1997 ANNUAL REPORT
Janus Equity Funds
Janus Fund
Janus Balanced Fund
Janus Enterprise Fund
Janus Equity Income Fund
Janus Growth and Income Fund
Janus Mercury Fund
Janus Olympus Fund
Janus Overseas Fund
Janus Special Situations Fund
Janus Twenty Fund
Janus Venture Fund
Janus Worldwide Fund
[Logo] JANUS
<PAGE>
TABLE OF CONTENTS
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Our Message to You 1
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Portfolio Manager's Commentary and Schedule of Investments
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Janus Fund 2
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Janus Balanced Fund 6
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Janus Enterprise Fund 10
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Janus Equity Income Fund 14
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Janus Growth and Income Fund 18
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Janus Mercury Fund 22
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Janus Olympus Fund 26
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Janus Overseas Fund 29
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Janus Special Situations Fund 35
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Janus Twenty Fund 38
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Janus Venture Fund 41
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Janus Worldwide Fund 46
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Statements of Operations 52
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Statements of Assets and Liabilities 52
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Statements of Changes in Net Assets 54
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Financial Highlights 57
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Notes to Schedules of Investments 61
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Notes to Financial Statements 63
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Report of Independent Accountants 65
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Performance Information
Performance overview graphs on the following pages compare the performance
of a $10,000 investment in each Fund since its inception to one or more widely
used market indexes. Each graph reflects the lifetime performance of the Fund
through October 31, 1997.
When comparing the performance of a Fund to an Index, keep in mind that
market indexes do not take into account brokerage commissions that would be
incurred if you purchased the individual securities in the Index. They also do
not include taxes payable on dividends, interest payments, or operating expenses
necessary to maintain a portfolio investing in the Index.
Average annual total returns are quoted for each Fund (except cumulative
total return is quoted for Janus Special Situations Fund). Average annual total
return is calculated by taking the growth or decline in value of an investment
over a period of time, including reinvestment of dividends and distributions,
and then calculating the annual compound percentage rate that would have
produced the same result had the rate of growth been constant throughout the
period.
An Explanation of the Schedule of Investments
Following the performance overview is each Fund's Schedule of Investments.
This schedule reports the industry concentrations and the different types of
securities held in the Fund's 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.).
The market value of each security represents its value on the last day of
the reporting period. The value of securities denominated in foreign currencies
is converted into U.S. dollars. Funds that invest in foreign securities also
provide a summary of investments by country. This summary reports the Fund's
exposure to different countries by indicating the percentage of securities
invested in each country.
An Explanation of the Forward Currency Contract Table
A table listing forward currency contracts follows each Fund's Schedule of
Investments (if applicable). Forward currency contracts are agreements to
deliver or receive a preset amount of currency at a future date. Forward
currency contracts are used to hedge against foreign currency risk in the Fund's
long-term holdings.
The table provides the name of the foreign currency, the settlement date of
the contract, the amount of the contract, the value of the currency in U.S.
dollars, and the amount of unrealized gain or loss. The amount of unrealized
gain or loss reflects the change in currency exchange rates from the time the
contract was opened to the last day of the reporting period.
<PAGE>
OUR MESSAGE TO YOU
Dear Shareholders:
U.S. stocks posted healthy gains during fiscal 1997, November 1, 1996 to
October 31, 1997. Our benchmark domestic indexes closed out the year within a
few percentage points of each other.
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Standard & Poor's 500 Stock Index 32.10%
Standard & Poor's 400 MidCap Stock Index 32.67%
Russell 2000 Index (Small stocks) 29.33%
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All returns include reinvested dividends.
The close finish among the indexes might indicate that market action this
year was smooth and uneventful; in fact it was the opposite: The year was
volatile and event driven.
The market's internal dynamics were also skewed. The first half of the year
belonged to large stocks. Not only was the performance gap between large stocks
and small stocks unusually wide from October through April, but the largest,
most easily traded stocks in each market capitalization category (small,
midsize, and large) were far ahead of smaller stocks in the same category.
The second half of the year belonged to small and midsize stocks, which
rebounded dramatically and finished the year even with the large caps.
The Asian Flu
Measured in U.S. dollars, the Morgan Stanley Capital International EAFE
Index and the Morgan Stanley Capital International World Index did not fare as
well.(1)
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MSCI EAFE Index 4.63%
MSCI World Index 16.77%
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As the year ended, Southeast Asia was in financial distress. Some observers
dubbed the Far East's troubles the Asian Flu. And not without reason. There is
no doubt Southeast Asia's economic woes will affect the U.S. and Europe. We
expect gross domestic product in the U.S. to come in roughly half a percentage
point (0.5%) lower due to the weakness in Asia. But not all of the effects will
be unhealthy.
Part of Southeast Asia's troubles stem from excess manufacturing capacity.
The region is producing too many goods, everything from autos to consumer
electronics to designer clothing. The result should be a drop in import prices
here in the U.S., and lower import prices will help restrain inflation and take
pressure off the Federal Reserve to raise interest rates.
The negative effects of the Asian Flu will probably be felt most in the
earnings of our large multinational corporations, especially heavy equipment
makers and others who derive significant revenues from the infrastructure build
out in the Far East. But on the plus side, any moderation in the growth of
business at these companies will be reflected in a slightly softer domestic
economy, which should also help keep interest rates and inflation low and
relieve some of the pressure in our very tight labor market.
For those of us who recall the U.S. real estate collapse and the ensuing
banking crisis of the late 1980s and early 1990s, the situation in Southeast
Asia sounds familiar. Our own banking and real estate woes culminated in a
prolonged low-grade recession that eventually formed the platform from which the
current bull market was launched. Of course, many factors, including revolutions
in technology and in the way people save for retirement, have kept the market
going. But the hard lessons learned in the late '80s and early '90s can be seen
today in the increasing atten-tion companies pay to their core businesses, in
the value they place on profits, and in the increased effectiveness with which
they allocate capital.
Largely as a result of Asia's problems, deflation has replaced inflation as
the principal concern of global equities markets. The fear is that prices,
revenues, and earnings will fall too quickly and too deeply, and precipitate a
global recession. However, the U.S., Latin America, and Europe are growing at a
reasonably good clip, and the business climate is increasingly practical and
efficient. Growth in these regions is acting as a counterweight to the slowdown
in the Far East.
Furthermore, it is not always true that lower prices subvert earnings. Look
at the rapid growth in technology stocks, where substantial price deflation has
been more than offset by volume growth (the number of products sold). New and
more powerful products, especially in telecommunications and networking, have
kept the tech companies growing. According to ISI Group, an economic research
firm, in the third calendar quarter of 1997, technology prices are down
approximately 16% from last year, yet spending on technology by both individuals
and business was up over 30%.(2) So the deflation picture in Asia may not be
quite as bleak as the headlines make it out to be.
Looking Ahead
"The report of my death was an exaggeration," Mark Twain wrote to a
newspaper that had published his obituary by mistake. I expect the same holds
true for Southeast Asia. Fortunately, surviving a financial obituary is fairly
common. Companies and countries are written off every day, but often manage to
live on and prosper. Those who believe the Asian Flu is an epidemic are probably
overdoing it, or so it appears as of late November.
Despite continued volatility and regional ups and downs, financial markets
should fare well in 1998. In an increasingly interdependent, global economy,
every region is surrounded by well-wishers as well as competitors - often they
are one and the same.
As I said in my semiannual letter, declines are normal, even healthy,
events in the life of any market. Despite the declines this year, and the
increased volatility, stocks performed well.(3)
To handle volatility, keep your expectations reasonable. Realistic
expectations, a long-term perspective, and careful allocation of your assets to
funds whose risks fit your comfort level are all critical components of an
intelligent financial plan.
We appreciate your investment with Janus.
/s/Thomas H. Bailey
Thomas H. Bailey
Chairman
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(1) Both index returns include net dividends reinvested. Net dividends are
those dividends that remain to be reinvested after foreign tax obligations
are met. Tax obligations vary from country to country. EAFE stands for
Europe, Australasia, and the Far East. Neither the U.S. nor the emerging
markets of Latin America and Eastern Europe are represented in EAFE. The
MSCI World Index contains North America, Europe, and the Asia/Pacific
Region.
(2) ISI Group. International Strategy & Investment, Daily Economic Report,
November 4, 1997.
(3) Past performance does not guarantee future results.
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 1
<PAGE>
JANUS FUND Portfolio Manager, James P. Craig
Performance
Janus Fund gained 24.18% for our fiscal year, November 1, 1996 to October
31, 1997, while the S&P 500 Index gained 32.10%. Both returns include reinvested
dividends.
Although Janus Fund scored below the Index for the year, returns improved
dramatically during the last six months. At the end of April, Janus Fund was up
6.83%, versus a gain of 14.71% for the Index. But during the second half of our
fiscal year the Fund kept pace with the Index, gaining 17.35% versus 17.39%. The
increase in market breadth certainly helped. Investors rediscovered small and
midsize stocks, and many larger stocks, which had become very expensive, lost
ground.
However, Janus Fund's improved performance was also the result of a more
flexible portfolio strategy. As I said in my semiannual letter, this is a
liquidity-driven market because equities are now the preferred vehicle for
retirement savings. The old valuation standards seem to have been discarded. My
challenge was to adjust to this new, high PE environment. Earlier in the year,
strict valuation rules caused me to sell positions too early on some occasions
and not to invest quickly enough on others. In the second half of the year, I
stayed with positions a little longer, and bought more aggres-sively when stocks
I liked declined.
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Portfolio Profile October 31, 1997 October 31, 1996
Equities 97.4% 79.0%
Foreign 18.6% 15.5%
European 17.6% 13.2%
Top 10 Equities (% of Assets) 25.9% 30.2%
Number of Stocks 110 120
Cash & Cash Equivalents 2.6% 21.0%
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Top 10 Equity Holdings October 31, 1997 October 31, 1996
Schlumberger Ltd. 3.4% --
Monsanto Co. 3.4% 0.3%
Microsoft Corp. 2.6% --
Cisco Systems, Inc. 2.6% 1.4%
Warner-Lambert Co. 2.5% --
Philips Electronics N.V 2.4% --
Halliburton Co. 2.3% --
Tele-Communications, Inc. - Class A 2.3% --
Westinghouse Electric Corp. 2.2% --
Pfizer, Inc. 2.2% 1.7%
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Top 5 Industries October 31, 1997 October 31, 1996
Diversified Operations 9.8% 1.5%
Medical - Drugs 8.4% 8.6%
Chemicals - Diversified 8.3% 1.5%
Computer Software 6.4% 0.1%
Oil - Field Services 6.0% --
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Stock Highlights
This year, I made several significant adjustments in the portfolio.
Financial stocks, which have been excellent performers for a long time now, were
reduced. In most cases, the financials had become very expensive and the upside
potential was not as attractive as in the past. Citicorp, Bank of New York,
Wells Fargo, and Associates First Capital were either trimmed or let go in their
entirety. The portfolio's industrial companies, Allied Signal, United
Technologies, and Xerox, were reduced for similar reasons.
Energy, cable, and technology stocks were increased - and made substantial
contributions to performance. In the energy area, oil service companies are
especially exciting because they are changing the economics of the drilling
industry. New technology provided by the oil and gas servicers is making energy
production far more cost-efficient. Even if the price of oil and gas remains
stable, profits should rise. In addition, international demand for oil and
natural gas is excellent, and integrated oil companies have upped their capital
spending on offshore exploration. Management across the industry is streamlining
operations, repurchasing stock, and putting discretionary cash to work
effectively. Among our oil servicers are Schlumberger, Halliburton, and Smith
International. Schlumberger and Halliburton are the premier providers of new
drilling and pumping technology, and Smith International is a leader in drilling
fluids and drill bits. We also own Burlington Resources and Pioneer Natural
Resources, which are the best of the gas producers.
Tele-Communications, Inc.(TCI) and Westinghouse are cable and media
companies undergoing positive change. TCI is one of the largest cable operators
in the U.S., and has been cutting costs and making a serious foray into the
Internet market. Westinghouse is selling off its industrial divisions and
transforming itself into a media company, with significant holdings in
television (via CBS), cable, and radio.
Our technology stocks are varied, but they all hold leading positions in
their respective markets, have excellent management teams and exceptional growth
rates. Cisco Systems is the market leader in networking equipment; Microsoft
dominates the PC software market; Texas Instruments is a leading manufacturer of
semiconductors; and Parametric Technology is the largest software developer in
computer-aided design and manufacturing. Cadence Design makes the software used
to manufacture semiconductors.
We held on to our pharmaceutical positions this year, and believe they
still have excellent potential. Warner-Lambert was an outstanding performer. Its
two new drugs, Lipitor, which treats high cholesterol, and Rezulin, which treats
diabetes, continue to pick up market share. Both drugs have the potential to be
billion-dollar-plus products.
This year we lost money in the satellite TV providers, where subscriber
growth was slower than we expected. General Motors H (Hughes Electronics) was
among this group.
The Current Outlook
Although the overall environment is still favorable for financial assets, I
expect the markets to remain volatile. Despite the recent declines in Southeast
Asia, and to a lesser extent in the U.S. and Europe, investor expectations
remain high, and it will be difficult for some companies to live up to analysts'
estimates. However, in this very robust and nearly inflation-free economy,
companies that meet earnings estimates will be rewarded. Our companies have very
good potential, and should benefit from investors' continuing enthusiasm for
stocks.
Thank you for your investment in Janus Fund.
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Past performance does not guarantee future results.
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 2
<PAGE>
JANUS FUND Portfolio Manager, James P. Craig
Performance Overview
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Fund and the S&P 500 Index. Janus Fund is represented by a solid blue
line. The S&P 500 Index is represented by a single dashed black line. The "y"
axis reflects the value of the investment. The "x" axis reflects the computation
periods from inception, February 5, 1970, through October 31, 1997. The upper
right quadrant reflects the ending value of the hypothetical investment in Janus
Fund ($764,285) as compared to the S&P 500 Index ($304,919). There is a legend
in the upper left quadrant of the graph which indicates Janus Fund's one-year,
five-year, ten-year and since inception (February 5, 1970) average annual total
returns as 24.18%, 16.54%, 18.01% and 16.91%, respectively.
*The Fund's inception date
Source - Lipper Analytical Services, Inc. 1997.
All returns reflect reinvested dividends.
Past performance does not guarantee future results. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The Fund's portfolio may differ significantly
from the securities in the Index. The Index is unmanaged and therefore does not
reflect the cost of portfolio management or trading.
JANUS FUND October 31, 1997
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Shares or
Principal Amount Market Value
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Common Stock - 97.4%
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Advertising Sales - 0%
200,000 Universal Outdoor Holdings, Inc.* $8,450,000
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Applications Software - 0.3%
1,002,500 PeopleSoft, Inc.* 63,032,188
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Automotive - Cars and Light Trucks - 0.9%
294,364 Volkswagen A.G.** 174,276,831
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Automotive - Truck Parts and Equipment - 0.7%
3,362,400 Federal-Mogul Corp.# 142,271,543
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Beverages - Non-Alcoholic - 0.1%
995,400 Coca-Cola Enterprises, Inc. 27,995,625
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Cable Television - 3.0%
4,426,825 Comcast Corp. - Special Class A 121,737,687
19,124,381 Tele-Communications, Inc. - Class A* 438,665,489
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560,403,176
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Chemicals - Diversified - 8.3%
3,450,725 Cytec Industries, Inc.*,# 168,222,844
5,452,650 E.I. du Pont de Nemours and Co. 310,119,469
27,800,000 Imperial Chemical Industries PLC** 410,236,816
15,069,975 Monsanto Co. 644,241,431
1,805,460 Solutia, Inc.* 39,945,802
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1,572,766,362
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Commercial Banks - 0.8%
788,400 Northern Trust Corp. 46,121,400
2,288,000 Star Banc Corp. 112,255,000
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158,376,400
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Commercial Services - 0.1%
924,350 ServiceMaster L.P. 22,126,628
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Computer Services - 0.9%
2,435,575 Computer Sciences Corp.*,# 172,773,602
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Computer Software - 6.4%
7,246,000 Cadence Design Systems, Inc.*,# $385,849,500
3,746,600 Microsoft Corp.* 487,058,000
7,894,750 Parametric Technology Co.*,# 348,355,844
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1,221,263,344
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Computers - Integrated Systems - 0.3%
2,125,000 Wang Laboratories, Inc.*,# 49,140,625
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Computers - Micro - 2.1%
4,915,825 Compaq Computer Corp.* 313,383,844
983,950 Dell Computer Corp.* 78,838,994
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392,222,838
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Containers - Paper and Plastic - 0.4%
1,353,975 Sealed Air Corp.* 69,814,336
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Cosmetics and Toiletries - 0.2%
661,125 Colgate-Palmolive Co. 42,807,844
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Cruise Lines - 0.8%
3,194,425 Carnival Corp. - Class A 154,929,613
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Diversified Financial Services - 0.8%
2,312,900 Associates First Capital Corp. - Class A# 147,158,262
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Diversified Operations - 9.8%
4,167,200 General Electric Co. 269,044,850
3,797,450 Minnesota Mining and Manufacturing Co. 347,466,675
8,000,858 Siebe PLC** 153,620,514
1,003,700 Textron, Inc. 58,026,406
9,510,000 Tyco International, Ltd. 359,002,500
4,679,300 Unilever N.V. - N.Y. Shares 249,757,637
16,153,600 Westinghouse Electric Corp.* 427,060,800
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1,863,979,382
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Electric - Generation - 0.3%
1,500,000 AES Corp.* 59,437,500
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See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 3
<PAGE>
JANUS FUND October 31, 1997
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Shares or
Principal Amount Market Value
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Electronic Components - 2.4%
5,749,360 Philips Electronics N.V.** $450,297,502
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Electronic Components - Semiconductors - 4.5%
2,300,000 Analog Devices, Inc. 70,293,750
3,266,250 Intel Corp. 251,501,250
1,004,100 Linear Technology Corp. 63,132,787
1,480,500 Maxim Integrated Products, Inc.* 98,083,125
3,530,925 Texas Instruments, Inc. 376,705,411
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859,716,323
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Fiber Optics - 0.2%
601,625 CIENA Corp.* 33,089,375
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Finance - Consumer Loans - 0.9%
1,213,450 SLM Holding Corp. 170,338,044
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Finance - Investment Bankers/Brokers - 1.4%
7,800,937 Charles Schwab Corp. 266,206,975
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Food - Diversified - 0.5%
1,722,475 Sara Lee Corp. 88,061,534
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Human Resources - 0.8%
1,365,145 Manpower, Inc. 52,387,439
2,461,538 Robert Half International, Inc.*,# 100,769,212
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153,156,651
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Instruments - Controls - 0.4%
1,806,112 Parker Hannifin Corp. 75,518,058
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Internet Software - 0.5%
1,238,000 America Online, Inc.* 95,326,000
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Investment Companies - 0.3%
2,268,794 Tele-Communications TCI Ventures Group - Class A* 52,324,062
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Life and Health Insurance - 2.8%
632,625 Protective Life Corp. 33,450,047
99,569 Schweizerishe Lebensversicherungs-und
Rentenanstalt** 67,596,934
1,072,700 UICI* 35,935,450
7,956,450 UNUM Corp.# 387,876,937
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524,859,368
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Machinery - Construction and Mining - 0.8%
2,970,000 Caterpillar, Inc. 152,212,500
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Medical - Biomedical and Genetic - 0.1%
379,775 Immunex Corp.* 24,305,600
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Medical - Drugs - 8.4%
2,326,325 Bristol-Myers Squibb Co. 204,135,019
7,191,846 Glaxo Wellcome PLC** 148,820,481
6,016,050 Pfizer, Inc. 425,635,538
36,427,354 SmithKline Beecham PLC** 345,130,419
3,326,950 Warner-Lambert Co. 476,377,653
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1,600,099,110
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Medical - HMO - 0.5%
2,122,165 United Healthcare Corp. 98,282,767
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Medical - Wholesale Drug Distributors - 1.2%
1,283,100 Bergen Brunswig Corp. 51,404,194
2,331,037 Cardinal Health, Inc. 173,079,497
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224,483,691
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Medical Instruments - 0.6%
1,866,400 Guidant Corp. 107,318,000
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Medical Labs and Testing Services - 0.2%
1,656,425 Covance, Inc.* 29,298,017
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Money Center Banks - 4.8%
7,263,475 Bank of New York Co., Inc. $341,837,292
1,461,650 BankAmerica Corp. 104,507,975
14,811,013 Barclays PLC** 370,810,254
7,422,027 Lloyds TSB Group PLC** 91,913,688
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909,069,209
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Multilevel Direct Selling - 0.4%
1,237,775 Avon Products, Inc. 81,074,263
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Multimedia - 1.1%
2,093,650 Meredith Corp.# 71,314,953
2,500,000 Time Warner, Inc. 144,218,750
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215,533,703
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Networking Products - 2.6%
6,061,425 Cisco Systems, Inc.* 497,226,132
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Office Automation and Equipment - 0.8%
1,949,655 Xerox Corp. 154,632,012
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Oil - Field Services - 6.0%
7,419,050 Halliburton Co. 442,360,856
7,379,175 Schlumberger Ltd. 645,677,813
538,875 Western Atlas, Inc.* 46,444,289
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1,134,482,958
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Oil and Gas Drilling - 3.0%
1,700,000 Diamond Offshore Drilling, Inc. 105,825,000
266,675 Falcon Drilling Co., Inc.* 9,700,303
1,705,650 Global Marine, Inc.* 53,088,356
1,780,000 Noble Drilling Corp.* 63,301,250
2,716,975 Santa Fe International Corp. 133,641,208
3,750,000 Transocean Offshore, Inc. 202,500,000
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568,056,117
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Oil Companies - Exploration and Production - 3.0%
5,739,325 Burlington Resources, Inc. 280,868,217
700,000 Elf Aquitaine S.A.** 86,830,575
1,000,000 Enron Oil & Gas Co. 21,062,500
4,727,425 Pioneer Natural Resources Co.# 189,392,464
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578,153,756
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Oil Companies - Integrated - 4.0%
13,100,000 British Petroleum Co. PLC** 189,798,250
450,000 British Petroleum Co. PLC (ADR)** 39,487,500
17,113,505 ENI S.p.A. 96,890,281
3,720,000 Royal Dutch Petroleum Co. - N.Y. Shares 195,765,000
2,122,650 Texaco, Inc. 120,858,384
3,842,950 YPF S.A. (ADR) 122,974,400
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765,773,815
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Oil Field Machinery and Equipment - 1.2%
3,112,875 Smith International, Inc.*,# 237,356,719
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Pharmacy Services - 0.4%
2,705,600 Omnicare, Inc. 75,249,500
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Printing - Commercial - 0.2%
1,482,100 World Color Press, Inc.* 37,515,656
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Property and Casualty Insurance - 0.3%
6,234,000 Sumitomo Marine & Fire Insurance Co.** 41,570,359
1,698,000 Tokio Marine & Fire Insurance Co.** 16,941,878
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58,512,237
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Publishing - Books - 1.7%
2,365,225 Elsevier N.V.** 37,171,385
2,295,440 Wolters Kluwer N.V.** 281,973,726
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319,145,111
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Publishing - Newspapers - 0%
678,200 Hollinger International, Inc. 8,858,988
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See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 4
<PAGE>
JANUS FUND October 31, 1997
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Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Radio - 0.6%
1,355,000 Chancellor Media Corp.* $74,355,625
544,875 Clear Channel Communications, Inc.* 35,961,750
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110,317,375
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Retail - Discount - 1.0%
5,605,150 Wal-Mart Stores, Inc. 196,880,894
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Retail - Hypermarkets - 1.3%
6,245,475 Costco Companies, Inc.* 240,450,788
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Retail - Major Department Stores - 1.5%
4,494,950 Dayton Hudson Corp. 282,339,047
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Telecommunication Equipment - 0%
82,725 Northern Telecom Ltd. 7,326,531
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Telephone - Local - 0.4%
3,008,300 Cincinnati Bell, Inc. 81,224,100
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Television - 0.4%
917,250 Univision Communications, Inc.*,# 56,869,500
441,300 Young Broadcasting Corp. - Class A*,# 15,997,125
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72,866,625
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Total Common Stock (cost $15,070,566,934) 18,540,165,212
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Short-Term Corporate Notes - 0.9%
Coca-Cola Co.
$25,000,000 5.44%, 12/2/97 24,882,889
General Electric Co.
151,500,000 5.70%, 11/3/97 151,452,025
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Total Short-Term Corporate Notes (amortized cost $176,334,914) 176,334,914
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Time Deposit - 0.7%
Sun Trust Bank EDT
130,000,000 5.625%, 11/3/97 (cost $130,000,000) 130,000,000
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U.S. Government Agencies - 1.6%
Fannie Mae:
200,000,000 5.48%, 11/4/97 199,908,667
100,000,000 5.46%, 11/13/97 99,818,000
- --------------------------------------------------------------------------------
Total U.S. Government Agencies (amortized cost $299,726,667) 299,726,667
- --------------------------------------------------------------------------------
Total Investments (total cost $15,676,628,515) - 100.6% 19,146,226,793
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (0.6%) (116,892,350)
- --------------------------------------------------------------------------------
Net Assets - 100% $19,029,334,443
- --------------------------------------------------------------------------------
Summary of Investments by Country
October 31, 1997
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Argentina 0.6% $122,974,400
France 0.5% 86,830,574
Germany 0.9% 174,276,830
Italy 0.5% 96,890,280
Japan 0.3% 58,512,236
Netherlands 6.3% 1,214,965,251
Switzerland 0.4% 67,596,933
United Kingdom 8.9% 1,710,330,422
United States++ 81.6% 15,613,849,867
- --------------------------------------------------------------------------------
Total 100.0% $19,146,226,793
================================================================================
++ Includes Short-Term Securities (78.4% excluding Short-Term Securities)
Forward Currency Contracts
Open at October 31, 1997
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 11/24/97 30,000,000 $50,199,000 ($1,068,900)
British Pound 2/11/98 190,000,000 316,844,000 (1,086,500)
British Pound 2/18/98 610,000,000 1,016,931,000 (40,428,103)
British Pound 3/4/98 150,000,000 249,915,000 (10,365,000)
Dutch Guilder 3/5/98 800,000,000 413,629,078 (22,335,363)
French Franc 3/18/98 204,000,000 35,525,216 (944,591)
French Franc 3/26/98 97,000,000 16,898,660 (435,939)
French Franc 4/15/98 140,000,000 24,413,637 (482,013)
German Deutschemark 2/26/98 279,500,000 163,097,392 (8,004,865)
- --------------------------------------------------------------------------------
Total $2,287,452,983 ($85,151,274)
================================================================================
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 5
<PAGE>
JANUS BALANCED FUND Portfolio Manager, Blaine P. Rollins
Performance
Janus Balanced Fund gained 23.38% during our fiscal year ended October 31,
1997. During the same period, the S&P 500 Index returned 32.10% and the Lehman
Brothers Government/Corporate Bond Index gained 8.81%. All returns include
reinvested dividends.
For the 12 months ended October 31, 1997, Janus Balanced Fund was ranked 48
out of 343 Balanced Funds (top 14%) tracked by Lipper Analytical Services, Inc.,
a mutual fund rating company.(1)
Janus Balanced Fund had very respectable returns this year, and posted
gains that were approximately two percentage points above the average of its two
benchmark indexes. This was partly because the portfolio was tilted toward
equities, with core holdings in high-quality companies that generate significant
amounts of discretionary cash and invest it effectively - either in the company
itself or in high-return acquisitions that complement the company's business.
Our fixed-income holdings remained highly diversified. The bond market went
through several sharp reversals during the year, both up and down. My objective
was to limit price volatility and maintain a competitive yield until the dust
settled and we had a clearer picture of the economy's growth rate and the
outlook for inflation. In September, when it appeared economic growth had
returned to moderate levels, maturities of any new positions were lengthened to
the 10-year range.
Fixed-Income Positions
The Fund held a mix of Treasuries, investment-grade corporate and
high-yield bonds, as well as convertible bonds and preferred stocks. Whenever
possible, I leveraged our equity research with
- --------------------------------------------------------------------------------
Portfolio Profile October 31, 1997 October 31, 1996
Equities 51.9% 49.7%
Fixed-Income Securities
U.S. Treasury Notes 18.2% 22.2%
Investment-Grade Corp. Bonds 6.3% 12.3%
High-Yield Corporate Bonds 8.0% 7.2%
Foreign Corporate Bonds 1.4% 1.5%
Preferred Stock 10.6% 2.2%
Top 10 Stocks (% of Total Assets) 16.6% 18.3%
Number of Stocks 87 73
Cash & Cash Equivalents 3.6% 4.9%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 10 Equity Holdings October 31, 1997 October 31, 1996
Dionex Corp. 2.5% 2.8%
Schweizerishe Lebensversicherungs
-und Rentenanstalt 2.4% --
Halliburton Co. 1.9% --
Minnesota Mining
and Manufacturing Co. 1.7% --
Dayton Hudson Corp. 1.5% --
Camco International, Inc. 1.5% --
Warner-Lambert Co. 1.4% --
Barclays PLC 1.3% 1.5%
Lloyds TSB Group PLC 1.2% --
Smith International, Inc. 1.2% --
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 5 Industries October 31, 1997 October 31, 1996
Diversified Operations 6.0% 1.2%
Commercial Banks 4.5% 0.4%
Cruise Lines 4.4% --
Cable Television 4.2% --
Life and Health Insurance 3.5% 5.7%
- --------------------------------------------------------------------------------
our credit analysis to help evaluate a security's quality and potential. Our
research group knows well the Fund's investment-grade corporate and high-yield
bonds. Walt Disney, IBM, Lockheed Martin, Diamond Offshore Drilling, and Royal
Caribbean Cruises, Ltd. are familiar names among our investment-grade positions.
I increased our high-yield holdings with companies like Lam Research, a maker of
manufacturing equipment for the semiconductor industry, and Sinclair Broadcast
Group, a television station operator.
Stock Highlights
Dionex, a manufacturer of ion chromatography equipment used in color
spectrum analysis, was the portfolio's top holding for much of the year. Dionex
continued to surpass expectations. Robust unit sales combined with strict cost
controls have produced gross margins approaching 70% and operating margins
approaching 30%. Dionex generates huge cash flow and is buying back shares.
Energy and technology companies, cable TV operators, and selected retailers
were increased this year and financial stocks were reduced. We have owned a
broad spectrum of financial stocks over the past few years, from insurers like
UNUM to small thrifts. In general, they have been very good performers. But the
growing competition among lenders led to increasingly marginal loans, and many
of these stocks also reached expensive prices, so I decided to lower the Fund's
exposure to them.
In the areas that were increased, the individual companies we own all have
built very competitive market positions in their respec-tive industries.
Tele-Communications, Inc. is one of the largest cable operators in the country,
and is venturing into the Internet market. Halliburton's new technology for oil
and gas exploration is cutting costs and increasing production, and Dayton
Hudson is benefiting from the success of its Target stores subsidiary. Microsoft
is a household word in PC software.
Performance of our satellite TV providers and real estate investment trusts
was disappointing. Subscribers to satellite TV were slower to sign up than we
anticipated, and Walden Residential Properties and Mid-America Apartment
Communities found the apartment markets in the Southwest and Southeast highly
competitive, which impacted margins.
Looking Ahead
The U.S. economy is very healthy. As a result, the government's cash
receipts have been exceptionally strong, and this has helped reduce the federal
deficit. Chances are good we will see a federal surplus next year. Add to this
the falling prices of goods from Southeast Asia, and the odds increase that
inflation and interest rates will remain low. If this proves true, we believe
that we should continue to see good performance from financial assets.
Thank you for your continued investment in Janus Balanced Fund.
- --------------------------------------------------------------------------------
(1) A Balanced Fund is defined by Lipper as "a fund whose primary objective is
to conserve principal by maintaining at all times a balanced portfolio of
both stocks and bonds. Typically the stock/bond ratio ranges around
60%/40%." As of October 31, 1997, Janus Balanced Fund ranked 19/217 (top
9%) of Balanced Funds for the 3-year period, and 10/99 (top 10%) for the
5-year period. Lipper's ranking is based on total return, including
reinvestment of dividends and capital gains for the stated period. Past
performance does not guarantee future results.
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 6
<PAGE>
JANUS BALANCED FUND Portfolio Manager, Blaine P. Rollins
Performance Overview
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Balanced Fund, the S&P 500 Index and the Lehman Brothers
Government/Corporate Bond Index. Janus Balanced Fund is represented by a solid
blue line. The S&P 500 Index is represented by a single dashed black line. The
Lehman Brothers Government/Corporate Bond Index is represented by a single
dotted black line. The "y" axis reflects the value of the investment. The "x"
axis reflects the computation periods from inception, September 1, 1992, through
October 31, 1997. The upper right quadrant reflects the ending value of the
hypothetical investment in Janus Balanced Fund, ($21,926) as compared to the S&P
500 Index ($25,104) and the Lehman Brothers Government/Corporate Bond Index
($14,409). There is a legend in the upper left quadrant of the graph which
indicates Janus Balanced Fund's one-year, five-year and since inception
(September 1, 1992) average annual total returns as 23.38%, 15.56% and 16.41,
respectively.
*The Fund's inception date
Source - Lipper Analytical Services, Inc. 1997.
All returns reflect reinvested dividends.
Past performance does not guarantee future results. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The Fund's portfolio may differ significantly
from the securities in the Index. The Index is unmanaged and therefore does not
reflect the cost of portfolio management or trading.
JANUS BALANCED FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 51.9%
- --------------------------------------------------------------------------------
Aerospace and Defense - 0.4%
60,000 DONCASTERS PLC (ADR)* $1,616,250
- --------------------------------------------------------------------------------
Airlines - 0.1%
8,425 Ryanair Holdings PLC (ADR)* 210,625
- --------------------------------------------------------------------------------
Appliances - 0.5%
23,257 Electrolux A.B. - Class B 1,926,631
- --------------------------------------------------------------------------------
Automotive - Truck Parts and Equipment - 0.7%
61,275 Federal-Mogul Corp. 2,592,698
- --------------------------------------------------------------------------------
Chemicals - Diversified - 2.4%
106,592 Imperial Chemical Industries PLC** 1,572,948
65,175 Monsanto Co. 2,786,231
186,625 Solutia, Inc.* 4,129,078
- --------------------------------------------------------------------------------
8,488,257
- --------------------------------------------------------------------------------
Commercial Banks - 1.5%
33,200 Chester Bancorp, Inc. 622,500
23,750 First Savings Bancorp, Inc. 552,188
16,500 Northern Trust Corp. 965,250
68,825 Star Banc Corp. 3,376,727
- --------------------------------------------------------------------------------
5,516,665
- --------------------------------------------------------------------------------
Computer Software - 3.0%
39,575 Cadence Design Systems, Inc.* 2,107,369
27,850 Microsoft Corp.* 3,620,500
77,450 Parametric Technology Co.* 3,417,481
46,575 Wind River Systems* 1,787,316
- --------------------------------------------------------------------------------
10,932,666
- --------------------------------------------------------------------------------
Computers - Micro - 1.5%
36,875 Compaq Computer Corp.* 2,350,781
37,400 Dell Computer Corp.* 2,996,675
- --------------------------------------------------------------------------------
5,347,456
- --------------------------------------------------------------------------------
Containers - Paper and Plastic - 0.4%
24,550 Sealed Air Corp.* $1,265,859
- --------------------------------------------------------------------------------
Cruise Lines - 1.7%
67,950 Carnival Corp. - Class A 3,295,575
61,675 Royal Caribbean Cruises, Ltd. 2,864,033
- --------------------------------------------------------------------------------
6,159,608
- --------------------------------------------------------------------------------
Diversified Operations - 4.3%
64,975 Minnesota Mining and Manufacturing Co. 5,945,212
143,441 Siebe PLC** 2,754,139
42,700 Unilever N.V. - N.Y. Shares 2,279,113
60,950 Westinghouse Electric Corp.* 1,611,365
4,195 Zellweger Luwa A.G. 2,914,058
- --------------------------------------------------------------------------------
15,503,887
- --------------------------------------------------------------------------------
Electronic Components - 0.8%
31,281 Philips Electronics N.V. 2,449,969
4,175 Philips Electronics N.V. - N.Y. Shares 327,216
- --------------------------------------------------------------------------------
2,777,185
- --------------------------------------------------------------------------------
Electronic Components - Semiconductors - 0.5%
24,700 Intel Corp. 1,901,900
- --------------------------------------------------------------------------------
Electronic Safety Devices - 0.3%
20,225 Pittway Corp. - Class A 1,260,270
- --------------------------------------------------------------------------------
Finance - Investment Bankers/Brokers - 1.1%
121,200 Charles Schwab Corp. 4,135,950
- --------------------------------------------------------------------------------
Finance - Other Services - 0.5%
49,450 HealthCare Financial Partners, Inc.* 1,706,025
- --------------------------------------------------------------------------------
Human Resources - 0.7%
58,387 Robert Half International, Inc.* 2,390,218
- --------------------------------------------------------------------------------
Instruments - Controls - 0.4%
31,837 Parker Hannifin Corp. 1,331,185
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 7
<PAGE>
JANUS BALANCED FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Instruments - Scientific - 2.5%
181,325 Dionex Corp.* $9,043,584
- --------------------------------------------------------------------------------
Life and Health Insurance - 3.5%
24,875 ALLIED Life Financial Corp. 547,250
15,050 Liberty Corp. 644,328
17,200 Protective Life Corp. 909,450
12,602 Schweizerishe Lebensversicherungs-und
Rentenanstalt 8,555,440
40,925 UNUM Corp. 1,995,094
- --------------------------------------------------------------------------------
12,651,562
- --------------------------------------------------------------------------------
Machinery - Pumps - 0.4%
42,100 Pfeiffer Vacuum Technology A.G. (ADR)* 1,368,250
Manufacturing - 0.5%
64,850 Roper Industries, Inc. 1,730,684
Medical - Drugs - 2.9%
60,400 Pfizer, Inc. 4,273,300
21,650 SmithKline Beecham PLC (ADR) 1,031,081
35,825 Warner-Lambert Co. 5,129,692
- --------------------------------------------------------------------------------
10,434,073
- --------------------------------------------------------------------------------
Money Center Banks - 3.2%
53,200 Bank of New York Co., Inc. 2,503,725
186,280 Barclays PLC** 4,663,728
352,987 Lloyds TSB Group PLC** 4,371,358
- --------------------------------------------------------------------------------
11,538,811
- --------------------------------------------------------------------------------
Multimedia - 0.3%
36,700 Meredith Corp. 1,250,094
- --------------------------------------------------------------------------------
Music/Clubs - 0.6%
96,850 Steinway Musical Instruments, Inc.* 2,300,188
- --------------------------------------------------------------------------------
Networking Products - 1.0%
44,250 Cisco Systems, Inc.* 3,629,883
- --------------------------------------------------------------------------------
Oil - Field Services - 2.9%
112,300 Halliburton Co. 6,695,888
42,850 Schlumberger Ltd. 3,749,375
- --------------------------------------------------------------------------------
10,445,263
- --------------------------------------------------------------------------------
Oil and Gas Drilling - 1.4%
62,250 Santa Fe International Corp. 3,061,922
37,850 Transocean Offshore, Inc. 2,043,900
- --------------------------------------------------------------------------------
5,105,822
- --------------------------------------------------------------------------------
Oil Companies - Exploration and Production - 1.0%
23,150 Burlington Resources, Inc. 1,132,903
65,225 Pioneer Natural Resources Co. 2,613,077
- --------------------------------------------------------------------------------
3,745,980
- --------------------------------------------------------------------------------
Oil Companies - Integrated - 0.4%
25,400 Royal Dutch Petroleum Co. - N.Y. Shares 1,336,675
- --------------------------------------------------------------------------------
Oil Field Machinery and Equipment - 2.7%
72,400 Camco International, Inc. 5,230,900
56,825 Smith International, Inc.* 4,332,906
- --------------------------------------------------------------------------------
9,563,806
- --------------------------------------------------------------------------------
Power Converters and Power Supply Equipment - 0.5%
59,450 American Power Conversion Corp.* 1,620,013
- --------------------------------------------------------------------------------
Property and Casualty Insurance - 0.9%
247,000 Sumitomo Marine & Fire Insurance Co. 1,647,077
47,000 Tokio Marine & Fire Insurance Co. 468,945
27,900 W. R. Berkley Corp. 1,147,388
- --------------------------------------------------------------------------------
3,263,410
- --------------------------------------------------------------------------------
Retail - Discount - 0.6%
63,825 Family Dollar Stores, Inc. 1,499,888
20,850 TJX Companies, Inc. 617,681
- --------------------------------------------------------------------------------
2,117,569
- --------------------------------------------------------------------------------
Retail - Hypermarkets - 1.0%
89,750 Costco Companies, Inc.* $3,455,375
- --------------------------------------------------------------------------------
Retail - Major Department Stores - 1.5%
86,675 Dayton Hudson Corp. 5,444,273
- --------------------------------------------------------------------------------
Retail - Regional Department Stores - 0.3%
39,900 Fred Meyer, Inc.* 1,139,644
- --------------------------------------------------------------------------------
Savings/Loan/Thrifts - 2.3%
17,650 Calumet Bancorp, Inc.* 891,325
40,450 Catskill Financial Corp. 717,988
20,000 FFLC Bancorp, Inc. 705,000
37,175 First Defiance Financial Corp. 590,153
31,575 Flushing Financial Corp. 686,756
25,000 Home Bancorp 600,000
69,925 Home Bancorp of Elgin, Inc. 1,228,058
11,975 JSB Financial, Inc. 577,045
35,000 North Central Bancshares, Inc. 634,375
25,225 Ocean Financial Corp. 945,938
32,250 South Street Financial Corp. 564,375
- --------------------------------------------------------------------------------
8,141,013
- --------------------------------------------------------------------------------
Telephone - Local - 0.7%
97,850 Cincinnati Bell, Inc. 2,641,950
- --------------------------------------------------------------------------------
Total Common Stock (cost $160,081,528) 187,031,257
- --------------------------------------------------------------------------------
Corporate Bonds - 14.3%
- --------------------------------------------------------------------------------
Aerospace and Defense - 1.7%
$2,430,000 International Lease Finance Corp., 7.50%
notes, due 3/1/99 2,478,600
3,700,000 Lockheed Martin Corp., 6.55%
company guaranteed unsecured notes,
due 5/15/99 3,737,000
- --------------------------------------------------------------------------------
6,215,600
- --------------------------------------------------------------------------------
Commercial Banks - 3.0%
8,050,000 First Nationwide Escrow Corp., 10.625%
senior subordinated notes, due 10/1/03 8,814,750
2,000,000 First Nationwide Holdings, Inc., 9.125%
senior subordinated notes, due 1/15/03 2,075,000
- --------------------------------------------------------------------------------
10,889,750
- --------------------------------------------------------------------------------
Computers - Mainframe - 1.1%
4,000,000 IBM Corp., 6.375%
global notes, due 6/15/00 4,035,000
- --------------------------------------------------------------------------------
Containers - Metal and Glass - 0.8%
2,650,000 Owens-Illinois, Inc., 7.85%
senior notes, due 5/15/04 2,756,000
- --------------------------------------------------------------------------------
Cruise Lines - 0.6%
2,050,000 Royal Caribbean Cruises, Ltd., 7.00%
senior notes, due 10/15/07 2,065,375
- --------------------------------------------------------------------------------
Electronic Components - Semiconductors - 0.9%
3,500,000 Lam Research Corp., 5.00%
subordinated notes, due 9/1/02+ 3,351,250
- --------------------------------------------------------------------------------
Finance - Leasing Companies - 0.7%
2,525,000 Ryder Trucks, Inc., 10.00%
senior subordinated notes, due 12/1/06 2,518,687
- --------------------------------------------------------------------------------
Medical Products - 0.9%
2,930,000 Dade International, Inc., 11.125%
senior subordinated notes, Series B,
due 5/1/06 3,259,625
- --------------------------------------------------------------------------------
Multi-Line Insurance - 0.3%
1,000,000 Loews Corp., 3.125%
subordinated notes, due 9/15/07 1,138,750
- --------------------------------------------------------------------------------
Multimedia - 1.0%
3,400,000 Walt Disney Co. (The), 6.375%
senior notes, due 3/30/01 3,438,250
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 8
<PAGE>
JANUS BALANCED FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Oil and Gas Drilling - 1.0%
$2,280,000 Diamond Offshore Drilling, Inc., 3.75%
subordinated notes, due 2/15/07 $3,696,450
- --------------------------------------------------------------------------------
Oil Companies - Exploration and Production - 0.4%
1,500,000 Pogo Producing Co., 5.50%
subordinated notes, due 6/15/06 1,582,500
- --------------------------------------------------------------------------------
Paint and Related Products - 0.1%
500,000 Sherwin-Williams Co., 6.25%
notes, due 2/1/00 502,500
- --------------------------------------------------------------------------------
Retail - Major Department Stores - 0.5%
1,800,000 Sears, Roebuck and Co., 6.50%
notes, due 6/15/00 1,815,750
- --------------------------------------------------------------------------------
Shipbuilding - 0.6%
1,950,000 Newport News Shipbuilding, Inc., 8.625%
senior notes, due 12/1/06 2,018,250
- --------------------------------------------------------------------------------
Television - 0.7%
2,250,000 Sinclair Broadcast Group, Inc., 10.00%,
senior subordinated
notes, due 9/30/05 2,334,375
- --------------------------------------------------------------------------------
Total Corporate Bonds (cost $49,963,859) 51,618,112
- --------------------------------------------------------------------------------
Foreign Bond - 1.4%
DEM 8,515,000 ITT Promedia, 9.125%
senior subordinated notes, due 9/15/07
(cost $4,804,898) 5,021,477
- --------------------------------------------------------------------------------
Preferred Stock - 10.6%
- --------------------------------------------------------------------------------
Cable Television - 4.2%
148,375 Houston Industries, Inc., 7.00% 8,123,531
50,017 TCI Pacific Communications, 5.00% 6,971,119
- --------------------------------------------------------------------------------
15,094,650
- --------------------------------------------------------------------------------
Cruise Lines - 2.1%
99,123 Royal Caribbean Cruises, Ltd., 7.25% 7,533,348
- --------------------------------------------------------------------------------
Diversified Operations - 1.7%
2,700,000 Williams Holdings PLC, 8.00%** 5,931,195
- --------------------------------------------------------------------------------
Electric - Generation - 0.5%
40,000 AES Trust II, 5.50%+ 1,885,000
- --------------------------------------------------------------------------------
Telephone - Local - 1.3%
85,810 Salomon, Inc., Exchangeable Notes
(Cincinnati Bell, Inc.), 6.25% 4,665,919
- --------------------------------------------------------------------------------
Transportation - Truck - 0.8%
44,850 CNF Trust I, Series A, 5.00% 2,892,825
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $34,782,144) 38,002,937
- --------------------------------------------------------------------------------
U.S. Government Obligations - 18.2%
- --------------------------------------------------------------------------------
U.S. Treasury Notes:
$12,950,000 6.375%, due 5/15/99 13,083,773
3,000,000 6.00%, due 6/30/99 3,017,040
5,150,000 5.75%, due 10/31/00 5,147,116
5,000,000 6.625%, due 4/30/02 5,159,800
10,000,000 5.75%, due 10/31/02 10,010,700
9,000,000 6.625%, due 5/15/07 9,457,830
19,275,000 6.125%, due 8/15/07 19,694,424
- --------------------------------------------------------------------------------
Total U. S. Government Obligations (cost $64,810,894) 65,570,683
- --------------------------------------------------------------------------------
Total Investments (total cost $314,443,323) - 96.4% 347,244,466
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 3.6% 12,914,992
- --------------------------------------------------------------------------------
Net Assets - 100% $360,159,458
- --------------------------------------------------------------------------------
Summary of Investments by Country
October 31, 1997
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Belgium 1.4% $5,021,477
Germany 0.4% 1,368,250
Ireland 0.1% 210,625
Japan 0.6% 2,116,022
Netherlands 1.8% 6,392,973
Sweden 0.6% 1,926,631
Switzerland 3.3% 11,469,498
United Kingdom 6.3% 21,940,699
United States 85.5% 296,798,291
- --------------------------------------------------------------------------------
Total 100.0% $347,244,466
================================================================================
Forward Currency Contracts
Open at October 31, 1997
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 2/11/98 3,150,000 $5,252,940 ($135,627)
British Pound 2/18/98 2,450,000 4,084,395 (223,615)
British Pound 2/25/98 2,350,000 3,916,510 (211,524)
British Pound 2/26/98 500,000 833,250 (45,725)
British Pound 3/4/98 320,000 533,152 (24,972)
British Pound 5/6/98 1,100,000 1,827,870 (62,260)
- --------------------------------------------------------------------------------
Total $16,448,117 ($703,723)
================================================================================
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 9
<PAGE>
JANUS ENTERPRISE FUND Portfolio Manager, James P. Goff
Performance
Janus Enterprise Fund returned 3.31% for the 12-month period ended October
31, 1997. The S&P 400 MidCap Index returned 32.67%. Both returns include
reinvested dividends.
The last year has been a very difficult period, and I am extremely
disappointed with our results. Significant crosscurrents in the markets hurt
Fund performance and, despite our efforts, we contin-ued to lag the S&P 400.
Small and midsize stocks experienced rough times during the first six months of
our fiscal year and failed to gain ground. Meanwhile, the S&P 500 moved steadily
higher, powered by the explosive popularity of the mega caps. However, market
leadership reversed in the last six months, and small and midsize stocks
reasserted themselves. It was during this time - early in the second half of the
fiscal year - that the market briefly moved away from us.
For example, we were substantially underweighted in technology and energy
stocks, which produced spectacular results in the second half of the year.
Technology alone accounts for nearly 25% of the S&P 400 MidCap Index, and
certain industries within the energy and technology sectors were up 60%-90% in
the last year. When these areas outperform, the Fund tends to underperform.
Despite solid earnings gains from several key positions, our areas of emphasis,
including restaurants, retail, and wireless, did not appreciate significantly.
Because several of our largest holdings failed to respond in a meaningful
manner, we trailed the Index.
- --------------------------------------------------------------------------------
Portfolio Profile October 31, 1997 October 31, 1996
Equities 98.3% 97.0%
Foreign 18.3% 19.0%
Top 10 Equities (% of Assets) 41.4% 53.4%
Number of Stocks 79 37
Cash & Cash Equivalents 1.7% 3.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 10 Equity Holdings October 31, 1997 October 31, 1996
J.D. Wetherspoon PLC 6.6% 5.5%
Fastenal Co. 6.1% 8.4%
PizzaExpress PLC 5.5% 5.6%
Petco Animal Supplies, Inc. 4.1% 3.2%
Omnicare, Inc. 4.0% 0.7%
Paychex, Inc. 3.4% --
AES Corp. 3.4% --
Apollo Group, Inc. - Class A 2.9% --
Clear Channel Communications, Inc. 2.7% --
Littlefuse, Inc. 2.7% 1.4%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 5 Industries October 31, 1997 October 31, 1996
Retail - Restaurants 7.8% 8.5%
Retail - Pubs 6.6% 5.5%
Retail - Building Products 6.1% 8.4%
Radio 5.5% --
Retail - Pet Food and Supplies 4.1% 3.6%
- --------------------------------------------------------------------------------
Portfolio Review
During the first half of the year, the Fund experienced several
disappointments. Paging Network, Global DirectMail, Omnipoint, and Viking Office
Products all had shifts in fundamentals that invalidated our investment thesis.
As a result, their stock prices dropped, and I sold each at a loss.
Meanwhile, Insignia Financial, Barnett, Omnicare, and Papa John's either
met or exceeded earnings estimates - in some cases for several quarters - only
to see stock prices retreat. For the latest reporting period, our top 10
positions had an average earnings increase of 40%-plus. The next 10 saw gains
greater than 30%. Essentially, our top 20 positions had an average earnings
increase of over 35%, which is well in excess of our benchmark Index. But in our
current economic environment, there is no scarcity of earnings growth. Although
we are finding companies that meet our strict invest-ment criteria, we are not
being rewarded for their rapid growth.
Fastenal, a substantial longtime holding, was also slower to develop than I
had hoped, and the stock's rise of approximately 14% was also a drag on
performance compared to the Index's gain. The company introduced a variety of
new products and dramatically increased its sales force, which temporarily
slowed earnings. However, earnings have begun to accelerate back over 30%, and I
expect them to pick up further. Fastenal's prospects continue to improve, and I
intend to hold the position.
Apollo Group, Sofamor Danek, and PizzaExpress were among our standouts,
each gaining over 40%. Apollo Group, which owns and operates the University of
Phoenix, has seen strong enrollment trends and is expanding into new markets.
Legal issues surrounding Sofamor Danek, a leader in surgical implants for spinal
fixation, were dismissed during the year, and the FDA recently expanded the
surgical applications for its products. The company is now seeing strong global
demand and appears to be on track to dominate this field. PizzaExpress, a
British-based upscale pizza chain, also appreciated nicely.
I sold HFS, a longtime holding, at a substantial profit. HFS, a leader in
the hotel, real estate and automobile rental industries, performed well for us,
but I opted to take profits because the company's recent expansion plans
(management is preparing to open its own mutual funds) made for a confusing
long-term business mix.
Current Strategy and Outlook
I emphasize three main criteria to screen for potential investments. First,
I look for companies that may rapidly grow earnings. However, this growth must
be sustainable for a long period, which is usually no less than three years.
Finally, I search for dominant franchises that may perform well in any economic
environment, and I want to purchase the stock at the right price. Admittedly,
this is a difficult combination to find.
Recently, I made some moderate adjustments, broadening the portfolio by
adding new positions in the Fund's bottom quartile (25%). I believe that this
should help mitigate volatility while giving greater trading flexibility going
forward.
Although I am very disappointed in the Fund's results over the past year, I
believe that, ultimately, the market will come to recognize the true value of
the companies we own, and we will be rewarded. However, I am actively searching
for compelling new ideas where our research can add value, and that I feel will
boost performance over time.
Thank you for your continued investment in Janus Enterprise Fund.
- --------------------------------------------------------------------------------
Past performance does not guarantee future results.
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 10
<PAGE>
JANUS ENTERPRISE FUND Portfolio Manager, James P. Goff
Performance Overview
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Enterprise Fund and the S&P 400 MidCap Index. Janus Enterprise Fund is
represented by a solid blue line. The S&P 400 MidCap Index is represented by a
single dashed black line. The "y" axis reflects the value of the investment. The
"x" axis reflects the computation periods from inception, September 1, 1992,
through October 31, 1997. The upper right quadrant reflects the ending value of
the hypothetical investment in Janus Enterprise Fund ($24,416) as compared to
the S&P 400 MidCap Index ($24,378). There is a legend in the upper left quadrant
of the graph which indicates Janus Enterprise Fund's one-year, five-year and
since inception (September 1, 1992) average annual total returns as 3.31%,
16.47% and 18.86%, respectively.
*The Fund's inception date
Source - Lipper Analytical Services, Inc. 1997.
All returns reflect reinvested dividends.
Past performance does not guarantee future results. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The Fund's portfolio may differ significantly
from the securities in the Index. The Index is unmanaged and therefore does not
reflect the cost of portfolio management or trading.
JANUS ENTERPRISE FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 95.6%
- --------------------------------------------------------------------------------
Advertising Sales - 1.2%
210,462 Outdoor Systems, Inc.* $6,471,706
- --------------------------------------------------------------------------------
Advertising Services - 0.6%
108,225 Snyder Communications, Inc.* 3,192,637
- --------------------------------------------------------------------------------
Airlines - 0.5%
107,925 Ryanair Holdings PLC (ADR)* 2,698,125
- --------------------------------------------------------------------------------
Applications Software - 0.3%
56,225 J.D. Edwards & Co.* 1,911,650
- --------------------------------------------------------------------------------
Automotive - Truck Parts and Equipment - 0.4%
51,425 OEA, Inc. 2,069,856
- --------------------------------------------------------------------------------
Cellular Telecommunications - 2.6%
105,150 Nextel Communications, Inc. - Class A* 2,760,187
1,077,025 PriCellular Corp. - Class A*,# 11,712,646
- --------------------------------------------------------------------------------
14,472,833
- --------------------------------------------------------------------------------
Chemicals - Diversified - 1.7%
651,689 Imperial Chemical Industries PLC** 9,616,792
- --------------------------------------------------------------------------------
Circuit Boards - 0.2%
16,275 Sanmina Corp.* 1,216,556
- --------------------------------------------------------------------------------
Circuits - 1.0%
84,150 Maxim Integrated Products, Inc.* 5,574,937
- --------------------------------------------------------------------------------
Commercial Banks - 2.1%
7,975 First Empire State Corp. 3,261,775
49,975 Northern Trust Corp. 2,923,538
83,375 Regions Financial Corp. 3,064,031
46,475 Star Banc Corp. 2,280,180
- --------------------------------------------------------------------------------
11,529,524
- --------------------------------------------------------------------------------
Commercial Services - 4.0%
29,650 ACNielsen Corp.* $678,244
495,662 Paychex, Inc. 18,897,114
172,275 Profit Recovery Group International, Inc.* 2,691,797
- --------------------------------------------------------------------------------
22,267,155
- --------------------------------------------------------------------------------
Computer Services - 1.6%
815,283 Capita Group PLC 4,197,145
114,075 Ceridian Corp.*,** 4,456,055
- --------------------------------------------------------------------------------
8,653,200
- --------------------------------------------------------------------------------
Computer Software - 1.1%
88,825 Aspen Technologies, Inc.* 3,342,041
65,300 Parametric Technology Co.* 2,881,363
- --------------------------------------------------------------------------------
6,223,404
- --------------------------------------------------------------------------------
Containers - Paper and Plastic - 2.0%
216,950 Sealed Air Corp.* 11,186,484
- --------------------------------------------------------------------------------
Cruise Lines - 1.2%
140,072 Royal Caribbean Cruises, Ltd. 6,504,593
- --------------------------------------------------------------------------------
Diversified Financial Services - 0.5%
149,875 American Capital Strategies, Ltd.* 2,697,750
- --------------------------------------------------------------------------------
Electric - Generation - 3.4%
473,700 AES Corp.* 18,770,362
- --------------------------------------------------------------------------------
Electronic Components - 1.2%
38,825 BMC Industries, Inc. 1,249,680
71,525 Philips Electronics N.V. - N.Y. Shares 5,605,772
- --------------------------------------------------------------------------------
6,855,452
- --------------------------------------------------------------------------------
Electronic Connectors - 0.9%
208,700 Berg Electronics Corp.* 4,878,363
- --------------------------------------------------------------------------------
Finance - Auto Loans - 0.5%
89,775 AmeriCredit Corp.* 2,609,086
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 11
<PAGE>
JANUS ENTERPRISE FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Finance - Investment Bankers/Brokers - 2.2%
354,987 Charles Schwab Corp. $12,113,931
- --------------------------------------------------------------------------------
Finance - Mortgage Loan Banker - 0.4%
39,000 Federal Agricultural Mortgage Corp. - Class C* 2,028,000
- --------------------------------------------------------------------------------
Finance - Other Services - 1.3%
51,925 HealthCare Financial Partners, Inc.* 1,791,413
263,700 Medallion Financial Corp. 5,537,700
- --------------------------------------------------------------------------------
7,329,113
- --------------------------------------------------------------------------------
Food - Retail - 0.5%
55,975 Quality Food Centers, Inc.* 2,665,809
- --------------------------------------------------------------------------------
Food - Wholesale - 1.1%
188,350 J.P. Foodservice, Inc.* 6,015,428
- --------------------------------------------------------------------------------
Glass Products - 0.2%
40,325 Apogee Enterprises, Inc. 962,759
- --------------------------------------------------------------------------------
Golf - 0.7%
139,525 Family Golf Centers, Inc.* 3,732,294
- --------------------------------------------------------------------------------
Health Care Cost - 1.2%
65,575 AmeriPath, Inc.* 1,081,987
135,775 Pediatrix Medical Group, Inc.* 5,736,494
- --------------------------------------------------------------------------------
6,818,481
- --------------------------------------------------------------------------------
Independent Power Producer - 1.7%
394,000 Trigen Energy Corp.# 9,382,125
- --------------------------------------------------------------------------------
Internet Software - 0.9%
67,125 America Online, Inc.* 5,168,625
- --------------------------------------------------------------------------------
Investment Management and Advisory Services - 1.1%
932,483 Amvescap PLC** 6,154,428
- --------------------------------------------------------------------------------
Life and Health Insurance - 1.4%
85,200 Protective Life Corp. 4,504,950
87,925 UICI* 2,945,487
- --------------------------------------------------------------------------------
7,450,437
- --------------------------------------------------------------------------------
Medical - Drugs - 0.3%
32,950 Forest Laboratories, Inc.* 1,523,937
1,050 Teva Pharmaceutical Industries, Ltd. (ADR) 49,088
- --------------------------------------------------------------------------------
1,573,025
- --------------------------------------------------------------------------------
Medical Instruments - 2.2%
32,225 ESC Medical Systems, Ltd.* 1,264,831
159,425 Sofamor Danek Group, Inc.* 10,980,397
- --------------------------------------------------------------------------------
12,245,228
- --------------------------------------------------------------------------------
Oil - Field Services - 0.2%
54,475 Hanover Compressor Co.* 1,178,022
- --------------------------------------------------------------------------------
Oil and Gas Drilling - 2.2%
99,450 Diamond Offshore Drilling, Inc. 6,190,763
63,675 Santa Fe International Corp. 3,132,014
54,675 Transocean Offshore, Inc. 2,952,450
- --------------------------------------------------------------------------------
12,275,227
- --------------------------------------------------------------------------------
Oil Field Machinery and Equipment - 0.4%
31,900 Camco International, Inc. 2,304,775
- --------------------------------------------------------------------------------
Pharmacy Services - 4.0%
785,775 Omnicare, Inc. 21,854,367
- --------------------------------------------------------------------------------
Property and Casualty Insurance - 1.4%
76,275 Progressive Corp. 7,951,669
- --------------------------------------------------------------------------------
Publishing - Newspapers - 0.2%
19,600 Central Newspapers, Inc. - Class A 1,287,475
- --------------------------------------------------------------------------------
Radio - 5.5%
119,025 Chancellor Media Corp.* 6,531,497
226,275 Clear Channel Communications, Inc.* 14,934,150
134,750 Heftel Broadcasting Corp.* 8,960,875
- --------------------------------------------------------------------------------
30,426,522
- --------------------------------------------------------------------------------
Real Estate Investment and Management - 3.1%
542,625 Insignia Financial Group, Inc. - Class A*,# $ 11,734,266
172,600 Security Capital Group, Inc. - Class B* 5,523,200
- --------------------------------------------------------------------------------
17,257,466
- --------------------------------------------------------------------------------
Real Estate Investment Trusts - 0.7%
81,025 Vornado Realty Trust 3,615,741
- --------------------------------------------------------------------------------
Resorts and Theme Parks - 0.7%
100,275 Premier Parks, Inc.* 4,011,000
- --------------------------------------------------------------------------------
Retail - Building Products - 6.1%
683,650 Fastenal Co. 33,498,850
- --------------------------------------------------------------------------------
Retail - Catalog Shopping - 1.6%
415,700 Barnett, Inc.* 8,573,813
- --------------------------------------------------------------------------------
Retail - Consumer Electronics - 1.0%
160,550 CompUSA, Inc.* 5,258,013
- --------------------------------------------------------------------------------
Retail - Mail Order - 0.5%
62,350 MSC Industrial Direct Co., Inc. - Class A* 2,595,319
- --------------------------------------------------------------------------------
Retail - Pet Food and Supplies - 4.1%
744,030 Petco Animal Supplies, Inc.*,# 22,878,923
- --------------------------------------------------------------------------------
Retail - Pubs - 6.6%
1,375,450 J.D. Wetherspoon PLC*,**,# 36,327,251
- --------------------------------------------------------------------------------
Retail - Regional Department Stores - 0.5%
100,750 Fred Meyer, Inc.* 2,877,672
- --------------------------------------------------------------------------------
Retail - Restaurants - 7.8%
417,780 Papa John's International, Inc.* 12,350,621
2,435,456 PizzaExpress PLC**,# 30,466,761
- --------------------------------------------------------------------------------
42,817,382
- --------------------------------------------------------------------------------
Savings/Loan/Thrifts - 0.5%
49,575 H.F. Ahmanson & Co. 2,924,925
- --------------------------------------------------------------------------------
Schools - 2.9%
384,025 Apollo Group, Inc. - Class A* 16,225,056
- --------------------------------------------------------------------------------
Telecommunication Equipment - 1.0%
61,892 Nokia Oy - Class A 5,413,917
- --------------------------------------------------------------------------------
Television - 1.1%
96,700 Univision Communications, Inc.* 5,995,400
- --------------------------------------------------------------------------------
Theaters - 0.5%
115,750 Regal Cinemas, Inc.* 2,662,250
- --------------------------------------------------------------------------------
Water Treatment Services - 0.8%
102,825 Culligan Water Technologies, Inc.* 4,382,916
- --------------------------------------------------------------------------------
Total Common Stock (cost $403,064,377) 527,634,099
- --------------------------------------------------------------------------------
Warrants - 2.7%
597,100 Littlefuse, Inc., exp. 12/31/01* 14,927,500
(cost $4,522,249)
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 1.1%
Household Finance Corp.
$6,100,000 5.68%, 11/3/97 (amortized cost $6,098,075) 6,098,075
- --------------------------------------------------------------------------------
Total Investments (total cost $413,684,701) - 99.4% 548,659,674
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 0.6% 3,168,373
- --------------------------------------------------------------------------------
Net Assets - 100% $551,828,047
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 12
<PAGE>
JANUS ENTERPRISE FUND October 31, 1997
Summary of Investments by Country
October 31, 1997
Country % of Investment Securities Value
- --------------------------------------------------------------------------------
Finland 1.0% $5,413,917
Ireland 0.5% 2,698,125
Israel -- 49,088
Netherlands 1.0% 5,605,772
United Kingdom 15.8% 86,762,376
United States++ 81.7% 448,130,396
- --------------------------------------------------------------------------------
Total 100.0% $548,659,674
================================================================================
++ Includes Short-Term Securities (80.6% excluding Short-Term Securities)
Forward Currency Contracts
Open at October 31, 1997
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 11/28/97 9,000,000 $15,057,000 ($476,100)
British Pound 1/20/98 7,000,000 11,683,700 90,300
British Pound 2/25/98 4,000,000 6,666,400 (360,040)
British Pound 2/26/98 12,597,000 20,992,901 (384,447)
British Pound 3/4/98 5,000,000 8,330,500 (345,500)
- --------------------------------------------------------------------------------
Total $62,730,501 ($1,475,787)
================================================================================
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 13
<PAGE>
JANUS EQUITY INCOME FUND Portfolio Manager, Blaine P. Rollins
Performance
Janus Equity Income Fund returned 29.46% for the fiscal year, November 1,
1996 to October 31, 1997. The Standard & Poor's 500 Index gained 32.10% for the
same period. Both returns include reinvested dividends.
For the 12 months ended October 31, 1997, Janus Equity Income Fund was
ranked 38 out of 174 Equity Income Funds (top 22%) tracked by Lipper Analytical
Services, Inc., a mutual fund rating company.(1)
Equity performance could be separated into two distinct periods this year.
During the first half of the year, November 1996 through April 1997, performance
was almost exclusively confined to the largest, most liquid stocks. Then, in the
second half, this unusually narrow focus dissipated and performance broadened
significantly. Stocks were once again evaluated individually, on their
fundamentals, and not just on their size. The increase in breadth provided a
good tail wind. After trailing the S&P 500 Index (8.11% to 14.71%) in the first
six months, Janus Equity Income Fund gained 21.35% during the second half,
versus a gain of 17.39% for the Index.
The Fund also performed well because it remained focused on high-quality
companies that were operating efficiently and generating substantial cash. I
looked for companies and management teams that stuck to what they knew, and
invested their extra cash effectively, either in the company itself or in
acquisitions that strengthened their businesses.
Stock Highlights
Companies in the portfolio tend to have several critical characteristics:
predictable earnings, shareholder-friendly management, excellent cash flow, and
a strong record of increasing profitability. This year, I found some very
attractive individual opportunities in
- --------------------------------------------------------------------------------
Portfolio Profile October 31, 1997 October 31, 1996
Equities 87.6% 88.0%
Fixed-Income Securities
Investment-Grade Corp. Bonds 0.8% --
High-Yield/High-Risk
Corporate Bonds -- 5.1%
Preferred Stock 6.5% 3.3%
Top 10 Stocks (% of Total Assets) 23.7% 32.4%
Number of Stocks 111 69
Cash & Cash Equivalents 5.1% 3.6%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 10 Equity Holdings October 31, 1997 October 31, 1996
Schweizerishe Lebensverischerungs
- und Rentenanstalt 3.4% --
Dionex Corp. 3.1% 5.1%
Federal-Mogul Corp. 2.8% 1.0%
TCI Pacific Communications, 5.00% 2.3% --
Dayton Hudson Corp. 2.2% --
Minnesota Mining and
Manufacturing Co. 2.1% --
Houston Industries, Inc., 7.00% 2.0% --
Royal Caribbean Cruises, Ltd. 2.0% --
Schlumberger Ltd. 1.9% --
Charles Schwab Corp. 1.9% 1.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 5 Industries October 31, 1997 October 31, 1996
Diversified Operations 5.3% 4.6%
Savings/Loan/Thrifts 4.6% 5.9%
Life and Health Insurance 4.6% 6.9%
Cable Television 4.5% --
Computer Software 4.2% --
- --------------------------------------------------------------------------------
financial, technology, and energy stocks. Over the 12 months, I added to
technology and energy, particularly the oil and gas service companies, and
reduced financial holdings, mostly during the second half.
Our financial stocks were trimmed due to increasing competition in lending.
Banks and other financial institutions are now making more marginal loans, and I
became concerned that over time this could lower credit quality. Many of these
stocks had also reached high prices.
There were some exceptions, however. One was Swiss Life, a large Swiss
insurer. I increased this position due to the company's growing presence in the
European life insurance market. The stock is also underfollowed by the
investment community and was selling at very reasonable prices. The company has
an exceptionally strong balance sheet and I expect Swiss Life will use some of
its extra cash to acquire German and French life insurers. I raised the position
in Charles Schwab as well. Schwab is a dominant participant in the discount
brokerage and financial services business. Lloyds TSB, a British bank that is
benefiting from the extremely healthy U.K. banking environment, was also added
to the portfolio.
Among our energy stocks, Schlumberger and Halliburton are the premier
suppliers of new drilling and pumping technology to oil and gas drillers. The
new technology is making exploration far more cost-efficient. Smith
International is a leader in drilling fluids and drill bits. Our technology
holdings include companies that control broad areas of the tech sector. These
include chip maker Texas Instruments; Microsoft; Cisco Systems, the leader in
computer networking equipment; and Dell Computer, which has the best operating
model in the PC, client server, and commercial workstation markets. Dell's
inventory turnover is very short, less than two weeks, and orders are often
built to specifications and put out the door the same day they are received.
On the income side, we own Royal Dutch Petroleum and Royal Caribbean
Cruises convertible preferred stock, both of which offer good dividends and have
appreciated nicely. TCI Pacific Communications convertible stock pays a dividend
and gives us exposure to Tele-Communications, Inc., the huge cable TV operator.
Satellite TV providers and real estate investment trusts were sold at
losses. Subscribers to satellite TV were slower to sign up than we anticipated,
and Walden Residential Properties and Mid-America Apartment Communities found
the apartment markets in the Southwest and Southeast highly competitive, which
impacted margins.
Looking Ahead
I remain optimistic about the financial markets. Interest rates are low and
inflation is dormant. U.S. economic growth appears to have cooled a little from
the robust pace of mid-year, and the sluggish economies of Japan and Southeast
Asia should help keep prices down on imports in the U.S. This is a very good
environment for the high-quality companies we own, and so I expect the portfolio
to perform well in the coming year.
Thank you for your continued investment in Janus Equity Income Fund.
- --------------------------------------------------------------------------------
(1) An Equity Income Fund is defined by Lipper as "a fund which seeks
relatively high current income and growth of income through investing 60%
or more of its portfolio in equities." Lipper's ranking is based on total
return, including reinvestment of dividends and capital gains for the
stated period. Past performance does not guarantee future results.
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 14
<PAGE>
JANUS EQUITY INCOME FUND Portfolio Manager, Blaine P. Rollins
Performance Overview
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Equity Income Fund and the S&P 500 Index. Janus Equity Income Fund is
represented by a solid blue line. The S&P 500 Index is represented by a single
dashed black line. The "y" axis reflects the value of the investment. The "x"
axis reflects the computation periods from inception, June 28, 1996, through
October 31, 1997. The upper right quadrant reflects the ending value of the
hypothetical investment in Janus Equity Income Fund ($14,654) as compared to the
S&P 500 Index ($13,994). There is a legend in the upper left quadrant of the
graph which indicates Janus Equity Income Fund's one-year and since inception
(June 28, 1996) average annual total returns as 29.46% and 33.19%, respectively.
*The Fund's inception date
Source - Lipper Analytical Services, Inc. 1997.
All returns reflect reinvested dividends.
Past performance does not guarantee future results. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The Fund's portfolio may differ significantly
from the securities in the Index. The Index is unmanaged and therefore does not
reflect the cost of portfolio management or trading.
JANUS EQUITY INCOME FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 87.6%
- --------------------------------------------------------------------------------
Advertising Sales - 0.8%
2,899 PubliGroupe S.A. $633,202
- --------------------------------------------------------------------------------
Aerospace and Defense - 0.7%
18,225 Doncasters Plc (ADR)* 490,936
- --------------------------------------------------------------------------------
Airlines - 0.8%
25,075 Ryanair Holdings PLC (ADR)* 626,875
- --------------------------------------------------------------------------------
Appliances - 1.0%
9,232 Electrolux A.B. - Class B 764,787
- --------------------------------------------------------------------------------
Automotive - Truck Parts and Equipment - 2.8%
49,900 Federal-Mogul Corp. 2,111,394
- --------------------------------------------------------------------------------
Beverages - Wine and Spirits - 1.6%
38,900 Beringer Wine Estates Holdings, Inc. - Class B* 1,205,900
- --------------------------------------------------------------------------------
Cable Television - 0.2%
6,887 Tele-Communications, Inc. - Class A* 157,971
- --------------------------------------------------------------------------------
Chemicals - Diversified - 3.2%
37,198 Imperial Chemical Industries PLC** 548,920
17,275 Monsanto Co. 738,506
50,120 Solutia, Inc.* 1,108,905
- --------------------------------------------------------------------------------
2,396,331
- --------------------------------------------------------------------------------
Chemicals - Specialty - 0.3%
49,996 Victrex PLC** 192,828
- --------------------------------------------------------------------------------
Circuits - 0.9%
5,475 Linear Technology Corp. 344,241
5,025 Maxim Integrated Products, Inc.* 332,906
- --------------------------------------------------------------------------------
677,147
- --------------------------------------------------------------------------------
Commercial Banks - 2.2%
8,000 Community Financial Corp.* $136,000
3,500 First Savings Bancorp, Inc. 81,375
4,700 Northern Trust Corp. 274,950
22,500 Prime Bancshares, Inc.* 428,906
15,150 Star Banc Corp. 743,297
- --------------------------------------------------------------------------------
1,664,528
- --------------------------------------------------------------------------------
Computer Software - 4.2%
10,300 Cadence Design Systems, Inc.* 548,475
8,225 Microsoft Corp.* 1,069,250
17,125 Parametric Technology Co.* 755,641
18,825 Wind River Systems* 722,409
- --------------------------------------------------------------------------------
3,095,775
- --------------------------------------------------------------------------------
Computers - Micro - 2.0%
9,475 Compaq Computer Corp.* 604,031
11,175 Dell Computer Corp.* 895,397
- --------------------------------------------------------------------------------
1,499,428
- --------------------------------------------------------------------------------
Containers - Paper and Plastic - 0.5%
6,800 Sealed Air Corp.* 350,625
- --------------------------------------------------------------------------------
Cruise Lines - 3.3%
20,150 Carnival Corp. - Class A 977,275
31,459 Royal Caribbean Cruises, Ltd. 1,460,877
- --------------------------------------------------------------------------------
2,438,152
- --------------------------------------------------------------------------------
Diversified Operations - 5.3%
16,725 Minnesota Mining and Manufacturing Co. 1,530,338
33,421 Siebe PLC** 641,700
12,700 Unilever N.V. - N.Y. Shares 677,863
11,250 Westinghouse Electric Corp.* 297,422
1,140 Zellweger Luwa A.G. 791,901
- --------------------------------------------------------------------------------
3,939,224
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 15
<PAGE>
JANUS EQUITY INCOME FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Electric Products - 0.3%
10,000 Kulicke & Soffa Industries, Inc.* $257,500
- --------------------------------------------------------------------------------
Electronic Components - 3.0%
30,550 International Manufacturing Services, Inc.* 332,231
10,728 Philips Electronics N.V. 840,231
13,225 Philips Electronics N.V. - N.Y. Shares 1,036,509
- --------------------------------------------------------------------------------
2,208,971
- --------------------------------------------------------------------------------
Electronic Components - Semiconductors - 3.1%
16,150 Applied Materials, Inc.* 539,006
7,300 Intel Corp. 562,100
11,225 Texas Instruments, Inc. 1,197,567
- --------------------------------------------------------------------------------
2,298,673
- --------------------------------------------------------------------------------
Electronic Measuring Instruments - 0.7%
4,089 Simac Techniek N.V. 523,155
- --------------------------------------------------------------------------------
Finance - Investment Bankers/Brokers - 1.9%
41,000 Charles Schwab Corp. 1,399,125
- --------------------------------------------------------------------------------
Finance - Other Services - 0.6%
13,525 HealthCare Financial Partners, Inc.* 466,613
- --------------------------------------------------------------------------------
Glass Products - 0.9%
251,417 Pilkington PLC** 636,618
- --------------------------------------------------------------------------------
Human Resources - 1.2%
9,875 Hall, Kinion & Associates, Inc.* 154,297
18,187 Robert Half International, Inc.* 744,530
- --------------------------------------------------------------------------------
898,827
- --------------------------------------------------------------------------------
Instruments - Controls - 0.4%
6,712 Parker Hannifin Corp. 280,646
- --------------------------------------------------------------------------------
Instruments - Scientific - 3.1%
46,775 Dionex Corp.* 2,332,903
- --------------------------------------------------------------------------------
Internet Content - 0.2%
6,667 Network Solutions, Inc.* 126,673
- --------------------------------------------------------------------------------
Life and Health Insurance - 4.6%
4,450 ALLIED Life Financial Corp. 97,900
4,250 Liberty Corp. 181,953
2,825 Protective Life Corp. 149,372
3,707 Schweizerishe Lebensversicherungs-und
Rentenanstalt 2,516,665
9,175 UNUM Corp. 447,281
- --------------------------------------------------------------------------------
3,393,171
- --------------------------------------------------------------------------------
Machinery - Pumps - 0.7%
16,525 Pfeiffer Vacuum Technology A.G. (ADR)* 537,063
- --------------------------------------------------------------------------------
Manufacturing - 0.6%
15,675 Roper Industries, Inc. 418,327
- --------------------------------------------------------------------------------
Medical - Drugs - 3.6%
16,725 Pfizer, Inc. 1,183,294
2,700 SmithKline Beecham PLC (ADR) 128,588
9,600 Warner-Lambert Co. 1,374,600
- --------------------------------------------------------------------------------
2,686,482
- --------------------------------------------------------------------------------
Money Center Banks - 3.5%
10,125 Bank of New York Co., Inc. 476,508
45,292 Barclays PLC** 1,133,936
80,112 Lloyds TSB Group PLC** 992,100
- --------------------------------------------------------------------------------
2,602,544
- --------------------------------------------------------------------------------
Multimedia - 0.4%
8,650 Meredith Corp. 294,641
- --------------------------------------------------------------------------------
Music/Clubs - 1.1%
35,200 Steinway Musical Instruments, Inc.* 836,000
- --------------------------------------------------------------------------------
Networking Products - 1.2%
11,075 Cisco Systems, Inc.* 908,496
- --------------------------------------------------------------------------------
Oil - Field Services - 4.1%
21,700 Halliburton Co. $1,293,863
14,850 Hanover Compressor Co.* 321,131
16,400 Schlumberger Ltd. 1,435,000
- --------------------------------------------------------------------------------
3,049,994
- --------------------------------------------------------------------------------
Oil and Gas Drilling - 2.0%
17,950 Santa Fe International Corp. 882,916
10,550 Transocean Offshore, Inc. 569,700
- --------------------------------------------------------------------------------
1,452,616
- --------------------------------------------------------------------------------
Oil Companies - Exploration and Production - 1.1%
3,550 Burlington Resources, Inc. 173,728
16,200 Pioneer Natural Resources Co. 649,012
- --------------------------------------------------------------------------------
822,740
- --------------------------------------------------------------------------------
Oil Companies - Integrated - 0.5%
6,700 Royal Dutch Petroleum Co. - N.Y. Shares 352,587
- --------------------------------------------------------------------------------
Oil Field Machinery and Equipment - 3.5%
17,475 Camco International, Inc. 1,262,569
17,350 Smith International, Inc.* 1,322,937
- --------------------------------------------------------------------------------
2,585,506
- --------------------------------------------------------------------------------
Power Converters and Power Supply Equipment - 0.4%
10,725 American Power Conversion Corp.* 292,256
- --------------------------------------------------------------------------------
Printing - Commercial - 0.9%
26,850 World Color Press, Inc.* 679,641
- --------------------------------------------------------------------------------
Property and Casualty Insurance - 1.0%
41,000 Sumitomo Marine & Fire Insurance Co. 273,402
7,000 Tokio Marine & Fire Insurance Co. 69,843
9,150 W. R. Berkley Corp. 376,294
- --------------------------------------------------------------------------------
719,539
- --------------------------------------------------------------------------------
Recreational Centers - 0.4%
18,200 Bally Total Fitness Holding Corp.* 323,050
- --------------------------------------------------------------------------------
Retail - Discount - 2.0%
27,450 Family Dollar Stores, Inc. 645,075
4,375 TJX Companies, Inc. 129,609
19,425 Wal-Mart Stores, Inc. 682,303
- --------------------------------------------------------------------------------
1,456,987
- --------------------------------------------------------------------------------
Retail - Hypermarkets - 1.3%
25,125 Costco Companies, Inc.* 967,313
- --------------------------------------------------------------------------------
Retail - Major Department Stores - 2.2%
25,900 Dayton Hudson Corp. 1,626,844
- --------------------------------------------------------------------------------
Retail - Regional Department Stores - 0.4%
10,200 Fred Meyer, Inc.* 291,338
- --------------------------------------------------------------------------------
Savings/Loan/Thrifts - 4.6%
2,500 Calumet Bancorp, Inc.* 126,250
8,000 Citizens First Financial Corp.* 147,000
12,000 Empire Federal Bancorp, Inc. 198,000
3,000 FFLC Bancorp, Inc. 105,750
5,200 Financial Bancorp, Inc. 126,100
7,050 First Defiance Financial Corp. 111,919
5,500 First Mutual Bancorp, Inc. 101,063
15,250 FirstSpartan Financial Corp. 556,625
4,450 Flushing Financial Corp. 96,788
1,925 FSF Financial Corp. 36,816
4,000 Gateway Bancorp, Inc. 75,000
15,000 GS Financial Corp. 260,625
3,400 Home Bancorp 81,600
25,675 Home Bancorp of Elgin, Inc. 450,917
1,325 JSB Financial, Inc. 63,848
6,800 Little Falls Bancorp, Inc. 124,100
4,500 North Central Bancshares, Inc. 81,563
4,250 Ocean Financial Corp. 159,375
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 16
<PAGE>
JANUS EQUITY INCOME FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Savings/Loan/Thrifts - (continued)
13,000 Park Bancorp, Inc.* $224,250
8,000 River Valley Bancorp 130,000
5,000 Wayne Bancorp, Inc. 110,000
4,000 Wells Financial Corp. 74,000
- --------------------------------------------------------------------------------
3,441,589
- --------------------------------------------------------------------------------
Telephone - Local - 0.8%
21,850 Cincinnati Bell, Inc. 589,950
- --------------------------------------------------------------------------------
Transportation - Air Freight - 1.1%
12,500 Airborne Freight Corp. 792,187
- --------------------------------------------------------------------------------
Transportation - Truck - 0.4%
7,350 CNF Transportation, Inc. 327,994
- --------------------------------------------------------------------------------
Total Common Stock (cost $57,973,604) 65,123,662
- --------------------------------------------------------------------------------
Corporate Bond - 0.8%
- --------------------------------------------------------------------------------
Multi-Line Insurance - 0.8%
$500,000 Loews Corp., 3.125%
subordinated notes, due 9/15/07
(cost $513,872) 569,375
- --------------------------------------------------------------------------------
Preferred Stock - 6.5%
- --------------------------------------------------------------------------------
Cable Television - 4.3%
27,550 Houston Industries, Inc., 7.00% 1,508,362
12,100 TCI Pacific Communications, 5.00% 1,686,437
- --------------------------------------------------------------------------------
3,194,799
- --------------------------------------------------------------------------------
Cruise Lines - 0.5%
4,775 Royal Caribbean Cruises, Ltd., 7.25% 362,900
- --------------------------------------------------------------------------------
Electric - Generation - 0.6%
9,400 AES Trust II, 5.50%+ 442,975
- --------------------------------------------------------------------------------
Telephone - Local - 1.1%
14,565 Salomon Inc. Exchangeable Notes
(Cincinnati Bell, Inc.), 6.25% 791,972
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $4,495,464) 4,792,646
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 1.7%
Household Finance Corp.
$1,300,000 5.68%, 11/3/97 (amortized cost $1,299,590) 1,299,590
- --------------------------------------------------------------------------------
Total Investments (total cost $64,282,530) - 96.6% 71,785,273
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 3.4% 2,539,816
- --------------------------------------------------------------------------------
Net Assets - 100% $74,325,089
- --------------------------------------------------------------------------------
Summary of Investments by Country
October 31, 1997
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Germany 0.7% $537,063
Ireland 0.9% 626,875
Japan 0.5% 343,244
Netherlands 4.3% 3,077,758
Sweden 1.1% 764,787
Switzerland 5.5% 3,941,768
United Kingdom 7.1% 5,118,217
United States++ 79.9% 57,375,561
- --------------------------------------------------------------------------------
Total 100.0% $71,785,273
================================================================================
++ Includes Short-Term Securities (78.1% excluding Short-Term Securities)
Forward Currency Contracts
Open at October 31, 1997
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 2/11/98 560,000 $933,856 ($21,183)
British Pound 2/18/98 460,000 766,866 (35,537)
British Pound 2/25/98 900,000 1,499,940 (74,472)
British Pound 3/4/98 230,000 383,203 (16,543)
British Pound 5/6/98 50,000 83,085 (2,830)
- --------------------------------------------------------------------------------
Total $3,666,950 ($150,565)
================================================================================
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 17
<PAGE>
JANUS GROWTH AND INCOME FUND Portfolio Manager, David J. Corkins
Performance
I would like to begin my comments by thanking all of the Fund's investors
for their confidence and support since I assumed manage-ment responsibilities on
August 11, 1997. This is an exciting opportunity for me personally and the
portfolio I inherited is in excellent shape. While I plan no major changes,
there will be some fine-tuning aimed at reducing volatility.
Janus Growth and Income Fund returned 37.78% for our fiscal year ended
October 31, 1997, outperforming the S&P 500 Index, which gained 32.10%. Both
returns include reinvested dividends.
In the 12 months ended October 31, the Fund's total return ranked 27 (top
5%) out of 589 Growth and Income Funds tracked by Lipper Analytical Services,
Inc., a large mutual fund rating company.(1)
The Fund outperformed the Index for a number of reasons. First, the
financial markets were bolstered by another year of positive business
fundamentals, including low interest rates, low inflation, and moderate economic
growth. We also benefited from another strong, if volatile, year in which the
market gains became more broad based in the second half. Of course, individual
stock selection played a major role in performance. By focusing primarily on
large, fast-growing companies, particularly in the life sciences, financial and
oil services sectors, we were able to generate healthy returns.
- --------------------------------------------------------------------------------
Portfolio Profile October 31, 1997 October 31, 1996
Equities 92.4% 94.1%
Foreign 8.0% 7.5%
European 7.8% 7.5%
Fixed-Income Securities -- 2.9%
Top 10 Equities (% of Assets) 33.9% 32.8%
Number of Stocks 64 62
Cash & Cash Equivalents 7.6% 3.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 10 Equity Holdings October 31, 1997 October 31, 1996
Warner-Lambert Co. 4.0% --
Diamond Offshore Drilling, Inc. 4.0% --
Schlumberger Ltd. 3.8% --
Coca-Cola Enterprises, Inc. 3.6% 1.0%
Monsanto Co. 3.4% 2.9%
Pfizer, Inc. 3.3% 2.3%
Lucent Technologies, Inc. 3.1% 4.5%
Eli Lilly and Co. 3.0% 2.5%
Dell Computer Corp. 3.0% 1.9%
Time Warner, Inc. 2.7% --
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 5 Industries October 31, 1997 October 31, 1996
Medical - Drugs 10.3% 9.3%
Chemicals - Diversified 7.7% 6.2%
Diversified Operations 6.4% 2.9%
Oil and Gas Drilling 5.3% --
Computer Software 4.8% 2.1%
- --------------------------------------------------------------------------------
Portfolio Strategy
My investment approach is essentially the Janus investment approach. I
select stocks one by one, based on rigorous analysis of company fundamentals and
the added value of field research. Generally, I favor companies I think have
predictable earnings that generate exceptional cash flow and emphasize
shareholder value.
Over time, I expect the Fund will be slightly less volatile than it has
been in the last few years, but the emphasis will remain primarily on growth.
Large growth stocks will continue to make up the core positions with income
generated primarily from dividend-paying stocks, rather than bonds or
fixed-income instruments.
Slight changes in the portfolio should allow a reduction in the Fund's
volatility. Until recently, the portfolio had been very concentrated, with about
35-40 stocks. That number will likely expand to about 50 names. Whereas the Fund
had been mostly comprised of very large companies, I anticipate adding a few
smaller large growth stocks. In addition, I hope to tap the expertise of our
outstanding international team to some extent. International stocks will likely
make up approximately 10% of the portfolio. By strategically adding foreign
companies, return potential can be increased while overall volatility should be
reduced.
Stock Highlights
Companies in the portfolio tend to have three things in common: strong
management, a good business and predictable earnings. Some examples include
Sealed Air, the world's leading protective packaging company, which recently
acquired the Cryovac packaging operations from W.R. Grace. Longtime holding
Cisco Systems, the premier developer of networking equipment, continues to
benefit as networking penetrates deeper into American business.
Among our restructuring stories, Monsanto took an important step in its
transformation into a pharmaceutical/agribiotech company when it spun off its
chemical/fiber division. Monsanto's short-term earnings have been slightly below
estimate, but its long-term growth potential is explosive. New management at
Philips Electronics, based in the Netherlands, is streamlining operations,
cutting costs, and disposing of low-margin divisions.
I'm also very optimistic about financial services. After selling down Wells
Fargo, which has had difficulties integrating its First Interstate acquisition,
I added BankAmerica. Its management is exceptionally shareholder oriented and is
restructuring operations. A strong California economy is also helping. Two other
additions, Star Banc and U.S. Bancorp, emphasize low costs and higher returns on
capital. Recent acquisitions have helped leverage their expense base and achieve
some of the lowest efficiency ratios in the industry. Both are also moving away
from capital intensive lending operations toward more fee-based businesses such
as investment services, custody and processing operations. Oil services is
another powerful theme as new technologies offered by Schlumberger and
Halliburton make energy production more cost-efficient.
Disappointments were few this year. We took losses in Gateway when it
failed to execute as effectively as larger rivals Compaq and Dell. Ascend was
also outperformed by its larger competitor Cisco. Volkswagen had a strong run
until management opted to announce the issuance of six million new shares, which
I believe will dilute future earnings.
Going Forward
The recent readjustment in the equity market, coupled with declining
interest rates, continue to make stocks an appealing invest-ment. Looking ahead,
however, I expect market volatility to continue. As a result, I intend to be
patient and search for stocks trading at a discount relative to their
anticipated growth rate. Ultimately, I believe we can use the current volatility
to add or increase positions where we have a high degree of confidence.
Thank you for your continued investment in Janus Growth and Income Fund.
- --------------------------------------------------------------------------------
(1) Lipper Analytical Services, Inc. defines a Growth and Income Fund as one
which "combines a growth of earnings orientation and an income requirement
for level and/or rising dividends." As of October 31, 1997 Janus Growth and
Income Fund ranked 4/382 of Growth and Income Funds for the 3-year period
and 25/228 for the 5-year period. The ranking is based on total return,
including reinvestment of dividends and capital gains for the stated
period. Past performance does not guarantee future results.
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 18
<PAGE>
JANUS GROWTH AND INCOME FUND Portfolio Manager, David J. Corkins
Performance Overview
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Growth and Income Fund and the S&P 500 Index. Janus Growth and Income
Fund is represented by a solid blue line. The S&P 500 Index is represented by a
single dashed black line. The "y" axis reflects the value of the investment. The
"x" axis reflects the computation periods from inception, May 15, 1991, through
October 31, 1997. The upper right quadrant reflects the ending value of the
hypothetical investment in Janus Growth and Income Fund ($33,239) as compared to
the S&P 500 Index ($29,346). There is a legend in the upper left quadrant of the
graph which indicates Janus Growth and Income Fund's one-year, five-year and
since inception (May 15, 1991) average annual total returns as 37.78%, 20.43%
and 20.44%, respectively.
*The Fund's inception date
Source - Lipper Analytical Services, Inc. 1997.
All returns reflect reinvested dividends.
Past performance does not guarantee future results. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The Fund's portfolio may differ significantly
from the securities in the Index. The Index is unmanaged and therefore does not
reflect the cost of portfolio management or trading.
JANUS GROWTH AND INCOME FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 91.2%
- --------------------------------------------------------------------------------
Agricultural Operations - 1.7%
850,000 Delta & Pine Land Co. $31,662,500
- --------------------------------------------------------------------------------
Airlines - 2.7%
575,000 UAL Corp.* 50,384,375
- --------------------------------------------------------------------------------
Appliances - 0.7%
152,132 Electrolux A.B. - Class B** 12,602,751
- --------------------------------------------------------------------------------
Applications Software - 0.2%
100,000 J.D. Edwards & Co.* 3,400,000
- --------------------------------------------------------------------------------
Automotive - Cars and Light Trucks - 1.5%
264,432 Renault S.A.* 7,373,360
34,938 Volkswagen A.G.** 20,684,880
- --------------------------------------------------------------------------------
28,058,240
- --------------------------------------------------------------------------------
Beverages - Non-Alcoholic - 3.6%
2,400,000 Coca-Cola Enterprises, Inc. 67,500,000
- --------------------------------------------------------------------------------
Beverages - Wine and Spirits - - 0.1%
37,950 Beringer Wine Estates Holdings, Inc. - Class B* 1,176,450
- --------------------------------------------------------------------------------
Building and Construction - 0.4%
700,000 M.D.C. Holdings, Inc.# 7,787,500
- --------------------------------------------------------------------------------
Cable Television - 1.1%
893,475 Tele-Communications, Inc. - Class A* 20,494,083
- --------------------------------------------------------------------------------
Chemicals - Diversified - 7.7%
890,000 Cytec Industries, Inc.* 43,387,500
435,000 E.I. du Pont de Nemours and Co. 24,740,625
1,500,000 Monsanto Co. 64,125,000
600,000 Solutia, Inc.* 13,275,000
- --------------------------------------------------------------------------------
145,528,125
- --------------------------------------------------------------------------------
Commercial Banks - 1.2%
1,675,006 Banca Commerciale Italiana $4,600,406
385,000 Star Banc Corp. 18,889,063
- --------------------------------------------------------------------------------
23,489,469
- --------------------------------------------------------------------------------
Commercial Services - 0.2%
200,000 ACNielsen Corp.* 4,575,000
- --------------------------------------------------------------------------------
Computer Software - 4.8%
416,125 Cadence Design Systems, Inc.* 22,158,656
330,000 Microsoft Corp.* 42,900,000
500,000 Parametric Technology Co.* 22,062,500
91,300 Wind River Systems* 3,503,638
- --------------------------------------------------------------------------------
90,624,794
- --------------------------------------------------------------------------------
Computers - Micro - 3.0%
700,000 Dell Computer Corp.* 56,087,500
- --------------------------------------------------------------------------------
Containers - Paper and Plastic - 1.5%
536,325 Sealed Air Corp.* 27,654,258
- --------------------------------------------------------------------------------
Cruise Lines - 1.1%
436,000 Royal Caribbean Cruises, Ltd. 20,246,750
- --------------------------------------------------------------------------------
Diversified Financial Services - 0.7%
110,000 Household International, Inc. 12,457,500
- --------------------------------------------------------------------------------
Diversified Operations - 6.4%
750,000 General Electric Co. 48,421,875
610,000 Textron, Inc. 35,265,625
1,436,125 Westinghouse Electric Corp.* 37,967,555
- --------------------------------------------------------------------------------
121,655,055
- --------------------------------------------------------------------------------
Electronic Components - 2.2%
139,226 Philips Electronics N.V.** 10,904,365
400,000 Philips Electronics N.V. - N.Y. Shares** 31,350,000
- --------------------------------------------------------------------------------
42,254,365
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 19
<PAGE>
JANUS GROWTH AND INCOME FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Electronic Components - Semiconductors - 1.4%
800,000 Applied Materials, Inc.* $26,700,000
- --------------------------------------------------------------------------------
Finance - Consumer Loans - 2.1%
285,275 SLM Holding Corp. 40,045,478
- --------------------------------------------------------------------------------
Finance - Investment Bankers/Brokers - 3.2%
550,000 Charles Schwab Corp. 18,768,750
625,000 Merrill Lynch & Co., Inc. 42,265,625
- --------------------------------------------------------------------------------
61,034,375
- --------------------------------------------------------------------------------
Finance - Mortgage Loan Banker - 3.7%
780,000 Fannie Mae 37,781,250
845,000 Freddie Mac 32,004,375
- --------------------------------------------------------------------------------
69,785,625
- --------------------------------------------------------------------------------
Food - Diversified - 1.3%
480,000 Sara Lee Corp. 24,540,000
- --------------------------------------------------------------------------------
Life and Health Insurance - 0.4%
237,000 UICI* 7,939,500
- --------------------------------------------------------------------------------
Machinery - Construction and Mining - 0.9%
275,000 Halliburton Co. 16,396,875
- --------------------------------------------------------------------------------
Medical - Drugs - 10.3%
850,000 Eli Lilly and Co. 56,843,750
884,575 Pfizer, Inc. 62,583,681
525,000 Warner-Lambert Co. 75,173,438
- --------------------------------------------------------------------------------
194,600,869
- --------------------------------------------------------------------------------
Money Center Banks - 2.9%
425,000 BankAmerica Corp. 30,387,500
200,000 Citicorp 25,012,500
- --------------------------------------------------------------------------------
55,400,000
- --------------------------------------------------------------------------------
Multi-Line Insurance - 0.5%
423,951 Assicurazioni Generali** 9,481,611
- --------------------------------------------------------------------------------
Multimedia - 2.7%
900,000 Time Warner, Inc. 51,918,750
- --------------------------------------------------------------------------------
Networking Products - 1.8%
408,525 Cisco Systems, Inc.* 33,511,816
- --------------------------------------------------------------------------------
Oil - Field Services - 3.8%
815,875 Schlumberger Ltd. 71,389,062
- --------------------------------------------------------------------------------
Oil and Gas Drilling - 5.3%
1,205,000 Diamond Offshore Drilling, Inc. 75,011,250
475,000 Transocean Offshore, Inc. 25,650,000
- --------------------------------------------------------------------------------
100,661,250
- --------------------------------------------------------------------------------
Oil Companies - Exploration and Production - 0.9%
410,000 Pioneer Natural Resources Co. 16,425,625
- --------------------------------------------------------------------------------
Oil Companies - Integrated - 1.0%
375,000 Royal Dutch Petroleum Co. - N.Y. Shares 19,734,375
- --------------------------------------------------------------------------------
Oil Field Machinery and Equipment - 0.3%
78,550 Smith International, Inc.* 5,989,438
- --------------------------------------------------------------------------------
Printers and Related Products - 1.4%
557,500 Electronics for Imaging, Inc.* 26,063,125
- --------------------------------------------------------------------------------
Retail - Hypermarkets - 0.2%
120,000 Costco Companies, Inc.* 4,620,000
- --------------------------------------------------------------------------------
Savings/Loan/Thrifts - 1.1%
800,000 Dime Community Bancorp, Inc.# 16,900,000
275,000 HFNC Financial Corp. 4,056,250
- --------------------------------------------------------------------------------
20,956,250
- --------------------------------------------------------------------------------
Super-Regional Banks - 1.5%
234,850 U.S. Bancorp 23,881,309
16,000 Wells Fargo & Co. 4,662,000
- --------------------------------------------------------------------------------
28,543,309
- --------------------------------------------------------------------------------
Telecommunication Services - 3.2%
60,000 Bell Canada International, Inc.* $1,005,000
700,000 Lucent Technologies, Inc. 57,706,250
87,500 RSL Communications, Ltd.* 2,056,250
- --------------------------------------------------------------------------------
60,767,500
- --------------------------------------------------------------------------------
Telephone - Integrated - 0.5%
1,386,961 Telecom Italia S.p.A.** 8,690,303
- --------------------------------------------------------------------------------
Total Common Stock (cost $1,340,098,463) 1,722,833,851
- --------------------------------------------------------------------------------
Preferred Stock - 1.2%
- --------------------------------------------------------------------------------
Automotive - Cars and Light Trucks - 1.2%
15,563 Porsche A.G.**
(cost $17,252,482) 22,921,976
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 2.8%
Household Finance Corp.
$28,700,000 5.68%, 11/3/97 28,690,944
IBM Credit Corp.
25,000,000 5.48%, 11/7/97 24,977,167
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes (amortized cost $53,668,111) 53,668,111
- --------------------------------------------------------------------------------
U.S. Government Agencies - 5.3%
Fannie Mae:
25,000,000 5.55%, 11/10/97 24,966,250
75,000,000 5.95%, 1/12/98 74,182,361
- --------------------------------------------------------------------------------
Total U.S. Government Agencies (amortized cost $99,151,250) 99,148,611
- --------------------------------------------------------------------------------
Total Investments (total cost $1,510,170,306) - 100.5% 1,898,572,549
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (0.5%) (9,573,729)
- --------------------------------------------------------------------------------
Net Assets - 100% $1,888,998,820
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 20
<PAGE>
JANUS GROWTH AND INCOME FUND October 31, 1997
Summary of Investments by Country
October 31, 1997
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Bermuda 0.1% $2,056,250
Canada 0.1% 1,005,000
France 0.4% 7,373,360
Germany 2.3% 43,606,856
Italy 1.2% 22,772,320
Netherlands 3.2% 61,596,866
Sweden 0.7% 12,602,751
United States ++ 92.0% 1,747,559,146
- --------------------------------------------------------------------------------
Total 100.0% $1,898,572,549
================================================================================
++ Includes Short-Term Securities (84.0% excluding Short-Term Securities)
Forward Currency Contracts
Open at October 31, 1997
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
Dutch Guilder 1/12/98 47,700,000 $24,595,236 ($844,708)
Dutch Guilder 2/25/98 9,000,000 4,651,403 (189,331)
Dutch Guilder 3/5/98 700,000 361,925 (16,383)
Dutch Guilder 3/31/98 16,000,000 8,283,717 (80,832)
Dutch Guilder 4/8/98 4,000,000 2,071,680 (33,879)
German Deutschemark 11/12/97 12,000,000 6,960,961 (27,114)
German Deutschemark 12/17/97 71,500,000 41,562,518 235,659
German Deutschemark 2/26/98 5,000,000 2,917,664 (103,220)
German Deutschemark 4/22/98 5,000,000 2,925,859 (19,135)
Italian Lira 3/5/98 320,000,000 188,360 (6,658)
Italian Lira 3/11/98 30,400,000,000 17,893,782 (681,570)
Swedish Krona 3/4/98 5,500,000 735,766 (1,709)
Swedish Krona 3/11/98 18,500,000 2,475,214 (33,744)
Swedish Krona 4/22/98 67,000,000 8,972,093 (27,349)
- --------------------------------------------------------------------------------
Total $124,596,178 ($1,829,973)
================================================================================
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 21
<PAGE>
JANUS MERCURY FUND Portfolio Manager, Warren B. Lammert
Performance
For the fiscal year ended October 31, 1997, Janus Mercury Fund gained
17.07% versus a gain of 32.10% for the S&P 500 Index. Both returns include
reinvested dividends.
The Year In Review
While the stock market soared to new heights over the last 12 months,
numerous crosscurrents swirled beneath the market's surface, and at times
created a very difficult environment. There were actually two distinct periods
this year. During the first half, the Fund was down 0.63% while the S&P 500
Index posted a return of 14.71%. However, most of the Index's gains were derived
from only a handful of stocks. The "Nifty Fifty" acted as the catalyst for these
early results, while small and midsize stocks severely underperformed their
larger counterparts. Also, companies with high growth rates were particularly
hard hit, leaving multiples severely compressed.
During the last six months, the market's advance became much broader. Small
and midsize stocks gained momentum and joined in the continuing rally. Investors
once again rewarded companies with solid fundamentals and excellent growth, and
looked beyond buying companies simply because of their size. The Fund performed
well in this setting, moving ahead 17.70% versus the benchmark's gain of 17.39%.
More recently, the portfolio has become slightly more focused because I
trimmed back a number of smaller positions. While I remain dedicated to several
themes, including financial services, technology, and pharmaceuticals, I
increased the Fund's international exposure and also added several exciting
positions in oil and gas service providers.
- --------------------------------------------------------------------------------
Portfolio Profile October 31, 1997 October 31, 1996
Equities 97.4% 88.3%
Foreign 23.6% 14.6%
European 23.0% 11.9%
Top 10 Equities (% of Assets) 34.2% 34.6%
Number of Stocks 100 116
Cash & Cash Equivalents 2.6% 11.7%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 10 Equity Holdings October 31, 1997 October 31, 1996
Warner-Lambert Co. 5.8% --
Philips Electronics N.V.
- N.Y. Shares 5.6% --
Parametric Technology Co. 4.7% 1.1%
Monsanto Co. 4.2% --
UNUM Corp. 3.0% 1.8%
Noble Drilling Corp. 2.3% --
Transocean Offshore, Inc. 2.3% --
Pittway Corp. - Class A 2.1% 1.4%
Schlumberger Ltd. 2.1% --
Sara Lee Corp. 2.1% --
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 5 Industries October 31, 1997 October 31, 1996
Computer Software 9.0% 1.3%
Oil and Gas Drilling 6.9% --
Electronic Components 6.8% 3.2%
Medical - Drugs 6.6% 6.4%
Chemicals - Diversified 5.8% --
- --------------------------------------------------------------------------------
Stock Highlights
In financial services, I sold Wells Fargo, and added BankAmerica in its
place. Wells Fargo had performed very well, but its integration of First
Interstate had fallen behind schedule. BankAmerica has excellent fundamentals
and more attractive long-term prospects. The company is de-emphasizing its loan
portfolio and raising its fee-based business, freeing up capital and creating a
steady stream of income.
I also found several promising ideas in Europe. As the global economy
continues to develop, competitive hurdles are rising, and many European
companies are working to increase profits and boost efficiencies. Philips
Electronics, now the Fund's second largest holding, serves as an excellent
example of the power of the new drive toward profitability. The company began
its restructuring less than a year ago. Philips is focusing on its core
business, selling underperforming or unprofitable divisions. By streamlining its
operations, earnings growth is reaccelerating rapidly. The company topped
analysts' estimates for the last three reporting periods, and further changes
are still outstanding.
I also added several positions in oil and gas service providers, including
Transocean Offshore, Noble Drilling, and Schlumberger. Although oil servicers
are not typically viewed as "growth" companies, our research is extremely
positive on this group's earnings prospects. Global oil demand is increasing,
and technology has made reserves reachable especially offshore. The larger oil
companies have increased their exploration budgets as a result, and this is
creating excellent demand for the servicers. New reserves must be located, and
maximizing these reserves is becoming critical. The oil service providers are
now uniquely positioned, commanding much higher prices for their services and
technology.
Among our pharmaceuticals, Warner-Lambert was a standout, more than
doubling. The company has two exciting new products: Rezulin, which treats
adult-onset diabetes, and Lipitor, which lowers cholesterol. Both are rapidly
gaining market share, and revenues have increased dramatically as a result.
Longtime holding Parametric Technology, a leader in computer-aided design
manufacturing, was a disappointment this year. However, I added to the position
on price weakness when the stock stalled due to poor Japanese sales. The company
has addressed these problems, installed a new management team, and boosted sales
incentives. Meanwhile, domestic sales have picked up, and Parametric has won
several new European clients.
Going Forward
As the year came to a close, the tremors that emanated from Southeast
Asia's currency devaluations impacted stocks around the world. The effects of
this regional downturn have yet to play themselves out, although they served as
a brief reminder that stocks do not go up endlessly. Volatility, while
unsettling, can be a disciplined investor's ally. Markets frequently overreact
to potential problems, quickly compressing stock prices to create buying
opportunities. Disciplined investors who have done their homework can pick up
great stocks at very attractive valuations. I intend to continue to search for
companies that exhibit strong growth characteristics. This strategy has served
us well in the past, and I remain confident that it will pay dividends going
forward.
Thank you for your continued investment in Janus Mercury Fund.
- --------------------------------------------------------------------------------
Past performance does not guarantee future results.
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 22
<PAGE>
JANUS MERCURY FUND Portfolio Manager, Warren B. Lammert
Performance Overview
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Mercury Fund and the S&P 500 Index. Janus Mercury Fund is represented
by a solid blue line. The S&P 500 Index is represented by a single dashed black
line. The "y" axis reflects the value of the investment. The "x" axis reflects
the computation periods from inception, May 3, 1993, through October 31, 1997.
The upper right quadrant reflects the ending value of the hypothetical
investment in Janus Mercury Fund ($24,523) as compared to the S&P 500 Index
($23,074). There is a legend in the upper left quadrant of the graph which
indicates Janus Mercury Fund's one-year and since inception (May 3, 1993)
average annual total returns as 17.07% and 22.06%, respectively.
*The Fund's inception date
Source - Lipper Analytical Services, Inc. 1997.
All returns reflect reinvested dividends.
Past performance does not guarantee future results. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The Fund's portfolio may differ significantly
from the securities in the Index. The Index is unmanaged and therefore does not
reflect the cost of portfolio management or trading.
JANUS MERCURY FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 96.8%
- --------------------------------------------------------------------------------
Advertising Sales - 0.6%
362,334 Lamar Advertising Co.* $12,274,064
- --------------------------------------------------------------------------------
Advertising Services - 0.6%
404,925 Outdoor Systems, Inc.* 12,451,444
- --------------------------------------------------------------------------------
Appliances - 0.6%
141,794 Electrolux A.B. - Class B** 11,746,342
- --------------------------------------------------------------------------------
Applications Software - 1.1%
114,600 PeopleSoft, Inc.* 7,205,475
60,175 Policy Management Systems Corp.* 3,685,719
212,750 Sapient Corp.* 11,328,938
- --------------------------------------------------------------------------------
22,220,132
- --------------------------------------------------------------------------------
Automotive - Cars and Light Trucks - 1.1%
36,557 Volkswagen A.G.** 21,643,401
- --------------------------------------------------------------------------------
Automotive - Truck Parts and Equipment - 0.1%
68,150 OEA, Inc. 2,743,037
- --------------------------------------------------------------------------------
Cable Television - 0.9%
793,682 Tele-Communications, Inc. - Class A* 18,205,081
- --------------------------------------------------------------------------------
Chemicals - Diversified - 5.8%
371,325 E.I. du Pont de Nemours and Co. 21,119,109
1,930,475 Monsanto Co. 82,527,806
485,465 Solutia, Inc.* 10,740,913
- --------------------------------------------------------------------------------
114,387,828
- --------------------------------------------------------------------------------
Commercial Banks - 1.2%
4,382,171 Banca Commerciale Italiana** 12,035,639
22,175 First Savings Bancorp, Inc. 515,569
210,650 Star Banc Corp. 10,335,016
- --------------------------------------------------------------------------------
22,886,224
- --------------------------------------------------------------------------------
Computer Services - 0.8%
119,650 Ceridian Corp.* $4,673,828
117,250 Ciber, Inc.* 5,188,312
211,737 Technology Solutions Co.* 6,669,716
- --------------------------------------------------------------------------------
16,531,856
- --------------------------------------------------------------------------------
Computer Software - 9.0%
772,550 Aspen Technologies, Inc.* 29,067,194
290,700 BEA Systems, Inc.* 3,924,450
190,125 Cadence Designs Systems* 10,124,156
236,575 Microsoft Corp.* 30,754,750
2,118,775 Parametric Technology Co.* 93,490,947
292,337 Wind River Systems* 11,218,432
- --------------------------------------------------------------------------------
178,579,929
- --------------------------------------------------------------------------------
Computers - Memory Devices - 1.0%
351,875 EMC Corp.* 19,705,000
- --------------------------------------------------------------------------------
Computers - Micro - 3.1%
559,525 Compaq Computer Corp.* 35,669,719
312,400 Dell Computer Corp.* 25,031,050
- --------------------------------------------------------------------------------
60,700,769
- --------------------------------------------------------------------------------
Containers - Paper and Plastic - 1.2%
448,075 Sealed Air Corp.* 23,103,867
- --------------------------------------------------------------------------------
Diversified Financial Services - 1.8%
450,000 Associates First Capital Corp. - Class A 28,631,250
202,162 SunAmerica, Inc. 7,265,197
- --------------------------------------------------------------------------------
35,896,447
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 23
<PAGE>
JANUS MERCURY FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Diversified Operations - 3.9%
781,591 Metra Oy - Class B** $20,873,598
2,950,424 Rentokil Initial PLC** 11,874,158
989,349 Siebe PLC** 18,996,000
957,225 Westinghouse Electric Corp.* 25,306,636
- --------------------------------------------------------------------------------
77,050,392
- --------------------------------------------------------------------------------
Electronic Components - 6.8%
318,063 Philips Electronics N.V.** 24,911,116
1,401,225 Philips Electronics N.V. - N.Y. Shares** 109,821,009
- --------------------------------------------------------------------------------
134,732,125
- --------------------------------------------------------------------------------
Electronic Components - Semiconductors - 5.6%
1,097,282 Analog Devices, Inc.* 33,535,681
489,850 Intel Corp. 37,718,450
367,975 Texas Instruments, Inc. 39,258,333
- --------------------------------------------------------------------------------
110,512,464
- --------------------------------------------------------------------------------
Electronic Safety Devices - 2.1%
673,075 Pittway Corp. - Class A 41,940,986
- --------------------------------------------------------------------------------
Finance - Consumer Loans - 0.7%
96,950 SLM Holding Corp. 13,609,356
- --------------------------------------------------------------------------------
Finance - Investment Bankers/Brokers - 0.9%
496,950 Charles Schwab Corp. 16,958,419
- --------------------------------------------------------------------------------
Food - Diversified - 3.9%
109,691 Cultor Oy - Series l** 5,943,848
268,185 Raisio Group PLC** 29,012,488
810,925 Sara Lee Corp. 41,458,541
- --------------------------------------------------------------------------------
76,414,877
- --------------------------------------------------------------------------------
Investment Companies - 0.2%
194,793 Tele-Communications TCI Ventures Group
- Class A* 4,492,414
- --------------------------------------------------------------------------------
Life and Health Insurance - 3.0%
1,203,750 UNUM Corp. 58,682,813
- --------------------------------------------------------------------------------
Machinery - General Industrial - 0.9%
234,925 ASM Lithography Holding N.V. (ADR)* 17,208,256
- --------------------------------------------------------------------------------
Medical - Drugs - 6.6%
283,424 Astra A.B. - Class A** 4,582,211
1,180,660 SmithKline Beecham PLC** 11,186,145
791,975 Warner-Lambert Co. 113,400,920
- --------------------------------------------------------------------------------
129,169,276
- --------------------------------------------------------------------------------
Medical - Wholesale Drug Distributors - 1.2%
283,650 Bergen Brunswig Corp. 11,363,728
157,325 Cardinal Health, Inc. 11,681,381
- --------------------------------------------------------------------------------
23,045,109
- --------------------------------------------------------------------------------
Medical Information Systems - 0.8%
374,075 HBO & Co. 16,272,263
- --------------------------------------------------------------------------------
Medical Instruments - 0.8%
216,100 Sofamor Danek Group, Inc.* 14,883,888
- --------------------------------------------------------------------------------
Money Center Banks - 2.7%
315,300 Bank of New York Co., Inc. 14,838,806
392,050 BankAmerica Corp. 28,031,575
79,525 Citicorp 9,945,595
- --------------------------------------------------------------------------------
52,815,976
- --------------------------------------------------------------------------------
Multi-Line Insurance - 0.4%
168,904 Skandia Forsakrings A.B.** 7,898,799
- --------------------------------------------------------------------------------
Multimedia - 1.0%
338,300 Time Warner Inc. 19,515,681
- --------------------------------------------------------------------------------
Networking Products - 2.0%
479,275 Cisco Systems, Inc.* 39,315,527
- --------------------------------------------------------------------------------
Oil - Field Services - 4.4%
24,684,037 Ocean Rig ASA*,# $30,676,120
475,675 Schlumberger Ltd. 41,621,563
500,008 Smedvig ASA - Class B 14,713,268
- --------------------------------------------------------------------------------
87,010,951
- --------------------------------------------------------------------------------
Oil and Gas Drilling - 6.9%
455,500 Diamond Offshore Drilling, Inc. 28,354,875
1,249,925 Noble Drilling Corp.* 44,450,458
385,825 Santa Fe International Corp. 18,977,767
821,550 Transocean Offshore, Inc. 44,363,700
- --------------------------------------------------------------------------------
136,146,800
- --------------------------------------------------------------------------------
Oil Companies - Exploration and Production - 1.6%
162,672 Elf Aquitaine S.A. 20,178,433
175,225 Elf Aquitaine S.A. (ADR) 10,820,144
- --------------------------------------------------------------------------------
30,998,577
- --------------------------------------------------------------------------------
Pharmacy Services - 1.3%
914,450 Omnicare, Inc. 25,433,141
- --------------------------------------------------------------------------------
Property and Casualty Insurance - 0.1%
166,150 Reliance Group Holdings, Inc. 2,097,644
- --------------------------------------------------------------------------------
Recycling - 0.4%
289,351 Tomra Systems A.S.A. 7,439,821
- --------------------------------------------------------------------------------
Retail - Apparel and Shoe - 0.7%
237,725 Nordstrom, Inc. 14,560,656
- --------------------------------------------------------------------------------
Retail - Bedding - 0.7%
371,100 Linens `N Things, Inc. 13,336,406
- --------------------------------------------------------------------------------
Retail - Consumer Electronics - 0.5%
302,850 CompUSA, Inc.* 9,918,338
- --------------------------------------------------------------------------------
Retail - Home Furnishings - 0.3%
256,045 Industrie Natuzzi S.p.A. (ADR) 5,729,007
- --------------------------------------------------------------------------------
Retail - Hypermarkets - 1.5%
779,525 Costco Companies, Inc.* 30,011,713
- --------------------------------------------------------------------------------
Savings/Loan/Thrifts - 1.9%
82,800 Ambanc Holding Co., Inc. 1,324,800
45,790 Astoria Financial Corp. 2,392,527
64,595 Catskill Financial Corp. 1,146,561
109,950 Dime Bancorp, Inc. 2,638,800
149,800 First Defiance Financial Corp. 2,378,075
45,550 FirstSpartan Financial Corp. 1,662,575
13,750 FSF Financial Corp. 262,969
31,125 GSB Financial Corp.* 468,820
118,425 Klamath First Bancorp, Inc. 2,649,759
64,700 North Central Bancshares, Inc. 1,172,687
64,700 Peekskill Financial Corp. 1,083,725
81,675 Provident Financial Holdings, Inc.* 1,607,977
68,137 Queens County Bancorp, Inc. 2,469,966
343,325 Roslyn Bancorp, Inc. 7,338,572
76,575 TF Financial Corp. 1,801,905
96,775 Washington Mutual Inc. 6,623,039
- --------------------------------------------------------------------------------
37,022,757
- --------------------------------------------------------------------------------
Security Services - 0.2%
160,435 Securitas A.B. - Class B** 4,287,284
- --------------------------------------------------------------------------------
Telecommunication Equipment - 1.4%
308,800 Oy Nokia Corp. (ADR) - Class A 27,251,600
- --------------------------------------------------------------------------------
Telephone - Integrated - 0.6%
1,758,983 Telecom Italia S.p.A.** 11,021,287
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 24
<PAGE>
JANUS MERCURY FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Telephone - Local - 1.1%
812,875 Cincinnati Bell, Inc. $21,947,625
- --------------------------------------------------------------------------------
Transportation - Services - 0.8%
298,950 Caliber System, Inc. 15,582,769
- --------------------------------------------------------------------------------
Total Common Stock (cost $1,605,839,650) 1,907,390,418
- --------------------------------------------------------------------------------
Preferred Stock - 0.6%
- --------------------------------------------------------------------------------
Telecommunication Equipment - 0.6%
389,107,000 Ericsson Telecomunicacoes S.A.
(cost $22,578,286) 11,470,795
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 2.6%
Household Finance Corp.
$51,400,000 5.68%, 11/3/97 (amortized cost $51,383,781) 51,383,781
- --------------------------------------------------------------------------------
Total Investments (total cost $1,679,801,717) - 100% 1,970,244,994
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities- 0% 804,195
- --------------------------------------------------------------------------------
Net Assets - 100% $1,971,049,189
- --------------------------------------------------------------------------------
Summary of Investments by Country
October 31, 1997
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Brazil 0.6% $11,792,124
Finland 4.2% 83,081,533
France 1.6% 30,998,576
Germany 1.3% 25,255,469
Italy 1.5% 28,815,579
Luxembourg 0.5% 9,466,800
Netherlands 7.7% 151,940,381
Norway 2.7% 52,829,209
Sweden 1.4% 28,514,636
United Kingdom 2.1% 42,056,304
United States ++ 76.4% 1,505,494,383
- --------------------------------------------------------------------------------
Total 100.0% $1,970,244,994
================================================================================
++ Includes Short-Term Securities (73.8% excluding Short-Term Securities)
Forward Currency Contracts
Open at October 31, 1997
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 11/28/97 2,048,000 $3,426,304 ($108,339)
British Pound 12/4/97 4,400,000 7,359,000 (127,000)
British Pound 1/20/98 4,000,000 6,676,400 51,600
British Pound 2/18/98 4,000,000 6,668,400 (179,580)
Dutch Guilder 1/9/98 27,000,000 13,918,961 (734,723)
Dutch Guilder 2/25/98 138,000,000 71,321,515 (2,188,301)
Dutch Guilder 3/31/98 5,000,000 2,588,662 (61,239)
Finnish Markka 11/28/97 55,000,000 10,647,360 280,082
Finnish Markka 1/9/98 30,000,000 5,821,851 (258,672)
Finnish Markka 1/15/98 2,057,000 399,325 (20,105)
Finnish Markka 3/26/98 62,892,000 12,248,427 (139,841)
Finnish Markka 3/31/98 22,000,000 4,285,492 (106,795)
German Deutschemark 2/18/98 13,000,000 7,582,828 (568,692)
Italian Lira 1/9/98 29,250,000,000 17,227,332 (701,222)
Italian Lira 3/11/98 12,000,000,000 7,063,335 (303,914)
Swedish Krona 11/28/97 28,000,000 3,735,226 (66,786)
Swedish Krona 1/15/98 71,000,000 9,486,905 (274,594)
Swedish Krona 3/4/98 24,000,000 3,210,616 (203,512)
- --------------------------------------------------------------------------------
Total $193,667,939 ($5,711,633)
================================================================================
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 25
<PAGE>
JANUS OLYMPUS FUND Portfolio Manager, Claire Young
Performance
I would like to preface my remarks by thanking the Fund's investors for
their confidence and support since I assumed management responsibilities from
Scott Schoelzel on August 11, 1997. This is an exciting opportunity, especially
in light of the compelling portfolio I have inherited.
Janus Olympus Fund gained 24.98% for our fiscal year ended October 31,
1997. During the same period, the S&P 500 Index gained 32.10%. Both returns
include reinvested dividends.
Fiscal 1997 was a challenging year, particularly in the first half. During
that time, investors were focused on a select number of large, multinational
corporations. Valuations of these companies became stretched until the slight
market decline in March and April. The breadth of the subsequent market recovery
expanded to include small and midsize companies. Our focus on stocks with
superior fundamentals rewarded us in the second half of the year, as evidenced
by the Fund's second-half performance of 23.42% compared to the S&P 500 gain of
17.39%
Portfolio Strategy
I want to take a moment to outline my investment philosophy. I look for
companies with three main characteristics: superior product offerings, dynamic
growth industries, and shareholder-oriented management. I believe that investing
in companies with best-of-breed products provides superior returns over time.
Equally important in realizing those returns is a management team that can lead
a company through tremendous growth and still deliver on operational and
financial expectations. I intend to continue to run the portfolio in a focused
manner, with 45-60 stocks across a range of market capitalizations.
- --------------------------------------------------------------------------------
Portfolio Profile October 31, 1997 October 31, 1996
Equities 93.8% 85.0%
Foreign 14.7% 2.6%
European 12.9% 2.6%
Top 10 Equities (% of Assets) 40.7% 45.7%
Number of Stocks 57 51
Cash & Cash Equivalents 6.2% 15.0%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 10 Equity Holdings October 31, 1997 October 31, 1996
Pfizer, Inc 5.6% --
Warner-Lambert Co. 5.1% --
Microsoft Corp. 5.1% 3.2%
Dell Computer Corp. 4.7% 1.4%
Eli Lilly and Co. 4.3% 1.2%
BankAmerica Corp. 4.2% --
Schlumberger Ltd. 3.3% --
Philips Electronics N.V
- N.Y. Shares 3.2% --
Monsanto Co. 2.6% --
Volkswagen A.G 2.6% --
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 5 Industries October 31, 1997 October 31, 1996
Medical - Drugs 20.6% 2.7%
Computer Software 8.7% 4.9%
Money Center Banks 6.3% 3.4%
Oil - Field Services 5.7% --
Computers - Micro 4.7% 1.4%
- --------------------------------------------------------------------------------
Stock Highlights
Among our best performers for the year were technology stocks. Dell
Computer has a superior operating model that allows it to deliver high quality
PCs at low prices. Its build-to-order focus is revolutionizing the industry as
other companies struggle to compete. Dell is also broadening its product line to
encompass higher margin laptops, workstations, and servers. Microsoft continues
to be the leader in desktop and operating system software. It benefits from the
proliferation of computers at home and office, especially as the Internet
phenomenon broadens. Microsoft has a tremendous product release schedule, with
new versions of Windows NT and SQL Server to be offered in the coming year.
In the telecommunications arena, Lucent and Qwest were excellent
performers. Lucent Technologies dominates the large telecommunications switching
and PCS wireless equipment market in the U.S. and is just beginning to
capitalize on that position overseas. Qwest Communications is building the most
advanced broadband communications network in the U.S. It is positioning itself
to be the country's premier provider of voice, video, and data transport.
In pharmaceuticals, Warner-Lambert, Pfizer, and Eli Lilly produced
excellent returns. Warner-Lambert's new anti-cholesterol drug Lipitor and
diabetes drug Rezulin continue to beat expectations for market share and sales
gains. Pfizer is launching Viagra, a revolutionary drug to treat male erectile
dysfunction. The company also has several exciting drugs in its product
pipeline. Eli Lilly's Zyprexa for schizophrenia is well on its way to becoming a
billion dollar drug, and its osteoporosis drug Evista will be launched in early
1998.
New holdings were added in the oil service industry. Capital spending for
offshore exploration is increasing and global demand for oil and natural gas is
growing. Schlumberger is the leading provider of seismic, logging, and
directional drilling services. Halliburton provides pressure pumping, wireline
services, and oil well completion products. Both companies' technologically
advanced products allow oil exploration companies to lower the cost of finding
and extracting oil.
There were some disappointments. I sold Telecomunicacoes Brasileiras in the
second half as currency fears in Southeast Asia spread to Latin America.
Although the prospects for the company's privatization continue to be positive,
the volatility of the emerging markets and the potential of currency devaluation
in Brazil overwhelmed the fundamentals. Nike was sold due to concerns of slowing
demand in the U.S. footwear market.
Going Forward
Looking ahead, I believe we have a solid, although volatile, backdrop for
stocks. Inflationary pressures remain benign; indeed, with the currency moves in
Asia, inflation should remain in check for the coming months. U.S. companies
continue to identify compelling market opportunities and eliminate excess costs
in their operations. In this environment, I believe our companies are
well-positioned to continue to generate strong earnings and good returns.
Thank you for your continued investment in Janus Olympus Fund.
- --------------------------------------------------------------------------------
Past performance does not guarantee future results.
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 26
<PAGE>
JANUS OLYMPUS FUND Portfolio Manager, Claire Young
Performance Overview
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Olympus Fund and the S&P 500 Index. Janus Olympus Fund is represented
by a solid blue line. The S&P 500 Index is represented by a single dashed black
line. The "y" axis reflects the value of the investment. The "x" axis reflects
the computation periods from inception, December 29, 1995, through October 31,
1997. The upper right quadrant reflects the ending value of the hypothetical
investment in Janus Olympus Fund ($15,477) as compared to the S&P 500 Index
($15,406). There is a legend in the upper left quadrant of the graph which
indicates Janus Olympus Fund's one-year and since inception (December 29, 1995)
average annual total returns as 24.98% and 26.90%, respectively.
*The Fund's inception date
Source - Lipper Analytical Services, Inc. 1997.
All returns reflect reinvested dividends.
Past performance does not guarantee future results. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The Fund's portfolio may differ significantly
from the securities in the Index. The Index is unmanaged and therefore does not
reflect the cost of portfolio management or trading.
JANUS OLYMPUS FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 92.8%
- --------------------------------------------------------------------------------
Applications Software - 1.5%
270,775 J.D. Edwards & Co.* $9,206,350
- --------------------------------------------------------------------------------
Automotive - Cars and Light Trucks - 2.6%
26,749 Volkswagen A.G.** 15,836,620
- --------------------------------------------------------------------------------
Beverages - Wine and Spirits - 0.2%
39,500 Beringer Wine Estates Holdings, Inc. - Class B* 1,224,500
- --------------------------------------------------------------------------------
Chemicals - Diversified - 4.1%
375,525 Monsanto Co. 16,053,694
408,875 Solutia, Inc.* 9,046,359
- --------------------------------------------------------------------------------
25,100,053
- --------------------------------------------------------------------------------
Computer Software - 8.7%
187,875 Cadence Design Systems, Inc.* 10,004,344
543,000 JBA Holdings PLC** 8,604,761
239,850 Microsoft Corp.* 31,180,500
99,125 Wind River Systems* 3,803,922
- --------------------------------------------------------------------------------
53,593,527
- --------------------------------------------------------------------------------
Computers - Memory Devices - 1.0%
150,000 VERITAS Software Corp.* 6,243,750
- --------------------------------------------------------------------------------
Computers - Micro - 4.7%
360,000 Dell Computer Corp.* 28,845,000
- --------------------------------------------------------------------------------
Consulting Services - 0.7%
295,425 Corporate Family Solutions, Inc.*,# 4,394,447
- --------------------------------------------------------------------------------
Cosmetics and Toiletries - 0.9%
81,800 Colgate-Palmolive Co. 5,296,550
- --------------------------------------------------------------------------------
Cruise Lines - 1.0%
126,860 Royal Caribbean Cruises, Ltd. 5,891,061
- --------------------------------------------------------------------------------
Data Processing and Management - 0.9%
119,075 i2 Technologies, Inc.* 5,410,470
- --------------------------------------------------------------------------------
Diversified Financial Services - 0.7%
120,000 SunAmerica, Inc. $4,312,500
- --------------------------------------------------------------------------------
Diversified Operations - 2.0%
454,875 Westinghouse Electric Corp.* 12,025,758
- --------------------------------------------------------------------------------
Educational Software - 1.5%
122,075 CBT Group PLC (ADR)* 9,369,256
- --------------------------------------------------------------------------------
Electric - Integrated - 0.5%
100,000 Unified Energy System (GDR) 3,125,000
- --------------------------------------------------------------------------------
Electronic Components - 3.2%
249,900 Philips Electronics N.V. - N.Y. Shares 19,585,912
- --------------------------------------------------------------------------------
Electronic Components - Semiconductors - 0.9%
54,575 Texas Instruments, Inc. 5,822,470
- --------------------------------------------------------------------------------
Electronic Measuring Instruments - 1.0%
210,150 GenRad, Inc.* 6,199,425
- --------------------------------------------------------------------------------
Fiber Optics - 1.7%
186,075 CIENA Corp.* 10,234,125
- --------------------------------------------------------------------------------
Finance - Investment Bankers/Brokers - 2.8%
350,000 Charles Schwab Corp. 11,943,750
77,075 Merrill Lynch & Co., Inc. 5,212,197
- --------------------------------------------------------------------------------
17,155,947
- --------------------------------------------------------------------------------
Internet Content - 0.4%
110,825 At Home Corp.* 2,673,653
- --------------------------------------------------------------------------------
Internet Software - 1.4%
110,025 America Online, Inc.* 8,471,925
- --------------------------------------------------------------------------------
Machinery - General Industrial - 0.6%
47,500 ASM Lithography Holding N.V. (ADR)* 3,479,375
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 27
<PAGE>
JANUS OLYMPUS FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Medical - Drugs - 20.6%
150,000 Bristol-Myers Squibb Co. $13,162,500
398,600 Eli Lilly and Co. 26,656,375
313,450 Kos Pharmaceuticals, Inc.* 11,205,838
491,000 Pfizer, Inc. 34,738,250
200,000 SmithKline Beecham PLC (ADR) 9,525,000
219,925 Warner-Lambert Co. 31,490,511
- --------------------------------------------------------------------------------
126,778,474
- --------------------------------------------------------------------------------
Medical - Wholesale Drug Distributors - 0.7%
61,025 Cardinal Health, Inc. 4,531,106
- --------------------------------------------------------------------------------
Money Center Banks - 6.3%
360,000 BankAmerica Corp. 25,740,000
48,600 Citicorp 6,078,038
574,392 Lloyds TSB Group PLC** 7,113,217
- --------------------------------------------------------------------------------
38,931,255
- --------------------------------------------------------------------------------
Multimedia - 1.0%
110,000 Time Warner Inc. 6,345,625
- --------------------------------------------------------------------------------
Networking Products - 0.4%
28,150 Cisco Systems, Inc.* 2,309,180
- --------------------------------------------------------------------------------
Oil - Field Services - 5.7%
250,000 Halliburton Co. 14,906,250
231,050 Schlumberger Ltd. 20,216,875
- --------------------------------------------------------------------------------
35,123,125
- --------------------------------------------------------------------------------
Oil and Gas Drilling - 2.9%
150,000 Diamond Offshore Drilling, Inc. 9,337,500
45,475 Santa Fe International Corp. 2,236,801
120,000 Transocean Offshore, Inc. 6,480,000
- --------------------------------------------------------------------------------
18,054,301
- --------------------------------------------------------------------------------
Oil Companies - Integrated - 0.2%
18,275 Lukoil Holding (ADR) 1,530,531
- --------------------------------------------------------------------------------
Oil Field Machinery and Equipment - 2.1%
90,000 EVI, Inc.* 5,776,875
93,575 Smith International, Inc.* 7,135,094
- --------------------------------------------------------------------------------
12,911,969
- --------------------------------------------------------------------------------
Real Estate Investment Trusts - 0.9%
127,625 Vornado Realty Trust 5,695,266
- --------------------------------------------------------------------------------
Retail - Hypermarkets - 1.6%
250,000 Costco Companies, Inc.* 9,625,000
- --------------------------------------------------------------------------------
Retail - Regional Department Stores - 1.0%
220,000 Fred Meyer, Inc.* 6,283,750
- --------------------------------------------------------------------------------
Telecommunication Equipment - 3.9%
100,000 Lucent Technologies, Inc. 8,243,750
69,073 Northern Telecom, Ltd. 6,194,985
105,000 Oy Nokia Corp. (ADR) - Class A 9,266,250
- --------------------------------------------------------------------------------
23,704,985
- --------------------------------------------------------------------------------
Telecommunication Services - 2.5%
49,000 IXC Communications, Inc.* 1,617,000
227,025 Qwest Communications International, Inc.* 14,018,794
- --------------------------------------------------------------------------------
15,635,794
- --------------------------------------------------------------------------------
Total Common Stock (cost $446,212,998) 570,958,035
- --------------------------------------------------------------------------------
Preferred Stock - 1.0%
- --------------------------------------------------------------------------------
Telecommunication Equipment - 1.0%
217,350,000 Ericsson Telecomunicacoes S.A.
(cost $12,899,549) 6,407,433
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 6.6%
Household Finance Corp.
$25,900,000 5.68%, 11/3/97 $25,891,827
IBM Credit Corp.
15,000,000 5.48%, 11/7/97 14,986,300
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes (amortized cost $40,878,127) 40,878,127
- --------------------------------------------------------------------------------
Total Investments (total cost $499,990,674) - 100.4% 618,243,595
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (0.4%) (2,592,920)
- --------------------------------------------------------------------------------
Net Assets - 100% $615,650,675
- --------------------------------------------------------------------------------
Summary of Investments by Country
October 31, 1997
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Brazil 1.0% $6,407,434
Finland 1.5% 9,266,250
Germany 2.6% 15,836,620
Netherlands 3.2% 19,585,913
Russia 0.7% 4,655,532
United Kingdom 5.6% 34,612,233
United States++ 85.4% 527,879,613
- --------------------------------------------------------------------------------
Total 100.0% $618,243,595
================================================================================
++Includes Short-Term Securities (78.8% excluding Short-Term Securities)
Forward Currency Contracts
Open at October 31, 1997
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 1/15/98 400,000 $667,800 ($19,572)
British Pound 2/25/98 190,000 316,654 (17,102)
British Pound 3/4/98 10,700,000 17,827,270 (881,260)
British Pound 3/25/98 2,000,000 3,329,200 (169,200)
German Deutschemark 11/12/97 2,300,000 1,334,184 41,908
German Deutschemark 12/17/97 22,000,000 12,788,467 (5,408)
German Deutschemark 4/22/98 2,500,000 1,462,930 (19,924)
- --------------------------------------------------------------------------------
Total $37,726,505 ($1,070,558)
================================================================================
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 28
<PAGE>
JANUS OVERSEAS FUND Portfolio Manager, Helen Young Hayes
Performance
Janus Overseas Fund gained 23.56% for our fiscal year ended October 31,
1997, significantly outperforming the Morgan Stanley International EAFE Index
(EAFE stands for Europe, Australasia, and the Far East), which returned 4.63%.
Both returns include reinvested net dividends.(1)
For the 12 months, Janus Overseas Fund ranked 18 (top 5%) out of 406
international funds tracked by Lipper Analytical Services, Inc., a large mutual
fund rating company.(2)
I believe that superior individual stock selection, a process that takes
advantage of the research inefficiencies present in foreign markets, accounted
for the Fund's substantial lead versus the EAFE Index. Ultimately, I believe our
intensive, fundamental analysis will continue to uncover companies with strong
earnings growth potential, regardless of their geographic location.
The Year in Review
I am pleased with our performance over the past year, especially in light
of the increased volatility across foreign markets. Certainly, our results were
bolstered due to limited exposure in the Far East and Japan. Concerns about the
speculative frenzy in Southeast Asia convinced us early on to look for
opportunity elsewhere. While Japan continued to feel the effects of its
long-term economic malaise, we trained our sights on Europe. Productivity gains
realized through corporate restructuring lifted returns at a growing number of
European companies. While rising valuations toward the end of the year made it
more difficult to find compelling values, pockets of opportunity continued to
emerge.
- --------------------------------------------------------------------------------
Portfolio Profile October 31, 1997 October 31, 1996
Equities 89.1% 73.6%
Foreign 88.1% 72.4%
Top 10 Equities (% of Assets) 22.6% 17.9%
Number of Stocks 211 190
Cash & Fixed Income Securities 10.9% 26.4%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 10 Equity Holdings October 31, 1997 October 31, 1996
Siebe PLC 2.8% --
Philips Electronics N.V 2.7% 0.3%
Philips Electronics N.V
- N.Y. Shares 2.6% 0.6%
Electrolux A.B. - Class B 2.5% --
Rentokil Initial PLC 2.2% 3.7%
Elf Aquitaine S.A 2.2% --
Akzo Nobel N.V 2.2% --
Lloyds TSB Group PLC 1.9% 0.4%
Nokia Oy - Class A 1.8% 0.1%
Suez Lyonnaise des Eaux 1.7% --
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 5 Industries October 31, 1997 October 31, 1996
Diversified Operations 9.8% 9.9%
Money Center Banks 6.1% 3.3%
Electronic Components 5.8% 1.2%
Computer Services 4.1% 5.5%
Medical - Drugs 3.7% 5.3%
- --------------------------------------------------------------------------------
Top 5 Countries October 31, 1997 October 31, 1996
United Kingdom 20.3% 15.0%
Netherlands 12.4% 4.4%
France 12.0% 2.7%
Sweden 7.7% 7.2%
Germany 7.5% 7.2%
- --------------------------------------------------------------------------------
Stock Highlights
During the year, we emphasized a number of themes. First and foremost, we
looked for reasonably priced, classic growth companies with superb management
teams and established franchises. Beyond that, we zeroed in on companies that
recognized the importance of building shareholder value.
In the pharmaceutical arena, Novartis, formed by the merger of Sweden's
Ciba-Geigy and Sandoz, has an impressive drug pipeline and continues to reap
numerous cost efficiencies. Netherlands-based Akzo Nobel is redefining its core
business and transforming itself from a cyclical chemical stock into a rapidly
growing life sciences company. While expanding its higher-margin pharmaceutical
business, drug sales should increase following the release of Remeron, its new
anti-depressant drug.
Intent on improving profit margins, Electrolux, a broadline manufacturer of
home appliances, has implemented a dramatic restructuring plan under a new CEO
that involves significant cost reductions and streamlining of operations.
France's Renault, suffering from low 1997 car sales, recently put its own
extensive cost-cutting program into place. We believe they will surpass earnings
estimates in 1998.
Likewise, we're very optimistic about U.K.-based Logica and France's Cap
Gemini, both key players in the growth of information technology infrastructure.
We also invested in a number of well-positioned telephone equipment
manufacturers. Sweeping global deregulation, coupled with tremendous demand for
mobile phones and data communications equipment, should create a wealth of
opportunities for Ericsson, Nokia, Northern Telecom and Alcatel.
Finally, consolidation in the financial services industry created
British-based Lloyds TSB and Germany's Bayerische Vereinsbank. Both mergers,
part of a growing trend in Europe, offer significant economies of scale.
Among our disappointments was Volkswagen. While its restructuring efforts
and new product launches have met with earnings success, the company chose to
announce a secondary offering of six million new shares, rather than buying back
outstanding stock. The market received this news poorly, and the stock price
dropped substantially. With the exception of blue chips such as Sony, NTT and
Honda, Japanese companies also performed poorly. Japanese business in general
needs to demonstrate a greater commitment to return on capital and disciplined
capital deployment.
Going Forward
I expect the current volatility in foreign equity markets to continue. The
effects of the Asian currency crises have been far reaching, resulting in sharp
corrections in emerging and developed markets alike. This will be an interesting
time for patient, disciplined investors who are selective in their purchases and
pursue individual stocks that are trading attractively. This is our approach and
I believe it will serve us well going forward.
Thank you for your continued investment in Janus Overseas Fund.
- --------------------------------------------------------------------------------
(1) Net dividends reinvested are the dividends that remain to be reinvested
after foreign tax obligations have been met. Such obligations vary from
country to country.
(2) Lipper Analytical Services, Inc. defines an International Fund as one which
"invests its assets in securities whose primary trading markets are outside
the United States." As of October 31, 1997, Janus Overseas Fund ranked
1/236 of International Funds for the 3-year period. This ranking is based
on total return, including reinvested dividends and capital gains for the
stated period. Past performance does not guarantee future results.
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 29
<PAGE>
JANUS OVERSEAS FUND Portfolio Manager, Helen Young Hayes
Performance Overview
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Overseas Fund and the Morgan Stanley Capital International EAFE Index.
Janus Overseas Fund is represented by a solid blue line. The Morgan Stanley
Capital International EAFE Index is represented by a single dashed black line.
The "y" axis reflects the value of the investment. The "x" axis reflects the
computation periods from inception, May 2, 1994, through October 31, 1997. The
upper right quadrant reflects the ending value of the hypothetical investment in
Janus Overseas Fund ($18,627) as compared to the Morgan Stanley Capital
International EAFE Index ($12,010). There is a legend in the upper left quadrant
of the graph which indicates Janus Overseas Fund's one-year and since inception
(May 2, 1994) average annual total returns as 23.56% and 19.45%, respectively.
*The Fund's inception date
Source - Lipper Analytical Services, Inc. 1997.
All returns reflect reinvested dividends.
Past performance does not guarantee future results. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The Fund's portfolio may differ significantly
from the securities in the Index. The Index is unmanaged and therefore does not
reflect the cost of portfolio management or trading.
JANUS OVERSEAS FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 88.0%
- --------------------------------------------------------------------------------
Airlines - 2.3%
1,217,691 Deutsche Lufthansa A.G.**,+ $21,295,330
740,262 KLM Royal Dutch Air Lines N.V.** 25,098,502
3,627 Sairgroup*,** 4,875,356
459,037 Sas Danmark A/S 7,918,180
444,667 SAS Norske ASA - Class B 7,495,177
563,481 SAS Svergie AB** 8,206,517
- --------------------------------------------------------------------------------
74,889,062
- --------------------------------------------------------------------------------
Apparel Manufacturers - 0.2%
167,017 Adolfo Dominguez S.A.* 4,578,720
- --------------------------------------------------------------------------------
Appliances - 2.6%
986,116 Electrolux A.B. - Class B** 81,690,735
- --------------------------------------------------------------------------------
Athletic Footwear - 0.5%
101,670 Adidas A.G.** 14,738,190
- --------------------------------------------------------------------------------
Audio and Video Products - 0.2%
62,500 Sony Corp.** 5,191,443
- --------------------------------------------------------------------------------
Automotive - Cars and Light Trucks - 2.5%
3,706 Bayerische Motoren Werke (BMW) A.G.** 2,685,052
58,117 Mahindra & Mahindra, Ltd. (GDR)*,+ 581,170
151,000 Mitsubishi Motors Corp.** 662,908
1,084,638 Renault S.A.*,** 30,243,794
70,525 Tata Engineering & Locomotive Co., Ltd.+ 698,198
166,464 Tata Engineering & Locomotive Co., Ltd. (GDR)*,+ 1,647,994
77,110 Volkswagen A.G.** 45,652,615
- --------------------------------------------------------------------------------
82,171,731
- --------------------------------------------------------------------------------
Automotive - Truck Parts and Equipment - 0.4%
547,000 Denso Corp.** 11,825,058
- --------------------------------------------------------------------------------
Brewery - 0.4%
1,760,600 Fomento Economico Mexicano, S.A. de C.V. $12,336,744
- --------------------------------------------------------------------------------
Broadcast Services and Programming - 0.5%
509,925 Grupo Televisa S.A. (GDR)* 15,807,675
119,524 Modern Times Group MTG A.B.*,** 854,402
- --------------------------------------------------------------------------------
16,662,077
- --------------------------------------------------------------------------------
Building and Construction - 1.7%
531,789 Suez Lyonnaise des Eaux** 55,340,438
- --------------------------------------------------------------------------------
Building and Construction Products - 0.6%
946,000 Matsushita Electric Works, Ltd.** 8,573,541
429,730 Tarkett A.G.** 11,435,152
- --------------------------------------------------------------------------------
20,008,693
- --------------------------------------------------------------------------------
Casino Services - 0.3%
1,505,063 London Clubs International PLC** 7,823,904
- --------------------------------------------------------------------------------
Cellular Telecommunications - 0.1%
95,300 Millicom International Cellular S.A.* 4,002,600
- --------------------------------------------------------------------------------
Chemicals - Diversified - 2.5%
393,813 Akzo Nobel N.V.**,+ 69,419,194
694,017 Imperial Chemical Industries PLC** 10,241,415
- --------------------------------------------------------------------------------
79,660,609
- --------------------------------------------------------------------------------
Chemicals - Specialty - 0.2%
3,176 Clariant A.G.** 2,449,575
1,271,167 Victrex PLC** 4,902,726
- --------------------------------------------------------------------------------
7,352,301
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 30
<PAGE>
JANUS OVERSEAS FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Commercial Banks - 3.7%
10,092,643 Banca Commerciale Italiana $27,719,459
127,050 Banco Rio de La Plata S.A. (ADR)* 1,334,025
298,261 Bankgesellschaft Berlin A.G.** 7,364,888
496,473 Bayerische Vereinsbank A.G.** 29,566,524
376,049 BG Bank A/S+ 24,202,307
2,428,205 Credito Italiano S.p.A. 6,511,034
2,260,172 Merita Ltd. - Class A 11,066,255
19,349 Nordbanken A.B.** 607,546
363,275 Uniao de Bancos Brasileiros S.A. (GDR)* 9,899,244
- --------------------------------------------------------------------------------
118,271,282
- --------------------------------------------------------------------------------
Commercial Services - 1.1%
1,365,915 Btg Plc** 15,529,609
130,530 Sophus Berendsen A/S - Class B 19,726,260
- --------------------------------------------------------------------------------
35,255,869
- --------------------------------------------------------------------------------
Computer Services - 4.1%
155,281 Atos S.A.*,** 17,346,255
417,159 Cap Gemini S.A.** 33,192,772
3,738,455 Capita Group PLC** 19,245,877
231,306 Delphi Group PLC** 2,668,594
99,473 Enator A.B.*,** 1,581,631
275,804 Getronics N.V.** 9,109,510
2,109,225 Logica PLC** 30,064,155
108,908 Misys (Jersey)*,** 2,702,892
381,180 Misys PLC** 9,603,991
346,645 WM-Data A.B. - Class B** 6,021,177
- --------------------------------------------------------------------------------
131,536,854
- --------------------------------------------------------------------------------
Computer Software - 3.0%
52,000 Dassault Systemes S.A. (ADR) 1,560,000
677,908 JBA Holdings PLC** 10,742,608
401,662 Merkantildata A.S.A. 13,483,219
819 NTT Data Corp.** 39,155,643
847,430 SEMA Group PLC** 19,042,142
96,657 TT Tieto Oy - Class B 10,849,257
- --------------------------------------------------------------------------------
94,832,869
- --------------------------------------------------------------------------------
Computers - Integrated Systems - 0.3%
925,000 Fujitsu, Ltd.** 10,152,156
- --------------------------------------------------------------------------------
Cosmetics and Toiletries - 0.6%
399,271 Rhone-Poulenc - Class A** 17,445,450
- --------------------------------------------------------------------------------
Diversified Financial Services - 0.1%
30,655 Compagnie Bancaire S.A.** 3,941,027
- --------------------------------------------------------------------------------
Diversified Operations - 9.8%
354,098 Amer Group, Ltd. 7,400,923
15,655 Barco N.V. 3,020,112
12,196,020 First Pacific Co., Ltd. 7,692,037
2,143,432 General Electric Co. PLC** 13,685,378
387,143 Grupo Carso S.A. de C.V. - Series A1* 2,436,886
1,906,886 Hays PLC** 22,383,600
851,000 Hutchison Whampoa, Ltd. 5,890,226
132,400 Kinnevik A.B. - Class B** 2,635,890
559,967 Lagardere S.C.A.** 16,139,320
347,194 Metra Oy - Class B 9,272,353
532,450 Quinenco S.A. (ADR)* 7,787,081
17,621,956 Rentokil Initial PLC** 70,920,619
4,747,192 Siebe PLC** 91,148,484
88,539 South African Breweries, Ltd.**,+ 2,354,902
947,000 Swire Pacific Ltd. - Class A 5,059,978
881,039 TI Group PLC** 8,088,843
2,446,239 Tomkins PLC** 12,552,420
4,401,104 Williams PLC** 26,421,156
- --------------------------------------------------------------------------------
314,890,208
- --------------------------------------------------------------------------------
Drug Delivery Systems - 0.1%
89,300 Elan Corp. PLC (ADR)* $4,453,838
- --------------------------------------------------------------------------------
Electric - Integrated - 0.8%
199,000 Cemig S.A. (adr) 7,910,250
91,220,000 Companhia de Eletricidade do Estado da Bahia* 4,964,579
304,325 Compannia Paranaense de Energia-Copel (ADR)* 3,632,880
56,575 Mosenergo (ADR)+ 2,404,438
221,931 Unified Energy System (GDR)* 6,935,344
- --------------------------------------------------------------------------------
25,847,491
- --------------------------------------------------------------------------------
Electric Products - 0.5%
1,379,000 Hitachi, Ltd.** 10,605,926
81,070 Siemens A.G.** 4,997,541
- --------------------------------------------------------------------------------
15,603,467
- --------------------------------------------------------------------------------
Electronic Components - 5.8%
1,049,002 Electrocomponents PLC** 8,144,501
1,092,621 Philips Electronics N.V.** 85,575,526
1,055,525 Philips Electronics N.V. - N.Y. Shares** 82,726,772
382,417 Pricer A.B. - Class B*,** 8,890,773
- --------------------------------------------------------------------------------
185,337,572
- --------------------------------------------------------------------------------
Electronic Measuring Instruments - 0.2%
48,316 Simac Techniek N.V.** 6,181,646
- --------------------------------------------------------------------------------
Electronic Parts Distributors - 0.4%
1,614,779 Premier Farnell PLC** 12,510,142
- --------------------------------------------------------------------------------
Engineering - Research and Development - 0.2%
2,600 Abb A.g.** 3,398,058
13,868 VA Technologie A.G. 2,464,743
- --------------------------------------------------------------------------------
5,862,801
- --------------------------------------------------------------------------------
Environmental Monitoring and Detection Devices - 0%
89,846 Munters A.B.*,**,+ 912,358
- --------------------------------------------------------------------------------
Film Processing - 0.7%
143,425 Grand Optical Photoservice**,+ 23,148,188
- --------------------------------------------------------------------------------
Finance - Auto Loans - 0.2%
14,264,000 Putra Surya Multidana* 4,945,904
- --------------------------------------------------------------------------------
Finance - Investment Bankers/Brokers - 0.1%
217,000 Nomura Securities Co., Ltd.** 2,525,983
- --------------------------------------------------------------------------------
Food - Catering - 0.6%
1,808,623 Compass Group PLC**,+ 19,273,952
- --------------------------------------------------------------------------------
Food - Dairy Products - 0.2%
258,960 Koninklijke Nutricia Verenidge Bedrijven N.V.** 7,405,632
- --------------------------------------------------------------------------------
Food - Diversified - 1.0%
820,983 Grand Metropolitan PLC** 7,406,680
17,666 Hero A.G.**,+ 9,361,910
138,271 Raisio Group PLC* 14,958,278
- --------------------------------------------------------------------------------
31,726,868
- --------------------------------------------------------------------------------
Food - Retail - 0.1%
8,436 Carrefour S.A.** 4,411,431
- --------------------------------------------------------------------------------
Glass Products - 0.4%
4,327,370 Pilkington PLC** 10,957,416
- --------------------------------------------------------------------------------
Home Furnishings - 0.1%
441,289 Ekornes A.S.A. 4,034,299
- --------------------------------------------------------------------------------
Human Resources - 0.1%
155,886 Vedior N.V.**,+ 3,204,915
- --------------------------------------------------------------------------------
Investment Companies - 0.1%
349,458 Corp. Financiera Reunida, S.A. 1,875,187
190,604 Investment AB Bure** 2,330,270
- --------------------------------------------------------------------------------
4,205,457
- --------------------------------------------------------------------------------
Investment Management and Advisory Services - 0.1%
243,482 Amvescap PLC** 1,606,992
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 31
<PAGE>
JANUS OVERSEAS FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Lasers - Systems and Components - 0.1%
326,525 Rofin-Sinar Technologies, Inc.* $4,530,534
- --------------------------------------------------------------------------------
Life and Health Insurance - 1.1%
52,095 Schweizerishe Lebensversicherungs-und
Rentenanstalt** 35,367,055
11,000 Union des Assurances Federales** 1,232,619
- --------------------------------------------------------------------------------
36,599,674
- --------------------------------------------------------------------------------
Machinery - General Industrial - 0.6%
43,425 ASM Lithography Holding N.V. (ADR)* 3,180,881
1,353,957 Powerscreen International PLC** 15,859,097
- --------------------------------------------------------------------------------
19,039,978
- --------------------------------------------------------------------------------
Machinery - Pumps - 0.2%
150,400 Pfeiffer Vacuum Technology A.G. (ADR)* 4,888,000
- --------------------------------------------------------------------------------
Medical - Biomedical and Genetic - 1.0%
16,201 Ares-Serono Group - Class B** 30,745,546
- --------------------------------------------------------------------------------
Medical - Drugs - 3.7%
40,506 Altana A.G.** 2,948,840
608,117 Astra A.B. - Class A** 9,831,632
652,004 Glaxo Wellcome PLC** 13,491,884
18,374 Novartis A.G.** 28,856,048
4,267 Roche Holding A.G.** 37,600,946
697,226 SmithKline Beecham PLC** 6,605,857
29,300 SmithKline Beecham PLC (ADR)** 1,395,413
699,000 Takeda Chemical Industries** 19,063,105
- --------------------------------------------------------------------------------
119,793,725
- --------------------------------------------------------------------------------
Medical - Wholesale Drug Distributors - 0.2%
31,133 Gehe A.G.** 1,627,962
290,525 Grupo Casa Autrey S.A. de C.V. (ADR) 4,975,241
- --------------------------------------------------------------------------------
6,603,203
- --------------------------------------------------------------------------------
Medical Products - 0.6%
365,550 Fresenius Medical Care A.G. (ADR)* 8,613,272
317,217 Ortivus A.B.*,**,# 11,020,033
- --------------------------------------------------------------------------------
19,633,305
- --------------------------------------------------------------------------------
Metal Processors and Fabricators - 0.9%
1,238,767 Assa Abloy A.B. - Class B** 28,303,415
- --------------------------------------------------------------------------------
Money Center Banks - 5.6%
117,023 Banque Nationale de Paris** 5,184,273
713,335 Barclays PLC** 17,859,139
106,832 Credit Suisse Group*,** 15,090,822
596,222 Deutsche Bank A.G.** 39,074,900
5,036,074 Lloyds TSB Group PLC** 62,366,270
411,000 Mitsubishi Trust & Banking Corp.** 5,057,619
1,311,000 Mitsui Trust & Banking Co., Ltd.** 4,556,397
77,495 Skandinaviska Enskilda Banken - Class A** 838,710
28,770 Societe Generale** 3,948,602
1,095,000 Sumitomo Trust & Banking Co., Ltd.** 8,348,839
9,508 Ubs** 10,976,117
97,385 Unidanmark A/S - Class A 6,585,595
- --------------------------------------------------------------------------------
179,887,283
- --------------------------------------------------------------------------------
Mortgage Banks - 0.8%
469,059 Deutsche Pfandbrief & Hypothekenbank A.G.** 26,516,798
- --------------------------------------------------------------------------------
Motorcycle and Motor Scooter Manufacturing - 0%
4,795 Bajaj Auto, Ltd. (GDR)+ 81,746
- --------------------------------------------------------------------------------
Multi-Line Insurance - 3.5%
94,334 AGF (Assurances Generales de France)** 4,973,972
38,032 Allianz A.G.** 8,485,182
1,166,606 Assicurazioni Generali 26,090,998
6,858 Baloise Holdings, Ltd.** 12,376,349
1,838,001 Royal & Sun Alliance Insurance Group PLC** 17,614,452
- --------------------------------------------------------------------------------
Multi-Line Insurance - (continued)
50,216 Sampo Insurance Co., Ltd. - Class A* $1,496,585
370,294 Skandia Forsakrings A.B.** 17,316,807
53,835 Zurich Versicherungs-Gesellschaft** 22,283,688
- --------------------------------------------------------------------------------
110,638,033
- --------------------------------------------------------------------------------
Office Automation and Equipment - 0.1%
23,492 Oce N.V.** 2,681,206
- --------------------------------------------------------------------------------
Office Furnishings - 0.9%
896,496 Koninklijke Ahrend Groep N.V.**,# 29,887,465
- --------------------------------------------------------------------------------
Oil - Field Services - 1.3%
64,531 Isis*,**,+ 7,567,433
404,425 Schlumberger Ltd. 35,387,187
- --------------------------------------------------------------------------------
42,954,620
- --------------------------------------------------------------------------------
Oil - International Integrated - 0.8%
232,579 Total S.A.** 25,859,903
- --------------------------------------------------------------------------------
Oil and Gas Drilling - 2.4%
566,338 Elf Aquitaine S.A.** 70,250,648
122,700 Transocean Offshore, Inc. 6,625,800
- --------------------------------------------------------------------------------
76,876,448
- --------------------------------------------------------------------------------
Oil Companies - Integrated - 1.1%
990,371 British Petroleum Co. PLC** 14,348,907
95,375 Lukoil Holding (ADR) 7,987,656
367,900 Ypf S.a. (adr) 11,772,800
- --------------------------------------------------------------------------------
34,109,363
- --------------------------------------------------------------------------------
Oil Refining and Marketing - 0.1%
284,000 Bharat Petroleum Corp., Ltd. 3,405,031
- --------------------------------------------------------------------------------
Paper and Related Products - 0.2%
1,357,300 Kimberly-Clark de Mexico, S.A. de C.V. - Class A 5,924,082
- --------------------------------------------------------------------------------
Property and Casualty Insurance - 0.1%
466,000 Tokio Marine & Fire Insurance Co.** 4,649,538
- --------------------------------------------------------------------------------
Publishing - Books - 1.6%
1,382,640 Elsevier N.V.** 21,729,283
229,811 Wolters Kluwer N.V.** 28,230,171
- --------------------------------------------------------------------------------
49,959,454
- --------------------------------------------------------------------------------
Publishing - Newspapers - 0.3%
609,706 Newsquest PLC*,**,+ 2,402,678
669,634 Pearson PLC** 8,646,401
- --------------------------------------------------------------------------------
11,049,079
- --------------------------------------------------------------------------------
Real Estate Development - 0.3%
832,000 Mitsui Fudosan Co., Ltd.** 9,408,163
- --------------------------------------------------------------------------------
Real Estate Investment and Management - 0.8%
379,226 Fastighets A.B. Tornet** 4,965,663
1,575,000 Mitsubishi Estate Co., Ltd.** 19,905,210
- --------------------------------------------------------------------------------
24,870,873
- --------------------------------------------------------------------------------
Recycling - 0.4%
537,716 Tomra Systems A.S.A. 13,825,806
- --------------------------------------------------------------------------------
Reinsurance - 0%
16,787 Scor** 781,308
- --------------------------------------------------------------------------------
Retail - Discount - 0.1%
1,035,289 Cifra S.A. de C.V. 2,050,905
- --------------------------------------------------------------------------------
Retail - Diversified - 0.1%
61,500 Ryohin Keikaku Co., Ltd.** 4,269,767
- --------------------------------------------------------------------------------
Retail - Jewelry - 0.1%
14,713 TAG Heuer International S.A.*,** 1,685,838
- --------------------------------------------------------------------------------
Retail - Pubs - 0.2%
183,206 J.D. Wetherspoon PLC** 4,838,686
- --------------------------------------------------------------------------------
Retail - Restaurants - 0.2%
96,742 Tele Pizza S.A.* 6,648,683
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 32
<PAGE>
JANUS OVERSEAS FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Rubber - Tires - 0.8%
503,662 Compagnie Generale des Etablissements
Michelin - Class B** $25,891,700
- --------------------------------------------------------------------------------
Security Services - 0.3%
66,241 Prosegur, CIA de Seguridad S.A. 742,796
374,967 Securitas A.B. - Class B** 10,020,194
- --------------------------------------------------------------------------------
10,762,990
- --------------------------------------------------------------------------------
Special Purpose Banks - 0.6%
48,719 Dexia Belgium (Credit Communal)+ 5,323,650
143,798 Dexia France** 14,464,647
- --------------------------------------------------------------------------------
19,788,297
- --------------------------------------------------------------------------------
Telecommunication Equipment - 2.1%
72,479 Alcatel Alsthom** 8,763,909
650,443 Nokia Oy - Class A 56,896,605
29,775 Northern Telecom Ltd. 2,670,445
- --------------------------------------------------------------------------------
68,330,959
- --------------------------------------------------------------------------------
Telecommunication Services - 2.4%
12,045,601 Freepages Group PLC*,** 7,170,740
434,675 Nortel Inversora S.A. (ADR)* 10,866,875
109,922 Royal PTT Nederland N.V.** 4,202,667
320,166 Telefonaktiebolaget L.M. Ericsson (ADR)
- Class B** 14,167,346
651,540 Telefonaktiebolaget L.M. Ericsson - Class B** 28,728,181
516,200 Telefonica del Peru S.A. (ADR) 10,194,950
- --------------------------------------------------------------------------------
75,330,759
- --------------------------------------------------------------------------------
Telephone - Integrated - 2.1%
4,675 Nippon Telegraph & Telephone Corp.** 39,648,284
274,150 Telecom Argentina Stet S.A. (ADR) 6,939,422
2,350,884 Telecom Italia S.p.A. 14,729,970
191,425 Telefonica de Argentina S.A. (ADR) 5,383,828
- --------------------------------------------------------------------------------
66,701,504
- --------------------------------------------------------------------------------
Tobacco - 0%
26,791 Souza Cruz S.A. 217,983
- --------------------------------------------------------------------------------
Transportation - Services - 0.6%
119,850 Koninklijke Nedlloyd Groep N.V.** 3,563,283
1,381,191 Stagecoach Holdings PLC** 16,884,509
- --------------------------------------------------------------------------------
20,447,792
- --------------------------------------------------------------------------------
Travel Services - 0.3%
2,846 Kuoni Reisen A.G. - Class B** 10,802,028
- --------------------------------------------------------------------------------
Total Common Stock (cost $2,512,771,336) 2,820,025,842
- --------------------------------------------------------------------------------
Foreign Bond - 0.5%
- --------------------------------------------------------------------------------
Money Center Banks - 0.5%
- --------------------------------------------------------------------------------
JPY 1,860,000,000 STB Cayman Capital Ltd., 0.50%
bank guaranteed notes, due 10/1/07+
(cost $16,133,929) 15,407,206
- --------------------------------------------------------------------------------
Preferred Stock - 1.1%
- --------------------------------------------------------------------------------
Automotive - Cars and Light Trucks - 0%
990 Porsche A.G.** 1,458,122
- --------------------------------------------------------------------------------
Brewery - 0.1%
2,926,000 Companhia Cervejaria Brahma 1,831,321
- --------------------------------------------------------------------------------
Electric - Integrated - 0.2%
160,000 Centrais Electricas de Santa Catarina S.A. 172,706
187,018,000 Companhia Energetica de Minas Gerais 7,464,095
35,975,000 Companhia Paranaense de Energia-Copel 436,103
- --------------------------------------------------------------------------------
8,072,904
- --------------------------------------------------------------------------------
Oil Companies - Integrated - 0.2%
26,571,000 Petroleo Brasileiro S.A. 5,133,678
- --------------------------------------------------------------------------------
Telecommunication Equipment - 0.5%
375,110,000 Ericsson Telecomunicacoes S.A. $11,058,166
38,925 Oy Nokia Corp. (ADR) - Class A 3,435,131
- --------------------------------------------------------------------------------
14,493,297
- --------------------------------------------------------------------------------
Telephone - Integrated - 0.1%
42,250 Telecomunicacoes Brasileiras S.A. (ADR) 4,288,375
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $41,184,088) 35,277,697
- --------------------------------------------------------------------------------
Warrants - 0%
61,734 Rhone-Poulenc, exp. 11/05/01*
(cost $10,436) 195,733
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 4.9%
Deutsche Bank A.G.
$25,000,000 5.51%, 11/10/97 24,965,563
UBS Financial, Inc.
132,500,000 5.69%, 11/3/97 132,458,115
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes (amortized cost $157,423,678) 157,423,678
- --------------------------------------------------------------------------------
Time Deposit - 1.7%
Sun Trust Bank EDT
55,000,000 5.625%, 11/3/97 (cost $55,000,000) 55,000,000
- --------------------------------------------------------------------------------
Total Investments (total cost $2,782,523,467) - 96.2% 3,083,330,156
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 3.8% 121,867,282
- --------------------------------------------------------------------------------
Net Assets - 100% $3,205,197,438
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 33
<PAGE>
JANUS OVERSEAS FUND October 31, 1997
Summary of Investments by Country
October 31, 1997
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Argentina 1.2% $36,296,949
Austria 0.1% 2,464,743
Belgium 0.3% 8,343,761
Brazil 1.9% 57,009,378
Canada 0.1% 2,670,445
Chile 0.3% 7,787,080
Denmark 1.9% 58,432,342
Finland 3.7% 115,375,388
France 12.0% 371,361,529
Germany 7.5% 231,348,367
Hong Kong 0.6% 18,642,240
India 0.2% 6,414,137
Indonesia 0.2% 4,945,903
Ireland 0.1% 4,453,837
Italy 2.4% 75,051,460
Japan 7.1% 219,006,786
Luxembourg 0.1% 4,002,600
Mexico 1.4% 43,531,532
Netherlands 12.4% 382,196,653
Norway 1.3% 38,838,500
Peru 0.3% 10,716,843
Russia 0.6% 17,327,438
South Africa 0.1% 2,354,902
Spain 0.5% 13,845,385
Sweden 7.7% 238,923,283
Switzerland 7.3% 225,869,334
United Kingdom 20.3% 627,152,142
United States++ 8.4% 258,967,199
- --------------------------------------------------------------------------------
Total 100.0% $3,083,330,156
================================================================================
++ Includes Short-Term Securities (1.5% excluding Short-Term Securities)
Forward Currency Contracts
Open at October 31, 1997
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 2/11/98 5,000,000 $8,338,000 ($278,649)
British Pound 2/18/98 83,000,000 138,369,300 (3,726,285)
British Pound 2/19/98 22,000,000 36,674,000 44,000
Dutch Guilder 1/9/98 17,000,000 8,763,790 (240,351)
Dutch Guilder 2/18/98 15,000,000 7,749,935 (570,841)
Dutch Guilder 2/19/98 44,000,000 22,734,318 (1,080,775)
French Franc 11/28/97 70,000,000 12,116,596 217,662
French Franc 1/20/98 4,000,000 694,565 (17,975)
French Franc 2/18/98 155,220,000 26,993,374 (1,920,935)
German Deutschemark 1/9/98 10,000,000 5,820,383 (177,042)
German Deutschemark 2/3/98 2,800,000 1,631,987 (50,959)
German Deutschemark 2/26/98 28,123,000 16,410,690 (812,798)
Japanese Yen 12/18/97 770,000,000 6,401,112 567,214
Japanese Yen 1/20/98 910,000,000 7,565,334 632,864
Japanese Yen 2/18/98 5,500,000,000 45,726,448 1,077,458
Japanese Yen 3/18/98 7,580,000,000 63,021,874 2,356,584
Japanese Yen 3/25/98 150,000,000 1,247,147 25,117
South African Rand 10/2/98 6,000,000 1,153,846 (15,758)
Swedish Krona 1/15/98 84,500,000 11,290,754 (304,743)
Swedish Krona 2/2/98 25,000,000 3,342,291 (103,151)
Swedish Krona 2/11/98 21,000,000 2,808,050 (132,891)
Swiss Franc 11/12/97 1,671,000 1,192,379 5,470
Swiss Franc 1/9/98 6,000,000 4,308,797 (162,574)
Swiss Franc 1/20/98 8,500,000 6,111,151 (175,397)
Swiss Franc 2/18/98 4,000,000 2,884,338 (210,541)
Swiss Franc 2/19/98 13,000,000 9,375,451 (422,283)
- --------------------------------------------------------------------------------
Total $452,725,910 ($5,477,579)
================================================================================
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 34
<PAGE>
JANUS SPECIAL SITUATIONS FUND Portfolio Manager, David C. Decker
Performance
Janus Special Situations Fund opened on December 31, 1996. As of October
31, 1997, the end of the fiscal period, the Fund gained 40.80%. The S&P 500
Index gained 25.31% for the same 10-month period. Both returns include
reinvested dividends.
Once again, I would like to thank you for your initial investment and
confidence in Janus Special Situations Fund. We have had a very strong start,
and I hope to keep the momentum going.
As a stock picker, my primary goal is to find stocks whose prices don't
reflect events that I believe are likely to materially change the stocks'
valuation. For example, these could be changes in management, corporate
structure, or a significant reallocation of capital. Such changes should result
in a substantial increase in the company's free cash flow (its discretionary
cash). This strategy served us well in the first 10 months.
Stock Highlights
The stocks I favor are sometimes controversial. Usually my view will differ
from the consensus view of the stock. Take Westinghouse. We began buying the
stock after a meeting with the head of the radio division. His company, Infinity
Broadcasting, had been acquired by Westinghouse and, as a result, he was now
Westinghouse's largest individual shareholder. At the time, the consensus view
on the stock was that CBS, which Westinghouse also owns, would never recover and
that the fortunes of Westinghouse's string of local TV stations were tied to the
dismal outlook for CBS. The important point, however, was that the stock's
valuation already reflected the consensus view. In essence, the downside on
Westinghouse was limited to a complete collapse at CBS, a risk we considered
low. The upside, on the other hand, was substantial if the right management team
was in place. The head of the radio division, Mel Karmazin, had already
demonstrated his ability to create shareholder value at Infinity Broadcasting,
and now, as head of the important radio division and the company's largest
shareholder, his interests were in line with ours. This was a very attractive
situation: a solid management team with its interests aligned with shareholders,
a fixable problem of a fundamentally sound franchise, and a stock price that
gave no credit to management's ability to improve the situation. Westinghouse
turned out to be a major factor in the Fund's performance.
Another stock that was an important contributor to performance, and is
currently the Fund's largest position, is Federal-Mogul, an auto parts
manufacturer mentioned in the semiannual letter. Again, new management made the
difference. This past quarter, management announced a merger agreement with T&N,
a U.K. piston company, which will create value far beyond what investors
currently anticipate.
This actually raises an important point about the special situations
discipline. When a stock is up 100% (as is the case with Federal-Mogul),
shouldn't we sell it and move on now that the risk/reward is apparently no
longer in our favor? The answer is, sometimes. Often, the most important
criterion in a special situation is management, because given the same set of
circumstances, a high-quality management team can create more value than a
low-quality management team. In the case of Federal-Mogul, I believe the
consensus view still does not recognize the magnitude of the value that will be
created by management over the coming years. So, while the risk/reward is less
favorable than it was, it is still favorable enough to warrant a sizable
position in the Fund's portfolio. In any investment discipline, you have to
constantly reevaluate the reasons you own positions. Simply because they are up
or down is often not reason enough to buy or sell.
While the Fund's aggregate performance was strong, there were still some
mistakes that hampered returns. One was Fruit of the Loom. While it did well
early in the year, competitive pricing and an inventory buildup drained much of
the expected free cash flow. When it became clear that cash flow wasn't going to
materialize in the foreseeable future, the stock was sold. Although Fruit of the
Loom is still relatively cheap, if there isn't an identifiable catalyst to
accelerate cash flow and earnings, it is likely to remain cheap.
- --------------------------------------------------------------------------------
Portfolio Profile October 31, 1997
Equities 97.1%
Foreign 17.1%
Top 10 Equities (% of Assets) 42.3%
Number of Stocks 58
Cash & Cash Equivalents 2.9%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 10 Equity Holdings October 31, 1997
Federal-Mogul Corp. 7.3%
Tele-Communications, Inc. - Class A 5.0%
World Color Press, Inc. 4.4%
Bally Total Fitness Holding Corp. 4.3%
Imperial Chemical Industries PLC (ADR) 4.0%
Westinghouse Electric Corp. 3.8%
Philips Electronics N.V. - N.Y. Shares 3.5%
Compaq Computer Corp. 3.4%
ITEQ, Inc. 3.3%
Young Broadcasting Corp. - Class A 3.3%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 5 Industries October 31, 1997
Chemicals - Diversified 9.1%
Diversified Operations 8.4%
Printing - Commercial 7.5%
Automotive - Truck Parts and Equipment 7.3%
Cable Television 5.0%
- --------------------------------------------------------------------------------
Looking Ahead
As I have said before, there are still high expectations built into this
market, which makes it inherently more volatile and, therefore, more risky.
In this environment, a modest earnings disappointment can precipitate
substantial price declines, even when the number on an absolute basis is pretty
good. So this is not a market in which I like to traffic. I prefer to discover
high-quality companies that have very few expectations built into their
valuations. This strategy allows me to sleep easier, even in a volatile market,
and I believe it will provide better returns over time.
Thank you again for your investment in Janus Special Situations Fund.
- --------------------------------------------------------------------------------
Past performance does not guarantee future results. Investing in special
situation companies may entail greater risks.
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 35
<PAGE>
JANUS SPECIAL SITUATIONS FUND Portfolio Manager, David C. Decker
Performance Overview
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Special Situations Fund and the S&P 500 Index. Janus Special Situations
Fund is represented by a solid blue line. The S&P 500 Index is represented by a
single dashed black line. The "y" axis reflects the value of the investment. The
"x" axis reflects the computation periods from inception, December 31, 1996,
through October 31, 1997. The upper right quadrant reflects the ending value of
the hypothetical investment in Janus Special Situations Fund ($14,080) as
compared to the S&P 500 Index ($12,531). There is a legend in the upper left
quadrant of the graph which indicates Janus Special Situations Fund's since
inception (December 31, 1996) cumulative total return as 40.80%.
*The Fund's inception date
Source - Lipper Analytical Services, Inc. 1997.
All returns reflect reinvested dividends.
Past performance does not guarantee future results. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The Fund's portfolio may differ significantly
from the securities in the Index. The Index is unmanaged and therefore does not
reflect the cost of portfolio management or trading.
JANUS SPECIAL SITUATIONS FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 97.1%
- --------------------------------------------------------------------------------
Advertising Sales - 3.1%
60,000 Lamar Advertising Co.* $2,032,500
200,000 Universal Outdoor Holdings, Inc.* 8,450,000
- --------------------------------------------------------------------------------
10,482,500
- --------------------------------------------------------------------------------
Automotive - Cars and Light Trucks - 1.9%
10,497 Volkswagen A.G.** 6,214,700
- --------------------------------------------------------------------------------
Automotive - Truck Parts and Equipment - 7.3%
585,000 Federal-Mogul Corp. 24,752,812
- --------------------------------------------------------------------------------
Cable Television - 5.0%
730,000 Tele-Communications, Inc. - Class A* 16,744,375
- --------------------------------------------------------------------------------
Chemicals - Diversified - 9.1%
175,000 Cytec Industries, Inc.* 8,531,250
225,000 Imperial Chemical Industries PLC (ADR) 13,471,875
400,000 Solutia, Inc.* 8,850,000
- --------------------------------------------------------------------------------
30,853,125
- --------------------------------------------------------------------------------
Commercial Services - 1.5%
212,800 ACNielsen Corp.* 4,867,800
- --------------------------------------------------------------------------------
Computer Services - 4.0%
293,925 Bell & Howell Co.* 8,101,308
276,423 Capita Group PLC** 1,423,049
100,000 Ceridian Corp.* 3,906,250
- --------------------------------------------------------------------------------
13,430,607
- --------------------------------------------------------------------------------
Computers - Integrated Systems - 2.8%
400,000 Wang Laboratories, Inc.* 9,250,000
- --------------------------------------------------------------------------------
Computers - Micro - 3.4%
180,000 Compaq Computer Corp.* 11,475,000
- --------------------------------------------------------------------------------
Consumer Products - 1.0%
140,000 Gibson Greetings, Inc.* 3,447,500
- --------------------------------------------------------------------------------
Containers - Paper and Plastic - 0.2%
32,500 Ivex Packaging Corp.* $686,563
- --------------------------------------------------------------------------------
Cruise Lines - 1.1%
78,625 Royal Caribbean Cruises, Ltd. 3,651,148
- --------------------------------------------------------------------------------
Diversified Operations - 8.4%
1,630,553 Tomkins PLC** 8,366,879
80,000 Tyco International, Ltd. 3,020,000
474,075 Westinghouse Electric Corp.* 12,533,358
712,542 Williams PLC** 4,277,605
- --------------------------------------------------------------------------------
28,197,842
- --------------------------------------------------------------------------------
Drug Delivery Systems - 2.8%
196,550 Atrix Laboratories, Inc.* 3,709,881
275,000 Sano Corp.* 5,706,250
- --------------------------------------------------------------------------------
9,416,131
- --------------------------------------------------------------------------------
Electronic Components - 4.1%
25,000 Philips Electronics N.V.** 1,958,033
150,000 Philips Electronics N.V. - N.Y. Shares** 11,756,250
- --------------------------------------------------------------------------------
13,714,283
- --------------------------------------------------------------------------------
Finance - Investment Bankers/Brokers - 1.0%
100,000 Charles Schwab Corp. 3,412,500
- --------------------------------------------------------------------------------
Food - Diversified - 1.8%
200,000 International Multifoods Corp. 5,900,000
- --------------------------------------------------------------------------------
Heart Monitors - 0.5%
150,000 Endocardial Solutions, Inc.* 1,650,000
- --------------------------------------------------------------------------------
Instruments - Scientific - 0.4%
25,000 Dionex Corp.* 1,246,875
- --------------------------------------------------------------------------------
Machinery - General Industrial - 3.3%
877,800 ITEQ, Inc.*,# 10,972,500
- --------------------------------------------------------------------------------
Medical - Wholesale Drug Distributors - 0.3%
26,000 Bergen Brunswig Corp. 1,041,625
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 36
<PAGE>
JANUS SPECIAL SITUATIONS FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Money Center Banks - 1.9%
256,400 Barclays PLC** $6,419,260
- --------------------------------------------------------------------------------
Multimedia - 0.6%
4,300 Meredith Corp. 146,469
30,000 Time Warner, Inc. 1,730,625
- --------------------------------------------------------------------------------
1,877,094
- --------------------------------------------------------------------------------
Office Automation and Equipment - 1.2%
50,000 Xerox Corp. 3,965,625
- --------------------------------------------------------------------------------
Oil - Field Services - 1.3%
70,075 Halliburton Co. 4,178,222
- --------------------------------------------------------------------------------
Oil and Gas Drilling - 1.9%
178,325 Falcon Drilling Co., Inc.* 6,486,572
- --------------------------------------------------------------------------------
Oil Companies - Exploration and Production - 1.2%
98,725 Pioneer Natural Resources Co. 3,955,170
- --------------------------------------------------------------------------------
Oil Field Machinery and Equipment - 1.5%
66,525 Smith International, Inc.* 5,072,531
- --------------------------------------------------------------------------------
Printing - Commercial - 7.5%
350,000 Valassis Communications, Inc.* 10,325,000
580,000 World Color Press, Inc.* 14,681,250
- --------------------------------------------------------------------------------
25,006,250
- --------------------------------------------------------------------------------
Property and Casualty Insurance - 0.6%
50,000 Mercury General Corp. 2,121,875
- --------------------------------------------------------------------------------
Publishing - Newspapers - 4.1%
70,000 Central Newspapers, Inc. - Class A 4,598,125
150,000 CMP Media, Inc. - Class A* 2,775,000
50,000 Harte-Hanks Communications, Inc. 1,737,500
350,000 Hollinger International, Inc. 4,571,875
- --------------------------------------------------------------------------------
13,682,500
- --------------------------------------------------------------------------------
Radio - 1.3%
94,450 Emmis Broadcasting Corp. - Class A* 4,179,412
- --------------------------------------------------------------------------------
Recreational Centers - 4.3%
800,000 Bally Total Fitness Holding Corp.* 14,200,000
- --------------------------------------------------------------------------------
Real Estate Investment Trusts - 0.2%
100,000 Property Capital Trust 612,500
- --------------------------------------------------------------------------------
Retail - Diversified - 1.0%
60,124 Vendex International N.V.** 3,283,902
- --------------------------------------------------------------------------------
Retail - Hypermarkets - 0.5%
40,000 Costco Companies, Inc.* 1,540,000
- --------------------------------------------------------------------------------
Savings/Loan/Thrifts - 1.3%
82,350 Dime Community Bancorp, Inc. 1,739,644
61,575 First Defiance Financial Corp. 977,503
47,475 Home Bancorp of Elgin, Inc. 833,780
34,775 Little Falls Bancorp, Inc. 634,644
- --------------------------------------------------------------------------------
4,185,571
- --------------------------------------------------------------------------------
Soap and Cleaning Preparations - 0.3%
54,100 Dial Corp. 912,937
- --------------------------------------------------------------------------------
Television - 3.3%
300,000 Young Broadcasting Corp. - Class A* 10,875,000
- --------------------------------------------------------------------------------
Therapeutics - 0.1%
100,000 Cytel Corp.* 212,500
- --------------------------------------------------------------------------------
Total Common Stock (cost $289,377,939) 324,174,807
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 4.2%
Household Finance Corp.
$14,100,000 5.38%, 11/3/97 14,095,551
(amortized cost $14,095,551)
- --------------------------------------------------------------------------------
Total Investments (total cost $303,473,490) - 101.3% 338,270,358
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets -(1.3%) (4,493,027)
- --------------------------------------------------------------------------------
Net Assets - 100% $333,777,331
- --------------------------------------------------------------------------------
Summary of Investments by Country
October 31, 1997
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Germany 1.9% $6,214,700
Netherlands 5.0% 16,998,185
United Kingdom 10.0% 33,958,668
United States++ 83.1% 281,098,805
- --------------------------------------------------------------------------------
Total 100.0% $338,270,358
================================================================================
++Includes Short-Term Securities (78.9% excluding Short-Term Securities)
Forward Currency Contracts
Open at October 31, 1997
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 12/4/97 175,000 $292,688 $796
British Pound 1/9/98 7,950,000 13,275,705 (381,500)
British Pound 2/11/98 200,000 333,520 (1,180)
British Pound 2/18/98 730,000 1,216,983 (48,914)
British Pound 2/19/98 500,000 833,500 (44,000)
British Pound 3/4/98 1,660,000 2,765,726 (137,658)
British Pound 4/22/98 9,000,000 14,963,400 (487,145)
Dutch Guilder 1/9/98 900,000 463,965 (10,291)
Dutch Guilder 2/25/98 15,900,000 8,217,479 (179,056)
Dutch Guilder 3/4/98 2,700,000 1,395,926 (21,822)
Dutch Guilder 3/5/98 7,100,000 3,670,958 (67,080)
Dutch Guilder 3/31/98 2,700,000 1,397,878 (13,361)
Dutch Guilder 4/8/98 1,000,000 517,920 (8,470)
German Deutschemark 3/4/98 6,100,000 3,560,588 (71,266)
German Deutschemark 4/22/98 4,600,000 2,691,790 (26,615)
- --------------------------------------------------------------------------------
Total $55,598,026 ($1,497,562)
================================================================================
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 37
<PAGE>
JANUS TWENTY FUND Portfolio Manager, Scott W. Schoelzel
Performance
For the fiscal year ended October 31, 1997, Janus Twenty Fund returned
31.65%, while the benchmark S&P 500 Index returned 32.10%. Both returns include
reinvested dividends.
For the 12-month period, Janus Twenty Fund ranked 43 out of 203 capital
appreciation funds (top 21%) according to Lipper Analytical Services, Inc., a
large mutual fund rating service.(1)
The Year in Review
Before I begin my review, I would like to thank all of the current
shareholders who have maintained their investment in the Fund since the recent
portfolio management change. I appreciate the vote of confidence, and I am
excited about the portfolio's prospects. Going forward, I do not anticipate any
significant changes in the Fund's approach or style. I am confident that,
together with all of Janus' portfolio managers and analysts, we can continue to
seek the exceptional returns that shareholders have come to enjoy.
Now to review the past 12 months.
For the third consecutive year, domestic stocks posted strong results.
However, these gains were not without renewed volatility, and the market's rise
masked some very real crosscurrents. The S&P 500's early gains were driven by
only a handful of stocks as investors' thirst for liquidity pushed many of the
large, multinational stocks to very high valuations. Meanwhile, small and
midsize stocks lost ground, and this created a very narrow market advance.
As the year progressed, we were fortunate to move into a "Goldilocks
Scenario" (everything is just right): corporate earnings were solid, economic
growth moderated, and inflation failed to materialize. Market leadership also
changed substantially in the second half, and we saw a resurgence in both small
and midsize stocks. As the period came to a close, the growing tempest in
Southeast Asia weighed heavily on stocks around the world and left many indexes
substantially off their peaks.
- --------------------------------------------------------------------------------
Portfolio Profile October 31, 1997 October 31, 1996
Equities 91.0% 97.4%
Foreign 4.2% 5.6%
Top 20 Equities (% of Assets) 80.1% 86.9%
Top 10 Equities (% of Assets) 53.1% 56.8%
Number of Stocks 34 28
Cash & Fixed Income Securities 9.0% 2.6%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 10 Equity Holdings October 31, 1997 October 31, 1996
Schlumberger Ltd. 7.0% --
Monsanto Co. 5.8% 4.0%
Dell Computer Corp. 5.7% --
UAL Corp. 5.5% 5.7%
Pfizer, Inc. 5.2% 4.2%
Lucent Technologies, Inc. 5.2% 4.9%
Microsoft Corp. 5.0% 3.0%
Eli Lilly and Co. 4.6% 2.9%
Warner-Lambert Co. 4.6% --
Citicorp 4.5% 6.4%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 5 Industries October 31, 1997 October 31, 1996
Medical - Drugs 14.4% 7.1%
Oil - Field Services 7.8% --
Chemicals - Diversified 7.5% 4.0%
Computers - Micro 5.7% --
Airlines 5.5% 5.7%
- --------------------------------------------------------------------------------
Portfolio Review
Drug stocks posted solid gains during the year, and the Fund remained
committed to top-quality pharmaceutical manufacturers, including Warner-Lambert,
Eli Lilly, and Pfizer. These companies have tremendous product pipelines, and
their recent product launches are rapidly gaining market share. Warner-Lambert's
recent product introductions include Rezulin, for the treatment of adult-onset
diabetes, and Lipitor, a statin that reduces cholesterol levels. Both launches
have met with tremendous market approval, and Lipitor has already become one of
the top-selling anti-cholesterol treatments in less than six months.
Additionally, Eli Lilly is about to launch Evista, which treats osteoporosis,
and our research indicates it could be a blockbuster, potentially generating $2
billion in annual revenues.
During the period, I added to positions in oil service providers, including
Schlumberger. On a fundamental basis, Schlumberger is among the world's premier
oil service providers. From a macroeconomic perspective, the company has the
wind at its back because the increase in worldwide demand for oil has in turn
pushed up drilling activity. During the energy shakeout of the late '80s and
early '90s, Schlumberger continued to invest in its research and development,
and now its superior technology is paying dividends. For example, Schlumberger's
directional drilling equipment can stay in formations of 10 feet or less for
1,000 feet. Couple this with a buildup in demand for oil rigs that use
Schlumberger's technology, and the company is enjoying what is a rarity in
today's marketplace: pricing power. Schlumberger is raising prices as its sales
volumes increase, which is creating solid earnings growth potential.
More recently, I cut the position in longtime holding First Data. The
environment for credit card processing has become increasingly competitive and,
despite its size and operating efficiencies, First Data's earnings have become
less predictable. While the Fund remains highly concentrated(2), I have added
several smaller "starter" positions in an effort to gain exposure to a few
rapidly growing midsize companies.
Going Forward
I remain cautiously optimistic going into 1998. The recent volatility in
global markets has certainly been unsettling. The Southeast Asian problems
create the very real possibility of deflationary pres-sures spilling over to the
U.S. However, this is not necessarily bad. Interest rates have already trended
significantly lower during the second half of the year. With further evidence of
lower inflation, interest rates could certainly trend even lower, and this would
help bolster equity valuations. Notwithstanding the market's fluctuations, I
believe careful security analysis is the key to long-term investment results,
and that remains my overriding focus.
Thank you for your continued investment in Janus Twenty Fund.
- --------------------------------------------------------------------------------
(1) A Capital Appreciation Fund is defined by Lipper as one which "aims at
maximum capital appreciation, frequently by means of 100% or more portfolio
turnover, leveraging, purchasing unregistered securities, purchasing
options, etc. The fund may take large cash positions." As of October 31,
1997, Janus Twenty Fund ranked 13/121 for the 3-year period and 34/77
Capital Appreciation Funds for the 5-year period, and number one out of 55
funds for the 10-year period. This ranking is based on total return,
including reinvestment of dividends and capital gains for the stated
period. Past performance does not guarantee future results.
(2) Concentration may lead to greater volatility.
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 38
<PAGE>
JANUS TWENTY FUND Portfolio Manager, Scott W. Schoelzel
Performance Overview
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Twenty Fund and the S&P 500 Index. Janus Twenty Fund is represented by
a solid blue line. The S&P 500 Index is represented by a single dashed black
line. The "y" axis reflects the value of the investment. The "x" axis reflects
the computation periods from inception, April 30, 1985, through October 31,
1997. The upper right quadrant reflects the ending value of the hypothetical
investment in Janus Twenty Fund ($76,168) as compared to the S&P 500 Index
($72,872). There is a legend in the upper left quadrant of the graph which
indicates Janus Twenty Fund's one-year, five-year, ten-year and since inception
(April 30, 1985) average annual total returns as 31.65%, 18.44%, 21.28% and
17.64%, respectively.
*The Fund's inception date
Source - Lipper Analytical Services, Inc. 1997.
All returns reflect reinvested dividends.
Past performance does not guarantee future results. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The Fund's portfolio may differ significantly
from the securities in the Index. The Index is unmanaged and therefore does not
reflect the cost of portfolio management or trading.
JANUS TWENTY FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 91.0%
- --------------------------------------------------------------------------------
Airlines - 5.5%
3,679,625 UAL Corp.*,# $322,427,141
- --------------------------------------------------------------------------------
Automotive - Cars and Light Trucks - 2.8%
277,689 Volkswagen A.G.** 164,404,475
- --------------------------------------------------------------------------------
Beverages - Non-Alcoholic - 1.1%
2,391,875 Coca-Cola Enterprises, Inc. 67,271,484
- --------------------------------------------------------------------------------
Cable Television - 0.3%
762,550 Tele-Communications, Inc. - Class A* 17,490,991
- --------------------------------------------------------------------------------
Chemicals - Diversified - 7.5%
995,375 E.I. du Pont de Nemours and Co. 56,611,953
7,982,025 Monsanto Co. 341,231,569
1,829,905 Solutia, Inc.* 40,486,648
- --------------------------------------------------------------------------------
438,330,170
- --------------------------------------------------------------------------------
Computer Software - 5.0%
2,240,000 Microsoft Corp.* 291,200,000
- --------------------------------------------------------------------------------
Computers - Micro - 5.7%
4,219,300 Dell Computer Corp.* 338,071,412
- --------------------------------------------------------------------------------
Cosmetics and Toiletries - 1.1%
1,000,000 Colgate-Palmolive Co. 64,750,000
- --------------------------------------------------------------------------------
Data Processing and Management - 0.2%
395,596 First Data Corp. 11,497,009
- --------------------------------------------------------------------------------
Diversified Operations - 5.2%
3,956,800 General Electric Co. 255,460,900
1,800,000 Westinghouse Electric Corp.* 47,587,500
- --------------------------------------------------------------------------------
303,048,400
- --------------------------------------------------------------------------------
Electronic Components - 1.4%
479,238 Philips Electronics N.V.** $37,534,556
600,650 Philips Electronics N.V. - N.Y. Shares** 47,075,944
- --------------------------------------------------------------------------------
84,610,500
- --------------------------------------------------------------------------------
Electronic Components - Semiconductors - 2.4%
4,236,050 Applied Materials, Inc.* 141,378,169
- --------------------------------------------------------------------------------
Finance - Consumer Loans - 2.7%
1,127,250 SLM Holding Corp. 158,237,719
- --------------------------------------------------------------------------------
Finance - Investment Bankers/Brokers - 4.2%
3,660,650 Merrill Lynch & Co., Inc. 247,551,456
- --------------------------------------------------------------------------------
Finance - Mortgage Loan Banker - 3.6%
4,352,975 Fannie Mae 210,847,226
- --------------------------------------------------------------------------------
Internet Software - 1.8%
1,350,000 America Online, Inc.* 103,950,000
- --------------------------------------------------------------------------------
Medical - Drugs - 14.4%
4,061,250 Eli Lilly and Co. 271,596,094
4,346,015 Pfizer, Inc. 307,480,561
1,880,725 Warner-Lambert Co. 269,296,311
- --------------------------------------------------------------------------------
848,372,966
- --------------------------------------------------------------------------------
Money Center Banks - 4.5%
2,094,075 Citicorp 261,890,255
- --------------------------------------------------------------------------------
Multimedia - 2.4%
2,414,500 Time Warner, Inc. 139,286,469
- --------------------------------------------------------------------------------
Networking Products - 1.5%
1,070,375 Cisco Systems, Inc.* 87,804,199
- --------------------------------------------------------------------------------
Oil - Field Services - 7.8%
844,000 Halliburton Co. 50,323,500
4,673,850 Schlumberger Ltd. 408,961,875
- --------------------------------------------------------------------------------
459,285,375
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 39
<PAGE>
JANUS TWENTY FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Retail - Building Products - 0.7%
700,000 Home Depot, Inc. $38,937,500
- --------------------------------------------------------------------------------
Super-Regional Banks - 2.4%
642,050 U.S. Bancorp 65,288,459
270,875 Wells Fargo & Co. 78,926,203
- --------------------------------------------------------------------------------
144,214,662
- --------------------------------------------------------------------------------
Telecommunication Equipment - 5.2%
3,696,075 Lucent Technologies, Inc. 304,695,183
- --------------------------------------------------------------------------------
Telephone - Long Distance - 0.4%
700,000 WorldCom, Inc.* 23,537,500
- --------------------------------------------------------------------------------
Transportation - Air Freight - 1.2%
1,053,125 Federal Express Corp.* 70,296,093
- --------------------------------------------------------------------------------
Total Common Stock (cost $4,188,641,789) 5,343,386,354
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 3.7%
Coca-Cola Corp.
$25,000,000 5.44%, 11/10/97 24,966,000
Household Finance Corp.
15,500,000 5.68%, 11/3/97 15,495,109
IBM Credit Corp.
100,000,000 5.58%, 11/3/97 99,969,000
Norwest Corp.
50,000,000 5.49%, 11/21/97 49,847,500
Royal Bank of Canada
25,000,000 5.51%, 1/20/98 24,692,097
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes (amortized cost $214,971,498) 214,969,706
- --------------------------------------------------------------------------------
U.S. Government Agencies - 6.6%
Fannie Mae:
140,000,000 5.46%, 11/13/97 139,745,200
50,000,000 5.95%, 1/16/98 49,424,278
50,000,000 5.95%, 1/30/98 49,319,931
50,000,000 6.00%, 2/18/98 49,179,500
Freddie Mac:
50,000,000 5.47%, 12/12/97 49,688,514
50,000,000 5.48%, 12/18/97 49,642,278
- --------------------------------------------------------------------------------
Total U.S. Government Agencies (amortized cost $387,001,922) 386,999,701
- --------------------------------------------------------------------------------
Total Investments (total cost $4,790,615,209) - 101.3% 5,945,355,761
- --------------------------------------------------------------------------------
Liabilities, net of Cash, Receivables and Other Assets - (1.3%) (74,286,133)
- --------------------------------------------------------------------------------
Net Assets - 100% $5,871,069,628
- --------------------------------------------------------------------------------
Summary of Investments by Country
October 31, 1997
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Germany 2.8% $164,404,475
Netherlands 1.4% 84,610,500
United States ++ 95.8% 5,696,340,786
- --------------------------------------------------------------------------------
Total 100.0% $5,945,355,761
================================================================================
++ Includes Short-Term Securities (85.7% excluding Short-Term Securities)
Forward Currency Contracts
Open at October 31, 1997
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
Dutch Guilder 1/12/98 123,000,000 $63,421,677 ($1,977,357)
Dutch Guilder 3/5/98 10,000,000 5,170,363 (234,042)
Dutch Guilder 3/11/98 1,000,000 517,197 (32,759)
Dutch Guilder 3/31/98 19,000,000 9,836,914 (136,764)
Dutch Guilder 4/8/98 5,000,000 2,589,600 (42,349)
German Deutschemark 11/17/97 59,000,000 34,234,652 (1,453,582)
German Deutschemark 1/9/98 44,000,000 25,609,685 (288,859)
German Deutschemark 2/3/98 4,000,000 2,331,410 (179,137)
German Deutschemark 2/26/98 15,000,000 8,752,991 (309,659)
German Deutschemark 3/4/98 30,000,000 17,511,090 (790,143)
German Deutschemark 3/11/98 102,000,000 59,562,044 325,227
German Deutschemark 4/22/98 25,000,000 14,629,294 (168,173)
- --------------------------------------------------------------------------------
Total $244,166,917 ($5,287,597)
================================================================================
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 40
<PAGE>
JANUS VENTURE FUND
Portfolio Managers, William H. Bales, Jonathan D. Coleman, James P. Craig
Performance
For the fiscal year ended October 31, 1997, Janus Venture Fund gained
13.38% while its benchmark, the Russell 2000 Index, gained 29.33%. Both gains
include reinvested dividends.
The Year in Review
Early in 1997, a new management team took over the Fund and implemented an
aggressive restructuring plan. We initially embarked on a diversification
strategy, broadening the Fund's focus. This created a flatter, more diversified
portfolio. We sought as well to broaden the Fund's industry representation, and
thus limit individual sector exposure. To achieve these goals, we scaled back a
number of large positions that had appreciated significantly. Small stocks are
frequently hampered by tight liquidity, which makes the trading of large
positions difficult. Daily trading volumes, total shares outstanding, and
diversification issues must be weighed carefully to avoid adverse effects on a
stock's price when a position is sold. As a result, our portfolio changes could
not be effected overnight.
When the period began, small-cap stocks came under pressure, and Fund
performance suffered as a result. For the first six months, the Fund lost 10.07%
while the Russell 2000 Index gained 1.61%. Then, as we proceeded with our
restructuring plans starting in early April, cash levels rose. However, while we
began to selectively deploy capital, small-cap stocks gained momentum, and our
large cash position served as a temporary drag on Fund performance. During the
last six months, the Fund returned 26.08% while the Russell 2000 gained 27.29%.
While we were pleased with our performance during the second half of the fiscal
year and the Fund's restructuring, we have a ways to go.
- --------------------------------------------------------------------------------
Portfolio Profile October 31, 1997 October 31, 1996
Equities 96.4% 97.8%
Foreign 5.6% 10.0%
European 3.8% 9.1%
Top 10 Equities (% of Assets) 17.1% 32.3%
Number of Stocks 197 177
Cash & Cash Equivalents 3.6% 2.2%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 10 Equity Holdings October 31, 1997 October 31, 1996
Camco International, Inc. 2.6% --
Delta & Pine Land Co. 2.1% --
First Empire State Corp. 2.0% 1.1%
Electronics for Imaging, Inc. 1.9% --
Federal-Mogul Corp. 1.7% 0.3%
Immunex Corp. 1.6% 0.3%
Valassis Communications, Inc. 1.3% --
Quality Food Centers, Inc. 1.3% --
Pittway Corp. - Class A 1.3% 0.4%
Applied Graphics Technologies, Inc. 1.3% --
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 5 Industries October 31, 1997 October 31, 1996
Savings/Loan/Thrifts 10.1% 0.5%
Oil - Field Services 4.8% --
Commercial Banks 4.6% 1.1%
Oil Field Machinery and Equipment 3.6% --
Medical Instruments 3.3% 1.3%
- --------------------------------------------------------------------------------
Portfolio Review
During the year, we reduced the Fund's exposure to retail, wireless, and
industrial stocks. Barnett, MSC Industrial, Fastenal, and Black Box were either
trimmed or cut entirely. We also sold several positions at a loss, including
Paging Network, APS Holdings, Compdent, and Labor Ready. We used the proceeds
from these sales to add positions across a variety of industries, including
technology, healthcare, energy, and financial services. In all, we successfully
flattened the portfolio while broadening the industries represented.
In the technology sector, we searched for companies we thought offered
products with minimal risk of obsolescence. We also looked for companies that we
believe are on the right long-term growth track to become significant niche
players. This is a tough combination to find in small technology stocks, but we
were able to uncover a number of companies that met our criteria, including
Applied Graphics, Electronics for Imaging, and Wind River. Applied Graphics and
Electronics for Imaging assist with digital color printing, while Wind River is
a software developer.
We also added a number of healthcare stocks. Immunex's new rheumatoid
arthritis drug met with impressive market approval and the stock appreciated
nicely. Sofamor Danek, a leader in surgical implants for spinal fixation
procedures, also saw robust earnings growth. The FDA recently expanded the
number of applications for Sofamor Danek's products, and it is now experiencing
solid global demand. Minimed, which produces an insulin infusion package for
diabetics, also had strong demand.
Financial services and thrifts, including Klamath Bancorp, Home Bancorp of
Elgin, and Standard Financial, were particularly exciting areas. Many thrifts
have entered the markets highly overcapitalized and extremely cheap relative to
both future growth and current assets. Most either paid dividends or bought back
shares with excess capital. Additionally, a wave of consolidation is sweeping
across the banking industry. Large banks are finding it is more efficient to
acquire a small thrift with an established customer base than to build a
competing operation from scratch.
We also added several positions in the oil and gas service providers.
Global demand for oil continues to grow 2%-3% annually, while global reserves
are evaporating. As a result of increased demand, the major oil producers have
dramatically increased exploration budgets. At the same time, many rig operation
contracts are being renegotiated. Extraction rigs operate on "day rates," which
are the per-day prices service providers charge to operate the rigs. As these
contracts are renegotiated, the servicers are commanding much higher prices,
which effectively creates a higher revenue stream. BJ Services, Atwood Oceanics,
and Unit all posted strong gains since our initial purchases.
Strategy Going Forward
Our restructuring plans took longer than initially expected, but we
achieved a broad set of goals that we believe should help performance going
forward. Diversification is vital in small caps, and the Fund is now much
broader and contains a wider spectrum of industries.
We remain committed to finding sound individual companies with strong
growth potential. Given the economic backdrop, with moderate growth, low
inflation, and declining long-term yields, we feel confident that we can
continue to uncover solid ideas.
Thank you for your continued investment in Janus Venture Fund.
- --------------------------------------------------------------------------------
Past performance does not guarantee future results.
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 41
<PAGE>
JANUS VENTURE FUND
Portfolio Managers, William H. Bales, Jonathan D. Coleman, James P. Craig
Performance Overview
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Venture Fund and the Russell 2000 Index. Janus Venture Fund is
represented by a solid blue line. The Russell 2000 Index is represented by a
single dashed black line. The "y" axis reflects the value of the investment. The
"x" axis reflects the computation periods from inception, April 30, 1985,
through October 31, 1997. The upper right quadrant reflects the ending value of
the hypothetical investment in Janus Venture Fund ($67,479) as compared to the
Russell 2000 Index ($47,466). There is a legend in the upper left quadrant of
the graph which indicates Janus Venture Fund's one-year, five-year, ten-year and
since inception (April 30, 1985) average annual total returns as 13.38%, 13.31%,
16.42% and 16.50%, respectively.
*The Fund's inception date
Source - Lipper Analytical Services, Inc. 1997.
All returns reflect reinvested dividends.
Past performance does not guarantee future results. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The Fund's portfolio may differ significantly
from the securities in the Index. The Index is unmanaged and therefore does not
reflect the cost of portfolio management or trading.
JANUS VENTURE FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 96.4%
- --------------------------------------------------------------------------------
Advertising Sales - 0.8%
209,216 Lamar Advertising Co.* $7,087,192
55,375 Universal Outdoor Holdings, Inc.* 2,339,594
- --------------------------------------------------------------------------------
9,426,786
- --------------------------------------------------------------------------------
Agricultural Operations - 2.8%
250,000 DEKALB Genetics Corp. 8,968,750
706,366 Delta & Pine Land Co. 26,312,134
- --------------------------------------------------------------------------------
35,280,884
- --------------------------------------------------------------------------------
Airlines - 0.5%
255,900 Ryanair Holdings PLC (ADR)* 6,397,500
- --------------------------------------------------------------------------------
Applications Software - 1.4%
57,175 J.D. Edwards & Co.* 1,943,950
200,000 Policy Management Systems Corp.* 12,250,000
151,275 Vantive Corp.* 3,819,694
- --------------------------------------------------------------------------------
18,013,644
- --------------------------------------------------------------------------------
Automotive - Truck Parts and Equipment - 2.7%
500,000 Federal-Mogul Corp. 21,156,250
300,000 OEA, Inc. 12,075,000
- --------------------------------------------------------------------------------
33,231,250
- --------------------------------------------------------------------------------
Building and Construction - 0.6%
110,725 J. Ray McDermott, S.A.* 4,581,247
300,000 M.D.C. Holdings, Inc. 3,337,500
- --------------------------------------------------------------------------------
7,918,747
- --------------------------------------------------------------------------------
Chemicals - Diversified - 0.4%
100,000 Cambrex Corp. 4,793,750
- --------------------------------------------------------------------------------
Circuit Boards - 0.3%
46,450 Sanmina Corp.* 3,472,138
- --------------------------------------------------------------------------------
Circuits - 0.5%
200,000 SIPEX Corp.* $6,575,000
- --------------------------------------------------------------------------------
Commercial Banks - 4.6%
58,000 AMBANC Corp. 1,413,750
103,725 Chester Bancorp, Inc. 1,944,844
193,025 Community Financial Corp.# 3,281,425
59,900 First Empire State Corp. 24,499,100
45,675 First Savings Bancorp, Inc. 1,061,944
75,000 Independent Bank Corp. 1,125,000
103,800 Investors Financial Services Corp. 4,567,200
436,600 National Commerce Bancorporation 12,934,275
90,000 R&G Financial Corp. - Class B 1,788,750
52,509 TCF Financial Corp. 2,986,449
64,800 Vectra Banking Corp. 1,692,900
- --------------------------------------------------------------------------------
57,295,637
- --------------------------------------------------------------------------------
Commercial Services - 1.6%
198,600 Central Parking Corp. 10,848,525
41,000 National Research Corp.* 830,250
87,500 NCO Group, Inc.* 3,150,000
107,200 Pierce Leahy Corp.* 3,001,600
150,000 ProSoft Development, Inc.* 1,893,750
- --------------------------------------------------------------------------------
19,724,125
- --------------------------------------------------------------------------------
Computer Graphics - 0.8%
140,000 Engineering Animation, Inc.* 6,177,500
99,150 Visio Corp.* 3,687,141
- --------------------------------------------------------------------------------
9,864,641
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 42
<PAGE>
JANUS VENTURE FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Computer Services - 2.8%
300,000 Ceridian Corp.* $11,718,750
145,950 Ciber, Inc.* 6,458,288
200,000 ECsoft Group PLC (ADR)* 3,700,000
342,855 Logica PLC** 4,886,935
263,455 Technology Solutions Co.* 8,298,832
- --------------------------------------------------------------------------------
35,062,805
- --------------------------------------------------------------------------------
Computer Software - 2.4%
300,000 Aspen Technologies, Inc.* 11,287,500
300,000 JBA Holdings PLC** 4,754,012
21,000 QAD, Inc.* 296,625
125,000 QuadraMed Corp.* 2,937,500
292,337 Wind River Systems* 11,218,432
- --------------------------------------------------------------------------------
30,494,069
- --------------------------------------------------------------------------------
Computers - Information Technology - 0.3%
150,000 Aris Corp.* 3,543,750
- --------------------------------------------------------------------------------
Computers- Integrated Systems - 0.6%
54,000 Radiant Systems, Inc.* 978,750
300,000 Wang Laboratories, Inc.* 6,937,500
- --------------------------------------------------------------------------------
7,916,250
- --------------------------------------------------------------------------------
Computers - Memory Devices - 0.3%
95,650 VERITAS Software Corp.* 3,981,431
- --------------------------------------------------------------------------------
Containers - Paper and Plastic - 1.1%
250,000 First Brands Corp. 6,375,000
32,500 Ivex Packaging Corp.* 686,563
135,000 Sealed Air Corp.* 6,960,937
- --------------------------------------------------------------------------------
14,022,500
- --------------------------------------------------------------------------------
Cruise Lines - 0.4%
100,000 Royal Caribbean Cruises, Ltd. 4,643,750
- --------------------------------------------------------------------------------
Data Processing and Management - 1.8%
300,000 Applied Graphics Technologies, Inc.* 16,050,000
50,000 Fiserv, Inc.* 2,237,500
95,550 i2 Technologies, Inc.* 4,341,553
- --------------------------------------------------------------------------------
22,629,053
- --------------------------------------------------------------------------------
Distribution and Wholesale - 0.3%
27,500 Industrial Distribution Group, Inc.* 532,812
68,000 U.S.A. Floral Products, Inc.* 1,190,000
100,000 United Natural Foods, Inc.* 2,100,000
- --------------------------------------------------------------------------------
3,822,812
- --------------------------------------------------------------------------------
Drug Delivery Systems - 0.5%
236,900 Atrix Laboratories, Inc.* 4,471,487
100,000 Sano Corp.* 2,075,000
- --------------------------------------------------------------------------------
6,546,487
- --------------------------------------------------------------------------------
Educational Software - 0.1%
50,000 Advantage Learning Systems, Inc.* 1,262,500
- --------------------------------------------------------------------------------
Electric Products - 0.9%
360,000 Littelfuse, Inc.*,# 11,025,000
- --------------------------------------------------------------------------------
Electronic Components - 0.1%
62,000 Stoneridge, Inc.* 1,007,500
- --------------------------------------------------------------------------------
Electronic Safety Devices - 1.3%
261,562 Pittway Corp. - Class A 16,298,582
- --------------------------------------------------------------------------------
Filtration and Separations Products - 0.1%
81,000 Flanders Corp.* 648,000
- --------------------------------------------------------------------------------
Finance - Mortgage Loan Banker - 1.1%
594,400 Doral Financial Corp.# 13,151,100
- --------------------------------------------------------------------------------
Food - Diversified - 1.2%
73,225 American Italian Pasta Co.* $1,537,725
450,000 International Multifoods Corp. 13,275,000
- --------------------------------------------------------------------------------
14,812,725
- --------------------------------------------------------------------------------
Food - Retail - 1.9%
200,000 Dominick's Supermarkets, Inc.* 7,300,000
350,075 Quality Food Centers, Inc. 16,672,322
- --------------------------------------------------------------------------------
23,972,322
- --------------------------------------------------------------------------------
Food - Wholesale - 1.1%
450,000 J.P. Foodservice, Inc.*,# 14,371,875
- --------------------------------------------------------------------------------
Health Care Cost - 0.3%
100,000 Concentra Managed Care, Inc.* 3,262,500
- --------------------------------------------------------------------------------
Heart Monitors - 0%
40,000 Endocardial Solutions, Inc.* 440,000
- --------------------------------------------------------------------------------
Hotels and Motels - 0.9%
403,223 Extended Stay America, Inc.* 5,292,302
250,000 Suburban Lodges of America, Inc.* 6,187,500
- --------------------------------------------------------------------------------
11,479,802
- --------------------------------------------------------------------------------
Human Resources - 0.7%
259,400 Personnel Group of America, Inc.* 8,997,937
- --------------------------------------------------------------------------------
Instruments - Scientific - 0.8%
203,050 Dionex Corp.* 10,127,119
- --------------------------------------------------------------------------------
Life and Health Insurance - 1.2%
75,900 Liberty Corp. 3,249,469
353,950 UICI* 11,857,325
- --------------------------------------------------------------------------------
15,106,794
- --------------------------------------------------------------------------------
Machinery - General Industrial - 0.6%
200,000 McDermott International, Inc. 7,262,500
- --------------------------------------------------------------------------------
Machinery - Pumps - 0.5%
179,525 Pfeiffer Vacuum Technology A.G. (ADR)* 5,834,562
- --------------------------------------------------------------------------------
Manufacturing - 0.5%
236,100 Roper Industries, Inc. 6,300,919
- --------------------------------------------------------------------------------
Medical - Biomedical and Genetic - 2.2%
30,000 Affymetrix, Inc.* 1,098,750
304,525 Immunex Corp.* 19,489,600
40,000 Incyte Pharmaceuticals, Inc. 3,220,000
100,000 SONUS Pharmaceuticals, Inc.* 3,806,250
- --------------------------------------------------------------------------------
27,614,600
- --------------------------------------------------------------------------------
Medical - Drugs - 2.4%
200,000 Forest Laboratories, Inc.* 9,250,000
237,200 Kos Pharmaceuticals, Inc.* 8,479,900
200,000 Medco Research, Inc.* 3,100,000
250,000 Sepracor, Inc.* 8,968,750
- --------------------------------------------------------------------------------
29,798,650
- --------------------------------------------------------------------------------
Medical - Generic Drugs - 1.0%
396,400 Watson Pharmaceuticals, Inc.* 12,585,700
- --------------------------------------------------------------------------------
Medical - HMO - 0.5%
350,000 Healthcare Recoveries, Inc.* 6,475,000
- --------------------------------------------------------------------------------
Medical - Wholesale Drug Distributors - 1.0%
201,900 AmeriSource Health Corp. - Class A* 11,987,812
- --------------------------------------------------------------------------------
Medical Instruments - 3.3%
100,000 Cyberonics, Inc.* 1,337,500
350,000 ESC Medical Systems, Ltd.* 13,737,500
274,600 MiniMed, Inc.* 10,709,400
218,500 Sofamor Danek Group, Inc.* 15,049,187
- --------------------------------------------------------------------------------
40,833,587
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 43
<PAGE>
JANUS VENTURE FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Medical Products - 2.0%
151,500 Hanger Orthopedic Group, Inc.* $1,969,500
352,500 Henry Schein, Inc.* 11,588,437
300,000 Mentor Corp. 10,931,250
- --------------------------------------------------------------------------------
24,489,187
- --------------------------------------------------------------------------------
Music/Clubs - 0.2%
77,500 N2K Inc.* 2,039,219
- --------------------------------------------------------------------------------
Office Furnishings - 0.4%
175,200 Knoll, Inc.* 4,861,800
- --------------------------------------------------------------------------------
Oil - Field Services - 4.8%
100,000 BJ Services Co.* 8,475,000
79,400 Cal Dive International, Inc.* 2,481,250
118,350 Coflexip S.A.(ADR) 6,509,250
413,875 Hanover Compressor Co.* 8,950,047
100,000 Newpark Resources, Inc.* 4,150,000
300,000 Oceaneering International, Inc.* 7,443,750
100,000 Stolt Comex Seaway, S.A.* 6,000,000
350,000 UTI Energy Corp.*,# 15,618,750
- --------------------------------------------------------------------------------
59,628,047
- --------------------------------------------------------------------------------
Oil and Gas Drilling - 1.7%
122,300 Atwood Oceanics, Inc.* 13,544,725
200,000 Falcon Drilling Co., Inc.* 7,275,000
100,000 Grey Wolf, Inc.* 825,000
- --------------------------------------------------------------------------------
21,644,725
- --------------------------------------------------------------------------------
Oil Companies - Exploration and Production - 0.9%
250,000 Domain Energy Corp.* 4,312,500
150,000 Gulf Indonesia Resources, Ltd. 3,150,000
100,000 Pogo Producing Co. 3,618,750
- --------------------------------------------------------------------------------
11,081,250
- --------------------------------------------------------------------------------
Oil Companies - Integrated - 0.3%
300,000 Unit Corp.* 3,881,250
- --------------------------------------------------------------------------------
Oil Field Machinery and Equipment - 3.6%
446,750 Camco International, Inc. 32,277,687
200,000 EVI, Inc.* 12,837,500
- --------------------------------------------------------------------------------
45,115,187
- --------------------------------------------------------------------------------
Pharmacy Services - 0.4%
200,000 NCS HealthCare, Inc. - Class A* 4,675,000
- --------------------------------------------------------------------------------
Pollution Control - 0.5%
533,333 Catalytica, Inc.* 6,666,663
- --------------------------------------------------------------------------------
Power Converters and Power Supply Equipment - 0.1%
50,000 Power-One, Inc.* 931,250
- --------------------------------------------------------------------------------
Printers and Related Products - 1.9%
518,875 Electronics for Imaging, Inc.* 24,257,406
- --------------------------------------------------------------------------------
Printing - Commercial - 1.3%
569,225 Valassis Communications, Inc.* 16,792,137
- --------------------------------------------------------------------------------
Property and Casualty Insurance - 2.4%
325,900 Allied Group, Inc. 15,398,775
64,900 Executive Risk, Inc. 4,275,288
80,000 NAC Re Corp. 3,560,000
192,325 Philadelphia Consolidated Holding Corp. 7,091,984
- --------------------------------------------------------------------------------
30,326,047
- --------------------------------------------------------------------------------
Protection - Safety - 0.1%
108,850 Lo-Jack Corp.* 1,510,294
- --------------------------------------------------------------------------------
Publishing - Books - 0.2%
57,000 Scholastic Corp.* 2,308,500
- --------------------------------------------------------------------------------
Publishing - Newspapers - 0.8%
150,000 Central Newspapers, Inc. - Class A 9,853,125
- --------------------------------------------------------------------------------
Publishing - Periodicals - 0.1%
62,500 Petersen Companies, Inc.* 1,234,375
- --------------------------------------------------------------------------------
Radio - 0.9%
53,925 Emmis Broadcasting Corp. - Class A* $2,386,181
134,025 Heftel Broadcasting Corp.* 8,912,663
- --------------------------------------------------------------------------------
11,298,844
- --------------------------------------------------------------------------------
Recreational Centers - 0.4%
287,500 Bally Total Fitness Holding Corp.* 5,103,125
- --------------------------------------------------------------------------------
Recycling - 0.4%
300,000 Philip Services Corp.* 5,250,000
- --------------------------------------------------------------------------------
Real Estate Investment Trusts - 0.1%
52,000 CCA Prison Realty Trust 1,794,000
- --------------------------------------------------------------------------------
Rental Auto/Equipment - 0.3%
213,900 Rent-Way, Inc.* 3,876,938
- --------------------------------------------------------------------------------
Resorts and Theme Parks - 1.1%
350,000 Premier Parks, Inc.# 14,000,000
- --------------------------------------------------------------------------------
Retail - Bedding - 0.6%
200,000 Linens `N Things, Inc.* 7,187,500
- --------------------------------------------------------------------------------
Retail - Building Products - 1.0%
256,975 Fastenal Co. 12,591,775
- --------------------------------------------------------------------------------
Retail - Catalog Shopping - 0.9%
260,000 MSC Industrial Direct Co., Inc. - Class A* 10,822,500
- --------------------------------------------------------------------------------
Retail - Consumer Electronics - 0.5%
385,000 Southern Electronics Corp.*,# 6,352,500
- --------------------------------------------------------------------------------
Retail - Pubs - 0.8%
362,631 J.D. Wetherspoon PLC** 9,577,511
- --------------------------------------------------------------------------------
Retail - Regional Department Stores - 0.5%
200,000 Fred Meyer, Inc.* 5,712,500
- --------------------------------------------------------------------------------
Retail - Restaurants - 1.2%
462,825 Papa John's International, Inc.*,# 13,682,264
135,800 PJ America Inc.* 1,901,200
- --------------------------------------------------------------------------------
15,583,464
- --------------------------------------------------------------------------------
Retirement and Aged Care - 0.3%
200,000 Assisted Living Concepts, Inc.* 4,100,000
- --------------------------------------------------------------------------------
Savings/Loan/Thrifts - 10.1%
112,312 Affiliated Community Bancorp, Inc. 3,285,126
150,000 Ambanc Holding Co., Inc. 2,400,000
100,000 Astoria Financial Corp. 5,225,000
110,000 Cameron Financial Corp. 2,103,750
165,000 Catskill Financial Corp. 2,928,750
119,437 Charter One Financial, Inc. 6,942,276
50,600 Citizens First Financial Corp.* 929,775
150,000 Community Federal Bancorp, Inc. 2,550,000
67,800 Dime Financial Corp. 2,067,900
60,000 Empire Federal Bancorp, Inc. 990,000
129,400 FFVA Financial Corp. 4,431,950
192,125 First Bergen Bancorp# 3,698,406
110,000 First Colorado Bancorp, Inc. 2,241,250
242,350 First Defiance Financial Corp. 3,847,306
165,000 First Mutual Bancorp, Inc. 3,031,875
150,000 First Savings Bank of Washington Bancorp, Inc. 3,562,500
75,000 FirstBank Corp. 1,237,500
120,400 FirstSpartan Financial Corp. 4,394,600
200,000 Flushing Financial Corp. 4,350,000
185,300 GA Financial, Inc. 3,613,350
50,000 GS Financial Corp. 868,750
55,675 GSB Financial Corp.* 838,605
43,550 HMN Financial, Inc.* 1,066,975
257,100 Home Bancorp of Elgin, Inc. 4,515,319
60,000 ISB Financial Corp. 1,477,500
191,500 ITLA Capital Corp.* 3,830,000
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 44
<PAGE>
JANUS VENTURE FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Savings/Loan/Thrifts - (continued)
66,275 JSB Financial, Inc. $3,193,627
283,625 Klamath First Bancorp, Inc. 6,346,109
75,000 Lawrence Savings Bank* 1,040,625
64,325 Little Falls Bancorp, Inc. 1,173,931
85,000 ML Bancorp, Inc. 2,337,500
56,625 Park Bancorp, Inc.* 976,781
350,000 PFF Bancorp, Inc.* 6,737,500
103,000 Provident Financial Holdings, Inc.* 2,027,813
66,200 PS Financial, Inc. 1,133,675
101,250 Queens County Bancorp, Inc. 3,670,312
43,325 River Valley Bancorp 704,031
473,050 Roslyn Bancorp, Inc. 10,111,444
245,000 South Street Financial Corp.# 4,287,500
64,975 TF Financial Corp. 1,528,943
175,000 WesterFed Financial Corp. 4,243,750
50,000 Westwood Homestead Financial Corp. 787,500
- --------------------------------------------------------------------------------
126,729,504
- --------------------------------------------------------------------------------
Schools - 1.2%
325,000 Computer Learning Centers, Inc.*,# 14,706,250
- --------------------------------------------------------------------------------
Telephone - Integrated - 0.1%
76,937 NEXTLINK Communications, Inc.* 1,740,700
- --------------------------------------------------------------------------------
Television - 0.5%
100,000 Univision Communications, Inc.* 6,200,000
- --------------------------------------------------------------------------------
Transportation - Marine - 0.1%
50,000 Hvide Marine, Inc. - Class A* 1,650,000
- --------------------------------------------------------------------------------
Transportation - Railroad - 1.2%
500,000 Wisconsin Central Transportation Corp.*,# 15,562,500
- --------------------------------------------------------------------------------
Transportation - Services - 0.6%
125,000 C.H. Robinson Worldwide, Inc.* 2,750,000
100,000 Caliber System, Inc. 5,212,500
- --------------------------------------------------------------------------------
7,962,500
- --------------------------------------------------------------------------------
Transportation - Truck - 0.7%
200,000 CNF Transportation, Inc. 8,925,000
- --------------------------------------------------------------------------------
Total Common Stock (cost $916,251,850) 1,207,336,668
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 3.4%
Prudential Funding Corp.
$42,800,000 5.67%, 11/3/97 (amortized cost $42,786,518) 42,786,518
- --------------------------------------------------------------------------------
Total Investments (total cost $959,038,368) - 99.8% 1,250,123,186
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 0.2% 2,217,404
- --------------------------------------------------------------------------------
Net Assets - 100% $1,252,340,590
- --------------------------------------------------------------------------------
Summary of Investments by Country
October 31, 1997
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Canada 0.4% $5,250,000
France 0.5% 6,509,250
Germany 0.5% 5,834,562
Indonesia 0.3% 3,150,000
Ireland 0.5% 6,397,500
Israel 1.1% 13,737,500
United Kingdom 2.3% 28,918,457
United States++ 94.4% 1,180,325,917
- --------------------------------------------------------------------------------
Total 100.0% $1,250,123,186
================================================================================
++ Includes Short-Term Securities (91.0% excluding Short-Term Securities)
Forward Currency Contracts
Open at October 31, 1997
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 11/28/97 1,700,000 $2,844,100 ($89,930)
British Pound 12/10/97 2,100,000 3,511,410 (107,310)
British Pound 2/18/98 700,000 1,166,970 (31,426)
British Pound 2/25/98 700,000 1,166,620 (47,754)
British Pound 2/26/98 2,925,000 4,874,513 (162,163)
- --------------------------------------------------------------------------------
Total $13,563,613 ($438,583)
================================================================================
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 45
<PAGE>
JANUS WORLDWIDE FUND Portfolio Manager, Helen Young Hayes
Performance
Janus Worldwide Fund returned 23.34% for the fiscal year ended October 31,
1997. The Morgan Stanley Capital Inter-national World Index returned 16.77%.
Both returns include net dividends reinvested.(1)
For the 12 months ended October 31, 1997, Janus Worldwide Fund ranked 33
out of 175 global funds (top 19%) tracked by Lipper Analytical Services,
Inc.,(2) a large mutual fund rating company.
The Year in Review
Overall, I am very pleased with our performance. We were underweighted in
the Far East and Japan for most of the year, which certainly helped our results.
We became increasingly concerned about the speculative nature of Southeast
Asia's infrastructure buildout and avoided most of the region. We were also
underweighted in Japan simply because we were unable to find enough strong
investment ideas. While many businesses worldwide recognize the added benefits
of restructuring to maintain their competitive edge, Japan remains well behind
the curve. We simply are not seeing the same sort of gains in Japanese corporate
productivity that are sweeping Europe and other developed areas, and this has
restrained market results.
- --------------------------------------------------------------------------------
Portfolio Profile October 31, 1997 October 31, 1996
Equities 94.1% 80.3%
Foreign 78.1% 71.0%
European 65.3% 56.3%
Top 10 Equities (% of Assets) 21.1% 22.1%
Number of Stocks 207 186
Cash & Cash Equivalents 5.9% 18.3%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 10 Equity Holdings October 31, 1997 October 31, 1996
Philips Electronics N.V.
- N.Y. Shares 3.1% 0.8%
Philips Electronics N.V 2.5% 0.4%
Rentokil Initial PLC 2.4% 4.5%
Elf Aquitaine S.A 2.3% --
Akzo Nobel N.V 2.2% --
Siebe PLC 2.1% --
Monsanto Co. 1.7% --
Electrolux A.B. - Class B 1.6% --
Suez Lyonnaise des Eaux 1.6% --
Volkswagen A.G 1.6% --
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 5 Industries October 31, 1997 October 31, 1996
Diversified Operations 10.5% 12.1%
Medical - Drugs 6.8% 6.6%
Electronics Components 5.9% 1.6%
Chemicals - Diversified 5.5% 1.0%
Money Center Banks 5.1% 5.3%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Top 5 Countries October 31, 1997 October 31, 1996
United States 16.5% 10.5%
United Kingdom 15.3% 14.0%
Netherlands 12.1% 7.1%
France 11.2% 3.3%
Germany 7.4% 8.0%
- --------------------------------------------------------------------------------
Stock Highlights
Pharmaceutical stocks were one area that performed well for us, and we
found several companies with strong fundamentals and promising growth potential.
For example, Novartis has an impressive drug pipeline, and the merger between
Sandoz and Ciba-Geigy continues to produce synergies and cost-cutting
opportunities. Additionally, Monsanto and Akzo Nobel are transitioning
themselves from cyclical chemical stocks into rapidly growing life sciences
companies. While Monsanto's agricultural business continues to grow, it is now
launching a promising anti-inflammatory drug called Cox II. Netherlands-based
Akzo Nobel is also expanding its higher-margin pharmaceutical business, and drug
sales should increase following the release of Remeron, its new anti-depressant
drug.
We also invested in a number of well-positioned telephone equipment
manufacturers. Deregulation continues to sweep across the globe, which is
creating a wealth of opportunities for various telecommunication equipment
companies. Nokia, Ericsson, and Alcatel all performed well, driven by tremendous
demand for mobile phones and data communication equipment.
Additionally, our research located several European restructuring
opportunities. Shareholder value, profit expansion, and the efficient use of
capital are concepts that continue to take hold on the Continent, and companies
now recognize the need to become more efficient to remain competitive in a
global environment. Philips Electronics, the large Netherlands-based consumer
electronics company, epitomizes the power of these changes. The company embarked
on a failed restructuring attempt over two years ago, but since that time, a new
CEO has stepped in and refocused the company. He moved quickly to sell off
unprofitable or underperforming divisions, sliced headquarters staff by nearly
30%, and looked for greater operating efficiencies. Philips has topped analysts'
estimates for the last three reporting periods, and there are still significant
changes pending.
The recent volatility in global markets compressed multiples in many
companies, especially the premier U.S. technology companies. We capitalized on
these price swings to create or build positions, including Microsoft and Cisco
Systems. Both dominate their respective fields and have excellent earnings
prospects.
We did experience a few disappointments, however, and Volkswagen was among
them. The German automobile manufacturer has done a terrific job of
restructuring its operations and reducing the number of platforms it uses to
build cars. With strong global sales, VW's earnings reflect how successful this
restructuring has been. But management recently opted to take advantage of the
strong run in its stock price to issue six million new shares, which will dilute
earnings going forward. The market did not receive the decision well, and the
stock price dropped substantially. Due to near-term concerns, I decided to trim
the position at a substantial profit.
Going Forward
The growing turmoil in Southeast Asia weighed heavily on global markets
recently, producing shock waves in markets around the world. The resulting
volatility, while certainly unsettling, has severely impacted prices, especially
in many emerging markets. Selectivity is critical in emerging markets, and we
intend to remain disciplined in our investment approach. Locating good
individual ideas has been the main driver of Fund returns since its inception,
and is vital to maintaining performance going forward.
Thank you for your continued investment in Janus Worldwide Fund.
- --------------------------------------------------------------------------------
(1) Net dividends reinvested are the dividends that remain to be reinvested
after foreign tax obligations have been met. Such obligations vary from
country to country.
(2) A Global Fund is defined by Lipper as one which "invests at least 25% of
its portfolio in securities traded outside the United States and may own
U.S. securities as well." As of October 31, 1997, Janus Worldwide Fund was
ranked 6/108 (top 6%) of Global Funds for the 3-year period, and 3/47 (top
7%) for the 5-year period. This ranking is based on total return, including
reinvested dividends and capital gains for the stated period. Past
performance does not guarantee future results.
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 46
<PAGE>
JANUS WORLDWIDE FUND Portfolio Manager, Helen Young Hayes
Performance Overview
GRAPHIC
A graphic comparison of the change in value of a hypothetical $10,000 investment
in Janus Worldwide Fund and the Morgan Stanley Capital International World
Index. Janus Worldwide Fund is represented by a solid blue line. The Morgan
Stanley Capital International World Index is represented by a single dashed
black line. The "y" axis reflects the value of the investment. The "x" axis
reflects the computation periods from inception, May 15, 1991, through October
31, 1997. The upper right quadrant reflects the ending value of the hypothetical
investment in Janus Worldwide Fund ($32,941) as compared to the Morgan Stanley
Capital International World Index ($20,125). There is a legend in the upper left
quadrant of the graph which indicates Janus Worldwide Fund's one-year, five-year
and since inception (May 15, 1991) average annual total returns as 23.34%,
21.06% and 20.27%, respectively.
*The Fund's inception date
Source - Lipper Analytical Services, Inc. 1997.
All returns reflect reinvested dividends.
Past performance does not guarantee future results. Investment return and
principal value may fluctuate so that shares, when redeemed, may be worth more
or less than their original cost. The Fund's portfolio may differ significantly
from the securities in the Index. The Index is unmanaged and therefore does not
reflect the cost of portfolio management or trading.
JANUS WORLDWIDE FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Common Stock - 93.0%
- --------------------------------------------------------------------------------
Airlines - 2.2%
3,913,146 Deutsche Lufthansa A.G.**,+ $68,434,220
1,312,873 KLM Royal Dutch Airlines N.V.** 44,512,815
22,440 Sairgroup*,** 30,163,493
1,602,911 Sas Danmark A/S 27,649,487
1,518,417 SAS Norske ASA - Class B# 25,593,993
1,937,822 SAS Sverige AB** 28,222,370
- --------------------------------------------------------------------------------
224,576,378
- --------------------------------------------------------------------------------
Appliances - 1.6%
2,061,059 Electrolux A.B. - Class B** 170,739,978
- --------------------------------------------------------------------------------
Athletic Footwear - 0.5%
340,910 Adidas A.G.** 49,418,671
- --------------------------------------------------------------------------------
Audio and Video Products - 0.2%
209,100 Sony Corp.** 17,368,493
- --------------------------------------------------------------------------------
Automotive - Cars and Light Trucks - 3.0%
14,911 Bayerische Motoren Werke (BMW) A.G.** 10,803,239
621,367 Mahindra & Mahindra, Ltd. (GDR)*,+ 6,213,670
544,000 Mitsubishi Motors Corp.** 2,388,226
3,570,124 Renault S.A.*,** 99,548,509
853,300 Tata Engineering & Locomotive Co., Ltd.+ 8,447,670
1,474,654 Tata Engineering & Locomotive Co., Ltd. (GDR)*,+ 14,599,075
284,233 Volkswagen A.G.** 168,278,820
- --------------------------------------------------------------------------------
310,279,209
- --------------------------------------------------------------------------------
Automotive - Truck Parts and Equipment - 0.4%
1,933,000 Denso Corp.** 41,787,637
- --------------------------------------------------------------------------------
Brewery - 0.3%
4,145,700 Fomento Economico Mexicano, S.A. de C.V. 29,049,438
- --------------------------------------------------------------------------------
Broadcast Services and Programming - 0.7%
1,981,575 Grupo Televisa S.A. (GDR)* $61,428,825
1,158,565 Modern Times Group MTG A.B.*,** 8,281,849
69,710,674
- --------------------------------------------------------------------------------
Building and Construction - 1.6%
1,634,102 Suez Lyonnaise des Eaux** 170,052,260
- --------------------------------------------------------------------------------
Building and Construction Products - 0.1%
1,749,000 Matsushita Electric Works, Ltd.** 15,851,082
- --------------------------------------------------------------------------------
Cable Television - 1.1%
5,234,150 Tele-Communications, Inc. - Class A* 120,058,316
- --------------------------------------------------------------------------------
Casino Services - 0%
42,094 London Clubs International PLC** 218,821
- --------------------------------------------------------------------------------
Cellular Telecommunications - 0.1%
177,900 Millicom International Cellular S.A.* 7,471,800
- --------------------------------------------------------------------------------
Chemicals - Diversified - 5.5%
1,263,993 Akzo Nobel N.V.**,+ 222,809,749
1,363,375 E.I. du Pont de Nemours and Co. 77,541,953
2,273,716 Imperial Chemical Industries PLC** 33,552,590
4,032,525 Monsanto Co. 172,390,444
2,973,530 Solutia, Inc.* 65,789,351
- --------------------------------------------------------------------------------
572,084,087
- --------------------------------------------------------------------------------
Chemicals - Specialty - 0.1%
10,975 Clariant A.G.** 8,464,762
756,751 Victrex PLC** 2,918,690
- --------------------------------------------------------------------------------
11,383,452
- --------------------------------------------------------------------------------
Commercial Banks - 2.5%
21,038,042 Banca Commerciale Italiana 57,781,013
313,679 Bankgesellschaft Berlin A.G.** 7,745,601
1,672,474 Bayerische Vereinsbank A.G.** 99,601,072
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 47
<PAGE>
JANUS WORLDWIDE FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Commercial Banks - (continued)
526,696 BG Bank A/S $33,896,890
10,795,404 Credito Italiano S.p.A. 28,946,996
142,078 Nordbanken A.B.** 4,461,160
1,169,950 Uniao de Bancos Brasileiros S.A. (GDR)* 31,881,138
- --------------------------------------------------------------------------------
264,313,870
- --------------------------------------------------------------------------------
Commercial Services - 1.0%
530,475 Quintiles Transnational Corp.* 38,459,438
436,134 Sophus Berendsen A/S - Class B 65,910,464
- --------------------------------------------------------------------------------
104,369,902
- --------------------------------------------------------------------------------
Computer Services - 3.4%
588,120 Atos S.A.*,**,# 65,698,181
1,428,898 Cap Gemini S.A.** 113,695,462
5,875,452 Capita Group PLC** 30,247,315
182,263 Enator A.B.*,** 2,898,002
1,946,797 Getronics N.V.** 64,300,618
1,542,951 Logica PLC** 21,992,684
255,519 Misys (Jersey)*,** 6,341,501
894,317 Misys PLC** 22,532,695
1,547,050 WM-Data A.B. - Class B** 26,872,051
- --------------------------------------------------------------------------------
354,578,509
- --------------------------------------------------------------------------------
Computer Software - 4.2%
344,400 Dassault Systemes S.A. (ADR) 10,332,000
2,712,996 JBA Holdings PLC**,# 42,992,047
485,808 Merkantildata A.S.A. 16,307,880
591,900 Microsoft Corp.* 76,947,000
2,752 NTT Data Corp.**,# 131,570,609
3,253,000 Parametric Technology Co.* 143,538,625
472,415 SEMA Group PLC** 10,615,382
- --------------------------------------------------------------------------------
432,303,543
- --------------------------------------------------------------------------------
Computers - Integrated Systems - 0.3%
3,095,000 Fujitsu, Ltd.** 33,968,566
- --------------------------------------------------------------------------------
Computers - Micro - 0.4%
694,900 Compaq Computer Corp.* 44,299,875
- --------------------------------------------------------------------------------
Cosmetics and Toiletries - 0.6%
1,318,566 Rhone-Poulenc - Class A** 57,612,442
- --------------------------------------------------------------------------------
Diversified Financial Services - 0.2%
137,153 Compagnie Bancaire S.A.** 17,632,482
- --------------------------------------------------------------------------------
Diversified Operations - 10.5%
1,248,452 Amer Group, Ltd.# 26,093,617
97,600 Barco N.V. 18,828,675
43,636,870 First Pacific Co., Ltd. 27,521,798
158,500 General Electric Co. PLC** 10,233,156
1,965,065 Grupo Carso S.A. de C.V. - Series A1* 12,369,173
9,606,179 Hays PLC** 112,760,211
3,074,000 Hutchison Whampoa, Ltd. 21,276,797
1,283,375 Kinnevik A.B. - Class B**,# 25,550,120
2,698,843 Lagardere S.C.A.** 77,785,819
870,293 Metra Oy - Class B 23,242,522
386,925 Minnesota Mining and Manufacturing Co. 35,403,638
60,657,830 Rentokil Initial PLC** 244,121,076
11,360,463 Siebe PLC** 218,126,627
749,657 South African Breweries, Ltd.**,+ 19,938,884
3,186,500 Swire Pacific Ltd. - Class A 17,025,998
3,150,508 TI Group PLC** 28,924,901
7,724,018 Tomkins PLC** 39,634,362
2,926,375 Westinghouse Electric Corp.* 77,366,039
8,474,600 Williams PLC** 50,875,583
- --------------------------------------------------------------------------------
1,087,078,996
- --------------------------------------------------------------------------------
Drug Delivery Systems - 0.3%
696,025 Elan Corp. PLC (ADR)* $34,714,247
- --------------------------------------------------------------------------------
Electric - Integrated - 0.4%
111,675 Cemig S.a. (adr) 4,439,081
983,575 Companhia Paranaense de Energia-Copel (ADR)* 11,741,427
131,225 Mosenergo (ADR)+ 5,577,063
696,948 Unified Energy System (GDR)* 21,779,625
- --------------------------------------------------------------------------------
43,537,196
- --------------------------------------------------------------------------------
Electric Products - 0.5%
4,543,000 Hitachi, Ltd.** 34,940,336
274,236 Siemens A.G.** 16,905,212
- --------------------------------------------------------------------------------
51,845,548
- --------------------------------------------------------------------------------
Electronic Components - 5.9%
3,874,885 Electrocomponents PLC** 30,084,789
3,315,788 Philips Electronics N.V.** 259,696,915
4,103,331 Philips Electronics N.V. - N.Y. Shares** 321,598,567
- --------------------------------------------------------------------------------
611,380,271
- --------------------------------------------------------------------------------
Electronic Components - Semiconductors - 0.6%
151,300 Analog Devices, Inc.* 4,624,106
511,525 Texas Instruments, Inc. 54,573,323
- --------------------------------------------------------------------------------
59,197,429
- --------------------------------------------------------------------------------
Electronic Parts Distributors - 0.4%
5,629,249 Premier Farnell PLC** 43,611,357
- --------------------------------------------------------------------------------
Engineering - Research and Development - 0.2%
8,485 Abb A.g. 11,089,430
78,906 VA Technologie A.G. 14,023,871
- --------------------------------------------------------------------------------
25,113,301
- --------------------------------------------------------------------------------
Film Processing - 0.1%
60,973 Grand Optical Photoservice** 9,840,784
- --------------------------------------------------------------------------------
Finance - Consumer Loans - 0.9%
660,575 SLM Holding Corp. 92,728,216
- --------------------------------------------------------------------------------
Finance - Investment Bankers/Brokers - 0.1%
799,000 Nomura Securities Co., Ltd.** 9,300,739
- --------------------------------------------------------------------------------
Food - Catering - 0.6%
6,190,527 Compass Group PLC**,+ 65,970,586
- --------------------------------------------------------------------------------
Food - Dairy Products - 0.8%
2,758,845 Koninklijke Nutricia Verenidge Bedrijven N.V.** 78,896,317
- --------------------------------------------------------------------------------
Food - Diversified - 1.2%
2,746,313 Grand Metropolitan PLC** 24,776,473
445,872 Raisio Group PLC* 48,234,823
1,004,225 Sara Lee Corp. 51,341,003
- --------------------------------------------------------------------------------
124,352,299
- --------------------------------------------------------------------------------
Food - Retail - 0.3%
29,412 Carrefour S.A.** 15,380,395
370,450 Disco S.A. (ADR)* 15,003,225
- --------------------------------------------------------------------------------
30,383,620
- --------------------------------------------------------------------------------
Glass Products - 0.2%
6,331,044 Pilkington PLC** 16,030,957
- --------------------------------------------------------------------------------
Human Resources - 0.3%
602,100 Manpower, Inc. 23,105,588
559,095 Vedior N.V.**,+ 11,494,629
- --------------------------------------------------------------------------------
34,600,217
- --------------------------------------------------------------------------------
Investment Companies - 0.2%
932,599 Corp. Financiera Reunida, S.A. 5,004,315
958,521 Investment AB Bure** 11,718,603
- --------------------------------------------------------------------------------
16,722,918
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 48
<PAGE>
JANUS WORLDWIDE FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Investment Management and Advisory Services - 0%
445,414 Amvescap PLC** $2,939,752
- --------------------------------------------------------------------------------
Life and Health Insurance - 1.1%
174,204 Schweizerishe Lebensversicherungs-und
Rentenanstalt** 118,266,290
- --------------------------------------------------------------------------------
Machinery - General Industrial - 0.2%
140,950 ASM Lithography Holding N.V. (ADR)* 10,324,588
840,621 Powerscreen International PLC** 9,846,317
- --------------------------------------------------------------------------------
20,170,905
- --------------------------------------------------------------------------------
Machinery - Pumps - 0%
52,675 Pfeiffer Vacuum Technology A.G. (ADR)*,** 1,711,938
- --------------------------------------------------------------------------------
Medical - Biomedical and Genetic - 0.3%
16,011 Ares-Serono Group - Class B** 30,384,972
- --------------------------------------------------------------------------------
Medical - Drugs - 6.8%
137,829 Altana A.G.** 10,033,962
2,140,172 Astra A.B. - Class A** 34,600,886
1,327,375 Bristol-Myers Squibb Co. 116,477,156
2,201,947 Glaxo Wellcome PLC** 45,564,770
78,911 Novartis A.G.** 123,928,357
679,100 Pfizer, Inc. 48,046,325
16,439 Roche Holding A.G.** 144,861,016
4,507,510 SmithKline Beecham PLC** 42,706,336
694,500 SmithKline Beecham PLC (ADR)** 33,075,563
2,450,000 Takeda Chemical Industries** 66,816,318
256,975 Warner-Lambert Co. 36,795,608
- --------------------------------------------------------------------------------
702,906,297
- --------------------------------------------------------------------------------
Medical - Wholesale Drug Distributors - 0.6%
230,300 Cardinal Health, Inc. 17,099,775
377,152 Gehe A.G.** 19,721,489
1,672,925 Grupo Casa Autrey S.A. de C.V. (ADR)# 28,648,841
- --------------------------------------------------------------------------------
65,470,105
- --------------------------------------------------------------------------------
Medical Products - 0.3%
1,442,410 Fresenius Medical Care A.G. (ADR)*,** 33,986,786
- --------------------------------------------------------------------------------
Metal Processors and Fabricators - 1.0%
4,577,514 Assa Abloy A.B. - Class B**,# 104,587,287
- --------------------------------------------------------------------------------
Money Center Banks - 5.1%
249,650 BankAmerica Corp. 17,849,975
348,674 Banque Nationale de Paris** 15,446,716
2,401,677 Barclays PLC** 60,128,666
338,021 Credit Suisse Group*,** 47,748,003
1,935,677 Deutsche Bank A.G.** 126,859,432
8,526,046 Lloyds TSB Group PLC** 105,585,756
1,426,000 Mitsubishi Trust & Banking Corp.** 17,547,847
4,642,000 Mitsui Trust & Banking Co., Ltd.** 16,133,330
1,141,557 Skandinaviska Enskilda Banken - Class A** 12,354,800
117,666 Societe Generale* 16,149,330
3,862,000 Sumitomo Trust & Banking Co., Ltd.** 29,445,858
30,567 Ubs** 35,286,808
325,804 Unidanmark A/S - Class A 22,032,276
- --------------------------------------------------------------------------------
522,568,797
- --------------------------------------------------------------------------------
Mortgage Banks - 1.0%
1,777,707 Deutsche Pfandbrief & Hypothekenbank A.G.** 100,497,162
- --------------------------------------------------------------------------------
Motorcycle and Motor Scooter Manufacturing - 0%
53,707 Bajaj Auto, Ltd. (GDR)+ 915,696
- --------------------------------------------------------------------------------
Multi-Line Insurance - 3.1%
308,042 AGF (Assurances Generales de France)** $16,242,207
124,192 Allianz A.G.** 27,708,042
2,096,997 Assicurazioni Generali 46,899,078
24,138 Baloise Holdings, Ltd.** 43,560,849
6,957,921 Royal & Sun Alliance Insurance Group PLC** 66,681,121
1,047,929 Skandia Forsakrings A.B.** 49,006,424
173,181 Zurich Versicherungs-Gesellschaft 71,684,059
- --------------------------------------------------------------------------------
321,781,780
- --------------------------------------------------------------------------------
Networking Products - 1.4%
1,706,600 Cisco Systems, Inc.* 139,994,531
- --------------------------------------------------------------------------------
Office Automation and Equipment - 0.2%
143,522 Oce N.V.** 16,380,557
- --------------------------------------------------------------------------------
Oil - Field Services - 1.2%
219,350 Halliburton Co. 13,078,744
1,222,450 Schlumberger Ltd. 106,964,375
- --------------------------------------------------------------------------------
120,043,119
- --------------------------------------------------------------------------------
Oil - International Integrated - 0.3%
254,833 Total S.A.** 28,334,272
- --------------------------------------------------------------------------------
Oil and Gas Drilling - 2.5%
1,913,657 Elf Aquitaine S.A.** 237,377,053
413,100 Transocean Offshore, Inc. 22,307,400
- --------------------------------------------------------------------------------
259,684,453
- --------------------------------------------------------------------------------
Oil Companies - Integrated - 1.0%
2,634,537 British Petroleum Co. PLC** 38,170,268
264,400 Lukoil Holding (ADR) 22,143,500
1,320,350 YPF S.A. (ADR) 42,251,200
- --------------------------------------------------------------------------------
102,564,968
- --------------------------------------------------------------------------------
Paper and Related Products - 0.2%
4,471,300 Kimberly-Clark de Mexico, S.A. de C.V. - Class A 19,515,470
- --------------------------------------------------------------------------------
Printers and Related Products - 0.3%
619,425 Electronics for Imaging, Inc.* 28,958,119
- --------------------------------------------------------------------------------
Property and Casualty Insurance - 0.2%
1,682,000 Tokio Marine & Fire Insurance Co.** 16,782,237
- --------------------------------------------------------------------------------
Publishing - Books - 1.6%
3,539,374 Elsevier N.V.** 55,624,067
863,203 Wolters Kluwer N.V.** 106,036,562
- --------------------------------------------------------------------------------
161,660,629
- --------------------------------------------------------------------------------
Publishing - Newspapers - 0.3%
2,279,777 Pearson PLC** 29,436,777
- --------------------------------------------------------------------------------
Real Estate Development - 0.3%
3,077,000 Mitsui Fudosan Co., Ltd.** 34,794,373
- --------------------------------------------------------------------------------
Real Estate Investment and Management - 0.7%
5,777,000 Mitsubishi Estate Co., Ltd.** 73,011,045
- --------------------------------------------------------------------------------
Recycling - 0.5%
2,002,036 Tomra Systems A.S.A.# 51,476,543
- --------------------------------------------------------------------------------
Reinsurance - 0%
51,949 Scor** 2,417,833
- --------------------------------------------------------------------------------
Retail - Discount - 0.1%
3,434,574 Cifra S.A. de C.V. 6,803,882
- --------------------------------------------------------------------------------
Rubber - Tires - 0.8%
1,699,709 Compagnie Generale des Etablissements
Michelin - Class B** 87,376,765
- --------------------------------------------------------------------------------
Security Services - 1.0%
805,838 Prosegur, CIA de Seguridad S.A. 9,036,295
3,617,675 Securitas A.B. - Class B**,# 96,674,659
- --------------------------------------------------------------------------------
105,710,954
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 49
<PAGE>
JANUS WORLDWIDE FUND October 31, 1997
- --------------------------------------------------------------------------------
Shares or
Principal Amount Market Value
- --------------------------------------------------------------------------------
Special Purpose Banks - 0.8%
268,842 Dexia Belgium (Credit Communal)+ $29,377,053
482,533 Dexia France** 48,538,014
- --------------------------------------------------------------------------------
77,915,067
- --------------------------------------------------------------------------------
Telecommunication Equipment - 1.0%
305,530 Alcatel Alsthom** 36,943,626
631,126 Nokia Oy - Class A 55,206,877
95,050 Northern Telecom Ltd. 8,524,797
- --------------------------------------------------------------------------------
100,675,300
- --------------------------------------------------------------------------------
Telecommunication Services - 1.6%
8,036,000 China Telecom Ltd.*,+ 12,839,718
368,171 Royal PTT Nederland N.V.** 14,076,346
1,795,099 Telefonaktiebolaget L.M. Ericsson - Class B 79,150,824
1,343,392 Telefonaktiebolaget L.M. Ericsson (ADR)
- Class B 59,445,096
- --------------------------------------------------------------------------------
165,511,984
- --------------------------------------------------------------------------------
Telephone - Integrated - 2.7%
172,450 Nippon Telegraph & Telephone Corp.** 146,253,402
930,300 Telecom Argentina Stet S.A. (ADR) 23,548,219
8,223,571 Telecom Italia S.p.A. 51,526,554
944,725 Telefonica de Argentina S.A. (ADR) 26,570,391
1,849,375 Telefonica del Peru S.A. (ADR) 36,525,154
- --------------------------------------------------------------------------------
284,423,720
- --------------------------------------------------------------------------------
Telephone - Local - 0.2%
950,750 Cincinnati Bell, Inc. 25,670,250
- --------------------------------------------------------------------------------
Tobacco - 0%
80,955 Souza Cruz S.A. 658,684
- --------------------------------------------------------------------------------
Transportation - Services - 0.7%
422,337 Koninklijke Nedlloyd Groep N.V.** 12,556,581
4,886,441 Stagecoach Holdings PLC** 59,734,792
- --------------------------------------------------------------------------------
72,291,373
- --------------------------------------------------------------------------------
Travel Services - 0.4%
10,692 Kuoni Reisen A.G. - Class B** 40,581,616
- --------------------------------------------------------------------------------
Total Common Stock (cost $8,346,752,651) 9,633,296,771
- --------------------------------------------------------------------------------
Preferred Stock - 1.1%
- --------------------------------------------------------------------------------
Automotive - Cars and Light Trucks - 0%
2,787 Porsche A.G.** 4,104,835
- --------------------------------------------------------------------------------
Brewery - 0.1%
16,326,000 Companhia Cervejaria Brahma 10,218,097
- --------------------------------------------------------------------------------
Electric - Integrated - 0.2%
606,000 Centrais Electricas de Santa Catarina S.A. 654,125
549,378,000 Companhia Energetica de Minas Gerais 21,926,284
137,500,000 Companhia Paranaense de Energia-Copel 2,191,269
- --------------------------------------------------------------------------------
24,771,678
- --------------------------------------------------------------------------------
Oil Companies - Integrated - 0.2%
93,322,000 Petroleo Brasileiro S.A. 18,030,375
- --------------------------------------------------------------------------------
Telecommunication Equipment - 0.5%
1,056,990,000 Ericsson Telecomunicacoes S.A. 31,159,849
222,250 Oy Nokia Corp. (ADR) - Class A 19,613,563
- --------------------------------------------------------------------------------
50,773,412
- --------------------------------------------------------------------------------
Telephone - Integrated - 0.1%
86,125 Telecomunicacoes Brasileiras S.A. (ADR) 8,741,687
- --------------------------------------------------------------------------------
Total Preferred Stock (cost $127,757,428) 116,640,084
- --------------------------------------------------------------------------------
Short-Term Corporate Notes - 1.7%
Ford Motor Credit Corp.
$100,000,000 5.57%, 11/4/97 $99,953,584
General Electric Co.
77,500,000 5.70%, 11/3/97 77,475,458
- --------------------------------------------------------------------------------
Total Short-Term Corporate Notes (amortized cost $177,429,042) 177,429,042
- --------------------------------------------------------------------------------
Time Deposit - 1.3%
130,000,000 Sun Trust Bank, EDT
5.625%, 11/3/97 (cost $130,000,000) 130,000,000
- --------------------------------------------------------------------------------
Warrants - 0%
183,862 Rhone-Poulenc, exp. 11/5/01* (cost $31,081) 582,950
- --------------------------------------------------------------------------------
Total Investments (total cost $8,781,970,202) - 97.1% 10,057,948,847
- --------------------------------------------------------------------------------
Cash, Receivables and Other Assets, net of Liabilities - 2.9% 300,276,191
- --------------------------------------------------------------------------------
Net Assets - 100% $10,358,225,038
- --------------------------------------------------------------------------------
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 50
<PAGE>
JANUS WORLDWIDE FUND October 31, 1997
Summary of Investments by Country
October 31, 1997
Country % of Investment Securities Market Value
- --------------------------------------------------------------------------------
Argentina 1.1% $107,373,034
Austria 0.1% 14,023,871
Belgium 0.5% 48,205,728
Brazil 1.4% 141,642,015
Denmark 1.5% 149,489,117
Finland 1.7% 172,391,401
France 11.2% 1,126,987,100
Germany 7.4% 745,810,482
Hong Kong 0.8% 78,664,310
India 0.3% 30,176,110
Ireland 0.3% 34,714,246
Italy 1.8% 185,153,640
Japan 6.9% 687,960,098
Luxembourg 0.1% 7,471,800
Mexico 1.6% 157,815,629
Netherlands 12.1% 1,218,308,310
Norway 0.9% 93,378,416
Peru 0.4% 36,525,156
Russia 0.6% 58,024,984
South Africa 0.2% 19,938,883
Spain 0.1% 14,040,609
Sweden 7.1% 714,564,111
Switzerland 7.0% 706,019,655
United Kingdom 15.3% 1,540,198,774
United States++ 19.6% 1,969,071,368
- --------------------------------------------------------------------------------
Total 100.0% $10,057,948,847
================================================================================
++Includes Short-Term Securities (16.5% excluding Short-Term Securities)
Forward Currency Contracts
Open at October 31, 1997
Currency Sold and Currency Currency Unrealized
Settlement Date Units Sold Value in $ U.S. Gain/(Loss)
- --------------------------------------------------------------------------------
British Pound 2/18/98 210,000,000 $350,091,000 ($9,427,950)
British Pound 2/19/98 65,000,000 108,355,000 130,000
Dutch Guilder 1/9/98 60,000,000 30,931,024 (848,296)
Dutch Guilder 2/18/98 60,000,000 30,999,742 (2,283,364)
Dutch Guilder 2/19/98 110,000,000 56,835,796 (2,701,938)
French Franc 11/28/97 200,000,000 34,618,847 621,892
French Franc 2/18/98 497,635,000 86,540,702 (6,281,379)
German Deutschemark 1/9/98 73,000,000 42,488,796 (1,292,408)
German Deutschemark 1/15/98 45,000,000 26,200,873 (463,056)
German Deutschemark 2/18/98 500,000 291,647 (21,829)
German Deutschemark 2/26/98 15,269,000 8,909,961 (441,298)
Japanese Yen 12/18/97 5,000,000,000 41,565,662 3,683,207
Japanese Yen 1/20/98 8,406,000,000 69,883,735 5,845,995
Japanese Yen 2/18/98 13,000,000,000 108,080,695 2,283,902
Japanese Yen 3/18/98 23,008,800,000 191,300,487 7,849,555
Japanese Yen 3/25/98 1,400,000,000 11,640,040 234,430
South African Rand 10/2/98 50,695,000 9,749,038 (133,143)
Swedish Krona 2/11/98 494,886,000 66,174,500 (3,084,643)
Swiss Franc 11/12/97 7,188,000 5,129,157 23,531
Swiss Franc 1/9/98 20,000,000 14,362,657 (541,912)
Swiss Franc 2/19/98 75,000,000 54,089,139 (2,436,246)
- --------------------------------------------------------------------------------
Total $1,348,238,498 ($9,284,950)
================================================================================
See Notes to Schedules of Investments
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 51
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Janus Janus
For the fiscal year or period Janus Janus Equity Growth Janus
ended October 31, 1997 Janus Balanced Enterprise Income and Income Mercury
(all numbers in thousands) Fund Fund Fund Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------------
Investment Income:
<S> <C> <C> <C> <C> <C> <C>
Interest $ 114,720 $ 7,377 $ 1,116 $ 373 $ 4,227 $ 11,744
Dividends 194,040 3,297 1,630 599 13,712 12,874
Foreign Tax Withheld (9,185) (114) (98) (18) (162) (711)
- ----------------------------------------------------------------------------------------------------------------
299,575 10,560 2,648 954 17,777 23,907
- ----------------------------------------------------------------------------------------------------------------
Expenses:
Advisory fees 114,245 2,168 4,439 395 9,650 13,722
Transfer agent fees and expenses 29,699 617 1,501 119 3,075 4,541
Registration fees 696 105 59 45 271 84
Postage and mailing expenses 1,950 84 237 17 323 596
Custodian fees 3,653 102 143 69 214 396
Printing expenses 1,454 64 157 10 218 472
Audit fees 47 7 15 12 13 20
Trustees' fees and expenses 149 2 6 1 11 17
Other expenses 392 28 41 15 53 233
- ----------------------------------------------------------------------------------------------------------------
Total expenses 152,285 3,177 6,598 683 13,828 20,081
- ----------------------------------------------------------------------------------------------------------------
Expense and fee offsets (2,284) (72) (184) (16) (280) (473)
- ----------------------------------------------------------------------------------------------------------------
Net expenses 150,001 3,105 6,414 667 13,548 19,608
- ----------------------------------------------------------------------------------------------------------------
Net investment income/(loss) 149,574 7,455 (3,766) 287 4,229 4,299
- ----------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized
Gain/(Loss) on Investments:
Net realized gain/(loss) from
securities transactions 3,054,150 34,198 36,372 5,200 181,579 190,634
Net realized gain/(loss) from
foreign currency transactions 56,189 285 (3,332) 52 4,401 7,603
Net realized gain/(loss) from
futures contracts -- -- -- -- -- 368
Change in net unrealized appreciation
or depreciation of investments 495,474 17,621 (21,277) 6,343 241,318 116,617
- ----------------------------------------------------------------------------------------------------------------
Net gain/loss on investments 3,605,813 52,104 11,763 11,595 427,298 315,222
- ----------------------------------------------------------------------------------------------------------------
Net increase/decrease in net assets
resulting from operations $3,755,387 $ 59,559 $ 7,997 $ 11,882 $ 431,527 $ 319,521
================================================================================================================
</TABLE>
STATEMENTS OF OPERATIONS (Continued)
<TABLE>
<CAPTION>
Janus
For the fiscal year or period Janus Janus Special Janus Janus Janus
ended October 31, 1997 Olympus Overseas Situations Twenty Venture Worldwide
(all numbers in thousands) Fund Fund Fund(1) Fund Fund Fund
- ----------------------------------------------------------------------------------------------------------------
Investment Income:
<S> <C> <C> <C> <C> <C> <C>
Interest $ 2,917 $ 12,180 $ 266 $ 12,043 $ 9,649 $ 28,799
Dividends 3,840 29,470 1,307 50,030 4,595 107,378
Foreign Tax Withheld (81) (3,459) (27) (119) (85) (11,551)
- ----------------------------------------------------------------------------------------------------------------
6,676 38,191 1,546 61,954 14,159 124,626
- ----------------------------------------------------------------------------------------------------------------
Expenses:
Advisory fees 3,801 14,050 1,090 32,876 9,406 51,016
Transfer agent fees and expenses 1,095 4,042 337 10,695 2,653 14,974
Registration fees 71 958 99 544 47 2,788
Postage and mailing expenses 150 335 59 922 277 1,051
Custodian fees 212 1,879 44 481 243 4,884
Printing expenses 109 224 39 750 209 402
Audit fees 14 15 7 20 22 24
Trustees' fees and expenses 4 15 1 40 30 61
Other expenses 28 39 16 108 54 84
- ----------------------------------------------------------------------------------------------------------------
Total expenses 5,484 21,557 1,692 46,436 12,941 75,284
- ----------------------------------------------------------------------------------------------------------------
Expense and fee offsets (165) (359) (37) (1,069) (292) (1,453)
- ----------------------------------------------------------------------------------------------------------------
Net expenses 5,319 21,198 1,655 45,367 12,649 73,831
- ----------------------------------------------------------------------------------------------------------------
Net investment income/(loss) 1,357 16,993 (109) 16,587 1,510 50,795
- ----------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized
Gain/(Loss) on Investments:
Net realized gain/(loss) from
securities transactions 34,073 73,757 17,956 758,804 192,999 560,139
Net realized gain/(loss) from
foreign currency transactions 1,911 12,780 150 (2,850) 2,360 97,579
Net realized gain/(loss) from
futures contracts (3,365) (500) -- -- -- (2,540)
Change in net unrealized appreciation
or depreciation of investments 82,685 231,923 33,300 546,527 (52,099) 690,790
- ----------------------------------------------------------------------------------------------------------------
Net gain/loss on investments 115,304 317,960 51,406 1,302,481 143,260 1,345,968
- ----------------------------------------------------------------------------------------------------------------
Net increase/decrease in net assets
resulting from operations $ 116,661 $ 334,953 $ 51,297 $1,319,068 $ 144,770 $1,396,763
================================================================================================================
</TABLE>
An Explanation of the Statement of Operations
This financial statement details the Funds' income, expenses, gains and
losses on securities and currency transactions and from appreciation or
depreciation of portfolio holdings. The first section in this statement, called
"Investment Income," reports the dividends earned from stocks and interest
earned from interest-bearing securities in the portfolio.
The next section reports the expenses and expense offsets incurred by the
Funds, including the advisory fee paid to the investment advisor, the transfer
agent fees, shareholder servicing expenses, printing and postage for mailing
statements, financial reports, and prospectuses to investors.
The last section lists the increase or decrease in the value of securities
held in the Funds' portfolios. Funds realize a gain (or loss) when they sell
their position in a particular security. Unrealized gain (or loss) refers to the
change in net appreciation or depreciation of the Funds' portfolios during the
period. This figure is affected by both changes in the market value of portfolio
holdings and by gains (or losses) realized during the reporting period.
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
Janus Janus
As of October 31, 1997 Janus Janus Equity Growth Janus
(all numbers in thousands except Janus Balanced Enterprise Income and Income Mercury
net asset value per share) Fund Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C>
Investments at cost $15,676,629 $ 314,443 $ 413,685 $ 64,283 $ 1,510,170 $ 1,679,802
==============================================================================================================================
Investments at value $19,146,227 $ 347,244 $ 548,660 $ 71,785 $ 1,898,573 $ 1,970,245
Cash 5,312 -- 583 577 616 57
Receivables:
Investments sold 512,931 15,029 10,497 2,628 45,700 37,438
Fund shares sold 21,306 1,461 3,804 1,641 7,229 12,085
Dividends 12,184 351 416 63 590 979
Interest 20 1,995 -- 2 -- --
Other assets 150 1 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------------------
Total Assets 19,698,130 366,081 563,960 76,696 1,952,708 2,020,804
- ------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Payables:
Due to custodian -- 757 -- -- -- --
Investments purchased 559,059 3,866 9,561 1,945 59,354 40,280
Fund shares repurchased 9,214 192 466 178 814 1,789
Advisory fees 10,979 225 360 46 1,088 1,186
Transfer agent fees and expenses 2,726 60 84 16 287 353
Accrued expenses 1,667 118 185 35 336 435
Forward currency contracts 85,151 704 1,476 151 1,830 5,712
- ------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 668,796 5,922 12,132 2,371 63,709 49,755
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets $19,029,334 $ 360,159 $ 551,828 $ 74,325 $ 1,888,999 $ 1,971,049
Shares Outstanding, $0.01 Par Value
(unlimited shares authorized) 648,151 21,530 17,881 5,317 75,342 105,674
==============================================================================================================================
Net Asset Value Per Share $ 29.36 $ 16.73 $ 30.86 $ 13.98 $ 25.07 $ 18.65
==============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Janus
As of October 31, 1997 Janus Janus Special Janus Janus Janus
(all numbers in thousands except Olympus Overseas Situations Twenty Venture Worldwide
net asset value per share) Fund Fund Fund(1) Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------
Assets:
<S> <C> <C> <C> <C> <C> <C>
Investments at cost $ 499,991 $ 2,782,523 $ 303,473 $ 4,790,615 $ 959,038 $ 8,781,970
==============================================================================================================================
Investments at value $ 618,244 $ 3,083,330 $ 338,270 $ 5,945,356 $ 1,250,123 $10,057,949
Cash 3,505 -- 525 -- 1,537 1,013
Receivables:
Investments sold 24,992 144,966 2,342 26,077 3,668 467,613
Fund shares sold 2,673 68,156 3,631 12,804 1,906 80,382
Dividends 344 4,489 26 3,084 258 17,007
Interest -- 36 -- -- -- 20
Other assets -- 3 2 61 33 53
- ------------------------------------------------------------------------------------------------------------------------------
Total Assets 649,758 3,300,980 344,796 5,987,382 1,257,525 10,624,037
- ------------------------------------------------------------------------------------------------------------------------------
Liabilities:
Payables:
Due to custodian -- 864 -- 928 -- --
Investments purchased 32,157 77,703 8,478 101,861 2,623 228,285
Fund shares repurchased 275 8,166 660 2,823 956 17,282
Advisory fees 388 1,925 205 3,406 763 6,114
Transfer agent fees and expenses 109 511 50 999 203 1,702
Accrued expenses 107 1,136 128 1,007 200 3,144
Forward currency contracts 1,071 5,478 1,498 5,288 439 9,285
- ------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 34,107 95,783 11,019 116,312 5,184 265,812
- ------------------------------------------------------------------------------------------------------------------------------
Net Assets $ 615,651 $ 3,205,197 $ 333,777 $ 5,871,070 $ 1,252,341 $10,358,225
Shares Outstanding, $0.01 Par Value
(unlimited shares authorized) 33,441 178,699 23,704 167,001 21,284 258,645
==============================================================================================================================
Net Asset Value Per Share $ 18.41 $ 17.94 $ 14.08 $ 35.16 $ 58.84 $ 40.05
==============================================================================================================================
</TABLE>
(1) Period from December 31, 1996 (inception) to October 31, 1997
See Notes to Financial Statements
An Explanation of the Statement of Assets and Liabilities
This financial statement is often referred to as the "balance sheet." It
lists the assets and liabilities of the Funds on the last day of the fiscal
period.
The Funds' assets are calculated by adding the value of the securities
owned, the receivable for securities sold but not yet settled, the receivable
for dividends declared but not yet received on stocks owned, and the receivable
for Fund shares sold to investors but not yet settled. The Funds' liabilities
include payables for securities purchased but not yet settled, Fund shares
redeemed but not yet paid, and expenses owed but not yet paid.
There may be other assets and liabilities such as forward currency
contracts.
The last line of this schedule reports the Funds' net asset value (NAV) per
share on the last day of the fiscal period. The NAV is calculated by dividing
the Funds' net assets (assets minus liabilities) by the number of shares
outstanding.
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 52 and 53
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the fiscal year or Janus Janus
period ended October 31 Janus Balanced Enterprise
(all numbers in thousands) Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net investment income/(loss) $ 149,574 $ 124,873 $ 7,455 $ 3,730 $ (3,766) $ (4,643)
Net realized gain/(loss) from
investment transactions 3,110,339 1,668,694 34,483 18,941 33,040 36,335
Change in unrealized net appreciation
or depreciation of investments 495,474 685,129 17,621 4,979 (21,277) 72,341
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 3,755,387 2,478,696 59,559 27,650 7,997 104,033
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions
to Shareholders from:
Net investment income* (120,830) (70,555) (6,418) (2,801) -- --
Net realized gain from
investment transactions* (1,689,077) (581,254) (19,020) (7,702) (30,151) (30,845)
- -----------------------------------------------------------------------------------------------------------------------------------
Net decrease from dividends
and distributions (1,809,907) (651,809) (25,438) (10,503) (30,151) (30,845)
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold 3,064,802 3,005,157 218,600 116,988 407,412 588,531
Reinvested dividends
and distributions 1,766,166 628,657 24,763 10,173 29,668 30,326
Shares repurchased (3,060,294) (2,110,491) (124,369) (61,809) (595,101) (419,412)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) from
capital share transactions 1,770,674 1,523,323 118,994 65,352 (158,021) 199,445
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in
net assets 3,716,154 3,350,210 153,115 82,499 (180,175) 272,633
Net Assets:
Beginning of period 15,313,180 11,962,970 207,044 124,545 732,003 459,370
- -----------------------------------------------------------------------------------------------------------------------------------
End of Period $ 19,029,334 $ 15,313,180 $ 360,159 $ 207,044 $ 551,828 $ 732,003
===================================================================================================================================
Net Assets consist of:
Capital(par value and paid-in surplus)* $ 12,379,736 $ 10,609,062 $ 291,100 $ 172,106 $ 382,952 $ 546,012
Undistributed net investment income* 160,515 173,997 2,406 1,570 -- --
Undistributed net realized
gain/(loss) from investments* 3,104,409 1,640,921 34,553 18,889 35,367 31,206
Unrealized appreciation of
investments and foreign currency 3,384,674 2,889,200 32,100 14,479 133,509 154,785
- -----------------------------------------------------------------------------------------------------------------------------------
$ 19,029,334 $ 15,313,180 $ 360,159 $ 207,044 $ 551,828 $ 732,003
===================================================================================================================================
Transactions in Fund Shares:
Shares sold 114,499 120,626 14,343 8,113 13,843 19,462
Reinvested distributions 71,795 27,285 1,721 733 1,027 1,105
- -----------------------------------------------------------------------------------------------------------------------------------
Total 186,294 147,911 16,064 8,846 14,870 20,567
Shares repurchased (112,847) (85,075) (8,152) (4,304) (20,455) (14,026)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) 73,447 62,836 7,912 4,542 (5,585) 6,541
- -----------------------------------------------------------------------------------------------------------------------------------
Shares outstanding
beginning of period 574,704 511,868 13,618 9,076 23,466 16,925
Shares outstanding
end of period 648,151 574,704 21,530 13,618 17,881 23,466
===================================================================================================================================
Purchases and Sales of
Investment Securities:
(excluding Short-Term Securities)
Purchases of Securities $ 23,008,189 $ 12,620,553 $ 411,623 $ 218,807 $ 654,058 $ 684,287
Proceeds from Sales of Securities 20,176,583 13,659,045 334,092 200,065 835,021 541,498
Purchases of Long-Term
U.S. Government Obligations -- 52,837 63,848 64,006 -- --
Proceeds from Sales of Long-Term
U.S. Government Obligations -- 155,889 45,558 31,633 -- --
===================================================================================================================================
</TABLE>
(1) Period from June 28, 1996 (inception) to October 31, 1996
(2) Period from December 29, 1995 (inception) to October 31, 1996
(3) Period from December 31, 1996 (inception) to October 31, 1997
*See Note 3 in Notes to Financial Statements
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
<TABLE>
<CAPTION>
Janus Janus Janus
For the fiscal year or Equity Income Growth and Income Mercury
period ended October 31 Fund Fund Fund
(all numbers in thousands)
- -----------------------------------------------------------------------------------------------------------------------------------
1997 1996(1) 1997 1996 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net investment income/(loss) $ 287 $ 222 $ 4,229 $ 5,418 $ 4,299 $ 8,219
Net realized gain from
investment transactions 5,252 950 185,980 96,004 198,605 243,601
Change in unrealized net appreciation
or depreciation of investments 6,343 1,010 241,318 64,283 116,617 31,715
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 11,882 2,182 431,527 165,705 319,521 283,535
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions
to Shareholders from:
Net investment income* (393) (75) (6,298) (3,323) (8,225) --
Net realized gain from
investment transactions* (992) -- (97,951) (73,130) (250,204) (182,852)
- -----------------------------------------------------------------------------------------------------------------------------------
Net decrease from
dividends and distributions (1,385) (75) (104,249) (76,453) (258,429) (182,852)
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold 81,250 40,622 906,848 495,936 1,157,958 1,232,319
Reinvested dividends
and distributions 1,306 68 101,813 74,420 252,800 176,985
Shares repurchased (49,157) (12,368) (480,123) (209,388) (1,503,151) (1,028,405)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) from
capital share transactions 33,399 28,322 528,538 360,968 (92,393) 380,899
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in
net assets 43,896 30,429 855,816 450,220 (31,301) 481,582
Net Assets:
Beginning of period 30,429 -- 1,033,183 582,963 2,002,350 1,520,768
- -----------------------------------------------------------------------------------------------------------------------------------
End of Period $ 74,325 $ 30,429 $ 1,888,999 $ 1,033,183 $ 1,971,049 $ 2,002,350
===================================================================================================================================
Net Assets consist of:
Capital(par value and paid-in surplus)* $ 61,722 $ 28,322 $ 1,317,911 $ 789,372 $ 1,488,013 $ 1,580,406
Undistributed net investment income* 87 119 823 5,340 5,512 15,395
Undistributed net realized
gain from investments* 5,163 978 183,694 93,217 192,788 238,429
Unrealized appreciation of
investments and foreign currency 7,353 1,010 386,571 145,254 284,736 168,120
- -----------------------------------------------------------------------------------------------------------------------------------
$ 74,325 $ 30,429 $ 1,888,999 $ 1,033,183 $ 1,971,049 $ 2,002,350
===================================================================================================================================
Transactions in Fund Shares:
Shares sold 6,443 3,793 40,425 26,416 65,228 70,853
Reinvested distributions 115 6 5,245 4,445 15,284 11,034
- -----------------------------------------------------------------------------------------------------------------------------------
Total 6,558 3,799 45,670 30,861 80,512 81,887
Shares repurchased (3,936) (1,104) (21,857) (11,490) (84,844) (59,376)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) 2,622 2,695 23,813 19,371 (4,332) 22,511
- -----------------------------------------------------------------------------------------------------------------------------------
Shares outstanding
beginning of period 2,695 -- 51,529 32,158 110,006 87,495
Shares outstanding
end of period 5,317 2,695 75,342 51,529 105,674 110,006
===================================================================================================================================
Purchases and Sales
of Investment Securities:
(excluding Short-Term Securities)
Purchases of Securities $ 108,410 $ 51,005 $ 2,032,309 $ 1,415,291 $ 2,839,050 $ 2,994,725
Proceeds from Sales of Securities 79,110 23,673 1,711,207 1,150,323 2,999,417 2,804,270
Purchases of Long-Term
U.S. Government Obligations 1,000 -- -- -- -- --
Proceeds from Sales of Long-Term
U.S. Government Obligations 1,007 -- -- -- -- --
===================================================================================================================================
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
<TABLE>
<CAPTION>
For the fiscal year or Janus Janus Janus
period ended October 31 Olympus Overseas Special Situations
(all numbers in thousands) Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
1997 1996(2) 1997 1996 1997(3)
- -----------------------------------------------------------------------------------------------------------------------------------
Operations:
<S> <C> <C> <C> <C> <C>
Net investment income/(loss) $ 1,357 $ 3,766 $ 16,993 $ 2,438 $ (109)
Net realized gain from
investment transactions 32,619 (9,331) 86,037 14,966 18,106
Change in unrealized net appreciation
or depreciation of investments 82,685 34,500 231,923 53,555 33,300
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 116,661 28,935 334,953 70,959 51,297
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions
to Shareholders from:
Net investment income* (3,648) -- (2,552) (1,175) --
Net realized gain from
investment transactions* -- -- (15,609) (1,110) --
- -----------------------------------------------------------------------------------------------------------------------------------
Net decrease from
dividends and distributions (3,648) -- (18,161) (2,285) --
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold 529,820 638,135 4,520,982 923,886 389,647
Reinvested dividends
and distributions 3,545 -- 17,781 2,204 --
Shares repurchased (463,102) (234,695) (2,422,988) (333,000) (107,167)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) from
capital share transactions 70,263 403,440 2,115,775 593,090 282,480
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in
net assets 183,276 432,375 2,432,567 661,764 333,777
Net Assets:
Beginning of period 432,375 -- 772,630 110,866 --
- -----------------------------------------------------------------------------------------------------------------------------------
End of Period $ 615,651 $ 432,375 $ 3,205,197 $ 772,630 $ 333,777
===================================================================================================================================
Net Assets consist of:
Capital(par value and paid-in surplus)* $ 473,702 $ 403,440 $ 2,807,706 $ 691,931 $ 282,480
Undistributed net investment income* 1,267 3,647 19,546 5,739 --
Undistributed net realized
gain from investments* 23,497 (9,212) 82,566 11,504 17,997
Unrealized appreciation of
investments and foreign currency 117,185 34,500 295,379 63,456 33,300
- -----------------------------------------------------------------------------------------------------------------------------------
$ 615,651 $ 432,375 $ 3,205,197 $ 772,630 $ 333,777
===================================================================================================================================
Transactions in Fund Shares:
Shares sold 33,016 45,233 262,026 66,683 32,037
Reinvested distributions 242 -- 1,181 183 --
- -----------------------------------------------------------------------------------------------------------------------------------
Total 33,258 45,233 263,207 66,866 32,037
Shares repurchased (28,918) (16,132) (136,692) (24,253) (8,333)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) 4,340 29,101 126,515 42,613 23,704
- -----------------------------------------------------------------------------------------------------------------------------------
Shares outstanding
beginning of period 29,101 -- 52,184 9,571 --
Shares outstanding
end of period 33,441 29,101 178,699 52,184 23,704
===================================================================================================================================
Purchases and Sales
of Investment Securities:
(excluding Short-Term Securities)
Purchases of Securities $ 1,202,420 $ 866,966 $ 3,322,515 $ 621,472 $ 488,802
Proceeds from Sales of Securities 1,107,630 525,025 1,331,836 210,188 217,384
Purchases of Long-Term
U.S. Government Obligations -- -- -- -- --
Proceeds from Sales of Long-Term
U.S. Government Obligations -- -- -- -- --
===================================================================================================================================
</TABLE>
An Explanation of the Statement of Changes in Net Assets
This financial statement reports the increase or decrease in the Funds' net
assets during the reporting period. Changes in the Funds' net assets are
attributable to investment operations, dividends, distributions, and capital
share transactions. This schedule is of importance to investors because it shows
exactly what caused the Funds' net asset size to change during the period.
Investors can use this information to determine if the Funds' growth was a
result of operations or an increase in the number of shares being purchased.
The first section summarizes the information from the Statement of
Operations regarding changes in net assets due to the Funds' investment
performance. The Funds' net assets may also change as a result of dividend and
capital gains distributions to investors. If investors receive their dividends
in cash, money is taken out of the Fund to pay the distribution. If investors
reinvest their dividends, the Funds' net assets will not be affected. If you
compare each Funds' "Net decrease from dividends and distributions" to the
"Reinvested dividends and distributions," you'll notice that dividend
distributions had little effect on each Funds' net assets. This is because the
majority of Janus investors reinvest their distributions.
The reinvestment of dividends is included under "Capital Share
Transactions." "Capital Shares" refers to the money investors contribute to the
Funds through purchases or withdraw via redemptions. The Funds' net assets will
increase and decrease in value as investors purchase and redeem shares from the
Fund.
The section titled "Net Assets Consist of" breaks down the components of
the Funds' net assets. Since funds must distribute substantially all earnings,
you'll notice that a significant portion of net assets is shareholder capital.
See Notes to Financial Statements
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 54 and 55
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (continued)
<TABLE>
<CAPTION>
For the fiscal year or Janus Janus Janus
period ended October 31 Twenty Venture Worldwide
(all numbers in thousands) Fund Fund Fund
- -----------------------------------------------------------------------------------------------------------------------------------
1997 1996 1997 1996 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Operations:
<S> <C> <C> <C> <C> <C> <C>
Net investment income/(loss) $ 16,587 $ 22,660 $ 1,510 $ (6,056) $ 50,795 $ 21,418
Net realized gain from
investment transactions 755,954 656,509 195,359 155,853 655,178 289,321
Change in unrealized net appreciation
or depreciation of investments 546,527 152,559 (52,099) 10,400 690,790 374,380
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 1,319,068 831,728 144,770 160,197 1,396,763 685,119
- -----------------------------------------------------------------------------------------------------------------------------------
Dividends and Distributions
to Shareholders from:
Net investment income* (22,661) -- -- (185) (21,409) (17,455)
Net realized gain from
investment transactions* (663,308) (524,809) (155,029) (218,108) (285,338) (71,145)
- -----------------------------------------------------------------------------------------------------------------------------------
Net decrease from
dividends and distributions (685,969) (524,809) (155,029) (218,293) (306,747) (88,600)
- -----------------------------------------------------------------------------------------------------------------------------------
Capital Share Transactions:
Shares sold 2,010,346 1,058,035 179,080 142,893 7,204,484 2,938,234
Reinvested dividends and distributions 653,113 512,051 150,172 212,018 299,515 86,150
Shares repurchased (1,362,932) (935,312) (807,968) (308,700) (2,702,975) (958,072)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) from
capital share transactions 1,300,527 634,774 (478,716) 46,211 4,801,024 2,066,312
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease)
in net assets 1,933,626 941,693 (488,975) (11,885) 5,891,040 2,662,831
Net Assets:
Beginning of period 3,937,444 2,995,751 1,741,316 1,753,201 4,467,185 1,804,354
- -----------------------------------------------------------------------------------------------------------------------------------
End of Period $5,871,070 $3,937,444 $1,252,341 $1,741,316 $10,358,225 $4,467,185
===================================================================================================================================
Net Assets consist of:
Capital(par value and paid-in surplus)* $3,950,593 $2,650,066 $ 766,715 $1,245,431 $8,391,943 $3,590,919
Undistributed net investment income* 16,568 46,083 3,432 -- 69,045 64,560
Undistributed net realized
gain from investments* 754,451 638,364 191,545 153,138 630,141 235,401
Unrealized appreciation of
investments and foreign currency 1,149,458 602,931 290,649 342,747 1,267,096 576,305
- -----------------------------------------------------------------------------------------------------------------------------------
$5,871,070 $3,937,444 $1,252,341 $1,741,316 $10,358,225 $4,467,185
===================================================================================================================================
Transactions in Fund Shares:
Shares sold 62,858 36,639 3,277 2,490 190,176 90,631
Reinvested distributions 23,127 19,948 2,884 3,919 8,941 3,033
- -----------------------------------------------------------------------------------------------------------------------------------
Total 85,985 56,587 6,161 6,409 199,117 93,664
Shares repurchased (42,422) (32,594) (15,340) (5,399) (69,584) (29,807)
- -----------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) 43,563 23,993 (9,179) 1,010 129,533 63,857
- -----------------------------------------------------------------------------------------------------------------------------------
Shares outstanding beginning of period 123,438 99,445 30,463 29,453 129,112 65,255
Shares outstanding end of period 167,001 123,438 21,284 30,463 258,645 129,112
===================================================================================================================================
Purchases and Sale
of Investment Securities:
(excluding Short-Term Securities)
Purchases of Securities $5,967,189 $4,729,450 $1,754,415 $2,393,103 $10,485,393 $3,434,902
Proceeds from Sales of Securities 5,818,841 4,542,826 2,388,474 2,522,326 5,673,413 2,161,421
Purchases of Long-Term
U.S. Government Obligations -- -- -- -- -- --
Proceeds from Sales of Long-Term
U.S. Government Obligations -- -- -- -- -- --
===================================================================================================================================
</TABLE>
*See Note 3 in Notes to Financial Statements
See Notes to Financial Statements
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 56
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For a share outstanding throughout Janus Fund
each fiscal year or period ended October 31 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $26.65 $23.37 $19.62 $20.81 $18.86
- -----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .15 .31 .16 .17 .26
Net gains or (losses) on securities
(both realized and unrealized) 5.69 4.23 3.99 (.03) 2.88
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 5.84 4.54 4.15 .14 3.14
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (.21) (.13) (.01) (.39) (.29)
Distributions (from capital gains) (2.92) (1.13) (.39) (.94) (.90)
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions (3.13) (1.26) (.40) (1.33) (1.19)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $29.36 $26.65 $23.37 $19.62 $20.81
===================================================================================================================================
Total return* 24.18% 20.31% 21.62% 0.75% 17.41%
===================================================================================================================================
Net assets, end of period (in thousands) $19,029,334 $15,313,180 $11,962,970 $9,647,245 $9,098,000
Average net assets for the period (in thousands) $17,515,216 $13,753,157 $10,559,806 $9,338,807 $7,335,871
Ratio of gross expenses to average net assets**(1) 0.87% 0.86% 0.87% NA NA
Ratio of net expenses to average net assets**(1) 0.86% 0.85% 0.86% 0.91% 0.92%
Ratio of net investment income to average net assets** 0.85% 0.91% 1.25% 1.12% 1.55%
Portfolio turnover rate** 132% 104% 118% 139% 127%
Average commission per share $.0500 $.0558 NA NA NA
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
For a share outstanding throughout Janus Balanced Fund
each fiscal year or period ended October 31 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.20 $13.72 $12.17 $12.23 $10.64
- -----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .36 .33 .61 .27 .19
Net gains or (losses) on securities
(both realized and unrealized) 2.88 2.22 1.52 (.09) 1.56
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.24 2.55 2.13 .18 1.75
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (.36) (.26) (.58) (.24) (.16)
Distributions (from capital gains) (1.35) (.81) -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.71) (1.07) (.58) (.24) (.16)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $16.73 $15.20 $13.72 $12.17 $12.23
===================================================================================================================================
Total return* 23.38% 19.39% 18.26% 1.51% 16.54%
===================================================================================================================================
Net assets, end of period (in thousands) $360,159 $207,044 $124,545 $93,546 $72,547
Average net assets for the period (in thousands) $283,220 $158,607 $107,259 $86,361 $43,522
Ratio of gross expenses to average net assets**(1) 1.12% 1.23% 1.35% NA NA
Ratio of net expenses to average net assets**(1) 1.10% 1.21% 1.32% 1.42% 1.70%
Ratio of net investment income/(loss)
to average net assets** 2.63% 2.35% 2.52% 2.28% 2.15%
Portfolio turnover rate** 139% 151% 185% 167% 131%
Average commission per share $.0468 $.0428 NA NA NA
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
For a share outstanding throughout Janus Enterprise Fund
each fiscal year or period ended October 31 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $31.19 $27.14 $24.43 $21.87 $17.09
- -----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income/(loss) -- -- .52 (.06) .04
Net gains or (losses) on securities
(both realized and unrealized) .95 5.85 3.09 3.18 4.76
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations .95 5.85 3.61 3.12 4.80
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) -- -- (.52) (.02) (.02)
Distributions (from capital gains) (1.28) (1.80) (.38) (.54) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.28) (1.80) (.90) (.56) (.02)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $30.86 $31.19 $27.14 $24.43 $21.87
===================================================================================================================================
Total return* 3.31% 22.43% 15.46% 14.56% 28.09%
===================================================================================================================================
Net assets, end of period (in thousands) $551,828 $732,003 $459,370 $370,028 $239,334
Average net assets for the period (in thousands) $613,784 $596,313 $407,791 $269,595 $188,345
Ratio of gross expenses to average net assets**(1) 1.07% 1.14% 1.26% NA NA
Ratio of net expenses to average net assets**(1) 1.04% 1.12% 1.23% 1.25% 1.36%
Ratio of net investment income/(loss)
to average net assets** (0.61%) (0.78%) 0.02% (0.32%) 0.14%
Portfolio turnover rate** 111% 93% 194% 193% 201%
Average commission per share $.0360 $.0333 NA NA NA
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) See "Explanation of the Financial Highlights"
* Total return not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
NA - Disclosure not applicable to prior periods
See Notes to Financial Statements
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 57
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For a share outstanding throughout Janus Growth and Income Fund
each fiscal year or period ended October 31 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $20.05 $18.13 $14.69 $15.24 $12.95
- -----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .01 .16 .11 .19 .14
Net gains or (losses) on securities
(both realized and unrealized) 6.98 4.01 3.43 (.31) 2.29
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 6.99 4.17 3.54 (.12) 2.43
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (.11) (.08) (.10) (.10) (.14)
Distributions (from capital gains) (1.86) (2.17) -- (.33) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions (1.97) (2.25) (.10) (.43) (.14)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $25.07 $20.05 $18.13 $14.69 $15.24
===================================================================================================================================
Total return* 37.78% 25.56% 24.20% (0.76%) 18.81%
===================================================================================================================================
Net assets, end of period (in thousands) $1,888,999 $1,033,183 $582,963 $489,942 $518,963
Average net assets for the period (in thousands) $1,415,563 $773,343 $498,442 $499,831 $404,285
Ratio of gross expenses to average net assets**(3) 0.98% 1.05% 1.19% NA NA
Ratio of net expenses to average net assets**(3) 0.96% 1.03% 1.17% 1.22% 1.28%
Ratio of net investment income to average net assets** 0.30% 0.70% 1.11% 1.26% 1.13%
Portfolio turnover rate** 127% 153% 195% 123% 138%
Average commission per share $.0588 $.0520 NA NA NA
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
For a share outstanding throughout Janus Mercury Fund
each fiscal year or period ended October 31 1997 1996 1995 1994 1993(1)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $18.20 $17.38 $14.12 $11.70 $10.00
- -----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income/(loss) (.01) .14 .16 .02 (.01)
Net gains or (losses) on securities
(both realized and unrealized) 2.82 2.74 3.37 2.40 1.71
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.81 2.88 3.53 2.42 1.70
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (.08) -- (.16) -- --
Distributions (from capital gains) (2.28) (2.06) (.11) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions (2.36) (2.06) (.27) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $18.65 $18.20 $17.38 $14.12 $11.70
===================================================================================================================================
Total return* 17.07% 18.18% 25.53% 20.68% 17.00%
===================================================================================================================================
Net assets, end of period (in thousands) $1,971,049 $2,002,350 $1,520,768 $596,330 $112,725
Average net assets for the period (in thousands) $2,045,901 $1,838,593 $1,116,377 $257,726 $67,462
Ratio of gross expenses to average net assets**(3) 0.98% 1.02% 1.14% NA NA
Ratio of net expenses to average net assets**(3) 0.96% 1.00% 1.12% 1.33% 1.75%
Ratio of net investment income/(loss)
to average net assets** 0.21% 0.45% 0.50% 0.25% (0.40%)
Portfolio turnover rate** 157% 177% 201% 283% 151%
Average commission per share $.0441 $.0383 NA NA NA
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
For a share outstanding throughout Janus Overseas Fund
each fiscal year or period ended October 31 1997 1996 1995 1994(2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $14.81 $11.58 $10.36 $10.00
- -----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income/(loss) .04 .10 .12 (.02)
Net gains or (losses) on securities
(both realized and unrealized) 3.39 3.34 1.10 .38
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.43 3.44 1.22 .36
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (.04) (.11) -- --
Distributions (from capital gains) (.26) (.10) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions (.30) (.21) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $17.94 $14.81 $11.58 $10.36
===================================================================================================================================
Total return* 23.56% 30.19% 11.78% 3.60%
===================================================================================================================================
Net assets, end of period (in thousands) $3,205,197 $772,630 $110,866 $64,065
Average net assets for the period (in thousands) $2,093,370 $335,098 $77,668 $36,645
Ratio of gross expenses to average net assets**(3) 1.03% 1.26% 1.76% NA
Ratio of net expenses to average net assets**(3) 1.01% 1.23% 1.73% 2.16%
Ratio of net investment income/(loss)
to average net assets** 0.81% 0.73% 0.36% (0.64%)
Portfolio turnover rate** 72% 71% 188% 181%
Average commission per share $.0329 $.0234 NA NA
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period from May 3, 1993 (inception) to October 31, 1993
(2) Fiscal period from May 2, 1994 (inception) to October 31, 1994
(3) See "Explanation of the Financial Highlights"
* Total return not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
NA - Disclosure not applicable to prior periods
See Notes to Financial Statements
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 58
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For a share outstanding throughout Janus Twenty Fund
each fiscal year or period ended October 31 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $31.90 $30.12 $24.24 $25.85 $22.75
- -----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income/(loss) (.09) .37 .01 .16 .17
Net gains or (losses) on securities
(both realized and unrealized) 8.85 6.68 5.94 (1.07) 3.31
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 8.76 7.05 5.95 (.91) 3.48
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (.18) -- (.07) (.25) (.18)
Distributions (from capital gains) (5.32) (5.27) -- (.45) (.20)
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions (5.50) (5.27) (.07) (.70) (.38)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $35.16 $31.90 $30.12 $24.24 $25.85
===================================================================================================================================
Total return* 31.65% 27.59% 24.67% (3.52%) 15.39%
===================================================================================================================================
Net assets, end of period (in thousands) $5,871,070 $3,937,444 $2,995,751 $2,742,812 $3,748,796
Average net assets for the period (in thousands) $4,989,616 $3,385,561 $2,716,278 $3,051,194 $3,545,727
Ratio of gross expenses to average net assets**(1) 0.93% 0.93% 1.00% NA NA
Ratio of net expenses to average net assets**(1) 0.91% 0.92% 0.99% 1.02% 1.05%
Ratio of net investment income to average net assets** 0.33% 0.67% 0.62% 0.57% 0.87%
Portfolio turnover rate** 123% 137% 147% 102% 99%
Average commission per share $.0567 $.0571 NA NA NA
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
For a share outstanding throughout Janus Venture Fund
each fiscal year or period ended October 31 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $57.16 $59.53 $52.86 $53.25 $47.74
- -----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income/(loss) .16 -- .05 .11 .66
Net gains or (losses) on securities
(both realized and unrealized) 6.80 5.09 9.49 4.40 6.72
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 6.96 5.09 9.54 4.51 7.38
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) -- (.01) (.03) (.53) (1.16)
Distributions (from capital gains) (5.28) (7.45) (2.84) (4.37) (.71)
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions (5.28) (7.46) (2.87) (4.90) (1.87)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $58.84 $57.16 $59.53 $52.86 $53.25
===================================================================================================================================
Total return* 13.38% 9.28% 19.24% 9.23% 15.76%
===================================================================================================================================
Net assets, end of period (in thousands) $1,252,341 $1,741,316 $1,753,201 $1,550,476 $1,836,657
Average net assets for the period (in thousands) $1,379,145 $1,822,801 $1,612,514 $1,562,521 $1,792,532
Ratio of gross expenses to average net assets**(1) 0.94% 0.89% 0.92% NA NA
Ratio of net expenses to average net assets**(1) 0.92% 0.88% 0.91% 0.96% 0.97%
Ratio of net investment income/(loss)
to average net assets** 0.11% (0.33%) 0.29% 0.27% 1.29%
Portfolio turnover rate** 146% 136% 113% 114% 139%
Average commission per share $.0391 $.0382 NA NA NA
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
For a share outstanding throughout Janus Worldwide Fund
each fiscal year or period ended October 31 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $34.60 $27.65 $27.00 $24.16 $18.95
- -----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income/(loss) (.08) .49 .81 .15 .14
Net gains or (losses) on securities
(both realized and unrealized) 7.73 7.79 1.39 3.34 5.29
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 7.65 8.28 2.20 3.49 5.43
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (.15) (.26) (.54) (.27) (.22)
Distributions (from capital gains) (2.05) (1.07) (1.01) (.38) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions (2.20) (1.33) (1.55) (.65) (.22)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $40.05 $34.60 $27.65 $27.00 $24.16
===================================================================================================================================
Total return* 23.34% 31.00% 8.89% 14.76% 28.79%
===================================================================================================================================
Net assets, end of period (in thousands) $10,358,225 $4,467,185 $1,804,354 $1,587,120 $754,608
Average net assets for the period (in thousands) $7,783,669 $2,953,495 $1,622,142 $1,244,194 $379,259
Ratio of gross expenses to average net assets**(1) 0.97% 1.02% 1.24% NA NA
Ratio of net expenses to average net assets**(1) 0.95% 1.01% 1.23% 1.12% 1.32%
Ratio of net investment income to average net assets** 0.65% 0.73% 0.99% 0.42% 0.92%
Portfolio turnover rate** 79% 80% 142% 158% 124%
Average commission per share $.0561 $.0311 NA NA NA
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) See "Explanation of the Financial Highlights"
* Total return not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
NA - Disclosure not applicable to prior periods.
See Notes to Financial Statements
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 59
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Janus
Janus Janus Special
Equity Income Olympus Situations
For a share outstanding throughout Fund Fund Fund
each fiscal year or period ended October 31 1997 1996(1) 1997 1996(2) 1997(3)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $11.29 $10.00 $14.86 $12.00 $10.00
- -----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income .09 .07 .04 .13 --
Net gains or (losses) on securities
(both realized and unrealized) 3.11 1.25 3.64 2.73 4.08
- -----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 3.20 1.32 3.68 2.86 4.08
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions
Dividends (from net investment income) (.12) (.03) (.13) -- --
Distributions (from capital gains) (.39) -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions (.51) (.03) (.13) -- --
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $13.98 $11.29 $18.41 $14.86 $14.08
===================================================================================================================================
Total return* 29.46% 13.20% 24.98% 23.83% 40.80%
===================================================================================================================================
Net assets, end of period (in thousands) $74,325 $30,429 $615,651 $432,375 $333,777
Average net assets for the period (in thousands) $46,054 $21,424 $517,424 $276,006 $168,215
Ratio of gross expenses to average net assets**(4) 1.48% 1.79% 1.06% 1.17% 1.20%
Ratio of net expenses to average net assets**(4) 1.45% 1.71% 1.03% 1.15% 1.18%
Ratio of net investment income to average net assets** 0.62% 3.09% 0.26% 1.64% (0.08%)
Portfolio turnover rate** 180% 325% 244% 303% 146%
Average commission per share $.0437 $.0350 $.0496 $.0336 $.0417
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fiscal period June 28, 1996 (inception) to October 31, 1996
(2) Fiscal period December 29, 1995 (inception) to October 31, 1996
(3) Fiscal period December 31, 1996 (inception) to October 31, 1997
(4) See "Explanation of the Financial Highlights"
* Total return not annualized for periods of less than one full year.
** Annualized for periods of less than one full year.
NA - Disclosure not applicable to prior periods.
An Explanation of the Financial Highlights
This schedule provides a per-share breakdown of the components that affect
the Funds' NAV for the current and past reporting periods. Not only does this
table provide you with total return, it also reports total distributions, asset
size, expense ratios, and portfolio turnover rate.
The first line in the table reflects the Funds' NAV per share at the
beginning of the fiscal period. The next line reports the Funds' net investment
income per share, which is comprised of dividends and interest income earned on
securities held by the Funds. Following is the total of gains, realized and
unrealized. Dividends and distributions are then subtracted to arrive at the NAV
per share at the end of the fiscal period.
Also included in the Financial Highlights are the Funds' expense ratios, or
the percentage of net assets that was used to cover operating expenses during
the period. Expense ratios vary across the Funds for a number of reasons,
including the differences in management fees, average shareholder account size,
the frequency of dividend payments, and the extent of foreign investments, which
entail greater transaction costs.
The Funds' expenses may be reduced through expense reduction arrangements.
Those arrangements include the use of brokerage commissions and uninvested cash
balances earning interest or balance credits. The Statements of Operations
reflect the total expenses before any offset, the amount of offset, and the net
expenses. The expense ratios listed in the Financial Highlights reflect total
expenses both prior to any expense offset and after the offsets.
Expense ratios prior to any expense offset are part of disclosure
requirements imposed in 1996. Years prior to 1995 do not reflect this
information.
The next line reports the ratio of net investment income, which is the
income earned divided by the average net assets of a Fund during the reporting
period. Don't confuse this ratio with a Fund's yield. The net investment income
ratio is not a true measure of a Fund's yield because it doesn't take into
account the dividends distributed to the Fund's investors.
The next ratio provided in this table is the portfolio turnover rate, which
measures the amount of buying and selling activity in the Funds' portfolios.
Portfolio turnover is affected by market conditions, changes in the size of a
Fund, the nature of the Fund's investments, and the investment style of the
portfolio manager. A 100% rate implies that an amount equal to the value of the
entire portfolio is turned over in a year; a 50% rate means that an amount equal
to the value of half the portfolio is traded in a year; and a 200% rate would
mean that an amount equal to the value of the portfolio is sold in an average of
six months.
The last item in the table is the average commission rate per share. This
number is derived by taking the agency commissions paid on equity securities
trades (excluding Syndicate or IPO and principal trades amounts, but including
foreign commissions) and dividing by the number of shares purchased. This is a
requirement under SEC regulations but is not a meaningful representation of
actual costs incurred.
See Notes to Financial Statements
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 60
<PAGE>
NOTES TO SCHEDULES OF INVESTMENTS
* Non-income-producing security
** A portion of this security has been segregated by the custodian to cover
segregation requirements on forward currency contracts.
+ Securities are registered pursuant to Rule 144A and may be deemed to be
restricted for resale.
DEM - German Deutschemark
JPY - Japanese Yen
# The Investment Company Act of 1940 defines affiliates as those companies in
which a fund holds 5% or more of the outstanding voting securities. Following
is a summary of the transactions with each such affiliate for the period
ended October 31, 1997:
<TABLE>
<CAPTION>
Purchases Sales Realized Dividend Market Value
Shares Cost Shares Cost Gain/(Loss) Income at 10/31/97
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Fund
<S> <C> <C> <C> <C> <C> <C> <C>
AGCO Corp. 100,000 $ 2,829,202 3,366,025 $73,038,762 $16,063,825 $ 60,748 --
Associates First Capital Corp. - Class A 844,100 36,176,830 2,780,050 103,462,102 55,597,019 1,561,170 $147,158,262
Cadence Design Systems, Inc. 7,246,000 343,648,710 -- -- -- -- 385,849,500
Computer Sciences Corp. 360,000 28,695,793 2,979,325 219,739,163 (2,645,046) -- 172,773,602
Cytec Industries, Inc. -- -- 77,875 2,272,774 870,541 -- 168,222,844
Federal-Mogul Corp. 942,475 33,417,613 -- -- -- 1,317,564 142,271,543
Ikon Office Solutions, Inc.(1) 420,350 14,764,640 7,584,575 155,388,489 63,145,408 228,314 --
Meredith Corp.(2) 2,093,650 52,050,185 -- -- -- 371,319 71,314,953
Parametric Technology Corp. 7,239,925 334,224,743 -- -- -- -- 348,355,844
Pioneer Natural Resources Co. 4,727,425 194,407,711 -- -- -- 231,793 189,392,464
Robert Half International, Inc.(3) 897,350 32,881,894 2,210,917 58,553,468 44,640,002 -- 100,769,212
Smith International, Inc. 3,112,875 194,982,309 -- -- -- -- 237,356,719
Triton Energy, Ltd. 40,000 1,860,882 1,974,525 96,866,957 (16,749,675) -- --
Unisource Worldwide, Inc.(4) -- -- 3,582,112 140,623,848 (64,514,511) -- --
Univision Communications, Inc. 813,400 28,168,547 -- -- -- -- 56,869,500
UNUM Corp.(5) 100,000 3,464,025 2,922,775 110,061,840 61,257,819 5,428,660 387,876,937
Wang Laboratories, Inc. -- -- -- -- -- -- 49,140,625
Young Broadcasting Corp. - Class A -- -- 848,850 28,722,458 (2,036,826) -- 15,997,125
- -----------------------------------------------------------------------------------------------------------------------------------
1,301,573,084 988,729,861 155,628,556 9,199,568 2,473,349,130
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Enterprise Fund
APS Holding Corp. - Class A -- -- 1,000,000 21,028,843 (9,866,018) -- --
Insignia Financial Group, Inc. - Class A -- -- 957,375 9,136,874 9,718,731 -- 11,734,266
J.D. Wetherspoon PLC -- -- 578,689 5,782,518 7,463,316 329,787 36,327,251
Petco Animal Supplies, Inc.(6) -- -- 401,350 10,858,098 721,512 -- 22,878,923
PizzaExpress PLC -- -- 1,168,196 7,269,065 4,116,021 220,108 30,466,761
PriCellular Corp. - Class A 25 217 423,000 3,316,341 1,027,299 -- 11,712,646
Trigen Energy Corp. -- -- 606,000 12,262,489 1,663,907 108,629 9,382,125
- -----------------------------------------------------------------------------------------------------------------------------------
217 69,654,228 14,844,768 658,524 122,501,972
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Growth and Income Fund
Dime Community Bancorp, Inc. -- -- -- -- -- 84,000 16,900,000
M.D.C. Holdings, Inc. 1,303,000 11,796,240 725,000 6,050,374 1,292,099 89,250 7,787,500
- -----------------------------------------------------------------------------------------------------------------------------------
11,796,240 6,050,374 1,292,099 173,250 24,687,500
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Mercury Fund
Abercrombie & Fitch Co. - Class A 191,500 3,679,108 435,500 9,196,235 (739,537) -- --
IntelliQuest Information Group, Inc. 138,275 3,245,750 511,075 13,499,680 (2,797,672) -- --
Ocean Rig A.S.A 7,052,582 14,527,817 -- -- -- -- 30,676,120
- -----------------------------------------------------------------------------------------------------------------------------------
21,452,675 22,695,915 (3,537,209) -- 30,676,120
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Olympus Fund
Corporate Family Solutions, Inc. 295,425 3,776,382 -- -- -- -- 4,394,447
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Overseas Fund
Koninklijke Ahrend Groep N.V.(7) 896,496 25,928,052 -- -- -- -- 29,887,465
Ortivus A.B.(8) 317,217 12,037,829 -- -- -- -- 11,020,033
- -----------------------------------------------------------------------------------------------------------------------------------
37,965,881 -- -- -- 40,907,498
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Special Situations Fund
ITEQ, Inc.(9) 927,800 8,605,171 50,000 351,000 347,977 -- 10,972,500
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 61
<PAGE>
NOTES TO SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
Purchases Sales Realized Dividend Market Value
Shares Cost Shares Cost Gain/(Loss) Income at 10/31/97
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Twenty Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Danka Business Systems PLC (ADR) 40,150 $ 1,761,906 3,118,825 $108,036,174 ($ 738,922) $ 503,776 --
UAL Corp. 501,400 33,601,209 1,595,375 78,916,479 14,672,720 -- $322,427,141
- -----------------------------------------------------------------------------------------------------------------------------------
35,363,115 186,952,653 13,933,798 503,776 322,427,141
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Venture Fund
Analysts International Corp. -- -- 840,000 6,898,275 13,444,579 74,943 --
APS Holding Corp. - Class A -- -- 1,057,500 21,009,469 (12,137,011) -- --
Biopsys Medical, Inc. 80,000 2,140,195 569,700 9,550,053 5,685,745 -- --
Coinmach Laundry Corp. 72,400 1,354,053 600,000 9,061,260 1,181,211 -- --
CommNet Cellular, Inc. -- -- 800,000 21,471,749 (149,777) -- --
Community Financial Corp. 193,025 2,979,936 -- -- -- 27,024 3,281,425
Computer Learning Centers, Inc.(10) 22,500 401,550 250,000 5,153,058 3,096,768 -- 14,706,250
Culligan Water Technologies, Inc. 247,200 9,299,311 1,282,900 43,114,127 7,472,787 -- --
Dayton Superior Corp. 2,800 33,306 302,800 4,010,219 (909,757) -- --
DepoTech Corp. -- -- 600,000 12,757,359 (4,483,149) -- --
Doral Financial Corp.(11) 242,400 3,249,550 -- -- -- 169,906 13,151,100
Educational Medical, Inc. 35,000 377,188 625,000 6,286,878 (1,017,491) -- --
Eurobike A.G 70,202 1,769,110 327,386 7,398,487 1,504,300 54,392 --
Family Golf Centers, Inc. 114,925 3,481,138 686,025 19,095,545 (2,646,514) -- --
First Bergen Bancorp 192,125 2,579,339 -- -- -- 17,288 3,698,406
Gildemeister Italiana -- -- 2,277,688 8,253,259 (1,304,388) -- --
J. P. Foodservice, Inc. 1,236,800 28,075,449 1,715,350 35,747,715 10,301,891 -- 14,371,875
Labor Ready, Inc. 216,000 3,170,868 695,175 11,715,926 (5,752,961) -- --
Littelfuse, Inc. 57,000 2,535,503 438,925 12,789,265 7,785,905 -- 11,025,000
Medallion Financial Corp. 58,125 833,959 449,950 5,824,044 1,650,619 201,647 --
Minerals Technologies, Inc. -- -- 1,232,845 33,347,122 11,924,875 54,162 --
O'Reilly Automotive, Inc. 50,000 1,755,352 742,500 23,556,204 (255,805) -- --
Papa John's International, Inc.(12) 248,012 7,965,582 1,388,932 29,607,513 7,979,222 -- 13,682,264
Premier Parks, Inc. 122,675 3,794,078 492,075 12,806,145 2,522,255 -- 14,000,000
PriCellular Corp. - Class A -- -- 1,539,543 13,262,386 56,204 -- --
Prosource, Inc. 350,000 4,823,750 350,000 4,823,750 (1,621,588) -- --
Recycling Industries, Inc. -- -- 1,354,000 5,585,250 (4,123,455) -- --
South Street Financial Corp. 245,000 3,799,664 -- -- -- 57,500 4,287,500
Southern Electronics Corp. 385,000 7,186,560 -- -- -- -- 6,352,500
Styling Technology Corp. 250,000 2,571,880 250,000 2,571,880 241,776 -- --
UTI Energy Corp.(13) 350,000 13,037,164 -- -- -- -- 15,618,750
Wisconsin Central Transportation Corp. -- -- 2,828,000 18,917,587 83,076,000 -- 15,562,500
- -----------------------------------------------------------------------------------------------------------------------------------
107,214,485 384,614,525 123,522,241 656,862 129,737,570
- -----------------------------------------------------------------------------------------------------------------------------------
Janus Worldwide Fund
Amer Group, Ltd. 781,488 15,474,078 237,443 6,048,050 (1,094,690) -- 26,093,617
Assa-Abloy A.B. - Class B 1,714,864 27,993,747 -- -- -- -- 104,587,287
Atos S.A.(14) 287,719 31,437,491 54,660 3,947,139 3,041,281 -- 65,698,181
CanWest Global Communications Corp. -- -- 874,425 8,452,775 5,509,798 66,486 --
Grupo Casa Autrey S.A. de C.V. (ADR) 615,975 12,572,774 -- -- -- 289,081 28,648,841
Indian Hotels Co., Ltd. (GDR) -- -- 321,010 8,873,347 (1,755,165) 23,791 --
JBA Holdings, PLC -- -- -- -- -- 288,222 42,992,047
Kinnevik A.B. - Class B -- -- 1,238,519 25,359,330 7,868,041 -- 25,550,120
NTT Data Corp. 755 20,759,472 -- -- -- 946,178 131,570,609
SAS Norske ASA - Class B 2,327,511 25,333,017 809,094 8,756,606 4,472,320 -- 25,593,993
Securitas A.B. - Class B -- -- 3,149 33,052 50,609 1,115,347 96,674,659
Tomra Systems A.S.A 723,146 13,869,297 -- -- -- 84,752 51,476,543
- -----------------------------------------------------------------------------------------------------------------------------------
147,439,876 61,470,299 18,092,194 2,813,857 598,885,897
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Name change from Alco Standard Corp. effective 1/27/97
(2) Adjusted for 2-for-1 stock split 3/18/97
(3) Adjusted for 3-for-2 stock split 9/29/97
(4) Spin-off from Alco Standard Corp. on a 1-for-2 basis 1/2/97
(5) Adjusted for 2-for-1 stock split 3/18/97
(6) Merged with Pet Food Warehouse, Inc. at a ratio of .2174 to 1 effective
1/2/97
(7) Adjusted for 2-for-1 stock split 3/18/97
(8) Name change from Medical Invest Svenska A.B. effective 6/4/97
(9) Name change from Air-Cure Technologies, Inc. effective 3/10/97
(10) Adjusted for 3-for-2 stock split 4/15/97
(11) Name change from First Financial Caribbean Corp. effective 9/23/97
(12) Adjusted for 3-for-2 stock split 11/25/96
(13) Adjusted for 3-for-1 stock split 9/8/97
(14) Name change from Axime S.A. following merger with Sligos S.A. effective
6/30/97
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 62
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The following section describes the organization and significant accounting
policies of the Funds and provides more detailed information about the schedules
and tables that appear throughout this report. In addition, the Notes explain
how the Funds operate and the methods used in preparing and presenting this
report.
1. Organization and Significant Accounting Policies
Janus Investment Fund (the "Trust") is registered under the Investment
Company Act of 1940 (the "1940 Act") as a no-load, open-end management
investment company. Twelve series of shares ("Equity Funds" or "Funds") included
in this report invest primarily in equity securities. Each Fund is diversified
as defined in the 1940 Act, with the exception of Janus Enterprise, Janus
Olympus, Janus Special Situations and Janus Twenty Funds, which are
nondiversified. Janus Special Situations Fund began operations on December 31,
1996. Organization costs were borne by Janus Capital Corporation ("Janus
Capital").
The following policies have been consistently followed by the Funds and are
in conformity with accounting principles generally accepted in the investment
company industry.
Investment Valuation
Securities are valued at the closing price for securities traded on a
principal exchange (U.S. or foreign) and on the NASDAQ National Market.
Securities traded on over-the-counter markets and listed securities for which no
sales are reported are valued at the latest bid price obtained from one or more
dealers, making a market for such securities or by a pricing service approved by
the Funds' Trustees. Short-term securities maturing within 60 days are valued at
amortized cost, which approximates market value. Foreign securities are
converted to U.S. dollars using exchange rates at the close of the New York
Stock Exchange. When market quotations are not readily available, securities are
valued at their fair value as determined in good faith by the Funds' Trustees.
Investment Transactions and Investment Income
Investment transactions are accounted for as of the date purchased or sold.
Dividend income is recorded on the ex-dividend date. Certain dividends from
foreign securities will be recorded as soon as the Trust is informed of the
dividend if such information is obtained subsequent to the ex-dividend date.
Interest income is recorded on the accrual basis and includes amortization of
discounts and premiums. Gains and losses are determined on the identified cost
basis, which is the same basis used for federal income tax purposes.
Forward Currency Transactions and Futures Contracts
The Funds enter into forward currency contracts in order to reduce their
exposure to changes in foreign currency exchange rates on their foreign
portfolio holdings and to lock in the U.S. dollar cost of firm purchase and sale
commitments for securities denominated in foreign currencies. A forward currency
exchange contract is a commitment to purchase or sell a foreign currency at a
future date at a negotiated forward rate. The gain or loss arising from the
difference between the U.S. dollar cost of the original contract and the value
of the foreign currency in U.S. dollars upon closing of such contract is
included in net realized gain or loss from foreign currency transactions.
Forward currency contracts held by the Funds are fully collateralized by
other securities which are denoted in the accompanying Schedule of Investments.
Such collateral is in the possession of the Funds' custodian. The collateral is
evaluated daily to ensure its market value equals or exceeds the current market
value of the corresponding forward currency contracts.
Currency gain and loss is also calculated on payables and receivables that
are denominated in foreign currencies. The payables and receivables are
generally related to security transactions and income.
Futures contracts are marked to market daily and the resultant variation
margin is recorded as an unrealized gain or loss. When a contract is closed, a
realized gain or loss is recorded equal to the difference between the opening
and closing value of the contract. Generally, open forward and futures contracts
are marked to market (i.e., treated as realized and subject to distribution) for
federal income tax purposes at fiscal year-end.
Foreign-denominated assets and forward currency contracts may involve more
risks than domestic transactions, including currency risk, political and
economic risk, regulatory risk, and market risk. Risks may arise from the
potential inability of a counterparty to meet the terms of a contract and from
unanticipated movements in the value of foreign currencies relative to the U.S.
dollar.
The Funds may enter into "futures contracts" and "options" on securities,
financial indexes and foreign currencies, forward contracts, and interest rate
swaps and swap-related products. The Funds intend to use such derivative
instruments primarily to hedge or protect from adverse movements in securities
prices, currency rates or interest rates. The use of futures contracts and
options may involve risks such as the possibility of illiquid markets or
imperfect correlation between the value of the contracts and the underlying
securities, or that the counterparty will fail to perform its obligations.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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.
Dividend Distributions and Expenses
Dividends for Janus Balanced, Janus Equity Income and Janus Growth and
Income Funds are declared and distributed quarterly and capital gains (if any)
are distributed annually. The remaining nine Equity Funds declare and distribute
dividends and capital gains (if any) annually. Each Fund bears expenses incurred
specifically on its behalf as well as a portion of general expenses.
Federal Income Taxes
The Funds intend to distribute to shareholders all taxable investment
income and realized gains and otherwise comply with the Internal Revenue Code
applicable to regulated investment companies.
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 63
<PAGE>
NOTES TO FINANCIAL STATEMENTS
2. Investment Advisory Agreement and Other Transactions with Affiliates
The advisory agreement with the Funds spells out the fees that the Funds
must pay for the period ended October 31, 1997. Each of the Funds was subject to
the following schedule:
Average Daily Net Annual Rate
- --------------------------------------------------------------------------------
Fee Schedule Assets of Fund Percentage (%)
Equity Funds First $300 Million .75
Next $200 Million .70
Over $500 Million .65
- --------------------------------------------------------------------------------
Effective July 1, 1997, Janus Capital reduced the advisory fee on the first
$30 million of average daily net assets from 1.00% to .75%
Janus Service Corporation ("Janus Service"), a wholly owned subsidiary of
Janus Capital, receives an annual fee of 0.16% of average net assets per fund,
plus $4.00 per shareholder account (excluding Janus and Janus Venture Funds) for
transfer agent services plus reimbursement of certain out-of-pocket expenses
(primarily postage and telephone charges).
Officers and certain trustees of the Funds are also officers and/ or
directors of Janus Capital; however, they receive no compensation from the
Funds.
DST Systems, Inc. (DST), an affiliate of Janus Capital through a degree of
common ownership, provides fund accounting and shareholder accounting systems to
the Funds. DST Securities, Inc., a wholly owned subsidiary of DST, is designated
as an introductory broker on certain portfolio transactions. Brokerage
commissions paid to DST Securities, Inc. serve to reduce transfer agent fees and
expenses. Brokerage commissions paid, fees reduced, and the net fees paid to DST
for the year or period ended October 31, 1997, are noted below.
DST Securities, Inc. Fund
Commissions Expense
Paid* Reduction* DST Fees
- --------------------------------------------------------------------------------
Janus Fund $1,118,869 $839,152 $3,114,521
- --------------------------------------------------------------------------------
Janus Balanced Fund 2,636 1,977 97,377
- --------------------------------------------------------------------------------
Janus Enterprise Fund 33,551 28,388 272,667
- --------------------------------------------------------------------------------
Janus Equity Income Fund 1,920 1,440 28,486
- --------------------------------------------------------------------------------
Janus Growth and Income Fund 76,575 57,431 340,207
- --------------------------------------------------------------------------------
Janus Mercury Fund 95,033 71,275 753,105
- --------------------------------------------------------------------------------
Janus Olympus Fund 5,922 4,442 188,227
- --------------------------------------------------------------------------------
Janus Overseas Fund 15,169 11,377 325,776
- --------------------------------------------------------------------------------
Janus Special Situations Fund 7,855 5,892 50,737
- --------------------------------------------------------------------------------
Janus Twenty Fund 177,408 133,056 1,037,071
- --------------------------------------------------------------------------------
Janus Venture Fund 51,096 38,322 359,106
- --------------------------------------------------------------------------------
Janus Worldwide Fund 177,943 133,457 975,514
- --------------------------------------------------------------------------------
* The difference between commissions paid to DST Securities, Inc. and expenses
reduced constituted commissions paid to an unaffiliated clearing broker.
3. Federal Income Tax
Net investment income distributions and capital gains distri- butions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are due to differing
treatments for items such as deferral of wash sales, foreign currency
transactions, net operating losses, and capital loss carryforwards. Permanent
items identified in the period ended October 31, 1997, have been reclassified
among the components of net assets as follows:
Undistributed Undistributed
Net Investment Net Realized Paid-In
Income Gains and Losses Capital
- --------------------------------------------------------------------------------
Janus Fund ($42,225,405) $ 42,225,405 --
- --------------------------------------------------------------------------------
Janus Balanced Fund (201,266) 201,266 --
- --------------------------------------------------------------------------------
Janus Enterprise Fund 3,765,581 1,271,555 ($5,037,136)
- --------------------------------------------------------------------------------
Janus Equity Income Fund 74,539 (74,539) --
- --------------------------------------------------------------------------------
Janus Growth and Income Fund (2,447,789) 2,447,789 --
- --------------------------------------------------------------------------------
Janus Mercury Fund (5,957,088) 5,957,088 --
- --------------------------------------------------------------------------------
Janus Olympus Fund (90,633) 90,633 --
- --------------------------------------------------------------------------------
Janus Overseas Fund (634,629) 634,629 --
- --------------------------------------------------------------------------------
Janus Special Situations Fund 108,450 (108,450) --
- --------------------------------------------------------------------------------
Janus Twenty Fund (23,440,912) 23,440,912 --
- --------------------------------------------------------------------------------
Janus Venture Fund 1,921,756 (1,921,756) --
- --------------------------------------------------------------------------------
Janus Worldwide Fund (24,901,680) 24,901,680 --
- --------------------------------------------------------------------------------
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 64
<PAGE>
NOTES TO FINANCIAL HIGHLIGHTS
The funds have elected to treat gains and losses on forward currency
contracts as capital gains and losses. Other foreign currency gains and losses
on debt instruments are treated as ordinary income for federal income tax
purposes pursuant to Section 988 of the Internal Revenue Code.
There were no net capital loss carryovers as of October 31, 1997. The
aggregate cost of investments and the composition of unrealized appreciation and
depreciation of investment securities for federal income tax purposes as of
October 31, 1997, are as follows:
<TABLE>
<CAPTION>
at October 31, 1997 at October 31, 1997
------------------- ------------------------------------------------------------------
Net
Net Capital Loss Federal Tax Unrealized Unrealized Appreciation/
Carryovers Cost Appreciation (Depreciation) (Depreciation)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Janus Fund -- $15,695,219,630 $3,781,114,698 ($330,107,535) $3,451,007,163
- --------------------------------------------------------------------------------------------------------------------
Janus Balanced Fund -- 314,444,013 36,048,560 (3,248,107) 32,800,453
- --------------------------------------------------------------------------------------------------------------------
Janus Enterprise Fund -- 414,269,117 142,901,841 (8,511,284) 134,390,557
- --------------------------------------------------------------------------------------------------------------------
Janus Equity Income Fund -- 64,282,664 8,970,867 (1,468,258) 7,502,609
- --------------------------------------------------------------------------------------------------------------------
Janus Growth and Income Fund -- 1,510,817,041 401,906,479 (14,150,971) 387,755,508
- --------------------------------------------------------------------------------------------------------------------
Janus Mercury Fund -- 1,682,759,015 339,972,243 (52,486,264) 287,485,979
- --------------------------------------------------------------------------------------------------------------------
Janus Olympus Fund -- 502,314,411 132,490,235 (16,561,051) 115,929,184
- --------------------------------------------------------------------------------------------------------------------
Janus Overseas Fund -- 2,784,955,022 433,008,914 (134,633,780) 298,375,134
- --------------------------------------------------------------------------------------------------------------------
Janus Special Situations Fund -- 303,640,129 41,628,724 (6,998,495) 34,630,229
- --------------------------------------------------------------------------------------------------------------------
Janus Twenty Fund -- 4,791,101,642 1,264,440,052 (110,185,933) 1,154,254,119
- --------------------------------------------------------------------------------------------------------------------
Janus Venture Fund -- 959,127,235 306,135,852 (15,139,901) 290,995,951
- --------------------------------------------------------------------------------------------------------------------
Janus Worldwide Fund -- 8,789,965,733 1,643,029,892 (375,046,778) 1,267,983,114
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of Janus Investment Fund
In our opinion, the accompanying Statements of Assets and Liabilities, including
the Schedules of Investments, and the related Statements of Operations and of
Changes in Net Assets and the Financial Highlights present fairly, in all
material respects, the financial position of Janus Fund, Janus Balanced Fund,
Janus Enterprise Fund, Janus Equity Income Fund, Janus Growth and Income Fund,
Janus Mercury Fund, Janus Olympus Fund, Janus Overseas Fund, Janus Special
Situations Fund, Janus Twenty Fund, Janus Venture Fund, and Janus Worldwide Fund
(12 of the portfolios constituting the Janus Investment Fund, hereafter referred
to as the "Funds") at October 31, 1997, the results of each of their operations,
the changes in each of their net assets, and the financial highlights for each
of the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Funds'
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 1997, by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where securities purchased had not been received, provide a reasonable basis for
the opinion expressed above.
Price Waterhouse LLP
/s/Price Waterhouse LLP
Denver, Colorado
December 2, 1997
JANUS EQUITY FUNDS OCTOBER 31, 1997 ANNUAL REPORT 65
<PAGE>
[Logo] JANUS
100 Fillmore Street
Denver, Colorado 80206-4923
1-800-525-3713
Funds distributed by Janus Distributors, Inc. Member NASD.
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