance that the investment process will consistently lead to successful investing. A 2% redemption fee may be imposed on shares held for 3 months or less. Performance shown does not reflect this redemption fee and, if reflected, performance would have been lower. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. Returns have sustained significant gains due to market volatility in the healthcare sector. The Fund will invest at least 80% of its net assets in the type of securities described by its name. FUND EXPENSES The example below shows you the ongoing costs (in dollars) of investing in your Fund and allows you to compare these costs with those of other mutual funds. Please refer to page 5 for a detailed explanation of the information presented in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD EXPENSE EXAMPLE (11/1/05) (4/30/06) (11/1/05-4/30/06)* --------------------------------------------- ----------------------- -------------------- --------------------------- Actual $ 1,000.00 $ 1,044.40 $ 5.02 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.89 $ 4.96
*Expenses are equal to the annualized expense ratio of 0.99%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 62 Janus Growth Funds April 30, 2006 Janus Global Life Sciences Fund Schedule of Investments and Securities Sold Short (unaudited) As of April 30, 2006
Shares or Principal Amount Value ------------------------------------------------ ---------------------- Common Stock -- 94.2% Agricultural Chemicals - 2.9% 228,405 Syngenta A.G.*,** $ 31,861,043 Dental Supplies and Equipment - 1.4% 476,605 Patterson Companies, Inc.*,# 15,527,791 Diagnostic Kits - 2.0% 566,076 Dade Behring Holdings, Inc. 22,076,964 Drug Delivery Systems - 1.2% 337,935 Hospira, Inc.* 13,027,394 Food - Dairy Products - 1.2% 353,700 Dean Foods Co.* 14,010,057 Instruments - Scientific - 2.2% 348,790 Fisher Scientific International, Inc.*,# 24,607,135 Medical - Biomedical and Genetic - 10.0% 443,900 Advanced Magnetics, Inc.*,# 11,585,790 533,280 Alexion Pharmaceuticals, Inc.* 18,126,187 239,080 Amgen, Inc.*,** 16,185,716 1,271,821 Fibrogen, Inc.*,(O),(S) 9,106,238 209,500 Genentech, Inc.* 16,699,245 201,300 Genmab A/S*,# 7,131,719 175,140 Genzyme Corp.* 10,711,562 325,845 Invitrogen Corp.*,# 21,509,029 ---------------------- 111,055,486 Medical - Drugs - 28.6% 438,955 Abbott Laboratories 18,760,937 1,229,248 Adolor Corp.*,# 28,911,913 1,163,340 Cubist Pharmaceuticals, Inc.* 26,372,918 516,825 Endo Pharmaceuticals Holdings, Inc.* 16,254,146 475,580 Forest Laboratories, Inc.* 19,203,920 653,784 Idenix Pharmaceuticals, Inc.*,# 6,563,991 513,175 K-V Pharmaceutical Co. - Class A*,# 11,074,317 1,346,445 Ligand Pharmaceuticals, Inc. - Class B*,# 16,493,951 765,535 Merck & Company, Inc. 26,349,715 321,039 Novartis A.G.**,# 18,417,937 907,225 Pfizer, Inc. 22,980,009 308,325 Roche Holding A.G.** 47,409,753 505,770 Shire PLC (ADR)**,# 23,953,267 416,486 Stada Arzneimittel A.G.# 20,087,631 314,625 Wyeth 15,312,799 ---------------------- 318,147,204 Medical - Generic Drugs - 3.0% 178,110 Barr Pharmaceuticals, Inc.* 10,784,561 559,510 Teva Pharmaceutical Industries, Ltd. (ADR)# 22,660,155 ---------------------- 33,444,716 Medical - HMO - 11.3% 998,455 Aetna, Inc. 38,440,518 900,750 Centene Corp.*,# 23,140,268 788,267 Coventry Health Care, Inc.* 39,153,221 493,130 UnitedHealth Group, Inc. 24,528,286 ---------------------- 125,262,293 Medical - Hospitals - 0.9% United Surgical Partners 291,799 International, Inc.*,# 9,632,285 Medical - Nursing Homes -- 1.7% 432,305 Manor Care, Inc.# 18,956,574
Shares or Principal Amount Value ------------------------------------------------ ---------------------- Medical - Wholesale Drug Distributors - 2.9% 486,750 Cardinal Health, Inc. $ 32,782,613 Medical Instruments - 2.3% 755,725 Boston Scientific Corp.* 17,563,049 720,985 Stereotaxis, Inc.*,# 8,536,462 ---------------------- 26,099,511 Medical Products - 2.2% 267,695 Stryker Corp. 11,711,656 241,355 Varian Medical Systems, Inc.* 12,642,175 ---------------------- 24,353,831 Optical Supplies - 1.1% 120,010 Alcon, Inc. (U.S. Shares)** 12,206,217 Pharmacy Services - 1.6% 331,950 Medco Health Solutions, Inc.* 17,669,699 Physical Therapy and Rehabilitation Centers - 1.7% 4,097,185 HEALTHSOUTH Corp.*,# 18,765,107 Respiratory Products - 1.4% 418,860 Respironics, Inc.* 15,338,653 Sugar - 2.4% 342,900 Cosan S.A. Industria e Comercio* 26,387,034 Therapeutics - 12.2% 318,255 Amylin Pharmaceuticals, Inc.*,# 13,860,005 588,160 Gilead Sciences, Inc.* 33,819,200 1,094,490 MGI Pharma, Inc.*,# 20,445,073 367,920 Neurocrine Biosciences, Inc.* 21,103,891 763,560 Nuvelo, Inc.*,# 12,499,477 578,984 United Therapeutics Corp.* 34,478,498 ---------------------- 136,206,144 ---------------------- Total Common Stock (cost $818,081,137) 1,047,417,751 Preferred Stock - 0.3% Medical - Biomedical and Genetic - 0.3% Cougar Technology, Inc.(O),(S) 1,678,901 (cost $2,904,499) 2,904,499 Equity-Linked Structured Note - 5.2% Finance - Investment Bankers/Brokers - 5.2% Goldman Sachs Group, Inc., convertible 721,700 (Celgene Corp.), 0%(B) (cost $50,584,242) 57,727,340 Other Securities - 15.6% State Street Navigator Securities Lending 174,002,620 Prime Portfolio+ (cost $174,002,620) 174,002,620 Securities Sold Short - (0.8)% Medical - Nursing Homes - (0.8)% Kindred Healthcare, Inc.* 354,350 (proceeds $8,353,528) (8,596,531) ---------------------- Total Investments and Securities Sold Short (total cost $1,037,218,970) -- 114.5% 1,273,455,679 Liabilities, net of Cash, Receivables and Other Assets -- (14.5)% (160,986,274) ---------------------- Net Assets -- 100% $1,112,469,405
See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds April 30, 2006 63 Janus Global Life Sciences Fund Schedule of Investments and Securities Sold Short (unaudited) As of April 30, 2006 Summary of Investments by Country
% of Investment Country Value Securities --------------- -------------- -------------- Brazil $ 26,387,034 2.1% Denmark 7,131,719 0.5% Germany 20,087,631 1.6% Israel 22,660,155 1.8% Switzerland 109,894,950 8.6% United Kingdom 23,953,267 1.9% United States++ 1,063,340,923 83.5% -------------- -------------- Total $1,273,455,679 100.0%
++ Includes Other Securities (69.8% excluding Other Securities) Forward Currency Contracts, Open
Currency Sold and Currency Currency Unrealized Settlement Date Units Sold Value in $ U.S. Gain/(Loss) ---------------------- ------------ --------------- ------------ British Pound 8/10/06 2,500,000 $ 4,565,248 $ (221,223) British Pound 10/19/06 600,000 1,096,905 (22,839) Swiss Franc 6/28/06 26,750,000 21,716,576 (405,334) Swiss Franc 8/10/06 4,700,000 3,832,917 (191,877) --------------- ------------ Total $ 31,211,646 $ (841,273)
See Notes to Schedules of Investments and Financial Statements. 64 Janus Growth Funds April 30, 2006 Janus Global Technology Fund (unaudited) TICKER: JAGTX FUND SNAPSHOT This fund pursues forward-thinking companies around the globe that are advancing the frontiers of technology in profitable ways. TEAM BASED APPROACH LED BY BRAD SLINGERLEND AND BARNEY WILSON PERFORMANCE OVERVIEW As inflationary fears and budget deficit concerns simmered beneath an otherwise healthy domestic economic environment, global equities generally outperformed U.S. stocks during the six-month period ended April 30, 2006. The Federal Reserve did little to help underlying sentiments as it continued its steady drumbeat of quarter-point rate hikes -- adding 1.00% to the overnight lending rate during the period. Buoyed by a number of solid overseas companies, Janus Global Technology Fund generated a 19.01% return during the period, outperforming its benchmarks, the S&P 500(R) Index, which advanced 9.64%, and the Morgan Stanley Capital International World Information Technology Index(SM), which gained 12.02%. INVESTMENT STRATEGY On February 1, 2006, we assumed management responsibility for the Fund and it spent part of the period in transition. While the Fund has always relied on the excellent work done by the Janus technology research team, we've decided to sharpen its focus on the group's best ideas. Accordingly, we're striving for 90% of the Fund's holdings to be "buy" or "strong buy" rated by Janus analysts. As part of the refinement process during the period, we scaled back the number of the Fund's holdings and finished within our ideal target of between 50 and 70 names. CONTRIBUTORS TO FUND PERFORMANCE Leading the way on a performance basis was Hon Hai Precision. The Taiwanese contract manufacturer reported a phenomenal 68.3% gain in sales during 2005 while it expanded its share of the personal computer, consumer electronic and enterprise technology markets. As the growth rate slowed somewhat through the first four months of 2006, we're watching carefully to assess this long-term holding's prospects going forward. Elsewhere, wireless technology developer Research in Motion (RIM) of Canada rallied after resolving a problematic patent issue with its popular BlackBerry communications service. Having tracked the company for several years, we frequently supplemented its own information with subscriber data from wireless service carriers. Thus, we believed that separate from the legal issues, it was still a high growth company with great returns and a courtroom battle wasn't going to stop that from continuing. We added heavily to the Fund's stake in 2005 as a reflection of our conviction. Once the settlement with rival NTP was announced in March, RIM's stock appreciated significantly and we were pleased to take some profits. Glassworks innovator Corning is another longtime holding that rewarded us during the period. Again, by leveraging our global research efforts and the wide reach of the Janus technology analyst team, we determined the full extent of the company's leadership position in the liquid crystal display (LCD) market. Following discussions with Corning customers and plant visits in the U.S. and Asia, we concluded that the company, relying on a proprietary manufacturing technology, frequently leads the industry into the next generation of glass displays, both in size and related technology. This edge has proven critical as television manufacturers keep expanding the market for large LCD screens. The first-mover advantage translates into higher margins, which are especially valuable when end-market demand accelerates quicker than anticipated, which happened during the period. However, as Corning's stock climbed, it reached our target price so we liquidated the position. Our global research efforts also led us to SOITEC, a French developer of silicon technology that essentially provides an insulation layer for semiconductor chips. The structure allows microprocessors to run faster with lower heat, which provides a performance advantage for chip manufacturers. Currently used in a small number of circumstances, we believe the technology will gain traction and proliferate through the chip industry and we'll see more supplier agreements such as the one it recently signed with Advanced Micro Devices. Based on our confidence in the company, we significantly increased the Fund's exposure. A company with a similarly promising outlook that's already well-entrenched in the industry is business software developer SAP of Germany. Validating SAP's strong marketing message that the company's enterprise software improves business metrics and makes companies more competitive, we believe the return on investment for SAP clients is remarkably high. As the company has consistently delivered on its promises, we believe SAP's growth rate will exceed that of the technology sector for a multi-year period. DETRACTORS FROM FUND PERFORMANCE Weighing on performance was Internet services outfit Yahoo!, which sagged amid mixed reviews of its search-generated revenue growth rate. We actually believed the response was overblown, viewed the compelling valuation as an opportunity and increased the Fund's position. Ultimately, we believe the potential for paid search and other advertising revenues, along with the increasing complexity of content available on the Web, outweighs any short-term setbacks. We witnessed another opportunistic shortfall in Internet protocol (IP) network gear Juniper Networks. Underwhelming quarterly results contributed to an extended selloff in the stock, although we added to the Fund's stake. We believe the sagging revenues will prove to be of temporary consequence, rather than the early inklings of a long-term fundamental problem. Eventually, we believe that voice, video and data Janus Growth Funds April 30, 2006 65 Janus Global Technology Fund (unaudited) delivery will all converge on IP networks, leading to steady demand for Juniper's equipment, perhaps most notably from the large telecommunication services carriers which will need to upgrade their networks. Computer maker Dell also declined amid short-term revenue growth issues. Although we locked in some profits on the stock as share prices approached near-term targets, we continue to hold a significant stake in the company. Ultimately, we believe the value of its well-honed direct-distribution model and its track record of strong execution will return to the fore, especially considering double-digit growth projections for computer sales during 2006. Online auction host eBay continued to disappoint as its flagship domestic marketplace business faltered. Despite steady growth in merchandise listings, the increase in revenue gains eased modestly, tempering management's optimism. The company's PayPal division is a steady outperformer and the voice over Internet protocol service provider Skype boasts high user volumes, although generating revenues from that business has proven challenging. While maintaining a stake in eBay, we're carefully gauging its ability to execute and drive new earnings going forward. LOOKING AHEAD As Janus' grassroots research efforts delve deep into company fundamentals, our analysts frequently find stocks that are undervalued in relation to the company's potential. Furthermore, by narrowing the Fund's focus to the team's top 50-70 ideas, we believe we're concentrating on the best prospects for appreciation in the world. In the coming quarters, the emphasis on company-level research will likely gain in importance as we don't believe any dramatic, broad-based themes will emerge from the technology sector. Instead, we believe exciting names with potential exist in virtually all corners of the technology universe, independent of any overall outlook for the group. By seeking out and investing in companies that are underestimated, misunderstood and undervalued by the broader market, we will attempt to continue to deliver benchmark-beating returns from the technology sector. Thank you for your investment in Janus Global Technology Fund. JANUS GLOBAL TECHNOLOGY FUND AT A GLANCE 5 LARGEST CONTRIBUTORS TO PERFORMANCE -- HOLDINGS
CONTRIBUTION ------------ Hon Hai Precision Industry Company, Ltd. Personal computer parts company - Taiwan 1.56% Marvell Technology Group, Ltd. Communication-related integrated circuits provider - U.S. 1.17% Advanced Micro Devices, Inc. Integrated circuits provider - U.S. 0.97% Broadcom Corp. - Class A Integrated silicon solutions provider - U.S. 0.94% Samsung Electronics Company, Ltd. Diversified electronics manufacturer - Korea 0.91%
5 LARGEST DETRACTORS FROM PERFORMANCE -- HOLDINGS
CONTRIBUTION ------------ Yahoo!, Inc. Global Internet media company - U.S. (0.49%) Juniper Networks, Inc. Internet infrastructure solutions provider - U.S. (0.42%) Dell, Inc. Worldwide computer systems and services - U.S. (0.38%) eBay, Inc. Online marketplace - U.S. (0.20%) Check Point Software Technologies, Ltd. (U.S. Shares) Internet security provider - U.S. (0.18%)
5 LARGEST CONTRIBUTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING ----------------- ----------------- --------------------------- Semiconductors & Semiconductor Equipment 8.31% 26.59% 3.15% Technology Hardware & Equipment 6.04% 31.06% 7.04% Software & Services 3.60% 32.24% 5.44% Consumer Durables & Apparel 0.83% 2.18% 1.31% Retailing 0.43% 2.91% 3.59%
5 LOWEST CONTRIBUTORS/DETRACTORS TO PERFORMANCE -- SECTORS
FUND WEIGHTING FUND CONTRIBUTION (% OF NET ASSETS) PRIMARY BENCHMARK WEIGHTING ----------------- ----------------- --------------------------- Pharmaceuticals & Biotechnology (0.05%) 0.32% 7.88% Utilities 0.00% 0.00% 3.30% Transportation 0.00% 0.00% 1.84% Real Estate 0.00% 0.00% 0.79% Insurance 0.00% 0.00% 4.75%
66 Janus Growth Funds April 30, 2006 (unaudited) 5 LARGEST EQUITY HOLDINGS -- (% of Net Assets) AS OF APRIL 30, 2006 Yahoo!, Inc. Web Portals/Internet Service Providers 3.8% Advanced Micro Devices, Inc. Electronic Components - Semiconductors 3.2% Oracle Corp. Enterprise Software/Services 2.9% Amdocs, Ltd. (U.S. Shares) Telecommunication Services 2.9% QUALCOMM, Inc. Wireless Equipment 2.7% ----------- 15.5%
ASSET ALLOCATION -- (% of Net Assets) AS OF APRIL 30, 2006 (PIE CHART) Common Stock 96.8% Cash and Cash Equivalents 2.7% Preferred Stock 0.5%
Emerging markets comprised 9.1% of total net assets. 5 LARGEST COUNTRY ALLOCATIONS -- (% of Investment Securities) (BAR CHARTS)
AS OF APRIL 30, 2006 ---------------------- United States 67.7% United Kingdom 7.2% Netherlands 3.2% Japan 2.9% Cayman Islands 2.7%
AS OF OCTOBER 31, 2005 ---------------------- United States 57.7% United Kingdom 6.5% Taiwan 5.0% France 4.3% Finland 4.0%
Janus Growth Funds April 30, 2006 67 Janus Global Technology Fund (unaudited) PERFORMANCE (PERFORMANCE GRAPH)
Initial investment of $10,000 MORGAN STANLEY CAPITAL INTERNATIONAL WORLD JANUS GLOBAL TECHNOLOGY FUND S&P 500(R) INDEX INFORMATION TECHNOLOGY INDEX(SM) ---------------------------- ----------------- --------------------------------- 12-31-1998* $ 10,000 $ 10,000 $ 10,000 4/30/2000 $ 32,616 $ 12,009 $ 20,215 4/30/2002 $ 10,190 $ 9,132 $ 6,779 4/30/2004 $ 10,282 $ 9,728 $ 7,083 4/30/2006 $ 13,234 $ 11,939 $ 8,398
Average Annual Total Return -- for the periods ended April 30, 2006
FISCAL SINCE YEAR-TO-DATE ONE YEAR FIVE YEAR INCEPTION* ------------ ----------- ------------ ------------- Janus Global Technology Fund 19.01% 34.60% (4.49)% 3.90% S&P 500(R) Index 9.64% 15.42% 2.70% 2.45% Morgan Stanley Capital International World Information Technology Index(SM) 12.02% 22.49% (3.36)% (2.35)% Lipper Quartile N/A 2nd 3rd 1st Lipper Ranking - based on total return for Science & Technology Funds N/A** 94/292 132/230 17/76
Visit janus.com to view up to date performance and characteristic information Data presented represents past performance, which is no guarantee of future results. Investment results and principal value will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Due to market volatility, current performance may be higher or lower than the performance shown. Call 800.525.3713 or visit www.janus.com for performance current to the most recent month-end. See Notes to Schedules of Investments for index definitions. Total return includes reinvestment of dividends, distributions and capital gains. The returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. *The Fund's inception date -- December 31, 1998 **The Fund's fiscal year-to-date Lipper ranking is not available. See "Explanations of Charts, Tables and Financial Statements." The Fund's portfolio may differ significantly from the securities held in the indices. The indices are not available for direct investment; therefore their performance does not reflect the expenses associated with the active management of an actual portfolio. There is no assurance that the investment process will consistently lead to successful investing. A 2% redemption fee may be imposed on shares held for 3 months or less. Performance shown does not reflect this redemption fee and, if reflected, performance would have been lower. Lipper Inc. - A Reuters Company, is a nationally recognized organization that ranks the performance of mutual funds within a universe of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested. This Fund may at times have significant exposure to certain industry groups, which may react similarly to market developments (resulting in greater price volatility). The Fund also may have significant exposure to foreign markets (which include risks such as currency fluctuation and political uncertainty). Returns have sustained significant gains due to market volatility in the information technology sector. Effective 2/1/06, Mike Lu is no longer the portfolio manager of Janus Global Technology Fund. Brad Slingerlend and Barney Wilson are now leading the Janus Technology Team in selecting investments for the Fund. The Fund will invest at least 80% of its net assets in the type of securities described by its name. FUND EXPENSES The example below shows you the ongoing costs (in dollars) of investing in your Fund and allows you to compare these costs with those of other mutual funds. Please refer to page 5 for a detailed explanation of the information presented in these charts.
BEGINNING ACCOUNT VALUE ENDING ACCOUNT VALUE EXPENSES PAID DURING PERIOD EXPENSE EXAMPLE (11/1/05) (4/30/06) (11/1/05-4/30/06)* ---------------------------------------- ----------------------- -------------------- --------------------------- Actual $ 1,000.00 $ 1,190.10 $ 5.81 Hypothetical (5% return before expenses) $ 1,000.00 $ 1,019.49 $ 5.36
*Expenses are equal to the annualized expense ratio of 1.07%, multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). 68 Janus Growth Funds April 30, 2006 Janus Global Technology Fund Schedule of Investments (unaudited) As of April 30, 2006
Shares or Principal Amount Value ------------------------------------------------ ---------------------- Common Stock - 96.8% Applications Software - 5.5% 285,885 Citrix Systems, Inc.* $ 11,412,529 187,877 Infosys Technologies, Ltd. 13,137,372 845,450 Microsoft Corp. 20,417,618 843,085 Quest Software, Inc.* 14,509,493 ---------------------- 59,477,012 Audio and Video Products - 1.3% 276,300 Sony Corp.** 13,879,910 Chemicals - Diversified - 0.6% 108,600 Shin-Etsu Chemical Company, Ltd.** 6,275,748 Commercial Services - Finance - 1.3% 343,235 Paychex, Inc. 13,863,262 Computer Services - 1.2% 517,490 Ceridian Corp.* 12,538,783 Computers - 3.8% 209,355 Apple Computer, Inc.* 14,736,498 410,465 Dell, Inc.* 10,754,183 205,105 Research In Motion, Ltd. (U.S. Shares)* 15,717,197 ---------------------- 41,207,878 Computers - Memory Devices - 4.3% 1,996,425 EMC Corp.* 26,971,702 303,405 SanDisk Corp.* 19,366,341 ---------------------- 46,338,043 Computers - Peripheral Equipment - 1.2% 322,018 Logitech International S.A.* 13,371,978 Data Processing and Management - 0.9% 231,270 NAVTEQ Corp.* 9,602,330 E-Commerce/Products - 2.6% 325,608 Amazon.com, Inc.*,# 11,464,658 592,030 Submarino S.A.* 16,027,645 ---------------------- 27,492,303 E-Commerce/Services - 1.0% 315,505 eBay, Inc.* 10,856,527 Electric Products - Miscellaneous - 1.3% 2,238,000 Toshiba Corp.** 14,249,769 Electronic Components - Miscellaneous - 2.5% 2,125,026 Hon Hai Precision Industry Company, Ltd.** 14,419,487 367,912 Koninklijke (Royal) Philips Electronics N.V.** 12,694,783 ---------------------- 27,114,270 Electronic Components - Semiconductors - 17.1% 1,060,245 Advanced Micro Devices, Inc.* 34,298,926 10,164,115 ARM Holdings PLC** 25,207,331 338,540 International Rectifier Corp.*,# 15,302,008 1,141,490 LSI Logic Corp.* 12,156,869 410,610 Microsemi Corp.*,# 11,217,865 924,658 MIPS Technologies, Inc.* 6,851,716 38,600 Samsung Electronics Company, Ltd.** 26,355,386 Silicon-On-Insulator Technologies 406,976 (SOITEC)* , ** ,# 13,282,788 314,420 SiRF Technology Holdings, Inc.*,# 10,737,443 833,715 Texas Instruments, Inc. 28,938,248 ---------------------- 184,348,580 Electronic Forms - 2.1% 568,245 Adobe Systems, Inc.* 22,275,204
Shares or Principal Amount Value ------------------------------------------------ --------------------- Electronic Measuring Instruments - 0.7% 166,585 Trimble Navigation, Ltd.* $ 7,892,797 Energy - Alternate Sources - 2.5% Suntech Power Holdings 780,900 Company, Ltd. (ADR)* 26,777,061 Enterprise Software/Services - 5.3% 481,410 CA, Inc.# 12,208,558 2,146,740 Oracle Corp.* 31,320,936 63,967 SAP A.G.** 13,993,588 --------------------- 57,523,082 Entertainment Software - 2.8% 1,026,980 Activision, Inc.* 14,572,846 282,055 Electronic Arts, Inc.* 16,020,724 --------------------- 30,593,570 Internet Connectivity Services - 1.4% 288,911 NDS Group PLC (ADR)*,** 14,561,114 Internet Infrastructure Software - 1.7% 180,625 Akamai Technologies, Inc.*,# 6,085,256 1,386,990 TIBCO Software, Inc.*,# 11,955,854 --------------------- 18,041,110 Internet Security - 2.3% Check Point Software Technologies, Ltd. 562,875 (U.S. Shares)* 10,891,631 550,755 McAfee, Inc.* 14,369,198 --------------------- 25,260,829 Medical - Drugs - 1.2% 568,024 Cubist Pharmaceuticals, Inc.* 12,877,104 Networking Products - 3.8% 656,249 Cisco Systems, Inc.* 13,748,417 1,467,360 Juniper Networks, Inc.* 27,116,812 --------------------- 40,865,229 Semiconductor Components/Integrated Circuits - 7.2% Actions Semiconductor 530,134 Company, Ltd. (ADR)* ,# 5,269,532 Advanced Semiconductor 10,378,000 Manufacturing Corp.* 2,583,357 1,518,470 Cypress Semiconductor Corp.*,# 26,056,946 205,145 Marvell Technology Group, Ltd.* 11,711,728 497,355 Maxim Integrated Products, Inc. 17,536,737 Taiwan Semiconductor 6,801,646 Manufacturing Company, Ltd.** 14,517,398 --------------------- 77,675,698 Semiconductor Equipment - 3.4% ASM Lithography Holding N.V. 1,151,475 (U.S. Shares)* , ** ,# 24,353,696 244,610 KLA-Tencor Corp. 11,780,418 --------------------- 36,134,114 Telecommunication Equipment - 1.1% 987,019 Arris Group, Inc.*,# 11,696,175 Telecommunication Services - 4.3% 829,690 Amdocs, Ltd. (U.S. Shares)*,** 30,864,468 433,665 NeuStar, Inc. - Class A* 15,221,642 --------------------- 46,086,110
See Notes to Schedules of Investments and Financial Statements. Janus Growth Funds April 30, 2006 69 Janus Global Technology Fund Schedule of Investments (unaudited) As of April 30, 2006
Shares or Principal Amount Value -------------------------------------- ------------------- Television - 1.2% 1,340,443 British Sky Broadcasting Group PLC** $ 12,845,158 Web Hosting/Design - 0.6% 96,580 Equinix, Inc.* 6,364,622 Web Portals/Internet Service Providers - 5.3% 38,140 Google, Inc. - Class A* 15,940,232 1,261,728 Yahoo!, Inc.* 41,359,443 ------------------- 57,299,675 Wireless Equipment - 5.3% 642,870 Nokia Oyj (ADR)** 14,567,434 568,190 QUALCOMM, Inc. 29,170,875 370,890 Telefonaktiebolaget LM Ericsson (ADR)# 13,155,468 ------------------- 56,893,777 ------------------- Total Common Stock (cost $778,455,685) 1,042,278,822 Corporate Bonds - 0% Candescent Technologies Corp., 8.00% convertible senior subordinated debentures $ 31,700,000 due 5/1/03 (144A) (cost $4,368,283)++,(Y),(0),(S) 0 Preferred Stock - 0.5% Wireless Equipment - 0.5% Crown Castle International Corp. 102,750 convertible, 6.25% (cost $5,137,500) 5,651,250 Other Securities - 7.1% State Street Navigator Securities Lending 76,982,279 Prime Portfolio+ (cost $76,982,279) 76,982,279 Time Deposit - 4.6% ING Financial, ETD, 4.86%, 5/1/06 $ 49,800,000 (cost $49,800,000) 49,800,000 ------------------- Total Investments (total cost $914,743,747) -- 109.0% 1,174,712,351 Liabilities, net of Cash, Receivables and Other Assets -- (9.0)% (96,805,525) ------------------- Net Assets -- 100% $ 1,077,906,826
Summary of Investments by Country
% of Investments Country Value Securities ------------------------------------- ---------------- ---------------- Bermuda $ 11,711,728 1.0% Brazil 16,027,645 1.4% Canada 15,717,197 1.3% Cayman Islands 32,046,593 2.7% China 2,583,357 0.2% Finland 14,567,434 1.2% France 13,282,788 1.1% Germany 13,993,588 1.2% India 13,137,372 1.1% Israel 10,891,631 0.9% Japan 34,405,427 2.9% Netherlands 37,048,479 3.2% South Korea 26,355,386 2.2% Sweden 13,155,468 1.1% Switzerland 13,371,978 1.1% Taiwan 28,936,885 2.5% United Kingdom 83,478,071 7.2% United States++ 794,001,324 67.7% ---------------- ---------------- Total $ 1,174,712,351 100.0%
++ Includes Short-Term Securities and Other Securities (56.8% excluding Short-Term Securities and Other Securities) Forward Currency Contracts, Open
Currency Sold and Currency Currency Unrealized Settlement Date Units Sold Value in $ U.S. Gain/(Loss) ------------------------- ---------------- ---------------- ---------------- British Pound 10/19/06 7,735,000 $ 14,140,942 $ (294,441) Euro 6/28/06 13,500,000 17,095,931 (527,230) Japanese Yen 6/28/06 924,000,000 8,187,333 31,845 South Korean Won 10/19/06 6,200,000,000 6,614,886 (34,891) Taiwan Dollar 10/19/06 213,000,000 6,824,225 (56,950) ---------------- ---------------- Total $ 52,863,317 $ (881,667)
See Notes to Schedules of Investments and Financial Statements. 70 Janus Growth Funds April 30, 2006 [This page intentionally left blank.] Janus Growth Funds April 30, 2006 71 Statements of Assets and Liabilities
As of April 30, 2006 (unaudited) Janus Janus Janus Janus (all numbers in thousands except net asset Janus Enterprise Mercury Olympus Orion value per share) Fund Fund Fund Fund Fund ---------------------------------------------- ------------ ------------ ------------ ------------ ------------ Assets: Investments at cost(1) $ 9,970,199 $ 1,471,744 $ 3,982,370 $ 2,192,514 $ 1,075,813 Investments at value(1) $ 12,113,654 $ 2,123,957 $ 4,399,978 $ 2,720,171 $ 1,338,109 Cash 16,950 1,198 1,019 1,090 1,354 Cash denominated in foreign currency(2) 2,190 50 217 587 -- Deposits with broker for short sales -- -- -- -- -- Receivables: Investments sold 261,846 -- 71,439 29,746 -- Fund shares sold 2,226 930 795 1,106 1,828 Dividends 12,367 744 2,891 1,756 84 Interest 985 33 84 81 56 Other assets 200 10 24 16 5 Forward currency contracts -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ Total Assets 12,410,418 2,126,922 4,476,447 2,754,553 1,341,436 Liabilities: Payables: Short sales, at value(3) -- -- -- -- -- Due to custodian -- -- -- -- -- Collateral for securities loaned (Note 1) 522,863 229,175 394,235 316,899 250,086 Investments purchased 199,533 12,588 20,541 14,072 6,823 Fund shares repurchased 45,845 1,330 3,045 1,445 476 Dividends and distributions -- -- -- -- -- Advisory fees 6,140 993 2,145 1,274 550 Transfer agent fees and expenses 2,183 437 974 553 212 Non-interested Trustees' fees and expenses 1 2 4 2 1 Foreign tax liability 666 -- 3,620 27 949 Accrued expenses 1,588 300 716 351 112 Forward currency contracts 6,216 -- 3,837 1,896 -- ------------ ------------ ------------ ------------ ------------ Total Liabilities 785,035 244,825 429,117 336,519 259,209 ------------ ------------ ------------ ------------ ------------ Net Assets $ 11,625,383 $ 1,882,097 $ 4,047,330 $ 2,418,034 $ 1,082,227 Net Assets Consist of: Capital (par value and paid in surplus)* $ 15,163,970 $ 5,462,489 $ 8,760,686 $ 3,418,918 $ 1,324,824 Undistributed net investment income/(loss)* 21,559 (1,134) 3,927 124 2,579 Undistributed net realized gain/(loss) from investments and foreign currency transactions* (5,696,955) (4,231,473) (5,127,467) (1,526,781) (506,526) Unrealized appreciation/(depreciation) of investments and foreign currency translations 2,136,809(4) 652,215 410,184(4) 525,773(4) 261,350(4) ------------ ------------ ------------ ------------ ------------ Total Net Assets $ 11,625,383 $ 1,882,097 $ 4,047,330 $ 2,418,034 $ 1,082,227 Shares Outstanding, $0.01 Par Value (unlimited shares authorized) 430,725 41,709 169,382 70,953 114,120 Net Asset Value Per Share $ 26.99 $ 45.12 $ 23.89 $ 34.08 $ 9.48
Janus Janus As of April 30, 2006 (unaudited) Janus Janus Janus Global Life Global (all numbers in thousands except net asset Triton Twenty Venture Sciences Technology value per share) Fund Fund Fund Fund Fund ---------------------------------------------- ------------ ------------ ------------ ------------ ------------ Assets: Investments at cost(1) $ 151,471 $ 7,314,654 $ 1,375,566 $ 1,045,572 $ 914,744 Investments at value(1) $ 165,422 $ 9,994,230 $ 1,842,487 $ 1,282,052 $ 1,174,712 Cash 156 1,375 -- -- 1,581 Cash denominated in foreign currency(2) 298 -- 53 -- 151 Deposits with broker for short sales -- -- -- 8,354 -- Receivables: Investments sold 3,320 230,835 32,621 14,400 464 Fund shares sold 1,003 2,670 184 168 196 Dividends 50 4,845 101 175 583 Interest 8 3,906 95 39 66 Other assets -- 96 27 14 15 Forward currency contracts -- -- -- -- 32 ------------ ------------ ------------ ------------ ------------ Total Assets 170,257 10,237,957 1,875,568 1,305,202 1,177,800 Liabilities: Payables: Short sales, at value(3) -- -- -- 8,597(3) -- Due to custodian -- -- 10,938 1,390 -- Collateral for securities loaned (Note 1) -- 355,132 364,896 174,003 76,982 Investments purchased 4,436 113,023 22,452 5,244 20,005 Fund shares repurchased 196 6,338 455 1,438 857 Dividends and distributions -- -- -- -- -- Advisory fees 81 5,040 771 601 570 Transfer agent fees and expenses 29 1,650 235 270 271 Non-interested Trustees' fees and expenses -- 3 3 3 3 Foreign tax liability 98 -- 487 99 59 Accrued expenses 46 1,307 236 247 232 Forward currency contracts -- -- -- 841 914 ------------ ------------ ------------ ------------ ------------ Total Liabilities 4,886 482,493 400,473 192,733 99,893 ------------ ------------ ------------ ------------ ------------ Net Assets $ 165,371 $ 9,755,464 $ 1,475,095 $ 1,112,469 $ 1,077,907 Net Assets Consist of: Capital (par value and paid in surplus)* $ 145,102 $ 9,273,238 $ 961,148 $ 1,702,561 $ 3,392,671 Undistributed net investment income/(loss)* 101 20,420 (3,289) (2,505) (2,679) Undistributed net realized gain/(loss) from investments and foreign currency transactions* 6,313 (2,218,536) 50,782 (822,886) (2,571,128) Unrealized appreciation/(depreciation) of investments and foreign currency translations 13,855(4) 2,680,342 466,454(4) 235,299(4) 259,043(4) ------------ ------------ ------------ ------------ ------------ Total Net Assets $ 165,371 $ 9,755,464 $ 1,475,095 $ 1,112,469 $ 1,077,907 Shares Outstanding, $0.01 Par Value (unlimited shares authorized) 12,049 190,971 22,346 55,003 83,312 Net Asset Value Per Share $ 13.73 $ 51.08 $ 66.01 $ 20.23 $ 12.94
* See Note 4 in Notes to Financial Statements (1) Investments at cost and value include $505,930,469, $223,640,930, $381,881,851, $307,516,553, $243,484,769, $347,802,617, $355,947,289, $168,908,989 and $74,889,311 of securities loaned for Janus Fund, Janus Enterprise Fund, Janus Mercury Fund, Janus Olympus Fund, Janus Orion Fund, Janus Twenty Fund, Janus Venture Fund, Janus Global Life Sciences Fund and Janus Global Technology Fund, respectively (Note 1). (2) Includes cost of $2,144,138, $49,480, $212,366, $574,272, $296,403, $53,492 and $150,818 for Janus Fund, Janus Enterprise Fund, Janus Mercury Fund, Janus Olympus Fund, Janus Triton Fund, Janus Venture Fund and Janus Global Technology Fund, respectively. (3) Includes proceeds of $8,353,528 on short sales for Janus Global Life Sciences Fund. (4) Net of foreign taxes on investments of $665,761, $3,619,824, $26,574, $948,727, $97,695, $486,618, $99,084 and $59,234 for Janus Fund, Janus Mercury Fund, Janus Olympus Fund, Janus Orion Fund, Janus Triton Fund, Janus Venture Fund, Janus Global Life Sciences Fund and Janus Global Technology Fund, respectively. See Notes to Financial Statements. 72 Janus Growth Funds April 30, 2006 Janus Growth Funds April 30, 2006 73 Statements of Operations
Janus Janus Janus Janus For the six-month period ended April 30, Janus Enterprise Mercury Olympus Orion 2006 (unaudited) (all numbers in thousands) Fund Fund Fund Fund Fund ------------------------------------------- ------------ ------------ ------------ ------------ ------------ Investment Income: Interest $ 4,318 $ 709 $ 1,485 $ 830 $ 1,067 Securities lending income 744 141 226 174 152 Dividends 65,810 6,766 22,910 10,888 8,862 Dividends from affiliates 3,834 86 489 26 80 Foreign tax withheld (1,758) (20) (600) (401) (207) ------------ ------------ ------------ ------------ ------------ Total Investment Income 72,948 7,682 24,510 11,517 9,954 Expenses: Advisory fees 36,533 5,845 13,926 7,578 2,851 Transfer agent fees and expenses 12,447 2,388 5,484 3,131 1,138 Registration fees 140 21 34 10 19 Postage and mailing expenses 298 126 238 182 50 Custodian fees 125 13 63 50 52 Professional fees 32 17 20 16 17 Non-interested Trustees' fees and expenses 149 29 67 40 15 Printing expenses 353 147 260 241 51 Other expenses 1,765 322 766 339 160 Non-recurring costs (Note 2) -- -- -- -- -- Costs assumed by Janus Capital Management LLC (Note 2) -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ Total Expenses 51,842 8,908 20,858 11,587 4,353 Expense and Fee Offset (420) (92) (275) (127) (50) ------------ ------------ ------------ ------------ ------------ Net Expenses 51,422 8,816 20,583 11,460 4,303 Net Investment Income/(Loss) 21,526 (1,134) 3,927 57 5,651 Net Realized and Unrealized Gain/(Loss) on Investments: Net realized gain/(loss) from securities transactions 1,020,240 133,446 1,050,667 162,790 42,057 Net realized gain/(loss) from foreign currency transactions 4,290 (1) (1,745) (424) (75)(1) Net realized gain/(loss) from short sales -- -- -- -- -- Net realized gain/(loss) from option contracts -- -- -- -- -- Change in net unrealized appreciation or depreciation of investments and foreign currency translations 102,385(2) 108,675 (683,433)(2) 63,601(2) 129,409(2) Payment from affiliate (Note 2) 47 -- -- 1 -- ------------ ------------ ------------ ------------ ------------ Net Gain/(Loss) on Investments 1,126,962 242,120 365,489 225,968 171,391 ------------ ------------ ------------ ------------ ------------ Net Increase/(Decrease) in Net Assets Resulting from Operations $ 1,148,488 $ 240,986 $ 369,416 $ 226,025 $ 177,042
Janus Janus Janus Janus Janus Global Life Global For the six-month period ended April 30, Triton Twenty Venture Sciences Technology 2006 (unaudited) (all numbers in thousands) Fund Fund Fund Fund Fund ------------------------------------------- ------------ ------------ ------------ ------------ ------------ Investment Income: Interest $ 324 $ 9,989 $ 12 $ 146 $ 580 Securities lending income -- 105 485 166 136 Dividends 392 41,107 2,300 3,021 2,337 Dividends from affiliates -- 12,852 96 -- -- Foreign tax withheld (6) (1,223) (21) (149) (170) ------------ ------------ ------------ ------------ ------------ Total Investment Income 710 62,830 2,872 3,184 2,883 Expenses: Advisory fees 290 30,877 4,415 3,732 3,406 Transfer agent fees and expenses 110 9,615 1,322 1,544 1,626 Registration fees 23 25 11 14 18 Postage and mailing expenses 3 280 62 56 131 Custodian fees 16 102 103 35 71 Professional fees 18 21 18 18 28 Non-interested Trustees' fees and expenses 3 132 29 26 23 Printing expenses 8 354 84 96 131 Other expenses 19 1,443 238 230 233 Non-recurring costs (Note 2) -- -- -- -- -- Costs assumed by Janus Capital Management LLC (Note 2) -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ Total Expenses 490 42,849 6,282 5,751 5,667 Expense and Fee Offset (6) (292) (46) (62) (99) ------------ ------------ ------------ ------------ ------------ Net Expenses 484 42,557 6,236 5,689 5,568 Net Investment Income/(Loss) 226 20,273 (3,364) (2,505) (2,685) Net Realized and Unrealized Gain/(Loss) on Investments: Net realized gain/(loss) from securities transactions 6,534 1,073,122 114,121 101,400 209,720 Net realized gain/(loss) from foreign currency transactions (50)(1) (108) 57 1,420(1) (78)(1) Net realized gain/(loss) from short sales -- -- -- 15 -- Net realized gain/(loss) from option contracts -- -- -- 37 -- Change in net unrealized appreciation or depreciation of investments and foreign currency translations 11,694(2) (388,964) 165,631(2) (48,739)(2) (24,328)(2) Payment from affiliate (Note 2) -- 17 -- -- 4 ------------ ------------ ------------ ------------ ------------ Net Gain/(Loss) on Investments 18,178 684,067 279,809 54,133 185,318 ------------ ------------ ------------ ------------ ------------ Net Increase/(Decrease) in Net Assets Resulting from Operations $ 18,404 $ 704,340 $ 276,445 $ 51,628 $ 182,633
(1) Net of foreign taxes on investments of $8,190, $13,096, $883 and $3,591 for Janus Orion Fund, Janus Triton Fund, Janus Global Life Sciences Fund and Janus Global Technology Fund, respectively. (2) Net of foreign taxes on investments of $665,761, $3,619,824, $26,574, $948,727, $97,695, $486,618, $99,084 and $59,234 for Janus Fund, Janus Mercury Fund, Janus Olympus Fund, Janus Orion Fund, Janus Triton Fund, Janus Venture Fund, Janus Global Life Sciences Fund and Janus Global Technology Fund, respectively. See Notes to Financial Statements. 74 Janus Growth Funds April 30, 2006 Janus Growth Funds April 30, 2006 75 Statements of Changes in Net Assets
For the six-month period ended April 30, 2006 (unaudited) and the fiscal year ended Janus Janus Janus October 31, 2005 (all numbers in thousands) Fund Enterprise Fund Mercury Fund --------------------------- --------------------------- --------------------------- 2006 2005 2006 2005 2006 2005 ------------ ------------ ------------ ------------ ------------ ------------ Operations: Net investment income/(loss) $ 21,526 $ 8,063 $ (1,134) $ (5,103) $ 3,927 $ 18,801 Net realized gain/(loss) from investment transactions 1,024,530 2,416,218 133,445 178,530 1,048,922 411,889 Change in unrealized net appreciation/(depreciation) of investments and foreign currency translations 102,385 (1,439,602) 108,675 97,620 (683,433) 146,894 Payment from affiliate (Note 2) 47 1 -- -- -- -- ------------ ------------ ------------ ------------ ------------ ------------ Net Increase/(Decrease) in Net Assets Resulting from Operations 1,148,488 984,680 240,986 271,047 369,416 577,584 Dividends and Distributions to Shareholders: Net investment income* (7,997) -- -- -- (12,423) (6,427) Net realized gain/(loss) from investment transactions* -- -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ ------------ Net Decrease from Dividends and Distributions (7,997) -- -- -- (12,423) (6,427) Capital Share Transactions: Shares sold 835,253 378,642 149,492 228,604 192,578 703,654 Reinvested dividends and distributions 7,772 -- -- -- 11,886 6,103 Shares repurchased (1,501,054) (3,497,874) (211,923) (476,067) (987,558) (1,278,997) ------------ ------------ ------------ ------------ ------------ ------------ Net Increase/(Decrease) from Capital Share Transactions (658,029) (3,119,232) (62,431) (247,463) (783,094) (569,240) Net Increase/(Decrease) in Net Assets 482,462 (2,134,552) 178,555 23,584 (426,101) 1,917 Net Assets: Beginning of period 11,142,921 13,277,473 1,703,542 1,679,958 4,473,431 4,471,514 End of period $ 11,625,383 $ 11,142,921 $ 1,882,097 $ 1,703,542 $ 4,047,330 $ 4,473,431 ------------ ------------ ------------ ------------ ------------ ------------ Undistributed net investment income/(loss)* $ 21,559 $ 8,030 $ (1,134) $ -- $ 3,927 $ 12,423
For the six-month period ended April 30, 2006 (unaudited) and the fiscal year ended October 31, 2005 Janus Janus (all numbers in thousands) Olympus Fund Orion Fund --------------------------- --------------------------- 2006 2005 2006 2005 ------------ ------------ ------------ ------------ Operations: Net investment income/(loss) $ 57 $ 762 $ 5,651 $ 3,091 Net realized gain/(loss) from investment transactions 162,366 302,052 41,982 67,290 Change in unrealized net appreciation/(depreciation) of investments and foreign currency translations 63,601 72,243 129,409 56,341 Payment from affiliate (Note 2) 1 1 -- -- ------------ ------------ ------------ ------------ Net Increase/(Decrease) in Net Assets Resulting from Operations 226,025 375,058 177,042 126,722 Dividends and Distributions to Shareholders: Net investment income* (637) -- (6,052) -- Net realized gain/(loss) from investment transactions* -- -- -- -- ------------ ------------ ------------ ------------ Net Decrease from Dividends and Distributions (637) -- (6,052) -- Capital Share Transactions: Shares sold 135,323 94,217 308,061 167,198 Reinvested dividends and distributions 624 -- 5,942 -- Shares repurchased (200,189) (572,853) (94,167) (132,323) ------------ ------------ ------------ ------------ Net Increase/(Decrease) from Capital Share Transactions (64,242) (478,636) 219,836 34,875 Net Increase/(Decrease) in Net Assets 161,146 (103,578) 390,826 161,597 Net Assets: Beginning of period 2,256,888 2,360,466 691,401 529,804 End of period $ 2,418,034 $ 2,256,888 $ 1,082,227 $ 691,401 ------------ ------------ ------------ ------------ Undistributed net investment income/(loss)* $ 124 $ 705 $ 2,579 $ 2,980
*See Note 4 in Notes to Financial Statements. See Notes to Financial Statements. 76 Janus Growth Funds April 30, 2006 Janus Growth Funds April 30, 2006 77 Statements of Changes in Net Assets (continued)
For the six-month period ended April 30, 2006 (unaudited) and for the Janus Janus Janus fiscal year or period ended Triton Twenty Venture October 31, 2005 (all numbers in thousands) Fund Fund Fund ------------------------- ------------------------- ------------------------- 2006 2005(1) 2006 2005 2006 2005 ----------- ----------- ----------- ----------- ----------- ----------- Operations: Net investment income/(loss) $ 226 $ (43) $ 20,273 $ 20,063 $ (3,364) $ (8,736) Net realized gain/(loss) from investment transactions 6,484 (40) 1,073,014 1,469,039 114,178 117,762 Net realized gain/(loss) from short sales -- -- -- -- -- -- Net realized gain/(loss) from option contracts -- -- -- -- -- -- Change in unrealized net appreciation/(depreciation) of investments and foreign currency translations 11,694 2,161 (388,964) 254,049 165,631 25,372 Payment from affiliate (Note 2) -- -- 17 7 -- -- ----------- ----------- ----------- ----------- ----------- ----------- Net Increase/(Decrease) in Net Assets Resulting from Operations 18,404 2,078 704,340 1,743,158 276,445 134,398 Dividends and Distributions to Shareholders: Net investment income* (125) -- (20,136) (2,651) -- -- Net realized gain/(loss) from investment transactions* (88) -- -- -- (65,399) -- ----------- ----------- ----------- ----------- ----------- ----------- Net Decrease from Dividends and Distributions (213) -- (20,136) (2,651) (65,399) -- Capital Share Transactions: Shares sold 123,872 45,861 232,842 542,721 17,012 36,715 Redemption fees N/A N/A N/A N/A N/A N/A Reinvested dividends and distributions 209 -- 19,712 2,597 62,815 -- Shares repurchased (14,596) (10,244) (793,797) (1,696,801) (108,928) (205,051) ----------- ----------- ----------- ----------- ----------- ----------- Net Increase/(Decrease) from Capital Share Transactions 109,485 35,617 (541,243) (1,151,483) (29,101) (168,336) ----------- ----------- ----------- ----------- ----------- ----------- Net Increase/(Decrease) in Net Assets 127,676 37,695 142,961 589,024 181,945 (33,938) Net Assets: Beginning of period 37,695 -- 9,612,503 9,023,479 1,293,150 1,327,088 End of Period $ 165,371 $ 37,695 $ 9,755,464 $ 9,612,503 $ 1,475,095 $ 1,293,150 ----------- ----------- ----------- ----------- ----------- ----------- Undistributed net investment income/(loss)* $ 101 $ -- $ 20,420 $ 20,284 $ (3,289) $ 75
For the six-month period ended April 30, 2006 (unaudited) Janus Janus and for the fiscal year or period ended October 31, 2005 Global Life Global Technology (all numbers in thousands) Sciences Fund Fund --------------------------- --------------------------- 2006 2005 2006 2005 ------------ ------------ ------------ ------------ Operations: Net investment income/(loss) $ (2,505) $ (5,782) $ (2,685) $ 758 Net realized gain/(loss) from investment transactions 102,820 175,006 209,642 99,671 Net realized gain/(loss) from short sales 15 -- -- -- Net realized gain/(loss) from option contracts 37 -- -- -- Change in unrealized net appreciation/(depreciation) of investments and foreign currency translations (48,739) 51,675 (24,328) 33,644 Payment from affiliate (Note 2) -- -- 4 -- ------------ ------------ ------------ ------------ Net Increase/(Decrease) in Net Assets Resulting from Operations 51,628 220,899 182,633 134,073 Dividends and Distributions to Shareholders: Net investment income* -- -- (719) -- Net realized gain/(loss) from investment transactions* -- -- -- -- ------------ ------------ ------------ ------------ Net Decrease from Dividends and Distributions -- -- (719) -- Capital Share Transactions: Shares sold 42,048 51,664 40,983 46,171 Redemption fees 35 35 54 80 Reinvested dividends and distributions -- -- 703 -- Shares repurchased (130,908) (306,428) (139,410) (441,684) ------------ ------------ ------------ ------------ Net Increase/(Decrease) from Capital Share Transactions (88,825) (254,729) (97,670) (395,433) ------------ ------------ ------------ ------------ Net Increase/(Decrease) in Net Assets (37,197) (33,830) 84,244 (261,360) Net Assets: Beginning of period 1,149,666 1,183,496 993,663 1,255,023 End of Period $ 1,112,469 $ 1,149,666 $ 1,077,907 $ 993,663 ------------ ------------ ------------ ------------ Undistributed net investment income/(loss)* $ (2,505) $ -- $ (2,679) $ 725
*See Note 4 in Notes to Financial Statements. (1)Period from February 25, 2005 (inception date) through October 31, 2005. See Notes to Financial Statements. 78 Janus Growth Funds April 30, 2006 Janus Growth Funds April 30, 2006 79 Financial Highlights
Janus Fund ------------------------------------------------------------------------------------------------------------- For a share outstanding during the six-month period ended April 30, 2006 (unaudited) and through each fiscal year ended October 31 2006 2005 2004 2003 2002 2001 ------------------ -------------- -------------- -------------- -------------- -------------- -------------- Net Asset Value, Beginning of Period $ 24.44 $ 22.69 $ 22.52 $ 18.39 $ 22.11 $ 44.00 Income from Investment Operations: Net investment income/(loss) .05 .02 --(1) --(1) --(1) --(1) Net gains/(losses) on securities (both realized and unrealized) 2.52 1.73 .17 4.13 (3.72) (17.50) -------------- -------------- -------------- -------------- -------------- -------------- Total from Investment Operations 2.57 1.75 .17 4.13 (3.72) (17.50) Less Distributions and Other: Dividends (from net investment income)* (.02) -- -- -- -- -- Distributions (from capital gains)* -- -- -- -- -- (4.39) Payment from affiliate --(2) --(2) --(2) -- -- -- -------------- -------------- -------------- -------------- -------------- -------------- Total Distributions and Other (.02) -- -- -- -- (4.39) -------------- -------------- -------------- -------------- -------------- -------------- Net Asset Value, End of Period $ 26.99 $ 24.44 $ 22.69 $ 22.52 $ 18.39 $ 22.11 Total Return** 10.51%(3) 7.71%(3) 0.75%(3) 22.46% (16.82)% (43.42)% Net Assets, End of Period (in thousands) $ 11,625,383 $ 11,142,921 $ 13,277,473 $ 17,426,458 $ 16,320,421 $ 23,513,436 Average Net Assets for the Period (in thousands) $ 11,539,726 $ 12,310,464 $ 15,433,191 $ 16,206,681 $ 21,651,285 $ 34,254,548 Ratio of Gross Expenses to Average Net Assets***(4)(5) 0.91% 0.88% 0.90% 0.89% 0.85% 0.84% Ratio of Net Expenses to Average Net Assets***(4) 0.90% 0.87% 0.90% 0.89% 0.84% 0.83% Ratio of Net Investment Income/(Loss) to Average Net Assets*** 0.38% 0.07% (0.17)% (0.17)% (0.24)% (0.16)% Portfolio Turnover Rate*** 110% 78% 21% 22% 27% 51%
Janus Enterprise Fund ------------------------------------------------------------------------------------------------------- For a share outstanding during the six-month period ended April 30, 2006 (unaudited) and through each fiscal year ended October 31 2006 2005 2004 2003 2002 2001 ------------------- ------------- ------------- ------------- ------------- ------------- ------------- Net Asset Value, Beginning of Period $ 39.48 $ 33.73 $ 30.02 $ 22.93 $ 29.67 $ 68.41 Income from Investment Operations: Net investment income/(loss) (.03) --(1) --(1) --(1) --(1) --(1) Net gains/(losses) on securities (both realized and unrealized) 5.67 5.75 3.71 7.09 (6.74) (38.74) ------------- ------------- ------------- ------------- ------------- ------------- Total from Investment Operations 5.64 5.75 3.71 7.09 (6.74) (38.74) Less Distributions: Dividends (from net investment income)* -- -- -- -- -- -- Distributions (from capital gains)* -- -- -- -- -- -- ------------- ------------- ------------- ------------- ------------- ------------- Total Distributions -- -- -- -- -- -- ------------- ------------- ------------- ------------- ------------- ------------- Net Asset Value, End of Period $ 45.12 $ 39.48 $ 33.73 $ 30.02 $ 22.93 $ 29.67 Total Return** 14.29% 17.05% 12.36% 30.92% (22.72)% (56.63)% Net Assets, End of Period (in thousands) $ 1,882,097 $ 1,703,542 $ 1,679,958 $ 1,916,706 $ 1,854,192 $ 3,071,818 Average Net Assets for the Period (in thousands) $ 1,842,337 $ 1,728,579 $ 1,795,534 $ 1,741,680 $ 2,518,273 $ 4,858,360 Ratio of Gross Expenses to Average Net Assets***(4)(5) 0.98% 0.96% 1.04% 1.02% 0.93% 0.92% Ratio of Net Expenses to Average Net Assets***(4) 0.97% 0.95% 1.03% 1.02% 0.90% 0.90% Ratio of Net Investment Income/(Loss) to Average Net Assets*** (0.12)% (0.30)% (0.46)% (0.46)% (0.43)% (0.55)% Portfolio Turnover Rate*** 44% 28% 27% 32% 64% 85%
* See Note 4 in Notes to Financial Statements. ** Total return not annualized for periods of less than one full year. *** Annualized for periods of less than one full year. (1)Net investment income/(loss) aggregated less than $.01 on a per share basis for the fiscal year ended. (2)Payment from affiliate aggregated less than $.01 on a per share basis for the fiscal year or period ended. (3)During the fiscal year or period ended, Janus Capital and/or Janus Services LLC ("Janus Services") fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. (4)See "Explanations of Charts, Tables and Financial Statements." (5)The effect of non-recurring costs assumed by Janus Capital (Note 2) is included in the ratio of gross expenses to average net assets and was less than 0.01%. See Notes to Financial Statements. 80 Janus Growth Funds April 30, 2006
Janus Mercury Fund ------------------------------------------------------------------------------------------------------- For a share outstanding during the six-month period ended April 30, 2006 (unaudited) and through each fiscal year ended October 31 2006 2005 2004 2003 2002 2001 ------------------------- -------------- -------------- -------------- -------------- -------------- -------------- Net Asset Value, Beginning of Period $ 22.05 $ 19.48 $ 18.14 $ 14.92 $ 19.14 $ 40.59 Income from Investment Operations: Net investment income/(loss) .02 .09 --(1) --(1) --(1) .04 Net gains/(losses) on securities (both realized and unrealized) 1.88 2.51 1.34 3.22 (4.18) (17.05) -------------- -------------- -------------- -------------- -------------- -------------- Total from Investment Operations 1.90 2.60 1.34 3.22 (4.18) (17.01) Less Distributions: Dividends (from net investment income)* (.06) (.03) -- -- (.04) (.03) Distributions (from capital gains)* -- -- -- -- -- (4.41) -------------- -------------- -------------- -------------- -------------- -------------- Total Distributions (.06) (.03) -- -- (.04) (4.44) -------------- -------------- -------------- -------------- -------------- -------------- Net Asset Value, End of Period $ 23.89 $ 22.05 $ 19.48 $ 18.14 $ 14.92 $ 19.14 Total Return** 8.63% 13.35% 7.39% 21.58% (21.88)% (46.21)% Net Assets, End of Period (in thousands) $ 4,047,330 $ 4,473,431 $ 4,471,514 $ 5,282,164 $ 5,034,041 $ 7,910,482 Average Net Assets for the Period (in thousands) $ 4,391,354 $ 4,447,616 $ 5,007,156 $ 5,088,567 $ 6,783,864 $ 11,243,108 Ratio of Gross Expenses to Average Net Assets***(2)(3) 0.96% 0.93% 0.97% 0.96% 0.94% 0.89% Ratio of Net Expenses to Average Net Assets***(2) 0.95% 0.92% 0.97% 0.95% 0.92% 0.88% Ratio of Net Investment Income/(Loss) to Average Net Assets*** 0.18% 0.42% (0.26)% (0.31)% (0.07)% 0.16% Portfolio Turnover Rate*** 186% 38% 43% 54% 97% 83%
Janus Olympus Fund ---------------------------------------------------------------------------------------------------------- For a share outstanding during the six-month period ended April 30, 2006 (unaudited) and through each fiscal year ended October 31 2006 2005 2004 2003 2002 2001 ---------------------- ------------- ------------- ------------- ------------- ------------- ------------- Net Asset Value, Beginning of Period $ 30.96 $ 26.30 $ 25.22 $ 20.60 $ 24.59 $ 50.50 Income from Investment Operations: Net investment income/(loss) -- .01 --(1) --(1) --(1) .13 Net gains/(losses) on securities (both realized and unrealized) 3.13 4.65 1.08 4.62 (3.88) (25.42) ------------- ------------- ------------- ------------- ------------- ------------- Total from Investment Operations 3.13 4.66 1.08 4.62 (3.88) (25.29) Less Distributions and Other: Dividends (from net investment income)* (.01) -- -- -- (.11) (.23) Distributions (from capital gains)* -- -- -- -- -- (.39) Payment from affiliate --(4) --(4) --(4) -- -- -- ------------- ------------- ------------- ------------- ------------- ------------- Total Distributions and Other (.01) -- -- -- (.11) (.62) ------------- ------------- ------------- ------------- ------------- ------------- Net Asset Value, End of Period $ 34.08 $ 30.96 $ 26.30 $ 25.22 $ 20.60 $ 24.59 Total Return** 10.11%(5) 17.72%(5) 4.28%(5) 22.38% (15.89)% (50.61)% Net Assets, End of Period (in thousands) $ 2,418,034 $ 2,256,888 $ 2,360,466 $ 2,772,209 $ 2,136,167 $ 3,074,317 Average Net Assets for the Period (in thousands) $ 2,388,082 $ 2,282,832 $ 2,575,897 $ 2,378,814 $ 2,882,934 $ 4,767,090 Ratio of Gross Expenses to Average Net Assets***(2)(3) 0.98% 0.97% 1.03% 0.99% 0.94% 0.91% Ratio of Net Expenses to Average Net Assets***(2) 0.97% 0.96% 1.03% 0.98% 0.91% 0.89% Ratio of Net Investment Income/(Loss) to Average Net Assets*** 0.00% 0.03% (0.36)% (0.14)% (0.13)% 0.34% Portfolio Turnover Rate*** 98% 119% 76% 84% 90% 118%
*See Note 4 in Notes to Financial Statements. **Total return not annualized for periods of less than one full year. ***Annualized for periods of less than one full year. (1)Net investment income/(loss) aggregated less than $.01 on a per share basis for the fiscal year ended. (2)See "Explanations of Charts, Tables and Financial Statements." (3)The effect of non-recurring costs assumed by Janus Capital (Note 2) is included in the ratio of gross expenses to average net assets and was less than 0.01%. (4)Payment from affiliate aggregated less than $.01 on a per share basis for the fiscal year or period ended. (5)During the fiscal year or period ended, Janus Capital and/or Janus Services fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. See Notes to Financial Statements. Janus Growth Funds April 30, 2006 81 Financial Highlights(continued)
Janus Orion Fund ---------------------------------------------------------------------------------------------------- For a share outstanding during the six-month period ended April 30, 2006 (unaudited) and through each fiscal year ended October 31 2006 2005 2004 2003 2002 2001 ---------------------- ------------- ------------- ------------- ------------- ------------- ------------- Net Asset Value, Beginning of Period $ 7.80 $ 6.25 $ 5.64 $ 4.33 $ 5.21 $ 8.81 Income from Investment Operations: Net investment income/(loss) .05 .03 --(1) --(1) --(1) --(1) Net gains/(losses) on securities (both realized and unrealized) 1.69 1.52 .61 1.31 (.88) (3.58) ------------- ------------- ------------- ------------- ------------- ------------- Total from Investment Operations 1.74 1.55 .61 1.31 (.88) (3.58) Less Distributions and Other: Dividends (from net investment income)* (.06) -- -- -- -- (.02) Distributions (from capital gains)* -- -- -- -- -- -- Payment from affiliate -- -- --(2) -- -- -- ------------- ------------- ------------- ------------- ------------- ------------- Total Distributions and Other (.06) -- -- -- -- (.02) ------------- ------------- ------------- ------------- ------------- ------------- Net Asset Value, End of Period $ 9.48 $ 7.80 $ 6.25 $ 5.64 $ 4.33 $ 5.21 Total Return** 22.45% 24.80% 10.82%(3) 29.95% (16.70)% (40.69)% Net Assets, End of Period (in thousands) $ 1,082,227 $ 691,401 $ 529,804 $ 513,708 $ 421,458 $ 602,303 Average Net Assets for the Period (in thousands) $ 899,038 $ 590,421 $ 540,305 $ 431,124 $ 562,457 $ 762,142 Ratio of Gross Expenses to Average Net Assets***(4)(5) 0.98% 1.02% 1.09% 1.10% 1.09% 1.06% Ratio of Net Expenses to Average Net Assets***(4) 0.97% 1.01% 1.08% 1.08% 1.04% 1.03% Ratio of Net Investment Income/(Loss) to Average Net Assets*** 1.27% 0.52% (0.05)% (0.43)% (0.30)% (0.06)% Portfolio Turnover Rate*** 54% 68% 69% 72% 161% 206%
Janus Triton Fund ------------------------------- For a share outstanding during the six-month period ended April 30, 2006 (unaudited) and through the period ended October 31 2006 2005(6) --------------------------------------------------------------- ------------ ------------ Net Asset Value, Beginning of Period $ 10.86 $ 10.00 Income from Investment Operations: Net investment income/(loss) .04 -- Net gains/(losses) on securities (both realized and unrealized) 2.88 .86 ------------ ------------ Total from Investment Operations 2.92 .86 Less Distributions: Dividends from net investment income* (.03) -- Distributions from net realized gains* (.02) -- ------------ ------------ Total Distributions (.05) -- ------------ ------------ Net Asset Value, End of Period $ 13.73 $ 10.86 Total Return** 26.98% 8.60% Net Assets, End of Period $ 165,371 $ 37,695 Average Net Assets for the Period $ 91,310 $ 25,904 Ratio of Gross Expenses to Average Net Assets***(4)(5) 1.08% 1.27%(7) Ratio of Net Expenses to Average Net Assets***(4) 1.07% 1.25% Ratio of Net Invest Income to Average Net Assets*** 0.50% (0.24)% Portfolio Turnover Rate*** 215% 48%
*See Note 4 in Notes to Financial Statements. **Total return not annualized for periods of less than one full year. ***Annualized for periods of less than one full year. (1)Net investment income/(loss) aggregated less than $.01 on a per share basis for the fiscal year ended. (2)Payment from affiliate aggregated less than $.01 on a per share basis for the fiscal year ended. (3)During the fiscal year ended, Janus Capital and/or Janus Services fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. (4)See "Explanations of Charts, Tables and Financial Statements." (5)The effect of non-recurring costs assumed by Janus Capital (Note 2) is included in the ratio of gross expenses to average net assets and was less than 0.01%. (6)Period from February 25, 2005 (inception date) through October 31, 2005. (7)The ratio was 1.85% in 2005 before waiver of certain fees incurred by the Fund. See Notes to Financial Statements. 82 Janus Growth Funds April 30, 2006
Janus Twenty Fund ---------------------------------------------------------------------------------------------------------------- For a share outstanding during the six-month period ended April 30, 2006 (unaudited) and through each fiscal year ended October 31 2006 2005 2004 2003 2002 2001 ---------------- -------------- -------------- -------------- -------------- -------------- -------------- Net Asset Value, Beginning of Period $ 47.63 $ 39.60 $ 34.06 $ 30.47 $ 36.31 $ 71.07 Income from Investment Operations: Net investment income/(loss) .11 .10 .03 .17 .21 .32 Net gains/ (losses) on securities (both realized and unrealized) 3.44 7.94 5.68 3.63 (5.71) (33.33) -------------- -------------- -------------- -------------- -------------- -------------- Total from Investment Operations 3.55 8.04 5.71 3.80 (5.50) (33.01) Less Distributions and Other: Dividends (from net investment income)* (.10) (.01) (.17) (.21) (.34) -- Distributions (from capital gains)* -- -- -- -- -- (1.75) Payment from affiliate --(1) --(1) --(1) -- -- -- -------------- -------------- -------------- -------------- -------------- -------------- Total Distributions and Other (.10) (.01) (.17) (.21) (.34) (1.75) -------------- -------------- -------------- -------------- -------------- -------------- Net Asset Value, End of Period $ 51.08 $ 47.63 $ 39.60 $ 34.06 $ 30.47 $ 36.31 Total Return** 7.46%(2) 20.31%(2) 16.85%(2) 12.60% (15.35)% (47.43)% Net Assets, End of Period (in thousands) $ 9,755,464 $ 9,612,503 $ 9,023,479 $ 9,821,492 $ 10,107,243 $ 14,378,453 Average Net Assets for the Period (in thousands) $ 9,820,060 $ 9,458,921 $ 9,319,532 $ 9,749,457 $ 12,572,984 $ 20,320,750 Ratio of Gross Expenses to Average Net Assets*** (3)(4) 0.88% 0.86% 0.89% 0.88% 0.84% 0.84% Ratio of Net Expenses to Average Net Assets***(3) 0.87% 0.86% 0.89% 0.88% 0.83% 0.84% Ratio of Net Investment Income/(Loss) to Average Net Assets*** 0.42% 0.21% 0.06% 0.52% 0.56% 0.63% Portfolio Turnover Rate*** 31% 44% 14% 44% 53% 50%
Janus Venture Fund -------------------------------------------------------------------------------------------------- For a share outstanding during the six-month period ended April 30, 2006 (unaudited) and through each fiscal year ended October 31 2006 2005 2004 2003 2002 2001 --------------------- ------------- ------------- ------------- ------------- ------------- ------------- Net Asset Value, Beginning of Period $ 56.82 $ 51.57 $ 47.77 $ 31.59 $ 36.99 $ 82.39 Income from Investment Operations: Net investment income/(loss) (.15) --(5) --(5) --(5) --(5) --(5) Net gains/ (losses) on securities (both realized and unrealized) 12.27 5.25 3.80 16.18 (5.40) (29.02) Total from Investment Operations 12.12 5.25 3.80 16.18 (5.40) (29.02) Less Distributions: Dividends (from net investment income)* -- -- -- -- -- -- Distributions (from capital gains)* (2.93) -- -- -- -- (16.38) ------------- ------------- ------------- ------------- ------------- ------------- Total Distributions (2.93) -- -- -- -- (16.38) ------------- ------------- ------------- ------------- ------------- ------------- Net Asset Value, End of Period $ 66.01 $ 56.82 $ 51.57 $ 47.77 $ 31.59 $ 36.99 Total Return** 22.17% 10.18% 7.95% 51.22% (14.60)% (40.67)% Net Assets, End of Period (in thousands) $ 1,475,095 $ 1,293,150 $ 1,327,088 $ 1,392,358 $ 756,323 $ 1,009,278 Average Net Assets for the Period (in thousands) $ 1,391,021 $ 1,367,775 $ 1,355,755 $ 988,156 $ 992,760 $ 1,312,759 Ratio of Gross Expenses to Average Net Assets*** (3)(4) 0.91% 0.87% 0.90% 0.94% 0.88% 0.87% Ratio of Net Expenses to Average Net Assets*** (3) 0.90% 0.87% 0.90% 0.93% 0.87% 0.86% Ratio of Net Investment Income/(Loss) to Average Net Assets*** (0.49)% (0.64)% (0.74)% (0.67)% (0.73)% (0.36)% Portfolio Turnover Rate*** 56% 63% 61% 75% 90% 70%
*See Note 4 in Notes to Financial Statements. **Total return not annualized for periods of less than one full year. ***Annualized for periods of less than one full year. (1)Payment from affiliate aggregated less than $.01 on a per share basis for the fiscal year or period ended. (2)During the fiscal year or period ended, Janus Capital and/or Janus Services fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. (3)See "Explanations of Charts, Tables and Financial Statements." (4)The effect of non-recurring costs assumed by Janus Capital (Note 2) is included in the ratio of gross expenses to average net assets and was less than 0.01%. (5)Net investment income/(loss) aggregated less than $.01 on a per share basis for the fiscal year ended. See Notes to Financial Statements. Janus Growth Funds April 30, 2006 83 Financial Highlights(continued)
Janus Global Life Sciences Fund ----------------------------------------------------------------------------------------------------- For a share outstanding during the six-month period ended April 30, 2006 (unaudited) and through each fiscal year ended October 31 2006 2005 2004 2003 2002 2001 --------------------- ------------- ------------- ------------- ------------- ------------- ------------- Net Asset Value, Beginning of Period $ 19.37 $ 16.08 $ 14.61 $ 12.82 $ 16.96 $ 22.41 Income from Investment Operations: Net investment income/(loss) (.05) --(1) --(1) --(1) --(1) --(1) Net gains/(losses) on securities (both realized and unrealized) .91 3.29 1.47 1.79 (4.14) (5.43) ------------- ------------- ------------- ------------- ------------- ------------- Total from Investment Operations .86 3.29 1.47 1.79 (4.14) (5.43) Less Distributions and Other: Dividends (from net investment income)* -- -- -- -- -- (.02) Distributions (from capital gains)* -- -- -- -- -- -- Redemption fees --(2) --(2) --(2) --(2) N/A N/A Payment from affiliate -- -- --(3) -- -- -- ------------- ------------- ------------- ------------- ------------- ------------- Total Distributions and Other -- -- -- -- -- (.02) ------------- ------------- ------------- ------------- ------------- ------------- Net Asset Value, End of Period $ 20.23 $ 19.37 $ 16.08 $ 14.61 $ 12.82 $ 16.96 Total Return** 4.44% 20.46% 10.06%(4) 13.87% (24.35)% (24.26)% Net Assets, End of Period (in thousands) $ 1,112,469 $ 1,149,666 $ 1,183,496 $ 1,264,220 $ 1,389,723 $ 2,415,086 Average Net Assets for the Period (in thousands) $ 1,175,835 $ 1,181,741 $ 1,288,416 $ 1,296,095 $ 1,927,734 $ 2,957,777 Ratio of Gross Expenses to Average Net Assets***(5)(6) 0.99% 0.97% 1.02% 0.99% 0.89% 0.93% Ratio of Net Expenses to Average Net Assets***(5) 0.98% 0.96% 1.01% 0.98% 0.88% 0.91% Ratio of Net Investment Income/(Loss) to Average Net Assets*** (0.43)% (0.49)% (0.52)% (0.28)% (0.42)% (0.32)% Portfolio Turnover Rate*** 84% 77% 78% 135% 73% 84%
Janus Global Technology Fund ---------------------------------------------------------------------------------------------------- For a share outstanding during the six-month period ended April 30, 2006 (unaudited) and through each fiscal year ended October 31 2006 2005 2004 2003 2002 2001 ----------------------- ------------- ------------- ------------- ------------- ------------- ------------- Net Asset Value, Beginning of Period $ 10.88 $ 9.70 $ 10.44 $ 7.41 $ 10.83 $ 27.44 Income from Investment Operations: Net investment income/(loss) (.03) .01 .02 --(1) (.01) .36 Net gains/(losses) on securities (both realized and unrealized) 2.10 1.17 (.76) 3.03 (3.41) (16.64) ------------- ------------- ------------- ------------- ------------- ------------- Total from Investment Operations 2.07 1.18 (.74) 3.03 (3.42) (16.28) Less Distributions and Other: Dividends (from net investment income)* (.01) -- -- -- -- (.16) Distributions (from capital gains)* -- -- -- -- -- -- Tax return of capital* -- -- -- -- -- (.17) Redemption fees --(2) --(2) --(2) --(2) N/A N/A Payment from affiliate --(3) -- --(3) -- -- -- ------------- ------------- ------------- ------------- ------------- ------------- Total Distributions and Other (.01) -- -- -- -- (.33) ------------- ------------- ------------- ------------- ------------- ------------- Net Asset Value, End of Period $ 12.94 $ 10.88 $ 9.70 $ 10.44 $ 7.41 $ 10.83 Total Return** 19.01%(7) 12.16% (7.09)%(4) 41.08% (31.67)% (59.95)% Net Assets, End of Period (in thousands) $ 1,077,907 $ 993,663 $ 1,255,023 $ 1,655,731 $ 1,249,514 $ 2,275,691 Average Net Assets for the Period (in thousands) $ 1,073,047 $ 1,109,908 $ 1,480,508 $ 1,332,510 $ 1,906,518 $ 4,009,850 Ratio of Gross Expenses to Average Net Assets***(5)(6) 1.07% 1.04% 1.07% 1.07% 0.96% 0.92% Ratio of Net Expenses to Average Net Assets***(5) 1.05% 1.03% 1.07% 1.06% 0.94% 0.90% Ratio of Net Investment % % % % Income/(Loss) to Average Net Assets*** (0.50) 0.07% (0.37) (0.27) (0.14) 0.55% Portfolio Turnover Rate*** 110% 31% 24% 48% 66% 60%
*See Note 4 in Notes to Financial Statements. **Total return not annualized for periods of less than one full year. ***Annualized for periods of less than one full year. (1)Net investment income/(loss) aggregated less than $.01 on a per share basis for the fiscal year or period ended. (2)Redemption fees aggregated less than $.01 on a per share basis for the fiscal year or period ended. (3)Payment from affiliate aggregated less than $.01 on a per share basis for the fiscal year or period ended. (4)During the fiscal year ended, Janus Capital and/or Janus Services fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing and/or shareholder activity errors, which otherwise would have reduced total return by less than 0.01%. (5)See "Explanations of Charts, Tables and Financial Statements." (6)The effect of non-recurring costs assumed by Janus Capital (Note 2) is included in the ratio of gross expenses to average net assets and was less than 0.01%. (7)During the period ended, Janus Capital and/or Janus Service's fully reimbursed the Fund for a loss on a transaction resulting from certain trading, pricing and/or shareholder activity errors, which otherwise would have reduced total return by 0.01%. See Notes to Financial Statements. 84 Janus Growth Funds April 30, 2006 Notes to Schedules of Investments and Securities Sold Short (unaudited) Lipper Health/Biotechnology Funds that invest at least 65% of their equity portfolio in shares of companies engaged in Funds healthcare, medicine, and biotechnology. Lipper Large-Cap Growth Funds Funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) greater than 300% of the dollar-weighted median market capitalization of the middle 1,000 securities of the S&P SuperComposite 1500 Index. Large-cap growth funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P 500 (R) Index. Lipper Mid-Cap Growth Funds Funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) less than 300% of the dollar-weighted median market capitalization of the middle 1,000 securities of the S&P SuperComposite 1500 Index. Mid-cap growth funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P MidCap 400 Index. Lipper Multi-Cap Growth Funds Funds that, by portfolio practice, invest in a variety of market capitalization ranges without concentrating 75% of their equity assets in any one market capitalization range over an extended period of time. Multi-cap funds typically have between 25% to 75% of their assets invested in companies with market capitalizations (on a three-year weighted basis) above 300% of the dollar-weighted median market capitalization of the middle 1,000 securities of the S&P SuperComposite 1500 Index. Multi-cap growth funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P SuperComposite 1500 Index. Lipper Science and Technology Funds that invest at least 65% of their equity portfolio in science and technology stocks. Funds Lipper Small-Cap Growth Funds Funds that, by portfolio practice, invest at least 75% of their equity assets in companies with market capitalizations (on a three-year weighted basis) less than 250% of the dollar-weighted median of the smallest 500 of the middle 1,000 securities of the S&P SuperComposite 1500 Index. Small-cap growth funds typically have an above-average price-to-earnings ratio, price-to-book ratio, and three-year sales-per-share growth value, compared to the S&P SmallCap 600 Index. Morgan Stanley Capital Is a capitalization weighted index that monitors the performance of information technology International World Information stocks from around the world. Technology Index(SM) Morgan Stanley Capital Is a capitalization weighted index that monitors the performance of healthcare stocks from International World Health Care developed market countries in North America, Europe, and the Asia/Pacific Region. Index(SM) Russell 1000(R) Growth Index Measures the performance of those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. Russell 2000(R) Growth Index Measures the performance of those Russell 2000 companies with higher price-to-book ratios and higher forecasted growth values. Russell 2000(R) Index Measures the performance of the 2,000 smallest companies in the Russell 3000(R) Index. Russell 2500(TM) Growth Index Measures the performance of those Russell 2500 companies with higher price-to-book ratios and higher forecasted growth values. Russell 3000(R) Growth Index Measures the performance of those Russell 3000(R) Index companies with higher price-to-book ratios and higher forecasted growth values. The stocks in this index are also members of either the Russell 1000 (R) Growth or the Russell 2000 (R) Growth Indices. Russell Midcap(R) Growth Index Consists of stocks from the Russell Midcap(R) Index with a greater-than-average growth orientation. The Russell Midcap(R) Index consists of the smallest 800 companies in the Russell 1000 (R) Index, as ranked by total market capitalization.
Janus Growth Funds April 30, 2006 85 Notes to Schedules of Investments and Securities Sold Short (unaudited) (continued) S&P 500(R) The Standard & Poor's Composite Index of 500 stocks is a widely recognized, unmanaged index of common stock prices. Index S&P MidCap An unmanaged group of 400 domestic stocks chosen for their market size, liquidity and industry group representation. 400 Index 144A Securities sold under Rule 144A of the Securities Act of 1933 are subject to legal and/or contractual restrictions on resale and may not be publicly sold without registration under the 1933 Act. ADR American Depositary Receipt ETD Euro Time Deposit GDR Global Depositary Receipt PLC Public Limited Company REIT Real Estate Investment Trust U.S. Shares Securities of foreign companies trading on an American Stock Exchange
*Non-income-producing security. **A portion of this holding has been segregated to cover margin or segregation requirements on open futures contracts, forward currency contracts, short sales, securities with extended settlement dates and/or option contracts. (Y)Security is a defaulted security in Janus Global Technology Fund with accrued interest in the amount of $1,268,000 that was written-off December 10, 2001. A principal payment was received by the Fund on July 13, 2005. It is anticipated that sometime during the third quarter of 2006 a second principal payment will be received by the Fund. (B)Security is illiquid. #Loaned security; a portion or all of the security is on loan as of April 30, 2006. +The security is purchased with the cash collateral received from Securities on Loan (Note 1). oSecurity is a defaulted security. (O)SCHEDULE OF FAIR VALUED SECURITIES (AS OF APRIL 30, 2006)
Value as a % Value of Net Assets --------------- --------------- Janus Venture Fund Candescent Technologies Corp. - Series E $ -- 0.0% DrugMax, Inc. -- 0.0% Genius Products, Inc. 5,775,525 0.4% Genius Products, Inc. 529,245 0.0% Infocrossing, Inc. - expires 5/10/07 2,404,853 0.2% OneTravel Holdings, Inc. -- 0.0% Ronco Fi-Tek, Inc. 5,100,000 0.3% --------------- --------------- $ 13,809,623 0.9% Janus Global Life Sciences Fund Cougar Technology, Inc. $ 2,904,499 0.3% Fibrogen, Inc. 9,106,238 0.8% --------------- --------------- $ 12,010,737 1.1% Janus Global Technology Fund Candescent Technologies Corp., 8.00% convertible senior subordinated debentures due 5/1/03 (144A) $ -- 0.0%
Securities are valued at "fair value" pursuant to procedures adopted by the Funds' Trustees. The Schedule of Fair Valued Securities does not include international activities fair valued pursuant to a systematic fair valuation model. 86 Janus Growth Funds April 30, 2006 (S) SCHEDULE OF RESTRICTED AND ILLIQUID SECURITIES
Acquisition Acquisition Value as a % Date Cost Value of Net Assets ------------------ --------------- --------------- --------------- Janus Enterprise Fund Morgan Stanley Co., convertible, (Celgene Corp.), 0% (144A) 2/21/06 $ 13,162,450 $ 15,166,903 0.8% Janus Mercury Fund Morgan Stanley Co., convertible, (Celgene Corp.), 0% (144A) 2/21/06 $ 30,050,300 $ 34,626,531 0.9% Janus Orion Fund Bajaj Hindusthan, Ltd. (GDR) (144A) 1/27/06 $ 2,722,636 $ 3,854,676 0.4% Janus Venture Fund DrugMax, Inc.(O) 9/23/05 $ 381,250 $ -- 0.0% Genius Products, Inc.(O) 12/5/05 6,312,750 5,775,525 0.4% Genius Products, Inc.(O) 12/5/05 1,083,000 529,245 0.0% OneTravel Holdings, Inc.(O) 4/15/05 -- -- 0.0% Ronco Fi-Tek, Inc.(O) 6/24/05 6,000,000 5,100,000 0.3% --------------- --------------- --------------- $ 13,777,000 $ 11,404,770 0.7% Janus Global Life Sciences Fund Cougar Technology, Inc.(O) 3/31/06 $ 2,904,499 $ 2,904,499 0.3% Fibrogen, Inc.(O) 12/28/04 - 11/8/05 5,786,786 9,106,238 0.8% --------------- --------------- --------------- $ 8,691,285 $ 12,010,737 1.1% Janus Global Technology Fund Candescent Technologies Corp., 8.00% convertible senior subordinated debentures due 5/1/03 (144A)(0) 3/6/00 - 2/23/01 $ 2,614,147 $ -- 0.0%
The Funds have registration rights for certain restricted securities held as of April 30, 2006. The issuer incurs all registration costs. Janus Growth Funds April 30, 2006 87 Notes to Schedules of Investments and Securities Sold Short (unaudited) (continued) L. The Investment Company Act of 1940 defines affiliates as those companies in which a fund holds 5% or more of the outstanding voting securities at any time during the period ended April 30, 2006.
Purchases Sales Realized Dividend Value Shares Cost Shares Cost Gain/(Loss) Income at 4/30/06 ------------ ------------ ------------ ------------ ------------ ------------ ------------ Janus Venture Fund Axesstel, Inc. -- $ -- 2,128,965 $ 8,515,860 $ (6,726,042) $ -- $ -- Century Casinos, Inc.(1) -- -- -- -- -- -- 15,449,000 DrugMax, Inc. -- -- -- -- -- -- 3,965,000 Genius Products, Inc. -- -- -- -- -- -- 5,775,525 Hythiam, Inc. 911,420 4,329,245 -- -- -- -- 13,851,413 Infocrossing, Inc. 170,270 1,248,391 -- -- -- -- 26,920,897 Intermap Technologies, Ltd. -- -- -- -- -- -- 12,951,669 LivePerson, Inc. 1,930 12,560 -- -- -- -- 21,159,772 Omnicell, Inc. 562,280 6,162,534 -- -- -- -- 25,679,348 OneTravel Holdings, Inc. -- -- -- -- -- -- 630,000 Ronco Fi-Tek, Inc. -- -- -- -- -- -- 5,100,000 SeraCare Life Sciences, Inc. 92,760 923,389 935,380 11,272,767 (10,678,539) -- -- TALX Corp.(2) -- -- 394,603 7,652,913 10,326,610 96,005 31,597,520 TechTeam Global, Inc. -- -- 644,992 8,326,760 (1,574,281) -- -- TransAct Technologies, Inc. -- -- 799,760 10,407,198 (3,037,746) -- -- Ultimate Software Group, Inc. -- -- 125,000 1,375,000 1,868,590 -- 45,386,749 ValueVision Media, Inc. -- -- -- -- -- -- 21,311,650 Workstream, Inc. (U.S. Shares) -- -- -- -- -- -- 6,692,155 ------------ ------------ ------------ ------------ ------------ ------------ ------------ $ 12,676,119 $ 47,550,498 $ (9,821,408) $ 96,005 $236,470,698
(1)Includes 1 for 1 share conversion 11/14/05 (2)Adjusted for 3 for 2 stock split 1/18/06 Aggregate collateral segregated to cover margin or segregation requirements on open futures contracts, forward currency contracts, options contracts, short sales and/or securities with extended settlement dates as of April 30, 2006 are noted below.
Fund Aggregate Value ------------------------------- --------------- Growth Janus Fund $ 980,397,580 Janus Mercury Fund 415,581,452 Janus Olympus Fund 162,878,399 Specialty Growth Janus Global Life Sciences Fund 116,384,462 Janus Global Technology Fund 243,544,483
Variable rate notes are notes for which the interest rate is based on an index or market interest rates and is subject to change. Rates in the security description are as of April 30, 2006. Repurchase Agreements held by a Fund are fully collateralized, and such collateral is in the possession of the Fund's custodian or subcustodian. The collateral is evaluated daily to ensure its market value equals or exceeds the current market value of the repurchase agreements, including accrued interest. In the event of default on the obligation to repurchase, the Fund has the right to liquidate the collateral and apply the proceeds in satisfaction of the obligation. In the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral or proceeds may be subject to legal proceedings. 88 Janus Growth Funds April 30, 2006 Notes to Financial Statements (unaudited) The following section describes the organization and significant accounting policies and provides more detailed information about the schedules and tables that appear throughout this report. In addition, the Notes to Financial Statements explain the methods used in preparing and presenting this report. 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Janus Fund, Janus Enterprise Fund, Janus Mercury Fund, Janus Olympus Fund, Janus Orion Fund, Janus Triton Fund, Janus Twenty Fund, Janus Venture Fund, Janus Global Life Sciences Fund and Janus Global Technology Fund (collectively the "Funds" and individually a "Fund") are series funds. The Funds are part of Janus Investment Fund (the "Trust"), which was organized as a Massachusetts business trust and is registered under the Investment Company Act of 1940, as amended (the "1940 Act") as an open-end management investment company. The Trust has thirty-two funds. Each of the Funds in this report is classified as diversified as defined in the 1940 Act, with the exception of Janus Orion Fund and Janus Twenty Fund, which are classified as nondiversified. The Funds are no-load investments. The following accounting policies have been consistently followed by the Funds and are in conformity with accounting principles generally accepted in the United States of America in the investment company industry. INVESTMENT VALUATION Securities are valued at the last sales price or the official closing price for securities traded on a principal securities exchange (U.S. or foreign) and on the NASDAQ National Market. Securities traded on over-the-counter markets and listed securities for which no sales are reported are valued at the latest bid price (or yield equivalent thereof) obtained from one or more dealers transacting in a market for such securities or by a pricing service approved by the Funds' Trustees. Short-term securities with maturities of 60 days or less may be valued at amortized cost, which approximates market value. Debt securities with a remaining maturity of greater than 60 days are valued in accordance with the evaluated bid price supplied by the pricing service. The evaluated bid price supplied by the pricing service is an evaluation that reflects such factors as security prices, yields, maturities and ratings. Foreign securities and currencies are converted to U.S. dollars using the applicable exchange rate in effect as of the daily close of the New York Stock Exchange ("NYSE"). When market quotations are not readily available or deemed unreliable, or events or circumstances that may affect the value of portfolio securities held by the Funds are identified between the closing of their principal markets and the time the net asset value ("NAV") is determined, securities may be valued at fair value as determined in good faith under procedures established by and under the supervision of the Funds' Trustees. The Funds may use a systematic fair valuation model provided by an independent third party to value international equity securities in order to adjust for stale pricing, which may occur between the close of certain foreign exchanges and the NYSE. INVESTMENT TRANSACTIONS AND INVESTMENT INCOME Investment transactions are accounted for as of the date purchased or sold (trade date). Dividend income is recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded as soon as the Trust is informed of the dividend if such information is obtained subsequent to the ex-dividend date and may be subject to withholding taxes in these jurisdictions. Interest income is recorded on the accrual basis and includes amortization of premiums and accretion of discounts. Gains and losses are determined on the identified cost basis, which is the same basis used for federal income tax purposes. EXPENSES Each Fund bears expenses incurred specifically on its behalf as well as a portion of general expenses, which may be allocated pro rata to each of the funds in the Trust. SECURITIES LENDING Under procedures adopted by the Trustees, the Funds may lend securities to qualified parties (typically brokers or other financial institutions) who need to borrow securities in order to complete certain transactions such as covering short sales, avoiding failures to deliver securities or completing arbitrage activities. The Funds may seek to earn additional income through securities lending. There is the risk of delay in recovering a loaned security or the risk of loss in collateral rights if the borrower fails financially. In addition, Janus Capital Management LLC ("Janus Capital") makes efforts to balance the benefits and risks from granting such loans. The Funds do not have the right to vote on securities while they are being lent; however, the Funds may attempt to call back the loan and vote the proxy if time permits. All loans will be continuously secured by collateral which may consist of cash, U.S. Government securities, domestic and foreign short-term debt instruments, letters of credit, money market mutual funds or other money market accounts, or such other collateral permitted by the Securities and Exchange Commission ("SEC"). Cash collateral may be invested in affiliated money market funds or other accounts advised by Janus Capital to the extent consistent with exemptive relief obtained from the SEC. Cash collateral may also be invested in unaffiliated money market funds or other accounts. State Street Bank and Trust Company (the "Lending Agent") may also invest the cash collateral in the State Street Navigator Securities Lending Prime Portfolio or investments in unaffiliated money market funds or accounts, mutually agreed to by the Funds and the Lending Agent, that comply with Rule 2a-7 of the 1940 Act relating to money market funds. Janus Growth Funds April 30, 2006 89 Notes to Financial Statements (unaudited) (continued) As of April 30, 2006, the following Funds had on loan securities valued as indicated:
Value at Fund April 30, 2006 ------------------------------- --------------- Growth Janus Fund $ 505,930,469 Janus Enterprise Fund 223,640,930 Janus Mercury Fund 381,881,851 Janus Olympus Fund 307,516,553 Janus Orion Fund 243,484,769 Janus Twenty Fund 347,802,617 Janus Venture Fund 355,947,289 Specialty Growth Janus Global Life Sciences Fund 168,908,989 Janus Global Technology Fund 74,889,311
As of April 30, 2006, the following Funds received cash collateral for securities lending activity as indicated:
Cash Collateral at Fund April 30, 2006 ------------------------------- ------------------ Growth Janus Fund $ 522,862,639 Janus Enterprise Fund 229,175,404 Janus Mercury Fund 394,234,533 Janus Olympus Fund 316,899,102 Janus Orion Fund 250,086,433 Janus Twenty Fund 355,131,715 Janus Venture Fund 364,896,141 Specialty Growth Janus Global Life Sciences Fund 174,002,620 Janus Global Technology Fund 76,982,279
As of April 30, 2006, all cash collateral received was invested in the State Street Navigator Securities Lending Prime Portfolio, except for Janus Mercury Fund, which also invested $5,354,957 in foreign bonds. The value of the collateral must be at least 102% of the market value of the loaned securities that are denominated in U.S. dollars and 105% of the market value of the loaned securities that are not denominated in U.S. dollars. Loaned securities and related collateral are marked-to-market each business day based upon the market value of the respective securities at the close of business, employing the most recent available pricing information. Collateral levels are then adjusted based upon this mark-to-market evaluation. The borrower pays fees at the Funds' direction to its Lending Agent. The Lending Agent may retain a portion of the interest earned. The cash collateral invested by the Lending Agent is disclosed in the Schedule of Investments. The lending fees and the Funds' portion of the interest income earned on cash collateral are included on the Statement of Operations (if applicable). During the six-month period ended April 30, 2006, there were no securities lending arrangements for Janus Triton Fund. INTERFUND LENDING Pursuant to an exemptive order received from the SEC, each of the Funds may be party to an interfund lending agreement between the Fund and other Janus Capital sponsored mutual funds, which permit it to borrow or lend cash at a rate beneficial to both the borrowing and lending funds. Outstanding borrowings from all sources totaling 10% or more of a borrowing Fund's total assets must be collateralized at 102% of the outstanding principal value of the loan; loans of less than 10% may be unsecured. During the six-month period ended April 30, 2006, there were no outstanding borrowing or lending arrangements for the Funds. SHORT SALES All Funds may engage in "short sales against the box." Short sales against the box involve selling either a security that the Funds own, or a security equivalent in kind and amount to the security sold short that the Funds have the right to obtain, for delivery at a specified date in the future. The Funds may enter into a short sale against the box in anticipation of an expected decline in the market price of that security. If the value of the securities sold short increases prior to the scheduled delivery date, the Funds lose the opportunity to participate in the gain. All Funds may also engage in "naked" short sales. Naked short sales involve a Fund selling a security it does not own to a purchaser at a specified price. To complete the transaction, a Fund must borrow the security to deliver it to the purchaser and buy that same security in the market to return it to the lender. Although the potential for gain is limited to the difference between the price at which a Fund sold the security short and the cost of borrowing the security, its potential for loss could be unlimited because there is no limit to the replacement cost of the borrowed security. There is no assurance that a Fund will be able to close out a short position at any particular time. A gain or a loss will be recognized upon termination of a short sale. There is no limit on the size of any loss that a Fund may recognize upon termination of a short sale. Short sales held by the Funds are fully collateralized by other securities, which are denoted in the accompanying Schedule of Investments (if applicable). FORWARD CURRENCY TRANSACTIONS The Funds may enter into forward currency contracts in order to reduce their exposure to changes in foreign currency exchange rates on their foreign portfolio holdings and to lock in the U.S. dollar cost of firm purchase and sale commitments for securities denominated in or exposed to foreign currencies. A forward currency exchange contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated rate. The gain or loss arising from the difference between the U.S. dollar cost of the original contract and the value of the foreign currency in U.S. dollars upon closing a contract is included in "Net realized gain/(loss) from foreign currency transactions" on the Statement of Operations (if applicable). 90 Janus Growth Funds April 30, 2006 Forward currency contracts held by the Funds are fully collateralized by other securities, which are denoted in the accompanying Schedule of Investments (if applicable). The collateral is evaluated daily to ensure its market value equals or exceeds the current market value of the corresponding forward currency contracts. FOREIGN CURRENCY TRANSLATIONS The Funds do not isolate that portion of the results of operations resulting from changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held at the date of the financial statements. Net unrealized appreciation or depreciation on investments and foreign currency translation arise from changes in the value of assets and liabilities, including investments in securities held at the date of the financial statements, resulting from changes in the exchange rates and changes in market prices of securities held. Currency gains and losses are also calculated on payables and receivables that are denominated in foreign currencies. The payables and receivables are generally related to security transactions and income. Foreign-denominated assets and forward currency contracts may involve more risks than domestic transactions, including currency risk, political and economic risk, regulatory risk and market risk. Risks may arise from the potential inability of a counterparty to meet the terms of a contract and from unanticipated movements in the value of foreign currencies relative to the U.S. dollar. OPTIONS CONTRACTS The Funds may purchase or write put and call options on futures contracts or foreign currencies in a manner similar to that in which futures or forward contracts on foreign currencies will be utilized, and on portfolio securities for hedging purposes or as a substitute for an investment. The Funds generally invest in options to hedge against adverse movements in the value of portfolio holdings. When an option is written, the Funds receive a premium and become obligated to sell or purchase the underlying security at a fixed price, upon exercise of the option. In writing an option, the Funds bear the market risk of an unfavorable change in the price of the security underlying the written option. Exercise of an option written by the Funds could result in the Funds buying or selling a security at a price different from the current market value. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option, or the cost of the security for a purchased put or call option is adjusted by the amount of premium received or paid. Holdings designated to cover outstanding written options are noted in the Schedule of Investments (if applicable). Options written are reported as a liability on the Statement of Assets and Liabilities (if applicable). Gains and losses are reported on the Statement of Operations (if applicable). Janus Global Life Sciences Fund recognized realized gains for written options of $37,700 during the six-month period ended April 30, 2006. The risk in writing a call option is that the Funds give up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in writing a put option is that the Funds may incur a loss if the market price of the security decreases and the option is exercised. The risk in buying an option is that the Funds pay a premium whether or not the option is exercised. The use of such instruments may involve certain additional risks as a result of unanticipated movement in the market. A lack of correlation between the value of an instrument underlying an option and the asset being hedged, or unexpected adverse price movements, could render the Funds' hedging strategy unsuccessful. In addition, there can be no assurance that a liquid secondary market will exist for any option purchased or sold. There is no limit to the loss that the Funds may recognize due to written call options. Written option activity for the six-month period ended April 30, 2006 was as follows:
Number of Premiums Put Options Options Received --------------------------------------- ------------ ------------ Janus Global Life Sciences Fund Options outstanding at October 31, 2005 -- $ -- Options written 290 58,580 Options closed (290) (58,580) Options expired -- -- Options exercised -- -- Options outstanding at April 30, 2006 -- --
WHEN-ISSUED SECURITIES The Funds may purchase or sell securities on a when-issued or forward commitment basis. The price of the underlying securities and date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. Losses may arise due to changes in the market value of the securities or from the inability of counterparties to meet the terms of the contract. In connection with such purchases, the Funds may hold liquid assets as collateral with the Funds' custodian sufficient to cover the purchase price. As of April 30, 2006, there were no Funds invested in when-issued securities. EQUITY-LINKED STRUCTURED NOTES The Funds may invest in equity-linked structured notes. Equity-linked structured notes are debt securities which combine the characteristics of common stock and the sale of an option. The return component is based upon the performance of a single equity security, a basket of equity securities, or an equity index and the sale of an option which is recognized as income. Equity-linked structured notes are typically offered in limited transactions to financial institutions by investment banks, examples of which include performance equity-linked redemption quarterly pay securities ("PERQS"), yield-enhanced securities ("YES"), and yield enhanced equity-linked debt securities ("YEELDS"). There is no guaranteed return of principal with these securities. The appreciation Janus Growth Funds April 30, 2006 91 Notes to Financial Statements (unaudited) (continued) potential of these securities may be limited by a maximum payment or call right and can be influenced by many unpredictable factors. INITIAL PUBLIC OFFERINGS The Funds may invest in initial public offerings ("IPOs"). IPOs and other investment techniques may have a magnified performance impact on a fund with a small asset base. The Funds may not experience similar performance as their assets grow. RESTRICTED SECURITY TRANSACTIONS Restricted securities held by a Fund may not be sold except in exempt transactions or in a public offering registered under the Securities Act of 1933. The risk of investing in such securities is generally greater than the risk of investing in the securities of widely held, publicly traded companies. Lack of a secondary market and resale restrictions may result in the inability of a Fund to sell a security at a fair price and may substantially delay the sale of the security. In addition, these securities may exhibit greater price volatility than securities for which secondary markets exist. DIVIDEND DISTRIBUTIONS Each Fund generally declares and distributes dividends of net investment income and capital gains (if any) annually. The majority of dividends and capital gains distributions from a Fund will be automatically reinvested into additional shares of that Fund, based on the discretion of the shareholder. ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. FEDERAL INCOME TAXES No provision for income taxes is included in the accompanying financial statements, as the Funds intend to distribute to shareholders all taxable investment income and realized gains and otherwise comply with Subchapter M of the Internal Revenue Code applicable to regulated investment companies. 2. INVESTMENT ADVISORY AGREEMENTS AND OTHER TRANSACTIONS WITH AFFILIATES Each Fund pays a monthly advisory fee to Janus Capital based upon average daily net assets and calculated at the annual rate of 0.64%. Effective February 1, 2006 for Janus Mercury Fund, the investment advisory fee rates changed from a fixed rate to a rate that adjusts upward or downward based upon the Fund's performance relative to a selected benchmark index. This change does not impact the current investment advisory fee until one year after the effective date when the performance adjustment takes effect. Until at least March 1, 2007, provided that Janus Capital remains investment adviser to the Funds, Janus Capital has agreed to reimburse the Janus Triton Fund by the amount, if any, that such Fund's normal operating expenses in any fiscal year, including the investment advisory fee, but excluding the brokerage commissions, interest, taxes and extraordinary expenses, exceed the annual rate of 1.25%. If applicable, amounts reimbursed to the Fund by Janus Capital are disclosed as Excess Expense Reimbursement on the Statement of Operations. Each of the Funds pays Janus Services LLC ("Janus Services"), a wholly-owned subsidiary of Janus Capital, an asset-weighted average annual fee based on the proportion of each Fund's total net assets sold directly and the proportion of each Fund's net assets sold through financial intermediaries. The applicable fee rates are 0.16% of net assets on the proportion of assets sold directly and 0.21% on the proportion of assets sold through intermediaries. In addition, Janus Services receives $4.00 per open shareholder account (excluding Janus Twenty Fund and Janus Venture Fund) for transfer agent services. During the six-month period ended April 30, 2006, Janus Services reimbursed the following Funds as a result of dilutions caused by incorrectly processed shareholder activity as indicated in the table below.
Funds --------------------------------------------- Growth Janus Fund $ 47,274 Janus Olympus Fund 954 Janus Twenty Fund 16,870 Special Growth Janus Global Technology Fund 3,607
For the six-month period ended April 30, 2006, Janus Capital assumed $14,642 of legal, consulting and Trustee costs and fees incurred by the funds in Janus Investment Fund, Janus Aspen Series and Janus Adviser Series (the "Portfolios") in connection with the regulatory and civil litigation matters discussed in Note 6. These non-recurring costs were allocated to all Portfolios, based upon the Portfolios' respective net assets as of July 31, 2004. No fees were allocated to Janus Research Fund, Janus Triton Fund and the Janus Smart Portfolios as the funds commenced operations after July 31, 2004. Additionally, all future non-recurring costs will be allocated based upon the Portfolios' respective net assets on July 31, 2004. These non-recurring costs and offsetting waivers are shown on the Statement of Operations. The Board of Trustees has adopted a deferred compensation plan (the "Plan") for independent Trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Funds. All deferred fees are credited to an account established in the name of the Trustees. The amounts credited to the account then increase or decrease, as the case may be, in accordance with the performance of one or more of the Janus funds that are selected by the Trustees. The account balance continues to fluctuate in accordance with the performance of the selected fund or funds until final payment of all amounts credited to the account. Trustees are allowed to change their designation of mutual funds from time to time. Amounts will be deferred until distributed in accordance to the Plan. No deferred fees were paid to any Trustee under the Plan during the six-month period ended April 30, 2006. 92 Janus Growth Funds April 30, 2006 Certain officers of the Funds may also be officers and/or directors of Janus Capital. Such officers receive no compensation from the Funds, except for the Funds' Chief Compliance Officer. Effective January 1, 2006, the Funds began reimbursing the adviser for a portion of the compensation paid to the Chief Compliance Officer of the Funds. $59,577 of total compensation was paid by the funds of the Trust. The Funds' portion is reported as part of "Other Expenses" on the Statement of Operations. The Funds' expenses may be reduced by expense offsets from an unaffiliated custodian and/or transfer agent. Such credits or offsets are included in Expense and Fee Offsets on the Statement of Operations. The transfer agent fee offsets received during the period reduce Transfer Agent Fees and Expenses. Custodian offsets received reduce Custodian Fees. The Funds could have employed the assets used by the custodian and/or transfer agent to produce income if they had not entered into an expense offset arrangement. A 2.00% redemption fee may be imposed on shares of Janus Global Life Sciences Fund and Janus Global Technology Fund held for three months or less. This fee is paid to the Funds rather than Janus Capital, and is designed to deter excessive short-term trading and to offset the brokerage commissions, market impact, and other costs associated with changes in the Funds' asset levels and cash flow due to short-term money movements in and out of the Funds. The redemption fee is accounted for as an addition to Paid-in Capital. Total redemption fees received by Janus Global Life Sciences Fund and Janus Global Technology Fund were $34,817 and $53,668, respectively, for the six-month period ended April 30, 2006. The Funds may invest in money market funds, including funds managed by Janus Capital. During the six-month period ended April 30, 2006, the following Funds recorded distributions from affiliated investment companies as affiliated dividend income, and had the following affiliated purchases and sales:
Purchases Sales Dividend Value Shares/Cost Shares/Cost Income at 4/30/06 --------------- --------------- --------------- --------------- Janus Government Money Market Fund Janus Mercury Fund $ 40,000,000 $ 40,000,000 $ 42,970 $ -- Janus Twenty Fund 290,000,000 90,000,000 812,816 200,000,000 --------------- --------------- --------------- --------------- $ 330,000,000 $ 130,000,000 $ 855,786 $ 200,000,000 Janus Institutional Cash Reserves Fund Janus Fund $ 625,000,000 $ 620,000,000 $ 2,988,404 $ 165,000,000 Janus Enterprise Fund 40,000,000 40,000,000 85,742 -- Janus Mercury Fund 285,000,000 205,000,000 197,059 80,000,000 Janus Olympus Fund 50,000,000 -- 25,932 50,000,000 Janus Orion Fund 50,000,000 50,000,000 79,918 -- Janus Twenty Fund 310,000,000 25,000,000 7,533,225 485,000,000 --------------- --------------- --------------- --------------- $ 1,360,000,000 $ 940,000,000 $ 10,910,280 $ 780,000,000 Janus Money Market Fund Janus Fund $ 345,000,000 $ 420,000,000 $ 845,792 $ 25,000,000 Janus Mercury Fund 200,000,000 200,000,000 489,495 -- Janus Twenty Fund 850,000,000 425,000,000 4,506,308 475,000,000 --------------- --------------- --------------- --------------- $ 1,395,000,000 $ 1,045,000,000 $ 5,841,595 $ 500,000,000
3. PURCHASES AND SALES OF INVESTMENT SECURITIES For the six-month period ended April 30, 2006, the aggregate cost of purchases and proceeds from sales of investment securities (excluding short-term securities and options) were as follows:
Purchase of Long- Proceeds from Sales Purchase of Proceeds from Sales Term U.S. Government of Long-Term U.S. Fund Securities of Securities Obligations Government Obligations ------------------------------- ---------------------- ---------------------- ---------------------- ---------------------- Growth Janus Fund $ 6,002,248,571 $ 6,005,476,689 $ -- $ -- Janus Enterprise Fund 389,076,524 448,203,962 -- -- Janus Mercury Fund 3,926,916,069 4,764,826,802 -- -- Janus Olympus Fund 1,126,738,823 1,198,009,293 -- -- Janus Orion Fund 432,782,648 227,100,902 -- -- Janus Triton Fund 181,318,581 87,018,400 -- -- Janus Twenty Fund 1,312,845,778 2,471,691,294 -- -- Janus Venture Fund 383,839,508 482,334,685 -- -- Specialty Growth Janus Global Life Sciences Fund 482,728,209 567,324,791 -- -- Janus Global Technology Fund 564,591,921 675,069,940 -- --
Janus Growth Funds April 30, 2006 93 Notes to Financial Statements (unaudited) (continued) 4. FEDERAL INCOME TAX Income and capital gains distributions are determined in accordance with income tax regulations that may differ from accounting principles generally accepted in the United States of America. These differences are due to differing treatments for items such as net short-term gains, deferral of wash sale losses, foreign currency transactions, net investment losses and capital loss carryovers. The Funds have elected to treat gains and losses on forward foreign currency contracts as capital gains and losses. Other foreign currency gains and losses on debt instruments are treated as ordinary income for federal income tax purposes pursuant to Section 988 of the Internal Revenue Code. The aggregate cost of investments and the composition of unrealized appreciation and depreciation of investment securities for federal income tax purposes as of April 30, 2006 are also noted below. Unrealized appreciation and unrealized depreciation in the table below exclude appreciation/depreciation on foreign currency translations. The primary difference between book and tax appreciation or depreciation of investments is wash sale loss deferrals.
Net Tax Federal Unrealized Unrealized Appreciation/ Fund Tax Cost Appreciation (Depreciation) (Depreciation) ------------------------------- -------------- -------------- -------------- -------------- Growth Janus Fund $9,986,114,406 $2,266,219,618 $ (138,680,425) $2,127,539,193 Janus Enterprise Fund 1,471,902,239 677,581,263 (25,526,663) 652,054,600 Janus Mercury Fund 3,992,672,519 506,388,474 (99,083,441) 407,305,033 Janus Olympus Fund 2,195,856,693 552,099,156 (27,784,635) 524,314,521 Janus Orion Fund 1,075,813,195 279,033,045 (16,736,838) 262,296,207 Janus Triton Fund 151,608,743 17,306,762 (3,493,239) 13,813,523 Janus Twenty Fund 7,330,756,041 2,681,929,402 (18,455,513) 2,663,473,889 Janus Venture Fund 1,375,566,249 520,366,251 (53,445,333) 466,920,918 Specialty Growth Janus Global Life Sciences Fund 1,046,239,534 257,306,772 (30,090,627) 227,216,145 Janus Global Technology Fund 916,597,277 284,030,559 (25,915,485) 258,115,074
Net capital loss carryovers as of October 31, 2005 are indicated in the table below. These losses may be available to offset future realized capital gains and thereby reduce future taxable gains distributions. The table below shows the expiration dates of the carryovers. Capital Loss Carryover Expiration Schedule For the fiscal year ended October 31, 2005
Accumulated Fund October 31, 2007 October 31, 2008 October 31, 2009 October 31, 2010 October 31, 2011 Capital Losses ------------------ ---------------- ---------------- ---------------- ---------------- ---------------- ---------------- Growth Janus Fund(1) $ -- $ (27,832,088) $ (3,409,665,900) $ (2,692,706,418) $ (569,521,625) $ (6,699,726,031) Janus Enterprise Fund(1) (2,880,396) (220,932,903) (2,924,501,200) (1,180,687,781) (35,756,979) (4,364,759,259) Janus Mercury Fund -- -- (3,254,153,236) (2,677,021,633) (222,598,721) (6,153,773,590) Janus Olympus Fund(1) -- (3,298,969) (1,147,259,588) (533,548,088) -- (1,684,106,645) Janus Orion Fund -- -- (480,697,899) (67,772,191) -- (548,470,090) Janus Triton Fund -- -- -- -- -- -- Janus Twenty Fund -- -- (2,514,552,821) (117,584,500) (643,606,306) (3,275,743,627) Janus Venture Fund(1) -- -- (50,323,147) (12,580,788) -- (62,903,935) Specialty Growth Janus Global Life Sciences Fund -- (109,162,517) (451,314,670) (251,753,591) (103,237,607) (915,468,385) Janus Global Technology Fund -- (6,230,420) (1,827,246,526) (857,178,929) (83,082,507) (2,773,738,382)
(1) Capital loss carryovers subject to annual limitations. 94 Janus Growth Funds April 30, 2006 During the fiscal year ended October 31, 2005, the following capital loss carryovers were utilized by the Funds as indicated in the table below.
Capital Carryover Loss Fund Utilized ------------------------------- ---------------------- Growth Janus Fund $ 2,439,165,545 Janus Enterprise Fund 178,030,460 Janus Mercury Fund 337,995,565 Janus Olympus Fund 299,430,515 Janus Orion Fund 65,588,058 Janus Twenty Fund 1,463,811,386 Janus Venture Fund 52,004,445 Specialty Growth Janus Global Life Sciences Fund 170,843,244 Janus Global Technology Fund 97,986,731
5. CAPITAL SHARE TRANSACTIONS
For the six-month period ended April 30, 2006 (unaudited) and the fiscal Janus Janus Janus year ended Janus Enterprise Mercury Olympus October 31, 2005 Fund Fund Fund Fund (all numbers ------------------------ ------------------------ ------------------------ ------------------------ in thousands) 2006 2005 2006 2005 2006 2005 2006 2005 ------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Transactions in Fund Shares Shares sold 31,817 15,753 3,442 6,111 8,253 33,707 4,050 3,301 Reinvested distributions 300 -- -- -- 513 289 19 -- Shares repurchased (57,269) (145,132) (4,880) (12,764) (42,266) (60,613) (6,007) (20,158) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net Increase/ (Decrease) in Capital Share Transactions (25,152) (129,379) (1,438) (6,653) (33,500) (26,617) (1,938) (16,857) Shares Outstanding, Beginning of Period 455,877 585,256 43,147 49,800 202,882 229,499 72,891 89,748 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Shares Outstanding, End of Period 430,725 455,877 41,709 43,147 169,382 202,882 70,953 72,891
For the six-month period ended April 30, 2006 (unaudited) and the fiscal year or Janus Janus Janus Janus period ended Orion Triton Twenty Venture October 31, 2005 Fund Fund Fund Fund (all numbers in ------------------------ ------------------------ ------------------------ ------------------------ thousands) 2006 2005 2006 2005(1) 2006 2005 2006 2005 ------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Transactions in Fund Shares Shares sold 35,447 22,671 9,686 4,486 4,666 12,470 273 653 Reinvested distributions 712 -- 18 -- 399 59 1,108 -- Shares repurchased (10,726) (18,685) (1,126) (1,015) (15,907) (38,601) (1,795) (3,628) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net Increase/ (Decrease) in Capital Share Transactions 25,433 3,986 8,578 3,471 (10,842) (26,072) (414) (2,975) Shares Outstanding, Beginning of Period 88,687 84,701 3,471 -- 201,813 227,885 22,760 25,735 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Shares Outstanding, End of Period 114,120 88,687 12,049 3,471 190,971 201,813 22,346 22,760
Janus Janus For the six-month period ended Global Life Sciences Global Technology April 30, 2006 (unaudited) and the Fund Fund fiscal year ended October 31, 2005 ---------------------- ---------------------- (all numbers in thousands) 2006 2005 2006 2005 ----------------------------------------------------- -------- -------- -------- -------- Transactions in Fund Shares Shares sold 2,030 2,837 3,293 4,449 Reinvested distributions -- -- 59 -- Shares repurchased (6,395) (17,065) (11,332) (42,493) ------- -------- -------- -------- Net Increase/(Decrease) in Capital Share Transactions (4,365) (14,228) (7,980) (38,044) Shares Outstanding, Beginning of Period 59,368 73,596 91,292 129,336 ------- -------- -------- -------- Shares Outstanding, End of Period 55,003 59,368 83,312 91,292
(1) Period from February 25, 2005 (inception date) through October 31, 2005. Janus Growth Funds April 30, 2006 95 Notes to Financial Statements (unaudited) (continued) 6. PENDING LEGAL MATTERS In the fall of 2003, the Securities and Exchange Commission ("SEC"), the Office of the New York State Attorney General ("NYAG"), the Colorado Attorney General ("COAG"), and the Colorado Division of Securities ("CDS") announced that they were investigating alleged frequent trading practices in the mutual fund industry. On August 18, 2004, Janus Capital announced that it had reached final settlements with the SEC, the NYAG, the COAG, and the CDS related to such regulators' investigations into Janus Capital's frequent trading arrangements. A number of civil lawsuits were brought against Janus Capital and certain of its affiliates, the Janus funds, and related entities and individuals based on allegations similar to those announced by the above regulators and were filed in several state and federal jurisdictions. Such lawsuits alleged a variety of theories for recovery including, but not limited to, the federal securities laws, other federal statutes (including ERISA), and various common law doctrines. The Judicial Panel on Multidistrict Litigation transferred these actions to the U.S. District Court for the District of Maryland (the "Court") for coordinated proceedings. On September 29, 2004, five consolidated amended complaints were filed in that Court that generally include: (i) claims by a putative class of investors in certain Janus funds asserting claims on behalf of the investor class; (ii) derivative claims by investors in certain Janus funds ostensibly on behalf of such funds; (iii) claims on behalf of participants in the Janus 401(k) plan; (iv) claims brought on behalf of shareholders of Janus Capital Group Inc. ("JCGI") on a derivative basis against the Board of Directors of JCGI; and (v) claims by a putative class of shareholders of JCGI asserting claims on behalf of the shareholders. Each of the five complaints initially named JCGI and/or Janus Capital as a defendant. In addition, the following were also named as defendants in one or more of the actions: Janus Investment Fund ("JIF"), Janus Aspen Series ("JAS"), Janus Adviser Series ("JAD"), Janus Distributors LLC, Enhanced Investment Technologies, LLC ("INTECH"), Bay Isle Financial LLC ("Bay Isle"), Perkins, Wolf, McDonnell and Company, LLC ("Perkins"), the Advisory Committee of the Janus 401(k) plan, and the current or former directors of JCGI. On August 25, 2005, the Court entered orders dismissing most of the claims asserted against Janus Capital and its affiliates by fund investors (actions (i) and (ii) described above), except certain claims under Section 10(b) of the Securities Exchange Act of 1934 and under Section 36(b) of the Investment Company Act of 1940. The complaint in the 401(k) plan class action (action (iii) described above) was voluntarily dismissed, but was refiled using a new named plaintiff and asserting claims similar to the initial complaint. As a result of the above events, JCGI, Janus Capital, the Advisory Committee of the Janus 401(k) plan, and the current or former directors of JCGI are the remaining defendants in one or more of the actions. The Attorney General's Office for the State of West Virginia filed a separate market timing related civil action against Janus Capital and several other non-affiliated mutual fund companies, claiming violations under the West Virginia Consumer Credit and Protection Act. The civil action requests certain monetary penalties, among other relief. This action has been removed to federal court and transferred to the Multidistrict Litigation case in the U.S. District Court of Baltimore, Maryland described above. In addition, the Auditor of the State of West Virginia, in his capacity as securities commissioner, has issued an order indicating an intent to initiate administrative proceedings against most of the defendants in the market timing cases (including Janus Capital) and seeking disgorgement and other monetary relief based on similar market timing allegations. In addition to the "market timing" actions described above, Janus Capital is a defendant in a consolidated lawsuit in the U.S. District Court for the District of Colorado challenging the investment advisory fees charged by Janus Capital to certain Janus funds. The action was filed in 2004 by fund investors asserting breach of fiduciary duty under Section 36(b) of the Investment Company Act of 1940. The plaintiffs seek declaratory and injunctive relief and an unspecified amount of damages. In 2001, Janus Capital's predecessor was also named as a defendant in a class action suit in the U.S. District Court for the Southern District of New York, alleging that certain underwriting firms and institutional investors violated antitrust laws in connection with initial public offerings. The U.S. District Court dismissed the plaintiff's antitrust claims in November 2003, however, the U.S. Court of Appeals vacated that decision and remanded it for further proceedings. Additional lawsuits may be filed against certain of the Janus funds, Janus Capital, and related parties in the future. Janus Capital does not currently believe that these pending actions will materially affect its ability to continue providing services it has agreed to provide to the Janus funds. 96 Janus Growth Funds April 30, 2006 Additional Information (unaudited) PROXY VOTING POLICIES AND VOTING RECORD A description of the policies and procedures that the Funds use to determine how to vote proxies relating to their portfolio securities is available: (i) without charge, upon request, by calling 1-800-525-3713 (toll free); (ii) on the Funds' website at www.janus.com; and (iii) on the SEC's website at http://www.sec.gov. Additionally, information regarding each Fund's proxy voting record for the most recent twelve-month period ended June 30 is also available, free of charge, through www.janus.com and from the SEC's website at http://www.sec.gov. QUARTERLY PORTFOLIO HOLDINGS The Funds file their complete portfolio holdings (schedule of investments) with the SEC for the first and third quarters of each fiscal year on Form N-Q within 60 days of the end of such fiscal quarter. The Funds' Form N-Q: (i) is available on the SEC's website at http://www.sec.gov; (ii) may be reviewed and copied at the SEC's Public Reference Room in Washington, D.C. (information on the Public Reference Room may be obtained by calling 1-800-SEC-0330); and (iii) is available without charge, upon request, by calling Janus at 1-800-525-3713 (toll free). APPROVAL OF ADVISORY AGREEMENTS DURING THE PERIOD AMENDMENTS TO ADVISORY AGREEMENTS TO CONFORM TO PREVAILING INDUSTRY PRACTICE On September 20, 2005, the Board of Trustees, including all of the Independent Trustees, voted unanimously to approve an amended Investment Advisory Agreement ("Amended Agreement") for each Fund and authorized the submission of each Amended Agreement to the Fund's shareholders for approval. Shareholders approved the Amended Agreement for their Fund at a special meeting of Shareholders held on December 29, 2005 for Janus Fund, Janus Orion Fund, Janus Triton Fund, Janus Twenty Fund, and Janus Venture Fund; and on January 9, 2006 for Janus Enterprise Fund, Janus Mercury Fund, Janus Olympus Fund, Janus Global Life Sciences Fund, and Janus Global Technology Fund. In approving the proposed Amended Agreements, the Trustees considered the recommendations of an independent compliance consultant engaged by Janus Capital regarding the form of each of those agreements and concluded that the proposed changes were consistent with industry practice and would reflect an appropriate delegation of authority to Janus Capital clarifying its investment discretion over the Funds it manages. In connection with their most recent consideration of the investment advisory agreements for all of the Funds, the Trustees received and reviewed a substantial amount of information provided by Janus Capital and the respective subadvisers for subadvised Funds in response to requests of the Independent Trustees and their counsel. They also received and reviewed a considerable amount of information and analysis provided to the Trustees by an independent fee consultant. Throughout their consideration of the agreements, the Independent Trustees were advised by their independent legal counsel. The Independent Trustees met on two separate occasions with Janus Capital management to consider the agreements, and at each of those meetings they also met separately in executive session with their counsel. Based on their evaluation of the information provided by Janus Capital, subadvisers, the independent fee consultant, Lipper Inc. ("Lipper"), and other information, the Trustees determined that the overall arrangements between the Funds and Janus Capital were fair and reasonable in light of the nature and quality of the services provided by Janus Capital, its affiliates and the subadvisers, the fees charged for those services, and other matters that the Trustees considered relevant in the exercise of their business judgment. In considering the agreements, the Trustees reviewed and analyzed various factors that they determined were relevant, including the factors described below, none of which by itself was considered dispositive. However, the material factors and conclusions that formed the basis for the Trustees' determination to approve the agreements are discussed separately below. NATURE, EXTENT, AND QUALITY OF SERVICES The Trustees reviewed the nature, extent, and quality of the services of Janus Capital and the subadvisers to the Funds, taking into account the investment objective and strategy of each Fund and the knowledge the Trustees gained from their regular meetings with management on at least a quarterly basis. In addition, the Trustees reviewed the resources and key personnel of Janus Capital and each subadviser, especially those who provide investment management services to the Funds. The Trustees also considered other services provided to the Funds by Janus Capital or the subadvisers, such as managing the execution of portfolio transactions and the selection of broker-dealers for those transactions, serving as the Funds' administrator, monitoring adherence to the Funds' investment restrictions, producing shareholder reports, providing support services for the Trustees and Trustee committees, and overseeing the activities of other service providers, including monitoring compliance with various policies and procedures of the Funds and with applicable securities laws and regulations. The Trustees also reviewed the enhanced compliance program of Janus Capital and the actions taken by Janus Capital in response to various legal and regulatory proceedings since the fall of 2003. Janus Growth Funds April 30, 2006 97 Additional Information (unaudited) (continued) The Trustees concluded that the nature, extent, and quality of the services provided by Janus Capital and, if applicable, the subadviser to each Fund were appropriate and consistent with the terms of the respective advisory agreements, that the quality of those services had been consistent with or superior to quality norms in the industry, and that the Funds were likely to benefit from the continued provision of those services. They also concluded that Janus Capital and each subadviser had sufficient personnel, with the appropriate education and experience, to serve the Funds effectively and had demonstrated its continuing ability to attract and retain well-qualified personnel. PERFORMANCE OF THE FUNDS The Trustees considered the short-term and longer term performance of each Fund. They reviewed information comparing each Fund's performance with the performance of comparable funds and peer groups identified by Lipper and with the Fund's benchmark index. They concluded that the performance of most Funds was good to very good. Although the performance of some Funds lagged that of their peers for certain periods, they also concluded that Janus Capital had taken appropriate steps to address the under-performance and that the more recent performance of most of those Funds had been improving. COSTS OF SERVICES PROVIDED The Trustees examined information on the fees and expenses of each Fund in comparison to information for other comparable funds as provided by Lipper. They noted that the rate of management (investment advisory and administrative) fees for each Fund, after contractual expense limitations, was below the mean management fee rate of the respective peer group of funds selected by Lipper. The Trustees considered the methodology used by Janus Capital in determining compensation payable to portfolio managers, the very competitive environment for investment management talent and the competitive market for mutual funds in different distribution channels. The Trustees also reviewed Janus Capital's management fees for its separate account clients and for its subadvised funds (for which Janus Capital provides only portfolio management services). Although in most instances subadvisory and separate account fee rates for various investment strategies were lower than management fees for Funds having a similar strategy, the Trustees noted that Janus Capital performs significant additional services for the Funds that it does not provide to those other clients, including administrative services, oversight of the Funds' other service providers, trustee support, regulatory compliance, and numerous other services. Moreover, they noted that the spread between the average fees charged to the Funds and the fees that Janus Capital charged to its separate account clients was significantly smaller than the average spread for such fees of other advisers, based on publicly available data and research conducted by their independent fee consultant. The Trustees also considered the profitability to Janus Capital and its affiliates of their relationships with each Fund and found Janus Capital's profitability not to be unreasonable. Finally, the Trustees considered the financial condition of Janus Capital, which they found to be sound. The Trustees concluded that the management fees and any other compensation payable by each Fund to Janus Capital and its affiliates, as well as the fees paid by Janus Capital or a Fund to the subadvisers of subadvised Funds, were reasonable in relation to the nature and quality of the services provided, taking into account the fees charged by other advisers for managing comparable mutual funds with similar strategies and the fees Janus Capital charges to other clients. The Trustees also concluded that the overall expense ratio of each Fund was reasonable, taking into account the size of the Fund, the quality of services provided by Janus Capital, the investment performance of the Fund, and the expense limitations agreed to by Janus Capital. ECONOMIES OF SCALE The Trustees received and considered information about the potential of Janus Capital to experience economies of scale as the assets of the Funds increase. They noted that, although each Fund (except four Funds that have breakpoints) pays an advisory fee at a fixed rate as a percentage of net assets, without any breakpoints, the management fee paid by each Fund, after any applicable contractual expense limitations, was below the mean management fee rate of the Fund's peer group selected by Lipper. The Trustees also took note that, for those Funds whose expenses are being reduced by the contractual expense limitations of Janus Capital, Janus Capital is subsidizing the Funds because they have not reached adequate scale. Moreover, as the assets of many of the Funds have declined in the past few years, the Funds have benefited from having advisory fee rates that have remained constant rather than fees with breakpoints and higher fee rates at lower asset levels in which the effective fee rate might have increased as assets declined. The Trustees considered certain Amended Agreements that included a change to the advisory fee to reflect a performance-based structure under which the rate of fee would increase or decrease from the current fixed rate if the Fund outperforms or underperforms its benchmark index over a trailing period. Such a fee structure is likely to increase or decrease Janus Capital's economies of scale, depending on whether the effective rate of the fee is increased or decreased. The Trustees also noted that the Funds share directly in economies of scale through lower charges of third party 98 Janus Growth Funds April 30, 2006 service providers based on the combined scale of all of the Funds. Based on all of the information they reviewed, the Trustees concluded that the fee structure in each of the advisory agreements was reasonable and that the current rates of fees reflect a sharing between Janus Capital and the Fund of economies of scale at the current asset level of the Fund. OTHER BENEFITS TO THE ADVISER The Trustees also considered benefits that accrue to Janus Capital and its affiliates from their relationship with the Funds. They recognized that affiliates of Janus Capital separately serve the Funds as transfer agent and distributor, respectively. The Trustees also considered Janus Capital's use of commissions paid by most Funds on their portfolio brokerage transactions to obtain proprietary research products and services benefiting the Funds and/or other clients of Janus Capital, as well as Janus Capital's agreement not to use any Fund's portfolio brokerage transactions to obtain third party research through brokers. The Trustees concluded that Janus Capital's use of "soft" commission dollars to obtain proprietary research products and services was consistent with regulatory requirements and was likely to benefit the Funds. The Trustees also concluded that, other than the services provided by Janus Capital and its affiliates pursuant to the agreements and the fees to be paid by each Fund therefor, the Funds and Janus Capital may potentially benefit from their relationship with each other in other ways. They concluded that Janus Capital benefits from the receipt of proprietary research products and services acquired through commissions paid on portfolio transactions of the Funds and that the Funds benefit from Janus Capital's receipt of those products and services, as well as research products and services acquired through commissions paid by other clients of Janus Capital. They further concluded that success of each Fund could attract other business to Janus Capital or its other Funds and that the success of Janus Capital could enhance Janus Capital's ability to serve the Funds. After full consideration of the above factors as well as other factors, the Trustees, including all of the Independent Trustees, concluded that the current Investment Advisory Agreement for each Fund was in the best interest of the Fund and its shareholders. In approving the Amended Agreements, the Independent Trustees also concluded that the Amended Agreement, as proposed, was in the best interest of the Fund and its shareholders. PERFORMANCE-BASED INVESTMENT ADVISORY FEE PROPOSAL -- FOR JANUS MERCURY FUND On September 20, 2005 and October 19, 2005, the Board of Trustees, including all of the Independent Trustees, voted unanimously to approve an Amended Investment Advisory Agreement for the Fund ("Proposed Agreement") and authorized the submission of the Proposed Agreement to the Fund's shareholders for approval. The Proposed Agreement changed the advisory fee paid by the Fund from a fixed rate to a rate that adjusts upward or downward based upon the Fund's performance relative to a selected benchmark index. Shareholders of the Fund approved the Proposed Agreement at a special meeting of Shareholders held on January 9, 2006. For more than a year the Independent Trustees and their independent fee consultant, in consultation with independent legal counsel to the Independent Trustees, have explored the possibility of modifying the fee structure for certain funds to provide for a performance-based adjustment to the current investment advisory fee rate that would increase or decrease the fee based on whether the Fund's total return performance exceeds or lags a stated relevant benchmark index. The Independent Trustees also worked with Janus Capital to develop a performance structure that was acceptable to Janus Capital. In doing so, the Independent Trustees were seeking to provide a closer alignment of the interests of Janus Capital with those of the Funds and their shareholders. They believe that the fee structure proposed for each Fund will achieve that objective. Included as part of their analysis of the overall performance fee structure, the Trustees, in consultation with their independent fee consultant, considered the appropriate performance range for achieving the maximum and minimum advisory fee that would result in the Performance Adjustment of up to 0.15% (positive or negative) of a Fund's average daily net assets during the applicable performance measurement period. The Trustees reviewed information provided by Janus Capital and prepared by their independent fee consultant with respect to an appropriate deviation of excess/under returns relative to a Fund's benchmark index, taking into consideration expected tracking error of the Fund, expected returns and potential risks and economics involved both for Janus Capital and the Fund's shareholders. The Trustees also reviewed the structure of performance fees applied by other mutual fund complexes. Based on this information, the Trustees determined that a performance range that approximates one standard deviation of excess/under returns relative to a Fund's benchmark index was appropriate for calculating the maximum range (positive or negative) of the Performance Adjustment. As described above, the Performance Adjustment that will be added to or subtracted from the "Base Fee" (as defined in the Proposed Agreement) as a result of a Fund's performance relative to its benchmark index is a variable up to 0.15% of average net assets during the performance measurement period. Importantly, the performance is computed after deducting the Fund's operating expenses (including advisory fees), which means that in order to receive any upward adjustment from the Base Fee, Janus Capital must deliver a Janus Growth Funds April 30, 2006 99 Additional Information(unaudited) (continued) total return after expenses that exceeds the return of the benchmark index, which does not incur any expenses. The Trustees determined that the benchmark index specified in each of the Proposed Agreements for purposes of computing the performance fee adjustments is appropriate for the respective Fund based on a number of factors, including the fact that the index is broad-based and is composed of securities of the types in which the Fund may invest. The Trustees believe that divergence between the Fund's performance and performance of the index can be attributed, in part, to the ability of the portfolio manager in making investment decisions within the parameters of the Fund's investment objective and investment policies and restrictions. The Trustees determined that the class of shares of each Fund selected for purposes of calculating the Performance Adjustment as applied to the Fund is the most appropriate class for use in calculating such Fund's Performance Adjustment. In making that determination, the Trustees considered the fee structure and expenses paid by each class of shares, any fees paid to or retained by Janus Capital or its affiliates, as well as the distribution channel for each class of shares. The time periods to be used in determining any Performance Adjustment were also judged to be of appropriate length to ensure proper correlation and to prevent fee adjustments from being based upon random or insignificant differences between the performance of the Fund and of the index. In that regard, the Trustees concluded that it would be appropriate for there to be no adjustment from the Base Fee for the first 12 months after the effective date of each Proposed Agreement before implementation of any Performance Adjustment, and that, once implemented, the Performance Adjustment should reflect only the Fund's performance subsequent to that effective date. Moreover, the Trustees believed that, upon reaching the thirty-sixth month after the effective date, the performance measurement period would be fully implemented, and that the Performance Adjustment should thereafter be based upon a thirty-six month rolling performance measurement period. In addition to considering the performance fee structure reflected in each Proposed Agreement, in approving each of those agreements, the Trustees followed the process and considered the factors and reached the conclusions described above under "Amendments to Advisory Agreements to Conform to Prevailing Industry Practice." 100 Janus Growth Funds April 30, 2006 Explanations of Charts, Tables and Financial Statements (unaudited) 1. PERFORMANCE OVERVIEWS Performance overview graphs compare the performance of a hypothetical $10,000 investment in each Fund with one or more widely used market indices. The hypothetical example does not represent the returns of any particular investment. When comparing the performance of a Fund with an index, keep in mind that market indices do not include brokerage commissions that would be incurred if you purchased the individual securities in the index. They also do not include taxes payable on dividends and interest or operating expenses incurred if you maintained a Fund invested in the index. Average annual total returns are also quoted for each Fund. Average annual total return is calculated by taking the growth or decline in value of an investment over a period of time, including reinvestment of any dividends, distributions and capital gains, then calculating the annual compounded percentage rate that would have produced the same result had the rate of growth been constant throughout the period. Average annual total return does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or redemptions of Fund shares. 2. SCHEDULES OF INVESTMENTS Following the performance overview section is each Fund's Schedule of Investments. This schedule reports the industry concentrations and types of securities held in each Fund on the last day of the reporting period. Securities are usually listed by type (common stock, corporate bonds, U.S. Government obligations, etc.) and by industry classification (banking, communications, insurance, etc.). Holdings are subject to change without notice. The value of each security is quoted as of the last day of the reporting period. The value of securities denominated in foreign currencies is converted into U.S. dollars. Funds that invest in foreign securities also provide a summary of investments by country. This summary reports the Fund's exposure to different countries by providing the percentage of securities invested in each country. The country of each security represents the country in which the company is incorporated. 2A. FORWARD CURRENCY CONTRACTS A table listing forward currency contracts follows each Fund's Schedule of Investments (if applicable). Forward currency contracts are agreements to deliver or receive a preset amount of currency at a future date. Forward currency contracts are used to hedge against foreign currency risk in the Fund's long-term holdings. The table provides the name of the foreign currency, the settlement date of the contract, the amount of the contract, the value of the currency in U.S. dollars and the amount of unrealized gain or loss. The amount of unrealized gain or loss reflects the change in currency exchange rates from the time the contract was opened to the last day of the reporting period. 2B. FUTURES A table listing futures contracts follows each Fund's Schedule of Investments (if applicable). Futures contracts are contracts that obligate the buyer to receive and the seller to deliver an instrument or money at a specified price on a specified date. Futures are used to hedge against adverse movements in securities prices, currency risk or interest rates. The table provides the name of the contract, number of contracts held, the expiration date, the principal amount, value and the amount of unrealized gain or loss. The amount of unrealized gain or loss reflects the marked-to-market amount for the last day of the reporting period. 2C. OPTIONS A table listing options contracts follows each Fund's Schedule of Investments (if applicable). Option contracts are contracts that obligate a Fund to sell or purchase an underlying security at a fixed price, upon exercise of the option. Options are used to hedge against adverse movements in securities prices, currency risk or interest rates. The table provides the name of the contract, number of contracts held, the expiration date, exercise price, value and premiums received. 3. STATEMENT OF ASSETS AND LIABILITIES This statement is often referred to as the "balance sheet." It lists the assets and liabilities of the Funds on the last day of the reporting period. The Funds' assets are calculated by adding the value of the securities owned, the receivable for securities sold but not yet settled, the receivable for dividends declared but not yet received on stocks owned and the receivable for Fund shares sold to investors but not yet settled. The Funds' liabilities include payables for securities purchased but not yet settled, Fund shares redeemed but not yet paid and expenses owed but not yet paid. Additionally, there may be other assets and liabilities such as unrealized gain or loss on forward currency contracts. The section entitled "Net Assets Consist of" breaks down the components of the Funds' net assets. Because Funds must distribute substantially all earnings, you'll notice that a significant portion of net assets is shareholder capital. Janus Growth Funds April 30, 2006 101 Explanations of Charts, Tables and Financial Statements (unaudited) (continued) The last section of this statement reports the net asset value ("NAV") per share on the last day of the reporting period. The NAV is calculated by dividing the Funds' net assets (assets minus liabilities) by the number of shares outstanding. 4. STATEMENT OF OPERATIONS This statement details the Funds' income, expenses, gains and losses on securities and currency transactions, and appreciation or depreciation of current Fund holdings. The first section in this statement, entitled "Investment Income," reports the dividends earned from stocks and interest earned from interest-bearing securities in the Funds. The next section reports the expenses and expense offsets incurred by the Funds, including the advisory fee paid to the investment adviser, transfer agent fees and expenses, and printing and postage for mailing statements, financial reports and prospectuses. Expense offsets, if any, are also shown. The last section lists the increase or decrease in the value of securities held in the Funds. Funds realize a gain (or loss) when they sell their position in a particular security. An unrealized gain (or loss) refers to the change in net appreciation or depreciation of the Funds during the reporting period. "Net Realized and Unrealized Gain/(Loss) on Investments" is affected both by changes in the market value of Fund holdings and by gains (or losses) realized during the reporting period. 5. STATEMENT OF CHANGES IN NET ASSETS This statement reports the increase or decrease in the Funds' net assets during the reporting period. Changes in the Funds' net assets are attributable to investment operations, dividends, distributions and capital share transactions. This is important to investors because it shows exactly what caused the Funds' net asset size to change during the period. The first section summarizes the information from the Statement of Operations regarding changes in net assets due to the Funds' investment performance. The Funds' net assets may also change as a result of dividend and capital gains distributions to investors. If investors receive their dividends in cash, money is taken out of the Fund to pay the distribution. If investors reinvest their dividends, the Fund's net assets will not be affected. If you compare each Fund's "Net Decrease from Dividends and Distributions" to the "Reinvested dividends and distributions," you'll notice that dividend distributions had little effect on each Fund's net assets. This is because the majority of Janus investors reinvest their distributions. The reinvestment of dividends is included under "Capital Share Transactions." "Capital Shares" refers to the money investors contribute to the Funds through purchases or withdraw via redemptions. The "Redemption Fees" refers to the fee paid to the Funds for shares held for three months or less by a shareholder. The Funds' net assets will increase and decrease in value as investors purchase and redeem shares from the Funds. 6. FINANCIAL HIGHLIGHTS This schedule provides a per-share breakdown of the components that affect the Funds' NAV for current and past reporting periods. Not only does this table provide you with total return, it also reports total distributions, asset size, expense ratios and portfolio turnover rate. The first line in the table reflects the NAV per share at the beginning of the reporting period. The next line reports the net investment income per share, which comprises dividends and interest income earned on securities held by the Funds. Following is the total of gains/(losses), realized and unrealized. Dividends and distributions are then subtracted to arrive at the NAV per share at the end of the period. The next line reflects the average annual total return reported the last day of the period. Also included are the expense ratios, or the percentage of net assets that were used to cover operating expenses during the period. Expense ratios vary across the Funds for a number of reasons, including the differences in management fees, the average shareholder account size and the extent of foreign investments, which entail greater transaction costs. The Funds' expenses may be reduced through expense reduction arrangements. These arrangements may include the use of balance credits or transfer agent fee offsets. The Statement of Operations reflects total expenses before any such offset, the amount of offset and the net expenses. The expense ratios listed in the Financial Highlights reflect total expenses prior to any expense offsets (gross expense ratio) and after the expense offsets (net expense ratio). Both expense ratios reflect expenses after waivers (reimbursements), if applicable. The ratio of net investment income/(loss) summarizes the income earned less expenses, divided by the average net assets of a Fund during the reporting period. Don't confuse this ratio with a Fund's yield. The net investment income ratio is not a true measure of a Fund's yield because it doesn't take into account the dividends distributed to the Fund's investors. The next ratio is the portfolio turnover rate, which measures the buying and selling activity in a Fund. Portfolio turnover is affected by market conditions, changes in the asset size of a Fund, the nature of the Fund's investments and the investment style of the portfolio manager. A 100% rate implies that an amount equal to the value of the entire portfolio is turned over in a year; a 50% rate means that an amount equal to the value of half the portfolio is traded in a year; and a 200% rate means that an amount equal to the value of the portfolio is traded every six months. 102 Janus Growth Funds April 30, 2006 [This page intentionally left blank.] Janus Growth Funds April 30, 2006 103 Shareholder Meeting (unaudited) A Special Meeting of Shareholders of the Funds was held on November 22, 2005 and adjourned and reconvened to December 29, 2005 and January 9, 2006. At the meetings, the following matters were voted on and approved by the Shareholders. Each vote reported represents one dollar of net asset value held on the record date of the meeting. The results of the Special Meeting of Shareholders are noted below. PROPOSAL 1 Elect nine Trustees, including eight "independent" candidates.
Number of Votes Record ---------------------------------------------- Trustees Date Votes Affirmative Withheld Total --------- -------------- -------------- -------------- -------------- Jerome S. Contro 72,431,132,779 28,415,846,253 806,823,785 29,222,670,038 William F. McCalpin 72,431,132,779 28,431,830,093 790,839,945 29,222,670,038 John W. McCarter, Jr. 72,431,132,779 28,410,815,406 811,854,632 29,222,670,038 Dennis B. Mullen 72,431,132,779 28,408,140,530 814,529,508 29,222,670,038 James T. Rothe 72,431,132,779 28,421,678,938 800,991,100 29,222,670,038 William D. Stewart 72,431,132,779 28,426,971,191 795,698,847 29,222,670,038 Martin H. Waldinger 72,431,132,779 28,400,077,651 822,592,387 29,222,670,038 Linda S. Wolf 72,431,132,779 28,406,316,741 816,353,297 29,222,670,038 Thomas H. Bailey 72,431,132,779 28,395,482,070 827,141,468 29,222,623,538 Percentage of Total Outstanding Votes Percentage of Voted ------------------------------------------------ ------------------------------------------------ Trustees Affirmative Withheld Total Affirmative Withheld Total --------- -------------- -------------- -------------- -------------- -------------- -------------- Jerome S. Contro 39.23% 1.12% 40.35% 97.24% 2.76% 100.00% William F. McCalpin 39.26% 1.09% 40.35% 97.29% 2.71% 100.00% John W. McCarter, Jr. 39.23% 1.12% 40.35% 97.22% 2.78% 100.00% Dennis B. Mullen 39.22% 1.13% 40.35% 97.21% 2.79% 100.00% James T. Rothe 39.24% 1.11% 40.35% 97.26% 2.74% 100.00% William D. Stewart 39.25% 1.10% 40.35% 97.28% 2.72% 100.00% Martin H. Waldinger 39.21% 1.14% 40.35% 97.18% 2.82% 100.00% Linda S. Wolf 39.22% 1.13% 40.35% 97.21% 2.79% 100.00% Thomas H. Bailey 39.21% 1.14% 40.35% 97.17% 2.83% 100.00%
PROPOSAL 3a To approve certain amendments to the Fund's investment advisory agreement with Janus Capital to conform to prevailing industry practice.
Number of Votes -------------------------------------------------------------- Record Broker Non- Fund Date Votes Affirmative Against Abstain Votes ---------------- -------------- -------------- -------------- -------------- -------------- GROWTH Janus Fund 11,815,883,814 5,141,704,247 298,128,737 253,100,803 1,597,577,073 Janus Enterprise Fund 1,768,581,761 655,989,507 39,765,195 30,146,258 223,066,755 Janus Mercury Fund 4,543,442,548 1,750,195,166 110,854,182 93,469,589 480,923,905 Janus Olympus Fund 2,299,460,931 871,255,022 60,570,362 45,247,870 271,664,004 Janus Orion Fund 671,127,831 291,456,936 21,189,706 14,196,184 65,470,079 Janus Triton Fund 34,409,032 18,943,291 1,137,454 571,245 2,189,775 Janus Twenty Fund 9,824,414,895 4,511,070,075 270,345,145 161,625,541 1,308,505,546 Janus Venture Fund 1,406,700,835 631,791,354 51,270,013 35,124,403 150,422,355 SPECIALTY GROWTH Janus Global Life Sciences Fund 1,213,179,543 502,255,257 36,813,843 25,335,504 142,457,413 Janus Global Technology Fund 1,059,507,132 426,902,165 31,772,093 22,473,123 99,490,344 Percentage of Total Outstanding Votes ----------------------------------------------------------------- Broker Fund Affirmative Against Abstain Non-Votes ---------------- -------------- -------------- -------------- -------------- GROWTH Janus Fund 43.52% 2.52% 2.14% 13.52% Janus Enterprise Fund 37.09% 2.25% 1.71% 12.61% Janus Mercury Fund 38.52% 2.44% 2.06% 10.59% Janus Olympus Fund 37.89% 2.63% 1.97% 11.81% Janus Orion Fund 43.43% 3.16% 2.11% 9.76% Janus Triton Fund 55.05% 3.31% 1.66% 6.36% Janus Twenty Fund 45.92% 2.75% 1.65% 13.32% Janus Venture Fund 44.91% 3.65% 2.50% 10.69% SPECIALTY GROWTH Janus Global Life Sciences Fund 41.40% 3.03% 2.09% 11.74% Janus Global Technology Fund 40.29% 3.00% 2.12% 9.39% Percentage of Voted ----------------------------------------------------------------- Broker Fund Affirmative Against Abstain Non-Votes ---------------- -------------- -------------- -------------- -------------- GROWTH Janus Fund 70.53% 4.09% 3.47% 21.91% Janus Enterprise Fund 69.13% 4.19% 3.18% 23.50% Janus Mercury Fund 71.86% 4.55% 3.84% 19.75% Janus Olympus Fund 69.77% 4.85% 3.62% 21.76% Janus Orion Fund 74.29% 5.40% 3.62% 16.69% Janus Triton Fund 82.93% 4.98% 2.50% 9.59% Janus Twenty Fund 72.16% 4.33% 2.58% 20.93% Janus Venture Fund 72.74% 5.90% 4.04% 17.32% SPECIALTY GROWTH Janus Global Life Sciences Fund 71.06% 5.21% 3.58% 20.15% Janus Global Technology Fund 73.52% 5.47% 3.87% 17.14%
PROPOSAL 3b To approve an amended investment advisory agreement between the Fund and Janus Capital to change the investment advisory fee rate from a fixed rate to a rate that adjusts upward or downward based upon the Fund's performance relative to its benchmark index.
Number of Votes ------------------------------------------------------------------------- Record Broker Fund Date Votes Affirmative Against Abstain Non-Votes -------- ------------- ------------- ------------- ------------- ------------- GROWTH Janus Mercury Fund 4,543,442,548 1,660,646,635 207,789,473 86,082,829 480,923,905 Percentage of Total Outstanding Votes Percentage of Voted ----------------------------------------------------------- ----------------------------------------------------------- Broker Broker Fund Affirmative Against Abstain Non-Votes Affirmative Against Abstain Non-Votes -------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- GROWTH Janus Mercury Fund 36.55% 4.57% 1.90% 10.59% 68.19% 8.53% 3.53% 19.75%
104 Janus Growth Funds April 30, 2006 Janus Growth Funds April 30, 2006 105 JANUS PROVIDES ACCESS TO A WIDE RANGE OF INVESTMENT DISCIPLINES. ASSET ALLOCATION Janus asset allocation funds invest in several underlying mutual funds, rather than individual securities, in an attempt to offer investors an instantly diversified portfolio. Janus Smart Portfolios are unique in their combination of funds that leverage the fundamental research approach of Janus with funds supported by the risk-managed, mathematical investment process of INTECH (a Janus subsidiary). GROWTH Janus growth funds focus on companies believed to be the leaders in their respective industries, with solid management teams, expanding market share, margins and efficiencies. CORE Janus core funds seek investments in more stable and predictable companies. These funds look for a strategic combination of steady growth and for certain funds, some degree of income. RISK-MANAGED Our risk-managed fund seeks to outperform its index while maintaining a risk profile equal to or lower than the index itself. Managed by INTECH (a Janus subsidiary), this fund uses a mathematical process in an attempt to build a more "efficient" portfolio than the index. VALUE Janus value funds invest in companies they believe are poised for a turnaround or are trading at a significant discount to fair value. The goal is to gain unique insight into a company's true value and identify and evaluate potential catalysts that may unlock shareholder value. INTERNATIONAL & GLOBAL Janus international and global funds seek to leverage Janus' research capabilities by taking advantage of inefficiencies in foreign markets, where accurate information and analytical insight are often at a premium. BOND & MONEY MARKET Janus bond funds attempt to provide less risk relative to equities while seeking to deliver a competitive total return through high current income and appreciation. Janus money market funds seek maximum current income consistent with stability of capital. For more information about our funds, go to www.janus.com. Please consider the charges, risks, expenses and investment objectives carefully before investing. For a prospectus containing this and other information, please call Janus at 1-800-525-3713 or download the file from www.janus.com. Read it carefully before you invest or send money. An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund. (JANUS LOGO) 151 Detroit Street Denver, CO 80206 1-800-525-3713 Funds distributed by Janus Distributors LLC (6/06) C-0606-22 111-24-103 06-06 JANUS OLYMPUS FUND PART C OTHER INFORMATION ITEM 15 INDEMNIFICATION Section 6.4 of the Trust Instrument provides in effect that the Trust shall indemnify (from the assets of the Series in question) each of its Trustees, members of the Advisory Board (if any) and officers (including persons who serve at the Trust's request as directors, officers or Trustees of another organization in which the Trust has any interest as a shareholder, creditor or otherwise (hereinafter referred to as a "Covered Person")) against all liabilities, including but not limited to amounts paid in satisfaction of judgments, in compromise or as fines and penalties, and expenses, including reasonable accountants' and counsel fees, incurred by any Covered Person in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, before any court or administrative or legislative body, in which such Covered Person may be or may have been involved as a party or otherwise or with which such person may be or may have been threatened, while in office or thereafter, by reason of being or having been such a Trustee, or a member of the Advisory Board, or officer, director or Trustee, except with respect to any matter as to which it has been determined that such Covered Person had acted with willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such Covered Person's office (such conduct referred to hereafter as "Disabling Conduct"). The Trust, its Trustees and officers, its investment adviser and persons affiliated with them are insured under a policy of insurance maintained by the Trust and its investment adviser, within the limits and subject to the limitations of the policy, against certain expenses in connection with the defense of actions, suits or proceedings, and certain liabilities that might be imposed as a result of such actions, suits or proceedings, to which they are parties by reason of being or having been such Trustees or officers. ITEM 16 EXHIBITS EXHIBIT (1) Amended and Restated Agreement and Declaration of Trust, dated March 18, 2003, is incorporated by reference to Exhibit 1(ii) to Post-Effective Amendment No. 109, filed on April 17, 2003 (File No. 2-34393). Certificate of Amendment Establishing and Designating Series, dated September 16, 2003, is incorporated by reference to Exhibit 1(jj) to Post-Effective Amendment No. 110, filed on December 23, 2003 (File No. 2-34393). Certificate of Amendment Establishing and Designating Series, dated September 30, 2003, is filed herein as Exhibit 1(a). II-1 Certificate of Amendment, Voting Powers, dated December 2, 2004, is filed herein as Exhibit 1(b). EXHIBIT (2) Amended and Restated Bylaws are incorporated by reference to Exhibit 2(e) to Post-Effective Amendment No. 112, filed on December 10, 2004 (File No. 2- 34393). First Amendment to the Amended and Restated Bylaws is incorporated by reference to Exhibit 2(f) to Post-Effective Amendment No. 114, filed on October 14, 2005 (File No. 2-34393). Second Amendment to the Amended and Restated Bylaws is incorporated by reference to Exhibit 2(g) to Post-Effective Amendment No. 114, filed on October 14, 2005 (File No. 2-34393). EXHIBIT (3) Not applicable. EXHIBIT (4) Form of Agreement and Plan of Reorganization (included as Appendix A to the Combined Proxy Statement/Prospectus of this Registration Statement) is filed herein as Exhibit 4. EXHIBIT (5) Not applicable. EXHIBIT (6) Investment Advisory Agreement for Janus Olympus Fund dated July 1, 2004 is incorporated by reference to Exhibit 4(ggg) to Post-Effective Amendment No. 112, filed on December 10, 2004 (File No. 2-34393). Investment Advisory Agreement for Janus Olympus Fund dated July 1, 2004, as amended February 1, 2006, is incorporated by reference to Exhibit 4(bbbb) to Post-Effective Amendment No. 117, filed on February 27, 2006 (File No. 2- 34393). EXHIBIT (7) Distribution Agreement between Janus Investment Fund and Janus Distributors LLC, dated June 18, 2002, is incorporated by reference to Exhibit 5(b) to Post- Effective Amendment No. 105, filed on December 13, 2002 (File No. 2-34393). II-2 EXHIBIT (8) Not applicable. EXHIBIT (9) Amended and Restated Custodian Contract dated August 1, 2005, between Janus Investment Fund and State Street Bank and Trust Company is incorporated by reference to Exhibit 7(mm) to Post-Effective Amendment No. 114, filed on October 14, 2005 (File No. 2-34393). EXHIBIT (10) Not applicable. EXHIBIT (11) Opinion of Goodwin Proctor LLP, counsel for the Registrant, is filed herein as Exhibit 11. EXHIBIT (12) Tax Opinion of Goodwin Proctor LLP, counsel for the Registrant, is filed herein as Exhibit 12. EXHIBIT (13) Not applicable. EXHIBIT (14) Consent of PricewaterhouseCoopers LLP is filed herein as Exhibit 14. EXHIBIT (15) Not applicable. EXHIBIT (16) Powers of Attorney dated as of January 1, 2006 are incorporated by reference to Exhibit 15(a) to Post-Effective Amendment No. 117, filed on February 27, 2006 (File No. 2-34393). EXHIBIT (17) Amended Janus Ethics Rules dated July 12, 2006 are filed herein as Exhibit 17. II-3 ITEM 17 UNDERTAKINGS (1) The undersigned registrant agrees that prior to any public reoffering of the securities registered through the use of a prospectus which is a part of this registration statement by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c) of the Securities Act, the reoffering prospectus will contain the information called for by the applicable registration form for reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. (2) The undersigned registrant agrees that every prospectus that is filed under paragraph (1) above will be filed as a part of an amendment to the registration statement and will not be used until the amendment is effective, and that, in determining any liability under the 1933 Act, each post-effective amendment shall be deemed to be a new registration statement for the securities offered therein, and the offering of the securities at that time shall be deemed to be the initial bona fide offering of them. II-4 SIGNATURES As required by the Securities Act of 1933, this Registration Statement has been signed on behalf of the registrant, in the City of Denver, and State of Colorado, on the 8th day of August, 2006. By: /s/ Kelley Abbott Howes ---------------------------------- Kelley Abbott Howes, President and Chief Executive Officer As required by the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ Kelley Abbott Howes President and Chief August 8, 2006 ---------------------------------- Executive Officer Kelley Abbott Howes (Principal Executive Officer) /s/ Jesper Nergaard Vice President, Chief August 8, 2006 ---------------------------------- Financial Officer, Jesper Nergaard Treasurer and Principal Accounting Officer (Principal Financial Officer and Principal Accounting Officer) Dennis B. Mullen* Chairman and Trustee August 8, 2006 ---------------------------------- Dennis B. Mullen Jerome S. Contro* Trustee August 8, 2006 ---------------------------------- Jerome S. Contro William F. McCalpin* Trustee August 8, 2006 ---------------------------------- William F. McCalpin John W. McCarter, Jr.* Trustee August 8, 2006 ---------------------------------- John W. McCarter, Jr. James T. Rothe* Trustee August 8, 2006 ---------------------------------- James T. Rothe
II-5
SIGNATURE TITLE DATE --------- ----- ---- William D. Stewart* Trustee August 8, 2006 ---------------------------------- William D. Stewart Martin H. Waldinger* Trustee August 8, 2006 ---------------------------------- Martin H. Waldinger Linda S. Wolf* Trustee August 8, 2006 ---------------------------------- Linda S. Wolf Thomas H. Bailey* Trustee August 8, 2006 ---------------------------------- Thomas H. Bailey *By: /s/ Stephanie Grauerholz-Lofton --------------------------------------- Stephanie Grauerholz-Lofton Attorney-in-Fact
II-6 SCHEDULE OF EXHIBITS TO FORM N-14
EXHIBIT NUMBER DESCRIPTION -------------- ----------- Exhibit 1(a) Certificate of Amendment Establishing and Designating Series, dated September 30, 2003. Exhibit 1(b) Certificate of Amendment, Voting Powers, dated December 2, 2004. Exhibit 4 Form of Agreement and Plan of Reorganization (also filed as Appendix A to the Combined Proxy Statement/Prospectus of this Registration Statement). Exhibit 11 Opinion of Goodwin Proctor LLP, counsel for the Registrant. Exhibit 12 Tax Opinion of Goodwin Proctor LLP, counsel for the Registrant. Exhibit 14 Consent of PricewaterhouseCoopers LLP. Exhibit 17 Amended Janus Ethics Rules dated July 12, 2006.