Explanatory Note
The Registrant is filing this amendment to its Form N-CSR for the period ended December 31, 2017, originally filed with the Securities and Exchange Commission on March 8, 2018 (Accession Number 0000277751-18-000031). The sole purpose of this filing is to replace the Independent Auditor's Report that was previously filed.
United States Securities and Exchange Commission
Washington, D.C. 20549
FORM N-CSR
Certified Shareholder Report of Registered Management Investment Companies
Investment Company Act file number 811-07736
Janus Aspen Series
(Exact name of registrant as specified in charter)
151 Detroit Street, Denver, Colorado 80206
(Address of principal executive offices) (Zip code)
Kathryn L. Santoro, 151 Detroit Street, Denver, Colorado 80206
(Name and address of agent for service)
Registrant's telephone number, including area code: 303-333-3863
Date of fiscal year end: 12/31
Date of reporting period: 12/31/17
Item 1 - Reports to Shareholders
ANNUAL REPORT December 31, 2017 | |||
Janus Henderson VIT Balanced Portfolio (formerly named Janus Aspen Balanced Portfolio) | |||
Janus Aspen Series | |||
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HIGHLIGHTS · Portfolio management perspective · Investment strategy behind your portfolio · Portfolio performance, characteristics |
Table of Contents
Janus Henderson VIT Balanced Portfolio
Janus Henderson VIT Balanced Portfolio (unaudited)
PERFORMANCE SUMMARY
Janus Henderson VIT Balanced Portfolio’s Institutional Shares and Service Shares returned 18.43% and 18.13%, respectively, for the 12-month period ended December 31, 2017, compared with 13.29% for the Balanced Index, an internally calculated benchmark that combines the total returns from the S&P 500® Index (55%) and the Bloomberg Barclays U.S. Aggregate Bond Index (45%). The S&P 500 Index returned 21.83% and the Bloomberg Barclays U.S. Aggregate Bond Index returned 3.54%.
INVESTMENT ENVIRONMENT
Stocks rallied over the course of the year fueled by a combination of strong corporate fundamentals and the expectation that the Trump administration would champion a pro-growth agenda. For their part, corporations delivered as both revenue and earnings results consistently exceeded consensus expectations. On the policy front, after early missteps and failure to pass health care reform, a tax deal was signed into law by the end of the period. Economic data reinforced the notion that conditions remained favorable for risk assets. Changes in non-farm payrolls averaged 172,000 for reports released during the period. After sliding from 1.8% to 1.3%, year-over-year core inflation rebounded to 1.5% by period end. The Federal Reserve (Fed) raised interest rates three times throughout the year and began normalizing its balance sheet late in the period. Investors were reassured that the central bank’s methodical cadence in unwinding accommodative monetary policy would continue under Jerome Powell, the nominee for the next Fed chairman. On a sector basis, within the S&P 500 Index, technology outpaced the broader market. Only energy and telecommunications failed to deliver positive returns.
Investment-grade corporate credit was the strongest-performing asset class in the Bloomberg Barclays U.S. Aggregate Bond Index, while asset-backed securities lagged. Spreads on investment-grade corporate credit reached post crisis tights amid investors’ risk-on mindset. High-yield spreads also tightened. The Treasury curve flattened over the year. Fed-driven volatility pushed shorter-dated yields higher, the 10-year note ended 2017 near where it began, and the yield on the 30-year bond fell amid investors’ reach for yield. The 10-year Treasury note yield closed December at 2.41%, compared with 2.44% one year ago.
PERFORMANCE DISCUSSION
The Portfolio, which seeks to provide more consistent returns over time by allocating across the spectrum of fixed income and equity securities, outperformed the Balanced Index, a blended benchmark of the S&P 500 Index (55%) and the Bloomberg Barclays U.S. Aggregate Bond Index (45%). The Portfolio underperformed its primary benchmark, the S&P 500 Index, and outperformed its secondary benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index.
Compared to the Balanced Index, the Portfolio remains overweight equities, with a 62% allocation to stocks, approximately 37% in fixed income and a small portion in cash. Our year-end allocation reflects our view that on a risk-adjusted basis, equities present more attractive opportunities relative to fixed income. The equity weighting may vary based on market conditions.
The Portfolio’s equity sleeve outperformed its benchmark, the S&P 500 Index. Growth equities performed well during the period, creating a tailwind for our growth tilt. At the sector level, stock selection in industrials and information technology aided relative returns. Our limited exposure to the poor-performing energy and telecommunications sectors also contributed to performance. Stock selection in the health care, consumer discretionary and financials sectors weighed on relative results.
Aerospace company Boeing was the top equity contributor to performance. Boeing benefited from
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continued strength in global air traffic and strong demand for its 737 and 787 planes, as well as from optimism around its newly integrated services business, which combined its defense and commercial servicing facilities. We like Boeing’s ability to generate free cash flow, which management often returns to shareholders. We also appreciate the multiple dividend increases throughout the period.
Microsoft also aided results. Our investment thesis in the technology company continues to play out as momentum in its cloud-based businesses, Azure and Office 365, led to strong earnings results. Microsoft continues to return cash to shareholders by way of dividends and share repurchases, and we believe tax reform will allow them to bring back much of their offshore cash balance. While the stock’s valuation is now toward the higher end of its historic range, we continue to like the company’s position as the second-largest provider of cloud-based IT services, and believe its strategic partnerships with clients provide a competitive advantage relative to peers.
Financial services firm Mastercard was another strong contributor. Our investment theme for Mastercard continues to play out, as the company has benefited from consumers and businesses switching from cash and check to plastic and electronic payments. The company continues to take market share, particularly outside of the U.S. where many markets have a lower penetration of electronic payments and are experiencing significantly faster growth in electronic purchase volume.
While pleased with the performance of our equity sleeve during the period, some holdings disappointed. Global pharmaceutical company Allergan was the largest equity detractor from performance. Patent disputes – which ultimately resulted in the invalidation of Allergan’s patent – concerning Restasis, the firm’s blockbuster medicine for dry eye, weighed on the stock. The arrival of a new competitor to the company’s popular wrinkle treatment Botox created further negative sentiment. Given our concerns around these issues, we are reviewing our position.
Mattel was another detractor. The toy manufacturer faced excess inventory issues which resulted from a slowdown in toy sales during the 2016 holiday season. The company also cut its dividend over the period, which was negatively received by investors. More bad news impacted the stock when Toys “R” Us, a major customer, filed for bankruptcy late in the period.
Kroger, an American grocery retailer, also detracted, primarily due to increased competition within the grocery store industry. Amazon’s acquisition of Whole Foods and the subsequent reduction of in-store prices created noise for all grocers over the period. German grocer Lidl also began expanding into the U.S. despite increased competition, we continue to have a favorable view of the company. The company should benefit from the passage of U.S. tax reform given its high effective tax rate. Kroger also continues to benefit from capital investments made to existing stores as well as its online “Clicklist” ordering platform that should allow it to remain on the leading edge of any potential online grocery transition.
The Portfolio’s fixed income sleeve outperformed its benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index. We spent the year emphasizing corporate issuers in traditionally defensive sectors, issuers with higher-quality business models, consistent free cash flow and management teams committed to sound balance sheets. We have been particularly concerned with the general complacency prevalent across markets, wary that any shift in sentiment would likely come with increased volatility. We are also mindful of how far spreads have tightened amid the extended innings of the credit cycle. While we are more constructive on both the economic outlook and corporate earnings growth in 2018, it is difficult to say how much optimism markets are already pricing in. Further, we anticipate spread tightening will be limited in the months ahead and carry (a measure of excess income) the primary driver of returns. As such, we continue to emphasize managing idiosyncratic risk and maintaining a diversified portfolio. While we anticipate the Fed’s path to both rate and balance sheet normalization to remain gradual, moderately higher yields are likely. In light of our cautious stance on rates, we lowered duration in the fixed income sleeve over the latter half of the period, ending December at 94% of the benchmark.
Our positioning in Treasury securities was the leading contributor to relative outperformance. We remain biased to the 30-year bond to help balance our corporate credit exposure. This positioning aided performance as long-term yields rallied. With yields rising across the front end of the Treasury curve, our significant underweight allocation to Treasuries further supported results.
Our corporate credit allocation was also accretive. As spreads tightened, our overweight allocation to investment-grade corporates contributed positively to relative outperformance. Our emphasis on owning securities in the lowest tier of investment-grade ratings
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Janus Henderson VIT Balanced Portfolio (unaudited)
was particularly beneficial, as “riskier” assets generally performed well during the period. For similar reasons, our out-of-index allocation to high yield was another leading contributor. Our focus on securities that can provide greater spread carry than the index supported results in both investment grade and high yield. However, our limited exposure to the duration of longer-dated corporate credit held back performance, while many benchmark constituents benefited from the decline in long-term rates.
At the credit sector level, banking and brokerage, asset managers and exchanges were among the largest relative contributors. Financials generally performed well throughout the period, benefiting from improved fundamentals, rising interest rates – which help pad net interest income – and the prospect of a more relaxed regulatory environment under the Trump administration. Security selection and our overweight allocations in both sectors aided relative results. At the individual issuer level, Neuberger Berman contributed positively to performance. The asset manager benefited from increased liquidity after the company issued a bond early in 2017. Although we continue to like the company’s conservative management team and its commitment to reducing leverage, our target valuation was realized and we trimmed our position.
Financial services company Raymond James was another leading corporate credit contributor. Raymond James received credit ratings upgrades by both Standard & Poor’s and Moody’s over the period, creating positive investor sentiment. Further, the company continues to demonstrate its ability to attract advisors and assets and to strengthen its business for the long term. We like the stability of the company’s business model and appreciate the management team’s conservative approach to the balance sheet.
Electric utilities led relative sector detractors; our limited exposure to longer-dated securities held back results. We shifted our positioning in independent energy and ended the period with a zero weight allocation, which was a factor in that sector detracting from relative performance. Energy-related issuers generally benefited from climbing oil prices in the latter half of the year.
Broadcom was the leading corporate credit detractor on a relative basis. Our overweight position weighed on results as the semiconductor company made an unexpected bid for Qualcomm late in the period. Spreads widened under the assumption that much of the acquisition would be financed with debt. We believe the diversification will ultimately be positive for Broadcom. We also appreciate management’s commitment to investment-grade ratings and the company’s track record of rapid deleveraging after prior acquisitions.
At the asset class level, our out-of-index allocation to bank loans failed to keep pace with corporate bonds and weighed on relative results. Also detracting was our exposure to U.S. mortgage-backed securities, which lagged the performance of index constituents. Negligible exposure to government-related debt also held back performance. Government-related securities include government agency debt as well as debt issued by state-owned firms, including many emerging market issuers. Emerging markets generally performed well amid investors’ risk-on appetite during the period.
OUTLOOK
We believe equities will continue to present more attractive risk-adjusted opportunities relative to fixed income as we start the new year. Barring a shock to the market, we expect the equity market to continue grinding higher. The predicted gradual pace of monetary normalization by Mr. Powell and the Fed should continue to foster a benign rate environment, which bodes well for stocks. Modest economic growth around the world adds to the favorable environment for equities, and a number of our holdings stand to benefit from tax reform. We remain focused on companies with strong growth prospects and those that are innovating through the use of technology to improve the efficiency and quality of product offerings.
We expect range-bound but moderately higher Treasury yields and a flatter curve, and within the fixed income sleeve, we intend to maintain duration modestly below that of the benchmark. However, we will continue in our tactical approach to yield curve positioning with a focus on capital preservation. While both the economic and corporate earnings outlooks remain constructive and supported by tax reform, we expect a lower return environment for corporate credit in 2018 compared with the previous two calendar years. Spread tightening will be moderate, in our view, and carry will be the primary driver of returns. Given rich valuations and the asymmetric risk profile of credit investing, security avoidance will be critical. As we balance our constructive fundamental outlook with the current valuation environment, we remain opportunistic, seeking to identify and capitalize on spread movements that create the potential for attractive returns. As always, our goal is to participate in spread tightening
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while keeping capital preservation and strong risk-adjusted returns at the forefront.
Thank you for your investment in Janus Henderson VIT Balanced Portfolio.
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Janus Henderson VIT Balanced Portfolio (unaudited)
Portfolio At A Glance
December 31, 2017
5 Top Performers - Holdings |
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Contribution | Contribution | |||||
Boeing Co | 3.48% | Allergan PLC | -0.55% | |||
Microsoft Corp | 2.09% | Mattel Inc | -0.32% | |||
Mastercard Inc | 1.93% | Kroger Co | -0.22% | |||
Adobe Systems Inc | 1.66% | Colony NorthStar Inc | -0.13% | |||
Alphabet Inc - Class C | 1.17% | Outfront Media Inc | -0.03% | |||
5 Top Performers - Sectors* |
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Portfolio | Portfolio Weighting | S&P 500 Index | ||||
Contribution | (Average % of Equity) | Weighting | ||||
Industrials | 4.00% | 13.80% | 10.15% | |||
Energy | 1.88% | 1.08% | 6.26% | |||
Information Technology | 1.13% | 23.10% | 22.79% | |||
Telecom Services | 0.61% | 0.00% | 2.21% | |||
Utilities | 0.33% | 0.00% | 3.17% | |||
5 Bottom Performers - Sectors* |
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Portfolio | Portfolio Weighting | S&P 500 Index | ||||
Contribution | (Average % of Equity) | Weighting | ||||
Health Care | -0.53% | 11.95% | 14.12% | |||
Consumer Discretionary | -0.44% | 17.73% | 12.16% | |||
Financials | -0.39% | 12.16% | 14.47% | |||
Other** | -0.24% | 1.04% | 0.00% | |||
Consumer Staples | 0.06% | 11.48% | 8.85% | |||
Security contribution to performance is measured by using an algorithm that multiplies the daily performance of each security with the previous day’s ending weight in the portfolio and is gross of advisory fees. Fixed income securities and certain equity securities, such as private placements and some share classes of equity securities, are excluded. | ||||||
* | Based on sector classification according to the Global Industry Classification Standard (“GICS”) codes, which are the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. | |||||
** | Not a GICS classified sector. |
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Janus Henderson VIT Balanced Portfolio (unaudited)
Portfolio At A Glance
December 31, 2017
5 Largest Equity Holdings - (% of Net Assets) | |
Microsoft Corp | |
Software | 3.5% |
Mastercard Inc | |
Information Technology Services | 2.7% |
Boeing Co | |
Aerospace & Defense | 2.6% |
Alphabet Inc - Class C | |
Internet Software & Services | 2.3% |
Altria Group Inc | |
Tobacco | 2.1% |
13.2% |
Asset Allocation - (% of Net Assets) | |||||
Common Stocks | 62.0% | ||||
Corporate Bonds | 16.0% | ||||
Mortgage-Backed Securities | 9.1% | ||||
United States Treasury Notes/Bonds | 8.0% | ||||
Investment Companies | 3.0% | ||||
Asset-Backed/Commercial Mortgage-Backed Securities | 2.9% | ||||
Bank Loans and Mezzanine Loans | 1.1% | ||||
Other | (2.1)% | ||||
100.0% |
Top Country Allocations - Long Positions - (% of Investment Securities) | |
As of December 31, 2017 | As of December 31, 2016 |
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Janus Henderson VIT Balanced Portfolio (unaudited)
Performance
See important disclosures on the next page. |
| Expense Ratios - | ||||||||
Average Annual Total Return - for the periods ended December 31, 2017 |
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| per the May 1, 2017 prospectuses | ||||||
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| One | Five | Ten | Since |
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| Total Annual Fund | |
Institutional Shares |
| 18.43% | 10.20% | 7.98% | 9.94% |
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| 0.64% | |
Service Shares |
| 18.13% | 9.92% | 7.71% | 9.77% |
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| 0.89% | |
S&P 500 Index |
| 21.83% | 15.79% | 8.50% | 9.63% |
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Bloomberg Barclays U.S. Aggregate Bond Index |
| 3.54% | 2.10% | 4.01% | 5.22% |
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Balanced Index |
| 13.29% | 9.57% | 6.73% | 7.89% |
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Morningstar Quartile - Institutional Shares |
| 1st | 1st | 1st | 1st |
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Morningstar Ranking - based on total returns for Allocation - 50% to 70% Equity Funds |
| 26/842 | 79/771 | 13/626 | 9/222 |
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Returns quoted are past performance and do not guarantee future results; current performance may be lower or higher. Investment returns and principal value will vary; there may be a gain or loss when shares are sold. For the most recent month-end performance call 800.668.0434 or visit janushenderson.com/VITperformance.
Performance may be affected by risks that include those associated with non-diversification, portfolio turnover, short sales, potential conflicts of interest, foreign and emerging markets, initial public offerings (IPOs), high-yield and high-risk securities, undervalued, overlooked and smaller capitalization companies, real estate related securities including Real Estate Investment Trusts (REITs), derivatives, and commodity-linked investments. Each product has different risks. Please see the prospectus for more information about risks, holdings and other details.
Returns shown do not represent actual returns since they do not include insurance charges. Returns shown would have been lower had they included insurance charges.
Returns include reinvestment of all dividends and distributions and do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or redemptions of Portfolio shares. The returns do not include adjustments in accordance with generally accepted accounting principles required at the period end for financial reporting purposes.
See Financial Highlights for actual expense ratios during the reporting period.
Performance for Service Shares prior to December 31, 1999 reflects the performance of Institutional Shares, adjusted to reflect the expenses of Service Shares.
Ranking is for the share class shown only; other classes may have different performance characteristics.
© 2017 Morningstar, Inc. All Rights Reserved.
There is no assurance that the investment process will consistently lead to successful investing.
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Janus Henderson VIT Balanced Portfolio (unaudited)
Performance
See Notes to Schedule of Investments and Other Information and Other Information for index definitions..
Index performance does not reflect the expenses of managing a portfolio as an index is unmanaged and not available for direct investment.
See “Useful Information About Your Portfolio Report.”
*The Portfolio’s inception date – September 13, 1993
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Janus Henderson VIT Balanced Portfolio (unaudited)
Expense Examples
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees; 12b-1 distribution and shareholder servicing fees (applicable to Service Shares only); transfer agent fees and expenses payable pursuant to the Transfer Agency Agreement; and other Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The example is based upon an investment of $1,000 invested at the beginning of the period and held for the six-months indicated, unless noted otherwise in the table and footnotes below.
Actual Expenses
The information in the table under the heading “Actual” provides information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the appropriate column for your share class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading “Hypothetical (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based upon the Portfolio’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’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 Portfolio and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Additionally, for an analysis of the fees associated with an investment in either share class or other similar funds, please visit www.finra.org/fundanalyzer.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as any charges at the separate account level or contract level. These fees are fully described in the Portfolio’s prospectuses. Therefore, the hypothetical examples are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
Actual | Hypothetical | |||||||||
| Beginning | Ending | Expenses |
| Beginning | Ending | Expenses | Net Annualized | ||
Institutional Shares | $1,000.00 | $1,091.60 | $3.32 |
| $1,000.00 | $1,022.03 | $3.21 | 0.63% | ||
Service Shares | $1,000.00 | $1,090.30 | $4.58 |
| $1,000.00 | $1,020.82 | $4.43 | 0.87% | ||
† | Expenses Paid During Period are equal to the Net Annualized Expense Ratio multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). Expenses in the examples include the effect of applicable fee waivers and/or expense reimbursements, if any. Had such waivers and/or reimbursements not been in effect, your expenses would have been higher. Please refer to the Notes to Financial Statements or the Portfolio’s prospectuses for more information regarding waivers and/or reimbursements. |
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Janus Henderson VIT Balanced Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | ||||||
Asset-Backed/Commercial Mortgage-Backed Securities – 2.9% | |||||||
AmeriCredit Automobile Receivables 2016-1, 3.5900%, 2/8/22 | $1,718,000 | $1,745,603 | |||||
AmeriCredit Automobile Receivables Trust 2015-2, 3.0000%, 6/8/21 | 1,180,000 | 1,191,727 | |||||
AmeriCredit Automobile Receivables Trust 2016-2, 3.6500%, 5/9/22 | 1,165,000 | 1,185,070 | |||||
Applebee's Funding LLC / IHOP Funding LLC, 4.2770%, 9/5/44 (144A) | 6,035,873 | 5,872,146 | |||||
BAMLL Commercial Mortgage Securities Trust 2013-WBRK, | |||||||
3.5343%, 3/10/37 (144A)‡ | 2,000,000 | 2,032,314 | |||||
BAMLL Commercial Mortgage Securities Trust 2014-FL1, | |||||||
ICE LIBOR USD 1 Month + 4.0000%, 5.4770%, 12/15/31 (144A) | 198,000 | 192,712 | |||||
BAMLL Commercial Mortgage Securities Trust 2014-FL1, | |||||||
ICE LIBOR USD 1 Month + 5.5000%, 6.9770%, 12/15/31 (144A) | 824,955 | 784,408 | |||||
BBCMS Trust 2015-SRCH, 4.1970%, 8/10/35 (144A) | 2,486,000 | 2,680,694 | |||||
BXP Trust 2017-GM, 3.3790%, 6/13/39 (144A) | 1,105,000 | 1,128,134 | |||||
Caesars Palace Las Vegas Trust 2017-VICI, 4.1384%, 10/15/34 (144A) | 1,596,000 | 1,639,125 | |||||
Caesars Palace Las Vegas Trust 2017-VICI, 4.3540%, 10/15/34 (144A)‡ | 2,263,000 | 2,197,245 | |||||
Caesars Palace Las Vegas Trust 2017-VICI, 4.3540%, 10/15/34 (144A)‡ | 1,700,000 | 1,734,556 | |||||
CGMS Commercial Mortgage Trust 2017-MDDR, | |||||||
ICE LIBOR USD 1 Month + 1.7500%, 3.2270%, 7/15/30 (144A) | 934,000 | 934,392 | |||||
CGMS Commercial Mortgage Trust 2017-MDDR, | |||||||
ICE LIBOR USD 1 Month + 2.5000%, 3.9770%, 7/15/30 (144A) | 589,000 | 589,242 | |||||
CKE Restaurant Holdings Inc, 4.4740%, 3/20/43 (144A) | 3,013,221 | 3,019,111 | |||||
Coinstar Funding LLC Series 2017-1, 5.2160%, 4/25/47 (144A) | 790,030 | 820,282 | |||||
DB Master Finance LLC, 3.6290%, 11/20/47 (144A) | 901,000 | 906,875 | |||||
DB Master Finance LLC, 4.0300%, 11/20/47 (144A) | 1,063,000 | 1,085,961 | |||||
Domino's Pizza Master Issuer LLC, 3.4840%, 10/25/45 (144A) | 3,085,020 | 3,095,756 | |||||
Domino's Pizza Master Issuer LLC, 3.0820%, 7/25/47 (144A) | 450,870 | 445,919 | |||||
Domino's Pizza Master Issuer LLC, 4.1180%, 7/25/47 (144A) | 2,314,200 | 2,364,372 | |||||
Fannie Mae Connecticut Avenue Securities, | |||||||
ICE LIBOR USD 1 Month + 3.0000%, 4.5521%, 7/25/24 | 2,577,672 | 2,755,287 | |||||
Fannie Mae Connecticut Avenue Securities, | |||||||
ICE LIBOR USD 1 Month + 4.9000%, 6.4521%, 11/25/24 | 1,407,411 | 1,610,302 | |||||
Fannie Mae Connecticut Avenue Securities, | |||||||
ICE LIBOR USD 1 Month + 4.0000%, 5.5521%, 5/25/25 | 524,048 | 569,385 | |||||
Freddie Mac Structured Agency Credit Risk Debt Notes, | |||||||
ICE LIBOR USD 1 Month + 4.5000%, 6.0521%, 2/25/24 | 3,675,000 | 4,292,961 | |||||
Freddie Mac Structured Agency Credit Risk Debt Notes, | |||||||
ICE LIBOR USD 1 Month + 3.6000%, 5.1521%, 4/25/24 | 2,525,620 | 2,817,523 | |||||
FREMF 2010 K-SCT Mortgage Trust, 2.0000%, 1/25/20 (144A)§ | 1,042,523 | 979,433 | |||||
GS Mortgage Securities Corp II, 3.5911%, 9/10/37 (144A)‡ | 1,433,000 | 1,459,325 | |||||
GS Mortgage Securities Trust 2014-GSFL, | |||||||
ICE LIBOR USD 1 Month + 5.9500%, 7.4270%, 7/15/31 (144A) | 992,000 | 994,833 | |||||
GSCCRE Commercial Mortgage Trust 2015-HULA, | |||||||
ICE LIBOR USD 1 Month + 4.4000%, 5.8770%, 8/15/32 (144A) | 1,558,000 | 1,562,890 | |||||
Houston Galleria Mall Trust 2015-HGLR, 3.0866%, 3/5/37 (144A) | 795,000 | 786,970 | |||||
Jimmy Johns Funding LLC, 4.8460%, 7/30/47 (144A) | 1,746,623 | 1,749,679 | |||||
JP Morgan Chase Commercial Mortgage Securities Trust 2010-C2, | |||||||
5.6616%, 11/15/43 (144A)‡ | 933,000 | 935,402 | |||||
JP Morgan Chase Commercial Mortgage Securities Trust 2015-UES, | |||||||
3.6210%, 9/5/32 (144A)‡ | 1,084,000 | 1,081,171 | |||||
JP Morgan Chase Commercial Mortgage Securities Trust 2016-WIKI, | |||||||
3.5537%, 10/5/31 (144A) | 336,000 | 337,900 | |||||
JP Morgan Chase Commercial Mortgage Securities Trust 2016-WIKI, | |||||||
4.0090%, 10/5/31 (144A)‡ | 513,000 | 515,353 | |||||
LB-UBS Commercial Mortgage Trust 2006-C1, 5.2760%, 2/15/41‡ | 2,850 | 2,851 | |||||
LB-UBS Commercial Mortgage Trust 2008-C1, 6.3193%, 4/15/41‡ | 1,162,000 | 1,154,625 | |||||
loanDepot Station Place Agency Securitization Trust 2017-1, | |||||||
ICE LIBOR USD 1 Month + 0.8000%, 2.3521%, 11/25/50 (144A)§ | 3,088,000 | 3,088,000 | |||||
loanDepot Station Place Agency Securitization Trust 2017-1, | |||||||
ICE LIBOR USD 1 Month + 1.0000%, 2.5521%, 11/25/50 (144A)§ | 772,000 | 772,000 | |||||
MAD Mortgage Trust 2017-330M, 3.2944%, 8/15/34 (144A)‡ | 839,000 | 843,973 | |||||
MSSG Trust 2017-237P, 3.3970%, 9/13/39 (144A) | 1,870,000 | 1,893,297 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
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Janus Henderson VIT Balanced Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | ||||||
Asset-Backed/Commercial Mortgage-Backed Securities – (continued) | |||||||
MSSG Trust 2017-237P, 3.6900%, 9/13/39 (144A) | $327,000 | $330,643 | |||||
OSCAR US Funding Trust V, 2.7300%, 12/15/20 (144A) | 570,000 | 568,944 | |||||
OSCAR US Funding Trust V, 2.9900%, 12/15/23 (144A) | 806,000 | 802,661 | |||||
Santander Drive Auto Receivables Trust 2013-4, 4.6700%, 1/15/20 (144A) | 2,189,000 | 2,193,671 | |||||
Santander Drive Auto Receivables Trust 2013-A, 4.7100%, 1/15/21 (144A) | 1,166,000 | 1,173,910 | |||||
Santander Drive Auto Receivables Trust 2015-1, 3.2400%, 4/15/21 | 1,237,000 | 1,249,912 | |||||
Santander Drive Auto Receivables Trust 2015-4, 3.5300%, 8/16/21 | 2,120,000 | 2,156,500 | |||||
Shops at Crystals Trust 2016-CSTL, 3.1255%, 7/5/36 (144A) | 1,424,000 | 1,398,979 | |||||
Starwood Retail Property Trust 2014-STAR, | |||||||
ICE LIBOR USD 1 Month + 2.5000%, 3.9770%, 11/15/27 (144A) | 654,000 | 633,513 | |||||
Starwood Retail Property Trust 2014-STAR, | |||||||
ICE LIBOR USD 1 Month + 3.2500%, 4.7270%, 11/15/27 (144A) | 1,997,000 | 1,889,638 | |||||
Starwood Retail Property Trust 2014-STAR, | |||||||
ICE LIBOR USD 1 Month + 4.1500%, 5.6270%, 11/15/27 (144A) | 1,059,000 | 976,187 | |||||
Station Place Securitization Trust 2017-3, | |||||||
ICE LIBOR USD 1 Month + 1.0000%, 2.2942%, 7/24/18 (144A)§ | 3,142,000 | 3,142,521 | |||||
Taco Bell Funding LLC, 3.8320%, 5/25/46 (144A) | 2,263,350 | 2,294,064 | |||||
Wachovia Bank Commercial Mortgage Trust Series 2007-C30, 5.4130%, 12/15/43‡ | 1,239,935 | 1,264,784 | |||||
Wachovia Bank Commercial Mortgage Trust Series 2007-C31, 5.6600%, 4/15/47‡ | 1,635,799 | 1,660,810 | |||||
Wachovia Bank Commercial Mortgage Trust Series 2007-C34, 6.0841%, 5/15/46‡ | 650,736 | 667,286 | |||||
Wendys Funding LLC 2015-1, 3.3710%, 6/15/45 (144A) | 3,705,703 | 3,715,634 | |||||
Wendys Funding LLC 2018-1, 3.5730%, 3/15/48 (144A) | 892,000 | 891,722 | |||||
Wendys Funding LLC 2018-1, 3.8840%, 3/15/48 (144A) | 1,267,000 | 1,267,891 | |||||
Worldwide Plaza Trust 2017-WWP, 3.5263%, 11/10/36 (144A) | 1,332,000 | 1,367,579 | |||||
Total Asset-Backed/Commercial Mortgage-Backed Securities (cost $95,664,237) | 95,495,653 | ||||||
Bank Loans and Mezzanine Loans – 1.1% | |||||||
Banking – 0% | |||||||
Vantiv LLC, ICE LIBOR USD + 2.0000%, 0%, 3/31/25 | 141,000 | 141,588 | |||||
Basic Industry – 0.2% | |||||||
Axalta Coating Systems US Holdings Inc, | |||||||
ICE LIBOR USD + 2.0000%, 3.6934%, 6/1/24 | 5,228,300 | 5,244,874 | |||||
Capital Goods – 0.1% | |||||||
Reynolds Group Holdings Inc, ICE LIBOR USD + 2.7500%, 4.0998%, 2/5/23 | 3,827,008 | 3,842,890 | |||||
Communications – 0.3% | |||||||
Mission Broadcasting Inc, ICE LIBOR USD + 2.5000%, 3.8607%, 1/17/24 | 224,553 | 225,033 | |||||
Nexstar Broadcasting Inc, ICE LIBOR USD + 2.5000%, 3.8607%, 1/17/24 | 1,778,282 | 1,782,088 | |||||
Nielsen Finance LLC, ICE LIBOR USD + 2.0000%, 3.4319%, 10/4/23 | 2,204,483 | 2,212,749 | |||||
Sinclair Television Group Inc, ICE LIBOR USD + 2.5000%, 0%, 12/12/24(a) | 2,660,000 | 2,655,026 | |||||
Zayo Group LLC, ICE LIBOR USD + 2.0000%, 3.5521%, 1/19/21 | 205,448 | 205,887 | |||||
Zayo Group LLC, ICE LIBOR USD + 2.2500%, 3.8021%, 1/19/24 | 1,881,066 | 1,886,804 | |||||
8,967,587 | |||||||
Consumer Cyclical – 0.4% | |||||||
Aramark Services Inc, ICE LIBOR USD + 2.0000%, 3.5690%, 3/28/24 | 2,148,180 | 2,159,587 | |||||
Golden Nugget Inc/NV, ICE LIBOR USD + 3.2500%, 4.7699%, 10/4/23 | 2,441,049 | 2,457,843 | |||||
Hilton Worldwide Finance LLC, ICE LIBOR USD + 2.0000%, 3.5521%, 10/25/23 | 5,398,590 | 5,423,531 | |||||
KFC Holding Co, ICE LIBOR USD + 2.0000%, 3.4908%, 6/16/23 | 5,023,321 | 5,049,493 | |||||
15,090,454 | |||||||
Consumer Non-Cyclical – 0% | |||||||
Post Holdings Inc, ICE LIBOR USD + 2.2500%, 3.8200%, 5/24/24 | 600,980 | 602,807 | |||||
Quintiles IMS Inc, ICE LIBOR USD + 2.0000%, 3.6934%, 3/7/24 | 927,738 | 931,050 | |||||
1,533,857 | |||||||
Technology – 0.1% | |||||||
CommScope Inc, ICE LIBOR USD + 2.5000%, 3.3833%, 12/29/22 | 2,501,567 | 2,513,025 | |||||
Total Bank Loans and Mezzanine Loans (cost $37,344,508) | 37,334,275 | ||||||
Corporate Bonds – 16.0% | |||||||
Asset-Backed Securities – 0.1% | |||||||
American Tower Trust #1, 1.5510%, 3/15/18 (144A) | 2,658,000 | 2,654,395 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Aspen Series | 11 |
Janus Henderson VIT Balanced Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | |||||||
Corporate Bonds – (continued) | ||||||||
Banking – 3.1% | ||||||||
Ally Financial Inc, 3.2500%, 11/5/18 | $1,453,000 | $1,456,632 | ||||||
Ally Financial Inc, 8.0000%, 12/31/18 | 844,000 | 884,090 | ||||||
Bank of America Corp, 2.5030%, 10/21/22† | 6,364,000 | 6,295,430 | ||||||
Bank of America Corp, ICE LIBOR USD 3 Month + 1.0900%, 3.0930%, 10/1/25 | 1,560,000 | 1,556,063 | ||||||
Bank of America Corp, 4.1830%, 11/25/27 | 3,075,000 | 3,210,243 | ||||||
Bank of America Corp, ICE LIBOR USD 3 Month + 1.8140%, 4.2440%, 4/24/38 | 3,096,000 | 3,355,204 | ||||||
Bank of New York Mellon Corp, 2.4500%, 8/17/26 | 505,000 | 479,481 | ||||||
Bank of New York Mellon Corp, 3.2500%, 5/16/27 | 4,014,000 | 4,056,014 | ||||||
Capital One Financial Corp, 3.3000%, 10/30/24 | 4,550,000 | 4,532,488 | ||||||
Citigroup Inc, ICE LIBOR USD 3 Month + 1.4300%, 2.9106%, 9/1/23 | 3,119,000 | 3,210,458 | ||||||
Citigroup Inc, 3.2000%, 10/21/26 | 1,916,000 | 1,900,498 | ||||||
Citigroup Inc, ICE LIBOR USD 3 Month + 1.5630%, 3.8870%, 1/10/28 | 5,465,000 | 5,655,143 | ||||||
Citizens Bank NA/Providence RI, 2.6500%, 5/26/22 | 1,287,000 | 1,275,069 | ||||||
Citizens Financial Group Inc, 3.7500%, 7/1/24 | 785,000 | 784,327 | ||||||
Citizens Financial Group Inc, 4.3500%, 8/1/25 | 613,000 | 637,460 | ||||||
Citizens Financial Group Inc, 4.3000%, 12/3/25 | 3,426,000 | 3,592,595 | ||||||
Discover Financial Services, 3.9500%, 11/6/24 | 1,494,000 | 1,525,776 | ||||||
Discover Financial Services, 3.7500%, 3/4/25 | 766,000 | 770,885 | ||||||
First Republic Bank/CA, 4.6250%, 2/13/47 | 1,158,000 | 1,237,324 | ||||||
Goldman Sachs Capital I, 6.3450%, 2/15/34 | 3,843,000 | 4,833,830 | ||||||
Goldman Sachs Group Inc, ICE LIBOR USD 3 Month + 1.2010%, 3.2720%, 9/29/25 | 4,031,000 | 4,013,838 | ||||||
Goldman Sachs Group Inc, 3.7500%, 2/25/26 | 1,236,000 | 1,267,930 | ||||||
Goldman Sachs Group Inc, 3.5000%, 11/16/26 | 5,508,000 | 5,538,850 | ||||||
JPMorgan Chase & Co, 2.2950%, 8/15/21 | 3,316,000 | 3,285,957 | ||||||
JPMorgan Chase & Co, 3.3750%, 5/1/23 | 4,252,000 | 4,321,354 | ||||||
JPMorgan Chase & Co, 3.8750%, 9/10/24 | 986,000 | 1,028,297 | ||||||
JPMorgan Chase & Co, ICE LIBOR USD 3 Month + 1.3370%, 3.7820%, 2/1/28 | 4,366,000 | 4,522,993 | ||||||
Morgan Stanley, ICE LIBOR USD 3 Month + 1.3400%, 3.5910%, 7/22/28 | 5,758,000 | 5,809,278 | ||||||
Santander UK PLC, 5.0000%, 11/7/23 (144A) | 3,833,000 | 4,095,787 | ||||||
SVB Financial Group, 5.3750%, 9/15/20 | 2,429,000 | 2,595,873 | ||||||
Synchrony Financial, 4.5000%, 7/23/25 | 3,093,000 | 3,231,459 | ||||||
Synchrony Financial, 3.7000%, 8/4/26 | 3,473,000 | 3,423,187 | ||||||
Wells Fargo & Co, 3.0000%, 4/22/26 | 1,013,000 | 993,587 | ||||||
Wells Fargo & Co, 4.1000%, 6/3/26 | 3,276,000 | 3,434,386 | ||||||
Wells Fargo & Co, 4.3000%, 7/22/27 | 2,869,000 | 3,054,043 | ||||||
101,865,829 | ||||||||
Basic Industry – 0.8% | ||||||||
CF Industries Inc, 4.5000%, 12/1/26 (144A) | 2,557,000 | 2,664,730 | ||||||
Freeport-McMoRan Inc, 3.1000%, 3/15/20 | 885,000 | 879,469 | ||||||
Georgia-Pacific LLC, 3.1630%, 11/15/21 (144A) | 4,027,000 | 4,098,387 | ||||||
Georgia-Pacific LLC, 3.6000%, 3/1/25 (144A) | 2,166,000 | 2,225,550 | ||||||
Reliance Steel & Aluminum Co, 4.5000%, 4/15/23 | 2,039,000 | 2,148,999 | ||||||
Sherwin-Williams Co, 2.7500%, 6/1/22 | 912,000 | 908,345 | ||||||
Sherwin-Williams Co, 3.1250%, 6/1/24 | 1,057,000 | 1,062,598 | ||||||
Sherwin-Williams Co, 3.4500%, 6/1/27 | 2,960,000 | 3,006,483 | ||||||
Sherwin-Williams Co, 4.5000%, 6/1/47 | 767,000 | 837,817 | ||||||
Steel Dynamics Inc, 4.1250%, 9/15/25 (144A) | 2,199,000 | 2,215,492 | ||||||
Steel Dynamics Inc, 5.0000%, 12/15/26 | 1,027,000 | 1,086,052 | ||||||
Teck Resources Ltd, 4.5000%, 1/15/21 | 919,000 | 947,673 | ||||||
Teck Resources Ltd, 4.7500%, 1/15/22 | 1,328,000 | 1,386,166 | ||||||
Teck Resources Ltd, 8.5000%, 6/1/24 (144A) | 2,184,000 | 2,467,920 | ||||||
25,935,681 | ||||||||
Brokerage – 0.7% | ||||||||
Cboe Global Markets Inc, 3.6500%, 1/12/27 | 3,023,000 | 3,112,753 | ||||||
Charles Schwab Corp, 3.0000%, 3/10/25 | 930,000 | 926,699 | ||||||
Charles Schwab Corp, 3.2000%, 1/25/28 | 1,880,000 | 1,882,373 | ||||||
E*TRADE Financial Corp, 2.9500%, 8/24/22 | 3,047,000 | 3,020,880 | ||||||
E*TRADE Financial Corp, 3.8000%, 8/24/27 | 2,680,000 | 2,670,487 | ||||||
Lazard Group LLC, 4.2500%, 11/14/20 | 1,625,000 | 1,692,443 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
12 | DECEMBER 31, 2017 |
Janus Henderson VIT Balanced Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | |||||||
Corporate Bonds – (continued) | ||||||||
Brokerage – (continued) | ||||||||
Neuberger Berman Group LLC / Neuberger Berman Finance Corp, | ||||||||
4.8750%, 4/15/45 (144A) | $562,000 | $572,605 | ||||||
Raymond James Financial Inc, 5.6250%, 4/1/24 | 1,545,000 | 1,751,255 | ||||||
Raymond James Financial Inc, 3.6250%, 9/15/26 | 1,409,000 | 1,415,225 | ||||||
Raymond James Financial Inc, 4.9500%, 7/15/46 | 2,747,000 | 3,102,865 | ||||||
TD Ameritrade Holding Corp, 2.9500%, 4/1/22 | 1,355,000 | 1,371,067 | ||||||
TD Ameritrade Holding Corp, 3.6250%, 4/1/25 | 1,752,000 | 1,813,338 | ||||||
23,331,990 | ||||||||
Capital Goods – 0.8% | ||||||||
Ball Corp, 4.3750%, 12/15/20 | 1,565,000 | 1,619,775 | ||||||
CNH Industrial Capital LLC, 3.6250%, 4/15/18 | 2,969,000 | 2,984,379 | ||||||
Huntington Ingalls Industries Inc, 5.0000%, 11/15/25 (144A) | 698,000 | 746,860 | ||||||
Martin Marietta Materials Inc, 4.2500%, 7/2/24 | 1,531,000 | 1,610,086 | ||||||
Northrop Grumman Corp, 2.5500%, 10/15/22 | 3,184,000 | 3,160,880 | ||||||
Northrop Grumman Corp, 2.9300%, 1/15/25 | 2,741,000 | 2,724,058 | ||||||
Northrop Grumman Corp, 3.2500%, 1/15/28 | 3,368,000 | 3,371,865 | ||||||
Northrop Grumman Corp, 4.0300%, 10/15/47 | 2,154,000 | 2,248,975 | ||||||
Owens Corning, 4.2000%, 12/1/24 | 1,411,000 | 1,477,938 | ||||||
Owens Corning, 3.4000%, 8/15/26 | 678,000 | 665,301 | ||||||
Rockwell Collins Inc, 3.2000%, 3/15/24 | 1,356,000 | 1,366,112 | ||||||
Rockwell Collins Inc, 3.5000%, 3/15/27 | 2,319,000 | 2,360,487 | ||||||
Vulcan Materials Co, 7.5000%, 6/15/21 | 1,083,000 | 1,253,148 | ||||||
Vulcan Materials Co, 4.5000%, 4/1/25 | 2,597,000 | 2,766,765 | ||||||
28,356,629 | ||||||||
Communications – 2.1% | ||||||||
American Tower Corp, 3.3000%, 2/15/21 | 2,413,000 | 2,457,028 | ||||||
American Tower Corp, 3.4500%, 9/15/21 | 249,000 | 254,473 | ||||||
American Tower Corp, 3.5000%, 1/31/23 | 443,000 | 452,904 | ||||||
American Tower Corp, 4.4000%, 2/15/26 | 1,580,000 | 1,661,098 | ||||||
American Tower Corp, 3.3750%, 10/15/26 | 2,919,000 | 2,867,077 | ||||||
AT&T Inc, 3.4000%, 8/14/24 | 2,139,000 | 2,149,510 | ||||||
AT&T Inc, 4.2500%, 3/1/27 | 993,000 | 1,012,006 | ||||||
AT&T Inc, 3.9000%, 8/14/27 | 1,774,000 | 1,785,342 | ||||||
AT&T Inc, 4.1000%, 2/15/28 (144A) | 3,030,000 | 3,039,124 | ||||||
AT&T Inc, 5.2500%, 3/1/37 | 875,000 | 924,801 | ||||||
AT&T Inc, 5.1500%, 2/14/50 | 1,233,000 | 1,239,152 | ||||||
AT&T Inc, 5.3000%, 8/14/58 | 2,790,000 | 2,796,570 | ||||||
CCO Holdings LLC / CCO Holdings Capital Corp, 5.2500%, 3/15/21 | 2,252,000 | 2,290,002 | ||||||
CCO Holdings LLC / CCO Holdings Capital Corp, 5.1250%, 5/1/27 (144A) | 810,000 | 797,850 | ||||||
CCO Holdings LLC / CCO Holdings Capital Corp, 5.0000%, 2/1/28 (144A) | 3,954,000 | 3,845,265 | ||||||
Charter Communications Operating LLC / Charter Communications Operating Capital, | ||||||||
4.9080%, 7/23/25 | 3,939,000 | 4,186,940 | ||||||
Charter Communications Operating LLC / Charter Communications Operating Capital, | ||||||||
3.7500%, 2/15/28 | 942,000 | 901,666 | ||||||
Charter Communications Operating LLC / Charter Communications Operating Capital, | ||||||||
4.2000%, 3/15/28 | 1,989,000 | 1,968,794 | ||||||
Charter Communications Operating LLC / Charter Communications Operating Capital, | ||||||||
5.3750%, 5/1/47 | 1,026,000 | 1,051,145 | ||||||
Comcast Corp, 2.3500%, 1/15/27 | 1,917,000 | 1,809,873 | ||||||
Comcast Corp, 3.3000%, 2/1/27 | 1,371,000 | 1,398,305 | ||||||
Comcast Corp, 3.4000%, 7/15/46 | 332,000 | 313,812 | ||||||
Cox Communications Inc, 3.1500%, 8/15/24 (144A) | 2,250,000 | 2,215,489 | ||||||
Cox Communications Inc, 3.3500%, 9/15/26 (144A) | 3,038,000 | 2,968,054 | ||||||
Cox Communications Inc, 3.5000%, 8/15/27 (144A) | 2,041,000 | 2,012,544 | ||||||
Crown Castle International Corp, 5.2500%, 1/15/23 | 1,968,000 | 2,154,559 | ||||||
Crown Castle International Corp, 3.2000%, 9/1/24 | 2,028,000 | 2,006,516 | ||||||
Crown Castle International Corp, 3.6500%, 9/1/27 | 3,680,000 | 3,669,899 | ||||||
NBCUniversal Media LLC, 4.4500%, 1/15/43 | 603,000 | 657,437 | ||||||
Time Warner Inc, 3.6000%, 7/15/25 | 1,929,000 | 1,932,863 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Aspen Series | 13 |
Janus Henderson VIT Balanced Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | |||||||
Corporate Bonds – (continued) | ||||||||
Communications – (continued) | ||||||||
UBM PLC, 5.7500%, 11/3/20 (144A) | $3,166,000 | $3,286,917 | ||||||
Verizon Communications Inc, 2.6250%, 8/15/26 | 6,068,000 | 5,713,784 | ||||||
Verizon Communications Inc, 4.1250%, 3/16/27 | 1,618,000 | 1,686,635 | ||||||
Verizon Communications Inc, 4.1250%, 8/15/46 | 2,241,000 | 2,068,380 | ||||||
Verizon Communications Inc, 4.8620%, 8/21/46 | 1,206,000 | 1,255,104 | ||||||
70,830,918 | ||||||||
Consumer Cyclical – 1.6% | ||||||||
1011778 BC ULC / New Red Finance Inc, 4.6250%, 1/15/22 (144A) | 3,214,000 | 3,290,332 | ||||||
1011778 BC ULC / New Red Finance Inc, 4.2500%, 5/15/24 (144A) | 2,992,000 | 2,984,520 | ||||||
Amazon.com Inc, 2.8000%, 8/22/24 (144A) | 1,501,000 | 1,496,094 | ||||||
Amazon.com Inc, 3.1500%, 8/22/27 (144A) | 4,781,000 | 4,786,784 | ||||||
Amazon.com Inc, 4.0500%, 8/22/47 (144A) | 1,780,000 | 1,916,468 | ||||||
CVS Health Corp, 2.8000%, 7/20/20 | 2,660,000 | 2,670,909 | ||||||
CVS Health Corp, 4.7500%, 12/1/22 | 1,198,000 | 1,283,048 | ||||||
DR Horton Inc, 3.7500%, 3/1/19 | 1,856,000 | 1,880,833 | ||||||
General Motors Co, 4.8750%, 10/2/23 | 2,289,000 | 2,476,713 | ||||||
General Motors Financial Co Inc, 3.9500%, 4/13/24† | 6,217,000 | 6,399,017 | ||||||
IHO Verwaltungs GmbH, 4.1250%, 9/15/21 (144A) | 515,000 | 524,012 | ||||||
IHO Verwaltungs GmbH, 4.5000%, 9/15/23 (144A) | 376,000 | 383,287 | ||||||
IHS Markit Ltd, 5.0000%, 11/1/22 (144A) | 1,496,000 | 1,621,963 | ||||||
IHS Markit Ltd, 4.7500%, 2/15/25 (144A) | 1,997,000 | 2,106,835 | ||||||
IHS Markit Ltd, 4.0000%, 3/1/26 (144A) | 3,421,000 | 3,416,724 | ||||||
McDonald's Corp, 3.5000%, 3/1/27 | 5,025,000 | 5,166,387 | ||||||
McDonald's Corp, 4.8750%, 12/9/45 | 1,719,000 | 1,989,603 | ||||||
MDC Holdings Inc, 5.5000%, 1/15/24 | 2,138,000 | 2,255,590 | ||||||
MGM Growth Properties Operating Partnership LP / MGP Finance Co-Issuer Inc, | ||||||||
5.6250%, 5/1/24 | 1,246,000 | 1,326,990 | ||||||
Tapestry Inc, 3.0000%, 7/15/22 | 986,000 | 982,390 | ||||||
Tapestry Inc, 4.1250%, 7/15/27 | 986,000 | 993,219 | ||||||
Toll Brothers Finance Corp, 4.0000%, 12/31/18 | 837,000 | 850,601 | ||||||
Toll Brothers Finance Corp, 5.8750%, 2/15/22 | 764,000 | 832,760 | ||||||
Toll Brothers Finance Corp, 4.3750%, 4/15/23 | 404,000 | 419,150 | ||||||
52,054,229 | ||||||||
Consumer Non-Cyclical – 1.8% | ||||||||
Abbott Laboratories, 3.8750%, 9/15/25 | 474,000 | 490,153 | ||||||
Abbott Laboratories, 3.7500%, 11/30/26 | 766,000 | 786,366 | ||||||
Anheuser-Busch InBev Finance Inc, 2.6500%, 2/1/21 | 831,000 | 835,097 | ||||||
Anheuser-Busch InBev Finance Inc, 3.3000%, 2/1/23 | 3,808,000 | 3,896,162 | ||||||
Becton Dickinson and Co, 2.8940%, 6/6/22 | 1,516,000 | 1,506,327 | ||||||
Becton Dickinson and Co, 3.3630%, 6/6/24 | 3,373,000 | 3,381,700 | ||||||
Becton Dickinson and Co, 3.7000%, 6/6/27 | 2,393,000 | 2,410,765 | ||||||
Celgene Corp, 2.7500%, 2/15/23 | 1,848,000 | 1,832,480 | ||||||
Constellation Brands Inc, 4.7500%, 12/1/25 | 333,000 | 365,762 | ||||||
Constellation Brands, Inc., 4.2500%, 5/1/23 | 2,885,000 | 3,051,481 | ||||||
Danone SA, 2.0770%, 11/2/21 (144A) | 2,758,000 | 2,697,576 | ||||||
Danone SA, 2.5890%, 11/2/23 (144A) | 1,891,000 | 1,843,813 | ||||||
Express Scripts Holding Co, 3.5000%, 6/15/24 | 1,165,000 | 1,175,065 | ||||||
Express Scripts Holding Co, 3.4000%, 3/1/27 | 1,333,000 | 1,307,716 | ||||||
HCA Inc, 3.7500%, 3/15/19 | 1,542,000 | 1,555,492 | ||||||
HCA Inc, 5.0000%, 3/15/24 | 1,908,000 | 1,984,320 | ||||||
HCA Inc, 5.2500%, 6/15/26 | 1,708,000 | 1,810,480 | ||||||
HCA Inc, 4.5000%, 2/15/27 | 2,001,000 | 2,011,005 | ||||||
LifePoint Health Inc, 5.5000%, 12/1/21 | 200,000 | 204,000 | ||||||
McCormick & Co Inc/MD, 3.1500%, 8/15/24 | 2,729,000 | 2,742,852 | ||||||
McCormick & Co Inc/MD, 3.4000%, 8/15/27 | 2,080,000 | 2,106,621 | ||||||
Molson Coors Brewing Co, 3.0000%, 7/15/26 | 3,899,000 | 3,815,217 | ||||||
Post Holdings Inc, 5.7500%, 3/1/27 (144A) | 1,238,000 | 1,259,665 | ||||||
Post Holdings Inc, 5.6250%, 1/15/28 (144A) | 658,000 | 660,467 | ||||||
Reckitt Benckiser Treasury Services PLC, 2.7500%, 6/26/24 (144A) | 1,891,000 | 1,849,605 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
14 | DECEMBER 31, 2017 |
Janus Henderson VIT Balanced Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | ||||||
Corporate Bonds – (continued) | |||||||
Consumer Non-Cyclical – (continued) | |||||||
Shire Acquisitions Investments Ireland DAC, 2.4000%, 9/23/21 | $1,837,000 | $1,807,892 | |||||
Shire Acquisitions Investments Ireland DAC, 3.2000%, 9/23/26 | 2,493,000 | 2,436,862 | |||||
Sysco Corp, 2.5000%, 7/15/21 | 630,000 | 628,232 | |||||
Sysco Corp, 3.3000%, 7/15/26 | 1,390,000 | 1,398,348 | |||||
Sysco Corp, 3.2500%, 7/15/27 | 1,121,000 | 1,116,893 | |||||
Universal Health Services Inc, 4.7500%, 8/1/22 (144A) | 1,894,000 | 1,929,512 | |||||
Wm Wrigley Jr Co, 2.4000%, 10/21/18 (144A) | 3,916,000 | 3,926,943 | |||||
58,824,869 | |||||||
Electric – 0.7% | |||||||
Dominion Energy Inc, 2.0000%, 8/15/21 | 366,000 | 357,616 | |||||
Dominion Energy Inc, 2.8500%, 8/15/26 | 506,000 | 488,529 | |||||
Duke Energy Corp, 1.8000%, 9/1/21 | 915,000 | 889,882 | |||||
Duke Energy Corp, 2.4000%, 8/15/22 | 1,332,000 | 1,308,507 | |||||
Duke Energy Corp, 2.6500%, 9/1/26 | 2,633,000 | 2,522,145 | |||||
Duke Energy Corp, 3.1500%, 8/15/27 | 2,042,000 | 2,026,624 | |||||
NextEra Energy Operating Partners LP, 4.2500%, 9/15/24 (144A) | 405,000 | 412,087 | |||||
NextEra Energy Operating Partners LP, 4.5000%, 9/15/27 (144A) | 850,000 | 845,750 | |||||
PPL Capital Funding Inc, 3.1000%, 5/15/26 | 3,249,000 | 3,179,059 | |||||
PPL WEM Ltd / Western Power Distribution Ltd, 5.3750%, 5/1/21 (144A) | 2,176,000 | 2,331,878 | |||||
Southern Co, 2.3500%, 7/1/21 | 2,835,000 | 2,817,892 | |||||
Southern Co, 2.9500%, 7/1/23 | 1,784,000 | 1,784,599 | |||||
Southern Co, 3.2500%, 7/1/26 | 2,850,000 | 2,794,305 | |||||
21,758,873 | |||||||
Energy – 1.0% | |||||||
Andeavor Logistics LP / Tesoro Logistics Finance Corp, 5.2500%, 1/15/25 | 811,000 | 852,929 | |||||
Columbia Pipeline Group Inc, 4.5000%, 6/1/25 | 998,000 | 1,062,372 | |||||
Enbridge Energy Partners LP, 5.8750%, 10/15/25 | 1,467,000 | 1,661,183 | |||||
Energy Transfer Equity LP, 4.2500%, 3/15/23 | 1,711,000 | 1,698,167 | |||||
Energy Transfer Equity LP, 5.8750%, 1/15/24 | 1,604,000 | 1,688,210 | |||||
Energy Transfer LP, 4.1500%, 10/1/20 | 1,412,000 | 1,458,000 | |||||
Kinder Morgan Energy Partners LP, 5.0000%, 10/1/21 | 1,294,000 | 1,379,081 | |||||
Kinder Morgan Energy Partners LP, 3.9500%, 9/1/22 | 1,383,000 | 1,427,113 | |||||
Kinder Morgan Inc/DE, 6.5000%, 9/15/20 | 134,000 | 146,511 | |||||
Motiva Enterprises LLC, 5.7500%, 1/15/20 (144A) | 1,765,000 | 1,863,936 | |||||
NGPL PipeCo LLC, 4.3750%, 8/15/22 (144A) | 388,000 | 394,547 | |||||
NGPL PipeCo LLC, 4.8750%, 8/15/27 (144A) | 996,000 | 1,033,350 | |||||
NuStar Logistics LP, 5.6250%, 4/28/27 | 2,174,000 | 2,212,045 | |||||
Oceaneering International Inc, 4.6500%, 11/15/24 | 1,240,000 | 1,206,163 | |||||
Phillips 66 Partners LP, 3.6050%, 2/15/25 | 1,548,000 | 1,559,265 | |||||
Phillips 66 Partners LP, 3.7500%, 3/1/28 | 619,000 | 619,092 | |||||
Phillips 66 Partners LP, 4.6800%, 2/15/45 | 551,000 | 565,468 | |||||
Plains All American Pipeline LP / PAA Finance Corp, 4.6500%, 10/15/25 | 741,000 | 763,417 | |||||
Plains All American Pipeline LP / PAA Finance Corp, 4.5000%, 12/15/26 | 718,000 | 727,645 | |||||
Regency Energy Partners LP / Regency Energy Finance Corp, 5.8750%, 3/1/22 | 1,788,000 | 1,954,531 | |||||
Sabine Pass Liquefaction LLC, 5.0000%, 3/15/27 | 2,769,000 | 2,970,574 | |||||
TC PipeLines LP, 3.9000%, 5/25/27 | 2,107,000 | 2,116,932 | |||||
Williams Cos Inc, 3.7000%, 1/15/23 | 894,000 | 889,530 | |||||
Williams Partners LP, 3.7500%, 6/15/27 | 3,544,000 | 3,550,358 | |||||
Williams Partners LP / ACMP Finance Corp, 4.8750%, 3/15/24 | 1,098,000 | 1,147,410 | |||||
34,947,829 | |||||||
Finance Companies – 0.1% | |||||||
Quicken Loans Inc, 5.2500%, 1/15/28 (144A) | 3,209,000 | 3,167,925 | |||||
Financial Institutions – 0.4% | |||||||
Jones Lang LaSalle Inc, 4.4000%, 11/15/22 | 2,686,000 | 2,829,508 | |||||
Kennedy-Wilson Inc, 5.8750%, 4/1/24 | 5,195,000 | 5,363,837 | |||||
LeasePlan Corp NV, 2.5000%, 5/16/18 (144A) | 4,744,000 | 4,744,543 | |||||
12,937,888 | |||||||
Industrial – 0% | |||||||
Cintas Corp No 2, 4.3000%, 6/1/21 | 1,143,000 | 1,205,019 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Aspen Series | 15 |
Janus Henderson VIT Balanced Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | ||||||
Corporate Bonds – (continued) | |||||||
Insurance – 0.4% | |||||||
Aetna Inc, 2.8000%, 6/15/23 | $1,264,000 | $1,243,814 | |||||
Centene Corp, 4.7500%, 5/15/22 | 183,000 | 189,863 | |||||
Centene Corp, 6.1250%, 2/15/24 | 559,000 | 591,142 | |||||
Centene Corp, 4.7500%, 1/15/25 | 794,000 | 807,895 | |||||
UnitedHealth Group Inc, 2.3750%, 10/15/22 | 1,138,000 | 1,126,841 | |||||
UnitedHealth Group Inc, 3.7500%, 7/15/25 | 2,171,000 | 2,287,735 | |||||
UnitedHealth Group Inc, 3.1000%, 3/15/26 | 1,134,000 | 1,142,078 | |||||
UnitedHealth Group Inc, 3.4500%, 1/15/27 | 833,000 | 861,463 | |||||
UnitedHealth Group Inc, 3.3750%, 4/15/27 | 612,000 | 628,707 | |||||
UnitedHealth Group Inc, 2.9500%, 10/15/27 | 2,202,000 | 2,194,895 | |||||
WellCare Health Plans Inc, 5.2500%, 4/1/25 | 2,183,000 | 2,303,065 | |||||
13,377,498 | |||||||
Real Estate Investment Trusts (REITs) – 0.5% | |||||||
Alexandria Real Estate Equities Inc, 2.7500%, 1/15/20 | 1,328,000 | 1,333,526 | |||||
Alexandria Real Estate Equities Inc, 4.6000%, 4/1/22 | 3,339,000 | 3,545,221 | |||||
Alexandria Real Estate Equities Inc, 4.5000%, 7/30/29 | 1,809,000 | 1,916,983 | |||||
Digital Realty Trust LP, 3.7000%, 8/15/27 | 1,193,000 | 1,201,327 | |||||
Senior Housing Properties Trust, 6.7500%, 4/15/20 | 756,000 | 802,890 | |||||
Senior Housing Properties Trust, 6.7500%, 12/15/21 | 840,000 | 929,431 | |||||
SL Green Realty Corp, 5.0000%, 8/15/18 | 1,894,000 | 1,917,199 | |||||
SL Green Realty Corp, 7.7500%, 3/15/20 | 3,720,000 | 4,092,870 | |||||
15,739,447 | |||||||
Technology – 1.8% | |||||||
Broadcom Corp / Broadcom Cayman Finance Ltd, 3.6250%, 1/15/24 (144A) | 2,112,000 | 2,099,710 | |||||
Broadcom Corp / Broadcom Cayman Finance Ltd, 3.8750%, 1/15/27 (144A)† | 8,579,000 | 8,439,789 | |||||
Cadence Design Systems Inc, 4.3750%, 10/15/24 | 4,174,000 | 4,427,365 | |||||
Equifax Inc, 2.3000%, 6/1/21 | 727,000 | 709,557 | |||||
Equifax Inc, 3.3000%, 12/15/22 | 2,536,000 | 2,519,189 | |||||
First Data Corp, 7.0000%, 12/1/23 (144A) | 2,991,000 | 3,162,982 | |||||
Iron Mountain Inc, 4.8750%, 9/15/27 (144A) | 3,574,000 | 3,574,000 | |||||
Iron Mountain Inc, 5.2500%, 3/15/28 (144A) | 2,885,000 | 2,870,575 | |||||
NXP BV / NXP Funding LLC, 4.1250%, 6/15/20 (144A) | 902,000 | 923,675 | |||||
NXP BV / NXP Funding LLC, 4.1250%, 6/1/21 (144A) | 687,000 | 700,740 | |||||
NXP BV / NXP Funding LLC, 3.8750%, 9/1/22 (144A) | 2,613,000 | 2,642,396 | |||||
NXP BV / NXP Funding LLC, 4.6250%, 6/1/23 (144A) | 1,500,000 | 1,569,000 | |||||
Total System Services Inc, 3.8000%, 4/1/21 | 1,610,000 | 1,650,045 | |||||
Total System Services Inc, 4.8000%, 4/1/26 | 2,865,000 | 3,098,865 | |||||
Trimble Inc, 4.7500%, 12/1/24† | 5,305,000 | 5,724,098 | |||||
TSMC Global Ltd, 1.6250%, 4/3/18 (144A) | 6,525,000 | 6,513,392 | |||||
Verisk Analytics Inc, 4.8750%, 1/15/19 | 1,750,000 | 1,791,869 | |||||
Verisk Analytics Inc, 5.8000%, 5/1/21 | 2,601,000 | 2,829,940 | |||||
Verisk Analytics Inc, 4.1250%, 9/12/22 | 1,574,000 | 1,643,020 | |||||
Verisk Analytics Inc, 5.5000%, 6/15/45 | 1,854,000 | 2,158,292 | |||||
VMware Inc, 3.9000%, 8/21/27 | 1,175,000 | 1,185,801 | |||||
60,234,300 | |||||||
Transportation – 0.1% | |||||||
Penske Truck Leasing Co Lp / PTL Finance Corp, 3.3750%, 3/15/18 (144A) | 2,579,000 | 2,586,656 | |||||
Total Corporate Bonds (cost $523,741,092) | 529,809,975 | ||||||
Mortgage-Backed Securities – 9.1% | |||||||
Fannie Mae Pool: | |||||||
6.0000%, 10/1/35 | 607,044 | 688,050 | |||||
6.0000%, 12/1/35 | 710,144 | 806,518 | |||||
6.0000%, 2/1/37 | 122,624 | 141,002 | |||||
6.0000%, 10/1/38 | 448,240 | 505,345 | |||||
5.5000%, 12/1/39 | 974,790 | 1,075,109 | |||||
5.5000%, 3/1/40 | 853,420 | 953,810 | |||||
5.5000%, 4/1/40 | 1,871,034 | 2,058,482 | |||||
5.5000%, 2/1/41 | 497,824 | 556,417 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
16 | DECEMBER 31, 2017 |
Janus Henderson VIT Balanced Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | ||||||
Mortgage-Backed Securities – (continued) | |||||||
Fannie Mae Pool – (continued) | |||||||
5.0000%, 5/1/41 | $1,006,260 | $1,086,466 | |||||
5.5000%, 5/1/41 | 661,419 | 728,965 | |||||
5.5000%, 6/1/41 | 1,118,766 | 1,231,998 | |||||
5.5000%, 6/1/41 | 949,158 | 1,059,106 | |||||
5.5000%, 7/1/41 | 111,696 | 123,000 | |||||
5.5000%, 12/1/41 | 893,170 | 984,968 | |||||
5.5000%, 2/1/42 | 3,861,885 | 4,252,403 | |||||
4.5000%, 6/1/42 | 294,265 | 314,606 | |||||
4.5000%, 11/1/42 | 482,380 | 520,588 | |||||
3.5000%, 2/1/43 | 3,520,937 | 3,630,829 | |||||
3.5000%, 2/1/43 | 840,976 | 867,265 | |||||
3.5000%, 4/1/44 | 1,623,579 | 1,681,658 | |||||
5.5000%, 5/1/44 | 877,299 | 966,086 | |||||
5.0000%, 7/1/44 | 110,074 | 120,865 | |||||
4.5000%, 10/1/44 | 1,146,939 | 1,244,057 | |||||
3.5000%, 2/1/45 | 3,421,209 | 3,528,480 | |||||
4.5000%, 3/1/45 | 1,906,542 | 2,068,208 | |||||
4.5000%, 6/1/45 | 1,094,169 | 1,171,412 | |||||
4.5000%, 9/1/45 | 662,259 | 718,429 | |||||
3.0000%, 10/1/45 | 831,793 | 832,415 | |||||
3.0000%, 10/1/45 | 529,679 | 530,054 | |||||
3.5000%, 12/1/45 | 1,064,074 | 1,101,999 | |||||
3.0000%, 1/1/46 | 107,607 | 107,691 | |||||
3.5000%, 1/1/46 | 2,989,651 | 3,096,206 | |||||
3.5000%, 1/1/46 | 2,592,328 | 2,684,722 | |||||
3.0000%, 3/1/46 | 3,581,220 | 3,583,755 | |||||
3.0000%, 3/1/46 | 2,409,912 | 2,411,618 | |||||
4.0000%, 5/31/46 | 57,918,000 | 60,599,603 | |||||
3.5000%, 7/1/46 | 1,912,203 | 1,976,469 | |||||
3.5000%, 7/1/46 | 1,878,666 | 1,943,431 | |||||
4.5000%, 7/1/46 | 1,312,394 | 1,415,218 | |||||
3.5000%, 8/1/46 | 1,134,896 | 1,169,912 | |||||
4.0000%, 8/1/46 | 140,059 | 148,251 | |||||
4.0000%, 8/1/46 | 119,502 | 126,492 | |||||
4.0000%, 8/1/46 | 90,696 | 96,001 | |||||
4.0000%, 10/1/46 | 1,304,568 | 1,379,761 | |||||
3.0000%, 11/1/46 | 570,206 | 571,725 | |||||
3.0000%, 11/1/46 | 536,032 | 537,463 | |||||
4.5000%, 11/1/46 | 519,766 | 561,809 | |||||
3.5000%, 12/1/46 | 187,884 | 193,609 | |||||
3.5000%, 12/1/46 | 43,747 | 45,080 | |||||
4.5000%, 12/1/46 | 1,139,539 | 1,225,062 | |||||
3.5000%, 1/1/47 | 703,052 | 724,475 | |||||
3.5000%, 1/1/47 | 126,068 | 129,909 | |||||
3.5000%, 1/1/47 | 84,988 | 87,578 | |||||
3.0000%, 2/1/47 | 4,600,073 | 4,628,590 | |||||
4.5000%, 2/1/47 | 2,072,211 | 2,235,204 | |||||
4.0000%, 3/1/47 | 188,070 | 199,002 | |||||
4.0000%, 3/1/47 | 50,483 | 53,413 | |||||
4.0000%, 3/1/47 | 49,099 | 51,938 | |||||
4.0000%, 4/1/47 | 245,230 | 259,031 | |||||
4.0000%, 4/1/47 | 196,461 | 207,862 | |||||
4.0000%, 4/1/47 | 173,896 | 183,682 | |||||
4.0000%, 5/1/47 | 17,116,692 | 18,102,020 | |||||
4.0000%, 5/1/47 | 702,660 | 735,688 | |||||
4.0000%, 5/1/47 | 260,874 | 275,555 | |||||
4.0000%, 5/1/47 | 205,131 | 217,035 | |||||
4.0000%, 5/1/47 | 161,408 | 170,775 | |||||
4.0000%, 5/1/47 | 67,198 | 71,144 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Aspen Series | 17 |
Janus Henderson VIT Balanced Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | ||||||
Mortgage-Backed Securities – (continued) | |||||||
Fannie Mae Pool – (continued) | |||||||
4.5000%, 5/1/47 | $342,595 | $370,901 | |||||
4.5000%, 5/1/47 | 282,107 | 304,391 | |||||
4.5000%, 5/1/47 | 276,870 | 298,334 | |||||
4.5000%, 5/1/47 | 208,517 | 225,828 | |||||
4.5000%, 5/1/47 | 194,023 | 209,064 | |||||
4.5000%, 5/1/47 | 169,769 | 183,705 | |||||
4.5000%, 5/1/47 | 95,555 | 103,257 | |||||
4.5000%, 5/1/47 | 69,065 | 74,808 | |||||
4.5000%, 5/1/47 | 62,530 | 67,658 | |||||
3.0000%, 5/31/47 | 1,317,000 | 1,315,463 | |||||
3.5000%, 5/31/47 | 12,877,000 | 13,207,416 | |||||
3.5000%, 6/1/47 | 134,722 | 138,862 | |||||
4.0000%, 6/1/47 | 757,670 | 800,308 | |||||
4.0000%, 6/1/47 | 416,242 | 436,714 | |||||
4.0000%, 6/1/47 | 372,301 | 393,735 | |||||
4.0000%, 6/1/47 | 361,797 | 382,793 | |||||
4.0000%, 6/1/47 | 356,559 | 374,647 | |||||
4.0000%, 6/1/47 | 291,818 | 309,182 | |||||
4.0000%, 6/1/47 | 176,158 | 184,823 | |||||
4.0000%, 6/1/47 | 169,054 | 177,369 | |||||
4.0000%, 6/1/47 | 133,488 | 141,381 | |||||
4.0000%, 6/1/47 | 110,163 | 116,345 | |||||
4.0000%, 6/1/47 | 80,141 | 83,926 | |||||
4.0000%, 6/1/47 | 48,009 | 51,008 | |||||
4.5000%, 6/1/47 | 1,284,099 | 1,383,646 | |||||
4.5000%, 6/1/47 | 119,517 | 129,454 | |||||
3.5000%, 7/1/47 | 264,946 | 273,235 | |||||
3.5000%, 7/1/47 | 159,546 | 164,615 | |||||
3.5000%, 7/1/47 | 118,404 | 122,417 | |||||
3.5000%, 7/1/47 | 72,213 | 74,583 | |||||
3.5000%, 7/1/47 | 71,539 | 74,018 | |||||
4.0000%, 7/1/47 | 3,114,793 | 3,295,990 | |||||
4.0000%, 7/1/47 | 777,501 | 821,255 | |||||
4.0000%, 7/1/47 | 598,492 | 632,173 | |||||
4.0000%, 7/1/47 | 559,273 | 591,472 | |||||
4.0000%, 7/1/47 | 307,225 | 324,436 | |||||
4.0000%, 7/1/47 | 299,500 | 317,091 | |||||
4.0000%, 7/1/47 | 230,261 | 243,876 | |||||
4.0000%, 7/1/47 | 165,312 | 175,021 | |||||
4.0000%, 7/1/47 | 143,812 | 150,886 | |||||
�� | 4.0000%, 7/1/47 | 142,897 | 151,290 | ||||
4.0000%, 7/1/47 | 91,691 | 96,342 | |||||
4.0000%, 7/1/47 | 81,130 | 85,478 | |||||
4.5000%, 7/1/47 | 912,604 | 983,352 | |||||
4.5000%, 7/1/47 | 814,580 | 877,729 | |||||
4.5000%, 7/1/47 | 788,518 | 849,650 | |||||
3.5000%, 8/1/47 | 985,567 | 1,013,013 | |||||
3.5000%, 8/1/47 | 623,072 | 642,332 | |||||
3.5000%, 8/1/47 | 569,732 | 587,833 | |||||
3.5000%, 8/1/47 | 137,688 | 142,003 | |||||
3.5000%, 8/1/47 | 119,462 | 123,257 | |||||
4.0000%, 8/1/47 | 1,641,064 | 1,718,654 | |||||
4.0000%, 8/1/47 | 1,352,162 | 1,416,094 | |||||
4.0000%, 8/1/47 | 1,303,807 | 1,377,180 | |||||
4.0000%, 8/1/47 | 1,280,292 | 1,352,341 | |||||
4.0000%, 8/1/47 | 794,010 | 838,693 | |||||
4.0000%, 8/1/47 | 592,576 | 626,872 | |||||
4.0000%, 8/1/47 | 557,718 | 586,010 | |||||
4.0000%, 8/1/47 | 343,681 | 362,004 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
18 | DECEMBER 31, 2017 |
Janus Henderson VIT Balanced Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | ||||||
Mortgage-Backed Securities – (continued) | |||||||
Fannie Mae Pool – (continued) | |||||||
4.0000%, 8/1/47 | $244,692 | $259,161 | |||||
4.0000%, 8/1/47 | 148,450 | 155,477 | |||||
4.5000%, 8/1/47 | 1,110,684 | 1,196,793 | |||||
4.5000%, 8/1/47 | 211,510 | 227,907 | |||||
3.5000%, 9/1/47 | 3,685,976 | 3,788,811 | |||||
3.5000%, 9/1/47 | 579,820 | 599,506 | |||||
4.0000%, 9/1/47 | 1,462,408 | 1,544,708 | |||||
4.0000%, 9/1/47 | 938,584 | 991,405 | |||||
4.0000%, 9/1/47 | 153,063 | 161,677 | |||||
4.0000%, 9/1/47 | 85,744 | 90,753 | |||||
4.5000%, 9/1/47 | 5,382,493 | 5,733,395 | |||||
4.5000%, 9/1/47 | 1,106,210 | 1,191,975 | |||||
4.5000%, 9/1/47 | 826,667 | 890,756 | |||||
4.5000%, 9/1/47 | 724,531 | 780,703 | |||||
3.5000%, 10/1/47 | 5,921,599 | 6,086,959 | |||||
3.5000%, 10/1/47 | 2,413,032 | 2,480,414 | |||||
3.5000%, 10/1/47 | 203,414 | 210,014 | |||||
3.5000%, 10/1/47 | 180,434 | 186,560 | |||||
3.5000%, 10/1/47 | 144,581 | 149,312 | |||||
3.5000%, 10/1/47 | 84,754 | 87,835 | |||||
4.0000%, 10/1/47 | 1,383,693 | 1,454,254 | |||||
4.0000%, 10/1/47 | 644,136 | 680,385 | |||||
4.0000%, 10/1/47 | 632,158 | 669,289 | |||||
4.0000%, 10/1/47 | 619,358 | 654,214 | |||||
4.0000%, 10/1/47 | 415,046 | 438,403 | |||||
4.0000%, 10/1/47 | 327,117 | 346,331 | |||||
4.5000%, 10/1/47 | 171,659 | 184,968 | |||||
4.5000%, 10/1/47 | 79,622 | 85,795 | |||||
3.0000%, 11/1/47 | 1,402,820 | 1,403,813 | |||||
3.5000%, 11/1/47 | 388,861 | 402,426 | |||||
3.5000%, 11/1/47 | 243,346 | 251,844 | |||||
4.0000%, 11/1/47 | 935,046 | 982,481 | |||||
4.0000%, 11/1/47 | 290,302 | 306,995 | |||||
4.0000%, 11/1/47 | 151,465 | 160,456 | |||||
4.5000%, 11/1/47 | 850,406 | 916,335 | |||||
3.0000%, 12/1/47 | 608,000 | 608,430 | |||||
3.0000%, 12/1/47 | 295,000 | 295,209 | |||||
3.5000%, 12/1/47 | 812,000 | 838,947 | |||||
3.5000%, 12/1/47 | 167,000 | 172,542 | |||||
3.5000%, 5/1/56 | 4,534,004 | 4,665,753 | |||||
232,644,573 | |||||||
Freddie Mac Gold Pool: | |||||||
5.5000%, 10/1/36 | 400,212 | 447,739 | |||||
6.0000%, 4/1/40 | 2,098,685 | 2,415,846 | |||||
5.5000%, 8/1/41 | 2,058,086 | 2,330,874 | |||||
5.5000%, 8/1/41 | 1,318,904 | 1,476,704 | |||||
5.5000%, 9/1/41 | 284,678 | 311,697 | |||||
5.0000%, 3/1/42 | 1,017,338 | 1,116,037 | |||||
3.5000%, 2/1/44 | 1,316,059 | 1,356,516 | |||||
4.5000%, 5/1/44 | 52,144 | 56,132 | |||||
3.0000%, 1/1/45 | 1,198,481 | 1,200,480 | |||||
4.5000%, 6/1/46 | 2,783,025 | 2,997,950 | |||||
3.5000%, 7/1/46 | 3,717,617 | 3,852,388 | |||||
3.0000%, 10/1/46 | 4,512,070 | 4,522,223 | |||||
3.0000%, 12/1/46 | 4,556,636 | 4,566,897 | |||||
4.0000%, 6/1/47 | 2,954,822 | 3,123,904 | |||||
4.0000%, 8/1/47 | 2,904,237 | 3,041,149 | |||||
3.5000%, 9/1/47 | 3,535,392 | 3,648,280 | |||||
3.5000%, 9/1/47 | 2,571,010 | 2,645,459 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Aspen Series | 19 |
Janus Henderson VIT Balanced Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | ||||||
Mortgage-Backed Securities – (continued) | |||||||
Freddie Mac Gold Pool – (continued) | |||||||
3.5000%, 9/1/47 | $1,473,707 | $1,516,379 | |||||
3.5000%, 9/1/47 | 1,168,345 | 1,202,178 | |||||
3.5000%, 9/1/47 | 1,137,665 | 1,176,190 | |||||
4.0000%, 9/1/47 | 1,329,011 | 1,390,437 | |||||
3.5000%, 10/1/47 | 3,138,219 | 3,229,091 | |||||
3.5000%, 10/1/47 | 1,808,364 | 1,860,729 | |||||
3.5000%, 12/1/47 | 4,733,766 | 4,892,610 | |||||
54,377,889 | |||||||
Ginnie Mae I Pool: | |||||||
4.0000%, 1/15/45 | 4,112,713 | 4,319,794 | |||||
4.5000%, 8/15/46 | 4,782,838 | 5,150,843 | |||||
4.0000%, 7/15/47 | 3,706,110 | 3,888,237 | |||||
4.0000%, 8/15/47 | 746,728 | 783,481 | |||||
14,142,355 | |||||||
Ginnie Mae II Pool: | |||||||
4.5000%, 10/20/41 | 1,200,851 | 1,261,498 | |||||
4.0000%, 8/20/47 | 391,534 | 411,254 | |||||
4.0000%, 8/20/47 | 184,469 | 193,760 | |||||
4.0000%, 8/20/47 | 93,490 | 98,199 | |||||
1,964,711 | |||||||
Total Mortgage-Backed Securities (cost $304,885,842) | 303,129,528 | ||||||
United States Treasury Notes/Bonds – 8.0% | |||||||
1.2500%, 6/30/19 | 1,308,000 | 1,296,304 | |||||
1.3750%, 7/31/19 | 320,000 | 317,561 | |||||
1.2500%, 8/31/19 | 12,278,000 | 12,151,703 | |||||
1.3750%, 9/30/19 | 17,675,000 | 17,520,645 | |||||
1.5000%, 10/31/19 | 16,104,000 | 15,991,351 | |||||
1.7500%, 11/30/19 | 56,812,000 | 56,666,419 | |||||
1.6250%, 10/15/20 | 4,349,000 | 4,310,040 | |||||
1.7500%, 11/15/20 | 18,167,000 | 18,061,149 | |||||
1.8750%, 9/30/22 | 5,452,000 | 5,372,333 | |||||
2.0000%, 11/30/22 | 1,779,000 | 1,762,558 | |||||
2.0000%, 5/31/24 | 8,050,000 | 7,897,888 | |||||
2.1250%, 9/30/24 | 1,619,000 | 1,598,255 | |||||
2.2500%, 2/15/27 | 2,845,000 | 2,806,816 | |||||
2.2500%, 8/15/27 | 7,629,000 | 7,519,343 | |||||
2.2500%, 11/15/27 | 53,707,000 | 52,932,535 | |||||
2.2500%, 8/15/46 | 16,454,000 | 14,825,437 | |||||
3.0000%, 2/15/47 | 1,105,000 | 1,160,827 | |||||
3.0000%, 5/15/47 | 5,919,000 | 6,216,185 | |||||
2.7500%, 8/15/47 | 13,781,000 | 13,782,737 | |||||
2.7500%, 11/15/47 | 22,867,000 | 22,878,777 | |||||
Total United States Treasury Notes/Bonds (cost $264,287,955) | 265,068,863 | ||||||
Common Stocks – 62.0% | |||||||
Aerospace & Defense – 4.4% | |||||||
Boeing Co | 289,690 | 85,432,478 | |||||
General Dynamics Corp† | 144,086 | 29,314,297 | |||||
Northrop Grumman Corp | 101,335 | 31,100,725 | |||||
145,847,500 | |||||||
Air Freight & Logistics – 0.6% | |||||||
United Parcel Service Inc | 178,897 | 21,315,578 | |||||
Automobiles – 1.0% | |||||||
General Motors Co | 812,944 | 33,322,575 | |||||
Banks – 1.9% | |||||||
US Bancorp | 1,146,685 | 61,439,382 | |||||
Beverages – 0.6% | |||||||
Dr Pepper Snapple Group Inc | 207,075 | 20,098,699 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
20 | DECEMBER 31, 2017 |
Janus Henderson VIT Balanced Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | ||||||
Common Stocks – (continued) | |||||||
Biotechnology – 1.9% | |||||||
AbbVie Inc | 80,197 | $7,755,852 | |||||
Amgen Inc | 321,831 | 55,966,411 | |||||
63,722,263 | |||||||
Capital Markets – 3.9% | |||||||
Blackstone Group LP | 632,543 | 20,254,027 | |||||
CME Group Inc | 447,600 | 65,371,980 | |||||
Morgan Stanley | 216,067 | 11,337,035 | |||||
TD Ameritrade Holding Corp | 645,301 | 32,994,240 | |||||
129,957,282 | |||||||
Chemicals – 1.9% | |||||||
LyondellBasell Industries NV | 576,948 | 63,648,903 | |||||
Consumer Finance – 1.6% | |||||||
American Express Co | 174,729 | 17,352,337 | |||||
Synchrony Financial | 948,449 | 36,619,616 | |||||
53,971,953 | |||||||
Equity Real Estate Investment Trusts (REITs) – 1.6% | |||||||
Colony NorthStar Inc | 1,216,682 | 13,882,342 | |||||
Crown Castle International Corp | 140,945 | 15,646,304 | |||||
Invitation Homes Inc | 167,730 | 3,953,396 | |||||
MGM Growth Properties LLC | 331,181 | 9,653,926 | |||||
Outfront Media Inc | 461,539 | 10,707,705 | |||||
53,843,673 | |||||||
Food & Staples Retailing – 3.1% | |||||||
Costco Wholesale Corp | 265,431 | 49,402,018 | |||||
Kroger Co† | 757,339 | 20,788,956 | |||||
Sysco Corp | 518,606 | 31,494,942 | |||||
101,685,916 | |||||||
Food Products – 0.7% | |||||||
Hershey Co | 193,025 | 21,910,268 | |||||
Health Care Equipment & Supplies – 2.3% | |||||||
Abbott Laboratories | 560,904 | 32,010,791 | |||||
Medtronic PLC | 529,995 | 42,797,096 | |||||
74,807,887 | |||||||
Health Care Providers & Services – 0.8% | |||||||
Aetna Inc | 153,095 | 27,616,807 | |||||
Hotels, Restaurants & Leisure – 2.0% | |||||||
McDonald's Corp | 123,127 | 21,192,619 | |||||
Norwegian Cruise Line Holdings Ltd* | 191,941 | 10,220,858 | |||||
Six Flags Entertainment Corp | 200,378 | 13,339,163 | |||||
Starbucks Corp | 363,596 | 20,881,318 | |||||
65,633,958 | |||||||
Household Products – 0.3% | |||||||
Kimberly-Clark Corp | 73,033 | 8,812,162 | |||||
Industrial Conglomerates – 1.8% | |||||||
Honeywell International Inc | 379,502 | 58,200,427 | |||||
Information Technology Services – 3.9% | |||||||
Accenture PLC | 204,401 | 31,291,749 | |||||
Automatic Data Processing Inc | 73,938 | 8,664,794 | |||||
Mastercard Inc | 597,490 | 90,436,086 | |||||
130,392,629 | |||||||
Insurance – 0.6% | |||||||
Progressive Corp | 323,761 | 18,234,220 | |||||
Internet & Direct Marketing Retail – 1.3% | |||||||
Priceline Group Inc* | 25,280 | 43,930,067 | |||||
Internet Software & Services – 2.3% | |||||||
Alphabet Inc - Class C* | 73,222 | 76,619,501 | |||||
Leisure Products – 0.6% | |||||||
Hasbro Inc | 167,700 | 15,242,253 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Aspen Series | 21 |
Janus Henderson VIT Balanced Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | ||||||
Common Stocks – (continued) | |||||||
Leisure Products – (continued) | |||||||
Mattel Inc | 290,043 | $4,460,861 | |||||
19,703,114 | |||||||
Machinery – 0.4% | |||||||
Deere & Co | 90,881 | 14,223,785 | |||||
Media – 1.8% | |||||||
Comcast Corp | 1,291,420 | 51,721,371 | |||||
Madison Square Garden Co* | 32,179 | 6,784,942 | |||||
58,506,313 | |||||||
Oil, Gas & Consumable Fuels – 1.1% | |||||||
Suncor Energy Inc | 568,972 | 20,892,652 | |||||
Suncor Energy Inc¤ | 468,279 | 17,195,318 | |||||
38,087,970 | |||||||
Personal Products – 0.8% | |||||||
Estee Lauder Cos Inc | 196,469 | 24,998,716 | |||||
Pharmaceuticals – 2.1% | |||||||
Allergan PLC | 164,263 | 26,870,142 | |||||
Bristol-Myers Squibb Co | 259,444 | 15,898,728 | |||||
Eli Lilly & Co | 221,733 | 18,727,569 | |||||
Merck & Co Inc | 163,289 | 9,188,272 | |||||
70,684,711 | |||||||
Real Estate Investment Trusts (REITs) – 0% | |||||||
Colony American Homes III (144A)¢,§ | 639,963 | 41,108 | |||||
Real Estate Management & Development – 0.8% | |||||||
CBRE Group Inc* | 649,991 | 28,151,110 | |||||
Road & Rail – 1.4% | |||||||
CSX Corp | 823,966 | 45,326,370 | |||||
Semiconductor & Semiconductor Equipment – 2.1% | |||||||
Intel Corp | 922,077 | 42,563,074 | |||||
Lam Research Corp | 151,611 | 27,907,037 | |||||
70,470,111 | |||||||
Software – 5.6% | |||||||
Activision Blizzard Inc | 120,144 | 7,607,518 | |||||
Adobe Systems Inc* | 303,516 | 53,188,144 | |||||
Microsoft Corp | 1,363,891 | 116,667,237 | |||||
salesforce.com Inc* | 96,027 | 9,816,840 | |||||
187,279,739 | |||||||
Specialty Retail – 1.9% | |||||||
Home Depot Inc | 332,968 | 63,107,425 | |||||
Technology Hardware, Storage & Peripherals – 1.8% | |||||||
Apple Inc | 353,697 | 59,856,143 | |||||
Textiles, Apparel & Luxury Goods – 1.0% | |||||||
NIKE Inc | 514,864 | 32,204,743 | |||||
Tobacco – 2.1% | |||||||
Altria Group Inc† | 974,570 | 69,594,044 | |||||
Total Common Stocks (cost $1,427,297,262) | 2,057,247,052 | ||||||
Investment Companies – 3.0% | |||||||
Money Markets – 3.0% | |||||||
Janus Cash Liquidity Fund LLC, 1.2731%ºº,£ (cost $99,929,079) | 99,929,079 | 99,929,079 | |||||
Total Investments (total cost $2,753,149,975) – 102.1% | 3,388,014,425 | ||||||
Liabilities, net of Cash, Receivables and Other Assets – (2.1)% | (70,998,887) | ||||||
Net Assets – 100% | $3,317,015,538 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
22 | DECEMBER 31, 2017 |
Janus Henderson VIT Balanced Portfolio
Schedule of Investments
December 31, 2017
Summary of Investments by Country (Long Positions) (unaudited) | |||||
% of | |||||
Investment | |||||
Country | Value | Securities | |||
United States | $3,300,011,964 | 97.4 | % | ||
Canada | 49,164,581 | 1.5 | |||
United Kingdom | 11,564,187 | 0.4 | |||
Netherlands | 10,580,354 | 0.3 | |||
Taiwan | 6,513,392 | 0.2 | |||
Belgium | 4,731,259 | 0.1 | |||
France | 4,541,389 | 0.1 | |||
Germany | 907,299 | 0.0 |
Total | $3,388,014,425 | 100.0 | % |
Schedules of Affiliated Investments – (% of Net Assets)
Dividend Income(1) | Realized Gain/(Loss)(1) | Change in Unrealized Appreciation/ Depreciation(1) | Value at 12/31/17 | ||||||||
Investment Companies – 3.0% | |||||||||||
Investments Purchased with Cash Collateral from Securities Lending – 0% | |||||||||||
Janus Cash Collateral Fund LLC, 1.2573%ºº | $ | 246∆ | $ | — | $ | — | $ | — | |||
Money Markets – 3.0% | |||||||||||
Janus Cash Liquidity Fund LLC, 1.2731%ºº | 399,707 | — | — | 99,929,079 |
Total Affiliated Investments – 3.0% | $ | 399,953 | $ | — | $ | — | $ | 99,929,079 |
(1)For securities that were affiliated for a portion of the year ended December 31, 2017, this column reflects amounts for the entire year ended December 31, 2017 and not just the period in which the security was affiliated.
Share Balance at 12/31/16 | Purchases | Sales | Share Balance at 12/31/17 | ||||||||
Investment Companies – 3.0% | |||||||||||
Investments Purchased with Cash Collateral from Securities Lending – 0% | |||||||||||
Janus Cash Collateral Fund LLC, 1.2573%ºº | — | 10,112,500 | (10,112,500) | — | |||||||
Money Markets – 3.0% | |||||||||||
Janus Cash Liquidity Fund LLC, 1.2731%ºº | 14,816,076 | 1,163,129,804 | (1,078,016,801) | 99,929,079 | |||||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Aspen Series | 23 |
Janus Henderson VIT Balanced Portfolio
Notes to Schedule of Investments and Other Information
Balanced Index | Balanced Index is an internally-calculated, hypothetical combination of total returns from the S&P 500® Index (55%) and the Bloomberg Barclays U.S. Aggregate Bond Index (45%). |
Bloomberg Barclays U.S. Aggregate Bond Index | Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based measure of the investment grade, US dollar-denominated, fixed-rate taxable bond market. |
S&P 500® Index | S&P 500® Index reflects U.S. large-cap equity performance and represents broad U.S. equity market performance. |
ICE | Intercontinental Exchange |
LIBOR | London Interbank Offered Rate |
LLC | Limited Liability Company |
LP | Limited Partnership |
PLC | Public Limited Company |
ULC | Unlimited Liability Company |
144A | Securities sold under Rule 144A of the Securities Act of 1933, as amended, are subject to legal and/or contractual restrictions on resale and may not be publicly sold without registration under the 1933 Act. Unless otherwise noted, these securities have been determined to be liquid under guidelines established by the Board of Trustees. The total value of 144A securities as of the year ended December 31, 2017 is $197,690,635, which represents 6.0% of net assets. |
* | Non-income producing security. |
(a) | All or a portion of this position has not settled, or is not funded. Upon settlement or funding date, interest rates for unsettled or unfunded amounts will be determined. Interest and dividends will not be accrued until time of settlement or funding. |
† | A portion of this security has been segregated to cover margin or segregation requirements on open futures contracts, forward currency contracts, options contracts, short sales, swap agreements, and/or securities with extended settlement dates, the value of which, as of December 31, 2017, is $100,755,033. |
‡ | Variable or floating rate security, the interest rate of which adjusts periodically based on changes in current interest rates and prepayments on the underlying pool of assets. The interest rate shown is the current rate as of December 31, 2017. |
¤ | Issued by the same entity and traded on separate exchanges. |
ºº | Rate shown is the 7-day yield as of December 31, 2017. |
¢ | Security is valued using significant unobservable inputs. |
£ | The Portfolio may invest in certain securities that are considered affiliated companies. As defined by the Investment Company Act of 1940, as amended, an affiliated company is one in which the Portfolio owns 5% or more of the outstanding voting securities, or a company which is under common ownership or control. |
∆ | Net of income paid to the securities lending agent and rebates paid to the borrowing counterparties. |
24 | DECEMBER 31, 2017 |
Janus Henderson VIT Balanced Portfolio
Notes to Schedule of Investments and Other Information
§ | Schedule of Restricted and Illiquid Securities (as of December 31, 2017) | |||||||||
Value as a | ||||||||||
Acquisition | % of Net | |||||||||
Date | Cost | Value | Assets | |||||||
FREMF 2010 K-SCT Mortgage Trust, 2.0000%, 1/25/20 | 4/29/13 | $ | 988,117 | $ | 979,433 | 0.0 | % | |||
loanDepot Station Place Agency Securitization Trust 2017-1, ICE LIBOR USD 1 Month + 0.8000%, 2.3521%, 11/25/50 | 11/29/17 | 3,088,000 | 3,088,000 | 0.1 | ||||||
loanDepot Station Place Agency Securitization Trust 2017-1, ICE LIBOR USD 1 Month + 1.0000%, 2.5521%, 11/25/50 | 11/29/17 | 772,000 | 772,000 | 0.0 | ||||||
Station Place Securitization Trust 2017-3, ICE LIBOR USD 1 Month + 1.0000%, 2.2942%, 7/24/18 | 8/11/17 | 3,142,000 | 3,142,521 | 0.1 | ||||||
Colony American Homes III | 1/30/13 | 50,678 | 41,108 | 0.0 | ||||||
Total | $ | 8,040,795 | $ | 8,023,062 | 0.2 | % | ||||
The Portfolio has registration rights for certain restricted securities held as of December 31, 2017. The issuer incurs all registration costs. |
The following is a summary of the inputs that were used to value the Portfolio’s investments in securities and other financial instruments as of December 31, 2017. See Notes to Financial Statements for more information. | ||||||||||||
Valuation Inputs Summary | ||||||||||||
Level 2 - | Level 3 - | |||||||||||
Level 1 - | Other Significant | Significant | ||||||||||
Quotes Prices | Observable Inputs | Unobservable Inputs | ||||||||||
Assets | ||||||||||||
Investments in Securities: | ||||||||||||
Asset-Backed/Commercial Mortgage-Backed Securities | $ | - | $ | 95,495,653 | $ | - | ||||||
Bank Loans and Mezzanine Loans | - | 37,334,275 | - | |||||||||
Corporate Bonds | - | 529,809,975 | - | |||||||||
Mortgage-Backed Securities | - | 303,129,528 | - | |||||||||
United States Treasury Notes/Bonds | - | 265,068,863 | - | |||||||||
Common Stocks | ||||||||||||
Oil, Gas & Consumable Fuels | 20,892,652 | 17,195,318 | - | |||||||||
Real Estate Investment Trusts (REITs) | - | - | 41,108 | |||||||||
All Other | 2,019,117,974 | - | - | |||||||||
Investment Companies | - | 99,929,079 | - | |||||||||
Total Assets | $ | 2,040,010,626 | $ | 1,347,962,691 | $ | 41,108 | ||||||
Janus Aspen Series | 25 |
Janus Henderson VIT Balanced Portfolio
Statement of Assets and Liabilities
December 31, 2017
|
|
|
|
|
|
|
Assets: | ||||||
Unaffiliated investments, at value(1) | $ | 3,288,085,346 | ||||
Affiliated investments, at value(2) | 99,929,079 | |||||
Cash | 1,578,125 | |||||
Non-interested Trustees' deferred compensation | 63,380 | |||||
Receivables: | ||||||
Interest | 7,828,790 | |||||
Dividends | 3,812,439 | |||||
Investments sold | 2,803,868 | |||||
Portfolio shares sold | 1,051,201 | |||||
Dividends from affiliates | 108,852 | |||||
Other assets | 26,695 | |||||
Total Assets |
|
| 3,405,287,775 |
| ||
Liabilities: | ||||||
Payables: | — | |||||
Investments purchased | 83,477,518 | |||||
Advisory fees | 1,589,785 | |||||
Portfolio shares repurchased | 859,048 | |||||
12b-1 Distribution and shareholder servicing fees | 628,136 | |||||
Transfer agent fees and expenses | 150,978 | |||||
Non-interested Trustees' deferred compensation fees | 63,380 | |||||
Professional fees | 41,297 | |||||
Portfolio administration fees | 22,546 | |||||
Non-interested Trustees' fees and expenses | 22,146 | |||||
Custodian fees | 6,589 | |||||
Accrued expenses and other payables | 1,410,814 | |||||
Total Liabilities |
|
| 88,272,237 |
| ||
Net Assets |
| $ | 3,317,015,538 |
| ||
Net Assets Consist of: | ||||||
Capital (par value and paid-in surplus) | $ | 2,577,496,618 | ||||
Undistributed net investment income/(loss) | 22,408,397 | |||||
Undistributed net realized gain/(loss) from investments and foreign currency transactions | 82,241,956 | |||||
Unrealized net appreciation/(depreciation) of investments and non-interested Trustees’ deferred compensation | 634,868,567 | |||||
Total Net Assets |
| $ | 3,317,015,538 |
| ||
Net Assets - Institutional Shares | $ | 429,402,812 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 12,175,445 | |||||
Net Asset Value Per Share |
| $ | 35.27 |
| ||
Net Assets - Service Shares | $ | 2,887,612,726 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 77,861,596 | |||||
Net Asset Value Per Share |
| $ | 37.09 |
|
(1) Includes cost of $2,653,220,896. (2) Includes cost of $99,929,079. |
See Notes to Financial Statements. | |
26 | DECEMBER 31, 2017 |
Janus Henderson VIT Balanced Portfolio
Statement of Operations
For the year ended December 31, 2017
|
|
|
|
|
|
Investment Income: | |||||
| Dividends | $ | 42,316,004 | ||
Interest | 32,743,077 | ||||
Dividends from affiliates | 399,707 | ||||
Affiliated securities lending income, net | 246 | ||||
Other income | 190,362 | ||||
Foreign tax withheld | (93,133) | ||||
Total Investment Income |
| 75,556,263 |
| ||
Expenses: | |||||
Advisory fees | 16,146,587 | ||||
12b-1Distribution and shareholder servicing fees: | |||||
Service Shares | 6,298,016 | ||||
Transfer agent administrative fees and expenses: | |||||
Institutional Shares | 208,268 | ||||
Service Shares | 1,259,603 | ||||
Other transfer agent fees and expenses: | |||||
Institutional Shares | 14,069 | ||||
Service Shares | 47,528 | ||||
Portfolio administration fees | 251,129 | ||||
Shareholder reports expense | 105,409 | ||||
Non-interested Trustees’ fees and expenses | 79,757 | ||||
Professional fees | 68,045 | ||||
Custodian fees | 46,194 | ||||
Registration fees | 26,183 | ||||
Other expenses | 260,821 | ||||
Total Expenses |
| 24,811,609 |
| ||
Net Investment Income/(Loss) |
| 50,744,654 |
| ||
Net Realized Gain/(Loss) on Investments: | |||||
Investments and foreign currency transactions | 91,650,385 | ||||
Total Net Realized Gain/(Loss) on Investments |
| 91,650,385 |
| ||
Change in Unrealized Net Appreciation/Depreciation: | |||||
Investments and non-interested Trustees’ deferred compensation | 347,796,218 | ||||
Total Change in Unrealized Net Appreciation/Depreciation |
| 347,796,218 |
| ||
Net Increase/(Decrease) in Net Assets Resulting from Operations | $ | 490,191,257 |
| ||
See Notes to Financial Statements. | |
Janus Aspen Series | 27 |
Janus Henderson VIT Balanced Portfolio
Statements of Changes in Net Assets
|
|
| Year ended |
| Year ended | |||
Operations: | ||||||||
Net investment income/(loss) | $ | 50,744,654 | $ | 41,128,282 | ||||
Net realized gain/(loss) on investments | 91,650,385 | 3,486,187 | ||||||
Change in unrealized net appreciation/depreciation | 347,796,218 | 58,375,166 | ||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations |
| 490,191,257 |
|
| 102,989,635 | |||
Dividends and Distributions to Shareholders: | ||||||||
Dividends from Net Investment Income | ||||||||
Institutional Shares | (6,674,911) | (9,062,439) | ||||||
Service Shares | (36,152,398) | (39,619,594) | ||||||
| Total Dividends from Net Investment Income |
| (42,827,309) |
|
| (48,682,033) | ||
Distributions from Net Realized Gain from Investment Transactions | ||||||||
Institutional Shares | (844,615) | (6,034,450) | ||||||
Service Shares | (4,921,407) | (26,828,177) | ||||||
| Total Distributions from Net Realized Gain from Investment Transactions | (5,766,022) |
|
| (32,862,627) | |||
Net Decrease from Dividends and Distributions to Shareholders |
| (48,593,331) |
|
| (81,544,660) | |||
Capital Share Transactions: | ||||||||
Institutional Shares | (37,543,596) | (42,473,989) | ||||||
Service Shares | 281,250,189 | 376,338,116 | ||||||
Net Increase/(Decrease) from Capital Share Transactions |
| 243,706,593 |
|
| 333,864,127 | |||
Net Increase/(Decrease) in Net Assets |
| 685,304,519 |
|
| 355,309,102 | |||
Net Assets: | ||||||||
Beginning of period | 2,631,711,019 | 2,276,401,917 | ||||||
| End of period | $ | 3,317,015,538 |
| $ | 2,631,711,019 | ||
Undistributed Net Investment Income/(Loss) | $ | 22,408,397 |
| $ | 12,374,394 |
See Notes to Financial Statements. | |
28 | DECEMBER 31, 2017 |
Janus Henderson VIT Balanced Portfolio
Financial Highlights
Institutional Shares | ||||||||||||||||||
For a share outstanding during each year ended December 31 |
| 2017 |
|
| 2016 |
|
| 2015 |
|
| 2014 |
|
| 2013 |
| |||
Net Asset Value, Beginning of Period |
| $30.32 |
|
| $30.08 |
|
| $31.43 |
|
| $30.26 |
|
| $27.17 |
| |||
Income/(Loss) from Investment Operations: | ||||||||||||||||||
Net investment income/(loss) | 0.64(1) | 0.58(1) | 0.63(1) | 0.62(1) | 0.56 | |||||||||||||
Net realized and unrealized gain/(loss) | 4.92 | 0.77 | (0.41) | 1.92 | 4.67 | |||||||||||||
Total from Investment Operations |
| 5.56 |
|
| 1.35 |
|
| 0.22 |
|
| 2.54 |
|
| 5.23 |
| |||
Less Dividends and Distributions: | ||||||||||||||||||
Dividends (from net investment income) | (0.54) | (0.67) | (0.50) | (0.55) | (0.45) | |||||||||||||
Distributions (from capital gains) | (0.07) | (0.44) | (1.07) | (0.82) | (1.69) | |||||||||||||
Total Dividends and Distributions |
| (0.61) |
|
| (1.11) |
|
| (1.57) |
|
| (1.37) |
|
| (2.14) |
| |||
Net Asset Value, End of Period | $35.27 | $30.32 | $30.08 | $31.43 | $30.26 | |||||||||||||
Total Return* |
| 18.43% |
|
| 4.60% |
|
| 0.62% |
|
| 8.54% |
|
| 20.11% |
| |||
Net Assets, End of Period (in thousands) | $429,403 | $403,833 | $444,472 | $475,807 | $475,100 | |||||||||||||
Average Net Assets for the Period (in thousands) | $417,575 | $413,338 | $467,346 | $472,445 | $455,356 | |||||||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses | 0.63% | 0.62% | 0.58% | 0.58% | 0.58% | |||||||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets) | 0.63% | 0.62% | 0.58% | 0.58% | 0.58% | |||||||||||||
Ratio of Net Investment Income/(Loss) | 1.94% | 1.94% | 2.03% | 2.01% | 1.87% | |||||||||||||
Portfolio Turnover Rate | 67%(2) | 80% | 73% | 87% | 76% | |||||||||||||
1 |
Service Shares | ||||||||||||||||||
For a share outstanding during each year ended December 31 |
| 2017 |
|
| 2016 |
|
| 2015 |
|
| 2014 |
|
| 2013 |
| |||
Net Asset Value, Beginning of Period |
| $31.89 |
|
| $31.61 |
|
| $32.97 |
|
| $31.72 |
|
| $28.42 |
| |||
Income/(Loss) from Investment Operations: | ||||||||||||||||||
Net investment income/(loss) | 0.58(1) | 0.53(1) | 0.58(1) | 0.57(1) | 0.58 | |||||||||||||
Net realized and unrealized gain/(loss) | 5.17 | 0.80 | (0.42) | 2.00 | 4.82 | |||||||||||||
Total from Investment Operations |
| 5.75 |
|
| 1.33 |
|
| 0.16 |
|
| 2.57 |
|
| 5.40 |
| |||
Less Dividends and Distributions: | ||||||||||||||||||
Dividends (from net investment income) | (0.48) | (0.61) | (0.45) | (0.50) | (0.41) | |||||||||||||
Distributions (from capital gains) | (0.07) | (0.44) | (1.07) | (0.82) | (1.69) | |||||||||||||
Total Dividends and Distributions |
| (0.55) |
|
| (1.05) |
|
| (1.52) |
|
| (1.32) |
|
| (2.10) |
| |||
Net Asset Value, End of Period | $37.09 | $31.89 | $31.61 | $32.97 | $31.72 | |||||||||||||
Total Return* |
| 18.13% |
|
| 4.32% |
|
| 0.41% |
|
| 8.24% |
|
| 19.80% |
| |||
Net Assets, End of Period (in thousands) | $2,887,613 | $2,227,878 | $1,831,930 | $1,228,244 | $863,259 | |||||||||||||
Average Net Assets for the Period (in thousands) | $2,523,514 | $1,938,234 | $1,645,283 | $1,013,680 | $596,154 | |||||||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses | 0.88% | 0.87% | 0.84% | 0.84% | 0.84% | |||||||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets) | 0.88% | 0.87% | 0.84% | 0.84% | 0.84% | |||||||||||||
Ratio of Net Investment Income/(Loss) | 1.69% | 1.71% | 1.79% | 1.77% | 1.62% | |||||||||||||
Portfolio Turnover Rate | 67%(2) | 80% | 73% | 87% | 76% | |||||||||||||
* Total return not annualized for periods of less than one full year. ** Annualized for periods of less than one full year. (1) Per share amounts are calculated based on average shares outstanding during the year or period. (2) Portfolio Turnover Rate excludes TBA (to be announced) purchase and sales commitments. |
See Notes to Financial Statements. | |
Janus Aspen Series | 29 |
Janus Henderson VIT Balanced Portfolio
Notes to Financial Statements
1. Organization and Significant Accounting Policies
Janus Henderson VIT Balanced Portfolio (formerly named Janus Aspen Balanced Portfolio) (the “Portfolio”) is a series of Janus Aspen Series (the “Trust”), which is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company, and therefore has applied the specialized accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946. The Trust offers 12 portfolios, each of which offers multiple share classes, with differing investment objectives and policies. The Portfolio seeks long-term capital growth, consistent with preservation of capital and balanced by current income. The Portfolio is classified as diversified, as defined in the 1940 Act.
The Portfolio currently offers two classes of shares: Institutional Shares and Service Shares. Each class represents an interest in the same portfolio of investments. Institutional Shares are offered only in connection with investment in and payments under variable insurance contracts as well as certain qualified retirement plans. Service Shares are offered only in connection with investment in and payments under variable insurance contracts as well as certain qualified retirement plans that require a fee from Portfolio assets to procure distribution and administrative services to contract owners and plan participants.
Shareholders, including other portfolios, participating insurance companies, as well as accounts, may from time to time own (beneficially or of record) a significant percentage of the Portfolio’s Shares and can be considered to “control” the Portfolio when that ownership exceeds 25% of the Portfolio’s assets (and which may differ from control as determined in accordance with accounting principles generally accepted in the United States of America).
The following accounting policies have been followed by the Portfolio and are in conformity with accounting principles generally accepted in the United States of America.
Investment Valuation
Securities held by the Portfolio are valued in accordance with policies and procedures established by and under the supervision of the Trustees (the “Valuation Procedures”). Equity securities traded on a domestic securities exchange are generally valued at the closing prices on the primary market or exchange on which they trade. If such price is lacking for the trading period immediately preceding the time of determination, such securities are valued at their current bid price. Equity securities that are traded on a foreign exchange are generally valued at the closing prices on such markets. In the event that there is no current trading volume on a particular security in such foreign exchange, the bid price from the primary exchange is generally used to value the security. Securities that are traded on the over-the-counter (“OTC”) markets are generally valued at their closing or latest bid prices as available. Foreign securities and currencies are converted to U.S. dollars using the applicable exchange rate in effect at the close of the New York Stock Exchange (“NYSE”). The Portfolio will determine the market value of individual securities held by it by using prices provided by one or more approved professional pricing services or, as needed, by obtaining market quotations from independent broker-dealers. Most debt securities are valued in accordance with the evaluated bid price supplied by the pricing service that is intended to reflect market value. The evaluated bid price supplied by the pricing service is an evaluation that may consider factors such as security prices, yields, maturities and ratings. Certain short-term securities maturing within 60 days or less may be evaluated and valued on an amortized cost basis provided that the amortized cost determined approximates market value. Securities for which market quotations or evaluated prices are not readily available or deemed unreliable are valued at fair value determined in good faith under the Valuation Procedures. Circumstances in which fair value pricing may be utilized include, but are not limited to: (i) a significant event that may affect the securities of a single issuer, such as a merger, bankruptcy, or significant issuer-specific development; (ii) an event that may affect an entire market, such as a natural disaster or significant governmental action; (iii) a nonsignificant event such as a market closing early or not opening, or a security trading halt; and (iv) pricing of a nonvalued security and a restricted or nonpublic security. Special valuation considerations may apply with respect to “odd-lot” fixed-income transactions which, due to their small size, may receive evaluated prices by pricing services which reflect a large block trade and not what actually could be obtained for the odd-lot position. The Portfolio uses systematic fair valuation models provided by independent third parties to value international equity securities in order to adjust for stale pricing, which may occur between the close of certain foreign exchanges and the close of the NYSE.
Valuation Inputs Summary
FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value, and expands disclosure requirements regarding fair value measurements. This standard
30 | DECEMBER 31, 2017 |
Janus Henderson VIT Balanced Portfolio
Notes to Financial Statements
emphasizes that fair value is a market-based measurement that should be determined based on the assumptions that market participants would use in pricing an asset or liability and establishes a hierarchy that prioritizes inputs to valuation techniques used to measure fair value. These inputs are summarized into three broad levels:
Level 1 – Unadjusted quoted prices in active markets the Portfolio has the ability to access for identical assets or liabilities.
Level 2 – Observable inputs other than unadjusted quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
Assets or liabilities categorized as Level 2 in the hierarchy generally include: debt securities fair valued in accordance with the evaluated bid or ask prices supplied by a pricing service; securities traded on OTC markets and listed securities for which no sales are reported that are fair valued at the latest bid price (or yield equivalent thereof) obtained from one or more dealers transacting in a market for such securities or by a pricing service approved by the Portfolio’s Trustees; certain short-term debt securities with maturities of 60 days or less that are fair valued at amortized cost; and equity securities of foreign issuers whose fair value is determined by using systematic fair valuation models provided by independent third parties in order to adjust for stale pricing which may occur between the close of certain foreign exchanges and the close of the NYSE. Other securities that may be categorized as Level 2 in the hierarchy include, but are not limited to, preferred stocks, bank loans, swaps, investments in unregistered investment companies, options, and forward contracts.
Level 3 – Unobservable inputs for the asset or liability to the extent that relevant observable inputs are not available, representing the Portfolio’s own assumptions about the assumptions that a market participant would use in valuing the asset or liability, and that would be based on the best information available.
There have been no significant changes in valuation techniques used in valuing any such positions held by the Portfolio since the beginning of the fiscal year.
The inputs or methodology used for fair valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of inputs used as of December 31, 2017 to fair value the Portfolio’s investments in securities and other financial instruments is included in the “Valuation Inputs Summary” in the Notes to Schedule of Investments and Other Information.
The Portfolio did not hold a significant amount of Level 3 securities as of December 31, 2017.
There were no transfers between Level 1, Level 2 and Level 3 of the fair value hierarchy during the year. The Portfolio recognizes transfers between the levels as of the beginning of the fiscal year.
Investment Transactions and Investment Income
Investment transactions are accounted for as of the date purchased or sold (trade date). Dividend income is recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded as soon as the Portfolio is informed of the dividend, if such information is obtained subsequent to the ex-dividend date. Dividends from foreign securities may be subject to withholding taxes in foreign jurisdictions. Interest income is recorded on the accrual basis and includes amortization of premiums and accretion of discounts. Gains and losses are determined on the identified cost basis, which is the same basis used for federal income tax purposes. Income, as well as gains and losses, both realized and unrealized, are allocated daily to each class of shares based upon the ratio of net assets represented by each class as a percentage of total net assets.
Expenses
The Portfolio bears expenses incurred specifically on its behalf. Each class of shares bears a portion of general expenses, which are allocated daily to each class of shares based upon the ratio of net assets represented by each class as a percentage of total net assets. Expenses directly attributable to a specific class of shares are charged against the operations of such class.
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and
Janus Aspen Series | 31 |
Janus Henderson VIT Balanced Portfolio
Notes to Financial Statements
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
Indemnifications
In the normal course of business, the Portfolio may enter into contracts that contain provisions for indemnification of other parties against certain potential liabilities. The Portfolio’s maximum exposure under these arrangements is unknown, and would involve future claims that may be made against the Portfolio that have not yet occurred. Currently, the risk of material loss from such claims is considered remote.
Dividends and Distributions
The Portfolio may make semiannual distributions of substantially all of its investment income and an annual distribution of its net realized capital gains (if any).
The Portfolio may make certain investments in real estate investment trusts (“REITs”) which pay dividends to their shareholders based upon funds available from operations. It is quite common for these dividends to exceed the REITs’ taxable earnings and profits, resulting in the excess portion of such dividends being designated as a return of capital. If the Portfolio distributes such amounts, such distributions could constitute a return of capital to shareholders for federal income tax purposes.
Federal Income Taxes
The Portfolio intends to continue to qualify as a regulated investment company and distribute all of its taxable income in accordance with the requirements of Subchapter M of the Internal Revenue Code. Management has analyzed the Portfolio’s tax positions taken for all open federal income tax years, generally a three-year period, and has concluded that no provision for federal income tax is required in the Portfolio’s financial statements. The Portfolio is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
On December 22, 2017, the Tax Cuts and Jobs Act was signed into law. Currently, Management does not believe the bill will have a material impact on the Fund’s intention to continue to qualify as a regulated investment company, which is generally not subject to U.S. federal income tax.
2. Other Investments and Strategies
Additional Investment Risk
The Portfolio may be invested in lower-rated debt securities that have a higher risk of default or loss of value since these securities may be sensitive to economic changes, political changes, or adverse developments specific to the issuer.
The financial crisis in both the U.S. and global economies over the past several years has resulted, and may continue to result, in a significant decline in the value and liquidity of many securities of issuers worldwide in the equity and fixed-income/credit markets. In response to the crisis, the United States and certain foreign governments, along with the U.S. Federal Reserve and certain foreign central banks, took steps to support the financial markets. The withdrawal of this support, a failure of measures put in place to respond to the crisis, or investor perception that such efforts were not sufficient could each negatively affect financial markets generally, and the value and liquidity of specific securities. In addition, policy and legislative changes in the United States and in other countries continue to impact many aspects of financial regulation. The effect of these changes on the markets, and the practical implications for market participants, including the Portfolio, may not be fully known for some time. As a result, it may also be unusually difficult to identify both investment risks and opportunities, which could limit or preclude the Portfolio’s ability to achieve its investment objective. Therefore, it is important to understand that the value of your investment may fall, sometimes sharply, and you could lose money.
The enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) of 2010 provided for widespread regulation of financial institutions, consumer financial products and services, broker-dealers, OTC derivatives, investment advisers, credit rating agencies, and mortgage lending, which expanded federal oversight in the financial sector, including the investment management industry. Many provisions of the Dodd-Frank Act remain pending and will be implemented through future rulemaking. Therefore, the ultimate impact of the Dodd-Frank Act and the regulations under the Dodd-Frank Act on the Portfolio and the investment management industry as a whole, is not yet certain.
32 | DECEMBER 31, 2017 |
Janus Henderson VIT Balanced Portfolio
Notes to Financial Statements
A number of countries in the European Union (“EU”) have experienced, and may continue to experience, severe economic and financial difficulties. In particular, many EU nations are susceptible to economic risks associated with high levels of debt, notably due to investments in sovereign debt of countries such as Greece, Italy, Spain, Portugal, and Ireland. Many non-governmental issuers, and even certain governments, have defaulted on, or been forced to restructure, their debts. Many other issuers have faced difficulties obtaining credit or refinancing existing obligations. Financial institutions have in many cases required government or central bank support, have needed to raise capital, and/or have been impaired in their ability to extend credit. As a result, financial markets in the EU experienced extreme volatility and declines in asset values and liquidity. Responses to these financial problems by European governments, central banks, and others, including austerity measures and reforms, may not work, may result in social unrest, and may limit future growth and economic recovery or have other unintended consequences. Further defaults or restructurings by governments and others of their debt could have additional adverse effects on economies, financial markets, and asset valuations around the world. Greece, Ireland, and Portugal have already received one or more "bailouts" from other Eurozone member states, and it is unclear how much additional funding they will require or if additional Eurozone member states will require bailouts in the future. The risk of investing in securities in the European markets may also be heightened due to the referendum in which the United Kingdom voted to exit the EU (known as “Brexit”). There is considerable uncertainty about how Brexit will be conducted, how negotiations of necessary treaties and trade agreements will proceed, or how financial markets will react. In addition, one or more other countries may also abandon the euro and/or withdraw from the EU, placing its currency and banking system in jeopardy.
Certain areas of the world have historically been prone to and economically sensitive to environmental events such as, but not limited to, hurricanes, earthquakes, typhoons, flooding, tidal waves, tsunamis, erupting volcanoes, wildfires or droughts, tornadoes, mudslides, or other weather-related phenomena. Such disasters, and the resulting physical or economic damage, could have a severe and negative impact on the Portfolio’s investment portfolio and, in the longer term, could impair the ability of issuers in which the Portfolio invests to conduct their businesses as they would under normal conditions. Adverse weather conditions may also have a particularly significant negative effect on issuers in the agricultural sector and on insurance companies that insure against the impact of natural disasters.
Counterparties
Portfolio transactions involving a counterparty are subject to the risk that the counterparty or a third party will not fulfill its obligation to the Portfolio (“counterparty risk”). Counterparty risk may arise because of the counterparty’s financial condition (i.e., financial difficulties, bankruptcy, or insolvency), market activities and developments, or other reasons, whether foreseen or not. A counterparty’s inability to fulfill its obligation may result in significant financial loss to the Portfolio. The Portfolio may be unable to recover its investment from the counterparty or may obtain a limited recovery, and/or recovery may be delayed. The extent of the Portfolio’s exposure to counterparty risk with respect to financial assets and liabilities approximates its carrying value.
The Portfolio may be exposed to counterparty risk through participation in various programs, including, but not limited to, lending its securities to third parties, cash sweep arrangements whereby the Portfolio’s cash balance is invested in one or more types of cash management vehicles, as well as investments in, but not limited to, repurchase agreements, debt securities, and derivatives, including various types of swaps, futures and options. The Portfolio intends to enter into financial transactions with counterparties that Janus Capital Management LLC (“Janus Capital”) believes to be creditworthy at the time of the transaction. There is always the risk that Janus Capital’s analysis of a counterparty’s creditworthiness is incorrect or may change due to market conditions. To the extent that the Portfolio focuses its transactions with a limited number of counterparties, it will have greater exposure to the risks associated with one or more counterparties.
Loans
The Portfolio may invest in various commercial loans, including bank loans, bridge loans, debtor-in-possession (“DIP”) loans, mezzanine loans, and other fixed and floating rate loans. These loans may be acquired through loan participations and assignments or on a when-issued basis. Commercial loans will comprise no more than 20% of the Portfolio’s total assets. Below are descriptions of the types of loans held by the Portfolio as of December 31, 2017.
· Bank Loans - Bank loans are obligations of companies or other entities entered into in connection with recapitalizations, acquisitions, and refinancings. The Portfolio’s investments in bank loans are generally acquired as a participation interest in, or assignment of, loans originated by a lender or other financial institution. These investments may include institutionally-traded floating and fixed-rate debt securities.
Janus Aspen Series | 33 |
Janus Henderson VIT Balanced Portfolio
Notes to Financial Statements
· Floating Rate Loans – Floating rate loans are debt securities that have floating interest rates, that adjust periodically, and are tied to a benchmark lending rate, such as London Interbank Offered Rate (“LIBOR”). In other cases, the lending rate could be tied to the prime rate offered by one or more major U.S. banks or the rate paid on large certificates of deposit traded in the secondary markets. If the benchmark lending rate changes, the rate payable to lenders under the loan will change at the next scheduled adjustment date specified in the loan agreement. Floating rate loans are typically issued to companies (‘‘borrowers’’) in connection with recapitalizations, acquisitions, and refinancings. Floating rate loan investments are generally below investment grade. Senior floating rate loans are secured by specific collateral of a borrower and are senior in the borrower’s capital structure. The senior position in the borrower’s capital structure generally gives holders of senior loans a claim on certain of the borrower’s assets that is senior to subordinated debt and preferred and common stock in the case of a borrower’s default. Floating rate loan investments may involve foreign borrowers, and investments may be denominated in foreign currencies. Floating rate loans often involve borrowers whose financial condition is troubled or uncertain and companies that are highly leveraged. The Portfolio may invest in obligations of borrowers who are in bankruptcy proceedings. While the Portfolio generally expects to invest in fully funded term loans, certain of the loans in which the Portfolio may invest include revolving loans, bridge loans, and delayed draw term loans.
Purchasers of floating rate loans may pay and/or receive certain fees. The Portfolio may receive fees such as covenant waiver fees or prepayment penalty fees. The Portfolio may pay fees such as facility fees. Such fees may affect the Portfolio’s return.
· Mezzanine Loans - Mezzanine loans are secured by the stock of the company that owns the assets. Mezzanine loans are a hybrid of debt and equity financing that is typically used to fund the expansion of existing companies. A mezzanine loan is composed of debt capital that gives the lender the right to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full. Mezzanine loans typically are the most subordinated debt obligation in an issuer’s capital structure.
Mortgage- and Asset-Backed Securities
Mortgage- and asset-backed securities represent interests in “pools” of commercial or residential mortgages or other assets, including consumer loans or receivables. The Portfolio may purchase fixed or variable rate commercial or residential mortgage-backed securities issued by the Government National Mortgage Association (“Ginnie Mae”), the Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac”), or other governmental or government-related entities. Ginnie Mae’s guarantees are backed by the full faith and credit of the U.S. Government, which means that the U.S. Government guarantees that the interest and principal will be paid when due. Fannie Mae and Freddie Mac securities are not backed by the full faith and credit of the U.S. Government. In September 2008, the Federal Housing Finance Agency (“FHFA”), an agency of the U.S. Government, placed Fannie Mae and Freddie Mac under conservatorship. Since that time, Fannie Mae and Freddie Mac have received capital support through U.S. Treasury preferred stock purchases, and Treasury and Federal Reserve purchases of their mortgage-backed securities. The FHFA and the U.S. Treasury have imposed strict limits on the size of these entities’ mortgage portfolios. The FHFA has the power to cancel any contract entered into by Fannie Mae and Freddie Mac prior to FHFA’s appointment as conservator or receiver, including the guarantee obligations of Fannie Mae and Freddie Mac.
The Portfolio may also purchase other mortgage- and asset-backed securities through single- and multi-seller conduits, collateralized debt obligations, structured investment vehicles, and other similar securities. Asset-backed securities may be backed by various consumer obligations, including automobile loans, equipment leases, credit card receivables, or other collateral. In the event the underlying loans are not paid, the securities’ issuer could be forced to sell the assets and recognize losses on such assets, which could impact your return. Unlike traditional debt instruments, payments on these securities include both interest and a partial payment of principal. Mortgage and asset-backed securities are subject to both extension risk, where borrowers pay off their debt obligations more slowly in times of rising interest rates, and prepayment risk, where borrowers pay off their debt obligations sooner than expected in times of declining interest rates. These risks may reduce the Portfolio’s returns. In addition, investments in mortgage- and asset backed securities, including those comprised of subprime mortgages, may be subject to a higher degree of credit risk, valuation risk, and liquidity risk than various other types of fixed-income securities. Additionally, although mortgage-backed securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that guarantors or insurers will meet their obligations.
34 | DECEMBER 31, 2017 |
Janus Henderson VIT Balanced Portfolio
Notes to Financial Statements
Real Estate Investing
The Portfolio may invest in equity and debt securities of real estate-related companies. Such companies may include those in the real estate industry or real estate-related industries. These securities may include common stocks, corporate bonds, preferred stocks, and other equity securities, including, but not limited to, mortgage-backed securities, real estate-backed securities, securities of REITs and similar REIT-like entities. A REIT is a trust that invests in real estate-related projects, such as properties, mortgage loans, and construction loans. REITs are generally categorized as equity, mortgage, or hybrid REITs. A REIT may be listed on an exchange or traded OTC.
Restricted Security Transactions
Restricted securities held by the Portfolio may not be sold except in exempt transactions or in a public offering registered under the Securities Act of 1933, as amended. 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 the Portfolio 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.
Securities Lending
Under procedures adopted by the Trustees, the Portfolio may seek to earn additional income by lending securities to certain qualified broker-dealers and institutions. Deutsche Bank AG acts as securities lending agent and a limited purpose custodian or subcustodian to receive and disburse cash balances and cash collateral, hold short-term investments, hold collateral, and perform other custodian functions in accordance with the Agency Securities Lending and Repurchase Agreement. The Portfolio may lend portfolio securities in an amount equal to up to 1/3 of its total assets as determined at the time of the loan origination. 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. 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, time deposits, repurchase agreements, money market mutual funds or other money market accounts, or such other collateral as permitted by the SEC. If the Portfolio is unable to recover a security on loan, the Portfolio may use the collateral to purchase replacement securities in the market. There is a risk that the value of the collateral could decrease below the cost of the replacement security by the time the replacement investment is made, resulting in a loss to the Portfolio.
Upon receipt of cash collateral, Janus Capital may invest it in affiliated or non-affiliated cash management vehicles, whether registered or unregistered entities, as permitted by the 1940 Act and rules promulgated thereunder. Janus Capital currently intends to invest the cash collateral in a cash management vehicle for which Janus Capital serves as investment adviser, Janus Cash Collateral Fund LLC. An investment in Janus Cash Collateral Fund LLC is generally subject to the same risks that shareholders experience when investing in similarly structured vehicles, such as the potential for significant fluctuations in assets as a result of the purchase and redemption activity of the securities lending program, a decline in the value of the collateral, and possible liquidity issues. Such risks may delay the return of the cash collateral and cause the Portfolio to violate its agreement to return the cash collateral to a borrower in a timely manner. As adviser to the Portfolio and Janus Cash Collateral Fund LLC, Janus Capital has an inherent conflict of interest as a result of its fiduciary duties to both the Portfolio and Janus Cash Collateral Fund LLC. Additionally, Janus Capital receives an investment advisory fee of 0.05% for managing Janus Cash Collateral Fund LLC, but it may not receive a fee for managing certain other affiliated cash management vehicles in which the Portfolio may invest, and therefore may have an incentive to allocate preferred investment opportunities to investment vehicles for which it is receiving a fee.
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 loaned 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 cash collateral invested by Janus Capital is disclosed in the Schedule of Investments (if applicable). Income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to the lending agent are included as “Affiliated securities lending income, net” on the Statement of Operations. There were no securities on loan as of December 31, 2017.
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Notes to Financial Statements
Sovereign Debt
The Portfolio may invest in U.S. and non-U.S. government debt securities (“sovereign debt”). Some investments in sovereign debt, such as U.S. sovereign debt, are considered low risk. However, investments in sovereign debt, especially the debt of less developed countries, can involve a high degree of risk, including the risk that the governmental entity that controls the repayment of sovereign debt may not be willing or able to repay the principal and/or to pay the interest on its sovereign debt in a timely manner. A sovereign debtor’s willingness or ability to satisfy its debt obligation may be affected by various factors including, but not limited to, its cash flow situation, the extent of its foreign currency reserves, the availability of foreign exchange when a payment is due, the relative size of its debt position in relation to its economy as a whole, the sovereign debtor’s policy toward international lenders, and local political constraints to which the governmental entity may be subject. Sovereign debtors may also be dependent on expected disbursements from foreign governments, multilateral agencies, and other entities. The failure of a sovereign debtor to implement economic reforms, achieve specified levels of economic performance, or repay principal or interest when due may result in the cancellation of third party commitments to lend funds to the sovereign debtor, which may further impair such debtor’s ability or willingness to timely service its debts. The Portfolio may be requested to participate in the rescheduling of such sovereign debt and to extend further loans to governmental entities, which may adversely affect the Portfolio’s holdings. In the event of default, there may be limited or no legal remedies for collecting sovereign debt and there may be no bankruptcy proceedings through which the Portfolio may collect all or part of the sovereign debt that a governmental entity has not repaid. In addition, to the extent the Portfolio invests in non-U.S. sovereign debt, it may be subject to currency risk.
TBA Commitments
A Portfolio may enter into “to be announced” or “TBA” commitments. TBAs are forward agreements for the purchase or sale of securities, including mortgage-backed securities, for a fixed price, with payment and delivery on an agreed upon future settlement date. The specific securities to be delivered are not identified at the trade date. However, delivered securities must meet specified terms, including issuer, rate, and mortgage terms. Although the particular TBA securities must meet industry-accepted “good delivery” standards, there can be no assurance that a security purchased on forward commitment basis will ultimately be issued or delivered by the counterparty. During the settlement period, the Portfolio will still bear the risk of any decline in the value of the security to be delivered. Because TBA commitments do not require the purchase and sale of identical securities, the characteristics of the security delivered to the Portfolio may be less favorable than the security delivered to the dealer. If the counterparty to a transaction fails to deliver the security, the Portfolio could suffer a loss.
When-Issued and Delayed Delivery Securities
The Portfolio may purchase or sell securities on a when-issued or delayed delivery basis. When-issued and delayed delivery securities in which the Portfolio may invest include U.S. Treasury Securities, municipal bonds, bank loans, and other similar instruments. 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 Portfolio may hold liquid assets as collateral with the Portfolio’s custodian sufficient to cover the purchase price.
3. Investment Advisory Agreements and Other Transactions with Affiliates
The Portfolio pays Janus Capital an investment advisory fee which is calculated daily and paid monthly. The Portfolio’s contractual investment advisory fee rate (expressed as an annual rate) is 0.55% of its average daily net assets.
Janus Services LLC (“Janus Services”), a wholly-owned subsidiary of Janus Capital, is the Portfolio’s transfer agent. Janus Services receives an administrative services fee at an annual rate of 0.05% of the average daily net assets of the Portfolio for arranging for the provision by participating insurance companies and qualified plan service providers of administrative services, including recordkeeping, subaccounting, order processing, or other shareholder services provided on behalf of contract holders or plan participants investing in the Portfolio. Other shareholder services may include the provision of order confirmations, periodic account statements, forwarding prospectuses, shareholder reports, and other materials to existing investors, and answering inquiries regarding accounts. Janus Services expects to use this entire fee to compensate insurance companies and qualified plan service providers for providing these services to their customers who invest in the Portfolio. Any unused portion will be reimbursed to the applicable share class at least annually.
In addition, Janus Services provides or arranges for the provision of certain other internal administrative, recordkeeping, and shareholder relations services for the Portfolio. Janus Services is not compensated for these internal services
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Notes to Financial Statements
related to the shares, except for out-of-pocket costs. These amounts are disclosed as “Other transfer agent fees and expenses” on the Statement of Operations.
Under a distribution and shareholder servicing plan (the “Plan”) adopted in accordance with Rule 12b-1 under the 1940 Act, the Service Shares may pay the Trust’s distributor, Janus Distributors LLC (“Janus Distributors”), a wholly-owned subsidiary of Janus Capital, a fee for the sale and distribution and/or shareholder servicing of the Service Shares at an annual rate of up to 0.25% of the average daily net assets of the Service Shares. Under the terms of the Plan, the Trust is authorized to make payments to Janus Distributors for remittance to insurance companies and qualified plan service providers as compensation for distribution and/or shareholder services performed by such entities. These amounts are disclosed as “12b-1 Distribution and shareholder servicing fees” on the Statement of Operations. Payments under the Plan are not tied exclusively to actual 12b-1 distribution and servicing fees, and the payments may exceed 12b-1 distribution and servicing fees actually incurred. If any of the Portfolio’s actual 12b-1 distribution and servicing fees incurred during a calendar year are less than the payments made during a calendar year, the Portfolio will be refunded the difference. Refunds, if any, are included in “12b-1 Distribution and shareholder servicing fees” in the Statement of Operations.
Janus Capital furnishes certain administration, compliance, and accounting services to the Portfolio, including providing office space for the Portfolio and providing personnel to serve as officers to the Portfolio. The Portfolio reimburses Janus Capital for certain of its costs in providing these services (to the extent Janus Capital seeks reimbursement and such costs are not otherwise waived). These costs include some or all of the salaries, fees, and expenses of Janus Capital employees and Portfolio officers, including the Portfolio’s Chief Compliance Officer and compliance staff, who provide specified administration and compliance services to the Portfolio. The Portfolio pays these costs based on out-of-pocket expenses incurred by Janus Capital, and these costs are separate and apart from advisory fees and other expenses paid in connection with the investment advisory services Janus Capital provides to the Portfolio. These amounts are disclosed as “Portfolio administration fees” on the Statement of Operations. Total compensation of $17,105 was paid to the Chief Compliance Officer and certain compliance staff by the Trust during the year ended December 31, 2017. The Portfolio's portion is reported as part of “Other expenses” on the Statement of Operations.
The Board of Trustees has adopted a deferred compensation plan (the “Deferred Plan”) for independent Trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Portfolio. All deferred fees are credited to an account established in the name of the Trustees. The amounts credited to the account then increase or decrease, as the case may be, in accordance with the performance of one or more of the Janus Henderson funds that are selected by the Trustees. The account balance continues to fluctuate in accordance with the performance of the selected fund or funds until final payment of all amounts are credited to the account. The fluctuation of the account balance is recorded by the Portfolio as unrealized appreciation/(depreciation) and is included as of December 31, 2017 on the Statement of Assets and Liabilities in the asset, “Non-interested Trustees’ deferred compensation,” and liability, “Non-interested Trustees’ deferred compensation fees.” Additionally, the recorded unrealized appreciation/(depreciation) is included in “Unrealized net appreciation/(depreciation) of investments, foreign currency translations and non-interested Trustees’ deferred compensation” on the Statement of Assets and Liabilities. Deferred compensation expenses for the year ended December 31, 2017 are included in “Non-interested Trustees’ fees and expenses” on the Statement of Operations. Trustees are allowed to change their designation of mutual funds from time to time. Amounts will be deferred until distributed in accordance with the Deferred Plan. Deferred fees of $416,450 were paid by the Trust to the Trustees under the Deferred Plan during the year ended December 31, 2017.
Pursuant to the provisions of the 1940 Act and related rules, the Portfolio may participate in an affiliated or nonaffiliated cash sweep program. In the cash sweep program, uninvested cash balances of the Portfolio may be used to purchase shares of affiliated or nonaffiliated money market funds or cash management pooled investment vehicles. The Portfolio is eligible to participate in the cash sweep program (the “Investing Funds”). As adviser, Janus Capital has an inherent conflict of interest because of its fiduciary duties to the affiliated money market funds or cash management pooled investment vehicles and the Investing Funds. Janus Cash Liquidity Fund LLC is an affiliated unregistered cash management pooled investment vehicle that invests primarily in highly-rated short-term fixed-income securities. Janus Cash Liquidity Fund LLC currently maintains a NAV of $1.00 per share and distributes income daily in a manner consistent with a registered product compliant with Rule 2a-7 under the 1940 Act. There are no restrictions on the Portfolio's ability to withdraw investments from Janus Cash Liquidity Fund LLC at will, and there are no unfunded capital commitments due from the Portfolio to Janus Cash Liquidity Fund LLC. The units of Janus Cash Liquidity Fund LLC are not charged any management fee, sales charge or service fee.
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Notes to Financial Statements
Any purchases and sales, realized gains/losses and recorded dividends from affiliated investments during the year ended December 31, 2017 can be found in a table located in the Schedule of Investments.
The Portfolio is permitted to purchase or sell securities (“cross-trade”) between itself and other funds or accounts managed by Janus Capital in accordance with Rule 17a-7 under the Investment Company Act of 1940 (“Rule 17a-7”), when the transaction is consistent with the investment objectives and policies of the Portfolio and in accordance with the Internal Cross Trade Procedures adopted by the Trust’s Board of Trustees. These procedures have been designed to ensure that any cross-trade of securities by the Portfolio from or to another fund or account that is or could be considered an affiliate of the Portfolio under certain limited circumstances by virtue of having a common investment adviser, common Officer, or common Trustee complies with Rule 17a-7. Under these procedures, each cross-trade is effected at the current market price to save costs where allowed. During the year ended December 31, 2017, the Portfolio engaged in cross trades amounting to $69,808,607 in purchases and $14,159,376 in sales, resulting in a net realized loss of $11,141. The net realized loss is included within the “Net Realized Gain/(Loss) on Investments” section of the Portfolio’s Statement of Operations.
4. Federal Income Tax
The tax components of capital shown in the table below represent: (1) distribution requirements the Portfolio must satisfy under the income tax regulations; (2) losses or deductions the Portfolio may be able to offset against income and gains realized in future years; and (3) unrealized appreciation or depreciation of investments for federal income tax purposes.
Other book to tax differences primarily consist of deferred compensation. The Portfolio has elected to treat gains and losses on forward foreign currency contracts as capital gains and losses, if applicable. Other foreign currency gains and losses on debt instruments are treated as ordinary income for federal income tax purposes pursuant to Section 988 of the Internal Revenue Code.
Loss Deferrals | Other Book | Net Tax | |||||
Undistributed | Undistributed | Accumulated | Late-Year | Post-October | to Tax | Appreciation/ | |
$ 22,223,280 | $ 89,253,515 | $ - | $ - | $ - | $ (59,265) | $628,101,390 |
The aggregate cost of investments and the composition of unrealized appreciation and depreciation of investment securities for federal income tax purposes as of December 31, 2017 are noted below. The primary differences between book and tax appreciation or depreciation of investments are wash sale loss deferrals and investments in partnerships.
Federal Tax Cost | Unrealized | Unrealized | Net Tax Appreciation/ |
$ 2,759,913,035 | $653,749,943 | $(25,648,553) | $ 628,101,390 |
Income and capital gains distributions are determined in accordance with income tax regulations that may differ from accounting principles generally accepted in the United States of America. These differences are due to differing treatments for items such as net short-term gains, deferral of wash sale losses, foreign currency transactions, net investment losses, and capital loss carryovers. Certain permanent differences such as tax returns of capital and net investment losses noted below have been reclassified to capital.
For the year ended December 31, 2017 | ||||
Distributions | ||||
From Ordinary Income | From Long-Term Capital Gains | Tax Return of Capital | Net Investment Loss | |
$ 42,827,309 | $ 5,766,022 | $ - | $ - |
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For the year ended December 31, 2016 | ||||
Distributions | ||||
From Ordinary Income | From Long-Term Capital Gains | Tax Return of Capital | Net Investment Loss | |
$ 48,682,033 | $ 32,862,627 | $ - | $ - |
Permanent book to tax basis differences may result in reclassifications between the components of net assets. These differences have no impact on the results of operations or net assets. The following reclassifications have been made to the Portfolio:
Increase/(Decrease) to Capital | Increase/(Decrease) to Undistributed | Increase/(Decrease) to Undistributed |
$ - | $ 2,116,658 | $ (2,116,658) |
5. Capital Share Transactions
Year ended December 31, 2017 | Year ended December 31, 2016 | |||||
Shares | Amount | Shares | Amount | |||
Institutional Shares: | ||||||
Shares sold | 525,764 | $ 17,251,280 | 1,189,959 | $ 34,459,931 | ||
Reinvested dividends and distributions | 225,051 | 7,519,526 | 513,363 | 15,096,889 | ||
Shares repurchased | (1,895,270) | (62,314,402) | (3,158,269) | (92,030,809) | ||
Net Increase/(Decrease) | (1,144,455) | $ (37,543,596) |
| (1,454,947) | $ (42,473,989) | |
Service Shares: | ||||||
Shares sold | 12,641,440 | $439,491,829 | 15,605,883 | $491,558,526 | ||
Reinvested dividends and distributions | 1,167,543 | 41,073,805 | 2,145,917 | 66,447,771 | ||
Shares repurchased | (5,816,644) | (199,315,445) | (5,844,123) | (181,668,181) | ||
Net Increase/(Decrease) | 7,992,339 | $281,250,189 |
| 11,907,677 | $376,338,116 |
6. Purchases and Sales of Investment Securities
For the year ended December 31, 2017, the aggregate cost of purchases and proceeds from sales of investment securities (excluding any short-term securities, short-term options contracts, TBAs, and in-kind transactions, as applicable) was as follows:
Purchases of | Proceeds from Sales | Purchases of Long- | Proceeds from Sales |
$916,763,559 | $1,238,009,792 | $ 1,303,957,452 | $ 709,781,435 |
7. Recent Accounting Pronouncements
The Securities and Exchange Commission ("SEC") adopted new rules as well as amendments to its rules to modernize the reporting and disclosure of information by registered investment companies. In addition, the SEC adopted amendments to Regulation S-X, which require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The compliance date of the amendments to Regulation S-X was August 1, 2017. This report incorporates the amendments to Regulation S-X.
The FASB issued Accounting Standards Update No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities ("ASU 2017-08") to amend the amortization period for certain purchased callable debt securities held at a premium. The guidance requires certain premiums on callable debt securities to be amortized to the earliest call date. The amortization period for callable debt
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securities purchased at a discount will not be impacted. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. Management is currently evaluating the impacts of ASU 2017-08 on the financial statements.
8. Merger Related Matters
On October 3, 2016, Janus Capital Group Inc. (“JCGI”), the direct parent of Janus Capital, and Henderson Group plc (“Henderson”) announced that they had entered into an Agreement and Plan of Merger (“Merger Agreement”) relating to the strategic combination of Henderson and JCGI (the “Merger”). Pursuant to the Merger Agreement, a newly formed, direct wholly-owned subsidiary of Henderson merged with and into JCGI, with JCGI as the surviving corporation and a direct wholly-owned subsidiary of Henderson. The Merger was effective May 30, 2017.
The consummation of the Merger may have been deemed to be an “assignment” (as defined in the 1940 Act) of the advisory agreement between the Portfolio and Janus Capital in effect on the date of the Merger. As a result, the consummation of the Merger caused the investment advisory agreement to terminate automatically in accordance with its terms.
On December 8, 2016, the Trustees approved, subject to shareholder approval, a new investment advisory agreement between the Portfolio and Janus Capital in order to permit Janus Capital to continue to provide advisory services to the Portfolio following the closing of the Merger (the “Post-Merger Advisory Agreement”). At the same meeting, the Trustees approved submitting the Post-Merger Advisory Agreement, among other proposals, to Portfolio shareholders for approval.
Special Meeting(s) of Shareholders were held on April 6, 2017, and adjourned and reconvened on April 18, 2017.
Approval of Advisory Agreements
On April 6, 2017, shareholders of the Portfolio approved the Post-Merger Advisory Agreement with Janus Capital. The Post- Merger Advisory Agreement took effect upon the consummation of the Merger.
9. Subsequent Event
Management has evaluated whether any events or transactions occurred subsequent to December 31, 2017 and through the date of issuance of the Portfolio’s financial statements and determined that there were no material events or transactions that would require recognition or disclosure in the Portfolio’s financial statements.
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Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Janus Aspen Series and Shareholders of Janus Henderson VIT Balanced Portfolio:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Janus Henderson VIT Balanced Portfolio (one of the portfolios constituting Janus Aspen Series, referred to hereafter as the “Portfolio”) as of December 31, 2017, the related statement of operations for the year ended December 31, 2017, the statements of changes in net assets for each of the two years in the period ended December 31, 2017, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2017 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Portfolio as of December 31, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2017 and the financial highlights for each of the five years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Portfolio’s management. Our responsibility is to express an opinion on the Portfolio’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Portfolio in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2017 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
Denver, Colorado
February 16, 2018
We have served as the auditor of one or more investment companies in Janus Henderson Funds since 1990.
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Additional Information (unaudited)
Proxy Voting Policies and Voting Record
A description of the policies and procedures that the Portfolio uses to determine how to vote proxies relating to its portfolio securities is available without charge: (i) upon request, by calling 1-800-525-1093; (ii) on the Portfolio’s website at janushenderson.com/proxyvoting; and (iii) on the SEC’s website at http://www.sec.gov. Additionally, information regarding the Portfolio’s proxy voting record for the most recent twelve-month period ended June 30 is also available, free of charge, through janushenderson.com/proxyvoting and from the SEC’s website at http://www.sec.gov.
Full Holdings
The Portfolio is required to disclose its complete holdings in the quarterly holdings report on Form N-Q within 60 days of the end of the first and third fiscal quarters, and in the annual report and semiannual report to Portfolio shareholders. These reports (i) are 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) are available without charge, upon request, by calling a Janus Henderson representative at 1-877-335-2687 (toll free) . Portfolio holdings consisting of at least the names of the holdings are generally available on a monthly basis with a 30-day lag. Holdings are generally posted approximately two business days thereafter under Full Holdings for the Portfolio at janushenderson.com/vit.
APPROVAL OF ADVISORY AGREEMENTS DURING THE PERIOD
December 2017
The Trustees of Janus Investment Fund and Janus Aspen Series, each of whom serves as an “independent” Trustee (the “Trustees”), oversee the management of each Fund of Janus Investment Fund and each Portfolio of Janus Aspen Series (each, a “Fund” and collectively, the “Funds”), and as required by law, determine annually whether to continue the investment advisory agreement for each Fund and the subadvisory agreements for the 14 Funds that utilize subadvisers.
In connection with their most recent consideration of those agreements for each Fund, the Trustees received and reviewed information provided by Janus Capital and the respective subadvisers in response to requests of the Trustees and their independent legal counsel. They also received and reviewed information and analysis provided by, and in response to requests of, their independent fee consultant. Throughout their consideration of the agreements, the Trustees were advised by their independent legal counsel. The Trustees met with management to consider the agreements, and also met separately in executive session with their independent legal counsel and their independent fee consultant.
Additionally, in connection with their consideration of whether to continue the investment advisory agreement and subadvisory agreement for each Fund, as applicable, the Trustees also received and reviewed information in connection with the transaction to combine the respective businesses of Henderson Group plc and Janus Capital Group, Inc., the parent company of Janus Capital (the “Transaction”), announced in October 2016, which closed in the second quarter of 2017. In this regard, the Trustees reviewed information regarding the impact of the Transaction on the services to be provided by Janus Capital and each subadviser, as applicable, to the Funds under such agreements prior to the close of the Transaction as well as the services provided after the Transaction closed.
At a meeting held on December 7, 2017, based on the Trustees’ evaluation of the information provided by Janus Capital, the subadvisers, and the independent fee consultant, as well as other information, the Trustees determined that the overall arrangements between each Fund and Janus Capital and each subadviser, as applicable, were fair and reasonable in light of the nature, extent and quality of the services provided by Janus Capital, its affiliates and the subadvisers, the fees charged for those services, and other matters that the Trustees considered relevant in the exercise of their business judgment. At that meeting, the Trustees unanimously approved the continuation of the investment advisory agreement for each Fund, and the subadvisory agreement for each subadvised Fund, for the period from February 1, 2018 through February 1, 2019, subject to earlier termination as provided for in each agreement.
In considering the continuation of those agreements, the Trustees reviewed and analyzed various factors that they determined were relevant, including the factors described below, none of which by itself was considered dispositive. However, the material factors and conclusions that formed the basis for the Trustees’ determination to approve the continuation of the agreements are discussed separately below. Also included is a summary of the independent fee consultant’s conclusions and opinions that arose during, and were included as part of, the Trustees’ consideration of the
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Additional Information (unaudited)
agreements. “Management fees,” as used herein, reflect actual annual advisory fees and any administration fees (excluding out of pocket costs), net of any waivers.
Nature, Extent and Quality of Services
The Trustees reviewed the nature, extent and quality of the services provided by Janus Capital and the subadvisers to the Funds, taking into account the investment objective, strategies and policies of each Fund, and the knowledge the Trustees gained from their regular meetings with management on at least a quarterly basis and their ongoing review of information related to the Funds. In addition, the Trustees reviewed the resources and key personnel of Janus Capital and each subadviser, particularly noting those employees who provide investment and risk management services to the Funds. The Trustees also considered other services provided to the Funds by Janus Capital or the subadvisers, such as managing the execution of portfolio transactions and the selection of broker-dealers for those transactions. The Trustees considered Janus Capital’s role as administrator to the Funds, noting that Janus Capital does not receive a fee for its services but is reimbursed for its out-of-pocket costs. The Trustees considered the role of Janus Capital in monitoring adherence to the Funds’ investment restrictions, providing support services for the Trustees and Trustee committees, and overseeing communications with shareholders and the activities of other service providers, including monitoring compliance with various policies and procedures of the Funds and with applicable securities laws and regulations.
In this regard, the independent fee consultant noted that Janus Capital provides a number of different services for the Funds and Fund shareholders, ranging from investment management services to various other servicing functions, and that, in its opinion, Janus Capital is a capable provider of those services. The independent fee consultant also provided its belief that Janus Capital has developed a number of institutional competitive advantages that should enable it to provide superior investment and service performance over the long term.
The Trustees concluded that the nature, extent and quality of the services provided by Janus Capital or the subadviser to each Fund were appropriate and consistent with the terms of the respective advisory and subadvisory agreements, and that, taking into account steps taken to address those Funds whose performance lagged that of their peers for certain periods, the Funds were likely to benefit from the continued provision of those services. They also concluded that Janus Capital and each subadviser had sufficient personnel, with the appropriate education and experience, to serve the Funds effectively and had demonstrated its ability to attract well-qualified personnel.
Performance of the Funds
The Trustees considered the performance results of each Fund over various time periods. They noted that they considered Fund performance data throughout the year, including periodic meetings with each Fund’s portfolio manager(s), and also reviewed information comparing each Fund’s performance with the performance of comparable funds and peer groups identified by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent data provider, and with the Fund’s benchmark index. In this regard, the independent fee consultant found that the overall Funds’ performance has been strong: for the 36 months ended September 30, 2017, approximately 70% of the Funds were in the top two quartiles of performance, as reported by Morningstar, and for the 12 months ended September 30, 2017, approximately 46% of the Funds were in the top two quartiles of performance, as reported by Morningstar.
The Trustees considered the performance of each Fund, noting that performance may vary by share class, and noted the following:
Alternative Funds
· For Janus Henderson Diversified Alternatives Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson International Long/Short Equity Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and the Fund’s limited performance history.
Asset Allocation Funds
· For Janus Henderson Global Allocation Fund – Conservative, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge
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Additional Information (unaudited)
quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Global Allocation Fund – Growth, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Global Allocation Fund – Moderate, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
Fixed-Income Funds
· For Janus Henderson Flexible Bond Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Bond Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Unconstrained Bond Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson High-Yield Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Multi-Sector Income Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Real Return Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Short-Term Bond Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Strategic Income Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
Global and International Equity Funds
· For Janus Henderson Asia Equity Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017.
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· For Janus Henderson Emerging Markets Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson European Focus Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Equity Income Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Global Life Sciences Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Global Real Estate Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Global Research Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Global Select Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Global Technology Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Value Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital and Perkins had taken or were taking to improve performance.
· For Janus Henderson International Opportunities Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson International Small Cap Fund, the Trustees noted that, due to limited performance for the Fund, performance history was not a material factor.
· For Janus Henderson International Value Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital and Perkins had taken or were taking to improve performance.
· For Janus Henderson Overseas Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that
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the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
Money Market Funds
· For Janus Henderson Government Money Market Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance.
· For Janus Henderson Money Market Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance.
Multi-Asset Funds
· For Janus Henderson Adaptive Global Allocation Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson All Asset Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Dividend & Income Builder Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Value Plus Income Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
Multi-Asset U.S. Equity Funds
· For Janus Henderson Balanced Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Contrarian Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Enterprise Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Forty Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Growth and Income Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Research Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
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· For Janus Henderson Triton Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson U.S. Growth Opportunities Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and the Fund’s limited performance history.
· For Janus Henderson Venture Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017.
Quantitative Equity Funds
· For Janus Henderson Emerging Markets Managed Volatility Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital and Intech had taken or were taking to improve performance, and the Fund’s limited performance history.
· For Janus Henderson Global Income Managed Volatility Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson International Managed Volatility Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital and Intech had taken or were taking to improve performance.
· For Janus Henderson U.S. Managed Volatility Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017.
U.S. Equity Funds
· For Janus Henderson Large Cap Value Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital and Perkins had taken or were taking to improve performance.
· For Janus Henderson Mid Cap Value Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Select Value Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Small Cap Value Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
Janus Aspen Series
· For Janus Henderson Balanced Portfolio, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Enterprise Portfolio, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
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· For Janus Henderson Flexible Bond Portfolio, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Forty Portfolio, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Global Allocation Portfolio – Moderate, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Global Research Portfolio, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Technology Portfolio, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Global Unconstrained Bond Portfolio, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and the Fund’s limited performance history.
· For Janus Henderson Mid Cap Value Portfolio, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital and Perkins had taken or were taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Overseas Portfolio, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Research Portfolio, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson U.S. Low Volatility Portfolio, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017.
In consideration of each Fund’s performance, the Trustees concluded that, taking into account the factors relevant to performance, as well as other considerations, including steps taken to improve performance, the Fund’s performance warranted continuation of the Fund’s investment advisory and subadvisory agreement(s).
Costs of Services Provided
The Trustees examined information regarding the fees and expenses of each Fund in comparison to similar information for other comparable funds as provided by Broadridge, an independent data provider. They also reviewed an analysis of
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that information provided by their independent fee consultant and noted that the rate of management (investment advisory and any administration, but excluding out-of-pocket costs) fees for many of the Funds, after applicable waivers, was below the average management fee rate of the respective peer group of funds selected by an independent data provider. The Trustees also examined information regarding the subadvisory fees charged for subadvisory services, as applicable, noting that all such fees were paid by Janus Capital out of its management fees collected from such Fund.
The independent fee consultant provided its belief that the management fees charged by Janus Capital to each of the Funds under the current investment advisory and administration agreements are reasonable in relation to the services provided by Janus Capital. The independent fee consultant found: (1) the total expenses and management fees of the Funds to be reasonable relative to other mutual funds; (2) total expenses, on average, were 10% below the average total expenses of their respective Broadridge Expense Group peers and 18% below the average total expenses for their Broadridge Expense Universes; (3) management fees for the Funds, on average, were 8% below the average management fees for their Expense Groups and 9% below the average for their Expense Universes; and (4) Fund expenses at the functional level for each asset and share class category were reasonable. The Trustees also considered the total expenses for each share class of each Fund compared to the average total expenses for its Broadridge Expense Group peers and to average total expenses for its Broadridge Expense Universe.
The independent fee consultant concluded that, based on its strategic review of expenses at the complex, category and individual fund level, Fund expenses were found to be reasonable relative to both Expense Group and Expense Universe benchmarks. Further, for certain Funds, the independent fee consultant also performed a systematic “focus list” analysis of expenses in the context of the performance or service delivered to each set of investors in each share class in each selected Fund. Based on this analysis, the independent fee consultant found that the combination of service quality/performance and expenses on these individual Funds and share classes were reasonable in light of performance trends, performance histories, and existence of performance fees, breakpoints, and expense waivers on such Funds.
The Trustees considered the methodology used by Janus Capital and each subadviser in determining compensation payable to portfolio managers, the competitive environment for investment management talent, and the competitive market for mutual funds in different distribution channels.
The Trustees also reviewed management fees charged by Janus Capital and each subadviser to comparable separate account clients and to comparable non-affiliated funds subadvised by Janus Capital or by a subadviser (for which Janus Capital or the subadviser provides only or primarily portfolio management services). Although in most instances subadvisory and separate account fee rates for various investment strategies were lower than management fee rates for Funds having a similar strategy, the Trustees considered that Janus Capital noted that, under the terms of the management agreements with the Funds, Janus Capital performs significant additional services for the Funds that it does not provide to those other clients, including administration services, oversight of the Funds’ other service providers, trustee support, regulatory compliance and numerous other services, and that, in serving the Funds, Janus Capital assumes many legal risks and other costs that it does not assume in servicing its other clients. Moreover, they noted that the independent fee consultant found that: (1) the management fees Janus Capital charges to the Funds are reasonable in relation to the management fees Janus Capital charges to its institutional clients and to the fees Janus Capital charges to funds subadvised by Janus Capital; (2) these institutional and subadvised accounts have different service and infrastructure needs; (3) Janus mutual fund investors enjoy reasonable fees relative to the fees charged to Janus institutional and subadvised fund investors; (4) in three of seven product categories, the Funds receive proportionally better pricing than the industry in relation to Janus institutional clients; and (5) in seven of eight strategies, Janus Capital has lower management fees than funds subadvised by Janus Capital’s portfolio managers.
The Trustees considered the fees for each Fund for its fiscal year ended in 2016, and noted the following with regard to each Fund’s total expenses, net of applicable fee waivers (the Fund’s “total expenses”):
Alternative Funds
· For Janus Henderson Diversified Alternatives Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson International Long/Short Equity Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were
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reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
Asset Allocation Funds
· For Janus Henderson Global Allocation Fund – Conservative, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Allocation Fund – Growth, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Allocation Fund – Moderate, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
Fixed-Income Funds
· For Janus Henderson Flexible Bond Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Bond Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Unconstrained Bond Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson High-Yield Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Multi-Sector Income Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Real Return Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Short-Term Bond Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to waive 11 basis points of management fees effective February 1, 2018 and also has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Strategic Income Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
Global and International Equity Funds
· For Janus Henderson Asia Equity Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
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· For Janus Henderson Emerging Markets Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
· For Janus Henderson European Focus Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
· For Janus Henderson Global Equity Income Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Life Sciences Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Real Estate Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Research Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Select Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Technology Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Value Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson International Opportunities Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
· For Janus Henderson International Small Cap Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
· For Janus Henderson International Value Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Overseas Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
Money Market Funds
· For Janus Henderson Government Money Market Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes. In addition, the Trustees considered that Janus Capital voluntarily waives one-half of its advisory fee and other expenses in order to maintain a positive yield.
· For Janus Henderson Money Market Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes. In addition, the Trustees considered that Janus Capital voluntarily waives one-half of its advisory fee and other expenses in order to maintain a positive yield.
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Multi-Asset Funds
· For Janus Henderson Adaptive Global Allocation Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson All Asset Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s total expenses effective June 5, 2017.
· For Janus Henderson Dividend & Income Builder Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
· For Janus Henderson Value Plus Income Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
Multi-Asset U.S. Equity Funds
· For Janus Henderson Balanced Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Contrarian Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Enterprise Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Forty Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Growth and Income Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Research Fund, the Trustees noted that, although the Fund’s total expenses were equal to or exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective February 1, 2017.
· For Janus Henderson Triton Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson U.S. Growth Opportunities Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
· For Janus Henderson Venture Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
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Quantitative Equity Funds
· For Janus Henderson Emerging Markets Managed Volatility Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Income Managed Volatility Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson International Managed Volatility Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson U.S. Managed Volatility Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
U.S. Equity Funds
· For Janus Henderson Large Cap Value Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Mid Cap Value Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Select Value Fund, the Trustees noted that the Fund’s total expenses were below the peer group averages for all share classes.
· For Janus Henderson Small Cap Value Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
Janus Aspen Series
· For Janus Henderson Balanced Portfolio, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable.
· For Janus Henderson Enterprise Portfolio, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable.
· For Janus Henderson Flexible Bond Portfolio, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Forty Portfolio, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable.
· For Janus Henderson Global Allocation Portfolio - Moderate, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Research Portfolio, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Technology Portfolio, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Unconstrained Bond Portfolio, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
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· For Janus Henderson Mid Cap Value Portfolio, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Overseas Portfolio, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Research Portfolio, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson U.S. Low Volatility Portfolio, the Trustees noted that the Fund’s total expenses were below the peer group average for its sole share class.
The Trustees reviewed information on the overall profitability to Janus Capital and its affiliates of their relationship with the Funds, and considered profitability data of other fund managers. The Trustees also considered the financial information, estimated profitability and corporate structure of Janus Capital’s parent company before and after the Transaction. The Trustees recognized that profitability comparisons among fund managers are difficult because of the variation in the type of comparative information that is publicly available, and the profitability of any fund manager is affected by numerous factors, including the organizational structure of the particular fund manager, the types of funds and other accounts it manages, possible other lines of business, the methodology for allocating expenses, and the fund manager’s capital structure and cost of capital. The Trustees also noted that the Trustees’ independent fee consultant reviewed the overall profitability of Janus Capital’s parent company prior to the Transaction, and the independent fee consultant found that, while assessing the reasonableness of Fund expenses in light of such profits was dependent on comparisons with other publicly-traded mutual fund advisers, and that these comparisons were limited in accuracy by differences in complex size, business mix, institutional account orientation and other factors, after accepting these limitations, the level of profit earned by Janus Capital’s parent company was reasonable. In this regard, the independent consultant concluded that the profitability of Janus Capital’s parent company did not show excess nor did it show any insufficiency that could limit the ability to invest the resources needed to drive strong future investment performance on behalf of the Funds.
Additionally, the Trustees considered the estimated profitability to Janus Capital from the investment management services it provided to each Fund. The Trustees also considered such estimated profitability taking into account the impact of the Transaction on Janus Capital’s expense structure on a pro forma basis. In their review, the Trustees considered whether Janus Capital and each subadviser receive adequate incentives and resources to manage the Funds effectively. In reviewing profitability, the Trustees noted that the estimated profitability for an individual Fund is necessarily a product of the allocation methodology utilized by Janus Capital to allocate its expenses as part of the estimated profitability calculation. In this regard, the Trustees noted that the independent fee consultant concluded that (1) the expense allocation methodology utilized by Janus Capital was reasonable and (2) the estimated profitability to Janus Capital from the investment management services it provided to each Fund was reasonable, including after taking into account the impact of the Transaction on Janus Capital’s expense structure on a pro forma basis. The Trustees also considered that the estimated profitability for an individual Fund was influenced by a number of factors, including not only the allocation methodology selected, but also the presence of fee waivers and expense caps, and whether the Fund’s investment management agreement contained breakpoints or a performance fee component. The Trustees determined, after taking into account these factors, among others, that Janus Capital’s estimated profitability with respect to each Fund was not unreasonable in relation to the services provided, and that the variation in the range of such estimated profitability among the Funds was not a material factor in the Board’s approval of the reasonableness of any Fund’s investment management fees.
The Trustees concluded that the management fees payable by each Fund to Janus Capital and its affiliates, as well as the fees paid by Janus Capital to the subadvisers of subadvised Funds, were reasonable in relation to the nature, extent, and quality of the services provided, taking into account the fees charged by other advisers for managing comparable mutual funds with similar strategies, the fees Janus Capital and the subadvisers charge to other clients, and, as applicable, the impact of fund performance on management fees payable by the Funds. The Trustees also concluded that each Fund’s total expenses were reasonable, taking into account the size of the Fund, the quality of services provided by Janus Capital and any subadviser, the investment performance of the Fund, and any expense limitations agreed to or provided by Janus Capital.
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Economies of Scale
The Trustees considered information about the potential for Janus Capital to realize economies of scale as the assets of the Funds increase. They noted their independent fee consultant’s analysis of economies of scale in prior years. They also noted that, although many Funds pay advisory fees at a base fixed rate as a percentage of net assets, without any breakpoints or performance fees, their independent fee consultant concluded that 86% of these Funds’ share classes have contractual management fees (gross of waivers) below their Broadridge expense group averages. They also noted that for those Funds whose expenses are being reduced by the contractual expense limitations of Janus Capital, Janus Capital is subsidizing certain of these Funds because they have not reached adequate scale. Moreover, as the assets of some of the Funds have declined in the past few years, certain Funds have benefited from having advisory fee rates that have remained constant rather than increasing as assets declined. In addition, performance fee structures have been implemented for various Funds that have caused the effective rate of advisory fees payable by such a Fund to vary depending on the investment performance of the Fund relative to its benchmark index over the measurement period; and a few Funds have fee schedules with breakpoints and reduced fee rates above certain asset levels. The Trustees also noted that the Funds share directly in economies of scale through the lower charges of third-party service providers that are based in part on the combined scale of all of the Funds. Based on all of the information they reviewed, including past research and analysis conducted by the Trustees’ independent fee consultant, the Trustees concluded that the current fee structure of each Fund was reasonable and that the current rates of fees do reflect a sharing between Janus Capital and the Fund of any economies of scale that may be present at the current asset level of the Fund.
The independent fee consultant concluded that, given the limitations of various analytical approaches to economies of scale it had considered in prior years, and their conflicting results, it is difficult to analytically confirm or deny the existence of economies of scale in the Janus complex. The independent consultant concluded that (1) to the extent there were economies of scale at Janus Capital, Janus Capital’s general strategy of setting fixed management fees below peers appeared to share any such economies with investors even on smaller Funds which have not yet achieved those economies and (2) by setting lower fixed fees from the start on these Funds, Janus Capital appeared to be investing to increase the likelihood that these Funds will grow to a level to achieve any scale economies that may exist. Further, the independent fee consultant provided its belief that Fund investors are well-served by the fee levels and performance fee structures in place on the Funds in light of any economies of scale that may be present at Janus Capital.
Other Benefits to Janus Capital
The Trustees also considered benefits that accrue to Janus Capital and its affiliates and subadvisers to the Funds from their relationships with the Funds. They recognized that two affiliates of Janus Capital separately serve the Funds as transfer agent and distributor, respectively, and the transfer agent receives compensation directly from the non-money market funds for services provided. The Trustees also considered Janus Capital’s past and proposed use of commissions paid by the Funds on portfolio brokerage transactions to obtain proprietary and third-party research products and services benefiting the Fund and/or other clients of Janus Capital and/or Janus Capital, and/or a subadviser to a Fund. The Trustees concluded that Janus Capital’s and the subadvisers’ use of these types of client commission arrangements to obtain proprietary and third-party research products and services was consistent with regulatory requirements and guidelines and was likely to benefit each Fund. The Trustees also concluded that, other than the services provided by Janus Capital and its affiliates and subadvisers pursuant to the agreements and the fees to be paid by each Fund therefor, the Funds and Janus Capital and the subadvisers may potentially benefit from their relationship with each other in other ways. They concluded that Janus Capital and/or the subadvisers benefits from the receipt of research products and services acquired through commissions paid on portfolio transactions of the Funds and that the Funds benefit from Janus Capital’s and/or the subadvisers’ receipt of those products and services as well as research products and services acquired through commissions paid by other clients of Janus Capital and/or other clients of the subadvisers. They further concluded that the success of any Fund could attract other business to Janus Capital, the subadvisers or other Janus funds, and that the success of Janus Capital and the subadvisers could enhance Janus Capital’s and the subadvisers’ ability to serve the Funds.
January 2017
The Trustees of Janus Investment Fund and Janus Aspen Series, each of whom serves as an “independent” Trustee (the “Trustees”), oversee the management of each Fund of Janus Investment Fund and each Portfolio of Janus Aspen Series (each, a “Fund” and collectively, the “Funds”), and as required by law, determine annually whether to continue the
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investment advisory agreement for each Fund and the subadvisory agreements for the 16 Funds that utilize subadvisers.
In connection with their most recent consideration of those agreements for each Fund, the Trustees received and reviewed information provided by Janus Capital and the respective subadvisers in response to requests of the Trustees and their independent legal counsel. They also received and reviewed information and analysis provided by, and in response to requests of, their independent fee consultant. Throughout their consideration of the agreements, the Trustees were advised by their independent legal counsel. The Trustees met with management to consider the agreements, and also met separately in executive session with their independent legal counsel and their independent fee consultant.
Additionally, in connection with their consideration of whether to continue the investment advisory agreement and subadvisory agreement for each Fund, as applicable, the Trustees also received and reviewed information in connection with the proposed transaction to combine the respective businesses of Henderson Group plc and Janus Capital Group, Inc., the parent company of Janus Capital (the “Transaction”), announced in October 2016, which Janus Capital advised the Trustees was expected to close in the second quarter of 2017. In this regard, the Trustees reviewed information regarding the impact of the Transaction on the services to be provided by Janus Capital and each subadviser, as applicable, to the Funds under such agreements both prior to the close of the Transaction, and afterwards, if the Transaction were not to close. If the Transaction closes, all such agreements would be replaced by new investment advisory agreements and subadvisory agreements, as applicable, for each Fund, assuming requisite Fund shareholder approvals have been obtained.
At a meeting held on January 26, 2017, based on the Trustees’ evaluation of the information provided by Janus Capital, the subadvisers, and the independent fee consultant, as well as other information, the Trustees determined that the overall arrangements between each Fund and Janus Capital and each subadviser, as applicable, were fair and reasonable in light of the nature, extent and quality of the services provided by Janus Capital, its affiliates and the subadvisers, the fees charged for those services, and other matters that the Trustees considered relevant in the exercise of their business judgment. At that meeting, the Trustees unanimously approved the continuation of the investment advisory agreement for each Fund, and the subadvisory agreement for each subadvised Fund, for the period from February 1, 2017 through February 1, 2018, subject to earlier termination as provided for in each agreement.
In considering the continuation of those agreements, the Trustees reviewed and analyzed various factors that they determined were relevant, including the factors described below, none of which by itself was considered dispositive. However, the material factors and conclusions that formed the basis for the Trustees’ determination to approve the continuation of the agreements are discussed separately below. Also included is a summary of the independent fee consultant’s conclusions and opinions that arose during, and were included as part of, the Trustees’ consideration of the agreements. “Management fees,” as used herein, reflect actual annual advisory fees and any administration fees (excluding out of pocket costs), net of any waivers.
Nature, Extent and Quality of Services
The Trustees reviewed the nature, extent and quality of the services provided by Janus Capital and the subadvisers to the Funds, taking into account the investment objective, strategies and policies of each Fund, and the knowledge the Trustees gained from their regular meetings with management on at least a quarterly basis and their ongoing review of information related to the Funds. In addition, the Trustees reviewed the resources and key personnel of Janus Capital and each subadviser, particularly noting those employees who provide investment and risk management services to the Funds. The Trustees also considered other services provided to the Funds by Janus Capital or the subadvisers, such as managing the execution of portfolio transactions and the selection of broker-dealers for those transactions. The Trustees considered Janus Capital’s role as administrator to the Funds, noting that Janus Capital does not receive a fee for its services but is reimbursed for its out-of-pocket costs. The Trustees considered the role of Janus Capital in monitoring adherence to the Funds’ investment restrictions, providing support services for the Trustees and Trustee committees, and overseeing communications with shareholders and the activities of other service providers, including monitoring compliance with various policies and procedures of the Funds and with applicable securities laws and regulations.
In this regard, the independent fee consultant noted that Janus Capital provides a number of different services for the Funds and Fund shareholders, ranging from investment management services to various other servicing functions, and that, in its opinion, Janus Capital is a capable provider of those services. The independent fee consultant also provided
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its belief that Janus Capital has developed a number of institutional competitive advantages that should enable it to provide superior investment and service performance over the long term.
The Trustees concluded that the nature, extent and quality of the services provided by Janus Capital or the subadviser to each Fund were appropriate and consistent with the terms of the respective advisory and subadvisory agreements, and that, taking into account steps taken to address those Funds whose performance lagged that of their peers for certain periods, the Funds were likely to benefit from the continued provision of those services. They also concluded that Janus Capital and each subadviser had sufficient personnel, with the appropriate education and experience, to serve the Funds effectively and had demonstrated its ability to attract well-qualified personnel.
Performance of the Funds
The Trustees considered the performance results of each Fund over various time periods. They noted that they considered Fund performance data throughout the year, including periodic meetings with each Fund’s portfolio manager(s), and also reviewed information comparing each Fund’s performance with the performance of comparable funds and peer groups identified by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent data provider, and with the Fund’s benchmark index. In this regard, the independent fee consultant found that the overall Funds’ performance has been strong: for the 36 months ended September 30, 2016, approximately 76% of the Funds were in the top two Broadridge quartiles of performance, and for the 12 months ended September 30, 2016, approximately 47% of the Funds were in the top two Broadridge quartiles of performance.
The Trustees considered the performance of each Fund, noting that performance may vary by share class, and noted the following:
Fixed-Income Funds and Money Market Funds
· For Janus Henderson Flexible Bond Fund (formerly, Janus Flexible Bond Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Bond Fund (formerly, Janus Global Bond Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Unconstrained Bond Fund (formerly, Janus Global Unconstrained Bond Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson High-Yield Fund (formerly, Janus High-Yield Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Multi-Sector Income Fund (formerly, Janus Multi-Sector Income Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Real Return Fund (formerly, Janus Real Return Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Short-Term Bond Fund (formerly, Janus Short-Term Bond Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Government Money Market Fund (formerly, Janus Government Money Market Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance.
· For Janus Henderson Money Market Fund (formerly, Janus Money Market Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the
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bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance.
Asset Allocation Funds
· For Janus Henderson Global Allocation Fund – Conservative (formerly, Janus Global Allocation Fund – Conservative), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Allocation Fund – Growth (formerly, Janus Global Allocation Fund – Growth), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Allocation Fund – Moderate (formerly, Janus Global Allocation Fund – Moderate), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
Alternative Fund
· For Janus Henderson Diversified Alternatives Fund (formerly, Janus Diversified Alternatives Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
Value Funds
· For Janus Henderson International Value Fund (formerly, Perkins International Value Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Value Fund (formerly, Perkins Global Value Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Large Cap Value Fund (formerly, Perkins Large Cap Value Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital and Perkins had taken or were taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Mid Cap Value Fund (formerly, Perkins Mid Cap Value Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital and Perkins had taken or were taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Select Value Fund (formerly, Perkins Select Value Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Small Cap Value Fund (formerly, Perkins Small Cap Value Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
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· For Janus Henderson Value Plus Income Fund (formerly, Perkins Value Plus Income Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
Mathematical Funds
· For Janus Henderson Emerging Markets Managed Volatility Fund (formerly, Intech Emerging Markets Managed Volatility Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Income Managed Volatility Fund (formerly, Intech Global Income Managed Volatility Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson International Managed Volatility Fund (formerly, Intech International Managed Volatility Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson U.S. Managed Volatility Fund (formerly, Intech U.S. Managed Volatility Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
Growth and Core Funds
· For Janus Henderson Balanced Fund (formerly, Janus Balanced Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Contrarian Fund (formerly, Janus Contrarian Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Enterprise Fund (formerly, Janus Enterprise Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Forty Fund (formerly, Janus Forty Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Growth and Income Fund (formerly, Janus Growth and Income Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and in the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Research Fund (formerly, Janus Research Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Triton Fund (formerly, Janus Triton Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Venture Fund (formerly, Janus Venture Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
Global and International Funds
· For Janus Henderson Adaptive Global Allocation Fund (formerly, Janus Adaptive Global Allocation Fund), the Trustees noted that, due to limited performance for the Fund, performance history was not a material factor.
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· For Janus Henderson Asia Equity Fund (formerly, Janus Asia Equity Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Life Sciences Fund (formerly, Janus Global Life Sciences Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Real Estate Fund (formerly, Janus Global Real Estate Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Research Fund (formerly, Janus Global Research Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Select Fund (formerly, Janus Global Select Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Technology Fund (formerly, Janus Global Technology Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Overseas Fund (formerly, Janus Overseas Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
Janus Aspen Series
· For Janus Henderson Balanced Portfolio (formerly, Janus Aspen Balanced Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Enterprise Portfolio (formerly, Janus Aspen Enterprise Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Flexible Bond Portfolio (formerly, Janus Aspen Flexible Bond Portfolio), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Forty Portfolio (formerly, Janus Aspen Forty Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
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Additional Information (unaudited)
· For Janus Henderson Global Allocation Portfolio – Moderate (formerly, Janus Aspen Global Allocation Portfolio – Moderate), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Research Portfolio (formerly, Janus Aspen Global Research Portfolio), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance
· For Janus Henderson Global Technology Portfolio (formerly, Janus Aspen Global Technology Portfolio), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Unconstrained Bond Portfolio (formerly, Janus Aspen Global Unconstrained Bond Portfolio), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson U.S. Low Volatility Portfolio (formerly, Janus Aspen Intech U.S. Low Volatility Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Research Portfolio (formerly, Janus Aspen Janus Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Overseas Portfolio (formerly, Janus Aspen Overseas Portfolio), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Mid Cap Value Portfolio (formerly, Janus Aspen Perkins Mid Cap Value Portfolio), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital and Perkins had taken or were taking to improve performance, and that the performance trend was improving.
In consideration of each Fund’s performance, the Trustees concluded that, taking into account the factors relevant to performance, as well as other considerations, including steps taken to improve performance, the Fund’s performance warranted continuation of the Fund’s investment advisory and subadvisory agreement(s).
Costs of Services Provided
The Trustees examined information regarding the fees and expenses of each Fund in comparison to similar information for other comparable funds as provided by Broadridge, an independent data provider. They also reviewed an analysis of that information provided by their independent fee consultant and noted that the rate of management (investment advisory and any administration, but excluding out-of-pocket costs) fees for many of the Funds, after applicable waivers, was below the average management fee rate of the respective peer group of funds selected by an independent data provider. The Trustees also examined information regarding the subadvisory fees charged for subadvisory services, as applicable, noting that all such fees were paid by Janus Capital out of its management fees collected from such Fund.
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Additional Information (unaudited)
The independent fee consultant provided its belief that the management fees charged by Janus Capital to each of the Funds under the current investment advisory and administration agreements are reasonable in relation to the services provided by Janus Capital. The independent fee consultant found: (1) the total expenses and management fees of the Funds to be reasonable relative to other mutual funds; (2) total expenses, on average, were 12% below the average total expenses of their respective Broadridge Expense Group peers and 20% below the average total expenses for their Broadridge Expense Universes; (3) management fees for the Funds, on average, were 11% below the average management fees for their Expense Groups and 13% below the average for their Expense Universes; and (4) Fund expenses at the functional level for each asset and share class category were reasonable. The Trustees also considered the total expenses for each share class of each Fund compared to the average total expenses for its Broadridge Expense Group peers and to average total expenses for its Broadridge Expense Universe.
The independent fee consultant concluded that, based on its strategic review of expenses at the complex, category and individual fund level, Fund expenses were found to be reasonable relative to both Expense Group and Expense Universe benchmarks. Further, for certain Funds, the independent fee consultant also performed a systematic “focus list” analysis of expenses in the context of the performance or service delivered to each set of investors in each share class in each selected Fund. Based on this analysis, the independent fee consultant found that the combination of service quality/performance and expenses on these individual Funds and share classes were reasonable in light of performance trends, performance histories, and existence of performance fees, breakpoints, and expense waivers on such Funds.
The Trustees considered the methodology used by Janus Capital and each subadviser in determining compensation payable to portfolio managers, the competitive environment for investment management talent, and the competitive market for mutual funds in different distribution channels.
The Trustees also reviewed management fees charged by Janus Capital and each subadviser to comparable separate account clients and to comparable non-affiliated funds subadvised by Janus Capital or by a subadviser (for which Janus Capital or the subadviser provides only or primarily portfolio management services). Although in most instances subadvisory and separate account fee rates for various investment strategies were lower than management fee rates for Funds having a similar strategy, the Trustees considered that Janus Capital noted that, under the terms of the management agreements with the Funds, Janus Capital performs significant additional services for the Funds that it does not provide to those other clients, including administration services, oversight of the Funds’ other service providers, trustee support, regulatory compliance and numerous other services, and that, in serving the Funds, Janus Capital assumes many legal risks and other costs that it does not assume in servicing its other clients. Moreover, they noted that the independent fee consultant found that: (1) the management fees Janus Capital charges to the Funds are reasonable in relation to the management fees Janus Capital charges to its institutional and subadvised accounts; (2) these institutional and subadvised accounts have different service and infrastructure needs; (3) Janus mutual fund investors enjoy reasonable fees relative to the fees charged to Janus institutional and subadvised fund investors; and (4) in the majority of cases, the Funds receive proportionally better pricing than the industry in relation to Janus institutional and subadvised accounts.
The Trustees considered the fees for each Fund for its fiscal year ended in 2015, and noted the following with regard to each Fund’s total expenses, net of applicable fee waivers (the Fund’s “total expenses”):
Fixed-Income Funds and Money Market Funds
· For Janus Henderson Flexible Bond Fund (formerly, Janus Flexible Bond Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Bond Fund (formerly, Janus Global Bond Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Unconstrained Bond Fund (formerly, Janus Global Unconstrained Bond Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for certain share
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classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson High-Yield Fund (formerly, Janus High-Yield Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Multi-Sector Income Fund (formerly, Janus Multi-Sector Income Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Real Return Fund (formerly, Janus Real Return Fund), the Trustees noted that, although the Fund’s total expenses were equal to or exceeded the peer group average for all share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Short-Term Bond Fund (formerly, Janus Short-Term Bond Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Government Money Market Fund (formerly, Janus Government Money Market Fund), the Trustees noted that the Fund’s total expenses exceeded the peer group average for both share classes. The Trustees considered that management fees for this Fund are higher than the peer group average due to the Fund’s management fee including other costs, such as custody and transfer agent services, while many funds in the peer group pay these expenses separately from their management fee. In addition, the Trustees considered that Janus Capital voluntarily waives one-half of its advisory fee and other expenses in order to maintain a positive yield.
· For Janus Henderson Money Market Fund (formerly, Janus Money Market Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes. In addition, the Trustees considered that Janus Capital voluntarily waives one- half of its advisory fee and other expenses in order to maintain a positive yield.
Asset Allocation Funds
· For Janus Henderson Global Allocation Fund – Conservative (formerly, Janus Global Allocation Fund – Conservative), the Trustees noted that, although the Fund’s total expenses exceeded the peer group median for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Allocation Fund – Growth (formerly, Janus Global Allocation Fund – Growth), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Allocation Fund – Moderate (formerly, Janus Global Allocation Fund – Moderate), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
Alternative Fund
· For Janus Henderson Diversified Alternatives Fund (formerly, Janus Diversified Alternatives Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
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Value Funds
· For Janus Henderson International Value Fund (formerly, Perkins International Value Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Value Fund (formerly, Perkins Global Value Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Large Cap Value Fund (formerly, Perkins Large Cap Value Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Mid Cap Value Fund (formerly, Perkins Mid Cap Value Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Select Value Fund (formerly, Perkins Select Value Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Small Cap Value Fund (formerly, Perkins Small Cap Value Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Value Plus Income Fund (formerly, Perkins Value Plus Income Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
Mathematical Funds
· For Janus Henderson Emerging Markets Managed Volatility Fund (formerly, Intech Emerging Markets Managed Volatility Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Income Managed Volatility Fund (formerly, Intech Global Income Managed Volatility Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson International Managed Volatility Fund (formerly, Intech International Managed Volatility Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson U.S. Managed Volatility Fund (formerly, Intech U.S. Managed Volatility Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
Growth and Core Funds
· For Janus Henderson Balanced Fund (formerly, Janus Balanced Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s
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expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Contrarian Fund (formerly, Janus Contrarian Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Enterprise Fund (formerly, Janus Enterprise Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Forty Fund (formerly, Janus Forty Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Growth and Income Fund (formerly, Janus Growth and Income Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Research Fund (formerly, Janus Research Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable.
· For Janus Henderson Triton Fund (formerly, Janus Triton Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Venture Fund (formerly, Janus Venture Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
Global and International Funds
· For Janus Henderson Adaptive Global Allocation Fund (formerly, Janus Adaptive Global Allocation Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group median for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Asia Equity Fund (formerly, Janus Asia Equity Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Life Sciences Fund (formerly, Janus Global Life Sciences Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Real Estate Fund (formerly, Janus Global Real Estate Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to
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limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Research Fund (formerly, Janus Global Research Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Select Fund (formerly, Janus Global Select Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Technology Fund (formerly, Janus Global Technology Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Overseas Fund (formerly, Janus Overseas Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
Janus Aspen Series
· For Janus Henderson Balanced Portfolio (formerly, Janus Aspen Balanced Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Enterprise Portfolio (formerly, Janus Aspen Enterprise Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Flexible Bond Portfolio (formerly, Janus Aspen Flexible Bond Portfolio), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for both share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Forty Portfolio (formerly, Janus Aspen Forty Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Allocation Portfolio – Moderate (formerly, Janus Aspen Global Allocation Portfolio – Moderate), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for both share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Research Portfolio (formerly, Janus Aspen Global Research Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Technology Portfolio (formerly, Janus Aspen Global Technology Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Unconstrained Bond Portfolio (formerly, Janus Aspen Global Unconstrained Bond Portfolio), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for both share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson U.S. Low Volatility Portfolio (formerly, Janus Aspen Intech U.S. Low Volatility Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for its sole share class.
· For Janus Henderson Research Portfolio (formerly, Janus Aspen Janus Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group mean for both share classes.
· For Janus Henderson Overseas Portfolio (formerly, Janus Aspen Overseas Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Mid Cap Value Portfolio (formerly, Janus Aspen Perkins Mid Cap Value Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
The Trustees reviewed information on the profitability to Janus Capital and its affiliates of their relationships with each Fund, as well as an explanation of the methodology utilized by Janus Capital when allocating various expenses of Janus Capital and its affiliates with respect to contractual relationships with the Funds and other clients. The Trustees also reviewed the financial statements and corporate structure of Janus Capital’s parent company. In their review, the
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Trustees considered whether Janus Capital and each subadviser receive adequate incentives and resources to manage the Funds effectively. The Trustees recognized that profitability comparisons among fund managers are difficult because very little comparative information is publicly available, and the profitability of any fund manager is affected by numerous factors, including the organizational structure of the particular fund manager, the types of funds and other accounts it manages, possible other lines of business, the methodology for allocating expenses, and the fund manager’s capital structure and cost of capital. However, taking into account those factors and the analysis provided by the Trustees’ independent fee consultant, and based on the information available, the Trustees concluded that Janus Capital’s profitability with respect to each Fund in relation to the services rendered was reasonable.
The independent fee consultant found that, while assessing the reasonableness of expenses in light of Janus Capital’s profits is dependent on comparisons with other publicly-traded mutual fund advisers, and that these comparisons are limited in accuracy by differences in complex size, business mix, institutional account orientation, and other factors, after accepting these limitations, the level of profit earned by Janus Capital from managing the Funds is reasonable.
The Trustees concluded that the management fees payable by each Fund to Janus Capital and its affiliates, as well as the fees paid by Janus Capital to the subadvisers of subadvised Funds, were reasonable in relation to the nature, extent, and quality of the services provided, taking into account the fees charged by other advisers for managing comparable mutual funds with similar strategies, the fees Janus Capital and the subadvisers charge to other clients, and, as applicable, the impact of fund performance on management fees payable by the Funds. The Trustees also concluded that each Fund’s total expenses were reasonable, taking into account the size of the Fund, the quality of services provided by Janus Capital and any subadviser, the investment performance of the Fund, and any expense limitations agreed to or provided by Janus Capital.
Economies of Scale
The Trustees considered information about the potential for Janus Capital to realize economies of scale as the assets of the Funds increase. They noted their independent fee consultant’s analysis of economies of scale in prior years. They also noted that, although many Funds pay advisory fees at a base fixed rate as a percentage of net assets, without any breakpoints, their independent fee consultant concluded that 91% of these Funds have contractual management fees (gross of waivers) below their Broadridge expense group averages and, overall, 83% of the Funds are below their respective expense group averages for contractual management fees. They also noted that for those Funds whose expenses are being reduced by the contractual expense limitations of Janus Capital, Janus Capital is subsidizing the Funds because they have not reached adequate scale. Moreover, as the assets of some of the Funds have declined in the past few years, certain Funds have benefited from having advisory fee rates that have remained constant rather than increasing as assets declined. In addition, performance fee structures have been implemented for various Funds that have caused the effective rate of advisory fees payable by such a Fund to vary depending on the investment performance of the Fund relative to its benchmark index over the measurement period; and a few Funds have fee schedules with breakpoints and reduced fee rates above certain asset levels. The Trustees also noted that the Funds share directly in economies of scale through the lower charges of third-party service providers that are based in part on the combined scale of all of the Funds. Based on all of the information they reviewed, including past research and analysis conducted by the Trustees’ independent fee consultant, the Trustees concluded that the current fee structure of each Fund was reasonable and that the current rates of fees do reflect a sharing between Janus Capital and the Fund of any economies of scale that may be present at the current asset level of the Fund.
The independent fee consultant concluded that, given the limitations of various analytical approaches to economies of scale considered in prior years, and their conflicting results, its analyses could not confirm or deny the existence of economies of scale in the Janus complex. Further, the independent fee consultant provided its belief that Fund investors are well-served by the fee levels and performance fee structures in place on the Funds in light of any economies of scale that may be present at Janus Capital.
Other Benefits to Janus Capital
The Trustees also considered benefits that accrue to Janus Capital and its affiliates and subadvisers to the Funds from their relationships with the Funds. They recognized that two affiliates of Janus Capital separately serve the Funds as transfer agent and distributor, respectively, and the transfer agent receives compensation directly from the non-money market funds for services provided. The Trustees also considered Janus Capital’s past and proposed use of commissions paid by the Funds on portfolio brokerage transactions to obtain proprietary and third-party research products and services benefiting the Fund and/or other clients of Janus Capital and/or Janus Capital, and/or a
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subadviser to a Fund. The Trustees concluded that Janus Capital’s and the subadvisers’ use of these types of client commission arrangements to obtain proprietary and third-party research products and services was consistent with regulatory requirements and guidelines and was likely to benefit each Fund. The Trustees also concluded that, other than the services provided by Janus Capital and its affiliates and subadvisers pursuant to the agreements and the fees to be paid by each Fund therefor, the Funds and Janus Capital and the subadvisers may potentially benefit from their relationship with each other in other ways. They concluded that Janus Capital and/or the subadvisers benefits from the receipt of research products and services acquired through commissions paid on portfolio transactions of the Funds and that the Funds benefit from Janus Capital’s and/or the subadvisers’ receipt of those products and services as well as research products and services acquired through commissions paid by other clients of Janus Capital and/or other clients of the subadvisers. They further concluded that the success of any Fund could attract other business to Janus Capital, the subadvisers or other Janus funds, and that the success of Janus Capital and the subadvisers could enhance Janus Capital’s and the subadvisers’ ability to serve the Funds.
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Useful Information About Your Portfolio Report (unaudited)
The Management Commentary in this report includes valuable insight as well as statistical information to help you understand how your Portfolio’s performance and characteristics stack up against those of comparable indices.
If the Portfolio invests in foreign securities, this report may include information about country exposure. Country exposure is based primarily on the country of risk. A company may be allocated to a country based on other factors such as location of the company’s principal office, the location of the principal trading market for the company’s securities, or the country where a majority of the company’s revenues are derived.
Please keep in mind that the opinions expressed in the Management Commentary are just that: opinions. They are a reflection based on best judgment at the time this report was compiled, which was December 31, 2017. As the investing environment changes, so could opinions. These views are unique and are not necessarily shared by fellow employees or by Janus Henderson in general.
Performance Overviews
Performance overview graphs compare the performance of a hypothetical $10,000 investment in the Portfolio with one or more widely used market indices. When comparing the performance of the Portfolio with an index, keep in mind that market indices are not available for investment and do not reflect deduction of expenses.
Average annual total returns are quoted for a Portfolio with more than one year of performance history. Average annual total return is calculated by taking the growth or decline in value of an investment over a period of time, including reinvestment of dividends and distributions, then calculating the annual compounded percentage rate that would have produced the same result had the rate of growth been constant throughout the period. Average annual total return does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or redemptions of Portfolio shares.
Cumulative total returns are quoted for a Portfolio with less than one year of performance history. Cumulative total return is the growth or decline in value of an investment over time, independent of the period of time involved. Cumulative total return does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or redemptions of Portfolio shares.
Pursuant to federal securities rules, expense ratios shown in the performance chart reflect subsidized (if applicable) and unsubsidized ratios. The total annual fund operating expenses ratio is gross of any fee waivers, reflecting the Portfolio’s unsubsidized expense ratio. The net annual fund operating expenses ratio (if applicable) includes contractual waivers of Janus Capital and reflects the Portfolio’s subsidized expense ratio. Ratios may be higher or lower than those shown in the “Financial Highlights” in this report.
Schedule of Investments
Following the performance overview section is the Portfolio’s Schedule of Investments. This schedule reports the types of securities held in the Portfolio on the last day of the reporting period. Securities are usually listed by type (common stock, corporate bonds, U.S. Government obligations, etc.) and by industry classification (banking, communications, insurance, etc.). Holdings are subject to change without notice.
The value of each security is quoted as of the last day of the reporting period. The value of securities denominated in foreign currencies is converted into U.S. dollars.
If the Portfolio invests in foreign securities, it will also provide a summary of investments by country. This summary reports the Portfolio exposure to different countries by providing the percentage of securities invested in each country. The country of each security represents the country of risk. The Portfolio’s Schedule of Investments relies upon the industry group and country classifications published by Barclays and/or MSCI Inc.
Tables listing details of individual forward currency contracts, futures, written options, swaptions, and swaps follow the Portfolio’s Schedule of Investments (if applicable).
Statement of Assets and Liabilities
This statement is often referred to as the “balance sheet.” It lists the assets and liabilities of the Portfolio on the last day of the reporting period.
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Useful Information About Your Portfolio Report (unaudited)
The Portfolio’s assets are calculated by adding the value of the securities owned, the receivable for securities sold but not yet settled, the receivable for dividends declared but not yet received on securities owned, and the receivable for Portfolio shares sold to investors but not yet settled. The Portfolio’s liabilities include payables for securities purchased but not yet settled, Portfolio shares redeemed but not yet paid, and expenses owed but not yet paid. Additionally, there may be other assets and liabilities such as unrealized gain or loss on forward currency contracts.
The section entitled “Net Assets Consist of” breaks down the components of the Portfolio’s net assets. Because the Portfolio must distribute substantially all earnings, you will notice that a significant portion of net assets is shareholder capital.
The last section of this statement reports the net asset value (“NAV”) per share on the last day of the reporting period. The NAV is calculated by dividing the Portfolio’s net assets for each share class (assets minus liabilities) by the number of shares outstanding.
Statement of Operations
This statement details the Portfolio’s income, expenses, realized gains and losses on securities and currency transactions, and changes in unrealized appreciation or depreciation of Portfolio holdings.
The first section in this statement, entitled “Investment Income,” reports the dividends earned from securities and interest earned from interest-bearing securities in the Portfolio.
The next section reports the expenses incurred by the Portfolio, including the advisory fee paid to the investment adviser, transfer agent fees and expenses, and printing and postage for mailing statements, financial reports and prospectuses. Expense offsets and expense reimbursements, if any, are also shown.
The last section lists the amounts of realized gains or losses from investment and foreign currency transactions, and changes in unrealized appreciation or depreciation of investments and foreign currency-denominated assets and liabilities. The Portfolio will realize a gain (or loss) when it sells its position in a particular security. A change in unrealized gain (or loss) refers to the change in net appreciation or depreciation of the Portfolio during the reporting period. “Net Realized and Unrealized Gain/(Loss) on Investments” is affected both by changes in the market value of Portfolio holdings and by gains (or losses) realized during the reporting period.
Statements of Changes in Net Assets
These statements report the increase or decrease in the Portfolio’s net assets during the reporting period. Changes in the Portfolio’s net assets are attributable to investment operations, dividends and distributions to investors, and capital share transactions. This is important to investors because it shows exactly what caused the Portfolio’s net asset size to change during the period.
The first section summarizes the information from the Statement of Operations regarding changes in net assets due to the Portfolio’s investment operations. The Portfolio’s net assets may also change as a result of dividend and capital gains distributions to investors. If investors receive their dividends and/or distributions in cash, money is taken out of the Portfolio to pay the dividend and/or distribution. If investors reinvest their dividends and/or distributions, the Portfolio’s net assets will not be affected. If you compare the Portfolio’s “Net Decrease from Dividends and Distributions” to “Reinvested Dividends and Distributions,” you will notice that dividends and distributions have little effect on the Portfolio’s net assets. This is because the majority of the Portfolio’s investors reinvest their dividends and/or distributions.
The reinvestment of dividends and distributions is included under “Capital Share Transactions.” “Capital Shares” refers to the money investors contribute to the Portfolio through purchases or withdrawals via redemptions. The Portfolio’s net assets will increase and decrease in value as investors purchase and redeem shares from the Portfolio.
Financial Highlights
This schedule provides a per-share breakdown of the components that affect the Portfolio’s NAV for current and past reporting periods as well as total return, asset size, ratios, and portfolio turnover rate.
The first line in the table reflects the NAV per share at the beginning of the reporting period. The next line reports the net investment income/(loss) per share. Following is the per share total of net gains/(losses), realized and unrealized. Per share dividends and distributions to investors are then subtracted to arrive at the NAV per share at the end of the
70 | DECEMBER 31, 2017 |
Janus Henderson VIT Balanced Portfolio
Useful Information About Your Portfolio Report (unaudited)
period. The next line reflects the total return for the period. Also included are ratios of expenses and net investment income to average net assets.
The Portfolio’s expenses may be reduced through expense offsets and expense reimbursements. The ratios shown reflect expenses before and after any such offsets and reimbursements.
The ratio of net investment income/(loss) summarizes the income earned less expenses, divided by the average net assets of the Portfolio during the reporting period. Do not confuse this ratio with the Portfolio’s yield. The net investment income ratio is not a true measure of the Portfolio’s yield because it does not take into account the dividends distributed to the Portfolio’s investors.
The next figure is the portfolio turnover rate, which measures the buying and selling activity in the Portfolio. Portfolio turnover is affected by market conditions, changes in the asset size of the Portfolio, fluctuating volume of shareholder purchase and redemption orders, the nature of the Portfolio’s investments, and the investment style and/or outlook of the portfolio manager(s) and/or investment personnel. A 100% rate implies that an amount equal to the value of the entire portfolio was replaced once during the fiscal year; a 50% rate means that an amount equal to the value of half the portfolio is traded in a year; and a 200% rate means that an amount equal to the value of the entire portfolio is traded every six months.
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Janus Henderson VIT Balanced Portfolio
Shareholder Meeting (unaudited)
Special meetings of shareholders were held on April 6, 2017 and adjourned and reconvened on April 18, 2017 (together, the "meeting"). At the meeting, the following matters were voted on and approved by shareholders. Each vote reported represents one dollar of net asset value held on the record date for the meeting. The results of the meeting are noted below. | |||||||||
Proposals | |||||||||
1. For all Portfolios, to approve a new investment advisory agreement between the Trust, on behalf of the Portfolio, and Janus Capital Management LLC. | |||||||||
| Number of Votes ($) |
|
| ||||||
Record Date Votes ($) | Affirmative | Against | Abstain | BNV | Total | ||||
2,638,178,774.950 | 2,370,873,935.428 | 100,178,894.048 | 110,214,167.941 | (1.627) | 2,581,266,995.790 | ||||
Percentage of Total Outstanding Votes (%) |
| Percentage Voted (%) | |||||||
Affirmative | Against | Abstain | BNV | Total | Affirmative | Against | Abstain | BNV | Total |
89.868 | 3.797 | 4.178 | 0.000 | 97.843 | 91.849 | 3.881 | 4.270 | 0.000 | 100.000 |
4. To elect an additional Trustee to the Board of Trustees of the Trust. - Diane L. Wallace. | |||||||||
| Number of Votes ($) |
|
| ||||||
Record Date Votes ($) | Affirmative | Against | Abstain | BNV | Total | ||||
7,198,647,378.476 | 6,547,141,899.530 | 651,505,478.946 | 0.000 | 0.000 | 7,198,647,378.476 | ||||
Percentage of Total Outstanding Votes (%) |
| Percentage Voted (%) | |||||||
Affirmative | Against | Abstain | BNV | Total | Affirmative | Against | Abstain | BNV | Total |
80.347 | 7.995 | 0.000 | 0.000 | 88.342 | 90.950 | 9.050 | 0.000 | 0.000 | 100.000 |
Alan A. Brown, William D. Cvengros, Raudline Etienne, William F. McCalpin, Gary A. Poliner, James T. Rothe, William D. Stewart and Linda S. Wolf continue to serve as Trustees following the meeting. | |||||||||
5. For all Portfolios, except Global Unconstrained Bond Portfolio, to approve a proposal that would authorize the Adviser to enter into and materially amend sub-advisory agreements in the future with wholly-owned subadvisers and unaffiliated sub-advisers, with the approval of the Board of Trustees of the Trust, but without obtaining additional shareholder approval. | |||||||||
| Number of Votes ($) |
|
| ||||||
Record Date Votes ($) | Affirmative | Against | Abstain | BNV | Total | ||||
2,638,178,774.950 | 2,114,660,169.894 | 279,702,102.306 | 186,904,723.606 | (0.016) | 2,581,266,995.790 | ||||
Percentage of Total Outstanding Votes (%) |
| Percentage Voted (%) | |||||||
Affirmative | Against | Abstain | BNV | Total | Affirmative | Against | Abstain | BNV | Total |
80.156 | 10.602 | 7.085 | 0.000 | 97.843 | 81.923 | 10.836 | 7.241 | 0.000 | 100.000 |
72 | DECEMBER 31, 2017 |
Janus Henderson VIT Balanced Portfolio
Designation Requirements (unaudited)
For federal income tax purposes, the Portfolio designated the following for the year ended December 31, 2017:
| |
Capital Gain Distributions | $5,766,022 |
Dividends Received Deduction Percentage | 66% |
|
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Janus Henderson VIT Balanced Portfolio
Trustees and Officers (unaudited)
The Portfolio’s Statement of Additional Information includes additional information about the Trustees and officers and is available, without charge, by calling 1-877-335-2687.
The following are the Trustees and officers of the Trust, together with a brief description of their principal occupations during the last five years (principal occupations for certain Trustees may include periods over five years).
Each Trustee has served in that capacity since he or she was originally elected or appointed. The Trustees do not serve a specified term of office. Each Trustee will hold office until the termination of the Trust or his or her earlier death, resignation, retirement, incapacity, or removal. Under the Portfolio’s Governance Procedures and Guidelines, the policy is for Trustees to retire no later than the end of the calendar year in which the Trustee turns 75. The Trustees review the Portfolio’s Governance Procedures and Guidelines from time to time and may make changes they deem appropriate. The Portfolio’s Nominating and Governance Committee will consider nominees for the position of Trustee recommended by shareholders. Shareholders may submit the name of a candidate for consideration by the Committee by submitting their recommendations to the Trust’s Secretary. Each Trustee is currently a Trustee of one other registered investment company advised by Janus Capital: Janus Investment Fund. Collectively, these two registered investment companies consist of 58 series or funds.
The Trust’s officers are elected annually by the Trustees for a one-year term. Certain officers also serve as officers of Janus Investment Fund. Certain officers of the Portfolio may also be officers and/or directors of Janus Capital. Except as otherwise disclosed, Portfolio officers receive no compensation from the Portfolio, except for the Portfolio’s Chief Compliance Officer, as authorized by the Trustees.
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Janus Henderson VIT Balanced Portfolio
Trustees and Officers (unaudited)
TRUSTEES | ||||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years | |
Independent Trustees | ||||||
William F. McCalpin | Chairman | 1/08-Present | Managing Partner, Impact Investments, Athena Capital Advisors LLC (independent | 63 | Director of Mutual Fund Directors Forum (a non-profit |
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Janus Henderson VIT Balanced Portfolio
Trustees and Officers (unaudited)
TRUSTEES | ||||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years | |
Independent Trustees | ||||||
Alan A. Brown | Trustee | 1/13-Present | Executive Vice President, | 63 | Director of WTTW (PBS affiliate) (since 2003). Formerly, Director of |
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Janus Henderson VIT Balanced Portfolio
Trustees and Officers (unaudited)
TRUSTEES | |||||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years | ||
Independent Trustees | |||||||
William D. Cvengros 151 Detroit Street Denver, CO 80206 DOB: 1948 | Trustee | 1/11-Present | Managing Member and Chief Executive Officer of SJC Capital, LLC (a personal investment company and | 63 | Advisory Board Member, Innovate Partners Emerging |
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Janus Henderson VIT Balanced Portfolio
Trustees and Officers (unaudited)
TRUSTEES | ||||||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years | |||
Independent Trustees | ||||||||
Raudline Etienne | Trustee | 6/16-Present | Founder, Daraja Capital (advisory and investment firm) | 63 | Director of Brightwood Capital Advisors, LLC (since 2014). |
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Janus Henderson VIT Balanced Portfolio
Trustees and Officers (unaudited)
TRUSTEES | ||||||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years | |||
Independent Trustees | ||||||||
Gary A. Poliner 151 Detroit Street Denver, CO 80206 DOB: 1953 | Trustee | 6/16-Present | Retired. Formerly, President (2010-2013) of Northwestern Mutual Life Insurance Company. | 63 | Director of MGIC Investment Corporation (private mortgage insurance) (since 2013) and West Bend Mutual Insurance Company (property/casualty insurance) (since 2013). Formerly, Trustee of Northwestern Mutual Life Insurance Company (2010-2013); Chairman and Director of Northwestern Mutual Series Fund, Inc. (2010-2012); and Director of Frank Russell Company (global asset management firm) (2008-2013). |
Janus Aspen Series | 79 |
Janus Henderson VIT Balanced Portfolio
Trustees and Officers (unaudited)
TRUSTEES | ||||||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years | |||
Independent Trustees | ||||||||
James T. Rothe | Trustee | 1/97-Present | Co-founder and Managing Director of Roaring Fork Capital SBIC, L.P. (SBA SBIC fund focusing on private investment in public equity firms), and Professor Emeritus of Business of the University of Colorado, Colorado Springs, CO (since 2004). Formerly, Professor of Business of the University of Colorado (2002-2004), and | 63 | Formerly, Director of Red Robin Gourmet Burgers, Inc. (RRGB) (2004-2014). | |||
William D. Stewart | Trustee | 9/93-Present | Retired. Formerly, President and founder of HPS Products and Corporate Vice President of MKS Instruments, Boulder, | 63 | None |
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Janus Henderson VIT Balanced Portfolio
Trustees and Officers (unaudited)
TRUSTEES | ||||||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years | |||
Independent Trustees | ||||||||
Diane L. Wallace | Trustee | 6/17-Present | Retired. |
| Formerly, Independent Trustee, |
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Janus Henderson VIT Balanced Portfolio
Trustees and Officers (unaudited)
TRUSTEES | ||||||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years | |||
Independent Trustees | ||||||||
Linda S. Wolf | Trustee | 12/05-Present | Retired. Formerly, Chairman and Chief Executive Officer of Leo Burnett (Worldwide) (advertising agency) (2001-2005). | 63 | Director of Chicago |
82 | DECEMBER 31, 2017 |
Janus Henderson VIT Balanced Portfolio
Trustees and Officers (unaudited)
OFFICERS | |||
Name, Address, and Age | Positions Held with the Trust | Term of Office* and Length of Time Served | Principal Occupations During the Past Five Years |
Jeremiah Buckley | Executive Vice President and Co-Portfolio Manager Janus Henderson Balanced Portfolio | 12/15-Present | Portfolio Manager for other Janus Henderson accounts. |
Marc Pinto | Executive Vice President and Co-Portfolio Manager Janus Henderson Balanced Portfolio | 5/05-Present | Vice President of Janus Capital and Portfolio Manager for other Janus Henderson accounts. |
Mayur Saigal | Executive Vice President and Co-Portfolio Manager Janus Henderson Balanced Portfolio | 12/15-Present | Portfolio Manager for other Janus Henderson accounts and Analyst for Janus Capital. |
Darrell Watters | Executive Vice President and Co-Portfolio Manager Janus Henderson Balanced Portfolio | 12/15-Present | Vice President of Janus Capital and Portfolio Manager for other Janus Henderson accounts. |
Janus Aspen Series | 83 |
Janus Henderson VIT Balanced Portfolio
Trustees and Officers (unaudited)
OFFICERS | |||
Name, Address, and Age | Positions Held with the Trust | Term of Office* and Length of Time Served | Principal Occupations During the Past Five Years |
Bruce L. Koepfgen | President and Chief Executive Officer | 7/14-Present | Head of North America at Janus Henderson Investors and Janus Capital Management LLC (since 2017); Executive Vice President and Director of Janus International Holding LLC (since 2011); Executive Vice President of Janus Distributors LLC (since 2011); Vice President and Director of INTECH Investment Management LLC (since 2011); Executive Vice President and Director of Perkins Investment Management LLC (since 2011); and Executive Vice President and Director of Janus Management Holdings Corporation (since 2011). Formerly, President of Janus Capital Group Inc. and Janus Capital Management LLC (2013-2017); Executive Vice President of Janus Services LLC (2011-2015), Janus Capital Group Inc. and Janus Capital Management LLC (2011-2013); and Chief Financial Officer of Janus Capital Group Inc., Janus Capital Management LLC, Janus Distributors LLC, Janus Management Holdings Corporation, and Janus Services LLC (2011-2013). |
84 | DECEMBER 31, 2017 |
Janus Henderson VIT Balanced Portfolio
Trustees and Officers (unaudited)
OFFICERS | |||
Name, Address, and Age | Positions Held with the Trust | Term of Office* and Length of Time Served | Principal Occupations During the Past Five Years |
Susan K. Wold | Vice President, Chief Compliance Officer, and Anti-Money Laundering Officer | 9/17-Present | Senior Vice President and Head of Compliance, North America for Janus |
Jesper Nergaard | Chief Financial Officer | 3/05-Present | Vice President of Janus Capital and Janus Services LLC. |
Kathryn L. Santoro | Vice President, Chief Legal Counsel, and Secretary | 12/16-Present | Vice President of Janus Capital and Janus Services LLC (since 2016). Formerly, Vice President and Associate Counsel of Curian Capital, LLC and Curian Clearing LLC |
* Officers are elected at least annually by the Trustees for a one-year term and may also be elected from time to time by the Trustees for an interim period.
Janus Aspen Series | 85 |
Knowledge. Shared
At Janus Henderson, we believe in the sharing of expert insight for better investment and business decisions. We call this ethos Knowledge. Shared.
Learn more by visiting janushenderson.com.
This report is submitted for the general information of shareholders of the Portfolio. It is not an offer or solicitation for the Portfolio and is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. | ||||||||
Janus Henderson, Janus, Perkins and Intech are trademarks or registered trademarks of Janus Henderson Investors. © Janus Henderson Investors. The name Janus Henderson Investors includes HGI Group Limited, Henderson Global Investors (Brand Management) Sarl and Janus International Holding LLC. Portfolios distributed by Janus Henderson Distributors | ||||||||
109-02-81113 02-18 |
ANNUAL REPORT December 31, 2017 | |||
Janus Henderson VIT Enterprise Portfolio (formerly named Janus Aspen Enterprise Portfolio) | |||
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Janus Aspen Series | |||
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HIGHLIGHTS · Portfolio management perspective · Investment strategy behind your portfolio · Portfolio performance, characteristics | |||
Table of Contents
Janus Henderson VIT Enterprise Portfolio
Janus Henderson VIT Enterprise Portfolio (unaudited)
PERFORMANCE OVERVIEW
During the 12 months ended December 31, 2017, Janus Henderson VIT Enterprise Portfolio’s Institutional Shares and Service Shares returned 27.42% and 27.09%, respectively. Meanwhile, the Portfolio’s benchmark, the Russell Midcap® Growth Index, returned 25.27%.
INVESTMENT ENVIRONMENT
Mid-cap stocks registered strong gains in 2017. Equities enjoyed a strong start to the year, as investors considered the potential impact of some of the Trump administration’s proposed corporate tax cuts and pro-growth initiatives. Strong corporate earnings and signs of a strengthening global economy continued to bolster stocks throughout the year. U.S. equities continued to climb higher in the fourth quarter as corporate tax reform appeared likely, and was eventually signed into law. Volatility remained low throughout most of the year. Technology and financials were two of the highest returning sectors within the Russell Midcap Growth Index.
PERFORMANCE DISCUSSION
The portfolio outperformed its benchmark, the Russell Midcap Growth Index, during the year. Our Fund tends to emphasize “durable growth” companies that we believe have more predictable business models, recurring revenue streams, strong free cash flow growth and strong competitive positioning that should allow those companies to take market share and experience sustainable long-term growth across a variety of economic environments. We believe a collection of these higher-quality growth companies can help drive relative outperformance over full market cycles. This year, some of our top contributors to performance were longtime holdings in the portfolio that exemplify many of the characteristics we typically seek in companies.
Semiconductor equipment manufacturer Lam Research was our top contributor to performance. Many of the businesses Lam serves are in the memory market. Those customers have enjoyed healthy end markets due to the growth in machine learning and the Internet of Things (IoT). A strong spending cycle by these companies has led to strong demand for Lam’s equipment, and that has shown through in its last several earnings reports.
ON Semiconductor was another large contributor. Strong earnings results have helped demonstrate the significant synergies and costs savings ON can achieve from its recent acquisition of Fairchild, and that helped lift the stock during the period. Going forward, we continue to like the company’s growth prospects, and also its potential to improve margins. We also like that ON produces semiconductors for a wide range of fast-growing industrial end markets, including power management and automobiles, where image sensors are becoming more prevalent. We believe the diversity of its end markets should create a more stable earnings profile for the company.
Atlassian Corp. was another top contributor. Third-quarter earnings that handily beat consensus expectations helped drive the stock during the period. We continue to see upside for the Australian software company. Atlassian’s software tools allow various business teams to collaborate with each other. We like the recurring revenue streams its subscription-based services provide. We also like that Atlassian’s offerings are valuable to the businesses that use them, but represent a relatively low cost for those companies. We believe this gives Atlassian a strong degree of pricing power for its services. Finally, we like that many of Atlassian’s services have gained traction virally, allowing the company to grow without a large sales force.
While generally pleased with our relative performance this year, we still held some stocks that detracted from results. World Fuel Services was our largest detractor. The fuel logistics company has had difficulties managing its costs, which has negatively affected the stock. We believe World Fuel Services will ultimately address its cost issues. We
Janus Aspen Series | 1 |
Janus Henderson VIT Enterprise Portfolio (unaudited)
continue to hold the stock, and believe their business linking fuel buyers and sellers in transportation markets around the world is valuable to clients. We also believe the company can continue to take share within the fragmented industries in which it operates.
Ritchie Brothers Auctioneers was another large detractor. The company conducts worldwide public auctions of heavy industrial equipment used in construction, transportation and agriculture. Auction proceeds were a little soft early in the period, which negatively affected the stock. Our long-term view of the company remains unchanged, however. We believe that earnings for auctioneers such as Ritchie Bros. are less economically sensitive than many other industrial companies: in strong economic environments, companies must buy heavy equipment to expand; in weak economic environments, they must sell the equipment that is not being used.
Omnicom Group also detracted from performance this year. Fear that online platforms will allow traditional advertisers to bypass advertising agencies such as Omnicom has weighed on the stock. While we acknowledge Omnicom’s competitive environment is evolving, we feel those concerns are more than reflected in the stock’s valuation, and continue to own the company.
DERIVATIVES
Please see the Derivative Instruments section in the “Notes to Financial Statements” for a discussion of derivatives used by the Fund.
OUTLOOK
We have a positive outlook for the broader economy, but expect more modest returns for mid-cap stocks from here. For the first time since the financial crisis, we see signs of a coordinated, global economic expansion. A stronger economy coupled with U.S. corporate tax cuts could provide a significant near-term boost to earnings in 2018, but we believe much of the optimism is already reflected in valuations, which are on the high end of historical averages.
As valuations have risen, it has become more challenging to find new, reasonably valued stocks that fit the investment criteria we typically seek in our portfolio. Despite the challenge, we are not veering from our investment approach. A focus on durable growth companies has served our clients well through the years and we believe it is the best way to add value through an entire market cycle. But we’ve had to dig a little deeper to find those reasonably valued, durable growth companies. On the margins, we’ve trimmed some stocks that have reached our valuation targets, and invested in some new positions where the sustainability of earnings growth is less appreciated by the market.
While we’ve made incremental changes to the portfolio, we head into 2018 with the same structural positioning we have maintained for the last few years. We continue to maintain an overweight to the technology and health care sectors. Those sectors include companies exposed to a few important themes within our portfolio that we believe provide some of the best long-term growth opportunities in the market: innovative health care treatments and devices, the digitization of the car and home, and the integration of software to automate functions in nearly every industry. The latter theme is particularly promising in the mid-cap space, where we find a number of companies creating specially tailored software solutions that address the unique needs of a niche vertical or industry.
Going forward, we are also likely to maintain our underweights to the consumer staples and consumer discretionary sectors. Within the consumer staples sector, we find a dearth of reasonably valued growth companies. We also believe new distribution channels and new marketing methods that make it easier to reach consumers have whittled away the barriers to entry many consumer staples companies once enjoyed.
Within the consumer discretionary sector, meanwhile, we are underexposed to brick and mortar retail companies within the index. Many of those stocks enjoyed gains this quarter because they stand to disproportionately benefit from U.S. tax cuts, but the long-term fundamental backdrop for mid-cap retailers hasn’t changed. E-commerce sites continue to take sales from these companies, who at the same time must make major investments to try and create better online and digital sales channels of their own.
Underweights to both sectors were large contributors to our relative performance in 2017. Given the challenging backdrop companies in both sectors face, we believe the underweights remain justified.
Thank you for your investment in Janus Henderson VIT Enterprise Portfolio.
2 | DECEMBER 31, 2017 |
Janus Henderson VIT Enterprise Portfolio (unaudited)
Portfolio At A Glance
December 31, 2017
5 Top Performers - Holdings |
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| 5 Bottom Performers - Holdings |
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Contribution | Contribution | |||||
Lam Research Corp | 0.88% | World Fuel Services Corp | -0.34% | |||
ON Semiconductor Corp | 0.85% | TESARO Inc | -0.16% | |||
Atlassian Corp PLC | 0.83% | Ritchie Bros Auctioneers Inc | -0.15% | |||
LPL Financial Holdings Inc | 0.80% | Omnicom Group Inc | -0.14% | |||
TE Connectivity Ltd | 0.79% | Celgene Corp | -0.12% | |||
5 Top Performers - Sectors* |
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Portfolio | Portfolio Weighting | Russell Midcap Growth Index | ||||
Contribution | (Average % of Equity) | Weighting | ||||
Consumer Discretionary | 2.44% | 9.42% | 19.97% | |||
Information Technology | 1.15% | 35.19% | 25.32% | |||
Consumer Staples | 1.14% | 0.00% | 5.51% | |||
Industrials | 0.77% | 17.79% | 15.72% | |||
Real Estate | 0.06% | 4.12% | 4.22% | |||
5 Bottom Performers - Sectors* |
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Portfolio | Portfolio Weighting | Russell Midcap Growth Index | ||||
Contribution | (Average % of Equity) | Weighting | ||||
Other** | -1.16% | 4.57% | 0.00% | |||
Health Care | -0.65% | 18.85% | 15.06% | |||
Energy | -0.17% | 0.62% | 1.84% | |||
Materials | -0.15% | 1.82% | 5.84% | |||
Utilities | -0.02% | 0.00% | 0.03% | |||
Security contribution to performance is measured by using an algorithm that multiplies the daily performance of each security with the previous day’s ending weight in the portfolio and is gross of advisory fees. Fixed income securities and certain equity securities, such as private placements and some share classes of equity securities, are excluded. | ||||||
* | Based on sector classification according to the Global Industry Classification Standard (“GICS”) codes, which are the exclusive property and a service mark of MSCI Inc. and Standard & Poor’s. | |||||
** | Not a GICS classified sector. |
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Janus Henderson VIT Enterprise Portfolio (unaudited)
Portfolio At A Glance
December 31, 2017
5 Largest Equity Holdings - (% of Net Assets) | |
Sensata Technologies Holding NV | |
Electrical Equipment | 2.5% |
TD Ameritrade Holding Corp | |
Capital Markets | 2.4% |
TE Connectivity Ltd | |
Electronic Equipment, Instruments & Components | 2.2% |
Lamar Advertising Co | |
Equity Real Estate Investment Trusts (REITs) | 2.0% |
Crown Castle International Corp | |
Equity Real Estate Investment Trusts (REITs) | 2.0% |
11.1% |
Asset Allocation - (% of Net Assets) | |||||
Common Stocks | 94.8% | ||||
Investment Companies | 5.8% | ||||
Preferred Stocks | 0.1% | ||||
Other | (0.7)% | ||||
100.0% |
Top Country Allocations - Long Positions - (% of Investment Securities) | |
As of December 31, 2017 | As of December 31, 2016 |
4 | DECEMBER 31, 2017 |
Janus Henderson VIT Enterprise Portfolio (unaudited)
Performance
See important disclosures on the next page. |
| Expense Ratios - | ||||||||
Average Annual Total Return - for the periods ended December 31, 2017 |
|
| per the May 1, 2017 prospectuses | ||||||
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| One | Five | Ten | Since |
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| Total Annual Fund | |
Institutional Shares |
| 27.42% | 17.28% | 10.16% | 11.07% |
|
| 0.74% | |
Service Shares |
| 27.09% | 16.98% | 9.88% | 10.79% |
|
| 0.98% | |
Russell Midcap Growth Index |
| 25.27% | 15.30% | 9.10% | 9.84% |
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Morningstar Quartile - Class Institutional Shares |
| 1st | 1st | 1st | 1st |
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Morningstar Ranking - based on total returns for Mid-Cap Growth Funds |
| 157/635 | 21/585 | 39/528 | 21/149 |
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|
|
Returns quoted are past performance and do not guarantee future results; current performance may be lower or higher. Investment returns and principal value will vary; there may be a gain or loss when shares are sold. For the most recent month-end performance call 800.668.0434 or visit janushenderson.com/VITperformance.
Performance may be affected by risks that include those associated with non-diversification, portfolio turnover, short sales, potential conflicts of interest, foreign and emerging markets, initial public offerings (IPOs), high-yield and high-risk securities, undervalued, overlooked and smaller capitalization companies, real estate related securities including Real Estate Investment Trusts (REITs), derivatives, and commodity-linked investments. Each product has different risks. Please see the prospectus for more information about risks, holdings and other details.
High absolute short-term performance is not typical and may not be achieved in the future. Such results should not be the sole basis for evaluating material facts in making an investment decision.
Returns shown do not represent actual returns since they do not include insurance charges. Returns shown would have been lower had they included insurance charges.
Returns include reinvestment of all dividends and distributions and do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or redemptions of Portfolio shares. The returns do not include adjustments in accordance with generally accepted accounting principles required at the period end for financial reporting purposes.
See Financial Highlights for actual expense ratios during the reporting period.
Performance for Service Shares prior to December 31, 1999 reflects the performance of Institutional Shares, adjusted to reflect the expenses of Service Shares.
Ranking is for the share class shown only; other classes may have different performance characteristics.
© 2017 Morningstar, Inc. All Rights Reserved.
There is no assurance that the investment process will consistently lead to successful investing.
See Notes to Schedule of Investments and Other Information for index definitions.
Janus Aspen Series | 5 |
Janus Henderson VIT Enterprise Portfolio (unaudited)
Performance
Index performance does not reflect the expenses of managing a portfolio as an index is unmanaged and not available for direct investment.
See “Useful Information About Your Portfolio Report.”
*The Portfolio’s inception date – September 13, 1993
6 | DECEMBER 31, 2017 |
Janus Henderson VIT Enterprise Portfolio (unaudited)
Expense Examples
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees; 12b-1 distribution and shareholder servicing fees (applicable to Service Shares only); transfer agent fees and expenses payable pursuant to the Transfer Agency Agreement; and other Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The example is based upon an investment of $1,000 invested at the beginning of the period and held for the six-months indicated, unless noted otherwise in the table and footnotes below.
Actual Expenses
The information in the table under the heading “Actual” provides information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the appropriate column for your share class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading “Hypothetical (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based upon the Portfolio’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’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 Portfolio and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Additionally, for an analysis of the fees associated with an investment in either share class or other similar funds, please visit www.finra.org/fundanalyzer.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as any charges at the separate account level or contract level. These fees are fully described in the Portfolio’s prospectuses. Therefore, the hypothetical examples are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
Actual | Hypothetical | |||||||||
| Beginning | Ending | Expenses |
| Beginning | Ending | Expenses | Net Annualized | ||
Institutional Shares | $1,000.00 | $1,114.50 | $3.89 |
| $1,000.00 | $1,021.53 | $3.72 | 0.73% | ||
Service Shares | $1,000.00 | $1,113.20 | $5.17 |
| $1,000.00 | $1,020.32 | $4.94 | 0.97% | ||
† | Expenses Paid During Period are equal to the Net Annualized Expense Ratio multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). Expenses in the examples include the effect of applicable fee waivers and/or expense reimbursements, if any. Had such waivers and/or reimbursements not been in effect, your expenses would have been higher. Please refer to the Notes to Financial Statements or the Portfolio’s prospectuses for more information regarding waivers and/or reimbursements. |
Janus Aspen Series | 7 |
Janus Henderson VIT Enterprise Portfolio
Schedule of Investments
December 31, 2017
| Value | ||||||
Common Stocks – 94.8% | |||||||
Aerospace & Defense – 2.5% | |||||||
HEICO Corp | 148,505 | $11,739,320 | |||||
Teledyne Technologies Inc* | 96,017 | 17,393,480 | |||||
29,132,800 | |||||||
Airlines – 1.1% | |||||||
Ryanair Holdings PLC (ADR)* | 126,751 | 13,206,187 | |||||
Banks – 0.6% | |||||||
SVB Financial Group* | 28,845 | 6,743,096 | |||||
Biotechnology – 3.2% | |||||||
ACADIA Pharmaceuticals Inc* | 169,965 | 5,117,646 | |||||
Alkermes PLC* | 98,759 | 5,405,080 | |||||
Celgene Corp* | 101,694 | 10,612,786 | |||||
Neurocrine Biosciences Inc* | 128,843 | 9,996,928 | |||||
Puma Biotechnology Inc* | 46,355 | 4,582,192 | |||||
TESARO Inc* | 29,109 | 2,412,263 | |||||
38,126,895 | |||||||
Building Products – 1.0% | |||||||
AO Smith Corp | 187,700 | 11,502,256 | |||||
Capital Markets – 5.0% | |||||||
LPL Financial Holdings Inc | 319,066 | 18,231,431 | |||||
MSCI Inc | 105,286 | 13,322,890 | |||||
TD Ameritrade Holding Corp | 540,679 | 27,644,917 | |||||
59,199,238 | |||||||
Commercial Services & Supplies – 1.8% | |||||||
Edenred | 321,747 | 9,320,037 | |||||
Ritchie Bros Auctioneers Inc | 377,759 | 11,306,327 | |||||
20,626,364 | |||||||
Communications Equipment – 0.8% | |||||||
Harris Corp | 62,566 | 8,862,474 | |||||
Containers & Packaging – 1.6% | |||||||
Sealed Air Corp | 385,812 | 19,020,532 | |||||
Diversified Consumer Services – 1.6% | |||||||
ServiceMaster Global Holdings Inc* | 363,409 | 18,631,979 | |||||
Electrical Equipment – 3.1% | |||||||
AMETEK Inc | 88,897 | 6,442,366 | |||||
Sensata Technologies Holding NV* | 581,594 | 29,725,269 | |||||
36,167,635 | |||||||
Electronic Equipment, Instruments & Components – 7.3% | |||||||
Amphenol Corp | 87,868 | 7,714,810 | |||||
Belden Inc | 126,193 | 9,738,314 | |||||
Dolby Laboratories Inc | 130,135 | 8,068,370 | |||||
Flex Ltd* | 938,916 | 16,891,099 | |||||
National Instruments Corp | 424,583 | 17,675,390 | |||||
TE Connectivity Ltd† | 269,380 | 25,601,875 | |||||
85,689,858 | |||||||
Equity Real Estate Investment Trusts (REITs) – 4.0% | |||||||
Crown Castle International Corp | 207,128 | 22,993,279 | |||||
Lamar Advertising Co | 314,915 | 23,379,290 | |||||
46,372,569 | |||||||
Health Care Equipment & Supplies – 7.7% | |||||||
Boston Scientific Corp* | 767,941 | 19,037,257 | |||||
Cooper Cos Inc | 42,919 | 9,351,192 | |||||
DexCom Inc* | 98,410 | 5,647,750 | |||||
ICU Medical Inc* | 36,953 | 7,981,848 | |||||
STERIS PLC | 200,955 | 17,577,534 | |||||
Teleflex Inc | 63,436 | 15,784,146 | |||||
Varian Medical Systems Inc* | 136,494 | 15,171,308 | |||||
90,551,035 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
8 | DECEMBER 31, 2017 |
Janus Henderson VIT Enterprise Portfolio
Schedule of Investments
December 31, 2017
| Value | ||||||
Common Stocks – (continued) | |||||||
Health Care Providers & Services – 0.6% | |||||||
Henry Schein Inc* | 92,326 | $6,451,741 | |||||
Health Care Technology – 1.4% | |||||||
athenahealth Inc* | 124,917 | 16,618,958 | |||||
Hotels, Restaurants & Leisure – 2.3% | |||||||
Dunkin' Brands Group Inc | 245,287 | 15,813,653 | |||||
Norwegian Cruise Line Holdings Ltd* | 212,539 | 11,317,702 | |||||
27,131,355 | |||||||
Industrial Conglomerates – 0.6% | |||||||
Carlisle Cos Inc | 65,874 | 7,486,580 | |||||
Information Technology Services – 8.7% | |||||||
Amdocs Ltd | 284,522 | 18,630,501 | |||||
Broadridge Financial Solutions Inc | 148,233 | 13,426,945 | |||||
Euronet Worldwide Inc* | 45,657 | 3,847,515 | |||||
Fidelity National Information Services Inc | 149,756 | 14,090,542 | |||||
Gartner Inc* | 82,390 | 10,146,328 | |||||
Global Payments Inc | 131,626 | 13,194,190 | |||||
Jack Henry & Associates Inc | 80,316 | 9,393,759 | |||||
WEX Inc* | 138,445 | 19,552,587 | |||||
102,282,367 | |||||||
Insurance – 2.6% | |||||||
Aon PLC | 145,017 | 19,432,278 | |||||
Intact Financial Corp | 129,280 | 10,799,735 | |||||
30,232,013 | |||||||
Internet & Direct Marketing Retail – 0.3% | |||||||
Wayfair Inc* | 46,704 | 3,748,930 | |||||
Internet Software & Services – 3.1% | |||||||
Cimpress NV* | 169,933 | 20,371,568 | |||||
CoStar Group Inc* | 53,172 | 15,789,425 | |||||
36,160,993 | |||||||
Leisure Products – 0.6% | |||||||
Polaris Industries Inc# | 55,531 | 6,885,289 | |||||
Life Sciences Tools & Services – 4.5% | |||||||
IQVIA Holdings Inc* | 161,024 | 15,764,250 | |||||
PerkinElmer Inc | 286,676 | 20,961,749 | |||||
Waters Corp* | 85,268 | 16,472,925 | |||||
53,198,924 | |||||||
Machinery – 2.4% | |||||||
Middleby Corp* | 53,089 | 7,164,361 | |||||
Rexnord Corp* | 561,124 | 14,600,446 | |||||
Wabtec Corp/DE# | 72,013 | 5,864,019 | |||||
27,628,826 | |||||||
Media – 0.8% | |||||||
Omnicom Group Inc | 131,359 | 9,566,876 | |||||
Oil, Gas & Consumable Fuels – 0.4% | |||||||
World Fuel Services Corp | 178,144 | 5,012,972 | |||||
Professional Services – 2.6% | |||||||
IHS Markit Ltd* | 184,414 | 8,326,292 | |||||
Verisk Analytics Inc*,† | 234,959 | 22,556,064 | |||||
30,882,356 | |||||||
Road & Rail – 1.8% | |||||||
Canadian Pacific Railway Ltd | 49,264 | 9,003,489 | |||||
Old Dominion Freight Line Inc | 91,975 | 12,099,311 | |||||
21,102,800 | |||||||
Semiconductor & Semiconductor Equipment – 7.9% | |||||||
KLA-Tencor Corp | 152,971 | 16,072,663 | |||||
Lam Research Corp | 93,381 | 17,188,641 | |||||
Microchip Technology Inc | 233,344 | 20,506,271 | |||||
ON Semiconductor Corp* | 980,693 | 20,535,711 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Aspen Series | 9 |
Janus Henderson VIT Enterprise Portfolio
Schedule of Investments
December 31, 2017
| Value | ||||||
Common Stocks – (continued) | |||||||
Semiconductor & Semiconductor Equipment – (continued) | |||||||
Xilinx Inc | 271,663 | $18,315,519 | |||||
92,618,805 | |||||||
Software – 8.6% | |||||||
Atlassian Corp PLC* | 349,128 | 15,892,307 | |||||
Constellation Software Inc/Canada | 36,314 | 22,017,818 | |||||
Intuit Inc | 72,594 | 11,453,881 | |||||
Nice Ltd (ADR) | 246,748 | 22,678,609 | |||||
SS&C Technologies Holdings Inc | 477,363 | 19,323,654 | |||||
Ultimate Software Group Inc* | 43,557 | 9,505,444 | |||||
100,871,713 | |||||||
Specialty Retail – 1.2% | |||||||
Tractor Supply Co | 105,598 | 7,893,451 | |||||
Williams-Sonoma Inc | 111,577 | 5,768,531 | |||||
13,661,982 | |||||||
Textiles, Apparel & Luxury Goods – 2.8% | |||||||
Carter's Inc | 81,395 | 9,563,099 | |||||
Gildan Activewear Inc | 503,751 | 16,271,157 | |||||
Lululemon Athletica Inc* | 96,359 | 7,572,854 | |||||
33,407,110 | |||||||
Trading Companies & Distributors – 0.3% | |||||||
Ferguson PLC | 56,557 | 4,046,031 | |||||
Total Common Stocks (cost $651,736,554) | 1,112,829,539 | ||||||
Preferred Stocks – 0.1% | |||||||
Electronic Equipment, Instruments & Components – 0.1% | |||||||
Belden Inc, 6.7500% (cost $1,200,000) | 12,000 | 1,236,600 | |||||
Investment Companies – 5.8% | |||||||
Investments Purchased with Cash Collateral from Securities Lending – 0.6% | |||||||
Janus Cash Collateral Fund LLC, 1.2573%ºº,£ | 6,842,000 | 6,842,000 | |||||
Money Markets – 5.2% | |||||||
Janus Cash Liquidity Fund LLC, 1.2731%ºº,£ | 61,393,542 | 61,393,542 | |||||
Total Investment Companies (cost $68,235,542) | 68,235,542 | ||||||
Total Investments (total cost $721,172,096) – 100.7% | 1,182,301,681 | ||||||
Liabilities, net of Cash, Receivables and Other Assets – (0.7)% | (8,001,794) | ||||||
Net Assets – 100% | $1,174,299,887 |
Summary of Investments by Country (Long Positions) (unaudited) | |||||
% of | |||||
Investment | |||||
Country | Value | Securities | |||
United States | $1,047,759,984 | 88.6 | % | ||
Canada | 69,398,526 | 5.9 | |||
Israel | 22,678,609 | 1.9 | |||
Australia | 15,892,307 | 1.4 | |||
Ireland | 13,206,187 | 1.1 | |||
France | 9,320,037 | 0.8 | |||
United Kingdom | 4,046,031 | 0.3 |
Total | $1,182,301,681 | 100.0 | % |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
10 | DECEMBER 31, 2017 |
Janus Henderson VIT Enterprise Portfolio
Schedule of Investments
December 31, 2017
Schedules of Affiliated Investments – (% of Net Assets)
Dividend Income(1) | Realized Gain/(Loss)(1) | Change in Unrealized Appreciation/ Depreciation(1) | Value at 12/31/17 | |||||||
Investment Companies – 5.8% | ||||||||||
Investments Purchased with Cash Collateral from Securities Lending – 0.6% | ||||||||||
Janus Cash Collateral Fund LLC, 1.2573%ºº | $ | 75,695∆ | $ | — | $ | — | $ | 6,842,000 | ||
Money Markets – 5.2% | ||||||||||
Janus Cash Liquidity Fund LLC, 1.2731%ºº | 432,846 | — | — | 61,393,542 |
Total Affiliated Investments – 5.8% | $ | 508,541 | $ | — | $ | — | $ | 68,235,542 |
(1) For securities that were affiliated for a portion of the year ended December 31, 2017, this column reflects amounts for the entire year ended December 31, 2017 and not just the period in which the security was affiliated.
Share Balance at 12/31/16 | Purchases | Sales | Share Balance at 12/31/17 | |||||||
Investment Companies – 5.8% | ||||||||||
Investments Purchased with Cash Collateral from Securities Lending – 0.6% | ||||||||||
Janus Cash Collateral Fund LLC, 1.2573%ºº | 6,464,316 | 87,950,437 | (87,572,753) | 6,842,000 | ||||||
Money Markets – 5.2% | ||||||||||
Janus Cash Liquidity Fund LLC, 1.2731%ºº | 30,395,468 | 165,249,074 | (134,251,000) | 61,393,542 | ||||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Aspen Series | 11 |
Janus Henderson VIT Enterprise Portfolio
Schedule of Investments
December 31, 2017
Schedule of Forward Foreign Currency Exchange Contracts, Open |
Counterparty/ Foreign Currency | Settlement Date | Foreign Currency Amount (Sold)/ Purchased | USD Currency Amount (Sold)/ Purchased | Unrealized Appreciation/ (Depreciation) | ||||
Bank of America: | ||||||||
Euro | 2/8/18 | (415,000) | $ | 491,545 | $ | (7,529) | ||
Barclays Capital, Inc.: | ||||||||
Canadian Dollar | 2/1/18 | (4,043,000) | 3,146,867 | (71,836) | ||||
Euro | 2/1/18 | (3,577,000) | 4,278,950 | (21,078) | ||||
(92,914) | ||||||||
Citibank NA: | ||||||||
Canadian Dollar | 2/1/18 | (4,325,000) | 3,366,964 | (76,244) | ||||
Euro | 2/1/18 | (4,096,000) | 4,896,973 | (26,962) | ||||
(103,206) | ||||||||
Credit Suisse International: | ||||||||
Canadian Dollar | 2/22/18 | (7,539,000) | 5,932,618 | (70,784) | ||||
HSBC Securities (USA), Inc.: | ||||||||
Canadian Dollar | 2/8/18 | (7,768,000) | 6,056,580 | (128,166) | ||||
Euro | 2/8/18 | (2,373,000) | 2,809,157 | (44,584) | ||||
(172,750) | ||||||||
JPMorgan Chase & Co.: | ||||||||
Euro | 2/1/18 | (7,358,000) | 8,807,416 | (37,876) | ||||
Total | $ | (485,059) |
The following table, grouped by derivative type, provides information about the fair value and location of derivatives within the Statement of Assets and Liabilities as of December 31, 2017.
Fair Value of Derivative Instruments (not accounted for as hedging instruments) as of December 31, 2017 | |||||
|
|
|
| Currency |
|
| |||||
Liability Derivatives: | |||||
Forward foreign currency exchange contracts | $485,059 | ||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
12 | DECEMBER 31, 2017 |
Janus Henderson VIT Enterprise Portfolio
Schedule of Investments
December 31, 2017
The following tables provide information about the effect of derivatives and hedging activities on the Portfolio’s Statement of Operations for the year ended December 31, 2017.
The effect of Derivative Instruments (not accounted for as hedging instruments) on the Statement of Operations for the year ended December 31, 2017 | ||||
Amount of Realized Gain/(Loss) Recognized on Derivatives | ||||
Derivative | Currency |
| ||
Forward foreign currency exchange contracts | $(2,362,633) | |||
Amount of Change in Unrealized Appreciation/Depreciation Recognized on Derivatives | ||||
Derivative | Currency |
| ||
Forward foreign currency exchange contracts | $ (547,032) | |||
Please see the "Net Realized Gain/(Loss) on Investments" and "Change in Unrealized Net Appreciation/Depreciation" sections of the Portfolio’s Statement of Operations.
Average Ending Monthly Market Value of Derivative Instruments During the Year Ended December 31, 2017 | |
| Market Value |
Forward foreign currency exchange contracts, sold | $32,102,998 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Aspen Series | 13 |
Janus Henderson VIT Enterprise Portfolio
Notes to Schedule of Investments and Other Information
Russell Midcap® Growth Index | Russell Midcap® Growth Index reflects the performance of U.S. mid-cap equities with higher price-to-book ratios and higher forecasted growth values. |
ADR | American Depositary Receipt |
LLC | Limited Liability Company |
PLC | Public Limited Company |
* | Non-income producing security. |
† | A portion of this security has been segregated to cover margin or segregation requirements on open futures contracts, forward currency contracts, options contracts, short sales, swap agreements, and/or securities with extended settlement dates, the value of which, as of December 31, 2017, is $26,352,000. |
ºº | Rate shown is the 7-day yield as of December 31, 2017. |
# | Loaned security; a portion of the security is on loan at December 31, 2017. |
£ | The Portfolio may invest in certain securities that are considered affiliated companies. As defined by the Investment Company Act of 1940, as amended, an affiliated company is one in which the Portfolio owns 5% or more of the outstanding voting securities, or a company which is under common ownership or control. |
∆ | Net of income paid to the securities lending agent and rebates paid to the borrowing counterparties. |
The following is a summary of the inputs that were used to value the Portfolio’s investments in securities and other financial instruments as of December 31, 2017. See Notes to Financial Statements for more information. | |||||||||||||
Valuation Inputs Summary | |||||||||||||
Level 2 - | Level 3 - | ||||||||||||
Level 1 - | Other Significant | Significant | |||||||||||
Quotes Prices | Observable Inputs | Unobservable Inputs | |||||||||||
Assets | |||||||||||||
Investments in Securities: | |||||||||||||
Common Stocks | |||||||||||||
Commercial Services & Supplies | $ | 11,306,327 | $ | 9,320,037 | $ | - | |||||||
Insurance | 19,432,278 | 10,799,735 | - | ||||||||||
Software | 78,853,895 | 22,017,818 | - | ||||||||||
Trading Companies & Distributors | - | 4,046,031 | - | ||||||||||
All Other | 957,053,418 | - | - | ||||||||||
Preferred Stocks | - | 1,236,600 | - | ||||||||||
Investment Companies | - | 68,235,542 | - | ||||||||||
Total Assets | $ | 1,066,645,918 | $ | 115,655,763 | $ | - | |||||||
Liabilities | |||||||||||||
Other Financial Instruments(a): | |||||||||||||
Forward Foreign Currency Exchange Contracts | $ | - | $ | 485,059 | $ | - | |||||||
(a) | Other financial instruments include forward foreign currency exchange, futures, written options, written swaptions, and swap contracts. Forward foreign currency exchange contracts are reported at their unrealized appreciation/(depreciation) at measurement date, which represents the change in the contract's value from trade date. Futures, certain written options on futures, and centrally cleared swap contracts are reported at their variation margin at measurement date, which represents the amount due to/from the Portfolio at that date. Written options, written swaptions, and other swap contracts are reported at their market value at measurement date. |
14 | DECEMBER 31, 2017 |
Janus Henderson VIT Enterprise Portfolio
Statement of Assets and Liabilities
December 31, 2017
|
|
|
|
|
|
|
Assets: | ||||||
Unaffiliated investments, at value(1)(2) | $ | 1,114,066,139 | ||||
Affiliated investments, at value(3) | 68,235,542 | |||||
Cash | 243,821 | |||||
Cash denominated in foreign currency(4) | 55,958 | |||||
Closed foreign currency contracts | 18,980 | |||||
Non-interested Trustees' deferred compensation | 22,439 | |||||
Receivables: | ||||||
Portfolio shares sold | 1,017,568 | |||||
Dividends | 345,649 | |||||
Dividends from affiliates | 56,085 | |||||
Other assets | 11,256 | |||||
Total Assets |
|
| 1,184,073,437 |
| ||
Liabilities: | ||||||
Collateral for securities loaned (Note 3) | 6,842,000 | |||||
Forward foreign currency exchange contracts | 485,059 | |||||
Closed foreign currency contracts | 2,471 | |||||
Payables: | — | |||||
Portfolio shares repurchased | 989,905 | |||||
Advisory fees | 654,175 | |||||
Investments purchased | 501,110 | |||||
12b-1 Distribution and shareholder servicing fees | 120,326 | |||||
Transfer agent fees and expenses | 54,260 | |||||
Professional fees | 29,203 | |||||
Non-interested Trustees' deferred compensation fees | 22,439 | |||||
Portfolio administration fees | 7,973 | |||||
Non-interested Trustees' fees and expenses | 7,943 | |||||
Custodian fees | 5,537 | |||||
Accrued expenses and other payables | 51,149 | |||||
Total Liabilities |
|
| 9,773,550 |
| ||
Net Assets |
| $ | 1,174,299,887 |
| ||
Net Assets Consist of: | ||||||
Capital (par value and paid-in surplus) | $ | 653,436,486 | ||||
Undistributed net investment income/(loss) | 962,521 | |||||
Undistributed net realized gain/(loss) from investments and foreign currency transactions | 59,248,552 | |||||
Unrealized net appreciation/(depreciation) of investments, foreign currency translations and non-interested Trustees’ deferred compensation | 460,652,328 | |||||
Total Net Assets |
| $ | 1,174,299,887 |
| ||
Net Assets - Institutional Shares | $ | 618,750,172 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 8,758,044 | |||||
Net Asset Value Per Share |
| $ | 70.65 |
| ||
Net Assets - Service Shares | $ | 555,549,715 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 8,332,261 | |||||
Net Asset Value Per Share |
| $ | 66.67 |
|
(1) Includes cost of $652,936,554. (2) Includes $6,700,720 of securities on loan. See Note 3 in Notes to Financial Statements. (3) Includes cost of $68,235,542. (4) Includes cost of $55,958. |
See Notes to Financial Statements. | |
Janus Aspen Series | 15 |
Janus Henderson VIT Enterprise Portfolio
Statement of Operations
For the year ended December 31, 2017
|
|
|
|
|
|
Investment Income: | |||||
| Dividends | $ | 9,049,233 | ||
Dividends from affiliates | 432,846 | ||||
Affiliated securities lending income, net | 75,695 | ||||
Other income | 28 | ||||
Foreign tax withheld | (165,250) | ||||
Total Investment Income |
| 9,392,552 |
| ||
Expenses: | |||||
Advisory fees | 6,685,291 | ||||
12b-1Distribution and shareholder servicing fees: | |||||
Service Shares | 1,221,160 | ||||
Transfer agent administrative fees and expenses: | |||||
Institutional Shares | 278,056 | ||||
Service Shares | 244,232 | ||||
Other transfer agent fees and expenses: | |||||
Institutional Shares | 19,009 | ||||
Service Shares | 9,706 | ||||
Shareholder reports expense | 117,425 | ||||
Portfolio administration fees | 89,435 | ||||
Professional fees | 42,743 | ||||
Non-interested Trustees’ fees and expenses | 28,225 | ||||
Custodian fees | 25,587 | ||||
Registration fees | 23,409 | ||||
Other expenses | 66,063 | ||||
Total Expenses |
| 8,850,341 |
| ||
Net Investment Income/(Loss) |
| 542,211 |
| ||
Net Realized Gain/(Loss) on Investments: | |||||
Investments and foreign currency transactions | 62,016,869 | ||||
Forward foreign currency exchange contracts | (2,362,633) | ||||
Total Net Realized Gain/(Loss) on Investments |
| 59,654,236 |
| ||
Change in Unrealized Net Appreciation/Depreciation: | |||||
Investments, foreign currency translations and non-interested Trustees’ deferred compensation | 189,285,897 | ||||
Forward foreign currency exchange contracts | (547,032) | ||||
Total Change in Unrealized Net Appreciation/Depreciation |
| 188,738,865 |
| ||
Net Increase/(Decrease) in Net Assets Resulting from Operations | $ | 248,935,312 |
| ||
See Notes to Financial Statements. | |
16 | DECEMBER 31, 2017 |
Janus Henderson VIT Enterprise Portfolio
Statements of Changes in Net Assets
|
|
| Year ended |
| Year ended | |||
Operations: | ||||||||
Net investment income/(loss) | $ | 542,211 | $ | 2,910,449 | ||||
Net realized gain/(loss) on investments | 59,654,236 | 68,045,643 | ||||||
Change in unrealized net appreciation/depreciation | 188,738,865 | 24,741,659 | ||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations |
| 248,935,312 |
|
| 95,697,751 | |||
Dividends and Distributions to Shareholders: | ||||||||
Dividends from Net Investment Income | ||||||||
Institutional Shares | (1,431,060) | (643,985) | ||||||
Service Shares | (715,202) | (98,035) | ||||||
| Total Dividends from Net Investment Income |
| (2,146,262) |
|
| (742,020) | ||
Distributions from Net Realized Gain from Investment Transactions | ||||||||
Institutional Shares | (35,399,828) | (34,561,214) | ||||||
Service Shares | (32,692,941) | �� | (31,048,820) | |||||
| Total Distributions from Net Realized Gain from Investment Transactions | (68,092,769) |
|
| (65,610,034) | |||
Net Decrease from Dividends and Distributions to Shareholders |
| (70,239,031) |
|
| (66,352,054) | |||
Capital Share Transactions: | ||||||||
Institutional Shares | 63,180,886 | 25,003,153 | ||||||
Service Shares | 53,921,594 | 84,512,086 | ||||||
Net Increase/(Decrease) from Capital Share Transactions |
| 117,102,480 |
|
| 109,515,239 | |||
Net Increase/(Decrease) in Net Assets |
| 295,798,761 |
|
| 138,860,936 | |||
Net Assets: | ||||||||
Beginning of period | 878,501,126 | 739,640,190 | ||||||
| End of period | $ | 1,174,299,887 |
| $ | 878,501,126 | ||
Undistributed Net Investment Income/(Loss) | $ | 962,521 |
| $ | 2,563,393 |
See Notes to Financial Statements. | |
Janus Aspen Series | 17 |
Janus Henderson VIT Enterprise Portfolio
Financial Highlights
Institutional Shares | ||||||||||||||||||
For a share outstanding during each year ended December 31 |
| 2017 |
|
| 2016 |
|
| 2015 |
|
| 2014 |
|
| 2013 |
| |||
Net Asset Value, Beginning of Period |
| $59.27 |
|
| $57.33 |
|
| $61.75 |
|
| $58.96 |
|
| $44.77 |
| |||
Income/(Loss) from Investment Operations: | ||||||||||||||||||
Net investment income/(loss) | 0.11(1) | 0.28(1) | 0.27(1) | 0.27(1) | 0.22 | |||||||||||||
Net realized and unrealized gain/(loss) | 15.67 | 6.50 | 2.55 | 6.79 | 14.23 | |||||||||||||
Total from Investment Operations |
| 15.78 |
|
| 6.78 |
|
| 2.82 |
|
| 7.06 |
|
| 14.45 |
| |||
Less Dividends and Distributions: | ||||||||||||||||||
Dividends (from net investment income) | (0.17) | (0.09) | (0.40) | (0.10) | (0.26) | |||||||||||||
Distributions (from capital gains) | (4.23) | (4.75) | (6.84) | (4.17) | — | |||||||||||||
Total Dividends and Distributions |
| (4.40) |
|
| (4.84) |
|
| (7.24) |
|
| (4.27) |
|
| (0.26) |
| |||
Net Asset Value, End of Period | $70.65 | $59.27 | $57.33 | $61.75 | $58.96 | |||||||||||||
Total Return* |
| 27.42% |
|
| 12.36% |
|
| 4.05% |
|
| 12.50% |
|
| 32.38% |
| |||
Net Assets, End of Period (in thousands) | $618,750 | $459,250 | $418,158 | $417,895 | $407,049 | |||||||||||||
Average Net Assets for the Period (in thousands) | $556,940 | $435,190 | $427,941 | $402,634 | $373,893 | |||||||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses | 0.73% | 0.72% | 0.68% | 0.68% | 0.69% | |||||||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets) | 0.73% | 0.72% | 0.68% | 0.68% | 0.69% | |||||||||||||
Ratio of Net Investment Income/(Loss) | 0.17% | 0.48% | 0.44% | 0.45% | 0.28% | |||||||||||||
Portfolio Turnover Rate | 14% | 20% | 22% | 16% | 15% | |||||||||||||
1 |
Service Shares | ||||||||||||||||||
For a share outstanding during each year ended December 31 |
| 2017 |
|
| 2016 |
|
| 2015 |
|
| 2014 |
|
| 2013 |
| |||
Net Asset Value, Beginning of Period |
| $56.22 |
|
| $54.67 |
|
| $59.26 |
|
| $56.80 |
|
| $43.18 |
| |||
Income/(Loss) from Investment Operations: | ||||||||||||||||||
Net investment income/(loss) | (0.05)(1) | 0.12(1) | 0.11(1) | 0.12(1) | (0.03) | |||||||||||||
Net realized and unrealized gain/(loss) | 14.82 | 6.19 | 2.45 | 6.53 | 13.83 | |||||||||||||
Total from Investment Operations |
| 14.77 |
|
| 6.31 |
|
| 2.56 |
|
| 6.65 |
|
| 13.80 |
| |||
Less Dividends and Distributions: | ||||||||||||||||||
Dividends (from net investment income) | (0.09) | (0.01) | (0.31) | (0.02) | (0.18) | |||||||||||||
Distributions (from capital gains) | (4.23) | (4.75) | (6.84) | (4.17) | — | |||||||||||||
Total Dividends and Distributions |
| (4.32) |
|
| (4.76) |
|
| (7.15) |
|
| (4.19) |
|
| (0.18) |
| |||
Net Asset Value, End of Period | $66.67 | $56.22 | $54.67 | $59.26 | $56.80 | |||||||||||||
Total Return* |
| 27.09% |
|
| 12.10% |
|
| 3.77% |
|
| 12.24% |
|
| 32.04% |
| |||
Net Assets, End of Period (in thousands) | $555,550 | $419,251 | $321,482 | $278,240 | $260,670 | |||||||||||||
Average Net Assets for the Period (in thousands) | $489,237 | $373,400 | $299,393 | $262,698 | $234,925 | |||||||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses | 0.98% | 0.97% | 0.94% | 0.93% | 0.94% | |||||||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets) | 0.98% | 0.97% | 0.94% | 0.93% | 0.94% | |||||||||||||
Ratio of Net Investment Income/(Loss) | (0.08)% | 0.22% | 0.19% | 0.20% | 0.03% | |||||||||||||
Portfolio Turnover Rate | 14% | 20% | 22% | 16% | 15% | |||||||||||||
* Total return not annualized for periods of less than one full year. ** Annualized for periods of less than one full year. (1) Per share amounts are calculated based on average shares outstanding during the year or period. |
See Notes to Financial Statements. | |
18 | DECEMBER 31, 2017 |
Janus Henderson VIT Enterprise Portfolio
Notes to Financial Statements
1. Organization and Significant Accounting Policies
Janus Henderson VIT Enterprise Portfolio (formerly named Janus Aspen Enterprise Portfolio) (the “Portfolio”) is a series of Janus Aspen Series (the “Trust”), which is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company, and therefore has applied the specialized accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946. The Trust offers 12 portfolios, each of which offers multiple share classes, with differing investment objectives and policies. The Portfolio seeks long-term growth of capital. The Portfolio is classified as diversified, as defined in the 1940 Act.
The Portfolio currently offers two classes of shares: Institutional Shares and Service Shares. Each class represents an interest in the same portfolio of investments. Institutional Shares are offered only in connection with investment in and payments under variable insurance contracts as well as certain qualified retirement plans. Service Shares are offered only in connection with investment in and payments under variable insurance contracts as well as certain qualified retirement plans that require a fee from Portfolio assets to procure distribution and administrative services to contract owners and plan participants.
Shareholders, including other portfolios, participating insurance companies, as well as accounts, may from time to time own (beneficially or of record) a significant percentage of the Portfolio’s Shares and can be considered to “control” the Portfolio when that ownership exceeds 25% of the Portfolio’s assets (and which may differ from control as determined in accordance with accounting principles generally accepted in the United States of America).
The following accounting policies have been followed by the Portfolio and are in conformity with accounting principles generally accepted in the United States of America.
Investment Valuation
Securities held by the Portfolio are valued in accordance with policies and procedures established by and under the supervision of the Trustees (the “Valuation Procedures”). Equity securities traded on a domestic securities exchange are generally valued at the closing prices on the primary market or exchange on which they trade. If such price is lacking for the trading period immediately preceding the time of determination, such securities are valued at their current bid price. Equity securities that are traded on a foreign exchange are generally valued at the closing prices on such markets. In the event that there is no current trading volume on a particular security in such foreign exchange, the bid price from the primary exchange is generally used to value the security. Securities that are traded on the over-the-counter (“OTC”) markets are generally valued at their closing or latest bid prices as available. Foreign securities and currencies are converted to U.S. dollars using the applicable exchange rate in effect at the close of the New York Stock Exchange (“NYSE”). The Portfolio will determine the market value of individual securities held by it by using prices provided by one or more approved professional pricing services or, as needed, by obtaining market quotations from independent broker-dealers. Most debt securities are valued in accordance with the evaluated bid price supplied by the pricing service that is intended to reflect market value. The evaluated bid price supplied by the pricing service is an evaluation that may consider factors such as security prices, yields, maturities and ratings. Certain short-term securities maturing within 60 days or less may be evaluated and valued on an amortized cost basis provided that the amortized cost determined approximates market value. Securities for which market quotations or evaluated prices are not readily available or deemed unreliable are valued at fair value determined in good faith under the Valuation Procedures. Circumstances in which fair value pricing may be utilized include, but are not limited to: (i) a significant event that may affect the securities of a single issuer, such as a merger, bankruptcy, or significant issuer-specific development; (ii) an event that may affect an entire market, such as a natural disaster or significant governmental action; (iii) a nonsignificant event such as a market closing early or not opening, or a security trading halt; and (iv) pricing of a nonvalued security and a restricted or nonpublic security. Special valuation considerations may apply with respect to “odd-lot” fixed-income transactions which, due to their small size, may receive evaluated prices by pricing services which reflect a large block trade and not what actually could be obtained for the odd-lot position. The Portfolio uses systematic fair valuation models provided by independent third parties to value international equity securities in order to adjust for stale pricing, which may occur between the close of certain foreign exchanges and the close of the NYSE.
Valuation Inputs Summary
FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value, and expands disclosure requirements regarding fair value measurements. This standard emphasizes that fair value is a market-based measurement that should be determined based on the assumptions that
Janus Aspen Series | 19 |
Janus Henderson VIT Enterprise Portfolio
Notes to Financial Statements
market participants would use in pricing an asset or liability and establishes a hierarchy that prioritizes inputs to valuation techniques used to measure fair value. These inputs are summarized into three broad levels:
Level 1 – Unadjusted quoted prices in active markets the Portfolio has the ability to access for identical assets or liabilities.
Level 2 – Observable inputs other than unadjusted quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
Assets or liabilities categorized as Level 2 in the hierarchy generally include: debt securities fair valued in accordance with the evaluated bid or ask prices supplied by a pricing service; securities traded on OTC markets and listed securities for which no sales are reported that are fair valued at the latest bid price (or yield equivalent thereof) obtained from one or more dealers transacting in a market for such securities or by a pricing service approved by the Portfolio’s Trustees; certain short-term debt securities with maturities of 60 days or less that are fair valued at amortized cost; and equity securities of foreign issuers whose fair value is determined by using systematic fair valuation models provided by independent third parties in order to adjust for stale pricing which may occur between the close of certain foreign exchanges and the close of the NYSE. Other securities that may be categorized as Level 2 in the hierarchy include, but are not limited to, preferred stocks, bank loans, swaps, investments in unregistered investment companies, options, and forward contracts.
Level 3 – Unobservable inputs for the asset or liability to the extent that relevant observable inputs are not available, representing the Portfolio’s own assumptions about the assumptions that a market participant would use in valuing the asset or liability, and that would be based on the best information available.
There have been no significant changes in valuation techniques used in valuing any such positions held by the Portfolio since the beginning of the fiscal year.
The inputs or methodology used for fair valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of inputs used as of December 31, 2017 to fair value the Portfolio’s investments in securities and other financial instruments is included in the “Valuation Inputs Summary” in the Notes to Schedule of Investments and Other Information.
There were no transfers between Level 1, Level 2 and Level 3 of the fair value hierarchy during the year. The Portfolio recognizes transfers between the levels as of the beginning of the fiscal year.
Investment Transactions and Investment Income
Investment transactions are accounted for as of the date purchased or sold (trade date). Dividend income is recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded as soon as the Portfolio is informed of the dividend, if such information is obtained subsequent to the ex-dividend date. Dividends from foreign securities may be subject to withholding taxes in foreign jurisdictions. Interest income is recorded on the accrual basis and includes amortization of premiums and accretion of discounts. Gains and losses are determined on the identified cost basis, which is the same basis used for federal income tax purposes. Income, as well as gains and losses, both realized and unrealized, are allocated daily to each class of shares based upon the ratio of net assets represented by each class as a percentage of total net assets.
Expenses
The Portfolio bears expenses incurred specifically on its behalf. Each class of shares bears a portion of general expenses, which are allocated daily to each class of shares based upon the ratio of net assets represented by each class as a percentage of total net assets. Expenses directly attributable to a specific class of shares are charged against the operations of such class.
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
20 | DECEMBER 31, 2017 |
Janus Henderson VIT Enterprise Portfolio
Notes to Financial Statements
Indemnifications
In the normal course of business, the Portfolio may enter into contracts that contain provisions for indemnification of other parties against certain potential liabilities. The Portfolio’s maximum exposure under these arrangements is unknown, and would involve future claims that may be made against the Portfolio that have not yet occurred. Currently, the risk of material loss from such claims is considered remote.
Foreign Currency Translations
The Portfolio does not isolate that portion of the results of operations resulting from the effect of changes in foreign exchange rates on investments from the fluctuations arising from changes in market prices of securities held at the date of the financial statements. Net unrealized appreciation or depreciation of investments and foreign currency translations arise from changes in the value of assets and liabilities, including investments in securities held at the date of the financial statements, resulting from changes in the exchange rates and changes in market prices of securities held.
Currency gains and losses are also calculated on payables and receivables that are denominated in foreign currencies. The payables and receivables are generally related to foreign security transactions and income translations.
Foreign currency-denominated assets and forward currency contracts may involve more risks than domestic transactions, including currency risk, counterparty risk, political and economic risk, regulatory risk and equity risk. Risks may arise from unanticipated movements in the value of foreign currencies relative to the U.S. dollar.
Dividends and Distributions
The Portfolio may make semiannual distributions of substantially all of its investment income and an annual distribution of its net realized capital gains (if any).
The Portfolio may make certain investments in real estate investment trusts (“REITs”) which pay dividends to their shareholders based upon funds available from operations. It is quite common for these dividends to exceed the REITs’ taxable earnings and profits, resulting in the excess portion of such dividends being designated as a return of capital. If the Portfolio distributes such amounts, such distributions could constitute a return of capital to shareholders for federal income tax purposes.
Federal Income Taxes
The Portfolio intends to continue to qualify as a regulated investment company and distribute all of its taxable income in accordance with the requirements of Subchapter M of the Internal Revenue Code. Management has analyzed the Portfolio’s tax positions taken for all open federal income tax years, generally a three-year period, and has concluded that no provision for federal income tax is required in the Portfolio’s financial statements. The Portfolio is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
On December 22, 2017, the Tax Cuts and Jobs Act was signed into law. Currently, Management does not believe the bill will have a material impact on the Fund’s intention to continue to qualify as a regulated investment company, which is generally not subject to U.S. federal income tax.
2. Derivative Instruments
The Portfolio may invest in various types of derivatives, which may at times result in significant derivative exposure. A derivative is a financial instrument whose performance is derived from the performance of another asset. The Portfolio may invest in derivative instruments including, but not limited to: futures contracts, put options, call options, options on future contracts, options on foreign currencies, options on recovery locks, options on security and commodity indices, swaps, forward contracts, structured investments, and other equity-linked derivatives. Each derivative instrument that was held by the Portfolio during the year ended December 31, 2017 is discussed in further detail below. A summary of derivative activity by the Fund is reflected in the tables at the end of the Schedule of Investments.
The Portfolio may use derivative instruments for hedging purposes (to offset risks associated with an investment, currency exposure, or market conditions), to adjust currency exposure relative to a benchmark index, or for speculative purposes (to earn income and seek to enhance returns). When the Portfolio invests in a derivative for speculative purposes, the Portfolio will be fully exposed to the risks of loss of that derivative, which may sometimes be greater than the derivative’s cost. The Portfolio may not use any derivative to gain exposure to an asset or class of assets that it
Janus Aspen Series | 21 |
Janus Henderson VIT Enterprise Portfolio
Notes to Financial Statements
would be prohibited by its investment restrictions from purchasing directly. The Portfolio’s ability to use derivative instruments may also be limited by tax considerations.
Investments in derivatives in general are subject to market risks that may cause their prices to fluctuate over time. Investments in derivatives may not directly correlate with the price movements of the underlying instrument. As a result, the use of derivatives may expose the Portfolio to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives. The use of derivatives may result in larger losses or smaller gains than otherwise would be the case. Derivatives can be volatile and may involve significant risks.
In pursuit of its investment objective, the Portfolio may seek to use derivatives to increase or decrease exposure to the following market risk factors:
· Commodity Risk – the risk related to the change in value of commodities or commodity-linked investments due to changes in the overall market movements, volatility of the underlying benchmark, changes in interest rates, or other factors affecting a particular industry of commodity such as drought, floods, weather, livestock disease, embargoes, tariffs, and international economic, political, and regulatory developments.
· Counterparty Risk – the risk that the counterparty (the party on the other side of the transaction) on a derivative transaction will be unable to honor its financial obligation to the Portfolio.
· Credit Risk – the risk an issuer will be unable to make principal and interest payments when due, or will default on its obligations.
· Currency Risk – the risk that changes in the exchange rate between currencies will adversely affect the value (in U.S. dollar terms) of an investment.
· Equity Risk – the risk related to the change in value of equity securities as they relate to increases or decreases in the general market.
· Index Risk – if the derivative is linked to the performance of an index, it will be subject to the risks associated with changes in that index. If the index changes, the Portfolio could receive lower interest payments or experience a reduction in the value of the derivative to below what the Portfolio paid. Certain indexed securities, including inverse securities (which move in an opposite direction to the index), may create leverage, to the extent that they increase or decrease in value at a rate that is a multiple of the changes in the applicable index.
· Interest Rate Risk – the risk that the value of fixed-income securities will generally decline as prevailing interest rates rise, which may cause the Portfolio’s NAV to likewise decrease.
· Leverage Risk – the risk associated with certain types of leveraged investments or trading strategies pursuant to which relatively small market movements may result in large changes in the value of an investment. The Portfolio creates leverage by investing in instruments, including derivatives, where the investment loss can exceed the original amount invested. Certain investments or trading strategies, such as short sales, that involve leverage can result in losses that greatly exceed the amount originally invested.
· Liquidity Risk – the risk that certain securities may be difficult or impossible to sell at the time that the seller would like or at the price that the seller believes the security is currently worth.
Derivatives may generally be traded OTC or on an exchange. Derivatives traded OTC are agreements that are individually negotiated between parties and can be tailored to meet a purchaser’s needs. OTC derivatives are not guaranteed by a clearing agency and may be subject to increased credit risk.
In an effort to mitigate credit risk associated with derivatives traded OTC, the Portfolio may enter into collateral agreements with certain counterparties whereby, subject to certain minimum exposure requirements, the Portfolio may require the counterparty to post collateral if the Portfolio has a net aggregate unrealized gain on all OTC derivative contracts with a particular counterparty. There is no guarantee that counterparty exposure is reduced and these arrangements are dependent on Janus Capital’s Management LLC (“Janus Capital”) ability to establish and maintain appropriate systems and trading.
Forward Foreign Currency Exchange Contracts
A forward foreign currency exchange contract (“forward currency contract”) is an obligation to buy or sell a specified currency at a future date at a negotiated rate (which may be U.S. dollars or a foreign currency). The Portfolio may enter
22 | DECEMBER 31, 2017 |
Janus Henderson VIT Enterprise Portfolio
Notes to Financial Statements
into forward currency contracts for hedging purposes, including, but not limited to, reducing exposure to changes in foreign currency exchange rates on foreign portfolio holdings and locking in the U.S. dollar cost of firm purchase and sale commitments for securities denominated in or exposed to foreign currencies. The Portfolio may also invest in forward currency contracts for non-hedging purposes such as seeking to enhance returns. The Portfolio is subject to currency risk and counterparty risk in the normal course of pursuing its investment objective through its investments in forward currency contracts.
Forward currency contracts are valued by converting the foreign value to U.S. dollars by using the current spot U.S. dollar exchange rate and/or forward rate for that currency. Exchange and forward rates as of the close of the NYSE shall be used to value the forward currency contracts. The unrealized appreciation/(depreciation) for forward currency contracts is reported in the Statement of Assets and Liabilities as a receivable or payable and in the Statement of Operations for the change in unrealized net appreciation/depreciation (if applicable). The gain or loss arising from the difference between the U.S. dollar cost of the original contract and the value of the foreign currency in U.S. dollars upon closing a forward currency contract is reported on the Statement of Operations (if applicable).
During the year, the Portfolio entered into forward currency contracts with the obligation to sell foreign currencies in the future at an agreed upon rate in order to decrease exposure to currency risk associated with foreign currency denominated securities held by the Portfolio.
3. Other Investments and Strategies
Additional Investment Risk
The financial crisis in both the U.S. and global economies over the past several years has resulted, and may continue to result, in a significant decline in the value and liquidity of many securities of issuers worldwide in the equity and fixed-income/credit markets. In response to the crisis, the United States and certain foreign governments, along with the U.S. Federal Reserve and certain foreign central banks, took steps to support the financial markets. The withdrawal of this support, a failure of measures put in place to respond to the crisis, or investor perception that such efforts were not sufficient could each negatively affect financial markets generally, and the value and liquidity of specific securities. In addition, policy and legislative changes in the United States and in other countries continue to impact many aspects of financial regulation. The effect of these changes on the markets, and the practical implications for market participants, including the Portfolio, may not be fully known for some time. As a result, it may also be unusually difficult to identify both investment risks and opportunities, which could limit or preclude the Portfolio’s ability to achieve its investment objective. Therefore, it is important to understand that the value of your investment may fall, sometimes sharply, and you could lose money.
The enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) of 2010 provided for widespread regulation of financial institutions, consumer financial products and services, broker-dealers, OTC derivatives, investment advisers, credit rating agencies, and mortgage lending, which expanded federal oversight in the financial sector, including the investment management industry. Many provisions of the Dodd-Frank Act remain pending and will be implemented through future rulemaking. Therefore, the ultimate impact of the Dodd-Frank Act and the regulations under the Dodd-Frank Act on the Portfolio and the investment management industry as a whole, is not yet certain.
A number of countries in the European Union (“EU”) have experienced, and may continue to experience, severe economic and financial difficulties. In particular, many EU nations are susceptible to economic risks associated with high levels of debt, notably due to investments in sovereign debt of countries such as Greece, Italy, Spain, Portugal, and Ireland. Many non-governmental issuers, and even certain governments, have defaulted on, or been forced to restructure, their debts. Many other issuers have faced difficulties obtaining credit or refinancing existing obligations. Financial institutions have in many cases required government or central bank support, have needed to raise capital, and/or have been impaired in their ability to extend credit. As a result, financial markets in the EU experienced extreme volatility and declines in asset values and liquidity. Responses to these financial problems by European governments, central banks, and others, including austerity measures and reforms, may not work, may result in social unrest, and may limit future growth and economic recovery or have other unintended consequences. Further defaults or restructurings by governments and others of their debt could have additional adverse effects on economies, financial markets, and asset valuations around the world. Greece, Ireland, and Portugal have already received one or more "bailouts" from other Eurozone member states, and it is unclear how much additional funding they will require or if additional Eurozone member states will require bailouts in the future. The risk of investing in securities in the European markets may also be
Janus Aspen Series | 23 |
Janus Henderson VIT Enterprise Portfolio
Notes to Financial Statements
heightened due to the referendum in which the United Kingdom voted to exit the EU (known as “Brexit”). There is considerable uncertainty about how Brexit will be conducted, how negotiations of necessary treaties and trade agreements will proceed, or how financial markets will react. In addition, one or more other countries may also abandon the euro and/or withdraw from the EU, placing its currency and banking system in jeopardy.
Certain areas of the world have historically been prone to and economically sensitive to environmental events such as, but not limited to, hurricanes, earthquakes, typhoons, flooding, tidal waves, tsunamis, erupting volcanoes, wildfires or droughts, tornadoes, mudslides, or other weather-related phenomena. Such disasters, and the resulting physical or economic damage, could have a severe and negative impact on the Portfolio’s investment portfolio and, in the longer term, could impair the ability of issuers in which the Portfolio invests to conduct their businesses as they would under normal conditions. Adverse weather conditions may also have a particularly significant negative effect on issuers in the agricultural sector and on insurance companies that insure against the impact of natural disasters.
Counterparties
Portfolio transactions involving a counterparty are subject to the risk that the counterparty or a third party will not fulfill its obligation to the Portfolio (“counterparty risk”). Counterparty risk may arise because of the counterparty’s financial condition (i.e., financial difficulties, bankruptcy, or insolvency), market activities and developments, or other reasons, whether foreseen or not. A counterparty’s inability to fulfill its obligation may result in significant financial loss to the Portfolio. The Portfolio may be unable to recover its investment from the counterparty or may obtain a limited recovery, and/or recovery may be delayed. The extent of the Portfolio’s exposure to counterparty risk with respect to financial assets and liabilities approximates its carrying value. See the "Offsetting Assets and Liabilities" section of this Note for further details.
The Portfolio may be exposed to counterparty risk through participation in various programs, including, but not limited to, lending its securities to third parties, cash sweep arrangements whereby the Portfolio’s cash balance is invested in one or more types of cash management vehicles, as well as investments in, but not limited to, repurchase agreements, debt securities, and derivatives, including various types of swaps, futures and options. The Portfolio intends to enter into financial transactions with counterparties that Janus Capital believes to be creditworthy at the time of the transaction. There is always the risk that Janus Capital’s analysis of a counterparty’s creditworthiness is incorrect or may change due to market conditions. To the extent that the Portfolio focuses its transactions with a limited number of counterparties, it will have greater exposure to the risks associated with one or more counterparties.
Offsetting Assets and Liabilities
The Portfolio presents gross and net information about transactions that are either offset in the financial statements or subject to an enforceable master netting arrangement or similar agreement with a designated counterparty, regardless of whether the transactions are actually offset in the Statement of Assets and Liabilities.
In order to better define its contractual rights and to secure rights that will help the Portfolio mitigate its counterparty risk, the Portfolio has entered into an International Swaps and Derivatives Association, Inc. Master Agreement (“ISDA Master Agreement”) or similar agreement with its derivative contract counterparties. An ISDA Master Agreement is a bilateral agreement between the Portfolio and a counterparty that governs OTC derivatives and forward foreign currency exchange contracts and typically contains, among other things, collateral posting terms and netting provisions in the event of a default and/or termination event. Under an ISDA Master Agreement, in the event of a default and/or termination event, the Portfolio may offset with each counterparty certain derivative financial instruments’ payables and/or receivables with collateral held and/or posted and create one single net payment. For financial reporting purposes, the Portfolio does not offset certain derivative financial instruments’ payables and receivables and related collateral on the Statement of Assets and Liabilities.
The following tables present gross amounts of recognized assets and/or liabilities and the net amounts after deducting collateral that has been pledged by counterparties or has been pledged to counterparties (if applicable). For corresponding information grouped by type of instrument, see the “Fair Value of Derivative Instruments as of December 31, 2017” table located in the Portfolio’s Schedule of Investments.
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Janus Henderson VIT Enterprise Portfolio
Notes to Financial Statements
Offsetting of Financial Assets and Derivative Assets | |||||||||
Gross Amounts | |||||||||
of Recognized | Offsetting Asset | Collateral | |||||||
Counterparty | Assets | or Liability(a) | Pledged(b) | Net Amount | |||||
Deutsche Bank AG | $ | 6,700,720 | $ | — | $ | (6,700,720) | $ | — | |
Offsetting of Financial Liabilities and Derivative Liabilities | |||||||||
Gross Amounts | |||||||||
of Recognized | Offsetting Asset | Collateral | |||||||
Counterparty | Liabilities | or Liability(a) | Pledged(b) | Net Amount | |||||
Bank of America | $ | 7,529 | $ | — | $ | — | $ | 7,529 | |
Barclays Capital, Inc. | 92,914 | — | — | 92,914 | |||||
Citibank NA | 103,206 | — | — | 103,206 | |||||
Credit Suisse International | 70,784 | — | — | 70,784 | |||||
HSBC Securities (USA), Inc. | 172,750 | — | — | 172,750 | |||||
JPMorgan Chase & Co. | 37,876 | — | — | 37,876 | |||||
Total | $ | 485,059 | $ | — | $ | — | $ | 485,059 | |
(a) | Represents the amount of assets or liabilities that could be offset with the same counterparty under master netting or similar agreements that management elects not to offset on the Statement of Assets and Liabilities. | ||||||||
(b) | Collateral pledged is limited to the net outstanding amount due to/from an individual counterparty. The actual collateral amounts pledged may exceed these amounts and may fluctuate in value. |
Deutsche Bank AG acts as securities lending agent and a limited purpose custodian or subcustodian to receive and disburse cash balances and cash collateral, hold short-term investments, hold collateral, and perform other custodian functions in accordance with the Agency Securities Lending and Repurchase Agreement. Securities on loan 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, time deposits, repurchase agreements, money market mutual funds or other money market accounts, or such other collateral as permitted by the SEC. 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. Upon receipt of cash collateral, Janus Capital intends to invest the cash collateral in a cash management vehicle for which Janus Capital serves as investment adviser, Janus Cash Collateral Fund LLC. Loaned securities and related collateral are marked-to-market each business day based upon the market value of the loaned 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 Portfolio does not exchange collateral on its forward currency contracts with its counterparties; however, the Portfolio may segregate cash or high-grade securities in an amount at all times equal to or greater than the Portfolio’s commitment with respect to these contracts. Such segregated assets, if with the Portfolio’s custodian, are denoted on the accompanying Schedule of Investments and are evaluated daily to ensure their market value equals or exceeds the current market value of the Portfolio’s corresponding forward currency contracts.
Real Estate Investing
The Portfolio may invest in equity and debt securities of real estate-related companies. Such companies may include those in the real estate industry or real estate-related industries. These securities may include common stocks, corporate bonds, preferred stocks, and other equity securities, including, but not limited to, mortgage-backed securities, real estate-backed securities, securities of REITs and similar REIT-like entities. A REIT is a trust that invests in real estate-related projects, such as properties, mortgage loans, and construction loans. REITs are generally categorized as equity, mortgage, or hybrid REITs. A REIT may be listed on an exchange or traded OTC.
Securities Lending
Under procedures adopted by the Trustees, the Portfolio may seek to earn additional income by lending securities to certain qualified broker-dealers and institutions. Deutsche Bank AG acts as securities lending agent and a limited purpose custodian or subcustodian to receive and disburse cash balances and cash collateral, hold short-term investments, hold collateral, and perform other custodian functions in accordance with the Agency Securities Lending
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Notes to Financial Statements
and Repurchase Agreement. The Portfolio may lend portfolio securities in an amount equal to up to 1/3 of its total assets as determined at the time of the loan origination. 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. 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, time deposits, repurchase agreements, money market mutual funds or other money market accounts, or such other collateral as permitted by the SEC. If the Portfolio is unable to recover a security on loan, the Portfolio may use the collateral to purchase replacement securities in the market. There is a risk that the value of the collateral could decrease below the cost of the replacement security by the time the replacement investment is made, resulting in a loss to the Portfolio.
Upon receipt of cash collateral, Janus Capital may invest it in affiliated or non-affiliated cash management vehicles, whether registered or unregistered entities, as permitted by the 1940 Act and rules promulgated thereunder. Janus Capital currently intends to invest the cash collateral in a cash management vehicle for which Janus Capital serves as investment adviser, Janus Cash Collateral Fund LLC. An investment in Janus Cash Collateral Fund LLC is generally subject to the same risks that shareholders experience when investing in similarly structured vehicles, such as the potential for significant fluctuations in assets as a result of the purchase and redemption activity of the securities lending program, a decline in the value of the collateral, and possible liquidity issues. Such risks may delay the return of the cash collateral and cause the Portfolio to violate its agreement to return the cash collateral to a borrower in a timely manner. As adviser to the Portfolio and Janus Cash Collateral Fund LLC, Janus Capital has an inherent conflict of interest as a result of its fiduciary duties to both the Portfolio and Janus Cash Collateral Fund LLC. Additionally, Janus Capital receives an investment advisory fee of 0.05% for managing Janus Cash Collateral Fund LLC, but it may not receive a fee for managing certain other affiliated cash management vehicles in which the Portfolio may invest, and therefore may have an incentive to allocate preferred investment opportunities to investment vehicles for which it is receiving a fee.
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 loaned 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 cash collateral invested by Janus Capital is disclosed in the Schedule of Investments (if applicable). Income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to the lending agent are included as “Affiliated securities lending income, net” on the Statement of Operations. As of December 31, 2017, securities lending transactions accounted for as secured borrowings with an overnight and continuous contractual maturity are $6,700,720 for equity securities. Gross amounts of recognized liabilities for securities lending (collateral received) as of December 31, 2017 is $6,842,000, resulting in the net amount due to the counterparty of $141,280.
4. Investment Advisory Agreements and Other Transactions with Affiliates
The Portfolio pays Janus Capital an investment advisory fee which is calculated daily and paid monthly. The Portfolio’s contractual investment advisory fee rate (expressed as an annual rate) is 0.64% of its average daily net assets.
Janus Services LLC (“Janus Services”), a wholly-owned subsidiary of Janus Capital, is the Portfolio’s transfer agent. Janus Services receives an administrative services fee at an annual rate of 0.05% of the average daily net assets of the Portfolio for arranging for the provision by participating insurance companies and qualified plan service providers of administrative services, including recordkeeping, subaccounting, order processing, or other shareholder services provided on behalf of contract holders or plan participants investing in the Portfolio. Other shareholder services may include the provision of order confirmations, periodic account statements, forwarding prospectuses, shareholder reports, and other materials to existing investors, and answering inquiries regarding accounts. Janus Services expects to use this entire fee to compensate insurance companies and qualified plan service providers for providing these services to their customers who invest in the Portfolio. Any unused portion will be reimbursed to the applicable share class at least annually.
In addition, Janus Services provides or arranges for the provision of certain other internal administrative, recordkeeping, and shareholder relations services for the Portfolio. Janus Services is not compensated for these internal services
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Notes to Financial Statements
related to the shares, except for out-of-pocket costs. These amounts are disclosed as “Other transfer agent fees and expenses” on the Statement of Operations.
Under a distribution and shareholder servicing plan (the “Plan”) adopted in accordance with Rule 12b-1 under the 1940 Act, the Service Shares may pay the Trust’s distributor, Janus Distributors LLC (“Janus Distributors”), a wholly-owned subsidiary of Janus Capital, a fee for the sale and distribution and/or shareholder servicing of the Service Shares at an annual rate of up to 0.25% of the average daily net assets of the Service Shares. Under the terms of the Plan, the Trust is authorized to make payments to Janus Distributors for remittance to insurance companies and qualified plan service providers as compensation for distribution and/or shareholder services performed by such entities. These amounts are disclosed as “12b-1 Distribution and shareholder servicing fees” on the Statement of Operations. Payments under the Plan are not tied exclusively to actual 12b-1 distribution and servicing fees, and the payments may exceed 12b-1 distribution and servicing fees actually incurred. If any of the Portfolio’s actual 12b-1 distribution and servicing fees incurred during a calendar year are less than the payments made during a calendar year, the Portfolio will be refunded the difference. Refunds, if any, are included in “12b-1 Distribution and shareholder servicing fees” in the Statement of Operations.
Janus Capital furnishes certain administration, compliance, and accounting services to the Portfolio, including providing office space for the Portfolio and providing personnel to serve as officers to the Portfolio. The Portfolio reimburses Janus Capital for certain of its costs in providing these services (to the extent Janus Capital seeks reimbursement and such costs are not otherwise waived). These costs include some or all of the salaries, fees, and expenses of Janus Capital employees and Portfolio officers, including the Portfolio’s Chief Compliance Officer and compliance staff, who provide specified administration and compliance services to the Portfolio. The Portfolio pays these costs based on out-of-pocket expenses incurred by Janus Capital, and these costs are separate and apart from advisory fees and other expenses paid in connection with the investment advisory services Janus Capital provides to the Portfolio. These amounts are disclosed as “Portfolio administration fees” on the Statement of Operations. Total compensation of $17,105 was paid to the Chief Compliance Officer and certain compliance staff by the Trust during the year ended December 31, 2017. The Portfolio's portion is reported as part of “Other expenses” on the Statement of Operations.
The Board of Trustees has adopted a deferred compensation plan (the “Deferred Plan”) for independent Trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Portfolio. All deferred fees are credited to an account established in the name of the Trustees. The amounts credited to the account then increase or decrease, as the case may be, in accordance with the performance of one or more of the Janus Henderson funds that are selected by the Trustees. The account balance continues to fluctuate in accordance with the performance of the selected fund or funds until final payment of all amounts are credited to the account. The fluctuation of the account balance is recorded by the Portfolio as unrealized appreciation/(depreciation) and is included as of December 31, 2017 on the Statement of Assets and Liabilities in the asset, “Non-interested Trustees’ deferred compensation,” and liability, “Non-interested Trustees’ deferred compensation fees.” Additionally, the recorded unrealized appreciation/(depreciation) is included in “Unrealized net appreciation/(depreciation) of investments, foreign currency translations and non-interested Trustees’ deferred compensation” on the Statement of Assets and Liabilities. Deferred compensation expenses for the year ended December 31, 2017 are included in “Non-interested Trustees’ fees and expenses” on the Statement of Operations. Trustees are allowed to change their designation of mutual funds from time to time. Amounts will be deferred until distributed in accordance with the Deferred Plan. Deferred fees of $416,450 were paid by the Trust to the Trustees under the Deferred Plan during the year ended December 31, 2017.
Pursuant to the provisions of the 1940 Act and related rules, the Portfolio may participate in an affiliated or nonaffiliated cash sweep program. In the cash sweep program, uninvested cash balances of the Portfolio may be used to purchase shares of affiliated or nonaffiliated money market funds or cash management pooled investment vehicles. The Portfolio is eligible to participate in the cash sweep program (the “Investing Funds”). As adviser, Janus Capital has an inherent conflict of interest because of its fiduciary duties to the affiliated money market funds or cash management pooled investment vehicles and the Investing Funds. Janus Cash Liquidity Fund LLC is an affiliated unregistered cash management pooled investment vehicle that invests primarily in highly-rated short-term fixed-income securities. Janus Cash Liquidity Fund LLC currently maintains a NAV of $1.00 per share and distributes income daily in a manner consistent with a registered product compliant with Rule 2a-7 under the 1940 Act. There are no restrictions on the Portfolio's ability to withdraw investments from Janus Cash Liquidity Fund LLC at will, and there are no unfunded capital commitments due from the Portfolio to Janus Cash Liquidity Fund LLC. The units of Janus Cash Liquidity Fund LLC are not charged any management fee, sales charge or service fee.
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Notes to Financial Statements
Any purchases and sales, realized gains/losses and recorded dividends from affiliated investments during the year ended December 31, 2017 can be found in a table located in the Schedule of Investments.
The Portfolio is permitted to purchase or sell securities (“cross-trade”) between itself and other funds or accounts managed by Janus Capital in accordance with Rule 17a-7 under the Investment Company Act of 1940 (“Rule 17a-7”), when the transaction is consistent with the investment objectives and policies of the Portfolio and in accordance with the Internal Cross Trade Procedures adopted by the Trust’s Board of Trustees. These procedures have been designed to ensure that any cross-trade of securities by the Portfolio from or to another fund or account that is or could be considered an affiliate of the Portfolio under certain limited circumstances by virtue of having a common investment adviser, common Officer, or common Trustee complies with Rule 17a-7. Under these procedures, each cross-trade is effected at the current market price to save costs where allowed. During the year ended December 31, 2017, the Portfolio engaged in cross trades amounting to $2,335,953 in purchases.
5. Federal Income Tax
The tax components of capital shown in the table below represent: (1) distribution requirements the Portfolio must satisfy under the income tax regulations; (2) losses or deductions the Portfolio may be able to offset against income and gains realized in future years; and (3) unrealized appreciation or depreciation of investments for federal income tax purposes.
Other book to tax differences primarily consist of deferred compensation, derivatives, and foreign currency contract adjustments. The Portfolio has elected to treat gains and losses on forward foreign currency contracts as capital gains and losses, if applicable. Other foreign currency gains and losses on debt instruments are treated as ordinary income for federal income tax purposes pursuant to Section 988 of the Internal Revenue Code.
Loss Deferrals | Other Book | Net Tax | |||||
Undistributed | Undistributed | Accumulated | Late-Year | Post-October | to Tax | Appreciation/ | |
$ 1,253,200 | $ 58,630,178 | $ - | $ - | $ - | $ (14,383) | $460,994,406 |
The aggregate cost of investments and the composition of unrealized appreciation and depreciation of investment securities for federal income tax purposes as of December 31, 2017 are noted below. The primary differences between book and tax appreciation or depreciation of investments are wash sale loss deferrals and investments in partnerships.
Federal Tax Cost | Unrealized | Unrealized | Net Tax Appreciation/ |
$ 721,307,275 | $465,577,916 | $ (4,583,510) | $ 460,994,406 |
Information on the tax components of derivatives as of December 31, 2017 is as follows:
Federal Tax Cost | Unrealized | Unrealized | Net Tax Appreciation/ |
$ (485,059) | $ - | $ - | $ - |
Tax cost of investments and unrealized appreciation/(depreciation) may also include timing differences that do not constitute adjustments to tax basis.
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Notes to Financial Statements
Income and capital gains distributions are determined in accordance with income tax regulations that may differ from accounting principles generally accepted in the United States of America. These differences are due to differing treatments for items such as net short-term gains, deferral of wash sale losses, foreign currency transactions, net investment losses, and capital loss carryovers. Certain permanent differences such as tax returns of capital and net investment losses noted below have been reclassified to capital.
For the year ended December 31, 2017 | ||||
Distributions | ||||
From Ordinary Income | From Long-Term Capital Gains | Tax Return of Capital | Net Investment Loss | |
$ 6,165,712 | $ 64,073,319 | $ - | $ - |
For the year ended December 31, 2016 | ||||
Distributions | ||||
From Ordinary Income | From Long-Term Capital Gains | Tax Return of Capital | Net Investment Loss | |
$ 6,166,666 | $ 60,185,388 | $ - | $ - |
Permanent book to tax basis differences may result in reclassifications between the components of net assets. These differences have no impact on the results of operations or net assets. The following reclassifications have been made to the Portfolio:
Increase/(Decrease) to Capital | Increase/(Decrease) to Undistributed | Increase/(Decrease) to Undistributed |
$ - | $ 3,179 | $ (3,179) |
6. Capital Share Transactions
Year ended December 31, 2017 | Year ended December 31, 2016 | |||||
Shares | Amount | Shares | Amount | |||
Institutional Shares: | ||||||
Shares sold | 1,890,480 | $121,760,466 | 979,051 | $ 56,320,924 | ||
Reinvested dividends and distributions | 576,744 | 36,830,888 | 632,158 | 35,205,199 | ||
Shares repurchased | (1,457,793) | (95,410,468) | (1,156,822) | (66,522,970) | ||
Net Increase/(Decrease) | 1,009,431 | $ 63,180,886 |
| 454,387 | $ 25,003,153 | |
Service Shares: | ||||||
Shares sold | 2,014,812 | $125,011,366 | 2,029,144 | $110,199,332 | ||
Reinvested dividends and distributions | 553,573 | 33,408,143 | 589,542 | 31,146,855 | ||
Shares repurchased | (1,693,457) | (104,497,915) | (1,041,304) | (56,834,101) | ||
Net Increase/(Decrease) | 874,928 | $ 53,921,594 |
| 1,577,382 | $ 84,512,086 |
7. Purchases and Sales of Investment Securities
For the year ended December 31, 2017, the aggregate cost of purchases and proceeds from sales of investment securities (excluding any short-term securities, short-term options contracts, TBAs, and in-kind transactions, as applicable) was as follows:
Purchases of | Proceeds from Sales | Purchases of Long- | Proceeds from Sales |
$147,325,422 | $ 135,040,478 | $ - | $ - |
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Janus Henderson VIT Enterprise Portfolio
Notes to Financial Statements
8. Recent Accounting Pronouncements
The Securities and Exchange Commission ("SEC") adopted new rules as well as amendments to its rules to modernize the reporting and disclosure of information by registered investment companies. In addition, the SEC adopted amendments to Regulation S-X, which require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The compliance date of the amendments to Regulation S-X was August 1, 2017. This report incorporates the amendments to Regulation S-X.
The FASB issued Accounting Standards Update No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities ("ASU 2017-08") to amend the amortization period for certain purchased callable debt securities held at a premium. The guidance requires certain premiums on callable debt securities to be amortized to the earliest call date. The amortization period for callable debt securities purchased at a discount will not be impacted. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. Management is currently evaluating the impacts of ASU 2017-08 on the financial statements.
9. Merger Related Matters
On October 3, 2016, Janus Capital Group Inc. (“JCGI”), the direct parent of Janus Capital, and Henderson Group plc (“Henderson”) announced that they had entered into an Agreement and Plan of Merger (“Merger Agreement”) relating to the strategic combination of Henderson and JCGI (the “Merger”). Pursuant to the Merger Agreement, a newly formed, direct wholly-owned subsidiary of Henderson merged with and into JCGI, with JCGI as the surviving corporation and a direct wholly-owned subsidiary of Henderson. The Merger was effective May 30, 2017.
The consummation of the Merger may have been deemed to be an “assignment” (as defined in the 1940 Act) of the advisory agreement between the Portfolio and Janus Capital in effect on the date of the Merger. As a result, the consummation of the Merger may have caused the investment advisory agreement to terminate automatically in accordance with its terms.
On December 8, 2016, the Trustees approved, subject to shareholder approval, a new investment advisory agreement between the Portfolio and Janus Capital in order to permit Janus Capital to continue to provide advisory services to the Portfolio following the closing of the Merger (the “Post-Merger Advisory Agreement”). At the same meeting, the Trustees approved submitting the Post-Merger Advisory Agreement, among other proposals, to Portfolio shareholders for approval.
Special Meeting(s) of Shareholders were held on April 6, 2017, and adjourned and reconvened on April 18, 2017.
Approval of Advisory Agreements
On April 18, 2017, shareholders of the Portfolio approved the Post-Merger Advisory Agreement with Janus Capital. The Post- Merger Advisory Agreement took effect upon the consummation of the Merger.
10. Subsequent Event
Management has evaluated whether any events or transactions occurred subsequent to December 31, 2017 and through the date of issuance of the Portfolio’s financial statements and determined that there were no material events or transactions that would require recognition or disclosure in the Portfolio’s financial statements.
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Janus Henderson VIT Enterprise Portfolio
Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Janus Aspen Series and Shareholders of Janus Henderson VIT Enterprise Portfolio:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Janus Henderson VIT Enterprise Portfolio (one of the portfolios constituting Janus Aspen Series, referred to hereafter as the “Portfolio”) as of December 31, 2017, the related statement of operations for the year ended December 31, 2017, the statements of changes in net assets for each of the two years in the period ended December 31, 2017, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2017 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Portfolio as of December 31, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2017 and the financial highlights for each of the five years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Portfolio’s management. Our responsibility is to express an opinion on the Portfolio’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Portfolio in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2017 by correspondence with the custodian, transfer agent, and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
Denver, Colorado
February 16, 2018
We have served as the auditor of one or more investment companies in Janus Henderson Funds since 1990.
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Additional Information (unaudited)
Proxy Voting Policies and Voting Record
A description of the policies and procedures that the Portfolio uses to determine how to vote proxies relating to its portfolio securities is available without charge: (i) upon request, by calling 1-800-525-1093; (ii) on the Portfolio’s website at janushenderson.com/proxyvoting; and (iii) on the SEC’s website at http://www.sec.gov. Additionally, information regarding the Portfolio’s proxy voting record for the most recent twelve-month period ended June 30 is also available, free of charge, through janushenderson.com/proxyvoting and from the SEC’s website at http://www.sec.gov.
Full Holdings
The Portfolio is required to disclose its complete holdings in the quarterly holdings report on Form N-Q within 60 days of the end of the first and third fiscal quarters, and in the annual report and semiannual report to Portfolio shareholders. These reports (i) are 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) are available without charge, upon request, by calling a Janus Henderson representative at 1-877-335-2687 (toll free) . Portfolio holdings consisting of at least the names of the holdings are generally available on a monthly basis with a 30-day lag. Holdings are generally posted approximately two business days thereafter under Full Holdings for the Portfolio at janushenderson.com/vit.
APPROVAL OF ADVISORY AGREEMENTS DURING THE PERIOD
December 2017
The Trustees of Janus Investment Fund and Janus Aspen Series, each of whom serves as an “independent” Trustee (the “Trustees”), oversee the management of each Fund of Janus Investment Fund and each Portfolio of Janus Aspen Series (each, a “Fund” and collectively, the “Funds”), and as required by law, determine annually whether to continue the investment advisory agreement for each Fund and the subadvisory agreements for the 14 Funds that utilize subadvisers.
In connection with their most recent consideration of those agreements for each Fund, the Trustees received and reviewed information provided by Janus Capital and the respective subadvisers in response to requests of the Trustees and their independent legal counsel. They also received and reviewed information and analysis provided by, and in response to requests of, their independent fee consultant. Throughout their consideration of the agreements, the Trustees were advised by their independent legal counsel. The Trustees met with management to consider the agreements, and also met separately in executive session with their independent legal counsel and their independent fee consultant.
Additionally, in connection with their consideration of whether to continue the investment advisory agreement and subadvisory agreement for each Fund, as applicable, the Trustees also received and reviewed information in connection with the transaction to combine the respective businesses of Henderson Group plc and Janus Capital Group, Inc., the parent company of Janus Capital (the “Transaction”), announced in October 2016, which closed in the second quarter of 2017. In this regard, the Trustees reviewed information regarding the impact of the Transaction on the services to be provided by Janus Capital and each subadviser, as applicable, to the Funds under such agreements prior to the close of the Transaction as well as the services provided after the Transaction closed.
At a meeting held on December 7, 2017, based on the Trustees’ evaluation of the information provided by Janus Capital, the subadvisers, and the independent fee consultant, as well as other information, the Trustees determined that the overall arrangements between each Fund and Janus Capital and each subadviser, as applicable, were fair and reasonable in light of the nature, extent and quality of the services provided by Janus Capital, its affiliates and the subadvisers, the fees charged for those services, and other matters that the Trustees considered relevant in the exercise of their business judgment. At that meeting, the Trustees unanimously approved the continuation of the investment advisory agreement for each Fund, and the subadvisory agreement for each subadvised Fund, for the period from February 1, 2018 through February 1, 2019, subject to earlier termination as provided for in each agreement.
In considering the continuation of those agreements, the Trustees reviewed and analyzed various factors that they determined were relevant, including the factors described below, none of which by itself was considered dispositive. However, the material factors and conclusions that formed the basis for the Trustees’ determination to approve the continuation of the agreements are discussed separately below. Also included is a summary of the independent fee consultant’s conclusions and opinions that arose during, and were included as part of, the Trustees’ consideration of the
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agreements. “Management fees,” as used herein, reflect actual annual advisory fees and any administration fees (excluding out of pocket costs), net of any waivers.
Nature, Extent and Quality of Services
The Trustees reviewed the nature, extent and quality of the services provided by Janus Capital and the subadvisers to the Funds, taking into account the investment objective, strategies and policies of each Fund, and the knowledge the Trustees gained from their regular meetings with management on at least a quarterly basis and their ongoing review of information related to the Funds. In addition, the Trustees reviewed the resources and key personnel of Janus Capital and each subadviser, particularly noting those employees who provide investment and risk management services to the Funds. The Trustees also considered other services provided to the Funds by Janus Capital or the subadvisers, such as managing the execution of portfolio transactions and the selection of broker-dealers for those transactions. The Trustees considered Janus Capital’s role as administrator to the Funds, noting that Janus Capital does not receive a fee for its services but is reimbursed for its out-of-pocket costs. The Trustees considered the role of Janus Capital in monitoring adherence to the Funds’ investment restrictions, providing support services for the Trustees and Trustee committees, and overseeing communications with shareholders and the activities of other service providers, including monitoring compliance with various policies and procedures of the Funds and with applicable securities laws and regulations.
In this regard, the independent fee consultant noted that Janus Capital provides a number of different services for the Funds and Fund shareholders, ranging from investment management services to various other servicing functions, and that, in its opinion, Janus Capital is a capable provider of those services. The independent fee consultant also provided its belief that Janus Capital has developed a number of institutional competitive advantages that should enable it to provide superior investment and service performance over the long term.
The Trustees concluded that the nature, extent and quality of the services provided by Janus Capital or the subadviser to each Fund were appropriate and consistent with the terms of the respective advisory and subadvisory agreements, and that, taking into account steps taken to address those Funds whose performance lagged that of their peers for certain periods, the Funds were likely to benefit from the continued provision of those services. They also concluded that Janus Capital and each subadviser had sufficient personnel, with the appropriate education and experience, to serve the Funds effectively and had demonstrated its ability to attract well-qualified personnel.
Performance of the Funds
The Trustees considered the performance results of each Fund over various time periods. They noted that they considered Fund performance data throughout the year, including periodic meetings with each Fund’s portfolio manager(s), and also reviewed information comparing each Fund’s performance with the performance of comparable funds and peer groups identified by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent data provider, and with the Fund’s benchmark index. In this regard, the independent fee consultant found that the overall Funds’ performance has been strong: for the 36 months ended September 30, 2017, approximately 70% of the Funds were in the top two quartiles of performance, as reported by Morningstar, and for the 12 months ended September 30, 2017, approximately 46% of the Funds were in the top two quartiles of performance, as reported by Morningstar.
The Trustees considered the performance of each Fund, noting that performance may vary by share class, and noted the following:
Alternative Funds
· For Janus Henderson Diversified Alternatives Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson International Long/Short Equity Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and the Fund’s limited performance history.
Asset Allocation Funds
· For Janus Henderson Global Allocation Fund – Conservative, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge
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quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Global Allocation Fund – Growth, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Global Allocation Fund – Moderate, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
Fixed-Income Funds
· For Janus Henderson Flexible Bond Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Bond Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Unconstrained Bond Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson High-Yield Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Multi-Sector Income Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Real Return Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Short-Term Bond Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Strategic Income Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
Global and International Equity Funds
· For Janus Henderson Asia Equity Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017.
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· For Janus Henderson Emerging Markets Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson European Focus Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Equity Income Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Global Life Sciences Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Global Real Estate Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Global Research Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Global Select Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Global Technology Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Value Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital and Perkins had taken or were taking to improve performance.
· For Janus Henderson International Opportunities Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson International Small Cap Fund, the Trustees noted that, due to limited performance for the Fund, performance history was not a material factor.
· For Janus Henderson International Value Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital and Perkins had taken or were taking to improve performance.
· For Janus Henderson Overseas Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that
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the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
Money Market Funds
· For Janus Henderson Government Money Market Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance.
· For Janus Henderson Money Market Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance.
Multi-Asset Funds
· For Janus Henderson Adaptive Global Allocation Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson All Asset Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Dividend & Income Builder Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Value Plus Income Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
Multi-Asset U.S. Equity Funds
· For Janus Henderson Balanced Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Contrarian Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Enterprise Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Forty Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Growth and Income Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Research Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
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· For Janus Henderson Triton Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson U.S. Growth Opportunities Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and the Fund’s limited performance history.
· For Janus Henderson Venture Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017.
Quantitative Equity Funds
· For Janus Henderson Emerging Markets Managed Volatility Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital and Intech had taken or were taking to improve performance, and the Fund’s limited performance history.
· For Janus Henderson Global Income Managed Volatility Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson International Managed Volatility Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital and Intech had taken or were taking to improve performance.
· For Janus Henderson U.S. Managed Volatility Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017.
U.S. Equity Funds
· For Janus Henderson Large Cap Value Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital and Perkins had taken or were taking to improve performance.
· For Janus Henderson Mid Cap Value Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Select Value Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Small Cap Value Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
Janus Aspen Series
· For Janus Henderson Balanced Portfolio, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Enterprise Portfolio, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
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· For Janus Henderson Flexible Bond Portfolio, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Forty Portfolio, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Global Allocation Portfolio – Moderate, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Global Research Portfolio, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Technology Portfolio, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Global Unconstrained Bond Portfolio, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and the Fund’s limited performance history.
· For Janus Henderson Mid Cap Value Portfolio, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital and Perkins had taken or were taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Overseas Portfolio, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Research Portfolio, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson U.S. Low Volatility Portfolio, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017.
In consideration of each Fund’s performance, the Trustees concluded that, taking into account the factors relevant to performance, as well as other considerations, including steps taken to improve performance, the Fund’s performance warranted continuation of the Fund’s investment advisory and subadvisory agreement(s).
Costs of Services Provided
The Trustees examined information regarding the fees and expenses of each Fund in comparison to similar information for other comparable funds as provided by Broadridge, an independent data provider. They also reviewed an analysis of
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that information provided by their independent fee consultant and noted that the rate of management (investment advisory and any administration, but excluding out-of-pocket costs) fees for many of the Funds, after applicable waivers, was below the average management fee rate of the respective peer group of funds selected by an independent data provider. The Trustees also examined information regarding the subadvisory fees charged for subadvisory services, as applicable, noting that all such fees were paid by Janus Capital out of its management fees collected from such Fund.
The independent fee consultant provided its belief that the management fees charged by Janus Capital to each of the Funds under the current investment advisory and administration agreements are reasonable in relation to the services provided by Janus Capital. The independent fee consultant found: (1) the total expenses and management fees of the Funds to be reasonable relative to other mutual funds; (2) total expenses, on average, were 10% below the average total expenses of their respective Broadridge Expense Group peers and 18% below the average total expenses for their Broadridge Expense Universes; (3) management fees for the Funds, on average, were 8% below the average management fees for their Expense Groups and 9% below the average for their Expense Universes; and (4) Fund expenses at the functional level for each asset and share class category were reasonable. The Trustees also considered the total expenses for each share class of each Fund compared to the average total expenses for its Broadridge Expense Group peers and to average total expenses for its Broadridge Expense Universe.
The independent fee consultant concluded that, based on its strategic review of expenses at the complex, category and individual fund level, Fund expenses were found to be reasonable relative to both Expense Group and Expense Universe benchmarks. Further, for certain Funds, the independent fee consultant also performed a systematic “focus list” analysis of expenses in the context of the performance or service delivered to each set of investors in each share class in each selected Fund. Based on this analysis, the independent fee consultant found that the combination of service quality/performance and expenses on these individual Funds and share classes were reasonable in light of performance trends, performance histories, and existence of performance fees, breakpoints, and expense waivers on such Funds.
The Trustees considered the methodology used by Janus Capital and each subadviser in determining compensation payable to portfolio managers, the competitive environment for investment management talent, and the competitive market for mutual funds in different distribution channels.
The Trustees also reviewed management fees charged by Janus Capital and each subadviser to comparable separate account clients and to comparable non-affiliated funds subadvised by Janus Capital or by a subadviser (for which Janus Capital or the subadviser provides only or primarily portfolio management services). Although in most instances subadvisory and separate account fee rates for various investment strategies were lower than management fee rates for Funds having a similar strategy, the Trustees considered that Janus Capital noted that, under the terms of the management agreements with the Funds, Janus Capital performs significant additional services for the Funds that it does not provide to those other clients, including administration services, oversight of the Funds’ other service providers, trustee support, regulatory compliance and numerous other services, and that, in serving the Funds, Janus Capital assumes many legal risks and other costs that it does not assume in servicing its other clients. Moreover, they noted that the independent fee consultant found that: (1) the management fees Janus Capital charges to the Funds are reasonable in relation to the management fees Janus Capital charges to its institutional clients and to the fees Janus Capital charges to funds subadvised by Janus Capital; (2) these institutional and subadvised accounts have different service and infrastructure needs; (3) Janus mutual fund investors enjoy reasonable fees relative to the fees charged to Janus institutional and subadvised fund investors; (4) in three of seven product categories, the Funds receive proportionally better pricing than the industry in relation to Janus institutional clients; and (5) in seven of eight strategies, Janus Capital has lower management fees than funds subadvised by Janus Capital’s portfolio managers.
The Trustees considered the fees for each Fund for its fiscal year ended in 2016, and noted the following with regard to each Fund’s total expenses, net of applicable fee waivers (the Fund’s “total expenses”):
Alternative Funds
· For Janus Henderson Diversified Alternatives Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson International Long/Short Equity Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were
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reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
Asset Allocation Funds
· For Janus Henderson Global Allocation Fund – Conservative, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Allocation Fund – Growth, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Allocation Fund – Moderate, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
Fixed-Income Funds
· For Janus Henderson Flexible Bond Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Bond Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Unconstrained Bond Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson High-Yield Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Multi-Sector Income Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Real Return Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Short-Term Bond Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to waive 11 basis points of management fees effective February 1, 2018 and also has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Strategic Income Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
Global and International Equity Funds
· For Janus Henderson Asia Equity Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
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Additional Information (unaudited)
· For Janus Henderson Emerging Markets Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
· For Janus Henderson European Focus Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
· For Janus Henderson Global Equity Income Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Life Sciences Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Real Estate Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Research Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Select Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Technology Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Value Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson International Opportunities Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
· For Janus Henderson International Small Cap Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
· For Janus Henderson International Value Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Overseas Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
Money Market Funds
· For Janus Henderson Government Money Market Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes. In addition, the Trustees considered that Janus Capital voluntarily waives one-half of its advisory fee and other expenses in order to maintain a positive yield.
· For Janus Henderson Money Market Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes. In addition, the Trustees considered that Janus Capital voluntarily waives one-half of its advisory fee and other expenses in order to maintain a positive yield.
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Additional Information (unaudited)
Multi-Asset Funds
· For Janus Henderson Adaptive Global Allocation Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson All Asset Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s total expenses effective June 5, 2017.
· For Janus Henderson Dividend & Income Builder Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
· For Janus Henderson Value Plus Income Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
Multi-Asset U.S. Equity Funds
· For Janus Henderson Balanced Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Contrarian Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Enterprise Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Forty Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Growth and Income Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Research Fund, the Trustees noted that, although the Fund’s total expenses were equal to or exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective February 1, 2017.
· For Janus Henderson Triton Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson U.S. Growth Opportunities Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
· For Janus Henderson Venture Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
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Additional Information (unaudited)
Quantitative Equity Funds
· For Janus Henderson Emerging Markets Managed Volatility Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Income Managed Volatility Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson International Managed Volatility Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson U.S. Managed Volatility Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
U.S. Equity Funds
· For Janus Henderson Large Cap Value Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Mid Cap Value Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Select Value Fund, the Trustees noted that the Fund’s total expenses were below the peer group averages for all share classes.
· For Janus Henderson Small Cap Value Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
Janus Aspen Series
· For Janus Henderson Balanced Portfolio, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable.
· For Janus Henderson Enterprise Portfolio, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable.
· For Janus Henderson Flexible Bond Portfolio, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Forty Portfolio, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable.
· For Janus Henderson Global Allocation Portfolio - Moderate, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Research Portfolio, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Technology Portfolio, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Unconstrained Bond Portfolio, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
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Additional Information (unaudited)
· For Janus Henderson Mid Cap Value Portfolio, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Overseas Portfolio, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Research Portfolio, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson U.S. Low Volatility Portfolio, the Trustees noted that the Fund’s total expenses were below the peer group average for its sole share class.
The Trustees reviewed information on the overall profitability to Janus Capital and its affiliates of their relationship with the Funds, and considered profitability data of other fund managers. The Trustees also considered the financial information, estimated profitability and corporate structure of Janus Capital’s parent company before and after the Transaction. The Trustees recognized that profitability comparisons among fund managers are difficult because of the variation in the type of comparative information that is publicly available, and the profitability of any fund manager is affected by numerous factors, including the organizational structure of the particular fund manager, the types of funds and other accounts it manages, possible other lines of business, the methodology for allocating expenses, and the fund manager’s capital structure and cost of capital. The Trustees also noted that the Trustees’ independent fee consultant reviewed the overall profitability of Janus Capital’s parent company prior to the Transaction, and the independent fee consultant found that, while assessing the reasonableness of Fund expenses in light of such profits was dependent on comparisons with other publicly-traded mutual fund advisers, and that these comparisons were limited in accuracy by differences in complex size, business mix, institutional account orientation and other factors, after accepting these limitations, the level of profit earned by Janus Capital’s parent company was reasonable. In this regard, the independent consultant concluded that the profitability of Janus Capital’s parent company did not show excess nor did it show any insufficiency that could limit the ability to invest the resources needed to drive strong future investment performance on behalf of the Funds.
Additionally, the Trustees considered the estimated profitability to Janus Capital from the investment management services it provided to each Fund. The Trustees also considered such estimated profitability taking into account the impact of the Transaction on Janus Capital’s expense structure on a pro forma basis. In their review, the Trustees considered whether Janus Capital and each subadviser receive adequate incentives and resources to manage the Funds effectively. In reviewing profitability, the Trustees noted that the estimated profitability for an individual Fund is necessarily a product of the allocation methodology utilized by Janus Capital to allocate its expenses as part of the estimated profitability calculation. In this regard, the Trustees noted that the independent fee consultant concluded that (1) the expense allocation methodology utilized by Janus Capital was reasonable and (2) the estimated profitability to Janus Capital from the investment management services it provided to each Fund was reasonable, including after taking into account the impact of the Transaction on Janus Capital’s expense structure on a pro forma basis. The Trustees also considered that the estimated profitability for an individual Fund was influenced by a number of factors, including not only the allocation methodology selected, but also the presence of fee waivers and expense caps, and whether the Fund’s investment management agreement contained breakpoints or a performance fee component. The Trustees determined, after taking into account these factors, among others, that Janus Capital’s estimated profitability with respect to each Fund was not unreasonable in relation to the services provided, and that the variation in the range of such estimated profitability among the Funds was not a material factor in the Board’s approval of the reasonableness of any Fund’s investment management fees.
The Trustees concluded that the management fees payable by each Fund to Janus Capital and its affiliates, as well as the fees paid by Janus Capital to the subadvisers of subadvised Funds, were reasonable in relation to the nature, extent, and quality of the services provided, taking into account the fees charged by other advisers for managing comparable mutual funds with similar strategies, the fees Janus Capital and the subadvisers charge to other clients, and, as applicable, the impact of fund performance on management fees payable by the Funds. The Trustees also concluded that each Fund’s total expenses were reasonable, taking into account the size of the Fund, the quality of services provided by Janus Capital and any subadviser, the investment performance of the Fund, and any expense limitations agreed to or provided by Janus Capital.
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Additional Information (unaudited)
Economies of Scale
The Trustees considered information about the potential for Janus Capital to realize economies of scale as the assets of the Funds increase. They noted their independent fee consultant’s analysis of economies of scale in prior years. They also noted that, although many Funds pay advisory fees at a base fixed rate as a percentage of net assets, without any breakpoints or performance fees, their independent fee consultant concluded that 86% of these Funds’ share classes have contractual management fees (gross of waivers) below their Broadridge expense group averages. They also noted that for those Funds whose expenses are being reduced by the contractual expense limitations of Janus Capital, Janus Capital is subsidizing certain of these Funds because they have not reached adequate scale. Moreover, as the assets of some of the Funds have declined in the past few years, certain Funds have benefited from having advisory fee rates that have remained constant rather than increasing as assets declined. In addition, performance fee structures have been implemented for various Funds that have caused the effective rate of advisory fees payable by such a Fund to vary depending on the investment performance of the Fund relative to its benchmark index over the measurement period; and a few Funds have fee schedules with breakpoints and reduced fee rates above certain asset levels. The Trustees also noted that the Funds share directly in economies of scale through the lower charges of third-party service providers that are based in part on the combined scale of all of the Funds. Based on all of the information they reviewed, including past research and analysis conducted by the Trustees’ independent fee consultant, the Trustees concluded that the current fee structure of each Fund was reasonable and that the current rates of fees do reflect a sharing between Janus Capital and the Fund of any economies of scale that may be present at the current asset level of the Fund.
The independent fee consultant concluded that, given the limitations of various analytical approaches to economies of scale it had considered in prior years, and their conflicting results, it is difficult to analytically confirm or deny the existence of economies of scale in the Janus complex. The independent consultant concluded that (1) to the extent there were economies of scale at Janus Capital, Janus Capital’s general strategy of setting fixed management fees below peers appeared to share any such economies with investors even on smaller Funds which have not yet achieved those economies and (2) by setting lower fixed fees from the start on these Funds, Janus Capital appeared to be investing to increase the likelihood that these Funds will grow to a level to achieve any scale economies that may exist. Further, the independent fee consultant provided its belief that Fund investors are well-served by the fee levels and performance fee structures in place on the Funds in light of any economies of scale that may be present at Janus Capital.
Other Benefits to Janus Capital
The Trustees also considered benefits that accrue to Janus Capital and its affiliates and subadvisers to the Funds from their relationships with the Funds. They recognized that two affiliates of Janus Capital separately serve the Funds as transfer agent and distributor, respectively, and the transfer agent receives compensation directly from the non-money market funds for services provided. The Trustees also considered Janus Capital’s past and proposed use of commissions paid by the Funds on portfolio brokerage transactions to obtain proprietary and third-party research products and services benefiting the Fund and/or other clients of Janus Capital and/or Janus Capital, and/or a subadviser to a Fund. The Trustees concluded that Janus Capital’s and the subadvisers’ use of these types of client commission arrangements to obtain proprietary and third-party research products and services was consistent with regulatory requirements and guidelines and was likely to benefit each Fund. The Trustees also concluded that, other than the services provided by Janus Capital and its affiliates and subadvisers pursuant to the agreements and the fees to be paid by each Fund therefor, the Funds and Janus Capital and the subadvisers may potentially benefit from their relationship with each other in other ways. They concluded that Janus Capital and/or the subadvisers benefits from the receipt of research products and services acquired through commissions paid on portfolio transactions of the Funds and that the Funds benefit from Janus Capital’s and/or the subadvisers’ receipt of those products and services as well as research products and services acquired through commissions paid by other clients of Janus Capital and/or other clients of the subadvisers. They further concluded that the success of any Fund could attract other business to Janus Capital, the subadvisers or other Janus funds, and that the success of Janus Capital and the subadvisers could enhance Janus Capital’s and the subadvisers’ ability to serve the Funds.
January 2017
The Trustees of Janus Investment Fund and Janus Aspen Series, each of whom serves as an “independent” Trustee (the “Trustees”), oversee the management of each Fund of Janus Investment Fund and each Portfolio of Janus Aspen Series (each, a “Fund” and collectively, the “Funds”), and as required by law, determine annually whether to continue the
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investment advisory agreement for each Fund and the subadvisory agreements for the 16 Funds that utilize subadvisers.
In connection with their most recent consideration of those agreements for each Fund, the Trustees received and reviewed information provided by Janus Capital and the respective subadvisers in response to requests of the Trustees and their independent legal counsel. They also received and reviewed information and analysis provided by, and in response to requests of, their independent fee consultant. Throughout their consideration of the agreements, the Trustees were advised by their independent legal counsel. The Trustees met with management to consider the agreements, and also met separately in executive session with their independent legal counsel and their independent fee consultant.
Additionally, in connection with their consideration of whether to continue the investment advisory agreement and subadvisory agreement for each Fund, as applicable, the Trustees also received and reviewed information in connection with the proposed transaction to combine the respective businesses of Henderson Group plc and Janus Capital Group, Inc., the parent company of Janus Capital (the “Transaction”), announced in October 2016, which Janus Capital advised the Trustees was expected to close in the second quarter of 2017. In this regard, the Trustees reviewed information regarding the impact of the Transaction on the services to be provided by Janus Capital and each subadviser, as applicable, to the Funds under such agreements both prior to the close of the Transaction, and afterwards, if the Transaction were not to close. If the Transaction closes, all such agreements would be replaced by new investment advisory agreements and subadvisory agreements, as applicable, for each Fund, assuming requisite Fund shareholder approvals have been obtained.
At a meeting held on January 26, 2017, based on the Trustees’ evaluation of the information provided by Janus Capital, the subadvisers, and the independent fee consultant, as well as other information, the Trustees determined that the overall arrangements between each Fund and Janus Capital and each subadviser, as applicable, were fair and reasonable in light of the nature, extent and quality of the services provided by Janus Capital, its affiliates and the subadvisers, the fees charged for those services, and other matters that the Trustees considered relevant in the exercise of their business judgment. At that meeting, the Trustees unanimously approved the continuation of the investment advisory agreement for each Fund, and the subadvisory agreement for each subadvised Fund, for the period from February 1, 2017 through February 1, 2018, subject to earlier termination as provided for in each agreement.
In considering the continuation of those agreements, the Trustees reviewed and analyzed various factors that they determined were relevant, including the factors described below, none of which by itself was considered dispositive. However, the material factors and conclusions that formed the basis for the Trustees’ determination to approve the continuation of the agreements are discussed separately below. Also included is a summary of the independent fee consultant’s conclusions and opinions that arose during, and were included as part of, the Trustees’ consideration of the agreements. “Management fees,” as used herein, reflect actual annual advisory fees and any administration fees (excluding out of pocket costs), net of any waivers.
Nature, Extent and Quality of Services
The Trustees reviewed the nature, extent and quality of the services provided by Janus Capital and the subadvisers to the Funds, taking into account the investment objective, strategies and policies of each Fund, and the knowledge the Trustees gained from their regular meetings with management on at least a quarterly basis and their ongoing review of information related to the Funds. In addition, the Trustees reviewed the resources and key personnel of Janus Capital and each subadviser, particularly noting those employees who provide investment and risk management services to the Funds. The Trustees also considered other services provided to the Funds by Janus Capital or the subadvisers, such as managing the execution of portfolio transactions and the selection of broker-dealers for those transactions. The Trustees considered Janus Capital’s role as administrator to the Funds, noting that Janus Capital does not receive a fee for its services but is reimbursed for its out-of-pocket costs. The Trustees considered the role of Janus Capital in monitoring adherence to the Funds’ investment restrictions, providing support services for the Trustees and Trustee committees, and overseeing communications with shareholders and the activities of other service providers, including monitoring compliance with various policies and procedures of the Funds and with applicable securities laws and regulations.
In this regard, the independent fee consultant noted that Janus Capital provides a number of different services for the Funds and Fund shareholders, ranging from investment management services to various other servicing functions, and that, in its opinion, Janus Capital is a capable provider of those services. The independent fee consultant also provided
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its belief that Janus Capital has developed a number of institutional competitive advantages that should enable it to provide superior investment and service performance over the long term.
The Trustees concluded that the nature, extent and quality of the services provided by Janus Capital or the subadviser to each Fund were appropriate and consistent with the terms of the respective advisory and subadvisory agreements, and that, taking into account steps taken to address those Funds whose performance lagged that of their peers for certain periods, the Funds were likely to benefit from the continued provision of those services. They also concluded that Janus Capital and each subadviser had sufficient personnel, with the appropriate education and experience, to serve the Funds effectively and had demonstrated its ability to attract well-qualified personnel.
Performance of the Funds
The Trustees considered the performance results of each Fund over various time periods. They noted that they considered Fund performance data throughout the year, including periodic meetings with each Fund’s portfolio manager(s), and also reviewed information comparing each Fund’s performance with the performance of comparable funds and peer groups identified by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent data provider, and with the Fund’s benchmark index. In this regard, the independent fee consultant found that the overall Funds’ performance has been strong: for the 36 months ended September 30, 2016, approximately 76% of the Funds were in the top two Broadridge quartiles of performance, and for the 12 months ended September 30, 2016, approximately 47% of the Funds were in the top two Broadridge quartiles of performance.
The Trustees considered the performance of each Fund, noting that performance may vary by share class, and noted the following:
Fixed-Income Funds and Money Market Funds
· For Janus Henderson Flexible Bond Fund (formerly, Janus Flexible Bond Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Bond Fund (formerly, Janus Global Bond Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Unconstrained Bond Fund (formerly, Janus Global Unconstrained Bond Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson High-Yield Fund (formerly, Janus High-Yield Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Multi-Sector Income Fund (formerly, Janus Multi-Sector Income Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Real Return Fund (formerly, Janus Real Return Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Short-Term Bond Fund (formerly, Janus Short-Term Bond Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Government Money Market Fund (formerly, Janus Government Money Market Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance.
· For Janus Henderson Money Market Fund (formerly, Janus Money Market Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the
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bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance.
Asset Allocation Funds
· For Janus Henderson Global Allocation Fund – Conservative (formerly, Janus Global Allocation Fund – Conservative), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Allocation Fund – Growth (formerly, Janus Global Allocation Fund – Growth), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Allocation Fund – Moderate (formerly, Janus Global Allocation Fund – Moderate), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
Alternative Fund
· For Janus Henderson Diversified Alternatives Fund (formerly, Janus Diversified Alternatives Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
Value Funds
· For Janus Henderson International Value Fund (formerly, Perkins International Value Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Value Fund (formerly, Perkins Global Value Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Large Cap Value Fund (formerly, Perkins Large Cap Value Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital and Perkins had taken or were taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Mid Cap Value Fund (formerly, Perkins Mid Cap Value Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital and Perkins had taken or were taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Select Value Fund (formerly, Perkins Select Value Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Small Cap Value Fund (formerly, Perkins Small Cap Value Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
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· For Janus Henderson Value Plus Income Fund (formerly, Perkins Value Plus Income Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
Mathematical Funds
· For Janus Henderson Emerging Markets Managed Volatility Fund (formerly, Intech Emerging Markets Managed Volatility Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Income Managed Volatility Fund (formerly, Intech Global Income Managed Volatility Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson International Managed Volatility Fund (formerly, Intech International Managed Volatility Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson U.S. Managed Volatility Fund (formerly, Intech U.S. Managed Volatility Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
Growth and Core Funds
· For Janus Henderson Balanced Fund (formerly, Janus Balanced Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Contrarian Fund (formerly, Janus Contrarian Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Enterprise Fund (formerly, Janus Enterprise Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Forty Fund (formerly, Janus Forty Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Growth and Income Fund (formerly, Janus Growth and Income Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and in the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Research Fund (formerly, Janus Research Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Triton Fund (formerly, Janus Triton Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Venture Fund (formerly, Janus Venture Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
Global and International Funds
· For Janus Henderson Adaptive Global Allocation Fund (formerly, Janus Adaptive Global Allocation Fund), the Trustees noted that, due to limited performance for the Fund, performance history was not a material factor.
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· For Janus Henderson Asia Equity Fund (formerly, Janus Asia Equity Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Life Sciences Fund (formerly, Janus Global Life Sciences Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Real Estate Fund (formerly, Janus Global Real Estate Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Research Fund (formerly, Janus Global Research Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Select Fund (formerly, Janus Global Select Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Technology Fund (formerly, Janus Global Technology Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Overseas Fund (formerly, Janus Overseas Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
Janus Aspen Series
· For Janus Henderson Balanced Portfolio (formerly, Janus Aspen Balanced Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Enterprise Portfolio (formerly, Janus Aspen Enterprise Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Flexible Bond Portfolio (formerly, Janus Aspen Flexible Bond Portfolio), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Forty Portfolio (formerly, Janus Aspen Forty Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
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· For Janus Henderson Global Allocation Portfolio – Moderate (formerly, Janus Aspen Global Allocation Portfolio – Moderate), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Research Portfolio (formerly, Janus Aspen Global Research Portfolio), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance
· For Janus Henderson Global Technology Portfolio (formerly, Janus Aspen Global Technology Portfolio), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Unconstrained Bond Portfolio (formerly, Janus Aspen Global Unconstrained Bond Portfolio), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson U.S. Low Volatility Portfolio (formerly, Janus Aspen Intech U.S. Low Volatility Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Research Portfolio (formerly, Janus Aspen Janus Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Overseas Portfolio (formerly, Janus Aspen Overseas Portfolio), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Mid Cap Value Portfolio (formerly, Janus Aspen Perkins Mid Cap Value Portfolio), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital and Perkins had taken or were taking to improve performance, and that the performance trend was improving.
In consideration of each Fund’s performance, the Trustees concluded that, taking into account the factors relevant to performance, as well as other considerations, including steps taken to improve performance, the Fund’s performance warranted continuation of the Fund’s investment advisory and subadvisory agreement(s).
Costs of Services Provided
The Trustees examined information regarding the fees and expenses of each Fund in comparison to similar information for other comparable funds as provided by Broadridge, an independent data provider. They also reviewed an analysis of that information provided by their independent fee consultant and noted that the rate of management (investment advisory and any administration, but excluding out-of-pocket costs) fees for many of the Funds, after applicable waivers, was below the average management fee rate of the respective peer group of funds selected by an independent data provider. The Trustees also examined information regarding the subadvisory fees charged for subadvisory services, as applicable, noting that all such fees were paid by Janus Capital out of its management fees collected from such Fund.
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The independent fee consultant provided its belief that the management fees charged by Janus Capital to each of the Funds under the current investment advisory and administration agreements are reasonable in relation to the services provided by Janus Capital. The independent fee consultant found: (1) the total expenses and management fees of the Funds to be reasonable relative to other mutual funds; (2) total expenses, on average, were 12% below the average total expenses of their respective Broadridge Expense Group peers and 20% below the average total expenses for their Broadridge Expense Universes; (3) management fees for the Funds, on average, were 11% below the average management fees for their Expense Groups and 13% below the average for their Expense Universes; and (4) Fund expenses at the functional level for each asset and share class category were reasonable. The Trustees also considered the total expenses for each share class of each Fund compared to the average total expenses for its Broadridge Expense Group peers and to average total expenses for its Broadridge Expense Universe.
The independent fee consultant concluded that, based on its strategic review of expenses at the complex, category and individual fund level, Fund expenses were found to be reasonable relative to both Expense Group and Expense Universe benchmarks. Further, for certain Funds, the independent fee consultant also performed a systematic “focus list” analysis of expenses in the context of the performance or service delivered to each set of investors in each share class in each selected Fund. Based on this analysis, the independent fee consultant found that the combination of service quality/performance and expenses on these individual Funds and share classes were reasonable in light of performance trends, performance histories, and existence of performance fees, breakpoints, and expense waivers on such Funds.
The Trustees considered the methodology used by Janus Capital and each subadviser in determining compensation payable to portfolio managers, the competitive environment for investment management talent, and the competitive market for mutual funds in different distribution channels.
The Trustees also reviewed management fees charged by Janus Capital and each subadviser to comparable separate account clients and to comparable non-affiliated funds subadvised by Janus Capital or by a subadviser (for which Janus Capital or the subadviser provides only or primarily portfolio management services). Although in most instances subadvisory and separate account fee rates for various investment strategies were lower than management fee rates for Funds having a similar strategy, the Trustees considered that Janus Capital noted that, under the terms of the management agreements with the Funds, Janus Capital performs significant additional services for the Funds that it does not provide to those other clients, including administration services, oversight of the Funds’ other service providers, trustee support, regulatory compliance and numerous other services, and that, in serving the Funds, Janus Capital assumes many legal risks and other costs that it does not assume in servicing its other clients. Moreover, they noted that the independent fee consultant found that: (1) the management fees Janus Capital charges to the Funds are reasonable in relation to the management fees Janus Capital charges to its institutional and subadvised accounts; (2) these institutional and subadvised accounts have different service and infrastructure needs; (3) Janus mutual fund investors enjoy reasonable fees relative to the fees charged to Janus institutional and subadvised fund investors; and (4) in the majority of cases, the Funds receive proportionally better pricing than the industry in relation to Janus institutional and subadvised accounts.
The Trustees considered the fees for each Fund for its fiscal year ended in 2015, and noted the following with regard to each Fund’s total expenses, net of applicable fee waivers (the Fund’s “total expenses”):
Fixed-Income Funds and Money Market Funds
· For Janus Henderson Flexible Bond Fund (formerly, Janus Flexible Bond Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Bond Fund (formerly, Janus Global Bond Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Unconstrained Bond Fund (formerly, Janus Global Unconstrained Bond Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for certain share
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classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson High-Yield Fund (formerly, Janus High-Yield Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Multi-Sector Income Fund (formerly, Janus Multi-Sector Income Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Real Return Fund (formerly, Janus Real Return Fund), the Trustees noted that, although the Fund’s total expenses were equal to or exceeded the peer group average for all share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Short-Term Bond Fund (formerly, Janus Short-Term Bond Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Government Money Market Fund (formerly, Janus Government Money Market Fund), the Trustees noted that the Fund’s total expenses exceeded the peer group average for both share classes. The Trustees considered that management fees for this Fund are higher than the peer group average due to the Fund’s management fee including other costs, such as custody and transfer agent services, while many funds in the peer group pay these expenses separately from their management fee. In addition, the Trustees considered that Janus Capital voluntarily waives one-half of its advisory fee and other expenses in order to maintain a positive yield.
· For Janus Henderson Money Market Fund (formerly, Janus Money Market Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes. In addition, the Trustees considered that Janus Capital voluntarily waives one- half of its advisory fee and other expenses in order to maintain a positive yield.
Asset Allocation Funds
· For Janus Henderson Global Allocation Fund – Conservative (formerly, Janus Global Allocation Fund – Conservative), the Trustees noted that, although the Fund’s total expenses exceeded the peer group median for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Allocation Fund – Growth (formerly, Janus Global Allocation Fund – Growth), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Allocation Fund – Moderate (formerly, Janus Global Allocation Fund – Moderate), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
Alternative Fund
· For Janus Henderson Diversified Alternatives Fund (formerly, Janus Diversified Alternatives Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
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Value Funds
· For Janus Henderson International Value Fund (formerly, Perkins International Value Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Value Fund (formerly, Perkins Global Value Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Large Cap Value Fund (formerly, Perkins Large Cap Value Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Mid Cap Value Fund (formerly, Perkins Mid Cap Value Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Select Value Fund (formerly, Perkins Select Value Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Small Cap Value Fund (formerly, Perkins Small Cap Value Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Value Plus Income Fund (formerly, Perkins Value Plus Income Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
Mathematical Funds
· For Janus Henderson Emerging Markets Managed Volatility Fund (formerly, Intech Emerging Markets Managed Volatility Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Income Managed Volatility Fund (formerly, Intech Global Income Managed Volatility Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson International Managed Volatility Fund (formerly, Intech International Managed Volatility Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson U.S. Managed Volatility Fund (formerly, Intech U.S. Managed Volatility Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
Growth and Core Funds
· For Janus Henderson Balanced Fund (formerly, Janus Balanced Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s
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expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Contrarian Fund (formerly, Janus Contrarian Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Enterprise Fund (formerly, Janus Enterprise Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Forty Fund (formerly, Janus Forty Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Growth and Income Fund (formerly, Janus Growth and Income Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Research Fund (formerly, Janus Research Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable.
· For Janus Henderson Triton Fund (formerly, Janus Triton Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Venture Fund (formerly, Janus Venture Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
Global and International Funds
· For Janus Henderson Adaptive Global Allocation Fund (formerly, Janus Adaptive Global Allocation Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group median for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Asia Equity Fund (formerly, Janus Asia Equity Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Life Sciences Fund (formerly, Janus Global Life Sciences Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Real Estate Fund (formerly, Janus Global Real Estate Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to
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limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Research Fund (formerly, Janus Global Research Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Select Fund (formerly, Janus Global Select Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Technology Fund (formerly, Janus Global Technology Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Overseas Fund (formerly, Janus Overseas Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
Janus Aspen Series
· For Janus Henderson Balanced Portfolio (formerly, Janus Aspen Balanced Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Enterprise Portfolio (formerly, Janus Aspen Enterprise Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Flexible Bond Portfolio (formerly, Janus Aspen Flexible Bond Portfolio), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for both share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Forty Portfolio (formerly, Janus Aspen Forty Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Allocation Portfolio – Moderate (formerly, Janus Aspen Global Allocation Portfolio – Moderate), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for both share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Research Portfolio (formerly, Janus Aspen Global Research Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Technology Portfolio (formerly, Janus Aspen Global Technology Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Unconstrained Bond Portfolio (formerly, Janus Aspen Global Unconstrained Bond Portfolio), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for both share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson U.S. Low Volatility Portfolio (formerly, Janus Aspen Intech U.S. Low Volatility Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for its sole share class.
· For Janus Henderson Research Portfolio (formerly, Janus Aspen Janus Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group mean for both share classes.
· For Janus Henderson Overseas Portfolio (formerly, Janus Aspen Overseas Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Mid Cap Value Portfolio (formerly, Janus Aspen Perkins Mid Cap Value Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
The Trustees reviewed information on the profitability to Janus Capital and its affiliates of their relationships with each Fund, as well as an explanation of the methodology utilized by Janus Capital when allocating various expenses of Janus Capital and its affiliates with respect to contractual relationships with the Funds and other clients. The Trustees also reviewed the financial statements and corporate structure of Janus Capital’s parent company. In their review, the
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Additional Information (unaudited)
Trustees considered whether Janus Capital and each subadviser receive adequate incentives and resources to manage the Funds effectively. The Trustees recognized that profitability comparisons among fund managers are difficult because very little comparative information is publicly available, and the profitability of any fund manager is affected by numerous factors, including the organizational structure of the particular fund manager, the types of funds and other accounts it manages, possible other lines of business, the methodology for allocating expenses, and the fund manager’s capital structure and cost of capital. However, taking into account those factors and the analysis provided by the Trustees’ independent fee consultant, and based on the information available, the Trustees concluded that Janus Capital’s profitability with respect to each Fund in relation to the services rendered was reasonable.
The independent fee consultant found that, while assessing the reasonableness of expenses in light of Janus Capital’s profits is dependent on comparisons with other publicly-traded mutual fund advisers, and that these comparisons are limited in accuracy by differences in complex size, business mix, institutional account orientation, and other factors, after accepting these limitations, the level of profit earned by Janus Capital from managing the Funds is reasonable.
The Trustees concluded that the management fees payable by each Fund to Janus Capital and its affiliates, as well as the fees paid by Janus Capital to the subadvisers of subadvised Funds, were reasonable in relation to the nature, extent, and quality of the services provided, taking into account the fees charged by other advisers for managing comparable mutual funds with similar strategies, the fees Janus Capital and the subadvisers charge to other clients, and, as applicable, the impact of fund performance on management fees payable by the Funds. The Trustees also concluded that each Fund’s total expenses were reasonable, taking into account the size of the Fund, the quality of services provided by Janus Capital and any subadviser, the investment performance of the Fund, and any expense limitations agreed to or provided by Janus Capital.
Economies of Scale
The Trustees considered information about the potential for Janus Capital to realize economies of scale as the assets of the Funds increase. They noted their independent fee consultant’s analysis of economies of scale in prior years. They also noted that, although many Funds pay advisory fees at a base fixed rate as a percentage of net assets, without any breakpoints, their independent fee consultant concluded that 91% of these Funds have contractual management fees (gross of waivers) below their Broadridge expense group averages and, overall, 83% of the Funds are below their respective expense group averages for contractual management fees. They also noted that for those Funds whose expenses are being reduced by the contractual expense limitations of Janus Capital, Janus Capital is subsidizing the Funds because they have not reached adequate scale. Moreover, as the assets of some of the Funds have declined in the past few years, certain Funds have benefited from having advisory fee rates that have remained constant rather than increasing as assets declined. In addition, performance fee structures have been implemented for various Funds that have caused the effective rate of advisory fees payable by such a Fund to vary depending on the investment performance of the Fund relative to its benchmark index over the measurement period; and a few Funds have fee schedules with breakpoints and reduced fee rates above certain asset levels. The Trustees also noted that the Funds share directly in economies of scale through the lower charges of third-party service providers that are based in part on the combined scale of all of the Funds. Based on all of the information they reviewed, including past research and analysis conducted by the Trustees’ independent fee consultant, the Trustees concluded that the current fee structure of each Fund was reasonable and that the current rates of fees do reflect a sharing between Janus Capital and the Fund of any economies of scale that may be present at the current asset level of the Fund.
The independent fee consultant concluded that, given the limitations of various analytical approaches to economies of scale considered in prior years, and their conflicting results, its analyses could not confirm or deny the existence of economies of scale in the Janus complex. Further, the independent fee consultant provided its belief that Fund investors are well-served by the fee levels and performance fee structures in place on the Funds in light of any economies of scale that may be present at Janus Capital.
Other Benefits to Janus Capital
The Trustees also considered benefits that accrue to Janus Capital and its affiliates and subadvisers to the Funds from their relationships with the Funds. They recognized that two affiliates of Janus Capital separately serve the Funds as transfer agent and distributor, respectively, and the transfer agent receives compensation directly from the non-money market funds for services provided. The Trustees also considered Janus Capital’s past and proposed use of commissions paid by the Funds on portfolio brokerage transactions to obtain proprietary and third-party research products and services benefiting the Fund and/or other clients of Janus Capital and/or Janus Capital, and/or a
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Additional Information (unaudited)
subadviser to a Fund. The Trustees concluded that Janus Capital’s and the subadvisers’ use of these types of client commission arrangements to obtain proprietary and third-party research products and services was consistent with regulatory requirements and guidelines and was likely to benefit each Fund. The Trustees also concluded that, other than the services provided by Janus Capital and its affiliates and subadvisers pursuant to the agreements and the fees to be paid by each Fund therefor, the Funds and Janus Capital and the subadvisers may potentially benefit from their relationship with each other in other ways. They concluded that Janus Capital and/or the subadvisers benefits from the receipt of research products and services acquired through commissions paid on portfolio transactions of the Funds and that the Funds benefit from Janus Capital’s and/or the subadvisers’ receipt of those products and services as well as research products and services acquired through commissions paid by other clients of Janus Capital and/or other clients of the subadvisers. They further concluded that the success of any Fund could attract other business to Janus Capital, the subadvisers or other Janus funds, and that the success of Janus Capital and the subadvisers could enhance Janus Capital’s and the subadvisers’ ability to serve the Funds.
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Useful Information About Your Portfolio Report (unaudited)
The Management Commentary in this report includes valuable insight as well as statistical information to help you understand how your Portfolio’s performance and characteristics stack up against those of comparable indices.
If the Portfolio invests in foreign securities, this report may include information about country exposure. Country exposure is based primarily on the country of risk. A company may be allocated to a country based on other factors such as location of the company’s principal office, the location of the principal trading market for the company’s securities, or the country where a majority of the company’s revenues are derived.
Please keep in mind that the opinions expressed in the Management Commentary are just that: opinions. They are a reflection based on best judgment at the time this report was compiled, which was December 31, 2017. As the investing environment changes, so could opinions. These views are unique and are not necessarily shared by fellow employees or by Janus Henderson in general.
Performance Overviews
Performance overview graphs compare the performance of a hypothetical $10,000 investment in the Portfolio with one or more widely used market indices. When comparing the performance of the Portfolio with an index, keep in mind that market indices are not available for investment and do not reflect deduction of expenses.
Average annual total returns are quoted for a Portfolio with more than one year of performance history. Average annual total return is calculated by taking the growth or decline in value of an investment over a period of time, including reinvestment of dividends and distributions, then calculating the annual compounded percentage rate that would have produced the same result had the rate of growth been constant throughout the period. Average annual total return does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or redemptions of Portfolio shares.
Cumulative total returns are quoted for a Portfolio with less than one year of performance history. Cumulative total return is the growth or decline in value of an investment over time, independent of the period of time involved. Cumulative total return does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or redemptions of Portfolio shares.
Pursuant to federal securities rules, expense ratios shown in the performance chart reflect subsidized (if applicable) and unsubsidized ratios. The total annual fund operating expenses ratio is gross of any fee waivers, reflecting the Portfolio’s unsubsidized expense ratio. The net annual fund operating expenses ratio (if applicable) includes contractual waivers of Janus Capital and reflects the Portfolio’s subsidized expense ratio. Ratios may be higher or lower than those shown in the “Financial Highlights” in this report.
Schedule of Investments
Following the performance overview section is the Portfolio’s Schedule of Investments. This schedule reports the types of securities held in the Portfolio on the last day of the reporting period. Securities are usually listed by type (common stock, corporate bonds, U.S. Government obligations, etc.) and by industry classification (banking, communications, insurance, etc.). Holdings are subject to change without notice.
The value of each security is quoted as of the last day of the reporting period. The value of securities denominated in foreign currencies is converted into U.S. dollars.
If the Portfolio invests in foreign securities, it will also provide a summary of investments by country. This summary reports the Portfolio exposure to different countries by providing the percentage of securities invested in each country. The country of each security represents the country of risk. The Portfolio’s Schedule of Investments relies upon the industry group and country classifications published by Barclays and/or MSCI Inc.
Tables listing details of individual forward currency contracts, futures, written options, swaptions, and swaps follow the Portfolio’s Schedule of Investments (if applicable).
Statement of Assets and Liabilities
This statement is often referred to as the “balance sheet.” It lists the assets and liabilities of the Portfolio on the last day of the reporting period.
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Useful Information About Your Portfolio Report (unaudited)
The Portfolio’s assets are calculated by adding the value of the securities owned, the receivable for securities sold but not yet settled, the receivable for dividends declared but not yet received on securities owned, and the receivable for Portfolio shares sold to investors but not yet settled. The Portfolio’s liabilities include payables for securities purchased but not yet settled, Portfolio shares redeemed but not yet paid, and expenses owed but not yet paid. Additionally, there may be other assets and liabilities such as unrealized gain or loss on forward currency contracts.
The section entitled “Net Assets Consist of” breaks down the components of the Portfolio’s net assets. Because the Portfolio must distribute substantially all earnings, you will notice that a significant portion of net assets is shareholder capital.
The last section of this statement reports the net asset value (“NAV”) per share on the last day of the reporting period. The NAV is calculated by dividing the Portfolio’s net assets for each share class (assets minus liabilities) by the number of shares outstanding.
Statement of Operations
This statement details the Portfolio’s income, expenses, realized gains and losses on securities and currency transactions, and changes in unrealized appreciation or depreciation of Portfolio holdings.
The first section in this statement, entitled “Investment Income,” reports the dividends earned from securities and interest earned from interest-bearing securities in the Portfolio.
The next section reports the expenses incurred by the Portfolio, including the advisory fee paid to the investment adviser, transfer agent fees and expenses, and printing and postage for mailing statements, financial reports and prospectuses. Expense offsets and expense reimbursements, if any, are also shown.
The last section lists the amounts of realized gains or losses from investment and foreign currency transactions, and changes in unrealized appreciation or depreciation of investments and foreign currency-denominated assets and liabilities. The Portfolio will realize a gain (or loss) when it sells its position in a particular security. A change in unrealized gain (or loss) refers to the change in net appreciation or depreciation of the Portfolio during the reporting period. “Net Realized and Unrealized Gain/(Loss) on Investments” is affected both by changes in the market value of Portfolio holdings and by gains (or losses) realized during the reporting period.
Statements of Changes in Net Assets
These statements report the increase or decrease in the Portfolio’s net assets during the reporting period. Changes in the Portfolio’s net assets are attributable to investment operations, dividends and distributions to investors, and capital share transactions. This is important to investors because it shows exactly what caused the Portfolio’s net asset size to change during the period.
The first section summarizes the information from the Statement of Operations regarding changes in net assets due to the Portfolio’s investment operations. The Portfolio’s net assets may also change as a result of dividend and capital gains distributions to investors. If investors receive their dividends and/or distributions in cash, money is taken out of the Portfolio to pay the dividend and/or distribution. If investors reinvest their dividends and/or distributions, the Portfolio’s net assets will not be affected. If you compare the Portfolio’s “Net Decrease from Dividends and Distributions” to “Reinvested Dividends and Distributions,” you will notice that dividends and distributions have little effect on the Portfolio’s net assets. This is because the majority of the Portfolio’s investors reinvest their dividends and/or distributions.
The reinvestment of dividends and distributions is included under “Capital Share Transactions.” “Capital Shares” refers to the money investors contribute to the Portfolio through purchases or withdrawals via redemptions. The Portfolio’s net assets will increase and decrease in value as investors purchase and redeem shares from the Portfolio.
Financial Highlights
This schedule provides a per-share breakdown of the components that affect the Portfolio’s NAV for current and past reporting periods as well as total return, asset size, ratios, and portfolio turnover rate.
The first line in the table reflects the NAV per share at the beginning of the reporting period. The next line reports the net investment income/(loss) per share. Following is the per share total of net gains/(losses), realized and unrealized. Per share dividends and distributions to investors are then subtracted to arrive at the NAV per share at the end of the
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Useful Information About Your Portfolio Report (unaudited)
period. The next line reflects the total return for the period. Also included are ratios of expenses and net investment income to average net assets.
The Portfolio’s expenses may be reduced through expense offsets and expense reimbursements. The ratios shown reflect expenses before and after any such offsets and reimbursements.
The ratio of net investment income/(loss) summarizes the income earned less expenses, divided by the average net assets of the Portfolio during the reporting period. Do not confuse this ratio with the Portfolio’s yield. The net investment income ratio is not a true measure of the Portfolio’s yield because it does not take into account the dividends distributed to the Portfolio’s investors.
The next figure is the portfolio turnover rate, which measures the buying and selling activity in the Portfolio. Portfolio turnover is affected by market conditions, changes in the asset size of the Portfolio, fluctuating volume of shareholder purchase and redemption orders, the nature of the Portfolio’s investments, and the investment style and/or outlook of the portfolio manager(s) and/or investment personnel. A 100% rate implies that an amount equal to the value of the entire portfolio was replaced once during the fiscal year; a 50% rate means that an amount equal to the value of half the portfolio is traded in a year; and a 200% rate means that an amount equal to the value of the entire portfolio is traded every six months.
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Janus Henderson VIT Enterprise Portfolio
Shareholder Meeting (unaudited)
Special meetings of shareholders were held on April 6, 2017 and adjourned and reconvened on April 18, 2017 (together, the "meeting"). At the meeting, the following matters were voted on and approved by shareholders. Each vote reported represents one dollar of net asset value held on the record date for the meeting. The results of the meeting are noted below. | |||||||||||
Proposals | |||||||||||
1. For all Portfolios, to approve a new investment advisory agreement between the Trust, on behalf of the Portfolio, and Janus Capital Management LLC. | |||||||||||
| Number of Votes ($) |
|
| ||||||||
Record Date Votes ($) | Affirmative | Against | Abstain | BNV | Total | ||||||
882,303,342.586 | 574,770,458.510 | 16,071,053.233 | 40,646,606.644 | (0.028) | 631,488,118.360 | ||||||
Percentage of Total Outstanding Votes (%) |
| Percentage Voted (%) | |||||||||
Affirmative | Against | Abstain | BNV | Total | Affirmative | Against | Abstain | BNV | Total | ||
65.144 | 1.821 | 4.607 | 0.000 | 71.573 | 91.018 | 2.545 | 6.437 | 0.000 | 100.000 | ||
4. To elect an additional Trustee to the Board of Trustees of the Trust. - Diane L. Wallace. | |||||||||||
| Number of Votes ($) |
|
| ||||||||
Record Date Votes ($) | Affirmative | Against | Abstain | BNV | Total | ||||||
7,198,647,378.476 | 6,547,141,899.530 | 651,505,478.946 | 0.000 | 0.000 | 7,198,647,378.476 | ||||||
Percentage of Total Outstanding Votes (%) |
| Percentage Voted (%) | |||||||||
Affirmative | Against | Abstain | BNV | Total | Affirmative | Against | Abstain | BNV | Total | ||
80.347 | 7.995 | 0.000 | 0.000 | 88.342 | 90.950 | 9.050 | 0.000 | 0.000 | 100.000 | ||
Alan A. Brown, William D. Cvengros, Raudline Etienne, William F. McCalpin, Gary A. Poliner, James T. Rothe, William D. Stewart and Linda S. Wolf continue to serve as Trustees following the meeting. | |||||||||||
5. For all Portfolios, except Global Unconstrained Bond Portfolio, to approve a proposal that would authorize the Adviser to enter into and materially amend sub-advisory agreements in the future with wholly-owned subadvisers and unaffiliated sub-advisers, with the approval of the Board of Trustees of the Trust, but without obtaining additional shareholder approval. | |||||||||||
| Number of Votes ($) |
|
| ||||||||
Record Date Votes ($) | Affirmative | Against | Abstain | BNV | Total | ||||||
882,303,342.586 | 518,490,273.337 | 62,328,462.044 | 50,669,382.985 | (0.006) | 631,488,118.360 | ||||||
Percentage of Total Outstanding Votes (%) |
| Percentage Voted (%) | |||||||||
Affirmative | Against | Abstain | BNV | Total | Affirmative | Against | Abstain | BNV | Total | ||
58.766 | 7.064 | 5.743 | 0.000 | 71.573 | 82.106 | 9.870 | 8.024 | 0.000 | 100.000 |
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Designation Requirements (unaudited)
For federal income tax purposes, the Portfolio designated the following for the year ended December 31, 2017:
| |
Capital Gain Distributions | $64,073,319 |
Dividends Received Deduction Percentage | 72% |
|
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Trustees and Officers (unaudited)
The Portfolio’s Statement of Additional Information includes additional information about the Trustees and officers and is available, without charge, by calling 1-877-335-2687.
The following are the Trustees and officers of the Trust, together with a brief description of their principal occupations during the last five years (principal occupations for certain Trustees may include periods over five years).
Each Trustee has served in that capacity since he or she was originally elected or appointed. The Trustees do not serve a specified term of office. Each Trustee will hold office until the termination of the Trust or his or her earlier death, resignation, retirement, incapacity, or removal. Under the Portfolio’s Governance Procedures and Guidelines, the policy is for Trustees to retire no later than the end of the calendar year in which the Trustee turns 75. The Trustees review the Portfolio’s Governance Procedures and Guidelines from time to time and may make changes they deem appropriate. The Portfolio’s Nominating and Governance Committee will consider nominees for the position of Trustee recommended by shareholders. Shareholders may submit the name of a candidate for consideration by the Committee by submitting their recommendations to the Trust’s Secretary. Each Trustee is currently a Trustee of one other registered investment company advised by Janus Capital: Janus Investment Fund. Collectively, these two registered investment companies consist of 58 series or funds.
The Trust’s officers are elected annually by the Trustees for a one-year term. Certain officers also serve as officers of Janus Investment Fund. Certain officers of the Portfolio may also be officers and/or directors of Janus Capital. Except as otherwise disclosed, Portfolio officers receive no compensation from the Portfolio, except for the Portfolio’s Chief Compliance Officer, as authorized by the Trustees.
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Trustees and Officers (unaudited)
TRUSTEES | ||||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years | |
Independent Trustees | ||||||
William F. McCalpin | Chairman | 1/08-Present | Managing Partner, Impact Investments, Athena Capital Advisors LLC (independent | 63 | Director of Mutual Fund Directors Forum (a non-profit |
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Trustees and Officers (unaudited)
TRUSTEES | ||||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years | |
Independent Trustees | ||||||
Alan A. Brown | Trustee | 1/13-Present | Executive Vice President, | 63 | Director of WTTW (PBS affiliate) (since 2003). Formerly, Director of |
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Trustees and Officers (unaudited)
TRUSTEES | |||||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years | ||
Independent Trustees | |||||||
William D. Cvengros 151 Detroit Street Denver, CO 80206 DOB: 1948 | Trustee | 1/11-Present | Managing Member and Chief Executive Officer of SJC Capital, LLC (a personal investment company and | 63 | Advisory Board Member, Innovate Partners Emerging |
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Trustees and Officers (unaudited)
TRUSTEES | ||||||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years | |||
Independent Trustees | ||||||||
Raudline Etienne | Trustee | 6/16-Present | Founder, Daraja Capital (advisory and investment firm) | 63 | Director of Brightwood Capital Advisors, LLC (since 2014). |
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Trustees and Officers (unaudited)
TRUSTEES | ||||||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years | |||
Independent Trustees | ||||||||
Gary A. Poliner 151 Detroit Street Denver, CO 80206 DOB: 1953 | Trustee | 6/16-Present | Retired. Formerly, President (2010-2013) of Northwestern Mutual Life Insurance Company. | 63 | Director of MGIC Investment Corporation (private mortgage insurance) (since 2013) and West Bend Mutual Insurance Company (property/casualty insurance) (since 2013). Formerly, Trustee of Northwestern Mutual Life Insurance Company (2010-2013); Chairman and Director of Northwestern Mutual Series Fund, Inc. (2010-2012); and Director of Frank Russell Company (global asset management firm) (2008-2013). |
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Trustees and Officers (unaudited)
TRUSTEES | ||||||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years | |||
Independent Trustees | ||||||||
James T. Rothe | Trustee | 1/97-Present | Co-founder and Managing Director of Roaring Fork Capital SBIC, L.P. (SBA SBIC fund focusing on private investment in public equity firms), and Professor Emeritus of Business of the University of Colorado, Colorado Springs, CO (since 2004). Formerly, Professor of Business of the University of Colorado (2002-2004), and | 63 | Formerly, Director of Red Robin Gourmet Burgers, Inc. (RRGB) (2004-2014). | |||
William D. Stewart | Trustee | 9/93-Present | Retired. Formerly, President and founder of HPS Products and Corporate Vice President of MKS Instruments, Boulder, | 63 | None |
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Trustees and Officers (unaudited)
TRUSTEES | ||||||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years | |||
Independent Trustees | ||||||||
Diane L. Wallace | Trustee | 6/17-Present | Retired. |
| Formerly, Independent Trustee, |
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Trustees and Officers (unaudited)
TRUSTEES | ||||||||
Name, Address, and Age | Positions Held with the Trust | Length of Time Served | Principal Occupations During the Past Five Years | Number of Portfolios/Funds in Fund Complex Overseen by Trustee | Other Directorships Held by Trustee During the Past Five Years | |||
Independent Trustees | ||||||||
Linda S. Wolf | Trustee | 12/05-Present | Retired. Formerly, Chairman and Chief Executive Officer of Leo Burnett (Worldwide) (advertising agency) (2001-2005). | 63 | Director of Chicago |
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Trustees and Officers (unaudited)
OFFICERS | |||
Name, Address, and Age | Positions Held with the Trust | Term of Office* and Length of Time Served | Principal Occupations During the Past Five Years |
Brian Demain | Executive Vice President and Co-Portfolio Manager Janus Henderson Enterprise Portfolio | 11/07-Present | Vice President of Janus Capital and Portfolio Manager for other Janus Henderson accounts. |
Cody Wheaton | Executive Vice President and Co-Portfolio Manager | 7/16-Present | Portfolio Manager for other Janus Henderson accounts and Analyst for Janus Capital. |
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Trustees and Officers (unaudited)
OFFICERS | |||
Name, Address, and Age | Positions Held with the Trust | Term of Office* and Length of Time Served | Principal Occupations During the Past Five Years |
Bruce L. Koepfgen | President and Chief Executive Officer | 7/14-Present | Head of North America at Janus Henderson Investors and Janus Capital Management LLC (since 2017); Executive Vice President and Director of Janus International Holding LLC (since 2011); Executive Vice President of Janus Distributors LLC (since 2011); Vice President and Director of INTECH Investment Management LLC (since 2011); Executive Vice President and Director of Perkins Investment Management LLC (since 2011); and Executive Vice President and Director of Janus Management Holdings Corporation (since 2011). Formerly, President of Janus Capital Group Inc. and Janus Capital Management LLC (2013-2017); Executive Vice President of Janus Services LLC (2011-2015), Janus Capital Group Inc. and Janus Capital Management LLC (2011-2013); and Chief Financial Officer of Janus Capital Group Inc., Janus Capital Management LLC, Janus Distributors LLC, Janus Management Holdings Corporation, and Janus Services LLC (2011-2013). |
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Trustees and Officers (unaudited)
OFFICERS | |||
Name, Address, and Age | Positions Held with the Trust | Term of Office* and Length of Time Served | Principal Occupations During the Past Five Years |
Susan K. Wold | Vice President, Chief Compliance Officer, and Anti-Money Laundering Officer | 9/17-Present | Senior Vice President and Head of Compliance, North America for Janus |
Jesper Nergaard | Chief Financial Officer | 3/05-Present | Vice President of Janus Capital and Janus Services LLC. |
Kathryn L. Santoro | Vice President, Chief Legal Counsel, and Secretary | 12/16-Present | Vice President of Janus Capital and Janus Services LLC (since 2016). Formerly, Vice President and Associate Counsel of Curian Capital, LLC and Curian Clearing LLC (2013-2016); and General Counsel and Secretary (2011-2012) and Vice President (2009-2012) of Old Mutual Capital, Inc. |
* Officers are elected at least annually by the Trustees for a one-year term and may also be elected from time to time by the Trustees for an interim period.
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Notes
NotesPage1
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Notes
NotesPage2
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Knowledge. Shared
At Janus Henderson, we believe in the sharing of expert insight for better investment and business decisions. We call this ethos Knowledge. Shared.
Learn more by visiting janushenderson.com.
This report is submitted for the general information of shareholders of the Portfolio. It is not an offer or solicitation for the Portfolio and is not authorized for distribution to prospective investors unless preceded or accompanied by an effective prospectus. | ||||||||
Janus Henderson, Janus, Perkins and Intech are trademarks or registered trademarks of Janus Henderson Investors. © Janus Henderson Investors. The name Janus Henderson Investors includes HGI Group Limited, Henderson Global Investors (Brand Management) Sarl and Janus International Holding LLC. Portfolios distributed by Janus Henderson Distributors | ||||||||
109-02-81116 02-18 |
ANNUAL REPORT December 31, 2017 | |||
Janus Henderson VIT Flexible Bond Portfolio (formerly named Janus Aspen Flexible Bond Portfolio) | |||
Janus Aspen Series | |||
| |||
HIGHLIGHTS · Portfolio management perspective · Investment strategy behind your portfolio · Portfolio performance, characteristics | |||
Table of Contents
Janus Henderson VIT Flexible Bond Portfolio
Janus Henderson VIT Flexible Bond Portfolio (unaudited)
PERFORMANCE OVERVIEW
During the 12-month period ended December 31, 2017, Janus Henderson VIT Flexible Bond Portfolio’s Institutional Shares and Service Shares returned 3.62% and 3.35%, respectively, compared with 3.54% for the Portfolio’s benchmark, the Bloomberg Barclays U.S. Aggregate Bond Index.
INVESTMENT ENVIRONMENT
The period began with optimism that the Trump administration’s pro-growth fiscal platform would spur economic expansion and corporate credit started the year off strong. Washington’s general lack of reform progress and escalating tensions between the U.S. and North Korea brought on brief hesitation, but positive earnings data, strengthening fundamentals and an upward trajectory in global growth ultimately helped corporate credit continue gaining ground. Late in the period, the passage of tax reform and optimism around its potential to provide tailwinds for the U.S. economy helped investment-grade corporate credit spreads reach post-crisis tights, concluding another year of strong returns. Spreads on high-yield corporate credit also tightened.
The Federal Reserve (Fed) raised its benchmark rate three times throughout the year and began normalizing its balance sheet late in the period. Investors’ view that the Fed’s measured pace to monetary policy normalization would continue was reinforced by the nomination of Jerome Powell for the next Fed chairman. The Treasury curve flattened over the year. Fed-driven volatility pushed shorter-dated yields higher, the 10-year note ended 2017 near where it began, and the yield on the 30-year bond fell amid investors’ reach for yield. The 10-year Treasury note yield closed December at 2.41%, compared with 2.44% one year ago.
PERFORMANCE DISCUSSION
For the year ending December 31, 2017, the Fund’s Institutional shares outperformed the Bloomberg Barclays U.S. Aggregate Bond Index while the Fund’s Service Shares underperformed the benchmark.
We spent the year emphasizing corporate issuers in traditionally defensive sectors, issuers with higher-quality business models, consistent free cash flow and management teams committed to sound balance sheets. We have been particularly concerned with the general complacency prevalent across markets, wary that any shift in sentiment would likely come with increased volatility. We are also mindful of how far spreads have tightened amid the extended innings of the credit cycle. While we are more constructive on both the economic outlook and corporate earnings growth in 2018, it is difficult to say how much optimism markets are already pricing in. Further, we anticipate spread tightening will be limited in the months ahead and carry (a measure of excess income) the primary driver of returns. As such, we continue to emphasize managing idiosyncratic risk and maintaining a diversified portfolio.
We reduced exposure to sectors we believe are exhibiting poor fundamentals, including independent energy and retailers. We increased our allocations to banking and aerospace and defense issuers. Our corporate credit allocation, including bank loans, ended December at 51%, compared with 47% one year ago. Our exposure to U.S. Treasury securities remains near the low end of our historical range. While we anticipate the Fed’s path to both rate and balance sheet normalization to remain gradual, moderately higher yields are likely. In light of our cautious stance on rates, we lowered duration in the latter half of the period, ending December at 91% of the benchmark.
Our positioning in Treasury securities was the leading contributor to relative outperformance. We remain biased to the 30-year bond to help balance our corporate credit exposure. This positioning aided performance as long-term yields rallied. With yields rising across the front end
Janus Aspen Series | 1 |
Janus Henderson VIT Flexible Bond Portfolio (unaudited)
of the Treasury curve, our significant underweight allocation to Treasurys further supported results.
Our corporate credit allocation was also accretive. As spreads tightened, our overweight allocation to investment-grade corporates contributed positively to relative outperformance. Our emphasis on owning securities in the lowest tier of investment-grade ratings was particularly beneficial, as “riskier” assets generally performed well during the period. For similar reasons, our out-of-index allocation to high yield was another leading contributor. Our focus on securities that can provide greater spread carry than the index supported results in both investment grade and high yield. However, our limited exposure to the duration of longer-dated corporate credit held back performance, while many benchmark constituents benefited from the decline in long-term rates.
At the credit sector level, banking and brokerage, asset managers and exchanges were among the largest relative contributors. Financials generally performed well throughout the period, benefiting from improved fundamentals, rising interest rates – which help pad net interest income – and the prospect of a more relaxed regulatory environment under the Trump administration. Security selection and our overweight allocations in both sectors aided relative results. At the individual issuer level, Neuberger Berman contributed positively to performance. The asset manager benefited from increased liquidity after the company issued a bond early in 2017. Although we continue to like the company’s conservative management team and its commitment to reducing leverage, our target valuation was realized and we trimmed our position.
Financial services company Raymond James was another leading corporate credit contributor. Raymond James received credit ratings upgrades by both Standard & Poor’s and Moody’s over the period, creating positive investor sentiment. Further, the company continues to demonstrate its ability to attract advisors and assets and to strengthen its business for the long term. We like the stability of the company’s business model and appreciate the management team’s conservative approach to the balance sheet.
Electric utilities led relative sector detractors; our limited exposure to longer-dated securities held back results. We shifted our positioning in independent energy to end the period underweight, which was a factor in that sector detracting from relative performance. Energy-related issuers generally benefited from climbing oil prices in the latter half of the year.
Broadcom was the leading corporate credit detractor on a relative basis. Our overweight position weighed on results as the semiconductor company made an unexpected bid for Qualcomm late in the period. Spreads widened under the assumption that much of the acquisition would be financed with debt. We believe the diversification will ultimately be positive for Broadcom. We also appreciate management’s commitment to investment-grade ratings and the company’s track record of rapid deleveraging after prior acquisitions.
At the asset class level, our out-of-index allocation to bank loans failed to keep pace with corporate bonds and weighed on relative results. Also detracting was our exposure to U.S. mortgage-backed securities, which lagged the performance of index constituents. Negligible exposure to government-related debt also held back performance. Government-related securities include government agency debt as well as debt issued by state-owned firms, including many emerging market issuers. Emerging markets generally performed well amid investors’ risk-on appetite during the period.
OUTLOOK
We anticipate growth will remain firm and inflation subdued in 2018. The Fed will likely raise interest rates two to three times as a result. We expect range-bound but moderately higher Treasury yields and a flatter curve. The front end of the curve should rise as the Fed hikes, while a cautious Fed, investors’ demand for yield and growth without inflation should push long-term yields lower. However, we are mindful that a more aggressive than expected tightening path could result in policy error, an inverted Treasury curve and dramatic disruption in the rate market. We intend to maintain duration modestly below that of the benchmark, but we will continue in our tactical approach to yield curve positioning with a focus on capital preservation.
While both the economic and corporate earnings outlooks remain constructive and supported by tax reform, we expect a lower return environment for corporate credit in 2018 compared with the previous two calendar years. Spread tightening will be moderate, in our view, and carry will be the primary driver of returns. Given rich valuations and the asymmetric risk profile of credit investing, security avoidance will be critical. We remain committed to managing idiosyncratic risk in the Fund and seeking higher-quality business models with consistent free cash
2 | DECEMBER 31, 2017 |
Janus Henderson VIT Flexible Bond Portfolio (unaudited)
flow and management teams committed to sound balance sheets. These issuers should offer steady carry and minimize downside risk in various market environments.
As we balance a constructive fundamental outlook with the current valuation environment, we remain opportunistic, seeking to identify and capitalize on spread movements that create the potential for attractive returns. In particular, we expect U.S. tax reform and disruptive industry trends – such as the Amazon effect – to be potential generators of opportunities. As always, our goal is to participate in spread tightening while keeping capital preservation and strong risk-adjusted returns at the forefront.
Thank you for your investment in the Janus Henderson VIT Flexible Bond Portfolio.
Janus Aspen Series | 3 |
Janus Henderson VIT Flexible Bond Portfolio (unaudited)
Portfolio At A Glance
December 31, 2017
Fund Profile |
|
|
30-day Current Yield* | Without | With |
Institutional Shares | 2.25% | 2.25% |
Service Shares | 1.99% | 1.99% |
Weighted Average Maturity | 7.6 Years | |
Average Effective Duration** | 5.4 Years | |
* Yield will fluctuate. | ||
** A theoretical measure of price volatility. |
Ratings† Summary - (% of Total Investments) |
|
AAA | 1.1% |
AA | 40.8% |
A | 7.9% |
BBB | 37.1% |
BB | 7.7% |
B | 1.9% |
Not Rated | 3.1% |
Other | 0.4% |
† Credit ratings provided by Standard & Poor's (S&P), an independent credit rating agency. Credit ratings range from AAA (highest) to D (lowest) based on S&P's measures. Further information on S&P's rating methodology may be found at www.standardandpoors.com. Other rating agencies may rate the same securities differently. Ratings are relative and subjective and are not absolute standards of quality. Credit quality does not remove market risk and is subject to change. "Not Rated" securities are not rated by S&P, but may be rated by other rating agencies and do not necessarily indicate low quality. "Other" includes cash equivalents, equity securities, and certain derivative instruments. |
Asset Allocation - (% of Net Assets) | |||||
Corporate Bonds | 46.9% | ||||
Mortgage-Backed Securities | 24.1% | ||||
United States Treasury Notes/Bonds | 15.5% | ||||
Asset-Backed/Commercial Mortgage-Backed Securities | 8.6% | ||||
Investment Companies | 6.5% | ||||
Bank Loans and Mezzanine Loans | 3.9% | ||||
Other | (5.5)% | ||||
100.0% |
4 | DECEMBER 31, 2017 |
Janus Henderson VIT Flexible Bond Portfolio (unaudited)
Performance
See important disclosures on the next page. |
| Expense Ratios - | ||||||||
Average Annual Total Return - for the periods ended December 31, 2017 |
|
| per the May 1, 2017 prospectuses | ||||||
|
| One | Five | Ten | Since |
|
| Total Annual Fund | |
Institutional Shares |
| 3.62% | 2.20% | 5.27% | 6.34% |
|
| 0.60% | |
Service Shares |
| 3.35% | 1.96% | 5.01% | 6.11% |
|
| 0.84% | |
Bloomberg Barclays U.S. Aggregate Bond Index |
| 3.54% | 2.10% | 4.01% | 5.22% |
|
|
| |
Morningstar Quartile - Institutional Shares |
| 3rd | 2nd | 1st | 1st |
|
|
| |
Morningstar Ranking - based on total returns for Intermediate-Term Bond Funds |
| 554/1,025 | 385/919 | 57/807 | 7/378 |
|
|
|
Returns quoted are past performance and do not guarantee future results; current performance may be lower or higher. Investment returns and principal value will vary; there may be a gain or loss when shares are sold. For the most recent month-end performance call 800.668.0434 or visit janushenderson.com/VITperformance.
Performance may be affected by risks that include those associated with non-diversification, portfolio turnover, short sales, potential conflicts of interest, foreign and emerging markets, initial public offerings (IPOs), high-yield and high-risk securities, undervalued, overlooked and smaller capitalization companies, real estate related securities including Real Estate Investment Trusts (REITs), derivatives, and commodity-linked investments. Each product has different risks. Please see the prospectus for more information about risks, holdings and other details.
The Portfolio will normally invest at least 80% of its net assets, measured at the time of purchase, in the type of securities described by its name.
Returns shown do not represent actual returns since they do not include insurance charges. Returns shown would have been lower had they included insurance charges.
Returns include reinvestment of all dividends and distributions and do not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or redemptions of Portfolio shares. The returns do not include adjustments in accordance with generally accepted accounting principles required at the period end for financial reporting purposes.
See Financial Highlights for actual expense ratios during the reporting period.
Performance for Service Shares prior to December 31, 1999 reflects the performance of Institutional Shares, adjusted to reflect the expenses of Service Shares.
Ranking is for the share class shown only; other classes may have different performance characteristics. When an expense waiver is in effect, it may have a material effect on the total return, and therefore the ranking for the period.
© 2017 Morningstar, Inc. All Rights Reserved.
There is no assurance that the investment process will consistently lead to successful investing.
Janus Aspen Series | 5 |
Janus Henderson VIT Flexible Bond Portfolio (unaudited)
Performance
See Notes to Schedule of Investments and Other Information for index definitions.
Index performance does not reflect the expenses of managing a portfolio as an index is unmanaged and not available for direct investment.
See “Useful Information About Your Portfolio Report.”
*The Portfolio’s inception date – September 13, 1993
6 | DECEMBER 31, 2017 |
Janus Henderson VIT Flexible Bond Portfolio (unaudited)
Expense Examples
As a shareholder of the Portfolio, you incur two types of costs: (1) transaction costs and (2) ongoing costs, including management fees; 12b-1 distribution and shareholder servicing fees (applicable to Service Shares only); transfer agent fees and expenses payable pursuant to the Transfer Agency Agreement; and other Portfolio expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Portfolio and to compare these costs with the ongoing costs of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. The example is based upon an investment of $1,000 invested at the beginning of the period and held for the six-months indicated, unless noted otherwise in the table and footnotes below.
Actual Expenses
The information in the table under the heading “Actual” provides information about actual account values and actual expenses. You may use the information in these columns, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the appropriate column for your share class under the heading entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during the period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading “Hypothetical (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based upon the Portfolio’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Portfolio’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 Portfolio and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Additionally, for an analysis of the fees associated with an investment in either share class or other similar funds, please visit www.finra.org/fundanalyzer.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transaction costs, such as any charges at the separate account level or contract level. These fees are fully described in the Portfolio’s prospectuses. Therefore, the hypothetical examples are useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transaction costs were included, your costs would have been higher.
Actual | Hypothetical | |||||||||
| Beginning | Ending | Expenses |
| Beginning | Ending | Expenses | Net Annualized | ||
Institutional Shares | $1,000.00 | $1,000.00 | $3.02 |
| $1,000.00 | $1,022.18 | $3.06 | 0.60% | ||
Service Shares | $1,000.00 | $1,000.00 | $4.28 |
| $1,000.00 | $1,020.92 | $4.33 | 0.85% | ||
† | Expenses Paid During Period are equal to the Net Annualized Expense Ratio multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). Expenses in the examples include the effect of applicable fee waivers and/or expense reimbursements, if any. Had such waivers and/or reimbursements not been in effect, your expenses would have been higher. Please refer to the Notes to Financial Statements or the Portfolio’s prospectuses for more information regarding waivers and/or reimbursements. |
Janus Aspen Series | 7 |
Janus Henderson VIT Flexible Bond Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | ||||||
Asset-Backed/Commercial Mortgage-Backed Securities – 8.6% | |||||||
AmeriCredit Automobile Receivables 2016-1, 3.5900%, 2/8/22 | $1,259,000 | $1,279,228 | |||||
AmeriCredit Automobile Receivables Trust 2015-2, 3.0000%, 6/8/21 | 870,000 | 878,646 | |||||
AmeriCredit Automobile Receivables Trust 2016-2, 3.6500%, 5/9/22 | 851,000 | 865,661 | |||||
Applebee's Funding LLC / IHOP Funding LLC, 4.2770%, 9/5/44 (144A) | 2,726,168 | 2,652,219 | |||||
BAMLL Commercial Mortgage Securities Trust 2013-WBRK, | |||||||
3.5343%, 3/10/37 (144A)‡ | 1,145,000 | 1,163,500 | |||||
BAMLL Commercial Mortgage Securities Trust 2014-FL1, | |||||||
ICE LIBOR USD 1 Month + 4.0000%, 5.4770%, 12/15/31 (144A) | 130,000 | 126,528 | |||||
BAMLL Commercial Mortgage Securities Trust 2014-FL1, | |||||||
ICE LIBOR USD 1 Month + 5.5000%, 6.9770%, 12/15/31 (144A) | 517,188 | 491,768 | |||||
BBCMS Trust 2015-SRCH, 4.1970%, 8/10/35 (144A) | 1,338,000 | 1,442,787 | |||||
BXP Trust 2017-GM, 3.3790%, 6/13/39 (144A) | 644,000 | 657,483 | |||||
Caesars Palace Las Vegas Trust 2017-VICI, 4.1384%, 10/15/34 (144A) | 984,000 | 1,010,589 | |||||
Caesars Palace Las Vegas Trust 2017-VICI, 4.3540%, 10/15/34 (144A)‡ | 1,239,000 | 1,202,999 | |||||
Caesars Palace Las Vegas Trust 2017-VICI, 4.3540%, 10/15/34 (144A)‡ | 906,000 | 924,416 | |||||
CGMS Commercial Mortgage Trust 2017-MDDR, | |||||||
ICE LIBOR USD 1 Month + 1.7500%, 3.2270%, 7/15/30 (144A) | 550,000 | 550,231 | |||||
CGMS Commercial Mortgage Trust 2017-MDDR, | |||||||
ICE LIBOR USD 1 Month + 2.5000%, 3.9770%, 7/15/30 (144A) | 379,000 | 379,156 | |||||
CKE Restaurant Holdings Inc, 4.4740%, 3/20/43 (144A) | 1,727,285 | 1,730,661 | |||||
Coinstar Funding LLC Series 2017-1, 5.2160%, 4/25/47 (144A) | 501,480 | 520,683 | |||||
DB Master Finance LLC, 3.6290%, 11/20/47 (144A) | 516,000 | 519,364 | |||||
DB Master Finance LLC, 4.0300%, 11/20/47 (144A) | 608,000 | 621,133 | |||||
Domino's Pizza Master Issuer LLC, 3.4840%, 10/25/45 (144A) | 2,274,365 | 2,282,280 | |||||
Domino's Pizza Master Issuer LLC, 3.0820%, 7/25/47 (144A) | 292,268 | 289,058 | |||||
Domino's Pizza Master Issuer LLC, 4.1180%, 7/25/47 (144A) | 1,478,295 | 1,510,344 | |||||
Fannie Mae Connecticut Avenue Securities, | |||||||
ICE LIBOR USD 1 Month + 3.0000%, 4.5521%, 7/25/24 | 1,652,566 | 1,766,437 | |||||
Fannie Mae Connecticut Avenue Securities, | |||||||
ICE LIBOR USD 1 Month + 4.9000%, 6.4521%, 11/25/24 | 914,108 | 1,045,885 | |||||
Fannie Mae Connecticut Avenue Securities, | |||||||
ICE LIBOR USD 1 Month + 4.0000%, 5.5521%, 5/25/25 | 360,233 | 391,398 | |||||
Freddie Mac Structured Agency Credit Risk Debt Notes, | |||||||
ICE LIBOR USD 1 Month + 4.5000%, 6.0521%, 2/25/24 | 2,111,000 | 2,465,970 | |||||
Freddie Mac Structured Agency Credit Risk Debt Notes, | |||||||
ICE LIBOR USD 1 Month + 3.6000%, 5.1521%, 4/25/24 | 1,615,525 | 1,802,242 | |||||
FREMF 2010 K-SCT Mortgage Trust, 2.0000%, 1/25/20 (144A)§ | 1,280,755 | 1,203,249 | |||||
GS Mortgage Securities Corp II, 3.5911%, 9/10/37 (144A)‡ | 841,000 | 856,450 | |||||
GS Mortgage Securities Trust 2014-GSFL, | |||||||
ICE LIBOR USD 1 Month + 5.9500%, 7.4270%, 7/15/31 (144A) | 633,000 | 634,808 | |||||
GSCCRE Commercial Mortgage Trust 2015-HULA, | |||||||
ICE LIBOR USD 1 Month + 4.4000%, 5.8770%, 8/15/32 (144A) | 1,079,000 | 1,082,387 | |||||
Houston Galleria Mall Trust 2015-HGLR, 3.0866%, 3/5/37 (144A) | 465,000 | 460,303 | |||||
Jimmy Johns Funding LLC, 4.8460%, 7/30/47 (144A) | 1,083,285 | 1,085,181 | |||||
JP Morgan Chase Commercial Mortgage Securities Trust 2010-C2, | |||||||
5.6616%, 11/15/43 (144A)‡ | 607,000 | 608,563 | |||||
JP Morgan Chase Commercial Mortgage Securities Trust 2015-UES, | |||||||
3.6210%, 9/5/32 (144A)‡ | 768,000 | 765,996 | |||||
JP Morgan Chase Commercial Mortgage Securities Trust 2016-WIKI, | |||||||
3.5537%, 10/5/31 (144A) | 261,000 | 262,476 | |||||
JP Morgan Chase Commercial Mortgage Securities Trust 2016-WIKI, | |||||||
4.0090%, 10/5/31 (144A)‡ | 400,000 | 401,835 | |||||
LB-UBS Commercial Mortgage Trust 2006-C1, 5.2760%, 2/15/41‡ | 1,143 | 1,144 | |||||
LB-UBS Commercial Mortgage Trust 2008-C1, 6.3193%, 4/15/41‡ | 744,000 | 739,278 | |||||
loanDepot Station Place Agency Securitization Trust 2017-1, | |||||||
ICE LIBOR USD 1 Month + 0.8000%, 2.3521%, 11/25/50 (144A)§ | 1,657,000 | 1,657,000 | |||||
loanDepot Station Place Agency Securitization Trust 2017-1, | |||||||
ICE LIBOR USD 1 Month + 1.0000%, 2.5521%, 11/25/50 (144A)§ | 414,000 | 414,000 | |||||
MAD Mortgage Trust 2017-330M, 3.2944%, 8/15/34 (144A)‡ | 486,000 | 488,881 | |||||
MSSG Trust 2017-237P, 3.3970%, 9/13/39 (144A) | 1,092,000 | 1,105,604 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
8 | DECEMBER 31, 2017 |
Janus Henderson VIT Flexible Bond Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | ||||||
Asset-Backed/Commercial Mortgage-Backed Securities – (continued) | |||||||
MSSG Trust 2017-237P, 3.6900%, 9/13/39 (144A) | $192,000 | $194,139 | |||||
OSCAR US Funding Trust V, 2.7300%, 12/15/20 (144A) | 450,000 | 449,166 | |||||
OSCAR US Funding Trust V, 2.9900%, 12/15/23 (144A) | 552,000 | 549,713 | |||||
Santander Drive Auto Receivables Trust 2013-4, 4.6700%, 1/15/20 (144A) | 1,293,000 | 1,295,759 | |||||
Santander Drive Auto Receivables Trust 2013-A, 4.7100%, 1/15/21 (144A) | 866,000 | 871,875 | |||||
Santander Drive Auto Receivables Trust 2015-1, 3.2400%, 4/15/21 | 892,000 | 901,311 | |||||
Santander Drive Auto Receivables Trust 2015-4, 3.5300%, 8/16/21 | 1,477,000 | 1,502,430 | |||||
Shops at Crystals Trust 2016-CSTL, 3.1255%, 7/5/36 (144A) | 820,000 | 805,592 | |||||
Starwood Retail Property Trust 2014-STAR, | |||||||
ICE LIBOR USD 1 Month + 3.2500%, 4.7270%, 11/15/27 (144A) | 1,350,000 | 1,277,422 | |||||
Starwood Retail Property Trust 2014-STAR, | |||||||
ICE LIBOR USD 1 Month + 4.1500%, 5.6270%, 11/15/27 (144A) | 662,000 | 610,232 | |||||
Station Place Securitization Trust 2017-3, | |||||||
ICE LIBOR USD 1 Month + 1.0000%, 2.2942%, 7/24/18 (144A)§ | 1,899,000 | 1,899,315 | |||||
Taco Bell Funding LLC, 3.8320%, 5/25/46 (144A) | 1,653,075 | 1,675,507 | |||||
Wachovia Bank Commercial Mortgage Trust Series 2007-C30, 5.4130%, 12/15/43‡ | 764,790 | 780,116 | |||||
Wachovia Bank Commercial Mortgage Trust Series 2007-C31, 5.6600%, 4/15/47‡ | 1,191,092 | 1,209,304 | |||||
Wachovia Bank Commercial Mortgage Trust Series 2007-C34, 6.0841%, 5/15/46‡ | 543,127 | 556,940 | |||||
Wendys Funding LLC 2015-1, 3.3710%, 6/15/45 (144A) | 2,753,618 | 2,760,997 | |||||
Wendys Funding LLC 2018-1, 3.5730%, 3/15/48 (144A) | 477,000 | 476,851 | |||||
Wendys Funding LLC 2018-1, 3.8840%, 3/15/48 (144A) | 678,000 | 678,477 | |||||
Worldwide Plaza Trust 2017-WWP, 3.5263%, 11/10/36 (144A) | 748,000 | 767,980 | |||||
Total Asset-Backed/Commercial Mortgage-Backed Securities (cost $59,644,822) | 59,600,947 | ||||||
Bank Loans and Mezzanine Loans – 3.9% | |||||||
Banking – 0% | |||||||
Vantiv LLC, ICE LIBOR USD + 2.0000%, 3.4770%, 8/9/24 | 286,000 | 287,310 | |||||
Vantiv LLC, ICE LIBOR USD + 2.0000%, 0%, 3/31/25 | 80,000 | 80,334 | |||||
367,644 | |||||||
Basic Industry – 0.5% | |||||||
Axalta Coating Systems US Holdings Inc, | |||||||
ICE LIBOR USD + 2.0000%, 3.6934%, 6/1/24 | 3,427,060 | 3,437,924 | |||||
Capital Goods – 0.4% | |||||||
Reynolds Group Holdings Inc, ICE LIBOR USD + 2.7500%, 4.0998%, 2/5/23 | 2,525,865 | 2,536,347 | |||||
Communications – 0.9% | |||||||
Mission Broadcasting Inc, ICE LIBOR USD + 2.5000%, 3.8607%, 1/17/24 | 154,242 | 154,572 | |||||
Nexstar Broadcasting Inc, ICE LIBOR USD + 2.5000%, 3.8607%, 1/17/24 | 1,221,421 | 1,224,034 | |||||
Nielsen Finance LLC, ICE LIBOR USD + 2.0000%, 3.4319%, 10/4/23 | 1,843,944 | 1,850,859 | |||||
Sinclair Television Group Inc, ICE LIBOR USD + 2.5000%, 0%, 12/12/24(a) | 1,418,000 | 1,415,348 | |||||
Zayo Group LLC, ICE LIBOR USD + 2.0000%, 3.5521%, 1/19/21 | 140,935 | 141,237 | |||||
Zayo Group LLC, ICE LIBOR USD + 2.2500%, 3.8021%, 1/19/24 | 1,298,372 | 1,302,332 | |||||
6,088,382 | |||||||
Consumer Cyclical – 1.6% | |||||||
Aramark Services Inc, ICE LIBOR USD + 2.0000%, 3.5690%, 3/28/24 | 1,458,183 | 1,465,926 | |||||
Golden Nugget Inc/NV, ICE LIBOR USD + 3.2500%, 4.7699%, 10/4/23 | 1,926,110 | 1,939,361 | |||||
Hilton Worldwide Finance LLC, ICE LIBOR USD + 2.0000%, 3.5521%, 10/25/23 | 4,195,702 | 4,215,087 | |||||
KFC Holding Co, ICE LIBOR USD + 2.0000%, 3.4908%, 6/16/23 | 3,878,466 | 3,898,672 | |||||
11,519,046 | |||||||
Consumer Non-Cyclical – 0.2% | |||||||
Post Holdings Inc, ICE LIBOR USD + 2.2500%, 3.8200%, 5/24/24 | 394,020 | 395,218 | |||||
Quintiles IMS Inc, ICE LIBOR USD + 2.0000%, 3.6934%, 3/7/24 | 769,751 | 772,499 | |||||
1,167,717 | |||||||
Technology – 0.3% | |||||||
CommScope Inc, ICE LIBOR USD + 2.5000%, 3.3833%, 12/29/22 | 1,944,163 | 1,953,067 | |||||
Total Bank Loans and Mezzanine Loans (cost $27,075,601) | 27,070,127 | ||||||
Corporate Bonds – 46.9% | |||||||
Asset-Backed Securities – 0.3% | |||||||
American Tower Trust #1, 1.5510%, 3/15/18 (144A) | 1,927,000 | 1,924,386 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Aspen Series | 9 |
Janus Henderson VIT Flexible Bond Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | ||||||
Corporate Bonds – (continued) | |||||||
Banking – 8.8% | |||||||
Ally Financial Inc, 3.2500%, 11/5/18 | $877,000 | $879,192 | |||||
Ally Financial Inc, 8.0000%, 12/31/18 | 464,000 | 486,040 | |||||
Bank of America Corp, 2.5030%, 10/21/22† | 3,476,000 | 3,438,547 | |||||
Bank of America Corp, ICE LIBOR USD 3 Month + 1.0900%, 3.0930%, 10/1/25 | 832,000 | 829,901 | |||||
Bank of America Corp, 4.1830%, 11/25/27 | 1,728,000 | 1,804,000 | |||||
Bank of America Corp, ICE LIBOR USD 3 Month + 1.8140%, 4.2440%, 4/24/38 | 1,750,000 | 1,896,514 | |||||
Bank of New York Mellon Corp, 2.4500%, 8/17/26 | 275,000 | 261,104 | |||||
Bank of New York Mellon Corp, 3.2500%, 5/16/27 | 2,184,000 | 2,206,860 | |||||
Capital One Financial Corp, 3.3000%, 10/30/24 | 2,641,000 | 2,630,835 | |||||
Citigroup Inc, ICE LIBOR USD 3 Month + 1.4300%, 2.9106%, 9/1/23 | 1,955,000 | 2,012,326 | |||||
Citigroup Inc, 3.2000%, 10/21/26 | 1,125,000 | 1,115,898 | |||||
Citigroup Inc, ICE LIBOR USD 3 Month + 1.5630%, 3.8870%, 1/10/28† | 2,824,000 | 2,922,255 | |||||
Citizens Bank NA/Providence RI, 2.6500%, 5/26/22 | 699,000 | 692,520 | |||||
Citizens Financial Group Inc, 3.7500%, 7/1/24 | 542,000 | 541,535 | |||||
Citizens Financial Group Inc, 4.3500%, 8/1/25 | 377,000 | 392,043 | |||||
Citizens Financial Group Inc, 4.3000%, 12/3/25 | 2,030,000 | 2,128,712 | |||||
Discover Financial Services, 3.9500%, 11/6/24 | 1,364,000 | 1,393,011 | |||||
Discover Financial Services, 3.7500%, 3/4/25 | 325,000 | 327,073 | |||||
First Republic Bank/CA, 4.6250%, 2/13/47 | 693,000 | 740,471 | |||||
Goldman Sachs Capital I, 6.3450%, 2/15/34 | 2,301,000 | 2,894,260 | |||||
Goldman Sachs Group Inc, ICE LIBOR USD 3 Month + 1.2010%, 3.2720%, 9/29/25 | 2,151,000 | 2,141,842 | |||||
Goldman Sachs Group Inc, 3.7500%, 2/25/26 | 574,000 | 588,829 | |||||
Goldman Sachs Group Inc, 3.5000%, 11/16/26 | 2,876,000 | 2,892,108 | |||||
JPMorgan Chase & Co, 2.2950%, 8/15/21 | 2,091,000 | 2,072,056 | |||||
JPMorgan Chase & Co, 3.3750%, 5/1/23 | 2,863,000 | 2,909,698 | |||||
JPMorgan Chase & Co, 3.8750%, 9/10/24 | 705,000 | 735,243 | |||||
JPMorgan Chase & Co, ICE LIBOR USD 3 Month + 1.3370%, 3.7820%, 2/1/28 | 2,429,000 | 2,516,342 | |||||
Morgan Stanley, ICE LIBOR USD 3 Month + 1.3400%, 3.5910%, 7/22/28† | 3,137,000 | 3,164,936 | |||||
Santander UK PLC, 5.0000%, 11/7/23 (144A) | 2,141,000 | 2,287,785 | |||||
SVB Financial Group, 5.3750%, 9/15/20 | 1,351,000 | 1,443,814 | |||||
Synchrony Financial, 4.5000%, 7/23/25 | 1,906,000 | 1,991,323 | |||||
Synchrony Financial, 3.7000%, 8/4/26 | 1,937,000 | 1,909,218 | |||||
UBS AG, USD SWAP SEMI 30/360 5YR + 3.7650%, 4.7500%, 5/22/23 | 1,157,000 | 1,164,935 | |||||
US Bancorp, 2.3750%, 7/22/26 | 1,964,000 | 1,848,631 | |||||
Wells Fargo & Co, 3.0000%, 4/22/26 | 598,000 | 586,540 | |||||
Wells Fargo & Co, 4.1000%, 6/3/26 | 1,778,000 | 1,863,962 | |||||
Wells Fargo & Co, 4.3000%, 7/22/27 | 1,579,000 | 1,680,842 | |||||
61,391,201 | |||||||
Basic Industry – 2.2% | |||||||
CF Industries Inc, 4.5000%, 12/1/26 (144A) | 1,418,000 | 1,477,742 | |||||
Freeport-McMoRan Inc, 3.1000%, 3/15/20 | 502,000 | 498,863 | |||||
Georgia-Pacific LLC, 3.1630%, 11/15/21 (144A) | 2,599,000 | 2,645,072 | |||||
Georgia-Pacific LLC, 3.6000%, 3/1/25 (144A) | 1,040,000 | 1,068,593 | |||||
Reliance Steel & Aluminum Co, 4.5000%, 4/15/23 | 1,383,000 | 1,457,610 | |||||
Sherwin-Williams Co, 2.7500%, 6/1/22 | 516,000 | 513,932 | |||||
Sherwin-Williams Co, 3.1250%, 6/1/24 | 589,000 | 592,120 | |||||
Sherwin-Williams Co, 3.4500%, 6/1/27 | 1,673,000 | 1,699,272 | |||||
Sherwin-Williams Co, 4.5000%, 6/1/47 | 433,000 | 472,979 | |||||
Steel Dynamics Inc, 4.1250%, 9/15/25 (144A) | 1,382,000 | 1,392,365 | |||||
Steel Dynamics Inc, 5.0000%, 12/15/26 | 617,000 | 652,478 | |||||
Teck Resources Ltd, 4.5000%, 1/15/21 | 545,000 | 562,004 | |||||
Teck Resources Ltd, 4.7500%, 1/15/22 | 787,000 | 821,471 | |||||
Teck Resources Ltd, 8.5000%, 6/1/24 (144A) | 1,300,000 | 1,469,000 | |||||
15,323,501 | |||||||
Brokerage – 2.0% | |||||||
Cboe Global Markets Inc, 3.6500%, 1/12/27 | 1,771,000 | 1,823,581 | |||||
Charles Schwab Corp, 3.0000%, 3/10/25 | 942,000 | 938,657 | |||||
Charles Schwab Corp, 3.2000%, 1/25/28 | 1,003,000 | 1,004,266 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
10 | DECEMBER 31, 2017 |
Janus Henderson VIT Flexible Bond Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | |||||||
Corporate Bonds – (continued) | ||||||||
Brokerage – (continued) | ||||||||
E*TRADE Financial Corp, 2.9500%, 8/24/22 | $1,655,000 | $1,640,813 | ||||||
E*TRADE Financial Corp, 3.8000%, 8/24/27 | 1,440,000 | 1,434,889 | ||||||
Lazard Group LLC, 4.2500%, 11/14/20 | 976,000 | 1,016,507 | ||||||
Neuberger Berman Group LLC / Neuberger Berman Finance Corp, | ||||||||
4.8750%, 4/15/45 (144A) | 368,000 | 374,944 | ||||||
Raymond James Financial Inc, 5.6250%, 4/1/24 | 805,000 | 912,466 | ||||||
Raymond James Financial Inc, 3.6250%, 9/15/26 | 940,000 | 944,153 | ||||||
Raymond James Financial Inc, 4.9500%, 7/15/46 | 1,543,000 | 1,742,890 | ||||||
TD Ameritrade Holding Corp, 2.9500%, 4/1/22 | 942,000 | 953,170 | ||||||
TD Ameritrade Holding Corp, 3.6250%, 4/1/25 | 1,004,000 | 1,039,150 | ||||||
13,825,486 | ||||||||
Capital Goods – 2.7% | ||||||||
Arconic Inc, 5.1250%, 10/1/24 | 1,983,000 | 2,116,521 | ||||||
Ardagh Packaging Finance PLC / Ardagh Holdings USA Inc, | ||||||||
4.2500%, 9/15/22 (144A) | 253,000 | 257,428 | ||||||
Ball Corp, 4.3750%, 12/15/20 | 902,000 | 933,570 | ||||||
CNH Industrial Capital LLC, 3.6250%, 4/15/18 | 1,663,000 | 1,671,614 | ||||||
CRH America Finance Inc, 3.4000%, 5/9/27 (144A) | 339,000 | 338,824 | ||||||
Eagle Materials Inc, 4.5000%, 8/1/26 | 124,000 | 129,270 | ||||||
Huntington Ingalls Industries Inc, 5.0000%, 11/15/25 (144A) | 374,000 | 400,180 | ||||||
Martin Marietta Materials Inc, 4.2500%, 7/2/24 | 766,000 | 805,569 | ||||||
Northrop Grumman Corp, 2.5500%, 10/15/22 | 1,880,000 | 1,866,349 | ||||||
Northrop Grumman Corp, 2.9300%, 1/15/25 | 1,618,000 | 1,607,999 | ||||||
Northrop Grumman Corp, 3.2500%, 1/15/28 | 1,959,000 | 1,961,248 | ||||||
Northrop Grumman Corp, 4.0300%, 10/15/47 | 1,269,000 | 1,324,953 | ||||||
Owens Corning, 4.2000%, 12/1/24 | 814,000 | 852,616 | ||||||
Owens Corning, 3.4000%, 8/15/26 | 414,000 | 406,246 | ||||||
Rockwell Collins Inc, 3.2000%, 3/15/24 | 778,000 | 783,802 | ||||||
Rockwell Collins Inc, 3.5000%, 3/15/27 | 1,330,000 | 1,353,794 | ||||||
Vulcan Materials Co, 7.5000%, 6/15/21 | 569,000 | 658,394 | ||||||
Vulcan Materials Co, 4.5000%, 4/1/25 | 1,619,000 | 1,724,833 | ||||||
19,193,210 | ||||||||
Communications – 5.8% | ||||||||
American Tower Corp, 3.3000%, 2/15/21 | 1,425,000 | 1,451,001 | ||||||
American Tower Corp, 3.4500%, 9/15/21 | 149,000 | 152,275 | ||||||
American Tower Corp, 3.5000%, 1/31/23 | 264,000 | 269,902 | ||||||
American Tower Corp, 4.4000%, 2/15/26 | 936,000 | 984,043 | ||||||
American Tower Corp, 3.3750%, 10/15/26 | 1,711,000 | 1,680,565 | ||||||
AT&T Inc, 3.4000%, 8/14/24 | 1,154,000 | 1,159,670 | ||||||
AT&T Inc, 4.2500%, 3/1/27 | 648,000 | 660,403 | ||||||
AT&T Inc, 3.9000%, 8/14/27 | 957,000 | 963,118 | ||||||
AT&T Inc, 4.1000%, 2/15/28 (144A) | 1,557,000 | 1,561,688 | ||||||
AT&T Inc, 5.2500%, 3/1/37 | 503,000 | 531,629 | ||||||
AT&T Inc, 5.1500%, 2/14/50 | 713,000 | 716,557 | ||||||
AT&T Inc, 5.3000%, 8/14/58 | 1,476,000 | 1,479,476 | ||||||
CCO Holdings LLC / CCO Holdings Capital Corp, 5.2500%, 3/15/21 | 1,311,000 | 1,333,123 | ||||||
CCO Holdings LLC / CCO Holdings Capital Corp, 5.1250%, 5/1/27 (144A) | 531,000 | 523,035 | ||||||
CCO Holdings LLC / CCO Holdings Capital Corp, 5.0000%, 2/1/28 (144A) | 2,317,000 | 2,253,282 | ||||||
Charter Communications Operating LLC / Charter Communications Operating Capital, | ||||||||
4.9080%, 7/23/25 | 1,848,000 | 1,964,322 | ||||||
Charter Communications Operating LLC / Charter Communications Operating Capital, | ||||||||
3.7500%, 2/15/28 | 509,000 | 487,206 | ||||||
Charter Communications Operating LLC / Charter Communications Operating Capital, | ||||||||
4.2000%, 3/15/28 | 1,074,000 | 1,063,089 | ||||||
Charter Communications Operating LLC / Charter Communications Operating Capital, | ||||||||
5.3750%, 5/1/47 | 554,000 | 567,577 | ||||||
Comcast Corp, 2.3500%, 1/15/27 | 1,165,000 | 1,099,897 | ||||||
Comcast Corp, 3.3000%, 2/1/27 | 789,000 | 804,714 | ||||||
Comcast Corp, 3.4000%, 7/15/46 | 193,000 | 182,427 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Aspen Series | 11 |
Janus Henderson VIT Flexible Bond Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | |||||||
Corporate Bonds – (continued) | ||||||||
Communications – (continued) | ||||||||
Cox Communications Inc, 3.1500%, 8/15/24 (144A) | $1,219,000 | $1,200,303 | ||||||
Cox Communications Inc, 3.3500%, 9/15/26 (144A) | 1,893,000 | 1,849,416 | ||||||
Cox Communications Inc, 3.5000%, 8/15/27 (144A) | 1,106,000 | 1,090,580 | ||||||
Crown Castle International Corp, 5.2500%, 1/15/23 | 1,178,000 | 1,289,670 | ||||||
Crown Castle International Corp, 3.2000%, 9/1/24 | 1,101,000 | 1,089,336 | ||||||
Crown Castle International Corp, 3.6500%, 9/1/27 | 1,968,000 | 1,962,598 | ||||||
Lamar Media Corp, 5.0000%, 5/1/23 | 739,000 | 761,170 | ||||||
NBCUniversal Media LLC, 4.4500%, 1/15/43 | 367,000 | 400,132 | ||||||
Time Warner Inc, 3.6000%, 7/15/25 | 1,062,000 | 1,064,127 | ||||||
UBM PLC, 5.7500%, 11/3/20 (144A) | 1,526,000 | 1,584,281 | ||||||
Verizon Communications Inc, 2.6250%, 8/15/26† | 3,796,000 | 3,574,410 | ||||||
Verizon Communications Inc, 4.1250%, 3/16/27 | 878,000 | 915,244 | ||||||
Verizon Communications Inc, 4.1250%, 8/15/46 | 1,306,000 | 1,205,401 | ||||||
Verizon Communications Inc, 4.8620%, 8/21/46 | 654,000 | 680,628 | ||||||
40,556,295 | ||||||||
Consumer Cyclical – 4.5% | ||||||||
1011778 BC ULC / New Red Finance Inc, 4.6250%, 1/15/22 (144A) | 1,841,000 | 1,884,724 | ||||||
1011778 BC ULC / New Red Finance Inc, 4.2500%, 5/15/24 (144A) | 1,667,000 | 1,662,832 | ||||||
Amazon.com Inc, 2.8000%, 8/22/24 (144A) | 811,000 | 808,349 | ||||||
Amazon.com Inc, 3.1500%, 8/22/27 (144A) | 2,559,000 | 2,562,096 | ||||||
Amazon.com Inc, 4.0500%, 8/22/47 (144A) | 961,000 | 1,034,677 | ||||||
CVS Health Corp, 2.8000%, 7/20/20 | 1,163,000 | 1,167,770 | ||||||
CVS Health Corp, 4.7500%, 12/1/22 | 717,000 | 767,901 | ||||||
DR Horton Inc, 3.7500%, 3/1/19 | 992,000 | 1,005,273 | ||||||
DR Horton Inc, 4.0000%, 2/15/20 | 238,000 | 244,803 | ||||||
General Motors Co, 4.8750%, 10/2/23 | 979,000 | 1,059,285 | ||||||
General Motors Co, 4.2000%, 10/1/27 | 1,168,000 | 1,208,487 | ||||||
General Motors Financial Co Inc, 3.1000%, 1/15/19 | 153,000 | 153,818 | ||||||
General Motors Financial Co Inc, 3.9500%, 4/13/24 | 1,783,000 | 1,835,201 | ||||||
IHO Verwaltungs GmbH, 4.1250%, 9/15/21 (144A) | 376,000 | 382,580 | ||||||
IHO Verwaltungs GmbH, 4.5000%, 9/15/23 (144A) | 242,000 | 246,690 | ||||||
IHS Markit Ltd, 5.0000%, 11/1/22 (144A) | 888,000 | 962,770 | ||||||
IHS Markit Ltd, 4.7500%, 2/15/25 (144A) | 1,078,000 | 1,137,290 | ||||||
IHS Markit Ltd, 4.0000%, 3/1/26 (144A) | 1,841,000 | 1,838,699 | ||||||
McDonald's Corp, 3.5000%, 3/1/27 | 2,729,000 | 2,805,785 | ||||||
McDonald's Corp, 4.8750%, 12/9/45 | 931,000 | 1,077,557 | ||||||
MDC Holdings Inc, 5.5000%, 1/15/24 | 1,106,000 | 1,166,830 | ||||||
MGM Growth Properties Operating Partnership LP / MGP Finance Co-Issuer Inc, | ||||||||
5.6250%, 5/1/24 | 805,000 | 857,325 | ||||||
Priceline Group Inc, 3.6000%, 6/1/26 | 2,619,000 | 2,629,538 | ||||||
Tapestry Inc, 3.0000%, 7/15/22 | 546,000 | 544,001 | ||||||
Tapestry Inc, 4.1250%, 7/15/27 | 546,000 | 549,998 | ||||||
Toll Brothers Finance Corp, 4.0000%, 12/31/18 | 485,000 | 492,881 | ||||||
Toll Brothers Finance Corp, 5.8750%, 2/15/22 | 395,000 | 430,550 | ||||||
Toll Brothers Finance Corp, 4.3750%, 4/15/23 | 270,000 | 280,125 | ||||||
ZF North America Capital Inc, 4.5000%, 4/29/22 (144A) | 272,000 | 285,600 | ||||||
31,083,435 | ||||||||
Consumer Non-Cyclical – 5.5% | ||||||||
Abbott Laboratories, 3.8750%, 9/15/25 | 236,000 | 244,042 | ||||||
Abbott Laboratories, 3.7500%, 11/30/26 | 439,000 | 450,672 | ||||||
Anheuser-Busch InBev Finance Inc, 2.6500%, 2/1/21 | 499,000 | 501,460 | ||||||
Anheuser-Busch InBev Finance Inc, 3.3000%, 2/1/23 | 2,825,000 | 2,890,404 | ||||||
Becton Dickinson and Co, 2.8940%, 6/6/22 | 858,000 | 852,525 | ||||||
Becton Dickinson and Co, 3.3630%, 6/6/24 | 1,907,000 | 1,911,919 | ||||||
Becton Dickinson and Co, 3.7000%, 6/6/27 | 1,329,000 | 1,338,866 | ||||||
Celgene Corp, 2.7500%, 2/15/23 | 1,063,000 | 1,054,073 | ||||||
Constellation Brands Inc, 4.7500%, 12/1/25 | 206,000 | 226,267 | ||||||
Constellation Brands, Inc., 4.2500%, 5/1/23 | 1,833,000 | 1,938,774 | ||||||
Danone SA, 2.0770%, 11/2/21 (144A) | 2,057,000 | 2,011,934 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
12 | DECEMBER 31, 2017 |
Janus Henderson VIT Flexible Bond Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | ||||||
Corporate Bonds – (continued) | |||||||
Consumer Non-Cyclical – (continued) | |||||||
Danone SA, 2.5890%, 11/2/23 (144A) | $957,000 | $933,120 | |||||
Express Scripts Holding Co, 3.5000%, 6/15/24 | 693,000 | 698,987 | |||||
Express Scripts Holding Co, 3.4000%, 3/1/27 | 780,000 | 765,205 | |||||
HCA Inc, 3.7500%, 3/15/19 | 712,000 | 718,230 | |||||
HCA Inc, 5.0000%, 3/15/24 | 1,102,000 | 1,146,080 | |||||
HCA Inc, 5.2500%, 6/15/26 | 909,000 | 963,540 | |||||
HCA Inc, 4.5000%, 2/15/27 | 1,064,000 | 1,069,320 | |||||
Life Technologies Corp, 6.0000%, 3/1/20 | 1,195,000 | 1,278,918 | |||||
LifePoint Health Inc, 5.5000%, 12/1/21 | 105,000 | 107,100 | |||||
McCormick & Co Inc/MD, 3.1500%, 8/15/24 | 1,534,000 | 1,541,787 | |||||
McCormick & Co Inc/MD, 3.4000%, 8/15/27 | 1,152,000 | 1,166,744 | |||||
Molson Coors Brewing Co, 3.0000%, 7/15/26 | 2,486,000 | 2,432,580 | |||||
Newell Brands Inc, 5.0000%, 11/15/23 | 829,000 | 874,920 | |||||
Post Holdings Inc, 5.7500%, 3/1/27 (144A) | 729,000 | 741,758 | |||||
Post Holdings Inc, 5.6250%, 1/15/28 (144A) | 354,000 | 355,328 | |||||
Reckitt Benckiser Treasury Services PLC, 2.7500%, 6/26/24 (144A) | 998,000 | 976,153 | |||||
Shire Acquisitions Investments Ireland DAC, 2.4000%, 9/23/21 | 1,202,000 | 1,182,954 | |||||
Shire Acquisitions Investments Ireland DAC, 3.2000%, 9/23/26 | 1,218,000 | 1,190,573 | |||||
Sysco Corp, 2.5000%, 7/15/21 | 374,000 | 372,950 | |||||
Sysco Corp, 3.3000%, 7/15/26 | 930,000 | 935,585 | |||||
Sysco Corp, 3.2500%, 7/15/27 | 621,000 | 618,725 | |||||
Universal Health Services Inc, 4.7500%, 8/1/22 (144A) | 1,316,000 | 1,340,675 | |||||
Wm Wrigley Jr Co, 2.4000%, 10/21/18 (144A) | 2,016,000 | 2,021,633 | |||||
Wm Wrigley Jr Co, 3.3750%, 10/21/20 (144A) | 1,221,000 | 1,250,379 | |||||
38,104,180 | |||||||
Electric – 1.9% | |||||||
Dominion Energy Inc, 2.0000%, 8/15/21 | 216,000 | 211,052 | |||||
Dominion Energy Inc, 2.8500%, 8/15/26 | 303,000 | 292,538 | |||||
Duke Energy Corp, 1.8000%, 9/1/21 | 581,000 | 565,051 | |||||
Duke Energy Corp, 2.4000%, 8/15/22 | 718,000 | 705,336 | |||||
Duke Energy Corp, 2.6500%, 9/1/26 | 1,559,000 | 1,493,363 | |||||
Duke Energy Corp, 3.1500%, 8/15/27 | 1,078,000 | 1,069,883 | |||||
NextEra Energy Operating Partners LP, 4.2500%, 9/15/24 (144A) | 247,000 | 251,323 | |||||
NextEra Energy Operating Partners LP, 4.5000%, 9/15/27 (144A) | 455,000 | 452,725 | |||||
PPL Capital Funding Inc, 3.1000%, 5/15/26 | 1,799,000 | 1,760,273 | |||||
PPL WEM Ltd / Western Power Distribution Ltd, 5.3750%, 5/1/21 (144A) | 1,328,000 | 1,423,132 | |||||
Southern Co, 2.3500%, 7/1/21 | 1,961,000 | 1,949,166 | |||||
Southern Co, 2.9500%, 7/1/23 | 1,220,000 | 1,220,409 | |||||
Southern Co, 3.2500%, 7/1/26 | 1,606,000 | 1,574,615 | |||||
12,968,866 | |||||||
Energy – 3.3% | |||||||
Andeavor Logistics LP / Tesoro Logistics Finance Corp, 5.2500%, 1/15/25 | 516,000 | 542,677 | |||||
Canadian Natural Resources Ltd, 5.9000%, 2/1/18 | 593,000 | 595,056 | |||||
Canadian Natural Resources Ltd, 2.9500%, 1/15/23 | 572,000 | 569,358 | |||||
Cenovus Energy Inc, 5.7000%, 10/15/19 | 37,000 | 38,917 | |||||
Columbia Pipeline Group Inc, 4.5000%, 6/1/25 | 633,000 | 673,829 | |||||
ConocoPhillips Co, 4.9500%, 3/15/26 | 1,507,000 | 1,710,142 | |||||
Enbridge Energy Partners LP, 5.8750%, 10/15/25 | 891,000 | 1,008,939 | |||||
Energy Transfer Equity LP, 4.2500%, 3/15/23 | 896,000 | 889,280 | |||||
Energy Transfer Equity LP, 5.8750%, 1/15/24 | 959,000 | 1,009,347 | |||||
Energy Transfer LP, 4.1500%, 10/1/20 | 737,000 | 761,010 | |||||
Kinder Morgan Energy Partners LP, 5.0000%, 10/1/21 | 688,000 | 733,236 | |||||
Kinder Morgan Energy Partners LP, 3.9500%, 9/1/22 | 795,000 | 820,358 | |||||
Kinder Morgan Inc/DE, 6.5000%, 9/15/20 | 79,000 | 86,376 | |||||
Motiva Enterprises LLC, 5.7500%, 1/15/20 (144A) | 634,000 | 669,539 | |||||
NGPL PipeCo LLC, 4.3750%, 8/15/22 (144A) | 211,000 | 214,561 | |||||
NGPL PipeCo LLC, 4.8750%, 8/15/27 (144A) | 538,000 | 558,175 | |||||
NuStar Logistics LP, 5.6250%, 4/28/27 | 1,366,000 | 1,389,905 | |||||
Oceaneering International Inc, 4.6500%, 11/15/24 | 822,000 | 799,569 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Aspen Series | 13 |
Janus Henderson VIT Flexible Bond Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | ||||||
Corporate Bonds – (continued) | |||||||
Energy – (continued) | |||||||
Phillips 66 Partners LP, 3.6050%, 2/15/25 | $906,000 | $912,593 | |||||
Phillips 66 Partners LP, 3.7500%, 3/1/28 | 366,000 | 366,054 | |||||
Phillips 66 Partners LP, 4.6800%, 2/15/45 | 325,000 | 333,534 | |||||
Plains All American Pipeline LP / PAA Finance Corp, 4.6500%, 10/15/25 | 404,000 | 416,222 | |||||
Plains All American Pipeline LP / PAA Finance Corp, 4.5000%, 12/15/26 | 391,000 | 396,252 | |||||
Regency Energy Partners LP / Regency Energy Finance Corp, 5.8750%, 3/1/22 | 1,071,000 | 1,170,751 | |||||
Sabine Pass Liquefaction LLC, 5.0000%, 3/15/27 | 1,758,000 | 1,885,977 | |||||
TC PipeLines LP, 3.9000%, 5/25/27 | 1,192,000 | 1,197,619 | |||||
Williams Cos Inc, 3.7000%, 1/15/23 | 482,000 | 479,590 | |||||
Williams Partners LP, 3.7500%, 6/15/27 | 1,950,000 | 1,953,498 | |||||
Williams Partners LP / ACMP Finance Corp, 4.8750%, 3/15/24 | 747,000 | 780,615 | |||||
22,962,979 | |||||||
Finance Companies – 0.6% | |||||||
Park Aerospace Holdings Ltd, 5.2500%, 8/15/22 (144A) | 1,242,000 | 1,234,237 | |||||
Park Aerospace Holdings Ltd, 5.5000%, 2/15/24 (144A) | 1,521,000 | 1,509,592 | |||||
Quicken Loans Inc, 5.2500%, 1/15/28 (144A) | 1,715,000 | 1,693,048 | |||||
4,436,877 | |||||||
Financial Institutions – 1.2% | |||||||
Jones Lang LaSalle Inc, 4.4000%, 11/15/22 | 2,070,000 | 2,180,596 | |||||
Kennedy-Wilson Inc, 5.8750%, 4/1/24 | 2,948,000 | 3,043,810 | |||||
LeasePlan Corp NV, 2.5000%, 5/16/18 (144A)† | 3,557,000 | 3,557,407 | |||||
8,781,813 | |||||||
Industrial – 0.1% | |||||||
Cintas Corp No 2, 4.3000%, 6/1/21 | 558,000 | 588,277 | |||||
Insurance – 1.0% | |||||||
Aetna Inc, 2.8000%, 6/15/23 | 759,000 | 746,879 | |||||
Centene Corp, 4.7500%, 5/15/22 | 110,000 | 114,125 | |||||
Centene Corp, 6.1250%, 2/15/24 | 324,000 | 342,630 | |||||
Centene Corp, 4.7500%, 1/15/25 | 454,000 | 461,945 | |||||
UnitedHealth Group Inc, 2.3750%, 10/15/22 | 670,000 | 663,430 | |||||
UnitedHealth Group Inc, 3.7500%, 7/15/25 | 1,083,000 | 1,141,233 | |||||
UnitedHealth Group Inc, 3.1000%, 3/15/26 | 415,000 | 417,956 | |||||
UnitedHealth Group Inc, 3.4500%, 1/15/27 | 274,000 | 283,362 | |||||
UnitedHealth Group Inc, 3.3750%, 4/15/27 | 139,000 | 142,795 | |||||
UnitedHealth Group Inc, 2.9500%, 10/15/27 | 1,295,000 | 1,290,821 | |||||
WellCare Health Plans Inc, 5.2500%, 4/1/25 | 1,285,000 | 1,355,675 | |||||
6,960,851 | |||||||
Real Estate Investment Trusts (REITs) – 1.2% | |||||||
Alexandria Real Estate Equities Inc, 2.7500%, 1/15/20 | 415,000 | 416,727 | |||||
Alexandria Real Estate Equities Inc, 4.6000%, 4/1/22 | 2,108,000 | 2,238,193 | |||||
Alexandria Real Estate Equities Inc, 4.5000%, 7/30/29 | 950,000 | 1,006,707 | |||||
Digital Realty Trust LP, 3.7000%, 8/15/27 | 645,000 | 649,502 | |||||
Senior Housing Properties Trust, 6.7500%, 4/15/20 | 431,000 | 457,732 | |||||
Senior Housing Properties Trust, 6.7500%, 12/15/21 | 504,000 | 557,659 | |||||
SL Green Realty Corp, 5.0000%, 8/15/18 | 929,000 | 940,379 | |||||
SL Green Realty Corp, 7.7500%, 3/15/20 | 1,654,000 | 1,819,787 | |||||
8,086,686 | |||||||
Technology – 5.6% | |||||||
Broadcom Corp / Broadcom Cayman Finance Ltd, 3.6250%, 1/15/24 (144A) | 1,265,000 | 1,257,639 | |||||
Broadcom Corp / Broadcom Cayman Finance Ltd, 3.8750%, 1/15/27 (144A)† | 4,614,000 | 4,539,129 | |||||
Cadence Design Systems Inc, 4.3750%, 10/15/24 | 2,614,000 | 2,772,672 | |||||
Equifax Inc, 2.3000%, 6/1/21 | 441,000 | 430,419 | |||||
Equifax Inc, 3.3000%, 12/15/22 | 1,355,000 | 1,346,018 | |||||
Fidelity National Information Services Inc, 3.6250%, 10/15/20 | 479,000 | 492,125 | |||||
Fidelity National Information Services Inc, 4.5000%, 10/15/22 | 568,000 | 607,926 | |||||
First Data Corp, 7.0000%, 12/1/23 (144A) | 1,661,000 | 1,756,507 | |||||
Iron Mountain Inc, 4.8750%, 9/15/27 (144A) | 1,933,000 | 1,933,000 | |||||
Iron Mountain Inc, 5.2500%, 3/15/28 (144A) | 1,528,000 | 1,520,360 | |||||
NXP BV / NXP Funding LLC, 4.1250%, 6/15/20 (144A) | 580,000 | 593,937 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
14 | DECEMBER 31, 2017 |
Janus Henderson VIT Flexible Bond Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | ||||||
Corporate Bonds – (continued) | |||||||
Technology – (continued) | |||||||
NXP BV / NXP Funding LLC, 4.1250%, 6/1/21 (144A) | $431,000 | $439,620 | |||||
NXP BV / NXP Funding LLC, 3.8750%, 9/1/22 (144A) | 1,695,000 | 1,714,069 | |||||
NXP BV / NXP Funding LLC, 4.6250%, 6/1/23 (144A) | 1,012,000 | 1,058,552 | |||||
Total System Services Inc, 3.8000%, 4/1/21 | 909,000 | 931,609 | |||||
Total System Services Inc, 4.8000%, 4/1/26 | 2,608,000 | 2,820,886 | |||||
Trimble Inc, 4.7500%, 12/1/24† | 3,225,000 | 3,479,777 | |||||
TSMC Global Ltd, 1.6250%, 4/3/18 (144A)† | 4,532,000 | 4,523,937 | |||||
Verisk Analytics Inc, 4.8750%, 1/15/19 | 851,000 | 871,360 | |||||
Verisk Analytics Inc, 5.8000%, 5/1/21 | 2,433,000 | 2,647,153 | |||||
Verisk Analytics Inc, 4.1250%, 9/12/22 | 1,060,000 | 1,106,481 | |||||
Verisk Analytics Inc, 5.5000%, 6/15/45 | 1,094,000 | 1,273,555 | |||||
VMware Inc, 3.9000%, 8/21/27 | 692,000 | 698,361 | |||||
38,815,092 | |||||||
Transportation – 0.2% | |||||||
FedEx Corp, 3.9000%, 2/1/35 | 148,000 | 150,247 | |||||
FedEx Corp, 4.4000%, 1/15/47 | 64,000 | 68,227 | |||||
Penske Truck Leasing Co Lp / PTL Finance Corp, 3.3750%, 3/15/18 (144A) | 1,106,000 | 1,109,283 | |||||
1,327,757 | |||||||
Total Corporate Bonds (cost $321,575,024) | 326,330,892 | ||||||
Mortgage-Backed Securities – 24.1% | |||||||
Fannie Mae Pool: | |||||||
6.0000%, 10/1/35 | 371,803 | 421,418 | |||||
6.0000%, 12/1/35 | 310,349 | 352,466 | |||||
6.0000%, 2/1/37 | 154,751 | 177,946 | |||||
6.0000%, 10/1/38 | 321,559 | 362,526 | |||||
5.5000%, 12/1/39 | 570,079 | 628,748 | |||||
5.5000%, 3/1/40 | 485,353 | 542,446 | |||||
5.5000%, 4/1/40 | 861,854 | 948,198 | |||||
5.5000%, 2/1/41 | 293,690 | 328,257 | |||||
5.0000%, 5/1/41 | 217,491 | 234,826 | |||||
5.5000%, 5/1/41 | 311,066 | 342,833 | |||||
5.5000%, 6/1/41 | 673,700 | 751,740 | |||||
5.5000%, 6/1/41 | 275,422 | 303,298 | |||||
5.5000%, 7/1/41 | 1,092,336 | 1,202,887 | |||||
5.0000%, 10/1/41 | 235,538 | 254,280 | |||||
5.5000%, 12/1/41 | 532,781 | 587,539 | |||||
5.5000%, 2/1/42 | 2,740,401 | 3,017,513 | |||||
4.5000%, 11/1/42 | 353,625 | 381,635 | |||||
3.5000%, 2/1/43 | 2,272,003 | 2,342,915 | |||||
3.5000%, 2/1/43 | 408,346 | 421,111 | |||||
3.5000%, 3/1/43 | 1,248,591 | 1,287,613 | |||||
5.5000%, 10/1/43 | 602,865 | 674,009 | |||||
3.5000%, 4/1/44 | 783,641 | 811,673 | |||||
5.5000%, 5/1/44 | 598,199 | 658,740 | |||||
5.0000%, 7/1/44 | 989,253 | 1,086,237 | |||||
4.5000%, 10/1/44 | 741,919 | 804,742 | |||||
3.5000%, 2/1/45 | 2,093,123 | 2,158,752 | |||||
4.5000%, 3/1/45 | 1,233,018 | 1,337,572 | |||||
4.5000%, 6/1/45 | 676,914 | 724,700 | |||||
4.5000%, 9/1/45 | 3,019,613 | 3,275,728 | |||||
3.0000%, 10/1/45 | 371,796 | 372,075 | |||||
3.0000%, 10/1/45 | 236,478 | 236,646 | |||||
3.5000%, 12/1/45 | 695,657 | 720,451 | |||||
3.0000%, 1/1/46 | 48,238 | 48,275 | |||||
3.5000%, 1/1/46 | 2,050,673 | 2,123,761 | |||||
3.5000%, 1/1/46 | 1,769,645 | 1,832,718 | |||||
3.0000%, 3/1/46 | 1,601,303 | 1,602,436 | |||||
3.0000%, 3/1/46 | 1,077,212 | 1,077,975 | |||||
4.0000%, 5/31/46 | 24,123,000 | 25,239,895 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Aspen Series | 15 |
Janus Henderson VIT Flexible Bond Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | ||||||
Mortgage-Backed Securities – (continued) | |||||||
Fannie Mae Pool – (continued) | |||||||
3.5000%, 7/1/46 | $1,328,134 | $1,372,771 | |||||
3.5000%, 7/1/46 | 1,304,815 | 1,349,797 | |||||
4.5000%, 7/1/46 | 824,702 | 889,316 | |||||
4.0000%, 8/1/46 | 86,506 | 91,566 | |||||
4.0000%, 8/1/46 | 73,380 | 77,672 | |||||
4.0000%, 8/1/46 | 56,071 | 59,350 | |||||
4.0000%, 10/1/46 | 355,881 | 376,394 | |||||
3.0000%, 11/1/46 | 765,643 | 766,185 | |||||
3.0000%, 11/1/46 | 300,251 | 301,051 | |||||
3.0000%, 11/1/46 | 282,313 | 283,067 | |||||
4.5000%, 11/1/46 | 299,983 | 324,248 | |||||
3.5000%, 12/1/46 | 101,811 | 104,913 | |||||
3.5000%, 12/1/46 | 35,410 | 36,489 | |||||
3.5000%, 1/1/47 | 407,329 | 419,741 | |||||
3.5000%, 1/1/47 | 74,910 | 77,193 | |||||
3.5000%, 1/1/47 | 39,415 | 40,616 | |||||
3.0000%, 2/1/47 | 2,057,309 | 2,070,063 | |||||
4.5000%, 2/1/47 | 1,243,703 | 1,341,528 | |||||
4.0000%, 3/1/47 | 114,422 | 121,073 | |||||
4.0000%, 3/1/47 | 30,704 | 32,485 | |||||
4.0000%, 3/1/47 | 30,365 | 32,121 | |||||
4.0000%, 4/1/47 | 150,435 | 158,901 | |||||
4.0000%, 4/1/47 | 118,792 | 125,686 | |||||
4.0000%, 4/1/47 | 106,501 | 112,494 | |||||
4.0000%, 5/1/47 | 6,496,987 | 6,870,988 | |||||
4.0000%, 5/1/47 | 386,203 | 404,356 | |||||
4.0000%, 5/1/47 | 164,593 | 173,855 | |||||
4.0000%, 5/1/47 | 124,428 | 131,649 | |||||
4.0000%, 5/1/47 | 97,619 | 103,284 | |||||
4.0000%, 5/1/47 | 40,030 | 42,381 | |||||
4.5000%, 5/1/47 | 205,408 | 222,380 | |||||
4.5000%, 5/1/47 | 169,552 | 182,944 | |||||
4.5000%, 5/1/47 | 166,270 | 179,159 | |||||
4.5000%, 5/1/47 | 125,508 | 135,928 | |||||
4.5000%, 5/1/47 | 116,417 | 125,442 | |||||
4.5000%, 5/1/47 | 102,237 | 110,629 | |||||
4.5000%, 5/1/47 | 57,654 | 62,301 | |||||
4.5000%, 5/1/47 | 41,227 | 44,655 | |||||
4.5000%, 5/1/47 | 37,133 | 40,178 | |||||
3.0000%, 5/31/47 | 894,000 | 892,957 | |||||
3.5000%, 5/31/47 | 13,990,000 | 14,348,975 | |||||
3.5000%, 6/1/47 | 81,257 | 83,754 | |||||
4.0000%, 6/1/47 | 476,849 | 503,684 | |||||
4.0000%, 6/1/47 | 250,838 | 263,175 | |||||
4.0000%, 6/1/47 | 228,811 | 241,984 | |||||
4.0000%, 6/1/47 | 223,095 | 236,041 | |||||
4.0000%, 6/1/47 | 213,535 | 224,367 | |||||
4.0000%, 6/1/47 | 175,934 | 186,403 | |||||
4.0000%, 6/1/47 | 104,948 | 110,110 | |||||
4.0000%, 6/1/47 | 100,185 | 105,113 | |||||
4.0000%, 6/1/47 | 79,729 | 84,443 | |||||
4.0000%, 6/1/47 | 65,757 | 69,447 | |||||
4.0000%, 6/1/47 | 48,018 | 50,286 | |||||
4.0000%, 6/1/47 | 29,955 | 31,826 | |||||
4.5000%, 6/1/47 | 741,352 | 798,824 | |||||
4.5000%, 6/1/47 | 72,095 | 78,090 | |||||
3.5000%, 7/1/47 | 154,664 | 159,503 | |||||
3.5000%, 7/1/47 | 93,543 | 96,514 | |||||
3.5000%, 7/1/47 | 70,902 | 73,305 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
16 | DECEMBER 31, 2017 |
Janus Henderson VIT Flexible Bond Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | ||||||
Mortgage-Backed Securities – (continued) | |||||||
Fannie Mae Pool – (continued) | |||||||
3.5000%, 7/1/47 | $44,637 | $46,184 | |||||
3.5000%, 7/1/47 | 43,238 | 44,657 | |||||
4.0000%, 7/1/47 | 1,850,240 | 1,957,875 | |||||
4.0000%, 7/1/47 | 466,885 | 493,159 | |||||
4.0000%, 7/1/47 | 350,034 | 369,732 | |||||
4.0000%, 7/1/47 | 327,507 | 346,362 | |||||
4.0000%, 7/1/47 | 179,978 | 190,060 | |||||
4.0000%, 7/1/47 | 178,926 | 189,436 | |||||
4.0000%, 7/1/47 | 142,505 | 150,931 | |||||
4.0000%, 7/1/47 | 96,995 | 102,691 | |||||
4.0000%, 7/1/47 | 86,090 | 90,325 | |||||
4.0000%, 7/1/47 | 85,190 | 90,194 | |||||
4.0000%, 7/1/47 | 55,224 | 58,025 | |||||
4.0000%, 7/1/47 | 50,621 | 53,333 | |||||
4.5000%, 7/1/47 | 527,249 | 568,122 | |||||
4.5000%, 7/1/47 | 470,467 | 506,939 | |||||
4.5000%, 7/1/47 | 463,519 | 499,455 | |||||
3.5000%, 8/1/47 | 575,240 | 591,259 | |||||
3.5000%, 8/1/47 | 364,146 | 375,402 | |||||
3.5000%, 8/1/47 | 333,187 | 343,772 | |||||
3.5000%, 8/1/47 | 80,456 | 82,977 | |||||
3.5000%, 8/1/47 | 35,839 | 36,977 | |||||
4.0000%, 8/1/47 | 959,542 | 1,004,909 | |||||
4.0000%, 8/1/47 | 788,696 | 825,986 | |||||
4.0000%, 8/1/47 | 783,350 | 827,433 | |||||
4.0000%, 8/1/47 | 701,667 | 741,154 | |||||
4.0000%, 8/1/47 | 464,311 | 490,440 | |||||
4.0000%, 8/1/47 | 346,479 | 366,531 | |||||
4.0000%, 8/1/47 | 325,989 | 342,526 | |||||
4.0000%, 8/1/47 | 200,812 | 211,517 | |||||
4.0000%, 8/1/47 | 146,733 | 155,409 | |||||
4.0000%, 8/1/47 | 82,500 | 86,405 | |||||
4.5000%, 8/1/47 | 653,183 | 703,823 | |||||
4.5000%, 8/1/47 | 160,563 | 173,011 | |||||
3.5000%, 9/1/47 | 1,828,368 | 1,879,377 | |||||
3.5000%, 9/1/47 | 287,593 | 297,358 | |||||
4.0000%, 9/1/47 | 802,052 | 847,189 | |||||
4.0000%, 9/1/47 | 514,193 | 543,130 | |||||
4.0000%, 9/1/47 | 83,530 | 88,231 | |||||
4.0000%, 9/1/47 | 24,925 | 26,382 | |||||
4.5000%, 9/1/47 | 3,105,971 | 3,308,459 | |||||
4.5000%, 9/1/47 | 548,990 | 591,554 | |||||
4.5000%, 9/1/47 | 410,405 | 442,222 | |||||
4.5000%, 9/1/47 | 372,852 | 401,759 | |||||
3.5000%, 10/1/47 | 2,472,080 | 2,541,113 | |||||
3.5000%, 10/1/47 | 711,053 | 730,909 | |||||
3.5000%, 10/1/47 | 59,828 | 61,769 | |||||
3.5000%, 10/1/47 | 52,834 | 54,628 | |||||
3.5000%, 10/1/47 | 42,876 | 44,279 | |||||
3.5000%, 10/1/47 | 24,928 | 25,834 | |||||
4.0000%, 10/1/47 | 407,731 | 428,523 | |||||
4.0000%, 10/1/47 | 353,514 | 373,408 | |||||
4.0000%, 10/1/47 | 339,996 | 359,129 | |||||
4.0000%, 10/1/47 | 227,497 | 240,300 | |||||
4.0000%, 10/1/47 | 186,457 | 197,409 | |||||
4.0000%, 10/1/47 | 96,739 | 102,421 | |||||
4.5000%, 10/1/47 | 94,464 | 101,788 | |||||
4.5000%, 10/1/47 | 43,336 | 46,696 | |||||
3.0000%, 11/1/47 | 627,026 | 627,470 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Aspen Series | 17 |
Janus Henderson VIT Flexible Bond Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | ||||||
Mortgage-Backed Securities – (continued) | |||||||
Fannie Mae Pool – (continued) | |||||||
3.5000%, 11/1/47 | $212,751 | $220,172 | |||||
3.5000%, 11/1/47 | 132,513 | 137,140 | |||||
4.0000%, 11/1/47 | 511,172 | 537,103 | |||||
4.0000%, 11/1/47 | 157,888 | 166,967 | |||||
4.0000%, 11/1/47 | 82,480 | 87,376 | |||||
4.5000%, 11/1/47 | 464,846 | 500,884 | |||||
3.0000%, 12/1/47 | 272,000 | 272,193 | |||||
3.0000%, 12/1/47 | 132,000 | 132,093 | |||||
3.5000%, 12/1/47 | 434,000 | 448,403 | |||||
3.5000%, 12/1/47 | 90,000 | 92,987 | |||||
3.5000%, 5/1/56 | 549,417 | 565,382 | |||||
128,349,278 | |||||||
Freddie Mac Gold Pool: | |||||||
5.5000%, 10/1/36 | 267,820 | 299,625 | |||||
6.0000%, 4/1/40 | 261,381 | 300,882 | |||||
5.5000%, 8/1/41 | 828,431 | 938,235 | |||||
5.5000%, 8/1/41 | 780,428 | 873,803 | |||||
5.0000%, 3/1/42 | 687,867 | 754,601 | |||||
3.5000%, 2/1/44 | 877,041 | 904,002 | |||||
4.5000%, 5/1/44 | 665,973 | 716,917 | |||||
3.0000%, 1/1/45 | 818,264 | 819,629 | |||||
4.0000%, 2/1/46 | 574,384 | 608,876 | |||||
3.5000%, 7/1/46 | 2,592,146 | 2,686,116 | |||||
3.0000%, 10/1/46 | 2,410,180 | 2,415,603 | |||||
3.0000%, 12/1/46 | 4,322,474 | 4,332,208 | |||||
4.0000%, 6/1/47 | 1,833,357 | 1,938,266 | |||||
4.0000%, 8/1/47 | 1,574,968 | 1,649,215 | |||||
3.5000%, 9/1/47 | 2,047,824 | 2,113,214 | |||||
3.5000%, 9/1/47 | 1,275,373 | 1,312,303 | |||||
3.5000%, 9/1/47 | 731,224 | 752,397 | |||||
3.5000%, 9/1/47 | 626,078 | 644,208 | |||||
3.5000%, 9/1/47 | 564,024 | 583,124 | |||||
4.0000%, 9/1/47 | 659,343 | 689,818 | |||||
3.5000%, 10/1/47 | 1,653,431 | 1,701,309 | |||||
3.5000%, 10/1/47 | 1,103,779 | 1,135,740 | |||||
3.5000%, 12/1/47 | 2,402,685 | 2,483,308 | |||||
30,653,399 | |||||||
Ginnie Mae I Pool: | |||||||
4.5000%, 9/15/40 | 431,620 | 461,092 | |||||
4.5000%, 5/15/41 | 395,151 | 418,115 | |||||
4.0000%, 1/15/45 | 2,485,633 | 2,610,788 | |||||
4.5000%, 8/15/46 | 2,808,984 | 3,025,116 | |||||
4.0000%, 7/15/47 | 1,491,181 | 1,564,461 | |||||
4.0000%, 8/15/47 | 300,282 | 315,062 | |||||
8,394,634 | |||||||
Ginnie Mae II Pool: | |||||||
4.0000%, 8/20/47 | 227,046 | 238,481 | |||||
4.0000%, 8/20/47 | 56,691 | 59,546 | |||||
4.0000%, 8/20/47 | 44,134 | 46,357 | |||||
344,384 | |||||||
Total Mortgage-Backed Securities (cost $168,982,921) | 167,741,695 | ||||||
United States Treasury Notes/Bonds – 15.5% | |||||||
1.3750%, 9/30/19 | 13,184,000 | 13,068,865 | |||||
1.5000%, 10/31/19 | 4,785,000 | 4,751,528 | |||||
1.7500%, 11/30/19† | 22,185,000 | 22,126,878 | |||||
1.6250%, 10/15/20 | 148,000 | 146,674 | |||||
1.7500%, 11/15/20 | 5,727,000 | 5,693,631 | |||||
1.7500%, 6/30/22 | 552,000 | 541,962 |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
18 | DECEMBER 31, 2017 |
Janus Henderson VIT Flexible Bond Portfolio
Schedule of Investments
December 31, 2017
Shares or | Value | ||||||
United States Treasury Notes/Bonds – (continued) | |||||||
1.8750%, 7/31/22 | $878,000 | $866,006 | |||||
1.6250%, 8/31/22† | 7,326,000 | 7,144,031 | |||||
1.8750%, 9/30/22 | 1,356,000 | 1,336,185 | |||||
2.0000%, 11/30/22 | 978,000 | 968,961 | |||||
2.1250%, 2/29/24 | 3,981,000 | 3,940,792 | |||||
2.1250%, 9/30/24 | 504,000 | 497,542 | |||||
2.0000%, 11/15/26 | 719,000 | 695,623 | |||||
2.2500%, 2/15/27† | 4,301,000 | 4,243,274 | |||||
2.2500%, 8/15/27† | 5,514,000 | 5,434,743 | |||||
2.2500%, 11/15/27 | 10,049,000 | 9,904,092 | |||||
3.6250%, 2/15/44 | 2,284,000 | 2,666,939 | |||||
2.2500%, 8/15/46 | 279,000 | 251,386 | |||||
3.0000%, 2/15/47 | 2,829,000 | 2,971,927 | |||||
3.0000%, 5/15/47 | 3,222,000 | 3,383,772 | |||||
2.7500%, 8/15/47 | 13,941,000 | 13,944,502 | |||||
2.7500%, 11/15/47 | 3,461,000 | 3,462,782 | |||||
Total United States Treasury Notes/Bonds (cost $107,445,834) | 108,042,095 | ||||||
Investment Companies – 6.5% | |||||||
Money Markets – 6.5% | |||||||
Janus Cash Liquidity Fund LLC, 1.2731%ºº,£ (cost $45,272,152) | 45,272,152 | 45,272,152 | |||||
Total Investments (total cost $729,996,354) – 105.5% | 734,057,908 | ||||||
Liabilities, net of Cash, Receivables and Other Assets – (5.5)% | (38,564,080) | ||||||
Net Assets – 100% | $695,493,828 |
Summary of Investments by Country - (Long Positions) (unaudited) | |||||
% of | |||||
Investment | |||||
Country | Value | Securities | |||
United States | $696,538,869 | 94.9 | % | ||
Canada | 7,603,362 | 1.0 | |||
Netherlands | 7,363,585 | 1.0 | |||
United Kingdom | 6,271,351 | 0.8 | |||
Taiwan | 4,523,937 | 0.6 | |||
Belgium | 3,391,864 | 0.5 | |||
Ireland | 3,340,081 | 0.5 | |||
France | 2,945,054 | 0.4 | |||
Switzerland | 1,164,935 | 0.2 | |||
Germany | 914,870 | 0.1 |
Total | $734,057,908 | 100.0 | % |
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
Janus Aspen Series | 19 |
Janus Henderson VIT Flexible Bond Portfolio
Schedule of Investments
December 31, 2017
Schedules of Affiliated Investments – (% of Net Assets)
Dividend Income(1) | Realized Gain/(Loss)(1) | Change in Unrealized Appreciation/ Depreciation(1) | Value at 12/31/17 | ||||||||
Investment Companies – 6.5% | |||||||||||
Investments Purchased with Cash Collateral from Securities Lending – 0% | |||||||||||
Janus Cash Collateral Fund LLC, 1.2573%ºº | $ | 7,809∆ | $ | — | $ | — | $ | — | |||
Money Markets – 6.5% | |||||||||||
Janus Cash Liquidity Fund LLC, 1.2731%ºº | 159,809 | — | — | 45,272,152 |
Total Affiliated Investments – 6.5% | $ | 167,618 | $ | — | $ | — | $ | 45,272,152 |
(1)For securities that were affiliated for a portion of the year ended December 31, 2017, this column reflects amounts for the entire year ended December 31, 2017 and not just the period in which the security was affiliated.
Share Balance at 12/31/16 | Purchases | Sales | Share Balance at 12/31/17 | ||||||||
Investment Companies – 6.5% | |||||||||||
Investments Purchased with Cash Collateral from Securities Lending – 0% | |||||||||||
Janus Cash Collateral Fund LLC, 1.2573%ºº | — | 10,132,500 | (10,132,500) | — | |||||||
Money Markets ��� 6.5% | |||||||||||
Janus Cash Liquidity Fund LLC, 1.2731%ºº | 8,443,000 | 477,212,432 | (440,383,280) | 45,272,152 | |||||||
See Notes to Schedule of Investments and Other Information and Notes to Financial Statements. | |
20 | DECEMBER 31, 2017 |
Janus Henderson VIT Flexible Bond Portfolio
Notes to Schedule of Investments and Other Information
Bloomberg Barclays U.S. Aggregate Bond Index | Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based measure of the investment grade, US dollar-denominated, fixed-rate taxable bond market. |
ICE | Intercontinental Exchange |
LIBOR | London Interbank Offered Rate |
LLC | Limited Liability Company |
LP | Limited Partnership |
PLC | Public Limited Company |
ULC | Unlimited Liability Company |
144A | Securities sold under Rule 144A of the Securities Act of 1933, as amended, are subject to legal and/or contractual restrictions on resale and may not be publicly sold without registration under the 1933 Act. Unless otherwise noted, these securities have been determined to be liquid under guidelines established by the Board of Trustees. The total value of 144A securities as of the year ended December 31, 2017 is $121,560,920, which represents 17.5% of net assets. |
(a) | All or a portion of this position has not settled, or is not funded. Upon settlement or funding date, interest rates for unsettled or unfunded amounts will be determined. Interest and dividends will not be accrued until time of settlement or funding. |
† | A portion of this security has been segregated to cover margin or segregation requirements on open futures contracts, forward currency contracts, options contracts, short sales, swap agreements, and/or securities with extended settlement dates, the value of which, as of December 31, 2017, is $50,649,462. |
‡ | Variable or floating rate security, the interest rate of which adjusts periodically based on changes in current interest rates and prepayments on the underlying pool of assets. The interest rate shown is the current rate as of December 31, 2017. |
ºº | Rate shown is the 7-day yield as of December 31, 2017. |
£ | The Portfolio may invest in certain securities that are considered affiliated companies. As defined by the Investment Company Act of 1940, as amended, an affiliated company is one in which the Portfolio owns 5% or more of the outstanding voting securities, or a company which is under common ownership or control. |
∆ | Net of income paid to the securities lending agent and rebates paid to the borrowing counterparties. |
§ | Schedule of Restricted and Illiquid Securities (as of December 31, 2017) | |||||||||
Value as a | ||||||||||
Acquisition | % of Net | |||||||||
Date | Cost | Value | Assets | |||||||
FREMF 2010 K-SCT Mortgage Trust, 2.0000%, 1/25/20 | 4/29/13 | $ | 1,213,917 | $ | 1,203,249 | 0.2 | % | |||
loanDepot Station Place Agency Securitization Trust 2017-1, ICE LIBOR USD 1 Month + 0.8000%, 2.3521%, 11/25/50 | 11/29/17 | 1,657,000 | 1,657,000 | 0.2 | ||||||
loanDepot Station Place Agency Securitization Trust 2017-1, ICE LIBOR USD 1 Month + 1.0000%, 2.5521%, 11/25/50 | 11/29/17 | 414,000 | 414,000 | 0.0 | ||||||
Station Place Securitization Trust 2017-3, ICE LIBOR USD 1 Month + 1.0000%, 2.2942%, 7/24/18 | 8/11/17 | 1,899,000 | 1,899,315 | 0.3 | ||||||
Total | $ | 5,183,917 | $ | 5,173,564 | 0.7 | % | ||||
The Portfolio has registration rights for certain restricted securities held as of December 31, 2017. The issuer incurs all registration costs. |
Janus Aspen Series | 21 |
Janus Henderson VIT Flexible Bond Portfolio
Notes to Schedule of Investments and Other Information
The following is a summary of the inputs that were used to value the Portfolio’s investments in securities and other financial instruments as of December 31, 2017. See Notes to Financial Statements for more information. | ||||||||||||
Valuation Inputs Summary | ||||||||||||
Level 2 - | Level 3 - | |||||||||||
Level 1 - | Other Significant | Significant | ||||||||||
Quotes Prices | Observable Inputs | Unobservable Inputs | ||||||||||
Assets | ||||||||||||
Investments in Securities: | ||||||||||||
Asset-Backed/Commercial Mortgage-Backed Securities | $ | - | $ | 59,600,947 | $ | - | ||||||
Bank Loans and Mezzanine Loans | - | 27,070,127 | - | |||||||||
Corporate Bonds | - | 326,330,892 | - | |||||||||
Mortgage-Backed Securities | - | 167,741,695 | - | |||||||||
United States Treasury Notes/Bonds | - | 108,042,095 | - | |||||||||
Investment Companies | - | 45,272,152 | - | |||||||||
Total Assets | $ | - | $ | 734,057,908 | $ | - | ||||||
22 | DECEMBER 31, 2017 |
Janus Henderson VIT Flexible Bond Portfolio
Statement of Assets and Liabilities
December 31, 2017
|
|
|
|
|
|
|
Assets: | ||||||
Unaffiliated investments, at value(1) | $ | 688,785,756 | ||||
Affiliated investments, at value(2) | 45,272,152 | |||||
Cash | 1,170,390 | |||||
Non-interested Trustees' deferred compensation | 13,295 | |||||
Receivables: | ||||||
Interest | 4,724,563 | |||||
Investments sold | 2,936,534 | |||||
Portfolio shares sold | 2,118,975 | |||||
Dividends from affiliates | 46,592 | |||||
Other assets | 14,146 | |||||
Total Assets |
|
| 745,082,403 |
| ||
Liabilities: | ||||||
Payables: | — | |||||
Investments purchased | 45,902,609 | |||||
Portfolio shares repurchased | 2,378,066 | |||||
Advisory fees | 300,598 | |||||
12b-1 Distribution and shareholder servicing fees | 87,924 | |||||
Professional fees | 37,464 | |||||
Transfer agent fees and expenses | 32,436 | |||||
Non-interested Trustees' deferred compensation fees | 13,295 | |||||
Custodian fees | 5,782 | |||||
Non-interested Trustees' fees and expenses | 5,291 | |||||
Portfolio administration fees | 4,754 | |||||
Accrued expenses and other payables | 820,356 | |||||
Total Liabilities |
|
| 49,588,575 |
| ||
Net Assets |
| $ | 695,493,828 |
| ||
Net Assets Consist of: | ||||||
Capital (par value and paid-in surplus) | $ | 697,464,344 | ||||
Undistributed net investment income/(loss) | 3,349,745 | |||||
Undistributed net realized gain/(loss) from investments | (9,381,812) | |||||
Unrealized net appreciation/(depreciation) of investments and non-interested Trustees’ deferred compensation | 4,061,551 | |||||
Total Net Assets |
| $ | 695,493,828 |
| ||
Net Assets - Institutional Shares | $ | 292,250,695 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 24,998,862 | |||||
Net Asset Value Per Share |
| $ | 11.69 |
| ||
Net Assets - Service Shares | $ | 403,243,133 | ||||
Shares Outstanding, $0.01 Par Value (unlimited shares authorized) | 31,675,685 | |||||
Net Asset Value Per Share |
| $ | 12.73 |
|
(1) Includes cost of $684,724,202. (2) Includes cost of $45,272,152. |
See Notes to Financial Statements. | |
Janus Aspen Series | 23 |
Janus Henderson VIT Flexible Bond Portfolio
Statement of Operations
For the year ended December 31, 2017
|
|
|
|
|
|
Investment Income: | |||||
| Interest | $ | 21,850,214 | ||
Dividends | 272,007 | ||||
Dividends from affiliates | 159,809 | ||||
Affiliated securities lending income, net | 7,809 | ||||
Other income | 221,696 | ||||
Total Investment Income |
| 22,511,535 |
| ||
Expenses: | |||||
Advisory fees | 3,538,776 | ||||
12b-1Distribution and shareholder servicing fees: | |||||
Service Shares | 1,003,628 | ||||
Transfer agent administrative fees and expenses: | |||||
Institutional Shares | 159,230 | ||||
Service Shares | 200,726 | ||||
Other transfer agent fees and expenses: | |||||
Institutional Shares | 11,389 | ||||
Service Shares | 8,474 | ||||
Shareholder reports expense | 114,515 | ||||
Portfolio administration fees | 61,725 | ||||
Professional fees | 48,569 | ||||
Custodian fees | 30,942 | ||||
Registration fees | 25,974 | ||||
Non-interested Trustees’ fees and expenses | 18,717 | ||||
Other expenses | 141,177 | ||||
Total Expenses |
| 5,363,842 |
| ||
Net Investment Income/(Loss) |
| 17,147,693 |
| ||
Net Realized Gain/(Loss) on Investments: | |||||
Investments | 1,927,983 | ||||
Total Net Realized Gain/(Loss) on Investments |
| 1,927,983 |
| ||
Change in Unrealized Net Appreciation/Depreciation: | |||||
Investments and non-interested Trustees’ deferred compensation | 5,918,589 | ||||
Total Change in Unrealized Net Appreciation/Depreciation |
| 5,918,589 |
| ||
Net Increase/(Decrease) in Net Assets Resulting from Operations | $ | 24,994,265 |
| ||
See Notes to Financial Statements. | |
24 | DECEMBER 31, 2017 |
Janus Henderson VIT Flexible Bond Portfolio
Statements of Changes in Net Assets
|
|
| Year ended |
| Year ended | |||
Operations: | ||||||||
Net investment income/(loss) | $ | 17,147,693 | $ | 16,009,760 | ||||
Net realized gain/(loss) on investments | 1,927,983 | (2,191,223) | ||||||
Change in unrealized net appreciation/depreciation | 5,918,589 | 1,556,768 | ||||||
Net Increase/(Decrease) in Net Assets Resulting from Operations |
| 24,994,265 |
|
| 15,375,305 | |||
Dividends and Distributions to Shareholders: | ||||||||
Dividends from Net Investment Income | ||||||||
Institutional Shares | (9,202,522) | (9,771,475) | ||||||
Service Shares | (10,135,006) | (9,601,454) | ||||||
Net Decrease from Dividends and Distributions to Shareholders |
| (19,337,528) |
|
| (19,372,929) | |||
Capital Share Transactions: | ||||||||
Institutional Shares | (45,488,748) | (19,540,667) | ||||||
Service Shares | (1,068,449) | 100,490,572 | ||||||
Net Increase/(Decrease) from Capital Share Transactions |
| (46,557,197) |
|
| 80,949,905 | |||
Net Increase/(Decrease) in Net Assets |
| (40,900,460) |
|
| 76,952,281 | |||
Net Assets: | ||||||||
Beginning of period | 736,394,288 | 659,442,007 | ||||||
| End of period | $ | 695,493,828 |
| $ | 736,394,288 | ||
Undistributed Net Investment Income/(Loss) | $ | 3,349,745 |
| $ | 2,913,562 |
See Notes to Financial Statements. | |
Janus Aspen Series | 25 |
Janus Henderson VIT Flexible Bond Portfolio
Financial Highlights
Institutional Shares | ||||||||||||||||||
For a share outstanding during each year ended December 31 |
| 2017 |
|
| 2016 |
|
| 2015 |
|
| 2014 |
|
| 2013 |
| |||
Net Asset Value, Beginning of Period |
| $11.62 |
|
| $11.67 |
|
| $11.98 |
|
| $11.82 |
|
| $12.59 |
| |||
Income/(Loss) from Investment Operations: | ||||||||||||||||||
Net investment income/(loss) | 0.30(1) | 0.28(1) | 0.28(1) | 0.33(1) | 0.38 | |||||||||||||
Net realized and unrealized gain/(loss) | 0.12 | 0.01(2) | (0.25) | 0.25 | (0.40) | |||||||||||||
Total from Investment Operations |
| 0.42 |
|
| 0.29 |
|
| 0.03 |
|
| 0.58 |
|
| (0.02) |
| |||
Less Dividends and Distributions: | ||||||||||||||||||
Dividends (from net investment income) | (0.35) | (0.34) | (0.28) | (0.42) | (0.30) | |||||||||||||
Distributions (from capital gains) | — | — | (0.06) | — | (0.45) | |||||||||||||
Total Dividends and Distributions |
| (0.35) |
|
| (0.34) |
|
| (0.34) |
|
| (0.42) |
|
| (0.75) |
| |||
Net Asset Value, End of Period | $11.69 | $11.62 | $11.67 | $11.98 | $11.82 | |||||||||||||
Total Return* |
| 3.62% |
|
| 2.46% |
|
| 0.22% |
|
| 4.94% |
|
| (0.06)% |
| |||
Net Assets, End of Period (in thousands) | $292,251 | $335,208 | $355,569 | $363,977 | $344,028 | |||||||||||||
Average Net Assets for the Period (in thousands) | $319,492 | $350,120 | $347,338 | $345,064 | $360,706 | |||||||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses | 0.60% | 0.58% | 0.57% | 0.59% | 0.56% | |||||||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets) | 0.60% | 0.58% | 0.57% | 0.58% | 0.55% | |||||||||||||
Ratio of Net Investment Income/(Loss) | 2.51% | 2.31% | 2.33% | 2.74% | 2.35% | |||||||||||||
Portfolio Turnover Rate | 130%(3) | 112% | 111% | 144% | 138% | |||||||||||||
1 |
Service Shares | ||||||||||||||||||
For a share outstanding during each year ended December 31 |
| 2017 |
|
| 2016 |
|
| 2015 |
|
| 2014 |
|
| 2013 |
| |||
Net Asset Value, Beginning of Period |
| $12.63 |
|
| $12.66 |
|
| $12.98 |
|
| $12.78 |
|
| $13.56 |
| |||
Income/(Loss) from Investment Operations: | ||||||||||||||||||
Net investment income/(loss) | 0.29(1) | 0.27(1) | 0.27(1) | 0.32(1) | 0.38 | |||||||||||||
Net realized and unrealized gain/(loss) | 0.13 | 0.01(2) | (0.27) | 0.28 | (0.44) | |||||||||||||
Total from Investment Operations |
| 0.42 |
|
| 0.28 |
|
| — |
|
| 0.60 |
|
| (0.06) |
| |||
Less Dividends and Distributions: | ||||||||||||||||||
Dividends (from net investment income) | (0.32) | (0.31) | (0.26) | (0.40) | (0.27) | |||||||||||||
Distributions (from capital gains) | — | — | (0.06) | — | (0.45) | |||||||||||||
Total Dividends and Distributions |
| (0.32) |
|
| (0.31) |
|
| (0.32) |
|
| (0.40) |
|
| (0.72) |
| |||
Net Asset Value, End of Period | $12.73 | $12.63 | $12.66 | $12.98 | $12.78 | |||||||||||||
Total Return* |
| 3.35% |
|
| 2.22% |
|
| (0.06)% |
|
| 4.69% |
|
| (0.32)% |
| |||
Net Assets, End of Period (in thousands) | $403,243 | $401,186 | $303,873 | $207,850 | $117,539 | |||||||||||||
Average Net Assets for the Period (in thousands) | $402,544 | $383,710 | $250,537 | $146,672 | $124,401 | |||||||||||||
Ratios to Average Net Assets**: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Ratio of Gross Expenses | 0.85% | 0.83% | 0.82% | 0.85% | 0.81% | |||||||||||||
Ratio of Net Expenses (After Waivers and Expense Offsets) | 0.85% | 0.83% | 0.82% | 0.84% | 0.80% | |||||||||||||
Ratio of Net Investment Income/(Loss) | 2.27% | 2.06% | 2.09% | 2.49% | 2.10% | |||||||||||||
Portfolio Turnover Rate | 130%(3) | 112% | 111% | 144% | 138% | |||||||||||||
* Total return not annualized for periods of less than one full year. ** Annualized for periods of less than one full year. (1) Per share amounts are calculated based on average shares outstanding during the year or period. (2) This amount does not agree with the change in the aggregate gains and losses in the Portfolio's securities for the year or period due to the timing of sales and repurchases of the Portfolio's shares in relation to fluctuating market values for the Portfolio's securities. (3) Portfolio Turnover Rate excludes TBA (to be announced) purchase and sales commitments. |
See Notes to Financial Statements. | |
26 | DECEMBER 31, 2017 |
Janus Henderson VIT Flexible Bond Portfolio
Notes to Financial Statements
1. Organization and Significant Accounting Policies
Janus Henderson VIT Flexible Bond Portfolio (formerly named Janus Aspen Flexible Bond Portfolio) (the “Portfolio”) is a series of Janus Aspen Series (the “Trust”), which is organized as a Delaware statutory trust and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company, and therefore has applied the specialized accounting and reporting guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946. The Trust offers 12 portfolios, each of which offers multiple share classes, with differing investment objectives and policies. The Portfolio seeks to obtain maximum total return, consistent with preservation of capital. The Portfolio is classified as diversified, as defined in the 1940 Act.
The Portfolio currently offers two classes of shares: Institutional Shares and Service Shares. Each class represents an interest in the same portfolio of investments. Institutional Shares are offered only in connection with investment in and payments under variable insurance contracts as well as certain qualified retirement plans. Service Shares are offered only in connection with investment in and payments under variable insurance contracts as well as certain qualified retirement plans that require a fee from Portfolio assets to procure distribution and administrative services to contract owners and plan participants.
Shareholders, including other portfolios, participating insurance companies, as well as accounts, may from time to time own (beneficially or of record) a significant percentage of the Portfolio’s Shares and can be considered to “control” the Portfolio when that ownership exceeds 25% of the Portfolio’s assets (and which may differ from control as determined in accordance with accounting principles generally accepted in the United States of America).
The following accounting policies have been followed by the Portfolio and are in conformity with accounting principles generally accepted in the United States of America.
Investment Valuation
Securities held by the Portfolio are valued in accordance with policies and procedures established by and under the supervision of the Trustees (the “Valuation Procedures”). Equity securities traded on a domestic securities exchange are generally valued at the closing prices on the primary market or exchange on which they trade. If such price is lacking for the trading period immediately preceding the time of determination, such securities are valued at their current bid price. Equity securities that are traded on a foreign exchange are generally valued at the closing prices on such markets. In the event that there is no current trading volume on a particular security in such foreign exchange, the bid price from the primary exchange is generally used to value the security. Securities that are traded on the over-the-counter (“OTC”) markets are generally valued at their closing or latest bid prices as available. Foreign securities and currencies are converted to U.S. dollars using the applicable exchange rate in effect at the close of the New York Stock Exchange (“NYSE”). The Portfolio will determine the market value of individual securities held by it by using prices provided by one or more approved professional pricing services or, as needed, by obtaining market quotations from independent broker-dealers. Most debt securities are valued in accordance with the evaluated bid price supplied by the pricing service that is intended to reflect market value. The evaluated bid price supplied by the pricing service is an evaluation that may consider factors such as security prices, yields, maturities and ratings. Certain short-term securities maturing within 60 days or less may be evaluated and valued on an amortized cost basis provided that the amortized cost determined approximates market value. Securities for which market quotations or evaluated prices are not readily available or deemed unreliable are valued at fair value determined in good faith under the Valuation Procedures. Circumstances in which fair value pricing may be utilized include, but are not limited to: (i) a significant event that may affect the securities of a single issuer, such as a merger, bankruptcy, or significant issuer-specific development; (ii) an event that may affect an entire market, such as a natural disaster or significant governmental action; (iii) a nonsignificant event such as a market closing early or not opening, or a security trading halt; and (iv) pricing of a nonvalued security and a restricted or nonpublic security. Special valuation considerations may apply with respect to “odd-lot” fixed-income transactions which, due to their small size, may receive evaluated prices by pricing services which reflect a large block trade and not what actually could be obtained for the odd-lot position. The Portfolio uses systematic fair valuation models provided by independent third parties to value international equity securities in order to adjust for stale pricing, which may occur between the close of certain foreign exchanges and the close of the NYSE.
Valuation Inputs Summary
FASB ASC 820, Fair Value Measurements and Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value, and expands disclosure requirements regarding fair value measurements. This standard
Janus Aspen Series | 27 |
Janus Henderson VIT Flexible Bond Portfolio
Notes to Financial Statements
emphasizes that fair value is a market-based measurement that should be determined based on the assumptions that market participants would use in pricing an asset or liability and establishes a hierarchy that prioritizes inputs to valuation techniques used to measure fair value. These inputs are summarized into three broad levels:
Level 1 – Unadjusted quoted prices in active markets the Portfolio has the ability to access for identical assets or liabilities.
Level 2 – Observable inputs other than unadjusted quoted prices included in Level 1 that are observable for the asset or liability either directly or indirectly. These inputs may include quoted prices for the identical instrument on an inactive market, prices for similar instruments, interest rates, prepayment speeds, credit risk, yield curves, default rates and similar data.
Assets or liabilities categorized as Level 2 in the hierarchy generally include: debt securities fair valued in accordance with the evaluated bid or ask prices supplied by a pricing service; securities traded on OTC markets and listed securities for which no sales are reported that are fair valued at the latest bid price (or yield equivalent thereof) obtained from one or more dealers transacting in a market for such securities or by a pricing service approved by the Portfolio’s Trustees; certain short-term debt securities with maturities of 60 days or less that are fair valued at amortized cost; and equity securities of foreign issuers whose fair value is determined by using systematic fair valuation models provided by independent third parties in order to adjust for stale pricing which may occur between the close of certain foreign exchanges and the close of the NYSE. Other securities that may be categorized as Level 2 in the hierarchy include, but are not limited to, preferred stocks, bank loans, swaps, investments in unregistered investment companies, options, and forward contracts.
Level 3 – Unobservable inputs for the asset or liability to the extent that relevant observable inputs are not available, representing the Portfolio’s own assumptions about the assumptions that a market participant would use in valuing the asset or liability, and that would be based on the best information available.
There have been no significant changes in valuation techniques used in valuing any such positions held by the Portfolio since the beginning of the fiscal year.
The inputs or methodology used for fair valuing securities are not necessarily an indication of the risk associated with investing in those securities. The summary of inputs used as of December 31, 2017 to fair value the Portfolio’s investments in securities and other financial instruments is included in the “Valuation Inputs Summary” in the Notes to Schedule of Investments and Other Information.
There were no transfers between Level 1, Level 2 and Level 3 of the fair value hierarchy during the year. The Portfolio recognizes transfers between the levels as of the beginning of the fiscal year.
Investment Transactions and Investment Income
Investment transactions are accounted for as of the date purchased or sold (trade date). Dividend income is recorded on the ex-dividend date. Certain dividends from foreign securities will be recorded as soon as the Portfolio is informed of the dividend, if such information is obtained subsequent to the ex-dividend date. Dividends from foreign securities may be subject to withholding taxes in foreign jurisdictions. Interest income is recorded on the accrual basis and includes amortization of premiums and accretion of discounts. Gains and losses are determined on the identified cost basis, which is the same basis used for federal income tax purposes. Income, as well as gains and losses, both realized and unrealized, are allocated daily to each class of shares based upon the ratio of net assets represented by each class as a percentage of total net assets.
Expenses
The Portfolio bears expenses incurred specifically on its behalf. Each class of shares bears a portion of general expenses, which are allocated daily to each class of shares based upon the ratio of net assets represented by each class as a percentage of total net assets. Expenses directly attributable to a specific class of shares are charged against the operations of such class.
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
28 | DECEMBER 31, 2017 |
Janus Henderson VIT Flexible Bond Portfolio
Notes to Financial Statements
Indemnifications
In the normal course of business, the Portfolio may enter into contracts that contain provisions for indemnification of other parties against certain potential liabilities. The Portfolio’s maximum exposure under these arrangements is unknown, and would involve future claims that may be made against the Portfolio that have not yet occurred. Currently, the risk of material loss from such claims is considered remote.
Dividends and Distributions
The Portfolio may make semiannual distributions of substantially all of its investment income and an annual distribution of its net realized capital gains (if any).
The Portfolio may make certain investments in real estate investment trusts (“REITs”) which pay dividends to their shareholders based upon funds available from operations. It is quite common for these dividends to exceed the REITs’ taxable earnings and profits, resulting in the excess portion of such dividends being designated as a return of capital. If the Portfolio distributes such amounts, such distributions could constitute a return of capital to shareholders for federal income tax purposes.
Federal Income Taxes
The Portfolio intends to continue to qualify as a regulated investment company and distribute all of its taxable income in accordance with the requirements of Subchapter M of the Internal Revenue Code. Management has analyzed the Portfolio’s tax positions taken for all open federal income tax years, generally a three-year period, and has concluded that no provision for federal income tax is required in the Portfolio’s financial statements. The Portfolio is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
On December 22, 2017, the Tax Cuts and Jobs Act was signed into law. Currently, Management does not believe the bill will have a material impact on the Fund’s intention to continue to qualify as a regulated investment company, which is generally not subject to U.S. federal income tax.
2. Other Investments and Strategies
Additional Investment Risk
The Portfolio may be invested in lower-rated debt securities that have a higher risk of default or loss of value since these securities may be sensitive to economic changes, political changes, or adverse developments specific to the issuer.
The financial crisis in both the U.S. and global economies over the past several years has resulted, and may continue to result, in a significant decline in the value and liquidity of many securities of issuers worldwide in the equity and fixed-income/credit markets. In response to the crisis, the United States and certain foreign governments, along with the U.S. Federal Reserve and certain foreign central banks, took steps to support the financial markets. The withdrawal of this support, a failure of measures put in place to respond to the crisis, or investor perception that such efforts were not sufficient could each negatively affect financial markets generally, and the value and liquidity of specific securities. In addition, policy and legislative changes in the United States and in other countries continue to impact many aspects of financial regulation. The effect of these changes on the markets, and the practical implications for market participants, including the Portfolio, may not be fully known for some time. As a result, it may also be unusually difficult to identify both investment risks and opportunities, which could limit or preclude the Portfolio’s ability to achieve its investment objective. Therefore, it is important to understand that the value of your investment may fall, sometimes sharply, and you could lose money.
The enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) of 2010 provided for widespread regulation of financial institutions, consumer financial products and services, broker-dealers, OTC derivatives, investment advisers, credit rating agencies, and mortgage lending, which expanded federal oversight in the financial sector, including the investment management industry. Many provisions of the Dodd-Frank Act remain pending and will be implemented through future rulemaking. Therefore, the ultimate impact of the Dodd-Frank Act and the regulations under the Dodd-Frank Act on the Portfolio and the investment management industry as a whole, is not yet certain.
A number of countries in the European Union (“EU”) have experienced, and may continue to experience, severe economic and financial difficulties. In particular, many EU nations are susceptible to economic risks associated with high levels of debt, notably due to investments in sovereign debt of countries such as Greece, Italy, Spain, Portugal, and
Janus Aspen Series | 29 |
Janus Henderson VIT Flexible Bond Portfolio
Notes to Financial Statements
Ireland. Many non-governmental issuers, and even certain governments, have defaulted on, or been forced to restructure, their debts. Many other issuers have faced difficulties obtaining credit or refinancing existing obligations. Financial institutions have in many cases required government or central bank support, have needed to raise capital, and/or have been impaired in their ability to extend credit. As a result, financial markets in the EU experienced extreme volatility and declines in asset values and liquidity. Responses to these financial problems by European governments, central banks, and others, including austerity measures and reforms, may not work, may result in social unrest, and may limit future growth and economic recovery or have other unintended consequences. Further defaults or restructurings by governments and others of their debt could have additional adverse effects on economies, financial markets, and asset valuations around the world. Greece, Ireland, and Portugal have already received one or more "bailouts" from other Eurozone member states, and it is unclear how much additional funding they will require or if additional Eurozone member states will require bailouts in the future. The risk of investing in securities in the European markets may also be heightened due to the referendum in which the United Kingdom voted to exit the EU (known as “Brexit”). There is considerable uncertainty about how Brexit will be conducted, how negotiations of necessary treaties and trade agreements will proceed, or how financial markets will react. In addition, one or more other countries may also abandon the euro and/or withdraw from the EU, placing its currency and banking system in jeopardy.
Certain areas of the world have historically been prone to and economically sensitive to environmental events such as, but not limited to, hurricanes, earthquakes, typhoons, flooding, tidal waves, tsunamis, erupting volcanoes, wildfires or droughts, tornadoes, mudslides, or other weather-related phenomena. Such disasters, and the resulting physical or economic damage, could have a severe and negative impact on the Portfolio’s investment portfolio and, in the longer term, could impair the ability of issuers in which the Portfolio invests to conduct their businesses as they would under normal conditions. Adverse weather conditions may also have a particularly significant negative effect on issuers in the agricultural sector and on insurance companies that insure against the impact of natural disasters.
Counterparties
Portfolio transactions involving a counterparty are subject to the risk that the counterparty or a third party will not fulfill its obligation to the Portfolio (“counterparty risk”). Counterparty risk may arise because of the counterparty’s financial condition (i.e., financial difficulties, bankruptcy, or insolvency), market activities and developments, or other reasons, whether foreseen or not. A counterparty’s inability to fulfill its obligation may result in significant financial loss to the Portfolio. The Portfolio may be unable to recover its investment from the counterparty or may obtain a limited recovery, and/or recovery may be delayed. The extent of the Portfolio’s exposure to counterparty risk with respect to financial assets and liabilities approximates its carrying value. See the "Offsetting Assets and Liabilities" section of this Note for further details.
The Portfolio may be exposed to counterparty risk through participation in various programs, including, but not limited to, lending its securities to third parties, cash sweep arrangements whereby the Portfolio’s cash balance is invested in one or more types of cash management vehicles, as well as investments in, but not limited to, repurchase agreements, debt securities, and derivatives, including various types of swaps, futures and options. The Portfolio intends to enter into financial transactions with counterparties that Janus Capital Management LLC (“Janus Capital”) believes to be creditworthy at the time of the transaction. There is always the risk that Janus Capital’s analysis of a counterparty’s creditworthiness is incorrect or may change due to market conditions. To the extent that the Portfolio focuses its transactions with a limited number of counterparties, it will have greater exposure to the risks associated with one or more counterparties.
Loans
The Portfolio may invest in various commercial loans, including bank loans, bridge loans, debtor-in-possession (“DIP”) loans, mezzanine loans, and other fixed and floating rate loans. These loans may be acquired through loan participations and assignments or on a when-issued basis. Commercial loans will comprise no more than 20% of the Portfolio’s total assets. Below are descriptions of the types of loans held by the Portfolio as of December 31, 2017.
· Bank Loans - Bank loans are obligations of companies or other entities entered into in connection with recapitalizations, acquisitions, and refinancings. The Portfolio’s investments in bank loans are generally acquired as a participation interest in, or assignment of, loans originated by a lender or other financial institution. These investments may include institutionally-traded floating and fixed-rate debt securities.
· Floating Rate Loans – Floating rate loans are debt securities that have floating interest rates, that adjust periodically, and are tied to a benchmark lending rate, such as London Interbank Offered Rate (“LIBOR”). In
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other cases, the lending rate could be tied to the prime rate offered by one or more major U.S. banks or the rate paid on large certificates of deposit traded in the secondary markets. If the benchmark lending rate changes, the rate payable to lenders under the loan will change at the next scheduled adjustment date specified in the loan agreement. Floating rate loans are typically issued to companies (‘‘borrowers’’) in connection with recapitalizations, acquisitions, and refinancings. Floating rate loan investments are generally below investment grade. Senior floating rate loans are secured by specific collateral of a borrower and are senior in the borrower’s capital structure. The senior position in the borrower’s capital structure generally gives holders of senior loans a claim on certain of the borrower’s assets that is senior to subordinated debt and preferred and common stock in the case of a borrower’s default. Floating rate loan investments may involve foreign borrowers, and investments may be denominated in foreign currencies. Floating rate loans often involve borrowers whose financial condition is troubled or uncertain and companies that are highly leveraged. The Portfolio may invest in obligations of borrowers who are in bankruptcy proceedings. While the Portfolio generally expects to invest in fully funded term loans, certain of the loans in which the Portfolio may invest include revolving loans, bridge loans, and delayed draw term loans.
Purchasers of floating rate loans may pay and/or receive certain fees. The Portfolio may receive fees such as covenant waiver fees or prepayment penalty fees. The Portfolio may pay fees such as facility fees. Such fees may affect the Portfolio’s return.
· Mezzanine Loans - Mezzanine loans are secured by the stock of the company that owns the assets. Mezzanine loans are a hybrid of debt and equity financing that is typically used to fund the expansion of existing companies. A mezzanine loan is composed of debt capital that gives the lender the right to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full. Mezzanine loans typically are the most subordinated debt obligation in an issuer’s capital structure.
Mortgage- and Asset-Backed Securities
Mortgage- and asset-backed securities represent interests in “pools” of commercial or residential mortgages or other assets, including consumer loans or receivables. The Portfolio may purchase fixed or variable rate commercial or residential mortgage-backed securities issued by the Government National Mortgage Association (“Ginnie Mae”), the Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac”), or other governmental or government-related entities. Ginnie Mae’s guarantees are backed by the full faith and credit of the U.S. Government, which means that the U.S. Government guarantees that the interest and principal will be paid when due. Fannie Mae and Freddie Mac securities are not backed by the full faith and credit of the U.S. Government. In September 2008, the Federal Housing Finance Agency (“FHFA”), an agency of the U.S. Government, placed Fannie Mae and Freddie Mac under conservatorship. Since that time, Fannie Mae and Freddie Mac have received capital support through U.S. Treasury preferred stock purchases, and Treasury and Federal Reserve purchases of their mortgage-backed securities. The FHFA and the U.S. Treasury have imposed strict limits on the size of these entities’ mortgage portfolios. The FHFA has the power to cancel any contract entered into by Fannie Mae and Freddie Mac prior to FHFA’s appointment as conservator or receiver, including the guarantee obligations of Fannie Mae and Freddie Mac.
The Portfolio may also purchase other mortgage- and asset-backed securities through single- and multi-seller conduits, collateralized debt obligations, structured investment vehicles, and other similar securities. Asset-backed securities may be backed by various consumer obligations, including automobile loans, equipment leases, credit card receivables, or other collateral. In the event the underlying loans are not paid, the securities’ issuer could be forced to sell the assets and recognize losses on such assets, which could impact your return. Unlike traditional debt instruments, payments on these securities include both interest and a partial payment of principal. Mortgage and asset-backed securities are subject to both extension risk, where borrowers pay off their debt obligations more slowly in times of rising interest rates, and prepayment risk, where borrowers pay off their debt obligations sooner than expected in times of declining interest rates. These risks may reduce the Portfolio’s returns. In addition, investments in mortgage- and asset backed securities, including those comprised of subprime mortgages, may be subject to a higher degree of credit risk, valuation risk, and liquidity risk than various other types of fixed-income securities. Additionally, although mortgage-backed securities are generally supported by some form of government or private guarantee and/or insurance, there is no assurance that guarantors or insurers will meet their obligations.
Real Estate Investing
The Portfolio may invest in equity and debt securities of real estate-related companies. Such companies may include those in the real estate industry or real estate-related industries. These securities may include common stocks,
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corporate bonds, preferred stocks, and other equity securities, including, but not limited to, mortgage-backed securities, real estate-backed securities, securities of REITs and similar REIT-like entities. A REIT is a trust that invests in real estate-related projects, such as properties, mortgage loans, and construction loans. REITs are generally categorized as equity, mortgage, or hybrid REITs. A REIT may be listed on an exchange or traded OTC.
Restricted Security Transactions
Restricted securities held by the Portfolio may not be sold except in exempt transactions or in a public offering registered under the Securities Act of 1933, as amended. 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 the Portfolio 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.
Securities Lending
Under procedures adopted by the Trustees, the Portfolio may seek to earn additional income by lending securities to certain qualified broker-dealers and institutions. Deutsche Bank AG acts as securities lending agent and a limited purpose custodian or subcustodian to receive and disburse cash balances and cash collateral, hold short-term investments, hold collateral, and perform other custodian functions in accordance with the Agency Securities Lending and Repurchase Agreement. The Portfolio may lend portfolio securities in an amount equal to up to 1/3 of its total assets as determined at the time of the loan origination. 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. 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, time deposits, repurchase agreements, money market mutual funds or other money market accounts, or such other collateral as permitted by the SEC. If the Portfolio is unable to recover a security on loan, the Portfolio may use the collateral to purchase replacement securities in the market. There is a risk that the value of the collateral could decrease below the cost of the replacement security by the time the replacement investment is made, resulting in a loss to the Portfolio.
Upon receipt of cash collateral, Janus Capital may invest it in affiliated or non-affiliated cash management vehicles, whether registered or unregistered entities, as permitted by the 1940 Act and rules promulgated thereunder. Janus Capital currently intends to invest the cash collateral in a cash management vehicle for which Janus Capital serves as investment adviser, Janus Cash Collateral Fund LLC. An investment in Janus Cash Collateral Fund LLC is generally subject to the same risks that shareholders experience when investing in similarly structured vehicles, such as the potential for significant fluctuations in assets as a result of the purchase and redemption activity of the securities lending program, a decline in the value of the collateral, and possible liquidity issues. Such risks may delay the return of the cash collateral and cause the Portfolio to violate its agreement to return the cash collateral to a borrower in a timely manner. As adviser to the Portfolio and Janus Cash Collateral Fund LLC, Janus Capital has an inherent conflict of interest as a result of its fiduciary duties to both the Portfolio and Janus Cash Collateral Fund LLC. Additionally, Janus Capital receives an investment advisory fee of 0.05% for managing Janus Cash Collateral Fund LLC, but it may not receive a fee for managing certain other affiliated cash management vehicles in which the Portfolio may invest, and therefore may have an incentive to allocate preferred investment opportunities to investment vehicles for which it is receiving a fee.
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 loaned 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 cash collateral invested by Janus Capital is disclosed in the Schedule of Investments (if applicable). Income earned from the investment of the cash collateral, net of rebates paid to, or fees paid by, borrowers and less the fees paid to the lending agent are included as “Affiliated securities lending income, net” on the Statement of Operations. There were no securities on loan as of December 31, 2017.
Sovereign Debt
The Portfolio may invest in U.S. and non-U.S. government debt securities (“sovereign debt”). Some investments in sovereign debt, such as U.S. sovereign debt, are considered low risk. However, investments in sovereign debt, especially
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the debt of less developed countries, can involve a high degree of risk, including the risk that the governmental entity that controls the repayment of sovereign debt may not be willing or able to repay the principal and/or to pay the interest on its sovereign debt in a timely manner. A sovereign debtor’s willingness or ability to satisfy its debt obligation may be affected by various factors including, but not limited to, its cash flow situation, the extent of its foreign currency reserves, the availability of foreign exchange when a payment is due, the relative size of its debt position in relation to its economy as a whole, the sovereign debtor’s policy toward international lenders, and local political constraints to which the governmental entity may be subject. Sovereign debtors may also be dependent on expected disbursements from foreign governments, multilateral agencies, and other entities. The failure of a sovereign debtor to implement economic reforms, achieve specified levels of economic performance, or repay principal or interest when due may result in the cancellation of third party commitments to lend funds to the sovereign debtor, which may further impair such debtor’s ability or willingness to timely service its debts. The Portfolio may be requested to participate in the rescheduling of such sovereign debt and to extend further loans to governmental entities, which may adversely affect the Portfolio’s holdings. In the event of default, there may be limited or no legal remedies for collecting sovereign debt and there may be no bankruptcy proceedings through which the Portfolio may collect all or part of the sovereign debt that a governmental entity has not repaid. In addition, to the extent the Portfolio invests in non-U.S. sovereign debt, it may be subject to currency risk.
TBA Commitments
A Portfolio may enter into “to be announced” or “TBA” commitments. TBAs are forward agreements for the purchase or sale of securities, including mortgage-backed securities, for a fixed price, with payment and delivery on an agreed upon future settlement date. The specific securities to be delivered are not identified at the trade date. However, delivered securities must meet specified terms, including issuer, rate, and mortgage terms. Although the particular TBA securities must meet industry-accepted “good delivery” standards, there can be no assurance that a security purchased on forward commitment basis will ultimately be issued or delivered by the counterparty. During the settlement period, the Portfolio will still bear the risk of any decline in the value of the security to be delivered. Because TBA commitments do not require the purchase and sale of identical securities, the characteristics of the security delivered to the Portfolio may be less favorable than the security delivered to the dealer. If the counterparty to a transaction fails to deliver the security, the Portfolio could suffer a loss.
When-Issued and Delayed Delivery Securities
The Portfolio may purchase or sell securities on a when-issued or delayed delivery basis. When-issued and delayed delivery securities in which the Portfolio may invest include U.S. Treasury Securities, municipal bonds, bank loans, and other similar instruments. 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 Portfolio may hold liquid assets as collateral with the Portfolio’s custodian sufficient to cover the purchase price.
3. Investment Advisory Agreements and Other Transactions with Affiliates
The Portfolio pays Janus Capital an investment advisory fee which is calculated daily and paid monthly. The following table reflects the Portfolio’s contractual investment advisory fee rate (expressed as an annual rate).
Average Daily Net Assets of the Portfolio | Contractual Investment Advisory Fee (%) |
First $300 Million | 0.55 |
Over $300 Million | 0.45 |
Janus Capital has contractually agreed to waive the advisory fee payable by the Portfolio or reimburse expenses in an amount equal to the amount, if any, that the Portfolio’s normal operating expenses, including the investment advisory fee, but excluding the 12b-1 distribution and shareholder servicing fees (applicable to Service Shares), transfer agent fees and expenses payable pursuant to the Transfer Agency Agreement, brokerage commissions, interest, dividends, taxes, acquired fund fees and expenses, and extraordinary expenses, exceed the annual rate of 0.57% of the Portfolio’s average daily net assets. Janus Capital has agreed to continue the waivers until at least May 1, 2018. If applicable, amounts waived and/or reimbursed to the Portfolio by Janus Capital are disclosed as “Excess Expense Reimbursement and Waivers” on the Statement of Operations.
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Janus Services LLC (“Janus Services”), a wholly-owned subsidiary of Janus Capital, is the Portfolio’s transfer agent. Janus Services receives an administrative services fee at an annual rate of 0.05% of the average daily net assets of the Portfolio for arranging for the provision by participating insurance companies and qualified plan service providers of administrative services, including recordkeeping, subaccounting, order processing, or other shareholder services provided on behalf of contract holders or plan participants investing in the Portfolio. Other shareholder services may include the provision of order confirmations, periodic account statements, forwarding prospectuses, shareholder reports, and other materials to existing investors, and answering inquiries regarding accounts. Janus Services expects to use this entire fee to compensate insurance companies and qualified plan service providers for providing these services to their customers who invest in the Portfolio. Any unused portion will be reimbursed to the applicable share class at least annually.
In addition, Janus Services provides or arranges for the provision of certain other internal administrative, recordkeeping, and shareholder relations services for the Portfolio. Janus Services is not compensated for these internal services related to the shares, except for out-of-pocket costs. These amounts are disclosed as “Other transfer agent fees and expenses” on the Statement of Operations.
Under a distribution and shareholder servicing plan (the “Plan”) adopted in accordance with Rule 12b-1 under the 1940 Act, the Service Shares may pay the Trust’s distributor, Janus Distributors LLC (“Janus Distributors”), a wholly-owned subsidiary of Janus Capital, a fee for the sale and distribution and/or shareholder servicing of the Service Shares at an annual rate of up to 0.25% of the average daily net assets of the Service Shares. Under the terms of the Plan, the Trust is authorized to make payments to Janus Distributors for remittance to insurance companies and qualified plan service providers as compensation for distribution and/or shareholder services performed by such entities. These amounts are disclosed as “12b-1 Distribution and shareholder servicing fees” on the Statement of Operations. Payments under the Plan are not tied exclusively to actual 12b-1 distribution and servicing fees, and the payments may exceed 12b-1 distribution and servicing fees actually incurred. If any of the Portfolio’s actual 12b-1 distribution and servicing fees incurred during a calendar year are less than the payments made during a calendar year, the Portfolio will be refunded the difference. Refunds, if any, are included in “12b-1 Distribution and shareholder servicing fees” in the Statement of Operations.
Janus Capital furnishes certain administration, compliance, and accounting services to the Portfolio, including providing office space for the Portfolio and providing personnel to serve as officers to the Portfolio. The Portfolio reimburses Janus Capital for certain of its costs in providing these services (to the extent Janus Capital seeks reimbursement and such costs are not otherwise waived). These costs include some or all of the salaries, fees, and expenses of Janus Capital employees and Portfolio officers, including the Portfolio’s Chief Compliance Officer and compliance staff, who provide specified administration and compliance services to the Portfolio. The Portfolio pays these costs based on out-of-pocket expenses incurred by Janus Capital, and these costs are separate and apart from advisory fees and other expenses paid in connection with the investment advisory services Janus Capital provides to the Portfolio. These amounts are disclosed as “Portfolio administration fees” on the Statement of Operations. Total compensation of $17,105 was paid to the Chief Compliance Officer and certain compliance staff by the Trust during the year ended December 31, 2017. The Portfolio's portion is reported as part of “Other expenses” on the Statement of Operations.
The Board of Trustees has adopted a deferred compensation plan (the “Deferred Plan”) for independent Trustees to elect to defer receipt of all or a portion of the annual compensation they are entitled to receive from the Portfolio. All deferred fees are credited to an account established in the name of the Trustees. The amounts credited to the account then increase or decrease, as the case may be, in accordance with the performance of one or more of the Janus Henderson funds that are selected by the Trustees. The account balance continues to fluctuate in accordance with the performance of the selected fund or funds until final payment of all amounts are credited to the account. The fluctuation of the account balance is recorded by the Portfolio as unrealized appreciation/(depreciation) and is included as of December 31, 2017 on the Statement of Assets and Liabilities in the asset, “Non-interested Trustees’ deferred compensation,” and liability, “Non-interested Trustees’ deferred compensation fees.” Additionally, the recorded unrealized appreciation/(depreciation) is included in “Unrealized net appreciation/(depreciation) of investments and non-interested Trustees’ deferred compensation” on the Statement of Assets and Liabilities. Deferred compensation expenses for the year ended December 31, 2017 are included in “Non-interested Trustees’ fees and expenses” on the Statement of Operations. Trustees are allowed to change their designation of mutual funds from time to time. Amounts will be deferred until distributed in accordance with the Deferred Plan. Deferred fees of $416,450 were paid by the Trust to the Trustees under the Deferred Plan during the year ended December 31, 2017.
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Pursuant to the provisions of the 1940 Act and related rules, the Portfolio may participate in an affiliated or nonaffiliated cash sweep program. In the cash sweep program, uninvested cash balances of the Portfolio may be used to purchase shares of affiliated or nonaffiliated money market funds or cash management pooled investment vehicles. The Portfolio is eligible to participate in the cash sweep program (the “Investing Funds”). As adviser, Janus Capital has an inherent conflict of interest because of its fiduciary duties to the affiliated money market funds or cash management pooled investment vehicles and the Investing Funds. Janus Cash Liquidity Fund LLC is an affiliated unregistered cash management pooled investment vehicle that invests primarily in highly-rated short-term fixed-income securities. Janus Cash Liquidity Fund LLC currently maintains a NAV of $1.00 per share and distributes income daily in a manner consistent with a registered product compliant with Rule 2a-7 under the 1940 Act. There are no restrictions on the Portfolio's ability to withdraw investments from Janus Cash Liquidity Fund LLC at will, and there are no unfunded capital commitments due from the Portfolio to Janus Cash Liquidity Fund LLC. The units of Janus Cash Liquidity Fund LLC are not charged any management fee, sales charge or service fee.
Any purchases and sales, realized gains/losses and recorded dividends from affiliated investments during the year ended December 31, 2017 can be found in a table located in the Schedule of Investments.
The Portfolio is permitted to purchase or sell securities (“cross-trade”) between itself and other funds or accounts managed by Janus Capital in accordance with Rule 17a-7 under the Investment Company Act of 1940 (“Rule 17a-7”), when the transaction is consistent with the investment objectives and policies of the Portfolio and in accordance with the Internal Cross Trade Procedures adopted by the Trust’s Board of Trustees. These procedures have been designed to ensure that any cross-trade of securities by the Portfolio from or to another fund or account that is or could be considered an affiliate of the Portfolio under certain limited circumstances by virtue of having a common investment adviser, common Officer, or common Trustee complies with Rule 17a-7. Under these procedures, each cross-trade is effected at the current market price to save costs where allowed. During the year ended December 31, 2017, the Portfolio engaged in cross trades amounting to $48,918,514 in purchases and $39,832,769 in sales, resulting in a net realized loss of $271,850. The net realized loss is included within the “Net Realized Gain/(Loss) on Investments” section of the Portfolio’s Statement of Operations.
4. Federal Income Tax
The tax components of capital shown in the table below represent: (1) distribution requirements the Portfolio must satisfy under the income tax regulations; (2) losses or deductions the Portfolio may be able to offset against income and gains realized in future years; and (3) unrealized appreciation or depreciation of investments for federal income tax purposes.
Other book to tax differences primarily consist of deferred compensation. The Portfolio has elected to treat gains and losses on forward foreign currency contracts as capital gains and losses, if applicable. Other foreign currency gains and losses on debt instruments are treated as ordinary income for federal income tax purposes pursuant to Section 988 of the Internal Revenue Code.
Loss Deferrals | Other Book | Net Tax | |||||
Undistributed | Undistributed | Accumulated | Late-Year | Post-October | to Tax | Appreciation/ | |
$ 3,363,040 | $ - | $ (8,538,547) | $ - | $ - | $ (13,297) | $ 3,218,288 |
Accumulated capital losses noted below represent net capital loss carryovers, as of December 31, 2017, that may be available to offset future realized capital gains and thereby reduce future taxable gains distributions. The following table shows these capital loss carryovers.
Capital Loss Carryover Schedule | |||||
For the year ended December 31, 2017 | |||||
No Expiration | |||||
| Short-Term | Long-Term | Accumulated | ||
| $(8,538,547) | $ - | $ (8,538,547) |
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The aggregate cost of investments and the composition of unrealized appreciation and depreciation of investment securities for federal income tax purposes as of December 31, 2017 are noted below. The primary differences between book and tax appreciation or depreciation of investments are wash sale loss deferrals and investments in partnerships.
Federal Tax Cost | Unrealized | Unrealized | Net Tax Appreciation/ |
$ 730,839,620 | $ 7,013,101 | $ (3,794,813) | $ 3,218,288 |
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, net investment losses, and capital loss carryovers. Certain permanent differences such as tax returns of capital and net investment losses noted below have been reclassified to capital.
For the year ended December 31, 2017 | ||||
Distributions | ||||
From Ordinary Income | From Long-Term Capital Gains | Tax Return of Capital | Net Investment Loss | |
$ 19,337,528 | $ - | $ - | $ - |
For the year ended December 31, 2016 | ||||
Distributions | ||||
From Ordinary Income | From Long-Term Capital Gains | Tax Return of Capital | Net Investment Loss | |
$ 19,372,929 | $ - | $ - | $ - |
Permanent book to tax basis differences may result in reclassifications between the components of net assets. These differences have no impact on the results of operations or net assets. The following reclassifications have been made to the Portfolio:
Increase/(Decrease) to Capital | Increase/(Decrease) to Undistributed | Increase/(Decrease) to Undistributed |
$ - | $ 2,626,018 | $ (2,626,018) |
5. Capital Share Transactions
Year ended December 31, 2017 | Year ended December 31, 2016 | |||||
Shares | Amount | Shares | Amount | |||
Institutional Shares: | ||||||
Shares sold | 3,453,758 | $ 40,639,685 | 4,343,672 | $ 51,810,237 | ||
Reinvested dividends and distributions | 785,137 | 9,202,522 | 830,664 | 9,771,475 | ||
Shares repurchased | (8,082,750) | (95,330,955) | (6,802,949) | (81,122,379) | ||
Net Increase/(Decrease) | (3,843,855) | $(45,488,748) |
| (1,628,613) | $ (19,540,667) | |
Service Shares: | ||||||
Shares sold | 6,337,426 | $ 81,111,460 | 14,435,323 | $186,652,808 | ||
Reinvested dividends and distributions | 794,338 | 10,135,006 | 751,582 | 9,601,454 | ||
Shares repurchased | (7,219,792) | (92,314,915) | (7,428,588) | (95,763,690) | ||
Net Increase/(Decrease) | (88,028) | $ (1,068,449) |
| 7,758,317 | $100,490,572 |
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6. Purchases and Sales of Investment Securities
For the year ended December 31, 2017, the aggregate cost of purchases and proceeds from sales of investment securities (excluding any short-term securities, short-term options contracts, TBAs, and in-kind transactions, as applicable) was as follows:
Purchases of | Proceeds from Sales | Purchases of Long- | Proceeds from Sales |
$455,481,358 | $ 497,100,154 | $ 450,636,538 | $ 438,867,629 |
7. Recent Accounting Pronouncements
The Securities and Exchange Commission ("SEC") adopted new rules as well as amendments to its rules to modernize the reporting and disclosure of information by registered investment companies. In addition, the SEC adopted amendments to Regulation S-X, which require standardized, enhanced disclosure about derivatives in investment company financial statements, as well as other amendments. The compliance date of the amendments to Regulation S-X was August 1, 2017. This report incorporates the amendments to Regulation S-X.
The FASB issued Accounting Standards Update No. 2017-08, Receivables – Nonrefundable Fees and Other Costs (Subtopic 310-20), Premium Amortization on Purchased Callable Debt Securities ("ASU 2017-08") to amend the amortization period for certain purchased callable debt securities held at a premium. The guidance requires certain premiums on callable debt securities to be amortized to the earliest call date. The amortization period for callable debt securities purchased at a discount will not be impacted. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted, including adoption in an interim period. Management is currently evaluating the impacts of ASU 2017-08 on the financial statements.
8. Merger Related Matters
On October 3, 2016, Janus Capital Group Inc. (“JCGI”), the direct parent of Janus Capital, and Henderson Group plc (“Henderson”) announced that they had entered into an Agreement and Plan of Merger (“Merger Agreement”) relating to the strategic combination of Henderson and JCGI (the “Merger”). Pursuant to the Merger Agreement, a newly formed, direct wholly-owned subsidiary of Henderson merged with and into JCGI, with JCGI as the surviving corporation and a direct wholly-owned subsidiary of Henderson. The Merger was effective May 30, 2017.
The consummation of the Merger may have been deemed to be an “assignment” (as defined in the 1940 Act) of the advisory agreement between the Portfolio and Janus Capital in effect on the date of the Merger. As a result, the consummation of the Merger may have caused the investment advisory agreement to terminate automatically in accordance with its terms.
On December 8, 2016, the Trustees approved, subject to shareholder approval, a new investment advisory agreement between the Portfolio and Janus Capital in order to permit Janus Capital to continue to provide advisory services to the Portfolio following the closing of the Merger (the “Post-Merger Advisory Agreement”). At the same meeting, the Trustees approved submitting the Post-Merger Advisory Agreement, among other proposals, to Portfolio shareholders for approval.
Special Meeting(s) of Shareholders were held on April 6, 2017, and adjourned and reconvened on April 18, 2017.
Approval of Advisory Agreements
On April 18, 2017, shareholders of the Portfolio approved the Post-Merger Advisory Agreement with Janus Capital. The Post- Merger Advisory Agreement took effect upon the consummation of the Merger.
9. Subsequent Event
Management has evaluated whether any events or transactions occurred subsequent to December 31, 2017 and through the date of issuance of the Portfolio’s financial statements and determined that there were no material events or transactions that would require recognition or disclosure in the Portfolio’s financial statements.
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Report of Independent Registered Public Accounting Firm
To the Board of Trustees of Janus Aspen Series and Shareholders of Janus Henderson VIT Flexible Bond Portfolio:
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Janus Henderson VIT Flexible Bond Portfolio (one of the portfolios constituting Janus Aspen Series, referred to hereafter as the “Portfolio”) as of December 31, 2017, the related statement of operations for the year ended December 31, 2017, the statements of changes in net assets for each of the two years in the period ended December 31, 2017, including the related notes, and the financial highlights for each of the five years in the period ended December 31, 2017 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Portfolio as of December 31, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period ended December 31, 2017 and the financial highlights for each of the five years in the period ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Portfolio’s management. Our responsibility is to express an opinion on the Portfolio��s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Portfolio in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our procedures included confirmation of securities owned as of December 31, 2017 by correspondence with the custodian, transfer agent and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
Denver, Colorado
February 16, 2018
We have served as the auditor of one or more investment companies in Janus Henderson Funds since 1990.
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Proxy Voting Policies and Voting Record
A description of the policies and procedures that the Portfolio uses to determine how to vote proxies relating to its portfolio securities is available without charge: (i) upon request, by calling 1-800-525-1093; (ii) on the Portfolio’s website at janushenderson.com/proxyvoting; and (iii) on the SEC’s website at http://www.sec.gov. Additionally, information regarding the Portfolio’s proxy voting record for the most recent twelve-month period ended June 30 is also available, free of charge, through janushenderson.com/proxyvoting and from the SEC’s website at http://www.sec.gov.
Full Holdings
The Portfolio is required to disclose its complete holdings in the quarterly holdings report on Form N-Q within 60 days of the end of the first and third fiscal quarters, and in the annual report and semiannual report to Portfolio shareholders. These reports (i) are 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) are available without charge, upon request, by calling a Janus Henderson representative at 1-877-335-2687 (toll free) . Portfolio holdings consisting of at least the names of the holdings are generally available on a monthly basis with a 30-day lag. Holdings are generally posted approximately two business days thereafter under Full Holdings for the Portfolio at janushenderson.com/vit.
APPROVAL OF ADVISORY AGREEMENTS DURING THE PERIOD
December 2017
The Trustees of Janus Investment Fund and Janus Aspen Series, each of whom serves as an “independent” Trustee (the “Trustees”), oversee the management of each Fund of Janus Investment Fund and each Portfolio of Janus Aspen Series (each, a “Fund” and collectively, the “Funds”), and as required by law, determine annually whether to continue the investment advisory agreement for each Fund and the subadvisory agreements for the 14 Funds that utilize subadvisers.
In connection with their most recent consideration of those agreements for each Fund, the Trustees received and reviewed information provided by Janus Capital and the respective subadvisers in response to requests of the Trustees and their independent legal counsel. They also received and reviewed information and analysis provided by, and in response to requests of, their independent fee consultant. Throughout their consideration of the agreements, the Trustees were advised by their independent legal counsel. The Trustees met with management to consider the agreements, and also met separately in executive session with their independent legal counsel and their independent fee consultant.
Additionally, in connection with their consideration of whether to continue the investment advisory agreement and subadvisory agreement for each Fund, as applicable, the Trustees also received and reviewed information in connection with the transaction to combine the respective businesses of Henderson Group plc and Janus Capital Group, Inc., the parent company of Janus Capital (the “Transaction”), announced in October 2016, which closed in the second quarter of 2017. In this regard, the Trustees reviewed information regarding the impact of the Transaction on the services to be provided by Janus Capital and each subadviser, as applicable, to the Funds under such agreements prior to the close of the Transaction as well as the services provided after the Transaction closed.
At a meeting held on December 7, 2017, based on the Trustees’ evaluation of the information provided by Janus Capital, the subadvisers, and the independent fee consultant, as well as other information, the Trustees determined that the overall arrangements between each Fund and Janus Capital and each subadviser, as applicable, were fair and reasonable in light of the nature, extent and quality of the services provided by Janus Capital, its affiliates and the subadvisers, the fees charged for those services, and other matters that the Trustees considered relevant in the exercise of their business judgment. At that meeting, the Trustees unanimously approved the continuation of the investment advisory agreement for each Fund, and the subadvisory agreement for each subadvised Fund, for the period from February 1, 2018 through February 1, 2019, subject to earlier termination as provided for in each agreement.
In considering the continuation of those agreements, the Trustees reviewed and analyzed various factors that they determined were relevant, including the factors described below, none of which by itself was considered dispositive. However, the material factors and conclusions that formed the basis for the Trustees’ determination to approve the continuation of the agreements are discussed separately below. Also included is a summary of the independent fee consultant’s conclusions and opinions that arose during, and were included as part of, the Trustees’ consideration of the
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Additional Information (unaudited)
agreements. “Management fees,” as used herein, reflect actual annual advisory fees and any administration fees (excluding out of pocket costs), net of any waivers.
Nature, Extent and Quality of Services
The Trustees reviewed the nature, extent and quality of the services provided by Janus Capital and the subadvisers to the Funds, taking into account the investment objective, strategies and policies of each Fund, and the knowledge the Trustees gained from their regular meetings with management on at least a quarterly basis and their ongoing review of information related to the Funds. In addition, the Trustees reviewed the resources and key personnel of Janus Capital and each subadviser, particularly noting those employees who provide investment and risk management services to the Funds. The Trustees also considered other services provided to the Funds by Janus Capital or the subadvisers, such as managing the execution of portfolio transactions and the selection of broker-dealers for those transactions. The Trustees considered Janus Capital’s role as administrator to the Funds, noting that Janus Capital does not receive a fee for its services but is reimbursed for its out-of-pocket costs. The Trustees considered the role of Janus Capital in monitoring adherence to the Funds’ investment restrictions, providing support services for the Trustees and Trustee committees, and overseeing communications with shareholders and the activities of other service providers, including monitoring compliance with various policies and procedures of the Funds and with applicable securities laws and regulations.
In this regard, the independent fee consultant noted that Janus Capital provides a number of different services for the Funds and Fund shareholders, ranging from investment management services to various other servicing functions, and that, in its opinion, Janus Capital is a capable provider of those services. The independent fee consultant also provided its belief that Janus Capital has developed a number of institutional competitive advantages that should enable it to provide superior investment and service performance over the long term.
The Trustees concluded that the nature, extent and quality of the services provided by Janus Capital or the subadviser to each Fund were appropriate and consistent with the terms of the respective advisory and subadvisory agreements, and that, taking into account steps taken to address those Funds whose performance lagged that of their peers for certain periods, the Funds were likely to benefit from the continued provision of those services. They also concluded that Janus Capital and each subadviser had sufficient personnel, with the appropriate education and experience, to serve the Funds effectively and had demonstrated its ability to attract well-qualified personnel.
Performance of the Funds
The Trustees considered the performance results of each Fund over various time periods. They noted that they considered Fund performance data throughout the year, including periodic meetings with each Fund’s portfolio manager(s), and also reviewed information comparing each Fund’s performance with the performance of comparable funds and peer groups identified by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent data provider, and with the Fund’s benchmark index. In this regard, the independent fee consultant found that the overall Funds’ performance has been strong: for the 36 months ended September 30, 2017, approximately 70% of the Funds were in the top two quartiles of performance, as reported by Morningstar, and for the 12 months ended September 30, 2017, approximately 46% of the Funds were in the top two quartiles of performance, as reported by Morningstar.
The Trustees considered the performance of each Fund, noting that performance may vary by share class, and noted the following:
Alternative Funds
· For Janus Henderson Diversified Alternatives Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson International Long/Short Equity Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and the Fund’s limited performance history.
Asset Allocation Funds
· For Janus Henderson Global Allocation Fund – Conservative, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge
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quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Global Allocation Fund – Growth, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Global Allocation Fund – Moderate, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
Fixed-Income Funds
· For Janus Henderson Flexible Bond Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Bond Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Unconstrained Bond Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson High-Yield Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Multi-Sector Income Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Real Return Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Short-Term Bond Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Strategic Income Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
Global and International Equity Funds
· For Janus Henderson Asia Equity Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017.
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· For Janus Henderson Emerging Markets Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson European Focus Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Equity Income Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Global Life Sciences Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Global Real Estate Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Global Research Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Global Select Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Global Technology Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Value Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital and Perkins had taken or were taking to improve performance.
· For Janus Henderson International Opportunities Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson International Small Cap Fund, the Trustees noted that, due to limited performance for the Fund, performance history was not a material factor.
· For Janus Henderson International Value Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital and Perkins had taken or were taking to improve performance.
· For Janus Henderson Overseas Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that
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the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
Money Market Funds
· For Janus Henderson Government Money Market Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance.
· For Janus Henderson Money Market Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance.
Multi-Asset Funds
· For Janus Henderson Adaptive Global Allocation Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson All Asset Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Dividend & Income Builder Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Value Plus Income Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
Multi-Asset U.S. Equity Funds
· For Janus Henderson Balanced Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Contrarian Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Enterprise Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Forty Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Growth and Income Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Research Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
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· For Janus Henderson Triton Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson U.S. Growth Opportunities Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and the Fund’s limited performance history.
· For Janus Henderson Venture Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017.
Quantitative Equity Funds
· For Janus Henderson Emerging Markets Managed Volatility Fund, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital and Intech had taken or were taking to improve performance, and the Fund’s limited performance history.
· For Janus Henderson Global Income Managed Volatility Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson International Managed Volatility Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital and Intech had taken or were taking to improve performance.
· For Janus Henderson U.S. Managed Volatility Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017.
U.S. Equity Funds
· For Janus Henderson Large Cap Value Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital and Perkins had taken or were taking to improve performance.
· For Janus Henderson Mid Cap Value Fund, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Select Value Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Small Cap Value Fund, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
Janus Aspen Series
· For Janus Henderson Balanced Portfolio, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Enterprise Portfolio, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
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· For Janus Henderson Flexible Bond Portfolio, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Forty Portfolio, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Global Allocation Portfolio – Moderate, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Global Research Portfolio, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Technology Portfolio, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson Global Unconstrained Bond Portfolio, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and the Fund’s limited performance history.
· For Janus Henderson Mid Cap Value Portfolio, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the second Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital and Perkins had taken or were taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Overseas Portfolio, the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2017 and the first Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance, while also noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Research Portfolio, the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2017 and the third Broadridge quartile for the 12 months ended May 31, 2017.
· For Janus Henderson U.S. Low Volatility Portfolio, the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017.
In consideration of each Fund’s performance, the Trustees concluded that, taking into account the factors relevant to performance, as well as other considerations, including steps taken to improve performance, the Fund’s performance warranted continuation of the Fund’s investment advisory and subadvisory agreement(s).
Costs of Services Provided
The Trustees examined information regarding the fees and expenses of each Fund in comparison to similar information for other comparable funds as provided by Broadridge, an independent data provider. They also reviewed an analysis of
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that information provided by their independent fee consultant and noted that the rate of management (investment advisory and any administration, but excluding out-of-pocket costs) fees for many of the Funds, after applicable waivers, was below the average management fee rate of the respective peer group of funds selected by an independent data provider. The Trustees also examined information regarding the subadvisory fees charged for subadvisory services, as applicable, noting that all such fees were paid by Janus Capital out of its management fees collected from such Fund.
The independent fee consultant provided its belief that the management fees charged by Janus Capital to each of the Funds under the current investment advisory and administration agreements are reasonable in relation to the services provided by Janus Capital. The independent fee consultant found: (1) the total expenses and management fees of the Funds to be reasonable relative to other mutual funds; (2) total expenses, on average, were 10% below the average total expenses of their respective Broadridge Expense Group peers and 18% below the average total expenses for their Broadridge Expense Universes; (3) management fees for the Funds, on average, were 8% below the average management fees for their Expense Groups and 9% below the average for their Expense Universes; and (4) Fund expenses at the functional level for each asset and share class category were reasonable. The Trustees also considered the total expenses for each share class of each Fund compared to the average total expenses for its Broadridge Expense Group peers and to average total expenses for its Broadridge Expense Universe.
The independent fee consultant concluded that, based on its strategic review of expenses at the complex, category and individual fund level, Fund expenses were found to be reasonable relative to both Expense Group and Expense Universe benchmarks. Further, for certain Funds, the independent fee consultant also performed a systematic “focus list” analysis of expenses in the context of the performance or service delivered to each set of investors in each share class in each selected Fund. Based on this analysis, the independent fee consultant found that the combination of service quality/performance and expenses on these individual Funds and share classes were reasonable in light of performance trends, performance histories, and existence of performance fees, breakpoints, and expense waivers on such Funds.
The Trustees considered the methodology used by Janus Capital and each subadviser in determining compensation payable to portfolio managers, the competitive environment for investment management talent, and the competitive market for mutual funds in different distribution channels.
The Trustees also reviewed management fees charged by Janus Capital and each subadviser to comparable separate account clients and to comparable non-affiliated funds subadvised by Janus Capital or by a subadviser (for which Janus Capital or the subadviser provides only or primarily portfolio management services). Although in most instances subadvisory and separate account fee rates for various investment strategies were lower than management fee rates for Funds having a similar strategy, the Trustees considered that Janus Capital noted that, under the terms of the management agreements with the Funds, Janus Capital performs significant additional services for the Funds that it does not provide to those other clients, including administration services, oversight of the Funds’ other service providers, trustee support, regulatory compliance and numerous other services, and that, in serving the Funds, Janus Capital assumes many legal risks and other costs that it does not assume in servicing its other clients. Moreover, they noted that the independent fee consultant found that: (1) the management fees Janus Capital charges to the Funds are reasonable in relation to the management fees Janus Capital charges to its institutional clients and to the fees Janus Capital charges to funds subadvised by Janus Capital; (2) these institutional and subadvised accounts have different service and infrastructure needs; (3) Janus mutual fund investors enjoy reasonable fees relative to the fees charged to Janus institutional and subadvised fund investors; (4) in three of seven product categories, the Funds receive proportionally better pricing than the industry in relation to Janus institutional clients; and (5) in seven of eight strategies, Janus Capital has lower management fees than funds subadvised by Janus Capital’s portfolio managers.
The Trustees considered the fees for each Fund for its fiscal year ended in 2016, and noted the following with regard to each Fund’s total expenses, net of applicable fee waivers (the Fund’s “total expenses”):
Alternative Funds
· For Janus Henderson Diversified Alternatives Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson International Long/Short Equity Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were
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reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
Asset Allocation Funds
· For Janus Henderson Global Allocation Fund – Conservative, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Allocation Fund – Growth, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Allocation Fund – Moderate, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
Fixed-Income Funds
· For Janus Henderson Flexible Bond Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Bond Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Unconstrained Bond Fund, the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2017 and the bottom Broadridge quartile for the 12 months ended May 31, 2017. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson High-Yield Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Multi-Sector Income Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Real Return Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Short-Term Bond Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to waive 11 basis points of management fees effective February 1, 2018 and also has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Strategic Income Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
Global and International Equity Funds
· For Janus Henderson Asia Equity Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
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· For Janus Henderson Emerging Markets Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
· For Janus Henderson European Focus Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
· For Janus Henderson Global Equity Income Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Life Sciences Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Real Estate Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Research Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Select Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Technology Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Value Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson International Opportunities Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
· For Janus Henderson International Small Cap Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
· For Janus Henderson International Value Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Overseas Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
Money Market Funds
· For Janus Henderson Government Money Market Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes. In addition, the Trustees considered that Janus Capital voluntarily waives one-half of its advisory fee and other expenses in order to maintain a positive yield.
· For Janus Henderson Money Market Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes. In addition, the Trustees considered that Janus Capital voluntarily waives one-half of its advisory fee and other expenses in order to maintain a positive yield.
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Multi-Asset Funds
· For Janus Henderson Adaptive Global Allocation Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson All Asset Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s total expenses effective June 5, 2017.
· For Janus Henderson Dividend & Income Builder Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
· For Janus Henderson Value Plus Income Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
Multi-Asset U.S. Equity Funds
· For Janus Henderson Balanced Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Contrarian Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Enterprise Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Forty Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Growth and Income Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Research Fund, the Trustees noted that, although the Fund’s total expenses were equal to or exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective February 1, 2017.
· For Janus Henderson Triton Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson U.S. Growth Opportunities Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses effective June 5, 2017.
· For Janus Henderson Venture Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
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Quantitative Equity Funds
· For Janus Henderson Emerging Markets Managed Volatility Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Income Managed Volatility Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson International Managed Volatility Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson U.S. Managed Volatility Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
U.S. Equity Funds
· For Janus Henderson Large Cap Value Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Mid Cap Value Fund, the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Select Value Fund, the Trustees noted that the Fund’s total expenses were below the peer group averages for all share classes.
· For Janus Henderson Small Cap Value Fund, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
Janus Aspen Series
· For Janus Henderson Balanced Portfolio, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable.
· For Janus Henderson Enterprise Portfolio, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable.
· For Janus Henderson Flexible Bond Portfolio, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Forty Portfolio, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable.
· For Janus Henderson Global Allocation Portfolio - Moderate, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Research Portfolio, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Technology Portfolio, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Unconstrained Bond Portfolio, the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
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· For Janus Henderson Mid Cap Value Portfolio, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Overseas Portfolio, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Research Portfolio, the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson U.S. Low Volatility Portfolio, the Trustees noted that the Fund’s total expenses were below the peer group average for its sole share class.
The Trustees reviewed information on the overall profitability to Janus Capital and its affiliates of their relationship with the Funds, and considered profitability data of other fund managers. The Trustees also considered the financial information, estimated profitability and corporate structure of Janus Capital’s parent company before and after the Transaction. The Trustees recognized that profitability comparisons among fund managers are difficult because of the variation in the type of comparative information that is publicly available, and the profitability of any fund manager is affected by numerous factors, including the organizational structure of the particular fund manager, the types of funds and other accounts it manages, possible other lines of business, the methodology for allocating expenses, and the fund manager’s capital structure and cost of capital. The Trustees also noted that the Trustees’ independent fee consultant reviewed the overall profitability of Janus Capital’s parent company prior to the Transaction, and the independent fee consultant found that, while assessing the reasonableness of Fund expenses in light of such profits was dependent on comparisons with other publicly-traded mutual fund advisers, and that these comparisons were limited in accuracy by differences in complex size, business mix, institutional account orientation and other factors, after accepting these limitations, the level of profit earned by Janus Capital’s parent company was reasonable. In this regard, the independent consultant concluded that the profitability of Janus Capital’s parent company did not show excess nor did it show any insufficiency that could limit the ability to invest the resources needed to drive strong future investment performance on behalf of the Funds.
Additionally, the Trustees considered the estimated profitability to Janus Capital from the investment management services it provided to each Fund. The Trustees also considered such estimated profitability taking into account the impact of the Transaction on Janus Capital’s expense structure on a pro forma basis. In their review, the Trustees considered whether Janus Capital and each subadviser receive adequate incentives and resources to manage the Funds effectively. In reviewing profitability, the Trustees noted that the estimated profitability for an individual Fund is necessarily a product of the allocation methodology utilized by Janus Capital to allocate its expenses as part of the estimated profitability calculation. In this regard, the Trustees noted that the independent fee consultant concluded that (1) the expense allocation methodology utilized by Janus Capital was reasonable and (2) the estimated profitability to Janus Capital from the investment management services it provided to each Fund was reasonable, including after taking into account the impact of the Transaction on Janus Capital’s expense structure on a pro forma basis. The Trustees also considered that the estimated profitability for an individual Fund was influenced by a number of factors, including not only the allocation methodology selected, but also the presence of fee waivers and expense caps, and whether the Fund’s investment management agreement contained breakpoints or a performance fee component. The Trustees determined, after taking into account these factors, among others, that Janus Capital’s estimated profitability with respect to each Fund was not unreasonable in relation to the services provided, and that the variation in the range of such estimated profitability among the Funds was not a material factor in the Board’s approval of the reasonableness of any Fund’s investment management fees.
The Trustees concluded that the management fees payable by each Fund to Janus Capital and its affiliates, as well as the fees paid by Janus Capital to the subadvisers of subadvised Funds, were reasonable in relation to the nature, extent, and quality of the services provided, taking into account the fees charged by other advisers for managing comparable mutual funds with similar strategies, the fees Janus Capital and the subadvisers charge to other clients, and, as applicable, the impact of fund performance on management fees payable by the Funds. The Trustees also concluded that each Fund’s total expenses were reasonable, taking into account the size of the Fund, the quality of services provided by Janus Capital and any subadviser, the investment performance of the Fund, and any expense limitations agreed to or provided by Janus Capital.
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Economies of Scale
The Trustees considered information about the potential for Janus Capital to realize economies of scale as the assets of the Funds increase. They noted their independent fee consultant’s analysis of economies of scale in prior years. They also noted that, although many Funds pay advisory fees at a base fixed rate as a percentage of net assets, without any breakpoints or performance fees, their independent fee consultant concluded that 86% of these Funds’ share classes have contractual management fees (gross of waivers) below their Broadridge expense group averages. They also noted that for those Funds whose expenses are being reduced by the contractual expense limitations of Janus Capital, Janus Capital is subsidizing certain of these Funds because they have not reached adequate scale. Moreover, as the assets of some of the Funds have declined in the past few years, certain Funds have benefited from having advisory fee rates that have remained constant rather than increasing as assets declined. In addition, performance fee structures have been implemented for various Funds that have caused the effective rate of advisory fees payable by such a Fund to vary depending on the investment performance of the Fund relative to its benchmark index over the measurement period; and a few Funds have fee schedules with breakpoints and reduced fee rates above certain asset levels. The Trustees also noted that the Funds share directly in economies of scale through the lower charges of third-party service providers that are based in part on the combined scale of all of the Funds. Based on all of the information they reviewed, including past research and analysis conducted by the Trustees’ independent fee consultant, the Trustees concluded that the current fee structure of each Fund was reasonable and that the current rates of fees do reflect a sharing between Janus Capital and the Fund of any economies of scale that may be present at the current asset level of the Fund.
The independent fee consultant concluded that, given the limitations of various analytical approaches to economies of scale it had considered in prior years, and their conflicting results, it is difficult to analytically confirm or deny the existence of economies of scale in the Janus complex. The independent consultant concluded that (1) to the extent there were economies of scale at Janus Capital, Janus Capital’s general strategy of setting fixed management fees below peers appeared to share any such economies with investors even on smaller Funds which have not yet achieved those economies and (2) by setting lower fixed fees from the start on these Funds, Janus Capital appeared to be investing to increase the likelihood that these Funds will grow to a level to achieve any scale economies that may exist. Further, the independent fee consultant provided its belief that Fund investors are well-served by the fee levels and performance fee structures in place on the Funds in light of any economies of scale that may be present at Janus Capital.
Other Benefits to Janus Capital
The Trustees also considered benefits that accrue to Janus Capital and its affiliates and subadvisers to the Funds from their relationships with the Funds. They recognized that two affiliates of Janus Capital separately serve the Funds as transfer agent and distributor, respectively, and the transfer agent receives compensation directly from the non-money market funds for services provided. The Trustees also considered Janus Capital’s past and proposed use of commissions paid by the Funds on portfolio brokerage transactions to obtain proprietary and third-party research products and services benefiting the Fund and/or other clients of Janus Capital and/or Janus Capital, and/or a subadviser to a Fund. The Trustees concluded that Janus Capital’s and the subadvisers’ use of these types of client commission arrangements to obtain proprietary and third-party research products and services was consistent with regulatory requirements and guidelines and was likely to benefit each Fund. The Trustees also concluded that, other than the services provided by Janus Capital and its affiliates and subadvisers pursuant to the agreements and the fees to be paid by each Fund therefor, the Funds and Janus Capital and the subadvisers may potentially benefit from their relationship with each other in other ways. They concluded that Janus Capital and/or the subadvisers benefits from the receipt of research products and services acquired through commissions paid on portfolio transactions of the Funds and that the Funds benefit from Janus Capital’s and/or the subadvisers’ receipt of those products and services as well as research products and services acquired through commissions paid by other clients of Janus Capital and/or other clients of the subadvisers. They further concluded that the success of any Fund could attract other business to Janus Capital, the subadvisers or other Janus funds, and that the success of Janus Capital and the subadvisers could enhance Janus Capital’s and the subadvisers’ ability to serve the Funds.
January 2017
The Trustees of Janus Investment Fund and Janus Aspen Series, each of whom serves as an “independent” Trustee (the “Trustees”), oversee the management of each Fund of Janus Investment Fund and each Portfolio of Janus Aspen Series (each, a “Fund” and collectively, the “Funds”), and as required by law, determine annually whether to continue the
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investment advisory agreement for each Fund and the subadvisory agreements for the 16 Funds that utilize subadvisers.
In connection with their most recent consideration of those agreements for each Fund, the Trustees received and reviewed information provided by Janus Capital and the respective subadvisers in response to requests of the Trustees and their independent legal counsel. They also received and reviewed information and analysis provided by, and in response to requests of, their independent fee consultant. Throughout their consideration of the agreements, the Trustees were advised by their independent legal counsel. The Trustees met with management to consider the agreements, and also met separately in executive session with their independent legal counsel and their independent fee consultant.
Additionally, in connection with their consideration of whether to continue the investment advisory agreement and subadvisory agreement for each Fund, as applicable, the Trustees also received and reviewed information in connection with the proposed transaction to combine the respective businesses of Henderson Group plc and Janus Capital Group, Inc., the parent company of Janus Capital (the “Transaction”), announced in October 2016, which Janus Capital advised the Trustees was expected to close in the second quarter of 2017. In this regard, the Trustees reviewed information regarding the impact of the Transaction on the services to be provided by Janus Capital and each subadviser, as applicable, to the Funds under such agreements both prior to the close of the Transaction, and afterwards, if the Transaction were not to close. If the Transaction closes, all such agreements would be replaced by new investment advisory agreements and subadvisory agreements, as applicable, for each Fund, assuming requisite Fund shareholder approvals have been obtained.
At a meeting held on January 26, 2017, based on the Trustees’ evaluation of the information provided by Janus Capital, the subadvisers, and the independent fee consultant, as well as other information, the Trustees determined that the overall arrangements between each Fund and Janus Capital and each subadviser, as applicable, were fair and reasonable in light of the nature, extent and quality of the services provided by Janus Capital, its affiliates and the subadvisers, the fees charged for those services, and other matters that the Trustees considered relevant in the exercise of their business judgment. At that meeting, the Trustees unanimously approved the continuation of the investment advisory agreement for each Fund, and the subadvisory agreement for each subadvised Fund, for the period from February 1, 2017 through February 1, 2018, subject to earlier termination as provided for in each agreement.
In considering the continuation of those agreements, the Trustees reviewed and analyzed various factors that they determined were relevant, including the factors described below, none of which by itself was considered dispositive. However, the material factors and conclusions that formed the basis for the Trustees’ determination to approve the continuation of the agreements are discussed separately below. Also included is a summary of the independent fee consultant’s conclusions and opinions that arose during, and were included as part of, the Trustees’ consideration of the agreements. “Management fees,” as used herein, reflect actual annual advisory fees and any administration fees (excluding out of pocket costs), net of any waivers.
Nature, Extent and Quality of Services
The Trustees reviewed the nature, extent and quality of the services provided by Janus Capital and the subadvisers to the Funds, taking into account the investment objective, strategies and policies of each Fund, and the knowledge the Trustees gained from their regular meetings with management on at least a quarterly basis and their ongoing review of information related to the Funds. In addition, the Trustees reviewed the resources and key personnel of Janus Capital and each subadviser, particularly noting those employees who provide investment and risk management services to the Funds. The Trustees also considered other services provided to the Funds by Janus Capital or the subadvisers, such as managing the execution of portfolio transactions and the selection of broker-dealers for those transactions. The Trustees considered Janus Capital’s role as administrator to the Funds, noting that Janus Capital does not receive a fee for its services but is reimbursed for its out-of-pocket costs. The Trustees considered the role of Janus Capital in monitoring adherence to the Funds’ investment restrictions, providing support services for the Trustees and Trustee committees, and overseeing communications with shareholders and the activities of other service providers, including monitoring compliance with various policies and procedures of the Funds and with applicable securities laws and regulations.
In this regard, the independent fee consultant noted that Janus Capital provides a number of different services for the Funds and Fund shareholders, ranging from investment management services to various other servicing functions, and that, in its opinion, Janus Capital is a capable provider of those services. The independent fee consultant also provided
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its belief that Janus Capital has developed a number of institutional competitive advantages that should enable it to provide superior investment and service performance over the long term.
The Trustees concluded that the nature, extent and quality of the services provided by Janus Capital or the subadviser to each Fund were appropriate and consistent with the terms of the respective advisory and subadvisory agreements, and that, taking into account steps taken to address those Funds whose performance lagged that of their peers for certain periods, the Funds were likely to benefit from the continued provision of those services. They also concluded that Janus Capital and each subadviser had sufficient personnel, with the appropriate education and experience, to serve the Funds effectively and had demonstrated its ability to attract well-qualified personnel.
Performance of the Funds
The Trustees considered the performance results of each Fund over various time periods. They noted that they considered Fund performance data throughout the year, including periodic meetings with each Fund’s portfolio manager(s), and also reviewed information comparing each Fund’s performance with the performance of comparable funds and peer groups identified by Broadridge Financial Solutions, Inc. (“Broadridge”), an independent data provider, and with the Fund’s benchmark index. In this regard, the independent fee consultant found that the overall Funds’ performance has been strong: for the 36 months ended September 30, 2016, approximately 76% of the Funds were in the top two Broadridge quartiles of performance, and for the 12 months ended September 30, 2016, approximately 47% of the Funds were in the top two Broadridge quartiles of performance.
The Trustees considered the performance of each Fund, noting that performance may vary by share class, and noted the following:
Fixed-Income Funds and Money Market Funds
· For Janus Henderson Flexible Bond Fund (formerly, Janus Flexible Bond Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Bond Fund (formerly, Janus Global Bond Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Unconstrained Bond Fund (formerly, Janus Global Unconstrained Bond Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson High-Yield Fund (formerly, Janus High-Yield Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Multi-Sector Income Fund (formerly, Janus Multi-Sector Income Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Real Return Fund (formerly, Janus Real Return Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Short-Term Bond Fund (formerly, Janus Short-Term Bond Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Government Money Market Fund (formerly, Janus Government Money Market Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance.
· For Janus Henderson Money Market Fund (formerly, Janus Money Market Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the
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Additional Information (unaudited)
bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance.
Asset Allocation Funds
· For Janus Henderson Global Allocation Fund – Conservative (formerly, Janus Global Allocation Fund – Conservative), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Allocation Fund – Growth (formerly, Janus Global Allocation Fund – Growth), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Allocation Fund – Moderate (formerly, Janus Global Allocation Fund – Moderate), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
Alternative Fund
· For Janus Henderson Diversified Alternatives Fund (formerly, Janus Diversified Alternatives Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
Value Funds
· For Janus Henderson International Value Fund (formerly, Perkins International Value Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Value Fund (formerly, Perkins Global Value Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Large Cap Value Fund (formerly, Perkins Large Cap Value Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital and Perkins had taken or were taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Mid Cap Value Fund (formerly, Perkins Mid Cap Value Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital and Perkins had taken or were taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Select Value Fund (formerly, Perkins Select Value Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Small Cap Value Fund (formerly, Perkins Small Cap Value Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
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· For Janus Henderson Value Plus Income Fund (formerly, Perkins Value Plus Income Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
Mathematical Funds
· For Janus Henderson Emerging Markets Managed Volatility Fund (formerly, Intech Emerging Markets Managed Volatility Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Income Managed Volatility Fund (formerly, Intech Global Income Managed Volatility Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson International Managed Volatility Fund (formerly, Intech International Managed Volatility Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson U.S. Managed Volatility Fund (formerly, Intech U.S. Managed Volatility Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
Growth and Core Funds
· For Janus Henderson Balanced Fund (formerly, Janus Balanced Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Contrarian Fund (formerly, Janus Contrarian Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Enterprise Fund (formerly, Janus Enterprise Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Forty Fund (formerly, Janus Forty Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Growth and Income Fund (formerly, Janus Growth and Income Fund), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and in the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Research Fund (formerly, Janus Research Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Triton Fund (formerly, Janus Triton Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Venture Fund (formerly, Janus Venture Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
Global and International Funds
· For Janus Henderson Adaptive Global Allocation Fund (formerly, Janus Adaptive Global Allocation Fund), the Trustees noted that, due to limited performance for the Fund, performance history was not a material factor.
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· For Janus Henderson Asia Equity Fund (formerly, Janus Asia Equity Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Life Sciences Fund (formerly, Janus Global Life Sciences Fund), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Global Real Estate Fund (formerly, Janus Global Real Estate Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Research Fund (formerly, Janus Global Research Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Select Fund (formerly, Janus Global Select Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Technology Fund (formerly, Janus Global Technology Fund), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, the steps Janus Capital had taken or was taking to improve performance, and that the performance trend was improving.
· For Janus Henderson Overseas Fund (formerly, Janus Overseas Fund), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
Janus Aspen Series
· For Janus Henderson Balanced Portfolio (formerly, Janus Aspen Balanced Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the third Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Enterprise Portfolio (formerly, Janus Aspen Enterprise Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Flexible Bond Portfolio (formerly, Janus Aspen Flexible Bond Portfolio), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Forty Portfolio (formerly, Janus Aspen Forty Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
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· For Janus Henderson Global Allocation Portfolio – Moderate (formerly, Janus Aspen Global Allocation Portfolio – Moderate), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Research Portfolio (formerly, Janus Aspen Global Research Portfolio), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance
· For Janus Henderson Global Technology Portfolio (formerly, Janus Aspen Global Technology Portfolio), the Trustees noted that the Fund’s performance was in the third Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Global Unconstrained Bond Portfolio (formerly, Janus Aspen Global Unconstrained Bond Portfolio), the Trustees noted that the Fund’s performance was in the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson U.S. Low Volatility Portfolio (formerly, Janus Aspen Intech U.S. Low Volatility Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Research Portfolio (formerly, Janus Aspen Janus Portfolio), the Trustees noted that the Fund’s performance was in the first Broadridge quartile for the 36 months ended May 31, 2016 and the second Broadridge quartile for the 12 months ended May 31, 2016.
· For Janus Henderson Overseas Portfolio (formerly, Janus Aspen Overseas Portfolio), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the bottom Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, and the steps Janus Capital had taken or was taking to improve performance.
· For Janus Henderson Mid Cap Value Portfolio (formerly, Janus Aspen Perkins Mid Cap Value Portfolio), the Trustees noted that the Fund’s performance was in the bottom Broadridge quartile for the 36 months ended May 31, 2016 and the first Broadridge quartile for the 12 months ended May 31, 2016. The Trustees noted the reasons for the Fund’s underperformance, noting that the Fund has a performance fee structure that results in lower management fees during periods of underperformance, the steps Janus Capital and Perkins had taken or were taking to improve performance, and that the performance trend was improving.
In consideration of each Fund’s performance, the Trustees concluded that, taking into account the factors relevant to performance, as well as other considerations, including steps taken to improve performance, the Fund’s performance warranted continuation of the Fund’s investment advisory and subadvisory agreement(s).
Costs of Services Provided
The Trustees examined information regarding the fees and expenses of each Fund in comparison to similar information for other comparable funds as provided by Broadridge, an independent data provider. They also reviewed an analysis of that information provided by their independent fee consultant and noted that the rate of management (investment advisory and any administration, but excluding out-of-pocket costs) fees for many of the Funds, after applicable waivers, was below the average management fee rate of the respective peer group of funds selected by an independent data provider. The Trustees also examined information regarding the subadvisory fees charged for subadvisory services, as applicable, noting that all such fees were paid by Janus Capital out of its management fees collected from such Fund.
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Additional Information (unaudited)
The independent fee consultant provided its belief that the management fees charged by Janus Capital to each of the Funds under the current investment advisory and administration agreements are reasonable in relation to the services provided by Janus Capital. The independent fee consultant found: (1) the total expenses and management fees of the Funds to be reasonable relative to other mutual funds; (2) total expenses, on average, were 12% below the average total expenses of their respective Broadridge Expense Group peers and 20% below the average total expenses for their Broadridge Expense Universes; (3) management fees for the Funds, on average, were 11% below the average management fees for their Expense Groups and 13% below the average for their Expense Universes; and (4) Fund expenses at the functional level for each asset and share class category were reasonable. The Trustees also considered the total expenses for each share class of each Fund compared to the average total expenses for its Broadridge Expense Group peers and to average total expenses for its Broadridge Expense Universe.
The independent fee consultant concluded that, based on its strategic review of expenses at the complex, category and individual fund level, Fund expenses were found to be reasonable relative to both Expense Group and Expense Universe benchmarks. Further, for certain Funds, the independent fee consultant also performed a systematic “focus list” analysis of expenses in the context of the performance or service delivered to each set of investors in each share class in each selected Fund. Based on this analysis, the independent fee consultant found that the combination of service quality/performance and expenses on these individual Funds and share classes were reasonable in light of performance trends, performance histories, and existence of performance fees, breakpoints, and expense waivers on such Funds.
The Trustees considered the methodology used by Janus Capital and each subadviser in determining compensation payable to portfolio managers, the competitive environment for investment management talent, and the competitive market for mutual funds in different distribution channels.
The Trustees also reviewed management fees charged by Janus Capital and each subadviser to comparable separate account clients and to comparable non-affiliated funds subadvised by Janus Capital or by a subadviser (for which Janus Capital or the subadviser provides only or primarily portfolio management services). Although in most instances subadvisory and separate account fee rates for various investment strategies were lower than management fee rates for Funds having a similar strategy, the Trustees considered that Janus Capital noted that, under the terms of the management agreements with the Funds, Janus Capital performs significant additional services for the Funds that it does not provide to those other clients, including administration services, oversight of the Funds’ other service providers, trustee support, regulatory compliance and numerous other services, and that, in serving the Funds, Janus Capital assumes many legal risks and other costs that it does not assume in servicing its other clients. Moreover, they noted that the independent fee consultant found that: (1) the management fees Janus Capital charges to the Funds are reasonable in relation to the management fees Janus Capital charges to its institutional and subadvised accounts; (2) these institutional and subadvised accounts have different service and infrastructure needs; (3) Janus mutual fund investors enjoy reasonable fees relative to the fees charged to Janus institutional and subadvised fund investors; and (4) in the majority of cases, the Funds receive proportionally better pricing than the industry in relation to Janus institutional and subadvised accounts.
The Trustees considered the fees for each Fund for its fiscal year ended in 2015, and noted the following with regard to each Fund’s total expenses, net of applicable fee waivers (the Fund’s “total expenses”):
Fixed-Income Funds and Money Market Funds
· For Janus Henderson Flexible Bond Fund (formerly, Janus Flexible Bond Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Bond Fund (formerly, Janus Global Bond Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Unconstrained Bond Fund (formerly, Janus Global Unconstrained Bond Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for certain share
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classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson High-Yield Fund (formerly, Janus High-Yield Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Multi-Sector Income Fund (formerly, Janus Multi-Sector Income Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Real Return Fund (formerly, Janus Real Return Fund), the Trustees noted that, although the Fund’s total expenses were equal to or exceeded the peer group average for all share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Short-Term Bond Fund (formerly, Janus Short-Term Bond Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Government Money Market Fund (formerly, Janus Government Money Market Fund), the Trustees noted that the Fund’s total expenses exceeded the peer group average for both share classes. The Trustees considered that management fees for this Fund are higher than the peer group average due to the Fund’s management fee including other costs, such as custody and transfer agent services, while many funds in the peer group pay these expenses separately from their management fee. In addition, the Trustees considered that Janus Capital voluntarily waives one-half of its advisory fee and other expenses in order to maintain a positive yield.
· For Janus Henderson Money Market Fund (formerly, Janus Money Market Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes. In addition, the Trustees considered that Janus Capital voluntarily waives one- half of its advisory fee and other expenses in order to maintain a positive yield.
Asset Allocation Funds
· For Janus Henderson Global Allocation Fund – Conservative (formerly, Janus Global Allocation Fund – Conservative), the Trustees noted that, although the Fund’s total expenses exceeded the peer group median for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Allocation Fund – Growth (formerly, Janus Global Allocation Fund – Growth), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Allocation Fund – Moderate (formerly, Janus Global Allocation Fund – Moderate), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
Alternative Fund
· For Janus Henderson Diversified Alternatives Fund (formerly, Janus Diversified Alternatives Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
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Value Funds
· For Janus Henderson International Value Fund (formerly, Perkins International Value Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Value Fund (formerly, Perkins Global Value Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Large Cap Value Fund (formerly, Perkins Large Cap Value Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Mid Cap Value Fund (formerly, Perkins Mid Cap Value Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Select Value Fund (formerly, Perkins Select Value Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Small Cap Value Fund (formerly, Perkins Small Cap Value Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Value Plus Income Fund (formerly, Perkins Value Plus Income Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
Mathematical Funds
· For Janus Henderson Emerging Markets Managed Volatility Fund (formerly, Intech Emerging Markets Managed Volatility Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Income Managed Volatility Fund (formerly, Intech Global Income Managed Volatility Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson International Managed Volatility Fund (formerly, Intech International Managed Volatility Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson U.S. Managed Volatility Fund (formerly, Intech U.S. Managed Volatility Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
Growth and Core Funds
· For Janus Henderson Balanced Fund (formerly, Janus Balanced Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s
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expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Contrarian Fund (formerly, Janus Contrarian Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Enterprise Fund (formerly, Janus Enterprise Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Forty Fund (formerly, Janus Forty Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Growth and Income Fund (formerly, Janus Growth and Income Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Research Fund (formerly, Janus Research Fund), the Trustees noted that although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable.
· For Janus Henderson Triton Fund (formerly, Janus Triton Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Venture Fund (formerly, Janus Venture Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
Global and International Funds
· For Janus Henderson Adaptive Global Allocation Fund (formerly, Janus Adaptive Global Allocation Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group median for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Asia Equity Fund (formerly, Janus Asia Equity Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for one share class, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Life Sciences Fund (formerly, Janus Global Life Sciences Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Real Estate Fund (formerly, Janus Global Real Estate Fund), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for certain share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to
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limit the Fund’s expenses, although this limit did not apply because the Fund’s total expenses were already below the applicable fee limit.
· For Janus Henderson Global Research Fund (formerly, Janus Global Research Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Select Fund (formerly, Janus Global Select Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Global Technology Fund (formerly, Janus Global Technology Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
· For Janus Henderson Overseas Fund (formerly, Janus Overseas Fund), the Trustees noted that the Fund’s total expenses were below the peer group average for all share classes.
Janus Aspen Series
· For Janus Henderson Balanced Portfolio (formerly, Janus Aspen Balanced Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Enterprise Portfolio (formerly, Janus Aspen Enterprise Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Flexible Bond Portfolio (formerly, Janus Aspen Flexible Bond Portfolio), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for both share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Forty Portfolio (formerly, Janus Aspen Forty Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Allocation Portfolio – Moderate (formerly, Janus Aspen Global Allocation Portfolio – Moderate), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for both share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson Global Research Portfolio (formerly, Janus Aspen Global Research Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Technology Portfolio (formerly, Janus Aspen Global Technology Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Global Unconstrained Bond Portfolio (formerly, Janus Aspen Global Unconstrained Bond Portfolio), the Trustees noted that, although the Fund’s total expenses exceeded the peer group average for both share classes, overall the Fund’s total expenses were reasonable. The Trustees also noted that Janus Capital has contractually agreed to limit the Fund’s expenses.
· For Janus Henderson U.S. Low Volatility Portfolio (formerly, Janus Aspen Intech U.S. Low Volatility Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for its sole share class.
· For Janus Henderson Research Portfolio (formerly, Janus Aspen Janus Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group mean for both share classes.
· For Janus Henderson Overseas Portfolio (formerly, Janus Aspen Overseas Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
· For Janus Henderson Mid Cap Value Portfolio (formerly, Janus Aspen Perkins Mid Cap Value Portfolio), the Trustees noted that the Fund’s total expenses were below the peer group average for both share classes.
The Trustees reviewed information on the profitability to Janus Capital and its affiliates of their relationships with each Fund, as well as an explanation of the methodology utilized by Janus Capital when allocating various expenses of Janus Capital and its affiliates with respect to contractual relationships with the Funds and other clients. The Trustees also reviewed the financial statements and corporate structure of Janus Capital’s parent company. In their review, the
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Additional Information (unaudited)
Trustees considered whether Janus Capital and each subadviser receive adequate incentives and resources to manage the Funds effectively. The Trustees recognized that profitability comparisons among fund managers are difficult because very little comparative information is publicly available, and the profitability of any fund manager is affected by numerous factors, including the organizational structure of the particular fund manager, the types of funds and other accounts it manages, possible other lines of business, the methodology for allocating expenses, and the fund manager’s capital structure and cost of capital. However, taking into account those factors and the analysis provided by the Trustees’ independent fee consultant, and based on the information available, the Trustees concluded that Janus Capital’s profitability with respect to each Fund in relation to the services rendered was reasonable.
The independent fee consultant found that, while assessing the reasonableness of expenses in light of Janus Capital’s profits is dependent on comparisons with other publicly-traded mutual fund advisers, and that these comparisons are limited in accuracy by differences in complex size, business mix, institutional account orientation, and other factors, after accepting these limitations, the level of profit earned by Janus Capital from managing the Funds is reasonable.
The Trustees concluded that the management fees payable by each Fund to Janus Capital and its affiliates, as well as the fees paid by Janus Capital to the subadvisers of subadvised Funds, were reasonable in relation to the nature, extent, and quality of the services provided, taking into account the fees charged by other advisers for managing comparable mutual funds with similar strategies, the fees Janus Capital and the subadvisers charge to other clients, and, as applicable, the impact of fund performance on management fees payable by the Funds. The Trustees also concluded that each Fund’s total expenses were reasonable, taking into account the size of the Fund, the quality of services provided by Janus Capital and any subadviser, the investment performance of the Fund, and any expense limitations agreed to or provided by Janus Capital.
Economies of Scale
The Trustees considered information about the potential for Janus Capital to realize economies of scale as the assets of the Funds increase. They noted their independent fee consultant’s analysis of economies of scale in prior years. They also noted that, although many Funds pay advisory fees at a base fixed rate as a percentage of net assets, without any breakpoints, their independent fee consultant concluded that 91% of these Funds have contractual management fees (gross of waivers) below their Broadridge expense group averages and, overall, 83% of the Funds are below their respective expense group averages for contractual management fees. They also noted that for those Funds whose expenses are being reduced by the contractual expense limitations of Janus Capital, Janus Capital is subsidizing the Funds because they have not reached adequate scale. Moreover, as the assets of some of the Funds have declined in the past few years, certain Funds have benefited from having advisory fee rates that have remained constant rather than increasing as assets declined. In addition, performance fee structures have been implemented for various Funds that have caused the effective rate of advisory fees payable by such a Fund to vary depending on the investment performance of the Fund relative to its benchmark index over the measurement period; and a few Funds have fee schedules with breakpoints and reduced fee rates above certain asset levels. The Trustees also noted that the Funds share directly in economies of scale through the lower charges of third-party service providers that are based in part on the combined scale of all of the Funds. Based on all of the information they reviewed, including past research and analysis conducted by the Trustees’ independent fee consultant, the Trustees concluded that the current fee structure of each Fund was reasonable and that the current rates of fees do reflect a sharing between Janus Capital and the Fund of any economies of scale that may be present at the current asset level of the Fund.
The independent fee consultant concluded that, given the limitations of various analytical approaches to economies of scale considered in prior years, and their conflicting results, its analyses could not confirm or deny the existence of economies of scale in the Janus complex. Further, the independent fee consultant provided its belief that Fund investors are well-served by the fee levels and performance fee structures in place on the Funds in light of any economies of scale that may be present at Janus Capital.
Other Benefits to Janus Capital
The Trustees also considered benefits that accrue to Janus Capital and its affiliates and subadvisers to the Funds from their relationships with the Funds. They recognized that two affiliates of Janus Capital separately serve the Funds as transfer agent and distributor, respectively, and the transfer agent receives compensation directly from the non-money market funds for services provided. The Trustees also considered Janus Capital’s past and proposed use of commissions paid by the Funds on portfolio brokerage transactions to obtain proprietary and third-party research products and services benefiting the Fund and/or other clients of Janus Capital and/or Janus Capital, and/or a
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Additional Information (unaudited)
subadviser to a Fund. The Trustees concluded that Janus Capital’s and the subadvisers’ use of these types of client commission arrangements to obtain proprietary and third-party research products and services was consistent with regulatory requirements and guidelines and was likely to benefit each Fund. The Trustees also concluded that, other than the services provided by Janus Capital and its affiliates and subadvisers pursuant to the agreements and the fees to be paid by each Fund therefor, the Funds and Janus Capital and the subadvisers may potentially benefit from their relationship with each other in other ways. They concluded that Janus Capital and/or the subadvisers benefits from the receipt of research products and services acquired through commissions paid on portfolio transactions of the Funds and that the Funds benefit from Janus Capital’s and/or the subadvisers’ receipt of those products and services as well as research products and services acquired through commissions paid by other clients of Janus Capital and/or other clients of the subadvisers. They further concluded that the success of any Fund could attract other business to Janus Capital, the subadvisers or other Janus funds, and that the success of Janus Capital and the subadvisers could enhance Janus Capital’s and the subadvisers’ ability to serve the Funds.
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Useful Information About Your Portfolio Report (unaudited)
The Management Commentary in this report includes valuable insight as well as statistical information to help you understand how your Portfolio’s performance and characteristics stack up against those of comparable indices.
If the Portfolio invests in foreign securities, this report may include information about country exposure. Country exposure is based primarily on the country of risk. A company may be allocated to a country based on other factors such as location of the company’s principal office, the location of the principal trading market for the company’s securities, or the country where a majority of the company’s revenues are derived.
Please keep in mind that the opinions expressed in the Management Commentary are just that: opinions. They are a reflection based on best judgment at the time this report was compiled, which was December 31, 2017. As the investing environment changes, so could opinions. These views are unique and are not necessarily shared by fellow employees or by Janus Henderson in general.
Performance Overviews
Performance overview graphs compare the performance of a hypothetical $10,000 investment in the Portfolio with one or more widely used market indices. When comparing the performance of the Portfolio with an index, keep in mind that market indices are not available for investment and do not reflect deduction of expenses.
Average annual total returns are quoted for a Portfolio with more than one year of performance history. Average annual total return is calculated by taking the growth or decline in value of an investment over a period of time, including reinvestment of dividends and distributions, then calculating the annual compounded percentage rate that would have produced the same result had the rate of growth been constant throughout the period. Average annual total return does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or redemptions of Portfolio shares.
Cumulative total returns are quoted for a Portfolio with less than one year of performance history. Cumulative total return is the growth or decline in value of an investment over time, independent of the period of time involved. Cumulative total return does not reflect the deduction of taxes that a shareholder would pay on Portfolio distributions or redemptions of Portfolio shares.
Pursuant to federal securities rules, expense ratios shown in the performance chart reflect subsidized (if applicable) and unsubsidized ratios. The total annual fund operating expenses ratio is gross of any fee waivers, reflecting the Portfolio’s unsubsidized expense ratio. The net annual fund operating expenses ratio (if applicable) includes contractual waivers of Janus Capital and reflects the Portfolio’s subsidized expense ratio. Ratios may be higher or lower than those shown in the “Financial Highlights” in this report.
Schedule of Investments
Following the performance overview section is the Portfolio’s Schedule of Investments. This schedule reports the types of securities held in the Portfolio on the last day of the reporting period. Securities are usually listed by type (common stock, corporate bonds, U.S. Government obligations, etc.) and by industry classification (banking, communications, insurance, etc.). Holdings are subject to change without notice.
The value of each security is quoted as of the last day of the reporting period. The value of securities denominated in foreign currencies is converted into U.S. dollars.
If the Portfolio invests in foreign securities, it will also provide a summary of investments by country. This summary reports the Portfolio exposure to different countries by providing the percentage of securities invested in each country. The country of each security represents the country of risk. The Portfolio’s Schedule of Investments relies upon the industry group and country classifications published by Barclays and/or MSCI Inc.
Tables listing details of individual forward currency contracts, futures, written options, swaptions, and swaps follow the Portfolio’s Schedule of Investments (if applicable).
Statement of Assets and Liabilities
This statement is often referred to as the “balance sheet.” It lists the assets and liabilities of the Portfolio on the last day of the reporting period.
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Useful Information About Your Portfolio Report (unaudited)
The Portfolio’s assets are calculated by adding the value of the securities owned, the receivable for securities sold but not yet settled, the receivable for dividends declared but not yet received on securities owned, and the receivable for Portfolio shares sold to investors but not yet settled. The Portfolio’s liabilities include payables for securities purchased but not yet settled, Portfolio shares redeemed but not yet paid, and expenses owed but not yet paid. Additionally, there may be other assets and liabilities such as unrealized gain or loss on forward currency contracts.
The section entitled “Net Assets Consist of” breaks down the components of the Portfolio’s net assets. Because the Portfolio must distribute substantially all earnings, you will notice that a significant portion of net assets is shareholder capital.
The last section of this statement reports the net asset value (“NAV”) per share on the last day of the reporting period. The NAV is calculated by dividing the Portfolio’s net assets for each share class (assets minus liabilities) by the number of shares outstanding.
Statement of Operations
This statement details the Portfolio’s income, expenses, realized gains and losses on securities and currency transactions, and changes in unrealized appreciation or depreciation of Portfolio holdings.
The first section in this statement, entitled “Investment Income,” reports the dividends earned from securities and interest earned from interest-bearing securities in the Portfolio.
The next section reports the expenses incurred by the Portfolio, including the advisory fee paid to the investment adviser, transfer agent fees and expenses, and printing and postage for mailing statements, financial reports and prospectuses. Expense offsets and expense reimbursements, if any, are also shown.
The last section lists the amounts of realized gains or losses from investment and foreign currency transactions, and changes in unrealized appreciation or depreciation of investments and foreign currency-denominated assets and liabilities. The Portfolio will realize a gain (or loss) when it sells its position in a particular security. A change in unrealized gain (or loss) refers to the change in net appreciation or depreciation of the Portfolio during the reporting period. “Net Realized and Unrealized Gain/(Loss) on Investments” is affected both by changes in the market value of Portfolio holdings and by gains (or losses) realized during the reporting period.
Statements of Changes in Net Assets
These statements report the increase or decrease in the Portfolio’s net assets during the reporting period. Changes in the Portfolio’s net assets are attributable to investment operations, dividends and distributions to investors, and capital share transactions. This is important to investors because it shows exactly what caused the Portfolio’s net asset size to change during the period.
The first section summarizes the information from the Statement of Operations regarding changes in net assets due to the Portfolio’s investment operations. The Portfolio’s net assets may also change as a result of dividend and capital gains distributions to investors. If investors receive their dividends and/or distributions in cash, money is taken out of the Portfolio to pay the dividend and/or distribution. If investors reinvest their dividends and/or distributions, the Portfolio’s net assets will not be affected. If you compare the Portfolio’s “Net Decrease from Dividends and Distributions” to “Reinvested Dividends and Distributions,” you will notice that dividends and distributions have little effect on the Portfolio’s net assets. This is because the majority of the Portfolio’s investors reinvest their dividends and/or distributions.
The reinvestment of dividends and distributions is included under “Capital Share Transactions.” “Capital Shares” refers to the money investors contribute to the Portfolio through purchases or withdrawals via redemptions. The Portfolio’s net assets will increase and decrease in value as investors purchase and redeem shares from the Portfolio.
Financial Highlights
This schedule provides a per-share breakdown of the components that affect the Portfolio’s NAV for current and past reporting periods as well as total return, asset size, ratios, and portfolio turnover rate.
The first line in the table reflects the NAV per share at the beginning of the reporting period. The next line reports the net investment income/(loss) per share. Following is the per share total of net gains/(losses), realized and unrealized. Per share dividends and distributions to investors are then subtracted to arrive at the NAV per share at the end of the
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Useful Information About Your Portfolio Report (unaudited)
period. The next line reflects the total return for the period. Also included are ratios of expenses and net investment income to average net assets.
The Portfolio’s expenses may be reduced through expense offsets and expense reimbursements. The ratios shown reflect expenses before and after any such offsets and reimbursements.
The ratio of net investment income/(loss) summarizes the income earned less expenses, divided by the average net assets of the Portfolio during the reporting period. Do not confuse this ratio with the Portfolio’s yield. The net investment income ratio is not a true measure of the Portfolio’s yield because it does not take into account the dividends distributed to the Portfolio’s investors.
The next figure is the portfolio turnover rate, which measures the buying and selling activity in the Portfolio. Portfolio turnover is affected by market conditions, changes in the asset size of the Portfolio, fluctuating volume of shareholder purchase and redemption orders, the nature of the Portfolio’s investments, and the investment style and/or outlook of the portfolio manager(s) and/or investment personnel. A 100% rate implies that an amount equal to the value of the entire portfolio was replaced once during the fiscal year; a 50% rate means that an amount equal to the value of half the portfolio is traded in a year; and a 200% rate means that an amount equal to the value of the entire portfolio is traded every six months.
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Shareholder Meeting (unaudited)
Special meetings of shareholders were held on April 6, 2017 and adjourned and reconvened on April 18, 2017 (together, the "meeting"). At the meeting, the following matters were voted on and approved by shareholders. Each vote reported represents one dollar of net asset value held on the record date for the meeting. The results of the meeting are noted below. | ||||||||||||||||||||||||||
Proposals | ||||||||||||||||||||||||||
1. For all Portfolios, to approve a new investment advisory agreement between the Trust, on behalf of the Portfolio, and Janus Capital Management LLC. | ||||||||||||||||||||||||||
| Number of Votes ($) |
|
| |||||||||||||||||||||||
Record Date Votes ($) | Affirmative | Against | Abstain | BNV | Total | |||||||||||||||||||||
736,301,557.196 | 567,562,568.942 | 15,243,633.532 | 31,189,299.238 | (0.002) | 613,995,501.711 | |||||||||||||||||||||
Percentage of Total Outstanding Votes (%) |
| Percentage Voted (%) | ||||||||||||||||||||||||
Affirmative | Against | Abstain | BNV | Total | Affirmative | Against | Abstain | BNV | Total | |||||||||||||||||
77.083 | 2.070 | 4.236 | 0.000 | 83.389 | 92.438 | 2.483 | 5.080 | 0.000 | 100.000 | |||||||||||||||||
4. To elect an additional Trustee to the Board of Trustees of the Trust. - Diane L. Wallace. | ||||||||||||||||||||||||||
| Number of Votes ($) |
|
| |||||||||||||||||||||||
Record Date Votes ($) | Affirmative | Against | Abstain | BNV | Total | |||||||||||||||||||||
7,198,647,378.476 | 6,547,141,899.530 | 651,505,478.946 | 0.000 | 0.000 | 7,198,647,378.476 | |||||||||||||||||||||
Percentage of Total Outstanding Votes (%) |
| Percentage Voted (%) | ||||||||||||||||||||||||
Affirmative | Against | Abstain | BNV | Total | Affirmative | Against | Abstain | BNV | Total | |||||||||||||||||
80.347 | 7.995 | 0.000 | 0.000 | 88.342 | 90.950 | 9.050 | 0.000 | 0.000 | 100.000 | |||||||||||||||||
Alan A. Brown, William D. Cvengros, Raudline Etienne, William F. McCalpin, Gary A. Poliner, James T. Rothe, William D. Stewart and Linda S. Wolf continue to serve as Trustees following the meeting. | ||||||||||||||||||||||||||
5. For all Portfolios, except Global Unconstrained Bond Portfolio, to approve a proposal that would authorize the Adviser to enter into and materially amend sub-advisory agreements in the future with wholly-owned subadvisers and unaffiliated sub-advisers, with the approval of the Board of Trustees of the Trust, but without obtaining additional shareholder approval. | ||||||||||||||||||||||||||
| Number of Votes ($) |
|
| |||||||||||||||||||||||
Record Date Votes ($) | Affirmative | Against | Abstain | BNV | Total | |||||||||||||||||||||
736,301,557.196 | 515,651,189.489 | 44,585,039.536 | 53,759,272.698 | (0.012) | 613,995,501.711 | |||||||||||||||||||||
Percentage of Total Outstanding Votes (%) |
| Percentage Voted (%) | ||||||||||||||||||||||||
Affirmative | Against | Abstain | BNV | Total | Affirmative | Against | Abstain | BNV | Total | |||||||||||||||||
70.033 | 6.055 | 7.301 | 0.000 | 83.389 | 83.983 | 7.261 | 8.756 | 0.000 | 100.000 |
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Trustees and Officers (unaudited)
The Portfolio’s Statement of Additional Information includes additional information about the Trustees and officers and is available, without charge, by calling 1-877-335-2687.
The following are the Trustees and officers of the Trust, together with a brief description of their principal occupations during the last five years (principal occupations for certain Trustees may include periods over five years).
Each Trustee has served in that capacity since he or she was originally elected or appointed. The Trustees do not serve a specified term of office. Each Trustee will hold office until the termination of the Trust or his or her earlier death, resignation, retirement, incapacity, or removal. Under the Portfolio’s Governance Procedures and Guidelines, the policy is for Trustees to retire no later than the end of the calendar year in which the Trustee turns 75. The Trustees review the Portfolio’s Governance Procedures and Guidelines from time to time and may make changes they deem appropriate. The Portfolio’s Nominating and Governance Committee will consider nominees for the position of Trustee recommended by shareholders. Shareholders may submit the name of a candidate for consideration by the Committee by submitting their recommendations to the Trust’s Secretary. Each Trustee is currently a Trustee of one other registered investment company advised by Janus Capital: Janus Investment Fund. Collectively, these two registered investment companies consist of 58 series or funds.
The Trust’s officers are elected annually by the Trustees for a one-year term. Certain officers also serve as officers of Janus Investment Fund. Certain officers of the Portfolio may also be officers and/or directors of Janus Capital. Except as otherwise disclosed, Portfolio officers receive no compensation from the Portfolio, except for the Portfolio’s Chief Compliance Officer, as authorized by the Trustees.